AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 30, 1999
REGISTRATION NOS. 33-19423
811-5436
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933 |X|
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 25 |X|
AND/OR
REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 27
(CHECK APPROPRIATE BOX OR BOXES)
----------------------
PHOENIX MULTI-PORTFOLIO 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
COMPLIANCE OFFICER
PHOENIX INVESTMENT PARTNERS, LTD.
56 PROSPECT STREET
HARTFORD, CONNECTICUT 06115
(NAME AND ADDRESS OF AGENT FOR SERVICE)
----------------------
It is proposed that this filing will become effective (check appropriate
box)
[X] immediately upon filing pursuant to paragraph (b)
| | pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
================================================================================
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
Cross Reference Sheet Pursuant to Rule 495(a)
THIS REGISTRATION STATEMENT CONTAINS TWO
PROSPECTUSES AND TWO STATEMENTS OF
ADDITIONAL INFORMATION. THESE ARE
IDENTIFIED AS VERSION A AND B OF EACH.
PART A
INFORMATION REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER FORM N-1A, PART A PROSPECTUS CAPTION
- ----------------------------- ------------------
<C> <S> <S>
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, Investment Risk and Return Summary; Investment
and Related Risks........................................ Strategies; Risks Related to Investment Strategies
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
</TABLE>
PART B
INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
ITEM NUMBER FORM N-1A, PART B STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ----------------------------- -------------------------------------------
<C> <S> <S>
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 Trust
14. Control Persons and Principal Holders of Securities...... Management of the Trust
15. Investment Advisory and Other Services................... Services of the Adviser; The Distributor;
Distribution Plans; Other Information
16. Brokerage Allocation and Other Practices................. Portfolio Transactions and Brokerage
17. Capital Stock and Other Securities...................... Other Information
18. Purchase, Redemption, and Pricing of Shares.............. Net Asset Value; How to Buy Shares; Investor
Account Services; Redemption of Shares; Tax
Sheltered Retirement Plans
19. Taxation of the Fund..................................... Dividends, Distributions and Taxes
20. Underwriters............................................. The Distributor
21. Calculation of Performance Data.......................... Performance Information
22. Financial Statements..................................... Financial Statements
</TABLE>
INFORMATION REQUIRED TO BE INCLUDED IN PART C IS SET FORTH
UNDER THE APPROPRIATE ITEM,
SO NUMBERED, IN PART C OF THIS REGISTRATION STATEMENT.
<PAGE>
Phoenix Investment Partners
Prospectus
March 30, 1999
- -------- Aberdeen
Phoenix-Aberdeen
International Fund
- -------- Duff & Phelps
Phoenix-Duff & Phelps
Real Estate Securities Fund
- -------- Goodwin(SM)
Phoenix-Goodwin
Emerging Markets Bond Fund
Phoenix-Goodwin
Tax-Exempt Bond Fund
- -------- Seneca
Phoenix-Seneca
Mid Cap Fund
Neither the Securities and Exchange
Commission nor any state securities
commission has approved or
disapproved of these securities or
determined if this prospectus is
truthful or complete. Any representation
to the contrary is a criminal offense.
This prospectus contains important
information that you should know
before investing in the Phoenix-Aberdeen
International Fund, Phoenix-Duff &
Phelps Real Estate Securities Fund,
Phoenix-Goodwin Emerging Markets
Bond Fund, Phoenix-Goodwin
Tax-Exempt Bond Fund and
Phoenix-Seneca Mid Cap Fund.
[logo] PHOENIX
INVESTMENT PARTNERS, LTD.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
--------------------------------------------------------------------------------------------
<S> <C>
Phoenix-Aberdeen International Fund
Investment Risk and Return Summary............................................... 1
Fund Expenses.................................................................... 4
Investment Strategies............................................................ 5
Risks Related to Investment Strategies........................................... 6
Management of the Fund........................................................... 9
Phoenix-Duff & Phelps Real Estate Securities Fund
Investment Risk and Return Summary............................................... 12
Fund Expenses.................................................................... 15
Investment Strategies............................................................ 16
Risks Related to Investment Strategies........................................... 18
Management of the Fund........................................................... 20
Phoenix-Goodwin Emerging Markets Bond Fund
Investment Risk and Return Summary............................................... 22
Fund Expenses.................................................................... 25
Investment Strategies............................................................ 26
Risks Related to Investment Strategies........................................... 28
Management of the Fund........................................................... 31
Phoenix-Goodwin Tax-Exempt Bond Fund
Investment Risk and Return Summary............................................... 33
Fund Expenses.................................................................... 35
Investment Strategies............................................................ 36
Risks Related to Investment Strategies........................................... 38
Management of the Fund........................................................... 39
Phoenix-Seneca Mid Cap Fund
Investment Risk and Return Summary............................................... 41
Fund Expenses.................................................................... 43
Investment Strategies............................................................ 44
Risks Related to Investment Strategies........................................... 45
Management of the Fund........................................................... 47
Pricing of Fund Shares.............................................................. 49
Sales Charges....................................................................... 50
Your Account........................................................................ 52
How to Buy Shares................................................................... 53
How to Sell Shares.................................................................. 54
Things You Should Know When Selling Shares.......................................... 54
Account Policies.................................................................... 56
Investor Services................................................................... 57
Tax Status of Distributions......................................................... 57
Financial Highlights................................................................ 59
Additional Information.............................................................. 69
[triangle] Phoenix
Multi-
Portfolio
Fund
</TABLE>
<PAGE>
PHOENIX-ABERDEEN INTERNATIONAL FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Aberdeen International Fund has an investment objective of high total
return consistent with reasonable risk. There is no guarantee that the fund will
achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The fund's focus is high total return. The fund seeks to increase the
value of your shares by investing in equity or debt securities the
subadviser believes offer the potential for growth, income or both.
[arrow] The fund invests primarily in common stocks of established foreign
(non-U.S.) companies. However, if the subadviser believes other types
of securities offer the potential for high returns, the fund may invest
in such securities, including convertible securities, preferred stocks,
bonds, notes and other debt obligations, foreign and U.S. Government
securities, and securities in emerging markets.
[arrow] The fund is managed by an adviser and subadviser. The subadviser uses
an asset allocation approach to select countries and regions for fund
investment. Countries and regions that exhibit favorable prospects for
economic growth, governmental policies, expected levels of inflation,
currency valuation and capital market price levels are given greater
allocations. Companies within selected countries and regions that the
subadviser believes show solid growth prospects with attractive
valuations are selected for fund investment.
[arrow] Debt obligations selected for investment may be of any credit quality
or maturity.
[arrow] The fund's ability to invest in growth as well as income producing
securities and its emphasis on investments in established countries
help the fund to maintain an acceptable level of investment risk.
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
Conditions affecting the overall economy, specific industries or companies in
which the fund invests can be worse than expected. As a result, the value of
your shares may decrease.
Unlike many other mutual funds, this fund will make significant investments in
foreign securities. Political and economic uncertainty, as well as relatively
less public information about investments, may negatively impact the fund's
portfolio. Some investments may be made in currencies other than U.S. dollars
that will fluctuate in value as a result of changes in the
Phoenix-Aberdeen International Fund 1
<PAGE>
currency exchange rate. Foreign markets and currencies may not perform as well
as U.S. markets. Emerging market countries and companies doing business in
emerging markets may not have the same range of opportunities as countries and
their companies in developed nations. They may also have more obstacles to
financial success.
The fund may be subject to greater risks than a fund that does not invest in
securities with growth characteristics.
To the extent the fund invests in debt securities, it will be subject to
interest rate and credit risk. Typically, debt obligations will increase in
value when interest rates decline and decrease in value when interest rates
rise. If interest rates do not move in the direction that the adviser expects,
then the value of your shares may decrease. Additionally, securities with lower
credit ratings have a greater chance of principal and interest payment default.
Debt obligations with longer maturities may be subject to greater price
fluctuation.
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Aberdeen International Fund. The bar chart shows changes in the
fund's Class A Shares performance from year to year over the life of the
fund.(1) The table below 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.
INTERNATIONAL FUND
[graphic omitted]
Calendar Year Annual Return (%)
1990 -4.94
1991 10.76
1992 -12.41
1993 37.61
1994 -0.08
1995 9.68
1996 17.39
1997 10.94
1998 25.90
(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 10-year period shown in the
chart above, the highest return for a quarter was 22.34% (quarter ending March
31, 1998) and the lowest return for a quarter was (19.55)% (quarter ending
September 30, 1990).
2 Phoenix-Aberdeen International Fund
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Life of the Fund(2)
------------------------------------------
Average Annual Total Return
(for the periods ending 12/31/98)(1) One Year Five Years Class A Class B Class C
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares 19.89% 11.35% 9.93% -- --
- ----------------------------------------------------------------------------------------------------------------
Class B Shares 21.07% N/A -- 11.93% --
- ----------------------------------------------------------------------------------------------------------------
Class C Shares(3) N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------
The Morgan Stanley Capital
International EAFE Index(4) 20.33% 9.50% 6.20% 8.52% N/A
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B Shares.
(2) Class A Shares since November 1, 1989 and Class B Shares since July 15,
1994.
(3) Class C Shares will be offered as of the effective date of this prospectus.
(4) The Morgan Stanley Capital International EAFE Index is an unmanaged,
commonly used measure of foreign stock fund performance which includes net
dividends reinvested. The EAFE Index is an aggregate of 19 individual country
indexes in Europe, Australia, New Zealand and the Far East. The Index's
performance does not reflect sales charges.
Phoenix-Aberdeen International 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.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
<S> <C> <C> <C>
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (load) (as a percentage of
the lesser of the value redeemed or the amount invested) None 5%(a) 1%(b)
Maximum Sales Charge (load) Imposed on Reinvested
Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
-------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees (c) 0.25% 1.00% 1.00%
Other Expenses 0.37% 0.37% 0.37%
----- ----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.37% 2.12% 2.12%
===== ===== =====
</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 maximum 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:
4 Phoenix-Aberdeen International Fund
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $608 $888 $1,189 $2,043
- --------------------------------------------------------------------------------
Class B $615 $864 $1,139 $2,261
- --------------------------------------------------------------------------------
Class C $315 $664 $1,139 $2,452
- --------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 0 YEARS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $608 $888 $1,189 $2,043
- --------------------------------------------------------------------------------
Class B $215 $664 $1,139 $2,261
- --------------------------------------------------------------------------------
Class C $215 $664 $1,139 $2,452
- --------------------------------------------------------------------------------
</TABLE>
INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Aberdeen International Fund has an investment objective of high total
return consistent with reasonable risk. There is no guarantee that the fund will
achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
The fund will invest primarily in common stocks of established foreign
(non-U.S.) companies believed by the subadviser to have the potential for
capital growth, income or both. Under normal circumstances at least 80% of the
fund's total assets will be invested in foreign issuers located in three or more
foreign countries. The fund may invest in any region of the world, including
emerging market countries.
In addition to common stocks, the fund may invest in any other type of security,
including convertible securities, preferred stocks, bonds, notes and other debt
obligations and foreign and U.S. Government obligations that the adviser
believes offers growth and/or income potential.
The fund employs an adviser, Phoenix Investment Counsel, Inc., and a subadviser,
Aberdeen Fund Managers, Inc., to select investments for the fund. Each month,
the subadviser's investment strategy committee determines how much (what
percentage) of the fund's assets will be invested in each region of the world
(e.g., continental Europe, United Kingdom, Asia, etc.). In making its
determination, the committee will generally select regions that exhibit
favorable:
Phoenix-Aberdeen International Fund 5
<PAGE>
[bullet] prospects for relative economic growth among foreign
countries;
[bullet] expected levels of inflation;
[bullet] capital market price levels;
[bullet] government policies influencing business conditions;
[bullet] currency valuations; and
[bullet] range of individual investment opportunities available to the
international investor.
The fund may, from time to time, have more than 25% of its assets invested in
any major industrial or developed country that the subadviser believes poses no
unique investment risk.
There is no limitation on the amount or percentage of fund assets that may be
invested in growth or income securities. At any time, the fund may focus
investments solely or primarily in securities that offer growth of capital or on
income-producing securities. In determining whether the fund will be invested
for capital growth or income, the subadviser will analyze the international
equity and fixed income markets and assess the degree of risk and level of
return expected from each.
Temporary Defensive Strategy: Under abnormal market or economic conditions, the
fund may invest all of its assets in domestic and foreign short-term money
market instruments, including government obligations, certificates of deposit,
bankers' acceptances, time deposits, commercial paper, short-term corporate debt
securities and repurchase agreements. When this happens, the fund may not
achieve its investment objective.
Please refer to the Statement of Additional Information for more detailed
information about these and other investment techniques.
RISKS RELATED TO INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
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.
The value of the fund's investments can decrease for a number of reasons. For
example, changing economic conditions may cause a decline in the value of many
or even most investments. Particular industries can face poor markets for their
products or services so that companies engaged in those businesses do not do as
well as companies in other industries. To the extent that the fund's investments
are affected by general economic declines and declines in industries that
negatively affect the companies in which the fund invests, fund share values may
decline. Share values can also decline if the
6 Phoenix-Aberdeen International Fund
<PAGE>
specific companies selected for fund investment fail to perform as the
subadviser expects, regardless of general economic trends, industry trends, and
other economic factors.
In addition to these general risks of investing in the fund, there are several
specific risks of investing in the fund that you should note.
FOREIGN INVESTING
The fund will invest in non-U.S. companies. Investing in the securities of
non-U.S. companies involves special risks and considerations not typically
associated with investing in U.S. companies. These include:
[bullet] differences in accounting, auditing and financial reporting
standards;
[bullet] generally higher commission rates on foreign portfolio
transactions;
[bullet] differences and inefficiencies in transaction settlement
systems;
[bullet] the possibility of expropriation or confiscatory taxation;
[bullet] adverse changes in investment or exchange control
regulations;
[bullet] political instability; and
[bullet] potential restrictions on the flow of international capital.
Political and economic uncertainty, as well as less public information about
investments, may negatively impact the fund's portfolio.
Foreign securities often trade with less frequency and volume than domestic
securities and, therefore, may exhibit greater price volatility. Additionally,
dividends and interest payable on foreign securities may be subject to foreign
taxes withheld prior to receipt by the fund.
Many of the foreign securities held by the fund will not be registered with, nor
will the issuers of those securities be subject to the reporting requirements
of, the U.S. Securities and Exchange Commission. Accordingly, there may be less
publicly available information about the securities and about the foreign
company or government issuing them than is available about a domestic company or
government entity. Moreover, individual foreign economies may differ favorably
or unfavorably from the U.S. economy in such respects as growth of gross
national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payment positions.
FOREIGN CURRENCY
Significant portions of the fund's assets may be invested in securities
denominated in foreign currencies. Changes in foreign exchange rates will affect
the value of those securities denominated or quoted in currencies other than the
U.S. dollar. The forces of supply and demand in the foreign exchange markets
determine exchange rates and these forces are in turn affected by a range of
economic, political, financial, governmental and other factors. Exchange
Phoenix-Aberdeen International Fund 7
<PAGE>
rate fluctuations can affect the fund's net asset value (share price) and
dividends either positively or negatively depending upon whether foreign
currencies are appreciating or depreciating in value relative to the U.S.
dollar. Exchange rates fluctuate over both the long and short terms.
On January 1, 1999, eleven European countries began converting from their
sovereign currency to the European Union common currency called the "Euro." This
conversion may expose the fund to certain risks, including the reliability and
timely reporting of pricing information of the fund's portfolio holdings. In
addition, one or more of the following may adversely affect specific securities
in the fund's portfolio:
[bullet] known trends or uncertainties related to the Euro conversion
that an issuer reasonably expects will have a material impact
on revenues, expenses or income from its operations;
[bullet] competitive implications of increased price transparency of
European Union markets (including labor markets) resulting
from adoption of a common currency and issuers' plans for
pricing their own products and services in the Euro;
[bullet] issuers' ability to make required information technology
updates on a timely basis, and costs associated with the
conversion (including costs of dual currency operations
through January 1, 2002);
[bullet] currency exchange rate risk and derivatives exposure
(including the disappearance of price sources, such as
certain interest rate indices); and
[bullet] potential tax consequences.
EMERGING MARKET INVESTING
Investments in less-developed countries whose markets are still emerging
generally present risks in greater degree than those presented by investment in
foreign issuers based in countries with developed securities markets and more
advanced regulatory systems. Prior governmental approval of foreign investments
may be required under certain circumstances in some developing countries, and
the extent of foreign investment in domestic companies may be subject to
limitation in other developing countries. The charters of individual companies
in developing countries may impose limitations on foreign ownership to prevent,
among other concerns, violation of foreign investment limitations.
The economies of developing countries generally are heavily dependent upon
international trade, and, accordingly, have been, and may continue to be,
adversely affected by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. These economies also have been (and may
continue to be) adversely affected by economic conditions in the countries with
which they trade.
8 Phoenix-Aberdeen International Fund
<PAGE>
GROWTH STOCKS
Typically, growth stocks make little or no dividend payments to shareholders.
Investment return is based upon the stocks' capital appreciation, making return
more dependent on market increases and decreases as compared to stocks that
provide dividend payments. Growth stocks also tend to rise faster when markets
advance, and drop more sharply when markets fall. Should a market decline occur,
the fund's price may fall more than that of other funds.
DEBT SECURITIES
Typically, debt obligations will increase in value when interest rates decline
and decrease in value when interest rates rise. If interest rates do not move in
the direction that the adviser expects, then the value of your shares may
decrease. Credit risk for debt obligations typically increases as the rating
declines. Securities with lower credit ratings have a greater chance of
principal and interest payment default. Defaults and missed payments may cause
the value of your shares to decrease and decrease the level of expected income
payments. Longer maturities may be subject to price fluctuations due to interest
rates, tax laws and other general market factors.
IMPACT OF THE YEAR 2000 ISSUE ON FUND INVESTMENTS
The Year 2000 issue is the result of computer programs being written using two
rather than four digits to define the applicable year. There is the possibility
that some or all of a company's computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. If a company whose securities are held by the fund does not "fix" its Year
2000 issue, it is possible that its operations and financial results would be
hurt. Also, the cost of modifying computer programs to become Year 2000
compliant may hurt the financial performance and market price of companies whose
securities are held by the fund.
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 other mutual funds, as subadviser to three
mutual funds and as adviser to institutional clients. As of December 31, 1998,
Phoenix had $23.9 billion in assets under management. Phoenix has acted as an
investment adviser for over sixty years.
Aberdeen Fund Managers, Inc. ("Aberdeen") is the subadviser to the fund and is
located at 1 Financial Plaza, Suite 2210, Fort Lauderdale, FL 33394. Aberdeen is
a wholly-owned subsidiary of Aberdeen Asset Management PLC based in Aberdeen,
Scotland. Together with its subsidiaries, Aberdeen Asset Management PLC provides
investment management services to
Phoenix-Aberdeen International Fund 9
<PAGE>
unit and investment trusts, segregated pension funds and other institutional and
private portfolios, and, through Aberdeen, U.S. mutual funds. Aberdeen has
served as subadviser for the following mutual funds since their inception in
1996: Phoenix-Aberdeen New Asia Fund, Phoenix-Aberdeen Global Small Cap Fund and
the Aberdeen New Asia Series of The Phoenix Edge Series Fund. Aberdeen also has
served as subadviser to Phoenix-Aberdeen Worldwide Opportunities Fund and the
International Series of The Phoenix Edge Series Fund since 1998. As of December
31, 1998, Aberdeen Asset Management PLC had $23.9 billion in assets under
management.
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. Aberdeen, as subadviser, is responsible for day-to-day management of the
fund's portfolio. Aberdeen 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 pays Aberdeen a subadvisory fee at the following rates.
- --------------------------------------------------------------------------------
$1+ billion
$1st billion through $2 billion $2+ billion
- --------------------------------------------------------------------------------
Subadvisory Fee 0.375% 0.35% 0.325%
- --------------------------------------------------------------------------------
During the fund's last fiscal year, the fund paid total management fees of
$1,350,786. The ratio of management fees to average net assets for the fiscal
year ended November 30, 1998 was 0.75%. The total advisory fee of 0.75% of the
average net assets of the fund is greater than that for most mutual funds;
however, the Trustees have determined that it is comparable to fees charged by
other mutual funds whose investment objectives are similar to those of the fund.
PORTFOLIO MANAGEMENT
Aberdeen's senior strategy committee determines and monitors the fund's regional
allocations across the globe on a monthly basis. An Aberdeen team of investment
professionals located in offices spread around the world selects securities for
the fund's portfolio.
IMPACT OF THE YEAR 2000 ISSUE ON FUND OPERATIONS
The Trustees have directed management to ensure that the systems used by service
providers (Phoenix and its affiliates) in support of the fund's operations be
assessed and brought into
10 Phoenix-Aberdeen International Fund
<PAGE>
Year 2000 compliance. Based upon preliminary assessments, Phoenix has determined
that it will be required to modify or replace portions of its software so that
its computer systems will properly utilize dates beyond December 31, 1999.
Phoenix management believes that the majority of these systems are already Year
2000 compliant. Phoenix believes that with modifications to existing software
and conversions to new software, the Year 2000 issue will be mitigated. It is
anticipated that such modifications and conversions will be completed on a
timely basis. It is not known at this time if there could be a material impact
on the operations of Phoenix or its affiliates or the fund if such modifications
and conversions are not completed timely.
Phoenix will utilize both internal and external resources to reprogram, or
replace, and test the software for Year 2000 modifications. Certain systems are
already in the process of being converted due to previous initiatives; and it is
expected that all core systems will be remediated and tested by June 1999. The
total cost to become Year 2000 compliant is not an expense of the fund and is
not expected to have a material impact on the operating results of Phoenix.
Phoenix-Aberdeen International Fund 11
<PAGE>
PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
Phoenix-Duff & Phelps Real Estate Securities Fund has an investment objective of
capital appreciation and income with approximately equal emphasis. There is no
guarantee that the fund will achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The fund's focus is capital appreciation and income. The fund seeks to
increase the value of your shares by investing in securities the
adviser believes have the potential for initial appreciation and
continued income growth.
[arrow] The fund intends to invest primarily in publicly traded real estate
investment trusts (REITs), with emphasis on investment in equity REITs,
and companies that are principally engaged in the real estate industry.
[arrow] Equity securities are selected using a two-tiered screening process.
First the adviser screens the universe of eligible securities for
securities it believes have the potential for initial appreciation,
continued dividend growth and that show signs the issuer is an
efficient user of capital. Securities that survive this screening are
further evaluated based on interviews and fundamental research that
focus on the issuer's strength of management and property, financial
and performance reviews.
[arrow] An equity security may be evaluated for sale if its market value
exceeds the adviser's estimated value, its financial performance is
expected to decline or if the adviser believes the security's issuer
fails to adjust its strategy to the real estate market cycle.
[arrow] To achieve its objective, the fund may invest up to 25% of its total
assets in investment grade debt obligations of companies principally
engaged in the real estate industry, mortgage-backed securities or
short-term investments. Debt obligations and mortgage-backed securities
may be of any maturity or duration (the length of a debt security on a
present value basis). Debt securities are selected using a sector
rotation approach. The adviser will seek to adjust the proportion of
assets in categories of debt obligations or "sectors" and the selection
within sectors to obtain higher returns on a relative basis.
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
The fund is a non-diversified investment company. It may invest a larger
proportion of its assets in the securities of a smaller number of issuers, and,
as a result, price fluctuations in these securities have a greater impact on the
fund's share price.
12 Phoenix-Duff & Phelps Real Estate Securities Fund
<PAGE>
Conditions affecting the overall economy, the real estate industry and specific
companies in which the fund invests can be worse than expected. As a result, the
value of your shares may decrease.
REITs are subject to mortgage prepayment and refinancing risks, changes in the
value of REIT-owned properties, and changing economic conditions, especially
those that impact the real estate industry, including changes in interest rates.
Additionally, REITs depend more on management skills than other types of
securities.
REIT securities may trade less frequently and in lower volume than securities in
other larger companies and they may be subject to abrupt and large price
movements. Additionally, REIT securities may trade at prices less than the value
of the underlying real estate and they are often not diversified. These factors
may decrease the overall marketability of the securities.
Debt issues are subject to credit, interest rate and maturity risks. If the
adviser misjudges the debt security issuer's ability to make principal and
interest payments, income available for distribution may be less than that of
other funds. Typically, debt obligations will increase in value when interest
rates decline and decrease in value when interest rates rise. If interest rates
do not move in the direction that the adviser expects, then the value of your
shares may decrease. Debt obligations with longer maturities may be subject to
greater price fluctuation.
Phoenix-Duff & Phelps Real Estate Securities Fund 13
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Duff & Phelps Real Estate Securities Fund. The bar chart shows
changes in the fund's Class A Shares performance from year to year over the life
of the fund.(1) The table below 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.
REAL ESTATE SECURITIES FUND
[graphic omitted]
Calendar Year Annual Return (%)
1996 32.77
1997 21.83
1998 -20.11
(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 17.60% (quarter ending December 31,
1996) and the lowest return for a quarter was (12.15)% (quarter ending September
30, 1998).
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
Average Annual Total Returns
(for the periods ending 12/31/98)(1) One Year Life of the Fund(2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A Shares (23.89)% 10.14%
- -----------------------------------------------------------------------------------------------------------------
Class B Shares (23.61)% 10.35%
- -----------------------------------------------------------------------------------------------------------------
NAREIT Index (3) (17.50)% 12.36%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B Shares.
(2) Class A and B Shares since March 1, 1995.
(3) The National Association of Real Estate Investment Trusts (NAREIT) Equity
Total Return Index is a commonly used, unmanaged indicator of REIT performance.
The Index does not reflect sales charges.
14 Phoenix-Duff & Phelps Real Estate Securities Fund
<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
SHARES SHARES
------ ------
<S> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 4.75% None
Maximum Deferred Sales Charge (load) (as a percentage of
the lesser of the value redeemed or the amount invested) None 5% (b)
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 (c) 0.25% 1.00%
Other Expenses 0.52% 0.52%
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES (a) 1.52% 2.27%
===== =====
</TABLE>
_____________________
(a) The fund's investment adviser has agreed to reimburse through December 31,
1999 the Phoenix-Duff & Phelps Real Estate Securities Fund's expenses, other
than Management Fees and Distribution and Service Fees, to the extent that such
expenses exceed 0.30% for each Class of Shares. Actual Total Annual Fund
Operating Expenses after expense reimbursement are 1.30% for Class A Shares and
2.05% for Class B Shares.
(b) 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.
(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:
Phoenix-Duff & Phelps Real Estate Securities Fund 15
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $622 $932 $1,265 $2,201
- -----------------------------------------------------------------------------------------------------------------
Class B $630 $909 $1,215 $2,417
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $622 $932 $1,265 $2,201
- -----------------------------------------------------------------------------------------------------------------
Class B $230 $709 $1,215 $2,417
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Your actual expenses may be lower than those shown in the tables above
since the expense levels used to calculate the figures shown do not include the
reimbursement of expenses over certain levels by the fund's investment adviser.
Refer to the section "Management of the Fund" for information about expense
reimbursement.
INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Duff & Phelps Real Estate Securities Fund has an investment objective of
capital appreciation and income with approximately equal emphasis. There is no
guarantee that the fund will achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
The fund's focus is capital appreciation and income. The fund seeks to increase
the value of your shares by investing in securities the adviser believes have
the potential for initial appreciation and continued income growth.
Under normal circumstances, the fund intends to invest at least 75% of its
assets in marketable securities of publicly-traded real estate investment trusts
(REITs) and companies that are principally engaged in the real estate industry.
A company is considered "principally engaged" in the real estate industry if at
least 50% of the company's gross revenues or net profits come from the
ownership, development, construction, financing, management or sale of
commercial, industrial or residential real estate. The fund does not invest
directly in real estate.
The fund will primarily focus its investments in equity REITs. Generally, REITs
are publicly-traded companies that invest primarily in income-producing real
estate or real estate-related
16 Phoenix-Duff & Phelps Real Estate Securities Fund
<PAGE>
loans or interests. Equity REITs own real estate directly. Mortgage REITs invest
the majority of their assets in real estate mortgages and earn income from the
collection of interest payments. Hybrid REITs combine the characteristics of
both equity and mortgage REITs.
Equity securities are selected using a two-tiered screening process. First the
adviser screens the universe of eligible securities for securities it believes
have:
[bullet] the potential for initial appreciation based on comparing the
price of a security to its projected funds from operations
growth rate;
[bullet] the potential for continued dividend growth based on
historical patterns of dividend growth; and
[bullet] signs the issuer is an efficient user of capital based on
cost of capital and return on investment comparisons.
Equity securities that survive this screening are further evaluated based on
interviews and fundamental research that focuses on the issuer's strength of
management and property, financial and performance reviews.
Portfolio holdings are continually compared to those in their peer group and
reevaluated for potential sale. A security that:
[bullet] exceeds the adviser's estimated value;
[bullet] the adviser expects to decline in financial performance; or
[bullet] the adviser believes has an issuer that fails to adjust its
strategy to the real estate market cycle
may be evaluated for sale.
The fund may invest up to 25% of its total assets in marketable debt obligations
of companies principally engaged in the real estate industry, mortgage-backed
securities, such as pass-through certificates, real estate mortgage investment
conduits (REMICS), and collateralized mortgage obligations (CMOs), or short-term
investments. These investments will have credit ratings within the four highest
rating categories, and, may be of any maturity or duration.
Debt obligations are selected using a sector rotation approach. The adviser will
seek to adjust the proportion of assets in the various sectors and the selection
of investments within sectors to obtain higher returns on a relative basis. The
adviser selects sectors based on value as compared to risk. The adviser seeks
investments within sectors that are undervalued based on fundamentals such as
earnings coverage of interest, cash flow and liquidity.
Phoenix-Duff & Phelps Real Estate Securities Fund 17
<PAGE>
Temporary Defensive Strategy: When the adviser believes there are extraordinary
risks associated with investment in real estate market securities, the fund may
invest up to 100% of its assets in short-term investments such as money market
instruments, repurchase agreements, certificates of deposits and bankers'
acceptances. When this happens, the fund may not achieve its investment
objective.
RISKS RELATED TO INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
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.
The value of the fund's investments can decrease for a number of reasons. For
example, changing economic conditions that affect the real estate industry may
cause a decline in value of many fund investments. The real estate industry
could experience a decrease in sales and sale prices so that companies engaged
in these businesses do not perform as well as expected. To the extent that the
fund's investments are affected by general economic declines and declines in the
real estate industry, that negatively affect the companies in which the fund
invests, fund share values may decline. Share values can also decline if the
specific issuers selected for fund investment fail to perform as the adviser
expects, regardless of general economic trends, industry trends, and other
economic factors.
In addition to these general risks of investing in the fund, there are several
specific risks of investing in the fund that you should note.
NON-DIVERSIFICATION
The fund is a non-diversified investment company. Diversifying a fund's
portfolio can reduce the risks of investing. As a non-diversified investment
company, the fund may be subject to greater risk since it can invest a greater
proportion of its assets in the securities of a small number of issuers. If the
fund takes concentrated positions in a small number of issuers, changes in the
price of those securities may cause the fund's return to fluctuate more than
that of a diversified investment company.
REAL ESTATE-RELATED INVESTMENTS
The fund primarily invests in the real estate industry. The value of investments
in issuers that hold real estate may be affected by changes in the values of
real properties owned by the issuers. Likewise, investments in businesses
related to the real estate industry may also be affected by the value of real
estate generally or in particular geographical areas in which the businesses
operate. A decline in real estate value may have a negative impact on the value
of your shares.
18 Phoenix-Duff & Phelps Real Estate Securities Fund
<PAGE>
Interest rates also can be a significant factor for issuers that hold real
estate and those in related businesses. Increases in interest rates can cause or
contribute to declines in real estate prices and can cause "slowdowns" in such
related businesses as real estate sales and constructions.
REIT SECURITIES
REIT securities are subject to mortgage prepayment and refinancing risks that
make it difficult to accurately predict cash flows. Additionally, changes in the
value of REIT-owned properties, economic conditions that impact the real estate
industry and interest rate changes may decrease the value of your shares. REIT
investments also depend more on management skills than other types of
investments.
REIT securities often are not diversified and may only finance a limited number
of projects or properties, which may subject REITs to abrupt and large price
movements. REITs are heavily dependent on cash flow from properties and, at
times, the market price of a REIT's securities may be less than the value of
investments in real estate which may result in a lower price when the fund sells
its shares in the REIT. REITs also may trade less frequently and in lower volume
than securities of other larger companies which may also contribute to REIT
securities losing value.
DEBT SECURITIES
Typically, debt obligations will increase in value when interest rates decline
and decrease in value when interest rates rise. If interest rates do not move in
the direction that the adviser expects, then the value of your shares may
decrease. Credit risk for debt obligations typically increases as the rating
declines. Securities with lower credit ratings have a greater chance of
principal and interest payment default. Defaults and missed payments may cause
the value of your shares to decrease and decrease the level of expected income
payments. Longer maturities may be subject to price fluctuations due to interest
rates, tax laws and other general market factors.
IMPACT OF THE YEAR 2000 ISSUE ON FUND INVESTMENTS
The Year 2000 issue is the result of computer programs being written using two
rather than four digits to define the applicable year. There is the possibility
that some or all of a company's computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. If a company whose securities are held by the fund does not "fix" its Year
2000 issue, it is possible that its operations and financial results would be
hurt. Also, the cost of modifying computer programs to become Year 2000
compliant may hurt the financial performance and market price of companies whose
securities are held by the fund.
Phoenix-Duff & Phelps Real Estate Securities Fund 19
<PAGE>
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
THE ADVISER
Duff & Phelps Investment Management Co. ("Duff & Phelps") is the investment
adviser to the fund and is located at 55 East Monroe Street, Suite 3600,
Chicago, Illinois 60603. Duff & Phelps also acts as investment adviser to eight
other mutual funds and as adviser to institutional clients. As of December 31,
1998, Duff & Phelps had approximately $15.2 billion in assets under management
on a discretionary basis.
Subject to the direction of the fund's Board of Trustees, Duff & Phelps is
responsible for managing the fund's investment program and the day-to-day
management of the fund's portfolio. Duff & Phelps manages the fund's assets to
conform with the investment policies as described in this prospectus. The fund
pays Duff & Phelps a monthly investment management fee that is accrued daily
against the value of the fund's net assets at the following rates.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
$1st billion $1+ billion through $2 billion $2+ billion
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee 0.75% 0.70% 0.65%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The adviser has voluntarily agreed to assume operating expenses of the fund
(excluding management fees, distribution and service fees, interest, taxes,
brokerage fees, commissions and extraordinary expenses) until December 31, 1999,
to the extent that such expenses exceed 0.30% of the average annual net asset
values of the fund.
During the fund's last fiscal year, the fund paid total management fees of
$398,336. The ratio of management fees to average net assets for the fiscal year
ended November 30, 1998 was 0.75%. The total advisory fee of 0.75% of the
average net assets of the fund is greater than that for most mutual funds;
however, the Trustees have determined that it is comparable to fees charged by
other mutual funds whose investment objectives are similar to those of the fund.
PORTFOLIO MANAGEMENT
Michael Schatt is responsible for managing the assets of the Real Estate
Securities Fund. Mr. Schatt is employed as Managing Director of Phoenix
Investment Partners, Ltd. and is a Senior Vice President of Duff & Phelps, as
well as Vice President, Phoenix Duff & Phelps Institutional Mutual Funds, The
Phoenix Edge Series Fund, Phoenix Multi-Portfolio Fund and Duff & Phelps
Utilities Income Inc. His current responsibilities include serving as Portfolio
Manager of the fund, Real Estate Equity Securities Portfolio of Phoenix Duff &
Phelps Institutional Mutual Funds, the Real Estate Securities Series of the
Phoenix Edge Series Fund, and managing the real estate investment securities of
Duff & Phelps Utilities Income, Inc. Previously, he served as Director of the
Real Estate Advisory Practice for Coopers & Lybrand, LLC and has over 16 years
experience in the real estate industry.
20 Phoenix-Duff & Phelps Real Estate Securities Fund
<PAGE>
IMPACT OF THE YEAR 2000 ISSUE ON FUND OPERATIONS
The Trustees have directed management to ensure that the systems used by service
providers (Phoenix and its affiliates) in support of the fund's operations be
assessed and brought into Year 2000 compliance. Based upon preliminary
assessments, Phoenix has determined that it will be required to modify or
replace portions of its software so that its computer systems will properly
utilize dates beyond December 31, 1999. Phoenix management believes that the
majority of these systems are already Year 2000 compliant. Phoenix believes that
with modifications to existing software and conversions to new software, the
Year 2000 issue will be mitigated. It is anticipated that such modifications and
conversions will be completed on a timely basis. It is not known at this time if
there could be a material impact on the operations of Phoenix or its affiliates
or the fund if such modifications and conversions are not completed timely.
Phoenix will utilize both internal and external resources to reprogram, or
replace, and test the software for Year 2000 modifications. Certain systems are
already in the process of being converted due to previous initiatives; and it is
expected that all core systems will be remediated and tested by June 1999. The
total cost to become Year 2000 compliant is not an expense of the fund and is
not expected to have a material impact on the operating results of Phoenix.
Phoenix-Duff & Phelps Real Estate Securities Fund 21
<PAGE>
PHOENIX-GOODWIN EMERGING MARKETS BOND FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
Phoenix-Goodwin Emerging Markets Bond Fund has an investment objective of high
current income and a secondary objective of long-term capital appreciation.
There is no guarantee that the fund will achieve its objectives.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The fund will invest primarily in U.S. dollar denominated bonds issued
by governments and corporations in emerging market countries. The bonds
will predominantly be below investment grade (so-called "junk bonds")
since generally these bonds have higher income rates and offer greater
capital appreciation potential over time. However, the fund may invest
in securities with any credit rating or unrated securities, securities
issued by entities in developed countries and non-U.S. dollar
denominated securities if the adviser believes the security offers the
potential for high current income and long-term capital appreciation.
[arrow] The adviser selects securities and countries for investment that it
believes have strong fundamentals such as cash flow and economic
stability. Securities may be evaluated for sale if the security
underperforms based on original expectations, or if there are changes
in the original fundamentals.
[arrow] The fund invests in securities of various maturities to maintain a
level of interest rate risk similar to that of the JP Morgan Emerging
Markets Bond Index, its benchmark. The adviser also seeks to control
duration risk (the length of a debt security on a present value basis),
so that the fund may remain duration neutral.
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
If the adviser misjudges the ability of debt issuers to make scheduled principal
and interest payments, the fund's income available for distribution may be less
than expected. Neither the fund nor the adviser can assure you that a particular
level of income will consistently be achieved.
The adviser will also attempt to select investments that provide long-term
capital appreciation. If the adviser misjudges the return potential, the fund's
returns may be lower than prevailing returns.
22 Phoenix-Goodwin Emerging Markets Bond Fund
<PAGE>
Debt securities are subject to interest rate risk. Generally, the value of debt
securities is inversely related to changes in interest rates. If interest rates
rise, the value of debt securities will fall. This may cause the value of your
shares to decrease.
Securities with longer maturities may be subject to greater price fluctuations
due to interest rate changes, tax laws and other general market factors.
Fund investments in "emerging market" countries (countries with markets that are
not fully developed) may be subject to political and economic uncertainty, as
well as less public information. This may negatively impact the fund's
portfolio. 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. Foreign markets and currencies may not perform as well as U.S. markets.
Emerging market countries and companies doing business in emerging markets may
not have the same range of opportunities as countries and companies in developed
nations. They may also have more obstacles to financial success. In addition, a
negative situation or condition that affects the market in one emerging market
region may have a negative impact on all emerging market regions due to the
so-called "ripple effect."
The fund will invest in below investment grade debt securities (so-called "junk
bonds"). Junk bonds present a greater risk that the issuer will not be able to
make interest or principal payments on time. If interest and principal payments
are not made, the fund would lose income and could expect a decline in the
market value of the securities. In addition, analysis of junk bonds is more
complex than for higher rated securities, making it more difficult for the
adviser to accurately predict return and risk.
The fund may invest in sovereign debt securities issued or guaranteed by
governments and government-related entities. The entities do not guarantee that
the value of fund shares will increase.
Phoenix-Goodwin Emerging Markets Bond Fund 23
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Goodwin Emerging Markets Bond Fund. The bar chart shows changes
in the fund's Class A Shares performance from year to year over the life of the
fund.(1) The table below 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.
EMERGING MARKETS BOND FUND
[graphic omitted]
Calendar Year Annual Return (%)
1996 54.44
1997 13.73
1998 -32.88
(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 16.84% (quarter ending December 31,
1998) and the lowest return for a quarter was (35.96)% (quarter ending September
30, 1998).
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
Average Annual Total Returns
(for the periods ending 12/31/98)(1) One Year Life of the Fund(2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A Shares (36.05)% 6.76%
- -----------------------------------------------------------------------------------------------------------------
Class B Shares (35.70)% 7.12%
- -----------------------------------------------------------------------------------------------------------------
JP Morgan Emerging Markets
Bond Index Plus (3) (14.35)% 13.46%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B Shares.
(2) Class A and B Shares since September 5, 1995.
(3) The JP Morgan Emerging Markets Bond Index Plus is an unmanaged, commonly
used measure of emerging-market debt total return performance. The Index tracks
total return for traded external debt instruments in emerging markets. The Index
is not available for direct investment.
Performance information is not included for Class C shares because the class has
not had annual returns for at least one calendar year.
24 Phoenix-Goodwin Emerging Markets Bond Fund
<PAGE>
FUND EXPENSES
- --------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
<S> <C> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (load) (as a percentage of
the lesser of the value redeemed or the amount invested) None 5%(a) 1%(b)
Maximum Sales Charge (load) Imposed on Reinvested
Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
-------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees (c) 0.25% 1.00% 1.00%
Other Expenses 0.43% 0.43% 0.43%
----- ----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.43% 2.18% 2.18%
===== ===== =====
</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 maximum 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").
Phoenix-Goodwin Emerging Markets Bond Fund 25
<PAGE>
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:
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $614 $906 $1,219 $2,107
- -----------------------------------------------------------------------------------------------------------------
Class B $621 $882 $1,169 $2,323
- -----------------------------------------------------------------------------------------------------------------
Class C $321 $682 $1,169 $2,513
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $614 $906 $1,219 $2,107
- -----------------------------------------------------------------------------------------------------------------
Class B $221 $682 $1,169 $2,323
- -----------------------------------------------------------------------------------------------------------------
Class C $221 $682 $1,169 $2,513
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Goodwin Emerging Markets Bond Fund has an investment objective of high
current income and a secondary objective of long-term capital appreciation.
There is no guarantee that the fund will achieve its objectives.
PRINCIPAL INVESTMENT STRATEGIES
Under normal circumstances, the fund will invest at least 65% of its total
assets in debt securities issued by governments, government-related entities and
corporations in emerging markets or the return from which principally comes from
emerging markets. The adviser
26 Phoenix-Goodwin Emerging Markets Bond Fund
<PAGE>
considers emerging markets to be any country that is defined as an emerging or
developing economy by an International Bank for Reconstruction and Development,
the International Finance Corporation or the United Nations or its authorities.
The fund will invest in at least three countries at any one time and will not
commit more than 40% of its assets to issuers in a single country.
The fund will invest predominantly in debt securities that are rated below
investment grade or if unrated, are judged by the adviser to be of equivalent
quality to below investment grade securities. The high yields on these
securities often reflect the greater risks associated with investing in these
types of securities. Below investment grade securities are in the lower credit
rating categories, or if unrated, of comparable, limited quality. Credit ratings
are established by nationally recognized statistical rating organizations
(NRSROs). Please see the Statement of Additional Information for credit rating
information.
The fund will invest at least 65% of its assets in U.S. dollar denominated debt
securities.
Under normal circumstances, at least 50% of fund assets will be invested in
sovereign debt securities issued or guaranteed by governments,
government-related entities and central banks based in emerging markets;
government owned, controlled or sponsored entities located in emerging markets;
entities with a purpose of restructuring investment characteristics of
governments or related entities in emerging market countries; and debt
obligations issued by organizations such as the Asian Development Bank and the
Inter-American Development Bar.
The fund invests in securities of various maturities to maintain a level of
interest rate risk similar to that of the JP Morgan Emerging Markets Bond Index,
its benchmark. The fund uses a duration neutral strategy. Duration measures the
length of a debt security on a present value basis using the time between now
and when interest and principal should be received weighted against the present
value of the cash to be received at each future date. The fund attempts to
remain "duration neutral" in that the adviser does not predict future interest
rate changes or invest based upon such predictions.
The advisor's portfolio selection and sale methods may result in a higher
portfolio turnover rate. Higher portfolio turnover rates may increase costs to
the fund, negatively affect fund performance and increase capital gains
distributions, which may result in greater tax liability to you.
Temporary Defensive Strategy: If the adviser does not believe that market
conditions are favorable to the fund's principal strategies, the fund may invest
without limit in U.S. debt securities, including short-term money market
instruments. When this happens, the fund may not achieve its investment
objectives.
Please refer to the Statement of Additional Information for more detailed
information about these and other investment techniques of the fund.
Phoenix-Goodwin Emerging Markets Bond Fund 27
<PAGE>
RISKS RELATED TO INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
GENERAL
If the adviser misjudges the ability of the issuer of a portfolio security to
make scheduled interest or other income payments to the fund, the fund's income
available for distribution to shareholders may decrease. Neither the fund nor
the adviser can assure you that a particular level of income will consistently
be achieved.
Typically, debt obligations will increase in value when interest rates decline
and decrease in value when interest rates rise. If interest rates do not move in
the direction that the adviser expects, then the value of your shares may
decrease.
In addition to these general risks of investing in the fund, there are several
specific risks of investing in the fund that you should note.
FOREIGN INVESTING
Investing in non-U.S.-issued debt securities involves special risks and
considerations not typically associated with investing in U.S. securities. These
include:
[bullet] differences in accounting, auditing and financial reporting
standards;
[bullet] generally higher commission rates on foreign portfolio
transactions;
[bullet] differences and inefficiencies in transaction settlement
systems;
[bullet] the possibility of expropriation or confiscatory taxation;
[bullet] adverse changes in investment or exchange control
regulations;
[bullet] political instability; and
[bullet] potential restrictions on the flow of international capital.
Political and economic uncertainty as well as less public information about
investments may negatively impact the fund's portfolio.
Foreign securities often trade with less frequency and volume than domestic
securities and, therefore, may exhibit greater price volatility. Additionally,
dividends and interest payable on foreign securities may be subject to foreign
taxes withheld prior to receipt by the fund.
Many of the foreign securities held by the fund will not be registered with, nor
will the issuers of those securities be subject to the reporting requirements
of, the U.S. Securities and Exchange Commission. Accordingly, there may be less
publicly available information about the securities and about the foreign
company or government issuing them than is available about a domestic company or
government entity. Moreover, individual foreign economies may differ favorably
or unfavorably from the U.S. economy in such respects as growth of gross
national
28 Phoenix-Goodwin Emerging Markets Bond Fund
<PAGE>
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payment positions.
FOREIGN CURRENCY
Portions of the fund's assets may be invested in securities denominated in
foreign currencies. Changes in foreign exchange rates will affect the value of
those securities denominated or quoted in currencies other than the U.S. dollar.
The forces of supply and demand in the foreign exchange markets determine
exchange rates and these forces are in turn affected by a range of economic,
political, financial, governmental and other factors. Exchange rate fluctuations
can affect the fund's net asset value (share price) and income either positively
or negatively depending upon whether foreign currencies are appreciating or
depreciating in value relative to the U.S. dollar. Exchange rates fluctuate over
both the long and short terms.
On January 1, 1999, eleven European countries began converting from their
sovereign currency to the European Union common currency called the "Euro." This
conversion may expose the fund to certain risks including the reliability and
timely reporting of pricing information of the fund's portfolio holdings. In
addition, one or more of the following may adversely affect specific securities
in the fund's portfolio:
[bullet] known trends or uncertainties related to the Euro conversion
that an issuer reasonably expects will have a material impact
on revenues, expenses or income from its operations;
[bullet] competitive implications of increased price transparency of
European Union markets (including labor markets) resulting
from adoption of a common currency and issuers' plans for
pricing their own products and services in the Euro;
[bullet] issuers' ability to make required information technology
updates on a timely basis, and costs associated with the
conversion (including costs of dual currency operations
through January 1, 2002);
[bullet] currency exchange rate risk and derivatives exposure
(including the disappearance of price sources, such as
certain interest rate indices); and
[bullet] potential tax consequences.
EMERGING MARKET INVESTING
Investments in less-developed countries whose markets are still emerging
generally present risks in greater degree than those presented by investment in
foreign issuers based in countries with developed securities markets and more
advanced regulatory systems. Prior governmental approval for the release of
investment income, capital or the proceeds of sales of securities to foreign
investors may be required under certain circumstances in some developing
countries, and the extent of foreign investment in domestic companies may be
subject to limitation in other developing countries. The charters of individual
companies in developing countries may impose limitations on foreign ownership to
prevent, among other concerns, violation of foreign
Phoenix-Goodwin Emerging Markets Bond Fund 29
<PAGE>
investment limitations. Historically, many emerging markets have experienced
high inflation rates, creating a negative interest rate environment and
devaluing outstanding financial assets. In addition, a negative situation or
condition that affects the market in one emerging market region may have a
negative impact on all emerging market regions due to the so-called "ripple
effect."
The economies of developing countries generally are heavily dependent upon
international trade, and, accordingly, have been, and may continue to be,
adversely affected by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. These economies also have been (and may
continue to be) adversely affected by economic conditions in the countries with
which they trade.
BELOW INVESTMENT GRADE SECURITIES
Although below investment grade securities provide greater income and
opportunity for capital appreciation than investments in higher-grade
securities, they also typically entail greater price volatility and principal
and interest risk. There is a greater risk that an issuer will not be able to
make principal and interest payments on time. Lower-rated securities may not
trade as often and may be less liquid than higher-rated securities. Fund
expenses could increase if the fund were to pursue recovery of missed income
payments. Achievement of fund goals will also be more dependent on the adviser's
ability to select fund investments than if the fund invested in securities in
higher rating categories. Analysis of the creditworthiness of issuers of below
investment grade securities may be more complex than for higher-grade
securities, making it more difficult for the adviser to accurately predict risk.
LONG-TERM MATURITIES
Securities with longer maturities may be subject to greater price fluctuations
due to interest rate changes, tax laws and other general market factors than
securities with shorter maturities.
GOVERNMENT SECURITIES
Obligations issued or guaranteed by governments, government-related entities and
central banks based in emerging markets only guarantee principal and interest
will be timely paid to holders of the securities. The entities do not guarantee
that the value of fund shares will increase.
IMPACT OF THE YEAR 2000 ISSUE ON FUND INVESTMENTS
The Year 2000 issue is the result of computer programs being written using two
rather than four digits to define the applicable year. There is the possibility
that some or all of a company's computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. If a company whose securities are held by the fund does not "fix" its Year
2000 issue, it is possible that its operations and financial results would be
hurt. Also, the cost of modifying computer programs to become Year 2000
compliant may hurt the financial performance and market price of companies whose
securities are held by the fund.
30 Phoenix-Goodwin Emerging Markets Bond Fund
<PAGE>
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
THE ADVISER
Phoenix Investment Counsel, Inc. ("Phoenix") is the investment adviser to the
fund and is located at 56 Prospect Street, Hartford, CT 06115. Phoenix also acts
as the investment adviser for 14 other mutual funds, as subadviser to three
mutual funds, and as adviser to institutional clients. As of December 31, 1998,
Phoenix had $23.9 billion in assets under management. Phoenix has acted as an
investment adviser for over sixty years.
Subject to the direction of the fund's Board of Trustees, Phoenix is responsible
for managing the fund's investment program and the day-to-day management of the
fund's portfolio. Phoenix manages the fund's assets to conform with the
investment policies as described in this prospectus. The fund pays Phoenix a
monthly investment management fee that is accrued daily against the value of the
fund's net assets at the following rates.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
$1st billion $1+ billion through $2 billion $2+ billion
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee 0.75% 0.70% 0.65%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
During the fund's last fiscal year, the fund paid total management fees of
$730,717. The ratio of management fees to average net assets for the fiscal year
ended November 30, 1998 was 0.75%. The total advisory fee of 0.75% of the
average net assets of the fund is greater than that for most mutual funds;
however, the Trustees have determined that it is comparable to fees charged by
other mutual funds whose investment objectives are similar to those of the fund.
PORTFOLIO MANAGEMENT
Peter S. Lannigan is the Portfolio Manager of the Emerging Markets Bond Fund and
as such is primarily responsible for the day-to-day management of the fund. Mr.
Lannigan served as Co-Manager of the fund from April 1995 until November 1996.
Mr. Lannigan served as a Vice President of Phoenix between May 1995 and
September 1996, a Director, Fixed Income Research between 1996-1997, and
presently, he is a Managing Director, Fixed Income. From 1993 until 1995, he was
a Director, Fixed Income Research for Phoenix Home Life Mutual Insurance
Company.
IMPACT OF THE YEAR 2000 ISSUE ON FUND OPERATIONS
The Trustees have directed management to ensure that the systems used by service
providers (Phoenix and its affiliates) in support of the fund's operations be
assessed and brought into Year 2000 compliance. Based upon preliminary
assessments, Phoenix has determined that it will be required to modify or
replace portions of its software so that its computer systems will properly
utilize dates beyond December 31, 1999. Phoenix management believes that the
Phoenix-Goodwin Emerging Markets Bond Fund 31
<PAGE>
majority of these systems are already Year 2000 compliant. Phoenix believes that
with modifications to existing software and conversions to new software, the
Year 2000 issue will be mitigated. It is anticipated that such modifications and
conversions will be completed on a timely basis. It is not known at this time if
there could be a material impact on the operations of Phoenix or its affiliates
or the fund if such modifications and conversions are not completed timely.
Phoenix will utilize both internal and external resources to reprogram, or
replace, and test the software for Year 2000 modifications. Certain systems are
already in the process of being converted due to previous initiatives; and it is
expected that all core systems will be remediated and tested by June 1999. The
total cost to become Year 2000 compliant is not an expense of the fund and is
not expected to have a material impact on the operating results of Phoenix.
32 Phoenix-Goodwin Emerging Markets Bond Fund
<PAGE>
PHOENIX-GOODWIN TAX-EXEMPT BOND FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
Phoenix-Goodwin Tax-Exempt Bond Fund has an investment objective of producing as
high a level of current income exempt from federal income taxation as is
consistent with the preservation of capital. There is no guarantee that the fund
will achieve the objective.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The fund will invest in municipal securities, primarily municipal
bonds, the income from which is fully exempt from federal income
taxation.
[arrow] Income from some fund investments may be included in the federal
alternative minimum tax calculation and some may be subject to state
and local taxes. In addition, up to 20% of fund assets may be invested
in taxable fixed income obligations.
[arrow] The adviser will seek to adjust the proportions of the fund's
investment in various sectors of the tax exempt market and the
selection of investments within sectors to obtain higher returns on a
relative basis.
[arrow] The adviser attempts to select securities that it believes are
undervalued based on credit rating, coupon rate, calls, maturity and
average life. The adviser also attempts to select securities that are
located in an area or region that is experiencing economic growth.
[arrow] Municipal securities selected for investment will have credit ratings
within the four highest rating categories, or, if unrated, will be of
comparable quality.
[arrow] The fund invests in securities of various maturities to maintain a
level of interest rate risk similar to that of Lehman Brothers
Municipal Bond Index, its benchmark. The adviser also seeks to control
duration risk (the length of a debt security on a present value basis),
so that the fund may remain duration neutral.
[arrow] The fund may attempt to minimize risk by diversifying its investments
broadly and by investing no more than 25% of its total assets in
municipal securities issued by one state or territory.
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
If the adviser misjudges the ability of issuers to make scheduled principal and
interest payments, the fund's income available for distribution may be less than
other funds. In addition, tax-exempt securities may not provide a higher after
tax return than taxable securities.
Phoenix-Goodwin Tax-Exempt Bond Fund 33
<PAGE>
Municipal and other debt securities are subject to interest rate risk.
Generally, the value of municipal and debt securities is inversely related to
changes in interest rates. If interest rates rise, the value of municipal and
debt securities will fall. This may cause the value of your shares to decrease.
Principal and interest payments may not be guaranteed by the issuing body and
may be payable only from monies derived from a particular source (so-called
"revenue bonds"). In addition, the market for municipal securities is often thin
and can be temporarily affected by large purchases and sales.
The fund may invest in municipal securities with longer maturities. Municipal
securities with longer maturities may be subject to greater price fluctuations
due to interest rates, tax laws and other general market factors than securities
with shorter maturities.
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Goodwin Tax-Exempt Bond Fund. The bar chart shows changes in the
fund's Class A Shares performance from year to year over a 10-year period.(1)
The table below 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.
TAX-EXEMPT BOND FUND
[graphic omitted]
Calendar Year Annual Return (%)
1989 11.00
1990 6.32
1991 11.41
1992 10.65
1993 13.44
1994 -7.41
1995 18.21
1996 3.05
1997 8.33
1998 3.10
(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 10-year period shown in the
chart above, the highest return for a quarter was 8.07% (quarter ending March
31, 1995) and the lowest return for a quarter was (6.00)% (quarter ending March
31, 1994).
34 Phoenix-Goodwin Tax-Exempt Bond Fund
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
Life of the Fund(2)
-----------------------------
Average Annual Total Returns
(for the periods ending 12/31/98)(1) One Year Five Years Ten Years Class A Class B
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares -1.78% 3.7% 7.07% 7.35% --
- -----------------------------------------------------------------------------------------------------------------
Class B Shares -1.32% N/A N/A -- 4.65%
- -----------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index(3) 6.48% 6.23% 8.22% 8.25% 7.84%(4)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B Shares.
(2) Class A Shares since July 15, 1988 and Class B Shares since March 16, 1994.
(3) The Lehman Brothers Municipal Bond Index is an unmanaged, commonly used
measure of long-term, investment-grade, tax-exempt municipal bond total return
performance. The Lehman Brothers Municipal Bond Index performance does not
reflect sales charges.
(4) Index performance since March 31, 1994.
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
SHARES SHARES
------ ------
<S> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 4.75% None
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 0.45% 0.45%
Distribution and Service (12b-1) Fees (b) 0.25% 1.00%
Other Expenses 0.27% 0.27%
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 0.97% 1.72%
===== =====
</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) 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").
Phoenix-Goodwin Tax-Exempt Bond Fund 35
<PAGE>
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:
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $569 $769 $986 $1,608
- ------------------------------------------------------------------------------------------------------------------
Class B $575 $742 $933 $1,831
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $569 $769 $986 $1,608
- ------------------------------------------------------------------------------------------------------------------
Class B $175 $542 $933 $1,831
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Goodwin Tax-Exempt Bond Fund has an investment objective of producing as
high a level of current income exempt from federal income taxation as is
consistent with the preservation of capital. There is no guarantee that the fund
will achieve the objective.
PRINCIPAL INVESTMENT STRATEGIES
The adviser intends to use a sector rotation approach to select the types of
securities for fund investment. Sector rotation allows the adviser to adjust the
proportion of fund investments in various sectors of the tax exempt market.
The adviser selects securities for fund investment using an analytical approach
which focuses on:
36 Phoenix-Goodwin Tax-Exempt Bond Fund
<PAGE>
[bullet] The relative value of a security considering the security's
credit rating. The adviser seeks to identify those securities
that have stable to improving credit ratings and that the
adviser believes are undervalued.
[bullet] The structure of the security. The adviser will look at the
coupon rate, calls, maturity and average life of a security.
[bullet] Geographic opportunities. The adviser seeks to identify
areas, regions and countries that are experiencing economic
growth.
[bullet] Sector relationships. The adviser seeks to identify those
sectors that are experiencing improved fundamentals or that
are undervalued.
Under normal market conditions, the fund will invest at least 80% of its net
assets in municipal securities, primarily municipal bonds, the income from which
is fully exempt from federal income taxation and that are rated within the four
highest rating categories. Municipal securities means obligations, including
municipal bonds and notes and tax-exempt commercial paper, issued by or on
behalf of states, territories and possessions of the United States, the District
of Columbia and their political subdivisions, agencies, and instrumentalities,
the interest from which is, in the opinion of counsel to the issuers of such
securities, exempt from federal income taxation.
