AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 11, 2000
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. 39 |X|
AND/OR
REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 40 |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)
------------------
PAMELA S. SINOFSKY
ASSISTANT VICE PRESIDENT
AND ASSISTANT COUNSEL
PHOENIX INVESTMENT PARTNERS, LTD.
56 PROSPECT STREET
HARTFORD, CONNECTICUT 06115-0479
(NAME AND ADDRESS OF AGENT FOR SERVICE)
-------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
|X| on May 12, 2000 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(A)
UNDER THE SECURITIES ACT OF 1993
PART A
INFORMATION REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER FORM N-1A, PART A PROSPECTUS CAPTION
- ----------------------------- ------------------
<S> <C> <C>
1. Front and Back Cover Pages................................ Cover Page, Back Cover Page
2. Risk/Return Summary: Investments, Risks, Performance...... Investment Risk and Return Summary
3. Risk/Return Summary: Fee Table............................ Fund Expenses
4. Investment Objectives, Principal Investment Strategies,
and Related Risks....................................... Investment Risk and Return Summary; Additional
Investment Techniques
5. Management's Discussion of Fund Performance............... Performance Tables
6. Management, Organization, and Capital Structure........... Management of the Fund
7. Shareholder Information................................... Pricing of Fund Shares; Sales Charges; Your
Account; How to Buy Shares; How to Sell Shares;
Things to Know When Selling Shares; Account
Policies; Investor Services; Tax Status of Distributions
8. Distribution Arrangements................................. Sales Charges
9. Financial Highlights Information.......................... Financial Highlights
PART B
INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
ITEM NUMBER FORM N-1A, PART B STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ----------------------------- -------------------------------------------
10. Cover Page and Table of Contents......................... Cover Page, Table of Contents
11. Fund History............................................. The Fund
12. Description of the Fund and Its Investment Risks......... Investment Objectives and Policies; Investment
Restrictions
13. Management of the Fund................................... Management of the Fund
14. Control Persons and Principal Holders of Securities...... Management of the Fund
15. Investment Advisory and Other Services................... Services of the Adviser; The Distributor;
Distribution Plans; Other Information
16. Brokerage Allocation and Other Practices................. Portfolio Transactions and Brokerage
17. Capital Stock and Other Securities...................... Other Information
18. Purchase, Redemption, and Pricing of Shares.............. Net Asset Value; How to Buy Shares; Investor
Account Services; Redemption of Shares; Tax
Sheltered Retirement Plans
19. Taxation of the Fund..................................... Dividends, Distributions and Taxes
20. Underwriters............................................. The Distributor
21. Calculation of Performance Data.......................... Performance Information
22. Financial Statements..................................... Financial Statements
PART C
INFORMATION REQUIRED TO BE INCLUDED IN PART C IS SET FORTH UNDER THE APPROPRIATE ITEM, SO NUMBERED,
IN PART C OF THIS REGISTRATION STATEMENT.
</TABLE>
<PAGE>
TABLE OF CONTENTS
- ---------------------------------------------------------------------------
Phoenix-Engemann Small Cap Fund
Investment Risk and Return Summary............. 1
Fund Expenses.................................. 4
Management of the Fund......................... 5
Phoenix-Seneca Growth Fund
Investment Risk and Return Summary............. 7
Fund Expenses.................................. 10
Management of the Fund......................... 11
Phoenix-Seneca Strategic Theme Fund
Investment Risk and Return Summary............. 13
Fund Expenses.................................. 16
Management of the Fund......................... 17
Additional Investment Techniques.................. 19
Pricing of Fund Shares............................ 19
Sales Charges..................................... 20
Your Account...................................... 23
How to Buy Shares................................. 24
How to Sell Shares................................ 24
Things You Should Know When Selling Shares........ 25
Account Policies.................................. 26
Investor Services................................. 27
Tax Status of Distributions....................... 28
Financial Highlights.............................. 29
Additional Information............................ 36
[triangle] Phoenix
Strategic
Equity
Series
Fund
<PAGE>
PHOENIX-ENGEMANN SMALL CAP FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Engemann Small Cap Fund has an investment objective of long-term capital
growth. There is no guarantee that the fund will achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The fund invests primarily in stocks of companies with total market
capitalizations of $1.5 billion or less at the time of investment. The
fund may invest in both U.S. and foreign (non-U.S.) issuers.
[arrow] The subadviser selects companies that it believes have the potential
for long-term, rapid growth. Companies are selected on the basis of
their:
o ability to expand existing product lines, introduce new products and
expand geographically,
o market share gains,
o improved operating efficiency, and
o unexploited themes or acquisitions.
Additionally, the fund seeks companies with strong financial structures
and strong fundamental prospects.
[arrow] Any income derived from investments will be incidental.
[arrow] The subadviser's investment strategy may result in a higher portfolio
turnover rate for the fund. High portfolio turnover rates may increase
costs to the fund, may negatively affect fund performance, and may
increase capital gains distributions, resulting in greater tax
liability to you.
[arrow] Securities are evaluated for sale when they fail to meet the
subadviser's expectations.
Temporary Defensive Strategy: When, in the subadviser's opinion, adverse market
or economic conditions warrant, any part of the fund's assets may be held in
cash or money market instruments, including U.S. Treasury obligations maturing
within one year from the date of purchase. In such instances, the fund may not
achieve its stated objective.
Please see "Additional Investment Techniques" for other investment techniques of
the fund.
Phoenix-Engemann Small Cap Fund 1
<PAGE>
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
GENERAL
The value of the fund's investments that supports your share value can decrease
as well as increase. If between the time you purchase shares and the time you
sell shares the value of the fund's investments decreases, you will lose money.
Investment values can decrease for a number of reasons. Conditions affecting the
overall economy, specific industries or companies in which the fund invests can
be worse than expected and investments may fail to perform as the adviser
expects. As a result, the value of your shares may decrease.
SMALL CAPITALIZATIONS
Given the limited operating history and rapidly changing fundamental prospects,
investment returns from smaller capitalization companies can be highly volatile.
Small capitalization companies may be affected to a greater extent to changes in
economic conditions and conditions in particular industries, are subject to
varying patterns of trading volume and may, at times, be more difficult to sell.
Focusing fund investments in small companies may also subject the fund to
greater risks than a fund that invests in a broad range of securities that do
not have the potential to appreciate, and companies with small capitalizations
may find it more difficult to raise capital.
GROWTH STOCKS
Because growth stocks typically make little or no dividend payments to
shareholders, investment return is based on a stock's capital appreciation,
making return more dependent on market increases and decreases. Growth stocks
are therefore more volatile than non-growth stocks to market changes, tending to
rise faster when markets rise and drop more sharply when markets fall.
FOREIGN INVESTING
Foreign markets and currencies may not perform as well as U.S. markets.
Political and economic uncertainty in foreign countries, as well as less public
information about foreign investments may negatively impact the fund's
portfolio. Dividends and other income payable on foreign securities may be
subject to foreign taxes. Some investments may be made in currencies other than
U.S. dollars that will fluctuate in value as a result of changes in the currency
exchange rate.
2 Phoenix-Engemann Small Cap Fund
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Engemann Small Cap Fund. The bar chart shows changes in the
fund's Class A Shares performance from year to year.(1) The table shows how the
fund's average annual returns for one year and for the life of the fund compare
to those of a broad-based securities market index. The fund's past performance
is not necessarily an indication of how the fund will perform in the future.
CALENDAR ANNUAL
YEAR RETURN (%)
1996 29.96
1997 9.51
1998 11.40
1999 83.61
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 71.44% (quarter ending December 31,
1999) and the lowest return for a quarter was (26.01)% (quarter ending September
30, 1998). Year-to-date performance (through March 31, 2000) is 14.32%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(for the periods ending 12/31/99)(1) One Year Life of the Fund(2)
- --------------------------------------------------------------------------------
Class A Shares(3) 73.05% 36.07%
- --------------------------------------------------------------------------------
Class B Shares 78.32% 36.81%
- --------------------------------------------------------------------------------
Russell 2000 Growth Index (4) 43.09% 16.74%
- --------------------------------------------------------------------------------
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B Shares.
(2) Since October 16, 1995.
(3) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(4) The Russell 2000 Growth Index is an unmanaged, commonly used measure of
total return performance of small-capitalization growth-orientated stocks. The
Index does not reflect sales charges.
Phoenix-Engemann Small Cap Fund 3
<PAGE>
FUND EXPENSES
- --------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
CLASS A CLASS B
SHARES SHARES
------- -------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 5.75% None
Maximum Deferred Sales Charge (load) (as a percentage of
the lesser of the value redeemed or the amount invested) None 5%(a)
Maximum Sales Charge (load) Imposed on Reinvested
Dividends None None
Redemption Fee None None
Exchange Fee None None
--------------------
CLASS A CLASS B
SHARES SHARES
------- -------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.75% 0.75%
Distribution and Service (12b-1) Fees (b) 0.25% 1.00%
Other Expenses 0.46% 0.46%
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.46% 2.21%
===== =====
(a) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year.
(b) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
4 Phoenix-Engemann Small Cap Fund
<PAGE>
- --------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Class A $715 $1,010 $1,327 $2,221
- --------------------------------------------------------------------------------
Class B $624 $891 $1,185 $2,355
- --------------------------------------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
- --------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Class B $224 $691 $1,185 $2,355
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
THE ADVISERS
Phoenix Investment Counsel, Inc. ("Phoenix") is the investment adviser to the
fund and is located at 56 Prospect Street, Hartford, CT 06115. Phoenix also acts
as the investment adviser for 14 fund companies totaling 38 mutual funds, as
subadviser to two fund companies totaling three mutual funds and as adviser to
institutional clients. As of December 31, 1999, Phoenix had $25.7 billion in
assets under management. Phoenix has acted as an investment adviser for over
sixty years.
Roger Engemann & Associates, Inc. ("Engemann") is the investment subadviser to
the fund and is located at 600 North Rosemead Boulevard, Pasadena, California
91107. Engemann acts as adviser to six mutual funds, as subadviser to four other
mutual funds and acts as investment adviser to institutions and individuals. As
of December 31, 1999, Engemann had $10.9 billion in assets under management.
Engemann has been an investment adviser since 1969.
Subject to the direction of the fund's Board of Trustees, Phoenix is responsible
for managing the fund's investment program and the general operations of the
funds. Engemann, as subadviser, is responsible for day-to-day management of the
fund's portfolio. Engemann manages the fund's assets to conform with the
investment policies as described in this prospectus. The fund pays Phoenix a
monthly investment management fee that is accrued daily against the value of
the fund's net assets at the following rates:
- --------------------------------------------------------------------------------
$1+ billion
1st billion through $2 billion $2+ billion
- --------------------------------------------------------------------------------
Management Fee 0.75% 0.70% 0.65%
- --------------------------------------------------------------------------------
Phoenix-Engemann Small Cap Fund 5
<PAGE>
Phoenix pays Engemann a subadvisory fee at the following rates:
- --------------------------------------------------------------------------------
Up to $323 million $1+ billion
$323 million through $1 billion through $2 billion 2+ billion
- --------------------------------------------------------------------------------
Subadvisory Fee 0.20% 0.375% 0.35% 0.325%
- --------------------------------------------------------------------------------
During the fund's last fiscal year, the fund paid total management fees of
$1,885,586. The ratio of management fees to average net assets for the fiscal
year ended April 30, 1999 was 0.75%.
PORTFOLIO MANAGEMENT
Roger Engemann, Jim Mair and John Tilson oversee the research and portfolio
management function at Engemann. Each is a Managing Director, Equities of
Phoenix. The portfolio managers named below are responsible for the day-to-day
management of the fund's portfolio. Mr. Engemann has been President of Engemann
since its inception. Messrs. Mair and Tilson are both Executive Vice Presidents
of Portfolio Management of Engemann and both have been with Engemann since 1983.
Messrs. Engemann and Mair earned the right to use the Chartered Financial
Analyst designation in 1972, and Mr. Tilson earned the right to use the
Chartered Financial Analyst designation in 1974.
Lou Abel and Yossi Lipsker serve as co-portfolio managers of the fund and as
such are responsible for the day-to-day management of the fund's portfolio.
Messrs. Abel and Lipsker are both Vice Presidents of Engemann and have been with
Engemann since 1991 and 1995, respectively. Messrs. Abel and Lipsker also serve
as co-portfolio managers of the Phoenix-Engemann Small & Mid-Cap Growth Fund of
the Phoenix-Engemann Funds, and Mr. Lipsker serves as co-portfolio manager of
the Phoenix-Engemann Nifty Fifty Fund of the Phoenix-Engemann Funds. Mr. Abel
earned the right to use the Chartered Financial Analyst designation in 1993.
6 Phoenix-Engemann Small Cap Fund
<PAGE>
PHOENIX-SENECA GROWTH FUND
INVESTMENT RISK AND RETURN SUMMARY
INVESTMENT OBJECTIVE
Phoenix-Seneca Growth Fund has an investment objective of long-term capital
growth. There is no guarantee that the fund will achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] Under normal circumstances, the fund will invest at least 65% of its
total assets in common stocks.
[arrow] The subadviser uses a screening process to select stocks of companies
that it believes are:
o growing at the fastest rates;
o producing quality, sustainable earnings;
o well managed; and
o reasonably valued relative to their growth rate and to the market.
[arrow] Stocks are reviewed for sale if:
o earnings reports disappoint;
o valuation levels reach the top of their historic levels; or
o earnings momentum peaks.
[arrow] The fund may invest in both U.S. and foreign (non-U.S.) stocks of any
type, with any capitalization and from any industry.
[arrow] Any income derived from investments will be incidental.
[arrow] The subadviser's investment strategy may result in a higher portfolio
turnover rate for the fund. High portfolio turnover rates may increase
costs to the fund, may negatively affect fund performance, and may
increase capital gains distributions, resulting in greater tax
liability to you.
Temporary Defensive Strategy: When, in the subadviser's opinion, adverse market
or economic conditions warrant, any part of the fund's assets may be held in
cash or money market instruments, including U.S. Treasury obligations maturing
within one year from the date of purchase. In such instances, the fund may not
achieve its stated objective.
Please see "Additional Investment Techniques" for other investment techniques of
the fund.
Phoenix-Seneca Growth Fund 7
<PAGE>
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
GENERAL
The value of the fund's investments that supports your share value can decrease
as well as increase. If between the time you purchase shares and the time you
sell shares the value of the fund's investments decreases, you will lose money.
Investment values can decrease for a number of reasons. Conditions affecting the
overall economy, specific industries or companies in which the fund invests can
be worse than expected and investments may fail to perform as the adviser
expects. As a result, the value of your shares may decrease.
GROWTH STOCKS
Because growth stocks typically make little or no dividend payments to
shareholders, investment return is based on a stock's capital appreciation,
making return more dependent on market increases and decreases. Growth stocks
are therefore more volatile than non-growth stocks to market changes, tending to
rise faster when markets rise and drop more sharply when markets fall.
SMALL CAPITALIZATIONS
Companies with small capitalizations are often companies with a limited
operating history or companies in industries that have recently emerged due to
cultural, economic, regulatory or technological developments. Such developments
can have a significant impact or negative effect on small capitalization
companies and their stock performance and can make investment returns highly
volatile. Product lines are often less diversified and subject to competitive
threats. Smaller capitalization stocks are subject to varying patterns of
trading volume and may, at times, be difficult to sell.
FOREIGN INVESTING
Foreign markets and currencies may not perform as well as U.S. markets.
Political and economic uncertainty in foreign countries, as well as less public
information about foreign investments may negatively impact the fund's
portfolio. Dividends and other income payable on foreign securities may be
subject to foreign taxes. Some investments may be made in currencies other than
U.S. dollars that will fluctuate in value as a result of changes in the currency
exchange rate.
8 Phoenix-Seneca Growth Fund
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Seneca Growth Fund. The bar chart shows changes in the fund's
Class A Shares performance from year to year.(1) The table shows how the fund's
average annual returns compare to those of a broad-based securities market
index. The fund's past performance is not necessarily an indication of how the
fund will perform in the future.
CALENDAR ANNUAL
YEAR RETURN (%)
1997 27.87
1998 28.80
1999 38.91
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 27.55% (quarter ending December 31,
1999) and the lowest return for a quarter was (12.35)% (quarter ending September
30, 1998). Year-to-date performance (through March 31, 2000) is 3.68%.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Life of the Fund(2)
Average Annual Total Returns --------------------------------------------------------
(for the periods ending 12/31/99)(1) One Year Class A Class B Class C Class X
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares(3) 30.92% 32.78% -- -- --
- -----------------------------------------------------------------------------------------------------------------
Class B Shares 33.28% -- 24.81% -- --
- -----------------------------------------------------------------------------------------------------------------
Class C Shares 37.20% -- -- 27.09% --
- -----------------------------------------------------------------------------------------------------------------
Class X Shares 39.26% -- -- -- 35.66%
- -----------------------------------------------------------------------------------------------------------------
S&P 500 Composite Stock Price Index(4) 21.14% 26.86% 19.57% 19.57% 26.86%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption of the fund's Class B and Class C Shares.
(2) Class X and Class A Shares since March 8, 1996; Class B and Class C Shares
since July 1, 1998.
(3) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(4) The S&P 500 Composite Stock Price Index is an unmanaged but commonly used
measure of common stock total return performance. The S&P's performance does not
reflect sales charges.
Phoenix-Seneca Growth Fund 9
<PAGE>
FUND EXPENSES
- --------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS X
SHARES SHARES SHARES SHARES
------- ------- ------- -------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases (as a
<S> <C> <C> <C> <C>
percentage of offering price) 5.75% None None None
Maximum Deferred Sales Charge (load) (as a percentage of
the lesser of the value redeemed or the amount invested) None 5%(a) 1%(b) None
Maximum Sales Charge (load) Imposed on Reinvested None None None
Dividends None
Redemption Fee None None None None
Exchange Fee None None None None
--------------------------------------------------------
CLASS A CLASS B CLASS C CLASS X
SHARES SHARES SHARES SHARES
------- ------- ------- -------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.70% 0.70% 0.70% 0.70%
Distribution and Service (12b-1) Fees (d) 0.25% 1.00% 1.00% None
Other Expenses 0.29% 0.29% 0.29% 0.29%
----- ----- ----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.24% 1.99% 1.99%(c) 0.99%(c)
===== ===== ===== =====
</TABLE>
(a) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year.
(b) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(c) For the purposes of this table, expenses of the former Phoenix-Seneca Equity
Opportunities Fund as of April 30, 1999, were used to estimate Total Annual Fund
Operating Expenses; actual expenses may be more or less than the amounts shown.
Effective May 12, 2000, the former Phoenix-Seneca Equity Opportunities Fund has
merged with the former Phoenix-Seneca Growth Fund, and is now called Phoenix-
Seneca Growth Fund.
(d) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
10 Phoenix-Seneca Growth Fund
<PAGE>
- --------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Class A $694 $946 $1,217 $1,989
- --------------------------------------------------------------------------------
Class B $602 $824 $1,073 $2,123
- --------------------------------------------------------------------------------
Class C $302 $624 $1,073 $2,317
- --------------------------------------------------------------------------------
Class X $101 $315 $547 $1,213
- --------------------------------------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
- --------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Class B $202 $624 $1,073 $2,123
- --------------------------------------------------------------------------------
Class C $202 $624 $1,073 $2,317
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
THE ADVISERS
Phoenix Investment Counsel, Inc. ("Phoenix") is the investment adviser to the
fund and is located at 56 Prospect Street, Hartford, CT 06115. Phoenix also acts
as the investment adviser for 14 fund companies totaling 38 mutual funds, as
subadviser to two fund companies totaling three mutual funds and as adviser to
institutional clients. As of December 31, 1999, Phoenix had $25.7 billion in
assets under management. Phoenix has acted as an investment adviser for over
sixty years.
Seneca Capital Management LLC ("Seneca") is the investment subadviser to the
fund and is located at 909 Montgomery Street, San Francisco, California 94133.
Seneca acts as a subadviser to nine other mutual funds and as investment adviser
to institutions and individuals. As of December 31, 1999, Seneca had $9.2
billion in assets under management. Seneca has been (with its predecessor,
GMG/Seneca Capital Management LP ("GMG/Seneca")) an investment adviser since
1989.
Subject to the direction of the fund's Board of Trustees, Phoenix is responsible
for managing the fund's investment program and the general operations of the
fund. Seneca, as subadviser, is responsible for day-to-day management of the
fund's portfolio. Seneca manages the fund's assets to conform with the
investment policies as described in this prospectus. The fund pays Phoenix a
monthly investment management fee that is accrued daily against the value of the
fund's net assets at the following rates:
Phoenix-Seneca Growth Fund 11
<PAGE>
- --------------------------------------------------------------------------------
$1st billion $1+ billion through $2 billion $2+ billion
- --------------------------------------------------------------------------------
Management Fee 0.70% 0.65% 0.60%
- --------------------------------------------------------------------------------
Phoenix pays Seneca a subadvisory fee at the following rates:
- --------------------------------------------------------------------------------
Up to $184 million $1+ billion $2+
$184 million through $1 billion through $2 billion billion
- --------------------------------------------------------------------------------
Subadvisory Fee 0.20% 0.35% 0.325% 0.30%
- --------------------------------------------------------------------------------
During the fund's last fiscal year, the fund paid total management fees of
$1,352,558. The ratio of management fees to average net assets for the fiscal
year ended April 30, 1999 was 0.70%.
PORTFOLIO MANAGEMENT
Investment and trading decisions for the fund are made by a team of managers and
analysts headed by Gail P. Seneca. The team leaders, which include Ms. Seneca,
Richard D. Little and Ronald K. Jacks, are primarily responsible for the day-to-
day decisions related to the fund.
Gail P. Seneca. Ms. Seneca has served as Co-Manager of the fund since January
1998. She also serves as Co-Manager of the Phoenix-Seneca Strategic Theme Fund
of Phoenix Strategic Equity Series Fund and of the Phoenix Duff & Phelps
Institutional Growth Stock Portfolio of Phoenix Duff & Phelps Institutional
Mutual Funds. Ms. Seneca also serves as a team leader for each of the
Phoenix-Seneca Funds. Ms. Seneca has been the Chief Executive and Investment
Officer of Seneca or GMG/Seneca since November 1989. From October 1987 until
October 1989, she was Senior Vice President of the Asset Management Division of
Wells Fargo Bank, and, from October 1983 to September 1987, she was Investment
Strategist and Portfolio Manager for Chase Lincoln Bank, heading the fixed
income division.
Richard D. Little. Mr. Little has served as Co-Manager of the fund since January
1998. He also serves as Co-Manager of the Phoenix-Seneca Strategic Theme Fund of
Phoenix Strategic Equity Series Fund and of the Phoenix Duff & Phelps
Institutional Growth Stock Portfolio of Phoenix Duff & Phelps Institutional
Mutual Funds. Mr. Little also serves as a Portfolio Manager for Phoenix-Seneca
Mid-Cap "EDGE"(SM) Fund of Phoenix-Seneca Funds. Mr. Little has been Director of
Equities with Seneca or GMG/Seneca since December 1989. Before he joined
GMG/Seneca, Mr. Little held positions as an analyst, board member, and regional
manager with Smith Barney, NatWest Securities, and Montgomery Securities.
Ronald K. Jacks. Mr. Jacks has served as Co-Manager of the fund since January
1998. He also serves as Co-Manager of the Phoenix-Seneca Strategic Theme Fund of
Phoenix Strategic Equity Series Fund and of the Phoenix Duff & Phelps
Institutional Growth Stock Portfolio of Phoenix Duff & Phelps Institutional
Mutual Funds. Mr. Jacks also serves as a Portfolio Manager for Phoenix-Seneca
Mid-Cap "EDGE"(SM) Fund of Phoenix-Seneca Funds. Mr. Jacks was Secretary of the
Phoenix-Seneca Funds from February 1996 through February 1998. Mr. Jacks was a
Trustee of Phoenix-Seneca Funds from February 1996 through June 1997. Mr. Jacks
has been a Portfolio Manager with Seneca or GMG/Seneca since July 1990.
12 Phoenix-Seneca Growth Fund
<PAGE>
PHOENIX-SENECA STRATEGIC THEME FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Seneca Strategic Theme Fund has an investment objective of long-term
capital growth. There is no guarantee that the fund will achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The fund invests primarily in stocks of U.S. and foreign (non-U.S.)
companies of any capitalization that the subadviser believes are well
positioned to benefit from cultural, demographic, regulatory, social,
or technological changes worldwide and that offer growth potential.
[arrow] The subadviser establishes strategic (major changes affecting markets
for prolonged periods) and tactical (focused, short-term) investment
themes that generally reflect trends that appear likely to drive stocks
with:
o similar technologies and products;
o embody social, economic, political and technological considerations;
or
o present a visionary idea or creative solution.
The themes should offer substantial appreciation potential and exhibit
some independence from economic cycles.
[arrow] The subadviser seeks to identify companies which are well positioned to
benefit from an investment theme and possess:
o satisfactory return on capital;
o enhanced industry position; and
o superior management skills.
[arrow] More than one theme may be pursued at a time and themes may change when
the subadviser believes that the theme is saturated or fully exploited.
[arrow] The subadviser's investment strategy may result in a higher portfolio
turnover rate for the fund. High portfolio turnover rates may increase
costs to the fund, may negatively affect fund performance, and may
increase capital gains distributions, resulting in greater tax
liability to you.
Temporary Defensive Strategy: When, in the subadviser's opinion, adverse market
conditions warrant, investments may be made in fixed income securities with or
without warrants or conversion features. The fund may also pursue a policy of
retaining cash or investing all or part of its assets in cash equivalents. In
such instances, the fund may not achieve its stated objective.
Phoenix-Seneca Strategic Theme Fund 13
<PAGE>
Please see "Additional Investment Techniques" for other investment techniques of
the fund.
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
GENERAL
The value of the fund's investments that supports your share value can decrease
as well as increase. If between the time you purchase shares and the time you
sell shares the value of the fund's investments decreases, you will lose money.
Investment values can decrease for a number of reasons. Conditions affecting the
overall economy, specific industries or companies in which the fund invests can
be worse than expected and investments may fail to perform as the adviser
expects. As a result, the value of your shares may decrease.
THEME INVESTING
Theme investing is dependent upon the subadviser's ability to anticipate
emerging market trends, exploit such investment opportunities and to thereafter
sell securities once the theme is saturated.
There is no assurance that the themes selected will increase as the market
increases.
If a limited number of themes are selected for fund investment, adverse
economic, political or regulatory developments may have a greater adverse effect
on the fund than if the fund invested in a larger number of themes.
Themes not selected for investment may prove more profitable than themes
selected for investment by the subadviser.
SMALL CAPITALIZATIONS
Companies with small capitalizations are often companies with a limited
operating history or companies in industries that have recently emerged due to
cultural, economic, regulatory or technological developments. Such developments
can have a significant impact or negative effect on small capitalization
companies and their stock performance and can make investment returns highly
volatile. Product lines are often less diversified and subject to competitive
threats. Smaller capitalization stocks are subject to varying patterns of
trading volume and may, at times, be difficult to sell.
FOREIGN INVESTING
Foreign markets and currencies may not perform as well as U.S. markets.
Political and economic uncertainty in foreign countries, as well as less public
information about foreign investments may negatively impact the fund's
portfolio. Dividends and other income payable on foreign securities may be
subject to foreign taxes. Some investments may be made in currencies other than
U.S. dollars that will fluctuate in value as a result of changes in the currency
exchange rate.
14 Phoenix-Seneca Strategic Theme Fund
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Seneca Strategic Theme Fund. The bar chart shows changes in the
fund's Class A Shares performance from year to year.(1) The table shows how the
fund's average annual returns for one year and for the life of the fund compare
to those of a broad-based securities market index. The fund's past performance
is not necessarily an indication of how the fund will perform in the future.
CALENDAR ANNUAL
YEAR RETURN (%)
1996 15.19
1997 17.05
1998 44.52
1999 52.15
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 37.17% (quarter ending December 31,
1998) and the lowest return for a quarter was (7.68)% (quarter ending September
30, 1998). Year-to-date performance (through March 31, 2000) is 19.07%.
- --------------------------------------------------------------------------------
Life of the Fund(2)
Average Annual Total Returns ---------------------------
(for the periods ending 12/31/99)(1) One Year Class A Class B Class C
- --------------------------------------------------------------------------------
Class A Shares(3) 43.41% 30.46% -- --
- --------------------------------------------------------------------------------
Class B Shares 47.02% -- 31.14% --
- --------------------------------------------------------------------------------
Class C Shares 50.92% -- -- 41.22%
- --------------------------------------------------------------------------------
S&P 500 Composite Stock Price Index(4) 21.14% 26.83% 26.83% 24.91%
- --------------------------------------------------------------------------------
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B Shares.
(2) Class A and Class B Shares since October 16, 1995, Class C Shares since
November 3, 1997.
(3) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(4) The S&P 500 Composite Stock Price Index is an unmanaged but commonly used
measure of common stock total return performance. The S&P 500's performance does
not reflect sales charges.
Phoenix-Seneca Strategic Theme Fund 15
<PAGE>
FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases (as a
<S> <C> <C> <C>
percentage of offering price) 5.75% None None
Maximum Deferred Sales Charge (load) (as a percentage of
the lesser of the value redeemed or the amount invested) None 5%(a) 1%(b)
Maximum Sales Charge (load) Imposed on Reinvested None None
Dividends None
Redemption Fee None None None
Exchange Fee None None None
-------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees (c) 0.25% 1.00% 1.00%
Other Expenses 0.38% 0.38% 0.38%
----- ----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.38% 2.13% 2.13%
===== ===== =====
</TABLE>
- ----------------------
(a) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year.
(b) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(c) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
16 Phoenix-Seneca Strategic Theme Fund
<PAGE>
- --------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------
Class A $707 $987 $1,287 $2,137
- ------------------------------------------------------------------------------
Class B $616 $867 $1,144 $2,271
- ------------------------------------------------------------------------------
Class C $316 $667 $1,144 $2,462
- --------------------------------------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
- --------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Class B $216 $667 $1,144 $2,271
- --------------------------------------------------------------------------------
Class C $216 $667 $1,144 $2,462
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
THE ADVISERS
Phoenix Investment Counsel, Inc. ("Phoenix") is the investment adviser to the
fund and is located at 56 Prospect Street, Hartford, CT 06115. Phoenix also acts
as the investment adviser for 14 fund companies totaling 38 mutual funds, as
subadviser to two fund companies totaling three mutual funds and as adviser to
institutional clients. As of December 31, 1999, Phoenix had $25.7 billion in
assets under management. Phoenix has acted as an investment adviser for over
sixty years.
Seneca Capital Management LLC ("Seneca") is the investment subadviser to the
fund and is located at 909 Montgomery Street, San Francisco, California
94133. Seneca acts as a subadviser to nine other mutual funds and as investment
adviser to institutions and individuals. As of December 31, 1999, Seneca had
$9.2 billion in assets under management. Seneca has been (with its predecessor,
GMG/Seneca Capital Management LP ("GMG/Seneca")) an investment adviser since
1989.
Subject to the direction of the fund's Board of Trustees, Phoenix is responsible
for managing the fund's investment program and the general operations of the
fund. Seneca, as subadviser, is responsible for day-to-day management of the
fund's portfolio. Seneca manages the fund's assets to conform with the
investment policies as described in this prospectus. The fund pays Phoenix a
monthly investment management fee that is accrued daily against the value of the
fund's net assets at the following rates:
Phoenix-Seneca Strategic Theme Fund 17
<PAGE>
- --------------------------------------------------------------------------------
$1st billion $1+ billion through $2 billion $2+ billion
- --------------------------------------------------------------------------------
Management Fee 0.75% 0.70% 0.65%
- --------------------------------------------------------------------------------
Phoenix pays Seneca a subadvisory fee at the following rates:
- --------------------------------------------------------------------------------
Up to $201 million $1+ billion
$201 million to $1 billion through $2 billion $2+ billion
- --------------------------------------------------------------------------------
Subadvisory Fee 0.10% 0.375% 0.350% 0.325%
- --------------------------------------------------------------------------------
During the fund's last fiscal year, the fund paid total management fees of
$1,129,085. The ratio of management fees to average net assets for the fiscal
year ended April 30, 1999 was 0.75%.
PORTFOLIO MANAGEMENT
Investment and trading decisions for the fund are made by a team of managers and
analysts headed by Gail P. Seneca. The team leaders, which include Ms. Seneca,
Richard D. Little and Ronald K. Jacks, are primarily responsible for the day-to-
day decisions related to the fund.
Gail P. Seneca. Ms. Seneca has served as Co-Manager of the fund since April
1999. She also serves as Co-Manager of the Phoenix-Seneca Growth Fund of Phoenix
Strategic Equity Series Fund and of the Phoenix Duff & Phelps Institutional
Growth Stock Portfolio of Phoenix Duff & Phelps Institutional Mutual Funds. Ms.
Seneca also serves as a team leader for each of the Phoenix-Seneca Funds. Ms.
Seneca has been the Chief Executive and Investment Officer of Seneca or
GMG/Seneca since November 1989. From October 1987 until October 1989, she was
Senior Vice President of the Asset Management Division of Wells Fargo Bank, and,
from October 1983 to September 1987, she was Investment Strategist and Portfolio
Manager for Chase Lincoln Bank, heading the fixed income division.
Richard D. Little. Mr. Little has served as Co-Manager of the fund since April
1999. He also serves as Co-Manager of the Phoenix-Seneca Growth Fund of Phoenix
Strategic Equity Series Fund and of the Phoenix Duff & Phelps Institutional
Growth Stock Portfolio of Phoenix Duff & Phelps Institutional Mutual Funds. Mr.
Little also serves as a Portfolio Manager for Phoenix-Seneca Mid-Cap "EDGE"(SM)
Fund of Phoenix-Seneca Funds. Mr. Little has been Director of Equities with
Seneca or GMG/Seneca since December 1989. Before he joined GMG/Seneca, Mr.
Little held positions as an analyst, board member, and regional manager with
Smith Barney, NatWest Securities, and Montgomery Securities.
Ronald K. Jacks. Mr. Jacks has served as Co-Manager of the fund since April
1999. He also serves as Co-Manager of the Phoenix-Seneca Growth Fund of Phoenix
Strategic Equity Series Fund and of the Phoenix Duff & Phelps Institutional
Growth Stock Portfolio of Phoenix Duff & Phelps Institutional Mutual Funds. Mr.
Jacks also serves as a Portfolio Manager for Phoenix-Seneca Mid-Cap "EDGE"(SM)
Fund of Phoenix-Seneca Funds. Mr. Jacks was Secretary of the Phoenix-Seneca
Funds from February 1996 through February 1998. Mr. Jacks was a Trustee of
Phoenix-Seneca Funds from February 1996 through June 1997. Mr. Jacks has been a
Portfolio Manager with Seneca or GMG/Seneca since July 1990.
18 Phoenix-Seneca Strategic Theme Fund
<PAGE>
ADDITIONAL INVESTMENT TECHNIQUES
- --------------------------------------------------------------------------------
CONVERTIBLE SECURITIES
Each of the funds may invest in convertible securities. Convertible securities
have several unique investment characteristics, such as:
o Higher yields than common stocks but lower yields than comparable
nonconvertible securities;
o Typically less fluctuation in value than the "underlying" common
stock, that is, the common stock that the investor receives if he
converts; and
o The potential for capital appreciation if the market price of the
underlying common stock increases.
PRICING OF FUND SHARES
- --------------------------------------------------------------------------------
HOW IS THE SHARE PRICE DETERMINED?
Each fund calculates a share price for each class of its shares. The share price
is based on the net assets of the fund and the number of outstanding shares. In
general, each fund calculates net asset value by:
o adding the values of all securities and other assets of the fund,
o subtracting liabilities, and
o dividing the result by the total number of outstanding shares of the
fund.
Asset Value: The funds' investments are valued at market value. If market
quotations are not available, the funds determine a "fair value" for an
investment according to rules and procedures approved by the Trustees. Foreign
and domestic debt securities (other than short-term investments) are valued on
the basis of broker quotations or valuations provided by a pricing service
approved by the Trustees when such prices are believed to reflect the fair value
of such securities. Foreign and domestic equity securities are valued at the
last sale price or, if there has been no sale that day, at the last bid price,
generally. Short-term investments having a remaining maturity of sixty days or
less are valued at amortized cost, which the Trustees have determined
approximates market value.
Liabilities: Class specific expenses, distribution fees, service fees and other
liabilities are deducted from the assets of each class. Expenses and
liabilities that are not class specific (such as management fees) are allocated
to each class in proportion to each class' net assets, except where an
alternative allocation can be more fairly made.
Phoenix Strategic Equity Series Fund 19
<PAGE>
Net Asset Value: The liability allocated to a class plus any other expenses are
deducted from the proportionate interest of such class in the assets of the
fund. The resulting amount for each class is then divided by the number of
shares outstanding of that class to produce each class' net asset value per
share.
The net asset value per share of each class of each fund is determined on days
when the New York Stock Exchange (the "NYSE") is open for trading as of the
close of trading (normally 4:00 PM eastern time). A fund will not calculate its
net asset values per share on days when the NYSE is closed for trading. If a
fund holds securities that are traded on foreign exchanges that trade on
weekends or other holidays when the funds do not price their shares, the net
asset value of the fund's shares may change on days when shareholders will not
be able to purchase or redeem the fund's shares.
AT WHAT PRICE ARE SHARES PURCHASED?
All investments received by the funds' authorized agents prior to the close of
regular trading on the NYSE (normally 4:00 PM eastern time) will be executed
based on that day's net asset value. Shares credited to your account from the
reinvestment of fund distributions will be in full and fractional shares that
are purchased at the closing net asset value on the next business day on which
the fund's net asset value is calculated following the dividend record date.
SALES CHARGES
- --------------------------------------------------------------------------------
WHAT ARE THE CLASSES AND HOW DO THEY DIFFER?
Presently, two classes of shares are offered of the Small Cap Fund, three
classes of shares are offered of the Strategic Theme Fund and four classes of
shares are offered of the Growth Fund. Each class of shares has different sales
and distribution charges (see "Fund Expenses" previously in this prospectus).
For certain classes of shares, the funds have adopted distribution and service
plans allowed under Rule 12b-1 of the Investment Company Act of 1940 that
authorize the funds to pay distribution and service fees for the sale of their
shares and for services provided to shareholders.
WHAT ARRANGEMENT IS BEST FOR YOU?
The different classes permit you to choose the method of purchasing shares that
is most beneficial to you. In choosing a class, consider the amount of your
investment, the length of time you expect to hold the shares, whether you decide
to receive distributions in cash or to reinvest them in additional shares, and
any other personal circumstances. Depending upon these considerations, the
accumulated distribution and service fees and contingent deferred sales charges
of one class may be more or less than the initial sales charge and accumulated
distribution and service fees of another class of shares bought at the same
time. Because distribution and service fees are paid out of a fund's assets on
an ongoing basis, over time these
20 Phoenix Strategic Equity Series Fund
<PAGE>
fees will increase the cost of your investment and may cost you more than
paying other types of sales charges.
CLASS A SHARES. If you purchase Class A Shares, you will pay a sales charge at
the time of purchase equal to 5.75% of the offering price (6.10% of the amount
invested). The sales charge may be reduced or waived under certain conditions.
Class A Shares are not subject to any charges by the fund when redeemed. Class A
Shares have lower distribution and service fees (0.25%) and pay higher dividends
than Class B and Class C Shares.
CLASS B SHARES. If you purchase Class B Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class B Shares within the first 5
years after they are purchased, you will pay a sales charge of up to 5% of your
shares' value. See "Deferred Sales Charge Alternative--Class B and Class C
Shares" below. This charge declines to 0% over a period of 5 years and may be
waived under certain conditions. Class B shares have higher distribution and
service fees (1.00%) and pay lower dividends than Class A Shares. Class B Shares
automatically convert to Class A Shares eight years after purchase. Purchase of
Class B Shares may be inappropriate for any investor who may qualify for reduced
sales charges of Class A Shares and anyone who is over 85 years of age. The
underwriter may decline purchases in such situations.
CLASS C SHARES. If you purchase Class C Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class C Shares within the first year
after they are purchased, you will pay a sales charge of 1%. See "Deferred Sales
Charge Alternative--Class B and Class C Shares" below. Class C Shares have the
same distribution and service fees (1.00%) and pay comparable dividends as Class
B Shares. Class C Shares do not convert to any other class of shares of the
fund.
CLASS X SHARES. Class X Shares are offered primarily to institutional investors
such as pension and profit sharing plans, other employee benefit trusts,
investment advisers, endowments, foundations and corporations. If you are
eligible to purchase and do purchase Class X Shares, you will pay no sales
charge at any time. There are no distribution and services fees applicable to
Class X Shares. For additional information about purchasing Class X Shares,
please contact Customer Service by calling (800) 243-1574.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
The public offering price of Class A Shares is the net asset value plus a sales
charge that varies depending on the size of your purchase (see "Class A
Shares--Reduced Initial Sales Charges: Combination Purchase Privilege" in the
Statement of Additional Information). Shares purchased based on the automatic
reinvestment of income dividends or capital gains distributions are not subject
to any sales charges. The sales charge is divided between your investment dealer
and the funds' underwriter (Phoenix Equity Planning Corporation or "PEPCO").
Phoenix Strategic Equity Series Fund 21
<PAGE>
SALES CHARGE YOU MAY PAY TO PURCHASE CLASS A SHARES
SALES CHARGE AS
A PERCENTAGE OF
-------------------------
AMOUNT OF NET
TRANSACTION OFFERING AMOUNT
AT OFFERING PRICE PRICE INVESTED
- --------------------------------------------------------------
Under $50,000 5.75% 6.10%
$50,000 but under $100,000 4.75 4.99
$100,000 but under $250,000 3.75 3.90
$250,000 but under $500,000 2.75 2.83
$500,000 but under $1,000,000 2.00 2.04
$1,000,000 or more None None
DEFERRED SALES CHARGE ALTERNATIVE--CLASS B AND CLASS C SHARES
Class B and Class C Shares are purchased without an initial sales charge;
however, shares sold within a specified time period are subject to a declining
contingent deferred sales charge ("CDSC") at the rates listed below. The sales
charge will be multiplied by the then current market value or the initial cost
of the shares being redeemed, whichever is less. No sales charge will be imposed
on increases in net asset value or on shares purchased through the reinvestment
of income dividends or capital gains distributions. To minimize the sales
charge, shares not subject to any charge will be redeemed first, followed by
shares held the longest time. To calculate the amount of shares owned and time
period held, all Class B Shares purchased in any month are considered purchased
on the last day of the preceding month, and all Class C Shares are considered
purchased on the trade date.
DEFERRED SALES CHARGE YOU MAY PAY TO SELL CLASS B SHARES
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
(GROWTH FUND AND STRATEGIC THEME FUND ONLY)
YEAR 1 2+
- --------------------------------------
CDSC 1% 0%
22 Phoenix Strategic Equity Series Fund
<PAGE>
YOUR ACCOUNT
- --------------------------------------------------------------------------------
OPENING AN ACCOUNT
Your financial advisor can assist you with your initial purchase as well as all
phases of your investment program. If you are opening an account by yourself,
please follow the instructions outlined below. These procedures do not apply to
purchases of Class X Shares.
STEP 1.
Your first choice will be the initial amount you intend to invest.