The fund invests in securities of various maturities to maintain a level of
interest rate risk similar to that of the Lehman Brothers Municipal Bond Index,
its benchmark. The fund uses a duration neutral strategy. Duration measures the
length of a debt security on a present value basis using the time between now
and when interest and principal should be received weighted against the present
value of the cash to be received at each future date. The fund attempts to
remain "duration neutral" in that the adviser does not predict future interest
rate changes or invest based upon such predictions.
The fund will attempt to minimize risk through diversification by investing no
more than 25% of its total assets in the municipal securities issued by one
state or territory.
The fund may invest up to 20% of its net assets in qualified "private activity"
industrial development bonds and taxable fixed income obligations. The income
from qualified "private activity" industrial development bonds will be exempt
from federal income taxation, but it is included in the federal alternative
minimum tax calculation. Taxable fixed income obligations in which the fund may
invest include: U.S. government obligations, high-investment-grade corporate
debt securities, high-investment-grade commercial paper, certificates of deposit
and repurchase agreements with banks, brokers and dealers considered by the fund
to be creditworthy. Income from some investments may also be subject to state
and local taxes.
Temporary Defensive Strategy: The fund may invest all of its assets in U.S.
government obligations, high-investment-grade corporate debt securities,
high-investment-grade commercial paper, certificates of deposit and repurchase
agreements with banks, brokers and
Phoenix-Goodwin Tax-Exempt Bond Fund 37
<PAGE>
dealers considered by the fund to be trustworthy for temporary defensive
purposes. In such instances, the fund may not achieve its stated objective.
RISKS RELATED TO INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
GENERAL
If the adviser misjudges the ability of issuers to make scheduled principal and
interest payments, the fund's income available for distribution may be less than
other funds. In addition, tax-exempt securities may not provide a higher
after-tax return than taxable securities.
Municipal and other debt securities are subject to interest rate risk.
Generally, the value of municipal and debt securities is inversely related to
changes in interest rates. If interest rates rise, the value of municipal and
debt securities will fall. This may cause the value of your shares to decrease.
In addition to these general risks of investing in the fund, there are several
specific risks of investing in the fund that should be noted.
MUNICIPAL SECURITIES
Principal and interest payments may not be guaranteed by the issuing body and
may be payable only from monies derived from a particular source (so-called
"revenue bonds"). If the source does not perform as expected, principal and
income payments may not be made on time or at all. In addition, the market for
municipal securities is often thin and can be temporarily affected by large
purchases and sales, including those by the fund.
LONG-TERM MATURITIES
The fund may invest in municipal securities with longer maturities. Municipal
securities with longer maturities may be subject to greater price fluctuations
due to interest rates, tax laws and other general market factors than securities
with shorter maturities.
IMPACT OF THE YEAR 2000 ISSUE ON FUND INVESTMENTS
The Year 2000 issue is the result of computer programs being written using two
rather than four digits to define the applicable year. There is the possibility
that some or all of a company's computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. If a company whose securities are held by the fund does not "fix" its Year
2000 issue, it is possible that its operations and financial results would be
hurt. Also the cost of modifying computer programs to become Year 2000 compliant
may hurt the financial performance and market price of companies whose
securities are held by the fund.
38 Phoenix-Goodwin Tax-Exempt Bond Fund
<PAGE>
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
THE ADVISER
Phoenix Investment Counsel, Inc. ("Phoenix") is the investment adviser to the
fund and is located at 56 Prospect Street, Hartford, CT 06115. Phoenix also acts
as the investment adviser for 14 other mutual funds, as subadviser to three
mutual funds and as adviser to institutional clients. As of December 31, 1998,
Phoenix had $23.9 billion in assets under management. Phoenix has acted as an
investment adviser for over sixty years.
Subject to the direction of the fund's Board of Trustees, Phoenix is responsible
for managing the fund's investment program and the day-to-day management of the
fund's portfolio. Phoenix manages the fund's assets to conform with the
investment policies as described in this prospectus. The fund pays Phoenix a
monthly investment management fee that is accrued daily against the value of the
fund's net assets at the following rates.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
$1st billion $1+ billion through $2 billion $2+ billion
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee 0.45% 0.40% 0.35%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
During the fund's last fiscal year, the fund paid total management fees of
$544,278. The ratio of management fees to average net assets for the fiscal year
ended November 30, 1998 was 0.45%.
PORTFOLIO MANAGEMENT
Timothy Heaney has served as Portfolio Manager of the Tax-Exempt Bond Fund since
September 1997 and, as such, is primarily responsible for the day-to-day
management of the fund. Mr. Heaney is also the Portfolio Manager of Phoenix
California Tax-Exempt Bonds, Inc. and, from March 1996 to September 1997, he
served as Co-Manager. Mr. Heaney is Vice President of the fund and served as
Director, Fixed Income Research of Phoenix from 1996 to 1998. Since 1998, he is
managing Director, Fixed Income of Phoenix. From 1995 to 1996, he was an
Investment Analyst with Phoenix, and, from 1992 to 1994, he was an Investment
Analyst with Phoenix Home Life Mutual Insurance Company.
IMPACT OF THE YEAR 2000 ISSUE ON FUND OPERATIONS
The Trustees have directed management to ensure that the systems used by service
providers (Phoenix and its affiliates) in support of the funds' operations be
assessed and brought into Year 2000 compliance. Based upon preliminary
assessments, Phoenix has determined that it will be required to modify or
replace portions of its software so that its computer systems will properly
utilize dates beyond December 31, 1999. Phoenix management believes that the
majority of these systems are already Year 2000 compliant. Phoenix believes that
with modifications to existing software and conversions to new software, the
Year 2000 issue will be mitigated. It is anticipated that such modifications and
conversions will be completed on a timely basis. It is not
Phoenix-Goodwin Tax-Exempt Bond Fund 39
<PAGE>
known at this time if there could be a material impact on the operations of
Phoenix or its affiliates or the fund if such modifications and conversions are
not completed timely.
Phoenix will utilize both internal and external resources to reprogram, or
replace, and test the software for Year 2000 modifications. Certain systems are
already in the process of being converted due to previous initiatives; and it is
expected that all core systems will be remediated and tested by June 1999. The
total cost to become Year 2000 compliant is not an expense of the fund and is
not expected to have a material impact on the operating results of Phoenix.
40 Phoenix-Goodwin Tax-Exempt Bond Fund
<PAGE>
PHOENIX-SENECA MID CAP FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
Phoenix-Seneca Mid Cap Fund has an investment objective of long-term capital
appreciation. There is no guarantee that the fund will achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The fund will seek to increase the value of your shares by investing in
securities that the subadviser believes have earnings growth potential
and the potential for capital appreciation over the intermediate or
long term.
[arrow] The fund intends to invest primarily in common stocks of U.S. companies
with market capitalizations between $1 billion and $10 billion.
[arrow] The fund may invest in any class or type of security, including
preferred stocks, bonds, junk bonds, and convertible securities whether
foreign (non-U.S.) or U.S., that the adviser believes have the
potential to appreciate.
[arrow] Generally, the fund expects to hold at least 35 positions.
[arrow] The fund is managed by an adviser and subadviser. The subadviser
screens for growth in the mid-cap market. The focus is on stocks the
subadviser projects will have earnings growth rates at substantially
higher levels than the market and that it forecasts will have major
earnings acceleration.
[arrow] More specifically, the subadviser selects stocks that it believes are
producing quality, sustainable earnings, are well managed, and are
reasonably valued relative to the growth rate and to the market.
[arrow] The subadviser will review stocks for potential sale if earnings
reports disappoint, valuation levels reach the top of their historic
level, or if earnings momentum peaks.
[arrow] Debt obligations selected for investment may be of any credit quality
or maturity.
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
Conditions affecting the overall economy, specific industries, or companies in
which the fund invests can be worse than expected. As a result, the value of
your shares may decrease. The fund may also be subject to greater risks than a
fund that invests in a broader range of securities that do not have growth
potential.
Mid-capitalization investing presents additional risks. These issuers may be
affected to a greater extent than larger, well established companies by changes
in general economic
Phoenix-Seneca Mid Cap Fund 41
<PAGE>
conditions and conditions in particular industries, and they may not have the
same operating history and "track record" as larger companies. Future
performance of mid-cap companies may, therefore, be more difficult to predict.
Political and economic uncertainty, as well as less public information about
foreign investments, may negatively impact the fund's portfolio. 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. Foreign
markets and currencies may not perform as well as U.S. markets.
Typically, debt obligations will increase in value when interest rates decline
and decrease in value when interest rates rise. If interest rates do not move in
the direction that the adviser expects, then the value of your shares may
decrease. Debt obligations with longer maturities may be subject to greater
price fluctuation and those with lower credit quality are subject to greater
risk that principal and interest payments will not be made on time or at all.
Debt obligations with longer maturities may be subject to greater price
fluctuation.
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Seneca Mid Cap Fund. The bar chart shows changes in the fund's
Class A Shares performance from year to year over the life of the fund.(1) The
table below 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.
MID CAP FUND
[graphic omitted]
Calendar Year Annual Return (%)
1990 20.47
1991 47.93
1992 8.14
1993 10.13
1994 -3.84
1995 30.84
1996 8.55
1997 13.21
1998 19.78
(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 28.79% (quarter ending December 31,
1998) and the lowest return for a quarter was (16.14)% (quarter ending September
30, 1998).
42 Phoenix-Seneca Mid Cap Fund
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
Life of the Fund(2)
-----------------------------
Average Annual Total Returns
(for the periods ending 12/31/98)(1) One Year Five Years Class A Class B
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Shares 14.07% 12.03% 16.20% --
- -----------------------------------------------------------------------------------------------------------
Class B Shares 15.16% N/A -- 14.97%
- -----------------------------------------------------------------------------------------------------------
S&P MidCap Index(3) 19.11% 18.85% 17.99% 21.84%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B Shares.
(2) Class A Shares since November 1, 1989, and Class B Shares since July 18,
1994.
(3) The S&P MidCap Index is an unmanaged commonly used measure of total return
performance of mid-capitalization companies. The Index is not available for
direct investment.
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
SHARES SHARES
------ ------
<S> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 4.75% None
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 0.30% 0.30%
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.30% 2.05%
===== =====
</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) 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").
Phoenix-Seneca Mid Cap Fund 43
<PAGE>
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:
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $601 $868 $1,154 $1,968
- ------------------------------------------------------------------------------------------------------------------
Class B $608 $843 $1,103 $2,187
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $601 $868 $1,154 $1,968
- ------------------------------------------------------------------------------------------------------------------
Class B $208 $643 $1,103 $2,187
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Seneca Mid Cap Fund has an investment objective of long-term capital
appreciation. There is no guarantee that the fund will achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
The fund contracts with an adviser, Phoenix Investment Counsel, Inc., to manage
the fund's investment program and to be responsible for the general operation of
the fund. It also contracts with a subadviser, Seneca Capital Management LLC, to
manage investments of the fund. The subadviser selects common stocks of mid-cap
companies that it believes have the potential to appreciate. However, since
common stocks do not always afford the greatest promise for capital
appreciation, the fund may invest any amount of its assets in any class or type
of security believed by the subadviser to offer the potential for capital
appreciation over both the intermediate and long terms.
44 Phoenix-Seneca Mid Cap Fund
<PAGE>
The fund will seek to increase the value of your shares by investing in
securities that the subadviser believes have earnings growth potential and the
potential for capital appreciation over the intermediate or long term.
The fund intends to invest primarily in common stocks of U.S. companies with
market capitalizations between $1 billion and $10 billion. Generally, the fund
expects to hold at least 35 positions. The subadviser selects stocks using a
screening process. It screens for growth across the mid-cap market. The focus is
on stocks the subadviser projects will have earnings growth rates at
substantially higher levels than the market and that it forecasts will have
major earnings acceleration. More specifically, the subadviser selects stocks
that it believes are producing quality, sustainable earnings, are well managed,
and are reasonably valued relative to the growth rate and to the market.
Up to one-third of fund assets may be invested in a broad range of foreign
securities, including equity, debt and convertible securities and foreign
government securities that the adviser believes have the potential to
appreciate.
The subadviser will review stocks for potential sale if earnings reports
disappoint; valuation levels reach the top of their historic level; or if
earnings momentum peaks.
Temporary Defensive Strategy: The subadviser, at its discretion, may invest in
any type of security that appears advantageous on the combined considerations of
risk and the protection of capital, cash retentions, or invest all or part of
its assets in cash equivalents for temporary defensive purposes such as when the
market for growth stocks is adverse. When this happens, the fund may not achieve
its investment objective.
Please refer to the Statement of Additional Information for more detailed
information about these and other investment techniques of the fund.
RISKS RELATED TO INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
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.
The value of the fund's investments can decrease for a number of reasons. For
example, changing economic conditions may cause a decline in the value of many
or most investments. Particular industries can face poor market conditions for
their products or services so that companies engaged in those businesses do not
perform as well as companies in other industries. To the extent that the fund's
investments are affected by general economic declines and declines in industries
that negatively affect the companies in which the fund invests, fund share
values may decline. Share values can also
Phoenix-Seneca Mid Cap Fund 45
<PAGE>
decline if the specific companies selected for fund investment fail to perform
as the subadviser expects, regardless of general economic trends, industry
trends and other economic factors.
In addition to these general risks of investing in the fund, there are several
specific risks of investing in the fund that you should note.
MID-CAPITALIZATION INVESTING
Companies with mid-capitalizations are often companies in industries that have
recently emerged due to cultural, economic, regulatory or technological
developments. Such developments can have a significant positive or negative
effect on mid-capitalization companies and their stock performance. Given the
limited operating history and rapidly changing fundamental prospects, investment
returns from mid-capitalization companies can be highly volatile. Mid-sized
companies may find their ability to raise capital impaired by their size or lack
of operating history. Product lines are often less diversified and subject to
competitive threats. Mid-cap stocks are subject to varying patterns of trading
volume and may, at times, be difficult to sell.
Focusing fund investments in mid-cap 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. Investment returns may be less for mid-cap
companies with appreciation potential because return is more dependent on market
increases and decreases as compared to stocks that provide dividend payments.
Should the market decline, the share value of mid-cap companies may decline at a
sharper rate than larger, dividend-paying companies.
DEBT SECURITIES
Typically, debt obligations will increase in value when interest rates decline
and decrease in value when interest rates rise. If interest rates do not move in
the direction that the adviser expects, then the value of your shares may
decrease. Credit risk for debt obligations typically increases as the rating
declines. Securities with lower credit ratings have a greater chance of
principal and interest payment default. Defaults and missed payments may cause
the value of your shares to decrease and decrease the level of expected income
payments. Longer maturities may be subject to price fluctuations due to interest
rates, tax laws and other general market factors.
IMPACT OF THE YEAR 2000 ISSUE ON FUND INVESTMENTS
The Year 2000 issue is the result of computer programs being written using two
rather than four digits to define the applicable year. There is the possibility
that some or all of a company's computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. If a company whose securities are held by the fund does not "fix" its Year
2000 issue, it is possible that its operations and financial results would be
hurt. Also, the cost of modifying computer programs to become Year 2000
compliant may hurt the financial performance and market price of companies whose
securities are held by the fund.
46 Phoenix-Seneca Mid Cap Fund
<PAGE>
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 other mutual funds, as
subadviser to three mutual funds and as adviser to institutional clients. As of
December 31, 1998, Phoenix had $23.9 billion in assets under management. Phoenix
has acted as an investment adviser for over sixty years.
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 two other mutual funds and as investment adviser
to institutions and individuals. As of December 31, 1998, Seneca had $5.9
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.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
$1st billion $1+ billion through $2 billion $2+ billion
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee 0.75% 0.70% 0.65%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Phoenix pays Seneca a subadvisory fee at the following rates:
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
$1st billion $1+ billion through $2 billion $2+ billion
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Subadvisory Fee 0.375% 0.350% 0.325%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
During the fund's last fiscal year, the fund paid total management fees of
$2,476,987. The ratio of management fees to average net assets for the fiscal
year ended November 30, 1998 was 0.75%. The total advisory fee of 0.75% of the
aggregate net assets of the fund is greater than that for most mutual funds;
however, the Trustees have determined that it is comparable to fees charged by
other mutual funds whose investment objectives are similar to those of the fund.
Phoenix-Seneca Mid Cap Fund 47
<PAGE>
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. Since January 1998, Ms. Seneca has also served as Co-Manager of
Phoenix Equity Opportunities Series of Phoenix Strategic Equity Series Fund and,
since June 1998, she has served as Co-Manager of the fund. 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. Since January 1998, Mr. Little has served as Co-Manager of
Phoenix Equity Opportunities Series of Phoenix Strategic Equity Series Fund,
and, since June 1998, he has served as Co-Manager of the fund. Mr. Little also
serves as a team leader for Phoenix-Seneca Growth Fund and Phoenix-Seneca
Mid-Cap "EDGE(SM)" Fund. 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 June 1998.
Mr. Jacks was Secretary of the Phoenix-Seneca Funds from February 1996 through
February 1998. Mr. Jacks was a Trustee of Seneca Funds from February 1996
through June 1997. Since July 1990, Mr. Jacks has been a Portfolio Manager of
GMG/Seneca, and, since July 1996, he has been a portfolio manager of Seneca.
IMPACT OF THE YEAR 2000 ISSUE ON FUND OPERATIONS
The Trustees have directed management to ensure that the systems used by service
providers (Phoenix and its affiliates) in support of the funds' operations be
assessed and brought into Year 2000 compliance. Based upon preliminary
assessments, Phoenix has determined that it will be required to modify or
replace portions of its software so that its computer systems will properly
utilize dates beyond December 31, 1999. Phoenix management believes that the
majority of these systems are already Year 2000 compliant. Phoenix believes that
with modifications to existing software and conversions to new software, the
Year 2000 issue will be mitigated. It is anticipated that such modifications and
conversions will be completed on a timely basis. It is not known at this time if
there could be a material impact on the operations of Phoenix or its affiliates
or the fund if such modifications and conversions are not completed timely.
Phoenix will utilize both internal and external resources to reprogram, or
replace, and test the software for Year 2000 modifications. Certain systems are
already in the process of being converted due to previous initiatives; and it is
expected that all core systems will be remediated and tested by June 1999. The
total cost to become Year 2000 compliant is not an expense of the fund and is
not expected to have a material impact on the operating results of Phoenix.
48 Phoenix-Seneca Mid Cap Fund
<PAGE>
PRICING OF FUND SHARES
- --------------------------------------------------------------------------------
HOW IS THE SHARE PRICE DETERMINED?
The fund calculates a share price for each class of its shares. The share price
is based on the net assets of the fund and the number of outstanding shares. In
general, the fund calculates net asset value by:
[bullet] adding the values of all securities and other assets of the
fund,
[bullet] subtracting liabilities, and
[bullet] dividing by the total number of outstanding shares of the
fund.
Asset Value: The fund's investments are valued at market value. If market
quotations are not available, the fund determines a "fair value" for an
investment according to rules and procedures approved by the Trustees. Foreign
and domestic debt securities (other than short-term investments) are valued on
the basis of broker quotations or valuations provided by a pricing service
approved by the Trustees when such prices are believed to reflect the fair value
of such securities. Foreign and domestic equity securities are valued at the
last sale price or, if there has been no sale that day, at the last bid price,
generally. Short-term investments having a remaining maturity of sixty days or
less are valued at amortized cost, which the Trustees have determined
approximates market value.
Liabilities: Class specific expenses, distribution fees, service fees and other
liabilities are deducted from the assets of each class. Expenses and
liabilities that are not class specific (such as management fees) are allocated
to each class in proportion to each class's net assets, except where an
alternative allocation can be more fairly made.
Net Asset Value: The liability allocated to a class plus any other expenses are
deducted from the proportionate interest of such class in the assets of the
fund. The resulting amount for each class is then divided by the number of
shares outstanding of that class to produce each class's net asset value per
share.
The net asset value per share of each class of the fund is determined on days
when the New York Stock Exchange (the "NYSE") is open for trading as of the
close of trading (normally 4:00 PM eastern time). The fund will not calculate
its net asset values per share on days when the NYSE is closed for trading.
Trading of securities held by the fund in foreign markets may negatively or
positively impact the value of such securities on days when the fund neither
trades securities nor calculates its net asset values (i.e., weekends and
certain holidays).
AT WHAT PRICE ARE SHARES PURCHASED?
All investments received by the fund's authorized agents prior to the close of
regular trading on the NYSE (normally 4:00 PM eastern time) will be executed
based on that day's net asset value. Shares credited to your account from the
reinvestment of fund distributions will be in
Phoenix Multi-Portfolio Fund 49
<PAGE>
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?
Each of the funds presently offers two classes of shares, and the International
Fund and the Emerging Markets Bond Fund offer one additional class of shares.
Each class of shares has different sales and distribution charges (see "Fund
Expenses" previously in this prospectus). The funds have adopted distribution
and service plans allowed under Rule 12b-1 of the Investment Company Act of 1940
that authorize the fund to pay distribution and service fees for the sale of its
shares and for services provided to shareholders. Because distribution and
service fees are paid out of the fund's assets on an ongoing basis, over time
these fees will increase the cost of your investment and may cost you more than
paying other types of sales charges.
WHAT ARRANGEMENT IS BEST FOR YOU?
The different classes permit you to choose the method of purchasing shares that
is most beneficial to you. In choosing a class, consider the amount of your
investment, the length of time you expect to hold the shares, whether you decide
to receive distributions in cash or to reinvest them in additional shares, and
any other personal circumstances. Depending upon these considerations, the
accumulated distribution and service fees and contingent deferred sales charges
of one class may be more or less than the initial sales charge and accumulated
distribution and service fees of another class of shares bought at the same
time. Because distribution and service fees are paid out of the fund's assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
CLASS A SHARES. If you purchase Class A Shares, you will pay a sales charge at
the time of purchase equal to 4.75% of the offering price (4.99% of the amount
invested). The sales charge may be reduced or waived under certain conditions.
Class A Shares are not subject to any charges by the fund when redeemed. Class A
Shares have lower distribution and service fees (0.25%) and pay higher dividends
than any other class.
CLASS B SHARES. If you purchase Class B Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class B Shares within the first 5
years after they are purchased, you will pay a sales charge of up to 5% of your
shares' value. See "Deferred Sales Charge Alternative--Class B and 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
50 Phoenix Multi-Portfolio Fund
<PAGE>
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.
PHOENIX MULTI-PORTFOLIO FUND
CLASS C SHARES. (International Fund and Emerging Markets Bond Fund only.) If you
purchase Class C Shares, you will not pay a sales charge at the time of
purchase. If you sell your Class C Shares within the first year after they are
purchased, you will pay a sales charge of 1%. See "Deferred Sales Charge
Alternative--Class B and C Shares" below. Class C Shares have the same
distribution and service fees (1.00%) and pay comparable dividends as Class B
Shares. Class C Shares do not convert to any other class of shares of the fund.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
The public offering price of Class A Shares is the net asset value plus a sales
charge that varies depending on the size of your purchase (see "Class A
Shares--Reduced Sales Charges: Combination Purchase Privilege" in the Statement
of Additional Information). Shares purchased based on the automatic reinvestment
of income dividends or capital gains distributions are not subject to any sales
charges. The sales charge is divided between your investment dealer and the
fund's underwriter (Phoenix Equity Planning Corporation or "PEPCO").
SALES CHARGE YOU MAY PAY TO PURCHASE CLASS A SHARES
<TABLE>
<CAPTION>
SALES CHARGE AS
A PERCENTAGE OF
------------------------------------------
AMOUNT OF NET
TRANSACTION OFFERING AMOUNT
AT OFFERING PRICE PRICE INVESTED
- ----------------- ----- --------
<S> <C> <C>
Under $50,000 4.75% 4.99%
$50,000 but under $100,000 4.50 4.71
$100,000 but under $250,000 3.50 3.63
$250,000 but under $500,000 3.00 3.09
$500,000 but under $1,000,000 2.00 2.04
$1,000,000 or more None None
</TABLE>
DEFERRED SALES CHARGE ALTERNATIVE--CLASS B AND C SHARES
Class B and C Shares are purchased without an initial sales charge; however,
shares sold within a specified time period are subject to a declining contingent
deferred sales charge ("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.
Phoenix Multi-Portfolio Fund 51
<PAGE>
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 (INTERNATIONAL FUND AND
EMERGING MARKETS BOND FUND ONLY)
YEAR 1 2+
- --------------------------------------------------------------------------------
CDSC 1% 0%
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.
STEP 1.
Your first choice will be the initial amount you intend to invest.
Minimum INITIAL investments:
[bullet] $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).
[bullet] 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.
[bullet] $500 for all other accounts.
Minimum ADDITIONAL investments:
[bullet] $25 for any account.
[bullet] 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.
52 Phoenix Multi-Portfolio Fund
<PAGE>
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:
[bullet] Receive both dividends and capital gain distributions in
additional shares
[bullet] Receive dividends in cash and capital gain distributions in
additional shares
[bullet] Receive both dividends and capital gain distributions in cash
No interest will be paid on uncashed distribution checks.
HOW TO BUY SHARES
- --------------------------------------------------------------------------------
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
TO OPEN AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- ---------------------------------------------------------------------------------------------------------------
Through the mail Complete a New Account Application and send it with a check payable to the
fund. Mail them to: State Street Bank, P.O. Box 8301, Boston, MA
02266-8301.
- ---------------------------------------------------------------------------------------------------------------
By Federal Funds wire Call us at (800)243-1574 (press 1, then 0).
- ---------------------------------------------------------------------------------------------------------------
By Investo-Matic Complete the appropriate section on the application and send it with your
initial investment payable to the fund. Mail them to: State Street Bank,
P.O. Box 8301, Boston, MA 02266-8301.
- ---------------------------------------------------------------------------------------------------------------
By telephone exchange Call us at (800)243-1574 (press 1, then 0).
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
Phoenix Multi-Portfolio Fund 53
<PAGE>
HOW TO SELL SHARES
- --------------------------------------------------------------------------------
You have the right to have the fund buy back shares at the net asset value next
determined after receipt of a redemption order by the fund's Transfer Agent or
an authorized agent. In the case of a Class B or C Share redemption, you will be
subject to the applicable deferred sales charge, if any, for such shares.
Subject to certain restrictions, shares may be redeemed by telephone or in
writing. In addition, shares may be sold through securities dealers, brokers or
agents who may charge customary commissions or fees for their services. The fund
does not charge any redemption fees. Payment for shares redeemed is made within
seven days; however, redemption proceeds will not be disbursed until each check
used for purchases of shares has been cleared for payment by your bank, which
may take up to 15 days after receipt of the check.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
TO SELL SHARES
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- ---------------------------------------------------------------------------------------------------------------
Through the mail Send a letter of instruction and any share certificates (if you hold
certificate shares) to: State Street Bank, P.O. Box 8301, Boston, MA
02266-8301. Be sure to include the registered owner's name, fund and
account number, number of shares or dollar value you wish to sell.
- ---------------------------------------------------------------------------------------------------------------
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).
- ---------------------------------------------------------------------------------------------------------------
By Check (Tax-Exempt Bond If you selected the checkwriting feature, you may write checks for amounts
Fund and Emerging Markets of $500 or more. Checks may not be used to close an account.
Bond Fund only)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
THINGS YOU SHOULD KNOW WHEN SELLING SHARES
- --------------------------------------------------------------------------------
You may realize a taxable gain or loss (for federal income tax purposes) if you
redeem shares of the fund. The fund reserves the right to pay large redemptions
"in-kind" (in securities owned by the fund rather than in cash). Large
redemptions are those over $250,000 or 1% of the fund's net assets. Additional
documentation will be required for redemptions by organizations, fiduciaries, or
retirement plans, or if redemption is requested by anyone but the shareholder(s)
of record. Transfers between broker-dealer "street" accounts are governed by the
accepting broker-dealer. Questions regarding this type of transfer should be
directed to your financial
54 Phoenix Multi-Portfolio Fund
<PAGE>
advisor. Redemption requests will not be honored until all required documents in
proper form have been received. To avoid delay in redemption or transfer,
shareholders having questions about specific requirements should contact the
fund's Transfer Agent at (800) 243-1574.
REDEMPTIONS BY MAIL
[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:
[bullet] The proceeds do not exceed $50,000.
[bullet] The proceeds are payable to the registered owner at the
address on record.
Send a clear letter of instructions with a signature guarantee when any
of these apply:
[bullet] You are selling more than $50,000 worth of shares.
[bullet] The name or address on the account has changed within the
last 60 days.
[bullet] 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 fund's Transfer Agent at (800) 243-1574.
The signature on your request must be guaranteed by an eligible guarantor
institution as defined by the fund's Transfer Agent in accordance with its
signature guarantee procedures. Currently, such procedures generally permit
guarantees by banks, broker dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
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.
Phoenix Multi-Portfolio Fund 55
<PAGE>
ACCOUNT POLICIES
- --------------------------------------------------------------------------------
ACCOUNT REINSTATEMENT PRIVILEGE
For 180 days after you sell your Class A, B or C shares, you can purchase Class
A Shares of any fund at net asset value, with no sales charge, by reinvesting
all or part of your proceeds, but not more. Send your written request to State
Street Bank, P.O. Box 8301, Boston, MA 02266-8301. You can call us at
(800)243-1574 for more information.
Please remember, a redemption and reinvestment are considered to be a sale and
purchase for tax-reporting purposes. Class B shareholders who have had the
contingent deferred sales charge waived because they are in the Systematic
Withdrawal Program are not eligible for this reinstatement privilege.
REDEMPTION OF SMALL ACCOUNTS
Due to the high cost of maintaining small accounts, if your account balance is
less than $200, you may receive a notice requesting you to bring the balance up
to $200 within 60 days. If you do not, the shares in the account will be sold at
net asset value, and a check will be mailed to the address of record.
EXCHANGE PRIVILEGES
You should read the prospectus carefully before deciding to make an exchange.
You can obtain a prospectus from your financial advisor or by calling us at
(800)243-4361 or accessing our Web site at www.phoenixinvestments.com.
[bullet] You may exchange shares for another fund in the same class of
shares; e.g., Class A for Class A.
[bullet] Exchanges may be made by phone ((800)243-1574) or by mail
(State Street Bank, P.O. Box 8301, Boston, MA 02266-8301).
[bullet] The amount of the exchange must be equal to or greater than
the minimum initial investment required.
[bullet] The exchange of shares is treated as a sale and a purchase
for federal income tax purposes.
[bullet] 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 fund distributor has the right to reject or suspend
them.
56 Phoenix Multi-Portfolio Fund
<PAGE>
RETIREMENT PLANS
Shares of the fund 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 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.
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.
TAX STATUS OF DISTRIBUTIONS
- --------------------------------------------------------------------------------
The fund plans 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.
Phoenix Multi-Portfolio Fund 57
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
FUND DIVIDEND PAID
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
International Fund Semiannually
- ------------------------------------------------------------------------------------------------------------------
Real Estate Securities Fund Quarterly
- ------------------------------------------------------------------------------------------------------------------
Emerging Markets Bond Fund Monthly
- ------------------------------------------------------------------------------------------------------------------
Tax-Exempt Bond Fund Monthly
- ------------------------------------------------------------------------------------------------------------------
Mid Cap Fund Semiannually
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
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.
The Tax-Exempt Bond Fund intends to distribute tax-exempt income.
The Tax-Exempt Bond Fund may invest a portion of its assets in securities that
generate income that is not exempt from federal or state income tax. Income
exempt from federal tax may be subject to state and local income tax. Any
capital gains distributed by the Tax-Exempt Bond Fund may be taxable.
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.
58 Phoenix Multi-Portfolio Fund
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
These tables are intended to help you understand the funds' financial
performance for the last five years or since inception. 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 fund (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
independent accountants. Their report, together with the funds' financial
statements, are included in the funds' most recent Annual Report, which is
available upon request.
<TABLE>
PHOENIX-ABERDEEN INTERNATIONAL FUND
<CAPTION>
CLASS A
--------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.89 $14.48 $12.20 $12.63 $11.16
INCOME FROM INVESTMENT OPERATIONS(3)
Net investment income (loss) 0.06(1) 0.03(1) 0.04(1) 0.03(1) (0.01)
Net realized and unrealized gain 3.27 1.01 2.28 0.42 1.48
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 3.33 1.04 2.32 0.45 1.47
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.29) -- -- --
Dividends from net realized gains (1.24) (1.34) (0.04) (0.88) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.24) (1.63) (0.04) (0.88) --
------ ------ ------ ------ ------
Change in net asset value 2.09 (0.59) 2.28 (0.43) 1.47
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $15.98 $13.89 $14.48 $12.20 $12.63
====== ====== ====== ====== ======
Total return(2) 26.17% 8.21% 19.03% 4.12% 13.17%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $171,463 $131,338 $135,524 $129,352 $167,918
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.37% 1.56% 1.57% 1.70% 1.47%
Net investment income (loss) 0.40% 0.22% 0.33% 0.23% 0.20%
Portfolio turnover 104% 167% 151% 236% 186%
</TABLE>
_______________________________
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) 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.
Phoenix Multi-Portfolio Fund 59
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
PHOENIX-ABERDEEN INTERNATIONAL FUND
<CAPTION>
CLASS B
---------------------------------------------------------------
FROM
INCEPTION
YEAR ENDED NOVEMBER 30, 7/15/94 TO
1998 1997 1996 1995 11/30/94
---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.56 $14.22 $12.07 $12.60 $12.80
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss) (0.05)(1) (0.08)(1) (0.05)(1) (0.07)(1) (0.01)
Net realized and unrealized gain
(loss) 3.17 1.00 2.24 0.42 (0.19)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 3.12 0.92 2.19 0.35 (0.20)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.24) -- -- --
Dividends from net realized gains (1.24) (1.34) (0.04) (0.88) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.24) (1.58) (0.04) (0.88) --
------ ------ ------ ------ ------
Change in net asset value 1.88 (0.66) 2.15 (0.53) (0.20)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $15.44 $13.56 $14.22 $12.07 $12.60
====== ====== ====== ====== ======
Total return(2) 25.17% 7.37% 18.16% 3.28% (1.56)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $17,315 $10,159 $6,955 $3,261 $1,991
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.11% 2.31% 2.31% 2.50% 1.93%(3)
Net investment income (loss) (0.34)% (0.55)% (0.39)% (0.61)% 0.36%(3)
Portfolio turnover 104% 167% 151% 236% 186%
</TABLE>
_______________________________
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) Annualized.
(4) Not annualized.
(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.
60 Phoenix Multi-Portfolio Fund
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES FUND
<CAPTION>
CLASS A
--------------------------------------------------------------
FROM
INCEPTION
YEAR ENDED NOVEMBER 30, 3/1/95 TO
1998 1997 1996 11/30/95
---- ---- ---- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period 16.39 $13.14 $10.72 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.55(4)(5) 0.49(4)(5) 0.53(5) 0.43(4)(5)
Net realized and unrealized gain (loss) (3.18) 3.52 2.50 0.55
------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (2.63) 4.01 3.03 0.98
------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.44) (0.51) (0.59) (0.26)
Dividends from net realized gains (1.07) (0.25) (0.02) --
------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.51) (0.76) (0.61) (0.26)
------ ------ ------ ------
Change in net asset value (4.14) 3.25 2.42 0.72
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $12.25 $16.39 $13.14 $10.72
====== ====== ====== ======
Total return(1) (17.42)% 31.44% 29.20% 9.87%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $24,686 $36,336 $22,872 $13,842
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.31% 1.30% 1.30% 1.30%(2)
Net investment income 3.79% 3.34% 4.55% 5.79%(2)
Portfolio turnover 11% 54% 24% 9%(3)
</TABLE>
_______________________________
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of $0.02,
$0.04, $0.07 and $0.12, respectively.
Phoenix Multi-Portfolio Fund 61
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES FUND
<CAPTION>
CLASS B
---------------------------------------------------------
FROM
INCEPTION
YEAR ENDED NOVEMBER 30, 3/1/95 TO
1998 1997 1996 11/30/95
---- ---- ---- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $16.32 $13.10 $10.68 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.43(4)(5) 0.38(4)(5) 0.46(5) 0.36(4)(5)
Net realized and unrealized gain (loss) (3.15) 3.50 2.47 0.56
------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (2.72) 3.88 2.93 0.92
------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.34) (0.41) (0.49) (0.24)
Dividends from net realized gains (1.07) (0.25) (0.02) --
------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.41) (0.66) (0.51) (0.24)
------ ------ ------ ------
Change in net asset value (4.13) 3.22 2.42 0.68
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $12.19 $16.32 $13.10 $10.68
====== ====== ====== ======
Total return(1) (18.01)% 30.44% 28.25% 9.21%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $18,237 $23,091 $8,259 $2,239
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.06% 2.05% 2.05% 2.05%(2)
Net investment income 3.07% 2.55% 3.95% 5.03%(2)
Portfolio turnover 11% 54% 24% 9%(3)
</TABLE>
_______________________________
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of $0.02,
$0.04, $0.07 and $0.12, respectively.
62 Phoenix Multi-Portfolio Fund
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
PHOENIX-GOODWIN EMERGING MARKETS BOND FUND
<CAPTION>
CLASS A
--------------------------------------------------------------
FROM
INCEPTION
YEAR ENDED NOVEMBER 30, 9/5/95 TO
1998 1997 1996 11/30/95
---- ---- ---- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.84 $14.80 $10.18 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 1.32 1.38(4) 1.26(5) 0.25(4)(5)
Net realized and unrealized gain (loss) (4.22) 0.17 4.56 0.18
------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (2.90) 1.55 5.82 0.43
------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (1.00) (1.28) (1.20) (0.25)
Dividends from net realized gains (0.23) (2.23) -- --
Distributions in excess of net realized gains (1.16) -- -- --
Return of capital (0.35) -- -- --
------ ------ ------ ------
TOTAL DISTRIBUTIONS (2.74) (3.51) (1.20) (0.25)
------ ------ ------ ------
Change in net asset value (5.64) (1.96) 4.62 0.18
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $(7.20) $12.84 $14.80 $10.18
====== ====== ====== ======
Total return(1) (27.20)% 11.91% 60.18% 4.40%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $41,725 $67,875 $29,661 $12,149
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.43% 1.40%(6) 1.50% 1.50%(2)
Net investment income 13.74% 9.90% 10.41% 10.48%(2)
Portfolio turnover 405% 614% 378% 38%(3)
</TABLE>
_______________________________
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of $0.07
and $0.03, respectively.
(6) For the year ended November 30, 1997, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian fees.
Prior period ratios include these amounts.
Phoenix Multi-Portfolio Fund 63
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
PHOENIX-GOODWIN EMERGING MARKETS BOND FUND
<CAPTION>
CLASS B CLASS C
------------------------------------------------ ----------
FROM FROM
INCEPTION INCEPTION
YEAR ENDED NOVEMBER 30, 9/5/95 TO 3/27/98 TO
1998 1997 1996 11/30/95 11/30/98
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.77 $14.78 $10.18 $10.00 $12.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income 1.23 1.26(4) 1.19(5) 0.22(4)(5) 0.85(4)
Net realized and unrealized gain (loss) (4.18) 0.18 4.53 0.20 (5.10)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (2.95) 1.44 5.72 0.42 (4.25)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.97) (1.22) (1.12) (0.24) (0.66)
Dividends from net realized gains (0.23) (2.23) -- -- --
Distributions in excess of net realized gains (1.16) -- -- -- --
Return of capital (0.33) -- -- -- (0.17)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (2.69) (3.45) (1.12) (0.24) (0.83)
------ ------ ------ ------ ------
Change in net asset value (5.64) (2.01) 4.60 0.18 (5.08)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $7.13 $12.77 $14.78 $10.18 $7.17
====== ====== ====== ====== ======
Total return(1) (27.86)% 11.07% 58.94% 4.22%(3) (35.33)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $37,270 $38,673 $9,713 $596 $1,205
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.20% 2.15%(6) 2.25% 2.25%(2) 2.29%(2)
Net investment income 12.98% 9.14% 9.79% 10.29%(2) 15.59%(2)
Portfolio turnover 405% 614% 378% 38%(3) 405%(3)
</TABLE>
_______________________________
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of $0.07
and $0.03, respectively.
(6) For the year ended November 30, 1997, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian fees.
Prior period ratios include these amounts.
64 Phoenix Multi-Portfolio Fund
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
PHOENIX-GOODWIN TAX-EXEMPT BOND FUND
<CAPTION>
CLASS A
-------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.17 $11.28 $11.40 $10.09 $11.58
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.57 0.59 0.60 0.61 0.65
Net realized and unrealized gain
(loss) 0.20 0.05 (0.12) 1.34 (1.49)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.77 0.64 0.48 1.95 (0.84)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.53) (0.59) (0.60) (0.61) (0.65)
Dividends in excess of net
investment income (0.11) -- -- -- --
Dividends from net realized gains (0.09) (0.16) -- (0.03) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.73) (0.75) (0.60) (0.64) (0.65)
------ ------ ------ ------ ------
Change in net asset value (0.04) (0.11) (0.12) 1.31 (1.49)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $11.21 $11.17 $11.28 $11.40 $10.09
====== ====== ====== ====== ======
Total return(1) 5.75% 6.04% 4.30% 19.87% (7.55)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $107,371 $122,763 $136,558 $147,821 $141,623
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 0.97% 0.96% 0.94% 0.97% 0.96%
Net investment income 4.77% 5.36% 5.42% 5.65% 5.65%
Portfolio turnover 14% 15% 27% 25% 54%
</TABLE>
_______________________________
(1) Maximum sales charges are not reflected in the total return calculation.
Phoenix Multi-Portfolio Fund 65
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
PHOENIX-GOODWIN TAX-EXEMPT BOND FUND
<CAPTION>
CLASS B
------------------------------------------------------------------
FROM
INCEPTION
YEAR ENDED NOVEMBER 30, 3/16/94 TO
1998 1997 1996 1995 11/30/94
---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.22 $11.32 $11.44 $10.12 $11.21
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.48 0.50 0.52 0.53 0.39
Net realized and unrealized gain
(loss) 0.19 0.06 (0.12) 1.35 (1.09)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.67 0.56 0.40 1.88 (0.70)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.45) (0.50) (0.52) (0.53) (0.39)
Dividends in excess of net
investment income (0.10) -- -- -- --
Dividends from net realized gains (0.09) (0.16) -- (0.03) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.64) (0.66) (0.52) (0.56) (0.39)
------ ------ ------ ------ ------
Change in net asset value 0.03 (0.10) (0.12) 1.32 (1.09)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $11.25 $11.22 $11.32 $11.44 $10.12
====== ====== ====== ====== ======
Total return(1) 4.97% 5.13% 3.60% 19.07% (6.42)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $7,001 $5,797 $4,762 $3,142 $1,147
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.69% 1.71% 1.69% 1.72% 1.54%(2)
Net investment income 3.98% 4.60% 4.68% 4.90% 5.07%(2)
Portfolio turnover 14% 15% 27% 25% 54%(3)
</TABLE>
_______________________________
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
66 Phoenix Multi-Portfolio Fund
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
PHOENIX-SENECA MID CAP FUND
<CAPTION>
CLASS A
------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $20.64 $21.65 $22.03 $18.03 $18.70
INCOME FROM INVESTMENT OPERATIONS(3)
Net investment income (loss) 0.01 (0.02)(1) (0.03)(1) 0.05(1) 0.11
Net realized and unrealized gain 1.18 1.52 2.53 4.74 0.10
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.19 1.50 2.50 4.79 0.21
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- (0.06) (0.10)
Dividends from net realized gains (1.93) (2.51) (2.88) (0.73) (0.78)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.93) (2.51) (2.88) (0.79) (0.88)
------ ------ ------ ------ ------
Change in net asset value (0.74) (1.01) (0.38) 4.00 (0.67)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $19.90 $20.64 $21.65 $22.03 $18.03
====== ====== ====== ====== ======
Total return(2) 6.64% 8.12% 13.52% 27.87% 1.03%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $279,326 $360,053 $451,474 $487,674 $419,760
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.30% 1.33% 1.35% 1.42% 1.36%
Net investment income (loss) (0.10)% (0.08)% (0.17)% 0.28% 0.59%
Portfolio turnover 379% 161% 242% 218% 227%
</TABLE>
_______________________________
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) 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.
Phoenix Multi-Portfolio Fund 67
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
PHOENIX-SENECA MID CAP FUND
<CAPTION>
CLASS B
-------------------------------------------------------------------
FROM
INCEPTION
YEAR ENDED NOVEMBER 30, 7/18/94 TO
1998 1997 1996 1995 11/30/94
---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $20.11 $21.30 $21.85 $17.97 $17.68
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss) (0.18) (0.16)(1) (0.18)(1) (0.12)(1) (0.01)
Net realized and unrealized gain 1.18 1.47 2.51 4.75 0.30
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.00 1.31 2.33 4.63 0.29
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- (0.02) --
Dividends from net realized gains (1.93) (2.50) (2.88) (0.73) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.93) (2.50) (2.88) (0.75) --
------ ------ ------ ------ ------
Change in net asset value (0.93) (1.19) (0.55) 3.88 0.29
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $19.18 $20.11 $21.30 $21.85 $17.97
====== ====== ====== ====== ======
Total return(2) 5.80% 7.27% 12.75% 26.92% 1.64%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $15,688 $18,583 $17,599 $10,908 $1,519
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.04% 2.08% 2.11% 2.18% 2.05%(3)
Net investment income (loss) (0.85)% (0.85)% (0.92)% (0.58)% (0.23)%(3)
Portfolio turnover 379% 161% 242% 218% 227%(4)
</TABLE>
_______________________________
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) Annualized.
(4) Not annualized.
(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.
68 Phoenix Multi-Portfolio Fund
<PAGE>
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
The fund has filed a Statement of Additional Information about the fund, dated
March 30, 1999 with the Securities and Exchange Commission. The Statement
contains more detailed information about the fund. It is incorporated into this
prospectus by reference and is legally part of the prospectus. You may obtain a
free copy of the Statement:
[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 fund 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 or
[arrow] by writing to its Public Reference Section, Washington, DC 20549-6009
(a fee may be charged).
Information about the operation of the Public Reference Room may be obtained by
calling (800) SEC-0330.
SHAREHOLDER REPORTS
The fund semiannually mails to its shareholders detailed reports containing
information about the fund's investments. The fund's Annual Report contains a
detailed discussion of the market conditions and investment strategies that
significantly affected the fund's performance from December 1 through November
30. You may request a free copy of the fund's 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. 33-19423 and 811-5436 Printed on recycled paper using soybean ink
Phoenix Multi-Portfolio Fund 69
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
PO Box 2200
Enfield CT 06083-2200
[LOGO] PHOENIX
INVESTMENT PARTNERS
PXP 467 (3/99)
<PAGE>
[triangle] Phoenix-
Goodwin
Strategic
Income
Fund
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Investment Risk and Return Summary............................ 1
Fund Expenses................................................. 4
Investment Strategies......................................... 5
Risks Related to Investment Strategies........................ 7
Management of the Fund........................................ 10
Pricing of Fund Shares........................................ 13
Sales Charges................................................. 14
Your Account.................................................. 16
How to Buy Shares............................................. 17
How to Sell Shares............................................ 18
Things You Should Know When Selling Shares.................... 18
Account Policies.............................................. 20
Investor Services............................................. 21
Tax Status of Distributions................................... 21
Financial Highlights.......................................... 23
Additional Information........................................ 25
<PAGE>
PHOENIX-GOODWIN STRATEGIC INCOME FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
IMPORTANT NOTICE
Phoenix-Goodwin Strategic Income Fund is currently closed to new investors.
INVESTMENT OBJECTIVES
Phoenix-Goodwin Strategic Income Fund has a primary investment objective of
maximizing current income and a secondary investment objective of capital
appreciation. There is no guarantee that the fund will achieve its objectives.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The fund will invest primarily in debt securities. The debt
securities may be of any credit quality, including below investment
grade securities (so-called "junk bonds").
[arrow] The adviser intends to select investments within sectors that it
believes will provide high current income and capital appreciation.
The principal sectors in which the fund will invest are debt
securities of U.S. companies, debt securities of foreign companies
and governments, mortgage securities, and U.S. government securities.
[arrow] The fund invests in securities of various maturities to maintain a
level of interest rate risk similar to that of Lehman Brothers
Aggregate Bond Index, its benchmark. The adviser also seeks to
control duration risk (the length of a debt security on a present
value basis), so that the fund may remain duration neutral.
[arrow] Issuers of foreign securities selected for investment may be in
developed countries or emerging market countries and may be U.S.
dollar or non-U.S. dollar denominated.
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
If the adviser misjudges the return potential, or the ability of issuers to make
scheduled principal and interest payments, the fund's returns may be lower than
prevailing returns, and the fund's income available for distribution may be less
than other funds. Neither the fund nor the adviser can assure you that a
particular level of income will consistently be achieved.
Debt securities are subject to interest rate risk. Generally, the value of debt
securities is inversely related to changes in interest rates. If interest rates
rise, the value of debt securities will fall. This may cause the value of your
shares to decrease.
Securities with longer maturities may be subject to greater price fluctuations
due to interest rate changes, tax laws and other general market factors.
Phoenix-Goodwin Strategic Income Fund 1
<PAGE>
Below investment grade securities present a greater risk that the issuer will
not be able to make interest or principal payments on time. If this happens, the
fund would lose income and could expect a decline in the market value of the
securities.
The fund may invest in mortgage securities. The value of CMOs, REMICs and other
pass-through securities may fluctuate to a greater degree than other debt
securities in response to changes in interest rates. The market for these
securities can be less liquid. These mortgage-backed type securities may also be
subject to prepayment risk.
The fund may invest in issuers in foreign countries, including "emerging market"
countries (countries with markets that are not fully developed). Political and
economic uncertainty, as well as less public information about investments, may
negatively impact the fund's portfolio. 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. Foreign markets and currencies may not
perform as well as U.S. markets. Emerging market countries and companies doing
business in emerging markets may not have the same range of opportunities as
countries and companies in developed nations. They may also have more obstacles
to financial success.
The fund may invest in U.S. government securities. Obligations issued or
guaranteed by the U.S. government, its agencies, authorities and
instrumentalities only guarantee principal and interest will be timely paid to
holders of the securities. The entities do not guarantee that the value of fund
shares will increase.
The fund may invest in securities with long-term maturities. Long-term
maturities present a greater risk that economic and market conditions may
negatively impact expected returns of the security and, typically, securities
with long-term maturities are more sensitive to interest rate movements than
shorter-term securities.
2 Phoenix-Goodwin Strategic Income Fund
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Goodwin Strategic Income Fund. The bar chart shows changes in the
fund's Class X Shares performance from year to year over the life of the
fund.(1) The table below 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.
STRATEGIC INCOME FUND
[graphic omitted]
Calendar Year Annual Return (%)
1994 -5.45
1995 17.99
1996 13.35
1997 10.54
1998 -13.75
(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 6.13% (quarter ending June 30, 1995)
and the lowest return for a quarter was (15.94)% (quarter ending September 30,
1998).
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Average Annual Total Returns One Year Five Years Life of the Fund(1)
(for the periods ending 12/31/98)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class X Shares (13.75)% 3.81% 4.39%
- -----------------------------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond
Index(3) 8.69% 7.27% 7.27%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Class X Shares since April 1, 1993.
(2) The Lehman Brothers Aggregate Bond Index is an unmanaged, commonly used
measure of broad bond market total return performance. The Index is not
available for direct investment.
Performance information is not included for Class A, Class B or Class C Shares
because these classes have not had annual returns for at least one calendar
year.
Phoenix-Goodwin Strategic Income 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.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS X
SHARES SHARES SHARES SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 4.75% None None None
Maximum Deferred Sales Charge (load) (as a percentage of None 5%(b) 1%(c)
the lesser of the value redeemed or the amount invested) None
Maximum Sales Charge (load) Imposed on Reinvested Dividends None None None 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 0.55% 0.55% 0.55% 0.55%
Distribution and Service (12b-1) Fees (d) 0.25% 1.00% 1.00% None
Other Expenses 2.95% 2.95% 2.95% 2.95%
----- ----- ----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES (a) 3.75% 4.50% 4.50% 3.50%
===== ===== ===== =====
</TABLE>
(a) The fund's investment adviser has agreed to reimburse through December 31,
1999 the Phoenix-Goodwin Strategic Income Fund's expenses, other than Management
Fees and Distribution and Service Fees, to the extent that such expenses exceed
.20% for each Class of Shares. Actual Total Annual Fund Operating Expenses after
expense reimbursement are 1.00% for Class A Shares, 1.75% for Class B Shares,
1.75% for Class C Shares and 0.75% for Class X Shares.
(b) 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.
(c) The maximum deferred sales charge is imposed on Class C Shares redeemed
during the first year only.
(d) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
4 Phoenix-Goodwin Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $834 $1,567 $2,318 $4,278
- -----------------------------------------------------------------------------------------------------------------
Class B $851 $1,560 $2,278 $4,463
- -----------------------------------------------------------------------------------------------------------------
Class C $551 $1,360 $2,278 $4,614
- -----------------------------------------------------------------------------------------------------------------
Class X $353 $1,074 $1,817 $3,774
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $834 $1,567 $2,318 $4,278
- -----------------------------------------------------------------------------------------------------------------
Class B $451 $1,360 $2,278 $4,463
- -----------------------------------------------------------------------------------------------------------------
Class C $451 $1,360 $2,278 $4,614
- -----------------------------------------------------------------------------------------------------------------
Class X $353 $1,074 $1,817 $3,774
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Your actual expenses may be lower than those shown in the tables above
since the expense levels used to calculate the figures shown do not include the
reimbursement of expenses over certain levels by the fund's investment adviser.
Refer to the section "Management of the Fund" for information about expense
reimbursement.
INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Goodwin Strategic Income Fund has a primary investment objective to
maximize current income by investing in debt securities with a secondary
objective of capital appreciation. There is no guarantee that the fund will
achieve its objectives.
PRINCIPAL INVESTMENT STRATEGIES
While the adviser cannot control either the general interest rate environment or
levels of return of securities on an absolute basis, the adviser will seek to
adjust the proportions of the fund's investment in the various sectors and the
selection of investments within sectors to obtain higher returns on a relative
basis.
Phoenix-Goodwin Strategic Income Fund 5
<PAGE>
The fund will invest principally in four market sectors:
[bullet] Debt securities of U.S. companies. Debt securities in which
the fund may invest include investment-grade and below
investment grade long-term or short-term debt securities of
U.S. issuers. Investment grade securities include bonds,
debentures, equipment lease and trust certificates,
asset-backed securities, pass-through securities,
private-issued Real Estate Mortgage Investment Conduits
(REMICs) and Collateralized Mortgage Obligations (CMOs),
sales contracts and commercial paper. Below investment grade
securities in which the fund may invest are preferred and
preference stock and debt obligations.
[bullet] Mortgage Securities. Mortgage-backed securities in which the
fund may invest include pass-through certificates, REMICs and
CMOs.
[bullet] Debt securities of foreign governments and companies. Foreign
securities in which the fund may invest are those issued by
foreign governments and companies in developed countries
considered creditworthy by the adviser and emerging market
countries.
[bullet] U.S. Government Securities. U.S. Government securities in
which the fund may invest include U.S. Treasury Obligations
and securities issued or guaranteed as to principal and
interest by the U.S. Government, its agencies, authorities or
instrumentalities which are supported by any of the
following: the full faith and credit of the U.S. Government
(such as Government National Mortgage Association (GNMA)
certificates); the borrower's right to a specific line of
credit at the U.S. Treasury; the discretionary authority of
the U.S. Government to purchase obligations from the issuer;
and the creditworthiness of the instrumentality. U.S.
Government securities may be denominated in foreign
currencies.
The fund invests in securities of various maturities to maintain a level of
interest rate risk similar to that of the Lehman Brothers Aggregate Bond Index,
its benchmark. The fund uses a duration neutral strategy. Duration measures the
length of a debt security on a present value basis using the time between now
and when interest and principal should be received weighted against the present
value of the cash to be received at each future date. The fund attempts to
remain "duration neutral" in that the adviser does not predict future interest
rate changes or invest based upon such predictions.
Issuers of foreign securities selected for investment may be in developed
countries or emerging market countries and may be U.S. dollar or non-U.S.
dollar denominated.
The adviser uses its own credit and investment analysis and the ratings assigned
by nationally recognized statistical rating organizations (NRSROs) to select
below investment grade securities for purchase. Below investment grade
securities are in the lower credit rating categories, or if unrated, of
comparable, limited quality. The high yields on these securities often reflect
the greater risks associated with investing in this type of security.
6 Phoenix-Goodwin Strategic Income Fund
<PAGE>
Mortgage pass-through securities are interests in pools of mortgage loans,
assembled and issued by various governmental, government related, and private
organizations. These securities provide a monthly payment consisting of both
principal and interest payments. In effect, these payments are a "pass through"
of the monthly payments made by individual borrowers on their residential or
commercial mortgage loans. Mortgage-backed securities also include
Collateralized Mortgage Obligations (CMOs) which generally include debt
instruments collateralized by mortgage loans or mortgage pass-throughs.
Additional payments on mortgage-backed securities are caused by repayment of
principal resulting from the sale of the underlying property, refinancing or
foreclosure. These prepayments are difficult to predict. This variability of
prepayments will tend to limit price gains when interest rates drop and
exaggerate price declines when interest rates rise.
The adviser's portfolio selection and sale methods may result in a higher
portfolio turnover rate. Higher portfolio turnover rates may increase costs to
the fund, negatively affect fund performance and increase capital gains
distributions, which may result in greater tax liability to you.
Please refer to the Statement of Additional Information for more detailed
information about these and other investment techniques of the fund.
RISKS RELATED TO INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
GENERAL
If the adviser misjudges the return potential of one sector relative to another,
the fund's returns may be lower than prevailing returns, and the fund's income
available for distribution to shareholders may be less, on a relative basis,
than other fixed income opportunities. Similarly, if the adviser misjudges the
ability of the issuer of a portfolio security to make scheduled interest or
other income payments to the fund, the fund's income available for distribution
to shareholders may decrease. Neither the fund nor the adviser can assure you
that a particular level of income will consistently be achieved.
The value of your shares is based on the market value of the fund's investments.
In the case of fixed income securities and other securities that have relatively
fixed levels of return, the value of the security will be directly affected by
trends in interest rates and the overall condition of credit markets. For
example, in times of rising interest rates, the value of these types of
securities tends to decrease. When interest rates fall, the value of these
securities tends to rise.
In addition to these general risks of investing in the fund, there are several
specific risks of investing in the fund that you should note.
Phoenix-Goodwin Strategic Income Fund 7
<PAGE>
BELOW INVESTMENT GRADE SECURITIES
Although below investment grade securities provide greater income and
opportunity for capital appreciation than investments in higher-grade
securities, they also typically entail greater price volatility, and principal
and interest risk. There is a greater risk that an issuer will not be able to
make principal and interest payments on time. Lower-rated securities may not
trade as often and may be less liquid than higher-rated securities. Fund
expenses could increase if the fund were to pursue recovery of missed income
payments. Achievement of fund goals will also be more dependent on the adviser's
ability to select fund investments than if the fund invested in securities in
higher rating categories. Analysis of the creditworthiness of issuers of below
investment grade securities may be more complex than for higher-grade
securities, making it more difficult for the adviser to accurately predict risk.
U.S. GOVERNMENT SECURITIES
Obligations issued or guaranteed by the U.S. government, its agencies,
authorities and instrumentalities only guarantee principal and interest will be
timely paid to holders of the securities. The entities do not guarantee that the
value of fund shares will increase.
PASS-THROUGH SECURITIES
It is difficult to predict cash flows from pass-through securities. Decreasing
interest rates may negatively affect the value of these securities. Payments of
principal and interest on the underlying mortgages may be allocated among
classes in a variety of ways and the inability to determine specific amounts and
timing of prepayments of the underlying loans makes it difficult to accurately
predict cash flow. In the event of high prepayments, the fund may be required to
invest these proceeds at a lower interest rate, causing the fund to earn less
than if the prepayments had not occurred.
FOREIGN INVESTING
Investing in the securities of non-U.S. issuers involves special risks and
considerations not typically associated with investing in U.S. issuers. These
include:
[bullet] differences in accounting, auditing and financial reporting
standards;
[bullet] generally higher commission rates on foreign portfolio
transactions;
[bullet] differences and inefficiencies in transaction settlement
systems;
[bullet] the possibility of expropriation or confiscatory taxation;
[bullet] adverse changes in investment or exchange control
regulations;
[bullet] political instability; and
[bullet] potential restrictions on the flow of international capital.
8 Phoenix-Goodwin Strategic Income Fund
<PAGE>
Political and economic uncertainty, as well as less public information about
investments, may negatively impact the fund's portfolio.
Foreign securities often trade with less frequency and volume than domestic
securities and, therefore, may exhibit greater price volatility. Additionally,
dividends and interest payable on foreign securities may be subject to foreign
taxes withheld prior to receipt by the fund. Many of the foreign securities held
by the fund will not be registered with, nor will the issuers of those
securities be subject to the reporting requirements of, the U.S. Securities and
Exchange Commission. Accordingly, there may be less publicly available
information about the securities and about the foreign company or government
issuing them than is available about a domestic company or government entity.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payment positions.
FOREIGN CURRENCY
Changes in foreign exchange rates will affect the value of those securities
denominated or quoted in currencies other than the U.S. dollar. The forces of
supply and demand in the foreign exchange markets determine exchange rates and
these forces are in turn affected by a range of economic, political, financial,
governmental and other factors. Exchange rate fluctuations can affect the fund's
net asset value ("share price") and dividends either positively or negatively
depending upon whether foreign currencies are appreciating or depreciating in
value relative to the U.S. dollar. Exchange rates fluctuate over both the long
and short terms.
On January 1, 1999, eleven European countries began converting from their
sovereign currency to the European Union common currency called the "Euro." This
conversion may expose the fund to certain risks including the reliability and
timely reporting of pricing information of the fund's portfolio holdings. In
addition, one or more of the following may adversely affect specific securities
in the fund's portfolio:
[bullet] Known trends or uncertainties related to the Euro conversion
that an issuer reasonably expects will have a material impact
on revenues, expenses or income from its operations;
[bullet] Competitive implications of increased price transparency of
European Union markets (including labor markets) resulting
from adoption of a common currency and issuers' plans for
pricing their own products and services in the Euro;
[bullet] Issuers' ability to make required information technology
updates on a timely basis, and costs associated with the
conversion (including costs of dual currency operations
through January 1, 2002);
[bullet] Currency exchange rate risk and derivatives exposure
(including the disappearance of price sources, such as
certain interest rate indices); and
[bullet] Potential tax consequences.
Phoenix-Goodwin Strategic Income Fund 9
<PAGE>
EMERGING MARKET INVESTING
Investments in less-developed countries whose markets are still emerging
generally present risks in greater degree than those presented by investment in
foreign issuers based in countries with developed securities markets and more
advanced regulatory systems. Prior governmental approval of foreign investments
may be required under certain circumstances in some developing countries, and
the extent of foreign investment in domestic companies may be subject to
limitations in other developing countries. The charters of individual companies
in developing countries may impose limitations on foreign ownership to prevent,
among other concerns, violation of foreign investment limitations.
LONG-TERM MATURITIES
Long-term maturities present a greater risk that economic and market conditions
may negatively impact expected returns of a security. Typically, securities with
long-term maturities are more sensitive to interest rate movements than
shorter-term securities. Small increases or decreases in interest rates will
have a greater effect on securities with longer maturities than on shorter-term
maturities because the change will effect the security for a longer period of
time.
IMPACT OF THE YEAR 2000 ISSUE ON FUND INVESTMENTS
The Year 2000 issue is the result of computer programs being written using two
rather than four digits to define the applicable year. There is the possibility
that some or all of a company's computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. If a company whose securities are held by the fund does not "fix" its Year
2000 issue, it is possible that its operations and financial results would be
hurt. Also, the cost of modifying computer programs to become Year 2000
compliant may hurt the financial performance and market price of companies whose
securities are held by the fund.
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
THE ADVISER
Phoenix Investment Counsel, Inc. ("Phoenix") is the investment adviser to the
fund and is located at 56 Prospect Street, Hartford, CT 06115. Phoenix also acts
as the investment adviser for 14 other mutual funds, as subadviser to three
mutual funds and as adviser to institutional clients. As of December 31, 1998,
Phoenix had $23.9 billion in assets under management. Phoenix has acted as an
investment adviser for over sixty years.
Subject to the direction of the fund's Board of Trustees, Phoenix is responsible
for managing the fund's investment program and the day-to-day management of the
fund's portfolio. Phoenix manages the fund's assets to conform with the
investment policies as described in this
10 Phoenix-Goodwin Strategic Income Fund
<PAGE>
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.
- --------------------------------------------------------------------------------
$1st billion $1+ billion through $2 billion $2+ billion
- --------------------------------------------------------------------------------
Management Fee 0.55% 0.50% 0.45%
- --------------------------------------------------------------------------------
The adviser has voluntarily agreed to assume operating expenses of the fund
(excluding management fees, distribution and service fees, interest, taxes,
brokerage fees, commissions and extraordinary expenses) until December 31, 1999,
to the extent that such expenses exceed 0.20% of the average annual net asset
values of the fund.
During the fund's last fiscal year, the fund paid total management fees of
$35,019. The ratio of management fees to average net assets for the fiscal year
ended November 30, 1998 was 0.52%. Prior to March 27, 1998, the fund paid
Phoenix an investment management fee at the annual rate of 0.50% of the fund's
net assets up to $1 billion, 0.45% of the fund's net assets between $1 billion
and $2 billion, and $0.40% of the fund's net assets over $2 billion.
PORTFOLIO MANAGEMENT
David L. Albrycht has been the Portfolio Manager of the fund since August 1993.
As such, Mr. Albrycht is primarily responsible for the day-to-day management of
the fund. Since August 1994, Mr. Albrycht has been a Vice President and
Portfolio Manager of Phoenix Multi-Sector Fixed Income Fund, Inc. Since August
1993, Mr. Albrycht has also been the Portfolio Manager of Phoenix Multi-Sector
Short Term Bond Fund. Mr. Albrycht has been Vice President of The Phoenix Edge
Series Fund and Phoenix Series Fund since 1997. He also served as a Vice
President of Phoenix between May 1995 and September 1996, and, presently, is a
Managing Director, Fixed Income. Until November 1995, Mr. Albrycht was a
Portfolio Manager of Phoenix Home Life Mutual Life Insurance Company and he has
held various investment management positions with Phoenix Home Life during the
last five years.
IMPACT OF THE YEAR 2000 ISSUE ON FUND OPERATIONS
The Trustees have directed management to ensure that the systems used by service
providers (Phoenix and its affiliates) in support of the funds' operations be
assessed and brought into Year 2000 compliance. Based upon preliminary
assessments, Phoenix has determined that it will be required to modify or
replace portions of its software so that its computer systems will properly
utilize dates beyond December 31, 1999. Phoenix management believes that the
majority of these systems are already Year 2000 compliant. Phoenix believes that
with modifications to existing software and conversions to new software, the
Year 2000 issue will be mitigated. It is anticipated that such modifications and
conversions will be completed on a timely basis. It is not known at this time if
there could be a material impact on the operations of Phoenix or its affiliates
or the fund if such modifications and conversions are not completed timely.
Phoenix-Goodwin Strategic Income Fund 11
<PAGE>
Phoenix will utilize both internal and external resources to reprogram, or
replace, and test the software for Year 2000 modifications. Certain systems are
already in the process of being converted due to previous initiatives; and it is
expected that all core systems will be remediated and tested by June 1999. The
total cost to become Year 2000 compliant is not an expense of the fund and is
not expected to have a material impact on the operating results of Phoenix.
12 Phoenix-Goodwin Strategic Income Fund
<PAGE>
PRICING OF FUND SHARES
- --------------------------------------------------------------------------------
HOW IS THE SHARE PRICE DETERMINED?
The fund calculates a share price for each class of its shares. The share price
is based on the net assets of the fund and the number of outstanding shares. In
general, the fund calculates net asset value by:
[bullet] adding the values of all securities and other assets of the
fund,
[bullet] subtracting liabilities, and
[bullet] dividing by the total number of outstanding shares of the
fund.
Asset Value: The fund's investments are valued at market value. If market
quotations are not available, the fund determines a "fair value" for an
investment according to rules and procedures approved by the Trustees. Foreign
and domestic debt securities (other than short-term investments) are valued on
the basis of broker quotations or valuations provided by a pricing service
approved by the Trustees when such prices are believed to reflect the fair value
of such securities. Foreign and domestic equity securities are valued at the
last sale price or, if there has been no sale that day, at the last bid price,
generally. Short-term investments having a remaining maturity of sixty days or
less are valued at amortized cost, which the Trustees have determined
approximates market value.
Liabilities: Class specific expenses, distribution fees, service fees and other
liabilities are deducted from the assets of each class. Expenses and
liabilities that are not class specific (such as management fees) are allocated
to each class in proportion to each class's net assets, except where an
alternative allocation can be more fairly made.
Net Asset Value: The liability allocated to a class plus any other expenses are
deducted from the proportionate interest of such class in the assets of the
fund. The resulting amount for each class is then divided by the number of
shares outstanding of that class to produce each class's net asset value per
share.
The net asset value per share of each class of the fund is determined on days
when the New York Stock Exchange (the "NYSE") is open for trading as of the
close of trading (normally 4:00 PM eastern time). The fund will not calculate
its net asset values per share on days when the NYSE is closed for trading.
Trading of securities held by the fund in foreign markets may negatively or
positively impact the value of such securities on days when the fund neither
trades securities nor calculates its net asset values (i.e., weekends and
certain holidays).
AT WHAT PRICE ARE SHARES PURCHASED?
All investments received by the fund's authorized agents prior to the close of
regular trading on the NYSE (normally 4:00 PM eastern time) will be executed
based on that day's net asset value. Shares credited to your account from the
reinvestment of fund distributions will be in
Phoenix-Goodwin Strategic Income Fund 13
<PAGE>
full and fractional shares that are purchased at the closing net asset value on
the next business day on which the fund's net asset value is calculated
following the dividend record date.
SALES CHARGES
- --------------------------------------------------------------------------------
WHAT ARE THE CLASSES AND HOW DO THEY DIFFER?
The fund presently offers three classes of shares. Each class of shares has
different sales and distribution charges (see "Fund Expenses" previously in this
prospectus). The fund has adopted distribution and service plans allowed under
Rule 12b-1 of the Investment Company Act of 1940 that authorize the fund to pay
distribution and service fees for the sale of its shares and for services
provided to shareholders. Because distribution and service fees are paid out of
the fund's assets on an ongoing basis, over time these fees will increase the
cost of your investment and may cost you more than paying other types of sales
charges.
WHAT ARRANGEMENT IS BEST FOR YOU?
The different classes permit you to choose the method of purchasing shares that
is most beneficial to you. In choosing a class, consider the amount of your
investment, the length of time you expect to hold the shares, whether you decide
to receive distributions in cash or to reinvest them in additional shares, and
any other personal circumstances. Depending upon these considerations, the
accumulated distribution and service fees and contingent deferred sales charges
of one class may be more or less than the initial sales charge and accumulated
distribution and service fees of another class of shares bought at the same
time. Because distribution and service fees are paid out of the fund's assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
CLASS A SHARES. If you purchase Class A Shares, you will pay a sales charge at
the time of purchase equal to 4.75% of the offering price (4.99% of the amount
invested). The sales charge may be reduced or waived under certain conditions.
Class A Shares are not subject to any charges by the fund when redeemed. Class A
Shares have lower distribution and service fees (0.25%) and pay higher dividends
than any other class.
CLASS B SHARES. If you purchase Class B Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class B Shares within the first 5
years after they are purchased, you will pay a sales charge of up to 5% of your
shares' value. See "Deferred Sales Charge Alternative--Class B and 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
14 Phoenix-Goodwin Strategic Income Fund
<PAGE>
inappropriate for any investor who may qualify for reduced sales charges of
Class A Shares and anyone who is over 85 years of age. The underwriter may
decline purchases in such situations.
CLASS C SHARES. If you purchase Class C Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class C Shares within the first year
after they are purchased, you will pay a sales charge of 1%. See "Deferred Sales
Charge Alternative--Class B and C Shares" below. Class C Shares have the same
distribution and service fees (1.00%) and pay comparable dividends as Class B
Shares. Class C Shares do not convert to any other class of shares of the fund.
CLASS X SHARES. Class X Shares are closed to new investors.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
The public offering price of Class A Shares is the net asset value plus a sales
charge that varies depending on the size of your purchase (see "Class A
Shares--Reduced Sales Charges: Combination Purchase Privilege" in the Statement
of Additional Information). Shares purchased based on the automatic reinvestment
of income dividends or capital gains distributions are not subject to any sales
charges. The sales charge is divided between your investment dealer and the
fund's underwriter (Phoenix Equity Planning Corporation or "PEPCO").
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 4.75% 4.99%
$50,000 but under $100,000 4.50 4.71
$100,000 but under $250,000 3.50 3.63
$250,000 but under $500,000 3.00 3.09
$500,000 but under $1,000,000 2.00 2.04
$1,000,000 or more None None
DEFERRED SALES CHARGE ALTERNATIVE--CLASS B AND C SHARES
Class B and C Shares are purchased without an initial sales charge; however,
shares sold within a specified time period are subject to a declining contingent
deferred sales charge ("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
Phoenix-Goodwin Strategic Income Fund 15
<PAGE>
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
Year 1 2+
- --------------------------------------------------------------------------------
CDSC 1% 0%
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.
STEP 1.
Your first choice will be the initial amount you intend to invest.
Minimum INITIAL investments:
[bullet] $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).
[bullet] 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.
[bullet] $500 for all other accounts.
Minimum ADDITIONAL investments:
[bullet] $25 for any account.
[bullet] 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.
16 Phoenix-Goodwin Strategic Income Fund
<PAGE>
STEP 2.
Your second choice will be what class of shares to buy. The fund offers three
classes of shares for individual investors. Each has different sales and
distribution charges. Because all future investments in your account will be
made in the share class you choose when you open your account, you should make
your decision carefully. Your financial advisor can help you pick the share
class that makes the most sense for your situation.
STEP 3.
Your next choice will be how you want to receive any dividends and capital gain
distributions. Your options are:
[bullet] Receive both dividends and capital gain distributions in
additional shares
[bullet] Receive dividends in cash and capital gain distributions in
additional shares
[bullet] 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
----------------------------------- -------------------------------------------
Through a financial advisor Contact your advisor. Some advisors may
charge a fee.
----------------------------------- -------------------------------------------
Through the mail Complete a New Account Application and send
it with a check payable to the fund. Mail
them to: State Street Bank, P.O. Box 8301,
Boston, MA 02266-8301.
----------------------------------- -------------------------------------------
By Federal Funds wire Call us at (800)243-1574 (press 1, then 0).
----------------------------------- -------------------------------------------
By Investo-Matic Complete the appropriate section on the
application and send it with your initial
investment payable to the fund. Mail them
to: State Street Bank, P.O. Box 8301,
Boston, MA 02266-8301.
----------------------------------- -------------------------------------------
By telephone exchange Call us at (800)243-1574 (press 1, then 0).
----------------------------------- -------------------------------------------
Phoenix-Goodwin Strategic Income Fund 17
<PAGE>
HOW TO SELL SHARES
- --------------------------------------------------------------------------------
You have the right to have the fund buy back shares at the net asset value next
determined after receipt of a redemption order by the fund's Transfer Agent or
an authorized agent. In the case of a Class B or C Share redemption, you will be
subject to the applicable deferred sales charge, if any, for such shares.
Subject to certain restrictions, shares may be redeemed by telephone or in
writing. In addition, shares may be sold through securities dealers, brokers or
agents who may charge customary commissions or fees for their services. The fund
does not charge any redemption fees. Payment for shares redeemed is made within
seven days; however, redemption proceeds will not be disbursed until each check
used for purchases of shares has been cleared for payment by your bank, which
may take up to 15 days after receipt of the check.
- ------------------------------------ -------------------------------------------
TO SELL SHARES
- ------------------------------------ -------------------------------------------
Through a financial advisor Contact your advisor. Some advisors may
charge a fee.
- ------------------------------------ -------------------------------------------
Through the mail Send a letter of instruction and any share
certificates (if you hold certificate
shares) to: State Street Bank, P.O. Box
8301, Boston, MA 02266-8301. Be sure to
include the registered owner's name, fund
and account number, number of shares or
dollar value you wish to sell.
- ------------------------------------ -------------------------------------------
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).
- ------------------------------------ -------------------------------------------
By check If you selected the checkwriting feature,
you may write checks for amounts of $500 or
more. Checks may not be used to close an
account.
- ------------------------------------ -------------------------------------------
THINGS YOU SHOULD KNOW WHEN SELLING SHARES
- --------------------------------------------------------------------------------
You may realize a taxable gain or loss (for federal income tax purposes) if you
redeem shares of the fund. The fund reserves the right to pay large redemptions
"in-kind" (in securities owned by the fund rather than in cash). Large
redemptions are those over $250,000 or 1% of the fund's net assets. Additional
documentation will be required for redemptions by organizations, fiduciaries, or
retirement plans, or if redemption is requested by anyone but the shareholder(s)
of record. Transfers between broker-dealer "street" accounts are governed by the
accepting broker-dealer. Questions regarding this type of transfer should be
directed to your financial advisor. Redemption requests will not be honored
until all required documents in proper form
18 Phoenix-Goodwin Strategic Income Fund
<PAGE>
have been received. To avoid delay in redemption or transfer, shareholders
having questions about specific requirements should contact the fund's Transfer
Agent at (800) 243-1574.
REDEMPTIONS BY MAIL
[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:
[bullet] The proceeds do not exceed $50,000.
[bullet] The proceeds are payable to the registered owner at the
address on record.
Send a clear letter of instructions with a signature guarantee when any
of these apply:
[bullet] You are selling more than $50,000 worth of shares.
[bullet] The name or address on the account has changed within the
last 60 days.
[bullet] 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 fund's Transfer Agent at (800) 243-1574.
The signature on your request must be guaranteed by an eligible guarantor
institution as defined by the fund's Transfer Agent in accordance with its
signature guarantee procedures. Currently, such procedures generally permit
guarantees by banks, broker dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
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.
Phoenix-Goodwin Strategic Income Fund 19
<PAGE>
ACCOUNT POLICIES
- --------------------------------------------------------------------------------
ACCOUNT REINSTATEMENT PRIVILEGE
For 180 days after you sell your Class A, B or C shares, you can purchase Class
A Shares of any fund at net asset value, with no sales charge, by reinvesting
all or part of your proceeds, but not more. Send your written request to State
Street Bank, P.O. Box 8301, Boston, MA 02266-8301. You can call us at
(800)243-1574 for more information.
Please remember, a redemption and reinvestment are considered to be a sale and
purchase for tax-reporting purposes. Class B shareholders who have had the
contingent deferred sales charge waived because they are in the Systematic
Withdrawal Program are not eligible for this reinstatement privilege.
REDEMPTION OF SMALL ACCOUNTS
Due to the high cost of maintaining small accounts, if your account balance is
less than $200, you may receive a notice requesting you to bring the balance up
to $200 within 60 days. If you do not, the shares in the account will be sold at
net asset value, and a check will be mailed to the address of record.
EXCHANGE PRIVILEGES
You should read the prospectus carefully before deciding to make an exchange.
You can obtain a prospectus from your financial advisor or by calling us at
(800)243-4361 or accessing our Web site at www.phoenixinvestments.com.
[bullet] You may exchange shares for another fund in the same class of
shares; e.g., Class A for Class A.
[bullet] Exchanges may be made by phone ((800)243-1574) or by mail
(State Street Bank, P.O. Box 8301, Boston, MA 02266-8301).
[bullet] The amount of the exchange must be equal to or greater than
the minimum initial investment required.
[bullet] The exchange of shares is treated as a sale and a purchase
for federal income tax purposes.
[bullet] 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 fund distributor has the right to reject or suspend
them.
20 Phoenix-Goodwin Strategic Income Fund
<PAGE>
RETIREMENT PLANS
Shares of the fund 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 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.
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.
TAX STATUS OF DISTRIBUTIONS
- --------------------------------------------------------------------------------
The fund plans to make distributions from net investment income monthly and to
distribute net realized capital gains, if any, at least annually.
Phoenix-Goodwin Strategic Income Fund 21
<PAGE>
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.
22 Phoenix-Goodwin Strategic Income Fund
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
These tables are intended to help you understand the funds' financial
performance for the last five years. 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 fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by PricewaterhouseCoopers LLP, independent accountants. Their
report, together with the fund's financial statements, is included in the fund's
most recent Annual Report, which is available upon request.
PHOENIX-GOODWIN STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
CLASS X
---------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.99 $10.03 $9.45 $8.97 $10.12
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.83(2) 0.74(2)(4) 0.78(2) 0.91(2) 0.63(2)
Net realized and unrealized gain (loss) (1.62) 0.09 0.59 0.51 (1.13)
----- ---- ---- ---- -----
TOTAL FROM INVESTMENT OPERATIONS (0.79) 0.83 1.37 1.42 (0.50)
----- ---- ---- ---- -----
LESS DISTRIBUTIONS
Dividends from net investment income (0.82) (0.75) (0.79) (0.94) (0.59)
Dividends from net realized gains (0.37) (0.12) -- -- (0.06)
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS (1.19) (0.87) (0.79) (0.94) (0.65)
----- ----- ----- ----- -----
Change in net asset value (1.98) (0.04) 0.58 0.48 (1.15)
----- ----- ---- ---- -----
NET ASSET VALUE, END OF PERIOD $8.01 $9.99 $10.03 $9.45 $8.97
===== ===== ====== ===== =====
Total return(1) (8.63)% 8.58% 15.32% 16.65% (5.26)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $5,653 $6,480 $5,967 $5,170 $1,780
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 0.72%(3) 0.65% 0.65% 0.65% 0.65%
Net investment income 8.92%(3) 7.45% 8.11% 7.60% 6.64%
Portfolio turnover 138% 194% 231% 618% 124%
</TABLE>
__________________________
(1) Maximum sales charges are not included in total return calculation.
(2) Includes reimbursement of operating expenses by investment adviser of $0.26,
$0.22, $0.15, $0.40 and $0.34, respectively.
(3) Annualized.
(4) Computed using average shares outstanding.
Phoenix-Goodwin Strategic Income Fund 23
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
PHOENIX-GOODWIN STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------- ------- -------
FROM FROM FROM
INCEPTION INCEPTION INCEPTION
3/27/98 TO 3/27/98 TO 3/27/98 TO
11/30/98 11/30/98 11/30/98
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $9.78 $9.78 $9.78
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.55(2)(7) 0.50(3)(7) 0.50(4)(7)
Net realized and unrealized gain (loss) (1.79) (1.77) (1.76)
----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS (1.24) (1.27) (1.26)
----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income (0.55) (0.53) (0.53)
Dividends from net realized gains -- -- --
----- ----- -----
TOTAL DISTRIBUTIONS (0.55) (0.53) (0.53)
----- ----- -----
Change in net asset value (1.79) (1.80) (1.79)
----- ----- -----
NET ASSET VALUE, END OF PERIOD $7.99 $7.98 $7.99
===== ===== =====
Total return(1) (12.89)%(6) (13.25)%(6) (13.15)%(6)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $183 $224 $117
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.00%(5) 1.75%(5) 1.75%(5)
Net investment income 8.79%(5) 8.37%(5) 8.47%(5)
Portfolio turnover 138%(6) 138%(6) 138%(6)
</TABLE>
____________________________
(1) Maximum sales charges are not included in total return calculation.
(2) Includes reimbursement of operating expenses by investment adviser of $0.20.
(3) Includes reimbursement of operating expenses by investment adviser of $0.20.
(4) Includes reimbursement of operating expenses by investment adviser of $0.20.
(5) Annualized.
(6) Not annualized.
(7) Computed using average shares outstanding.
24 Phoenix-Goodwin Strategic Income Fund
<PAGE>
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
The fund has filed a Statement of Additional Information about the fund, dated
March 30, 1999 with the Securities and Exchange Commission. The Statement
contains more detailed information about the fund. It is incorporated into this
prospectus by reference and is legally part of the prospectus. You may obtain a
free copy of the Statement:
[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 fund 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 or
[arrow] by writing to its Public Reference Section, Washington, DC 20549-6009
(a fee may be charged).
Information about the operation of the Public Reference Room may be obtained by
calling (800) SEC-0330.
SHAREHOLDER REPORTS
The fund semiannually mails to its shareholders detailed reports containing
information about the fund's investments. The fund's Annual Report contains a
detailed discussion of the market conditions and investment strategies that
significantly affected the fund's performance from December 1 through November
30. You may request a free copy of the fund's 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. 33-19423 and 811-5436 Printed on recycled paper using soybean ink
Phoenix-Goodwin Strategic Income Fund 25
<PAGE>
[Version A]
PHOENIX-ABERDEEN INTERNATIONAL FUND
PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES FUND
PHOENIX-GOODWIN EMERGING MARKETS BOND FUND
PHOENIX-GOODWIN TAX-EXEMPT BOND FUND
PHOENIX-SENECA MID CAP FUND
101 Munson Street
Greenfield, Massachusetts 01301
STATEMENT OF ADDITIONAL INFORMATION
March 30, 1999
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current Prospectus of
Phoenix Multi-Portfolio Fund (the "Trust"), dated March 30, 1999, 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 ................................................. 14
PERFORMANCE ............................................................. 15
PERFORMANCE COMPARISONS ................................................. 17
PORTFOLIO TURNOVER ...................................................... 17
PORTFOLIO TRANSACTIONS .................................................. 17
THE INVESTMENT ADVISERS ................................................. 18
DETERMINATION OF NET ASSET VALUE ........................................ 20
HOW TO BUY SHARES ....................................................... 21
ALTERNATIVE PURCHASE ARRANGEMENTS ....................................... 21
INVESTOR ACCOUNT SERVICES ............................................... 24
HOW TO REDEEM SHARES .................................................... 25
TAX SHELTERED RETIREMENT PLANS .......................................... 26
DIVIDENDS, DISTRIBUTIONS AND TAXES ...................................... 26
THE DISTRIBUTOR ......................................................... 29
DISTRIBUTION PLANS....................................................... 30
MANAGEMENT OF THE TRUST.................................................. 31
ADDITIONAL INFORMATION .................................................. 39
APPENDIX................................................................. 41
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunication Device (TTY): (800) 243-1926
PXP468 (3/99)
<PAGE>
THE TRUST
Phoenix Multi-Portfolio Fund (the "Trust") is an open-end management
investment company which was organized under Massachusetts law in 1987 as a
Massachusetts business trust.
The Trust's Prospectus describes the investment objectives of the
Phoenix-Goodwin Tax-Exempt Bond Fund (the "Bond Fund"), the Phoenix-Seneca Mid
Cap Fund (the "Mid Cap Fund"), the Phoenix-Aberdeen International Fund (the
"International Fund"), the Phoenix-Goodwin Emerging Markets Bond Fund (the
"Emerging Markets Fund") and the Phoenix-Duff & Phelps Real Estate Securities
Fund (the "Real Estate Fund"), (each, a "Fund" and, together, the "Funds"), five
of the Funds currently offered by the Trust, and summarizes the investment
policies and investment techniques each Fund will employ in seeking to achieve
its investment objective. (A separate prospectus and Statement of Additional
Information apply to Phoenix-Goodwin Strategic Income Fund.) The following
discussion supplements the description of the Funds' investment policies and
investment techniques in the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Fund is deemed to be a fundamental policy
and may not be changed without the approval of the shareholders of that Fund.
Investment restrictions described in this Statement of Additional Information
are fundamental policies of the Trust and may not be changed as to any Fund
without the approval of such Fund's shareholders.
MUNICIPAL SECURITIES
As described more fully in the Prospectus, the Bond Fund intends under normal
conditions to invest at least 80% of its net assets in municipal securities. As
used in the Prospectus and this Statement of Additional Information, the term
"municipal securities" means obligations, including municipal bonds and notes
and tax-exempt commercial paper, issued by or on behalf of states, territories
and possessions of the United States, the District of Columbia and their
political subdivisions, agencies and instrumentalities, the interest from which
is, in the opinion of counsel to the issuers of such securities, exempt from
federal income tax. To the extent that an investment in municipal securities
does not run counter to any of the investment policies of the Bond Fund or any
of the investment restrictions to which the Bond Fund is subject, the Bond Fund
may invest in any combination of the various types of municipal securities
described below which, in the judgment of Phoenix Investment Counsel, Inc.
("PIC"), the investment adviser to the Bond, Mid Cap and International Funds
will contribute to the attainment of the Bond Fund's investment objective. Such
combination of municipal securities may vary from time to time. The two
principal classes of municipal securities are municipal bonds and municipal
notes.
Municipal Bonds. Municipal bonds, which meet longer term capital needs and
generally have maturities of more than one year when issued, have two principal
classifications: general obligation bonds and revenue bonds. Another type of
municipal bond is referred to as an industrial development bond. These three are
discussed below.
General Obligation Bonds. Issuers of general obligation bonds include states,
counties, cities, towns, and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. The basic security behind general obligation bonds is the issuer's
pledge of its full faith and credit and taxing power for the payment of
principal and interest. The taxes that can be levied for the payment of debt
service may be limited or unlimited as to the rate or amount of special
assessments.
Revenue Bonds. The principal security for a revenue bond is generally the net
revenues derived from a particular facility, group of facilities, or, in some
cases, the proceeds of a special excise or other specific revenue source.
Revenue bonds are issued to finance a wide variety of capital projects
including: electric, gas, water and sewer systems; highways, bridges, and
tunnels; port and airport facilities; colleges and universities; and hospitals.
Although the principal security behind these bonds may vary, many provide
additional security in the form of a debt service reserve fund whose money may
be used to make principal and interest payments on the issuer's obligations.
Housing finance authorities have a wide range of security, including partially
or fully insured mortgages, rent subsidized and/or collateralized mortgages,
and/or the net revenues from housing or other public projects. Some authorities
provide further security in the form of a state's ability (without obligation)
to make up deficiencies in the debt service reserve fund.
Industrial Development Bonds. Industrial development bonds, which are
considered municipal bonds if the interest paid is exempt from federal income
tax, are issued by or on behalf of public authorities to raise money to finance
various privately operated facilities for business and manufacturing, housing,
sports arenas and pollution control. These bonds are also used to finance public
facilities such as airports, mass transit systems, ports and parking. The
payment of the principal and interest on such bonds is dependent solely on the
ability of the facility's user to meet its financial obligations and the pledge,
if any, of real and personal property so financed as security for such payment.
Municipal Notes. Municipal notes generally are used to provide for short-term
working capital needs and generally have maturities of one year or less.
Municipal notes include:
1
<PAGE>
Tax Anticipation Notes. Tax anticipation notes are issued to finance working
capital needs of municipalities. Generally, they are issued in anticipation of
various seasonal tax revenue, such as income, sales, use and business taxes, and
are payable from these specific future taxes.
Revenue Anticipation Notes. Revenue anticipation notes are issued in
expectation of receipt of other types of revenue, such as federal revenues
available under federal revenue sharing programs.
Bond Anticipation Notes. Bond anticipation notes are issued to provide
interim financing until long-term financing can be arranged. In most cases, the
long-term bonds then provide the money for the repayment of the notes.
Construction Loan Notes. Construction loan notes are sold to provide
construction financing. After successful completion and acceptance, many
projects receive permanent financing through the Federal Housing Administration
under "Fannie Mae" (the Federal National Mortgage Association) or "Ginnie Mae"
(the Government National Mortgage Association).
Tax-Exempt Commercial Paper. Tax-exempt commercial paper is a short-term
obligation with a stated maturity of 365 days or less. It is issued by state and
local governments or their agencies to finance seasonal working capital needs or
as short-term financing in anticipation of longer-term financing.
In addition, other types of municipal securities similar to the
above-described municipal bonds and municipal notes are, or may become,
available. For the purpose of the Trust's investment restrictions set forth in
this Statement of Additional Information, the identification of the "issuer" of
a municipal security which is not a general obligation bond is made by PIC on
the basis of the characteristics of the obligation, the most significant of
which is the source of funds for the payment of principal and interest on such
security.
RISKS RELATING TO MUNICIPAL SECURITIES
There can be no assurance that the Bond Fund will achieve its investment
objective. Yields on municipal securities are dependent on a variety of factors,
including the general conditions of the money market and the municipal bond
market, the size of a particular offering, the maturity of the obligations and
the rating of the issue. Municipal securities with longer maturities tend to
produce higher yields and are generally subject to potentially greater capital
appreciation and depreciation than obligations with shorter maturities and lower
yields. The market prices of municipal securities usually vary, depending upon
available yields. An increase in interest rates will generally reduce the value
of portfolio investments, and a decline in interest rates will generally
increase the value of portfolio investments. The ability of the Fund to achieve
its investment objective is also dependent on the continuing ability of the
issuers of municipal securities in which the Fund invests to meet their
obligations for the payment of interest and principal when due. The ratings of
Moody's and Standard & Poor's represent their opinions as to the quality of
municipal securities which they undertake to rate. Ratings are not absolute
standards of quality; consequently, municipal securities with the same maturity,
coupon, and rating may have different yields. There are variations in municipal
securities, both within a particular classification and between classifications,
depending on numerous factors. It should also be pointed out that, unlike other
types of investments, municipal securities have traditionally not been subject
to regulation by, or registration with, the Securities and Exchange Commission
(the "Commission"), although there have been proposals which would provide for
such regulation in the future.
The federal bankruptcy statutes relating to the debts of political
subdivisions and authorities of states of the United States provide that, in
certain circumstances, such subdivisions or authorities may be authorized to
initiate bankruptcy proceedings without prior notice to or consent of creditors,
which proceedings could result in material and adverse changes in the rights of
holders of their obligations.
Lawsuits challenging the validity under state constitutions of present
systems of financing public education have been initiated or adjusted in a
number of states, and legislation has been introduced to effect changes in
public school financing in some states. In other instances there have been
lawsuits challenging the issuance of pollution control revenue bonds or the
validity of their issuance under state or federal law which could ultimately
affect the validity of those municipal securities or the tax-free nature of the
interest thereon.
VARIABLE AND FLOATING RATE SECURITIES
Some municipal securities bear rates of interest that are adjusted
periodically according to formulae intended to minimize fluctuation in values of
floating rate instruments. Variable rate instruments are those whose terms
provide for automatic establishment of a new interest rate on set dates.
Floating rate instruments are those whose terms provide for automatic adjustment
of their interest rates whenever some specified interest rate changes. Variable
rate and floating rate instruments will be referred to collectively as "Variable
Rate Securities." The interest rate on Variable Rate Securities is ordinarily
determined by reference to, or is a percentage of, a bank's prime rate, the
90-day U.S. Treasury Bill rate, the rate of return on commercial paper or bank
certificates of deposit, an index of short-term, tax-exempt rates, or some
objective standard. Generally, the changes in the interest rate on Variable Rate
Securities reduce the fluctuation in the market value of such securities.
Accordingly, as interest rates decrease or increase, the potential for capital
appreciation or depreciation is less than for fixed-rate obligations.
2
<PAGE>
Variable Rate Demand Securities are Variable Rate Securities which have
demand features entitling the purchaser to resell the securities to the issuer
at an amount approximately equal to amortized cost or the principal amount
thereof plus accrued interest, which may be more or less than the price the Bond
Fund paid for them. The interest rate on Variable Rate Demand Securities also
varies either according to some objective standard, such as an index of
short-term, tax-exempt rates, or according to rates set by or on behalf of the
issuer.
TAXABLE SECURITIES
The income from investments (either in the form of dividends or interest)
made by the Mid Cap Fund and the International Fund are expected to be taxable
as ordinary income.
The Bond Fund may also invest a portion of its net assets (up to 20% under
normal conditions and more under extraordinary circumstances, as described in
the Prospectus) in taxable securities.
Interest earned on investments in taxable securities may be taxable to
shareholders as ordinary income. Investors should be aware that investments in
taxable securities by the Bond Fund are restricted to:
U.S. Government Securities--obligations issued or guaranteed by the U.S.
Government, its agencies, authorities or instrumentalities (collectively
referred to as "U.S. Government" issues). Some of these securities are supported
by the full faith and credit of the U.S. Government; others are supported by the
right of the issuer to borrow from the U.S. Treasury; and the remainder are
supported only by the credit of the instrumentality.
Bank Obligations--certificates of deposit, bankers' acceptances, and other
short-term obligations of U.S. banks which at the date of the investment have
capital, surplus and undivided profits in excess of $100,000,000 as of the date
of their most recently published financial statements.
Commercial Paper--commercial paper which at the date of the investment is
rated P-l by Moody's Investors Service, Inc. or A-1 by Standard & Poor's
Corporation or, if not rated, is issued by a company which at the date of the
investment has an outstanding debt issue rated Aa or higher by Moody's or AA or
higher by Standard & Poor's.
Corporate Debt Securities--corporate debt securities which at the date of the
investment are rated Aa or higher by Moody's or AA or higher by Standard &
Poor's.
Repurchase Agreements--repurchase agreements with respect to any of the
foregoing.
The Bond Fund also has the right to hold cash reserves as the Adviser deems
necessary. For example, a Fund may invest in money market securities or hold
cash pending investment of proceeds from sales of its shares or from the sale of
portfolio securities and/or in anticipation of redemptions.
RATINGS
If the rating of a security purchased by a Fund is subsequently reduced below
the minimum rating required for purchase or a security purchased by the Fund
ceases to be rated, neither event will require the sale of the security.
However, the Adviser, as applicable, will consider any such event in determining
whether the Fund should continue to hold the security. To the extent that
ratings established by Moody's or Standard & Poor's may change as a result of
changes in such organizations or their rating systems, the Funds will invest in
securities which are deemed by the Fund's adviser to be of comparable quality to
securities whose current ratings render them eligible for purchase by the Fund.
RISKS OF HIGH YIELD BONDS
The Mid Cap and International Funds may invest up to 10% and 20%,
respectively, of their total assets in bonds considered to be less than
investment-grade, commonly known as "junk" bonds. The Emerging Markets Fund may
invest up to 100% of their total assets in these bonds. The Mid Cap and
International Funds did not invest in any bonds considered less than
investment-grade for the fiscal year ended November 30, 1998.
While management will seek to minimize risk through diversification and
continual evaluation of current developments in interest rates and economic
conditions, the market prices of lower-rated securities generally fluctuate more
than those of higher rated securities. Using credit ratings helps to evaluate
the safety of principal and interest payments but does not assess market risk.
Fluctuations in the market value of portfolio securities subsequent to
acquisition by the Funds will not normally affect cash income from such
securities but will be reflected in the Fund's net asset value. Additionally,
with lower-rated securities, there is a greater possibility that an adverse
change in the financial condition of the issuer, particularly a highly-leveraged
issuer, may affect its ability to make payments of income and principal and
increase the expenses of the Fund seeking recovery from the issuer. Also, to the
extent that the Fund invests in securities in the lower rating categories, the
achievement of its goals will be more dependent on management's ability than
would be the case if it were only investing in securities in the higher rating
categories. Lower-rated securities may be thinly traded and therefore harder to
value and more susceptible to adverse publicity concerning the issuer.
3
<PAGE>
WRITING AND PURCHASING OPTIONS ON SECURITIES AND SECURITIES INDICES
The Bond, Mid Cap, International and Emerging Markets Funds may engage in
option transactions.
Call options on securities and securities indices written by the Funds
normally will have expiration dates between three and nine months from the date
written. The exercise price of a call option written by a Fund utilizing this
investment technique 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.
During the option period, a Fund utilizing this investment technique 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.
A multiplier for an index option performs a function similar to the unit of
trading for an option on an individual security. It determines the total dollar
value per contract of each point between the exercise price of the option and
the current level of the underlying index. A multiplier of 100 means that a
one-point difference will yield $100. Options on different indices may have
different multipliers.
Securities indices for which options are currently traded include the
Standard & Poor's 100 and 500 Composite Stock Price Indices, Computer/Business
Equipment Index, Major Market Index, Amex Market Value Index, Computer
Technology Index, Oil and Gas Index, NYSE Options Index, Gaming/Hotel Index,
Telephone Index, Transportation Index, Technology Index, and Gold/ Silver Index.
The Mid Cap and International Funds may write call options and purchase call and
put options on these and 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 the 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, the 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.
OVER-THE-COUNTER OPTIONS
The Mid Cap Fund, International and Emerging Markets Funds may deal in
over-the-counter options ("OTC options"). PIC understands the position of the
staff of the Commission to be that purchased OTC options and the assets used in
"cover" for written OTC options are illiquid securities. The Funds have adopted
procedures for engaging in OTC options for the purpose of reducing any potential
adverse effect of such transactions upon the liquidity of a Fund. A brief
description of such procedures is set forth below.
The Mid Cap, International and Emerging Markets Funds will engage in OTC
options transactions only with dealers that meet certain credit and other
criteria. The Funds and PIC believe that the approved dealers present minimal
credit risks to the Funds and, therefore, should be able to enter into closing
transactions if necessary. A Fund currently will not engage in OTC options
transactions if the amount invested by the Fund in OTC options, plus a
"liquidity charge" related to OTC options written by the Fund (as described
below) plus the amount invested by the Fund in other illiquid securities, would
exceed 10% of the Fund's total assets. The "liquidity charge" referred to above
is computed as described below.
The Funds anticipate entering into agreements with dealers to which the Funds
sell OTC options. Under these agreements the Funds would have the absolute right
to repurchase the OTC options from the dealer at any time at a price no greater
than a price established under the agreements (the "Repurchase Price"). The
"liquidity charge" referred to above for a specific OTC option transaction will
be the Repurchase Price related to the OTC option less the intrinsic value of
the OTC option. The intrinsic value of an OTC call option for such purposes will
be the amount by which the current market value of the underlying security
exceeds the exercise price. In the case of an OTC put option, intrinsic value
will be the amount by which the exercise price exceeds the current market value
of the underlying security. If there is no such agreement requiring a dealer to
allow the Funds to repurchase a specific OTC option written by the Funds, the
"liquidity charge" will be the current market value of the assets serving as
"cover" for such OTC option.
LIMITATIONS ON OPTIONS ON SECURITIES AND SECURITIES INDICES
The Bond, Mid Cap, International and Emerging Markets Funds may write call
options only if they are covered and remain covered for as long as the Fund is
obligated as a writer. Thus, if a Fund utilizing this investment technique
writes a call option on an individual security, the Fund must own the underlying
security or other securities that are acceptable for a pledged account at all
4
<PAGE>
times during the option period. The Funds 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 a pledged account in accordance with
clearing corporation and exchange rules.
In the case of an index call option written by a Fund, the Fund will be
required to deposit qualified securities. A "qualified security" is a security
against which the Fund has not written a call option and which has not been
hedged by the 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, the Fund will deposit an amount of cash, U.S. Government Securities
or other liquid high quality debt obligations equal in value to the difference.
In addition, when the Fund writes a call on an index which is "in-the-money" at
the time the call is written, the Fund will pledge with the Trust's custodian
bank cash, U.S. Government securities or other liquid high quality debt
obligations equal in value to the amount by which the call is "in-the-money"
times the multiplier times the number of contracts. Any amount otherwise pledged
may be applied to the Fund's other obligations to pledge assets 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.
Each Fund utilizing this investment technique may invest up to 5% of its
total assets in exchange-traded call and put options on securities and
securities indices. 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's qualifying as a regulated investment company
under the Internal Revenue Code of 1986, other restrictions on the Fund's
ability to enter into option transactions may apply from time to time. See
"Dividends, Distributions and Taxes."
RISKS RELATING TO OPTIONS ON SECURITIES
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 within the
option period 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 the Fund
utilizing this investment technique may lose the premium it paid plus
transaction costs, if the Fund does not exercise the option and is unable to
close out the position prior to expiration of the option.
An option position may be closed out on an exchange only if the exchange
provides a secondary market for an option of the same series. Although the Funds
utilizing this investment technique will write and purchase options only when
PIC 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 any 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 the following: (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 in
general or of particular options or impose restrictions on orders.
Each exchange has established limitations governing the maximum number of
call options, whether or not covered, which may be written by a single investor
acting alone or in concert with others (regardless of whether such options are
written on the same or different exchanges or are held or written on one or more
accounts or through one or more brokers). An exchange may order the liquidation
of positions found to be in violation of these limits and it may impose other
sanctions or restrictions. PIC believes that the position limits established by
the exchanges will not have any adverse impact upon the Funds.
RISKS OF OPTIONS ON SECURITIES 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 utilizing this investment technique 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 (depending on
the index option in question) 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 PIC's ability to predict correctly movements in the direction
5
<PAGE>
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 utilizing this
investment technique 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 the
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, the Funds will write call options only on indices which meet the
interim described above.
Price movements in securities held by a Fund utilizing this investment
technique will not correlate perfectly with movements in the level of the index
and, therefore, the Fund bears the risk that the price of the securities held by
the Fund might 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 the securities held by the Fund. It is also possible
that the index might rise when the value of the securities held by the Fund 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 its portfolio securities.
Unless a Fund utilizing this investment technique has other liquid assets
which are sufficient to satisfy the exercise of a call on an index, the Fund
will be required to liquidate securities in order to satisfy the exercise.
Because an exercise must be settled within hours after receiving the notice of
exercise, if the Fund fails to anticipate an exercise, it may have to borrow
from a bank (in an amount not exceeding 10% of the Fund's total assets) 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 the 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 the Fund is able to sell its securities. As with options
on its securities, the Fund will not learn that a call has been exercised until
the day following the exercise date but, unlike a call on a security where the
Fund would be able to deliver the underlying security in settlement, the Fund
may have to sell some of its securities in order to make settlement in cash, and
the price of such securities may decline before they can 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" the 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 the 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
The Bond, Mid Cap, International and Emerging Markets Funds may use financial
futures contracts and related options to hedge against changes in the market
value of their portfolio securities or securities which they intend to purchase.
The Mid Cap, International and Emerging Markets Funds may use foreign currency
futures contracts to hedge against changes in the value of foreign currencies.
(See "Foreign Currency Transactions" below.) Hedging is accomplished when an
investor takes a position in the futures market opposite to the investor's 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 (although in inverse relation to) 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 or
the value of foreign currencies 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 the Fund
utilizing this investment technique may wish to purchase in the future by
purchasing futures contracts.
The Bond, Mid Cap, International and Emerging Markets Funds may purchase or
sell any financial futures contracts which are traded on a recognized exchange
or board of trade and may purchase exchange- or board-traded put and call
options on financial futures contracts as a hedge against anticipated changes in
the market value of its portfolio securities or securities which it intends to
purchase. Financial futures contracts consist of interest rate futures
contracts, securities index futures contracts and foreign currency 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
6
<PAGE>
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 in which a Fund purchases or sells a security,
no security is delivered or received by the Fund upon the purchase or sale of a
financial futures contract (although an obligation to deliver or receive the
underlying security in the future is created by such a contract). Initially,
when it enters into a financial futures contract, a Fund utilizing this
investment technique will be required to deposit in a pledged account with the
Trust's custodian bank with respect to such Fund an amount of cash or U.S.
Treasury bills. This amount is known as an 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. However,
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 a margin
balance 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.
The Funds utilizing this investment technique 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, and will be in addition to those paid for direct purchases and sales
of securities.
LIMITATIONS ON FUTURES CONTRACTS AND RELATED OPTIONS
The Funds utilizing this investment technique 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 portfolio
securities or securities which it intends to purchase or foreign currencies. A
Fund utilizing this investment technique may not purchase or sell financial
futures contracts or related options if, immediately thereafter, the sum of the
amount of initial margin deposits on the Fund's existing futures and related
options positions and the premiums paid for related options would exceed 5% of
the market value of the 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 non-investment-grade debt so long as the asset is liquid,
unencumbered and marked to market daily equal to the market value of the futures
contract minus the Fund's initial margin deposit with respect thereto will be
deposited in a pledged account with the Trust's custodian bank with respect to
such Fund 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 of 1986 for qualification 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 on an
exchange if the exchange provides a secondary market for such contracts or
options. A Fund utilizing this investment technique will enter into a futures or
futures related option 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 the Fund
would continue to be required to make daily margin payments. In this situation,
if the Fund has insufficient cash to meet daily margin requirements it may have
to sell portfolio securities to meet its margin obligations at a time when it
may be disadvantageous to do so. In addition, the 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 the Fund's ability to hedge its positions 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 limit a hedger's opportunity to benefit fully from
favorable market
7
<PAGE>
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 turnover rate.
The successful use of futures contracts and related options 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, the 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, the Fund's total 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 or currencies which are being hedged. If the price of
the futures contract moves more or less than the price of the securities or
currency being hedged, the Fund will experience a gain or loss which will not be
completely offset by movements in the price of the securities or currency. It is
possible that, where a Fund has sold futures contracts to hedge against decline
in the market, the market may advance and the value of securities held in the
Fund or the currencies in which its foreign securities are denominated may
decline. If this occurred, the 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 or foreign currencies before the 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 the 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, the 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 elect to close out their contracts through offsetting
transactions rather than to meet margin deposit requirements. In such cases,
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 or
currencies rather than to engage in closing transactions because such action
would reduce the liquidity of the futures market. In addition, because, from the
point of view of speculators, the deposit requirements in the futures markets
are less onerous than margin requirements in the underlying securities market,
increased participation by speculators in the futures market could cause
temporary price distortions. Because of the possibility of price distortions in
the futures market and of the imperfect correlation between movements in the
prices of securities or foreign currencies 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 the Fund (i.e., the loss
of the premium paid) 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.
REPURCHASE AGREEMENTS
Repurchase agreements will be entered into only with commercial banks,
brokers and dealers considered by the Trust to be creditworthy. The Trustees of
the Trust will monitor each Fund's repurchase agreement transactions
periodically and, with the Funds' investment advisers, will consider standards
which the investment advisers will use in reviewing the creditworthiness of any
party to a repurchase agreement with a Fund. No more than an aggregate of 10% of
a Fund's total assets, at the time of investment, will be invested in repurchase
agreements having maturities longer than seven days and other investments
subject to legal or contractual restrictions on resale, or for which there are
not readily available market quotations.
The use of repurchase agreements involves certain risks. For example, if the
seller under a repurchase agreement defaults on its obligation to repurchase the
underlying instrument at a time when the value of the instrument has declined, a
Fund may incur a loss upon its disposition. If the seller becomes insolvent and
subject to liquidation or reorganization under bankruptcy or other laws, a
bankruptcy court may determine that the underlying instrument is collateral for
a loan by the Fund and therefore is subject to sale by the trustee in
bankruptcy. Finally, it is possible that the Fund may not be able to
substantiate its interest in the underlying instrument. While the Trustees of
the Trust acknowledge these risks, it is expected that they can be controlled
through careful structuring of repurchase agreement transactions to meet
requirements for treatment as a purchase and sale under the bankruptcy laws and
through monitoring procedures designed to assure the creditworthiness of
counterparties to such transactions.
LENDING PORTFOLIO SECURITIES
The Funds may lend portfolio securities to broker-dealers and other financial
institutions in amounts up to 25% of the market or other fair value for its
total assets, provided that such loans are callable at any time by the Fund
utilizing this investment technique and are at all times secured by collateral
held by the Fund at least equal to the market value, determined daily, of the
loaned securities. The Fund utilizing this investment technique will continue to
receive any income on the loaned securities, and
8
<PAGE>
at the same time will earn interest on cash collateral (which will be invested
in short-term debt obligations) or a securities lending fee in the case of
collateral in the form of U.S. Government securities. A loan may be terminated
at any time by either the Fund or the borrower. Upon termination of a loan, the
borrower will be required to return the securities to the Fund, and any gain or
loss in the market price during the period of the loan would accrue to the Fund.
If the borrower fails to maintain the requisite amount of collateral, the loan
will automatically terminate, and the Fund may use the collateral to replace the
loaned securities while holding the borrower liable for any excess of the
replacement cost over the amount of the collateral.
When voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loan, in whole or in
part as may be appropriate, in order to exercise such rights if the matters
involved would have a material effect on the Fund's investment in the securities
which are the subject of the loan. The Fund may pay reasonable finders,
administrative and custodial fees in connection with loans of its portfolio
securities.
As with any extension of credit, there are risks of delay in recovery of the
loaned securities and in some cases loss of rights in the collateral should the
borrower of the securities fail financially. However, loans of portfolio
securities will be made only to firms considered by the Trust to be creditworthy
and when the Adviser believes the consideration to be earned justifies the
attendant risks.
WHEN-ISSUED SECURITIES
New issues of municipal and emerging market securities are often offered on a
when-issued basis, that is, delivery and payment for the securities normally
takes place 15 to 45 days or more after the date of the commitment to purchase.
The payment obligation and the interest rate that will be received on the
securities are each fixed at the time the buyer enters into the commitment. The
Bond and Emerging Markets Funds will generally make a commitment to purchase
such securities with the intention of actually acquiring the securities.
However, the Funds may sell these securities before the settlement date if it is
deemed advisable as a matter of investment strategy. When the Bond and Emerging
Markets Funds purchase securities on a when-issued basis, cash or liquid high
quality debt securities equal in value to commitments for the when-issued
securities will be deposited in a segregated account with the Trust's custodian
bank. Such segregated securities either will mature or, if necessary, be sold on
or before the settlement date.
Securities purchased on a when-issued basis and the securities held in the
Bond and Emerging Markets Funds are subject to changes in market value based
upon the public perception of the creditworthiness of the issuer and changes in
the level of interest rates which will generally result in similar changes in
value; i.e., both experiencing appreciation when interest rates decline and
depreciation when interest rates rise. Therefore, to the extent the Bond and
Emerging Markets Funds remain substantially fully invested at the same time that
they have purchased securities on a when-issued basis, there will be greater
fluctuations in the net asset values than if the Funds merely set aside cash to
pay for when-issued securities. In addition, there will be a greater potential
for the realization of capital gains, which are not exempt from federal income
taxation. When the time comes to pay for when-issued securities, the Bond and
Emerging Markets Funds will meet their obligations from then available cash
flow, the sale of securities or, although it would not normally expect to do so,
from the sale of the when-issued securities themselves (which may have a value
greater or less than the payment obligation). The policies described in this
paragraph are not fundamental and may be changed without shareholder approval.
FOREIGN CURRENCY TRANSACTIONS
The Mid Cap, International and Emerging Markets Funds (each a "Foreign
Currency Fund") each may engage in foreign currency transactions, although the
Mid Cap Fund has no present intention of doing so. 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 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 banks will
segregate any asset, including equity securities and non-investment-grade debt
so long as the asset is liquid, unencumbered and marked to market daily in an
amount not less than the value of a Foreign Currency Fund's total assets
committed to forward foreign currency exchange contracts entered into for the
purchase of a foreign currency. If the value of the securities segregated
declines, additional cash or securities will be added so that the segregated
amount is not less than the amount of the Foreign Currency Fund's commitments
with respect to such contracts. Generally, the Foreign Currency Funds do not
enter into forward contracts with terms 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,
9
<PAGE>
but not the obligation, to buy the currency, while a put option gives its owner
the right, but not the obligation, to sell the currency. The option seller
(writer) is obligated to fulfill the terms of the option sold if it is
exercised. However, either seller or buyer may close its position during the
option period for such options any time prior to expiration.
A call rises in value if the underlying currency appreciates. Conversely, a
put rises in value if the underlying currency depreciates. While purchasing a
foreign currency option can protect a Foreign Currency 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 Foreign Currency 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 Foreign Currency 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 Foreign Currency 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 Foreign Currency Fund may use
foreign currency futures contracts and options on such futures contracts.
Through the purchase or sale of such contracts, a Foreign Currency 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 Foreign Currency Fund will maintain in a pledged
account any asset, including equity securities and non-investment-grade debt so
long as the asset is liquid, unencumbered and marked to market daily equal to
the value of such contracts.
To the extent required to comply with Commodity Futures Trading Commission
Regulation 4.5 and thereby avoid "commodity pool operator" status, a Foreign
Currency 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 Foreign Currency Fund plus premiums paid by it for open options on futures
would exceed 5% of the Foreign Currency Fund's total assets. Neither Foreign
Currency 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.
EMERGING MARKET SECURITIES
The Emerging Markets Fund may invest in countries or regions with relatively
low gross national product per capita compared to the world's major economies,
and in countries or regions with the potential for rapid economic growth
(emerging markets). Emerging markets will include any country: (i) having an
"emerging stock market" as defined by the International Finance Corporation;
(ii) with low-to-middle-income economies according to the International Bank for
Reconstruction and Development (the "World Bank"); (iii) listed in World Bank
publications as developing; or (iv) determined by the Adviser to be an emerging
market as defined above. The Emerging Markets Fund may also invest in securities
of: (i) companies the principal securities trading market for which is an
emerging market country; (ii) companies organized under the laws of, and with a
principal office in, an emerging market country, or (iii) companies whose
principal activities are located in emerging market countries.
The risks of investing in foreign securities may be intensified in the case
of investments in emerging markets. Securities of many issuers in emerging
markets may be less liquid and more volatile than securities of comparable
domestic issuers. Emerging markets also have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when a portion of the assets of the Funds are uninvested and
no return is earned thereon. The inability of the Funds to make intended
security purchases due to settlement problems could cause the Funds to miss
attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result either in losses to the Funds
due to subsequent declines in value of portfolio securities or, if the Funds
have entered into a contract to sell the security, in possible liability to the
purchaser. Securities prices in emerging markets can be significantly more
volatile than in the more developed nations of the world, reflecting the greater
uncertainties of investing in less established markets and economies. In
particular, countries with emerging markets may have relatively unstable
governments, present the risk of nationalization of businesses, restrictions on
foreign ownership, or prohibitions of repatriation of assets, and may have less
protection of property
10
<PAGE>
rights than more developed countries. The economies of countries with emerging
markets may be predominantly based on only a few industries, may be highly
vulnerable to changes in local or global trade conditions, and may suffer from
extreme and volatile debt burdens or inflation rates. Local securities markets
may trade a small number of securities and may be unable to respond effectively
to increases in trading volume, potentially making prompt liquidation of
substantial holdings difficult or impossible at times. Securities of issuers
located in countries with emerging markets may have limited marketability and
may be subject to more abrupt or erratic price movements.
Certain emerging markets may require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in an
emerging market's balance of payments or for other reasons, a country could
impose temporary restrictions on foreign capital remittances. The Funds could be
adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation of capital, as well as by the application
to the Funds of any restrictions on investments.
Investments in certain foreign emerging market debt obligations may be
restricted or controlled to varying degrees. These restrictions or controls may
at times preclude investment in certain foreign emerging market debt obligations
and increase the expenses of the Funds.
ADDITIONAL RISK FACTORS. As a result of its investments in foreign
securities, the Emerging Markets Fund may receive interest or dividend payments,
or the proceeds of the sale or redemption of such securities, in the foreign
currencies in which such securities are denominated. In that event, the Fund may
convert such currencies into dollars at the then current exchange rate. Under
certain circumstances, however, such as where the Adviser believes that the
applicable rate is unfavorable at the time the currencies are received or the
Adviser anticipates, for any other reason, that the exchange rate will improve,
the Fund may hold such currencies for an indefinite period of time.
In addition, the Fund may be required to receive delivery of the foreign
currency underlying forward foreign currency contracts it has entered into. This
could occur, for example, if an option written by the Fund is exercised or the
Fund is unable to close out a forward contract. The Fund may hold foreign
currency in anticipation of purchasing foreign securities. The Fund may also
elect to take delivery of the currencies' underlying options or forward
contracts if, in the judgment of the Adviser, it is in the best interest of the
Fund to do so. In such instances as well, the Fund may convert the foreign
currencies to dollars at the then current exchange rate, or may hold such
currencies for an indefinite period of time.
While the holding of currencies will permit the Fund to take advantage of
favorable movements in the applicable exchange rate, it also exposes the Fund to
risk of loss if such rates move in a direction adverse to the Fund's position.
Such losses could reduce any profits or increase any losses sustained by the
Fund from the sale or redemption of securities, and could reduce the dollar
value of interest or dividend payments received. In addition, the holding of
currencies could adversely affect the Fund's profit or loss on currency options
or forward contracts, as well as its hedging strategies.
RUSSIAN SECURITIES
The Emerging Markets Fund may invest in Russian securities. While investment
risks exist in many markets around the world, some of the risks inherent in
investing in Russia appear to be greater than those in other established and
emerging markets. These risks include, without limitation:
POLITICAL AND ECONOMIC RISKS. There is no history of stability in this market
and no guarantee of future stability. The emerging nature of the Russian
political system in its current democratic form leaves it more vulnerable to
break down in the event of economic instability or popular unrest. The dynamic
nature of the political environment can make the future uncertain. The economic
infrastructure is poor, and the country maintains a high level of external and
internal debt. Tax regulations are ambiguous and unclear, and there is a risk of
imposition of arbitrary or onerous taxes due to the lack of a fair and
economically-rational tax regime.