Minimum INITIAL investments:
o $25 for individual retirement accounts, or accounts that use the
systematic exchange privilege, or accounts that use the
Investo-Matic program (see below for more information on the
Investo-Matic program).
o There is no initial dollar requirement for defined contribution
plans, profit-sharing plans, or employee benefit plans. There is
also no minimum for reinvesting dividends and capital gains into
another account.
o $500 for all other accounts.
Minimum ADDITIONAL investments:
o $25 for any account.
o There is no minimum for defined contribution plans, profit-sharing
plans, or employee benefit plans. There is also no minimum for
reinvesting dividends and capital gains into an existing account.
STEP 2.
Your second choice will be what class of shares to buy. The funds offer up to
three classes of shares for individual investors. Each has different sales and
distribution charges. Because all future investments in your account will be
made in the share class you choose when you open your account, you should make
your decision carefully. Your financial advisor can help you pick the share
class that makes the most sense for your situation.
STEP 3.
Your next choice will be how you want to receive any dividends and capital gain
distributions. Your options are:
o Receive both dividends and capital gain distributions in additional
shares;
o Receive dividends in additional shares and capital gain distributions
in cash;
Phoenix Strategic Equity Series Fund 23
<PAGE>
o Receive dividends in cash and capital gain distributions in
additional shares; or
o Receive both dividends and capital gain distributions in cash.
No interest will be paid on uncashed distribution checks.
HOW TO BUY SHARES
- --------------------------------------------------------------------------------
- ------------------------------------ -------------------------------------------
TO OPEN AN ACCOUNT
(CLASS A, CLASS B AND CLASS C SHARES ONLY)
----------------------------------- -------------------------------------------
Through a financial advisor Contact your advisor. Some advisors may
charge a fee and may set different minimum
investments or limitations on buying
shares.
----------------------------------- -------------------------------------------
Through the mail Complete a New Account Application and send
it with a check payable to the fund. Mail
them to: State Street Bank, P.O. Box 8301,
Boston, MA 02266-8301.
----------------------------------- -------------------------------------------
By Federal Funds wire Call us at (800)243-1574 (press 1, then 0).
----------------------------------- -------------------------------------------
Through express delivery Complete a New Account Application and send
it with a check payable to the fund. Send
them to: Boston Financial Data Services,
Attn: Phoenix Funds, 66 Brooks Drive,
Braintree, MA 02184.
----------------------------------- -------------------------------------------
By Investo-Matic Complete the appropriate section on the
application and send it with your initial
investment payable to the fund. Mail them
to: State Street Bank, P.O. Box 8301,
Boston, MA 02266-8301.
----------------------------------- -------------------------------------------
By telephone exchange Call us at (800)243-1574 (press 1, then 0).
----------------------------------- -------------------------------------------
HOW TO SELL SHARES
- --------------------------------------------------------------------------------
You have the right to have the funds buy back shares at the net asset value next
determined after receipt of a redemption order by the funds' Transfer Agent or
an authorized agent. In the case of a Class B or Class C Share redemption, you
will be subject to the applicable deferred sales charge, if any, for such
shares. Subject to certain restrictions, shares may be redeemed by telephone or
in writing. In addition, shares may be sold through securities dealers, brokers
or agents who may charge customary commissions or fees for their services. The
funds do not charge any redemption fees. Payment for shares redeemed is made
within seven days; however, redemption proceeds will not be disbursed until each
check used for purchases of shares has been cleared for payment by your bank,
which may take up to 15 days after receipt of the check.
24 Phoenix Strategic Equity Series Fund
<PAGE>
- ------------------------------------ -------------------------------------------
TO SELL SHARES
(CLASS A, CLASS B AND CLASS C SHARES ONLY)
- ------------------------------------ -------------------------------------------
Through a financial advisor Contact your advisor. Some advisors may
charge a fee and may set different minimums
on redemptions of accounts.
- ------------------------------------ -------------------------------------------
Through the mail Send a letter of instruction and any share
certificates (if you hold certificate
shares) to: State Street Bank, P.O. Box
8301, Boston, MA 02266-8301. Be sure to
include the registered owner's name, fund
and account number and number of shares or
dollar value you wish to sell.
- ------------------------------------ -------------------------------------------
Through express delivery Send a letter of instruction and any share
certificates (if you hold certificate
shares) to: Boston Financial Data Services,
Attn: Phoenix Funds, 66 Brooks Drive,
Braintree, MA 02184. Be sure to include the
registered owner's name, fund and account
number and number of shares or dollar value
you wish to sell.
- ------------------------------------ -------------------------------------------
By telephone For sales up to $50,000, requests can be
made by calling (800)243-1574.
- ------------------------------------ -------------------------------------------
By telephone exchange Call us at (800)243-1574 (press 1, then 0).
- ------------------------------------ -------------------------------------------
THINGS YOU SHOULD KNOW WHEN SELLING SHARES
- --------------------------------------------------------------------------------
You may realize a taxable gain or loss (for federal income tax purposes) if you
redeem shares of the funds. Each fund reserves the right to pay large
redemptions "in-kind" (in securities owned by the fund rather than in cash).
Large redemptions are those over $250,000 or 1% of the fund's net assets.
Additional documentation will be required for redemptions by organizations,
fiduciaries, or retirement plans, or if redemption is requested by anyone but
the shareholder(s) of record. Transfers between broker-dealer "street" accounts
are governed by the accepting broker-dealer. Questions regarding this type of
transfer should be directed to your financial advisor. Redemption requests will
not be honored until all required documents in proper form have been received.
To avoid delay in redemption or transfer, shareholders having questions about
specific requirements should contact the funds' Transfer Agent at (800)
243-1574.
REDEMPTIONS BY MAIL
[arrow] If you are selling shares held individually, jointly, or as custodian
under the Uniform Gifts to Minors Act or Uniform Transfers to Minors
Act.
Send a clear letter of instructions if all of these apply:
o The proceeds do not exceed $50,000.
o The proceeds are payable to the registered owner at the address on
record.
Phoenix Strategic Equity Series Fund 25
<PAGE>
Send a clear letter of instructions with a signature guarantee when
any of these apply:
o You are selling more than $50,000 worth of shares.
o The name or address on the account has changed within the last 60
days.
o You want the proceeds to go to a different name or address than on
the account.
[arrow] If you are selling shares held in a corporate or fiduciary account,
please contact the funds' Transfer Agent at (800) 243-1574.
If required, the signature guarantee on your request must be made by an eligible
guarantor institution as defined by the funds' Transfer Agent in accordance with
its signature guarantee procedures. Currently, such procedures generally permit
guarantees by banks, broker dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
SELLING SHARES BY TELEPHONE
The Transfer Agent will use reasonable procedures to confirm that telephone
instructions are genuine. Address and bank account information are verified,
redemption instructions are taped, and all redemptions are confirmed in writing.
The individual investor bears the risk from instructions given by an
unauthorized third-party that the Transfer Agent reasonably believed to be
genuine.
The Transfer Agent may modify or terminate the telephone redemption privilege at
any time with 60 days notice to shareholders.
During times of drastic economic or market changes, telephone redemptions may be
difficult to make or temporarily suspended.
ACCOUNT POLICIES
- --------------------------------------------------------------------------------
ACCOUNT REINSTATEMENT PRIVILEGE
For 180 days after you sell your Class A, Class B or Class C Shares, you can
purchase Class A Shares of any fund at net asset value, with no sales charge, by
reinvesting all or part of your proceeds, but not more. Send your written
request to State Street Bank, P.O. Box 8301, Boston, MA 02266-8301. You can call
us at (800)243-1574 for more information.
Please remember, a redemption and reinvestment are considered to be a sale and
purchase for tax-reporting purposes. Class B shareholders who have had the
contingent deferred sales charge waived because they are in the Systematic
Withdrawal Program are not eligible for this reinstatement privilege.
26 Phoenix Strategic Equity Series Fund
<PAGE>
REDEMPTION OF SMALL ACCOUNTS
Due to the high cost of maintaining small accounts, if your account balance is
less than $200, you may receive a notice requesting you to bring the balance up
to $200 within 60 days. If you do not, the shares in the account will be sold at
net asset value, and a check will be mailed to the address of record.
EXCHANGE PRIVILEGES
You should carefully read the prospectus of the fund into which you want to
exchange before deciding to make an exchange. You can obtain a prospectus from
your financial advisor or by calling us at (800)243-4361 or accessing our Web
site at www.phoenixinvestments.com.
o You may exchange shares for another fund in the same class of shares;
e.g., Class A for Class A.
o Exchanges may be made by phone ((800)243-1574) or by mail (State
Street Bank, P.O. Box 8301, Boston, MA 02266-8301).
o The amount of the exchange must be equal to or greater than the
minimum initial investment required.
o The exchange of shares is treated as a sale and a purchase for
federal income tax purposes.
o Because excessive trading can hurt fund performance and harm other
shareholders, the fund reserves the right to temporarily or
permanently end exchange privileges or reject an order from anyone
who appears to be attempting to time the market, including investors
who request more than one exchange in any 30-day period. The fund's
underwriter has entered into agreements with certain timing firms
permitting them to exchange by telephone. These privileges are
limited, and the funds' distributor has the right to reject or
suspend them.
RETIREMENT PLANS
Shares of the funds may be used as investments under the following qualified
prototype retirement plans: traditional IRA, rollover IRA, SIMPLE IRA, Roth IRA,
401(k) plans, profit-sharing, money purchase plans, and 403(b) plans. For more
information, call (800)243-4361.
INVESTOR SERVICES
- --------------------------------------------------------------------------------
INVESTO-MATIC is a systematic investment plan that allows you to have a
specified amount automatically deducted from your checking or savings account
and then deposited into your
Phoenix Strategic Equity Series Fund 27
<PAGE>
mutual fund account. Just complete the Investo-Matic Section on the application
and include a voided check.
SYSTEMATIC EXCHANGE allows you to automatically move money from one Phoenix Fund
to another on a monthly, quarterly, semiannual or annual basis. Shares of one
Phoenix Fund will be exchanged for shares of the same class of another fund at
the interval you select. To sign up, just complete the Systematic Exchange
Section on the application.
TELEPHONE EXCHANGE lets you exchange shares of one fund for the same class of
shares in another fund, using our customer service telephone service. See the
Telephone Exchange Section on the application.
SYSTEMATIC WITHDRAWAL PROGRAM allows you to periodically redeem a portion of
your account on a predetermined monthly, quarterly, semiannual, or annual basis.
Sufficient shares will be redeemed on the 15th of the month at the closing net
asset value so that the payment is made about the 20th of the month. The program
also provides for redemptions on or about the 10th, 15th, or 25th with proceeds
directed through Automated Clearing House (ACH) to your bank. The minimum
withdrawal is $25, and minimum account balance requirements continue.
Shareholders in the program must own fund shares worth at least $5,000.
TAX STATUS OF DISTRIBUTIONS
- --------------------------------------------------------------------------------
The funds plan to make distributions from net investment income at intervals
stated on the table below and to distribute net realized capital gains, if any,
at least annually.
- --------------------------------------------------------------------------------
FUND DIVIDEND PAID
- --------------------------------------------------------------------------------
Small Cap Fund Semiannually
- --------------------------------------------------------------------------------
Growth Fund Annually
- --------------------------------------------------------------------------------
Strategic Theme Fund Semiannually
- --------------------------------------------------------------------------------
Distributions of short-term capital gains and net investment income are taxable
to shareholders as ordinary income. Long-term capital gains, if any, distributed
to shareholders and which are designated by the fund as capital gains
distributions, are taxable to shareholders as long-term capital gain
distributions regardless of the length of time you have owned your shares.
Unless you elect to receive distributions in cash, dividends and capital gain
distributions are paid in additional shares. All distributions, cash or
additional shares, are subject to federal income tax and may be subject to
state, local and other taxes.
28 Phoenix Strategic Equity Series Fund
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
These tables are intended to help you understand the funds' financial
performance for the past five years or for the life of the funds. Certain
information reflects financial results for a single fund share. The total
returns in the table represent the rate that an investor would have earned or
lost on an investment in the funds (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
independent accountants, except as noted. Their report, together with the funds'
financial statements, are included in the funds' most recent Annual Report,
which is available upon request.
PHOENIX-ENGEMANN SMALL CAP FUND
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------
SIX MONTHS FROM
ENDED INCEPTION
10/31/99 YEAR ENDED APRIL 30, 10/16/95 TO
(UNAUDITED) 1999 1998 1997 4/30/96
----------- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.74 $17.37 $14.13 $16.74 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.11)(5) (0.14)(5) (0.08)(5) (0.05)(5) (0.04)(1)(5)
Net realized and unrealized gain (loss) 4.62 (0.88) 6.80 (2.53) 6.79
------ ------- ------ ------- ------
TOTAL FROM INVESTMENT OPERATIONS 4.51 (1.02) 6.72 (2.58) 6.75
------ ------- ------ ------- ------
LESS DISTRIBUTIONS
Dividends from net realized gains -- (0.61) (3.48) (0.02) --
In excess of net investment income -- -- -- -- (0.01)
In excess of net realized gains -- -- -- (0.01) --
------ ------- ------- ------- -------
TOTAL DISTRIBUTIONS -- (0.61) (3.48) (0.03) (0.01)
------ ------- ------- ------- -------
Change in net asset value 4.51 (1.63) 3.24 (2.61) 6.74
------ ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $20.25 $15.74 $17.37 $14.13 $16.74
====== ======= ======= ======= =======
Total return(2) 28.72%(4) (5.66)% 52.33% (15.43)% 67.48%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $146,950 $121,313 $203,560 $155,089 $98,372
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 1.50%(3) 1.46%(6) 1.31% 1.37% 1.50%(3)
Net investment income (loss) (1.31)%(3) (0.95)% (0.48)% (0.28)% (0.53)%(3)
Portfolio turnover 53%(4) 276% 498% 325% 103%(4)
- ---------------------
</TABLE>
(1) Includes reimbursement of operating expenses by investment advisor of $0.02.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
(6) For the year ended April 30, 1999, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
Phoenix Strategic Equity Series Fund 29
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ENGEMANN SMALL CAP FUND
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
SIX MONTHS FROM
ENDED INCEPTION
10/31/99 YEAR ENDED APRIL 30, 10/16/95 TO
(UNAUDITED) 1999 1998 1997 4/30/96
----------- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.26 $16.99 $13.98 $16.68 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.17)(5) (0.25) (5) (0.21)(5) (0.17)(5) (0.09)(1)(5)
Net realized and unrealized gain (loss) 4.47 (0.87) 6.70 (2.50) 6.77
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 4.30 (1.12) 6.49 (2.67) 6.68
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net realized gains -- (0.61) (3.48) (0.02) --
In excess of net realized gains -- -- -- (0.01) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS -- (0.61) (3.48) (0.03) --
------ ------ ------ ------ ------
Change in net asset value 4.30 (1.73) 3.01 (2.70) 6.68
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $19.56 $15.26 $16.99 $13.98 $16.68
====== ====== ====== ====== ======
Total return(2) 28.24%(4) (6.39)% 51.16% (16.03)% 66.80%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $102,245 $89,349 $147,785 $97,647 $45,168
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 2.24%(3) 2.21%(6) 2.06% 2.12% 2.26%(3)
Net investment income (loss) (2.06)%(3) (1.70)% (1.22)% (1.03)% (1.44)%(3)
Portfolio turnover 53%(4) 276% 498% 325% 103%(4)
- ---------------------
</TABLE>
(1) Includes reimbursement of operating expenses by investment advisor of $0.02.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
(6) For the year ended April 30, 1999, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
30 Phoenix Strategic Equity Series Fund
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-SENECA GROWTH FUND
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------
SIX MONTHS FROM
ENDED INCEPTION
3/31/00 YEAR ENDED SEPTEMBER 30, 3/8/96 TO
(UNAUDITED) 1999 1998 1997 9/30/96
----------- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.57 $16.23 $16.28 $13.63 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.03)(1) (0.09)(1) (0.06)(1) (0.08) --
Net realized and unrealized gain 6.13 5.04 1.24 3.50 3.63
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 6.10 4.95 1.18 3.42 3.63
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (2.54) (1.61) (1.23) (0.77) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (2.54) (1.61) (1.23) (0.77) --
------ ------ ------ ------ ------
Change in net asset value 3.56 3.34 (0.05) 2.65 3.63
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $23.13 $19.57 $16.23 $16.28 $13.63
====== ====== ====== ====== ======
Total return(2) 32.24%(4) 31.89% 7.93% 26.51% 36.30%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $48,278 $31,001 $17,364 $6,013 $466
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 1.31%(3) 1.44% 1.55% 2.48%(5) 1.46%(3)(5)
Net investment income (loss) (0.30)%(3) (0.49)% (0.36)% (0.62)% 0.16%(3)
Portfolio turnover 53%(4) 169% 166% 145.69% 87.66%(4)
- ---------------------
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.63% and
14.01% for the periods ended September 30, 1997 and 1996, respectively.
Phoenix Strategic Equity Series Fund 31
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-SENECA GROWTH FUND
<TABLE>
<CAPTION>
CLASS B
---------------------------------
SIX MONTHS FROM
ENDED YEAR INCEPTION
3/31/00 ENDED 7/1/98 TO
(UNAUDITED) 9/30/99 9/30/98
----------- ------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period $19.28 $16.19 $18.71
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(1) (0.15) (0.31) (0.04)
Net realized and unrealized gain (loss) 6.04 5.01 (2.48)
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 5.89 4.70 (2.52)
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- --
Dividends from net realized gains (2.54) (1.61) --
------ ------ ------
TOTAL DISTRIBUTIONS (2.54) (1.61) --
------ ------ ------
Change in net asset value 3.35 3.09 (2.52)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $22.63 $19.28 $16.19
====== ====== ======
Total return(2) 31.60%(4) 30.31% (13.47)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $10,431 $4,395 $519
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 2.44%(3) 2.60%(5) 2.60%(3)(5)
Net investment income (loss) (1.42)%(3) (1.66)% (1.12)%(3)
Portfolio turnover 53%(4) 169% 166%(4)
</TABLE>
<TABLE>
<CAPTION>
CLASS C
----------------------------------
SIX MONTHS FROM
ENDED YEAR INCEPTION
3/31/00 ENDED 7/1/98 TO
(UNAUDITED) 9/30/99 9/30/98
----------- ------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period $19.25 $16.18 $18.71
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(1) (0.17) (0.32) (0.06)
Net realized and unrealized gain (loss) 6.04 5.00 (2.47)
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 5.87 4.68 (2.53)
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- --
Dividends from net realized gains (2.54) (1.61) --
------ ------ ------
TOTAL DISTRIBUTIONS (2.54) (1.61) --
------ ------ ------
Change in net asset value 3.33 3.07 (2.53)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $22.58 $19.25 $16.18
====== ====== ======
Total return(2) 31.54%(4) 30.20% 13.52%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $9,339 $1,833 $126
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 2.55%(3) 2.60%(6) 2.60%(3)(6)
Net investment income (loss) (1.55)%(3) (1.66)% (1.39)%(3)
Portfolio turnover 53%(4) 169% 166%(4)
- ---------------------
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 3.46% and
12.48% for the periods ended September 30, 1999 and 1999, respectively.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 5.67% and
20.24% for the periods ended September 30, 1999 and 1998, respectively.
32 Phoenix Strategic Equity Series Fund
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-SENECA GROWTH FUND
<TABLE>
<CAPTION>
CLASS X
-------------------------------------------------------------------
SIX MONTHS FROM
ENDED INCEPTION
3/31/00 YEAR ENDED SEPTEMBER 30, 3/8/96 TO
(UNAUDITED) 1999 1998 1997 9/30/96
----------- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.92 $16.46 $16.43 $13.74 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.01)(1) (0.04)(1) 0.00(1) 0.03 0.03
Net realized and unrealized gain 6.27 5.11 1.28 3.50 3.71
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 6.26 5.07 1.28 3.53 3.74
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- (0.02) (0.07) --
Dividends from net realized gains (2.54) (1.61) (1.23) (0.77) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (2.54) (1.61) (1.25) (0.84) --
------ ------ ------ ------ ------
Change in net asset value 3.72 3.46 0.03 $2.69 3.74
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $23.64 $19.92 $16.46 $16.43 $13.74
====== ====== ====== ====== ======
Total return(2) 32.49%(4) 32.19% 8.48% 27.27% 37.40%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $42,945 $35,695 $30,713 $34,093 $12,920
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 1.06%(3) 1.16% 1.14% 1.52%(5) 0.81%(3)(5)
Net investment income (loss) (0.06)%(3) (0.20)% 0.02% 0.31% 0.76%(3)
Portfolio turnover 53%(4) 169% 166% 145.69% 87.66%4)
- ---------------------
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.52% and
3.49% for the periods ended September 30, 1997 and 1996, respectively.
Phoenix Strategic Equity Series Fund 33
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-SENECA STRATEGIC THEME FUND
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
SIX MONTHS FROM
ENDED INCEPTION
10/31/99 YEAR ENDED APRIL 30, 10/16/95 TO
(UNAUDITED) 1999 1998 1997 4/30/96
----------- ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.22 $13.70 $12.03 $12.37 $10.00
INCOME FROM INVESTMENT OPERATIONS(6)
Net investment income (loss) (0.06)(5) (0.11)(5) (0.04)(5) 0.06(5) 0.00(1)(5)
Net realized and unrealized gain (loss) 1.80 6.03 4.03 (0.38) 2.39
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.74 5.92 3.99 (0.32) 2.39
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- (0.01) --
Dividends from net realized gains (1.54) (1.40) (2.29) -- --
In excess of net investment income -- -- (0.03) -- --
In excess of net realized gains -- -- -- (0.01) --
Tax return of capital -- -- -- -- (0.02)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.54) (1.40) (2.32) (0.02) (0.02)
------ ------ ------ ------ ------
Change in net asset value 0.20 4.52 1.67 (0.34) 2.37
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $18.42 $18.22 $13.70 $12.03 $12.37
====== ====== ====== ====== ======
Total return(2) 9.95%(4) 44.91% 36.22% (2.57)% 23.89%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $122,199 $107,871 $89,884 $77,827 $33,393
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 1.31%(3)(7) 1.38%(7) 1.33% 1.40% 1.40%(3)
Net investment income (loss) (0.60)%(3) (0.72)% (0.26)% 0.49% (0.09)%(3)
Portfolio turnover 110%(4) 205% 618% 532% 175%(4)
- ---------------------
</TABLE>
(1) Includes reimbursement of operating expenses by investment advisor of $0.04.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
(6) 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) The ratio of operating expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were included, the
ratio would not significantly differ.
34 Phoenix Strategic Equity Series Fund
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-SENECA STRATEGIC THEME FUND
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------
SIX MONTHS FROM
ENDED INCEPTION
10/31/99 YEAR ENDED APRIL 30, 10/16/95 TO
(UNAUDITED) 1999 1998 1997 9/30/96
----------- ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $17.75 $13.46 $11.91 $12.33 $10.00
INCOME FROM INVESTMENT OPERATIONS(6)
Net investment income (loss) (0.12)(5) (0.22)(5) (0.14)(5) (0.03)(5) (0.06)(1)(5)
Net realized and unrealized gain (loss) 1.73 5.91 3.98 (0.38) 2.40
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.61 5.69 3.84 (0.41) 2.34
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (1.54) (1.40) (2.29) -- --
In excess of net investment income -- -- -- -- --
In excess of net realized gains -- -- -- (0.01) --
Tax return of capital -- -- -- -- (0.01)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.54) (1.40) (2.29) (0.01) (0.01)
------ ------ ------ ------ ------
Change in net asset value 0.07 4.29 1.55 (0.42) 2.33
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $17.82 $17.75 $13.46 $11.91 $12.33
====== ====== ====== ====== ======
Total return(2) 9.47%(4) 43.98% 35.18% (3.31)% 23.41%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $92,047 $84,698 $66,107 $49,843 $11,920
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 2.06%(3)(7) 2.13%(7) 2.08% 2.15% 2.16%(3)
Net investment income (loss) (1.35)%(3) (1.48)% (1.02)% (0.23)% (1.06)%(3)
Portfolio turnover 110%(4) 205% 618% 532% 175%(4)
</TABLE>
PHOENIX-SENECA STRATEGIC THEME FUND
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------
SIX MONTHS FROM
ENDED YEAR ENDED INCEPTION
10/31/99 APRIL 30, 11/3/97 TO
(UNAUDITED) 1999 4/30/98
----------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $17.75 $13.47 $14.93
INCOME FROM INVESTMENT OPERATIONS(6)
Net investment income (loss) (0.12)(5) (0.22)(5) (0.05)(5)
Net realized and unrealized gain (loss) 1.73 5.90 0.88
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.61 5.68 0.83
------ ------ ------
LESS DISTRIBUTIONS
Dividends from net realized gains (1.54) (1.40) (2.29)
------ ------ ------
TOTAL DISTRIBUTIONS (1.54) (1.40) (2.29)
------ ------ ------
Change in net asset value 0.07 4.28 (1.46)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $17.82 $17.75 $13.47
====== ====== ======
Total return(2) 9.47%(4) 43.87% 7.92%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $1,464 $682 $267
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 2.06%(3)(7) 2.13%(7) 2.08%(3)
Net investment income (loss) (1.36)%(3) (1.47)% (0.87)%(3)
Portfolio turnover 110%(4) 205% 618%(4)
- ---------------------
</TABLE>
(1) Includes reimbursement of operating expenses by investment advisor of $0.04.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
(6) 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) The ratio of operating expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were included, the
ratio would not significantly differ.
Phoenix Strategic Equity Series Fund 35
<PAGE>
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
The funds have filed a Statement of Additional Information about the funds,
dated May 12, 2000, with the Securities and Exchange Commission. The Statement
contains more detailed information about the funds. It is incorporated into this
prospectus by reference and is legally part of the prospectus. You may obtain a
free copy of the Statement:
[arrow] by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
[arrow] by calling (800) 243-4361.
You may also obtain information about the funds from the Securities and Exchange
Commission:
[arrow] through its internet site (http://www.sec.gov),
[arrow] by visiting its Public Reference Room in Washington, DC,
[arrow] by writing to its Public Reference Section, Washington, DC 20549-0102
(a fee may be charged), or
[arrow] by electronic request at [email protected] (a fee may be charged).
Information about the operation of the Public Reference Room may be obtained by
calling 1-202-942-8090.
SHAREHOLDER REPORTS
The funds semiannually mail to shareholders detailed reports containing
information about each fund's investments. The funds' Annual Report contains a
detailed discussion of the market conditions and investment strategies that
significantly affected the funds' performance from May 1 through April 30. You
may request a free copy of the funds' Annual and Semiannual Reports:
[arrow] by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
[arrow] by calling (800) 243-4361.
CUSTOMER SERVICE: (800) 243-1574
MARKETING: (800) 243-4361
TELEPHONE ORDERS: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY): (800) 243-1926
SEC File Nos. 33-6931 and 811-4727 [recycle logo] Printed on recycled
paper using soybean ink
36 Phoenix Strategic Equity Series Fund
<PAGE>
PHOENIX-ENGEMANN SMALL CAP FUND
PHOENIX-SENECA GROWTH FUND
PHOENIX-SENECA STRATEGIC THEME FUND
101 Munson Street
Greenfield, MA 01301
Statement of Additional Information
May 12, 2000
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 May 12, 2000, 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 .................................................... 10
Portfolio Transactions and Brokerage........................................ 11
Services of the Advisers.................................................... 12
Net Asset Value............................................................. 13
How to Buy Shares........................................................... 14
Alternative Purchase Arrangements........................................... 14
Investor Account Services................................................... 17
How to Redeem Shares........................................................ 18
Dividends, Distributions and Taxes.......................................... 19
Tax Sheltered Retirement Plans.............................................. 20
The Distributor............................................................. 20
Distribution Plans.......................................................... 22
Management of the Trust .................................................... 23
Additional Information...................................................... 30
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
PXP731 (5/00)
<PAGE>
THE TRUST
Phoenix Strategic Equity Series Fund (the "Trust") 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-Seneca Growth Fund (the "Growth Fund"), formerly the
Phoenix-Seneca Equity Opportunities Fund, the Phoenix-Seneca Strategic Theme
Fund (the "Theme Fund"), and the Phoenix-Engemann Small Cap Fund (the "Small Cap
Fund"). The Growth 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 Growth 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.
In addition, the Theme Fund may invest in preferred stocks, investment grade
bonds (Moody's Baa or higher or S&P's BBB or higher), convertible preferred
stocks and convertible debentures if in the judgement of the Adviser the
investment would further its investment objective.
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,
2
<PAGE>
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 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.
3
<PAGE>
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.
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.
4
<PAGE>
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.
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
5
<PAGE>
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.
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.
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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). 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 specific
questions regarding foreign, federal, state or local taxes.
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.
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
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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.
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 accured 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. 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.
LOWER RATED CONVERTIBLE SECURITIES. 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). 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.
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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 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.
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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 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 Shares covering periods prior to
the inception of Class C Shares will reflect historical performance of Class A
Shares adjusted for the higher operating expenses applicable to Class C 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.
The average annual total return of the Small Cap Fund Class A Shares for the
1-year period ended April 30, 1999 and since inception October 16, 1995 to April
30, 1999, was (11.09)% and 20.21%, respectively. The average annual total return
of the Small Cap Fund Class B Shares for the 1-year period ended April 30, 1999
and since inception October 16, 1995 to April 30, 1999, was (9.84)% and 20.98%,
respectively. The average annual total return of the Growth Fund Class A Shares
for the 1-year period ended April 30, 1999 and since inception March 8, 1996 to
April 30, 1999, was 9.89% and 29.12%, respectively. The average annual total
return of the Growth Fund Class B Shares since inception July 1, 1998 to April
30, 1999 was 4.49%. The average annual total return of the Growth Fund Class C
Shares since inception July 1, 1998 to April 30, 1999 was 8.37%. The average
annual total return of the Growth Fund Class X Shares for the 1-year period
ended April 30, 1999 and since inception March 8, 1996 to April 30, 1999, was
17.08% and 32.45%, respectively. The average annual total return of the Theme
Fund Class A Shares for the 1-year period ended April 30, 1999 and since
inception October 16, 1995 to April 30, 1999, was 36.58% and 25.68%,
respectively. The average annual total return of the Theme Fund Class B Shares
for the 1-year period ended April 30, 1999 and since inception October 16, 1995
to April 30, 1999, was 40.14% and 26.57%, respectively. The average annual total
return of the Theme Fund Class C Shares for the 1-year period ended April 30,
1999 and since inception November 3, 1997 to April 30, 1999, was 43.87% and
34.41%, respectively. Class A Share performance has been restated to reflect the
deduction of the current maximum sales charge.
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The Funds may also compute aggregate cumulative total return for specified
periods based on a hypothetical Class A, Class B or Class C account with an
assumed initial investment of $10,000. The aggregate total return is determined
by dividing the net asset value of this account at the end of the specified
period by the value of the initial investment and is expressed as a percentage.
Calculation of aggregate total return reflects payment of the Class A Shares'
maximum sales charge of 5.75% and assumes reinvestment of all income dividends
and capital gain distributions during the period.
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 and/or Subadviser (throughout this section 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 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.
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.
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
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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.
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 Adviser may use its broker/dealer affiliates, or other firms that sell
shares of the Funds, to buy and sell securities for the Funds, provided they
have the execution capability and that their commission rates are comparable to
those of other unaffiliated broker/dealers. Directors of PXP Securities Corp. or
its affiliates receive indirect benefits from the Funds as a result of its usual
and customary brokerage commissions that PXP Securities Corp. may receive for
acting as broker to the Funds in the purchase and sale of portfolio securities.
The investment advisory agreement does not provide for a reduction of the
advisory fee by any portion of the brokerage fees generated by portfolio
transactions of the Funds that PXP Securities Corp. may receive.
During the fiscal years ended April 30, 1997, 1998 and 1999, brokerage
commissions paid by the Funds totalled $2,686,635, $3,579,420 and $2,087,042,
respectively. In the fiscal year ended April 30, 1999, W.S. Griffith & Co.,
Inc., a broker-dealer subsidiary of Phoenix Home Life, received $6,660, or .31%
of total brokerage commissions paid by the Trust, in fund related commissions
attributed to a clearing arrangement with an unaffiliated broker-dealer.
Brokerage commissions of $644,307 paid during the fiscal year ended April 30,
1999 were paid on portfolio transactions aggregating $606,964,035 executed by
brokers who provided research and other statistical and factual information.
SERVICES OF THE ADVISERS
The investment adviser to the Fund is Phoenix Investment Counsel, Inc. ("PIC"
or "Adviser"), which is located at 56 Prospect Street, Hartford, Connecticut
06115-0480. PIC also acts as the investment adviser for 14 fund companies
totaling 38 mutual funds, as subadviser to two fund companies totaling three
mutual funds, and as adviser to institutional clients. PIC has acted as an
investment adviser for over sixty years. PIC was originally organized in 1932 as
John P. Chase, Inc. As of December 31, 1999, PIC had approximately $25.7 billion
in assets under management. Philip R. McLoughlin, a Trustee and officer of the
Fund, is a director of PIC. All other executive officers of the Fund are
officers of PIC.
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning" or "Distributor"), a subsidiary of Phoenix
Investment Partners, Ltd. ("PXP"). Phoenix Home Life Mutual Insurance Company
("Phoenix Home Life") of Hartford, Connecticut is a majority shareholder of PXP.
Phoenix Home Life is in the business of writing ordinary and group life and
health insurance and annuities. Its principal offices are located at One
American Row, Hartford, Connecticut, 06115-2520. Equity Planning, a mutual fund
distributor, acts as the national distributor of the Fund's shares and as
Financial Agent of the Fund. The principal office of Equity Planning is located
at 100 Bright Meadow Boulevard, Enfield, Connecticut, 06082.
PXP is a publicly-traded independent registered investment advisory firm and
has served investors for over 70 years. It manages over $64.6 billion in assets
(as of December 31, 1999) through its investment partners: Aberdeen Fund
Managers, Inc. (Aberdeen) in Aberdeen, London, Singapore and Fort Lauderdale;
Duff & Phelps Investment Management Co. (Duff & Phelps) in Chicago and
Cleveland; Roger Engemann & Associates, Inc. (Engemann) in Pasadena; Seneca
Capital Management LLC (Seneca) in San Francisco; Phoenix/Zweig Advisers LLC
(Zweig) in New York; and Phoenix Investment Counsel, Inc. (Goodwin, Hollister,
and Oakhurst divisions) in Hartford, Sarasota and Scotts Valley, CA,
respectively.
Roger Engemann & Associates, Inc. ("Engemann") is the investment subadviser
to the Small Cap Fund and is located at 600 North Rosemead Boulevard, Pasadena,
California 91107. Engemann acts as adviser to six mutual funds, as subadviser to
four other mutual funds and acts as investment adviser to institutions and
individuals. As of December 31, 1999, Engemann had $10.9 billion in assets under
management. Engemann has been an investment adviser since 1969.
Seneca Capital Management LLC ("Seneca") is the investment subadviser to the
Growth Fund and Strategic Theme Fund and is located at 909 Montgomery Street,
San Francisco, California 94133. Seneca acts as a subadviser to nine other
mutual funds and as investment adviser to institutions and individuals. As of
December 31, 1999, Seneca had $9.2 billion in assets under management. Seneca
has been (with its predecessor, GMG/Seneca Capital Management LP ("GMG/Seneca"))
an investment adviser since 1989.
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
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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 Growth 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. As compensation for its services, PIC receives a
fee from the Theme Fund and the Small Cap Fund which is accrued daily against
the value of each Fund's net assets and is paid by the Fund monthly. The fee is
computed at an annual rate of 0.75% of the average daily net asset values of
each Fund 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
1997, and 1998 and 1999, the combined management fees paid by the Funds were
$4,145,821, $4,953,597 and $4,367,229, respectively.
The Management Agreement for Growth Fund was approved by the Trustees on
March 16, 1993 and by the shareholders of the Growth Fund on April 30, 1993. The
Management Agreement for Strategic Theme and Small Cap Funds 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.
The Fund, its Adviser and Subadvisers, and its Distributor have each adopted
a Code of Ethics pursuant to Rule 17-j1 under the Investment Company Act of
1940. Personnel subject to the Codes of Ethics may purchase and sell securities
for their personal accounts, including securities that may be purchased, sold or
held by the Funds, subject to certain restrictions and conditions. Generally,
personal securities transactions are subject to preclearance procedures,
reporting requirements and holding period rules. The Codes also restrict
personal securities transactions in private placements, initial public offerings
and securities in which the Funds have a pending order.
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,
Presidents' 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.
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.
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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. The minimum initial investment for Class
X Shares is $250,000, and the minimum subsequent investment for Class X Shares
is $10,000. 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"). Each Fund also offers one Class of shares (Class X
Shares) that may be purchased by certain institutional investors at a price
equal to their net asset value per share.
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 and services fees 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 Shares purchased at the same time. NOTE,
ONLY THE GROWTH FUND AND THEME FUND OFFER CLASS C SHARES AND ONLY THE GROWTH
FUND OFFERS CLASS X SHARES.
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 and services fees and any incremental
transfer agency costs relating to each class of shares will be borne exclusively
by that class. See "Dividends, Distributions and Taxes."
CLASS A SHARES
Class A Shares incur a sales charge when they are purchased and enjoy the
benefit of not being subject to any sales charge when they are redeemed. Class A
Shares are subject to ongoing distribution and service fees at an annual rate of
up to 0.25% of the Funds' aggregate average daily net assets attributable to the
Class A Shares. In addition, certain purchases of Class A Shares qualify for
reduced initial sales charges.
CLASS B SHARES
Class B Shares do not incur a sales charge when they are purchased, but they
are subject to a sales charge if they are redeemed within five years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions.
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 services fees paid by Class B Shares
will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than those related to Class A
Shares. Class B Shares will automatically convert to Class A Shares eight years
after the end of the calendar month in which the shareholder's order to purchase
was accepted. The purpose of the conversion feature is to relieve the holders of
the Class B Shares that have been outstanding for a period of time sufficient
for the adviser and the Distributor to have been compensated for distribution
expenses related to the Class B Shares from most of the burden of such
distribution related expenses.
Class B Shares include all shares purchased, pursuant to the deferred sales
charge alternative, which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were issued. At the
end of this period, Class B Shares will automatically convert to Class A Shares
and will no longer be subject to the higher distribution and 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
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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 (GROWTH FUND AND 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 X SHARES (GROWTH FUND ONLY)
Class X Shares are offered without any sales charges to institutional
investors, such as pension and profit sharing plans, other employee benefit
trusts, investment advisers, endowments, foundations and corporations, and
others who purchase the minimum amounts.
CLASS A SHARES--REDUCED INITIAL SALES CHARGES
Investors choosing Class A Shares may be entitled to reduced sales charges.
The ways in which sales charges may be avoided or reduced are described below.
QUALIFIED PURCHASERS. If you fall within any one of the following categories,
you will not have to pay a sales charge on your purchase of Class A Shares: (1)
trustee, director or officer of the Phoenix Funds, the Phoenix-Engemann Funds,
Phoenix-Seneca Funds or any other mutual fund advised, subadvised or distributed
by the Adviser, Distributor or any of their corporate affiliates (an "Affiliated
Phoenix Fund"); (2) any director or officer, or any full-time employee or sales
representative (for at least 90 days) of the Adviser or Distributor; (3)
registered representatives and employees of securities dealers with whom
Distributor has sales agreements; (4) any qualified retirement plan exclusively
for persons described above; (5) any officer, director or employee of a
corporate affiliate of the Adviser or Distributor; (6) any spouse, child,
parent, grandparent, brother or sister of any person named in (1), (2), (3) or
(5) above; (7) employee benefit plans for employees of the Adviser, Distributor
and/or their corporate affiliates; (8) any employee or agent who retires from
Phoenix Home Life, Distributor and/or their corporate affiliates; (9) any
account held in the name of a qualified employee benefit plan, endowment fund or
foundation if, on the date of the initial investment, the plan, fund or
foundation has assets of $10,000,000 or more or at least 100 eligible employees;
(10) any person with a direct rollover transfer of shares from an established
Phoenix Fund or any other Affiliated Phoenix Fund qualified plan; (11) any
Phoenix Home Life separate account which funds group annuity contracts offered
to qualified employee benefit plans; (12) any state, county, city, department,
authority or similar agency prohibited by law from paying a sales charge; (13)
any fully matriculated student in any U.S. service academy; (14) any unallocated
account held by a third party administrator, registered investment adviser, Fund
company, or bank Fund department which exercises discretionary authority and
holds the account in a fiduciary, agency, custodial or similar capacity, if in
the aggregate such accounts held by such entity equal or exceed $1,000,000; (15)
any person who is investing redemption proceeds from investment companies other
than the Phoenix Funds or any other Affiliated Phoenix Fund if, in connection
with the purchases or redemption of the redeemed shares, the investor paid a
prior sales charge provided such investor supplies verification that the
redemption occurred within 90 days of the Phoenix Fund purchase and that a sales
charge was paid; (16) any deferred compensation plan established for the benefit
of any Phoenix Fund or any other Affiliated Phoenix Fund trustee or director;
provided that sales to persons listed in (1) through (16) above are made upon
the written assurance of the purchaser that the purchase is made for investment
purposes and that the shares so acquired will not be resold except to the Fund;
(17) purchasers of Class A Shares bought through investment advisers and
financial planners who charge an advisory, consulting or other fee for their
services and buy shares for their own accounts or the accounts of their clients;
(18) retirement plans and deferred compensation plans and trusts used to fund
those plans (including, for example, plans qualified or created under sections
401(a), 403(b) or 457 of the Internal Revenue Code), and "rabbi trusts" that buy
shares for their own accounts, in each case if those purchases are made through
a broker or agent or other financial intermediary that has made special
arrangements with the Distributor for such purchases; (19) 401(k) participants
in the Merrill Lynch Daily K Plan (the "Plan") if the Plan has at least $3
million in assets or 500 or more eligible employees; (20) clients of investment
advisors or financial planners who buy shares for their own accounts but only if
their accounts are linked to a master account of their investment advisor or
financial planner on the books and records of the broker, agent or financial
intermediary with which the Distributor has made such special arrangements (each
of the investors described in (17) through (20) may be charged a fee by the
broker, agent or financial intermediary for purchasing shares).
COMBINATION PURCHASE PRIVILEGE. Your purchase of any class of shares of this
or any other Affiliated Phoenix Fund (other than Phoenix Money Market Fund
Series Class A Shares), if made at the same time by the same "person," will be
added together to determine whether the combined sum entitles you to an
immediate reduction in sales charges. A "person" is defined in this and the
following sections as (a) any individual, their spouse and minor children
purchasing shares for his or their own account (including an IRA account)
including his or their own trust; (b) a trustee or other fiduciary purchasing
for a single trust, estate or single fiduciary account (even though more than
one beneficiary may exist); (c) multiple employer trusts or Section
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<PAGE>
403(b) plans for the same employer; (d) multiple accounts (up to 200) under a
qualified employee benefit plan or administered by a third party administrator;
or (e) trust companies, bank trust departments, registered investment advisers,
and similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority and
which are held in a fiduciary, agency, custodial or similar capacity, provided
all shares are held of record in the name, or nominee name, of the entity
placing the order.
An "Affiliated Phoenix Fund" means any other mutual fund advised, subadvised
or distributed by the Adviser or Distributor or any corporate affiliate of
either or both the Adviser and Distributor provided such other mutual fund
extends reciprocal privileges to shareholders of the Phoenix Fund.
LETTER OF INTENT. If you sign a Letter of Intent, your purchase of any class
of shares of this or any other Affiliated Phoenix Fund (other than Phoenix Money
Market Fund Series Class A Shares), if made by the same person within a 13-month
period, will be added together to determine whether you are entitled to an
immediate reduction in sales charges. Sales charges are reduced based on the
overall amount you indicate that you will buy under the Letter of Intent. The
Letter of Intent is a mutually non-binding arrangement between you and the
Distributor. Since the Distributor doesn't know whether you will ultimately
fulfill the Letter of Intent, shares worth 5% of the amount of each purchase
will be set aside until you fulfill the Letter of Intent. When you buy enough
shares to fulfill the Letter of Intent, these shares will no longer be
restricted. If, on the other hand, you do not satisfy the Letter of Intent, or
otherwise wish to sell any restricted shares, you will be given the choice of
either buying enough shares to fulfill the Letter of Intent or paying the
difference between any sales charge you previously paid and the otherwise
applicable sales charge based on the intended aggregate purchases described in
the Letter of Intent. You will be given 20 days to make this decision. If you do
not exercise either election, the Distributor will automatically redeem the
number of your restricted shares needed to make up the deficiency in sales
charges received. The Distributor will redeem restricted Class A Shares before
Class C or B Shares, respectively. Oldest shares will be redeemed before selling
newer shares. Any remaining shares will then be deposited to your account.
RIGHT OF ACCUMULATION. Your purchase of any class of shares of this or any
other Affiliated Phoenix Fund, if made over time by the same person may be added
together to determine whether the combined sum entitles you to a prospective
reduction in sales charges. You must provide certain account information to the
Distributor to exercise this right.
ASSOCIATIONS. Certain groups or associations may be treated as a "person" and
qualify for reduced Class A share sales charges. The group or association must:
(1) have been in existence for at least six months; (2) have a legitimate
purpose other than to purchase mutual fund shares at a reduced sales charge; (3)
work through an investment dealer; or (4) not be a group whose sole reason for
existing is to consist of members who are credit card holders of a particular
company, policyholders of an insurance company, customers of a bank or a
broker-dealer or clients of an investment adviser.
CLASS B AND C SHARES--WAIVER OF SALES CHARGES
The CDSC is waived on the redemption (sale) of Class B 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)
from the Merrill Lynch Daily K Plan ("Plan") invested in Class B Shares, in
which such shares the Distributor has not paid the dealer the Class B sales
commission; (f) based on the exercise of exchange privileges among Class B and C
Shares of this or any other Affiliated Phoenix Fund; (g) based on any direct
rollover transfer of shares from an established Affiliated Phoenix Fund
qualified plan into an Affiliated Phoenix Fund IRA by participants terminating
from the qualified plan; and (h) based on the systematic withdrawal program. If,
as described in condition (a) above, an account is transferred to an account
registered in the name of a deceased's estate, the CDSC will be waived on any
redemption from the estate account occurring within one year of the death. If
the Class B Shares are not redeemed within one year of the death, they will
remain subject to the applicable CDSC.
CONVERSION FEATURES--CLASS B SHARES
Class B Shares will automatically convert to Class A Shares of the same
Portfolio eight years after they are purchased. Conversion will be on the basis
of the then-prevailing net asset value of Class A and B Shares. There is no
sales load, fee or other charge for this feature. Class B Shares acquired
through dividend or distribution reinvestments will be converted into Class A
Shares at the same time that other Class B Shares are converted based on the
proportion that the reinvested shares bear to purchased Class B Shares. The
conversion feature is subject to the continuing availability of an opinion of
counsel or a ruling of the Internal Revenue Service that the assessment of the
higher distribution fees and associated costs with respect to Class B Shares
does not result in any dividends or distributions constituting "preferential
dividends" under the Code, and that the conversion of shares does not constitute
a taxable event under federal income tax law. If the conversion feature is
suspended, Class B Shares would continue to be subject to the higher
distribution fee for an indefinite period. Even if the Fund was unable
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to obtain such assurances, it might continue to make distributions if doing so
would assist in complying with its general practice of distributing sufficient
income to reduce or eliminate federal taxes otherwise payable by the Fund.
INVESTOR ACCOUNT SERVICES
The Funds offer accumulation plans, withdrawal plans and reinvestment and
exchange privileges. Certain privileges may not be available in connection with
all classes. In most cases, changes to account services may be accomplished over
the phone. Inquiries regarding policies and procedures relating to shareholder
account services should be directed to Shareholder Services at (800) 243-1574.
Broker/dealers may impose their own restrictions and limits on accounts held
through the broker/dealer. Please consult your broker/dealer for account
restrictions and limit information.
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 or Series, 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. Distributions may also be mailed to a second
payee and/or address. Requests for directing distributions to an alternate payee
must be made in writing with a signature guarantee of the registered owner(s).
To be effective with respect to a particular dividend or distribution,
notification of the new distribution option must be received by the Transfer
Agent at least three days prior to the record date of such dividend or
distribution. If all shares in your account are repurchased or redeemed or
transferred between the record date and the payment date of a dividend or
distribution, you will receive cash for the dividend or distribution regardless
of the distribution option selected.
INVEST-BY-PHONE
This expedited investment service allows a shareholder to make an investment
in an account by requesting a transfer of funds from the balance of their bank
account. Once a request is phoned in, Equity Planning will initiate the
transaction by wiring a request for monies to the shareholder's commercial bank,
savings bank or credit union via Automated Clearing House (ACH). The
shareholder's bank, which must be an ACH member, will in turn forward the monies
to Equity Planning for credit to the shareholder's account. ACH is a computer
based clearing and settlement operation established for the exchange of
electronic transactions among participating depository institutions.
To establish this service, please complete an Invest-by-Phone Application and
attach a voided check if applicable. Upon Equity Planning's acceptance of the
authorization form (usually within two weeks) shareholders may call toll free
(800) 367-5877 prior to 3:00 p.m. (New York time) to place their purchase
request. Instructions as to the account number and amount to be invested must be
communicated to Equity Planning. Equity Planning will then contact the
shareholder's bank via ACH with appropriate instructions. The purchase is
normally credited to the shareholder's account the day following receipt of the
verbal instructions. The Fund may delay the mailing of a check for redemption
proceeds of Fund shares purchased with a check or via Invest-by-Phone service
until the Fund has assured itself that good payment has been collected for the
purchase of the shares, which may take up to 15 days. The Fund and Equity
Planning reserve the right to modify or terminate the Invest-by-Phone service
for any reason or to institute charges for maintaining an Invest-by-Phone
account.
17
<PAGE>
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 Shares
investor since a sales charge will be paid by the investor on the purchase of
Class A Shares at the same time as other shares are being redeemed. For this
reason, investors in Class A Shares may not participate in an automatic
investment program while participating in the Systematic Withdrawal Program.
Through the Program, Class B shareholders may withdraw up to 1% of their
aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B shareholders redeeming more shares than the
percentage permitted by the withdrawal program will be subject to any applicable
contingent deferred sales charge on all shares redeemed. Accordingly, the
purchase of Class B Shares will generally not be suitable for an investor who
anticipates withdrawing sums in excess of the above limits shortly after
purchase.
HOW TO REDEEM SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefor postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for the 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.
REDEMPTION OF SMALL ACCOUNTS
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.
REDEMPTION IN KIND
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. However, the Fund has
elected to pay in cash all requests for redemption by any shareholder of record,
limited in respect
18
<PAGE>
to each shareholder during any 90-day period to the lesser of $250,000 or 1% of
the net asset value of the Fund at the beginning of such period. This election
has been made pursuant to Rule 18f-1 under the Investment 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 Fund. A shareholder receiving such securities would
incur brokerage costs when he sold the securities.
ACCOUNT REINSTATEMENT 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.
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.
19
<PAGE>
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 Fund are offered in connection with the following qualified
prototype retirement plans: IRA, Rollover IRA, SEP-IRA, SIMPLE IRA, Roth IRA,
401(k), Profit-Sharing, Money Purchase Pension Plans and 403(b) Retirement
Plans. Write or call Equity Planning (800) 243-4361 for further information
about the plans.
MERRILL LYNCH DAILY K PLAN
Class A Shares of a Fund are made available to Merrill Lynch Daily K Plan
(the "Plan") participants at NAV without an initial sales charge if:
(i) the Plan is recordkept on a daily valuation basis by Merrill Lynch and,
on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service
Agreement, the Plan has $3 million or more in assets invested in broker/dealer
funds not advised or managed by Merrill Lynch Asset Management L.P. ("MLAM")
that are made available pursuant to a Service Agreement between Merrill Lynch
and the fund's principal underwriter or distributor and in funds advised or
managed by MLAM (collectively, the "Applicable Investments");
(ii) the Plan is recordkept on a daily valuation basis by an independent
recordkeeper whose services are provided through a contract or alliance
arrangement with Merrill Lynch, and, on the date the Plan Sponsor signs the
Merrill Lynch Recordkeeping Service Agreement, the Plan has $3 million or more
in assets, excluding money market funds, invested in Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by a Merrill
Lynch plan conversion manager, on the date the Plan Sponsor signs the Merrill
Lynch Recordkeeping Service Agreement.
Alternatively, Class B Shares of a Fund are made available to Plan
participants at NAV without a CDSC if the Plan conforms with the requirements
for eligibility set forth in (i) through (iii) above but either does not meet
the $3 million asset threshold or does not have 500 or more eligible employees.
Plans recordkept on a daily basis by Merrill Lynch or an independent
recordkeeper under a contract with Merrill Lynch that are currently investing in
Class B Shares of a Fund convert to Class A Shares once the Plan has reached
$5 million invested in Applicable Investments, or after the normal holding
period of seven years from the initial date of purchase.
THE DISTRIBUTOR
Phoenix Equity Planning Corporation (the "Equity Planning" or "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 1997, 1998 and
1999, purchasers of Fund shares paid aggregate sales charges of $4,241,930,
$2,025,485 and $1,723,056, respectively, of which the Distributor for the Funds
received net commissions of $736,095, $1,058,952 and $1,279,374, respectively,
for its services, the balance being paid to dealers. For the fiscal year ended
April 30, 1999, the Distributor received net commissions of $55,140 for Class A
Shares and deferred sales charges of $1,224,234 for Class B and Class C Shares.
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.
20
<PAGE>
DEALER CONCESSIONS
Dealers with whom the Distributor has entered into sales agreements receive a
discount or commission as described below.
<TABLE>
<CAPTION>
AMOUNT OF
TRANSACTION SALES CHARGE AS A PERCENTAGE SALES CHARGE AS A PERCENTAGE DEALER DISCOUNT
AT OFFERING PRICE OF OFFERING PRICE OF AMOUNT INVESTED PERCENTAGE OF OFFERING PRICE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Under $50,000 5.75% 6.10% 5.25%
$50,000 but under $100,000 4.75 4.99 4.25
$100,000 but under $250,000 3.75 3.90 3.25
$250,000 but under $500,000 2.75 2.83 2.25
$500,000 but under $1,000,000 2.00 2.04 1.75
$1,000,000 or more None None None
</TABLE>
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sale price of
Class C Shares sold by such dealers. This sales commission will not be paid to
dealers for sales of Class B or Class C Shares purchased by 401(k) participants
of the Merrill Lynch Daily K Plan (the "Plan") due to waiver of the CDSC for
these Plan participants' purchases. 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
Fund and/or for providing other shareholder services. Such fees are in addition
to the sales commissions referenced above and may be based upon the amount of
sales of fund shares by a dealer; the provision of assistance in marketing of
fund shares; access to sales personnel and information dissemination services;
provision of recordkeeping and administrative services to qualified employee
benefit plans; and other criteria as established by the Distributor. Depending
on the nature of the services, these fees may be paid either from the Fund
through distribution fees, service fees or transfer agent fees or in some cases,
the Distributor may pay certain fees from its own profits and resources. From
its own profits and resources, the Distributor does intend to: (a) sponsor
training and educational meetings and provide additional compensation to
qualifying dealers in the form of trips, merchandise or expense reimbursements;
(b) from time to time, pay special incentive and retention fees to qualified
wholesalers, registered financial institutions and third party marketers; (c)
pay broker/dealers an amount equal to 1% of the first $3 million of Class A
Share purchases by an account held in the name of a qualified employee benefit
plan with at least 100 eligible employees, 0.50% on the next $3 million, plus
0.25% on the amount in excess of $6 million; and (d) excluding purchases as
described in (c) above, pay broker/dealers an amount equal to 1% of the amount
of Class A Shares sold above $1 million but under $3 million, 0.50% on the next
$3 million, plus 0.25% on the amount in excess of $6 million. If part or all of
such investment, including investments by qualified employee benefit plans, is
subsequently redeemed within one year of the investment date, the broker/dealer
will refund to the Distributor such amounts paid with respect to the investment.
In addition, the Distributor may pay the entire applicable sales charge on
purchases of Class A Shares to selected dealers and agents. From its own profits
and resources, the Distributor intends to pay the following additional
compensation to Merrill Lynch, Pierce, Fenner & Smith, Inc.: 0.25% on sales of
Class A and B shares, 0.10% on sales of Class C shares, 0.10% on sales of Class
A shares sold at net asset value, and 0.10% annually on the average daily net
asset value of fund shares on which Merrill Lynch is broker of record and which
such shares exceed the amount of assets on which Merrill Lynch is broker of
record as of July 1, 1999. Any dealer who receives more than 90% of a sales
charge may be deemed to be an "underwriter" under the Securities Act of 1933.
Equity Planning reserves the right to discontinue or alter such fee payment
plans at any time.
ADMINISTRATIVE SERVICES
Equity Planning also acts as 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%
21
<PAGE>
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, 1999, Equity Planning received $523,541.
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 (except Class X
Shares) of the Trust (the "Class A Plan," the "Class B Plan," the "Class C
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.
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 (the "Service Fee") and will reimburse the Distributor for actual
expenses of the Distributor up to 0.75% of the average daily net assets of the
Funds' Class B Shares and Class C Shares, respectively. 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.
From the Service Fee the Distributor expects to pay a quarterly fee to
qualifying broker/dealer firms, as compensation for providing personal services
and/or the maintenance of shareholder accounts, with respect to shares sold by
such firms. This fee will not exceed on an annual basis 0.25% of the average
annual net asset value of such shares, and will be in addition to sales charges
on Fund shares which are reallowed to such firms. To the extent that the entire
amount of the Service Fee is not paid to such firms, the balance will serve as
compensation for personal and account maintenance services furnished by the
Distributor. The Distributor also pays to dealers as additional compensation
with respect to Class C Shares, 0.75% of the average annual net asset value of
that class.
From its own resources or pursuant to the Plan, and subject to the dealers'
prior approval, the Distributor may provide additional compensation to
registered representatives of dealers in the form of travel expenses, meals, and
lodging associated with training and educational meetings sponsored by the
Distributor. The Distributor may also provide gifts amounting in value to less
than $100, and occasional meals or entertainment, to registered representatives
of dealers. Any such travel expenses, meals, lodging, gifts or entertainment
paid will not be preconditioned upon the registered representatives' or dealers'
achievement of a sales target. The Distributor may, from time to time, reallow
the entire portion of the sales charge on Class A shares which it normally
retains to individual selling dealers. However, such additional reallowance
generally will be made only when the selling dealer commits to substantial
marketing support such as internal wholesaling through dedicated personnel,
internal communications and mass mailings.
In order to receive payments under the Plans, participants must meet such
qualifications to be established in the sole discretion of the Distributor, such
as services to the 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
22
<PAGE>
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.
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.
For the fiscal year ended April 30, 1999, the Funds paid Rule 12b-1 Fees in
the amount of $2,812,308, of which the principal underwriter received
$1,607,602, W.S. Griffith & Co., Inc., an affiliate, received $121,999 and
unaffiliated broker-dealers received $1,082,707. 12b-1 Fees paid by the Funds
during last fiscal year were spent on: (1) advertising, $387,276; (2) printing
and mailing of prospectuses to other than current shareholders, $14,070; (3)
compensation to dealers, $1,705,506; (4) compensation to sales personnel,
$932,692; (5) service costs, $143,929 and (6) other, $160,291. The Distributor's
expenses from selling and servicing Class B Shares may be more than the payments
received from contingent deferred sales charges collected on redeemed shares and
from the Fund under the Class B Plan. Those expenses may be carried over and
paid in future years. At April 30, 1999, the end of the last Plan year,
Distributor had incurred unreimbursed expenses under the Class B Plan of
$3,830,970 (equal to 0.63% of the Fund's net assets) which have been carried
over into the present Class B Plan year.
No interested person of the Fund and no Director who is not an interested
person of the Fund, as that term is defined in the Investment Company Act of
1940, had any direct or indirect financial interest in the operation of the
Plans.
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.
MANAGEMENT OF THE TRUST
The Trust is an open-end management investment company known as a mutual
fund. The Trustees of the Trust ("Trustees") are responsible for the overall
supervision of the Trust and perform duties imposed on Trustees by the
Investment Company Act and Massachusetts business trust law.
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 (65) Trustee Trustee/Director (1981-present) and Chairman (1989-1994), Phoenix
49 Old Post Road Funds. Trustee, Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps
Wethersfield, CT 06109 Institutional Mutual Funds (1996-present) and Phoenix-Seneca Funds
(2000-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>
E. Virgil Conway (70) Trustee Chairman, Metropolitan Transportation Authority (1992-present).
9 Rittenhouse Road Trustee/Director, Consolidated Edison Company of New York, Inc.
Bronxville, NY 10708 (1970-present), Pace University (1978-present), Atlantic Mutual
Insurance Company (1974-present), HRE Properties (1989-present),
Greater New York Councils, Boy Scouts of America (1985-present),
Union Pacific Corp. (1978-present), Blackrock Freddie Mac Mortgage
Securities Fund (Advisory Director) (1990-present), Centennial
Insurance Company (1974-present), Josiah Macy, Jr., Foundation
(1975-present), The Harlem Youth Development Foundation
(1987-present) (Chairman, 1998-present), Accuhealth (1994-present),
Trism, Inc. (1994-present), Realty Foundation of New York
(1972-present), New York Housing Partnership Development Corp.
(Chairman) (1981-present) and Academy of Political Science (Vice
Chairman) (1985-present). Director/Trustee, Phoenix Funds
(1993-present). Trustee, Phoenix-Aberdeen Series Fund, Phoenix Duff &
Phelps Institutional Mutual Funds (1996-present) and Phoenix-Seneca
Funds (2000-present). Director, Duff & Phelps Utilities Tax-Free
Income Inc. and Duff & Phelps Utility and Corporate Bond Trust Inc.
(1995-present). Member, Audit Committee of the City of New York
(1981-1996). Advisory Director, Blackrock Fannie Mae Mortgage
Securities Fund (1989-1996) and Fund Directions (1993-1998).
Chairman, Financial Accounting Standards Advisory Council
(1992-1995).
Harry Dalzell-Payne (70) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
330 East 39th Street Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Apartment 29G Mutual Funds (1996-present) and Phoenix-Seneca Funds (1999-present).
New York, NY 10022 Director, Duff & Phelps Utilities Tax-Free Income Inc. and Duff &
Phelps Utility and Corporate Bond Trust Inc. (1995-present).
Director, Farragut Mortgage Co., Inc. (1991-1994). Formerly a Major
General of the British Army.
*Francis E. Jeffries (69) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
8477 Bay Colony Dr. Phoenix-Aberdeen Series Inc., Phoenix Duff & Phelps Institutional
#902 Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Naples, FL 34108 Director, Duff & Phelps Utilities Income Inc. (1987-present), Duff &
Phelps Utilities Tax-Free Income Inc. (1991-present) and Duff &
Phelps Utility and Corporate Bond Trust Inc. (1993-present).
Director, The Empire District Electric Company (1984-present).
Director (1989-1997), Chairman of the Board (1993-1997), President
(1989-1993), and Chief Executive Officer (1989-1995), Phoenix
Investment Partners, Ltd.
Leroy Keith, Jr. (61) Trustee Chairman (1995-present) and Chief Executive Officer (1995-1999),
Chairman Carson Products Company. Director/Trustee, Phoenix Funds
Carson Products Company (1980-present). Trustee, Phoenix-Aberdeen Series Fund, Phoenix Duff &
64 Ross Road Phelps Institutional Mutual Funds (1996-present) and Phoenix-Seneca
Savannah, GA 30750 Funds (2000-present). Director, Equifax Corp. (1991-present) and
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.
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
*Philip R. McLoughlin (53) Trustee and President Chairman (1997-present), Director (1995-present), Vice 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). Trustee, Phoenix-Seneca Funds (1999-present),
Director (1983-present) and Chairman (1995-present), Phoenix
Investment Counsel, Inc. Director (1984-present) and President
(1990-present), Phoenix Equity Planning Corporation. Chairman and
Chief Executive Officer, Phoenix/Zweig Advisers LLC (1999-present).
Director, PXRE Corporation (Delaware) (1985-present) and World Trust
Fund (1991-present). Director and Executive Vice President, Phoenix
Life and Annuity Company (1996-present). Director and Executive Vice
President, PHL Variable Insurance Company (1995-present). Director,
Phoenix Charter Oak Trust Company (1996-present). Director and Vice
President, PM Holdings, Inc. (1985-present). Director and President,
Phoenix Securities Group, Inc. (1993-1995). Director (1992-present)
and President (1992-1994), W.S. Griffith & Co., Inc. Director,
Townsend Financial Advisers, Inc. (1992-present), Director, PHL
Associates, Inc. (1995-present).
Everett L. Morris (71) Trustee Vice President, W.H. Reaves and Company (1993-present). Director/
164 Laird Road Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
Colts Neck, N.J. 07722 Series Fund, Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present) and Phoenix-Seneca Funds (2000-present). Director,
Duff & Phelps Utilities Tax-Free Income Inc. (1991-present) and Duff
& Phelps Utility and Corporate Bond Trust Inc. (1993-present).
*James M. Oates (54) Trustee Chairman, IBEX Capital Markets, Inc. (formerly, IBEX Capital Markets
Managing Director LLC) (1997-present). Managing Director, Wydown Group (1994-present).
The Wydown Group Director, Phoenix Investment Partners, Ltd. (1995-present).
IBEX Capital Markets, Inc. Director/Trustee, Phoenix Funds (1987-present). Trustee,
60 State Street Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Suite 950 Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Boston, MA 02109 Director, AIB Govett Funds (1991-present), Investors Financial
Service Corporation (1995-present), Investors Bank & Trust
Corporation (1995-present), Plymouth Rubber Co. (1995-present),
Stifel Financial (1996-present), Command Systems, Inc.
(1998-present), Connecticut River Bancorp (1998-present) and
Endowment for Health (1999-present). Vice Chairman, Massachusetts
Housing-Partnership (1998-2000). Director, Blue Cross and Blue Shield
of New Hampshire (1994-1999).
*Calvin J. Pedersen (58) Trustee Director (1986-present), President (1993-2000) and Executive Vice
Phoenix Investment President (1992-1993), Phoenix Investment Partners, Ltd. Director/
Partners, Ltd. Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
55 East Monroe Street Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
Suite 3600 (1996-present). President and Chief Executive Officer, Duff & Phelps
Chicago, IL 60603 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).
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Herbert Roth, Jr. (71) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
P.O. Box 909 Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Sherborn, MA 01770 Director, Boston Edison Company (1978-present), Landauer, Inc.
(medical services) (1970-present), Tech Ops./ Sevcon, Inc.
(electronic controllers) (1987-present), and Mark IV Industries
(diversified manufacturer) (1985-present). Member, Directors Advisory
Council, Phoenix Home Life Mutual Insurance Company (1998-present).
Director, Phoenix Home Life Mutual Insurance Company (1972-1998).
Richard E. Segerson (54) Trustee Managing Director, Northway Management Company (1998-present).
102 Valley Road Director/Trustee, Phoenix Funds (1993-present). Trustee,
New Canaan, CT 06840 Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Managing Director, Mullin Associates (1993-1998).
Lowell P. Weicker, Jr. (68) Trustee Trustee/Director, Phoenix Funds (1995-present). Trustee,
731 Lake Avenue Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Greenwich, CT 06830 Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Director, UST Inc. (1995-present), HPSC Inc. (1995-present), and
Compuware (1996-present) and Burroughs Wellcome Fund (1996-present).
Visiting Professor, University of Virginia (1997-present). Director,
Duty Free International, Inc. (1997). Chairman, Dresing, Lierman,
Weicker (1995-1996). Governor of the State of Connecticut (1991-1995).
Michael E. Haylon (42) Executive Director and Executive Vice President--Investments, Phoenix Investment
Vice Partners, Ltd. (1995-present). Executive Vice President, Phoenix
President Funds (1993-present) and Phoenix-Aberdeen Series Fund (1996-present).
Executive Vice President (1997-present), Vice President (1996-1997),
Phoenix Duff & Phelps Institutional Mutual Funds. Director
(1994-present), President (1995-present), Executive Vice President
(1994-1995), Vice President (1991-1994), Phoenix Investment Counsel,
Inc. Director, Phoenix Equity Planning Corporation (1995-present).
Senior Vice President, Securities Investments, Phoenix Home Life
Mutual Insurance Company (1993-1995). Various other positions with
Phoenix Home Life Mutual Insurance Company (1990-1993).
John F. Sharry (47) Executive President, Retail Division (1999-present), Executive Vice President,
Vice Retail Division (1997-1999), Phoenix Investment Partners, Ltd.
President Executive Vice President, Phoenix Strategic Allocation Fund, Inc.
(1998-present). Managing Director, Retail Distribution
(1995-present). Executive Vice President, Phoenix Funds
(1998-present) and Phoenix-Aberdeen Series Fund (1998-present).
Managing Director, Director and National Sales Manager, Putnam Mutual
Funds (1992-1995).
J. Roger Engemann (59) Senior Vice President President and Director, Roger Engemann & Associates, Inc.
600 Rosemead Blvd. (1969-present). President and Director, Pasadena Capital Corporation
Pasadena, CA 91107-2138 (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).
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Gail P. Seneca (47) Senior Vice Managing Director, Equities, Phoenix Investment Counsel, Inc.
909 Montgomery St. President (1998-present). President and Trustee (1996-present), Phoenix-Seneca
San Francisco, CA 94133 Funds. President, Chief Executive and Investment Officer, Seneca
Capital Management LLC (1996-present). Chief Investment Officer and
managing general partner (1989-present), GMG/Seneca Capital Management,
L.P. Senior Vice President, The Phoenix Edge Series Fund (1998-present),
Phoenix Multi-Portfolio Fund (1998-present) and Phoenix Duff & Phelps
Institutional Mutual Funds (1999-present).
Robert S. Dreissen (52) Vice President and Vice President and Compliance Officer, Phoenix Investment Partners,
Assistant Secretary Ltd. (1999-present) and Phoenix Investment Counsel, Inc.
(1999-present). Vice President, Phoenix Funds, Phoenix-Aberdeen
Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1999-present). Compliance Officer (2000-present) and Associate
Compliance Officer (1999), PXP Securities Corporation. Vice
President, Risk Management Liaison, Bank of America (1996-1999). Vice
President, Securities Compliance, The Prudential Insurance Company of
America (1993-1996). Branch Chief/Financial Analyst, Securities and
Exchange Commission, Division of Investment Management (1972-1993).
Ronald K. Jacks (35) Vice President Managing Director, Equities, Phoenix Investment Counsel, Inc.
909 Montgomery St. (1998-present). Secretary (1996-present) and Trustee (1996-1997),
San Francisco, CA 94133 Phoenix-Seneca Funds. Portfolio Manager, Seneca Capital Management
LLC (1996-present). Portfolio Manager, GMG/Seneca Capital Management,
L.P. (1990-present). Vice President, The Phoenix Edge Series Fund
(1998-present), Phoenix Multi-Portfolio Fund (1998-present) and
Phoenix Duff & Phelps Institutional Mutual Funds (1999-present).
Richard D. Little (51) Vice President Managing Director, Equities, Phoenix Investment Counsel, Inc.
909 Montgomery St. (1998-present). Vice President, Phoenix-Seneca Funds (1996-present).
San Francisco, CA 94133 General Partner and Director of Equities, GMG/Seneca Capital
Management, L.P. (1989-present). Director of Equities, Seneca Capital
Management LLC (1996-present). Vice President, The Phoenix Edge
Series Fund (1998-present), Phoenix Multi-Portfolio Fund
(1998-present) and Phoenix Duff & Phelps Institutional Mutual Funds
(1999-present).
James E. Mair (58) Vice President Executive Vice President (1994-present), Senior Vice President
600 Rosemead Blvd. (1983-1994), Roger Engemann & Associates, Inc. Director
Pasadena, CA 91107-2138 (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 (1983-1994), Roger Engemann
Management Co., Inc. Managing Director, Equities, Phoenix Investment
Counsel, Inc. (1998-present). Vice President, The Phoenix Edge Series
Fund and Phoenix Series Fund (1998-present).
</TABLE>
27
<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 (55) Vice President Executive Vice President and Chief Financial Officer (1999-present),
100 Bright Meadow Blvd. Senior Vice President and Chief Financial Officer (1995-1999),
P.O. Box 2200 Phoenix Investment Partners, Ltd. Director (1998-present), Senior
Enfield, CT 06083-2200 Vice President, Finance (1990-present), Chief Financial Officer
(1996-present), and Treasurer (1994-1996 and 1998-present), Phoenix
Equity Planning Corporation. Director (1998-present), Senior Vice
President (1990-present), Chief Financial Officer (1996-present) and
Treasurer (1994-present), Phoenix Investment Counsel, Inc. Senior
Vice President and Chief Financial Officer, Duff & Phelps Investment
Management Co. (1996-present). Vice President, Phoenix Funds
(1990-present), Phoenix-Duff & Phelps Institutional Mutual Funds
(1996-present) and Phoenix-Aberdeen Series Fund (1996-present). Vice
President, Investment Products Finance, Phoenix Home Life Mutual
Insurance Company (1990-1995). Senior Vice President and Chief
Financial Officer, W. S. Griffith & Co., Inc. (1992-1995) and
Townsend Financial Advisers, Inc. (1993-1995).
John S. Tilson (56) Vice President Executive Vice President (1994-present), Senior Vice President
600 Rosemead Blvd. (1983-1994), Roger Engemann & Associates, Inc. Director (1990-present),
Pasadena, CA 91107-2138 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 (1983-1994), Roger Engemann
Management Co., Inc. Managing Director, Equities, Phoenix Investment
Counsel, Inc. (1998-present). Vice President, The Phoenix Edge Series
Fund and Phoenix Series Fund (1998-present).
G. Jeffrey Bohne (52) Secretary Vice President and General Manager, Phoenix Home Life Mutual Insurance
101 Munson Street Co. (1993-present). Senior Vice President, Mutual Fund Customer Service
Greenfield, MA 01301 (1999-present) and Vice President, Mutual Fund Customer Service
(1996-1999), Phoenix Equity Planning Corporation. Secretary/Clerk,
Phoenix Funds (1993-present), Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present) and Phoenix-Aberdeen Series Fund
(1996-present).
Nancy G. Curtiss (47) 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
(1995-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.
For services rendered to the Trust for the fiscal year ended April 30, 1999,
the Trustees received aggregate remuneration of $45,151. 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.
28
<PAGE>
For the Trust's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
PENSION OR FROM FUND AND
AGGREGATE RETIREMENT BENEFITS ESTIMATED FUND COMPLEX
COMPENSATION ACCRUED AS PART ANNUAL BENEFITS (14 FUNDS)
NAME FROM FUND OF FUND EXPENSES UPON RETIREMENT PAID TO TRUSTEES
- ---- --------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Robert Chesek $3,812* $65,000
E. Virgil Conway[dagger] $5,246 $87,750
Harry Dalzell-Payne[dagger] $4,686 $78,750
Francis E. Jeffries $3,847* $65,500
Leroy Keith, Jr. $3,947 None None $67,500
Philip R. McLoughlin[dagger] $ 0 for any for any $ 0
Everett L. Morris[dagger] $4,547 Trustee Trustee $77,750
James M. Oates[dagger] $4,547 $76,750
Calvin J. Pedersen $ 0 $ 0
Herbert Roth, Jr.[dagger] $5,386 $88,750
Richard E. Segerson $4,547* $76,500
Lowell Weicker, Jr. $4,547 $75,500
</TABLE>
*This compensation (and the earnings thereon) will be deferred pursuant to the
Directors' Deferred Compensation Plan. At April 30, 1999, the total amount of
deferred compensation (including interest and other accumulation earned on the
original amounts deferred) accrued for Messrs. Chesek, Jeffries, Morris, Roth
and Segerson was $29,601, $176,390, $155,408, $151,539 and $16,816,
respectively. At present, by agreement among the 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 May 2, 2000, the Trustees and officers of the Fund beneficially owned less
than 1% of the outstanding shares of the Trust.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of May 2, 2000 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>
Merrill Lynch Pierce Fenner & Smith Small Cap Fund Class B 541,970.0080 10.94%
For the Sole Benefit of its Customers Growth Fund Class B 23,920.8740 6.63%
Attn Fund Administration Theme Fund Class B 552,109.8700 7.62%
4800 Deer Lake Dr E 3rd Fl
Jacksonville, FL 32246-6484
SEI Trust Company Theme Fund Class C 13,321.4920 5.64%
c/o The Trust Company
One Freedom Valley Drive
Oaks, PA 19456
Phoenix Investment Counsel Growth Fund Class B 29,390.9890 8.15%
100 Bright Meadow Blvd
Enfield, CT 06082-1957
</TABLE>
29
<PAGE>
ADDITIONAL INFORMATION
CAPITAL STOCK
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
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."
Prior to May 12, 2000, the Growth Fund was known as Phoenix-Seneca Equity
Opportunities Fund, and from August 27, 1999 to May 12, 2000, it was known as
Phoenix Equity Opportunities Fund. Prior to August 27, 1999, the Small Cap Fund
was known as the Phoenix Small Cap Fund and the Strategic Theme Fund was known
as Phoenix Strategic Theme 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 Small Cap Fund offer Class A and Class B Shares. The Strategic Theme
Fund offers Class A, Class B, Class C Shares. The Growth Fund offers Class A,
Class B, Class C and Class X Shares.
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.
FINANCIAL STATEMENTS
The Financial Statements for the Small Cap Fund and Theme Fund for the fiscal
year ended April 30, 1999 and for the period ended October 31, 1999 appearing in
the Trust's 1999 Annual Report to Shareholders and Semi-Annual Report to
Shareholders, respectively, are incorporated herein by reference. The Financial
Statements for the Growth Fund for the fiscal year ended September 30, 1999 and
for the period ended March 31, 2000 appearing in the Phoenix-Seneca Funds' 1999
Annual Report to Shareholders and Semiannual Report to Shareholders,
respectively, are incorporated herein by reference.
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.
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 $17.95 for each
designated shareholder account plus out-of-pocket expenses. Transfer Agent fees
are also utilized to offset costs and fees paid to subtransfer agents employed
by Equity Planning. State Street serves as a subtransfer agent pursuant to a
Subtransfer Agency Agreement.
30
<PAGE>
Phoenix Small Cap Fund
INVESTMENTS AT APRIL 30, 1999
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C> <C>
COMMON STOCKS--94.8%
AIR FREIGHT--1.3%
Expeditors International of
Washington, Inc............... 45,000 $ 2,728,125
BIOTECHNOLOGY--1.9%
Biomatrix, Inc.(b)............ 80,000 2,635,000
Coulter Pharmaceutical,
Inc.(b)....................... 72,000 1,449,000
------------
4,084,000
------------
BROADCASTING (TELEVISION, RADIO & CABLE)--1.8%
Metro Networks, Inc.(b)....... 86,000 3,870,000
COMMUNICATIONS EQUIPMENT--0.9%
Ortel Corp.(b)................ 275,000 1,856,250
COMPUTERS (SOFTWARE & SERVICES)--15.5%
Abacus Direct Corp.(b)........ 83,000 6,142,000
Broadcast.com, Inc.(b)........ 28,200 3,616,650
Concentric Network Corp.(b)... 32,000 2,672,000
EarthLink Network, Inc.(b).... 32,000 2,206,000
Inktomi Corp.(b).............. 6,400 766,400
International Network
Services(b)................... 42,000 1,596,000
Legato Systems, Inc.(b)....... 89,700 3,627,244
Network Solutions, Inc.(b).... 46,000 3,576,500
New Era of Networks,
Inc.(b)....................... 78,000 2,929,875
Peregrine Systems, Inc.(b).... 146,000 3,285,000
Verio, Inc.(b)................ 30,000 2,130,000
------------
32,547,669
------------
CONSUMER FINANCE--5.2%
Metris Companies, Inc......... 180,000 11,002,500
DISTRIBUTORS (FOOD & HEALTH)--3.2%
Schein (Henry), Inc.(b)....... 150,000 3,928,125
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C> <C>
DISTRIBUTORS (FOOD & HEALTH)--CONTINUED
Smart & Final, Inc............ 275,000 $ 2,767,187
------------
6,695,312
------------
ELECTRICAL EQUIPMENT--3.3%
Advanced Energy Industries,
Inc.(b)....................... 103,000 2,851,812
Flextronics International
Ltd.(b)....................... 90,000 4,201,875
------------
7,053,687
------------
ELECTRONICS (INSTRUMENTATION)--0.5%
Meade Instruments Corp.(b).... 85,000 1,136,875
ELECTRONICS (SEMICONDUCTORS)--8.1%
Applied Micro Circuits
Corp.(b)...................... 87,500 4,664,844
Conexant Systems, Inc.(b)..... 93,000 3,789,750
Micrel, Inc.(b)............... 77,000 4,533,375
Vitesse Semiconductor
Corp.(b)...................... 90,000 4,168,125
------------
17,156,094
------------
ENTERTAINMENT--1.3%
Carmike Cinemas, Inc.(b)...... 125,000 2,695,312
FINANCIAL (DIVERSIFIED)--1.7%
Federal Agricultural Mortgage
Corp. Class C(b).............. 62,000 3,530,125
GAMING, LOTTERY & PARI-MUTUEL COMPANIES--3.1%
Championship Auto Racing
Teams, Inc.(b)................ 70,000 2,156,875
International Speedway Corp.
Class A....................... 85,000 4,377,500
------------
6,534,375
------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--1.2%
Inhale Therapeutic Systems,
Inc.(b)....................... 90,000 2,587,500
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Phoenix Small Cap Fund
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C> <C>
HEALTH CARE (SPECIALIZED SERVICES)--0.4%
Omnicare, Inc................. 35,000 $ 842,187
INVESTMENT BANKING/BROKERAGE--2.9%
Ameritrade Holding Corp. Class
A(b).......................... 26,000 3,472,625
Investment Technology Group,
Inc........................... 45,000 1,558,125
Jefferies Group, Inc.(b)...... 45,000 1,029,375
------------
6,060,125
------------
INVESTMENT MANAGEMENT--1.8%
Gabelli Asset Management,
Inc.(b)....................... 245,000 3,690,312
RESTAURANTS--7.2%
CKE Restaurants, Inc.......... 346,500 5,673,938
Cheesecake Factory, Inc.
(The)(b)...................... 340,000 9,520,000
------------
15,193,938
------------
RETAIL (BUILDING SUPPLIES)--2.6%
Fastenal Co................... 115,000 5,491,250
RETAIL (DISCOUNTERS)--3.6%
99 Cents Only Stores(b)....... 160,775 7,576,522
RETAIL (FOOD CHAINS)--3.9%
Whole Foods Market, Inc.(b)... 211,000 8,229,000
RETAIL (SPECIALTY)--15.1%
Claire's Stores, Inc.......... 323,000 10,699,375
Cost Plus, Inc.(b)............ 217,500 7,666,875
Lithia Motors, Inc. Class
A(b).......................... 150,000 2,821,875
Restoration Hardware,
Inc.(b)....................... 331,500 5,179,688
Sonic Automotive, Inc.(b)..... 363,500 5,384,344
------------
31,752,157
------------
SERVICES (ADVERTISING/MARKETING)--1.0%
DoubleClick, Inc.(b).......... 15,000 2,097,188
SERVICES (COMMERCIAL & CONSUMER)--2.6%
Corporate Executive Board Co.
(The)(b)...................... 90,000 2,531,250
NCO Group, Inc.(b)............ 92,000 3,001,500
------------
5,532,750
------------
SERVICES (COMPUTER SYSTEMS)--2.3%
Whittman-Hart, Inc.(b)........ 170,000 4,802,500
SHIPPING--0.5%
Dril-Quip, Inc.(b)............ 40,800 994,500
TELECOMMUNICATIONS (LONG DISTANCE)--1.9%
WinStar Communications,
Inc.(b)....................... 82,000 3,987,250
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C> <C>
TEXTILES (APPAREL)--0.0%
Boss Holdings, Inc.(b)........ 2,915 $ 5,830
- - --------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $166,487,940) 199,733,333
- - --------------------------------------------------------------------
FOREIGN COMMON STOCKS--4.2%
COMMUNICATIONS EQUIPMENT--0.7%
Research in Motion Ltd.
(Canada)(b)................... 120,000 1,454,360
COMPUTERS (SOFTWARE & SERVICES)--0.7%
Fundtech Ltd. (Israel)(b)..... 40,000 1,377,500
OIL & GAS (EXPLORATION & PRODUCTION)--2.8%
Encal Energy Ltd.
(Canada)(b)................... 1,200,000 5,850,403
- - --------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $7,131,840) 8,682,263
- - --------------------------------------------------------------------
PREFERRED STOCKS--0.7%
COMPUTERS (NETWORKING)--0.7%
Women.com(b).................. 455,930 1,500,010
- - --------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(IDENTIFIED COST $1,500,010) 1,500,010
- - --------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--99.7%
(IDENTIFIED COST $175,119,790) 209,915,606
- - --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------ ------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--0.3%
COMMERCIAL PAPER--0.3%
AT&T Corp. 4.93%, 5/3/99...... A-1+ $655 654,821
- - ----------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $654,821) 654,821
- - ----------------------------------------------------------------------
TOTAL INVESTMENTS--100.0%
(IDENTIFIED COST $175,774,611) 210,570,427(a)
Cash and receivables, less liabilities--0.0% 91,619
--------------
NET ASSETS--100.0% $ 210,662,046
--------------
--------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $45,935,813 and gross
depreciation of $12,573,213 for federal income tax purposes. At April 30,
1999, the aggregate cost of securities for federal income tax purposes was
$177,207,827.
(b) Non-income producing.