COMMERCIAL AND CREDIT RISKS. Banks and other financial systems are not well
developed or regulated, and as a result tend to be untested and have low credit
ratings. Organized crime and corruption are a feature of the business
environment, and bankruptcy and insolvency are commonplace as businesses are
learning how to cope in new conditions. In terms of cash, securities and other
investment transactions, the risk of broker, counterparty and other third-party
default is high. The same holds true for issuers, where the risk of default is
high. Insurance is expensive and difficult to obtain in light of the volatility
of the commercial environment.
LIQUIDITY RISKS. Foreign investment is affected by restrictions in terms of
repatriation and convertibility of the currency. The ruble is only convertible
internally, and the value of investments may be affected by fluctuations in
available currency rates and exchange control regulations. The repatriation of
profits may be restricted in some cases. Due to the undeveloped nature of the
banking system, considerable delays can occur in transferring funds, converting
rubles into other currencies and remitting funds out of Russia.
LEGAL AND REGULATORY RISKS. Russia's legal system is evolving and is not as
developed as that of a western country. It is based on a civil code with no
system of judicial precedents. The regulatory environment is sometimes uncertain
since the total law can
11
<PAGE>
encompass the civil code, legislative laws, presidential decrees, and ministry
resolutions. The code, laws, decrees, and resolutions ("Regulations") are
promulgated at separate times and are not necessarily consistent. The issuance
of Regulations does not always keep pace with market developments, thereby
creating ambiguities and inconsistencies.
Regulations governing securities investment may not exist or may be
interpreted and applied in an arbitrary or inconsistent manner. There may be a
risk of conflict between the rules and regulations of the local, regional, and
national governments. The concept of share ownership rights and controls may not
be in place or be enforceable. The independence of the courts from economic,
political, or national influence is basically untested and the courts and judges
are not experienced in business and corporate law. Foreign investors cannot be
guaranteed redress in a court of law for a breach of local laws, regulations or
contracts.
The securities market regulatory body, the Federal Commission on the Capital
Market, was established in 1994 and is responsible for overseeing market
participants, including registrars. However, the monitoring of and enforcement
of the obligations of registrar companies is difficult due to geographic
dispersion and inconsistent interpretation and application of regulations.
OPERATIONAL RISKS. Shareholder Title to Securities: Shareholder risk is a
major risk for equity investment in Russia. For example, shares are
dematerialized and the only legal evidence of ownership is the shareholder's
name entered in the register of the company. The concept of fiduciary duty on
the part of companies' management is generally non-existent. Therefore,
shareholders may suffer a dilution or loss of investment, due to arbitrary
changes in the shareholder register, with little or no recourse or redress
available. Local laws and regulations may not prohibit or restrict a company's
management from materially changing the company's structure without the consent
of shareholders. Legislation prohibiting insider trading activities is
rudimentary.
Clearing and Settlement: For equity settlements, the payments are usually
handled offshore in U.S. dollars after the shares are reregistered on the books
of the company or its registrar. However, the only evidence of the registration
is a company "extract" which is a photocopy of the appropriate page from the
register reflecting the new shareholder's name. The extract does not have a
legal basis for establishing ownership in the event of a loss.
For Ministry of Finance (MinFin) bond settlements, payments are made offshore
in U.S. dollars upon settlement of the bearer bonds at Vneshtorgbank's (VTB)
office in Moscow. If the bonds are transported between the local subcustodian
and VTB, the investor is exposed to transportation risk as the MinFins are
bearer bonds and are not replaceable in the event they are lost, stolen, or
destroyed.
Foreign investors can also invest in treasury issues through the Moscow
Interbank Currency Exchange (MICEX). These issues settle book-entry at MICEX in
rubles only.
Transparency: The rules regulating corporate governance may not exist or are
underdeveloped and offer little protection to minority shareholders. Disclosure
and reporting requirements are not to the expected level of most developed
western nations. The accounting standards generally used in Russia are not
international standards and in many cases may be cash based, nonaccrual method
of accounting. The quality, reliability, and availability of information on
companies in Russia is lower than in most western markets.
Derivative Investments. In order to seek to hedge various portfolio
positions, including to hedge against price movements in markets in which the
Fund anticipates increasing its exposure, the Fund may invest in certain
instruments which may be characterized as derivative investments. These
investments include various types of interest rate transactions, options and
futures. Such investments also may consist of indexed securities, including
inverse securities. The Fund has express limitations on the percentage of its
assets that may be committed to certain of such investments. 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 require
limitations as to the type of permissible counter-party to the transaction.
Interest rate transactions involve the risk of an imperfect correlation between
the index used in the hedging transactions and that pertaining to the securities
which are the subject of such transactions. Similarly, utilization of options
and futures transactions involves the risk of imperfect correlation in movements
in the price of options and futures and movements in the price of the securities
or interest rates which are the subject of the hedge. Investments in indexed
securities, including inverse securities, subject the Fund to the risks
associated with changes in the particular indices, which may include reduced or
eliminated interest payments and losses of invested principal.
REAL ESTATE INVESTMENT TRUSTS
As described in the Prospectus, the Real Estate Fund intends under normal
conditions to invest in real estate investment trusts ("REITs"). REITs pool
investors' funds for investment primarily in income-producing commercial real
estate or real estate-related loans. A REIT is not taxed on income distributed
to shareholders if it complies with several requirements relating to its
organization, ownership, assets, and income and a requirement that it distribute
to its shareholders at least 95% of its taxable income (other than net capital
gains) for each taxable year.
REITs can generally be classified as follows:
--Equity REITs, which invest the majority of their assets directly in real
property and derive their income primarily from rents. Equity REITs can also
realize capital gains by selling properties that have appreciated in value.
12
<PAGE>
--Mortgage REITs, which invest the majority of their assets in real estate
mortgages and derive their income primarily from interest payments.
--Hybrid REITs, which combine the characteristics of both equity REITs and
mortgage REITs.
REITs are like closed-end investment companies in that they are essentially
holding companies which rely on professional managers to supervise their
investments. A shareholder in the Real Estate Fund should realize that by
investing in REITs indirectly through the Fund, he will bear not only his
proportionate share of the expenses of the Fund, but also, indirectly, similar
expenses of underlying REITs.
RISKS OF INVESTMENT IN REAL ESTATE SECURITIES
Selecting REITs requires an evaluation of the merits of each type of asset a
particular REIT owns, as well as regional and local economics. Due to the
proliferation of REITs in recent years and the relative lack of sophistication
of certain REIT managers, the quality of REIT assets has varied significantly.
The Real Estate Fund will not invest in real estate directly, but only in
securities issued by real estate companies. However, the Fund may be subject to
risks similar to those associated with the direct ownership of real estate
because of its policy of concentrating in the securities of companies in the
real estate industry. These include declines in the value of real estate, risks
related to general and local economic conditions, dependence on management
skill, cash flow dependence, possible lack of availability of long-term mortgage
funds, over-building, extended vacancies of properties, decreased occupancy
rates and increased competition, increases in property taxes and operating
expenses, changes in neighborhood values and the appeal of the properties to
tenants and changes in interest rates.
In addition to these risks, equity REITs may be affected by changes in the
value of the underlying properties owned by the trusts, while mortgage REITs may
be affected by the quality of any credit extended. Further, equity and mortgage
REITs are dependent upon management skills and generally are not diversified.
Equity and mortgage REITs are also subject to potential defaults by borrowers,
self-liquidation, and the possibility of failing to qualify for tax-free status
of income under the Code and failing to maintain exemption from the Investment
Company Act of 1940. In the event of a default by a borrower or lessee, the REIT
may experience delays in enforcing its rights as a mortgagee or lessor and may
incur substantial costs associated with protecting its investments. In addition,
investment in REITs could cause the Fund to possibly fail to qualify as a
regulated investment company.
DEBT SECURITIES
Up to 25% of the Real Estate Fund's total assets may be invested in debt
securities (which include for purposes of this investment policy convertible
debt securities which the Adviser believes have attractive equity
characteristics). The Real Estate Fund may invest in debt securities rated BBB
or better by Standard & Poor's Corporation ("S&P") or Baa or better by Moody's
Investor Service, Inc. ("Moody's") or, if not rated, are judged to be of
comparable quality as determined by the Adviser. In choosing debt securities for
purchase by the Fund, the Adviser will employ the same analytical and valuation
techniques utilized in managing the equity portion of the Real Estate Fund's
holdings (see "Investment Advisory and Other Services") and will invest in debt
securities only of companies that satisfy the Adviser's investment criteria.
The value of the Real Estate Fund's investments in debt securities will
change as interest rates fluctuate. When interest rates decline, the values of
such securities generally can be expected to increase and when interest rates
rise, the values of such securities can generally be expected to decrease. The
lower-rated and comparable unrated debt securities described above are subject
to greater risks of loss of income and principal than are higher-rated fixed
income securities. The market value of lower- rated securities generally tends
to reflect the market's perception of the creditworthiness of the issuer and
short-term market developments to a greater extent than is the case with more
highly rated securities, which reflect primarily functions in general levels of
interest rates.
ZERO COUPON BONDS
The Emerging Markets Fund may invest in debt obligations that do not make any
interest payments for a specified period of time prior to maturity or until
maturity. Even though such bonds do not pay current interest in cash, the
Emerging Markets Fund is required to accrue interest income on such investments
and to distribute such amounts to shareholders. Thus, the Emerging Markets Fund
would not be able to purchase income-producing securities to the extent of cash
used to pay such distributions and current income could be less than it
otherwise would have been. Alternatively, the Emerging Markets Fund might
liquidate investments in order to satisfy these distribution requirements. The
value of these obligations fluctuates more in response to interest rate changes,
if they are of the same maturity, than does the value of debt obligations that
make current interest payments.
LOAN PARTICIPATIONS AND ASSIGNMENTS
The Emerging Markets Fund may also invest in fixed- or floating-rate loans
arranged through private negotiations between an issuer of emerging market debt
instruments and one or more financial institutions ("lenders"). Generally,
investments in loans would be in the form of loan participations and assignments
of loan portfolios from third parties.
13
<PAGE>
When investing in a loan participation, the Funds will typically have the
right to receive payments from the lender to the extent that the lender receives
payments from the borrower. In addition, the Funds will be able to enforce their
rights through the lender, and not directly against the borrower. As a result,
in a loan participation the Funds assume credit risk with respect to both the
borrower and the lender.
When the Funds purchase loan assignments from lenders, they will acquire
direct rights against the borrower, but these rights and the Funds' obligations
may differ from, and be more limited than, those held by the assigning lender.
Loan participations and assignments may be illiquid.
INVESTMENT RESTRICTIONS
The investment restrictions described below are fundamental policies and may
not be changed as to any Fund without the approval of the lesser of (i) a
majority of the Fund's outstanding shares or (ii) 67% of the Fund's shares
represented at a meeting of Trust shareholders at which the holders of 50% or
more of the Fund's outstanding shares are present. No Fund of the Trust may:
(1) Make short sales of securities, unless at the time of sale the Fund owns
an equal amount of such securities.
(2) Purchase securities on margin, except that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities. The deposit or payment by the Fund of initial or
maintenance margin in connection with financial futures contracts or
related options transactions is not considered the purchase of a security
on margin.
(3) Write, purchase or sell puts, calls or combinations thereof, except that
the Funds may (a) write exchange-traded covered call options on portfolio
securities and enter into closing purchase transactions with respect to
such options, and Funds, other than the Bond Fund, may write
exchange-traded covered call options on foreign currencies and secured
put options on securities and foreign currencies and write covered call
and secured put options on securities and foreign currencies traded over
the counter, and enter into closing purchase transactions with respect to
such options, (b) purchase exchange- traded call options and put options,
and such Funds, other than the Bond Fund, may purchase call and put
options traded over the counter, provided that the premiums on all
outstanding call and put options do not exceed 5% of its total assets,
and enter into closing sale transactions with respect to such options,
and (c) engage in financial futures contracts and related options
transactions, provided that the sum of the initial margin deposits on
such Fund's existing futures and related options positions and the
premiums paid for related options would not exceed 5% of its total
assets.
(4) Borrow in excess of 10% of the market or other fair value of its total
assets, or pledge its assets to an extent greater than 15% of the market
or other fair value of its total assets. Any such borrowings shall be
from banks and shall be undertaken only as a temporary measure for
administrative purposes. Deposits in escrow in connection with the
writing of covered call options, secured put options, or the purchase or
sale of financial futures contracts and related options are not deemed to
be a pledge or other encumbrance. The Bond Fund will not purchase
securities while temporary bank borrowings in excess of 5% of its net
assets are outstanding.
(5) Underwrite the securities of other issuers, except to the extent that in
connection with the disposition of its portfolio securities, a Fund may
be deemed to be an underwriter. The Mid Cap (with respect to up to
one-third of its assets), International and Emerging Markets Funds may
buy and sell securities outside the United States which are not
registered with the Commission or marketable in the United States.
(6) Concentrate its assets in the securities of issuers which conduct their
principal business activities in the same industry, except that the Real
Estate Fund may so concentrate its assets and the Bond Fund may invest
more than 25% of its assets in a particular segment of the municipal
securities market. This restriction does not apply to obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities.
(7) Make any investment in real estate, real estate limited partnerships,
commodities or commodities contracts, except that a Fund may (a) purchase
or sell readily marketable securities which are secured by interests in
real estate, including real estate investment and mortgage investment
trusts, and (b) engage in financial futures contracts and related options
transactions, provided that the sum of the initial margin deposits on the
Fund's futures and related options positions and the premiums paid for
related options would not exceed 5% of the Fund's total assets, and (c)
the Mid Cap, International and Emerging Markets Funds may enter into
foreign currency transactions.
(8) Make loans, except that the Fund may (a) purchase bonds, notes,
debentures or similar obligations which are customarily purchased by
institutional investors, whether publicly distributed or not, (b) invest
in repurchase agreements, provided that an aggregate of no more than 10%
of the Fund's net assets (taken at market value) may be invested in
repurchase agreements having maturities of more than seven days and all
other illiquid securities, and (c) loan its portfolio securities in
amounts up to one third of the market or other fair value of its total
assets, subject to restrictions described more fully above.
14
<PAGE>
(9) Purchase securities of other investment companies, except that the Fund
may make such a purchase (a) in the open market involving no commission
or profit to a sponsor or dealer (other than the customary broker's
commission), provided that immediately thereafter (i) not more than 10%
of the Fund's total assets would be invested in such securities and (ii)
not more than 3% of the voting stock of another investment company would
be owned by the Fund, or (b) as part of a merger, consolidation, or
acquisition of assets.
(10) Invest more than 5% of its total assets in the securities of any one
issuer (except the U.S. Government and, in the case of the Mid Cap,
International and Emerging Markets Funds, any foreign government, its
agencies and instrumentalities) or purchase more than 10% of the
outstanding voting securities or more than 10% of the securities of any
class of any one issuer; however, the foregoing limitations do not apply
to the Real Estate Fund and Emerging Markets Fund. With respect to 75% of
its assets, a Fund which may invest in foreign securities will limit its
investments in the securities of any one foreign government, its agencies
and instrumentalities, to 5% of the Fund's total assets.
(11) Invest in securities of any issuer if any officer or Trustee of the Trust
or any officer or director of the Adviser owns more than 1/2 of 1% of the
outstanding securities of such issuer and all such persons own in the
aggregate more than 5% of the securities of such issuer.
(12) Invest in the aggregate more than 5% of its total assets in the
securities of any issuers (other than real estate investment trusts)
which have (with predecessors) a record of less than three years of
continuous operations.
(13) Invest in warrants or rights except where acquired in units or attached
to other securities. The Mid Cap, Real Estate, International and Emerging
Markets Funds each may invest up to 5% of its total assets in warrants or
rights which are not in units or attached to other securities.
(14) Purchase restricted securities (including repurchase agreements having
maturities of more than seven days) or securities for which market value
quotations are not readily available if as a result of such purchase more
than 10% of each Fund's, total assets would be invested in the aggregate
in such securities.
(15) Invest in interests in oil, gas, or other mineral exploration or
development programs.
(16) Issue senior securities as defined in the Investment Company Act of 1940
except to the extent that it is permissible to (a) borrow money from
banks pursuant to the Trust's investment restrictions regarding the
borrowing of money, and (b) enter into transactions involving forward
foreign currency contracts and options thereon, as described in the
Trust's Prospectus and this Statement of Additional Information.
If a percentage restriction on investment or utilization of assets as set
forth is adhered to at the time an investment is made, a later change in the
percentage resulting from a change in the value or costs of the Fund's assets
will not be considered a violation of the restriction except as provided in (11)
above.
PERFORMANCE
Performance information for each Fund (and Class of Fund) may appear in
advertisements, sales literature, or reports to shareholders or prospective
shareholders. Performance information in advertisements and sales literature may
be expressed as the "yield" of the Bond Fund and Emerging Markets Fund, and as
"average annual total return" and "total return" of any of the other Funds.
Quotations of the yield for the Bond Fund and Emerging Markets Fund will be
based on all investment income per share earned during a particular 30-day
period (including dividends and interest), less expenses (including pro rata
Trust expenses and expenses applicable to each particular Fund or Class of Fund)
accrued during the period ("net investment income"), and are computed by
dividing net investment income by the value of a share of the Fund or Class on
the last day of the period, according to the following formula:
YIELD = 2[( a-b + 1)(6)-1]
---
cd
where a = dividends and interest earned during the period by the Fund,
b = expenses accrued for the period (net of any reimbursements),
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends, and
d = the net asset value per share on the last day of the period.
For the 30-day period ended November 30, 1998, the yield for the Bond Fund
Class A shares and Class B shares was 4.29% and 3.76%, respectively and the
Emerging Markets Fund Class A shares, Class B shares and Class C shares was
14.57%, 14.59%, and 14.62%, respectively.
15
<PAGE>
A Fund's average annual total return quotation is computed in accordance with
a standardized method prescribed by rules of the Securities and Exchange
Commission. The average annual total return for the Fund for a specific period
is found by first taking a hypothetical $1,000 investment ("initial investment")
in the Fund's shares on the first day of the period, adjusting to deduct the
maximum sales charge, and computing the "redeemable value" of that investment at
the end of the period. The redeemable value is then divided by the initial
investment, and this quotient is taken to the Nth root (N representing the
number of years in the period) and 1 is subtracted from the result, which is
then expressed as a percentage. The calculation assumes that all income and
capital gains dividends paid by the Fund have been reinvested at net asset value
on the reinvestment dates during the period.
Calculation of a Fund's total return is subject to a standardized formula.
Total return performance for a specific period is calculated by first taking an
investment ("initial investment") in the Fund's shares on the first day of the
period, either adjusting or not adjusting to deduct the maximum sales charge,
and computing the "redeemable value" of that investment at the end of the
period. The total return percentage is then determined by subtracting the
initial investment from the redeemable value and dividing the remainder by the
initial investment and expressing the result as a percentage. The calculation
assumes that all income and capital gains dividends by the Fund have been
reinvested at net asset value on the reinvestment dates during the period. Total
return may also be shown as the increased dollar value of the hypothetical
investment over the period. Total return calculations that do not include the
effect of the sales charge would be reduced if such charge were included.
The manner in which total return will be calculated for public use is
described above. The following table illustrates average annual total return for
each Fund for the 1, 5 and 10 year periods ended November 30, 1998.
AVERAGE ANNUAL TOTAL RETURN AS OF NOVEMBER 30, 1998
<TABLE>
<CAPTION>
PERIODS ENDED
-----------------------------------------------------
Fund 1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION(1)
---- ------ ------ ------- ------------------
<S> <C> <C> <C> <C>
Bond
Class A 0.70% 4.30% 7.36% 8.01%
Class B 1.14% N/A N/A 4.93%
Mid Cap
Class A 1.58% 10.00% N/A 14.69%
Class B 2.13% N/A N/A 11.85%
International
Class A 20.19% 12.76% N/A 9.59%
Class B 21.32% N/A N/A 11.25%
Real Estate
Class A (21.36)% N/A N/A 10.76%
Class B (20.88)% N/A N/A 10.99%
Emerging Markets
Class A (30.66)% N/A N/A 8.38%
Class B (30.01)% N/A N/A 8.79%
Class C N/A N/A N/A (35.91)%
</TABLE>
- ----------
(1)The Bond, Mid Cap, and International Funds Class A commenced operations on
July 15, 1988, November 1, 1989 and November 1, 1989, respectively. Bond Fund
Class B commenced operations on March 16, 1994. Mid Cap and International
Funds Class B commenced operations on July 18, 1994 and July 15, 1994,
respectively. The Real Estate and Emerging Markets Funds' Class A and B
commenced operations on March 1, 1995 and September 5, 1995, respectively.
The Emerging Markets Bond Fund's Class C Shares commenced operations on March
26, 1998.
Performance information reflects only the performance of a hypothetical
investment in each class during the particular time period on which the
calculations are based. Performance information should be considered in light of
the Fund's investment objectives and policies, characteristics and quality of
the portfolio, and the market conditions during the given time period, and
should not be considered as a representation of what may be achieved in the
future.
The Trust 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.
16
<PAGE>
PERFORMANCE COMPARISONS
Each Fund or Class of Fund may, from time to time, include in advertisements
containing total return the ranking of those performance figures relative to
such figures for groups of mutual funds having similar investment objectives as
categorized by ranking services such as Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc., Weisenberger Financial Services, Inc., and rating
services such as Morningstar, Inc. Additionally, a Fund may compare its
performance results to other investment or savings vehicles (such as
certificates of deposit) and may refer to results published in various
publications such as Changing Times, Forbes, Fortune, Money, Barrons, Business
Week, Stanger's Mutual Fund Monitor, The Stanger Register, Stanger's Investment
Adviser, The Wall Street Journal, New York Times, Consumer Reports, Registered
Representative, Financial Planning, Financial Services Weekly, Financial World,
U.S. News and World Report, Standard and Poor's The Outlook, Investor's Daily
and Personal Investor. The total return may 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
(the "S&P 400"), Dow Jones Industrial Average, Europe Australia Far East Index
("EAFE"), NAREIT Equity Index, Consumer Price Index, J.P. Morgan Emerging
Markets Bond Index, Lehman Brothers Municipal Bond Index, Lehman Brothers
Aggregate Bond Index, Lehman Brothers Corporate Index and Lehman Brothers T-Bond
Index. The S&P 500 is a commonly quoted measure of stock market performance and
represents common stocks of companies of varying sizes segmented across 90
different industries which are listed on the New York Stock Exchange, the
American Stock Exchange and traded over the NASDAQ National Market System.
PORTFOLIO TURNOVER
The Funds pay brokerage commissions for purchases and sales of portfolio
securities. A high rate of portfolio turnover generally involves a
correspondingly greater amount of brokerage commissions and other costs which
must be borne directly by a Fund and thus indirectly by its shareholders. It may
also result in the realization of larger amounts of short-term capital gains,
which are taxable to shareholders as ordinary income. If such rate of turnover
exceeds 100%, the Funds will pay more in brokerage commissions than would be the
case if they had lower portfolio turnover rates. Historical turnover rates can
be found under the heading "Financial Highlights" located in the Trust's
Prospectus.
PORTFOLIO TRANSACTIONS
In effecting fund transactions for the Trust, each adviser adheres to the
Trust's policy of seeking best execution and price, determined as described
below, except to the extent it is permitted to pay higher brokerage commissions
for "brokerage and research services" as defined herein. The determination of
what may constitute best execution and price in the execution of a securities
transaction by a broker involves a number of considerations including, without
limitation, the overall direct net economic result to the Trust (involving both
price paid or received and any commissions and other costs paid), the efficiency
with which the transaction is effected, the ability to effect the transaction at
all where a large block is involved, availability of the broker to stand ready
to execute possibly difficult transactions in the future and the financial
strength and stability of the broker. Such considerations are judgmental and are
weighed by each adviser and the Subadviser in determining the overall
reasonableness of brokerage commissions paid by the Trust.
Each adviser may cause the Trust to pay a broker an amount of commission for
effecting a securities transaction in excess of the amount of commission which
another broker or dealer would have charged for effecting that transaction if
such adviser determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker. As provided in Section 28(e) of the Securities Exchange
Act of 1934, "brokerage and research services" include advising as to the value
of securities, the advisability of investing in, purchasing or selling
securities, the availability of securities or purchasers or sellers of
securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts, and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Brokerage and research
services provided by brokers to the Trust are considered to be in addition to
and not in lieu of services required to be performed by each adviser under its
contract with the Trust and may benefit both the Trust and other accounts of
such adviser. Conversely, brokerage and research services provided by brokers to
other accounts of an adviser may benefit the Trust.
If the securities in which a particular Fund of the Trust invests are traded
primarily in the over-the-counter market, where possible the Fund will deal
directly with the dealers who make a market in the securities involved unless
better prices and executions are available elsewhere. Such securities may be
purchased directly from the issuer. Bonds and money market instruments are
generally traded on a net basis and do not normally involve either brokerage
commissions or transfer taxes.
Some fund transactions are, subject to the Conduct Rules of the National
Association of Securities Dealers, Inc. and subject to obtaining best prices and
executions, effected through dealers (excluding Equity Planning) who sell shares
of the Trust.
17
<PAGE>
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 share pro rata based on the
Trust's participation in the transaction. If the aggregated order is filled in
its entirety, it shall be allocated among the Adviser's accounts in accordance
with the allocation order, and if the order is partially filled, it shall be
allocated pro rata based on the allocation order. Notwithstanding the foregoing,
the order may be allocated on a basis different from that specified in the
allocation order if all accounts of the Adviser whose orders are allocated
receive fair and equitable treatment and the reason for such different
allocation is explained in writing and is approved in writing by the Adviser's
compliance officer as soon as practicable after the opening of the markets on
the trading day following the day on which the order is executed. If an
aggregated order is partially filled and allocated on a basis different from
that specified in the allocation order, no account that is benefited by such
different allocation may intentionally and knowingly effect any purchase or sale
for a reasonable period following the execution of the aggregated order that
would result in it receiving or selling more shares than the amount of shares it
would have received or sold had the aggregated order been completely filled. The
Trustees will annually review these procedures or as frequently as shall appear
appropriate.
For the fiscal years ended November 30, 1996, 1997 and 1998, brokerage
commissions paid by the Trust on Fund transactions totaled $3,104,255,
$2,269,745 and $2,904,276, respectively. Brokerage commissions of $1,564,683
paid during the fiscal year ended November 30, 1998, were paid on fund
transactions aggregating $989,159,000 executed by brokers who provided research
and other statistical and factual information.
Investment decisions for the Trust are made independently from those of the
other investment companies or accounts advised by either adviser. It may
frequently happen that the same security is held in the portfolio of more than
one fund. Simultaneous transactions are inevitable when several funds are
managed by the same investment adviser, particularly when the same security is
suited for the investment objectives of more than one fund. When two or more
funds advised by either adviser (or any subadviser) are simultaneously engaged
in the purchase or sale of the same security, the transactions are allocated
among the funds in a manner equitable to each fund. It is recognized that in
some cases this system could have a detrimental effect on the price or volume of
the security as far as the Trust is concerned. In other cases, however, it is
believed that the ability of the Trust to participate in volume transactions
will produce better executions for the Trust. It is the opinion of the Board of
Trustees of the Trust that the desirability of utilizing each adviser as
investment adviser to the Trust outweighs the disadvantages that may be said to
exist from simultaneous transactions.
THE INVESTMENT ADVISERS
The investment adviser to the Bond, Mid Cap, International and Emerging
Markets Funds is Phoenix Investment Counsel, Inc. ("PIC"), which is located at
56 Prospect Street, Hartford, Connecticut 06115-0480. PIC also acts as the
investment adviser for 14 other mutual funds, as subadviser to three mutual
funds, and as adviser to institutional clients. PIC has acted as an investment
adviser for over sixty years. PIC was originally organized in 1932 as John P.
Chase, Inc. As of December 31, 1998, PIC had approximately $23.9 billion in
assets under management. Philip R. McLoughlin, a Trustee and officer of the
Trust, is a director of PIC. All other executive officers of the Trust are
officers of PIC.
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning" or "Distributor"), a subsidiary of Phoenix
Investment Partners, Ltd. ("PXP"). PXP is a New York Stock Exchange traded
company that provides investment management and related services to
institutional investors, corporations and individuals through operating
subsidiaries. Phoenix Home Life Mutual Insurance Company ("Phoenix Home Life")
of Hartford, Connecticut is a majority shareholder of PXP. Phoenix Home Life is
in the business of writing ordinary and group life and health insurance and
annuities. Its principal offices are located at One American Row, Hartford,
Connecticut, 06115-2520. Equity Planning, a mutual fund distributor, acts as the
national distributor of the Trust's shares and as Financial Agent of the Trust.
The principal office of Equity Planning is located at 100 Bright Meadow
Boulevard, Enfield, Connecticut, 06082.
Phoenix Investment Partners, Ltd., is the 10th largest publicly traded
investment company in the nation, and has served investors for over 70 years. It
manages approximately $53.5 billion in assets 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; and Phoenix Investment
Counsel, Inc. (Goodwin, Hollister, and Oakhurst divisions) in Hartford, Sarasota
and Scotts Valley, CA, respectively.
Duff & Phelps Investment Management Co. ("Duff & Phelps") is the investment
adviser to the Real Estate Fund and is located at 55 East Monroe Street, Suite
3600, Chicago, Illinois 60603. Duff & Phelps also acts as investment adviser to
eight other mutual
18
<PAGE>
funds and as adviser to institutional clients. As of December 31, 1998, Duff &
Phelps had approximately $15.2 billion in assets under management on a
discretionary basis. Duff & Phelps is a subsidiary of PXP. Duff & Phelps also
serves as investment adviser to the Core Equity Fund of Phoenix Equity Series
Fund, the Enhanced Reserves Portfolio and Core Equity Portfolio of Phoenix Duff
& Phelps Institutional Mutual Funds and three closed-end funds: Duff & Phelps
Utilities Income Inc., Duff & Phelps Utilities Tax-Free Income Inc. and Duff &
Phelps Utility and Corporate Bond Trust Inc.
Aberdeen Fund Managers Inc. ("Aberdeen") is the subadviser to the
International Fund and is located at 1 Financial Plaza, Suite 2210, Fort
Lauderdale, FL 33394. Aberdeen is a wholly-owned subsidiary of Aberdeen Asset
Management PLC based in Aberdeen, Scotland. Together with its subsidiaries,
Aberdeen Asset Management PLC provides investment management services to unit
and investment trusts, segregated pension funds and other institutional and
private portfolios, and, through Aberdeen, U.S. mutual funds. Aberdeen has
served as subadviser for the following mutual funds since their inception in
1996: Phoenix-Aberdeen New Asia Fund, Phoenix-Aberdeen Global Small Cap Fund and
the Aberdeen New Asia Series of The Phoenix Edge Series Fund. Aberdeen also has
served as subadviser to Phoenix-Aberdeen Worldwide Opportunities Fund and the
International Series of The Phoenix Edge Series Fund since 1998. As of December
31, 1998, Aberdeen Asset Management PLC had $23.9 billion in assets under
management.
Seneca Capital Management LLC ("Seneca") is the subadviser to the Mid Cap
Fund and is located at 909 Montgomery Street, San Francisco, California 94133.
Seneca acts as a subadviser to two other mutual funds and as investment adviser
to institutions and individuals. As of December 31, 1998, Seneca had $5.9
billion in assets under management. Seneca has been (with its predecessor,
GMG/Seneca Capital Management LP ("GMG/Seneca")) an investment adviser since
1989.
The investment advisory agreements, approved by the Trustees, provide that
the Trust will bear all costs and expenses (other than those specifically
referred to as being borne by the Adviser) incurred in the operation of the
Trust. Such expenses include, but shall not be limited to, all expenses incurred
in the operation of the Trust and any public offering of its shares, including,
among others, interest, taxes, brokerage fees and commissions, fees of Trustees
who are not employees of PIC or any of its affiliates, expenses of Trustees, and
shareholders' meetings, expenses of printing and mailing proxy soliciting
material, expenses of the insurance premiums for fidelity and other coverage,
expenses of the repurchase and redemption of shares, expenses of the issue and
sale of shares (to the extent not borne by Equity Planning under its agreement
with the Trust), expenses of printing and mailing share certificates
representing shares of the Trust, association membership dues, charges of
custodians, transfer agents, dividend disbursing agents and financial agents,
and bookkeeping, auditing and legal expenses. The Trust will also pay the fees
and bear the expense of registering and maintaining the registration of the
Trust and its shares with the Securities and Exchange Commission and registering
or qualifying its shares under state or other securities laws and the expense of
preparing and mailing prospectuses and reports to shareholders. If authorized by
the Trustees, the Trust will also pay for extraordinary expenses and expenses of
a non-recurring nature which may include, but shall not be limited to, the
reasonable cost of any reorganization or acquisition of assets and the cost of
legal proceedings to which the Trust is a party.
Each Fund will pay expenses incurred in its own operation and will also pay a
portion of the Trust's general administration expenses allocated on the basis of
the asset values of the respective Funds.
For managing, or directing the management of, the investments of the Bond,
Mid Cap, International, Emerging Markets and Income Funds, PIC is entitled to a
fee, payable monthly, at the following annual rates:
<TABLE>
<CAPTION>
FUND 1ST $1 BILLION $1-2 BILLION $2+ BILLION
---- -------------- ------------ -----------
<S> <C> <C> <C>
Bond 0.45% 0.40% 0.35%
Mid Cap 0.75% 0.70% 0.65%
International 0.75% 0.70% 0.65%
Emerging Markets 0.75% 0.70% 0.65%
</TABLE>
For managing, or directing the management of, the investments of the Real
Estate Fund, Duff & Phelps is entitled to a monthly fee at the annual rate of
0.75% of the average aggregate daily net asset values of the 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.
The investment advisory agreements provide that the applicable adviser will
reimburse the Trust for the amount, if any, by which the total operating and
management expenses of any Fund (including the investment adviser's
compensation, but excluding interest, taxes, brokerage fees and commissions and
extraordinary expenses) for any fiscal year exceed the level of expenses which
such Fund is permitted to bear under the most restrictive expense limitation
(which is not waived) imposed on mutual funds by any state in which shares of
such Fund are then qualified for sale. Currently the most restrictive state
expense limitation provisions limit such expenses of any Fund of the Trust to
2.5% of the first $30 million of average net assets, 2% of the next $70 million
of such net assets and 1.5% of such net assets in excess of $100 million. Such
reimbursement, if any, will be made by the applicable adviser to the Trust
within five days after the end of each month. In the event legislation were to
be adopted in each state so as to eliminate this restriction, the Trust would
take such action necessary to eliminate this expense limitation.
19
<PAGE>
For its services to the Bond, Mid Cap, International and Emerging Markets
Funds of the Trust during the fiscal year ended November 30, 1998, PIC received
a fee of $5,102,768. Of this total, PIC received fees from each Fund as follows:
<TABLE>
<CAPTION>
Fund 1996 1997 1998
---- ---- ---- ----
<S> <C> <C> <C>
Bond $ 646,989 $ 593,217 $ 544,278
Mid Cap 3,579,657 3,027,757 2,476,987
International 1,071,572 1,062,391 1,350,786
Emerging Markets 177,790 577,472 730,717
</TABLE>
For the fiscal year ended November 30, 1996, it was necessary that PIC bear
ordinary operating expenses of the Emerging Markets Fund of $123,979.
Accordingly, the fee of $177,790 to which PIC would otherwise have been entitled
was reduced to $53,811.
The Real Estate Fund, during the fiscal years ended November 30, 1996, 1997
and 1998, paid management fees of $168,177, $355,100 and $398,336, respectively.
For the fiscal years 1996, 1997 and 1998, the Adviser bore ordinary operating
expenses of the Real Estate Fund of $130,944, $112,306 and $111,386,
respectively. Accordingly, the fees which the Adviser would otherwise have been
entitled were reduced to $286,950 in fiscal year 1998, $242,794 in fiscal year
1997, and $37,233 in fiscal year 1996.
The investment advisory agreements also provide that each adviser shall not
be liable to the Trust or to any shareholder of the Trust for any error of
judgment or mistake of law or for any loss suffered by the Trust or by any
shareholder of the Trust in connection with the matters to which the agreement
relates, except a loss resulting from willful misfeasance, bad faith, gross
negligence or reckless disregard on the part of such adviser in the performance
of its duties thereunder.
Provided it has been approved by a vote of the majority of the outstanding
shares of a Fund of the Trust which is subject to its terms and conditions, each
investment advisory agreement continues from year to year with respect of such
Fund so long as (1) such continuance is approved at least annually by the
Trustees or by a vote of the majority of the outstanding shares of such Fund and
(2) the terms and any renewal of the agreement with respect to such Fund have
been approved by the vote of a majority of the Trustees who are not parties to
the agreement or interested persons, as that term is defined in the Investment
Company Act of 1940, of the Trust or the relevant adviser, cast in person at a
meeting called for the purpose of voting on such approval. On sixty days'
written notice and without penalty the agreement may be terminated as to the
Trust or as to a Fund by the Trustees or by the relevant adviser and may be
terminated as to a Fund by a vote of the majority of the outstanding shares of
such Fund. The Agreement automatically terminates upon its assignment (within
the meaning of the Investment Company Act). The agreement provides that upon its
termination, or at the request of the relevant adviser, the Trust will eliminate
all reference to Phoenix from its name, and will not thereafter transact
business in a name using the word Phoenix.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close of
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Since the Trust does 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 Trust. 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.
20
<PAGE>
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent investment
is $25. However, both the minimum initial and subsequent investment amounts are
$25 for investments pursuant to the "Investo-Matic" plan, a bank draft investing
program administered by Distributor, or pursuant to the Systematic Exchange
privilege or for an individual retirement account (IRA). In addition, there are
no subsequent investment minimum amounts in connection with the reinvestment of
dividend or capital gain distributions. Completed applications for the purchase
of shares should be mailed to: Phoenix Funds, c/o State Street Bank and Trust
Company, P.O. Box 8301, Boston, MA 02266-8301.
The Trust has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased from investment dealers at a price equal to their net
asset value per share, plus a sales charge which, at the election of the
purchaser, may be imposed either (i) at the time of the purchase (the "initial
sales charge alternative") or (ii) on a contingent deferred basis (the "deferred
sales charge alternative"). Orders received by dealers prior to the close of
trading on the New York Stock Exchange are confirmed at the offering price
effective at that time, provided the order is received by the Authorized Agent
prior to its close of business.
The alternative purchase arrangements permit an investor to choose the method
of purchasing shares that is more beneficial given the amount of the purchase,
the length of time the investor expects to hold the shares, whether the investor
wishes to receive distributions in cash or to reinvest them in additional shares
of the Funds, and other circumstances. Investors should consider whether, during
the anticipated life of their investment in the 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 Emerging Markets Fund and the International Fund currently offer Class
C Shares.
Dividends paid by the Fund, 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 services fees at an annual rate
of 0.25% of the Fund's aggregate average daily net assets attributable to the
Class A Shares. In addition, certain purchases of Class A Shares qualify for
reduced initial sales charges. See the Funds' current Prospectus for additional
information.
CLASS B SHARES
Class B Shares do not incur a sales charge when they are purchased, but they
are subject to a sales charge if they are redeemed within five years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions. See the Funds' current Prospectus for additional
information.
Class B Shares are subject to ongoing distribution and services fees at an
aggregate annual rate of up to 1.00% of the Fund's aggregate average daily net
assets attributable to the Class B Shares. Class B Shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment is
made. The higher ongoing distribution and services fees paid by Class B Shares
will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than those related to Class A
Shares. Class B Shares will automatically convert to Class A Shares eight years
after the end of the calendar month in which the shareholder's order to purchase
was accepted, in the circumstances and subject to the qualifications described
in the Funds' Prospectus. The purpose of the conversion feature is to relieve
the holders of the Class B Shares that have been outstanding for a period of
time sufficient for the adviser and the Distributor to have been compensated for
distribution expenses related to the Class B Shares from most of the burden of
such distribution related expenses.
Class B Shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were issued. At the
end of this period, Class B Shares will automatically convert to Class A Shares
and will no longer be subject to the higher distribution and services fees. Such
conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge.
21
<PAGE>
For purposes of conversion to Class A Shares, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares in
a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Fund account
(other than those in the sub-account) convert to Class A, an equal pro rata
portion of the Class B Share dividends in the sub-account will also convert to
Class A Shares.
CLASS C SHARES--EMERGING MARKETS FUND AND INTERNATIONAL 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 ongoing distribution and services fees at
an aggregate annual rate of up to 1.00% of the Fund's aggregate average daily
net assets attributable to Class C Shares. See the Funds' current Prospectus for
more information.
CLASS A SHARES--REDUCED INITIAL SALES CHARGES
Investors choosing Class A Shares may be entitled to reduced sales charges.
The five ways in which sales charges may be avoided or reduced are described
below.
QUALIFIED PURCHASERS. If you fall within any one of the following categories,
you will not have to pay a sales charge on your purchase of Class A 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, Phoenix-Engemann Fund or Phoenix-Seneca Fund qualified plan; (11)
any Phoenix Home Life separate account which funds group annuity contracts
offered to qualified employee benefit plans; (12) any state, county, city,
department, authority or similar agency prohibited by law from paying a sales
charge; (13) any fully matriculated student in any U.S. service academy; (14)
any unallocated account held by a third party administrator, registered
investment adviser, trust company, or bank trust department which exercises
discretionary authority and holds the account in a fiduciary, agency, custodial
or similar capacity, if in the aggregate such accounts held by such entity equal
or exceed $1,000,000; (15) any person who is investing redemption proceeds from
investment companies other than the Phoenix Funds, Phoenix-Engemann Fund or
Phoenix-Seneca 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, Phoenix-Engemann Fund or
Phoenix-Seneca Fund trustee or director; provided that sales to persons listed
in (1) through (15) above are made upon the written assurance of the purchaser
that the purchase is made for investment purposes and that the shares so
acquired will not be resold except to the Fund; (17) purchasers of Class A
Shares bought through investment advisers and financial planners who charge an
advisory, consulting or other fee for their services and buy shares for their
own accounts or the accounts of their clients; (18) retirement plans and
deferred compensation plans and trusts used to fund those plans (including, for
example, plans qualified or created under sections 401(a), 403(b) or 457 of the
Internal Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker or agent or
other financial intermediary that has made special arrangements with the
Distributor for such purchases; or (19) 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 (19) may be charged a fee by the broker,
agent or financial intermediary for purchasing shares).
COMBINATION PURCHASE PRIVILEGE. Your purchase of any class of shares of this
or any other Affiliated Phoenix Fund (other than Phoenix Money Market Fund
Series Class A Shares), if made at the same time by the same "person," will be
added together to determine whether the combined sum entitles you to an
immediate reduction in sales charges. A "person" is defined in this and the
following sections as (a) any individual, their spouse and minor children
purchasing shares for his or their own account (including an IRA account)
including his or their own trust; (b) a trustee or other fiduciary purchasing
for a single trust, estate or single fiduciary account (even though more than
one beneficiary may exist); (c) multiple employer trusts or Section 403(b) plans
for the same employer; (d) multiple accounts (up to 200) under a qualified
employee benefit plan or administered by a third party administrator; or (e)
trust companies, bank trust departments, registered investment advisers, and
similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority and
which are held in a fiduciary, agency, custodial or similar capacity, provided
all shares are held of record in the name, or nominee name, of the entity
placing the order.
22
<PAGE>
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 Funds.
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 and C Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to
Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section 72(m)(7);
(c) as a mandatory distribution upon reaching age 70 1/2 under any retirement
plan qualified under Code Sections 401, 408 or 403(b) or resulting from the
tax-free return of an excess contribution to an IRA; (d) by 401(k) plans using
an approved participant tracking system for participant hardships, death,
disability or normal retirement, and loans which are subsequently repaid; (e)
based on the exercise of exchange privileges among Class B and C Shares of this
or any other Affiliated Phoenix Fund; (f) based on any direct rollover transfer
of shares from an established Affiliated Phoenix Fund qualified plan into an
Affiliated Phoenix Fund IRA by participants terminating from the qualified plan;
and (g) based on the systematic withdrawal program (Class B Shares only). If, as
described in condition (a) above, an account is transferred to an account
registered in the name of a deceased's estate, the CDSC will be waived on any
redemption from the estate account occurring within one year of the death. If
the Class B or C Shares are not redeemed within one year of the death, they will
remain subject to the applicable CDSC.
CONVERSION FEATURE--CLASS B SHARES
Class B Shares will automatically convert to Class A Shares of the same
Portfolio eight years after they are bought. Conversion will be on the basis of
the then prevailing net asset value of Class A and B Shares. There is no sales
load, fee or other charge for this feature. Class B Shares acquired through
dividend or distribution reinvestments will be 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 Trust were unable to obtain such assurances,
it might continue to make distributions if doing so would assist in complying
with its general practice of distributing sufficient income to reduce or
eliminate federal taxes otherwise payable by the Funds.
IMMEDIATE INVESTMENT
In order to obtain immediate investment of funds, initial and subsequent
purchases of shares of a Fund may also be made by wiring Federal Trusts (monies
held in a bank account with a Federal Reserve Bank) directly pursuant to the
following instructions:
23
<PAGE>
(1) For initial investments, telephone the Trust at (800) 367-5877. Certain
information will be requested from you regarding the account, and an
account number will be assigned.
(2) Once an account number has been assigned, direct your bank to wire the
Federal Trusts to State Street Bank and Trust Company, Custody &
Shareholder Services Division, Boston, Massachusetts 02105, attention of
the appropriate Fund of the Phoenix Multi-Portfolio Fund. Your bank must
include the account number and the name(s) in which your account is
registered in its wire and also request a telephone advice. Your bank may
charge a fee to you for transmitting funds by wire.
An order for shares of a Fund purchased with Federal Trusts will be accepted
on the business day Federal Trusts are wired provided the Federal Trusts are
received by 4:00 p.m. on that day; otherwise, the order will not be accepted
until the next business day. Shareholders should bear in mind that wire
transfers may take two or more hours to complete.
Promptly after an initial purchase of shares made by wiring Federal Trusts
directly, the shareholder should complete and mail to Equity Planning an Account
Application.
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.
EXCHANGES. Under certain circumstances, shares of any Phoenix Fund may be
exchanged for shares of the same Class of another Phoenix Fund or any other
Affiliated Phoenix Fund on the basis of the relative net asset values per share
at the time of the exchange. Exchanges are subject to the minimum initial
investment requirement of the designated Series or Fund, except if made in
connection with the Systematic Exchange privilege. Shareholders may exchange
shares held in book-entry form for an equivalent number (value) of the same
class of shares of any other Affiliated Phoenix Fund, if currently offered. On
exchanges with share classes that carry a contingent deferred sales charge, the
CDSC schedule of the original shares purchased continues to apply. The exchange
of shares is treated as a sale and purchase for federal income tax purposes (see
also "Dividends, Distributions and Taxes").
SYSTEMATIC EXCHANGES. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Phoenix Fund or any other 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. Exchanges will be based upon each Fund's net
asset value per share next computed after the close of business on the 10th day
of each month (or next succeeding business day), without sales charge.
DIVIDEND REINVESTMENT ACROSS ACCOUNTS. If you maintain an account balance of
at least $5,000, or $2,000 for tax qualified retirement benefit plans
(calculated on the basis of the net asset value of the shares held in a single
account), you may direct that any dividends and distributions paid with respect
to shares in that account be automatically reinvested in a single account of one
of the other Phoenix Funds or any other Affiliated Phoenix Fund at net asset
value. You should obtain a current prospectus and consider the objectives and
policies of each Fund carefully before directing dividends and distributions to
another Fund. Reinvestment election forms and prospectuses are available from
Equity Planning. Distributions may also be mailed to a second payee and/or
address. Requests for directing distributions to an alternate payee must be made
in writing with a signature guarantee of the registered owner(s). To be
effective 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
24
<PAGE>
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 Trust may
delay the mailing of a check for redemption proceeds of Trust shares purchased
with a check or via Invest-by-Phone service until the Trust has assured itself
that good payment has been collected for the purchase of the shares, which may
take up to 15 days. The Trust 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.
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 Fund's current Prospectus
for more information.
BY MAIL
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds, c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the possession of the shareholder, they must be mailed or
presented, duly endorsed in the full name of the account, with a written request
to Equity Planning that the Trust redeem the shares. See the Funds' current
Prospectus for more information.
25
<PAGE>
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.
BY CHECK (BOND FUND AND EMERGING MARKETS FUND ONLY)
Any shareholder of these Funds may elect to redeem shares held in his Open
Account by check. Checks will be sent to an investor upon receipt by Equity
Planning of a completed application and signature card (attached to the
application). If the signature card accompanies an individual's initial account
application, the signature guarantee section of the form may be disregarded.
However, the Trust reserves the right to require that all signatures be
guaranteed prior to the establishment of a check writing service account. When
an authorization form is submitted after receipt of the initial account
application, all signatures must be guaranteed regardless of account value.
Checks may be drawn payable to any person in an amount of not less than $500,
provided that immediately after the payment of the redemption proceeds the
balance in the shareholder's Open Account is $500 or more.
When a check is presented to Equity Planning for payment, a sufficient number
of full and fractional shares in the shareholder's Open Account will be redeemed
to cover the amount of the check. The number of shares to be redeemed will be
determined on the date the check is received by the Transfer Agent. Presently
there is no charge to the shareholder for the check writing service, but this
may be changed or modified in the future upon two weeks written notice to
shareholders. Checks drawn from Class B and Class C accounts are subject to the
applicable deferred sales charge, if any.
The checkwriting procedure for redemption enables a shareholder to receive
income accruing on the shares to be redeemed until such time as the check is
presented to Equity Planning for payment. Inasmuch as canceled checks are
returned to shareholders monthly, no confirmation statement is issued at the
time of redemption.
Shareholders utilizing withdrawal checks will be subject to Equity Planning's
rules governing checking accounts. A shareholder should make sure that there are
sufficient shares in his Open Account to cover the amount of any check drawn. If
insufficient shares are in the account and the check is presented to Equity
Planning on a banking day on which the Trust does not redeem shares (for
example, a day on which the New York Stock Exchange is closed), or if the check
is presented against redemption proceeds of an investment made by check which
has not been in the account for at least fifteen calendar days, the check may be
returned marked "Non-sufficient Funds" and no shares will be redeemed. A
shareholder may not close his account by a withdrawal check because the exact
value of the account will not be known until after the check is received by
Equity Planning.
REDEMPTION IN KIND
To the extent consistent with state and federal law, the Trust may make
payment of the redemption price either in cash or in kind. However, the Trust
has elected to pay in cash all requests for redemption by any shareholder of
record, limited in respect to each shareholder during any 90-day period to the
lesser of $250,000 or 1% of the net asset value of the Trust 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 a 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.
TAX SHELTERED RETIREMENT PLANS
Shares of the Trust 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.
DIVIDENDS, DISTRIBUTIONS AND TAXES
QUALIFICATION AS A REGULATED INVESTMENT COMPANY ("RIC")
Each Fund is treated as a separate entity for federal income tax purposes.
Each Fund has elected to qualify and intends to remain qualified as a RIC under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). In
each taxable year a Fund qualifies as a RIC, it (but not its shareholders) will
be relieved of federal income tax on that portion of its net investment income
and net capital gains that are currently distributed (or deemed distributed) to
its shareholders. To the extent that a Fund fails to distribute all of its
taxable income, it will be subject to corporate income tax (currently 35%) on
any retained ordinary investment income or short-term capital gains, and
corporate income tax (currently 35%) on any undistributed long-term capital
26
<PAGE>
gains. Each Fund intends to make timely distributions, if necessary, sufficient
in amount to avoid the non-deductible 4% excise tax that is imposed on a RIC to
the extent that it fails to distribute, with respect to each calendar year, at
least 98% of its ordinary income for such calendar year and 98% of its net
capital gains as determined for a one-year period ending on October 31 of such
calendar year (or as determined on a fiscal year basis, if the Fund so elects).
The Code sets forth numerous criteria that must be satisfied in order for
each Fund to qualify as a RIC. Among these requirements, each Fund must meet the
following tests for each taxable year: (a) derive in each taxable year at least
90% of its gross income from dividends, interest and gains from the sale or
other disposition of securities; and (b) meet certain diversification
requirements imposed under the Code at the end of each quarter of the taxable
year. If in any taxable year each Fund does not qualify as a regulated
investment company, all of its taxable income will be taxed at corporate rates.
In addition, if in any tax year the Fund does not qualify as a RIC for state tax
purposes a capital gain dividend may not retain its character in the hands of
the shareholder for state tax purposes.
In the case of the International and Emerging Markets Funds, gains from
foreign currencies (i.e., gains from foreign currency options, foreign currency
futures and foreign currency forward contracts) are anticipated to constitute
qualifying income for purposes of the 90% test.
Section 988 of the Code provides special rules for foreign currency
transactions under which foreign currency gains or losses from forward
contracts, futures contracts that are not required to be marked-to-market and
unlisted options generally will be treated as ordinary income or loss.
In addition to meeting the 90% and 30% tests, in order to qualify as a RIC
each Fund will be required to distribute annually to its shareholders as
dividends (not including "capital gains dividends," discussed below) at least
90% of its ordinary investment income, short-term capital gains and tax exempt
income, with certain modifications. Each Fund intends to make distributions to
shareholders that will be sufficient to meet the 90% distribution requirement.
Each Fund must also diversify its holdings so that, at the close of each
quarter of its taxable year, (i) at least 50% of the value of its total assets
consists of cash, cash items, U.S. Government Securities, and other securities
limited generally with respect to any one issuer to not more than 5% of the
total assets of that Fund and not more than 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its assets
is invested in the securities of any issuer (other than U.S. Government
Securities). For purposes of these diversification tests, the issuer of an
option on a particular security is the issuer of the underlying security. In the
case of a stock index futures contract or option thereon, the position taken by
the Internal Revenue Service in a recent letter ruling is that the issuers of
the stocks underlying the index, in proportion to the weighing of the stocks in
the computation of the index, are treated as the issuers of the instrument
irrespective of whether the underlying index is broad- based or narrow-based. In
the case of a foreign currency option, futures contract or forward contract,
however, there is as yet no specific guidance in the tax law concerning who will
be treated as the issuer of such instruments or how they will be valued for
purposes of these diversification tests.
Each Fund intends to comply with all of the foregoing criteria for
qualification as a RIC; however, there can be no assurance that the Fund will so
qualify and continue to maintain its status as a RIC. If a Fund were unable for
any reason to maintain its status as a RIC for any taxable year, adverse tax
consequences would ensue.
TAXATION OF SHAREHOLDERS
The Bond Fund expects that under normal conditions, at least 80% of its net
assets will be invested in state, municipal and other obligations the interest
on which is excluded from gross income for federal income tax purposes, and that
substantially all of its dividends therefore will be exempt interest dividends
which will be treated by its shareholders as excludable from federal gross
income. (The character of tax-exempt interest distributed by the Bond Fund will
flow through as tax-exempt interest to its shareholders provided that 50% or
more of the value of its assets at the end of each quarter of its taxable year
is invested in obligations the interest on which is excluded from gross income
for federal income tax purposes). An exempt interest dividend is any dividend or
part thereof (other than a capital gain dividend) paid by the Bond Fund with
respect to its net federal excludable municipal security interest, and
designated as an exempt interest dividend in a written notice mailed to
shareholders not later than 60 days after the close of the taxable year. The
percentage of total dividends paid by the Bond Fund with respect to any taxable
year which qualify as exempt interest dividends will be the same for all
shareholders receiving dividends with respect to such year. If a shareholder
receives an exempt interest dividend with respect to any share and such share is
held for 6 months or less, any loss on the sale or exchange of such share will
not be allowed to the extent of the exempt interest dividend amount.
Interest on certain "private activity bonds" issued after August 7, 1986,
although otherwise tax-exempt, is treated as a tax preference item for
alternative minimum tax purposes. Under regulations to be promulgated, the Bond
Fund's exempt interest dividends will be treated as a tax preference item for
purposes of computing the alternative minimum tax liability of shareholders in
such Fund to the extent attributable to interest paid on "private activity"
bonds. Corporate shareholders should also be aware that the receipt of exempt
interest dividends could subject them to alternative minimum tax under the
provisions of Code Section 56(f) (relating generally to book income or adjusted
current earnings in excess of taxable income).
27
<PAGE>
Interest on indebtedness incurred or continued by shareholders to purchase or
carry shares of the Bond Fund will not be deductible for federal income tax
purposes to the extent of the portion of the interest expense relating to exempt
interest dividends; that portion is determined by multiplying the total amount
of interest paid or accrued on the indebtedness by a fraction, the numerator of
which is the exempt interest dividends received by a shareholder in the
shareholder's taxable year and the denominator of which is the sum of the exempt
interest dividends and the taxable distributions received by the shareholder.
Distributions by the Mid Cap, International, Real Estate and Emerging Markets
Funds from ordinary investment income and net short-term capital gains will be
taxed to the shareholders as ordinary dividend income to the extent of the
earnings and profits of the respective Funds. Similarly, any portion of the Bond
Fund's dividends which does not qualify as exempt interest dividends and any
short-term capital gain distribution will be taxed to the Bond Fund shareholders
as ordinary income for federal income tax purposes. Ordinary income dividends
received by corporate shareholders will qualify for the 70% dividends-received
deduction to the extent the Funds designate such amounts as qualifying dividend
distributions; however, the portion that may be so designated is subject to
certain limitations. As a result of these limitations, it is not currently
anticipated that certain distributions by Funds will be qualifying dividend
distributions. Distributions by a Fund that are designated as capital gain
distributions will be taxed to the shareholders as capital gains, and will not
be eligible for the corporate dividends-received deduction.
Dividends declared by the Funds to shareholders of record in October,
November or December will be taxable to such shareholders in the year that the
dividend is declared, even if it is not paid until the following year (so long
as it is actually paid by the Fund prior to February 1). Also, shareholders will
be taxable on the amount of long-term capital gains designated by a Fund by
written notice mailed to shareholders within 60 days after the close of the
year, even if such amounts are not actually distributed to them. Shareholders
will be entitled to claim a credit against their own federal income tax
liability for taxes paid by the Fund on such undistributed gains, if any. If a
shareholder receives a long-term capital dividend with respect to any share and
such share is held for less than 6 months, any loss on sale or exchange of such
share will be long-term capital loss to the extent of long-term capital dividend
payments.
Dividends (other than exempt interest dividends) and capital gain
distributions will be taxable to shareholders as described above whether
received in cash or in shares under a Fund's distribution reinvestment plan.
With respect to distributions received in cash or reinvested in shares purchased
on the open market, the amount of the distribution for tax purposes will be the
amount of cash distributed or allocated to the shareholder. With respect to
distributions made in shares issued by the Fund as a stock dividend, the amount
of the distribution will be the fair market value of the shares on the payment
date.
Shareholders should be aware that the price of shares of a Fund that are
purchased prior to a dividend or distribution by the Fund may reflect the amount
of the forthcoming dividend or distribution. Such dividend or distribution, when
made, would be taxable to shareholders under the principles discussed above even
though the dividend or distribution may reduce the net asset value of shares
below a shareholder's cost and thus represent a return of a shareholder's
investment in an economic sense.
FOREIGN TAX CREDIT
The International Fund may incur liability for foreign income and
withholding taxes on investment income. The Fund intends to qualify for and may
make an election permitted under Section 853 of the Code. The effect of such
election is that the shareholders of such Fund will be able to claim a credit or
deduction on their U.S. federal income tax returns for, and may treat as part of
the amounts distributed to them, their pro rata share of the income taxes paid
by the Fund to foreign countries. (The election is not available unless stocks
or securities in foreign corporations represent more than 50% of the value of
the total assets of the Fund). The shareholders may claim a deduction or credit
by reason of the Fund's election subject to the limitations imposed under
Section 904 of the Code. The deduction for foreign taxes paid may not be claimed
by individual shareholders who do not elect to itemize deductions on their
federal income tax returns although such shareholders may claim a credit for
foreign income taxes paid. In either case, shareholders will be required to
report taxable income in the amount of their respective pro rata share of
foreign taxes paid by the Fund. Although the International Fund intends to meet
the requirements of the Code to "pass through" such taxes, there can be no
assurance that it will be able to do so in the future.
SALE OR EXCHANGE OF FUND SHARES
Gain or loss will be recognized by a shareholder upon the sale of his shares
in a Fund or upon an exchange of his shares in a Fund for shares in another
Fund. Provided that the shareholder is not a dealer in such shares, such gain or
loss will generally be treated as capital gain or loss, measured by the
difference between the adjusted basis of the shares and the amount realized
therefrom. Under current law, capital gains (whether long-term or short-term) of
individuals and corporations are fully includable in income and are taxed at the
regular federal income tax rates applicable to the shareholder's ordinary
income. Capital losses (whether long-term or short-term) may offset capital
gains plus (for non-corporate taxpayers only) up to $3,000 per year of ordinary
income.
TAX INFORMATION
Written notices will be sent to shareholders regarding the tax status of all
distributions made (or deemed to have been made) during each taxable year,
including the tax-exempt portion thereof (if applicable), the amount qualifying
for the dividends-received
28
<PAGE>
deduction (if applicable) and the amount designated as capital gains dividends,
undistributed capital gains (if any), tax credits (if applicable), and
cumulative return of capital (if any).
BACKUP WITHHOLDING
The Funds may be required to withhold federal income tax at a rate of 31% on
reportable dividends paid to certain noncorporate shareholders. Generally,
shareholders subject to such backup withholding will be those for whom a
taxpayer identification number and certain required certifications are not filed
with the Funds or who, to a Fund's knowledge, have furnished an incorrect
number.
FOREIGN SHAREHOLDERS
Dividends paid by a Fund from net investment income and net realized
short-term capital gains to a shareholder who is a nonresident alien individual,
a foreign trust or estate, a foreign corporation or a foreign partnership (a
"foreign shareholder") will be subject to United States withholding tax at a
rate of 30% unless a reduced rate of withholding or a withholding exemption is
provided under applicable treaty law. Foreign shareholders are urged to consult
their own tax advisors concerning the applicability of the United States
withholding tax and any foreign taxes.
OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences, described above,
applicable to an investment in a Fund, there may be state or local tax
considerations and estate tax considerations applicable to the circumstances of
a particular investor. In particular, distributions by the Bond Fund may be
subject to state and local taxation even though wholly or partially exempt for
federal income tax purposes. The foregoing discussion is based upon the Code,
judicial decisions and administrative regulations, rulings and practices, all of
which are subject to change and which, if changed, may be applied retroactively
to a Fund, its shareholders and/or its assets. No rulings have been sought from
the Internal Revenue Service with respect to any of the tax matters discussed
above.
The information included in the Prospectus with respect to taxes, in
conjunction with the foregoing, is a general and abbreviated summary of
applicable provisions of the Code and Treasury regulations now in effect as
currently interpreted by the courts and the Internal Revenue Service. The Code
and these Regulations, as well as the current interpretations thereof, may be
changed at any time by legislative, judicial, or administrative action.
THE DISTRIBUTOR
Equity Planning, a registered broker-dealer which is an indirect less than
wholly-owned subsidiary of Phoenix Home Life Mutual Insurance Company, serves as
Distributor of the Trust's shares. Philip R. McLoughlin, a Trustee and President
of the Trust, is a director and officer of Equity Planning. Michael E. Haylon,
an officer of the Trust, is a director of Equity Planning; and G. Jeffrey Bohne,
Nancy G. Curtiss, William R. Moyer, and Leonard J. Saltiel, officers of the
Trust, are officers of Equity Planning.
The Trust and Equity Planning have entered into distribution agreements under
which Equity Planning has agreed to use its best efforts to find purchasers for
Trust shares and the Trust has granted to Equity Planning the exclusive right to
purchase from the Trust and resell, as principal, shares needed to fill
unconditional orders for Trust shares. Equity Planning may sell Trust shares
through its registered representatives or through securities dealers with whom
it has sales agreements. Equity Planning may also sell Trust shares pursuant to
sales agreements entered into with bank-affiliated securities brokers who,
acting as agent for their customers, place orders for Trust shares with Equity
Planning. Although the Glass-Steagall Act prohibits banks and bank affiliates
from engaging in the business of underwriting, distributing or selling
securities (including mutual fund shares), banking regulators have indicated
that such institutions are not prohibited from purchasing mutual fund shares
upon the order and for the account of their customers. If, because of changes in
law or regulations, or because of new interpretations of existing law, it is
determined that agency transactions of banks and bank affiliated securities
brokers are not permitted under the Glass-Steagall Act, the Trustees will
consider what action, if any, is appropriate. In addition, state securities laws
on this issue may differ from federal law, and banks and bank affiliates may be
required to register as securities dealers pursuant to state law. It is not
anticipated that termination of sales agreements with banks and bank affiliated
securities brokers would result in a loss to their customers or a change in the
net asset value per share of a Fund of the Trust.
For its services under the distribution agreements, Equity Planning receives
sales charges on transactions in Trust shares and retains such charges less the
portion thereof allowed to its registered representatives and to securities
dealers and securities brokers with whom it has sales agreements. In addition,
Equity Planning may receive payments from the Trust pursuant to the Distribution
Plans described below. For the fiscal years ended November 30, 1996, 1997 and
1998, purchasers of shares of the Funds paid aggregate sales charges of
$1,599,637, $2,114,382 and $4,260,271, respectively, of which the Distributor
received net commission of $258,916, $494,335 and $545,050, respectively, for
its services, the balance being paid to dealers. For the fiscal year ended
November 30, 1998, the distributor received net commission of $122,184 for Class
A Shares and deferred sales charges of $422,867 for Class B and C Shares.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
Dealers with whom the Distributor has entered into sales agreements receive a
discount or commission as described below.
29
<PAGE>
<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 4.75% 4.99% 4.25%
$50,000 but under $100,000 4.50 4.71 4.00
$100,000 but under $250,000 3.50 3.63 3.00
$250,000 but under $500,000 3.00 3.09 2.75
$500,000 but under $1,000,000 2.00 2.04 1.75
$1,000,000 or more None None None
</TABLE>
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sale price of
Class C Shares sold by such dealers. Your broker, dealer or investment adviser
may also charge you additional commissions or fees for their services in selling
shares to you provided they notify the Distributor of their intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of the
Trust and/or for providing other shareholder services. Depending on the nature
of the services, these fees may be paid either from the Trust 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. Any dealer who
receives more than 90% of a sales charge may be deemed to be an "underwriter"
under the Securities Act of 1933.
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
its services, 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, plus (2) the documented costs to Equity Planning to provide
financial reporting and tax services and to oversee the subagent's performance.
The current fee schedule of PFPC, Inc. is based upon the average of the
aggregate daily net asset values of the Funds, at the following incremental
annual rates.
First $200 million .085%
$200 million to $400 million .05%
$400 million to $600 million .03%
$600 million to $800 million .02%
$800 million to $1 billion .015%
Greater than $1 billion .0125%
Percentage rates are applied to the aggregate daily net asset values of the
Funds, PFPC, Inc. also charges minimum fees and additional fees to each
additional class of fund shares. Equity Planning retains PFPC, Inc. as subagent
for each of the funds for which Equity Planning serves as administrative 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 administrative agent on the basis of the
relative net assets of each fund. As a result, the PFPC, Inc. charges to the
Fund are expected to be slightly less than the amount that would be found
through direct application of the table illustrated above. For services to the
Trust during the fiscal years ended November 30, 1996, 1997 and 1998, the
Financial Agent received fees of $243,021, $541,814 and $654,165, respectively.
DISTRIBUTION PLANS
The Trust has adopted separate amended and restated distribution plans under
Rule 12b-1 of the 1940 Act for each class of shares of each Fund of the Trust
(the "Class A Plan," the "Class B Plan," the "Class C Plan," and collectively
the "Plans"). The Plans
30
<PAGE>
permit the Trust to pay for services and 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.
Pursuant to the Plans, the Trust shall pay the Distributor for actual
expenses of the Distributor of 0.25% of the average daily net assets of the
Trust's average daily net assets for providing services to shareholders,
including assistance with inquiries related to shareholder accounts (the
"Service Fee"). Pursuant to the Class B Plan, the Trust may reimburse the
Distributor monthly for actual expenses of the Distributor up to 0.75% annually
of the average daily net assets of each Fund's Class B Shares. Pursuant to the
Class C Plan, the Trust may reimburse the Distributor monthly for actual
expenses of the Distributor up to 0.75%, 0.75% and 0.75% annually of the average
daily net assets of the Emerging Markets, Income, and International Funds' Class
C Shares, respectively.
Expenditures under the Plans shall consist of: (i) commissions to sales
personnel for selling shares of the Trust (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 Trust's 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 Trust.
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 Trust shares which are reallowed to such firms. To the extent that the entire
amount of the Service Fee is not paid to such firms, the balance will serve as
compensation for personal and account maintenance services furnished by the
Distributor.
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.
Each Plan requires that at least quarterly the Trustees of the Trust review a
written report with respect to the amounts expended under the Plans and the
purposes for which such expenditures were made. While the Plans are in effect,
the Trust will be required to commit the selection and nomination of candidates
for Trustees who are not interested persons of the Trust to the discretion of
other Trustees who are not interested persons. Each Plan continues in effect
from year to year only provided such continuance is approved annually in advance
by votes of the majority of both (a) the Board of Trustees of the Trust and (b)
the Rule 12b-1 Trustees, cast in person at a meeting called for the purpose of
voting on the Plan and any agreements related to the Plan.
For the fiscal year ended November 30, 1998 the Trust paid Rule 12b-1 Fees in
the amount of $2,708,081, of which the Distributor received $1,025,897,
unaffiliated broker-dealers received $1,404,016 and W.S. Griffith & Co., Inc.,
an affiliate, received $278,168. The Rule 12b-1 payments were used for (1)
compensating dealers, $3,182,864, (2) compensating sales personnel, $1,736,570,
(3) advertising, $815,800, (4) printing and mailing of prospectuses to other
than current shareholders, $60,074, (5) service costs, $236,653 and (6) other,
$314,389. No interested person of the Trust and no Trustee who is not an
interested person of the Trust, 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.
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 the various duties imposed on Trustees by
the Investment Company Act of 1940 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 Trustee and executive officer is 56 Prospect Street, Hartford,
Connecticut, 06115-0480.
31
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Robert Chesek (64) Trustee Trustee/Director (1981-present) and Chairman (1989-1994), Phoenix
49 Old Post Road Funds. Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff &
Wethersfield, CT 06109 Phelps Institutional Mutual Funds (1996-present). Vice President,
Common Stock, Phoenix Home Life Mutual Insurance Company
(1980-1994).
E. Virgil Conway (69) 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 and Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Duff & Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present). Member,
Audit Committee of the City of New York (1981-1996). Advisory
Director, Blackrock Fannie Mae Mortgage Securities Fund
(1989-1996) and Fund Directions (1993-1998). Chairman, Financial
Accounting Standards Advisory Council (1992-1995).
Harry Dalzell-Payne (69) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
330 East 39th Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Apartment 29G Institutional Mutual Funds (1996-present). Director, Duff & Phelps
New York, NY 10016 Utilities Tax-Free Income Inc. and Duff & Phelps Utility and
Corporate Bond Trust Inc. (1995-present). Director, Farragut
Mortgage Co., Inc. (1991-1994). Formerly a Major General of the
British Army.
*Francis E. Jeffries (68) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
6585 Nicholas Blvd Phoenix-Aberdeen Series Inc. and Phoenix Duff & Phelps
Apt. 1601 Institutional Mutual Funds (1996-present). Director, Duff & Phelps
Naples, FL 33963 Utilities Income Inc. (1987-present), Duff & Phelps Utilities
Tax-Free Income Inc. (1991-present) and Duff & Phelps Utility and
Corporate Bond Trust Inc. (1993-present). Director, The Empire
District Electric Company (1984-present). Director (1989-1997),
Chairman of the Board (1993-1997), President (1989-1993), and
Chief Executive Officer (1989-1995), Phoenix Investment Partners,
Ltd.
Leroy Keith, Jr. (60) Trustee Chairman and Chief Executive Officer, Carson Products Company
Chairman and Chief (1995-present). Director/Trustee, Phoenix Funds (1980-present).
Executive Officer Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Carson Product Company Institutional Mutual Funds (1996-present). Director, Equifax Corp.
64 Ross Road (1991-present) and Evergreen International Fund, Inc.
Savannah, GA 30750 (1989-present). Trustee, Evergreen Liquid Trust, Evergreen Tax
Exempt Trust, Evergreen Tax Free Fund, Master Reserves Tax Free
Trust, and Master Reserves Trust. President, Morehouse College
(1987-1994). Chairman and Chief Executive Officer, Keith Ventures
(1992-1994).
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
*Philip R. McLoughlin (52) Trustee and Chairman (1997-present), Director (1995-present), Vice Chairman
President (1995-1997) and Chief Executive Officer (1995-present), Phoenix
Investment Partners, Ltd. Director (1994-present) and Executive
Vice President, Investments (1988-present), Phoenix Home Life
Mutual Insurance Company. Director/Trustee and President, Phoenix
Funds (1989-present). Trustee and President, Phoenix-Aberdeen
Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Duff & Phelps Utilities Tax-Free Income
Inc. (1995-present) and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1995-present). Director (1983-present) and Chairman
(1995-present), Phoenix Investment Counsel, Inc. Director
(1984-present) and President (1990- present), Phoenix Equity
Planning Corporation. Director (1993-present), Chairman
(1993-present) and Chief Executive Officer (1993-1995), National
Securities & Research Corporation. Director, Phoenix Realty Group,
Inc. (1994-present), Phoenix Realty Advisors, Inc. (1987-present),
Phoenix Realty Investors, Inc. (1994-present), Phoenix Realty
Securities, Inc. (1994-present), PXRE Corporation (Delaware)
(1985-present), and World Trust Fund (1991-present). Director and
Executive Vice President, Phoenix Life and Annuity Company
(1996-present). Director and Executive Vice President, PHL
Variable Insurance Company (1995-present). Director, Phoenix
Charter Oak Trust Company (1996-present). Director and Vice
President, PM Holdings, Inc. (1985-present). Director 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 (70) Trustee Vice President, W.H. Reaves and Company (1993-present). Director/
164 Laird Road Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
Colts Neck, NJ 07722 Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Duff & Phelps Utilities Tax-Free Income
Inc. (1991-present) and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1993-present).
*James M. Oates (52) Trustee Chairman, IBEX Capital Markets, Inc. (formerly IBEX Capital
Managing Director Markets LLC) (1997-present). Managing Director, Wydown Group
The Wydown Group (1994-present). Director, Phoenix Investment Partners, Ltd.
IBEX Capital Markets, Inc. (1995-present). Director/Trustee, Phoenix Funds (1987-present).
60 State Street Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Suite 950 Institutional Mutual Funds (1996-present). Director, AIB Govett
Boston, MA 02109 Funds (1991-present), Blue Cross and Blue Shield of New Hampshire
(1994-present), Investors Financial Service Corporation
(1995-present), Investors Bank & Trust Corporation
(1995-present), Plymouth Rubber Co. (1995-present), Stifel
Financial (1996-present), Command Systems, Inc. (1998-present)
and Connecticut River Bancorp (1998-present). Vice Chairman,
Massachusetts Housing-Partnership (1998-present). Member, Chief
Executives Organization (1996-present). Director (1984-1994),
President (1984-1994) and Chief Executive Officer (1986-1994),
Neworld Bank.
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
*Calvin J. Pedersen (57) Trustee Director (1986-present), President (1993-present) and Executive
Phoenix Duff & Phelps Vice President (1992-1993), Phoenix Investment Partners, Ltd.
Corporation Director/Trustee, Phoenix Funds (1995-present). Trustee,
55 East Monroe Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Suite 3600 Institutional Mutual Funds (1996-present). President and Chief
Chicago, IL 60603 Executive Officer, Duff & Phelps Utilities Tax-Free Income Inc.
(1995-present), Duff & Phelps Utilities Income Inc.
(1994-present) and Duff & Phelps Utility and Corporate Bond Trust
Inc. (1995-present).
Herbert Roth, Jr. (70) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
P.O. Box 909 Institutional Mutual Funds (1996-present). Director, Boston
Sherborn, MA 01770 Edison Company (1978-present), Phoenix Home Life Mutual Insurance
Company (1972-1998), 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, Key
Energy Group (oil rig service) (1988-1994). Director/Trustee, the
National Affiliated Investment Companies (until 1993).
Richard E. Segerson (53) Trustee Managing Director, Northway Management Company (1998-present).
102 Valley Road Director/Trustee, Phoenix Funds (1993-present). Trustee,
New Canaan, CT 07840 Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Managing Director,
Mullin Associates (1993-1998).
Lowell P. Weicker, Jr. (67) Trustee Trustee/Director, Phoenix Funds (1995-present). Trustee,
731 Lake Avenue Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Greenwich, CT 06830 Institutional Mutual Funds (1996-present). Director, UST Inc.
(1995-present), HPSC Inc. (1995-present), Duty Free International,
Inc. (1997-present) and Compuware (1996-present) and Burroughs
Wellcome Fund (1996-present). Visiting Professor, University of
Virginia (1997-present). Chairman, Dresing, Lierman, Weicker
(1995-1996). Governor of the State of Connecticut (1991-1995).
Michael E. Haylon (41) Executive Director and Executive Vice President--Investments, Phoenix
Vice Investment Partners, Ltd. (1995-present). Executive Vice
President President, Phoenix Funds (1993-present) and Phoenix-Aberdeen
Series Fund (1996-present). Executive Vice President
(1997-present), Vice President (1996-1997), Phoenix Duff & Phelps
Institutional Mutual Funds. Director (1994-present), President
(1995-present), Executive Vice President (1994-1995), Vice
President (1991-1994), Phoenix Investment Counsel, Inc. Director
(1994-present), President (1996-present), Executive Vice President
(1994-1996), Vice President (1993-1994), National Securities &
Research Corporation. Director, Phoenix Equity Planning
Corporation (1995-present). Senior Vice President, Securities
Investments, Phoenix Home Life Mutual Insurance Company
(1993-1995). Various other positions with Phoenix Home Life Mutual
Insurance Company (1990-1993).
John F. Sharry (47) Executive Managing Director, Retail Distribution, Phoenix Equity Planning
Vice Corporation (1995-present). Executive Vice President, Phoenix
President Funds (1998-present) and Phoenix-Aberdeen Series Fund
(1998-present). Managing Director, Director and National Sales
Manager, Putnam Mutual Funds (until 1995).
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Gail P. Seneca (45) Senior Vice Senior Vice President, Phoenix Strategic Allocation Fund, Inc.
President (1998-present), Phoenix Multi-Portfolio Fund (1998-present).
Managing Director, Equities, Phoenix Investment Counsel, Inc.
(1998-present). Senior Vice President, The Phoenix Edge Series
Fund (1998-present) and Phoenix Strategic Equity Series Fund
(1998-present). President and Chief Executive and Investment
Officer, Seneca Capital Management LLC (1996-present). Managing
General Partner and Chief Executive and Investment Officer,
GMG/Seneca Capital Management LP (1989-present). President and
Trustee, Phoenix-Seneca Funds (1996-present). General Partner,
Genesis Merchant Group. LP (1990-present). President, GenCap, Inc.
(1994-present).
James D. Wehr (41) Senior Vice Senior Vice President (1998-present), Managing Director, Fixed
Income (1996-1998), Vice President (1991-1996), Phoenix Investment
President Counsel, Inc. Senior Vice President (1998-present), Managing
Director, Fixed Income (1996-1998), Vice President (1993-1996),
National Securities & Research Corporation. Senior Vice President
(1997-present), Vice President (1988-1997) Phoenix Multi-Portfolio
Fund; Senior Vice President (1997-present), Vice President
(1990-1997) Phoenix Series Fund; Senior Vice President
(1997-present), Vice President (1991-1997) The Phoenix Edge Series
Fund; Senior Vice President (1997-present), Vice President
(1993-1997) Phoenix California Tax Exempt Bonds, Inc., and Senior
Vice President (1997-present), Vice President (1996-1997) Phoenix
Duff & Phelps Institutional Mutual Funds. Senior Vice President
(1997-present) Phoenix Multi-Sector Fixed Income Fund, Inc.,
Phoenix Multi-Sector Short Term Bond Fund, Phoenix Income and
Growth Fund and Phoenix Strategic Allocation Fund, Inc. Managing
Director, Public Fixed Income, Phoenix Home Life Insurance Company
(1991-1995).
David L. Albrycht (37) Vice Managing Director, Fixed Income (1996-present) and Vice President
President (1995-1996), Phoenix Investment Counsel, Inc. Managing Director,
Fixed Income (1996-present) and Investment Officer (1994-1996),
National Securities & Research Corporation. Vice President,
Phoenix Multi-Portfolio Fund (1993-present), Phoenix Multi-Sector
Short Term Bond Fund (1993-present), Phoenix Multi-Sector Fixed
Income Fund, Inc. (1994-present), The Phoenix Edge Series Fund
(1997-present) and Phoenix Series Fund (1997-present). Fund
Manager, Phoenix Home Life Mutual Insurance Company (1994-1995).
Timothy M. Heaney (33) Vice Managing Director, Fixed Income (1997-present), Director, Fixed
President Income Research (1996-1997), Investment Analyst (1995-1996),
Phoenix Investment Counsel, Inc. Vice President, Phoenix
Multi-Portfolio Fund (1996-present). Managing Director, Fixed
Income (1997-present), Director, Fixed Income Research
(1996-1997), National Securities & Research Corporation.
Investment Analyst, Phoenix Home Life Mutual Insurance Company
(1992-1994). Vice President, Phoenix California Tax Exempt Bonds,
Inc. (1996-present) and Duff & Phelps Utilities Tax Free Income,
Inc. (1997-present).
Ron K. Jacks (33) Vice Managing Director, Equities, Phoenix Investment Counsel, Inc.
President (1998-present). Vice President, The Phoenix Edge Series Fund
(1998-present), Phoenix Strategic Equity Series Fund
(1998-present), and Phoenix Multi-Portfolio Fund (1998-present).
Secretary, Phoenix-Seneca Funds (1996-1998). Trustee,
Phoenix-Seneca Funds (1996-1997). General Partner and Equity
Portfolio Manager, GMG/Seneca Capital Management LP
(1995-present). Equity Portfolio Manager, Seneca Capital
Management LLC (1996-present).
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Peter S. Lannigan (38) Vice Managing Director, Fixed Income (1997-present), Director, Fixed
President Income Research (1996-1997), Vice President (1995-1996), Phoenix
Investment Counsel, Inc. Managing Director, Fixed Income
(1998-present), Director, Fixed Income Research (1996-present),
National Securities & Research Corporation, Inc. Vice President,
Phoenix Multi-Portfolio Fund (1995-present). Director, Public
Fixed Income, Phoenix Home Life Mutual Insurance Company
(1993-1995). Various positions with Standard & Poor's Corporation
(1989-1993).
William R. Moyer (54) Vice Senior Vice President and Chief Financial Officer, Phoenix Duff &
100 Bright Meadow Blvd. President Phelps Corporation (1995-present). Senior Vice President, Finance
PO Box 2200 (1990-present), Director (1998-present), Treasurer (1998-present
Enfield, CT 06083-2200 and 1994-1996), and Chief Financial Officer (1996-present),
Phoenix Equity Planning Corporation. Senior Vice President
(1990-present), Director (1998-present), Chief Financial Officer
(1996-present) and Treasurer (1994-present), Phoenix Investment
Counsel, Inc. Senior Vice President, Finance (1993-present), Chief
Financial Officer (1996-present), and Treasurer (1994-present),
National Securities & Research Corporation. Senior Vice President
and Chief 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). Senior Vice
President and Chief Financial Officer,
W. S. Griffith & Co., Inc. (1992-1995) and Townsend Financial
Advisers, Inc. (1993-1995). Vice President, the National
Affiliated Investment Companies (until 1993). Vice President,
Investment Products Finance, Phoenix Home Life Mutual Insurance
Company (1990-1995).
Richard D. Little (50) Vice Managing Director, Equities, Phoenix Investment Counsel, Inc.
President (1998-present). Vice President, The Phoenix Edge Series Fund
(1998-present), Phoenix Strategic Equity Series Fund
(1998-present), and Phoenix Multi-Portfolio Fund (1998-present).
Director of Equities, Seneca Capital Management LLC
(1996-present). General Partner and Director of Equities, Seneca
Capital Management LP (1989-present).
Leonard J. Saltiel (45) Vice Managing Director, Operations and Service (1996-present), Senior
President Vice President, (1994-1996), Phoenix Equity Planning Corporation.
Vice President, Phoenix Funds (1994-present), Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present), and Phoenix-Aberdeen
Series Fund (1996-present). Vice President, National Securities &
Research Corporation (1994-1996). Vice President, Investment
Operations, Phoenix Home Life Mutual Insurance Company (1994-1995).
Various positions with Home Life Insurance Company and Phoenix Home
Life Mutual Insurance Company (1987-1994).
Michael Schatt (51) Vice Managing Director, Phoenix Investment Partners, Ltd.
President (1994-present). Senior Vice President, Phoenix Realty Securities,
Inc. (1997-present). Vice President, Duff & Phelps Investment
Management Co. (1997-present), Duff & Phelps Utilities Income,
Inc. (1997-present), Phoenix Duff & Phelps Institutional Mutual
Funds (1997-present), The Phoenix Edge Series Fund (1997-present),
and Phoenix Multi-Portfolio Fund (1997-present). Director, Real
Estate Advisory Practice, Coopers & Lybrand (1990-1994).
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Pierre G. Trinque (43) Vice Vice President, Phoenix Strategic Allocation Fund, Inc.
President (1998-present), The Phoenix Edge Series Fund (1997-present),
Phoenix Multi-Portfolio Fund (1998-present), Phoenix Series Fund
(1997-present), Phoenix Duff & Phelps Institutional Mutual Funds
(1997-present), Phoenix Worldwide Opportunities Fund (1998-present),
and Phoenix Strategic Equity Series Fund (1998-present). Managing
Director, Large Cap Growth Team (1998-present), Managing Director,
Equities (1997-1998), Sr. Research Analyst, Equities (1996), and
Managing Director, Equity Research (1996-1997), Phoenix Investment
Counsel, Inc.
Nancy G. Curtiss (46) Treasurer Vice President, Fund Accounting (1994-present) and Treasurer
(1996-present), Phoenix Equity Planning Corporation. Treasurer,
Phoenix Funds (1994-present), Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present) and Phoenix-Aberdeen Series Fund
(1996-present). Second Vice President and Treasurer, Fund
Accounting, Phoenix Home Life Mutual Insurance Company
(1994-1995). Various positions with Phoenix Home Life Insurance
Company (1987-1994).
G. Jeffrey Bohne (51) Secretary Vice President and General Manager, Phoenix Home Life Mutual
101 Munson Street Insurance Co. (1993-present). Vice President, Transfer Agent
Greenfield, MA 01301 Operations (1993-1996), Vice President, Mutual Fund Customer
Service (1996-present), Phoenix Equity Planning Corporation.
Secretary/Clerk, Phoenix Funds (1993-present), Phoenix Duff &
Phelps Institutional Mutual Funds (1996-present) and
Phoenix-Aberdeen Series Fund (1996-present). Vice President, Home
Life of New York Insurance Company (1984-1992). Clerk, Phoenix
Investment Council (1995-present).
</TABLE>
- ----------------
*Trustees identified with an asterisk are considered to be interested persons
of the Trust (within the meaning of the Investment Company Act of 1940, as
amended) because of their affiliation with Phoenix Investment Counsel, Inc.,
or Phoenix Equity Planning Corporation or Phoenix Investment Partners, Ltd.
For services rendered to the Trust for the fiscal year ended November 30,
1998, the Trustees received an aggregate of $92,876. 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.
Trustee fee costs are allocated equally to each of the Funds and the Funds
within the Phoenix Funds complex. The foregoing fees do not include
reimbursement of expenses incurred in connection with meeting attendance.
Officers and employees of the Adviser who are not interested persons are
compensated for their services by the Adviser and receive no compensation from
the Trust.
37
<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
---- --------- ---------------- --------------- ----------------
<CAPTION>
<S> <C> <C> <C> <C>
Robert Chesek $8,019 $60,000
E. Virgil Conway+ $10,625 $79,500
Harry Dalzell-Payne+ $9,559 $71,250
Francis E. Jeffries $7,986 $60,000
Leroy Keith, Jr. $8,368 None None $62,500
Philip R. McLoughlin+ $0 for any for any $0
Everett L. Morris+ $9,177 Trustee Trustee $69,500
James M. Oates+ $9,177 $68,750
Calvin J. Pedersen $0 $0
Herbert Roth, Jr.+ $11,007 $81,250
Richard E. Segerson $9,434 $70,750
Lowell P. Weicker $9,434 $70,000
</TABLE>
- ----------
*This compensation (and the earnings thereon) will be deferred pursuant to the
Deferred Compensation Plan. At December 31, 1998, the total amount of deferred
compensation (including interest and other accumulation earned on the original
amounts deferred) accrued for Messrs. Jeffries, Morris and Roth was $175,029,
$151,807 and $147,653, respectively. At present, by agreement among the Fund,
the Distributor and the electing director, director fees that are deferred are
paid by the Fund to the Distributor. The liability for the deferred compensation
obligation appears only as a liability of the Distributor.
+Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are members
of the Executive Committee.
At March 18, 1999, the Trustees and officers as a group owned less than 1% of
the then outstanding shares of the Trust.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of March 18, 1999 with respect
to each person who owns of record or is known by the Trust to own of record or
beneficially own 5% or more of any class of the Funds' equity securities.
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER NAME OF FUND NUMBER OF SHARES PERCENT OF CLASS
- ------------------- ------------ ---------------- ----------------
<S> <C> <C> <C>
Phoenix Home Life Emerging Markets Class A 2,083,489.4080 34.82%
One American Row Emerging Markets Class C 8,484.4530 5.45%
Hartford, CT 06115 Real Estate Class A 526,415.8300 29.12%
Income Class X
MLPF&S for the sole benefit Emerging Markets Class B 712,342.3690 12.84%
of its customers Emerging Markets Class C 26,291.3810 16.88%
ATTN: Fund Administration International Class A 1,324,384.8680 9.86%
4800 Deer Lake Dr E 3rd FL International Class B 138,556.8830 9.16%
Jacksonville, FL 32246-6484 Bond Class B 140,423.3570 22.45%
Real Estate Class B 65,453.7760 5.00%
Phoenix Charter Oak Trust Co. TTEE International Class A 1,885,268.0510 14.04%
Phoenix Home Life Employee Pension Plan
One American Row
Hartford, CT 06103
Norwest Bank Iowa N.A. Emerging Markets Class C 16,166.0250 10.38%
ATTN: Trust Operations
822 Central PO Box 658
Ft. Dodge, IA 50501-0658
Don M Sears Emerging Markets Class C 15,408.3200 9.89%
Glenda R Sears
1526 S 105th St
Omaha, NE 68124-1012
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER NAME OF FUND NUMBER OF SHARES PERCENT OF CLASS
- ------------------- ------------ ---------------- ----------------
<S> <C> <C> <C>
Elmer J Krauss Partner Emerging Markets Class C 13,869.6260 8.90%
Krauss Portfolio Ltd
715 N Sherrill St
Tampa, FL 33609-1109
Dain Rauscher Custodian Emerging Markets Class C 9,297.6600 5.97%
Jerome A Hofelt
6202 Revere Place
Dallas, TX 75214-3044
</TABLE>
ADDITIONAL INFORMATION
The Trust's Prospectus and this Statement of Additional Information omit
certain information contained in the registration statement filed with the
Securities and Exchange Commission which may be obtained from the Commission's
principal office at 450 Fifth Street, N.W., Washington, DC 20549, upon payment
of the fee prescribed by the rules and regulations promulgated by the
Commission.
CAPITAL STOCK
The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest. The Trust currently offers shares in different
series or "Funds" and different classes of those Funds. Holders of shares of a
Fund are entitled to one full vote for each full share owned and a fractional
vote for any fractional share. Shares of a Fund participate equally in dividends
and distributions paid with respect to such Fund and in such Fund's net assets
on liquidation, except that Class B and C Shares of any Fund which bear higher
distribution fees and, certain incrementally higher expenses associated with the
deferred sales arrangement, pay correspondingly lower dividends per share than
Class A Shares of the same Fund. Shareholders of all Funds vote on the election
of Trustees. On matters affecting an individual Fund (such as approval of an
investment advisory agreement or a change in fundamental investment policies),
and on matters affecting an individual class (such as approval of matters
relating to a Distribution Plan for a particular class of shares), a separate
vote of that Fund or Class is required. Shares of a Fund are fully paid and
non-assessable when issued and are transferable and redeemable. Shares have no
preemptive or conversion rights (other than as described herein).
The assets received by the Trust for the issue or sale of shares of a Fund
and any class thereof and all income, earnings, profits and proceeds thereof,
subject only to the rights of creditors, are allocated to such Fund and Class
respectively, subject only to the rights of creditors, and constitute the
underlying assets of such Fund or Class. Any underlying assets of a Fund are
required to be segregated on the books of account and are to be charged with the
expenses in respect to such Fund and with a share of the general expenses of the
Trust. Any general expenses of the Trust not readily identifiable as belonging
to a particular Fund or Class will be allocated by or under the direction of the
Trustees in such manner as the Trustees determine to be fair and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a business trust such as the Trust may be personally liable for
debts or claims against the Trust. The Declaration of Trust provides that
shareholders will not be subject to any personal liability for the acts or
obligations of the Trust and that every written agreement, undertaking or
obligation made or issued by the Trust shall contain a provision to that effect.
The Declaration of Trust provides for indemnification out of the Trust property
for all losses and expenses of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability, which is considered remote, is limited
to circumstances in which the Trust itself would be unable to meet its
obligations.
FINANCIAL STATEMENTS
The Financial Statements for the Fund's fiscal year ended November 30, 1998,
appearing in the Fund's 1998 Annual Report to Shareholders, are incorporated
herein by reference.
REPORTS TO SHAREHOLDERS
The fiscal year of the Trust ends on November 30. The Trust will send
financial statements to its shareholders at least semiannually. An annual report
containing financial statements audited by the Trust's independent accountants,
will be sent to shareholders each year.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110, has been
selected independent accountants for the Trust. PricewaterhouseCoopers LLP
audits the Trust's annual financial statements and expresses an opinion thereon.
39
<PAGE>
CUSTODIANS AND TRANSFER AGENT
The custodian of the assets of the Bond Fund, Mid Cap Fund, Real Estate Fund,
Emerging Markets Fund and Income Fund is State Street Bank and Trust Company,
P.O. Box 351, Boston, Massachusetts, 02101. The custodian of the assets of the
International Fund is Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts 02109. The Trust has authorized the custodians to appoint one or
more subcustodians for the assets of the Trust held outside the United States.
The securities and other assets of each Fund of the Trust are held by each
Custodian or any subcustodian separate from the securities and assets of each
other Fund.
Pursuant to a Transfer Agent and Service Agreement with the Phoenix Funds,
Equity Planning acts as transfer agent for the Trust (the "Transfer Agent") for
which it is paid $22.25 for each designated daily dividend shareholder account
and $17.95 for each designated non-daily dividend shareholder account plus
out-of-pocket expenses. The Transfer Agent is authorized to engage subagents to
perform certain shareholder servicing functions from time to time for which such
agents shall be paid a fee by the Transfer Agent.
40
<PAGE>
APPENDIX
A-1 AND P-1 COMMERCIAL PAPER RATINGS
The Trust will only invest in commercial paper which at the date of
investment is rated A-1 by Standard & Poor's Corporation or P-1 by Moody's
Investors Services, Inc., or, if not rated, is issued or guaranteed by companies
which at the date of investment have an outstanding debt issue rated AA or
higher by Standard & Poor's or Aa or higher by Moody's.
Commercial paper rated A-1 by Standard & Poor's Corporation ("S&P") has the
following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is rated "A" or better. The issuer has
access to at least two additional channels of borrowing. Basic earnings and cash
flow have an upward trend with allowance made for unusual circumstances.
Typically, the issuer's industry is well established and the issuer has a strong
position within the industry. The reliability and quality of management are
unquestioned.
The rating P-1 is the highest commercial paper rating assigned by Moody's
Investors Services, Inc. ("Moody's"). Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationship which exists with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt-edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they compromise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate
and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this
class.
B: Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other
marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
STANDARD AND POOR'S CORPORATION'S CORPORATE BOND RATINGS
AAA: This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay
principal and interest.
41
<PAGE>
AA: Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the
majority of instances they differ from AAA issues only in small
degree.
A: Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay principal and
interest for bonds in this category than for bonds in the A category.
BB, B,
CCC, CC: Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to issuer's capacity to pay
interest and repay principal in accordance with the terms of the
obligation. BB indicates the lowest degree of speculation and CC the
highest degree of speculation. While such bonds will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
D: Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period.
The D rating also will be used upon the filing of a bankruptcy
petition if debt service payments are jeopardized.
42
<PAGE>
[Version B]
PHOENIX-GOODWIN STRATEGIC INCOME FUND
101 Munson Street
Greenfield, Massachusetts 01301
STATEMENT OF ADDITIONAL INFORMATION
March 30, 1999
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current Prospectus of
Phoenix Multi-Portfolio Fund (the "Trust"), dated March 30, 1999, 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 ................................................. 9
PERFORMANCE ............................................................. 10
PERFORMANCE COMPARISONS ................................................. 11
PORTFOLIO TURNOVER ...................................................... 11
PORTFOLIO TRANSACTIONS .................................................. 12
THE INVESTMENT ADVISER .................................................. 13
DETERMINATION OF NET ASSET VALUE ........................................ 14
HOW TO BUY SHARES ....................................................... 14
ALTERNATIVE PURCHASE ARRANGEMENTS ....................................... 15
INVESTOR ACCOUNT SERVICES ............................................... 18
HOW TO REDEEM SHARES .................................................... 19
TAX SHELTERED RETIREMENT PLANS .......................................... 20
DIVIDENDS, DISTRIBUTIONS AND TAXES ...................................... 20
THE DISTRIBUTOR ......................................................... 22
DISTRIBUTION PLANS....................................................... 24
MANAGEMENT OF THE TRUST.................................................. 25
ADDITIONAL INFORMATION .................................................. 32
APPENDIX................................................................. 34
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunication Device (TTY): (800) 243-1926
PXP1202 (3/99)
<PAGE>
THE TRUST
Phoenix Multi-Portfolio Fund (the "Trust") is an open-end management
investment company which was organized under Massachusetts law in 1987 as a
Massachusetts business trust.
The Prospectus of Phoenix-Goodwin Strategic Income Fund (the "Income Fund" or
the "Fund") describes the investment objectives of the "Fund" and summarizes the
investment policies and investment techniques the Income Fund will employ in
seeking to achieve its investment objective. (A separate prospectus and
Statement of Additional Information applies to five other funds of the Trust.)
The following discussion supplements the description of the Income Fund's
investment policies and investment techniques in the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Fund is deemed to be a fundamental policy and
may not be changed without the approval of the shareholders. Investment
restrictions described in this Statement of Additional Information are
fundamental policies of the Trust and may not be changed as to any Fund without
the approval of such Fund's shareholders.
RATINGS
If the rating of a security purchased by the Fund is subsequently reduced
below the minimum rating required for purchase or a security purchased by the
Fund ceases to be rated, neither event will require the sale of the security.
However, the Adviser, as applicable, will consider any such event in determining
whether the Fund should continue to hold the security. To the extent that
ratings established by Moody's or Standard & Poor's may change as a result of
changes in such organizations or their rating systems, the Funds will invest in
securities which are deemed by the Fund's adviser to be of comparable quality to
securities whose current ratings render them eligible for purchase by the Fund.
RISKS OF HIGH YIELD BONDS
The Income Fund may invest up to 100% of its total assets in bonds considered
to be less than investment-grade, commonly known as junk bonds.
While management will seek to minimize risk through diversification and
continual evaluation of current developments in interest rates and economic
conditions, the market prices of lower-rated securities generally fluctuate more
than those of higher rated securities. Using credit ratings helps to evaluate
the safety of principal and interest payments but does not assess market risk.
Fluctuations in the market value of portfolio securities subsequent to
acquisition by the Fund will not normally affect cash income from such
securities but will be reflected in the Fund's net asset value. Additionally,
with lower-rated securities, there is a greater possibility that an adverse
change in the financial condition of the issuer, particularly a highly-leveraged
issuer, may affect its ability to make payments of income and principal and
increase the expenses of the Fund seeking recovery from the issuer. Also, to the
extent that the Fund invests in securities in the lower rating categories, the
achievement of its goals will be more dependent on management's ability than
would be the case if it were only investing in securities in the higher rating
categories. Lower-rated securities may be thinly traded and therefore harder to
value and more susceptible to adverse publicity concerning the issuer.
WRITING AND PURCHASING OPTIONS ON SECURITIES AND SECURITIES INDICES
The Income Fund may engage in option transactions.
Call options on securities and securities indices written by the Fund
normally will have expiration dates between three and nine months from the date
written. The exercise price of a call option written by a Fund utilizing this
investment technique 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.
During the option period, a Fund utilizing this investment technique 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.
A multiplier for an index option performs a function similar to the unit of
trading for an option on an individual security. It determines the total dollar
value per contract of each point between the exercise price of the option and
the current level of the underlying index. A multiplier of 100 means that a
one-point difference will yield $100. Options on different indices may have
different multipliers.
Securities indices for which options are currently traded include the
Standard & Poor's 100 and 500 Composite Stock Price Indices, Computer/Business
Equipment Index, Major Market Index, Amex Market Value Index, Computer
Technology Index, Oil and Gas Index, NYSE Options Index, Gaming/Hotel Index,
Telephone Index, Transportation Index, Technology Index, and Gold/ Silver Index.
The Mid Cap and International Funds may write call options and purchase call and
put options on these and any other indices traded on a recognized exchange.
1
<PAGE>
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 the Fund to write another call option
with either a different exercise price or expiration date or both. The 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 the Fund expires unexercised, the 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 ON SECURITIES AND SECURITIES INDICES
The Income Fund may write call options only if they are covered and remain
covered for as long as the Fund is obligated as a writer. Thus, if the Fund
writes a call option on an individual security, the Fund must own the underlying
security or other securities that are acceptable for a pledged account at all
times during the option period. The 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 the 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 a pledged account in accordance with
clearing corporation and exchange rules.
In the case of an index call option written by the Fund, the Fund will be
required to deposit qualified securities. A "qualified security" is a security
against which the Fund has not written a call option and which has not been
hedged by the 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, the Fund will deposit an amount of cash, U.S. Government Securities
or other liquid high quality debt obligations equal in value to the difference.
In addition, when the Fund writes a call on an index which is "in-the-money" at
the time the call is written, the Fund will pledge with the Trust's custodian
bank cash, U.S. Government securities or other liquid high quality debt
obligations equal in value to the amount by which the call is "in-the-money"
times the multiplier times the number of contracts. Any amount otherwise pledged
may be applied to the Fund's other obligations to pledge assets 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.
The Fund may invest up to 5% of its total assets in exchange-traded call and
put options on securities and securities indices. The 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 the Fund's qualifying as a regulated investment company
under the Internal Revenue Code of 1986, other restrictions on the Fund's
ability to enter into option transactions may apply from time to time. See
"Dividends, Distributions and Taxes."
RISKS RELATING TO OPTIONS ON SECURITIES
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 within the
option period 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 the Fund
utilizing this investment technique may lose the premium it paid plus
transaction costs, if the Fund does not exercise the option and is unable to
close out the position prior to expiration of the option.
An option position may be closed out on an exchange only if the exchange
provides a secondary market for an option of the same series. Although the Fund
will write and purchase options only when PIC 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 any 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 the following: (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
2
<PAGE>
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 in
general or of particular options or impose restrictions on orders.
Each exchange has established limitations governing the maximum number of
call options, whether or not covered, which may be written by a single investor
acting alone or in concert with others (regardless of whether such options are
written on the same or different exchanges or are held or written on one or more
accounts or through one or more brokers). An exchange may order the liquidation
of positions found to be in violation of these limits and it may impose other
sanctions or restrictions. PIC believes that the position limits established by
the exchanges will not have any adverse impact upon the Funds.
RISKS OF OPTIONS ON SECURITIES 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
the 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 (depending on the index option in question)
rather than upon movements in the price of an individual security. Accordingly,
successful use by the Fund of options on indices will be subject to PIC'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, the 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 the 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, the Fund will write call options only on indices which meet the
interim described above.
Price movements in securities held by the Fund will not correlate perfectly
with movements in the level of the index and, therefore, the Fund bears the risk
that the price of the securities held by the Fund might 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 the
securities held by the Fund. It is also possible that the index might rise when
the value of the securities held by the Fund 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 its portfolio securities.
Unless the Fund has other liquid assets which are sufficient to satisfy the
exercise of a call on an index, the Fund will be required to liquidate
securities in order to satisfy the exercise. Because an exercise must be settled
within hours after receiving the notice of exercise, if the Fund fails to
anticipate an exercise, it may have to borrow from a bank (in an amount not
exceeding 10% of the Fund's total assets) pending settlement of the sale of
securities in its portfolio and pay interest on such borrowing.
When the Fund has written a call on an index, there is also a risk that the
market may decline between the time the 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 the Fund is able to sell its securities. As with options
on its securities, the Fund will not learn that a call has been exercised until
the day following the exercise date but, unlike a call on a security where the
Fund would be able to deliver the underlying security in settlement, the Fund
may have to sell some of its securities in order to make settlement in cash, and
the price of such securities may decline before they can be sold.
If the 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" the 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 the 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
The Income Fund may use financial futures contracts and related options to
hedge against changes in the market value of their portfolio securities or
securities which it intends to purchase. The Income Fund may use foreign
currency futures contracts to hedge against changes in the value of foreign
currencies. (See "Foreign Currency Transactions" below.) Hedging is accomplished
when an investor takes a position in the futures market opposite to the
investor's 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
3
<PAGE>
concert with (although in inverse relation to) 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 or the
value of foreign currencies 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 the Fund utilizing
this investment technique may wish to purchase in the future by purchasing
futures contracts.
The Income Fund may purchase or sell any financial futures contracts which
are traded on a recognized exchange or board of trade and may purchase exchange-
or board-traded put and call options on financial futures contracts as a hedge
against anticipated changes in the market value of its portfolio securities or
securities which it intends to purchase. Financial futures contracts consist of
interest rate futures contracts, securities index futures contracts and foreign
currency 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 in which the Fund purchases or sells a security,
no security is delivered or received by the Fund upon the purchase or sale of a
financial futures contract (although an obligation to deliver or receive the
underlying security in the future is created by such a contract). Initially,
when it enters into a financial futures contract, the Fund will be required to
deposit in a pledged account with the Trust's custodian bank with respect to
such Fund an amount of cash or U.S. Treasury bills. This amount is known as an
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. However, 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 a margin
balance 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.
The 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, and will be in addition to
those paid for direct purchases and sales of securities.
LIMITATIONS ON FUTURES CONTRACTS AND RELATED OPTIONS
The 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 portfolio securities or securities which it
intends to purchase or foreign currencies. The 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 the Fund's existing futures and
related options positions and the premiums paid for related options would exceed
5% of the market value of the 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 non-investment-grade debt so long as the asset is liquid,
unencumbered and marked to market daily equal to the market value of the futures
contract minus the Fund's initial margin deposit with respect thereto will be
deposited in a pledged account with the Trust's custodian bank with respect to
such Fund to collateralize fully the position and thereby ensure that it is not
leveraged.
The extent to which the Fund may enter into financial futures contracts and
related options also may be limited by the requirements of the Internal Revenue
Code of 1986 for qualification as a regulated investment company. See
"Dividends, Distributions and Taxes."
4
<PAGE>
RISKS RELATING TO FUTURES CONTRACTS AND RELATED OPTIONS
Positions in futures contracts and related options may be closed out on an
exchange if the exchange provides a secondary market for such contracts or
options. The Fund will enter into a futures or futures related option 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 the Fund would continue to be required to make
daily margin payments. In this situation, if the Fund has insufficient cash to
meet daily margin requirements it may have to sell portfolio securities to meet
its margin obligations at a time when it may be disadvantageous to do so. In
addition, the 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 the Fund's ability to hedge its
positions 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 limit a hedger's opportunity to benefit fully from
favorable market movement. In addition, investing in futures contracts and
options on futures contracts will cause a Fund to incur additional brokerage
commissions and may cause an increase in a Fund's turnover rate.
The successful use of futures contracts and related options 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, the 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, the Fund's total return for the period may be
less than if it had not engaged in the hedging transaction.
Utilization of futures contracts involves the risk of imperfect correlation
in movements in the price of futures contracts and movements in the price of the
securities or currencies which are being hedged. If the price of the futures
contract moves more or less than the price of the securities or currency being
hedged, the Fund will experience a gain or loss which will not be completely
offset by movements in the price of the securities or currency. It is possible
that, where the Fund has sold futures contracts to hedge against decline in the
market, the market may advance and the value of securities held in the Fund or
the currencies in which its foreign securities are denominated may decline. If
this occurred, the 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 or
foreign currencies before the 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 the 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, the 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 elect to close out their contracts through offsetting
transactions rather than to meet margin deposit requirements. In such cases,
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 or
currencies rather than to engage in closing transactions because such action
would reduce the liquidity of the futures market. In addition, because, from the
point of view of speculators, the deposit requirements in the futures markets
are less onerous than margin requirements in the underlying securities market,
increased participation by speculators in the futures market could cause
temporary price distortions. Because of the possibility of price distortions in
the futures market and of the imperfect correlation between movements in the
prices of securities or foreign currencies 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 the 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 the Fund (i.e., the loss
of the premium paid) 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.
REPURCHASE AGREEMENTS
Repurchase agreements will be entered into only with commercial banks,
brokers and dealers considered by the Trust to be creditworthy. The Trustees of
the Trust will monitor each Fund's repurchase agreement transactions
periodically and, with the Funds' investment advisers, will consider standards
which the investment advisers will use in reviewing the creditworthiness of any
party to a repurchase agreement with a Fund. No more than an aggregate of 15% of
the Income Fund's net assets, at the time of investment, will be invested in
repurchase agreements having maturities longer than seven days and other
investments subject to legal or contractual restrictions on resale, or for which
there are not readily available market quotations.
The use of repurchase agreements involves certain risks. For example, if the
seller under a repurchase agreement defaults on its obligation to repurchase the
underlying instrument at a time when the value of the instrument has declined, a
Fund may incur a loss upon its disposition. If the seller becomes insolvent and
subject to liquidation or reorganization under bankruptcy or other laws, a
bankruptcy court may determine that the underlying instrument is collateral for
a loan by the Fund and therefore is subject to sale
5
<PAGE>
by the trustee in bankruptcy. Finally, it is possible that the Fund may not be
able to substantiate its interest in the underlying instrument. While the
Trustees of the Trust acknowledge these risks, it is expected that they can be
controlled through careful structuring of repurchase agreement transactions to
meet requirements for treatment as a purchase and sale under the bankruptcy laws
and through monitoring procedures designed to assure the creditworthiness of
counterparties to such transactions.
LENDING PORTFOLIO SECURITIES
The Fund may lend portfolio securities to broker-dealers and other financial
institutions in amounts up to one-third of the market or other fair value for
its total assets, provided that such loans are callable at any time by the Fund
utilizing this investment technique and are at all times secured by collateral
held by the Fund at least equal to the market value, determined daily, of the
loaned securities. The Fund will continue to receive any income on the loaned
securities, and at the same time will earn interest on cash collateral (which
will be invested in short-term debt obligations) or a securities lending fee in
the case of collateral in the form of U.S. Government securities. A loan may be
terminated at any time by either the Fund or the borrower. Upon termination of a
loan, the borrower will be required to return the securities to the Fund, and
any gain or loss in the market price during the period of the loan would accrue
to the Fund. If the borrower fails to maintain the requisite amount of
collateral, the loan will automatically terminate, and the Fund may use the
collateral to replace the loaned securities while holding the borrower liable
for any excess of the replacement cost over the amount of the collateral.
When voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loan, in whole or in
part as may be appropriate, in order to exercise such rights if the matters
involved would have a material effect on the Fund's investment in the securities
which are the subject of the loan. The Fund may pay reasonable finders,
administrative and custodial fees in connection with loans of its portfolio
securities.
As with any extension of credit, there are risks of delay in recovery of the
loaned securities and in some cases loss of rights in the collateral should the
borrower of the securities fail financially. However, loans of portfolio
securities will be made only to firms considered by the Trust to be creditworthy
and when the Adviser believes the consideration to be earned justifies the
attendant risks.
WHEN-ISSUED SECURITIES
New issues of municipal and emerging market securities are often offered on a
when-issued basis, that is, delivery and payment for the securities normally
takes place 15 to 45 days or more after the date of the commitment to purchase.
The payment obligation and the interest rate that will be received on the
securities are each fixed at the time the buyer enters into the commitment. The
Income Fund will generally make a commitment to purchase such securities with
the intention of actually acquiring the securities. However, the Fund may sell
these securities before the settlement date if it is deemed advisable as a
matter of investment strategy. When the Income Fund purchases securities on a
when-issued basis, cash or liquid high quality debt securities equal in value to
commitments for the when-issued securities will be deposited in a segregated
account with the Trust's custodian bank. Such segregated securities either will
mature or, if necessary, be sold on or before the settlement date.
Securities purchased on a when-issued basis and the securities held in the
Income Fund are subject to changes in market value based upon the public
perception of the creditworthiness of the issuer and changes in the level of
interest rates which will generally result in similar changes in value; i.e.,
both experiencing appreciation when interest rates decline and depreciation when
interest rates rise. Therefore, to the extent the Income Fund remains
substantially fully invested at the same time that they have purchased
securities on a when-issued basis, there will be greater fluctuations in the net
asset values than if the Fund merely set aside cash to pay for when-issued
securities. In addition, there will be a greater potential for the realization
of capital gains, which are not exempt from federal income taxation. When the
time comes to pay for when-issued securities, the Income Fund will meet its
obligations from then available cash flow, the sale of securities or, although
it would not normally expect to do so, from the sale of the when-issued
securities themselves (which may have a value greater or less than the payment
obligation). The policies described in this paragraph are not fundamental and
may be changed without shareholder approval.
FOREIGN CURRENCY TRANSACTIONS
The Income 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.
The Fund will not 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 the Fund. The Trust's custodian banks
will segregate any asset, including equity securities and non-investment-grade
debt so long as the asset is liquid, unencumbered and marked to market daily in
an amount not less than the value of the Fund's total assets committed to
forward foreign currency exchange contracts entered into for the purchase of a
6
<PAGE>
foreign currency. If the value of the securities segregated declines, additional
cash or securities will be added so that the segregated amount is not less than
the amount of the Fund's commitments with respect to such contracts. Generally,
the Fund does not enter into forward contracts with terms longer than one year.
Foreign Currency Options. A foreign currency option provides the option buyer
with the right to buy or sell a stated amount of foreign currency at the
exercise price at a specified date or during the option period. A call option
gives its owner the right, but not the obligation, to buy the currency, while a
put option gives its owner the right, but not the obligation, to sell the
currency. The option seller (writer) is obligated to fulfill the terms of the
option sold if it is exercised. However, either seller or buyer may close its
position during the option period for such options any time prior to expiration.
A call rises in value if the underlying currency appreciates. Conversely, a
put rises in value if the underlying currency depreciates. While purchasing a
foreign currency option can protect the 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 the 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 the 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. The Fund may use foreign currency
futures contracts and options on such futures contracts. Through the purchase or
sale of such contracts, the 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, the Fund will maintain in a pledged account any asset,
including equity securities and non-investment-grade debt so long as the asset
is liquid, unencumbered and marked to market daily equal to the value of such
contracts.
To the extent required to comply with Commodity Futures Trading Commission
Regulation 4.5 and thereby avoid "commodity pool operator" status, the 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. The
Fund will not 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.
EMERGING MARKET SECURITIES
The Income Fund may invest in countries or regions with relatively low gross
national product per capita compared to the world's major economies, and in
countries or regions with the potential for rapid economic growth (emerging
markets). Emerging markets will include any country: (i) having an "emerging
stock market" as defined by the International Finance Corporation; (ii) with
low-to-middle-income economies according to the International Bank for
Reconstruction and Development (the "World Bank"); (iii) listed in World Bank
publications as developing; or (iv) determined by the Adviser to be an emerging
market as defined above. The Income Fund may also invest in securities of: (i)
companies the principal securities trading market for which is an emerging
market country; (ii) companies organized under the laws of, and with a principal
office in, an emerging market country, or (iii) companies whose principal
activities are located in emerging market countries.
The risks of investing in foreign securities may be intensified in the case
of investments in emerging markets. Securities of many issuers in emerging
markets may be less liquid and more volatile than securities of comparable
domestic issuers. Emerging markets also have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when a portion of the assets of the Funds are uninvested and
no return is earned thereon. The inability of the Fund to make intended security
purchases due to settlement problems could cause the Fund to miss attractive
investment opportunities. Inability to dispose of portfolio securities due to
settlement problems could result either in losses to the Fund due to subsequent
declines in value of portfolio securities or, if the Fund have entered into a
contract to sell the security,
7
<PAGE>
in possible liability to the purchaser. Securities prices in emerging markets
can be significantly more volatile than in the more developed nations of the
world, reflecting the greater uncertainties of investing in less established
markets and economies. In particular, countries with emerging markets may have
relatively unstable governments, present the risk of nationalization of
businesses, restrictions on foreign ownership, or prohibitions of repatriation
of assets, and may have less protection of property rights than more developed
countries. The economies of countries with emerging markets may be predominantly
based on only a few industries, may be highly vulnerable to changes in local or
global trade conditions, and may suffer from extreme and volatile debt burdens
or inflation rates. Local securities markets may trade a small number of
securities and may be unable to respond effectively to increases in trading
volume, potentially making prompt liquidation of substantial holdings difficult
or impossible at times. Securities of issuers located in countries with emerging
markets may have limited marketability and may be subject to more abrupt or
erratic price movements.
Certain emerging markets may require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in an
emerging market's balance of payments or for other reasons, a country could
impose temporary restrictions on foreign capital remittances. The Fund could be
adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation of capital, as well as by the application
to the Fund of any restrictions on investments.
Investments in certain foreign emerging market debt obligations may be
restricted or controlled to varying degrees. These restrictions or controls may
at times preclude investment in certain foreign emerging market debt obligations
and increase the expenses of the Fund.
ADDITIONAL RISK FACTORS. As a result of its investments in foreign
securities, the Fund may receive interest or dividend payments, or the proceeds
of the sale or redemption of such securities, in the foreign currencies in which
such securities are denominated. In that event, the Fund may convert such
currencies into dollars at the then current exchange rate. Under certain
circumstances, however, such as where the Adviser believes that the applicable
rate is unfavorable at the time the currencies are received or the Adviser
anticipates, for any other reason, that the exchange rate will improve, the Fund
may hold such currencies for an indefinite period of time.
In addition, the Fund may be required to receive delivery of the foreign
currency underlying forward foreign currency contracts it has entered into. This
could occur, for example, if an option written by the Fund is exercised or the
Fund is unable to close out a forward contract. The Fund may hold foreign
currency in anticipation of purchasing foreign securities. The Fund may also
elect to take delivery of the currencies underlying options or forward contracts
if, in the judgment of the Adviser, it is in the best interest of the Fund to do
so. In such instances as well, the Fund may convert the foreign currencies to
dollars at the then current exchange rate, or may hold such currencies for an
indefinite period of time.
While the holding of currencies will permit the Fund to take advantage of
favorable movements in the applicable exchange rate, it also exposes the Fund to
risk of loss if such rates move in a direction adverse to the Fund's position.
Such losses could reduce any profits or increase any losses sustained by the
Fund from the sale or redemption of securities, and could reduce the dollar
value of interest or dividend payments received. In addition, the holding of
currencies could adversely affect the Fund's profit or loss on currency options
or forward contracts, as well as its hedging strategies.
ZERO COUPON BONDS
The Income Fund may invest in debt obligations that do not make any interest
payments for a specified period of time prior to maturity or until maturity.
Even though such bonds do not pay current interest in cash, the Income Fund is
required to accrue interest income on such investments and to distribute such
amounts to shareholders. Thus, the Income Fund would not be able to purchase
income-producing securities to the extent of cash used to pay such distributions
and current income could be less than it otherwise would have been.
Alternatively, the Income Fund might liquidate investments in order to satisfy
these distribution requirements. The value of these obligations fluctuates more
in response to interest rate changes, if they are of the same maturity, than
does the value of debt obligations that make current interest payments.
LOAN PARTICIPATIONS AND ASSIGNMENTS
The Income Fund may also invest in fixed- or floating-rate loans arranged
through private negotiations between an issuer of emerging market debt
instruments and one or more financial institutions ("lenders"). Generally,
investments in loans would be in the form of loan participations and assignments
of loan portfolios from third parties.