See Notes to Financial Statements
7
<PAGE>
Phoenix Small Cap Fund
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $175,774,611) $ 210,570,427
Cash 1,633,960
Receivables
Fund shares sold 2,571,950
Prepaid expenses 5,897
--------------
Total assets 214,782,234
--------------
LIABILITIES
Payables
Investment securities purchased 2,999,401
Fund shares repurchased 625,938
Transfer agent fee 126,946
Investment advisory fee 129,850
Distribution fee 98,494
Financial agent fee 15,033
Trustees' fee 4,110
Accrued expenses 120,416
--------------
Total liabilities 4,120,188
--------------
NET ASSETS $ 210,662,046
--------------
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 201,175,766
Accumulated net realized loss (25,309,536)
Net unrealized appreciation 34,795,816
--------------
NET ASSETS $ 210,662,046
--------------
--------------
CLASS A
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $121,313,331) 7,709,289
Net asset value per share $15.74
Offering price per share $15.74/(1-4.75%) $16.52
CLASS B
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $89,348,715) 5,854,781
Net asset value and offering price per share $15.26
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 971,501
Dividends 315,605
Foreign taxes withheld (9,053)
--------------
Total investment income 1,278,053
--------------
EXPENSES
Investment advisory fee 1,885,586
Distribution fee, Class A 360,521
Distribution fee, Class B 1,072,031
Financial agent 205,062
Transfer agent 689,371
Printing 126,487
Registration 38,237
Professional 36,547
Custodian 34,415
Trustees 16,507
Miscellaneous 13,580
--------------
Total expenses 4,478,344
Custodian fees paid indirectly (10,392)
--------------
Net expenses 4,467,952
--------------
NET INVESTMENT LOSS (3,189,899)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (24,980,470)
Net realized loss on foreign currency transactions (3,310)
Net change in unrealized appreciation (depreciation) on
investments 6,208,917
--------------
NET LOSS ON INVESTMENTS (18,774,863)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (21,964,762)
--------------
--------------
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Phoenix Small Cap Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
4/30/99 4/30/98
-------------- -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (3,189,899) $ (2,593,774)
Net realized gain (loss) (24,983,780) 99,577,404
Net change in unrealized appreciation
(depreciation) 6,208,917 30,589,425
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (21,964,762) 127,573,055
-------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A (5,773,229) (35,702,853)
Net realized gains, Class B (4,219,826) (26,132,919)
-------------- -------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (9,993,055) (61,835,772)
-------------- -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(18,013,110 and 5,292,562 shares,
respectively) 273,064,204 91,738,490
Net asset value of shares issued from
reinvestment of distributions
(360,829 and 2,365,346 shares,
respectively) 5,383,573 34,439,436
Cost of shares repurchased (22,385,155
and 6,909,942 shares, respectively) (343,459,404) (119,890,542)
-------------- -------------
Total (65,011,627) 6,287,384
-------------- -------------
CLASS B
Proceeds from sales of shares (987,925
and 1,984,492 shares, respectively) 14,507,598 35,124,815
Net asset value of shares issued from
reinvestment of distributions
(243,730 and 1,737,551 shares,
respectively) 3,536,528 24,812,223
Cost of shares repurchased (4,075,435
and 2,007,557 shares, respectively) (61,757,518) (33,352,450)
-------------- -------------
Total (43,713,392) 26,584,588
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS (108,725,019) 32,871,972
-------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS (140,682,836) 98,609,255
NET ASSETS
Beginning of period 351,344,882 252,735,627
-------------- -------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
$0 AND $0, RESPECTIVELY] $ 210,662,046 $ 351,344,882
-------------- -------------
-------------- -------------
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Phoenix Small Cap Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
YEAR ENDED APRIL 30 FROM INCEPTION
-------------------------------------- 10/16/95 TO
1999 1998 1997 4/30/96
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.37 $ 14.13 $ 16.74 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.14)(5) (0.08)(5) (0.05)(5) (0.04)(1)(5)
Net realized and unrealized gain
(loss) (0.88) 6.80 (2.53) 6.79
-------- -------- -------- -----
TOTAL FROM INVESTMENT
OPERATIONS (1.02) 6.72 (2.58) 6.75
-------- -------- -------- -----
LESS DISTRIBUTIONS
Dividends from net realized gains (0.61) (3.48) (0.02) --
In excess of net investment income -- -- -- (0.01)
In excess of net realized gains -- -- (0.01) --
-------- -------- -------- -----
TOTAL DISTRIBUTIONS (0.61) (3.48) (0.03) (0.01)
-------- -------- -------- -----
Change in net asset value (1.63) 3.24 (2.61) 6.74
-------- -------- -------- -----
NET ASSET VALUE, END OF PERIOD $ 15.74 $ 17.37 $ 14.13 $ 16.74
-------- -------- -------- -----
-------- -------- -------- -----
Total return(2) (5.66)% 52.33% (15.43)% 67.48%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $121,313 $203,560 $155,089 $98,372
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.46%(6) 1.31% 1.37% 1.50%(3)
Net investment income (loss) (0.95)% (0.48)% (0.28)% (0.53)%(3)
Portfolio turnover 276% 498% 325% 103%(4)
</TABLE>
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------
FROM
INCEPTION
YEAR ENDED APRIL 30 10/16/95
------------------------------------ TO
1999 1998 1997 4/30/96
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.99 $ 13.98 $ 16.68 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.25)(5) (0.21)(5) (0.17)(5) (0.09)(1)(5)
Net realized and unrealized gain
(loss) (0.87) 6.70 (2.50) 6.77
------- -------- ------- --------
TOTAL FROM INVESTMENT
OPERATIONS (1.12) 6.49 (2.67) 6.68
------- -------- ------- --------
LESS DISTRIBUTIONS
Dividends from net realized gains (0.61) (3.48) (0.02) --
In excess of net realized gains -- -- (0.01) --
------- -------- ------- --------
TOTAL DISTRIBUTIONS (0.61) (3.48) (0.03) --
------- -------- ------- --------
Change in net asset value (1.73) 3.01 (2.70) 6.68
------- -------- ------- --------
NET ASSET VALUE, END OF PERIOD $ 15.26 $ 16.99 $ 13.98 $ 16.68
------- -------- ------- --------
------- -------- ------- --------
Total return(2) (6.39)% 51.16% (16.03)% 66.80%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $89,349 $147,785 $97,647 $45,168
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.21%(6) 2.06% 2.12% 2.26%(3)
Net investment income (loss) (1.70)% (1.22)% (1.03)% (1.44)%(3)
Portfolio turnover 276% 498% 325% 103%(4)
</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 the year ended April 30, 1999, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
10
See Notes to Financial Statements
<PAGE>
Phoenix Strategic Theme Fund
INVESTMENTS AT APRIL 30, 1999
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMMON STOCKS--93.8%
BANKS (MAJOR REGIONAL)--0.9%
Firstar Corp...................... 59,100 $ 1,776,694
BANKS (MONEY CENTER)--1.9%
Bank of America Corp.............. 51,753 3,726,216
BEVERAGES (NON-ALCOHOLIC)--0.9%
PepsiCo, Inc...................... 47,600 1,758,225
BIOTECHNOLOGY--2.2%
Amgen, Inc.(b).................... 26,100 1,603,519
Genzyme Corp. (b)................. 49,200 1,857,300
Gilead Sciences, Inc.(b).......... 17,700 814,753
------------
4,275,572
------------
BROADCASTING (TELEVISION, RADIO & CABLE)--6.4%
AT&T Corp.- Liberty Media Group
Class A(b)........................ 142,500 9,102,187
Clear Channel Communications,
Inc.(b)........................... 46,600 3,238,700
------------
12,340,887
------------
COMMUNICATIONS EQUIPMENT--3.8%
Echostar Communications
Corp.(b).......................... 28,800 2,889,000
General Motors Corp. Class H...... 35,300 1,954,737
Tellabs, Inc.(b).................. 22,900 2,508,981
------------
7,352,718
------------
COMPUTERS (HARDWARE)--7.7%
Apple Computer, Inc.(b)........... 41,100 1,890,600
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMPUTERS (HARDWARE)--CONTINUED
Dell Computer Corp.(b)............ 67,700 $ 2,788,394
International Business Machines
Corp.............................. 24,900 5,208,769
Sun Microsystems, Inc.(b)......... 81,600 4,880,700
------------
14,768,463
------------
COMPUTERS (NETWORKING)--3.4%
Cisco Systems, Inc.(b)............ 58,200 6,638,437
COMPUTERS (PERIPHERALS)--1.9%
EMC Corp.(b)...................... 33,200 3,616,725
COMPUTERS (SOFTWARE & SERVICES)--13.6%
America Online, Inc.(b)........... 39,800 5,681,450
At Home Corp. Series A(b)......... 21,600 3,109,050
BMC Software, Inc.(b)............. 17,900 770,819
Inktomi Corp.(b).................. 25,100 3,005,725
Microsoft Corp.(b)................ 100,600 8,180,037
USWeb Corp.(b).................... 81,800 1,835,387
Yahoo!, Inc.(b)................... 21,500 3,755,781
------------
26,338,249
------------
CONSUMER FINANCE--3.5%
Capital One Financial Corp........ 38,700 6,721,706
DISTRIBUTORS (FOOD & HEALTH)--0.8%
Cardinal Health, Inc.............. 26,050 1,558,116
ELECTRICAL EQUIPMENT--2.4%
General Electric Co............... 43,300 4,568,150
</TABLE>
See Notes to Financial Statements 13
<PAGE>
Phoenix Strategic Theme Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
ELECTRONICS (SEMICONDUCTORS)--3.9%
Transwitch Corp.(b)............... 26,300 $ 1,157,200
Uniphase Corp.(b)................. 51,700 6,275,087
------------
7,432,287
------------
ENGINEERING & CONSTRUCTION--0.3%
J. Ray Mcdermott SA(b)............ 20,800 655,200
EQUIPMENT (SEMICONDUCTOR)--1.7%
Novellus Systems, Inc.(b)......... 34,800 1,644,300
Teradyne, Inc.(b)................. 35,600 1,679,875
------------
3,324,175
------------
FINANCIAL (DIVERSIFIED)--5.7%
Citigroup, Inc.................... 59,700 4,492,425
Freddie Mac....................... 25,300 1,587,575
Morgan Stanley Dean Witter &
Co................................ 50,300 4,989,131
------------
11,069,131
------------
HEALTH CARE (DIVERSIFIED)--0.9%
American Home Products Corp....... 28,300 1,726,300
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--3.8%
Merck & Co., Inc.................. 21,900 1,538,475
Pfizer, Inc....................... 28,800 3,313,800
Schering-Plough Corp.............. 52,400 2,531,575
------------
7,383,850
------------
HEALTH CARE (GENERIC AND OTHER)--1.3%
Mylan Laboratories, Inc........... 65,000 1,474,687
Sepracor Inc.(b).................. 13,100 1,106,950
------------
2,581,637
------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--1.5%
Affymetrix, Inc.(b)............... 45,500 1,859,813
Invitrogen Corporation(b)......... 51,500 923,781
------------
2,783,594
------------
HOUSEHOLD PRODUCTS (NON-DURABLES)--2.0%
Clorox Co. (The).................. 19,000 2,192,125
Procter & Gamble Co. (The)........ 17,200 1,613,575
------------
3,805,700
------------
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
INSURANCE (MULTI-LINE)--1.5%
American International Group,
Inc............................... 24,640 $ 2,893,660
INVESTMENT BANKING/BROKERAGE--1.5%
Merrill Lynch & Co., Inc.......... 35,300 2,962,994
OIL & GAS (DRILLING & EQUIPMENT)--1.8%
Halliburton Co.................... 25,100 1,069,888
Schlumberger Ltd.................. 15,900 1,015,613
Transocean Offshore, Inc.......... 21,700 644,219
Varco International, Inc.(b)...... 59,100 668,569
------------
3,398,289
------------
PERSONAL CARE--0.9%
Gillette Co. (The)................ 33,000 1,722,188
RETAIL (BUILDING SUPPLIES)--2.2%
Home Depot, Inc. (The)............ 69,000 4,135,688
RETAIL (DEPARTMENT STORES)--2.0%
Kohl's Corp.(b)................... 59,200 3,933,100
RETAIL (FOOD CHAINS)--0.9%
Safeway, Inc.(b).................. 33,200 1,790,725
RETAIL (GENERAL MERCHANDISE)--3.7%
Costco Companies, Inc.(b)......... 26,700 2,161,031
Wal-Mart Stores, Inc.............. 106,800 4,912,800
------------
7,073,831
------------
RETAIL (HOME SHOPPING)--1.3%
Amazon.com, Inc.(b)............... 14,800 2,546,525
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--1.4%
AirTouch Communications,
Inc.(b)........................... 29,800 2,782,575
TELECOMMUNICATIONS (LONG DISTANCE)--4.6%
AT&T Corp......................... 115,954 5,855,677
MCI WorldCom, Inc.(b)............. 37,800 3,106,688
------------
8,962,365
------------
TELEPHONE--1.5%
SBC Communications, Inc........... 50,100 2,805,600
- - ----------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $132,845,500) 181,209,572
- - ----------------------------------------------------------------------
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Phoenix Strategic Theme Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
FOREIGN COMMON STOCKS--2.7%
COMPUTERS (SOFTWARE & SERVICES)--0.9%
Learout & Hauspic Speech Products
N.V.(b)........................... 42,700 $ 1,670,638
ELECTRONICS (INSTRUMENTATION)--0.9%
Qiagen NV (Netherlands)(b)........ 25,000 1,831,250
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--0.9%
Elan Corp. PLC Sponsored ADR
(Ireland)(b)...................... 34,800 1,792,200
- - ----------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $5,952,411) 5,294,088
- - ----------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--96.5%
(IDENTIFIED COST $138,797,911) 186,503,660
- - ----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- -------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--3.3%
COMMERCIAL PAPER--3.3%
Goldman Sachs Group, Inc.
4.92%, 5/3/99................. A-1+ $ 2,950 $ 2,949,193
Ford Motor Credit Co. 4.84%,
5/4/99........................ A-1 3,380 3,378,637
-------------
6,327,830
-------------
- - ----------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $6,327,830) 6,327,830
- - ----------------------------------------------------------------------
TOTAL INVESTMENTS--99.8%
(IDENTIFIED COST $145,125,741) 192,831,490(a)
Cash and receivables, less liabilities--0.2% 419,395
-------------
NET ASSETS--100.0% $ 193,250,885
-------------
-------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $50,507,778 and gross
depreciation of $3,190,370 for federal income tax purposes. At April 30,
1999, the aggregate cost of securities for federal income tax purposes was
$145,514,082.
(b) Non-income producing.
See Notes to Financial Statements
15
<PAGE>
Phoenix Strategic Theme Fund
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $145,125,741) $ 192,831,490
Cash 1,914
Receivables
Fund shares sold 828,099
Dividends and interest 64,954
Prepaid expenses 3,428
--------------
Total assets 193,729,885
--------------
LIABILITIES
Payables
Fund shares repurchased 136,219
Investment advisory fee 117,538
Distribution fee 94,831
Transfer agent fee 58,198
Financial agent fee 14,999
Trustees' fee 3,319
Accrued expenses 53,896
--------------
Total liabilities 479,000
--------------
NET ASSETS $ 193,250,885
--------------
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 129,096,816
Accumulated net realized gain 16,448,320
Net unrealized appreciation 47,705,749
--------------
NET ASSETS $ 193,250,885
--------------
--------------
CLASS A
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $107,870,953) 5,919,225
Net asset value per share $18.22
Offering price per share $18.22/(1-4.75%) $19.13
CLASS B
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $84,698,182) 4,772,864
Net asset value per share and offering per share $17.75
CLASS C
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $681,750) 38,408
Net asset value per share and offering per share $17.75
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 651,163
Interest 333,164
Foreign taxes withheld (259)
--------------
Total investment income 984,068
--------------
EXPENSES
Investment advisory fee 1,129,085
Distribution fee, Class A 208,712
Distribution fee, Class B 667,573
Distribution fee, Class C 2,665
Distribution fee, Class M 273
Financial agent fee 143,236
Transfer agent 305,439
Registration 32,832
Professional 31,327
Printing 20,390
Custodian 16,699
Trustees 15,367
Miscellaneous 7,226
--------------
Total expenses 2,580,824
Custodian fees paid indirectly (4,419)
--------------
Net expenses 2,576,405
--------------
NET INVESTMENT LOSS (1,592,337)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 18,354,872
Net change in unrealized appreciation (depreciation) on
investments 38,225,117
--------------
NET GAIN ON INVESTMENTS 56,579,989
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 54,987,652
--------------
--------------
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Phoenix Strategic Theme Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
4/30/99 4/30/98
------------- -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (1,592,337) $ (860,603)
Net realized gain (loss) 18,354,872 37,824,448
Net change in unrealized appreciation
(depreciation) 38,225,117 7,260,964
------------- -------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 54,987,652 44,224,809
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
In excess of net investment income,
Class A -- (101,991)
Net realized gains, Class A (6,923,924) (13,931,615)
Net realized gains, Class B (5,772,230) (9,617,855)
Net realized gains, Class C (28,108) (21,083)
Net realized gains, Class M -- (15,426)
------------- -------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (12,724,262) (23,687,970)
------------- -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(3,919,529 and 1,116,085 shares,
respectively) 64,808,215 15,627,146
Net asset value of shares issued from
reinvestment of distributions
(419,976 and 1,156,842 shares,
respectively) 6,560,032 13,731,378
Cost of shares repurchased (4,982,395
and 2,197,107 shares, respectively) (76,814,571) (29,983,137)
------------- -------------
Total (5,446,324) (624,613)
------------- -------------
CLASS B
Proceeds from sales of shares (819,204
and 666,515 shares, respectively) 13,391,640 9,141,162
Net asset value of shares issued from
reinvestment of distributions
(329,762 and 783,925 shares,
respectively) 5,028,874 9,156,239
Cost of shares repurchased (1,286,009
and 724,153 shares, respectively) (18,585,029) (9,883,220)
------------- -------------
Total (164,515) 8,414,181
------------- -------------
CLASS C
Proceeds from sales of shares (36,724
and 18,017 shares, respectively) 589,799 248,777
Net asset value of shares issued from
reinvestment of distributions
(1,354 and 1,797 shares,
respectively) 20,648 20,990
Cost of shares repurchased (19,484 and
0 shares, respectively) (266,095) --
------------- -------------
Total 344,352 269,767
------------- -------------
CLASS M
Proceeds from sales of shares (0 and
14,974 shares, respectively) -- 196,112
Net asset value of shares issued from
reinvestment of distributions
(0 and 1,314 shares, respectively) -- 15,357
Cost of shares repurchased (16,288 and
0 shares, respectively) (223,551) --
------------- -------------
Total (223,551) 211,469
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS (5,490,038) 8,270,804
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS 36,773,352 28,807,643
NET ASSETS
Beginning of period 156,477,533 127,669,890
------------- -------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
$0 AND $0, RESPECTIVELY] $ 193,250,885 $ 156,477,533
------------- -------------
------------- -------------
</TABLE>
See Notes to Financial Statements 17
<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
1999 1998 1997 4/30/96
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.70 $ 12.03 $ 12.37 $ 10.00
INCOME FROM INVESTMENT OPERATIONS(6)
Net investment income (loss) (0.11)(5) (0.04)(5) 0.06(5) 0.00(1)(5)
Net realized and unrealized gain
(loss) 6.03 4.03 (0.38) 2.39
-------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 5.92 3.99 (0.32) 2.39
-------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- (0.01) --
Dividends from net realized gains (1.40) (2.29) -- --
In excess of net investment income -- (0.03) -- --
In excess of net realized gains -- -- (0.01) --
Tax return of capital -- -- -- (0.02)
-------- ------- ------- -------
TOTAL DISTRIBUTIONS (1.40) (2.32) (0.02) (0.02)
-------- ------- ------- -------
Change in net asset value 4.52 1.67 (0.34) 2.37
-------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 18.22 $ 13.70 $ 12.03 $ 12.37
-------- ------- ------- -------
-------- ------- ------- -------
Total return(2) 44.91% 36.22% (2.57)% 23.89%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $107,871 $89,884 $77,827 $33,393
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.38%(7) 1.33% 1.40% 1.40%(3)
Net investment income (loss) (0.72)% (0.26)% 0.49% (0.09)%(3)
Portfolio turnover 205% 618% 532% 175%(4)
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of $0.04.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
(6) 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) For the year ended April 30, 1999, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
18 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 B CLASS C
--------------------------------------------- -------------------
FROM FROM
INCEPTION INCEPTION
YEAR ENDED APRIL 30 10/16/95 YEAR 11/3/97
-------------------------------- TO ENDED TO
1999 1998 1997 4/30/96 4/30/99 4/30/98
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.46 $ 11.91 $ 12.33 $ 10.00 $13.47 $14.93
INCOME FROM INVESTMENT OPERATIONS(6)
Net investment income (loss) (0.22)(5) (0.14)(5) (0.03)(5) (0.06)(1)(5) (0.22)(5) (0.05)(5)
Net realized and unrealized gain
(loss) 5.91 3.98 (0.38) 2.40 5.90 0.88
------- ------- ------- ------- ------ ------
TOTAL FROM INVESTMENT OPERATIONS 5.69 3.84(5) (0.41) 2.34 5.68 0.83
------- ------- ------- ------- ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- -- --
Dividends from net realized gains (1.40) (2.29) -- -- (1.40) (2.29)
In excess of net investment income -- -- -- -- -- --
In excess of net realized gains -- -- (0.01) -- -- --
Tax return of capital -- -- -- (0.01) -- --
------- ------- ------- ------- ------ ------
TOTAL DISTRIBUTIONS (1.40) (2.29) (0.01) (0.01) (1.40) (2.29)
------- ------- ------- ------- ------ ------
Change in net asset value 4.29 1.55 (0.42) 2.33 4.28 (1.46)
------- ------- ------- ------- ------ ------
NET ASSET VALUE, END OF PERIOD $ 17.75 $ 13.46 $ 11.91 $ 12.33 $17.75 $13.47
------- ------- ------- ------- ------ ------
------- ------- ------- ------- ------ ------
Total return(2) 43.98% 35.18% (3.31)% 23.41%(4) 43.87% 7.92%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $84,698 $66,107 $49,843 $11,920 $682 $267
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.13%(7) 2.08% 2.15% 2.16%(3) 2.13%(7) 2.08%(3)
Net investment income (loss) (1.48)% (1.02)% (0.23)% (1.06)%(3) (1.47)% (0.87)%(3)
Portfolio turnover 205% 618% 532% 175%(4) 205% 618%(4)
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of $0.04.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
(6) 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) For the year ended April 30, 1999, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
See Notes to Financial Statements 19
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Strategic Equity Series Fund (the "Trust") 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 Fund has distinct investment objectives. The Small Cap Fund 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 Fund 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 Fund seeks to achieve long-term growth of capital from investment
in a diversified group of stocks or securities convertible into stocks.
Each Fund offers both Class A and Class B shares. The Strategic Theme Fund
also offers Class C shares. Class M shares have been closed. 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 Fund are borne pro rata by the
holders of all 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 Trust 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 Fund 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 Fund is treated as a separate taxable entity. It is the policy of each
Fund in the Trust 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 Fund intends to
distribute an amount sufficient to avoid imposition of any excise tax under
Section 4982 of the Code. Therefore, no provision for federal income taxes or
excise taxes has been made.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by each Fund 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 Trust does not separate that
portion of the results of operations arising from changes in exchange rates and
that portion arising from changes in the market prices of securities.
F. EXPENSES:
Expenses incurred by the Trust with respect to any two or more Funds are
allocated in proportion to the net assets of each Fund, except where allocation
of direct expense to each Fund or an alternative allocation method can be more
fairly made.
27
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 (CONTINUED)
G. OPTIONS:
The Trust 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 Trust 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 Trust may purchase options which are included in the Trust'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
Effective June 1, 1998, National Securities and Research Corporation assigned
its investment advisory agreement for the Equity Opportunities Fund to Phoenix
Investment Counsel, Inc. ("PIC"), both an indirect majority-owned subsidiary of
Phoenix Home Life Mutual Insurance Company ("PHL"). PIC is entitled to a fee
based upon the following annual rates as a percentage of the average daily net
assets of each Fund:
<TABLE>
<CAPTION>
1st $1 $1-2 $2+
Fund Billion Billion Billion
- - ---------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Small Cap Fund.......................... 0.75% 0.70% 0.65%
Strategic Theme Fund.................... 0.75% 0.70% 0.65%
Equity Opportunities Fund............... 0.70% 0.65% 0.60%
</TABLE>
Seneca Capital Management LLC ("Seneca") serves as subadviser to PIC for the
Equity Opportunities Fund. For its services, Seneca is paid a fee by PIC ranging
from 0.35% to 0.20% of the average daily net assets of the Equity Opportunities
Fund. A majority of the equity interests of Seneca are owned by Phoenix
Investment Partners Ltd. ("PXP"), an indirect majority-owned subsidiary of PHL.
Roger Engemann & Associates, Inc. ("REA") serves as subadviser to PIC for the
Small Cap Fund. For its services, REA is paid a fee by the Adviser ranging from
0.375% to 0.20% of the average daily net assets of the Small Cap Fund. REA is a
wholly owned subsidiary of Pasadena Capital Corporation which in turn is a
wholly owned subsidiary of PXP.
As Distributor of the Trust's shares, Phoenix Equity Planning Corp. ("PEPCO"),
an indirect majority-owned subsidiary of PHL, has advised the Trust that it
retained net selling commissions of $55,140 for Class A shares and deferred
sales charges of $1,223,469 for Class B shares and $765 for Class C shares, for
the year ended April 30, 1999. 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, prior to closing, 0.50% for Class M
shares applied to the average daily net assets of each Fund. The Distribution
Plan for Class A shares provides for fees to be paid up to a maximum on an
annual basis of 0.30%; the Distributor has voluntarily agreed to limit the fee
to 0.25%. The Distributor has advised the Trust that of the total amount
expensed for the year ended April 30, 1999, $1,607,602 was earned by the
Distributor, $1,082,707 was earned by unaffiliated participants and $121,999 was
paid to W.S. Griffith, an indirect subsidiary of PHL.
As Financial Agent of the Trust, PEPCO received a fee for bookkeeping,
administration, and pricing services through May 31, 1998, at an annual rate of
0.05% of average daily net assets up to $100 million, 0.04% of average daily net
assets of $100 million to $300 million, 0.03% of average daily net assets of
$300 million through $500 million, and 0.015% of average daily net assets
greater than $500 million; a minimum fee applied. Effective June 1, 1998, PEPCO
receives a financial agent fee equal to the sum of (1) the documented cost of
fund accounting and related services provided by PFPC, Inc. (subagent to PEPCO),
plus (2) the documented cost to PEPCO to provide financial reporting, tax
services and oversight of subagent's performance. The current fee schedule of
PFPC, Inc. ranges from 0.085% to 0.0125% of the average daily net asset values
of the Trust. Certain minimum fees and fee waivers may apply.
PEPCO serves as the Trust's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent. For the year ended April 30, 1999, transfer agent
fees were $1,238,334 of which PEPCO retained $435,178 which is net of the fees
paid to State Street.
At April 30, 1999, PHL and its affiliates held shares of the Trust as follows:
<TABLE>
<CAPTION>
Aggregate
Net Asset
Shares Value
--------- ---------
<S> <C> <C>
Equity Opportunities Fund--Class A............ 166 $ 1,451
Equity Opportunities Fund--Class B............ 25,410 212,680
</TABLE>
28
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 (CONTINUED)
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities (excluding short-term securities and
options) for the year ended April 30, 1999, aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Small Cap Fund....................... $658,542,968 $722,915,699
Strategic Theme Fund................. 298,564,798 314,372,543
Equity Opportunities Fund............ 266,817,938 291,477,943
</TABLE>
There were no purchases or sales of long-term U.S. Government securities.
4. CAPITAL LOSS CARRYOVERS
At April 30, 1999, the Small Cap Fund had a capital loss carryover of
$23,761,798 expiring in 2007, which may be used to offset future capital gains.
Under current tax law, capital losses realized after October 31, 1998 may be
deferred and treated as occurring on the first day of the following fiscal year.
For the year ended April 30, 1999, the Small Cap Fund deferred $114,522 in
capital losses.
5. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Funds have recorded several
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of the Funds and are designed generally to present
undistributed income and realized gains on a tax basis which is considered to be
more informative to the shareholder. As of April 30, 1999, the Funds 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 benefical
income gain (loss) interest
-------------- -------------- ------------
<S> <C> <C> <C>
Small Cap Fund................ $3,189,899 $ (35,985) $(3,153,914)
Strategic Theme Fund.......... 1,592,337 (1,596,375) 4,038
Equity Opportunities Fund..... 414,880 (414,880) --
</TABLE>
TAX INFORMATION NOTICE (UNAUDITED)
The Trust distributed long-term capital gain dividends of:
<TABLE>
<CAPTION>
Total
Long-Term
Fund Distributions
- - --------------------------------------------------- ------------
<S> <C>
Small Cap Fund..................................... $ --
Strategic Theme Fund............................... 373
Equity Opportunities Fund.......................... 3,272,689
</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.
29
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[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 "Trust") at April 30, 1999,
the results of each of their operations, the changes in each of their net assets
and the financial highlights for each of the periods presented, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at April 30, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
June 11, 1999
30
<PAGE>
PHOENIX-ENGEMANN SMALL CAP FUND
INVESTMENTS AT OCTOBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C> <C>
COMMON STOCKS--90.9%
AIR FREIGHT--1.3%
Expeditors International of Washington,
Inc..................................... 90,000 $ 3,363,750
BIOTECHNOLOGY--1.4%
Coulter Pharmaceutical, Inc.(b)......... 72,000 1,224,000
IDEC Pharmaceuticals Corp.(b)........... 10,000 1,161,875
Pharmacyclics, Inc.(b).................. 30,000 1,061,250
------------
3,447,125
------------
BROADCASTING (TELEVISION, RADIO & CABLE)--2.6%
Cumulus Media, Inc.(b).................. 80,000 2,870,000
Insight Communications Co., Inc.(b)..... 34,500 815,062
Salem Communications Corp.(b)........... 65,000 1,616,875
Spanish Broadcasting System, Inc.
Class A(b).............................. 45,000 1,198,125
------------
6,500,062
------------
COMMUNICATIONS EQUIPMENT--3.2%
Advanced Fibre Communications,
Inc.(b)................................. 76,000 1,662,500
Netro Corp.(b).......................... 64,500 1,471,406
Ortel Corp.(b).......................... 150,000 4,968,750
------------
8,102,656
------------
COMPUTERS (NETWORKING)--10.0%
Agile Software Corp.(b)................. 24,000 2,352,000
Akamai Technologies, Inc.(b)............ 3,000 435,562
Bluestone Software, Inc.(b)............. 24,000 885,000
Commerce One, Inc.(b)................... 30,000 5,137,500
ITXC Corp.(b)........................... 36,000 1,629,000
Intertrust Technologies Corp.(b)........ 12,000 654,000
Interwoven, Inc.(b)..................... 28,000 2,194,500
Keynote Systems, Inc.(b)................ 40,500 1,837,687
NetZero, Inc.(b)........................ 73,300 1,507,231
Women.com Networks, Inc.(b)............. 455,930 8,206,740
------------
24,839,220
------------
COMPUTERS (SOFTWARE & SERVICES)--17.3%
Abacus Direct Corp.(b).................. 73,000 10,694,500
BEA Systems, Inc.(b).................... 120,000 5,475,000
Concentric Network Corp.(b)............. 54,000 1,383,750
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)--CONTINUED
E.piphany, Inc.(b)...................... 18,000 $ 1,548,000
Edwards (J.D.) & Co.(b)................. 140,000 3,351,250
Inktomi Corp.(b)........................ 6,400 649,200
Legato Systems, Inc.(b)................. 69,400 3,730,250
New Era of Networks, Inc.(b)............ 55,000 1,784,062
Peregrine Systems, Inc.(b).............. 150,000 6,581,250
Sapient Corp.(b)........................ 45,000 5,754,375
Verio, Inc.(b).......................... 60,000 2,238,750
------------
43,190,387
------------
CONSUMER FINANCE--3.2%
Metris Companies, Inc................... 230,000 7,920,625
ELECTRICAL EQUIPMENT--4.0%
Advanced Energy Industries, Inc.(b)..... 103,000 4,235,875
Flextronics International Ltd.(b)....... 80,000 5,680,000
------------
9,915,875
------------
ELECTRONICS (COMPONENT DISTRIBUTORS)--0.8%
NETsilicon, Inc.(b)..................... 165,000 2,103,750
ELECTRONICS (INSTRUMENTATION)--0.9%
Meade Instruments Corp.(b).............. 85,000 2,167,500
ELECTRONICS (SEMICONDUCTORS)--12.7%
Applied Micro Circuits Corp.(b)......... 108,000 8,403,750
Conexant Systems, Inc.(b)............... 70,000 6,536,250
Micrel, Inc.(b)......................... 134,000 7,286,250
SDL, Inc.(b)............................ 22,800 2,811,525
TriQuint Semiconductor, Inc.(b)......... 35,750 2,860,000
Vitesse Semiconductor Corp.(b).......... 80,000 3,670,000
------------
31,567,775
------------
EQUIPMENT (SEMICONDUCTOR)--0.7%
Cymer, Inc.(b).......................... 44,000 1,625,250
FINANCIAL (DIVERSIFIED)--1.7%
Federal Agricultural Mortgage Corp.
Class C(b).............................. 176,000 3,234,000
Pinnacle Holdings, Inc.(b).............. 45,000 1,080,000
------------
4,314,000
------------
</TABLE>
See Notes to Financial Statements 3
<PAGE>
Phoenix-Engemann Small Cap Fund
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C> <C>
GAMING, LOTTERY & PARI-MUTUEL COMPANIES--0.5%
Championship Auto Racing Teams,
Inc.(b)................................. 51,000 $ 1,169,813
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--0.5%
Inhale Therapeutic Systems(b)........... 40,000 1,102,500
ViroPharma, Inc.(b)..................... 9,000 187,875
------------
1,290,375
------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--0.6%
ArthroCare Corp.(b)..................... 21,000 1,522,500
INVESTMENT MANAGEMENT--1.4%
Gabelli Asset Management, Inc.
Class A(b).............................. 241,500 3,607,406
OIL & GAS (EXPLORATION & PRODUCTION)--0.7%
Pinnacle Oil International, Inc.(b)..... 115,000 1,635,156
POWER PRODUCERS (INDEPENDENT)--0.1%
Plug Power, Inc.(b)..................... 22,500 360,000
RAILROADS--1.5%
Kansas City Southern Industries, Inc.... 80,000 3,795,000
RESTAURANTS--1.7%
Cheesecake Factory, Inc. (The)(b)....... 139,000 4,256,875
RETAIL (BUILDING SUPPLIES)--0.4%
Fastenal Co............................. 28,000 1,015,000
RETAIL (COMPUTERS & ELECTRONICS)--0.4%
REX Stores Corp.(b)..................... 33,000 944,625
RETAIL (DISCOUNTERS)--1.5%
99 Cents Only Stores(b)................. 124,275 3,712,716
RETAIL (FOOD CHAINS)--2.4%
Smart & Final, Inc.(b).................. 303,832 2,772,467
Whole Foods Market, Inc.(b)............. 95,000 3,230,000
------------
6,002,467
------------
RETAIL (SPECIALTY)--7.2%
Cost Plus, Inc.(b)...................... 270,000 9,855,000
Linens 'n Things, Inc.(b)............... 58,000 2,305,500
Lithia Motors, Inc. Class A(b).......... 75,000 1,495,313
Sonic Automotive, Inc.(b)............... 100,000 1,043,750
eToys, Inc.(b).......................... 23,000 1,374,250
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C> <C>
RETAIL (SPECIALTY)--CONTINUED
uBid, Inc.(b)........................... 48,000 $ 1,758,000
------------
17,831,813
------------
RETAIL (SPECIALTY-APPAREL)--0.8%
Children's Place Retail Stores, Inc.
(The)(b)................................ 75,000 1,954,688
SERVICES (ADVERTISING/MARKETING)--0.3%
MyPoints.com, Inc.(b)................... 60,000 810,000
SERVICES (COMMERCIAL & CONSUMER)--4.1%
Charles River Associates, Inc.(b)....... 45,000 1,136,250
Corporate Executive Board Co.
(The)(b)................................ 60,000 2,265,000
MIPS Technologies, Inc. Class A(b)...... 103,650 2,992,894
NCO Group, Inc.(b)...................... 92,000 3,898,500
------------
10,292,644
------------
SERVICES (COMPUTER SYSTEMS)--3.4%
CyberSource Corp.(b).................... 49,000 3,111,500
Whittman-Hart, Inc.(b).................. 140,000 5,381,250
------------
8,492,750
------------
SERVICES (DATA PROCESSING)--0.6%
Predictive Systems, Inc.(b)............. 19,500 848,250
ZapMe! Corp.(b)......................... 90,000 675,000
------------
1,523,250
------------
TELECOMMUNICATIONS (LONG DISTANCE)--1.3%
WinStar Communications, Inc.(b)......... 82,000 3,182,625
TELEPHONE--0.9%
Allied Riser Communications Corp.(b).... 36,000 650,250
Network Plus Corp.(b)................... 121,000 1,497,375
------------
2,147,625
------------
TEXTILES (APPAREL)--0.8%
bebe Stores, Inc.(b).................... 72,500 1,912,188
- - --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $136,297,347) 226,517,491
- - --------------------------------------------------------------------------------
</TABLE>
4 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small Cap Fund
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
FOREIGN COMMON STOCKS--4.0%
<S> <C> <C> <C>
COMMUNICATIONS EQUIPMENT--1.5%
Research in Motion Ltd. (Canada)(b)..... 120,000 $ 3,724,251
INSURANCE (LIFE/HEALTH)--0.4%
London Pacific Group Ltd. Sponsored ADR
(United Kingdom)........................ 49,000 986,125
OIL & GAS (EXPLORATION & PRODUCTION)--1.9%
Encal Energy Ltd. (Canada)(b)........... 1,000,000 4,589,027
SERVICES (DATA PROCESSING)--0.2%
Trintech Group PLC Sponsored ADR
(Germany)(b)............................ 30,000 528,750
- - --------------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $6,535,786) 9,828,153
- - --------------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--94.9%
(IDENTIFIED COST $142,833,133) 236,345,644
- - --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
-------- ----------- ---------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--4.8%
COMMERCIAL PAPER--4.2%
Coca Cola Co. 5.27%, 11/1/99............ A-1+ $ 6,365 $ 6,365,000
Koch Industries, Inc. 5.34%, 11/1/99.... A-1+ 4,055 4,055,000
------------
10,420,000
------------
FEDERAL AGENCY SECURITIES--0.6%
FMC Discount Note 5.16%, 11/1/99........ 1,635 1,635,000
- - ---------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $12,055,000) 12,055,000
- - ---------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--99.7%
(IDENTIFIED COST $154,888,133) 248,400,644(a)
Cash and receivables, less liabilities--0.3% 794,198
------------
NET ASSETS--100.0% $249,194,842
============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $98,360,705 and gross
depreciation of $5,818,804 for federal income tax purposes. At October 31,
1999, the aggregate cost of securities for federal income tax purposes was
$155,858,743.
(b) Non-income producing.