When investing in a loan participation, the Fund will typically have the
right to receive payments from the lender to the extent that the lender receives
payments from the borrower. In addition, the Fund will be able to enforce its
rights through the lender, and not directly against the borrower. As a result,
in a loan participation the Fund assumes credit risk with respect to both the
borrower and the lender.
When the Fund purchases loan assignments from lenders, it will acquire direct
rights against the borrower, but these rights and the Fund's obligations may
differ from, and be more limited than, those held by the assigning lender. Loan
participations and assignments may be illiquid.
8
<PAGE>
INVESTMENT RESTRICTIONS
The investment restrictions described below are fundamental policies and may
not be changed without the approval of the lesser of (i) a majority of the
Fund's outstanding shares or (ii) 67% of the Fund's shares represented at a
meeting of Trust shareholders at which the holders of 50% or more of the Fund's
outstanding shares are present. The Fund may not:
(1) Make short sales of securities, unless at the time of sale the Fund owns
an equal amount of such securities.
(2) Purchase securities on margin, except that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities. The deposit or payment by the Fund of initial or
maintenance margin in connection with financial futures contracts or
related options transactions is not considered the purchase of a security
on margin.
(3) Write, purchase or sell puts, calls or combinations thereof, except that
the Fund may (a) write exchange-traded covered call options on portfolio
securities and enter into closing purchase transactions with respect to
such options, and may write exchange-traded covered call options on
foreign currencies and secured put options on securities and foreign
currencies and write covered call and secured put options on securities
and foreign currencies traded over the counter, and enter into closing
purchase transactions with respect to such options, (b) purchase
exchange- traded call options and put options, provided that the premiums
on all outstanding call and put options do not exceed 5% of its total
assets, and enter into closing sale transactions with respect to such
options, and (c) engage in financial futures contracts and related
options transactions, provided that the sum of the initial margin
deposits on the Fund's existing futures and related options positions and
the premiums paid for related options would not exceed 5% of its total
assets.
(4) Borrow in excess of 10% of the market or other fair value of its total
assets, or pledge its assets to an extent greater than 15% of the market
or other fair value of its total assets. Any such borrowings shall be
from banks and shall be undertaken only as a temporary measure for
administrative purposes. Deposits in escrow in connection with the
writing of covered call options, secured put options, or the purchase or
sale of financial futures contracts and related options are not deemed to
be a pledge or other encumbrance.
(5) Underwrite the securities of other issuers, except to the extent that in
connection with the disposition of its portfolio securities, the Fund may
be deemed to be an underwriter. The Fund may buy and sell securities
outside the United States which are not registered with the Commission or
marketable in the United States.
(6) Concentrate its assets in the securities of issuers which conduct their
principal business activities in the same industry. This restriction does
not apply to obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
(7) Make any investment in real estate, real estate limited partnerships,
commodities or commodities contracts, except that a Fund may (a) purchase
or sell readily marketable securities which are secured by interests in
real estate, including real estate investment and mortgage investment
trusts, and (b) engage in financial futures contracts and related options
transactions, provided that the sum of the initial margin deposits on the
Fund's futures and related options positions and the premiums paid for
related options would not exceed 5% of the Fund's total assets, and (c)
the Fund may enter into foreign currency transactions.
(8) Make loans, except that the Fund may (a) purchase bonds, notes,
debentures or similar obligations which are customarily purchased by
institutional investors, whether publicly distributed or not, (b) invest
in repurchase agreements, and (c) loan its portfolio securities in
amounts up to one-third of the market or other fair value of its total
assets, subject to restrictions described more fully above.
(9) Purchase securities of other investment companies, except that the Fund
may make such a purchase (a) in the open market involving no commission
or profit to a sponsor or dealer (other than the customary broker's
commission), provided that immediately thereafter (i) not more than 10%
of the Fund's total assets would be invested in such securities and (ii)
not more than 3% of the voting stock of another investment company would
be owned by the Fund, or (b) as part of a merger, consolidation, or
acquisition of assets.
(10) Invest more than 5% of its total assets in the securities of any one
issuer (except the U.S. Government) or purchase more than 10% of the
outstanding voting securities or more than 10% of the securities of any
class of any one issuer. With respect to 75% of its assets, the Fund will
limit its investments in the securities of any one foreign government,
its agencies and instrumentalities, to 5% of the Fund's total assets.
(11) Invest in securities of any issuer if any officer or Trustee of the Trust
or any officer or director of the Adviser owns more than 1/2 of 1% of the
outstanding securities of such issuer and all such persons own in the
aggregate more than 5% of the securities of such issuer.
(12) Invest in warrants or rights except where acquired in units or attached
to other securities.
9
<PAGE>
(13) Purchase securities for which market quotations are not readily
available, including but not limited to repurchase agreements having
maturities of more than seven days, or which are not deemed liquid
pursuant to procedures adopted by the Trustees if as a result of such
purchase more than 15% of the Fund's net assets would be invested in the
aggregate in such securities.
(14) Invest in interests in oil, gas, or other mineral exploration or
development programs.
(15) Issue senior securities as defined in the Investment Company Act of 1940
except to the extent that it is permissible to (a) borrow money from
banks pursuant to the Trust's investment restrictions regarding the
borrowing of money, and (b) enter into transactions involving forward
foreign currency contracts and options thereon, as described in the
Trust's Prospectus and this Statement of Additional Information.
If a percentage restriction on investment or utilization of assets as set
forth is adhered to at the time an investment is made, a later change in the
percentage resulting from a change in the value or costs of the Fund's assets
will not be considered a violation of the restriction except as provided in (11)
above.
PERFORMANCE
Performance information for the Fund (and each Class of the Fund) may appear
in advertisements, sales literature, or reports to shareholders or prospective
shareholders. Performance information in advertisements and sales literature may
be expressed as the "yield" and as "average annual total return" and "total
return."
Quotations of the yield for the Fund will be based on all investment income
per share earned during a particular 30-day period (including dividends and
interest), less expenses (including pro rata Trust expenses and expenses
applicable to each particular Class of the Fund) accrued during the period ("net
investment income"), and are computed by dividing net investment income by the
value of a share of the Fund or Class on the last day of the period, according
to the following formula:
YIELD = 2[( a-b + 1)(6)-1]
---
cd
where a = dividends and interest earned during the period by the Fund,
b = expenses accrued for the period (net of any reimbursements),
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends, and
d = the net asset value per share on the last day of the period.
For the 30-day period ended November 30, 1998, the yield for the Fund's Class
X shares, Class A shares, Class B shares and Class C shares was 11.25%, 9.96%,
10.12% and 10.21%, respectively.
The Fund's average annual total return quotation is computed in accordance
with a standardized method prescribed by rules of the Securities and Exchange
Commission. The average annual total return for the Fund for a specific period
is found by first taking a hypothetical $1,000 investment ("initial investment")
in the Fund's shares on the first day of the period, adjusting to deduct the
maximum sales charge, and computing the "redeemable value" of that investment at
the end of the period. The redeemable value is then divided by the initial
investment, and this quotient is taken to the Nth root (N representing the
number of years in the period) and 1 is subtracted from the result, which is
then expressed as a percentage. The calculation assumes that all income and
capital gains dividends paid by the Fund have been reinvested at net asset value
on the reinvestment dates during the period.
Calculation of the Fund's total return is subject to a standardized formula.
Total return performance for a specific period is calculated by first taking an
investment ("initial investment") in the Fund's shares on the first day of the
period, either adjusting or not adjusting to deduct the maximum sales charge,
and computing the "redeemable value" of that investment at the end of the
period. The total return percentage is then determined by subtracting the
initial investment from the redeemable value and dividing the remainder by the
initial investment and expressing the result as a percentage. The calculation
assumes that all income and capital gains dividends by the Fund have been
reinvested at net asset value on the reinvestment dates during the period. Total
return may also be shown as the increased dollar value of the hypothetical
investment over the period. Total return calculations that do not include the
effect of the sales charge would be reduced if such charge were included.
The manner in which total return will be calculated for public use is
described above. The following table illustrates average annual total return for
the Fund for the indicated periods ended November 30, 1998.
10
<PAGE>
AVERAGE ANNUAL TOTAL RETURN AS OF NOVEMBER 30, 1998
PERIODS ENDED
---------------------------------------
Fund 1 YEAR SINCE INCEPTION(1)
---- ------ ------------------
Income
Class X (8.63)% 5.19%
Class A N/A (17.05)%
Class B N/A (17.13)%
Class C N/A (13.95)%
- ----------
(1) The Income Fund Class X commenced operations on April 1, 1993 and Class A,
B and C commenced operations on March 27, 1998.
Performance information reflects only the performance of a hypothetical
investment in each class during the particular time period on which the
calculations are based. Performance information should be considered in light of
the Fund's investment objectives and policies, characteristics and quality of
the portfolio, and the market conditions during the given time period, and
should not be considered as a representation of what may be achieved in the
future.
The Trust 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.
PERFORMANCE COMPARISONS
The Fund or each Class of the Fund may, from time to time, include in
advertisements containing total return the ranking of those performance figures
relative to such figures for groups of mutual funds having similar investment
objectives as categorized by ranking services such as Lipper Analytical
Services, Inc., CDA Investment Technologies, Inc., Weisenberger Financial
Services, Inc., and rating services such as Morningstar, Inc. Additionally, a
Fund may compare its performance results to other investment or savings vehicles
(such as certificates of deposit) and may refer to results published in various
publications such as Changing Times, Forbes, Fortune, Money, Barrons, Business
Week, Stanger's Mutual Fund Monitor, The Stanger Register, Stanger's Investment
Adviser, The Wall Street Journal, New York Times, Consumer Reports, Registered
Representative, Financial Planning, Financial Services Weekly, Financial World,
U.S. News and World Report, Standard and Poor's The Outlook, Investor's Daily
and Personal Investor. The total return may be used to compare the performance
of the Fund against certain widely acknowledged outside standards or indices for
stock and bond market performance, such as the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500"), Standard & Poor's 400 Midcap Index (the "S&P
400"), Dow Jones Industrial Average, Europe Australia Far East Index ("EAFE"),
NAREIT Equity Index, Consumer Price Index, J.P. Morgan Emerging Markets Bond
Index, Lehman Brothers Municipal Bond Index, Lehman Brothers Aggregate Bond
Index, Lehman Brothers Corporate Index and Lehman Brothers T-Bond Index. The S&P
500 is a commonly quoted measure of stock market performance and represents
common stocks of companies of varying sizes segmented across 90 different
industries which are listed on the New York Stock Exchange, the American Stock
Exchange and traded over the NASDAQ National Market System.
PORTFOLIO TURNOVER
The Fund pays brokerage commissions for purchases and sales of portfolio
securities. A high rate of portfolio turnover generally involves a
correspondingly greater amount of brokerage commissions and other costs which
must be borne directly by a Fund and thus indirectly by its shareholders. It may
also result in the realization of larger amounts of short-term capital gains,
which are taxable to shareholders as ordinary income. If such rate of turnover
exceeds 100%, the Fund will pay more in brokerage commissions than would be the
case if it had lower portfolio turnover rates. Historical turnover rates can be
found under the heading "Financial Highlights" located in the Fund's Prospectus.
PORTFOLIO TRANSACTIONS
In effecting fund transactions for the Trust, the adviser adheres to the
Trust's policy of seeking best execution and price, determined as described
below, except to the extent it is permitted to pay higher brokerage commissions
for "brokerage and research services" as defined herein. The determination of
what may constitute best execution and price in the execution of a securities
transaction by a broker involves a number of considerations including, without
limitation, the overall direct net economic result to the Trust (involving both
price paid or received and any commissions and other costs paid), the efficiency
with which the
11
<PAGE>
transaction is effected, the ability to effect the transaction at all where a
large block is involved, availability of the broker to stand ready to execute
possibly difficult transactions in the future and the financial strength and
stability of the broker. Such considerations are judgmental and are weighed by
each adviser and the Subadviser in determining the overall reasonableness of
brokerage commissions paid by the Trust.
The adviser may cause the Trust to pay a broker an amount of commission for
effecting a securities transaction in excess of the amount of commission which
another broker or dealer would have charged for effecting that transaction if
such adviser determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker. As provided in Section 28(e) of the Securities Exchange
Act of 1934, "brokerage and research services" include advising as to the value
of securities, the advisability of investing in, purchasing or selling
securities, the availability of securities or purchasers or sellers of
securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts, and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Brokerage and research
services provided by brokers to the Trust are considered to be in addition to
and not in lieu of services required to be performed by each adviser under its
contract with the Trust and may benefit both the Trust and other accounts of
such adviser. Conversely, brokerage and research services provided by brokers to
other accounts of an adviser may benefit the Trust.
If the securities in which the Fund invests are traded primarily in the
over-the-counter market, where possible the Fund will deal directly with the
dealers who make a market in the securities involved unless better prices and
executions are available elsewhere. Such securities may be purchased directly
from the issuer. Bonds and money market instruments are generally traded on a
net basis and do not normally involve either brokerage commissions or transfer
taxes.
Some fund transactions are, subject to the Conduct Rules of the National
Association of Securities Dealers, Inc. and subject to obtaining best prices and
executions, effected through dealers (excluding Equity Planning) who sell shares
of the Trust.
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 share pro rata based on the
Trust's participation in the transaction. If the aggregated order is filled in
its entirety, it shall be allocated among the Adviser's accounts in accordance
with the allocation order, and if the order is partially filled, it shall be
allocated pro rata based on the allocation order. Notwithstanding the foregoing,
the order may be allocated on a basis different from that specified in the
allocation order if all accounts of the Adviser whose orders are allocated
receive fair and equitable treatment and the reason for such different
allocation is explained in writing and is approved in writing by the Adviser's
compliance officer as soon as practicable after the opening of the markets on
the trading day following the day on which the order is executed. If an
aggregated order is partially filled and allocated on a basis different from
that specified in the allocation order, no account that is benefited by such
different allocation may intentionally and knowingly effect any purchase or sale
for a reasonable period following the execution of the aggregated order that
would result in it receiving or selling more shares than the amount of shares it
would have received or sold had the aggregated order been completely filled. The
Trustees will annually review these procedures or as frequently as shall appear
appropriate.
For the fiscal years ended November 30, 1996, 1997 and 1998, brokerage
commissions paid by the Trust on Fund transactions totaled $3,104,255,
$2,269,745 and $2,904,276, respectively. Brokerage commissions of $1,564,683
paid during the fiscal year ended November 30, 1998, were paid on fund
transactions aggregating $989,159,000 executed by brokers who provided research
and other statistical and factual information.
Investment decisions for the Trust are made independently from those of the
other investment companies or accounts advised by either adviser. It may
frequently happen that the same security is held in the portfolio of more than
one fund. Simultaneous transactions are inevitable when several funds are
managed by the same investment adviser, particularly when the same security is
suited for the investment objectives of more than one fund. When two or more
funds advised by either adviser (or any subadviser) are simultaneously engaged
in the purchase or sale of the same security, the transactions are allocated
among the funds in a manner equitable to each fund. It is recognized that in
some cases this system could have a detrimental effect on the price or volume of
the security as far as the Trust is concerned. In other cases, however, it is
believed that the ability of the Trust to participate in volume transactions
will produce better executions for the Trust. It is the opinion of the Board of
Trustees of the Trust that the desirability of utilizing each adviser as
investment adviser to the Trust outweighs the disadvantages that may be said to
exist from simultaneous transactions.
12
<PAGE>
THE INVESTMENT ADVISER
The investment adviser to the Income Fund is Phoenix Investment Counsel, Inc.
("PIC"), which is located at 56 Prospect Street, Hartford, Connecticut
06115-0480. PIC also acts as the investment adviser for 14 other mutual funds,
as subadviser to three mutual funds, and as adviser to institutional clients.
PIC has acted as an investment adviser for over sixty years. PIC was originally
organized in 1932 as John P. Chase, Inc. As of December 31, 1998, PIC had
approximately $23.9 billion in assets under management. Philip R. McLoughlin, a
Trustee and officer of the Trust, is a director of PIC. All other executive
officers of the Trust are officers of PIC.
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning" or "Distributor"), a subsidiary of Phoenix
Investment Partners, Ltd. ("PXP"). PXP is a New York Stock Exchange traded
company that provides investment management and related services to
institutional investors, corporations and individuals through operating
subsidiaries. Phoenix Home Life Mutual Insurance Company ("Phoenix Home Life")
of Hartford, Connecticut is a majority shareholder of PXP. Phoenix Home Life is
in the business of writing ordinary and group life and health insurance and
annuities. Its principal offices are located at One American Row, Hartford,
Connecticut, 06115-2520. Equity Planning, a mutual fund distributor, acts as the
national distributor of the Trust's shares and as Financial Agent of the Trust.
The principal office of Equity Planning is located at 100 Bright Meadow
Boulevard, Enfield, Connecticut, 06082.
Phoenix Investment Partners, Ltd, is the 10th largest publicly traded
investment company in the nation, and has served investors for over 70 years. It
manages approximately $53.5 billion in assets 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; and Phoenix Investment
Counsel, Inc. (Goodwin, Hollister, and Oakhurst divisions) in Hartford, Sarasota
and Scotts Valley, CA, respectively.
The investment advisory agreement, approved by the Trustees, provides, that
the Trust will bear all costs and expenses (other than those specifically
referred to as being borne by the Adviser) incurred in the operation of the
Trust. Such expenses include, but shall not be limited to, all expenses incurred
in the operation of the Trust and any public offering of its shares, including,
among others, interest, taxes, brokerage fees and commissions, fees of Trustees
who are not employees of PIC or any of its affiliates, expenses of Trustees, and
shareholders' meetings, expenses of printing and mailing proxy soliciting
material, expenses of the insurance premiums for fidelity and other coverage,
expenses of the repurchase and redemption of shares, expenses of the issue and
sale of shares (to the extent not borne by Equity Planning under its agreement
with the Trust), expenses of printing and mailing share certificates
representing shares of the Trust, association membership dues, charges of
custodians, transfer agents, dividend disbursing agents and financial agents,
and bookkeeping, auditing and legal expenses. The Trust will also pay the fees
and bear the expense of registering and maintaining the registration of the
Trust and its shares with the Securities and Exchange Commission and registering
or qualifying its shares under state or other securities laws and the expense of
preparing and mailing prospectuses and reports to shareholders. If authorized by
the Trustees, the Trust will also pay for extraordinary expenses and expenses of
a non-recurring nature which may include, but shall not be limited to, the
reasonable cost of any reorganization or acquisition of assets and the cost of
legal proceedings to which the Trust is a party.
The Fund will pay expenses incurred in its own operation and will also pay a
portion of the Trust's general administration expenses allocated on the basis of
the asset values of the respective Funds.
For managing, or directing the management of, the investments of the Fund,
PIC is entitled to a fee, payable monthly, at the annual rate of: 0.55% of the
aggregate daily net asset values of the Fund up to $1 billion; 0.50% on such
values between $1 billion and $2 billion; and 0.45% on such value in excess of
$2 billion.
The investment advisory agreement provides that the applicable adviser will
reimburse the Trust for the amount, if any, by which the total operating and
management expenses of the Fund (including the investment adviser's
compensation, but excluding interest, taxes, brokerage fees and commissions and
extraordinary expenses) for any fiscal year exceed the level of expenses which
the Fund is permitted to bear under the most restrictive expense limitation
(which is not waived) imposed on mutual funds by any state in which shares of
the Fund are then qualified for sale. Currently the most restrictive state
expense limitation provisions limit such expenses of any Fund of the Trust to
2.5% of the first $30 million of average net assets, 2% of the next $70 million
of such net assets and 1.5% of such net assets in excess of $100 million. Such
reimbursement, if any, will be made by the applicable adviser to the Trust
within five days after the end of each month. In the event legislation were to
be adopted in each state so as to eliminate this restriction, the Trust would
take such action necessary to eliminate this expense limitation.
For its services to the Income Fund, PIC received a fee of $27,273, $31,318
and $35,019 for the fiscal years ended November 30, 1996, 1997 and 1998,
respectively.
For the fiscal year ended November 30, 1996, it was necessary that PIC bear
ordinary operating expenses of the Income Fund of $87,028. Accordingly, the fee
of $27,273 to which PIC would otherwise have been entitled was reduced to a loss
of $59,755. For the fiscal year ended November 30, 1997, it was necessary that
PIC bear ordinary operating expenses of the Income Fund of
13
<PAGE>
$140,966. Accordingly, the fee of $31,318 to which PIC would otherwise have been
entitled was reduced to a loss of $109,648. For the fiscal year ended November
30, 1998, it was necessary that PIC bear ordinary operating expenses of the
Income Fund of $185,168. Accordingly, the fee of $35,019 to which PIC would
otherwise have been entitled was reduced to a loss of $150,149.
The investment advisory agreement also provides that each adviser shall not
be liable to the Trust or to any shareholder of the Trust for any error of
judgment or mistake of law or for any loss suffered by the Trust or by any
shareholder of the Trust in connection with the matters to which the agreement
relates, except a loss resulting from willful misfeasance, bad faith, gross
negligence or reckless disregard on the part of such adviser in the performance
of its duties thereunder.
Provided it has been approved by a vote of the majority of the outstanding
shares of the Fund, the investment advisory agreement continues from year to
year with respect of such Fund so long as (1) such continuance is approved at
least annually by the Trustees or by a vote of the majority of the outstanding
shares of such Fund and (2) the terms and any renewal of the agreement with
respect to such Fund have been approved by the vote of a majority of the
Trustees who are not parties to the agreement or interested persons, as that
term is defined in the Investment Company Act of 1940, of the Trust or the
relevant adviser, cast in person at a meeting called for the purpose of voting
on such approval. On sixty days' written notice and without penalty the
agreement may be terminated as to the Trust or as to a Fund by the Trustees or
by the relevant adviser and may be terminated as to a Fund by a vote of the
majority of the outstanding shares of such Fund. The agreement automatically
terminates upon its assignment (within the meaning of the Investment Company
Act). The agreement provides that upon its termination, or at the request of the
relevant adviser, the Trust will eliminate all reference to Phoenix from its
name, and will not thereafter transact business in a name using the word
Phoenix.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined as of the close of
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Since the Trust does 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 Trust. The net asset value per share of the Fund is determined by
adding the values of all securities and other assets of the Fund, subtracting
liabilities, and dividing by the total number of outstanding shares of the Fund.
Assets and liabilities are determined in accordance with generally accepted
accounting principles and applicable rules and regulations of the Securities and
Exchange Commission. The total liability allocated to a class, plus that class's
distribution 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 the Fund has investments where market quotations are not readily
available, such investments are valued at the fair value thereof as determined
in good faith by the Trustees although the actual calculations may be made by
persons acting pursuant to the direction of the Trustees.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent investment
is $25. However, both the minimum initial and subsequent investment amounts are
$25 for investments pursuant to the "Investo-Matic" plan, a bank draft investing
program administered by Distributor, or pursuant to the Systematic Exchange
privilege or for an individual retirement account (IRA). In addition, there are
no subsequent investment minimum amounts in connection with the reinvestment of
dividend or capital gain distributions. Completed applications for the purchase
of shares should be mailed to: Phoenix Funds, c/o State Street Bank and Trust
Company, P.O. Box 8301, Boston, MA 02266-8301.
14
<PAGE>
The Trust has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased from investment dealers at a price equal to their net
asset value per share, plus a sales charge which, at the election of the
purchaser, may be imposed either (i) at the time of the purchase (the "initial
sales charge alternative") or (ii) on a contingent deferred basis (the "deferred
sales charge alternative"). Orders received by dealers prior to the close of
trading on the New York Stock Exchange are confirmed at the offering price
effective at that time, provided the order is received by the Authorized Agent
prior to its close of business.
The alternative purchase arrangements permit an investor to choose the method
of purchasing shares that is more beneficial given the amount of the purchase,
the length of time the investor expects to hold the shares, whether the investor
wishes to receive distributions in cash or to reinvest them in additional shares
of the Funds, and other circumstances. Investors should consider whether, during
the anticipated life of their investment in the 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.
Dividends paid by the Fund, 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 services fees at an annual rate
of 0.25% of the Fund's aggregate average daily net assets attributable to the
Class A Shares. In addition, certain purchases of Class A Shares qualify for
reduced initial sales charges. See the Funds' current Prospectus for additional
information.
CLASS B SHARES
Class B Shares do not incur a sales charge when they are purchased, but they
are subject to a sales charge if they are redeemed within five years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions. See the Funds' current Prospectus for additional
information.
Class B Shares are subject to ongoing distribution and services fees at an
aggregate annual rate of up to 1.00% of the Fund's aggregate average daily net
assets attributable to the Class B Shares. Class B Shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment is
made. The higher ongoing distribution and services fees paid by Class B Shares
will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than those related to Class A
Shares. Class B Shares will automatically convert to Class A Shares eight years
after the end of the calendar month in which the shareholder's order to purchase
was accepted, in the circumstances and subject to the qualifications described
in the Funds' Prospectus. The purpose of the conversion feature is to relieve
the holders of the Class B Shares that have been outstanding for a period of
time sufficient for the adviser and the Distributor to have been compensated for
distribution expenses related to the Class B Shares from most of the burden of
such distribution related expenses.
Class B Shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were issued. At the
end of this period, Class B Shares will automatically convert to Class A Shares
and will no longer be subject to the higher distribution and services fees. Such
conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge.
For purposes of conversion to Class A Shares, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares in
a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Fund account
(other than those in the sub-account) convert to Class A, an equal pro rata
portion of the Class B Share dividends in the sub-account will also convert to
Class A Shares.
CLASS C SHARES
Class C Shares are purchased without an initial sales charge but are subject
to a deferred sales charge if redeemed within one year of purchase. The deferred
sales charge may be waived in connection with certain qualifying redemptions.
Shares issued in conjunction with the automatic reinvestment of income
distributions and capital gain distributions are not subject to any sales
charges. Class C Shares are subject to ongoing distribution and services fees at
an aggregate annual rate of up to 1.00% of the Fund's aggregate average daily
net assets attributable to Class C Shares. See the Funds' current Prospectus for
more information.
15
<PAGE>
CLASS X SHARES
CLASS X SHARES ARE CURRENTLY CLOSED TO NEW INVESTORS.
CLASS A SHARES--REDUCED INITIAL SALES CHARGES
Investors choosing Class A Shares may be entitled to reduced sales charges.
The five ways in which sales charges may be avoided or reduced are described
below.
QUALIFIED PURCHASERS. If you fall within any one of the following categories,
you will not have to pay a sales charge on your purchase of Class A 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, Phoenix-Engemann Fund or Phoenix-Seneca Fund qualified plan; (11)
any Phoenix Home Life separate account which funds group annuity contracts
offered to qualified employee benefit plans; (12) any state, county, city,
department, authority or similar agency prohibited by law from paying a sales
charge; (13) any fully matriculated student in any U.S. service academy; (14)
any unallocated account held by a third party administrator, registered
investment adviser, trust company, or bank trust department which exercises
discretionary authority and holds the account in a fiduciary, agency, custodial
or similar capacity, if in the aggregate such accounts held by such entity equal
or exceed $1,000,000; (15) any person who is investing redemption proceeds from
investment companies other than the Phoenix Funds, Phoenix-Engemann Fund or
Phoenix-Seneca 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, Phoenix-Engemann Fund or
Phoenix-Seneca Fund trustee or director; provided that sales to persons listed
in (1) through (15) above are made upon the written assurance of the purchaser
that the purchase is made for investment purposes and that the shares so
acquired will not be resold except to the Fund; (17) purchasers of Class A
Shares bought through investment advisers and financial planners who charge an
advisory, consulting or other fee for their services and buy shares for their
own accounts or the accounts of their clients; (18) retirement plans and
deferred compensation plans and trusts used to fund those plans (including, for
example, plans qualified or created under sections 401(a), 403(b) or 457 of the
Internal Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker or agent or
other financial intermediary that has made special arrangements with the
Distributor for such purchases; or (19) 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 (19) may be charged a fee by the broker,
agent or financial intermediary for purchasing shares).
COMBINATION PURCHASE PRIVILEGE. Your purchase of any class of shares of this
or any other Affiliated Phoenix Fund (other than Phoenix Money Market Fund
Series Class A Shares), if made at the same time by the same "person," will be
added together to determine whether the combined sum entitles you to an
immediate reduction in sales charges. A "person" is defined in this and the
following sections as (a) any individual, their spouse and minor children
purchasing shares for his or their own account (including an IRA account)
including his or their own trust; (b) a trustee or other fiduciary purchasing
for a single trust, estate or single fiduciary account (even though more than
one beneficiary may exist); (c) multiple employer trusts or Section 403(b) plans
for the same employer; (d) multiple accounts (up to 200) under a qualified
employee benefit plan or administered by a third party administrator; or (e)
trust companies, bank trust departments, registered investment advisers, and
similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority and
which are held in a fiduciary, agency, custodial or similar capacity, provided
all shares are held of record in the name, or nominee name, of the entity
placing the order.
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 Funds.
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
16
<PAGE>
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 and C Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to
Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section 72(m)(7);
(c) as a mandatory distribution upon reaching age 70 1/2 under any retirement
plan qualified under Code Sections 401, 408 or 403(B) or resulting from the
tax-free return of an excess contribution to an IRA; (d) by 401(k) plans using
an approved participant tracking system for participant hardships, death,
disability or normal retirement, and loans which are subsequently repaid; (e)
based on the exercise of exchange privileges among Class B and C Shares of this
or any other Affiliated Phoenix Fund; (f) based on any direct rollover transfer
of shares from an established Affiliated Phoenix Fund qualified plan into an
Affiliated Phoenix Fund IRA by participants terminating from the qualified plan;
and (g) based on the systematic withdrawal program (Class B Shares only). If, as
described in condition (a) above, an account is transferred to an account
registered in the name of a deceased's estate, the CDSC will be waived on any
redemption from the estate account occurring within one year of the death. If
the Class B or C Shares are not redeemed within one year of the death, they will
remain subject to the applicable CDSC.
CONVERSION FEATURE--CLASS B SHARES
Class B Shares will automatically convert to Class A Shares of the same
Portfolio eight years after they are bought. Conversion will be on the basis of
the then prevailing net asset value of Class A and B Shares. There is no sales
load, fee or other charge for this feature. Class B Shares acquired through
dividend or distribution reinvestments will be 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 Trust were unable to obtain such assurances,
it might continue to make distributions if doing so would assist in complying
with its general practice of distributing sufficient income to reduce or
eliminate federal taxes otherwise payable by the Funds.
IMMEDIATE INVESTMENT
In order to obtain immediate investment of funds, initial and subsequent
purchases of shares of a Fund may also be made by wiring Federal Trusts (monies
held in a bank account with a Federal Reserve Bank) directly pursuant to the
following instructions:
(1) For initial investments, telephone the Trust at (800) 367-5877. Certain
information will be requested from you regarding the account, and an
account number will be assigned.
(2) Once an account number has been assigned, direct your bank to wire the
Federal Trusts to State Street Bank and Trust Company, Custody &
Shareholder Services Division, Boston, Massachusetts 02105, attention of
the appropriate Fund of the Phoenix Multi-Portfolio Fund. Your bank must
include the account number and the name(s) in which your account is
registered in its wire and also request a telephone advice. Your bank may
charge a fee to you for transmitting funds by wire.
17
<PAGE>
An order for shares of the Fund purchased with Federal Trusts will be
accepted on the business day Federal Trusts are wired provided the Federal
Trusts are received by 4:00 p.m. on that day; otherwise, the order will not be
accepted until the next business day. Shareholders should bear in mind that wire
transfers may take two or more hours to complete.
Promptly after an initial purchase of shares made by wiring Federal Trusts
directly, the shareholder should complete and mail to Equity Planning an Account
Application.
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.
EXCHANGES. Under certain circumstances, shares of any Phoenix Fund may be
exchanged for shares of the same Class of another Phoenix Fund or any other
Affiliated Phoenix Fund on the basis of the relative net asset values per share
at the time of the exchange. Exchanges are subject to the minimum initial
investment requirement of the designated Series or Fund, except if made in
connection with the Systematic Exchange privilege. Shareholders may exchange
shares held in book-entry form for an equivalent number (value) of the same
class of shares of any other Affiliated Phoenix Fund, if currently offered. On
exchanges with share classes that carry a contingent deferred sales charge, the
CDSC schedule of the original shares purchased continues to apply. The exchange
of shares is treated as a sale and purchase for federal income tax purposes (see
also "Dividends, Distributions and Taxes").
SYSTEMATIC EXCHANGES. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Phoenix Fund or any other 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. Exchanges will be based upon each Fund's net
asset value per share next computed after the close of business on the 10th day
of each month (or next succeeding business day), without sales charge.
DIVIDEND REINVESTMENT ACROSS ACCOUNTS. If you maintain an account balance of
at least $5,000, or $2,000 for tax qualified retirement benefit plans
(calculated on the basis of the net asset value of the shares held in a single
account), you may direct that any dividends and distributions paid with respect
to shares in that account be automatically reinvested in a single account of one
of the other Phoenix Funds or any other Affiliated Phoenix Fund at net asset
value. You should obtain a current prospectus and consider the objectives and
policies of each Fund carefully before directing dividends and distributions to
another Fund. Reinvestment election forms and prospectuses are available from
Equity Planning. Distributions may also be mailed to a second payee and/or
address. Requests for directing distributions to an alternate payee must be made
in writing with a signature guarantee of the registered owner(s). To be
effective 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 Trust may delay the mailing of a check for redemption
proceeds of Trust shares purchased with a check or via Invest-by-Phone service
until the Trust has assured itself that good payment has been collected for the
purchase of the shares, which may take up to 15 days. The Trust 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.
18
<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 Fund's current Prospectus
for more information.
BY MAIL
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds, c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the possession of the shareholder, they must be mailed or
presented, duly endorsed in the full name of the account, with a written request
to Equity Planning that the 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.
BY CHECK
Any shareholder may elect to redeem shares held in his Open Account by check.
Checks will be sent to an investor upon receipt by Equity Planning of a
completed application and signature card (attached to the application). If the
signature card accompanies an individual's initial account application, the
signature guarantee section of the form may be disregarded. However, the Trust
reserves the right to require that all signatures be guaranteed prior to the
establishment of a check writing service account. When an
19
<PAGE>
authorization form is submitted after receipt of the initial account
application, all signatures must be guaranteed regardless of account value.
Checks may be drawn payable to any person in an amount of not less than $500,
provided that immediately after the payment of the redemption proceeds the
balance in the shareholder's Open Account is $500 or more.
When a check is presented to Equity Planning for payment, a sufficient number
of full and fractional shares in the shareholder's Open Account will be redeemed
to cover the amount of the check. The number of shares to be redeemed will be
determined on the date the check is received by the Transfer Agent. Presently
there is no charge to the shareholder for the check writing service, but this
may be changed or modified in the future upon two weeks written notice to
shareholders. Checks drawn from Class B and Class C accounts are subject to the
applicable deferred sales charge, if any.
The checkwriting procedure for redemption enables a shareholder to receive
income accruing on the shares to be redeemed until such time as the check is
presented to Equity Planning for payment. Inasmuch as canceled checks are
returned to shareholders monthly, no confirmation statement is issued at the
time of redemption.
Shareholders utilizing withdrawal checks will be subject to Equity Planning's
rules governing checking accounts. A shareholder should make sure that there are
sufficient shares in his Open Account to cover the amount of any check drawn. If
insufficient shares are in the account and the check is presented to Equity
Planning on a banking day on which the Trust does not redeem shares (for
example, a day on which the New York Stock Exchange is closed), or if the check
is presented against redemption proceeds of an investment made by check which
has not been in the account for at least fifteen calendar days, the check may be
returned marked "Non-sufficient Funds" and no shares will be redeemed. A
shareholder may not close his account by a withdrawal check because the exact
value of the account will not be known until after the check is received by
Equity Planning.
REDEMPTION IN KIND
To the extent consistent with state and federal law, the Trust may make
payment of the redemption price either in cash or in kind. However, the Trust
has elected to pay in cash all requests for redemption by any shareholder of
record, limited in respect to each shareholder during any 90-day period to the
lesser of $250,000 or 1% of the net asset value of the Trust 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 a 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.
TAX SHELTERED RETIREMENT PLANS
Shares of the Trust 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.
DIVIDENDS, DISTRIBUTIONS AND TAXES
QUALIFICATION AS A REGULATED INVESTMENT COMPANY ("RIC")
Each Fund is treated as a separate entity for federal income tax purposes.
Each Fund has elected to qualify and intends to remain qualified as a RIC under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). In
each taxable year a Fund qualifies as a RIC, it (but not its shareholders) will
be relieved of federal income tax on that portion of its net investment income
and net capital gains that are currently distributed (or deemed distributed) to
its shareholders. To the extent that a Fund fails to distribute all of its
taxable income, it will be subject to corporate income tax (currently 35%) on
any retained ordinary investment income or short-term capital gains, and
corporate income tax (currently 35%) on any undistributed long-term capital
gains. Each Fund intends to make timely distributions, if necessary, sufficient
in amount to avoid the non-deductible 4% excise tax that is imposed on a RIC to
the extent that it fails to distribute, with respect to each calendar year, at
least 98% of its ordinary income for such calendar year and 98% of its net
capital gains as determined for a one-year period ending on October 31 of such
calendar year (or as determined on a fiscal year basis, if the Fund so elects).
The Code sets forth numerous criteria that must be satisfied in order for
each Fund to qualify as a RIC. Among these requirements, each Fund must meet the
following tests for each taxable year: (a) derive in each taxable year at least
90% of its gross income from dividends, interest and gains from the sale or
other disposition of securities; and (b) meet certain diversification
requirements imposed under the Code at the end of each quarter of the taxable
year. Under certain state tax laws, each Fund must
20
<PAGE>
also comply with the "short-short" test to qualify for treatment as a RIC for
state tax purposes. Under the "short-short" test the Fund must derive less than
30% of its gross income each taxable year as gains (without deduction for
losses) from the sale or other disposition of securities for less than three
months. If in any taxable year each Fund does not qualify as a regulated
investment company, all of its taxable income will be taxed at corporate rates.
In addition, if in any tax year the Fund does not qualify as a RIC for state tax
purposes a capital gain dividend may not retain its character in the hands of
the shareholder for state tax purposes.
In determining the Fund's gross income for purposes of the 30% test, any gain
realized by the Fund on a hedged position that is part of a "designated hedge"
will be offset by any decrease in value (whether realized or not) of any
offsetting position in the hedge during the period that the hedge was
outstanding. Thus, only the net gain (if any) from the hedge will be included in
the computation of the 30% test. At the present time, however, it is not clear
whether or to what extent such hedging exception will be available to the Funds'
contemplated hedging transactions. To the extent that the hedging exception is
not available, gains realized by the Funds from actual dispositions of futures
or forward contracts or options will be included in the calculation of the 30%
test if less than three months has elapsed between the date such instruments are
acquired and the date of their sale. This provision may limit the Funds' ability
to engage in such transactions.
Section 988 of the Code provides special rules for foreign currency
transactions under which foreign currency gains or losses from forward
contracts, futures contracts that are not required to be marked-to-market and
unlisted options generally will be treated as ordinary income or loss.
In addition to meeting the 90% and 30% tests, in order to qualify as a RIC
each Fund will be required to distribute annually to its shareholders as
dividends (not including "capital gains dividends," discussed below) at least
90% of its ordinary investment income, short-term capital gains and tax exempt
income, with certain modifications. Each Fund intends to make distributions to
shareholders that will be sufficient to meet the 90% distribution requirement.
Each Fund must also diversify its holdings so that, at the close of each
quarter of its taxable year, (i) at least 50% of the value of its total assets
consists of cash, cash items, U.S. Government Securities, and other securities
limited generally with respect to any one issuer to not more than 5% of the
total assets of that Fund and not more than 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its assets
is invested in the securities of any issuer (other than U.S. Government
Securities). For purposes of these diversification tests, the issuer of an
option on a particular security is the issuer of the underlying security. In the
case of a stock index futures contract or option thereon, the position taken by
the Internal Revenue Service in a recent letter ruling is that the issuers of
the stocks underlying the index, in proportion to the weighing of the stocks in
the computation of the index, are treated as the issuers of the instrument
irrespective of whether the underlying index is broad- based or narrow-based. In
the case of a foreign currency option, futures contract or forward contract,
however, there is as yet no specific guidance in the tax law concerning who will
be treated as the issuer of such instruments or how they will be valued for
purposes of these diversification tests.
Each Fund intends to comply with all of the foregoing criteria for
qualification as a RIC; however, there can be no assurance that the Fund will so
qualify and continue to maintain its status as a RIC. If a Fund were unable for
any reason to maintain its status as a RIC for any taxable year, adverse tax
consequences would ensue.
TAXATION OF SHAREHOLDERS
Distributions by the Income Fund from ordinary investment income and net
short-term capital gains will be taxed to the shareholders as ordinary dividend
income to the extent of the earnings and profits of the Fund. Ordinary income
dividends received by corporate shareholders will qualify for the 70% dividends-
received deduction to the extent the Funds designate such amounts as qualifying
dividend distributions; however, the portion that may be so designated is
subject to certain limitations. As a result of these limitations, it is not
currently anticipated that certain distributions will be qualifying dividend
distributions. Distributions by a Fund that are designated as capital gain
distributions will be taxed to the shareholders as capital gains, and will not
be eligible for the corporate dividends-received deduction.
Dividends declared by the Funds to shareholders of record in October,
November or December will be taxable to such shareholders in the year that the
dividend is declared, even if it is not paid until the following year (so long
as it is actually paid by the Fund prior to February 1). Also, shareholders will
be taxable on the amount of long-term capital gains designated by a Fund by
written notice mailed to shareholders within 60 days after the close of the
year, even if such amounts are not actually distributed to them. Shareholders
will be entitled to claim a credit against their own federal income tax
liability for taxes paid by the Fund on such undistributed gains, if any. If a
shareholder receives a long-term capital dividend with respect to any share and
such share is held for less than 6 months, any loss on sale or exchange of such
share will be long-term capital loss to the extent of long-term capital dividend
payments.
Dividends (other than exempt interest dividends) and capital gain
distributions will be taxable to shareholders as described above whether
received in cash or in shares under a Fund's distribution reinvestment plan.
With respect to distributions received in cash or reinvested in shares purchased
on the open market, the amount of the distribution for tax purposes will be the
amount of cash
21
<PAGE>
distributed or allocated to the shareholder. With respect to distributions made
in shares issued by the Fund as a stock dividend, the amount of the distribution
will be the fair market value of the shares on the payment date.
Shareholders should be aware that the price of shares of a Fund that are
purchased prior to a dividend or distribution by the Fund may reflect the amount
of the forthcoming dividend or distribution. Such dividend or distribution, when
made, would be taxable to shareholders under the principles discussed above even
though the dividend or distribution may reduce the net asset value of shares
below a shareholder's cost and thus represent a return of a shareholder's
investment in an economic sense.
SALE OR EXCHANGE OF FUND SHARES
Gain or loss will be recognized by a shareholder upon the sale of his shares
in a Fund or upon an exchange of his shares in a Fund for shares in another
Fund. Provided that the shareholder is not a dealer in such shares, such gain or
loss will generally be treated as capital gain or loss, measured by the
difference between the adjusted basis of the shares and the amount realized
therefrom. Under current law, capital gains (whether long-term or short-term) of
individuals and corporations are fully includable in income and are taxed at the
regular federal income tax rates applicable to the shareholder's ordinary
income. Capital losses (whether long-term or short-term) may offset capital
gains plus (for non-corporate taxpayers only) up to $3,000 per year of ordinary
income.
TAX INFORMATION
Written notices will be sent to shareholders regarding the tax status of all
distributions made (or deemed to have been made) during each taxable year,
including the tax-exempt portion thereof (if applicable), the amount qualifying
for the dividends-received deduction (if applicable) and the amount designated
as capital gains dividends, undistributed capital gains (if any), tax credits
(if applicable), and cumulative return of capital (if any).
BACKUP WITHHOLDING
The Funds may be required to withhold federal income tax at a rate of 31% on
reportable dividends paid to certain noncorporate shareholders. Generally,
shareholders subject to such backup withholding will be those for whom a
taxpayer identification number and certain required certifications are not filed
with the Funds or who, to a Fund's knowledge, have furnished an incorrect
number.
FOREIGN SHAREHOLDERS
Dividends paid by a Fund from net investment income and net realized
short-term capital gains to a shareholder who is a nonresident alien individual,
a foreign trust or estate, a foreign corporation or a foreign partnership (a
"foreign shareholder") will be subject to United States withholding tax at a
rate of 30% unless a reduced rate of withholding or a withholding exemption is
provided under applicable treaty law. Foreign shareholders are urged to consult
their own tax advisors concerning the applicability of the United States
withholding tax and any foreign taxes.
OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences, described above,
applicable to an investment in a Fund, there may be state or local tax
considerations and estate tax considerations applicable to the circumstances of
a particular investor. The foregoing discussion is based upon the Code, judicial
decisions and administrative regulations, rulings and practices, all of which
are subject to change and which, if changed, may be applied retroactively to a
Fund, its shareholders and/or its assets. No rulings have been sought from the
Internal Revenue Service with respect to any of the tax matters discussed above.
The information included in the Prospectus with respect to taxes, in
conjunction with the foregoing, is a general and abbreviated summary of
applicable provisions of the Code and Treasury regulations now in effect as
currently interpreted by the courts and the Internal Revenue Service. The Code
and these Regulations, as well as the current interpretations thereof, may be
changed at any time by legislative, judicial, or administrative action.
THE DISTRIBUTOR
Equity Planning, a registered broker-dealer which is an indirect less than
wholly-owned subsidiary of Phoenix Home Life Mutual Insurance Company, serves as
Distributor of the Trust's shares. Philip R. McLoughlin, a Trustee and President
of the Trust, is a director and officer of Equity Planning. Michael E. Haylon,
an officer of the Trust, is a director of Equity Planning; and G. Jeffrey Bohne,
Nancy G. Curtiss, William R. Moyer, and Leonard J. Saltiel, officers of the
Trust, are officers of Equity Planning.
The Trust and Equity Planning have entered into distribution agreements under
which Equity Planning has agreed to use its best efforts to find purchasers for
Trust shares and the Trust has granted to Equity Planning the exclusive right to
purchase from the Trust and resell, as principal, shares needed to fill
unconditional orders for Trust shares. Equity Planning may sell Trust shares
through its registered representatives or through securities dealers with whom
it has sales agreements. Equity Planning may also sell Trust shares pursuant to
sales agreements entered into with bank-affiliated securities brokers who,
acting as agent for their customers, place orders for Trust shares with Equity
Planning. Although the Glass-Steagall Act prohibits banks and bank affiliates
from engaging in the business of underwriting, distributing or selling
securities (including mutual fund shares), banking regulators
22
<PAGE>
have indicated that such institutions are not prohibited from purchasing mutual
fund shares upon the order and for the account of their customers. If, because
of changes in law or regulations, or because of new interpretations of existing
law, it is determined that agency transactions of banks and bank affiliated
securities brokers are not permitted under the Glass-Steagall Act, the Trustees
will consider what action, if any, is appropriate. In addition, state securities
laws on this issue may differ from federal law, and banks and bank affiliates
may be required to register as securities dealers pursuant to state law. It is
not anticipated that termination of sales agreements with banks and bank
affiliated securities brokers would result in a loss to their customers or a
change in the net asset value per share of a Fund of the Trust.
For its services under the distribution agreements, Equity Planning receives
sales charges on transactions in Trust shares and retains such charges less the
portion thereof allowed to its registered representatives and to securities
dealers and securities brokers with whom it has sales agreements. In addition,
Equity Planning may receive payments from the Trust pursuant to the Distribution
Plans described below. For the fiscal years ended November 30, 1996, 1997 and
1998, purchasers of shares of the Trust paid aggregate sales charges of
$1,599,637, $2,114,382 and $4,260,271, respectively, of which the Distributor
received net commission of $258,916, $494,335 and $545,050, respectively, for
its services, the balance being paid to dealers. For the fiscal year ended
November 30, 1998, the distributor received net commission of $122,184 for Class
A Shares and deferred sales charges of $422,867 for Class B and C Shares.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
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 4.75% 4.99% 4.25%
$50,000 but under $100,000 4.50 4.71 4.00
$100,000 but under $250,000 3.50 3.63 3.00
$250,000 but under $500,000 3.00 3.09 2.75
$500,000 but under $1,000,000 2.00 2.04 1.75
$1,000,000 or more None None None
</TABLE>
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sale price of
Class C Shares sold by such dealers. Your broker, dealer or investment adviser
may also charge you additional commissions or fees for their services in selling
shares to you provided they notify the Distributor of their intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of the
Trust and/or for providing other shareholder services. Depending on the nature
of the services, these fees may be paid either from the Trust 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. Any dealer who
receives more than 90% of a sales charge may be deemed to be an "underwriter"
under the Securities Act of 1933.
23
<PAGE>
ADMINISTRATIVE SERVICES
Equity Planning also acts as administrative agent of the Trust and as such
performs administrative, bookkeeping and pricing functions. For its services,
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,
plus (2) the documented costs to Equity Planning to provide financial reporting
and tax services and to oversee the subagent's performance. The current fee
schedule of PFPC, Inc. is based upon the average of the aggregate daily net
asset values of the Trust, at the following incremental annual rates.
First $200 million .085%
$200 million to $400 million .05%
$400 million to $600 million .03%
$600 million to $800 million .02%
$800 million to $1 billion .015%
Greater than $1 billion .0125%
Percentage rates are applied to the aggregate daily net asset values of the
Trust, PFPC, Inc. also charges minimum fees and additional fees to each
additional class of fund shares. Equity Planning retains PFPC, Inc. as subagent
for each of the funds for which Equity Planning serves as administrative 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 administrative agent on the basis of the
relative net assets of each fund. As a result, the PFPC, Inc. charges to the
Trust are expected to be slightly less than the amount that would be found
through direct application of the table illustrated above. For services to the
Trust during the fiscal years ended November 30, 1996, 1997 and 1998, the
Financial Agent received fees of $243,021, $541,814 and $654,165, respectively.
DISTRIBUTION PLANS
The Trust has adopted separate amended and restated distribution plans under
Rule 12b-1 of the 1940 Act for each class of shares of each Fund of the Trust
(the "Class A Plan," the "Class B Plan," the "Class C Plan," and collectively
the "Plans"). The Plans permit the Trust to pay for services and 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.
Pursuant to the Plans, the Trust shall pay the Distributor for actual
expenses of the Distributor of 0.25% of the average daily net assets of the
Trust's average daily net assets for providing services to shareholders,
including assistance with inquiries related to shareholder accounts (the
"Service Fee"). Pursuant to the Class B Plan, the Trust may reimburse the
Distributor monthly for actual expenses of the Distributor up to 0.75% annually
of the average daily net assets of each Fund's Class B Shares. Pursuant to the
Class C Plan, the Trust may reimburse the Distributor monthly for actual
expenses of the Distributor up to 0.75%, 0.75% and 0.75% annually of the average
daily net assets of the Emerging Markets, Income, and International Funds' Class
C Shares, respectively.
Expenditures under the Plans shall consist of: (i) commissions to sales
personnel for selling shares of the Trust (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 Trust's 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 Trust.
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 Trust shares which are reallowed to such firms. To the extent that the entire
amount of the Service Fee is not paid to such firms, the balance will serve as
compensation for personal and account maintenance services furnished by the
Distributor.
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
24
<PAGE>
substantial marketing support such as internal wholesaling through dedicated
personnel, internal communications and mass mailings.
Each Plan requires that at least quarterly the Trustees of the Trust review a
written report with respect to the amounts expended under the Plans and the
purposes for which such expenditures were made. While the Plans are in effect,
the Trust will be required to commit the selection and nomination of candidates
for Trustees who are not interested persons of the Trust to the discretion of
other Trustees who are not interested persons. Each Plan continues in effect
from year to year only provided such continuance is approved annually in advance
by votes of the majority of both (a) the Board of Trustees of the Trust and (b)
the Rule 12b-1 Trustees, cast in person at a meeting called for the purpose of
voting on the Plan and any agreements related to the Plan.
For the fiscal year ended November 30, 1998 the Trust paid Rule 12b-1 Fees in
the amount of $2,708,081, of which the Distributor received $1,025,897,
unaffiliated broker-dealers received $1,404,016 and W.S. Griffith & Co., Inc.,
an affiliate, received $278,168. The Rule 12b-1 payments were used for (1)
compensating dealers, $3,182,864, (2) compensating sales personnel, $1,736,570,
(3) advertising, $815,800, (4) printing and mailing of prospectuses to other
than current shareholders, $60,074, (5) service costs, $236,653 and (6) other,
$314,389. No interested person of the Trust and no Trustee who is not an
interested person of the Trust, 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.
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 the various duties imposed on Trustees by
the Investment Company Act of 1940 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 Trustee and executive officer is 56 Prospect Street, Hartford,
Connecticut, 06115-0480.
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Robert Chesek (64) Trustee Trustee/Director (1981-present) and Chairman (1989-1994), Phoenix
49 Old Post Road Funds. Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff &
Wethersfield, CT 06109 Phelps Institutional Mutual Funds (1996-present). Vice President,
Common Stock, Phoenix Home Life Mutual Insurance Company
(1980-1994).
E. Virgil Conway (69) 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 and Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Duff & Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present). Member,
Audit Committee of the City of New York (1981-1996). Advisory
Director, Blackrock Fannie Mae Mortgage Securities Fund
(1989-1996) and Fund Directions (1993-1998). Chairman, Financial
Accounting Standards Advisory Council (1992-1995).
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Harry Dalzell-Payne (69) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
330 East 39th Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Apartment 29G Institutional Mutual Funds (1996-present). Director, Duff & Phelps
New York, NY 10016 Utilities Tax-Free Income Inc. and Duff & Phelps Utility and
Corporate Bond Trust Inc. (1995-present). Director, Farragut
Mortgage Co., Inc. (1991-1994). Formerly a Major General of the
British Army.
*Francis E. Jeffries (68) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
6585 Nicholas Blvd Phoenix-Aberdeen Series Inc. and Phoenix Duff & Phelps
Apt. 1601 Institutional Mutual Funds (1996-present). Director, Duff & Phelps
Naples, FL 33963 Utilities Income Inc. (1987-present), Duff & Phelps Utilities
Tax-Free Income Inc. (1991-present) and Duff & Phelps Utility and
Corporate Bond Trust Inc. (1993-present). Director, The Empire
District Electric Company (1984-present). Director (1989-1997),
Chairman of the Board (1993-1997), President (1989-1993), and
Chief Executive Officer (1989-1995), Phoenix Investment Partners,
Ltd.
Leroy Keith, Jr. (60) Trustee Chairman and Chief Executive Officer, Carson Products Company
Chairman and Chief (1995-present). Director/Trustee, Phoenix Funds (1980-present).
Executive Officer Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Carson Product Company Institutional Mutual Funds (1996-present). Director, Equifax Corp.
64 Ross Road (1991-present) and Evergreen International Fund, Inc.
Savannah, GA 30750 (1989-present). Trustee, Evergreen Liquid Trust, Evergreen Tax
Exempt Trust, Evergreen Tax Free Fund, Master Reserves Tax Free
Trust, and Master Reserves Trust. President, Morehouse College
(1987-1994). Chairman and Chief Executive Officer, Keith Ventures
(1992-1994).
*Philip R. McLoughlin (52) Trustee and Chairman (1997-present), Director (1995-present), Vice Chairman
President (1995-1997) and Chief Executive Officer (1995-present), Phoenix
Investment Partners, Ltd. Director (1994-present) and Executive
Vice President, Investments (1988-present), Phoenix Home Life
Mutual Insurance Company. Director/Trustee and President, Phoenix
Funds (1989-present). Trustee and President, Phoenix-Aberdeen
Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Duff & Phelps Utilities Tax-Free Income
Inc. (1995-present) and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1995-present). Director (1983-present) and Chairman
(1995-present), Phoenix Investment Counsel, Inc. Director
(1984-present) and President (1990- present), Phoenix Equity
Planning Corporation. Director (1993-present), Chairman
(1993-present) and Chief Executive Officer (1993-1995), National
Securities & Research Corporation. Director, Phoenix Realty Group,
Inc. (1994-present), Phoenix Realty Advisors, Inc. (1987-present),
Phoenix Realty Investors, Inc. (1994-present), Phoenix Realty
Securities, Inc. (1994-present), PXRE Corporation (Delaware)
(1985-present), and World Trust Fund (1991-present). Director and
Executive Vice President, Phoenix Life and Annuity Company
(1996-present). Director and Executive Vice President, PHL
Variable Insurance Company (1995-present). Director, Phoenix
Charter Oak Trust Company (1996-present). Director and Vice
President, PM Holdings, Inc. (1985-present). Director and
President, Phoenix Securities Group, Inc. (1993-1995). Director
(1992-present) and President (1992-1994), W.S. Griffith & Co.,
Inc. Director, Townsend Financial Advisers, Inc. (1992-present),
Director, PHL Associates, Inc. (1995-present).
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Everett L. Morris (70) Trustee Vice President, W.H. Reaves and Company (1993-present). Director/
164 Laird Road Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
Colts Neck, NJ 07722 Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Duff & Phelps Utilities Tax-Free Income
Inc. (1991-present) and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1993-present).
*James M. Oates (52) Trustee Chairman, IBEX Capital Markets, Inc. (formerly IBEX Capital
Managing Director Markets LLC) (1997-present). Managing Director, Wydown Group
The Wydown Group (1994-present). Director, Phoenix Investment Partners, Ltd.
IBEX Capital Markets, Inc. (1995-present). Director/Trustee, Phoenix Funds (1987-present).
60 State Street Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Suite 950 Institutional Mutual Funds (1996-present). Director, AIB Govett
Boston, MA 02109 Funds (1991-present), Blue Cross and Blue Shield of New Hampshire
(1994-present), Investors Financial Service Corporation
(1995-present), Investors Bank & Trust Corporation
(1995-present), Plymouth Rubber Co. (1995-present), Stifel
Financial (1996-present), Command Systems, Inc. (1998-present)
and Connecticut River Bancorp (1998-present). Vice Chairman,
Massachusetts Housing-Partnership (1998-present). Member, Chief
Executives Organization (1996-present). Director (1984-1994),
President (1984-1994) and Chief Executive Officer (1986-1994),
Neworld Bank.
*Calvin J. Pedersen (57) Trustee Director (1986-present), President (1993-present) and Executive
Phoenix Duff & Phelps Vice President (1992-1993), Phoenix Investment Partners, Ltd.
Corporation Director/Trustee, Phoenix Funds (1995-present). Trustee,
55 East Monroe Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Suite 3600 Institutional Mutual Funds (1996-present). President and Chief
Chicago, IL 60603 Executive Officer, Duff & Phelps Utilities Tax-Free Income Inc.
(1995-present), Duff & Phelps Utilities Income Inc.
(1994-present) and Duff & Phelps Utility and Corporate Bond Trust
Inc. (1995-present).
Herbert Roth, Jr. (70) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
P.O. Box 909 Institutional Mutual Funds (1996-present). Director, Boston
Sherborn, MA 01770 Edison Company (1978-present), Phoenix Home Life Mutual Insurance
Company (1972-1998), 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, Key
Energy Group (oil rig service) (1988-1994). Director/Trustee, the
National Affiliated Investment Companies (until 1993).
Richard E. Segerson (53) Trustee Managing Director, Northway Management Company (1998-present).
102 Valley Road Director/Trustee, Phoenix Funds (1993-present). Trustee,
New Canaan, CT 07840 Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Managing Director,
Mullin Associates (1993-1998).
Lowell P. Weicker, Jr. (67) Trustee Trustee/Director, Phoenix Funds (1995-present). Trustee,
731 Lake Avenue Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Greenwich, CT 06830 Institutional Mutual Funds (1996-present). Director, UST Inc.
(1995-present), HPSC Inc. (1995-present), Duty Free International,
Inc. (1997-present) and Compuware (1996-present) and Burroughs
Wellcome Fund (1996-present). Visiting Professor, University of
Virginia (1997-present). Chairman, Dresing, Lierman, Weicker
(1995-1996). Governor of the State of Connecticut (1991-1995).
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Michael E. Haylon (41) Executive Director and Executive Vice President--Investments, Phoenix
Vice Investment Partners, Ltd. (1995-present). Executive Vice
President President, Phoenix Funds (1993-present) and Phoenix-Aberdeen
Series Fund (1996-present). Executive Vice President
(1997-present), Vice President (1996-1997), Phoenix Duff & Phelps
Institutional Mutual Funds. Director (1994-present), President
(1995-present), Executive Vice President (1994-1995), Vice
President (1991-1994), Phoenix Investment Counsel, Inc. Director
(1994-present), President (1996-present), Executive Vice President
(1994-1996), Vice President (1993-1994), National Securities &
Research Corporation. Director, Phoenix Equity Planning
Corporation (1995-present). Senior Vice President, Securities
Investments, Phoenix Home Life Mutual Insurance Company
(1993-1995). Various other positions with Phoenix Home Life Mutual
Insurance Company (1990-1993).
John F. Sharry (47) Executive Managing Director, Retail Distribution, Phoenix Equity Planning
Vice Corporation (1995-present). Executive Vice President, Phoenix
President Funds (1998-present) and Phoenix-Aberdeen Series Fund
(1998-present). Managing Director, Director and National Sales
Manager, Putnam Mutual Funds (until 1995).
Gail P. Seneca (45) Senior Vice Senior Vice President, Phoenix Strategic Allocation Fund, Inc.
President (1998-present), Phoenix Multi-Portfolio Fund (1998-present).
Managing Director, Equities, Phoenix Investment Counsel, Inc.
(1998-present). Senior Vice President, The Phoenix Edge Series
Fund (1998-present) and Phoenix Strategic Equity Series Fund
(1998-present). President and Chief Executive and Investment
Officer, Seneca Capital Management LLC (1996-present). Managing
General Partner and Chief Executive and Investment Officer,
GMG/Seneca Capital Management LP (1989-present). President and
Trustee, Phoenix-Seneca Funds (1996-present). General Partner,
Genesis Merchant Group. LP (1990-present). President, GenCap, Inc.
(1994-present).
James D. Wehr (41) Senior Vice Senior Vice President (1998-present), Managing Director, Fixed
President Income (1996-1998), Vice President (1991-1996), Phoenix Investment
Counsel, Inc. Senior Vice President (1998-present), Managing Director,
Fixed Income (1996-1998), Vice President (1993-1996), National
Securities & Research Corporation. Senior Vice President
(1997-present), Vice President (1988-1997) Phoenix Multi-Portfolio
Fund; Senior Vice President (1997-present), Vice President (1990-1997)
Phoenix Series Fund; Senior Vice President (1997-present), Vice
President (1991-1997) The Phoenix Edge Series Fund; Senior Vice
President (1997-present), Vice President (1993-1997) Phoenix California
Tax Exempt Bonds, Inc., and Senior Vice President (1997-present), Vice
President (1996-1997) Phoenix Duff & Phelps Institutional Mutual Funds.
Senior Vice President (1997-present) Phoenix Multi-Sector Fixed Income
Fund, Inc., Phoenix Multi-Sector Short Term Bond Fund, Phoenix Income
and Growth Fund and Phoenix Strategic Allocation Fund, Inc. Managing
Director, Public Fixed Income, Phoenix Home Life Insurance Company
(1991-1995).
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
David L. Albrycht (37) Vice Managing Director, Fixed Income (1996-present) and Vice President
President (1995-1996), Phoenix Investment Counsel, Inc. Managing Director,
Fixed Income (1996-present) and Investment Officer (1994-1996),
National Securities & Research Corporation. Vice President,
Phoenix Multi-Portfolio Fund (1993-present), Phoenix Multi-Sector
Short Term Bond Fund (1993-present), Phoenix Multi-Sector Fixed
Income Fund, Inc. (1994-present), The Phoenix Edge Series Fund
(1997-present) and Phoenix Series Fund (1997-present). Fund
Manager, Phoenix Home Life Mutual Insurance Company (1994-1995).
Timothy M. Heaney (33) Vice Managing Director, Fixed Income (1997-present), Director, Fixed
President Income Research (1996-1997), Investment Analyst (1995-1996),
Phoenix Investment Counsel, Inc. Vice President, Phoenix
Multi-Portfolio Fund (1996-present). Managing Director, Fixed
Income (1997-present), Director, Fixed Income Research
(1996-1997), National Securities & Research Corporation.
Investment Analyst, Phoenix Home Life Mutual Insurance Company
(1992-1994). Vice President, Phoenix California Tax Exempt Bonds,
Inc. (1996-present) and Duff & Phelps Utilities Tax Free Income,
Inc. (1997-present).
Ron K. Jacks (33) Vice Managing Director, Equities, Phoenix Investment Counsel, Inc.
President (1998-present). Vice President, The Phoenix Edge Series Fund
(1998-present), Phoenix Strategic Equity Series Fund
(1998-present), and Phoenix Multi-Portfolio Fund (1998-present).
Secretary, Phoenix-Seneca Funds (1996-1998). Trustee,
Phoenix-Seneca Funds (1996-1997). General Partner and Equity
Portfolio Manager, GMG/Seneca Capital Management LP
(1995-present). Equity Portfolio Manager, Seneca Capital
Management LLC (1996-present).
Peter S. Lannigan (38) Vice Managing Director, Fixed Income (1997-present), Director, Fixed
President Income Research (1996-1997), Vice President (1995-1996), Phoenix
Investment Counsel, Inc. Managing Director, Fixed Income
(1998-present), Director, Fixed Income Research (1996-present),
National Securities & Research Corporation, Inc. Vice President,
Phoenix Multi-Portfolio Fund (1995-present). Director, Public
Fixed Income, Phoenix Home Life Mutual Insurance Company
(1993-1995). Various positions with Standard & Poor's Corporation
(1989-1993).
William R. Moyer (54) Vice Senior Vice President and Chief Financial Officer, Phoenix Duff &
100 Bright Meadow Blvd. President Phelps Corporation (1995-present). Senior Vice President, Finance
PO Box 2200 (1990-present), Director (1998-present), Treasurer (1998-present
Enfield, CT 06083-2200 and 1994-1996), and Chief Financial Officer (1996-present),
Phoenix Equity Planning Corporation. Senior Vice President
(1990-present), Director (1998-present), Chief Financial Officer
(1996-present) and Treasurer (1994-present), Phoenix Investment
Counsel, Inc. Senior Vice President, Finance (1993-present), Chief
Financial Officer (1996-present), and Treasurer (1994-present),
National Securities & Research Corporation. Senior Vice President
and Chief 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). Senior Vice
President and Chief Financial Officer, W. S. Griffith & Co., Inc.
(1992-1995) and Townsend Financial Advisers, Inc. (1993-1995).
Vice President, the National Affiliated Investment Companies
(until 1993). Vice President, Investment Products Finance, Phoenix
Home Life Mutual Insurance Company (1990-1995).
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Richard D. Little (50) Vice Managing Director, Equities, Phoenix Investment Counsel, Inc.
President (1998-present). Vice President, The Phoenix Edge Series Fund
(1998-present), Phoenix Strategic Equity Series Fund
(1998-present), and Phoenix Multi-Portfolio Fund (1998-present).
Director of Equities, Seneca Capital Management LLC
(1996-present). General Partner and Director of Equities, Seneca
Capital Management LP (1989-present).
Leonard J. Saltiel (45) Vice Managing Director, Operations and Service (1996-present), Senior
President Vice President, (1994-1996), Phoenix Equity Planning Corporation.
Vice President, Phoenix Funds (1994-present), Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present), and Phoenix-Aberdeen Series
Fund (1996-present). Vice President, National Securities & Research
Corporation (1994-1996). Vice President, Investment Operations, Phoenix
Home Life Mutual Insurance Company (1994-1995). Various positions with
Home Life Insurance Company and Phoenix Home Life Mutual Insurance
Company (1987-1994).
Michael Schatt (51) Vice Managing Director, Phoenix Investment Partners, Ltd.
President (1994-present). Senior Vice President, Phoenix Realty Securities,
Inc. (1997-present). Vice President, Duff & Phelps Investment
Management Co. (1997-present), Duff & Phelps Utilities Income,
Inc. (1997-present), Phoenix Duff & Phelps Institutional Mutual
Funds (1997-present), The Phoenix Edge Series Fund (1997-present),
and Phoenix Multi-Portfolio Fund (1997-present). Director, Real
Estate Advisory Practice, Coopers & Lybrand (1990-1994).
Pierre G. Trinque (43) Vice Vice President, Phoenix Strategic Allocation Fund, Inc.
President (1998-present), The Phoenix Edge Series Fund (1997-present),
Phoenix Multi-Portfolio Fund (1998-present), Phoenix Series Fund
(1997-present), Phoenix Duff & Phelps Institutional Mutual Funds
(1997-present), Phoenix Worldwide Opportunities Fund (1998-present),
and Phoenix Strategic Equity Series Fund (1998-present). Managing
Director, Large Cap Growth Team (1998-present), Managing Director,
Equities (1997-1998), Sr. Research Analyst, Equities (1996), and
Managing Director, Equity Research (1996-1997), Phoenix Investment
Counsel, Inc.
Nancy G. Curtiss (46) Treasurer Vice President, Fund Accounting (1994-present) and Treasurer
(1996-present), Phoenix Equity Planning Corporation. Treasurer,
Phoenix Funds (1994-present), Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present) and Phoenix-Aberdeen Series Fund
(1996-present). Second Vice President and Treasurer, Fund
Accounting, Phoenix Home Life Mutual Insurance Company
(1994-1995). Various positions with Phoenix Home Life Insurance
Company (1987-1994).
G. Jeffrey Bohne (51) Secretary Vice President and General Manager, Phoenix Home Life Mutual
101 Munson Street Insurance Co. (1993-present). Vice President, Transfer Agent
Greenfield, MA 01301 Operations (1993-1996), Vice President, Mutual Fund Customer
Service (1996-present), Phoenix Equity Planning Corporation.
Secretary/Clerk, Phoenix Funds (1993-present), Phoenix Duff &
Phelps Institutional Mutual Funds (1996-present) and
Phoenix-Aberdeen Series Fund (1996-present). Vice President, Home
Life of New York Insurance Company (1984-1992). Clerk, Phoenix
Investment Council (1995-present).
</TABLE>
- ----------------
*Trustees identified with an asterisk are considered to be interested persons
of the Trust (within the meaning of the Investment Company Act of 1940, as
amended) because of their affiliation with Phoenix Investment Counsel, Inc.,
or Phoenix Equity Planning Corporation or Phoenix Investment Partners, Ltd.
30
<PAGE>
For services rendered to the Trust for the fiscal year ended November 30,
1998, the Trustees received an aggregate of $92,876. 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.
Trustee fee costs are allocated equally to each of the Funds and the Funds
within the Phoenix Funds complex. The foregoing fees do not include
reimbursement of expenses incurred in connection with meeting attendance.
Officers and employees of the Adviser who are not interested persons are
compensated for their services by the Adviser and receive no compensation from
the Trust.
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 $8,019 $60,000
E. Virgil Conway+ $10,625 $79,500
Harry Dalzell-Payne+ $9,559 $71,250
Francis E. Jeffries $7,986 $60,000
Leroy Keith, Jr. $8,368 None None $62,500
Philip R. McLoughlin+ $0 for any for any $0
Everett L. Morris+ $9,177 Trustee Trustee $69,500
James M. Oates+ $9,177 $68,750
Calvin J. Pedersen $0 $0
Herbert Roth, Jr.+ $11,007 $81,250
Richard E. Segerson $9,434 $70,750
Lowell P. Weicker $9,434 $70,000
</TABLE>
- ----------
*This compensation (and the earnings thereon) will be deferred pursuant to the
Deferred Compensation Plan. At December 31, 1998, the total amount of deferred
compensation (including interest and other accumulation earned on the original
amounts deferred) accrued for Messrs. Jeffries, Morris and Roth was $175,029,
$151,807 and $147,653, respectively. At present, by agreement among the Fund,
the Distributor and the electing director, director fees that are deferred are
paid by the Fund to the Distributor. The liability for the deferred compensation
obligation appears only as a liability of the Distributor.
+Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are members
of the Executive Committee.
At March 18, 1999, the Trustees and officers as a group owned less than 1% of
the then outstanding shares of the Trust.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of March 18, 1999 with respect
to each person who owns of record or is known by the Registrant to own of record
or beneficially own 5% or more of any class of the Registrant's equity
securities.
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER NAME OF FUND NUMBER OF SHARES PERCENT OF CLASS
- ------------------- ------------ ---------------- ----------------
<S> <C> <C> <C>
Phoenix Home Life Income Class A 11,203.8080 41.85%
One American Row Income Class B 11,154.0830 34.46%
Hartford, CT 06115 Income Class C 11,154.1050 80.73%
Income Class X 725,752.1020 100.00%
MLPF&S for the sole benefit Income Class A 2,428.000 9.07%
of its customers
ATTN: Fund Administration
4800 Deer Lake Dr E 3rd FL
Jacksonville, FL 32246-6484
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER NAME OF FUND NUMBER OF SHARES PERCENT OF CLASS
- ------------------- ------------ ---------------- ----------------
<S> <C> <C> <C>
Donaldson Lufkin Jenrette Income Class A 8,717.5490 32.56%
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303
Dean Witter Reynolds Cust Income Class A 2,194.0990 8.20%
FBO Robert Thuer
1 N 639 Augusta Ct
Winfield, IL 60190-2361
Bear Stearns Securities Corp. Income Class B 9,848.0000 30.42%
1 Metrotech Center North
Brooklyn, NY 11201-3870
Eugene E Curran Income Class B 4,653.0430 14.37%
AnnMarie S Curran JT WROS
197 Champion Dr
Hampstead, NC 28443-2600
Bettie M Austad Income Class B 4,259.4550 13.16%
1400 SE Fancy Free Dr Apt 114
Pullman, WA 99163-5531
Jane A Allen Income Class C 1,262.2330 9.14%
147 Beers Road
Easton, CT 06612-1723
Paul H Anderson Income Class C 1,243.1140 9.00%
Doris M Anderson JT Ten
1574 Melville Ave
Fairfield, CT 06432-2022
</TABLE>
ADDITIONAL INFORMATION
The Trust's Prospectus and this Statement of Additional Information omit
certain information contained in the registration statement filed with the
Securities and Exchange Commission which may be obtained from the Commission's
principal office at 450 Fifth Street, N.W., Washington, DC 20549, upon payment
of the fee prescribed by the rules and regulations promulgated by the
Commission.
CAPITAL STOCK
The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest. The Trust currently offers shares in different
series or "Funds" and different classes of those Funds. Holders of shares of a
Fund are entitled to one full vote for each full share owned and a fractional
vote for any fractional share. Shares of a Fund participate equally in dividends
and distributions paid with respect to such Fund and in such Fund's net assets
on liquidation, except that Class B and C Shares of any Fund which bear higher
distribution fees and, certain incrementally higher expenses associated with the
deferred sales arrangement, pay correspondingly lower dividends per share than
Class A Shares of the same Fund. Shareholders of all Funds vote on the election
of Trustees. On matters affecting an individual Fund (such as approval of an
investment advisory agreement or a change in fundamental investment policies),
and on matters affecting an individual class (such as approval of matters
relating to a Distribution Plan for a particular class of shares), a separate
vote of that Fund or Class is required. Shares of a Fund are fully paid and
non-assessable when issued and are transferable and redeemable. Shares have no
preemptive or conversion rights (other than as described herein).
The assets received by the Trust for the issue or sale of shares of a Fund
and any class thereof and all income, earnings, profits and proceeds thereof,
subject only to the rights of creditors, are allocated to such Fund and Class
respectively, subject only to the rights of creditors, and constitute the
underlying assets of such Fund or Class. Any underlying assets of a Fund are
required to be segregated on the books of account and are to be charged with the
expenses in respect to such Fund and with a share of the general expenses of the
Trust. Any general expenses of the Trust not readily identifiable as belonging
to a particular Fund or Class will be allocated by or under the direction of the
Trustees in such manner as the Trustees determine to be fair and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a business trust such as the Trust may be personally liable for
debts or claims against the Trust. The Declaration of Trust provides that
shareholders will not be subject to any personal liability for the acts or
obligations of the Trust and that every written agreement, undertaking or
obligation made or issued by the Trust shall contain a provision to that effect.
The Declaration of Trust provides for indemnification out of the Trust property
32
<PAGE>
for all losses and expenses of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability, which is considered remote, is limited
to circumstances in which the Trust itself would be unable to meet its
obligations.
FINANCIAL STATEMENTS
The Financial Statements for the Fund's fiscal year ended November 30, 1998,
appearing in the Fund's 1998 Annual Report to Shareholders, are incorporated
herein by reference.
REPORTS TO SHAREHOLDERS
The fiscal year of the Trust ends on November 30. The Trust will send
financial statements to its shareholders at least semiannually. An annual report
containing financial statements audited by the Trust's independent accountants,
will be sent to shareholders each year.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110, has been
selected independent accountants for the Trust. PricewaterhouseCoopers LLP
audits the Trust's annual financial statements and expresses an opinion thereon.
CUSTODIANS AND TRANSFER AGENT
The custodian of the assets of the Bond Fund, Mid Cap Fund, Real Estate Fund,
Emerging Markets Fund and Income Fund is State Street Bank and Trust Company,
P.O. Box 351, Boston, Massachusetts, 02101. The custodian of the assets of the
International Fund is Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts 02109. The Trust has authorized the custodians to appoint one or
more subcustodians for the assets of the Trust held outside the United States.
The securities and other assets of each Fund of the Trust are held by each
Custodian or any subcustodian separate from the securities and assets of each
other Fund.
Pursuant to a Transfer Agent and Service Agreement with the Phoenix Funds,
Equity Planning acts as transfer agent for the Trust (the "Transfer Agent") for
which it is paid $22.25 for each designated daily dividend shareholder account
and $17.95 for each designated non-daily dividend shareholder account plus
out-of-pocket expenses. The Transfer Agent is authorized to engage subagents to
perform certain shareholder servicing functions from time to time for which such
agents shall be paid a fee by the Transfer Agent.
33
<PAGE>
APPENDIX
A-1 AND P-1 COMMERCIAL PAPER RATINGS
The Trust will only invest in commercial paper which at the date of
investment is rated A-1 by Standard & Poor's Corporation or P-1 by Moody's
Investors Services, Inc., or, if not rated, is issued or guaranteed by companies
which at the date of investment have an outstanding debt issue rated AA or
higher by Standard & Poor's or Aa or higher by Moody's.
Commercial paper rated A-1 by Standard & Poor's Corporation ("S&P") has the
following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is rated "A" or better. The issuer has
access to at least two additional channels of borrowing. Basic earnings and cash
flow have an upward trend with allowance made for unusual circumstances.
Typically, the issuer's industry is well established and the issuer has a strong
position within the industry. The reliability and quality of management are
unquestioned.
The rating P-1 is the highest commercial paper rating assigned by Moody's
Investors Services, Inc. ("Moody's"). Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationship which exists with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt-edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they compromise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate
and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this
class.
B: Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other
marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
STANDARD AND POOR'S CORPORATION'S CORPORATE BOND RATINGS
AAA: This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay
principal and interest.
34
<PAGE>
AA: Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the
majority of instances they differ from AAA issues only in small
degree.
A: Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay principal and
interest for bonds in this category than for bonds in the A category.
BB, B,
CCC, CC: Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to issuer's capacity to pay
interest and repay principal in accordance with the terms of the
obligation. BB indicates the lowest degree of speculation and CC the
highest degree of speculation. While such bonds will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
D: Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period.
The D rating also will be used upon the filing of a bankruptcy
petition if debt service payments are jeopardized.
35
<PAGE>
Phoenix Tax-Exempt Bond Portfolio
INVESTMENTS AT NOVEMBER 30, 1998
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- -------------
<S> <C> <C> <C>
MUNICIPAL TAX-EXEMPT BONDS--97.9%
ALABAMA--3.0%
Alabama Special Care Facility 5%,
11/1/25................................. AA+ $ 3,500 $ 3,421,250
ALASKA--1.1%
Valdez Marine Terminal Revenue 7%,
12/1/25(d).............................. AA 1,125 1,229,062
ARIZONA--0.9%
Pima County Pre-refunded 6.75%, 7/1/15
(FGIC Insured).......................... AAA 460 499,100
Pima County Unrefunded 6.75%, 7/1/15
(FGIC Insured).......................... AAA 540 583,200
-------------
1,082,300
-------------
ARKANSAS--1.3%
Drew County Public Facilities Board
Series A-2 7.90%, 8/1/11 (FNMA
Collateralized)......................... Aaa(c) 255 275,827
Jacksonville Residential Housing Board
Series A-2 7.90%, 1/1/11 (FNMA
Collateralized)......................... Aaa(c) 443 476,505
Lonoke County Residential Housing
Facilities Board Series A-2 7.90%,
4/1/11 (FNMA Collateralized)............ Aaa(c) 447 493,512
Stuggart Public Facilities Board Series
A-2 7.90%, 9/1/11 (FNMA
Collateralized)......................... Aaa(c) 208 223,300
-------------
1,469,144
-------------
CALIFORNIA--6.8%
California Housing Financing Agency
Series A 7.75%, 8/1/17.................. AA- 225 232,335
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- -------------
<S> <C> <C> <C>
CALIFORNIA--CONTINUED
Pittsburg Redevelopment Series A 4.625%,
8/1/21 (AMBAC Insured).................. AAA $ 1,650 $ 1,565,437
Riverside County Series B 8.625%, 5/1/16
(GNMA Collateralized)................... AAA 4,300 5,923,250
-------------
7,721,022
-------------
COLORADO--3.9%
Arapahoe County Capital Improvement
Series E Pre-refunded 6.90%, 8/31/15.... Aaa(c) 2,500 2,990,625
Jefferson County School District G.O.
Bond 6.50%, 12/15/07 (MBIA Insured)..... AAA 1,250 1,475,000
-------------
4,465,625
-------------
CONNECTICUT--4.5%
Connecticut State Health and Educational
Facilities Authority Series B 5.125%,
7/1/07.................................. BBB 1,000 1,045,000
Mashantucket Western Pequot Tribe
Special Development Revenue Bond Series
A Pre-refunded 144A 6.50%, 9/1/05(f).... AAA 845 963,300
Mashantucket Western Pequot Tribe
Special Development Revenue Bond Series
A Pre-refunded 144A 6.50%, 9/1/06(f).... AAA 495 571,106
Mashantucket Western Pequot Tribe
Special Development Revenue Bond Series
A Unrefunded 144A 6.50%, 9/1/05(f)...... BBB- 855 964,012
Mashantucket Western Pequot Tribe
Special Development Revenue Bond Series
A Unrefunded 144A 6.50%, 9/1/06(f)...... BBB- 505 576,331
</TABLE>
See Notes to Financial Statements 5
<PAGE>
Phoenix Tax-Exempt Bond Portfolio
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- -------------
<S> <C> <C> <C>
CONNECTICUT--CONTINUED
Mashantucket Western Pequot Tribe
Special Development Revenue Bond Series
B 144A 5.60%, 9/1/09(f)................. Baa(c) $ 1,000 $ 1,061,250
-------------
5,180,999
-------------
FLORIDA--1.5%
Martin County Industrial Development
Revenue Bond Indiantown Cogeneration
Series A 7.875%, 12/15/25............... BBB- 1,500 1,725,000
GEORGIA--5.6%
Atlanta Water and Sewer Revenue Bond
4.50%, 1/1/18 (FGIC Insured)............ AAA 2,250 2,120,625
Cartersville Development Authority
Revenue Bond 5.625%, 5/1/09............. A+ 2,000 2,167,500
Georgia Municipal Electric Authority
Power Revenue Bond Series Z 5.50%,
1/1/20 (FGIC Insured)................... AAA 2,000 2,147,500
-------------
6,435,625
-------------
ILLINOIS--5.7%
Chicago Board of Education Series A 6%,
1/1/20 (MBIA Insured)................... AAA 500 568,750
Chicago Gas Supply Revenue Bond Series B
7.50%, 3/1/15........................... AA- 1,000 1,056,250
Chicago O'Hare International Airport
Special Facility Revenue Bond 8.85%,
5/1/18.................................. BB+ 855 943,706
Illinois Development Finance Authority
Pollution Control Revenue Bond Series B
7.60%, 9/1/13........................... A+ 2,000 2,117,500
Illinois Health Facilities Authority
Revenue Bond Series C 7%, 4/1/08 (FSA
Insured)................................ AAA 1,100 1,318,625
Illinois Housing Development Authority
Residential Mortgage Revenue Bond Series
A 7%, 8/1/17............................ A+ 475 483,313
Metropolitan Pier & Exposition Authority
Revenue Bond Unrefunded 6.50%, 6/15/07
(FGIC Insured).......................... AA- 30 33,450
-------------
6,521,594
-------------
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- -------------
<S> <C> <C> <C>
INDIANA--3.0%
Indianapolis Public Local Improvement
Revenue Bond Series A 0%, 2/1/05........ Aa(c) $ 1,765 $ 1,367,875
Indianapolis Public Local Improvement
Revenue Bond Series C 0%, 1/1/03........ A(c) 2,500 2,118,750
-------------
3,486,625
-------------
KENTUCKY--2.7%
Kentucky State Turnpike Authority
Economic Development Revenue Bond 0%,
1/1/10 (FGIC Insured)................... AAA 3,300 2,013,000
Perry County Solid Waste Disposal
Revenue Bond 7%, 6/1/24................. NR 1,000 1,085,000
-------------
3,098,000
-------------
LOUISIANA--2.9%
St. Mary Public Transportation Financing
Authority Revenue Bond Series A 7.625%,
3/25/12................................. Aaa(c) 51 54,445
St. Tammany Public Transportation
Financing Authority Revenue Bond Series
A 7%, 6/1/02 (FNMA Collateralized)...... Aaa(c) 88 91,556
St. Tammany Sales Tax Revenue Bond
4.70%, 4/1/09 (FGIC Insured)............ AAA 2,000 2,052,500
St. Tammany Sales Tax Revenue Bond
4.80%, 4/1/10 (FGIC Insured)............ AAA 1,105 1,136,769
-------------
3,335,270
-------------
MARYLAND--0.5%
Baltimore G.O. Bond 7%, 10/15/09 (MBIA
Insured)................................ AAA 500 618,125
MASSACHUSETTS--1.8%
Massachusetts Bay Transportation
Authority Revenue Bond Series B 6.20%,
3/1/16.................................. AA- 1,000 1,171,250
Massachusetts State Industrial Financing
Agency Revenue Bond 0%, 8/1/05.......... A+ 1,100 831,875
-------------
2,003,125
-------------
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Phoenix Tax-Exempt Bond Portfolio
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- -------------
<S> <C> <C> <C>
MICHIGAN--3.0%
Western Townships Utilities Authority
Sewage Disposal System G.O. Bond 8.20%,
1/1/18.................................. BBB+ $ 1,500 $ 1,535,250
Williamston Community School G.O. Bond
5.50%, 5/1/25 (MBIA Insured)............ AAA 1,725 1,878,094
-------------
3,413,344
-------------
MISSISSIPPI--1.5%
Lowndes County Solid Waste Disposal &
Pollution Control Revenue Bond Series A
6.80%, 4/1/22........................... A 1,450 1,772,625
NEBRASKA--1.2%
Nebraska Revenue Bond Jr Sub Lien Series
A-6 6.70%, 12/1/02 (Called 12/1/98)..... Aaa(c) 1,345 1,345,000
NEVADA--1.5%
Clark County School District G.O. Bond
Series B 0%, 6/1/03 (MBIA Insured)...... AAA 2,000 1,680,000
NEW JERSEY--2.4%
Atlantic City Improvement Authority
Lease Pre-refunded 8.875%, 2/1/10....... NR 1,000 1,009,280
Camden County Municipal Utilities
Authority Sewer Revenue Bond 0%, 9/1/11
(FGIC Insured).......................... AAA 3,000 1,687,500
-------------
2,696,780
-------------
NEW YORK--7.3%
Erie County Water Authority Revenue Bond
0%, 12/1/17 (AMBAC Insured)............. AAA 550 140,894
New York State Dormitory Authority
Revenue Bond Series U Pre-refunded
6.375%, 7/1/08.......................... BBB+ 575 636,094
Niagara Falls Bridge Commission Toll
Revenue Bond Series B 5.25%, 10/1/15
(FGIC Insured)(e)....................... AAA 4,000 4,250,000
Port Authority New York & New Jersey
Special Obligation Revenue Bond 6.75%,
10/1/11................................. NR 3,000 3,363,750
-------------
8,390,738
-------------
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- -------------
<S> <C> <C> <C>
NORTH CAROLINA--1.4%
North Carolina Municipal Power Agency
Revenue Bond 6%, 1/1/09 (AMBAC
Insured)................................ AAA $ 1,385 $ 1,561,588
PENNSYLVANIA--13.3%
Delaware Valley Regional Finance
Authority Revenue Bond Series B 5.70%,
7/1/27 (AMBAC Insured).................. AAA 2,000 2,225,000
New Castle Area Hospital Authority
Revenue Bond Series A 6.50%,
11/15/09(b)............................. A(c) 1,000 1,060,000
Pennsylvania Economic Development
Financing Authority Recycling Revenue
Bond Series A 9.25%, 1/1/22(b)(g)....... NR 3,995 2,277,150
Pennsylvania Economic Development
Financing Authority Resource Recovery
Revenue Bond Series A 6.40%, 1/1/09..... BBB- 5,000 5,287,500
Pennsylvania State Finance Authority
Revenue Bond 6.60%, 11/1/09............. A 4,000 4,390,000
-------------
15,239,650
-------------
TENNESSEE--1.5%
Metropolitan Government Nashville &
Davidson County Health & Educational
Facilities Board Revenue Bond 6%,
12/1/16 (AMBAC Insured)................. AAA 1,500 1,700,625
TEXAS--9.0%
Alliance Airport Authority Special
Facilities Revenue Bond 7%, 12/1/11..... BBB- 1,100 1,299,375
Austin Convention Center Revenue Bond
Series B 8.25%, 11/15/14................ AAA 930 992,533
Brazos River Authority Revenue Bond
Series A 7.625%, 5/1/19................. A- 1,000 1,040,290
Colorado River Municipal Water Revenue
Bond Pre-refunded 8.25%, 1/1/15......... NR 540 589,275
Hurst Euless Bedford Independant School
District G.O. Bond 4.75%, 8/15/28....... AAA 2,000 1,912,500
San Antonio Electric & Gas Revenue Bond
5%, 2/1/12(e)........................... AA 2,000 2,060,000
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Phoenix Tax-Exempt Bond Portfolio
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- -------------
<S> <C> <C> <C>
TEXAS--CONTINUED
Texas State Public Finance Authority
Building Revenue Bond 6.25%, 8/1/09
(MBIA Insured).......................... AAA $ 1,250 $ 1,439,063
Texas Water Resource Finance Authority
Revenue Bond 7.625%, 8/15/08............ A 890 912,099
-------------
10,245,135
-------------
VIRGINIA--5.6%
Pittsylvania County Industrial
Development Authority Revenue Bond
Series A 7.30%, 1/1/04.................. NR 1,000 1,071,250
Pittsylvania County Industrial
Development Revenue Bond Series A 7.45%,
1/1/09.................................. NR 3,000 3,296,250
Upper Occoquan Sewer Authority Regional
Sewer Revenue Bond Series A 5.15%,
7/1/20 (MBIA Insured)................... AAA 2,000 2,072,500
-------------
6,440,000
-------------
WEST VIRGINIA--2.8%
Upshur County Solid Waste Disposal
Revenue Bond 7%, 7/15/25................ NR 2,000 2,182,500
West Virginia State Housing Development
Fund Revenue Bond 6.625%, 7/1/20 (FHA
Insured)................................ AA 1,000 1,000,290
-------------
3,182,790
-------------
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- -------------
<S> <C> <C> <C>
WISCONSIN--0.8%
Wisconsin State Clean Water Revenue Bond
Series 1 6.875%, 6/1/11................. AA+ $ 750 $ 916,875
OTHER TERRITORIES--1.4%
Puerto Rico Commonwealth Highway &
Transportation Authority Revenue Bond
Series V 6.625%, 7/1/12................. A 1,500 1,642,500
- - --------------------------------------------------------------------------------
TOTAL MUNICIPAL TAX-EXEMPT BONDS
(IDENTIFIED COST $103,837,658) 112,020,416
- - --------------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--97.9%
(IDENTIFIED COST $103,837,658) 112,020,416
- - --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS--1.1%
COMMERCIAL PAPER--1.1%
Ford Motor Credit Co. 4.84%, 12/4/98.... A-1 1,250 1,249,496
- - --------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $1,249,496) 1,249,496
- - --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--99.0%
(IDENTIFIED COST $105,087,154) 113,269,912(a)
Cash and receivables, less liabilities--1.0% 1,101,677
--------------
NET ASSETS--100.0% $ 114,371,589
--------------
--------------
</TABLE>
(a) Federal Income Tax Information: Net appreciation of investment securities
is comprised of gross appreciation of $10,143,099 and gross depreciation of
$1,894,092 for federal income tax purposes. At November 30, 1998, the
aggregate cost of securities for federal income tax purpose was
$105,020,905.
(b) Non-income producing.
(c) As rated by Moody's, Fitch or Duff & Phelps.
(d) Variable security; interest rate reflects the rate currently in effect.
(e) All or a portion segregated as collateral.
(f) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At November 30,
1998, these securities amounted to a value of $4,135,999 or 3.6% of net
assets.
(g) Security in default.
At November 30, 1998, 37.3% of the securities in the portfolio are backed by
insurance of financial institutions and financial guaranty assurance agencies.
Insurers with a concentration greater than 10% of net assets are as follows:
FGIC, 14.6%
8 See Notes to Financial Statements
<PAGE>
Phoenix Tax-Exempt Bond Portfolio
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $105,087,154) $ 113,269,912
Cash 90,283
Receivables
Fund shares sold 1,921
Interest 1,877,543
--------------
Total assets 115,239,659
--------------
LIABILITIES
Payables
Variation margin for futures contracts 10,000
Dividend distributions 114,135
Fund shares repurchased 572,959
Investment advisory fee 42,388
Distribution fee 28,161
Financial agent fee 11,140
Transfer agent fee 7,061
Trustees' fee 5,514
Accrued expenses 76,712
--------------
Total liabilities 868,070
--------------
NET ASSETS $ 114,371,589
--------------
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 106,684,614
Distributions in excess of net investment income (114,135)
Accumulated net realized loss (352,089)
Net unrealized appreciation 8,153,199
--------------
NET ASSETS $ 114,371,589
--------------
--------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $107,370,966) 9,581,538
Net asset value per share $11.21
Offering price per share $11.21/(1-4.75%) $11.77
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $7,000,623) 622,243
Net asset value and offering price per share $11.25
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 6,943,511
--------------
Total investment income 6,943,511
--------------
EXPENSES
Investment advisory fee 544,278
Distribution fee, Class A 286,241
Distribution fee, Class B 64,542
Financial agent fee 102,535
Transfer agent 84,634
Professional 45,738
Registration 29,072
Trustees 21,706
Printing 18,949
Custodian 14,688
Miscellaneous 5,739
--------------
Total expenses 1,218,122
--------------
NET INVESTMENT INCOME 5,725,389
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (18,863)
Net realized loss on futures contracts (390,703)
Net change in unrealized appreciation on investments 1,555,273
--------------
NET REALIZED GAIN ON INVESTMENTS 1,145,707
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 6,871,096
--------------
--------------
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Phoenix Tax-Exempt Bond Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, November 30,
1998 1997
-------------- --------------
<S> <C> <C>
FROM OPERATIONS
Net investment income $ 5,725,389 $ 7,025,130
Net realized gain (loss) (409,566) 175,101
Net change in unrealized appreciation 1,555,273 420,432
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 6,871,096 7,620,663
-------------- --------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (5,342,324) (6,755,466)
Net investment income, Class B (259,422) (233,919)
Net realized gains, Class A (96,887) (1,898,761)
Net realized gains, Class B (4,637) (65,944)
In excess of net investment income, Class A (566,555) (5,836)
In excess of net investment income, Class B (27,512) (202)
-------------- --------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS (6,297,337) (8,960,128)
-------------- --------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (3,799,813 and
5,119,900 shares, respectively) 42,705,753 56,427,974
Net asset value of shares issued from
reinvestment of distributions
(286,921 and 458,029 shares, respectively) 3,230,781 5,044,059
Cost of shares repurchased (5,491,445 and
6,702,201 shares, respectively) (61,903,573) (73,960,582)
-------------- --------------
Total (15,967,039) (12,488,549)
-------------- --------------
CLASS B
Proceeds from sales of shares (259,511 and
200,165 shares, respectively) 2,940,057 2,212,684
Net asset value of shares issued from
reinvestment of distributions
(12,310 and 15,780 shares, respectively) 139,134 174,441
Cost of shares repurchased (166,434 and 119,828
shares, respectively) (1,874,018) (1,319,055)
-------------- --------------
Total 1,205,173 1,068,070
-------------- --------------
DECREASE IN NET ASSETS FROM SHARE TRANSACTIONS (14,761,866) (11,420,479)
-------------- --------------
NET DECREASE IN NET ASSETS (14,188,107) (12,759,944)
-------------- --------------
NET ASSETS
Beginning of period 128,559,696 141,319,640
-------------- --------------
END OF PERIOD (INCLUDING DISTRIBUTIONS IN EXCESS
OF NET INVESTMENT INCOME OF ($114,135) AND
($123,643), RESPECTIVELY) $ 114,371,589 $ 128,559,696
-------------- --------------
-------------- --------------
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Phoenix Tax-Exempt Bond Portfolio
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------
YEAR ENDED NOVEMBER 30
------------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.17 $ 11.28 $ 11.40 $ 10.09 $ 11.58
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.57 0.59 0.60 0.61 0.65
Net realized and unrealized gain
(loss) 0.20 0.05 (0.12) 1.34 (1.49)
---------- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 0.77 0.64 0.48 1.95 (0.84)
---------- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment
income (0.53) (0.59) (0.60) (0.61) (0.65)
Dividends in excess of net
investment income (0.11) -- -- -- --
Dividends from net realized gains (0.09) (0.16) -- (0.03) --
---------- ----- ----- ----- -----
TOTAL DISTRIBUTIONS (0.73) (0.75) (0.60) (0.64) (0.65)
---------- ----- ----- ----- -----
Change in net asset value 0.04 (0.11) (0.12) 1.31 (1.49)
---------- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 11.21 $ 11.17 $ 11.28 $ 11.40 $ 10.09
---------- ----- ----- ----- -----
---------- ----- ----- ----- -----
Total return(1) 5.75% 6.04% 4.30% 19.87% (7.55)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $107,371 $122,763 $136,558 $147,821 $141,623
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 0.97% 0.96% 0.94% 0.97% 0.96%
Net investment income 4.77% 5.36% 5.42% 5.65% 5.65%
Portfolio turnover 14% 15% 27% 25% 54%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------------------
FROM
YEAR ENDED NOVEMBER 30 INCEPTION
---------------------------------------------------- 3/16/94 TO
1998 1997 1996 1995 11/30/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.22 $ 11.32 $ 11.44 $ 10.12 $ 11.21
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.48 0.50 0.52 0.53 0.39
Net realized and unrealized gain
(loss) 0.19 0.06 (0.12) 1.35 (1.09)
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 0.67 0.56 0.40 1.88 (0.70)
----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment
income (0.45) (0.50) (0.52) (0.53) (0.39)
Dividends in excess of net
investment income (0.10) -- -- -- --
Dividends from net realized gains (0.09) (0.16) -- (0.03) --
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS (0.64) (0.66) (0.52) (0.56) (0.39)
----- ----- ----- ----- -----
Change in net asset value 0.03 (0.10) (0.12) 1.32 (1.09)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 11.25 $ 11.22 $ 11.32 $ 11.44 $ 10.12
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Total return(1) 4.97% 5.13% 3.60% 19.07% (6.42)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $7,001 $5,797 $4,762 $3,142 $1,147
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.69% 1.71% 1.69% 1.72% 1.54%(2)
Net investment income 3.98% 4.60% 4.68% 4.90% 5.07%(2)
Portfolio turnover 14% 15% 27% 25% 54%(3)
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
See Notes to Financial Statements 11
<PAGE>
Phoenix Mid Cap Portfolio
INVESTMENTS AT NOVEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C> <C>
COMMON STOCKS--95.0%
BANKS (MAJOR REGIONAL)--7.6%
AmSouth Bancorporation.................. 142,240 $ 6,009,640
Comerica, Inc........................... 133,550 8,613,975
Northern Trust Corp..................... 97,500 7,873,125
-------------
22,496,740
-------------
BEVERAGES (ALCOHOLIC)--1.7%
Coors (Adolph) Co. Class B.............. 103,000 5,124,250
BEVERAGES-SOFT DRINK--1.0%
Whitman Corp............................ 127,350 2,881,294
BROADCASTING (TELEVISION, RADIO & CABLE)--2.3%
Chancellor Media Corp.(b)............... 179,070 6,748,701
COMPUTERS (HARDWARE)--1.7%
International Business Machines Corp.... 30,000 4,950,000
COMPUTERS (NETWORKING)--5.0%
Ascend Communications, Inc.(b).......... 183,000 10,282,312
Network Appliance, Inc.................. 59,530 4,472,191
-------------
14,754,503
-------------
COMPUTERS (SOFTWARE & SERVICES)--16.1%
America Online, Inc.(b)................. 100,000 8,756,250
BMC Software, Inc.(b)................... 141,080 7,203,897
Computer Horizons Corp.(b).............. 167,830 3,776,175
Compuware Corp.(b)...................... 144,200 8,976,450
Documentum, Inc.(b)..................... 92,950 3,909,709
Legato Systems, Inc.(b)................. 59,800 2,859,187
Microsoft Corp.(b)...................... 35,000 4,270,000
VERITAS Software Corp.(b)............... 129,610 7,744,197
-------------
47,495,865
-------------
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C> <C>
ELECTRONICS (INSTRUMENTATION)--1.9%
Micron Electronics, Inc.(b)............. 245,450 $ 5,583,987
ELECTRONICS (SEMICONDUCTORS)--7.6%
Advance Micro Devices, Inc.(b).......... 165,900 4,593,356
Micron Technology, Inc.(b).............. 180,140 7,442,034
Xilinx, Inc.(b)......................... 205,740 10,441,305
-------------
22,476,695
-------------
ENTERTAINMENT--2.2%
SFX Entertainment, Inc. Class A(b)...... 127,210 6,376,401
FINANCIAL (DIVERSIFIED)--1.4%
Providian Financial Corp................ 43,960 4,036,078
HEALTH CARE (DRUGS--MAJOR PHARMACEUTICALS)--7.7%
McKesson Corp........................... 97,520 6,942,205
MedImmune, Inc.(b)...................... 85,000 5,684,375
Mylan Laboratories, Inc................. 247,100 8,200,631
Warner-Lambert Co....................... 25,000 1,887,500
-------------
22,714,711
-------------
HEALTH CARE (HOSPITAL MANAGEMENT)--1.2%
Health Management Associates, Inc. Class
A(b).................................... 169,440 3,674,730
HEALTH CARE (LONG TERM CARE)--1.6%
Omnicare, Inc........................... 170,150 4,870,544
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--1.3%
Ocular Sciences, Inc.(b)................ 164,660 3,704,850
HOUSEHOLD FURNITURE & APPLIANCES--2.6%
Maytag Corp............................. 143,730 7,779,386
INSURANCE (LIFE/HEALTH)--1.6%
Annuity and Life Re (Holdings), Ltd..... 182,610 4,633,729
INSURANCE (PROPERTY, CASUALTY, & TITLE)--0.9%
Progressive Corp. (The)................. 17,270 2,562,436
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Phoenix Mid Cap Portfolio
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C> <C>
MANUFACTURING (DIVERSIFIED)--1.5%
Tyco International Ltd.................. 65,539 $ 4,313,285
OFFICE EQUIPMENT & SUPPLIES--1.3%
Miller (Herman), Inc.................... 181,150 3,849,438
OIL (DOMESTIC INTEGRATED)--2.4%
USX-Marathon Group...................... 253,230 7,185,401
OIL & GAS (DRILLING & EQUIPMENT)--1.6%
Cooper Cameron Corp.(b)................. 100,000 2,437,500
Smith International, Inc.(b)............ 100,000 2,412,500
-------------
4,850,000
-------------
RETAIL (COMPUTERS & ELECTRONICS)--1.1%
Tandy Corp.............................. 75,000 3,379,688
RETAIL (DISCOUNTERS)--5.2%
Dollar Tree Stores, Inc.(b)............. 165,540 7,511,378
Kmart Corp.(b).......................... 507,350 7,737,088
-------------
15,248,466
-------------
RETAIL (SPECIALTY)--2.3%
Staples, Inc.(b)........................ 192,470 6,724,421
RETAIL (SPECIALTY-APPAREL)--2.3%
TJX Companies, Inc. (The)............... 268,000 6,867,500
SERVICES (ADVERTISING/MARKETING)--3.6%
Outdoor Systems, Inc.(b)................ 388,100 10,478,700
SERVICES (COMMERCIAL & CONSUMER)--3.8%
Administaff, Inc.(b).................... 114,620 3,101,904
Gemstar International Group, Ltd.(b).... 132,720 8,062,740
-------------
11,164,644
-------------
TELECOMMUNICATIONS-CELLULAR--1.0%
Crown Castle International Corp.(b)..... 223,200 2,999,250
WASTE MANAGEMENT--3.5%
Republic Services, Inc. Class A(b)...... 378,560 7,050,680
Waste Management, Inc................... 74,300 3,185,613
-------------
10,236,293
-------------
- - -----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $264,544,067) 280,161,986
- - -----------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C> <C>
FOREIGN COMMON STOCKS--2.1%
ELECTRONICS (SEMICONDUCTORS)--2.1%
PMC-Sierra, Inc. (Canada)(b)............ 112,530 $ 6,062,554
- - -----------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $4,547,950) 6,062,554
- - -----------------------------------------------------------------------------
UNIT INVESTMENT TRUSTS--1.1%
S & P Mid Cap 400 Depositary Receipts... 50,000 3,350,000
- - -----------------------------------------------------------------------------
TOTAL UNIT INVESTMENT TRUSTS
(IDENTIFIED COST $3,359,755) 3,350,000
- - -----------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--98.2%
(IDENTIFIED COST $272,451,772) 289,574,540
- - -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------ -------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--3.7%
COMMERCIAL PAPER--3.7%
Shell Oil Co. 5.30%, 12/1/98............ A-1+ $ 230 230,000
Colgate-Palmolive Co. 5%, 12/17/98...... A-1 2,810 2,803,755
Greenwich Funding Corp. 5.20%, 1/4/99... A-1+ 2,000 1,984,612
Lexington Parker Capital LLC 5.31%,
1/13/99................................. A-1 5,000 4,958,774
Minnesota Mining & Manufacturing Co.
4.95%, 1/21/99.......................... A-1+ 1,000 989,194
-------------
10,966,335
-------------
- - --------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $10,985,209) 10,966,335
- - --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--101.9%
(IDENTIFIED COST $283,436,981) 300,540,875(a)
Cash and receivables, less liabilities--(1.9%) (5,527,136)
--------------
NET ASSETS--100.0% $ 295,013,739
--------------
--------------
</TABLE>
(a) Federal Income Tax Information: Net appreciation of investment securities
is comprised of gross appreciation of $34,646,500 and gross depreciation of
$17,704,670 for federal income tax purposes. At November 30, 1998, the
aggregate cost of securities for federal income tax purposes was
$283,599,045.
(b) Non-income producing.
See Notes to Financial Statements 15
<PAGE>
Phoenix Mid Cap Portfolio
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $283,436,981) $ 300,540,875
Short term investments held as collateral for loaned securities 6,957,460
Cash 4,041
Receivables
Investment securities sold 4,594,014
Interest and dividends 135,550
Fund shares sold 137,059
--------------
Total assets 312,368,999
--------------
LIABILITIES
Payables
Investment securities purchased 9,462,426
Fund shares repurchased 463,703
Collateral on securities loaned 6,957,460
Investment advisory fee 182,048
Distribution fee 70,354
Transfer agent fee 66,642
Financial agent fee 19,739
Trustees' fee 5,514
Accrued expenses 127,374
--------------
Total liabilities 17,355,260
--------------
NET ASSETS $ 295,013,739
--------------
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 216,741,954
Accumulated net realized gain 61,167,891
Net unrealized appreciation 17,103,894
--------------
NET ASSETS $ 295,013,739
--------------
--------------
CLASS A
Shares of beneficial interest outstanding, $1 par value, unlimited
authorization (Net Assets $279,326,040) 14,035,651
Net asset value per share $19.90
Offering price per share $19.90/(1-4.75%) $20.89
CLASS B
Shares of beneficial interest outstanding, $1 par value, unlimited
authorization (Net Assets $15,687,699) 817,833
Net asset value and offering price per share $19.18
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 2,655,076
Dividends 1,154,346
Security lending 141,922
Foreign tax withheld (562)
--------------
Total investment income 3,950,782
--------------
EXPENSES
Investment advisory fee 2,476,987
Distribution fee, Class A 783,434
Distribution fee, Class B 168,938
Financial agent fee 198,734
Transfer agent 563,414
Printing 80,377
Professional 42,675
Registration 41,007
Custodian 35,510
Trustees 21,986
Miscellaneous 5,244
--------------
Total expenses 4,418,306
--------------
NET INVESTMENT LOSS (467,524)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 61,746,081
Net change in unrealized appreciation (depreciation) on
investments (38,514,321)
--------------
NET GAIN ON INVESTMENTS 23,231,760
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 22,764,236
--------------
--------------
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Phoenix Mid Cap Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, November 30,
1998 1997
-------------- --------------
<S> <C> <C>
FROM OPERATIONS
Net investment loss $ (467,524) $ (450,831)
Net realized gain 61,746,081 36,321,860
Net change in unrealized appreciation
(depreciation) (38,514,321) (8,036,315)
-------------- --------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 22,764,236 27,834,714
-------------- --------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A (33,084,355) (51,980,339)
Net realized gains, Class B (1,776,186) (2,025,912)
-------------- --------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS (34,860,541) (54,006,251)
-------------- --------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (2,824,332 and
2,046,000 shares, respectively) 55,807,991 41,010,257
Net asset value of shares issued from
reinvestment of distributions
(1,780,474 and 2,624,028 shares, respectively) 32,263,501 49,101,364
Cost of shares repurchased (8,014,004 and
8,074,195 shares, respectively) (157,423,669) (156,230,117)
-------------- --------------
Total (69,352,177) (66,118,496)
-------------- --------------
CLASS B
Proceeds from sales of shares (92,246 and
229,655 shares, respectively) 1,729,101 4,456,304
Net asset value of shares issued from
reinvestment of distributions
(96,993 and 102,293 shares, respectively) 1,705,266 1,877,087
Cost of shares repurchased (295,559 and 234,195
shares, respectively) (5,608,396) (4,479,411)
-------------- --------------
Total (2,174,029) 1,853,980
-------------- --------------
DECREASE IN NET ASSETS FROM SHARE TRANSACTIONS (71,526,206) (64,264,516)
-------------- --------------
NET DECREASE IN NET ASSETS (83,622,511) (90,436,053)
NET ASSETS
Beginning of period 378,636,250 469,072,303
-------------- --------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET
INVESTMENT INCOME OF $0 AND $0, RESPECTIVELY) $ 295,013,739 $ 378,636,250
-------------- --------------
-------------- --------------
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Phoenix Mid Cap Portfolio
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30
--------------------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.64 $ 21.65 $ 22.03 $ 18.03 $ 18.70
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss) 0.01 (0.02)(1) (0.03)(1) 0.05(1) 0.11
Net realized and unrealized gain 1.18 1.52 2.53 4.74 0.10
------- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 1.19 1.50 2.50 4.79 0.21
------- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment
income -- -- -- (0.06) (0.10)
Dividends from net realized gains (1.93) (2.51) (2.88) (0.73) (0.78)
------- ----- ----- ----- -----
TOTAL DISTRIBUTIONS (1.93) (2.51) (2.88) (0.79) (0.88)
------- ----- ----- ----- -----
Change in net asset value (0.74) (1.01) (0.38) 4.00 (0.67)
------- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 19.90 $ 20.64 $ 21.65 $ 22.03 $ 18.03
------- ----- ----- ----- -----
------- ----- ----- ----- -----
Total return(2) 6.64% 8.12% 13.52% 27.87% 1.03%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $279,326 $360,053 $451,474 $487,674 $419,760
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.30% 1.33% 1.35% 1.42% 1.36%
Net investment income (loss) (0.10)% (0.08)% (0.17)% 0.28% 0.59%
Portfolio turnover 379% 161% 242% 218% 227%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------------------------------
FROM
YEAR ENDED NOVEMBER 30 INCEPTION
------------------------------------------------------------ 7/18/94 TO
1998 1997 1996 1995 11/30/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.11 $ 21.30 $ 21.85 $ 17.97 $ 17.68
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss) (0.18) (0.16)(1) (0.18)(1) (0.12)(1) (0.01)
Net realized and unrealized gain 1.18 1.47 2.51 4.75 0.30
------ ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 1.00 1.31 2.33 4.63 0.29
------ ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment
income -- -- -- (0.02) --
Dividends from net realized gains (1.93) (2.50) (2.88) (0.73) --
------ ----- ----- ----- -----
TOTAL DISTRIBUTIONS (1.93) (2.50) (2.88) (0.75) --
------ ----- ----- ----- -----
Change in net asset value (0.93) (1.19) (0.55) 3.88 0.29
------ ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 19.18 $ 20.11 $ 21.30 $ 21.85 $ 17.97
------ ----- ----- ----- -----
------ ----- ----- ----- -----
Total return(2) 5.80% 7.27% 12.75% 26.92% 1.64%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $15,688 $18,583 $17,599 $10,908 $1,519
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.04% 2.08% 2.11% 2.18% 2.05%(3)
Net investment income (loss) (0.85)% (0.85)% (0.92)% (0.58)% (0.23)%(3)
Portfolio turnover 379% 161% 242% 218% 227%(4)
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) Annualized.
(4) Not annualized.
(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.
18
See Notes to Financial Statements
<PAGE>
Phoenix International Portfolio
INVESTMENTS AT NOVEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C> <C>
FOREIGN COMMON STOCKS--96.9%
AUSTRALIA--1.1%
Australian Gas Light Co., Ltd. (Oil
(International Integrated))......... 135,000 $ 1,005,159
QBE Insurance Group Ltd. (Insurance
(Property-Casualty))................ 250,000 1,078,393
-------------
2,083,552
-------------
BRAZIL--1.3%
Tele Centro Sul Participacoes SA ADR
(Telephone)(b)...................... 6,500 370,906
Tele Norte Leste Participacoes SA
ADR (Telephone)(b).................. 26,000 442,000
Tele Sudeste Celular Participacoes
SA ADR (Telecommunications
(Cellular/Wireless))(b)............. 13,000 351,000
Telecomunicacoes Brasileiras SA
Sponsored ADR (Telephone)........... 13,900 1,317,894
-------------
2,481,800
-------------
DENMARK--0.5%
Tele Danmark A/S (Telecommunications
(Cellular/ Wireless))............... 8,200 918,477
FINLAND--2.3%
Nokia Oyj Class A
(Telecommunications (Cellular/
Wireless)).......................... 27,500 2,700,918
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C> <C>
FINLAND--CONTINUED
Raisio Group PLC (Foods)............ 129,900 $ 1,687,614
-------------
4,388,532
-------------
FRANCE--9.7%
Alcatel (Telecommunications
(Cellular/Wireless))................ 12,300 1,630,975
Alstom (Machinery (Diversified)).... 58,750 1,378,828
Axa (Insurance (Multi-Line))........ 16,931 2,194,291
Cap Gemini SA (Computers (Software &
Services)).......................... 5,480 803,948
Castorama Dubois (Retail (Building
Supplies)).......................... 4,800 973,337
Coflexip SA (Oil & Gas (Drilling &
Equipment))......................... 10,800 791,831
Compagnie Financiere de Paribas
(Investment Banking/Brokerage)...... 21,600 1,931,017
Elf Aquitaine SA (Oil (International
Integrated))........................ 12,000 1,500,209
Galeries Lafayette (Retail
(Department Stores))................ 1,390 1,588,233
Groupe Danone (Foods)............... 6,100 1,785,510
Pechiney SA Class A (Aluminum)...... 51,600 1,723,272
Pinault-Printemps-Redoute SA (Retail
(Department Stores))................ 6,250 1,068,996
Rhodia SA (Chemicals
(Specialty))(b)..................... 61,000 957,829
-------------
18,328,276
-------------
GERMANY--8.6%
Adidas-Salomon AG (Textiles
(Apparel)).......................... 8,050 880,807
Bayerische Motoren Werke AG
(Automobiles)....................... 1,600 1,239,665
Bayerische Motoren Werke AG New
(Automobiles)(b).................... 479 362,626
DaimlerChrysler AG
(Automobiles)(b).................... 33,685 3,237,448
Deutsche Bank AG (Banks (Money
Center))............................ 29,200 1,808,183
Hoechst AG (Chemicals).............. 44,000 1,894,510
</TABLE>
See Notes to Financial Statements 23
<PAGE>
Phoenix International Portfolio
<TABLE>
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C> <C>
GERMANY--CONTINUED
Mannesmann AG (Machinery
(Diversified))...................... 23,000 $ 2,496,185
Metro AG (Retail (Department
Stores))............................ 13,100 822,827
Muenchener
Rueckversicherungs-Gesellschaft AG
(Insurance (Reinsurance))........... 4,576 2,111,026
RWE AG (Oil (International
Integrated))........................ 26,800 1,429,731
-------------
16,283,008
-------------
GREECE--0.3%
Alpha Credit Bank (Banks (Major
Regional)).......................... 5,000 475,804
HONG KONG--1.3%
Henderson China Holding Ltd. (Real
Estate Development)................. 780 355
Hong Kong Electric Holdings Ltd.
(Electric Companies)................ 375,000 1,247,094
Swire Pacific Ltd. Class B
(Diversified Miscellaneous)(b)...... 1,800,000 1,266,951
-------------
2,514,400
-------------
HUNGARY--0.6%
Magyar Tavkozlesi Rt. Sponsored ADR
(Telecommunications (Long
Distance)).......................... 40,700 1,111,619
INDONESIA--0.4%
PT Indosat (Telecommunications
(Cellular/Wireless))................ 186,000 268,039
PT Indosat ADR (Telecommunications
(Cellular/ Wireless))............... 38,000 532,000
-------------
800,039
-------------
ITALY--4.6%
Istituto Bancario San Paolo di
Torino (Banks (Money Center))....... 145,464 2,393,772
Mediolanum SPA (Insurance
(Life/Health))...................... 305,000 1,840,038
Telecom Italia Mobile SPA
(Telecommunications
(Cellular/Wireless))................ 365,000 2,398,232
Telecom Italia SPA (Communications
Equipment).......................... 255,000 2,072,260
-------------
8,704,302
-------------
JAPAN--17.1%
77 Bank Ltd. (The) (Banks (Major
Regional)).......................... 154,000 1,437,016
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C> <C>
JAPAN--CONTINUED
Canon, Inc. (Office Equipment &
Supplies)........................... 72,000 $ 1,593,231
Dai Nippon Printing Co., Ltd.
(Specialty Printing)................ 102,000 1,481,207
Fuji Photo Film Co.
(Photography/Imaging)............... 44,000 1,646,599
Hitachi Credit Corp. (Consumer
Finance)............................ 98,000 1,829,726
Ito-Yokado Co., Ltd. (Retail
(General Merchandise)).............. 30,000 1,835,340
Kao Corp. (Personal Care)........... 100,000 1,895,541
Kawasumi Laboratories, Inc. (Health
Care (Medical Products &
Supplies)).......................... 79,000 1,349,658
Kirin Beverage Corp. (Beverages
(Non-Alcoholic)).................... 68,000 1,228,115
Mabuchi Motor Co., Ltd. (Electronics
(Component Distributors))........... 24,000 1,767,003
Nippon COMSYS Corp. (Communications
Equipment).......................... 120,000 1,534,656
Nippon Telegraph & Telephone Corp.
(Telephone)......................... 1,500 1,122,681
Rinnai Corp. (Building Materials)... 87,000 1,468,638
Rohm Co., Ltd (Electronics
(Semiconductors))................... 17,000 1,438,333
Sanwa Bank Ltd. (The) (Banks (Money
Center))............................ 226,000 2,050,032
Secom Co., Ltd. (Services
(Commercial & Consumer))............ 30,000 2,223,397
Shin-Etsu Chemical Co., Ltd.