See Notes to Financial Statements
5
<PAGE>
Phoenix-Engemann Small Cap Fund
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $154,888,133) $ 248,400,644
Cash 303,105
Receivables
Fund shares sold 2,773,743
Investment securities sold 1,764,672
Prepaid expenses 4,528
--------------
Total assets 253,246,692
--------------
LIABILITIES
Payables
Investment securities purchased 3,253,262
Fund shares repurchased 295,676
Transfer agent fee 142,263
Investment advisory fee 138,213
Distribution fee 104,913
Financial agent fee 18,786
Trustees' fee 5,390
Accrued expenses 93,347
--------------
Total liabilities 4,051,850
--------------
NET ASSETS $ 249,194,842
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 183,661,374
Undistributed net investment loss (1,725,752)
Accumulated net realized loss (26,253,291)
Net unrealized appreciation 93,512,511
--------------
NET ASSETS $ 249,194,842
==============
CLASS A
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $146,949,687) 7,255,402
Net asset value per share $20.25
Offering price per share $20.25/(1-4.75%) $21.26
CLASS B
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $102,245,155) 5,226,263
Net asset value and offering price per share $19.56
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1999
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 147,458
Dividends 48,227
--------------
Total investment income 195,685
--------------
EXPENSES
Investment advisory fee 791,025
Distribution fee, Class A 151,332
Distribution fee, Class B 449,372
Financial agent 104,364
Transfer agent 327,572
Printing 37,619
Professional 19,804
Registration 16,683
Custodian 9,653
Trustees 8,689
Miscellaneous 5,324
--------------
Total expenses 1,921,437
--------------
NET INVESTMENT LOSS (1,725,752)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (944,423)
Net realized gain on foreign currency transactions 668
Net change in unrealized appreciation (depreciation) on
investments 58,716,695
--------------
NET GAIN ON INVESTMENTS 57,772,940
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 56,047,188
==============
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small Cap Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended
10/31/99 Year Ended
(Unaudited) 4/30/99
------------ -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (1,725,752) $ (3,189,899)
Net realized gain (loss) (943,755) (24,983,780)
Net change in unrealized appreciation
(depreciation) 58,716,695 6,208,917
------------ -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 56,047,188 (21,964,762)
------------ -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A -- (5,773,229)
Net realized gains, Class B -- (4,219,826)
------------ -------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS -- (9,993,055)
------------ -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(16,115,590 and 18,013,110 shares,
respectively) 273,409,835 273,064,204
Net asset value of shares issued from
reinvestment of distributions
(0 and 360,829 shares, respectively) -- 5,383,573
Cost of shares repurchased (16,569,477
and 22,385,155 shares, respectively) (280,818,977) (343,459,404)
------------ -------------
Total (7,409,142) (65,011,627)
------------ -------------
CLASS B
Proceeds from sales of shares (498,510
and 987,925 shares, respectively) 8,340,399 14,507,598
Net asset value of shares issued from
reinvestment of distributions
(0 and 243,730 shares, respectively) -- 3,536,528
Cost of shares repurchased (1,127,028
and 4,075,435 shares, respectively) (18,445,649) (61,757,518)
------------ -------------
Total (10,105,250) (43,713,392)
------------ -------------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS (17,514,392) (108,725,019)
------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS 38,532,796 (140,682,836)
NET ASSETS
Beginning of period 210,662,046 351,344,882
------------ -------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
($1,725,752) AND $0, RESPECTIVELY] $249,194,842 $ 210,662,046
============ =============
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Phoenix-Engemann Small Cap Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
SIX MONTHS FROM
ENDED YEAR ENDED APRIL 30 INCEPTION
10/31/99 --------------------------------- 10/16/95 TO
(UNAUDITED) 1999 1998 1997 4/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.74 $ 17.37 $ 14.13 $ 16.74 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.11)(5) (0.14)(5) (0.08)(5) (0.05)(5) (0.04)(1)(5)
Net realized and unrealized gain
(loss) 4.62 (0.88) 6.80 (2.53) 6.79
------ ------- ------- ------- ------
TOTAL FROM INVESTMENT
OPERATIONS 4.51 (1.02) 6.72 (2.58) 6.75
------ ------- ------- ------- ------
LESS DISTRIBUTIONS
Dividends from net realized gains -- (0.61) (3.48) (0.02) --
In excess of net investment income -- -- -- -- (0.01)
In excess of net realized gains -- -- -- (0.01) --
------ ------- ------- ------- ------
TOTAL DISTRIBUTIONS -- (0.61) (3.48) (0.03) (0.01)
------ ------- ------- ------- ------
Change in net asset value 4.51 (1.63) 3.24 (2.61) 6.74
------ ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD $20.25 $ 15.74 $ 17.37 $ 14.13 $16.74
====== ======= ======= ======= ======
Total return(2) 28.72 %(4) (5.66)% 52.33 % (15.43)% 67.48 %(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $146,950 $121,313 $203,560 $155,089 $98,372
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.50 %(3) 1.46 %(6) 1.31 % 1.37 % 1.50 %(3)
Net investment income (loss) (1.31)%(3) (0.95)% (0.48)% (0.28)% (0.53)%(3)
Portfolio turnover 53 %(4) 276 % 498 % 325 % 103 %(4)
</TABLE>
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------------
SIX MONTHS FROM
ENDED YEAR ENDED APRIL 30 INCEPTION
10/31/99 ------------------------------- 10/16/95 TO
(UNAUDITED) 1999 1998 1997 4/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.26 $16.99 $ 13.98 $16.68 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.17)(5) (0.25)(5) (0.21)(5) (0.17)(5) (0.09)(1)(5)
Net realized and unrealized gain
(loss) 4.47 (0.87) 6.70 (2.50) 6.77
------ ------ ------- ------ ------
TOTAL FROM INVESTMENT
OPERATIONS 4.30 (1.12) 6.49 (2.67) 6.68
------ ------ ------- ------ ------
LESS DISTRIBUTIONS
Dividends from net realized gains -- (0.61) (3.48) (0.02) --
In excess of net realized gains -- -- -- (0.01) --
------ ------ ------- ------ ------
TOTAL DISTRIBUTIONS -- (0.61) (3.48) (0.03) --
------ ------ ------- ------ ------
Change in net asset value 4.30 (1.73) 3.01 (2.70) 6.68
------ ------ ------- ------ ------
NET ASSET VALUE, END OF PERIOD $19.56 $15.26 $ 16.99 $13.98 $16.68
====== ====== ======= ====== ======
Total return(2) 28.24 %(4) (6.39)% 51.16 % (16.03)% 66.80 %(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $102,245 $89,349 $147,785 $97,647 $45,168
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.24 %(3) 2.21 %(6) 2.06 % 2.12 % 2.26 %(3)
Net investment income (loss) (2.06)%(3) (1.70)% (1.22)% (1.03)% (1.44)%(3)
Portfolio turnover 53 %(4) 276 % 498 % 325 % 103 %(4)
</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 the year ended April 30, 1999, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
See Notes to Financial Statements
<PAGE>
PHOENIX-SENECA STRATEGIC THEME FUND
INVESTMENTS AT OCTOBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C> <C>
COMMON STOCKS--85.0%
ALUMINUM--3.4%
Alcoa, Inc.............................. 119,850 $ 7,280,887
BROADCASTING (TELEVISION, RADIO & CABLE)--6.2%
AMFM, Inc.(b)........................... 57,500 4,025,000
EchoStar Communications Corp.(b)........ 152,200 9,417,375
------------
13,442,375
------------
CHEMICALS--3.2%
Dow Chemical Co......................... 59,000 6,976,750
COMMUNICATIONS EQUIPMENT--9.0%
General Motors Corp. Class H(b)......... 146,000 10,630,625
Motorola, Inc........................... 89,000 8,671,937
------------
19,302,562
------------
COMPUTERS (HARDWARE)--6.5%
Extreme Networks, Inc.(b)............... 30,700 2,465,594
Sun Microsystems, Inc.(b)............... 109,600 11,597,050
------------
14,062,644
------------
COMPUTERS (SOFTWARE & SERVICES)--4.3%
Microsoft Corp.(b)...................... 100,600 9,311,787
ELECTRICAL EQUIPMENT--2.7%
General Electric Co..................... 43,300 5,869,856
ELECTRONICS (SEMICONDUCTORS)--11.3%
Intel Corp.............................. 54,400 4,212,600
LSI Logic Corp.(b)...................... 150,950 8,028,653
Texas Instruments, Inc.................. 135,000 12,116,250
------------
24,357,503
------------
EQUIPMENT (SEMICONDUCTOR)--7.3%
Applied Materials, Inc.(b).............. 119,100 10,696,669
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
EQUIPMENT (SEMICONDUCTOR)--CONTINUED
Teradyne, Inc.(b)....................... 129,200 $ 4,974,200
------------
15,670,869
------------
FINANCIAL (DIVERSIFIED)--6.1%
Citigroup, Inc.......................... 89,550 4,846,894
Morgan Stanley Dean Witter & Co......... 75,300 8,306,531
------------
13,153,425
------------
HEALTH CARE (DIVERSIFIED)--1.8%
Johnson & Johnson....................... 37,000 3,875,750
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--2.3%
VISX, Inc.(b)........................... 79,500 4,973,719
OIL & GAS (DRILLING & EQUIPMENT)--6.7%
Baker Hughes, Inc....................... 260,200 7,269,337
Halliburton Co.......................... 193,000 7,273,687
------------
14,543,024
------------
RETAIL (COMPUTERS & ELECTRONICS)--5.3%
Best Buy Co., Inc.(b)................... 31,160 1,731,328
Tandy Corp.............................. 155,000 9,755,313
------------
11,486,641
------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--5.4%
Nextel Communications, Inc.(b).......... 46,500 4,007,719
Sprint Corp. (PCS Group)(b)............. 92,000 7,630,250
------------
11,637,969
------------
TELECOMMUNICATIONS (LONG DISTANCE)--3.5%
MCI WorldCom, Inc.(b)................... 87,240 7,486,283
- - ------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $152,539,053) 183,432,044
- - ------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Phoenix-Seneca Strategic Theme Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
FOREIGN COMMON STOCKS--9.2%
<S> <C> <C> <C>
COMMUNICATIONS EQUIPMENT--9.2%
Nokia Oyj Sponsored ADR (Finland)....... 92,900 $ 10,735,756
Nortel Networks Corp. (Canada).......... 147,000 9,104,813
- - ------------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $15,144,613) 19,840,569
- - ------------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--94.2%
(IDENTIFIED COST $167,683,666) 203,272,613
- - ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
-------- ------- ---------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--3.4%
COMMERCIAL PAPER--3.4%
Koch Industries, Inc. 5.34%, 11/1/99.... A-1+ $3,245 $ 3,245,000
Albertson's, Inc. 5.30%, 11/2/99........ A-1 1,500 1,499,779
Gannett Co., Inc. 5.30%, 11/5/99........ A-1 1,575 1,574,072
Private Export Funding Corp. 5.28%,
11/9/99................................. A-1+ 1,000 998,827
- - -----------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $7,317,678) 7,317,678
- - -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--97.6%
(IDENTIFIED COST $175,001,344) 210,590,291(a)
Cash and receivables, less liabilities--2.4% 5,119,651
------------
NET ASSETS--100.0% $215,709,942
============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $40,289,866 and gross
depreciation of $5,089,260 for federal income tax purposes. At October 31,
1999, the aggregate cost of securities for federal income tax purposes was
$175,389,685.
(b) Non-income producing.
10
See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Strategic Theme Fund
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $175,001,344) $ 210,590,291
Cash 1,622
Receivables
Investment securities sold 7,716,073
Fund shares sold 170,369
Dividends and interest 20,475
Prepaid expenses 2,630
--------------
Total assets 218,501,460
--------------
LIABILITIES
Payables
Investment securities purchased 2,408,992
Fund shares repurchased 55,840
Investment advisory fee 129,545
Distribution fee 99,395
Transfer agent fee 30,643
Financial agent fee 20,848
Trustees' fee 4,481
Accrued expenses 41,774
--------------
Total liabilities 2,791,518
--------------
NET ASSETS $ 215,709,942
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 149,181,334
Undistributed net investment loss (945,236)
Accumulated net realized gain 31,884,897
Net unrealized appreciation 35,588,947
--------------
NET ASSETS $ 215,709,942
==============
CLASS A
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $122,198,546) 6,634,775
Net asset value per share $18.42
Offering price per share $18.42/(1-4.75%) $19.34
CLASS B
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $92,047,015) 5,165,204
Net asset value per share and offering per share $17.82
CLASS C
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $1,464,381) 82,170
Net asset value per share and offering per share $17.82
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1999
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 445,358
Interest 270,826
--------------
Total investment income 716,184
--------------
EXPENSES
Investment advisory fee 759,686
Distribution fee, Class A 142,901
Distribution fee, Class B 436,497
Distribution fee, Class C 4,814
Financial agent fee 104,205
Transfer agent 136,846
Registration 22,685
Printing 19,857
Professional 15,049
Custodian 9,084
Trustees 8,571
Miscellaneous 3,913
--------------
Total expenses 1,664,108
Custodian fees paid indirectly (2,688)
--------------
Net expenses 1,661,420
--------------
NET INVESTMENT LOSS (945,236)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 32,263,878
Net change in unrealized appreciation (depreciation) on
investments (12,116,802)
--------------
NET GAIN ON INVESTMENTS 20,147,076
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 19,201,840
==============
</TABLE>
See Notes to Financial Statements 11
<PAGE>
Phoenix-Seneca Strategic Theme Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended
10/31/99 Year Ended
(Unaudited) 4/30/99
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (945,236) $ (1,592,337)
Net realized gain (loss) 32,263,878 18,354,872
Net change in unrealized appreciation
(depreciation) (12,116,802) 38,225,117
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 19,201,840 54,987,652
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A (9,383,652) (6,923,924)
Net realized gains, Class B (7,340,312) (5,772,230)
Net realized gains, Class C (103,337) (28,108)
------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (16,827,301) (12,724,262)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(1,478,273 and 3,919,529 shares,
respectively) 27,016,064 64,808,215
Net asset value of shares issued from
reinvestment of distributions
(510,078 and 419,976 shares,
respectively) 8,982,584 6,560,032
Cost of shares repurchased (1,272,801
and 4,982,395 shares, respectively) (23,340,769) (76,814,571)
------------ ------------
Total 12,657,879 (5,446,324)
------------ ------------
CLASS B
Proceeds from sales of shares (424,048
and 819,204 shares, respectively) 7,538,687 13,391,640
Net asset value of shares issued from
reinvestment of distributions
(378,552 and 329,762 shares,
respectively) 6,454,296 5,028,874
Cost of shares repurchased (410,260
and 1,286,009 shares, respectively) (7,350,883) (18,585,029)
------------ ------------
Total 6,642,100 (164,515)
------------ ------------
CLASS C
Proceeds from sales of shares (43,077
and 36,724 shares, respectively) 772,709 589,799
Net asset value of shares issued from
reinvestment of distributions
(5,562 and 1,354 shares,
respectively) 94,887 20,648
Cost of shares repurchased (4,877 and
19,484 shares, respectively) (83,057) (266,095)
------------ ------------
Total 784,539 344,352
------------ ------------
CLASS M
Cost of shares repurchased (0 and
16,288 shares, respectively) -- (223,551)
------------ ------------
Total -- (223,551)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS 20,084,518 (5,490,038)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 22,459,057 36,773,352
NET ASSETS
Beginning of period 193,250,885 156,477,533
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
($945,236) AND $0, RESPECTIVELY] $215,709,942 $193,250,885
============ ============
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Strategic Theme Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED APRIL 30 FROM INCEPTION
10/31/99 ------------------------------------------- 10/16/95 TO
(UNAUDITED) 1999 1998 1997 4/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.22 $ 13.70 $ 12.03 $ 12.37 $ 10.00
INCOME FROM INVESTMENT OPERATIONS(6)
Net investment income (loss) (0.06)(5) (0.11)(5) (0.04)(5) 0.06(5) 0.00(1)(5)
Net realized and unrealized gain
(loss) 1.80 6.03 4.03 (0.38) 2.39
--------- --------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 1.74 5.92 3.99 (0.32) 2.39
--------- --------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- (0.01) --
Dividends from net realized gains (1.54) (1.40) (2.29) -- --
In excess of net investment income -- -- (0.03) -- --
In excess of net realized gains -- -- -- (0.01) --
Tax return of capital -- -- -- -- (0.02)
--------- --------- -------- -------- --------
TOTAL DISTRIBUTIONS (1.54) (1.40) (2.32) (0.02) (0.02)
--------- --------- -------- -------- --------
Change in net asset value 0.20 4.52 1.67 (0.34) 2.37
--------- --------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 18.42 $ 18.22 $ 13.70 $ 12.03 $ 12.37
========= ========= ======== ======== ========
Total return(2) 9.95 %(4) 44.91 % 36.22 % (2.57)% 23.89 %(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $122,199 $107,871 $89,884 $77,827 $33,393
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.31 %(3)(7) 1.38 %(7) 1.33 % 1.40 % 1.40 %(3)
Net investment income (loss) (0.60)%(3) (0.72)% (0.26)% 0.49 % (0.09)%(3)
Portfolio turnover 110 %(4) 205 % 618 % 532 % 175 %(4)
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of $0.04.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
(6) 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) The ratio of operating expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were included, the
ratio would not significantly differ.
See Notes to Financial Statements 13
<PAGE>
Phoenix-Seneca Strategic Theme Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED APRIL 30 FROM INCEPTION
10/31/99 ----------------------------------------- 10/16/95 TO
(UNAUDITED) 1999 1998 1997 4/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.75 $ 13.46 $ 11.91 $ 12.33 $ 10.00
INCOME FROM INVESTMENT OPERATIONS(6)
Net investment income (loss) (0.12)(5) (0.22)(5) (0.14)(5) (0.03)(5) (0.06)(1)(5)
Net realized and unrealized gain
(loss) 1.73 5.91 3.98 (0.38) 2.40
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 1.61 5.69 3.84(5) (0.41) 2.34
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (1.54) (1.40) (2.29) -- --
In excess of net investment income -- -- -- -- --
In excess of net realized gains -- -- -- (0.01) --
Tax return of capital -- -- -- -- (0.01)
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (1.54) (1.40) (2.29) (0.01) (0.01)
-------- -------- -------- -------- --------
Change in net asset value 0.07 4.29 1.55 (0.42) 2.33
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 17.82 $ 17.75 $ 13.46 $ 11.91 $ 12.33
======== ======== ======== ======== ========
Total return(2) 9.47 %(4) 43.98 % 35.18 % (3.31)% 23.41 %(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $92,047 $84,698 $66,107 $49,843 $11,920
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.06 %(3)(7) 2.13 %(7) 2.08 % 2.15 % 2.16 %(3)
Net investment income (loss) (1.35)%(3) (1.48)% (1.02)% (0.23)% (1.06)%(3)
Portfolio turnover 110 %(4) 205 % 618 % 532 % 175 %(4)
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of $0.04.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
(6) 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) The ratio of operating expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were included, the
ratio would not significantly differ.
14 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Strategic Theme Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS C
------------------------------------------
SIX MONTHS FROM
ENDED YEAR INCEPTION
10/31/99 ENDED 11/3/97 TO
(UNAUDITED) 4/30/99 4/30/98
<S> <C> <C> <C>
Net asset value, beginning of period $17.75 $13.47 $14.93
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss) (0.12)(4) (0.22)(4) (0.05)(4)
Net realized and unrealized gain
(loss) 1.73 5.90 0.88
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.61 5.68 0.83
------ ------ ------
LESS DISTRIBUTIONS
Dividends from net realized gains (1.54) (1.40) (2.29)
------ ------ ------
TOTAL DISTRIBUTIONS (1.54) (1.40) (2.29)
------ ------ ------
Change in net asset value 0.07 4.28 (1.46)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $17.82 $17.75 $13.47
====== ====== ======
Total return(1) 9.47 %(3) 43.87 % 7.92 %(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $1,464 $682 $267
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.06 %(2)(6) 2.13 %(6) 2.08 %(2)
Net investment income (loss) (1.36)%(2) (1.47)% (0.87)%(2)
Portfolio turnover 110 %(3) 205 % 618 %(3)
</TABLE>
(1) Maximum sales charge is not reflected in total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) 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.
(6) The ratio of operating expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were included, the
ratio would not significantly differ.
See Notes to Financial Statements 15
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Strategic Equity Series Fund (the "Trust") 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 Fund has distinct investment objectives. The Small Cap Fund 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 Fund 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 Fund seeks to achieve long-term growth of capital from investment
in a diversified group of stocks or securities convertible into stocks.
Each Fund offers both Class A and Class B shares. The Strategic Theme Fund
also offers Class C shares. Class M shares have been closed. 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 Fund are borne pro rata by the
holders of all 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 Trust 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 Fund 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 Fund is treated as a separate taxable entity. It is the policy of each
Fund in the Trust 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 Fund intends to
distribute an amount sufficient to avoid imposition of any excise tax under
Section 4982 of the Code. Therefore, no provision for federal income taxes or
excise taxes has been made.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by each Fund 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 Trust does not separate that
portion of the results of operations arising from changes in exchange rates and
that portion arising from changes in the market prices of securities.
F. EXPENSES:
Expenses incurred by the Trust with respect to any two or more Funds are
allocated in proportion to the net assets of each Fund, except where allocation
of direct expense to each Fund or an alternative allocation method can be more
fairly made.
21
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999 (UNAUDITED) (CONTINUED)
G. OPTIONS:
The Trust 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 Trust 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 Trust may purchase options which are included in the Trust'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 its services to the Trust, the Adviser, Phoenix Investment
Counsel, Inc., an indirect majority-owned subsidiary of Phoenix Home Life Mutual
Insurance Company ("PHL"), is entitled to a fee based upon the following annual
rates as a percentage of the average daily net assets of each Fund.
<TABLE>
<CAPTION>
1st $1 $1-2 $2+
Fund Billion Billion Billion
- - ---- -------- -------- --------
<S> <C> <C> <C>
Small Cap Fund..................... 0.75% 0.70% 0.65%
Strategic Theme Fund............... 0.75% 0.70% 0.65%
Equity Opportunities Fund.......... 0.70% 0.65% 0.60%
</TABLE>
Seneca Capital Management LLC ("Seneca") serves as subadviser to PIC for the
Equity Opportunities Fund and Strategic Theme Fund. For its services, Seneca is
paid a fee by PIC ranging from 0.35% to 0.20% of the average daily net assets of
the Equity Opportunities Fund. A majority of the equity interests of Seneca are
owned by Phoenix Investment Partners Ltd. ("PXP"), an indirect majority-owned
subsidiary of PHL.
Roger Engemann & Associates, Inc. ("REA") serves as subadviser to PIC for the
Small Cap Fund. For its services, REA is paid a fee by the Adviser ranging from
0.375% to 0.20% of the average daily net assets of the Small Cap Fund. REA is a
wholly owned subsidiary of Pasadena Capital Corporation which in turn is a
wholly owned subsidiary of PXP.
As Distributor of the Trust's shares, Phoenix Equity Planning Corp. ("PEPCO"),
an indirect majority-owned subsidiary of PHL, has advised the Trust that it
retained net selling commissions of $18,608 for Class A shares and deferred
sales charges of $307,244 for Class B shares and $590 for Class C shares, for
the six months ended October 31, 1999. 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, prior to closing, 0.50% for
Class M shares applied to the average daily net assets of each Fund. The
Distribution Plan for Class A shares provides for fees to be paid up to a
maximum on an annual basis of 0.30%; the Distributor has voluntarily agreed to
limit the fee to 0.25%. The Distributor has advised the Trust that of the total
amount expensed for the six months ended October 31, 1999, $825,868 was earned
by the Distributor, $567,456 was earned by unaffiliated participants and $64,000
was paid to W.S. Griffith, an indirect subsidiary of PHL.
As Financial Agent of the Trust, PEPCO receives a financial agent fee equal to
the sum of (1) the documented cost of fund accounting and related services
provided by PFPC, Inc. (subagent to PEPCO), plus (2) the documented cost to
PEPCO to provide financial reporting, tax services and oversight of subagent's
performance. The current fee schedule of PFPC, Inc. ranges from 0.085% to
0.0125% of the average daily net asset values of the Trust. Certain minimum fees
and fee waivers may apply.
PEPCO serves as the Trust's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent. For the six months ended October 31, 1999,
transfer agent fees were $588,546 of which PEPCO retained $258,347 which is net
of the fees paid to State Street.
At October 31, 1999, PHL and its affiliates held shares of the Trust as
follows:
<TABLE>
<CAPTION>
Aggregate
Net Asset
Shares Value
-------- ---------
<S> <C> <C>
Equity Opportunities Fund--Class A....... 173 $ 1,654
Equity Opportunities Fund--Class B....... 26,519 242,118
</TABLE>
22
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999 (UNAUDITED) (CONTINUED)
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities (excluding short-term securities and
options) for the six months ended October 31, 1999, aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Small Cap Fund................... $110,288,918 $141,631,185
Strategic Theme Fund............. 213,296,543 216,406,453
Equity Opportunities Fund........ 135,875,796 152,926,575
</TABLE>
There were no purchases or sales of long-term U.S. Government securities.
4. CAPITAL LOSS CARRYOVERS
At April 30, 1999, the Small Cap Fund had a capital loss carryover of
$23,761,798 expiring in 2007, which may be used to offset future capital gains.
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.
23
<PAGE>
Phoenix-Seneca Growth Fund
INVESTMENTS AT SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES VALUE
------- -----------
<S> <C> <C> <C>
COMMON STOCKS--85.8%
ALUMINUM--3.5%
Alcoa, Inc.............................. 40,660 $ 2,523,461
BANKS (MAJOR REGIONAL)--3.0%
Mellon Bank Corp........................ 64,410 2,173,838
BROADCASTING (TELEVISION, RADIO & CABLE)--3.3%
AMFM, Inc.(b)........................... 39,590 2,410,041
CHEMICALS--2.1%
Dow Chemical Co......................... 13,210 1,500,986
COMMUNICATIONS EQUIPMENT--6.2%
General Motors Corp. Class H(b)......... 34,540 1,977,415
Motorola, Inc........................... 28,770 2,531,760
-----------
4,509,175
-----------
COMPUTERS (HARDWARE)--6.0%
International Business Machines Corp.... 11,590 1,406,736
Sun Microsystems, Inc.(b)............... 32,000 2,976,000
-----------
4,382,736
-----------
COMPUTERS (NETWORKING)--3.0%
Cisco Systems, Inc.(b).................. 29,140 1,997,911
Internap Network Services Corp.(b)...... 4,040 180,285
-----------
2,178,196
-----------
COMPUTERS (SOFTWARE & SERVICES)--4.2%
Microsoft Corp.(b)...................... 33,740 3,055,579
<CAPTION>
SHARES VALUE
------- -----------
<S> <C> <C> <C>
ELECTRICAL EQUIPMENT--3.6%
General Electric Co..................... 22,060 $ 2,615,489
ELECTRONICS (SEMICONDUCTORS)--1.3%
Intel Corp.............................. 13,200 980,925
FINANCIAL (DIVERSIFIED)--7.2%
Citigroup, Inc.......................... 61,930 2,724,920
Morgan Stanley Dean Witter & Co......... 28,450 2,537,384
-----------
5,262,304
-----------
FOODS--1.8%
General Mills, Inc...................... 16,480 1,336,940
HEALTH CARE (DIVERSIFIED)--5.9%
Bristol-Myers Squibb Co................. 37,940 2,560,950
Johnson & Johnson....................... 18,940 1,740,113
-----------
4,301,063
-----------
HOUSEHOLD FURNISHINGS & APPLIANCES--1.2%
Whirlpool Corp.......................... 13,990 913,722
HOUSEHOLD PRODUCTS (NON-DURABLE)--2.4%
Procter & Gamble Co. (The).............. 18,540 1,738,125
MANUFACTURING (DIVERSIFIED)--4.2%
Tyco International Ltd.................. 29,610 3,057,233
OIL & GAS (DRILLING & EQUIPMENT)--6.4%
Baker Hughes, Inc....................... 74,100 2,148,900
Halliburton Co.......................... 60,870 2,495,670
-----------
4,644,570
-----------
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
------- -----------
<S> <C> <C> <C>
OIL (INTERNATIONAL INTEGRATED)--3.1%
Texaco, Inc............................. 36,350 $ 2,294,594
RETAIL (COMPUTERS & ELECTRONICS)--3.1%
Tandy Corp.............................. 43,750 2,261,328
RETAIL (GENERAL MERCHANDISE)--1.9%
Wal-Mart Stores, Inc.................... 29,900 1,422,119
RETAIL (SPECIALTY-APPAREL)--2.4%
TJX Companies, Inc. (The)............... 62,290 1,748,013
SERVICES (ADVERTISING/MARKETING)--3.8%
Outdoor Systems, Inc.(b)................ 76,590 2,738,093
TELECOMMUNICATIONS (LONG DISTANCE)--3.2%
MCI WorldCom, Inc.(b)................... 32,950 2,368,281
TELEPHONE--3.0%
Bell Atlantic Corp...................... 32,190 2,166,789
- - ------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $52,029,496) 62,583,600
- - ------------------------------------------------------------------
FOREIGN COMMON STOCKS--9.7%
COMMUNICATIONS EQUIPMENT--6.9%
Nokia Oyj Sponsored ADR (Finland)....... 25,850 2,321,653
Nortel Networks Corp. (Canada).......... 52,730 2,689,230
-----------
5,010,883
-----------
ELECTRONICS (SEMICONDUCTORS)--2.8%
STMicroelectronics N.V. (Netherlands)... 27,300 2,020,200
- - ------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $6,778,972) 7,031,083
- - ------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--95.5%
(IDENTIFIED COST $58,808,468) 69,614,683
- - ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PAR
VALUE
(000) VALUE
------- -----------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--7.6%
REPURCHASE AGREEMENT--7.6%
State Street Bank & Trust Co. repurchase
agreement, 4.25%, dated 9/30/99 due
10/1/99, repurchase price $5,545,655
collateralized by U.S. Treasury Note
5.50%, 3/31/00, market value
$5,657,063.............................. $ 5,545 $ 5,545,000
- - ------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $5,545,000) 5,545,000
- - ------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--103.1%
(IDENTIFIED COST $64,353,468) 75,159,683(a)
Cash and receivables, less liabilities--(3.1%) (2,236,353)
--------------------
NET ASSETS--100.0% $ 72,923,330
====================
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $12,536,684 and gross
depreciation of $1,844,747 for federal income tax purposes. At
September 30, 1999, the aggregate cost of securities for federal income tax
purposes was $64,467,746.
(b) Non-income producing.
See Notes to Financial Statements
17
<PAGE>
Phoenix-Seneca Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $64,353,468) $75,159,683
Cash 898
Receivables
Fund shares sold 158,602
Dividends and interest 35,815
Deferred organization expenses 13,527
Prepaid expenses 3,669
-----------
Total assets 75,372,194
-----------
LIABILITIES
Payables
Investment securities purchased 2,292,003
Fund shares repurchased 7,910
Distribution fee 32,748
Transfer agent fee 13,453
Investment advisory fee 13,450
Financial agent fee 5,852
Trustees' fee 856
Accrued expenses 82,592
-----------
Total liabilities 2,448,864
-----------
NET ASSETS $72,923,330
===========
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial
interest $55,020,063
Accumulated net realized gain 7,097,052
Net unrealized appreciation 10,806,215
-----------
NET ASSETS $72,923,330
===========
CLASS X
Shares of beneficial interest outstanding,
$1 par value,
unlimited authorization (Net Assets
$35,694,595) 1,791,537
Net asset value and offering price per share $19.92
CLASS A
Shares of beneficial interest outstanding,
$1 par value,
unlimited authorization (Net Assets
$31,000,738) 1,584,310
Net asset value per share $19.57
Offering price per share $19.57/(1-4.75%) $20.55
CLASS B
Shares of beneficial interest outstanding,
$1 par value,
unlimited authorization (Net Assets
$4,394,693) 227,897
Net asset value and offering price per share $19.28
CLASS C
Shares of beneficial interest outstanding,
$1 par value,
unlimited authorization (Net Assets
$1,833,304) 95,222
Net asset value and offering price per share $19.25
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 465,256
Interest 141,205
-----------
Total investment income 606,461
-----------
EXPENSES
Investment advisory fee 443,317
Distribution fee, Class A 66,526
Distribution fee, Class B 24,197
Distribution fee, Class C 9,293
Financial agent fee 85,097
Transfer agent 88,614
Registration 53,567
Printing 40,695
Trustees 25,716
Professional 23,412
Custodian 12,443
Amortization of deferred
organization expenses 10,658
Miscellaneous 23,541
-----------
Total expenses 907,076
Less expenses borne by
investment adviser (49,249)
-----------
Net expenses 857,827
-----------
NET INVESTMENT LOSS (251,366)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on securities 7,420,446
Net change in unrealized
appreciation (depreciation) on
investments 8,897,166
-----------
NET GAIN ON INVESTMENTS 16,317,612
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $16,066,246
===========
</TABLE>
18 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
9/30/99 9/30/98
----------- -----------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (251,366) $ (23,589)
Net realized gain (loss) 7,420,446 5,786,850
Net change in unrealized appreciation (depreciation) 8,897,166 (3,716,413)
----------- -----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS 16,066,246 2,046,848
----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class X -- (28,234)
Net realized gains, Class X (2,678,808) (2,638,126)
Net realized gains, Class A (2,257,410) (456,891)
Net realized gains, Class B (125,950) --
Net realized gains, Class C (32,675) --
----------- -----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (5,094,843) (3,123,251)
----------- -----------
FROM SHARE TRANSACTIONS
CLASS X
Proceeds from sales of shares (191,178 and 285,390 shares,
respectively) 3,657,324 4,884,932
Net asset value of shares issued from reinvestment of
distributions
(152,656 and 175,598 shares, respectively) 2,665,381 2,655,713
Cost of shares repurchased (417,927 and 669,955 shares,
respectively) (7,626,080) (11,501,669)
----------- -----------
Total (1,303,375) (3,961,024)
----------- -----------
CLASS A
Proceeds from sales of shares (713,052 and 903,203 shares,
respectively) 12,978,542 16,095,224
Net asset value of shares issued from reinvestment of
distributions
(130,999 and 30,397 shares, respectively) 2,250,565 454,436
Cost of shares repurchased (329,410 and 233,349 shares,
respectively) (5,879,689) (3,581,463)
----------- -----------
Total 9,349,418 12,968,197
----------- -----------
CLASS B
Proceeds from sales of shares (209,861 and 32,039 shares,
respectively) 3,860,313 544,661
Net asset value of shares issued from reinvestment of
distributions
(5,386 and 0 shares, respectively) 92,053 --
Cost of shares repurchased (19,389 and 0 shares,
respectively) (368,688) --
----------- -----------
Total 3,583,678 544,661
----------- -----------
CLASS C
Proceeds from sales of shares (88,996 and 7,802 shares,
respectively) 1,633,483 139,674
Net asset value of shares issued from reinvestment of
distributions
(1,890 and 0 shares, respectively) 32,392 --
Cost of shares repurchased (3,466 and 0 shares,
respectively) (65,089) --
----------- -----------
Total 1,600,786 139,674
----------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 13,230,507 9,691,508
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS 24,201,910 8,615,105
NET ASSETS
Beginning of period 48,721,420 40,106,315
----------- -----------
END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) OF
$0 AND $0, RESPECTIVELY] $72,923,330 $48,721,420
=========== ===========
</TABLE>
See Notes to Financial Statements 19
<PAGE>
Phoenix-Seneca Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS X
----------------------------------------------------
FROM
YEAR ENDED SEPTEMBER 30 INCEPTION
------------------------------------ 3/8/96 TO
1999 1998 1997 9/30/96
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.46 $ 16.43 $ 13.74 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.04)(1) 0.00(1) 0.03(2) 0.03(2)
Net realized and unrealized gain (loss) 5.11 1.28 3.50 3.71
------- ------- -------- -------
TOTAL FROM INVESTMENT OPERATIONS 5.07 1.28 3.53 3.74
------- ------- -------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (0.02) (0.07) --
Dividends from net realized gains (1.61) (1.23) (0.77) --
------- ------- -------- -------
TOTAL DISTRIBUTIONS (1.61) (1.25) (0.84) --
------- ------- -------- -------
Change in net asset value 3.46 0.03 2.69 3.74
------- ------- -------- -------
NET ASSET VALUE, END OF PERIOD $ 19.92 $ 16.46 $ 16.43 $ 13.74
======= ======= ======== =======
Total return(3) 32.19 % 8.48% 27.27% 37.40%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $35,695 $30,713 $34,093 $12,920
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.16 % 1.14% 1.52%(6) 0.81%(4)(6)
Net investment income (loss) (0.20)% 0.02% 0.31% 0.76%(4)
Portfolio turnover 169 % 166% 145.69% 87.66%(5)
</TABLE>
(1) Computed using average shares outstanding.
(2) Net investment income (loss) is after waiver of certain fees and
reimbursement of certain expenses by the investment adviser. If the
investment adviser had not waived fees and reimbursed expenses, net
investment income (loss) per share would have been $0.03 and $(0.09) for the
year ended September 30, 1997 and the period ended September 30, 1996,
respectively.
(3) Total return represents total return for the period indicated. The total
return would have been lower if certain fees and expenses had not been
waived or reimbursed by the investment adviser.
(4) Annualized.
(5) Not annualized.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.52% and
3.49% for the year ended September 30, 1997 and the period ended
September 30, 1996, respectively.
20 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------
FROM
YEAR ENDED SEPTEMBER 30 INCEPTION
---------------------------------- 3/8/96 TO
1999 1998 1997 9/30/96
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.23 $ 16.28 $13.63 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.09)(1) (0.06)(1) (0.08)(2) --(2)
Net realized and unrealized gain 5.04 1.24 3.50 3.63
------- ------- ------ ------
TOTAL FROM INVESTMENT OPERATIONS 4.95 1.18 3.42 3.63
------- ------- ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- -- --
Dividends from net realized gains (1.61) (1.23) (0.77) --
------- ------- ------ ------
TOTAL DISTRIBUTIONS (1.61) (1.23) (0.77) --
------- ------- ------ ------
Change in net asset value 3.34 (0.05) 2.65 3.63
------- ------- ------ ------
NET ASSET VALUE, END OF PERIOD $ 19.57 $ 16.23 $16.28 $13.63
======= ======= ====== ======
Total return(3) 31.89 % 7.93 % 26.51 % 36.30%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $31,001 $17,364 $6,013 $466
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.44 % 1.55 % 2.48 %(6) 1.46%(4)(6)
Net investment income (loss) (0.49)% (0.36)% (0.62)% 0.16%(4)
Portfolio turnover 169 % 166 % 145.69 % 87.66%(5)
</TABLE>
(1) Computed using average shares outstanding.
(2) Net investment income (loss) is after waiver of certain fees and
reimbursement of certain expenses by the investment adviser. If the
investment adviser had not waived fees and reimbursed expenses, net
investment income (loss) per share would have been $(0.09) and $(0.34) for
the year ended September 30, 1997 and the period ended September 30, 1996,
respectively.
(3) Total return represents total return for the period indicated. The total
return would have been lower if certain fees and expenses had not been
waived or reimbursed by the investment adviser.
(4) Annualized.
(5) Not annualized.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.63% and
14.01% for the year ended September 30, 1997 and the period ended
September 30, 1996, respectively.
See Notes to Financial Statements 21
<PAGE>
Phoenix-Seneca Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------ ------------------------------
FROM FROM
YEAR INCEPTION YEAR INCEPTION
ENDED 7/1/98 TO ENDED 7/1/98 TO
9/30/99 9/30/98 9/30/99 9/30/98
<S> <C> <C> <C> <C>
Net asset value, beginning of period $16.19 $18.71 $16.18 $18.71
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.31)(1)(8) (0.04)(1)(8) (0.32)(2)(8) (0.06)(2)(8)
Net realized and unrealized gain (loss) 5.01 (2.48) 5.00 (2.47)
------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 4.70 (2.52) 4.68 (2.53)
------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- -- --
Dividends from net realized gains (1.61) -- (1.61) --
------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.61) -- (1.61) --
------ ------ ------ ------
Change in net asset value 3.09 (2.52) 3.07 (2.53)
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $19.28 $16.19 $19.25 $16.18
====== ====== ====== ======
Total return(3) 30.31 % (13.47)%(5) 30.20 % (13.52)%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $4,395 $519 $1,833 $126
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.60 %(6) 2.60 %(4)(6) 2.60 %(7) 2.60%(4)(7)
Net investment income (loss) (1.66)% (1.12)%(4) (1.66)% (1.39)%(4)
Portfolio turnover 169 % 166 %(5) 169 % 166 %(5)
</TABLE>
(1) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had
not waived fees and reimbursed expenses, net investment income (loss) per
share would have been $(0.47) and $(0.36) for the periods ended
September 30, 1999 and September 30, 1998, respectively.
(2) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had
not waived fees and reimbursed expenses, net investment income (loss) per
share would have been $(0.90) and $(0.79) for the periods ended
September 30, 1999 and September 30, 1998, respectively.
(3) Total return represents total return for the period indicated. The total
return would have been lower if certain fees and expenses had not been
waived or reimbursed by the investment adviser.
(4) Annualized.
(5) Not annualized.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 3.46% and
12.48% for the periods ended September 30, 1999 and September 30, 1998,
respectively.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 5.67% and
20.24% for the periods ended September 30, 1999 and September 30, 1998,
respectively.
(8) Computed using average shares outstanding.
22 See Notes to Financial Statements
<PAGE>
PHOENIX-SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix-Seneca Funds (the "Trust") is organized as a Delaware business
trust and is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company. Shares of the Trust are
divided into four series, each a "Fund" and collectively the "Funds" as follows:
Phoenix-Seneca Bond Fund, Phoenix-Seneca Growth Fund, Phoenix-Seneca Mid-Cap
"EDGE"-SM- Fund and Phoenix-Seneca Real Estate Securities Fund (formerly Seneca
Bond Fund, Seneca Growth Fund, Seneca Mid-Cap "EDGE"-SM- Fund and Seneca Real
Estate Securities Fund, respectively). Each Fund has distinct investment
objectives. Bond Fund seeks to generate a high level of current income and
capital appreciation. Growth Fund seeks to achieve long-term capital
appreciation. Mid-Cap "EDGE"-SM- Fund seeks to achieve long-term capital
appreciation by investing primarily in a diversified portfolio of equity
securities of companies with market capitalizations between $500 million and $5
billion. Real Estate Securities Fund seeks to emphasize capital appreciation and
income equally by investing primarily in marketable securities of
publicly-traded real estate investment trusts (REITS) and companies that invest
in, operate, develop and/or manage real estate located in the United States.
Each Fund offers Class X (formerly Seneca Institutional), Class A (formerly
Seneca Administrative), Class B and Class C shares. Class X shares are sold
without a sales charge. 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 Class A, Class B and Class C shares bear distribution
expenses and have exclusive voting rights with respect to their distribution
plans. Investment income and realized and unrealized gains/losses are allocated
among the classes on the basis of net assets of each class. Expenses that relate
to the distribution of shares or services provided to a particular class are
allocated to that class.
The following is a summary of significant accounting policies consistently
followed by the Trust 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 mean between the most recent high bid and the most recent
low asked quotations. Debt securities are valued on the basis of broker
quotations or valuations provided by a pricing service which utilizes
information with respect to recent sales, market transactions in comparable
securities, quotations from dealers and various relationships between securities
in determining value. Short-term investments having a remaining maturity of 60
days or less are valued at amortized cost which approximates market. All other
securities and assets are valued at their fair value as determined in good faith
by or under the direction of the Trustees.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign securities,
as soon as the Fund is notified. Interest income is recorded on the accrual
basis. The Trust amortizes premiums and discounts using the effective interest
method. Realized gains and losses are determined on the identified cost basis.
C. INCOME TAXES:
Each Fund is treated as a separate taxable entity. It is the policy of each
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 Fund intends to distribute
an amount sufficient to avoid imposition of any excise tax under Section 4982 of
the Code. Therefore, no provision for federal income taxes or excise taxes has
been made.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by each Fund 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, market
discount, organization costs, expiring capital loss carryforwards, foreign
currency gain/loss, partnerships, operating losses 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
41
<PAGE>
PHOENIX-SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 (CONTINUED)
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
Trust does not separate that portion of the results of operations arising from
changes in exchange rates and that portion arising from changes in the market
prices of securities.
F. FORWARD CURRENCY CONTRACTS:
Each Fund may enter into forward currency contracts in conjunction with the
planned purchase or sale of foreign denominated securities in order to hedge the
U.S. dollar cost or proceeds. Forward currency contracts involve, to varying
degrees, elements of market risk in excess of the amount recognized in the
statement of assets and liabilities. Risks arise from the possible movements in
foreign exchange rates or if the counterparty does not perform under the
contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any 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 and
their customers. The contract is marked-to-market daily and the change in market
value is recorded by each Fund as an unrealized gain (or loss). When the
contract is closed or offset with the same counterparty, the Fund records a
realized gain (or loss) equal to the change in the value of the contract when it
was opened and the value at the time it was closed or offset.
G. OPTIONS:
Each 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.
Each 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.
Each Fund may purchase options which are included in the Funds' 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.
H. ORGANIZATION EXPENSE:
In 1996, the Trust incurred organizational expenses which are amortized on a
straight line basis over a period of sixty months from the commencement of
operations. If any of the initial shares are redeemed before the end of the
amortization period, the proceeds of the redemption will be reduced by the pro
rata share of unamortized organization expenses.
I. EXPENSES:
Trust expenses not directly attributable to a specific Fund are allocated
evenly among all funds. Fund expenses that are not related to the distribution
of shares of a particular class or to services provided specifically to a
particular class are allocated among the classes on the basis of relative
average daily net assets of each class.
J. REPURCHASE AGREEMENTS:
A repurchase agreement is a transaction where a Fund acquires a security for
cash and obtains a simultaneous commitment from the seller to repurchase the
security at an agreed upon price and date. Each Fund, through its custodian,
takes possession of securities collateralizing the repurchase agreement. The
collateral is marked-to-market daily to ensure that the market value of the
underlying assets remains sufficient to protect the Fund in the event of default
by the seller. If the seller defaults and the value of the collateral declines,
or if the seller enters insolvency proceedings, realization of collateral may be
delayed or limited.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
Phoenix Investment Counsel, Inc, ("PIC" or the "Adviser") serves as investment
adviser to the Phoenix-Seneca Funds and Seneca Capital Management LLC ("Seneca"
or the "Subadviser") serves as investment subadviser. All of the outstanding
stock of PIC and a majority of the equity interests of Seneca are owned by
Phoenix Investment Partners Ltd. ("PXP"), an indirect, majority-owned subsidiary
of Phoenix Home Life Mutual Insurance Company ("PHL"). As compensation for
services
42
<PAGE>
PHOENIX-SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 (CONTINUED)
to the Trust, the adviser receives a fee based upon the following annual rates
as a percentage of the average daily net assets of each Fund:
<TABLE>
<CAPTION>
Adviser
Fee
--------
<S> <C>
Bond Fund.................................... 0.50%
Growth Fund.................................. 0.70%
Mid-Cap "EDGE"-SM- Fund...................... 0.80%
Real Estate Securities Fund.................. 0.85%
</TABLE>
The Adviser pays the Subadviser a fee equal to one half of the Adviser fee.
Phoenix Equity Planning Corporation ("PEPCO"), a direct subsidiary of PXP,
serves as Administrator of the Trust. PEPCO received a fee for administration
services through December 31, 1998 at an annual rate of 0.08% of average daily
net assets of each Fund up to $125 million, 0.06% of average daily net assets of
$125 million to $250 million and 0.04% of average daily net assets greater than
$250 million; a minimum fee applied. Effective January 1, 1999, PEPCO receives a
financial agent fee equal to the sum of (1) the documented cost of fund
accounting and related services provided by PFPC Inc. (subagent to PEPCO), plus
(2) the documented cost to PEPCO to provide financial reporting, tax services
and oversight of the subagent's performance. The current fee schedule of PFPC
Inc. ranges from 0.085% to 0.0125% of the average daily net asset values of the
Trust. Certain minimum fees and fee waivers may apply.
The Adviser voluntarily agreed to waive or reimburse each Fund's operating
expenses until July 1, 2000, to the extent that such expenses exceed the
following percentages of average annual net assets:
<TABLE>
<CAPTION>
Class X Class A Class B Class C
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Bond Fund.................. 0.90% 1.15% 1.90% 1.90%
Growth Fund................ 1.25% 1.85% 2.60% 2.60%
Mid-Cap "EDGE"-SM- Fund.... 2.10% 2.70% 3.45% 3.45%
Real Estate Securities
Fund....................... 2.35% 3.05% 3.80% 3.80%
</TABLE>
Prior to July 1, 1999, the Adviser voluntarily agreed to waive or reimburse
the Bond Fund's operating expenses until July 1, 2000, to the extent that such
expenses exceeded the following percentages of average annual net assets: 1.85%
for Class X, 2.45% for Class A and 3.20% for Class B and Class C.
PEPCO serves as the national distributor of the Trust's shares and has advised
the Trust that it retained net selling commissions of $16,238 for Class A shares
for the year ended September 30, 1999. Deferred sales charges retained by PEPCO
for the year ended September 30, 1999 were $6,758 for Class B shares and $689
for Class C shares. In addition, each Fund pays PEPCO a distribution fee at an
annual rate of 0.25% for Class A shares and 1.00% for Class B and C shares
applied to the average daily net assets of each Fund. The distributor has
advised the Trust that of the total amount expensed for the year ended
September 30, 1999, $121,864 was retained by the Distributor, $24,658 was paid
out to unaffiliated Participants and $1,637 was paid to W.S. Griffith, an
indirect subsidiary of PHL.
PEPCO serves as the Trust's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent. For the year ended September 30, 1999, transfer
agent fees were $330,067 of which PEPCO retained $425 which is net of fees paid
to State Street.
At September 30, 1999, PHL and affiliates held Phoenix-Seneca Fund shares
which aggregated the following:
<TABLE>
<CAPTION>
Aggregate
Net Asset
Shares Value
--------- -----------
<S> <C> <C>
Bond Fund--Class X.................. 1,496,147 $15,485,121
Bond Fund--Class A.................. 9,878 101,646
Bond Fund--Class B.................. 9,816 100,810
Bond Fund--Class C.................. 9,815 100,800
Growth Fund--Class B................ 829 15,982
Growth Fund--Class C................ 5,931 114,177
Mid-Cap "EDGE"-SM- Fund--Class B.... 6,062 105,532
Mid-Cap "EDGE"-SM- Fund--Class C.... 6,062 105,479
Real Estate Securities
Fund--Class B....................... 8,345 79,697
Real Estate Securities
Fund--Class C....................... 8,346 79,700
</TABLE>
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended September 30, 1999
(excluding U.S. Government and agency securities and short-term securities)
aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Bond Fund........................ $ 26,311,365 $ 16,449,029
Growth Fund...................... 108,894,225 101,158,985
Mid-Cap "EDGE"-SM- Fund.......... 34,069,753 31,673,766
Real Estate Securities Fund...... 1,130,983 3,044,370
</TABLE>
Purchases and sales of long-term U.S. Government and agency securities during
the year ended September 30, 1999, aggregated $18,227,311 and $13,990,110,
respectively, for the Bond Fund.
4. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a fund's ability to
repatriate such amounts.
43
<PAGE>
PHOENIX-SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 (CONTINUED)
5. OTHER
As of September 30, 1999, the Funds had shareholders who each individually
owned more than 10% of total net assets, none of whom are affiliated with PHL or
PXP as follows. In addition, affiliate holdings are presented in the table
located within Note 2.
<TABLE>
<CAPTION>
Number of % of Total
shareholders net assets
------------ ------------
<S> <C> <C>
Growth Fund....................... 1 12.1 %
Real Estate Securities Fund....... 2 33.8 %
</TABLE>
6. CAPITAL LOSS CARRYOVERS
At September 30, 1999, the Real Estate Securities Fund had a capital loss
carryover of $24,701, expiring in 2007, which may be used to offset future
capital gains.
Under current tax law, capital losses realized after October 31 may be
deferred and treated as occurring on the first day of the following fiscal year.
For the year ended September 30, 1999 the Real Estate Securities Fund deferred
capital losses of $639,028.
7. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Funds have recorded
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of each of the Funds 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 September 30, 1999,
the Funds 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>
Bond Fund................... $ (6,484) $ 17,363 $(10,879)
Growth Fund................. 251,366 (252,922) 1,556
Mid-Cap "EDGE"-SM- Fund..... 275,816 (277,372) 1,556
Real Estate Securities
Fund........................ (2,537) 980 1,557
</TABLE>
TAX INFORMATION NOTICE (UNAUDITED)
For the fiscal year ended September 30, 1999, the Funds distributed long-term
capital gain dividends as follows:
<TABLE>
<S> <C>
Bond Fund...................................... $ 182,516
Growth Fund.................................... 1,530,633
Mid-Cap "EDGE"-SM- Fund........................ 542,452
Real Estate Securities Fund.................... 535,508
</TABLE>
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by an effective Prospectus which includes information
concerning the sales charge, the Trust's record and other pertinent information.
44
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO]
To the Trustees and Shareholders of
Phoenix-Seneca Funds
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-Seneca Bond Fund, the Phoenix-Seneca Growth Fund, the Phoenix-Seneca
Mid-Cap "EDGE"-SM- Fund and the Phoenix-Seneca Real Estate Securities Fund
(constituting the Phoenix-Seneca Funds, hereafter referred to as the "Funds") at
September 30, 1999, and the results of each of their operations, the changes in
each of their net assets and the financial highlights for 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 Funds' 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 September 30, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above. The financial highlights of the Funds, formerly the
Seneca Funds, for the periods ended September 30, 1997 were audited by other
independent accountants whose report dated November 5, 1997 expressed an
unqualified opinion on those statements.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
November 16, 1999
45
<PAGE>
Phoenix-Seneca Growth Fund
INVESTMENTS AT MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMMON STOCKS--84.6%
ALUMINUM--2.4%
Alcoa, Inc.............................. 38,770 $ 2,723,592
BANKS (MAJOR REGIONAL)--2.2%
Mellon Financial Corp................... 81,600 2,407,200
BROADCASTING (TELEVISION, RADIO & CABLE)--3.3%
AMFM, Inc.(b)........................... 58,890 3,658,541
CHEMICALS--3.0%
Dow Chemical Co. (The).................. 29,130 3,320,820
COMMUNICATIONS EQUIPMENT--8.5%
General Motors Corp. Class H(b)......... 37,280 4,641,360
Metricom, Inc.(b)....................... 28,350 1,314,731
Motorola, Inc........................... 24,190 3,444,051
------------
9,400,142
------------
COMPUTERS (HARDWARE)--3.9%
Sun Microsystems, Inc.(b)............... 45,920 4,302,847
COMPUTERS (NETWORKING)--3.6%
Cisco Systems, Inc.(b).................. 51,360 3,970,770
COMPUTERS (SOFTWARE & SERVICES)--4.8%
Microsoft Corp.(b)...................... 49,700 5,280,625
ELECTRICAL EQUIPMENT--4.1%
General Electric Co..................... 29,280 4,543,890
ELECTRONICS (SEMICONDUCTORS)--4.0%
Intel Corp.............................. 34,130 4,503,027
EQUIPMENT (SEMICONDUCTOR)--6.9%
Applied Materials, Inc.(b).............. 38,140 3,594,695
KLA-Tencor Corp.(b)..................... 48,610 4,095,392
------------
7,690,087
------------
FINANCIAL (DIVERSIFIED)--8.5%
Citigroup, Inc.......................... 83,290 4,940,138
Morgan Stanley Dean Witter & Co......... 55,740 4,546,294
------------
9,486,432
------------
HEALTH CARE (DIVERSIFIED)--4.6%
Bristol-Myers Squibb Co................. 49,730 2,871,908
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
HEALTH CARE (DIVERSIFIED)--CONTINUED
Johnson & Johnson....................... 32,620 $ 2,285,439
------------
5,157,347
------------
HEALTH CARE (DRUGS--MAJOR PHARMACEUTICALS)--2.9%
Merck & Co., Inc........................ 51,510 3,200,059
HOUSEHOLD PRODUCTS (NON-DURABLE)--1.9%
Clorox Co. (The)........................ 64,640 2,100,800
MANUFACTURING (DIVERSIFIED)--3.9%
Corning, Inc............................ 22,380 4,341,720
OIL & GAS (DRILLING & EQUIPMENT)--4.3%
Halliburton Co.......................... 116,040 4,757,640
PAPER & FOREST PRODUCTS--1.8%
Champion International Corp............. 37,140 1,977,705
RETAIL (BUILDING SUPPLIES)--3.9%
Lowe's Companies, Inc................... 73,890 4,313,329
RETAIL (GENERAL MERCHANDISE)--2.8%
Wal-Mart Stores, Inc.................... 56,750 3,149,625
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--3.3%
Nextel Communications, Inc. Class
A(b).................................... 24,430 3,621,748
- - --------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $73,395,817) 93,907,946
- - --------------------------------------------------------------------
FOREIGN COMMON STOCKS--10.4%
COMMUNICATIONS EQUIPMENT--6.7%
Nokia Oyj Sponsored ADR (Finland)....... 17,290 3,756,252
Nortel Networks Corp. (Canada).......... 29,570 3,725,820
------------
7,482,072
------------
ELECTRONICS (SEMICONDUCTORS)--3.7%
STMicroelectronics N.V. (Netherlands)... 21,870 4,093,791
- - --------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $5,117,185) 11,575,863
- - --------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--95.0%
(IDENTIFIED COST $78,513,002) 105,483,809
- - --------------------------------------------------------------------
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Growth Fund
<TABLE>
<CAPTION>
PAR
VALUE
(000) VALUE
-------- ------------
SHORT-TERM OBLIGATIONS--5.7%
<S> <C> <C> <C>
REPURCHASE AGREEMENT--5.7%
State Street Bank & Trust Co. repurchase
agreement, 4.25%, dated 3/31/00 due
4/3/00, repurchase price $6,261,217
collateralized by U.S. Treasury Bond
8.875%, 2/15/19, market value
$6,389,142.............................. $ 6,259 $ 6,259,000
- - --------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $6,259,000) 6,259,000
- - --------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL INVESTMENTS--100.7%
(IDENTIFIED COST $84,772,002) 111,742,809(a)
Cash and receivables, less liabilities--(0.7%) (749,859)
------------
NET ASSETS--100.0% $110,992,950
============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $32,151,911 and gross
depreciation of $5,277,892 for federal income tax purposes. At March 31,
2000, the aggregate cost of securities for federal income tax purposes was
$84,868,790.
(b) Non-income producing.
See Notes to Financial Statements
13
<PAGE>
Phoenix-Seneca Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $84,772,002) $111,742,809
Cash 480
Receivables
Fund shares sold 642,197
Dividends and interest 74,959
Deferred organization expenses 8,183
Prepaid expenses 1,320
------------
Total assets 112,469,948
------------
LIABILITIES
Payables
Investment securities purchased 1,022,164
Fund shares repurchased 207,207
Distribution fee 67,750
Investment advisory fee 63,747
Transfer agent fee 19,419
Financial agent fee 7,150
Trustees' fee 4,711
Accrued expenses 84,850
------------
Total liabilities 1,476,998
------------
NET ASSETS $110,992,950
============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 78,959,367
Undistributed net investment loss (166,190)
Accumulated net realized gain 5,228,966
Net unrealized appreciation 26,970,807
------------
NET ASSETS $110,992,950
============
CLASS X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $42,944,854) 1,816,926
Net asset value and offering price per share $23.64
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $48,278,362) 2,087,018
Net asset value per share $23.13
Offering price per share $23.13/(1-4.75%) $24.28
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $10,431,118) 461,021
Net asset value and offering price per share $22.63
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $9,338,616) 413,563
Net asset value and offering price per share $22.58
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 371,890
Interest 87,316
Foreign taxes witheld (2,427)
--------------
Total investment income 456,779
--------------
EXPENSES
Investment advisory fee 317,559
Distribution fee, Class A 47,317
Distribution fee, Class B 36,077
Distribution fee, Class C 29,247
Financial agent fee 56,915
Transfer agent 45,075
Registration 23,024
Printing 22,421
Trustees 11,885
Professional 8,855
Custodian 6,096
Amortization of deferred organization expenses 5,344
Miscellaneous 13,154
--------------
Total expenses 622,969
--------------
NET INVESTMENT LOSS (166,190)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 7,668,326
Net change in unrealized appreciation (depreciation) on
investments 16,164,592
--------------
NET GAIN ON INVESTMENTS 23,832,918
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 23,666,728
==============
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended
3/31/00 Year Ended
(Unaudited) 9/30/99
------------ -----------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (166,190) $ (251,366)
Net realized gain (loss) 7,668,326 7,420,446
Net change in unrealized appreciation
(depreciation) 16,164,592 8,897,166
------------ -----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 23,666,728 16,066,246
------------ -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class X (4,159,508) (2,678,808)
Net realized gains, Class A (3,991,659) (2,257,410)
Net realized gains, Class B (733,816) (125,950)
Net realized gains, Class C (651,429) (32,675)
------------ -----------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (9,536,412) (5,094,843)
------------ -----------
FROM SHARE TRANSACTIONS
CLASS X
Proceeds from sales of shares (81,151
and 191,178 shares, respectively) 1,849,900 3,657,324
Net asset value of shares issued from
reinvestment of distributions
(189,191 and 152,656 shares,
respectively) 4,124,386 2,665,381
Cost of shares repurchased (244,953
and 417,927 shares, respectively) (5,308,182) (7,626,080)
------------ -----------
Total 666,104 (1,303,375)
------------ -----------
CLASS A
Proceeds from sales of shares (738,710
and 713,052 shares, respectively) 16,386,777 12,978,542
Net asset value of shares issued from
reinvestment of distributions
(183,997 and 130,999 shares,
respectively) 3,928,347 2,250,565
Cost of shares repurchased (419,999
and 329,410 shares, respectively) (8,934,125) (5,879,689)
------------ -----------
Total 11,380,999 9,349,418
------------ -----------
CLASS B
Proceeds from sales of shares (232,294
and 209,861 shares, respectively) 5,061,461 3,860,313
Net asset value of shares issued from
reinvestment of distributions
(29,013 and 5,386 shares,
respectively) 607,535 92,053
Cost of shares repurchased (28,183 and
19,389 shares, respectively) (612,860) (368,688)
------------ -----------
Total 5,056,136 3,583,678
------------ -----------
CLASS C
Proceeds from sales of shares (310,354
and 88,996 shares, respectively) 6,688,778 1,633,483
Net asset value of shares issued from
reinvestment of distributions
(27,094 and 1,890 shares,
respectively) 566,265 32,392
Cost of shares repurchased (19,107 and
3,466 shares, respectively) (418,978) (65,089)
------------ -----------
Total 6,836,065 1,600,786
------------ -----------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS 23,939,304 13,230,507
------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS 38,069,620 24,201,910
NET ASSETS
Beginning of period 72,923,330 48,721,420
------------ -----------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
($166,190) AND $0, RESPECTIVELY] $110,992,950 $72,923,330
============ ===========
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Phoenix-Seneca Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS X
--------------------------------------------------------------------
SIX MONTHS FROM
ENDED YEAR ENDED SEPTEMBER 30, INCEPTION
3/31/00 ------------------------------------ 3/8/96 TO
(UNAUDITED) 1999 1998 1997 9/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.92 $ 16.46 $ 16.43 $ 13.74 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.01)(1) (0.04)(1) 0.00(1) 0.03 0.03
Net realized and unrealized gain (loss) 6.27 5.11 1.28 3.50 3.71
------- -------- -------- -------- -------
TOTAL FROM INVESTMENT OPERATIONS 6.26 5.07 1.28 3.53 3.74
------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- (0.02) (0.07) --
Dividends from net realized gains (2.54) (1.61) (1.23) (0.77) --
------- -------- -------- -------- -------
TOTAL DISTRIBUTIONS (2.54) (1.61) (1.25) (0.84) --
------- -------- -------- -------- -------
Change in net asset value 3.72 3.46 0.03 2.69 3.74
------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD $ 23.64 $ 19.92 $ 16.46 $ 16.43 $ 13.74
======= ======== ======== ======== =======
Total return 32.49%(4) 32.19% 8.48% 27.27% 37.40%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $42,945 $35,695 $30,713 $34,093 $12,920
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.06%(3) 1.16% 1.14% 1.52%(5) 0.81%(3)(5)
Net investment income (loss) (0.06)%(3) (0.20)% 0.02% 0.31% 0.76%(3)
Portfolio turnover 53%(4) 169% 166% 145.69% 87.66%(4)
</TABLE>
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------
SIX MONTHS FROM
ENDED YEAR ENDED SEPTEMBER 30, INCEPTION
3/31/00 ------------------------------------ 3/8/96 TO
(UNAUDITED) 1999 1998 1997 9/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.57 $ 16.23 $ 16.28 $ 13.63 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.03)(1) (0.09)(1) (0.06)(1) (0.08) --
Net realized and unrealized gain 6.13 5.04 1.24 3.50 3.63
------- -------- -------- -------- ------
TOTAL FROM INVESTMENT OPERATIONS 6.10 4.95 1.18 3.42 3.63
------- -------- -------- -------- ------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (2.54) (1.61) (1.23) (0.77) --
------- -------- -------- -------- ------
TOTAL DISTRIBUTIONS (2.54) (1.61) (1.23) (0.77) --
------- -------- -------- -------- ------
Change in net asset value 3.56 3.34 (0.05) 2.65 3.63
------- -------- -------- -------- ------
NET ASSET VALUE, END OF PERIOD $ 23.13 $ 19.57 $ 16.23 $ 16.28 $13.63
======= ======== ======== ======== ======
Total return(2) 32.24%(4) 31.89% 7.93% 26.51% 36.30%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $48,278 $31,001 $17,364 $6,013 $466
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.31%(3) 1.44% 1.55% 2.48%(6) 1.46%(3)(6)
Net investment income (loss) (0.30)%(3) (0.49)% (0.36)% (0.62)% 0.16%(3)
Portfolio turnover 53%(4) 169% 166% 145.69% 87.66%(4)
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.52% and
3.49% for the periods ended September 30, 1997 and 1996, respectively.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.63% and
14.01% for the periods ended September 30, 1997 and 1996, respectively.
16
See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------
SIX MONTHS FROM
ENDED YEAR INCEPTION
3/31/00 ENDED 7/1/98 TO
(UNAUDITED) 9/30/99 9/30/98
<S> <C> <C> <C>
Net asset value, beginning of period $ 19.28 $16.19 $18.71
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(1) (0.15) (0.31) (0.04)
Net realized and unrealized gain (loss) 6.04 5.01 (2.48)
------- ------ ------
TOTAL FROM INVESTMENT OPERATIONS 5.89 4.70 (2.52)
------- ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- --
Dividends from net realized gains (2.54) (1.61) --
------- ------ ------
TOTAL DISTRIBUTIONS (2.54) (1.61) --
------- ------ ------
Change in net asset value 3.35 3.09 (2.52)
------- ------ ------
NET ASSET VALUE, END OF PERIOD $ 22.63 $19.28 $16.19
======= ====== ======
Total return(2) 31.60%(4) 30.31% (13.47)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $10,431 $4,395 $519
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.44%(3) 2.60%(5) 2.60%(3)(5)
Net investment income (loss) (1.42)%(3) (1.66)% (1.12)%(3)
Portfolio turnover 53%(4) 169% 166%(4)
</TABLE>
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------
SIX MONTHS FROM
ENDED YEAR INCEPTION
3/31/00 ENDED 7/1/98 TO
(UNAUDITED) 9/30/99 9/30/98
<S> <C> <C> <C>
Net asset value, beginning of period $19.25 $16.18 $18.71
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(1) (0.17) (0.32) (0.06)
Net realized and unrealized gain (loss) 6.04 5.00 (2.47)
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 5.87 4.68 (2.53)
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- --
Dividends from net realized gains (2.54) (1.61) --
------ ------ ------
TOTAL DISTRIBUTIONS (2.54) (1.61) --
------ ------ ------
Change in net asset value 3.33 3.07 (2.53)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $22.58 $19.25 $16.18
====== ====== ======
Total return(2) 31.54%(4) 30.20% (13.52)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $9,339 $1,833 $126
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.55%(3) 2.60%(6) 2.60%(3)(6)
Net investment income (loss) (1.55)%(3) (1.66)% (1.39)%(3)
Portfolio turnover 53%(4) 169% 166%(4)
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 3.46% and
12.48% for the periods ended September 30, 1999 and 1998, respectively.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 5.67% and
20.24% for the periods ended September 30, 1999 and 1998, respectively.
See Notes to Financial Statements
17
<PAGE>
PHOENIX-SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix-Seneca Funds (the "Trust") is organized as a Delaware business
trust and is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company. Shares of the Trust are
divided into four series, each a "Fund" and collectively the "Funds" as follows:
Phoenix-Seneca Bond Fund, Phoenix-Seneca Growth Fund, Phoenix-Seneca Mid-Cap
"EDGE"-SM- Fund and Phoenix-Seneca Real Estate Securities Fund (formerly Seneca
Bond Fund, Seneca Growth Fund, Seneca Mid-Cap "EDGE"-SM- Fund and Seneca Real
Estate Securities Fund, respectively). Each Fund has distinct investment
objectives. Bond Fund seeks to generate a high level of current income and
capital appreciation. Growth Fund seeks to achieve long-term capital
appreciation. Mid-Cap "EDGE"-SM- Fund seeks to achieve long-term capital
appreciation by investing primarily in a diversified portfolio of equity
securities of companies with market capitalizations between $500 million and $5
billion. Real Estate Securities Fund seeks to emphasize capital appreciation and
income equally by investing primarily in marketable securities of
publicly-traded real estate investment trusts (REITS) and companies that invest
in, operate, develop and/or manage real estate located in the United States.
Each Fund offers Class X (formerly Seneca Institutional), Class A (formerly
Seneca Administrative), Class B and Class C shares. Class X shares are sold
without a sales charge. 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 Class A, Class B and Class C shares bear distribution
expenses and have exclusive voting rights with respect to their distribution
plans. Investment income and realized and unrealized gains/losses are allocated
among the classes on the basis of net assets of each class. Expenses that relate
to the distribution of shares or services provided to a particular class are
allocated to that class.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 mean between the most recent high bid and the most recent
low asked quotations. Debt securities are valued on the basis of broker
quotations or valuations provided by a pricing service which utilizes
information with respect to recent sales, market transactions in comparable
securities, quotations from dealers and various relationships between securities
in determining value. Short-term investments having a remaining maturity of 60
days or less are valued at amortized cost which approximates market. All other
securities and assets are valued at their fair value as determined in good faith
by or under the direction of the Trustees.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign securities,
as soon as the Fund is notified. Interest income is recorded on the accrual
basis. The Trust amortizes premiums and discounts using the effective interest
method. Realized gains and losses are determined on the identified cost basis.
C. INCOME TAXES:
Each Fund is treated as a separate taxable entity. It is the policy of each
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 Fund intends to distribute
an amount sufficient to avoid imposition of any excise tax under Section 4982 of
the Code. Therefore, no provision for federal income taxes or excise taxes has
been made.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by each Fund 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, market
discount, organization costs, expiring capital loss carryforwards, foreign
currency gain/loss, partnerships, operating losses 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
30
<PAGE>
PHOENIX-SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED) (CONTINUED)
treated as a gain or loss on foreign currency. The Trust does not separate that
portion of the results of operations arising from changes in exchange rates and
that portion arising from changes in the market prices of securities.
F. FORWARD CURRENCY CONTRACTS:
Each Fund may enter into forward currency contracts in conjunction with the
planned purchase or sale of foreign denominated securities in order to hedge the
U.S. dollar cost or proceeds. Forward currency contracts involve, to varying
degrees, elements of market risk in excess of the amount recognized in the
statement of assets and liabilities. Risks arise from the possible movements in
foreign exchange rates or if the counterparty does not perform under the
contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any 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 and
their customers. The contract is marked-to-market daily and the change in market
value is recorded by each Fund as an unrealized gain (or loss). When the
contract is closed or offset with the same counterparty, the Fund records a
realized gain (or loss) equal to the change in the value of the contract when it
was opened and the value at the time it was closed or offset.
G. OPTIONS:
Each 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.
Each 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.
Each Fund may purchase options which are included in the Funds' 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.
H. ORGANIZATION EXPENSE:
In 1996, the Trust incurred organizational expenses which are amortized on a
straight line basis over a period of sixty months from the commencement of
operations. If any of the initial shares are redeemed before the end of the
amortization period, the proceeds of the redemption will be reduced by the pro
rata share of unamortized organization expenses.
I. EXPENSES:
Trust expenses not directly attributable to a specific Fund are allocated
evenly among all funds. Fund expenses that are not related to the distribution
of shares of a particular class or to services provided specifically to a
particular class are allocated among the classes on the basis of relative
average daily net assets of each class.
J. REPURCHASE AGREEMENTS:
A repurchase agreement is a transaction where a Fund acquires a security for
cash and obtains a simultaneous commitment from the seller to repurchase the
security at an agreed upon price and date. Each Fund, through its custodian,
takes possession of securities collateralizing the repurchase agreement. The
collateral is marked-to-market daily to ensure that the market value of the
underlying assets remains sufficient to protect the Fund in the event of default
by the seller. If the seller defaults and the value of the collateral declines,
or if the seller enters insolvency proceedings, realization of collateral may be
delayed or limited.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
Phoenix Investment Counsel, Inc, ("PIC" or the "Adviser") serves as investment
adviser to the Phoenix-Seneca Funds and Seneca Capital Management LLC ("Seneca"
or the "Subadviser") serves as investment subadviser. All of the outstanding
stock of PIC and a majority of the equity interests of Seneca are owned by
Phoenix Investment Partners Ltd. ("PXP"), an indirect, majority-owned subsidiary
of Phoenix Home Life Mutual Insurance Company ("PHL"). As compensation for
services to the Trust, the adviser receives a fee based upon the following
annual rates as a percentage of the average daily net assets of each Fund:
<TABLE>
<CAPTION>
Adviser
Fee
--------
<S> <C>
Bond Fund.................................... 0.50%
Growth Fund.................................. 0.70%
Mid-Cap "EDGE"-SM- Fund...................... 0.80%
Real Estate Securities Fund.................. 0.85%
</TABLE>
31
<PAGE>
PHOENIX-SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED) (CONTINUED)
The Adviser pays the Subadviser a fee equal to one half of the Adviser fee.
Phoenix Equity Planning Corporation ("PEPCO"), a direct subsidiary of PXP,
serves as Administrator of the Trust. PEPCO receives a financial agent fee equal
to the sum of (1) the documented cost of fund accounting and related services
provided by PFPC Inc. (subagent to PEPCO), plus (2) the documented cost to PEPCO
to provide financial reporting, tax services and oversight of the subagent's
performance. The current fee schedule of PFPC Inc. ranges from 0.085% to 0.0125%
of the average daily net asset values of the Trust. Certain minimum fees and fee
waivers may apply.
The Adviser voluntarily agreed to waive or reimburse each Fund's operating
expenses until January 31, 2001, to the extent that such expenses exceed the
following percentages of average annual net assets:
<TABLE>
<CAPTION>
Class X Class A Class B Class C
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Bond Fund.................. 0.90% 1.15% 1.90% 1.90%
Growth Fund................ 1.25% 1.85% 2.60% 2.60%
Mid-Cap "EDGE"-SM- Fund.... 1.15% 1.40% 2.15% 2.15%
Real Estate Securities
Fund....................... 2.35% 3.05% 3.80% 3.80%
</TABLE>
Prior to January 28, 2000, the Adviser voluntarily agreed to waive or
reimburse the Mid-Cap "EDGE"-SM- Fund's operating expenses until January 31,
2001 to the extent that such expenses exceeded the following percentages of
average annual net assets: 2.10% for Class X, 2.70% for Class A and 3.45% for
Class B and Class C.
PEPCO serves as the national distributor of the Trust's shares and has advised
the Trust that it retained net selling commissions of $24,402 for Class A shares
for the six months ended March 31, 2000. Deferred sales charges retained by
PEPCO for the six months ended March 31, 2000 were $11,423 for Class B shares
and $904 for Class C shares. In addition, each Fund pays PEPCO a distribution
fee at an annual rate of 0.25% for Class A shares and 1.00% for Class B and C
shares applied to the average daily net assets of each Fund. The distributor has
advised the Trust that of the total amount expensed for the six months ended
March 31, 2000, $142,002 was retained by the Distributor, $45,801 was paid out
to unaffiliated Participants and $2,663 was paid to W.S. Griffith, an indirect
subsidiary of PHL.
PEPCO serves as the Trust's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent. For the six months ended March 31, 2000, transfer
agent fees were $160,619 of which PEPCO retained $879 which is net of fees paid
to State Street.
At March 31, 2000, PHL and affiliates held Phoenix-Seneca Fund shares which
aggregated the following:
<TABLE>
<CAPTION>
Aggregate
Net Asset
Shares Value
---------- -----------
<S> <C> <C>
Bond Fund--Class X...................... 1,568,254 $15,619,810
Bond Fund--Class A...................... 10,487 104,031
Bond Fund--Class B...................... 10,389 102,643
Bond Fund--Class C...................... 10,378 102,638
Growth Fund--Class B.................... 929 21,023
Growth Fund--Class C.................... 6,651 150,180
Mid-Cap "EDGE"-SM- Fund--Class B........ 6,646 187,882
Mid-Cap "EDGE"-SM- Fund--Class C........ 6,646 187,816
Real Estate Securities Fund--Class B.... 8,641 82,262
Real Estate Securities Fund--Class C.... 8,641 82,262
</TABLE>
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended March 31, 2000
(excluding U.S. Government and agency securities and short-term securities)
aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
-------------- --------------
<S> <C> <C>
Bond Fund............................... $10,665,819 $ 6,834,358
Growth Fund............................. 58,426,550 46,390,343
Mid-Cap "EDGE"-SM- Fund................. 49,611,673 31,961,408
Real Estate Securities Fund............. 3,700,894 6,922,200
</TABLE>
Purchases and sales of long-term U.S. Government and agency securities during
the year ended March 31, 2000, aggregated $9,055,050 and $9,073,465,
respectively, for the Bond Fund.
4. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a fund's ability to
repatriate such amounts.
32
<PAGE>
PHOENIX-SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED) (CONTINUED)
5. OTHER
As of March 31, 2000, the Funds had shareholders who each individually owned
more than 10% of total net assets, none of whom are affiliated with PHL or PXP
as follows. In addition, affiliate holdings are presented in the table located
within Note 2.
<TABLE>
<CAPTION>
Number of % of Total
Shareholders Net Assets
------------ ----------
<S> <C> <C>
Growth Fund............................. 1 10.5%
Real Estate Securities Fund............. 2 39.7%
</TABLE>
6. CAPITAL LOSS CARRYOVERS
At September 30, 1999, the Real Estate Securities Fund had a capital loss
carryover of $24,701, expiring in 2007, which may be used to offset future
capital gains.
7. SUBSEQUENT EVENT
On April 28, 2000, the Phoenix-Seneca Growth Fund, a series of the Trust, will
hold a special meeting of shareholders to vote on an agreement and plan of
reorganization under which the Phoenix-Seneca Growth Fund will be combined with
the Phoenix-Seneca Equity Opportunities Fund, a series of the Phoenix Strategic
Equity Series Fund.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by an effective Prospectus which includes information
concerning the sales charge, the Trust's record and other pertinent information.
33
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
PART C--OTHER INFORMATION
ITEM 23. EXHIBITS
a.1 Declaration of Trust of the Registrant filed via EDGAR as
Exhibit 1.1 with Post-Effective Amendment No. 26 on August
29, 1997, incorporated herein by reference.
a.2 Amendment to Declaration of Trust of the Registrant creating
additional classes and dual distribution system filed via
EDGAR as Exhibit 1.2 with Post-Effective Amendment No. 25 on
August 20, 1997, incorporated herein by reference.
a.3 Amendment to Declaration of Trust of the Registrant changing
name of the Trust and establishing additional Series of the
Trust filed via EDGAR as Exhibit 1.3 with Post-Effective
Amendment No. 13 on October 16, 1995, incorporated herein by
reference.
a.4 Amendment to Declaration of Trust of the Registrant changing
the name of the Series of the Trust filed via EDGAR as
Exhibit 1.4 with Post-Effective Amendment No. 14 on April 15,
1996, incorporated herein by reference.
a.5 Amendment to Declaration of Trust establishing an additional
Series of the Trust filed via EDGAR as Exhibit 1.5 with
Post-Effective Amendment No. 15 on May 24, 1996, incorporated
herein by reference.
a.6 Amendment to Declaration of Trust creating additional classes
and multi-class distribution system filed via EDGAR as
Exhibit 1.6 with Post-Effective Amendment No. 27 on October
27, 1997, incorporated herein by reference.
a.7* Amendment to Declaration of Trust of the Registrant changing
the name of a series and creating additional classes of that
series filed via EDGAR herewith.
b.1 By-laws of the Registrant filed via EDGAR as Exhibit 2.1 with
Post-Effective Amendment No. 29 on August 28, 1998,
incorporated herein by reference.
c.1 Reference is hereby made to Article VI of Registrant's
Declaration of Trust referenced in Exhibit a above.
d.1 Management Agreement between Registrant and National
Securities & Research Corporation dated January 1, 1994, as
assigned to Phoenix Investment Counsel Inc. effective June 1,
1998, filed via EDGAR as Exhibit 5.1 with Post-Effective
Amendment No. 25 on August 20, 1997, incorporated herein by
reference.
d.2 Investment Advisory between Registrant and Phoenix Investment
Counsel, Inc. dated October 16, 1995, filed via EDGAR as
Exhibit 5.2 with Post-Effective Amendment No. 13 on October
16, 1995, incorporated herein by reference.
d.3 First Amendment to Phoenix Strategic Equity Series Fund
Management Agreement between Registrant and National
Securities Research Corporation dated January 1, 1994, as
assigned to Phoenix Investment Counsel, Inc. effective June
1, 1998, filed via EDGAR as Exhibit 5.3 with Post-Effective
Amendment No. 25 on August 20, 1997, incorporated herein by
reference.
d.4 Second Amendment to Phoenix Strategic Equity Series Fund
Management Agreement between Registrant and National
Securities and Research Corporation dated October 16, 1995,
as assigned to Phoenix Investment Counsel, Inc. effective
June 1, 1998, filed via EDGAR as Exhibit 5.4 with
Post-Effective Amendment No. 25 on August 20, 1997,
incorporated herein by reference.
d.5 Subadvisory Agreement between Phoenix Investment Counsel,
Inc. and Seneca Capital Management LLC, dated June 26, 1998,
on behalf of Growth Fund filed via EDGAR as Exhibit 5.5 with
Post-Effective Amendment No. 29 on August 28, 1998,
incorporated herein by reference.
d.6 Subadvisory Agreement between Phoenix Investment Counsel,
Inc. and Roger Engemann & Associates, Inc., dated June 26,
1998, on behalf of Small Cap Fund filed via EDGAR as Exhibit
5.6 with Post-Effective Amendment No. 29 on August 28, 1998,
incorporated herein by reference.
d.7* Subadvisory Agreement between Phoenix Investment Counsel,
Inc. and Seneca Capital Management LLC dated August 6, 1999,
on behalf of Strategic Theme Fund filed via EDGAR herewith.
e.1 Underwriting Agreement between Registrant and Phoenix Equity
Planning Corporation ("Equity Planning") dated November 19,
1997, filed via EDGAR as Exhibit 6.1 with Post-Effective
Amendment No. 28 on February 13, 1998, and incorporated
herein by reference.
e.2 Form of Sales Agreement between Phoenix Equity Planning
Corporation and dealers filed via EDGAR as Exhibit 6.2 with
Post-Effective Amendment No. 29 on August 28, 1998,
incorporated herein by reference.
C-1
<PAGE>
e.3 Form of Supplement to Phoenix Family of Funds Sales Agreement
filed via EDGAR as Exhibit 6.3 with Post-Effective Amendment
No. 29 on August 28, 1998, incorporated herein by reference.
e.4 Form of Financial Institution Sales Contract for the Phoenix
Family of Funds filed via EDGAR as Exhibit 6.4 with
Post-Effective Amendment No. 29 on August 28, 1998,
incorporated herein by reference.
f. None.
g. Custodian Contract between Registrant and State Street Bank
and Trust Company dated May 1, 1997, filed via EDGAR as
Exhibit 8 with Post-Effective Amendment No. 27 on October 27,
1997, incorporated herein by reference.
h.1 Transfer Agency and Service Agreement between Registrant and
Equity Planning dated June 1, 1994, filed via EDGAR as
Exhibit 9.1 with Post-Effective Amendment No. 25 on August
20, 1997, incorporated herein by reference.
h.2 Sub-Transfer Agency Agreement between Registrant and Phoenix
Equity Planning Corporation dated June 1, 1994, filed via
EDGAR as Exhibit 9.2 with Post-Effective Amendment No. 29 on
August 28, 1998, incorporated herein by reference.
h.3 Amended and Restated Financial Agent Agreement between
Registrant and Equity Planning dated November 19, 1997 filed
via EDGAR as Exhibit 9.3 with Post-Effective Amendment No. 28
on February 13, 1998, incorporated herein by reference.
h.4 First Amendment to Financial Agent Agreement between
Registrant and Phoenix Equity Planning Corporation dated
March 23, 1998, filed via EDGAR as Exhibit 9.4 with
Post-Effective Amendment No. 29 on August 28, 1998,
incorporated herein by reference.
h.5 Second Amendment to Financial Agent Agreement between
Registrant and Phoenix Equity Planning Corporation dated July
31, 1998, filed via EDGAR as Exhibit 9.5 with Post-Effective
Amendment No. 29 on August 28, 1998, incorporated herein by
reference.
i. Opinion as to legality of the shares filed via EDGAR with
Post-Effective Amendment No. 31 on August 27, 1999,
incorporated herein by reference.
j.* Consent of Independent Accountants filed via EDGAR herewith.
k. Not applicable.
l. None.
m.1 Amended and Restated Distribution Plan for Class A Shares
filed via EDGAR as Exhibit 15.1 with Post-Effective Amendment
No. 27 on October 27, 1997, incorporated herein by reference.
m.2* Amended and Restated Distribution Plan for Class B Shares
filed via EDGAR herewith.
m.3 Amended and Restated Distribution Plan for Class C Shares
filed via EDGAR as Exhibit 15.3 with Post-Effective Amendment
No. 27 on October 27, 1997, incorporated herein by reference.
n. Financial Data Schedules.
o.1* Amended and Restated Rule 18f-3 Multi-Class Distribution Plan
effective May 1, 1999 filed via EDGAR herewith.
o.2* First Amendment to Amended and Restated Plan Pursuant to Rule
18f-3, effective February 24, 2000, filed via EDGAR herewith.
p. Codes of Ethics of the Fund, its Adviser, Subadvisers and
Distributor.
q. Powers of Attorney filed via EDGAR as Exhibit p. with
Post-Effective Amendment No. 30 on June 28, 1999,
incorporated herein by reference.
- -------------------
*Filed herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
No person is controlled by, or under common control, with the Fund.
C-2
<PAGE>
ITEM 25. 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 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Management of the Fund" in the Prospectus and "Services of the Advisers"
and "Management of the Trust" 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 27. PRINCIPAL UNDERWRITER
(a) Equity Planning also serves as the principal underwriter for the
following other investment companies:
Phoenix-Aberdeen Series Fund, Phoenix-Aberdeen Worldwide Opportunities
Fund, Phoenix Duff & Phelps Institutional Mutual Funds, Phoenix-Engemann
Funds, Phoenix Equity Series Fund, Phoenix-Euclid Funds, Phoenix-Goodwin
California Tax Exempt Bonds, Inc., Phoenix-Goodwin Multi-Sector Fixed
Income Fund, Inc., Phoenix-Goodwin Multi-Sector Short Term Bond Fund,
Phoenix Investment Trust 97, Phoenix Multi-Portfolio Fund,
Phoenix-Oakhurst Income & Growth Fund, Phoenix-Oakhurst Strategic
Allocation Fund, Inc., Phoenix-Seneca Funds, Phoenix Series Fund,
Phoenix Strategic Equity Series Fund, Phoenix-Zweig Trust, Phoenix Home
Life Variable Universal Life Account, Phoenix Home Life Variable
Accumulation Account, PHL Variable Accumulation Account, Phoenix Life
and Annuity Variable Universal Life Account and PHL Variable Separate
Account MVA1.
(b) Directors and executive officers of Phoenix Equity Planning Corporation
are as follows:
<TABLE>
<CAPTION>
NAME AND POSITIONS AND OFFICES POSITIONS AND OFFICES
PRINCIPAL ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
- ----------------- ---------------- ---------------
<S> <C> <C>
Michael E. Haylon Director Executive Vice President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and Chairman Trustee and President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Executive Vice President, Vice President
100 Bright Meadow Blvd. Chief Financial Officer and Treasurer
P.O. Box 2200
Enfield, CT 06083-2200
John F. Sharry President, Executive Vice President
100 Bright Meadow Blvd. Retail Division
P.O. Box 2200
Enfield, CT 06083-2200
Barry Mandinach Executive Vice President, None
900 Third Avenue Chief Marketing Officer,
New York, NY 10022 Retail Division
Robert Tousingnant Executive Vice President, None
100 Bright Meadow Blvd. Chief Sales Officers,
P.O. Box 2200 Retail Division
Enfield, CT 06083-2200
G. Jeffrey Bohne Vice President, Secretary
101 Munson St. Mutual Fund
P.O. Box 2200 Retail Division
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITIONS AND OFFICES POSITIONS AND OFFICES
PRINCIPAL ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
- ----------------- ---------------- ---------------
<S> <C> <C>
Robert S. Dreissen Vice President, Compliance Vice President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
Jacqueline Porter Assistant Vice President Assistant Treasurer
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an
affiliated person of the Registrant or an affiliated person of such
affiliated person, directly or indirectly, from the Registrant during
the Registrant's last fiscal year.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Persons maintaining physical possession of accounts, books and other
documents required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder include 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 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
Not applicable.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment Company
Act, the Fund duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, duly authorized, in the City of
Hartford, and State of Connecticut on the 11th day of May, 2000.
PHOENIX STRATEGIC EQUITY SERIES FUND
ATTEST:/s/Pamela S. Sinofsky BY:/s/Philip R. McLoughli
-------------------------- ----------------------------
Pamela S. Sinofsky Philip R. McLoughlin
Assistant Secretary President
Pursuant to the requirements of the Securities Act, this amendment to the
registration statement has been signed below by the following persons in the
capacities indicated, on this 11th day of May, 2000.
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
Exhibit a.7
PHOENIX STRATEGIC EQUITY SERIES FUND
CERTIFICATE OF AMENDMENT TO DECLARATION OF TRUST
AND FURTHER ESTABLISHMENT
AND DESIGNATION OF SERIES AND CLASSES
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
CERTIFICATE OF AMENDMENT TO DECLARATION OF TRUST
AND FURTHER ESTABLISHMENT
AND DESIGNATION OF SERIES AND CLASSES
The undersigned, individually as Trustee of Phoenix Strategic Equity Series
Fund, a Massachusetts business trust (the "Trust") under a Declaration of Trust
dated June 25, 1986, as amended from time to time (the "Declaration"), and as
attorney-in-fact for each of the other Trustees of the Trust pursuant to a
certain Delegation and Power of Attorney dated August 27, 1999, executed by each
of such Trustees, a copy of which is attached hereto, hereby certifies that at a
duly held meeting of the Board of Trustees of the Trust , at which a quorum was
present, the Board of Trustees acting pursuant to Article 1 Section 1.1 and
Article VI Section 6.9 of said Declaration for the purpose of changing the name
of the "Phoenix Equity Opportunities Fund"; hereby consent to the following
action effective on May 12, 2000:
1. Without in any manner limiting the authority of the Trustees to establish
and designate any further Series, the Trustees hereby divide the Shares of
the Trust into three Series and designate those Series as the
"Phoenix-Engemann Small Cap Fund", "Phoenix-Seneca Strategic Theme Fund",
and "Phoenix-Seneca Growth Fund".
IN WITNESS WHEREOF, I have hereunto set my hand this 20 day of April, 2000.
/s/ Philip R. McLoughlin
------------------------
Philip R. McLoughlin, individually and as
attorney-in-fact for Robert Chesek, E. Virgil
Conway, Harry Dalzell-Payne, Francis E.
Jefferies, Leroy Keith, Jr., Everett L. Morris,
James M. Oates, Calvin J. Pedersen, Richard E.
Segerson, and Lowell P. Weicker, Jr.
<PAGE>
DELEGATION AND POWER OF ATTORNEY
PHOENIX-ABERDEEN SERIES FUND
THE PHOENIX EDGE SERIES FUND
PHOENIX EQUITY SERIES FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX INVESTMENT TRUST 97
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
The undersigned, being all of the Trustees of Phoenix-Aberdeen Series, The
Phoenix Edge Series Fund, Phoenix Equity Series Fund, Phoenix Income and Growth
Fund, Phoenix Investment Trust 97, Phoenix Multi-Portfolio Fund, Phoenix
Multi-Sector Short Term Bond Fund, Phoenix Series Fund, Phoenix Strategic Equity
Series Fund, and Phoenix Worldwide Opportunities Fund (sometimes hereafter
collectively the "Funds"), other than Philip R. McLoughlin, do hereby declare,
delegate and certify as follows:
1. Pursuant to Section 2.2 of that certain Declaration of Trust dated
August 25, 1997 establishing Phoenix Investment Trust 97, pursuant
to Section 2.2 of that certain Agreement and Declaration of Trust
dated May 30, 1997, establishing Phoenix Equity Series Fund.
Pursuant to Section 2.2 of that certain Agreement and Declaration
of Trust dated May 31, 1996, as amended, establishing
Phoenix-Aberdeen Series Fund, pursuant to Section 2.2 of that
certain Agreement and Declaration of Trust dated February 18, 1986,
as amended, establishing The Big Edge Series Fund, now know as the
Phoenix Edge Series Fund, pursuant to Section 2.2 of that certain
Declaration of Trust of Phoenix-Chase Series Fund, as amended and
restated July 28, 1980, as further amended, now know as Phoenix
Series Fund, and Section 2.2 of that certain Agreement and
Declaration of Trust dated October 15, 1987, as amended,
establishing the Phoenix Multi-Portfolio Fund, the undersigned, and
each of them, hereby appoints PHILIP R. MCLOUGHLIN, his agent and
attorney-in-fact for a period of one (1) year from the date hereof,
to execute any and all instruments including specifically but
without limitation amendments of either of said trust instruments
and appointments of trustee(s), provided that such action as
evidenced by such instrument shall have been adopted by requisite
vote of the Trustees and, where necessary, the Shareholders of such
funds, such vote or votes to be conclusively presumed by the
execution of such instrument by such attorney-in-fact.
2. Pursuant to Section 3.6 of that certain Declaration of Trust dated
June 25, 1986, as amended, establishing National Total Income Fund,
now know as Phoenix Income and Growth Fund, pursuant to Section 3.6
of that certain
<PAGE>
DELEGATION AND POWER OF ATTORNEY
August 25, 1999
Declaration of Trust dated June 25, 1986, as amended, establishing
National Stock Fund, now known as Phoenix Strategic Equity Series
Fund, and pursuant to Section 2.5 of that certain Declaration of
Trust dated February 20, 1992, as amended, establishing National
Short-Term Income Series, now know as Phoenix Multi-Sector Short
Term Bond Fund, and pursuant to Section 2.5 of that certain
Declaration of Trust of National Worldwide Opportunities Fund dated
November 4, 1991, as amended, now know as Phoenix Worldwide
Opportunities Fund, the undersigned, and each of them, hereby
delegates to and appoints PHILIP R. MCLOUGHLIN, his agent and
attorney-in-fact for a period of one (1) year from the date hereof,
to execute any and all instruments, including specifically but
without limitation amendments of each and every said trust
instrument and appointments of trustee(s), provided that such
action as evidenced by such instrument shall have been adopted by
requisite vote of the Trustees and, where necessary, the
Shareholders of such funds, such vote or votes to be conclusively
presumed by the execution of such instrument by such
attorney-in-fact.
3. The undersigned Trustees, and each of them, hereby further declare
that a photostatic, xerographic or other similar copy of this
original instrument shall be as effective as the original, and
that, as to any such amendment of any of the aforementioned trust
agreements or declarations, such copy shall be filed with such
instrument of amendment in the records of the Office of the
Secretary of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, we have hereunto subscribed this Delegation and Power of
Attorney this 25th day of August 1999.
/s/ Robert Chesek /s/ James M. Oates
- ----------------------- -------------------------
Robert Chesek James M. Oates
/s/ E. Virgil Conway /s/ Calvin J. Pedersen
- ----------------------- -------------------------
E. Virgil Conway Calvin J. Pedersen
/s/ Harry Dalzell-Payne
- ----------------------- -------------------------
Harry Dalzell-Payne Hebert Roth, Jr.
/s/ Francis E. Jeffries /s/ Richard E. Segerson
- ----------------------- -------------------------
Francis E. Jeffries Richard E. Segerson
/s/ Leroy Keith, Jr. /s/ Lowell P. Weicker, Jr.
- ----------------------- -------------------------
Leroy Keith, Jr. Lowell P. Weicker, Jr.
/s/ Everett L. Morris
- -----------------------
Everett L. Morris
Exhibit d.7
PHOENIX STRATEGIC EQUITY SERIES FUND
SUBADVISORY AGREEMENT
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
SUBADVISORY AGREEMENT
August 6, 1999
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 Strategic Theme Fund (hereafter referred to as the
"Fund").
Phoenix Investment Counsel, Inc. (the "Adviser") evaluates and recommends series
advisers for the Trust and is responsible for the day-to-day management of the
Fund.
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 Fund 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
Fund 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 Fund, the Subadviser shall be
subject to the investment objectives, policies and restrictions of the
Trust as they apply to the Fund 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 Fund 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 Fund's 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 Fund 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 Fund. 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 Fund 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 Fund 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 Fund 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
2
<PAGE>
the direct or exclusive 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 Fund. 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 Fund
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 Fund 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 Fund 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 December 31, 1999, 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, and by the majority vote of the
disinterested Trustees in accordance with the requirements of Section
15(c) thereof.
4
<PAGE>
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 J. Westhoff
----------------------------
Sandra J. Westhoff
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 Fund
assets, the Subadviser shall provide, at its own expense:
(a) An investment program for the Fund 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 Fund 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 Fund assets in accordance with the
then-prevailing prospectus and statement of additional
information pertaining to the Fund 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 Fund 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 Fund investment program, including,
without limitation, analysis of Fund 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
Fund, 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 0.10% of the average daily net
assets of the Phoenix Strategic Theme Fund up to $201 million, 0.375% of such
value between $201 million and $1 billion, 0.350% 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 Fund 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.
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Exhibit j
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. 39 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated June 11, 1999, relating to the financial
statements and financial highlights appearing in the April 30, 1999 Annual
Report to Shareholders of the Phoenix Small Cap Fund, the Phoenix Strategic
Theme Fund and the Phoenix Equity Opportunities Fund (constituting separate
series of the Phoenix Strategic Equity Series Fund), and of our report dated
November 16,1999, relating to the financial statements and financial highlights
appearing in the September 30, 1999 Annual Report to Shareholders of the
Phoenix-Seneca Funds, which are also incorporated by reference into the
Registration Statement. We also consent to the reference to us under the heading
"Financial Highlights" in the Prospectus and under the heading "Additional
Information - Independent Accountants" in the Statement of Additional
Information.
PricewaterhouseCoopers LLP
Boston, Massachusetts
May 8, 2000
Exhibit m.2
PHOENIX STRATEGIC EQUITY SERIES FUND
(the "Fund")
CLASS B SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
(the "Fund")
CLASS B SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have entered
into a Distribution Agreement pursuant to which the Distributor will act as
principal underwriter of each class of shares of the Fund for sale to the
permissible purchasers. The Trustees of the Fund have determined to adopt this
Distribution Plan (the "Plan"), in accordance with the requirements of Section
12b-1 of the Investment Company Act of 1940, as amended (the "Act") with respect
to Class B shares of the Fund and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its Class B shareholders.
2. Rule 12b-1 Fees
---------------
The Fund shall reimburse the Distributor, at the end of each month, up
to a maximum on an annual basis of 0.75% of the average daily value of the net
assets of the Fund's Class B shares, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc., for
distribution expenditures incurred by Distributor subsequent to the
effectiveness of this Plan, in connection with the sale and promotion of the
Class B shares of the Fund and the furnishing of services to Class B
shareholders of the Fund (the "Distribution Fee"). Such expenditures shall
consist of: (i) commissions to sales personnel for selling Class B shares of the
Fund (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 selling agreements with the
Distributor for services rendered in connection with the sale and distribution
of Class B shares of the Fund; (iv) payment of expenses incurred in sales and
promotional activities, including advertising expenditures related to the Class
B shares of the Fund; (v) the costs of preparing and distributing promotional
materials; (vi) the cost of printing the Fund's Prospectus and Statement of
Additional Information for distribution to potential investors; and (vii) such
other similar services that the Trustees of the Fund determine are reasonably
calculated to result in the sale of Class B shares of the Fund. The Fund shall
also pay the Distributor, at the end of each month, an amount on an annual basis
equal to 0.25% of the average daily value of the net assets of the Fund's Class
B shares, as compensation for providing personal service to shareholders,
including assistance in connection with inquiries relating to shareholder
accounts, and for maintaining shareholder accounts (the "Service Fee").
<PAGE>
Any reduction to amounts payable under this Plan shall first be to the
extent of the Service Fee, and then from the balance of the 12b-1 Fee.
Amounts paid or payable by the Fund under this Plan or any agreement
with any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
Any Distribution Agreement in respect of Class B shares may provide
that (I) the Distributor in respect of such Distribution Agreement will be
deemed to have fully earned its Allocable Portion (as hereinafter defined) of
the Distribution Fee in respect of Class B shares of such series upon the sale
of each "Initial Issue Commission Share" (as hereinafter defined) of such series
taken into account in determining the Distributor's Allocable Portion of such
Distribution Fee; (II) except as provided in (III) below, the Fund's obligation
to pay such Distributor its Allocable Portion of the Distribution Fee payable in
respect of the Class B shares of the Fund shall be absolute and unconditional
and shall not be subject to dispute, offset, counterclaim or any defense
whatsoever (it being understood that such provision is not a waiver of the
Fund's right to pursue the Distributor and enforce such claims against the
assets of the Distributor other than its right to the Distribution Fees in
respect of the Class B shares of the Fund); (III) the Fund's obligation to pay
the Distributor its Allocable Portion of the Distribution Fee in respect to
Class B shares of the Fund shall not be terminated or modified except to the
extent required by a change in the Act or the Rules of Conduct enacted or
promulgated after November 17, 1999 (a "Change-in-Applicable-Law"), or in
connection with a Complete Termination (as hereinafter defined) of this Plan in
respect of the Class B shares of such series: (IV) the Trust will not waive or
change any CDSC in respect of the Class B shares of such series, except as
provided in the Trust's Prospectus or statement of additional information
without the consent of the Distributor (or its assigns); (V) except to the
extent required by a Change-in-Applicable-Law, neither the termination of such
Distributor's role as distributor of the Class B shares of such series, nor the
termination of such Distribution Agreement nor the termination of this Plan will
terminate such Distributor's right to its Allocable Portion of the CDSC's in
respect of Class B shares of such series sold prior to such termination; (VI)
except as provided in the Trust's Prospectus and statement of additional
information, until such Distributor has been paid its Allocable Portion of the
Distribution Fee in respect of the Class B shares of such series, the Trust will
not adopt a plan of liquidation in respect of such series without the consent of
such Distributor (or its assigns); and (VII) such Distributor may sell and
assign its right to its Allocable Portion of the Distribution Fees and CDSCs
(but not such Distributor's obligations to the Trust under the Distribution
Agreement) to raise funds to make the expenditures related to the distribution
of Class B shares of such series and in connection therewith, upon receipt of
notice of such sale and assignment, the Trust shall pay to the purchaser or
assignee such portion
<PAGE>
of the Distributor's Allocable Portion of the Distribution Fees in respect of
the Class B shares of such series so sold or assigned.
For purposes of this Plan, the term "Allocable Portion" means, in respect of
Distribution Fees payable in respect of the Class B shares of any series as
applied to any Distributor, the portion of such Distribution Fees and CDSCs
allocated to such Distributor in accordance with the Allocation Schedule (as
hereinafter defined). For purposes of this Plan, the term "Complete Termination"
of this Plan means, in respect of any series, a termination of this Plan
involving the cessation of payments of Distribution Fees hereunder in respect of
Class B shares of such series and the cessation of payments of distribution fees
pursuant to every other rule 12b-1 plan of the Trust in respect of such series
for every future class of shares which, in the good faith determination of the
Board of Trustees of the Trust, has substantially similar economic
characteristics to the Class B shares taking into account the total sales
charge, contingent deferred sales charge and other similar charges, it being
understood that the existing Class A shares and existing Class C shares do not
have substantially similar economic characteristics to the Class B shares. For
purposes of this Plan, the term "Allocation Schedule" means, in respect of the
Class B shares of any series, a schedule which shall be approved in the same
manner as this Plan as contemplated by Section 4 hereof for assigning to each
Distributor of Class B shares of such series the portion of the total
Distribution Fees payable by the Trust in respect of the Class B shares of such
series which has been earned by such Distributor, which shall be attached to and
become a part of any Distribution Agreement in respect of Class B shares
provided that where there is only one Distributor at any given time, the
Allocation Schedule shall mean all of the total Distribution Fees payable by the
Trust in respect of the Class B shares of such series which has been earned by
such Distributor. For purposes of clause (I) of the first sentence of this
Section 2, the term "Initial Issue Commission Share" shall mean, in respect of
any series, a Class B share which is a Commission Share issued by such series
under circumstances other than in connection with a permitted free exchange with
another fund. For purposes of the foregoing definition, a "Commission Share"
shall mean, in respect of any series, each Class B share of such series which is
issued under circumstances which would normally give rise to an obligation of
the holder of such Class B share to pay a CDSC upon redemption of such share,
including, without limitation, any Class B share of such Fund issued in
connection with a permitted free exchange, and any such Class B share shall not
cease to be a Commission Share prior to the redemption (including a redemption
in connection with a permitted free exchange) or conversion even though the
obligation to pay the CDSC shall have expired or conditions for thereof still
exist.
3. Reports
-------
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare and
furnish to the Trustees of the Fund for their review, and the Trustees shall
review, a written report complying with the requirements of Rule 12b-l under the
Act regarding the amounts expended under this Plan and the purposes for which
such expenditures were made.
<PAGE>
4. Required Approval
-----------------
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of this Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or any related agreement and this
Plan shall not take effect with respect to the Fund until it has been approved
by a vote of at least a majority of the outstanding voting Class B shares (as
such phrase is defined in the Act).
5. Term
----
This Plan shall remain in effect for one year from the date of its
adoption and may be continued thereafter if specifically approved at least
annually by a vote of at least a majority of the Trustees of the Fund as well as
a majority of the Disinterested Trustees. This Plan may be amended at any time,
provided that (a) the Plan may not be amended to increase materially the amount
of the distribution expenses provided in Paragraph 2 hereof (including the
Service Fee) without the approval of at least a majority of the outstanding
voting securities (as defined in the Act) of the Class B shares of the Fund and
(b) all material amendments to this Plan must be approved by a majority vote of
the Trustees of the Fund and of the Disinterested Trustees cast in person at a
meeting called for the purpose of such vote.
<PAGE>
6. Selection of Disinterested Trustees
-----------------------------------
While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
------------------
Any related agreement shall be in writing and shall provide that (a)
such agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class B shares of the Fund on not more than 60 days' written notice to the other
party to the agreement and (b) such agreement shall terminate automatically in
the event of its assignment.
8. Termination
-----------
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class B shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
9. Records
-------
The Fund shall preserve copies of this Plan and any related agreements
and all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
10. Non-Recourse
------------
The Fund's Declaration of Trust dated June 25,1986, a copy of which,
together with the amendments thereto ("Declaration"), is on file in the office
of the Secretary of the Commonwealth of Massachusetts, refers to the Trustees
under the Declaration of Trust collectively as Trustees, but not as individuals
or personally, and no Trustee, shareholder, officer, employee or agent of the
Fund may be held to any personal liability, nor may any resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Fund but the Fund property only shall be
liable.
[Adopted at a duly held meeting of the Board of Trustees on November 17,1999]
Exhibit o.1
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
<PAGE>
PHOENIX FUNDS
(the "Funds")
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended ("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the original effective date of this Plan, the Funds shall offer
multiple classes of shares, as described herein, pursuant to Rule 18f-3 and this
Plan.
2. The Multi-Class Structure
-------------------------
Each of the portfolios of the Funds (each a "Multi-Class Portfolio" and
collectively the "Multi-Class Portfolios") listed on Schedule A hereto shall
offer up to three classes of shares as indicated on Schedule A: Class A, Class
B, and Class C Shares of the Multi-Class Portfolios shall represent an equal pro
rata interest in the respective Multi-Class Portfolio and, generally, shall have
identical voting, dividend, liquidation, and other rights, preferences, powers,
restrictions, limitations, qualifications and terms and conditions, except that:
(a) each class shall have a different designation; (b) each class shall bear any
Class Expenses, as defined by Section 2(b), below; (c) each class shall have
exclusive voting rights on any matter submitted to shareholders that relates
solely to its distribution arrangement; and (d) each class shall have separate
voting rights on any matter submitted to shareholders in which the interests of
one class differ from the interests of any other class. In addition, Class A,
Class B, and Class C shares shall have the features described in Sections a, b,
c and d, below.
a. Distribution Plans
------------------
The Funds have adopted Distribution Plans pursuant to Rule 12b-1 with
respect to each Multi-Class Portfolio containing substantially the following
terms:
i. Class A shares of each Multi-Class Portfolio shall
reimburse Phoenix Equity Planning Corporation (the "Distributor") for costs and
expenses incurred in connection with distribution and marketing of shares
thereof, as provided in the Class A Distribution Plan and any supplements
thereto, subject to an annual limit of 0.25% of the average daily net assets of
a Multi-Class Portfolio's Class A shares.
<PAGE>
ii. Class B shares of each Multi-Class Portfolio shall
reimburse the Distributor for costs and expenses incurred in connection with
distribution and marketing of shares thereof, as provided in the Class B
Distribution Plan and any supplements thereto, subject to an annual limit of
1.00% of the average daily net assets of a Multi-Class Portfolio's Class B
shares.
iii. Class C shares of each Multi-Class Portfolio shall
reimburse the Distributor for costs and expenses incurred in connection with
distribution and marketing of shares thereof, as provided in the Class C
Distribution Plan and any supplements thereto, subject to an annual limit of
1.00%, or in some cases 0.50%, of the average daily net assets of a Multi-Class
Portfolio's Class C shares.
b. Allocation of Income and Expenses
i. General.
--------
The gross income, realized and unrealized capital gains and
losses and expenses (other than Class Expenses, as defined below) of each
Multi-Class Portfolio shall be allocated to each class on the basis of its net
asset value relative to the net asset value of the Multi-Class Portfolio.
Expenses to be so allocated include expenses of the Funds that are not
attributable to a particular Multi-Class Portfolio or class of a Multi-Class
Portfolio but are allocated to a Multi- Class Portfolio ("Fund Expenses") and
expenses of a particular Multi-Class Portfolio that are not attributable to a
particular class of that Multi-Class Portfolio ("Portfolio Expenses"). Fund
Expenses include, but are not limited to, trustees' fees, insurance costs and
certain legal fees. Portfolio Expenses include, but are not limited to, certain
state registration fees, custodial fees, advisory fees and other expenses
relating to the management of the Multi-Class Portfolio's assets.
ii. Class Expenses.
---------------
Expenses attributable to a particular class ("Class Expenses")
shall be limited to: (1) transfer agency fees; (2) stationery, printing,
postage, and delivery expenses relating to preparing and distributing
shareholder reports, prospectuses, and proxy statements; (3) state Blue Sky
registration fees; (4) SEC registration fees; (5) expenses of administrative
personnel and services to the extent related to another category of
class-specific expenses; (6) trustees' fees and expenses; (7) accounting
expenses, auditors' fees, litigation expenses, and legal fees and expenses; and
(8) expenses incurred in connection with shareholder meetings. Expenses
described in subsection (a) (i),(ii) and (iii) above of this paragraph (12b-1
Expenses) must be allocated to the class for which they are incurred. All other
expenses described in this paragraph will be allocated as Class Expenses, if a
Fund's President and Treasurer have determined, subject to Board approval or
ratification, which of such categories of expenses will be treated as Class
Expenses, consistent with applicable legal principles under the 1940 Act and the
Internal Revenue Code of 1986, as amended ("Code"). The difference between the
Class Expenses (other than 12b-1 Expenses) allocated to each share of a class
during a year and the Class Expenses allocated to each share of any other class
during such year shall at all times be less than .50% of the average daily net
asset value of the class of shares with the smallest average net asset value.
2
<PAGE>
The afore-described description of Class Expenses and any amendment thereto
shall be subject to the continuing availability of an opinion of counsel or a
ruling from the Internal Revenue Service to the effect that any such allocation
of expenses or the assessment of higher distribution fees and transfer agency
costs on any class of shares does not result in any dividends or distributions
constituting "preferential dividends" under the Code.
In the event that a particular expense is no longer reasonably
allocable by class or to a particular class, it shall be treated as a Fund
Expense or Portfolio Expense as applicable, and in the event a Fund Expense or
Portfolio Expense becomes allocable as a Class Expense, it shall be so
allocated, subject to compliance with Rule 18f-3 and Board approval or
ratification.
The initial determination of expenses that will be allocated
as Class Expenses and any subsequent changes thereto as set forth in this Plan
shall be reviewed by the Board of Trustees and approved by such Board and by a
majority of the Trustees who are not "interested persons" of the Fund, as
defined in the 1940 Act ("Independent Trustees").
iii. Waivers or Reimbursements of Expenses.
--------------------------------------
Investment Advisor may waive or reimburse its management fee
in whole or in part provided that the fee is waived or reimbursed to all shares
of the Fund in proportion to the relative average daily net asset values.
Investment Advisor or a related entity who charges a fee for a
Class Expense may waive or reimburse that fee in whole or in part only if the
revised fee more accurately reflects the relative cost of providing to each
Multi-Class Portfolio the service for which the Class Expense is charged.
Distributor may waive or reimburse a Rule 12b- 1 Plan fee
payment in whole or in part.
c. Exchange Privileges
-------------------
Shareholders of a Multi-Class Portfolio may exchange shares of a
particular class for shares of the same class in another Multi-Class Portfolio,
or in another portfolio of an open-end investment company managed by the
Investment Advisor or an affiliate of the Investment Advisor that permits
corresponding exchanges, at the relative net asset values of the respective
shares to be exchanged and with no sales charge, provided the shares to be
acquired in the exchange are, as may be necessary, qualified for sale in the
shareholder's state of residence and subject to the applicable requirements, if
any, as to minimum amount. Each Multi-Class
3
<PAGE>
Portfolio reserves the right to temporarily or permanently terminate exchange
privileges, impose conditions upon the exercise of exchange privileges, or
reject any specific order for any dealer, shareholder or person whose
transactions seem to follow a timing pattern, including those who request more
than one exchange out of a Multi-Class Portfolio within any thirty (30) day
period. Each Multi-Class Portfolio reserves the right to terminate or modify
these exchange privileges at any time upon giving prominent notice to
shareholders at least 60 days in advance.
d. Conversion Feature
------------------
Class B Shares of a Multi-Class Portfolio will automatically convert to
Class A Shares of that portfolio, without sales charge, at the relative net
asset values of each such classes, not later than eight years from the
acquisition of the Class B Shares. The conversion of Class B Shares to Class A
Shares is subject to the continuing availability of an opinion of counsel or a
ruling from the Internal Revenue Service to the effect that the conversion of
shares does not constitute a taxable event under federal income tax law.
3. Board Review
------------
a. Approval of Amended and Restated Plan
-------------------------------------
The Board of Trustees, including a majority of the Independent
Trustees, at a meeting held on November 17,1999 approved the Amended and
Restated Plan based on a determination that the Plan, including the expense
allocation, is in the best interests of each class and Multi-Class Portfolio
individually and of the Funds. Their determination was based on their review of
information furnished to them which they deemed reasonably necessary and
sufficient to evaluate the Plan.
b. Approval of Amendments
----------------------
The Plan may not be amended materially unless the Board of Trustees,
including a majority of the Independent Trustees, have found that the proposed
amendment, including any proposed related expense allocation, is in the best
interests of each class and Multi-Class Portfolio individually and of the Funds.
Such funding shall be based on information required by the Board and furnished
to them that the Board deems reasonably necessary to evaluate the proposed
amendment.
c. Periodic Review
---------------
The Board shall review reports of expense allocations and such other
information as they request at such times, or pursuant to such schedule, as they
may determine consistent with applicable legal requirements.
4
<PAGE>
4. Contracts
---------
Any agreement related to the Multi-Class System shall require the
parties thereto to furnish to the Board of Trustees, upon their request, such
information as is reasonably necessary to permit the Trustees to evaluate the
Plan or any proposed amendment.
5. Effective Date
--------------
The Amended and Restated Plan, having been reviewed and approved by the
Board of Trustees and the Independent Trustees, shall take effect as of the
first day of each Fund's current fiscal year.
6. Amendments
----------
The Plan may not be amended to modify materially its terms unless such
amendment has been approved in the manner specified in Section 3(b) of this
Plan.
C:/Docs/Mutual Fund Agreements/Rule 18f3 Plans Nov 1999
5
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
(Updated as of November 17, 1999)
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
PHOENIX-GOODWIN CALIFORNIA TAX-EXEMPT BONDS, INC. X X -
PHOENIX EQUITY SERIES FUND:
PHOENIX-DUFF & PHELPS CORE EQUITY FUND X X X
PHOENIX-OAKHURST GROWTH AND INCOME FUND X X X
PHOENIX-OAKHURST INCOME AND GROWTH FUND X X X
PHOENIX INVESTMENT TRUST 97:
PHOENIX-HOLLISTER SMALL CAP VALUE FUND X X X
PHOENIX-HOLLISTER VALUE EQUITY FUND X X X
PHOENIX MULTI-PORTFOLIO FUND:
PHOENIX-GOODWIN EMERGING MARKETS BOND FUND X X X
PHOENIX-ABERDEEN INTERNATIONAL FUND X X X
PHOENIX-SENECA MID-CAP FUND X X -
PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES FUND X X -
PHOENIX-GOODWIN TAX-EXEMPT BOND FUND X X -
PHOENIX-SENECA TAX SENSITIVE GROWTH FUND X X X
PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME FUND, INC. X X X
PHOENIX GOODWIN MULTI-SECTOR SHORT TERM BOND FUND X X X
PHOENIX SERIES FUND:
PHOENIX-ENGEMANN AGGRESSIVE GROWTH FUND X X -
PHOENIX-OAKHURST BALANCED FUND X X -
PHOENIX-ENGEMANN CAPITAL GROWTH FUND X X -
PHOENIX-GOODWIN HIGH YIELD FUND X X X
PHOENIX-GOODWIN MONEY MARKET FUND X X X
PHOENIX-DUFF & PHELPS CORE BOND FUND X X X
PHOENIX STRATEGIC EQUITY SERIES FUND:
PHOENIX-SENECA EQUITY OPPORTUNITIES FUND X X -
PHOENIX-ENGEMANN SMALL CAP FUND X X -
PHOENIX-SENECA STRATEGIC THEME FUND X X X
PHOENIX-OAKHURST STRATEGIC ALLOCATION FUND, INC. X X -
PHOENIX-ABERDEEN WORLDWIDE OPPORTUNITIES FUND X X X
</TABLE>
Exhibit o.1
FIRST AMENDMENT TO THE
AMENDED AND RESTATED PLAN PURSUANT TO RULE 18f-3
<PAGE>
PHOENIX FUNDS
(the "Funds")
FIRST AMENDMENT TO THE
AMENDED AND RESTATED PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
That certain Amended and Restated Plan Pursuant to Rule 18f-3 under the
Investment Company Act of 1940 duly adopted by the Board of Directors/Trustees
of the Funds on November 17, 1999, is hereby amended as follows:
The Board of Directors/Trustees has granted authority for the following
additional Fund to issue Class C Shares:
Phoenix Strategic Equity Series Fund: Phoenix-Seneca Equity
Opportunities Fund
Additionally, the Board of Directors/Trustees has granted authority for the
following Funds to issue Class X Shares:
Phoenix Multi-Portfolio Fund: Phoenix-Seneca Tax Sensitive Growth Fund
Phoenix Strategic Equity Series Fund: Phoenix-Seneca Equity
Opportunities Fund
Accordingly, Schedule A is amended as attached hereto.
This Amendment was approved by the Board of Directors/Trustees at a
meeting held on February 24, 2000.
/s/ Pamela S. Sinofsky
----------------------------
Assistant Secretary
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
(Updated as of February 25, 2000)
Class A Class B Class C Class X
------- ------- ------- -------
<S> <C> <C> <C> <C>
PHOENIX-GOODWIN CALIFORNIA TAX-EXEMPT BONDS, INC. X X -
PHOENIX EQUITY SERIES FUND:
PHOENIX-DUFF & PHELPS CORE EQUITY FUND X X X
PHOENIX-OAKHURST GROWTH AND INCOME FUND X X X
PHOENIX-OAKHURST INCOME AND GROWTH FUND X X X
PHOENIX INVESTMENT TRUST 97:
PHOENIX-HOLLISTER SMALL CAP VALUE FUND X X X
PHOENIX-HOLLISTER VALUE EQUITY FUND X X X
PHOENIX MULTI-PORTFOLIO FUND:
PHOENIX-GOODWIN EMERGING MARKETS BOND FUND X X X
PHOENIX-ABERDEEN INTERNATIONAL FUND X X X
PHOENIX-SENECA MID-CAP FUND X X -
PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES FUND X X -
PHOENIX-GOODWIN TAX-EXEMPT BOND FUND X X -
PHOENIX-SENECA TAX SENSITIVE GROWTH FUND X X X X
PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME FUND, INC. X X X
PHOENIX GOODWIN MULTI-SECTOR SHORT TERM BOND FUND X X X
PHOENIX SERIES FUND:
PHOENIX-ENGEMANN AGGRESSIVE GROWTH FUND X X -
PHOENIX-OAKHURST BALANCED FUND X X -
PHOENIX-ENGEMANN CAPITAL GROWTH FUND X X -
PHOENIX-GOODWIN HIGH YIELD FUND X X X
PHOENIX-GOODWIN MONEY MARKET FUND X X X
PHOENIX-DUFF & PHELPS CORE BOND FUND X X X
PHOENIX STRATEGIC EQUITY SERIES FUND:
PHOENIX-SENECA EQUITY OPPORTUNITIES FUND X X X X
PHOENIX-ENGEMANN SMALL CAP FUND X X -
PHOENIX-SENECA STRATEGIC THEME FUND X X X
PHOENIX-OAKHURST STRATEGIC ALLOCATION FUND, INC. X X -
PHOENIX-ABERDEEN WORLDWIDE OPPORTUNITIES FUND X X X
</TABLE>
Exhibit p
Code of Ethics
<PAGE>
PHOENIX FUNDS
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
PHOENIX-ABERDEEN SERIES FUND
PHOENIX EQUITY PLANNING CORP.
AMENDED AND RESTATED
CODE OF ETHICS
1. Statement of Ethical Principles
-------------------------------
When Fund Access Persons covered by the terms of this Code of Ethics
engage in personal securities transactions, they must adhere to the
following general principles as well as to the Code's specific
provisions:
A. At all times, the interests of Fund shareholders must
be paramount;
B. Personal transactions must be conducted consistent
with this Code of Ethics in a manner that avoids any actual or
potential conflict of interest; and
C. No inappropriate advantage should be taken of any
position of trust and responsibility.
2. Definitions
-----------
A. "Fund" means each and every investment company, or
series thereof, or other institutional account managed by the
Adviser, individually and collectively.
B. "Access Person" means any Trustee (other than a
Disinterested Trustee who does not obtain information
concerning recommendations made to the Fund regarding the
purchase or sale of a security), officer, general partner,
Portfolio Manager or Advisory Person of the Fund or (i) any
temporary or permanent employee of the Fund or of any company
in a control relationship to the Fund, who, in connection with
his regular functions or duties, makes, participates in or
obtains information regarding the purchase or sale of a
security by the Fund, or whose functions relate to the making
of any recommendations with respect to such purchases or
sales; and (ii) any natural person in a control relationship
to the Fund who obtains information concerning recommendations
made to the Fund with regard to the purchase or sale of a
security. The Compliance Officer of each Fund shall maintain a
list of the Fund's Access Persons.
C. "Advisory Person" means any Portfolio Manager or
other investment person, such as an analyst or trader, who
provides information and advice to a Portfolio Manager or
assists in the execution of the investment decisions. For
purposes of Section 4, "Advisory Person" shall not include
Portfolio Managers.
p.1
<PAGE>
D. A security is "being considered for purchase or sale"
when a recommendation to purchase or sell a security has been
made and communicated and, with respect to the Advisory Person
making the recommendation, when such person seriously
considers making such a recommendation.
E. "Beneficial ownership" shall be interpreted in the
same manner as it would be in determining whether a person is
subject to the provisions of Section 16 of the Securities
Exchange Act of 1934 and the rules and regulations thereunder,
except that the determination of direct or indirect beneficial
ownership shall apply to all securities which an Access Person
has or acquires.
F. "Control" shall have the same meaning as that set
forth in Section 2(a)(9) of the Investment Company Act, as
amended.
G. "Disinterested Trustee" means a Trustee of a Fund who
is not an "interested person" of the Fund within the meaning
of Section 2(a)(19) of the Investment Company Act, as amended.
H. "Initial Public Offering" means a public sale of an
issue not previously offered to the public.
I. "Managed Fund" shall mean those Funds, individually
and collectively, for which the Portfolio Manager makes buy
and sell decisions.
J. "Portfolio Manager" means the person entrusted to
make the buy and sell decisions for a Fund.
K. "Private Placement" shall have the same meaning as
that set forth in Section 4(2) of the Securities Exchange Act.
L. "Purchase or sale of a security" includes inter alia,
the writing of an option or the purchase or sale of a security
that is exchangeable for or convertible into, a security that
is held or to be acquired by a Fund.
M. "Security" shall have the meaning set forth in
Section 2(a)(36) of the Investment Company Act, as amended,
except that it shall not include securities issued by the
Government of the United States, bankers' acceptances, bank
certificates of deposit, commercial paper and shares of
registered open-end investment companies.
3. Exempted Transactions
---------------------
The prohibitions of Section 4 of this Code shall not apply to:
A. Purchases or sales effected in any account over which
the Access Person has no direct or indirect influence or
control in the reasonable estimation of the Compliance
Officer.
p.2
<PAGE>
B. Purchases or sales of securities (1) not eligible for
purchase or sale by the Fund; or (2) specified from time to
time by the Trustees, subject to such rules, if any, as the
Trustees shall specify.
C. Purchases or sales which are non-volitional on the
part of either the Access Person or the Fund.
D. Purchases of shares necessary to establish an
automatic dividend reinvestment plan or pursuant to an
automatic dividend reinvestment plan, and subsequent sales of
such securities.
E. Purchases effected upon the exercise of rights issued
by an issuer pro rata to all holders of a class of its
securities, to the extent such rights were acquired from such
issuer, and sales of such rights so acquired.
4. Prohibited Activities
---------------------
A. IPO Rule: No Advisory Person or Portfolio Manager may
purchase securities in an Initial Public Offering, except with
the prior approval of the Compliance Officer of the Fund.
B. Private Placement Rule: No Advisory Person or
Portfolio Manager may purchase securities in a Private
Placement unless such purchase has been approved by the
Compliance Officer of the Fund. Any such approved purchase
should be disclosed to the Fund if that issuer's securities
are being considered for purchase or sale by the Fund.
C. Preclearance Rule: No Access Person, Advisory Person
nor Portfolio Manager may purchase or sell a security unless
such purchase or sale has been precleared by the Compliance
Officer of the Fund. Preclearance is shall be valid through
the business day next following the day preclearance is given.
Exceptions: The following securities transactions are exempt
from the pre-clearance requirement:
1. Purchases or sales of up to 1,000 shares of
securities of issuers ranked within the top
200 Standard & Poor's 500 Composite Stock
Index (S&P 500) ("Large Cap List") at the
time of purchase or sale. The Compliance
Officer of the Fund shall distribute an
updated list of such securities quarterly.
2. Purchase orders sent directly to the issuer
via mail (other than in connection with a
Private Placement) or sales of such
securities which are redeemed directly by
the issuer via mail.
p.3
<PAGE>
NOTE: THE COMPLIANCE OFFICER OF THE FUND MAY DENY APPROVAL OF
ANY TRANSACTION REQUIRING PRECLEARANCE UNDER THIS PRECLEARANCE
RULE, EVEN IF NOMINALLY PERMITTED UNDER THIS CODE OF ETHICS,
IF HE/SHE REASONABLY BELIEVES THAT DENYING PRECLEARANCE IS
NECESSARY FOR THE PROTECTION OF A FUND. ANY SUCH DENIAL MAY BE
APPEALED TO THE FUND'S COUNSEL. THE DECISION OF COUNSEL SHALL
BE FINAL.
D. Open Order Rule: No Access Person, Advisory Person or
Portfolio Manager may purchase or sell, directly or
indirectly, any security in which he has, or by reason of such
transaction acquires, any direct or indirect beneficial
ownership, when a Fund has a pending "buy" or "sell" order for
that security of the same type (i.e. buy or sell) as the
proposed personal trade, until the Fund's order is executed or
withdrawn.
Exceptions: The following securities transactions are exempt
from the Open Order Rule:
1. Purchases or sales of up to 1,000 shares of
securities of issuers on the Large Cap List
at the time of the transaction.
2. Purchases or sales approved by the
Compliance Officer of the Fund in his/her
discretion.
ANY PROFITS REALIZED ON A PERSONAL TRADE IN VIOLATION OF THIS
SECTION 4D MUST BE DISGORGED.
E. Blackout Rule: If a Portfolio Manager's Managed Fund
holds a security that is the subject of a proposed personal
trade by that Portfolio Manager, such personal trade may be
permitted only as follows:
1. If the proposed personal trade is on the
same side as the last Managed Fund
transaction in that security, the personal
trade cannot occur within two days of such
Managed Fund transaction (i.e. neither at T
nor T + 1 calendar day).
2. If the proposed personal trade is on the
opposite side of the last Managed Fund
transaction in that security, the personal
trade cannot occur unless (a) it is more
than two days after the Managed Fund
transaction (i.e. T + 2 calendar days or
later) AND (b) the Preclearance Request, if
required for such personal transaction (i.e.
it is not eligible for The Large Cap List
exception to the Preclearance Rule) sets
forth, to the reasonable satisfaction of the
Compliance Officer, an explanation of the
reasons the Managed Fund is not effecting a
similar transaction.
Transactions permitted under the Blackout Rule must also
satisfy the Open Order Rule and the Preclearance Rule if and
to the extent the transaction is not covered by exceptions to
those rules.
ANY PROFITS REALIZED BY A PORTFOLIO MANAGER ON A PERSONAL
TRADE IN VIOLATION OF THIS SECTION 4E MUST BE DISGORGED.
p.4
<PAGE>
F. Holding Period Rule: Access Persons, Advisory Persons
and Portfolio Managers must hold each Security, other than
those described in Section 3B, (securities (1) not eligible
for purchase or sale by the Fund; or (2) specified from time
to time by the Trustees, subject to such rules, if any, as the
Trustees shall specify) for a period of not less than six (6)
months, whether or not the purchase of such Security was an
exempt transaction under any other provision of Section 4.
ANY PROFITS REALIZED ON TRADING IN CONTRAVENTION OF THIS
POLICY MUST BE DISGORGED.
G. No Advisory Person shall annually accept any gift or
other item of more than de minimis value from any person or
entity that does business with or on behalf of the Fund.
H. No Advisory Person shall serve on the board of
directors of a publicly traded company without prior
authorization by the President or the Compliance Officer of
the Fund. If board service is authorized, such Advisory Person
shall have no role in making investment decisions with respect
to the publicly traded company.
5. Compliance Procedures
---------------------
A. All Access Persons shall direct their brokers to
supply, at the same time that they are sent to the Access
Person, a copy of the confirmation for each personal
securities trade and a copy of each periodic account statement
to the Fund's Compliance Officer.
B. Every Access Person shall report to the Fund the
information described in Section 5D of this Code with respect
to transactions in any security in which such Access Person
has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership in the security; provided,
however, that an Access Person shall not be required to make a
report with respect to transactions effected for any account
over which such person does not have any direct or indirect
influence.
C. A Disinterested Trustee of the Fund need only report
a transaction in a security if such Trustee, at the time of
that transaction knew or, in the ordinary course of fulfilling
his official duties as a Trustee of the Fund, should have
known that, (1) during the 7-day period immediately preceding
or after the date of the transaction by the Trustee, such
security was purchased or sold by the Fund or (2) such
security was being considered for purchase or sale by the
Fund.
D. Every report required pursuant to Section 5B above
shall be made not later than 10 days after the end of the
calendar quarter in which the transaction to which the report
relates was effected, and shall contain the following
information:
(i) The date of the transaction, the title and
the number of shares, and the principal amount of
each security involved;
(ii) The nature of the transaction (i.e.,
purchase, sale, or any other type of acquisition or
disposition);
(iii) The price at which the transaction was
effected;
p.5
<PAGE>
(iv) The name of the broker, dealer or bank with
or through whom the transaction was effected; and
(v) The date of approval of the transaction and
the person who approved it as required by Section 4B
or C above.
E. Each Access Person shall submit a report listing all
personal securities holdings to the Compliance Officer upon
the commencement of service and annually thereafter. This
annual report shall be and include a certification by the
Access Person that he or she has read and understood the Code
of Ethics and has complied with the Code's requirements.
F. Any report made under this Section 5 may contain a
statement that the report shall not be construed as an
admission by the person making such report that he or she has
any direct or indirect beneficial ownership in the security to
which the report relates.
G. The Compliance Officer shall submit an annual report
to the Fund's Board of Trustees that summarizes the current
Code of Ethics procedures, identifies any violations requiring
significant remedial action, and recommends appropriate
changes to the Code, if any.
H. Any Access Person or Disinterested Trustee shall
immediately report any potential violation of this Code of
which he or she becomes aware to the Fund's Compliance
Officer.
6. Sanctions
---------
Upon discovering a violation of this Code, the Board of Trustees of the
Fund may impose such sanctions as it deems appropriate, including inter
alia, a letter of censure or suspension or termination of employment,
or suspension of personal trading privileges for such period as it may
deem appropriate.
p.6
<PAGE>
PHOENIX FUNDS
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
PHOENIX-ABERDEEN SERIES FUND
AMENDED AND RESTATED
CODE OF ETHICS
ADDENDUM
As stated in Section 3B(2) of the Code of Ethics, the Trustees/Directors may
specify from time to time, EXEMPTED TRANSACTIONS, which are purchases or sales
of securities which are exempt from Section 4 of the Code.
The following transactions have been specified as EXEMPT TRANSACTIONS by the
Trustees/Directors:
1. Purchases or sales of securities trading at less than $5.00 per share at the
time of the trade. (Nov. '96)
2. Purchases or sales of securities issued by Phoenix Investment Partners, Ltd.
(Aug. '97)
3. Purchases or sales by Directors or Trustees who are not employees of the
adviser or distributor of a fund or any affiliates thereof provided such
Director or Trustee does not obtain information concerning recommendations
to the Fund regarding the purchase or sale of a security. (Nov. '97)
p.7
<PAGE>
PHOENIX INVESTMENT COUNSEL, INC.
AMENDED AND RESTATED
CODE OF ETHICS
1. Statement of Ethical Principles
-------------------------------
When Fund Access Persons covered by the terms of this Code of Ethics
engage in personal securities transactions, they must adhere to the
following general principles as well as to the Code's specific
provisions:
A. At all times, the interests of Fund shareholders must
be paramount;
B. Personal transactions must be conducted consistent with
this Code of Ethics in a manner that avoids any actual
or potential conflict of interest; and
C. No inappropriate advantage should be taken of any
position of trust and responsibility.
2. Definitions
-----------
A. "Fund" means each and every investment company, or
series thereof, or other institutional account managed by the
Adviser, individually and collectively.
B. "Access Person" means any Trustee (other than a
Disinterested Trustee who does not obtain information
concerning recommendations made to the Fund regarding the
purchase or sale of a security), officer, general partner,
Portfolio Manager or Advisory Person of the Fund or (i) any
temporary or permanent employee of the Fund or of any company
in a control relationship to the Fund, who, in connection with
his regular functions or duties, makes, participates in or
obtains information regarding the purchase or sale of a
security by the Fund, or whose functions relate to the making
of any recommendations with respect to such purchases or
sales; and (ii) any natural person in a control relationship
to the Fund who obtains information concerning recommendations
made to the Fund with regard to the purchase or sale of a
security. For purposes of Section 4, "Access Person" shall not
include Advisory Persons nor Portfolio Managers. The
Compliance Officer of each Fund shall maintain a list of the
Fund's Access Persons.
p.1
<PAGE>
C. "Advisory Person" means any Portfolio Manager or other
investment person, such as an analyst or trader, who provides
information and advice to a Portfolio Manager or assists in
the execution of the investment decisions. For purposes of
Section 4, "Advisory Person" shall not include Portfolio
Managers.
D. A security is "being considered for purchase or sale"
when a recommendation to purchase or sell a security has been
made and communicated and, with respect to the Advisory Person
making the recommendation, when such person seriously
considers making such a recommendation.
E. "Beneficial ownership" shall be interpreted in the same
manner as it would be in determining whether a person is
subject to the provisions of Section 16 of the Securities
Exchange Act of 1934 and the rules and regulations thereunder,
except that the determination of direct or indirect beneficial
ownership shall apply to all securities which an Access Person
has or acquires.
F. "Control" shall have the same meaning as that set forth
in Section 2(a)(9) of the Investment Company Act, as amended.
G. "Disinterested Trustee" means a Trustee of a Fund who
is not an "interested person" of the Fund within the meaning
of Section 2(a)(19) of the Investment Company Act, as amended.
H. "Initial Public Offering" means a public sale of an
issue not previously offered to the public.
I. "Managed Fund" shall mean those Funds, individually and
collectively, for which the Portfolio Manager makes buy and
sell decisions.
J. "Portfolio Manager" means the person entrusted to make
the buy and sell decisions for a Fund.
K. "Private Placement" shall have the same meaning as that
set forth in Section 4(2) of the Securities Exchange Act.
L. "Purchase or sale of a security" includes inter alia,
the writing of an option or the purchase or sale of a security
that is exchangeable for or convertible into, a security that
is held or to be acquired by a Fund.
M. "Security" shall have the meaning set forth in Section
2(a)(36) of the Investment Company Act, as amended, except
that it shall not include securities issued by the Government
of the United States, bankers' acceptances, bank
p.2
<PAGE>
certificates of deposit, commercial paper and shares of
registered open-end investment companies.
N. "Short term trading" is buying and then selling or
selling and then buying the same (or equivalent) securities
within seven (7) calendar days (e.g. opening transaction at
"T" and closing transaction at T + 6 calendar days or less).
3. Exempted Transactions
---------------------
The prohibitions of Section 4 of this Code shall not apply to:
A. Purchases or sales effected in any account over which
the Access Person has no direct or indirect influence or
control in the reasonable estimation of the Compliance
Officer.
B. Purchases or sales of securities (1) not eligible for
purchase or sale by the Fund; or (2) specified from time to
time by the Trustees, subject to such rules, if any, as the
Trustees shall specify.
C. Purchases or sales which are non-volitional on the part
of either the Access Person or the Fund.
D. Purchases of shares necessary to establish an automatic
dividend reinvestment plan or pursuant to an automatic
dividend reinvestment plan, and subsequent sales of such
securities.
E. Purchases effected upon the exercise of rights issued
by an issuer pro rata to all holders of a class of its
securities, to the extent such rights were acquired from such
issuer, and sales of such rights so acquired.
4. Prohibited Activities
---------------------
A. IPO Rule: No Advisory Person or Portfolio Manager may
purchase securities in an Initial Public Offering, except with
the prior approval of the Compliance Officer of the Fund.
B. Private Placement Rule: No Advisory Person or Portfolio
Manager may purchase securities in a Private Placement unless
such purchase has been approved by the Compliance Officer of
the Fund. Any such approved purchase should be disclosed to
the Fund if that issuer's securities are being considered for
purchase or sale by the Fund. Such consideration for purchase
or sale shall be conducted by a person other than the
interested Advisory Person or Portfolio Manager.
p.3
<PAGE>
C. Preclearance Rule: No Access Person, Advisory Person
nor Portfolio Manager may purchase or sell a security unless
such purchase or sale has been precleared by the Compliance
Officer of the Fund. Preclearance shall be valid through the
business day next following the day preclearance is given.
Exceptions: The following securities transactions are exempt
from the pre-clearance requirement:
1. Purchases or sales of up to 1,000 shares of
securities of issuers ranked within the top
200 of the Standard & Poor's 500 Composite
Stock Index (S&P 500) (the "Large Cap List")
at the time of purchase or sale. The
Compliance Officer of the Fund shall
distribute an updated list of such
securities quarterly.
2. Purchase orders sent directly to the issuer
via mail (other than in connection with a
Private Placement) or sales of such
securities which are redeemed directly by
the issuer via mail.
NOTE: THE COMPLIANCE OFFICER OF THE FUND MAY DENY APPROVAL OF
ANY TRANSACTION REQUIRING PRECLEARANCE UNDER THIS PRECLEARANCE
RULE, EVEN IF NOMINALLY PERMITTED UNDER THIS CODE OF ETHICS,
IF HE/SHE REASONABLY BELIEVES THAT DENYING PRECLEARANCE IS
NECESSARY FOR THE PROTECTION OF A FUND. ANY SUCH DENIAL MAY BE
APPEALED TO THE FUND'S COUNSEL. THE DECISION OF COUNSEL SHALL
BE FINAL.
D. Open Order Rule: No Access Person, Advisory Person or
Portfolio Manager may purchase or sell, directly or
indirectly, any security in which he has, or by reason of such
transaction acquires, any direct or indirect beneficial
ownership, when a Fund has a pending "buy" or "sell" order for
that security of the same type (i.e. buy or sell) as the
proposed personal trade, until the Fund's order is executed or
withdrawn.
Exceptions: The following securities transactions are exempt
from the Open Order Rule:
1. Purchases or sales of up to 1,000
shares of securities of issuer on the Large
Cap List at the time of the transaction.
2. Purchases or sales approved by the
Compliance Officer of the Fund in his/her discretion.
ANY PROFITS REALIZED ON A PERSONAL TRADE IN VIOLATION OF THIS
SECTION 4D MUST BE DISGORGED.
p.4
<PAGE>
E. Blackout Rule: If a Portfolio Manager's Managed Fund
holds a security that is the subject of a proposed personal
trade by that Portfolio Manager, such personal trade may be
permitted only as follows:
1. If the proposed personal trade is on the
same side as the last Managed Fund transaction in
that security, the personal trade cannot occur within
two days of such Managed Fund transaction (i.e.
neither at T nor T + 1 calendar day).
2. If the proposed personal trade is on the
opposite side of the last Managed Fund transaction in
that security, the personal trade cannot occur unless
(a) it is more than two days after the Managed Fund
transaction (i.e. T + 2 calendar days or later) AND
(b) the Preclearance Request, if required for such
personal transaction (i.e. it is not eligible for the
Large Cap List exception to the Preclearance Rule)
sets forth, to the reasonable satisfaction of the
Compliance Officer, an explanation of the reasons the
Managed Fund is not effecting a similar transaction.
Transactions permitted under the Blackout Rule must also
satisfy the Short Term Trading Rule, the Open Order Rule, and
the Preclearance Rule if and to the extent the transaction is
not covered by exceptions to those rules.
Note: Read together, the Short Term Trading Rule and the
Blackout Rule generally will require that a Portfolio Manager
must hold a position in a security until the LATER of (a) T +
7 calendar days ( T = his/her Opening Transaction); and (b) T
+ 2 (T = the Managed Fund's last transaction in that
security).
ANY PROFITS REALIZED BY A PORTFOLIO MANAGER ON A PERSONAL
TRADE IN VIOLATION OF THIS SECTION 4E MUST BE DISGORGED.
F. Short Term Trading Rule: No Advisory Person or
Portfolio Manager may engage in Short Term Trading for profit.
Exceptions:
----------
1. Advisory Persons may effect Closing
Transactions (i.e. a sale after a purchase or a
purchase after a sale of the same security) within 7
calendar days of the Opening Transaction in that
security (i.e. within T + 6 calendar days or less)
(a) if there are no Fund trades in that security
within that period; or (b) if there are Fund trades
in that security within that period, there are no
Fund trades in that security on the opposite side of
the proposed personal
p.5
<PAGE>
Closing Transaction occurring prior to the proposed
personal Closing Transaction. This Short Term Trading
Exception does not constitute a waiver of either the
Open Order Rule or the Preclearance Rule.
2. Portfolio Managers may effect Closing
Transactions within 7 calendar days of the Opening
Transaction in that security (i.e. within T + 6
calendar days or less (a) if there are no Fund trades
in that security within that period; or (b) if there
are Fund trades in that security within that period,
(i) there are no trades in that security in any of
his/her Managed Funds occurring prior to the proposed
personal Closing Transaction, and (ii) no trades in
that security for any other Fund on the opposite side
of the proposed personal Closing Transaction
occurring prior to the proposed personal Closing
Transaction. This Short Term Trading Exception does
not constitute a waiver of any of the Open Order
Rule, the Blackout Rule or the Preclearance Rule.
Note: Read together, the Short Term Trading Rule and the
Blackout Rule generally will require that a Portfolio Manager
must hold a position in a security until the LATER of (a) T +
7 calendar days ( T = his/her Opening Transaction); and (b) T
+ 2 (T = the Managed Fund's last transaction in that
security).
ANY PROFITS REALIZED ON SHORT TERM TRADING IN CONTRAVENTION OF
THIS POLICY MUST BE DISGORGED.
G. No Advisory Person shall accept any gift or other item
of more than de minimis value from any person or entity that
does business with or on behalf of the Fund.
H. No Advisory Person shall serve on the board of
directors of a publicly traded company without prior
authorization by the President or the Compliance Officer of
the Fund. If board service is authorized, such Advisory Person
shall have no role in making investment decisions with respect
to the publicly traded company.
5. Compliance Procedures
---------------------
A. All Access Persons shall direct their brokers to
supply, at the same time that they are sent to the Access
Person, a copy of the confirmation for each personal
securities trade and a copy of each periodic account statement
to the Fund's Compliance Officer.
p.6
<PAGE>
B. Every Access Person shall report to the Fund the
information described in Section 5D of this Code with respect
to transactions in any security in which such Access Person
has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership in the security; provided,
however, that an Access Person shall not be required to make a
report with respect to transactions effected for any account
over which such person does not have any direct or indirect
influence.
C. A Disinterested Trustee of the Fund need only report a
transaction in a security if such Trustee, at the time of that
transaction knew or, in the ordinary course of fulfilling his
official duties as a Trustee of the Fund, should have known
that, (1) during the 7-day period immediately preceding or
after the date of the transaction by the Trustee, such
security was purchased or sold by the Fund or (2) such
security was being considered for purchase or sale by the
Fund.
D. Every report required pursuant to Section 5B above
shall be made not later than 10 days after the end of the
calendar quarter in which the transaction to which the report
relates was effected, and shall contain the following
information:
(i) The date of the transaction, the title and
the number of shares, and the principal amount of
each security involved;
(ii) The nature of the transaction (i.e.,
purchase, sale, or any other type of acquisition or
disposition);
(iii) The price at which the transaction was
effected;
(iv) The name of the broker, dealer or bank with
or through whom the transaction was effected; and
(v) The date of approval of the transaction and
the person who approved it as required by Section 4B
or C above.
E. Each Access Person and Disinterested Trustee shall
submit a report listing all personal securities holdings to
the Compliance Officer upon the commencement of service and
annually thereafter. This annual report shall include a
certification by the Access Person that he or she has read and
understood the Code of Ethics and has complied with the Code's
requirements.
F. Any report made under this Section 5 may contain a
statement that the report shall not be construed as an
admission by the person making such report that he or she has
any direct or indirect beneficial ownership in the security to
which the report relates.
p.7
<PAGE>
G. The Compliance Officer shall submit an annual report to
the Fund's Board of Trustees that summarizes the current Code
of Ethics procedures, identifies any violations requiring
significant remedial action, and recommends appropriate
changes to the Code, if any.
H. Any Access Person or Disinterested Trustee shall
immediately report any potential violation of this Code of
which he or she becomes aware to the Fund's Compliance
Officer.
6. Sanctions
---------
Upon discovering a violation of this Code, the Board of Trustees of the
Fund may impose such sanctions as it deems appropriate, including inter
alia, a letter of censure or suspension or termination of employment,
or suspension of personal trading privileges for such period as it may
deem appropriate.
CODE-PIC.
402-REV.doc
p.8
<PAGE>
ROGER ENGEMANN & ASSOCIATES, INC.
================================================================================
Amended and Restated
Statement of Policy
on
Personal Trading
and Confidential Information
================================================================================
As a registered investment adviser under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), with substantial responsibility to it's
advisory clients, ROGER ENGEMANN & ASSOCIATES, INC. (the "Company") has an
obligation to implement and maintain a meaningful policy governing the personal
trading and use of confidential and material nonpublic information by it's
officers, directors and employees. The purpose of this Statement of Policy is to
minimize conflicts of interest (including the appearance of such conflicts), as
well as to comply with the Insider Trading and Securities Fraud Transaction Act
of 1988, as amended ("ITSFEA") and the Advisers Act. In addition, this Statement
of Policy is designed to provide a program for educating, detecting and
preventing insider trading by, the officers, directors and employees of the
Company.
INSIDER TRADING
- ---------------
A. BACKGROUND
1. INSIDER TRADING. It is unlawful to engage in "insider trading."
This means, in general, that no "insider" may (i) purchase or
sell a security on the basis of material, nonpublic information
or (ii) communicate material, nonpublic information to another
where the communication leads to, or is intended to lead to, a
purchase or sale of securities. Although the insider trading
prohibitions extend to the activities of each employee of the
Company, it is not anticipated that such persons will routinely
receive "inside information." However, to educate the Company's
employees, more information describing "insider trading" and the
penalties for such trading is set forth below. Compliance
procedures regarding the use of inside information, if any,
obtained by any of the Company's employees also are described.
<PAGE>
2. OTHER CONFIDENTIAL INFORMATION. Certain information obtained by
the Company that does not constitute "inside" information still
constitutes confidential information that must be protected by
the Company and it's employees. Compliance procedures regarding
the use and treatment of all confidential information are set
forth below.
3. CONFLICTS OF INTEREST. Because the Company is a fiduciary to it's
clients, each employee of the Company must avoid actual and
apparent conflicts of interest with the Company's clients. Such
conflicts of interest could arise if securities are bought or
sold for personal accounts in a manner that would significantly
compete with the purchase or sale of securities for clients or if
securities are bought or sold for client accounts in a manner
that is advantageous to such personal accounts. More information
describing such conflicts of interest and the compliance
procedures for avoiding such conflicts of interest are set forth
below.
B. INSIDER TRADING
1. INSIDER TRADING DEFINED. The term "insider trading" is generally
used to refer to (i) a person's use of material, nonpublic
information in connection with transactions in securities and
(ii) certain communications of material, nonpublic information.
The laws concerning insider trading generally prohibit:
o The purchase or sale of securities by an insider, on the basis of
material, nonpublic information;
o The purchase or sale of securities by a non-insider, on the basis
of material, nonpublic information if the information was
disclosed to the non-insider in violation of an insider's duty to
keep the information confidential or was misappropriated; or
o The communication of material, nonpublic information in violation
of a confidentiality obligation where the information leads to a
purchase or sale of securities.
a. WHO IS AN INSIDER? The concept of "insider" is broad. It includes
the officers, directors, employees and majority shareholders of a
company. In addition, a person can be considered a "temporary
insider" of a company if he or she enters into a confidential
relationship in the conduct of the company's affairs and, as a
result, is given access to company information that is intended
to be used solely for company purposes. A temporary insider can
include, among others, a company's attorneys, accountants,
consultants, investment bankers, commercial bankers and the
employees of such organizations. In order for a person to be
1
<PAGE>
considered a temporary insider of a particular company, the
company must expect that the person receiving the information
will keep the information confidential and the relationship
between the company and the person must at least imply such a
duty. Analysts are usually not considered insiders of the company
that they follow, although if an analyst is given confidential
information by a company's representative in a manner in which
the analyst knows or should know to be a breach of that
representative's duties to the company, the analyst may become a
temporary insider.
b. WHAT IS MATERIAL INFORMATION? Trading on inside information is
not a basis for liability unless the information is "material."
"Material" information is generally defined as information that a
reasonable investor would likely consider important in making his
or her investment decision, or information that is reasonably
certain to have a substantial effect on the price of a company's
securities. Information that should be considered material
includes, but is not limited to: dividend changes, earnings
estimates, changes in previously released earnings estimates,
significant merger or acquisition proposals or agreement, major
litigation, liquidity problems and extraordinary management
developments. Material information does not have to relate to a
company's business, it can be significant market information.
(For example, a reporter for The Wall Street Journal was found
criminally liable for disclosing to others the dates on which
reports on various companies would appear in The Wall Street
Journal and whether or not those reports would be favorable.)
c. WHAT IS NONPUBLIC INFORMATION? Information is nonpublic unless it
has been effectively communicated to the market place. For
information to be considered public, one must be able to point to
some fact to show that the information has been generally
disseminated to the public. For example, information found in a
report filed with the SEC or appearing in Dow Jones, Reuters
Economic Services, The Wall Street Journal or another publication
of general circulation is considered public. Market rumors are
not considered public information.
2. PENALTIES FOR INSIDER TRADING. Penalties for trading on or
communicating material, nonpublic information are severe, both
for the individuals involved in the unlawful conduct and for its
employers. A person can be subject to some or all of the
penalties set forth below even if he or she does not personally
benefit from the violation. Penalties include:
o civil injunctions;
o disgorgement of profits;
o jail sentences;
2
<PAGE>
o fines for the person who committed the violation of up to three
times the profit gained or loss avoided (per violation, or
illegal trade), whether or not the person actually benefited from
the violation; and
o fines for the employer or other controlling person of the person
who committed the violation of up to the greater of $1,000,000 or
three times the amount of the profit gained or loss avoided per
violation, or illegal trade.
In addition, any violation of the procedures set forth in this
Statement of Policy can be expected to result in serious
sanctions by the Company, including dismissal of the persons
involved.
3. PROCEDURES REGARDING THE RECEIPT OF MATERIAL NONPUBLIC
INFORMATION. Because the Company does not have an investment
banking division or affiliate, it does not anticipate it's
officers, directors and employees routinely being in receipt of
material, nonpublic information. However, such persons may from
time-to-time receive such information. If any such person
receives any information which may constitute such material,
nonpublic information, such person (i) should not buy or sell any
securities (including options or other securities convertible
into or exchangeable for such securities) for a personal account
or a client account, (ii) should not communicate such information
to any other person (other than the Compliance Officer) and (iii)
should discuss promptly such information with the Compliance
Officer. Under no circumstances should such information be shared
with any persons not employed by the Company, including family
members and friends.
C. OTHER CONFIDENTIAL INFORMATION
1. GENERALLY. In addition to material, nonpublic information, the
Company or it's employees may receive other confidential
information from it's clients, issuers of securities or other
third parties. Such confidential information may include, among
other things, (i) proprietary information that is important to
the client, issuer or other party, but that is not "material" or
(ii) information that could be embarrassing for the client,
issuer or third party if disclosed. Even information that appears
commonplace, such as the name of a client, issuer or third party
may, either alone or when coupled with other available
information, constitute proprietary, sensitive or confidential
information. Therefore, all information that an employee obtains
through the Company should be considered confidential unless that
information is specifically available to the public.
2. PROCEDURES REGARDING USE AND TREATMENT OF CONFIDENTIAL
INFORMATION.
3
<PAGE>
a. NO PERSONAL USE. All confidential information, whatever the
source, may be used only in the discharge of the employee's
duties with the Company. Confidential information may not be used
for any personal purpose, including the purchase or sale of
securities.
b. TREATMENT OF CONFIDENTIAL INFORMATION. The Company encourages
each of it's employees to be aware of, and sensitive to, such
employee's treatment of confidential information. Each employee
is encouraged not to discuss such information unless necessary as
part of his or her duties and responsibilities with the Company,
not to store confidential information in plain view where anyone
entering the room may see it, and to remove confidential
information from conference rooms, reception areas or other areas
where third parties may inadvertently see it. Particular care
should be exercised if confidential information must be discussed
in public places, such as elevators, taxicabs, trains or
airplanes, where such information may be overheard. Under no
circumstances may confidential information be shared with any
person, including the spouse or other family member, who is not
an employee of the Company.
PERSONAL TRADING
- ----------------
D. CONFLICTS OF INTEREST INVOLVING TRADING FOR PERSONAL ACCOUNTS
1. FIDUCIARY DUTY TO AVOID CONFLICTS OF INTEREST. As noted above,
because the Company is a fiduciary to it's clients, the Company
and each of it's employees must avoid actual and apparent
conflicts of interest with the Company's clients. In addition,
non-employee "access persons" with respect to the mutual funds
advised by the Company are covered by this section of the
Statement of Policy.
2. WHO IS COVERED. The following persons are subject to this section
of this Statement of Policy: all employees of the Company (also
referred to as "Associates") and all non-employee "access
persons" as that term is defined in Rule 17j-1 under the
Investment Company Act of 1940. Directors of the Company and
Trustees of the Investment Company directly advised by the
Company are non-employee access persons. Such non-employee access
persons include both interested mutual fund Trustees and
independent (or disinterested) mutual fund Trustees. All
non-employee Directors of the Company and interested mutual fund
Trustees are referred to herein as reporting non-employee access
persons. Independent mutual fund Trustees are referred to as
non-reporting non-employee access persons.
3. PERSONAL ACCOUNT DEFINED. The "personal account" of an employee
of the Company or non-employee access person shall include each
and
4
<PAGE>
every account for which such employee or non-employee access
person, directly or indirectly, influences or controls the
investment decisions of such account. This would include any
account of (i) any employee or non-employee access person, (ii)
the spouse of such employee or non-employee access person, (iii)
any children under the age of 22 of such employee or non-employee
access person, and/or (iv) any other person residing in the same
household of such employee or non-employee access person. Each
account shall be deemed a personal account of the employee or
non-employee access person UNLESS such employee or
non-employee access person certifies in writing to the Compliance
Department for each applicable personal account that: (x) the
certifying employee or non-employee access person does not
influence the investment decisions for such account, and (y) the
person or persons making the investment decisions for such
account do not make such decisions, in whole or in part, based
upon any information provided by the certifying employee or
non-employee access person. (For example, if an employee or
non-employee access person has established an account with an
investment adviser or broker/dealer and has signed a written
contract giving the investment adviser or broker/dealer full
discretion over the account.)
4. SECURITIES DEFINED. The term "security" shall have the same
meaning as that set forth in Section 2(a)(36) of the Investment
Company Act of 1940, as amended, except that it shall not include
securities issued by the Government of the United States,
bankers' acceptances, bank certificates of deposit, commercial
paper and shares of registered open-end investment Company.
E. PROCEDURES REGARDING CONFLICTS OF INTEREST INVOLVING PERSONAL ACCOUNTS
1. LIMITATIONS ON CERTAIN PERSONAL TRANSACTIONS. We take the subject
of personal trading extremely seriously. In order to avoid any
conflict of interest, or the appearance of any conflict of
interest, the following rules have been adopted by the Company.
2. PRECLEARANCE RULE: All employees of the Company are required to
obtain written approval from Jim Mair or John Tilson and the
Compliance Officer before a security transaction may be executed
for the employee's personal account (as defined in Section D3).
a. EXEMPT PRECLEARANCE RULE TRANSACTIONS: The following securities
transactions are exempt from the preclearance rule:
1. Purchase or sale of up to 1,000 shares of any security
listed on the Company's Large Cap List (the "List"). The List
will contain names of securities that are currently ranked within
the top 200 of the Standard & Poor's 500 Composite Stock Index as
of the beginning of each calendar
5
<PAGE>
quarter. The List will be maintained, updated and distributed at
the beginning of each quarter by the Compliance Department.
(Please note that updates and/or changes to the List can only be
made by the Compliance Department and will only be made at the
end of each quarter.)
2. Purchase of a security as part of an automatic dividend
reinvestment plan;
3. Purchase and/or redemption of open-end investment company
securities (open-end mutual funds);
4. Purchase or sale of securities issued by the Government of
the United States (U.S Treasury Notes or Bonds);
5. Purchase or sale of any banker's acceptances, bank
certificates of deposit and commercial paper; and
6. Purchase or sale of any security effected in any account
over which the employee has no direct or indirect influence
and/or control (for example: a full discretionary account).
3. PROHIBITED TRANSACTIONS: No employee may:
a. purchase any security in an initial public offering;
b. purchase or sell any precleared security within seven (7)
calendar days before and after any executed trade has taken place
for a client or shareholders account in that same security;
(Blackout Period)
c. sell within six months of purchasing or acquiring any
security, except for those described in 2 through 6 of Section
E2A above, for their personal account; (Short-term trading)
d. purchase privately offered securities of a company that has
a class of publicly traded securities without prior written
approval from Jim Mair or John Tilson and the Compliance Officer;
e. receive any gift or other item of more than a de minims
value from any person or entity that does business with the
Company;
f. serve as a director of any publicly traded company, unless
a determination has been made that service would be consistent
with the interests of the clients and shareholders and prior
authorization is given; and
6
<PAGE>
g. buy or sell a security on the basis of material, nonpublic
information, or communicate such information to another.
F. REPORTS OF PERSONAL TRANSACTIONS.
1. SUBMISSION OF QUARTERLY REPORTS. In order for the Company to
monitor compliance with it's insider trading and conflict of
interest policies and procedures, and to comply with SEC Rule
204-2(a)(12) under the Advisers Act and Rule 17j-1 under the
Investment Company Act, every employee and reporting non-employee
access person shall be required to sign, date and submit to the
Compliance Department a "Personal Securities Transaction and
Regulatory Report" no later than 10 days after the end of each
calendar quarter reporting any security transactions, except for
transactions listed in F2 below, that were executed during such
calendar quarter for any personal account in which the employee
or non-employee access person had any direct or indirect
beneficial influence and/or control. Independent Trustees of
mutual funds advised by the Company, as non-reporting
non-employee access persons, are not required to file such
reports unless (i) they have actual knowledge of the trading
activity being engaged in on behalf of the mutual funds
and (ii) they wish to trade in the same securities within 15 days
of the mutual funds' trades.
2. EXEMPT REPORTING TRANSACTIONS. The following securities
transactions are exempt from the reporting requirement:
1. Purchase of a security as part of an automatic dividend
reinvestment plan;
2. Purchase and/or redemption of open-end investment company
securities (open-end mutual funds);
3. Purchase or sale of securities issued by the Government of
the United States (U.S Treasury Notes or Bonds);
4. Purchase or sale of any banker's acceptances, bank
certificates of deposit and commercial paper; and
5. Purchase or sale of any security effected in any account over
which the employee has no direct or indirect influence and/or
control (for example: a full discretionary account).
3. REVIEW AND RETENTION OF QUARTERLY REPORTS. The Compliance
Department shall be responsible for ensuring that all employees
and reporting non-employee access persons submit such reports in
a timely manner as described in section G-1 above. A consistent
failure to submit
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<PAGE>
timely reports shall be communicated to the President of the
Company for appropriate action. The Compliance Department shall
review each such report as soon as practicable to determine that
this Statement of Policy has been complied with and shall
maintain such quarterly reports for each employee and reporting
non-employee access person as part of the books and records
required by the Advisers Act and the Investment Company Act and
the rules promulgated thereunder. No person shall review his or
her own report.
4. SANCTIONS. If the Compliance Officer determines that a violation
of this Policy has or may have occurred, he/she shall submit a
written determination and any additional explanatory material
provided by the employee, to the President of the Company, who
shall make an independent determination of whether any
non-complying transaction has occurred. If it is determined by
the President that a violation has occurred, the President may
impose such sanctions as he deems appropriate, including
dismissal from the Company, and/or a disgorging of any profits
made by the violator.
G. SUMMARY
1. IMPORTANCE OF ADHERENCE TO PROCEDURES. It is very important that
all employees and non-employee access persons adhere strictly to
this Statement of Policy on Personal Trading and Confidential
Information. Any violations of such policies and procedures may
result in serious sanctions, including dismissal from the
Company.
2. QUESTIONS. Any questions regarding the Company's policies and
procedures regarding insider trading, confidential information
and conflicts of interest should be referred directly to the
Compliance Officer.
March 22, 1999
8
<PAGE>
ACKNOWLEDGMENT
To: Compliance Department
This will acknowledge that I have read and understand the
Statement of Policy on Personal Trading and Confidential Information for Roger
Engemann & Associates, Inc., dated March 22, 1999.
--------------------------
Signature
--------------------------
Name of Associate
Date:_____________________
9
<PAGE>
SENECA CAPITAL MANAGEMENT
CODE OF ETHICS
DATED MARCH 31, 2000
As an investment adviser, Seneca Capital Management LLC ("Seneca") is a
fiduciary. It owes its clients the highest duty of loyalty and relies on each
employee to avoid conduct that is or may be inconsistent with that duty. It is
also important for employees to avoid actions that, while they may not actually
involve a conflict of interest or an abuse of a client's trust, may have the
appearance of impropriety.
Because Seneca serves as investment manager to registered investment companies
("Fund Clients"), Seneca is required to adopt a code of ethics setting forth
policies and procedures, including the imposition of restrictions on itself and
employees, to the extent reasonably necessary to prevent certain violations of
rules under the Investment Company Act of 1940. This Code of Ethics and Conduct
(the "Code") is intended to set forth those policies and procedures and to state
Seneca's broader policies regarding its duty of loyalty to clients.
1. Statement of Ethical Principles
-------------------------------
When Fund Access Persons covered by the terms of this Code of Ethics
engage in personal securities transactions, they must adhere to the
following general principles as well as to the Code's specific
provisions:
A. At all times, the interests of Fund shareholders must be
paramount;
B. Personal transactions must be conducted consistent with
this Code of Ethics in a manner that avoids any actual or
potential conflict of interest; and
C. No inappropriate advantage should be taken of any
position of trust and responsibility.
2. Definitions
-----------
A. "Fund" means each and every investment company, or
series thereof, or other institutional account managed by the
Adviser, individually and collectively.
B. "Access Person" means any Trustee (other than a
Disinterested Trustee who does not obtain information
concerning recommendations made to the Fund regarding the
purchase or sale of a security), officer, general partner,
Portfolio Manager or Advisory Person of the Fund or (i) any
temporary or permanent employee of the Fund or of any company
in a control relationship to the Fund, who, in connection with
his regular functions or duties, makes, participates in or
obtains information regarding the purchase or sale of a
security by the Fund, or whose functions relate to the making
of any recommendations with respect to such purchases or
sales; and (ii) any natural person in a control relationship
to the Fund who obtains information concerning recommendations
made to the Fund with regard to the purchase or sale of a
security. For purposes of
(1)
<PAGE>
Section 4, "Access Person" shall not include Advisory Persons
nor Portfolio Managers. The Compliance Officer of each Fund
shall maintain a list of the Fund's Access Persons.
C. "Advisory Person" means any Portfolio Manager or other
investment person, such as an analyst or trader, who provides
information and advice to a Portfolio Manager or assists in
the execution of the investment decisions. For purposes of
Section 4, "Advisory Person" shall not include Portfolio
Managers.
D. A security is "being considered for purchase or sale"
when a recommendation to purchase or sell a security has been
made and communicated and, with respect to the Advisory Person
making the recommendation, when such person seriously
considers making such a recommendation.
E. "Beneficial ownership" shall be interpreted in the same
manner as it would be in determining whether a person is
subject to the provisions of Section 16 of the Securities
Exchange Act of 1934 and the rules and regulations thereunder,
except that the determination of direct or indirect beneficial
ownership shall apply to all securities which an Access Person
has or acquires.
F. "Control" shall have the same meaning as that set forth
in Section 2(a)(9) of the Investment Company Act, as amended.
G. "Disinterested Trustee" means a Trustee of a Fund who is
not an "interested person" of the Fund within the meaning of
Section 2(a)(19) of the Investment Company Act, as amended.
H. "Initial Public Offering" means a public sale of an
issue not previously offered to the public.
I. "Managed Fund" shall mean those Funds, individually and
collectively, for which the Portfolio Manager makes buy and
sell decisions.
J. "Portfolio Manager" means the person entrusted to make
the buy and sell decisions for a Fund.
K. "Private Placement" shall have the same meaning as that
set forth in Section 4(2) of the Securities Exchange Act.
L. "Purchase or sale of a security" includes inter alia,
the writing of an option or the purchase or sale of a security
that is exchangeable for or convertible into, a security that
is held or to be acquired by a Fund.
M. "Security" shall have the meaning set forth in Section
2(a)(36) of the Investment Company Act, as amended, except
that it shall not include securities issued by the Government
of the United States, bankers' acceptances, bank certificates
of deposit, commercial paper and shares of registered open-end
investment companies.
(2)
<PAGE>
3. Exempted Transactions
---------------------
The prohibitions of Section 4 of this Code shall not apply to:
A. Purchases or sales effected in any account over which
the Access Person has no direct or indirect influence or
control in the reasonable estimation of the Compliance
Officer.
B. Purchases or sales of securities (1) not eligible for
purchase or sale by the Fund; or (2) specified from time to
time by the Trustees, subject to such rules, if any, as the
Trustees shall specify.
C. Purchases or sales which are non-volitional on the part
of either the Access Person or the Fund.
D. Purchases of shares necessary to establish an automatic
dividend reinvestment plan or pursuant to an automatic
dividend reinvestment plan, and subsequent sales of such
securities.
E. Purchases effected upon the exercise of rights issued by
an issuer pro rata to all holders of a class of its
securities, to the extent such rights were acquired from such
issuer, and sales of such rights so acquired.
4. Prohibited Activitie
--------------------
A. IPO Rule: No Advisory Person or Portfolio Manager may
purchase securities in an Initial Public Offering, except with
the prior approval of the Compliance Officer of the Fund.
B. Private Placement Rule: No Advisory Person or Portfolio
Manager may purchase securities in a Private Placement unless
such purchase has been approved by the Compliance Officer of
the Fund. Any such approved purchase should be disclosed to
the Fund if that issuer's securities are being considered for
purchase or sale by the Fund. Such consideration for purchase
or sale shall be conducted by a person other than the
interested Advisory Person or Portfolio Manager.
C. Preclearance Rule: No Access Person, Advisory Person nor
Portfolio Manager may purchase or sell a security unless such
purchase or sale has been precleared by the Compliance Officer
of the Fund. Preclearance shall be valid through the business
day next following the day preclearance is given.
Exceptions: The following securities transactions are exempt
from the pre-clearance requirement:
1. Purchases or sales of up to 500 shares of
securities of issuers ranked within the top 200 of
the Standard & Poor's 500 Composite Stock Index
(S&P 500) (the "Large Cap List") at the time of
purchase or sale. The Compliance Officer of the
Fund shall distribute an updated list of such
securities quarterly.
(3)
<PAGE>
2. Purchase orders sent directly to the issuer via
mail (other than in connection with a Private
Placement) or sales of such securities which are
redeemed directly by the issuer via mail.
NOTE: THE COMPLIANCE OFFICER OF THE FUND MAY DENY APPROVAL OF
ANY TRANSACTION REQUIRING PRECLEARANCE UNDER THIS PRECLEARANCE
RULE, EVEN IF NOMINALLY PERMITTED UNDER THIS CODE OF ETHICS,
IF HE/SHE REASONABLY BELIEVES THAT DENYING PRECLEARANCE IS
NECESSARY FOR THE PROTECTION OF A FUND. ANY SUCH DENIAL MAY BE
APPEALED TO THE FUND'S COUNSEL. THE DECISION OF COUNSEL SHALL
BE FINAL.
D. Open Order Rule: No Access Person, Advisory Person or
Portfolio Manager may purchase or sell, directly or
indirectly, any security in which he has, or by reason of such
transaction acquires, any direct or indirect beneficial
ownership, when a Fund has a pending "buy" or "sell" order for
that security of the same type (i.e. buy or sell) as the
proposed personal trade, until the Fund's order is executed or
withdrawn.
Exceptions: The following securities transactions are exempt
from the Open Order Rule:
1. Purchases or sales of up to 500 shares of
securities of issuer on the Large Cap List at the
time of the transaction.
2. Purchases or sales approved by the Compliance
Officer of the Fund in his/her discretion.
ANY PROFITS REALIZED ON A PERSONAL TRADE IN VIOLATION OF THIS
SECTION 4D MUST BE DISGORGED.
E. Blackout Rule: If a Portfolio Manager's Managed Fund
holds a security that is the subject of a proposed personal
trade by that Portfolio Manager, such personal trade may be
permitted only as follows:
1. If the proposed personal trade is on the same side
as the last Managed Fund transaction in that
security, the personal trade cannot occur within
two days of such Managed Fund transaction (i.e.
neither at T nor T + 1 calendar day).
2. If the proposed personal trade is on the opposite
side of the last Managed Fund transaction in that
security, the personal trade cannot occur unless
(a) it is more than two days after the Managed
Fund transaction (i.e. T + 2 calendar days or
later) AND (b) the Preclearance Request, if
required for such personal transaction (i.e. it is
not eligible for the Large Cap List exception to
the Preclearance Rule) sets forth, to the
reasonable satisfaction of the Compliance Officer,
an explanation of the reasons the Managed Fund is
not effecting a similar transaction.
Transactions permitted under the Blackout Rule must also
satisfy the Open Order Rule and the Preclearance Rule if and
to the extent the transaction is not covered by exceptions to
those rules.
(4)
<PAGE>
ANY PROFITS REALIZED BY A PORTFOLIO MANAGER ON A PERSONAL
TRADE IN VIOLATION OF THIS SECTION 4E MUST BE DISGORGED.
F. Holding Period Rule: Access Persons, Advisory Persons
and Portfolio Managers must hold each Security, other than
those described in Section 3B, (securities (1) not eligible
for purchase or sale by the Fund; or (2) specified from time
to time by the Trustees, subject to such rules, if any, as the
Trustees shall specify) for a period of not less than six (6)
months, whether or not the purchase of such Security was an
exempt transaction under any other provision of Section 4.
ANY PROFITS REALIZED ON TRADING IN CONTRAVENTION OF THIS
POLICY MUST BE DISGORGED.
G. No Advisory Person shall accept any gift or other item
of more than de minimis value from any person or entity that
does business with or on behalf of the Fund.
H. No Advisory Person shall serve on the board of directors
of a publicly traded company without prior authorization by
the President or the Compliance Officer of the Fund. If board
service is authorized, such Advisory Person shall have no role
in making investment decisions with respect to the publicly
traded company.
5. Compliance Procedures
---------------------
A. All Access Persons shall direct their brokers to supply,
at the same time that they are sent to the Access Person, a
copy of the confirmation for each personal securities trade
and a copy of each periodic account statement to the Fund's
Compliance Officer.
B. Every Access Person shall report to the Fund the
information described in Section 5D of this Code with respect
to transactions in any security in which such Access Person
has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership in the security; provided,
however, that an Access Person shall not be required to make a
report with respect to transactions effected for any account
over which such person does not have any direct or indirect
influence.
C. A Disinterested Trustee of the Fund need only report a
transaction in a security if such Trustee, at the time of that
transaction knew or, in the ordinary course of fulfilling his
official duties as a Trustee of the Fund, should have known
that, (1) during the 7-day period immediately preceding or
after the date of the transaction by the Trustee, such
security was purchased or sold by the Fund or (2) such
security was being considered for purchase or sale by the
Fund.
D. Every report required pursuant to Section 5B above shall
be made not later than 10 days after the end of the calendar
quarter in which the transaction to which the report relates
was effected, and shall contain the following information:
(i) The date of the transaction, the title and the
number of shares, and the principal amount of each
security involved;
(ii) The nature of the transaction (i.e., purchase,
sale, or any other type of acquisition or disposition);
(5)
<PAGE>
(iii) The price at which the transaction was effected;
(iv) The name of the broker, dealer or bank with or
through whom the transaction was effected; and
(v) The date of approval of the transaction and the
person who approved it as required by Section 4B or C
above.
E. Each Access Person shall submit a report listing all
personal securities holdings to the Compliance Officer upon
the commencement of service and annually thereafter. This
annual report shall include a certification by the Access
Person that he or she has read and understood the Code of
Ethics and has complied with the Code's requirements.
F. Any report made under this Section 5 may contain a
statement that the report shall not be construed as an
admission by the person making such report that he or she has
any direct or indirect beneficial ownership in the security to
which the report relates.
G. The Compliance Officer shall submit an annual report to
the Fund's Board of Trustees that summarizes the current Code
of Ethics procedures, identifies any violations requiring
significant remedial action, and recommends appropriate
changes to the Code, if any.
H. Any Access Person or Disinterested Trustee shall
immediately report any potential violation of this Code of
which he or she becomes aware to the Fund's Compliance
Officer.
6. Sanctions
---------
Upon discovering a violation of this Code, the Board of Trustees of the
Fund may impose such sanctions as it deems appropriate, including inter
alia, a letter of censure or suspension or termination of employment,
or suspension of personal trading privileges for such period as it may
deem appropriate.
(6)
<PAGE>
SENECA CAPITAL MANAGEMENT
CODE OF ETHICS
ADDENDUM
As stated in Section 3B(2) of the Code of Ethics, the Trustees/Directors may
specify from time to time, EXEMPTED TRANSACTIONS, which are purchases or sales
of securities, which are exempt from Section 4 of the Code.
The following transactions have been specified as EXEMPT TRANSACTIONS by the
Trustees/Directors:
1. Purchases or sales of securities issued by Phoenix Investment Partners, Ltd.
2. Purchases or sales by Directors or Trustees who are not employees of the
adviser or distributor of a fund or any affiliates thereof provided such
Director or Trustee does not obtain information concerning recommendations
to the Fund regarding the purchase or sale of a security.
(7)