(Chemicals)......................... 101,000 2,259,599
Suzuki Motor Corp. (Automobiles).... 180,000 2,064,757
Takeda Chemical Industries (Health
Care (Drugs-Major
Pharmaceuticals))................... 63,000 2,126,993
-------------
32,352,522
-------------
MALAYSIA--0.2%
Carlsberg Brewery Malaysia Berhad
(Beverages (Alcoholic))(c).......... 125,000 254,934
Malaysian Oxygen Berhad
(Chemicals)(c)...................... 85,000 136,075
-------------
391,009
-------------
MEXICO--1.3%
Cemex SA de C.V. Class B (Building
Materials).......................... 142,500 419,976
Cemex SA de C.V. CPO (Building
Materials).......................... 4,275 10,357
</TABLE>
24 See Notes to Financial Statements
<PAGE>
Phoenix International Portfolio
<TABLE>
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C> <C>
MEXICO--CONTINUED
Telefonos de Mexico SA Sponsored ADR
Class L (Telephone)................. 43,800 $ 2,039,437
-------------
2,469,770
-------------
NETHERLANDS--7.2%
AKZO Nobel NV (Chemicals)........... 39,700 1,632,494
ASM Lithography Holding NV
(Electronics (Semiconductors))(b)... 56,100 1,638,940
Fortis Amev NV (Insurance
(Multi-Line))....................... 20,000 1,473,843
Getronics NV (Computers (Software &
Services)).......................... 43,700 1,916,164
Koninklijke Ahold NV (Foods)........ 52,900 1,839,561
Koninklijke KPN NV
(Telecommunications (Cellular/
Wireless)).......................... 27,000 1,168,322
Royal Dutch Petroleum Co. (Oil
(International Integrated))......... 42,500 2,041,876
Verenigde Nederlandse
Uitgeversbedrijven NV
(Publishing)........................ 53,400 1,840,143
-------------
13,551,343
-------------
NEW ZEALAND--0.2%
Telecom Corporation of New Zealand
Ltd. (Telecommunications
(Cellular/Wireless))................ 80,000 341,918
PHILIPPINES--0.5%
Ayala Land, Inc. (Real Estate
Development)........................ 1,250,000 388,641
Philippine Long Distance Telephone
Co. Sponsored ADR (Telephone)....... 18,000 472,500
-------------
861,141
-------------
SINGAPORE--0.8%
Rothmans Industries Ltd.
(Tobacco)........................... 150,000 856,112
United Overseas Bank Ltd. (Banks
(Money Center))..................... 105,000 608,842
-------------
1,464,954
-------------
SOUTH AFRICA--0.2%
Liberty Life Association of Africa
(Insurance (Life/ Health)).......... 26,000 444,605
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C> <C>
SPAIN--3.1%
Argentaria, Caja Postal y Banco
Hipotecario de Espana SA (Banks
(Major Regional))................... 71,400 $ 1,667,389
Banco Popular Espanol SA (Banks
(Major Regional))................... 21,700 1,598,693
Banco Santander SA (Banks (Money
Center))............................ 1,684 34,527
Telefonica SA (Telephone)........... 55,900 2,634,153
-------------
5,934,762
-------------
SWEDEN--5.6%
AssiDoman AB (Paper & Forest
Products)........................... 59,000 1,032,727
Astra AB Class A (Health Care
(Drugs-Major Pharmaceuticals))...... 103,100 1,893,609
ForeningsSparbanken AB (Banks (Major
Regional)).......................... 48,000 1,349,029
Mandamus AB (Real Estate
Development)(b)..................... 2,400 12,721
Skandia Forsakrings AB (Insurance
(Multi-Line))....................... 134,000 1,907,797
Svenska Handlesbanken Class A (Banks
(Major Regional))................... 32,900 1,330,194
Telefonaktiebolaget LM Ericsson
Class B (Telecommunications
(Cellular/Wireless))................ 70,000 1,950,077
Volvo AB Class B (Automobiles)...... 50,000 1,164,869
-------------
10,641,023
-------------
SWITZERLAND--8.1%
Nestle AG (Foods)................... 830 1,729,801
Novartis AG Registered Shares
(Health Care (Drugs-Major
Pharmaceuticals))................... 2,540 4,782,499
Roche Holding AG (Health Care
(Drugs-Major Pharmaceuticals))...... 150 1,767,889
Schweizerische
Lebensversicherungs-und
Rentenanstalt Bearer (Insurance
(Life/Health))...................... 2,060 1,444,897
Schweizerische
Rueckersicherungs-Gesellschaft
Registered (Insurance
(Reinsurance))...................... 430 1,090,227
UBS AG (Banks (Money Center))....... 5,900 1,780,825
</TABLE>
See Notes to Financial Statements 25
<PAGE>
Phoenix International Portfolio
<TABLE>
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C> <C>
SWITZERLAND--CONTINUED
Zurich Allied AG (Insurance
(Multi-Line))....................... 3,670 $ 2,629,548
-------------
15,225,686
-------------
TAIWAN--0.2%
Standard Foods Taiwan Ltd. GDR
(Foods)............................. 27,000 307,125
UNITED KINGDOM--21.7%
3I Group PLC (Investment
Banking/Brokerage).................. 67,000 630,364
Bank of Scotland (Banks (Money
Center))............................ 100,000 1,105,903
Barclays PLC (Banks (Money
Center))............................ 45,000 1,021,309
Bass PLC (Beverages (Alcoholic)).... 45,000 620,956
Berkeley Group PLC (The) (Real
Estate Development)................. 55,000 443,929
BG PLC (Oil & Gas (Exploration &
Production))........................ 112,000 768,124
British Aerospace PLC
(Aerospace/Defense)................. 125,400 1,078,394
British Petroleum Co. PLC (Oil
(International Integrated))......... 145,000 2,261,736
British Telecommunications PLC
(Telecommunications
(Cellular/Wireless))................ 150,000 2,056,236
Cable & Wireless PLC
(Telecommunications
(Cellular/Wireless))................ 130,000 1,652,251
Compass Group PLC (Foods)........... 131,000 1,381,701
FirstGroup PLC
(Transportation-Services)........... 104,000 673,775
GKN PLC (Auto Parts & Equipment).... 64,000 706,721
Glaxo Wellcome PLC (Health Care
(Drugs-Major Pharmaceuticals))...... 84,000 2,657,929
Granada Group PLC (Leisure Time
(Products))......................... 55,000 858,808
HSBC Holdings PLC (Banks (Money
Center))............................ 33,000 893,305
Kingfisher PLC (Retail (Department
Stores))............................ 103,800 990,301
Ladbroke Group PLC (Gaming, Lottery
& Parimutuel Companies)............. 143,000 553,504
Legal & General Group PLC (Insurance
(Life/ Health))..................... 96,000 1,176,548
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C> <C>
UNITED KINGDOM--CONTINUED
Lloyds TSB Group PLC (Banks (Money
Center))............................ 140,000 $ 1,946,884
Logica PLC (Computers (Software &
Services)).......................... 110,000 798,891
National Westminster Bank PLC (Banks
(Money Center))..................... 65,000 1,186,617
Norwich Union PLC (Insurance
(Life/Health))...................... 106,000 743,596
Rentokil Initial PLC (Services
(Commercial & Consumer))............ 126,000 811,105
Reuters Group PLC (Services
(Commercial & Consumer))............ 76,000 734,484
Rio Tinto PLC (Metals Mining)....... 47,000 550,806
RMC Group PLC (Building
Materials).......................... 55,000 718,094
Safeway PLC (Foods)................. 138,000 681,071
Schroders PLC (Banks (Money
Center))............................ 38,000 780,272
Shell Transport & Trading Co. PLC
(Oil (International Integrated)).... 160,000 965,271
Siebe PLC (Electrical Equipment).... 224,800 808,900
SmithKline Beecham PLC (Health Care
(Drugs-Major Pharmaceuticals))...... 110,000 1,350,852
Southern Electric PLC (Electric
Companies).......................... 85,000 978,600
Tesco PLC (Foods)................... 352,628 1,041,865
Unilever PLC (Consumer Products
(Miscellaneous)).................... 76,000 790,935
United Utilities PLC (Electric
Companies).......................... 50,000 728,740
Vodafone Group PLC
(Telecommunications
(Cellular/Wireless))................ 108,000 1,595,471
Woolwich PLC (Banks (Major
Regional)).......................... 190,000 1,209,767
Zeneca Group PLC (Health Care
(Drugs-Major Pharmaceuticals))...... 23,000 956,688
-------------
40,910,703
-------------
- - ----------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $165,539,529) 182,986,370
- - ----------------------------------------------------------------------------
</TABLE>
26 See Notes to Financial Statements
<PAGE>
Phoenix International Portfolio
<TABLE>
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C> <C>
RIGHTS--0.0%
GERMANY--0.0%
Metro AG Rights (Retail (Department
Stores))(b)......................... 13,100 $ 28,125
- - ----------------------------------------------------------------------------
TOTAL RIGHTS
(IDENTIFIED COST $0) 28,125
- - ----------------------------------------------------------------------------
WARRANTS--0.0%
GERMANY--0.0%
Muenchener
Rueckversicherungs-Gesellschaft AG
Warrants (Insurance
(Reinsurance))(b)................... 176 7,412
- - ----------------------------------------------------------------------------
TOTAL WARRANTS
(IDENTIFIED COST $0) 7,412
- - ----------------------------------------------------------------------------
FOREIGN PREFERRED STOCKS--0.9%
GERMANY--0.9%
SAP AG Vorzug Pfd. (Computers
(Software & Services)).............. 3,100 1,618,957
- - ----------------------------------------------------------------------------
TOTAL FOREIGN PREFERRED STOCKS
(IDENTIFIED COST $752,357) 1,618,957
- - ----------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--97.8%
(IDENTIFIED COST $166,291,886) 184,640,864
- - ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--2.9%
COMMERCIAL PAPER--2.9%
Home Products Inc., 5.25%,
12/01/98........................ A-1+ $ 1,700 $ 1,700,000
Marsh & McLennan Co., Inc.
4.85%, 12/02/98................. A-1+ 2,235 2,234,699
Preferred Receivables Funding
5.05%, 12/02/98................. A-1 1,610 1,609,774
-------------
5,544,473
-------------
- - ----------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $5,544,473) 5,544,473
- - ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--100.7%
(IDENTIFIED COST $171,836,359) 190,185,337(a)
Cash and receivables, less liabilities--(0.7%) (1,407,840)
-------------
NET ASSETS--100.0% $ 188,777,497
-------------
-------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $25,612,280 and gross
depreciation of $7,326,527 for federal income tax purposes. At November 30,
1998, the aggregate cost of securities for federal income tax purposes was
$171,899,584.
(b) Non-income producing.
(c) Security valued at fair value as determined in good faith by or under the
direction of the directors.
See Notes to Financial Statements 27
<PAGE>
Phoenix International Portfolio
INDUSTRY DIVERSIFICATION
AS A PERCENTAGE OF TOTAL VALUE OF
TOTAL LONG-TERM INVESTMENTS
(UNAUDITED)
<TABLE>
<S> <C>
Aerospace/Defense........................................................ 0.6%
Aluminum................................................................. 0.9
Auto Parts & Equipment................................................... 0.4
Automobiles.............................................................. 4.4
Banks (Major Regional)................................................... 4.9
Banks (Money Center)..................................................... 8.4
Beverages (Alcoholic).................................................... 0.5
Beverages (Non-Alcoholic)................................................ 0.7
Building Materials....................................................... 1.4
Chemicals................................................................ 3.2
Chemicals (Specialty).................................................... 0.5
Communications Equipment................................................. 3.3
Computers (Software & Services).......................................... 2.8
Consumer Finance......................................................... 1.0
Consumer Products (Miscellaneous)........................................ 0.4
Diversified Miscellaneous................................................ 0.7
Health Care (Drugs-Major Pharmaceuticals)................................ 8.3
Health Care (Medical Products & Supplies)................................ 0.7
Electric Companies....................................................... 1.6
Electrical Equipment..................................................... 0.4
Electronics (Component Distributors)..................................... 1.0
Electronics (Semiconductors)............................................. 1.7
Foods.................................................................... 5.7
Gaming, Lottery & Parimutuel Companies................................... 0.3
Insurance (Life/Health).................................................. 3.1
Insurance (Multi-Line)................................................... 4.4
Insurance (Property-Casualty)............................................ 0.6
Insurance (Reinsurance).................................................. 1.7%
Investment Banking/Brokerage............................................. 1.4
Leisure Time (Products).................................................. 0.5
Machinery (Diversified).................................................. 2.1
Metals Mining............................................................ 0.3
Office Equipment & Supplies.............................................. 0.9
Oil & Gas (Drilling & Equipment)......................................... 0.4
Oil & Gas (Exploration & Production)..................................... 0.4
Oil (International Integrated)........................................... 5.0
Paper & Forest Products.................................................. 0.6
Personal Care............................................................ 1.0
Photography/Imaging...................................................... 0.9
Publishing............................................................... 1.0
Real Estate Development.................................................. 0.5
Retail (Building Supplies)............................................... 0.5
Retail (Department Stores)............................................... 2.4
Retail (General Merchandise)............................................. 1.0
Services (Commercial & Consumer)......................................... 2.0
Specialty Printing....................................................... 0.8
Telecommunications (Long Distance)....................................... 0.6
Telecommunications (Cellular/Wireless)................................... 8.2
Telephone................................................................ 4.5
Textiles (Apparel)....................................................... 0.5
Tobacco.................................................................. 0.5
Transportation--Services................................................. 0.4
-----
100.0%
-----
-----
</TABLE>
28 See Notes to Financial Statements
<PAGE>
Phoenix International Portfolio
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $171,836,359) $ 190,185,337
Cash 1,202,278
Foreign currency at value
(Identified cost $576,607) 584,199
Receivables
Investment securities sold 3,991,994
Fund shares sold 604,657
Dividends and interest 170,380
Tax reclaim 169,985
--------------
Total assets 196,908,830
--------------
LIABILITIES
Payables
Fund shares repurchased 5,583,952
Investment securities purchased 2,143,991
Investment advisory fee 119,430
Distribution fee 50,212
Transfer agent fee 45,394
Financial agent fee 6,602
Trustees' fee 5,514
Accrued expenses 176,238
--------------
Total liabilities 8,131,333
--------------
NET ASSETS $ 188,777,497
--------------
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 132,064,884
Undistributed net investment income 805,667
Accumulated net realized gain 37,536,027
Net unrealized appreciation 18,370,919
--------------
NET ASSETS $ 188,777,497
--------------
--------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $171,462,754) 10,731,189
Net asset value per share $15.98
Offering price per share $15.98/(1-4.75%) $16.78
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $17,314,743) 1,121,391
Net asset value and offering price per share $15.44
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 2,953,335
Interest 515,499
Foreign taxes withheld (290,037)
--------------
Total investment income 3,178,797
--------------
EXPENSES
Investment advisory fee 1,350,786
Distribution fee, Class A 414,622
Distribution fee, Class B 142,559
Financial agent fee 127,252
Transfer agent 192,676
Custodian 184,310
Professional 47,799
Printing 40,125
Registration 28,080
Trustees 21,998
Miscellaneous 16,440
--------------
Total expenses 2,566,647
--------------
NET INVESTMENT INCOME 612,150
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 39,063,948
Net realized gain on foreign currency transactions 525,954
Net change in unrealized appreciation (depreciation) on
investments (654,741)
Net change in unrealized appreciation (depreciation) on foreign
currency and foreign currency transactions 20,093
--------------
NET GAIN ON INVESTMENTS 38,955,254
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 39,567,404
--------------
--------------
</TABLE>
See Notes to Financial Statements 29
<PAGE>
Phoenix International Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, November 30,
1998 1997
-------------- --------------
<S> <C> <C>
FROM OPERATIONS
Net investment income $ 612,150 $ 234,826
Net realized gain 39,589,902 11,443,109
Net change in unrealized appreciation
(depreciation) (634,648) (622,326)
-------------- --------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 39,567,404 11,055,609
-------------- --------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A -- (2,608,239)
Net investment income, Class B -- (129,259)
Net realized gains, Class A (12,005,464) (12,021,547)
Net realized gains, Class B (942,871) (658,133)
-------------- --------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS (12,948,335) (15,417,178)
-------------- --------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (14,403,040 and
4,286,206 shares, respectively) 222,721,708 59,385,258
Net asset value of shares issued from
reinvestment of distributions
(829,298 and 1,013,490 shares, respectively) 10,631,599 12,960,134
Cost of shares repurchased (13,954,794 and
5,208,361 shares, respectively) (218,052,596) (72,329,439)
-------------- --------------
Total 15,300,711 15,953
-------------- --------------
CLASS B
Proceeds from sales of shares (1,090,651 and
728,032 shares, respectively) 16,507,911 9,939,001
Net asset value of shares issued from
reinvestment of distributions
(68,327 and 56,632 shares, respectively) 852,722 713,037
Cost of shares repurchased (786,659 and 524,764
shares, respectively) (12,000,603) (7,287,447)
-------------- --------------
Total 5,360,030 3,364,591
-------------- --------------
INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS 20,660,741 3,380,544
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS 47,279,810 (981,025)
NET ASSETS
Beginning of period 141,497,687 142,478,712
-------------- --------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET
INVESTMENT INCOME AND DISTRIBUTIONS IN EXCESS
OF NET INVESTMENT INCOME OF $805,667 AND
($332,438), RESPECTIVELY) $ 188,777,497 $ 141,497,687
-------------- --------------
-------------- --------------
</TABLE>
30 See Notes to Financial Statements
<PAGE>
Phoenix International Portfolio
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------
YEAR ENDED NOVEMBER 30
----------------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.89 $ 14.48 $ 12.20 $ 12.63 $ 11.16
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss) 0.06(1) 0.03(1) 0.04(1) 0.03(1) (0.01)
Net realized and unrealized gain 3.27 1.01 2.28 0.42 1.48
---------- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 3.33 1.04 2.32 0.45 1.47
---------- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.29) -- -- --
Dividends from net realized gains (1.24) (1.34) (0.04) (0.88) --
---------- ----- ----- ----- -----
TOTAL DISTRIBUTIONS (1.24) (1.63) (0.04) (0.88) --
---------- ----- ----- ----- -----
Change in net asset value 2.09 (0.59) 2.28 (0.43) 1.47
---------- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 15.98 $ 13.89 $ 14.48 $ 12.20 $ 12.63
---------- ----- ----- ----- -----
---------- ----- ----- ----- -----
Total return(2) 26.17% 8.21% 19.03% 4.12% 13.17%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $171,463 $131,338 $135,524 $129,352 $167,918
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.37% 1.56% 1.57% 1.70% 1.47%
Net investment income 0.40% 0.22% 0.33% 0.23% 0.20%
Portfolio turnover 104% 167% 151% 236% 186%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------------
FROM
YEAR ENDED NOVEMBER 30 INCEPTION
------------------------------------------------------- 7/15/94 TO
1998 1997 1996 1995 11/30/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.56 $ 14.22 $ 12.07 $ 12.60 $ 12.80
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss) (0.05)(1) (0.08)(1) (0.05)(1) (0.07)(1) (0.01)
Net realized and unrealized gain
(loss) 3.17 1.00 2.24 0.42 (0.19)
---------- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 3.12 0.92 2.19 0.35 (0.20)
---------- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.24) -- -- --
Dividends from net realized gains (1.24) (1.34) (0.04) (0.88) --
---------- ----- ----- ----- -----
TOTAL DISTRIBUTIONS (1.24) (1.58) (0.04) (0.88) --
---------- ----- ----- ----- -----
Change in net asset value 1.88 (0.66) 2.15 (0.53) (0.20)
---------- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 15.44 $ 13.56 $ 14.22 $ 12.07 $ 12.60
---------- ----- ----- ----- -----
---------- ----- ----- ----- -----
Total return(2) 25.17% 7.37% 18.16% 3.28% (1.56)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $17,315 $10,159 $6,955 $3,261 $1,991
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.11% 2.31% 2.31% 2.50% 1.93%(3)
Net investment income (0.34)% (0.55)% (0.39)% (0.61)% 0.36%(3)
Portfolio turnover 104% 167% 151% 236% 186%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(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.
See Notes to Financial Statements 31
<PAGE>
Phoenix Real Estate Securities Portfolio
INVESTMENTS AT NOVEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C> <C>
COMMON STOCKS--98.7%
REAL ESTATE INVESTMENT TRUSTS--98.4%
COMMERCIAL--45.8%
OFFICE/INDUSTRIAL--43.4%
Alexandria Real Estate Equities, Inc.... 30,000 $ 926,250
Boston Properties, Inc.................. 92,200 2,910,062
Duke Realty Investments, Inc............ 93,400 2,119,012
Equity Office Properties Trust.......... 40,360 1,014,045
First Industrial Realty Trust, Inc...... 59,000 1,427,062
Highwoods Properties, Inc............... 58,000 1,576,875
Mack-Cali Realty Corp................... 57,900 1,718,906
Reckson Associates Realty Corp.......... 60,700 1,399,894
Spieker Properties, Inc................. 79,400 2,868,325
TriNet Corporate Realty Trust, Inc...... 60,000 1,608,750
Weeks Corp.............................. 37,300 1,067,712
------------
18,636,893
------------
STORAGE--2.4%
Storage USA, Inc........................ 31,700 1,006,475
- - -------------------------------------------------------------------------------
TOTAL COMMERCIAL 19,643,368
- - -------------------------------------------------------------------------------
DIVERSIFIED--16.3%
Colonial Properties Trust............... 55,000 1,488,438
Crescent Real Estate Equities Co........ 96,400 2,391,925
Vornado Realty Trust.................... 81,500 3,097,000
------------
6,977,363
------------
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C> <C>
HEALTH CARE--3.9%
Nationwide Health Properties, Inc....... 56,400 $ 1,261,950
OMEGA Healthcare Investors, Inc......... 14,000 425,250
------------
1,687,200
------------
HOTELS--2.9%
Patriot American Hospitality, Inc....... 55,301 407,845
Starwood Hotels & Resorts............... 27,600 838,350
------------
1,246,195
------------
RESIDENTIAL--18.4%
APARTMENTS--13.9%
Avalonbay Communities, Inc.............. 40,700 1,378,713
Equity Residential Properties Trust..... 54,800 2,318,725
Essex Property Trust, Inc............... 38,400 1,188,000
Irvine Apartment Communities, Inc....... 40,500 1,085,906
------------
5,971,344
------------
MANUFACTURED HOMES--4.5%
Manufactured Home Communities, Inc...... 41,500 1,016,750
Sun Communities, Inc.................... 28,200 918,263
------------
1,935,013
------------
- - -------------------------------------------------------------------------------
TOTAL RESIDENTIAL 7,906,357
- - -------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements 35
<PAGE>
Phoenix Real Estate Securities Portfolio
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C> <C>
RETAIL--11.1%
FACTORY OUTLET--2.5%
Chelsea GCA Realty, Inc................. 31,600 $ 1,068,475
REGIONAL MALLS--6.4%
Macerich Co. (The)...................... 43,800 1,166,175
Simon Property Group, Inc............... 22,208 657,912
Urban Shopping Centers, Inc............. 28,000 920,500
------------
2,744,587
------------
STRIP CENTERS--2.2%
Developers Diversified Realty Corp...... 49,200 950,175
- - -------------------------------------------------------------------------------
TOTAL RETAIL 4,763,237
- - -------------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(IDENTIFIED COST $43,212,338) 42,223,720
- - -------------------------------------------------------------------------------
REAL ESTATE OPERATING COMPANIES--0.3%
COMMERCIAL--0.2%
OFFICE/INDUSTRIAL--0.2%
Reckson Services Industries, Inc........ 29,136 85,587
DIVERSIFIED--0.1%
Vornado Operating Inc.(b)............... 4,075 25,978
HEALTH CARE--0.0%
OMEGA Worldwide, Inc.(b)................ 4,641 21,176
- - -------------------------------------------------------------------------------
TOTAL REAL ESTATE OPERATING COMPANIES
(IDENTIFIED COST $122,775) 132,741
- - -------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $43,335,113) 42,356,461
- - -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------ -------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--1.9%
COMMERCIAL PAPER--1.9%
Exxon Imperial, Inc. 5.32%, 12/1/98..... A-1+ $820 $ 820,000
- - -------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $820,000) 820,000
- - -------------------------------------------------------------------------------
TOTAL INVESTMENTS--100.6%
(IDENTIFIED COST $44,155,113) 43,176,461(a)
Cash and receivables, less liabilities--(0.6)% (252,796)
-------------
NET ASSETS--100.0% $ 42,923,665
-------------
-------------
</TABLE>
(a) Federal Income Tax Information: Net depreciation of investment securities
is comprised of gross appreciation of $4,041,966 and gross depreciation of
$5,021,622 for federal income tax purposes. At November 30, 1998, the
aggregate cost of securities for federal income tax purpose was
$44,156,117.
(b) Non-income producing.
36 See Notes to Financial Statements
<PAGE>
Phoenix Real Estate Securities Portfolio
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $44,155,113) $ 43,176,461
Cash 4,134
Receivables
Dividends and interest 59,631
Fund shares sold 15,882
--------------
Total assets 43,256,108
--------------
LIABILITIES
Payables
Fund shares repurchased 209,329
Distribution fee 20,136
Investment advisory fee 15,045
Transfer agent fee 5,624
Financial agent fee 5,533
Trustees' fee 5,515
Accrued expenses 71,261
--------------
Total liabilities 332,443
--------------
NET ASSETS $ 42,923,665
--------------
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 43,409,899
Undistributed net investment income 563,936
Accumulated net realized loss (71,518)
Net unrealized depreciation (978,652)
--------------
NET ASSETS $ 42,923,665
--------------
--------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $24,686,262) 2,015,284
Net asset value per share $12.25
Offering price per share $12.25/(1-4.75%) $12.86
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $18,237,403) 1,496,083
Net asset value and offering price per share $12.19
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 2,674,086
Interest 40,807
--------------
Total investment income 2,714,893
--------------
EXPENSES
Investment advisory fee 398,336
Distribution fee, Class A 77,859
Distribution fee, Class B 219,679
Financial agent fee 74,616
Transfer agent 86,663
Professional 33,199
Registration 24,441
Printing 21,794
Trustees 20,071
Custodian 9,930
Miscellaneous 5,549
--------------
Total expenses 972,137
Less expenses borne by investment adviser (111,386)
--------------
Net expenses 860,751
--------------
NET INVESTMENT INCOME 1,854,142
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (70,514)
Net change in unrealized appreciation (depreciation) on
investments (12,098,214)
--------------
NET LOSS ON INVESTMENTS (12,168,728)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (10,314,586)
--------------
--------------
</TABLE>
See Notes to Financial Statements 37
<PAGE>
Phoenix Real Estate Securities Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, November 30,
1998 1997
-------------- --------------
<S> <C> <C>
FROM OPERATIONS
Net investment income $ 1,854,142 $ 1,449,798
Net realized gain (loss) (70,514) 3,771,039
Net change in unrealized appreciation
(depreciation) (12,098,214) 6,590,856
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS (10,314,586) 11,811,693
-------------- --------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (967,687) (1,017,253)
Net investment income, Class B (535,003) (412,660)
Net realized gains, Class A (2,254,756) (436,592)
Net realized gains, Class B (1,514,857) (164,397)
-------------- --------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS (5,272,303) (2,030,902)
-------------- --------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (445,657 and
1,072,429 shares, respectively) 6,419,885 15,754,217
Net asset value of shares issued from
reinvestment of distributions
(207,094 and 96,059 shares, respectively) 3,035,928 1,368,531
Cost of shares repurchased (855,051 and 692,074
shares, respectively) (11,951,570) (10,024,000)
-------------- --------------
Total (2,495,757) 7,098,748
-------------- --------------
CLASS B
Proceeds from sales of shares (362,036 and
851,567 shares, respectively) 5,231,142 12,428,285
Net asset value of shares issued from
reinvestment of distributions
(120,031 and 32,975 shares, respectively) 1,757,836 472,566
Cost of shares repurchased (400,698 and 100,202
shares, respectively) (5,408,854) (1,484,452)
-------------- --------------
Total 1,580,124 11,416,399
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE
TRANSACTIONS (915,633) 18,515,147
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS (16,502,522) 28,295,938
NET ASSETS
Beginning of period 59,426,187 31,130,249
-------------- --------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET
INVESTMENT INCOME OF $563,936 AND $212,484,
RESPECTIVELY) $ 42,923,665 $ 59,426,187
-------------- --------------
-------------- --------------
</TABLE>
38 See Notes to Financial Statements
<PAGE>
Phoenix Real Estate Securities Portfolio
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------
FROM
YEAR ENDED NOVEMBER 30 INCEPTION
-------------------------------------------- 3/1/95 TO
1998 1997 1996 11/30/95
----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.39 $ 13.14 $ 10.72 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.55(4)(5) 0.49(4)(5) 0.53(5) 0.43(4)(5)
Net realized and unrealized gain
(loss) (3.18) 3.52 2.50 0.55
---------- ----- ----- ----------
TOTAL FROM INVESTMENT
OPERATIONS (2.63) 4.01 3.03 0.98
---------- ----- ----- ----------
LESS DISTRIBUTIONS
Dividends from net investment
income (0.44) (0.51) (0.59) (0.26)
Dividends from net realized gains (1.07) (0.25) (0.02) --
---------- ----- ----- ----------
TOTAL DISTRIBUTIONS (1.51) (0.76) (0.61) (0.26)
---------- ----- ----- ----------
Change in net asset value (4.14) 3.25 2.42 0.72
---------- ----- ----- ----------
NET ASSET VALUE, END OF PERIOD $ 12.25 $ 16.39 $ 13.14 $ 10.72
---------- ----- ----- ----------
---------- ----- ----- ----------
Total return(1) (17.42)% 31.44% 29.20% 9.87%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $24,686 $36,336 $22,872 $13,842
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.31% 1.30% 1.30% 1.30%(2)
Net investment income 3.79% 3.34% 4.55% 5.79%(2)
Portfolio turnover 11% 54% 24% 9%(3)
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------
FROM
YEAR ENDED NOVEMBER 30 INCEPTION
-------------------------------------------- 3/1/95 TO
1998 1997 1996 11/30/95
----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.32 $ 13.10 $ 10.68 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.43(4)(6) 0.38(4)(6) 0.46(6) 0.36(4)(6)
Net realized and unrealized gain
(loss) (3.15) 3.50 2.47 0.56
---------- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS (2.72) 3.88 2.93 0.92
---------- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment
income (0.34) (0.41) (0.49) (0.24)
Dividends from net realized gains (1.07) (0.25) (0.02) --
---------- ----- ----- -----
TOTAL DISTRIBUTIONS (1.41) (0.66) (0.51) (0.24)
---------- ----- ----- -----
Change in net asset value (4.13) 3.22 2.42 0.68
---------- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 12.19 $ 16.32 $ 13.10 $ 10.68
---------- ----- ----- -----
---------- ----- ----- -----
Total return(1) (18.01)% 30.44% 28.25% 9.21%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $18,237 $23,091 $8,259 $2.239
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.06% 2.05% 2.05% 2.05%(2)
Net investment income 3.07% 2.55% 3.95% 5.03%(2)
Portfolio turnover 11% 54% 24% 9%(3)
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of
$0.02, $0.04, $0.07 and $0.12, respectively.
(6) Includes reimbursement of operating expenses by investment adviser of
$0.02, $0.04, $0.07 and $0.12, respectively.
See Notes to Financial Statements
39
<PAGE>
Phoenix Emerging Markets Bond Portfolio
INVESTMENTS AT NOVEMBER 30, 1998
<TABLE>
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
FOREIGN GOVERNMENT SECURITIES--68.2%
ALGERIA--2.5%
Algeria Tranch 1 Unaffected Loans
7.188%, 3/4/00(b)....................... NR $ 2,300 $ 2,029,750
ARGENTINA--20.6%
Republic of Argentina Bocon Pre1 M1, PIK
interest capitalization, 2.909%,
4/1/01(b)............................... Ba 2,513(e) 2,226,587
Republic of Argentina Bocon Pro1 M1, PIK
interest capitalization, 2.909%,
4/1/07(b)............................... Ba 8,671(e) 5,669,526
Republic of Argentina RegS 8.75%,
7/10/02................................. Ba 5,010(e) 4,202,894
Republic of Argentina RegS 11.75%,
2/12/07................................. Ba 5,000(e) 4,394,541
-------------
16,493,548
-------------
BRAZIL--16.8%
Brazil MYDFA Trust Certificate RegS
6.25%, 9/15/07(b)....................... NR 7,790 5,180,556
Republic of Brazil C Bond, PIK interest
capitalization, 8%, 4/15/14(b).......... B 88 58,292
Republic of Brazil FLIRB Registered 5%,
4/15/09(b).............................. B 2,000 1,130,000
Republic of Brazil NMB-L Bearer 6.188%,
4/15/09(b).............................. B 8,250 5,419,219
Republic of Brazil NMB-L Registered
Series RG 6.188%, 4/15/09(b)............ B 2,500 1,642,187
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
BRAZIL--CONTINUED
Republic of Brazil Series EI-L 6.125%,
4/15/06(b).............................. B $ 96 $ 71,280
-------------
13,501,534
-------------
BULGARIA--2.2%
Republic of Bulgaria FLIRB RegA 2.50%,
7/28/12(b).............................. B 1,250 768,750
Republic of Bulgaria FLIRB Series A
Bearer Euro 2.50%, 7/28/12(b)........... B 1,615 993,225
-------------
1,761,975
-------------
ECUADOR--3.2%
Ecuador Bearer PDI Euro, PIK interest
capitalization, 6.625%, 2/17/15(b)...... B 3,123 1,546,061
Ecuador Global Bearer Series IE 6.563%,
12/21/04(b)............................. B 825 585,750
Ecuador Registered PDI Euro, PIK
interest capitalization, 6.625%,
2/27/15(b).............................. B 905 448,135
-------------
2,579,946
-------------
IVORY COAST--0.1%
Ivory Coast FLIRB Series FRF 2%,
3/29/18(b)(k)........................... NR 950(f) 49,416
Ivory Coast PDI Series FRF 1.90%,
12/29/49(b)(k).......................... NR 630(f) 33,882
-------------
83,298
-------------
</TABLE>
42 See Notes to Financial Statements
<PAGE>
Phoenix Emerging Markets Bond Portfolio
<TABLE>
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
KOREA--2.5%
Korean Won Denominated Bond 0%,
4/26/99................................. NR $ 2,600(i) $ 2,004,671
MEXICO--6.8%
United Mexican States 6.63%,
12/31/19(j)............................. Ba 8,250(f) 1,152,862
United Mexican States Global Bond
11.375%, 9/15/16........................ Ba 2,000 2,135,000
United Mexican States Global Bond
11.50%, 5/15/26......................... Ba 2,050 2,198,625
-------------
5,486,487
-------------
MOROCCO--1.0%
Morocco Restructure & Consolidation
Agreement Series A 6.063%, 1/1/09(b).... NR 1,000 815,000
NIGERIA--1.6%
Nigeria Promissory Notes 5.092%,
1/5/10.................................. NR 1,841 1,241,927
PANAMA--0.8%
Republic of Panama 8.875%, 9/30/27...... Ba 700 663,250
PERU--0.7%
Peru FLIRB 3.25%, 3/7/17(b)............. BB(d) 1,000 567,500
POLAND--1.5%
Poland Treasury Bill 0%, 1/13/99........ NR 4,310(g) 1,217,093
RUSSIA--5.1%
Russia Federal Loan Bond Series 25022
15%, 2/23/00............................ NR 25,556(h) 592,843
Russia IAN Series U.S. 6.625%,
12/15/15................................ Ca 197 25,164
Russia Principal Loans, PIK interest
capitalization, 6.625%,
12/15/20(b)(l).......................... NR 250 17,188
Russia Treasury Bill OFZ 14%, 9/12/01... NR 52,885(h) 438,558
Russian Federated Government Bond 144A
11%, 7/24/18(c)......................... B 5,418 1,381,590
Russian Federated Government Bond RegS
11%, 7/24/18............................ B 6,500 1,657,500
-------------
4,112,843
-------------
VENEZUELA--2.8%
Republic of Venezuela DCB Series DL
6.625%, 12/18/07(b)..................... B 1,131 647,469
Republic of Venezuela FLIRB Series A
6.125%, 3/31/07(b)...................... B 1,619 890,472
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
VENEZUELA--CONTINUED
Republic of Venezuela FLIRB Series B
6.125%, 3/31/07(b)...................... B $ 1,214 $ 667,854
-------------
2,205,795
-------------
- - --------------------------------------------------------------------------------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(IDENTIFIED COST $56,794,106) 54,764,617
- - --------------------------------------------------------------------------------------
FOREIGN CORPORATE BONDS--29.0%
ARGENTINA--2.0%
Acindar Industria Argentina de Aceros SA
11.25%, 2/15/04 (Iron & Steel).......... B 1,000 855,000
Imasac 11%, 5/2/05 (Broadcasting
(Television, Radio & Cable))............ B 1,000 745,000
-------------
1,600,000
-------------
BRAZIL--8.6%
Globo Communicacoes Co. 144A 10.625%,
12/5/08 (Telecommunications (Long
Distance))(c)........................... B 1,100 825,000
Localiza Rent a Car 10.25%, 10/1/05
(Services (Commercial & Consumer))...... B 1,500 930,000
MRS. Logistica SA RegS Series A 9%,
8/15/05 (Transportation (Railroads)).... B(d) 2,000 1,515,400
MRS. Logistica SA RegS Series B 10.625%,
8/15/05 (Transportation (Railroads)).... B(d) 1,500 818,400
Petroleo Ipirang 10.625%, 2/25/02 (Oil &
Gas)(b)................................. NR 1,000 905,000
Tevecap SA Senior Notes 12.625%,
11/26/04 (Broadcasting (Television,
Radio & Cable))......................... B 1,600 1,080,000
TV Bandeirantes 144A 12.875%, 5/15/06
(Publishing (Newspapers))(c)............ B 1,500 825,000
-------------
6,898,800
-------------
INDONESIA--3.0%
APP Finance II Mauritius, Ltd. 0%,
12/29/49(b)............................. Caa 3,890 2,372,900
JAMAICA--1.4%
Mechala Group Jamaica Series B 12.75%,
12/30/99 (Engineering & Construction)... NR 1,500 1,132,500
</TABLE>
See Notes to Financial Statements 43
<PAGE>
Phoenix Emerging Markets Bond Portfolio
<TABLE>
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
MEXICO--13.1%
Azteca Holdings SA 11%, 6/15/02
(Broadcasting (Television, Radio &
Cable))................................. B $ 1,000 $ 890,000
Bufete Industrial RegS Series B-22
11.375%, 7/15/99 (Engineering &
Construction)........................... B 500 407,500
Corporacion Geo SA de C.V. RegS Series 1
10%, 5/23/02
(Homebuilding).......................... NR 610 527,650
Dine SA de C.V. RegS 8.75%, 10/15/07
(Diversified)........................... Ba 745 666,775
Grupo Elektra SA de C.V. 12.75%, 5/15/01
(Banks (Major Regional))................ B(d) 1,000 955,000
Grupo Industrial Durango 12%, 7/15/01
(Paper & Forest Products)............... B 800 756,000
Grupo Industrial Durango 12.625%, 8/1/03
(Paper & Forest Products)............... B 2,000 1,850,000
Innova S de R.L. Sr. Notes 12.875%,
4/1/07 (Broadcasting (Television, Radio
& Cable))............................... B 1,000 795,000
Sanluis Corp SA de C.V. 8.875%, 3/18/08
(Auto Parts & Equipment)................ NR 1,000 825,000
Transporte Maritma Yankee Senior Notes
10%, 11/15/06 (Services (Commercial &
Consumer)).............................. Ba 1,000 860,000
Vicap SA 11.375%, 5/15/07 (Banks (Money
Center))................................ Ba 2,100 1,953,000
-------------
10,485,925
-------------
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
NETHERLANDS--0.9%
TJIWI Kim-Global 13.25%, 8/1/01 (Paper &
Forest Products)........................ Caa $ 1,000 $ 735,000
RUSSIA--0.0%
Unexim International Finance RegS
9.875%, 8/1/00 (Banks (Money Center))... Ca 200 15,000
- - --------------------------------------------------------------------------------------
TOTAL FOREIGN CORPORATE BONDS
(IDENTIFIED COST $23,651,955) 23,240,125
- - --------------------------------------------------------------------------------------
FOREIGN CONVERTIBLE BONDS--0.3%
CANADA--0.3%
PLD Telekom Cv. 144A 9%, 6/1/06
(Telephone)(c).......................... NR 600 225,000
- - --------------------------------------------------------------------------------------
TOTAL FOREIGN CONVERTIBLE BONDS
(IDENTIFIED COST $750,000) 225,000
- - --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL LONG-TERM INVESTMENTS--97.5%
(IDENTIFIED COST $81,196,061) 78,229,742
-------------
TOTAL INVESTMENTS--97.5%
(IDENTIFIED COST $81,196,061) 78,229,742(a)
Cash and receivables, less liabilities--2.5% 1,969,430
-------------
NET ASSETS--100.0% $ 80,199,172
-------------
-------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $5,913,750 and gross
depreciation of $12,201,280 for federal income tax purposes. At November
30, 1998, the aggregate cost of securities for federal income tax purposes
was $84,517,272.
(b) Variable or step coupon security; interest rate reflects the rate currently
in effect.
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At November 30,
1998, these securities amounted to a value of $3,256,590 or 4.1% of net
assets.
(d) As rated by Standard & Poor's, Fitch or Duff & Phelps.
(e) Par value represents Argentine Pesos.
(f) Par value represents French Francs.
(g) Par value represents Polish Zloty.
(h) Par value represents Russian Rubles.
(i) Par value represents South Korean Won rounded in millions.
(j) Rights incorporated as a unit.
(k) Non-income producing.
(l) Security defaulted subsequent to November 30, 1998.
44 See Notes to Financial Statements
<PAGE>
Phoenix Emerging Markets Bond Portfolio
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $81,196,061) $ 78,229,742
Cash 1,094,350
Receivables
Investment securities sold 3,140,067
Interest 2,173,419
Fund shares sold 1,455,780
--------------
Total assets 86,093,358
--------------
LIABILITIES
Payables
Investment securities purchased 5,394,296
Fund shares repurchased 323,944
Investment advisory fee 46,730
Distribution fee 37,647
Transfer agent fee 9,441
Financial agent fee 7,090
Trustees' fee 5,515
Accrued expenses 69,523
--------------
Total liabilities 5,894,186
--------------
NET ASSETS $ 80,199,172
--------------
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 131,968,368
Distributions in excess of net investment income (50,697)
Accumulated net realized loss (48,714,714)
Net unrealized depreciation (3,003,785)
--------------
NET ASSETS $ 80,199,172
--------------
--------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $41,724,985) 5,795,710
Net asset value per share $7.20
Offering price per share $7.20/(1-4.75%) $7.56
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $37,269,642) 5,223,771
Net asset value and offering price per share $7.13
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $1,204,545) 168,054
Net asset value and offering price per share $7.17
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 15,021,162
Foreign taxes withheld (228,185)
--------------
Total investment income 14,792,977
--------------
EXPENSE
Investment advisory fee 730,717
Distribution fee, Class A 142,226
Distribution fee, Class B 400,847
Distribution fee, Class C 4,491
Financial agent fee 94,013
Transfer agent 155,061
Custodian 69,768
Professional 35,321
Registration 35,213
Printing 17,591
Trustees 17,063
Miscellaneous 2,434
--------------
Total expenses 1,704,745
--------------
NET INVESTMENT INCOME 13,088,232
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (39,143,275)
Net realized loss on foreign currency transactions (4,055,155)
Net realized gain on written options 49,783
Net change in unrealized appreciation (depreciation)
on investments 1,606,800
Net change in unrealized appreciation (depreciation) on
foreign currency and foreign currency transactions (37,466)
--------------
NET LOSS ON INVESTMENTS (41,579,313)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (28,491,081)
--------------
--------------
</TABLE>
See Notes to Financial Statements 45
<PAGE>
Phoenix Emerging Markets Bond Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
11/30/98 11/30/97
-------------- --------------
<S> <C> <C>
FROM OPERATIONS
Net investment income $ 13,088,232 $ 7,435,613
Net realized gain (loss) (43,148,647) 1,466,964
Net change in unrealized appreciation
(depreciation) 1,569,334 (7,091,439)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS (28,491,081) 1,811,138
-------------- --------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (5,581,936) (4,916,690)
Net investment income, Class B (3,942,930) (2,280,551)
Net investment income, Class C (54,521) --
Net realized gains, Class A (1,201,906) (4,477,700)
Net realized gains, Class B (697,910) (1,490,259)
Net realized gains, Class C -- --
In excess of net realized gains, Class A (6,002,330) --
In excess of net realized gains, Class B (3,485,367) --
In excess of net realized gains, Class C -- --
Tax return of capital, Class A (1,984,297) --
Tax return of capital, Class B (1,343,438) --
Tax return of capital, Class C (14,524) --
-------------- --------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS (24,309,159) (13,165,200)
-------------- --------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (2,907,456 and
4,047,705 shares, respectively) 27,208,118 56,372,468
Net asset value of shares issued from
reinvestment of distributions
(1,029,832 and 636,006 shares, respectively) 10,935,153 8,387,234
Cost of shares repurchased (3,428,413 and
1,401,387 shares, respectively) (34,342,515) (19,377,800)
-------------- --------------
Total 3,800,756 45,381,902
-------------- --------------
CLASS B
Proceeds from sales of shares (3,220,244 and
2,934,383 shares, respectively) 30,065,148 41,013,074
Net asset value of shares issued from
reinvestment of distributions
(492,109 and 163,679 shares, respectively) 4,864,295 2,172,877
Cost of shares repurchased (1,516,158 and
727,786 shares, respectively) (13,762,067) (10,039,719)
-------------- --------------
Total 21,167,376 33,146,232
-------------- --------------
CLASS C
Proceeds from sales of shares (170,364 and 0
shares, respectively) 1,509,747 --
Net asset value of shares issued from
reinvestment of distributions
(2,515 and 0 shares, respectively) 19,878 --
Cost of shares repurchased (4,825 and 0 shares,
respectively) (46,423) --
-------------- --------------
Total 1,483,202 --
-------------- --------------
INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS 26,451,334 78,528,134
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS (26,348,906) 67,174,072
NET ASSETS
Beginning of period 106,548,078 39,374,006
-------------- --------------
END OF PERIOD (INCLUDING DISTRIBUTIONS IN EXCESS
OF NET INVESTMENT INCOME AND UNDISTRIBUTED NET
INVESTMENT INCOME OF $(50,697) AND $362,088,
RESPECTIVELY) $ 80,199,172 $ 106,548,078
-------------- --------------
-------------- --------------
</TABLE>
46 See Notes to Financial Statements
<PAGE>
Phoenix Emerging Markets Bond Portfolio
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------
FROM
YEAR ENDED NOVEMBER 30 INCEPTION
---------------------------------------- 9/5/95 TO
1998 1997 1996 11/30/95
----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.84 $ 14.80 $ 10.18 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 1.32 1.38(4) 1.26(5) 0.25(4)(5)
Net realized and unrealized gain
(loss) (4.22) 0.17 4.56 0.18
----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS (2.90) 1.55 5.82 0.43
----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment
income (1.00) (1.28) (1.20) (0.25)
Dividends from net realized gains (0.23) (2.23) -- --
Distributions in excess of net
realized gains (1.16) -- -- --
Return of capital (0.35) -- -- --
----- ----- ----- -----
TOTAL DISTRIBUTIONS (2.74) (3.51) (1.20) (0.25)
----- ----- ----- -----
Change in net asset value (5.64) (1.96) 4.62 0.18
----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 7.20 $ 12.84 $ 14.80 $ 10.18
----- ----- ----- -----
----- ----- ----- -----
Total return(1) (27.20)% 11.91% 60.18% 4.40%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $41,725 $67,875 $29,661 $12,149
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.43% 1.40%(7) 1.50% 1.50%(2)
Net investment income 13.74% 9.90% 10.41% 10.48%(2)
Portfolio turnover 405% 614% 378% 38%(3)
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------
FROM
YEAR ENDED NOVEMBER 30 INCEPTION
---------------------------------------- 9/5/95 TO
1998 1997 1996 11/30/95
----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.77 $ 14.78 $ 10.18 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 1.23 1.26(4) 1.19(6) 0.22(4)(6)
Net realized and unrealized gain
(loss) (4.18) 0.18 4.53 0.20
----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS (2.95) 1.44 5.72 0.42
----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment
income (0.97) (1.22) (1.12) (0.24)
Dividends from net realized gains (0.23) (2.23) -- --
Distributions in excess of net
realized gains (1.16) -- -- --
Return of capital (0.33) -- -- --
----- ----- ----- -----
TOTAL DISTRIBUTIONS (2.69) (3.45) (1.12) (0.24)
----- ----- ----- -----
Change in net asset value (5.64) (2.01) 4.60 0.18
----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 7.13 $ 12.77 $ 14.78 $ 10.18
----- ----- ----- -----
----- ----- ----- -----
Total return(1) (27.86)% 11.07% 58.94% 4.22%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $37,270 $38,673 $9,713 $596
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.20% 2.15%(7) 2.25% 2.25%(2)
Net investment income 12.98% 9.14% 9.79% 10.29%(2)
Portfolio turnover 405% 614% 378% 38%(3)
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of $0.07
and $0.03, respectively.
(6) Includes reimbursement of operating expenses by investment adviser of $0.07
and $0.03, respectively.
(7) For the year ended November 30, 1997, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees. Prior period ratios include these amounts.
See Notes to Financial Statements 47
<PAGE>
Phoenix Emerging Markets Bond Portfolio
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS C
----------
FROM
INCEPTION
3/26/98 TO
11/30/98
----------
<S> <C>
Net asset value, beginning of period $ 12.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.85(4)
Net realized and unrealized gain
(loss) (5.10)
-----
TOTAL FROM INVESTMENT OPERATIONS (4.25)
-----
LESS DISTRIBUTIONS
Dividends from net investment income (0.66)
Dividends from net realized gains --
Distributions in excess of net
realized gains --
Return of capital (0.17)
-----
TOTAL DISTRIBUTIONS (0.83)
-----
Change in net asset value (5.08)
-----
NET ASSET VALUE, END OF PERIOD $ 7.17
-----
-----
Total return(1) (35.33)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $1,205
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.29%(2)
Net investment income 15.59%(2)
Portfolio turnover 405%(3)
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
48 See Notes to Financial Statements
<PAGE>
Phoenix Strategic Income Portfolio
INVESTMENTS AT NOVEMBER 30, 1998
<TABLE>
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- -----------
<S> <C> <C> <C>
MUNICIPAL BONDS--4.9%
FLORIDA--0.8%
University of Miami Exchangeable Revenue
Bond Series A Taxable 7.65%,
4/1/20(c)............................... Aaa $ 45 $ 48,769
ILLINOIS--2.3%
Illinois Educational Facilities
Authority Revenue Bond--Loyola
University Series A Taxable 7.84%,
7/1/24.................................. Aaa 125 140,625
PENNSYLVANIA--1.8%
Pennsylvania Economic Development
Financing Authority Recycling Revenue
Bond Series B 9.25%, 1/1/12(e)(h)....... NR 200 114,000
- - ------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(IDENTIFIED COST $378,170) 303,394
- - ------------------------------------------------------------------------------
CORPORATE BONDS--32.3%
COMPUTERS (SOFTWARE & SERVICES)--1.6%
PSINET, Inc. Series B 10%, 2/15/05...... B 100 101,000
COSMETICS/PERSONAL CARE--2.2%
Revlon Consumer Products Sr. Notes
8.625%, 2/1/08.......................... B 75 74,250
Revlon Consumer Products Sr. Notes 144A
9%, 11/1/06(b).......................... B 60 62,175
-----------
136,425
-----------
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- -----------
<S> <C> <C> <C>
GAMING, LOTTERY & PARIMUTUEL COMPANIES--1.1%
Mashantucket Pequot Tribe Revenue Bond
Series A 144A 6.57%, 9/1/13(b).......... Aaa $ 70 $ 70,525
HEALTH CARE (DIVERSIFIED)--3.7%
Bally Total Fitness Holding Corp. Sr.
Notes Series B, 9.875%, 10/15/07........ B 150 148,875
Global Health Sciences Series 11%,
5/1/08.................................. Caa 100 80,000
-----------
228,875
-----------
HEALTH CARE (DRUGS--MAJOR PHARMACEUTICALS)--1.2%
Schein Pharmaceutical, Inc. 8.467%,
12/15/04(c)............................. B 85 74,800
MANUFACTURING (SPECIALIZED)--3.2%
Indesco International, Inc. Sr. Notes
9.75%, 4/15/08.......................... B 100 94,000
Nortek, Inc. Sr. Notes 9.875%, 3/1/04... B 100 103,750
-----------
197,750
-----------
METALS MINING--0.8%
NSM Steel, Inc. 144A 12%, 2/1/06(b)..... Caa 200 50,000
OFFICE EQUIPMENT & SUPPLIES--1.2%
U.S. Office Products Co. Sr. Notes 144A
9.75%, 6/15/08(b)....................... B 100 74,000
OIL & GAS (EXPLORATION & PRODUCTION)--3.6%
Forcenergy, Inc. Sr. Notes Series B
8.50%, 2/15/07.......................... B 175 149,625
</TABLE>
See Notes to Financial Statements 51
<PAGE>
Phoenix Strategic Income Portfolio
<TABLE>
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- -----------
<S> <C> <C> <C>
OIL & GAS (EXPLORATION & PRODUCTION)--CONTINUED
Lomak Petroleum, Inc. 8.75%, 1/15/07.... B $ 75 $ 71,250
-----------
220,875
-----------
PAPER & FOREST PRODUCTS--1.6%
Buckeye Technologies, Inc. Sr. Notes 8%,
10/15/10................................ Ba 100 99,500
SERVICES (COMMERCIAL & CONSUMER)--1.6%
Anthony Crane Rentals Sr. Notes 144A
10.375%, 8/1/08(b)...................... B 100 97,250
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--6.5%
Comcast Cellular Holdings, Inc. Sr.
Notes Series B 9.50%, 5/1/07............ Ba 100 107,750
Pathnet, Inc. Sr. Notes 12.25%,
4/15/08................................. NR 175 133,000
Teligent, Inc. Sr. Notes 11.50%,
12/1/07................................. Caa 170 163,200
-----------
403,950
-----------
TELECOMMUNICATIONS (LONG DISTANCE)--2.5%
RCN Corp. Sr. Notes Series B, 0%,
2/15/08(c).............................. B 275 151,250
TELEPHONE--1.5%
FirstCom Corp. Sr. Notes 144A 14%,
10/27/07(b)............................. NR 170 90,525
- - ------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $2,361,055) 1,996,725
- - ------------------------------------------------------------------------------
NON-AGENCY MORTGAGE-BACKED SECURITIES--19.6%
ContiMortgage Home Equity Loan Trust
98-1, B 7.86%, 4/15/29.................. Baa 200 197,812
DLJ Mortgage Acceptance Corp. 144A
97-CF2, B2 7.14%, 11/15/08(b)........... Baa 100 91,000
First Chicago/Lennar Trust 97-CHL1, E
144A 8.129%, 2/28/11(b)................. B(d) 175 133,547
GE Capital Mortgage Services, Inc. 96-8,
2A5 7.50%, 5/25/26...................... AAA(d) 219 223,225
Norwest Asset Securities Corp. 96-3, B2
7.25%, 9/25/26.......................... BBB(d) 147 144,183
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- -----------
<S> <C> <C> <C>
Resolution Trust Corp. 92-C3, B 9.05%,
8/25/23................................. AA(d) $ 119 $ 118,956
Structured Asset Securities Corp. 95-C1,
D 7.375%, 9/25/24(j).................... BBB(d) 150 150,187
Structured Asset Securities Corp. 95-C4,
D 7%, 6/25/26(j)........................ BBB(d) 150 149,344
- - ------------------------------------------------------------------------------
TOTAL NON-AGENCY MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $1,225,121) 1,208,254
- - ------------------------------------------------------------------------------
FOREIGN GOVERNMENT SECURITIES--29.2%
ARGENTINA--6.9%
Republic of Argentina RegS 11.75%,
2/12/07................................. Ba 250(f) 219,727
Republic of Argentina Series WW 11%,
12/4/05................................. Ba 200 209,500
-----------
429,227
-----------
BRAZIL--3.8%
Republic of Brazil C Bond, PIK interest
capitalization, 8%, 4/15/14(c).......... B 353 233,168
BULGARIA--3.5%
Republic of Bulgaria FLIRB Series A
Bearer Euro 2.50%, 7/28/12(c)........... B 50 30,750
Republic of Bulgaria IAB Series PDI Euro
6.688%, 7/28/11(c)...................... B 250 183,437
-----------
214,187
-----------
ECUADOR--2.5%
Ecuador Bearer PDI Euro, PIK interest
capitalization, 6.625%, 2/17/15(c)...... B 311 154,047
KOREA--1.6%
Republic of Korea 8.75%, 4/15/03........ Ba 100 100,438
MEXICO--5.6%
United Mexican States Global Bond
11.375%, 9/15/16........................ Ba 80 85,400
United Mexican States Global Bond
11.50%, 5/15/26......................... Ba 245 262,763
-----------
348,163
-----------
</TABLE>
52 See Notes to Financial Statements
<PAGE>
Phoenix Strategic Income Portfolio
<TABLE>
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- -----------
<S> <C> <C> <C>
PERU--1.3%
Peru PDI 4%, 3/7/17(c).................. BB(d) $ 125 $ 78,750
POLAND--3.1%
Poland Bearer PDI 5%, 10/27/14(c)....... Baa 25 23,453
Poland Treasury Bill 0%, 1/13/99........ NR 600(g) 167,130
-----------
190,583
-----------
RUSSIA--0.9%
Russia IAN Series U.S. 6.625%,
12/2/15(c).............................. Ca 259 32,993
Russia Principal Loans, PIK interest
capitalization, 6.625%, 12/15/15(i)..... NR 350 24,063
-----------
57,056
-----------
- - ------------------------------------------------------------------------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(IDENTIFIED COST $2,283,216) 1,805,619
- - ------------------------------------------------------------------------------
FOREIGN CORPORATE BONDS--11.7%
BERMUDA--1.1%
AES China Generating Co. Yankee 10.125%,
12/15/06................................ Ba(d) 100 68,000
CANADA--0.5%
Metronet Communications Corp. Sr. Notes
0%, 6/15/08(c).......................... B 50 31,500
INDONESIA--1.0%
APP Finance VII Mauritius, Ltd. 12%,
12/29/49(c)............................. Caa 100 61,000
JAPAN--2.4%
SB Treasury Co. LLC Series A 144A 9.4%,
12/29/49(b)(c).......................... Baa 150 148,777
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- -----------
<S> <C> <C> <C>
MEXICO--1.3%
Innova S de R.L. Sr. Notes 12.875%,
4/1/07.................................. B $ 100 $ 79,500
NETHERLANDS--3.3%
Kazkommertsbank International 144A
11.25%, 5/8/01(b)....................... B 100 51,000
Netia Holdings BV Yankee Series B, 0%,
11/1/07(e).............................. B 250 156,250
-----------
207,250
-----------
UNITED KINGDOM--2.1%
RSL Communications PLC Yankee 0%,
3/1/08(c)............................... B 225 127,687
- - ------------------------------------------------------------------------------
TOTAL FOREIGN CORPORATE BONDS
(IDENTIFIED COST $890,763) 723,714
- - ------------------------------------------------------------------------------
<CAPTION>
SHARES
-------
<S> <C> <C> <C>
WARRANTS--0.2%
SERVICES (DATA PROCESSING)--0.2%
FirstCom, Corp. 144A Warrants(b)(e)..... NR 5,950 8,925
TELEPHONE--0.0%
Pathnet, Inc. 144A Warrants(b)(e)....... NR 175 175
- - ------------------------------------------------------------------------------
TOTAL WARRANTS
(IDENTIFIED COST $0) 9,100
- - ------------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--97.9%
(IDENTIFIED COST $7,138,325) 6,046,806
- - ------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements 53
<PAGE>
Phoenix Strategic Income Portfolio
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- -----------
SHORT-TERM OBLIGATIONS--2.8%
<S> <C> <C> <C>
COMMERCIAL PAPER--2.8%
Dupont (E.I.) de Nemours & Co. 4.91%,
12/7/98................................. A-1+ $ 175 $ 174,857
- - ------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $174,857) 174,857
- - ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--100.7%
(IDENTIFIED COST $7,313,182) 6,221,663(a)
Cash and receivables, less liabilities--(0.7%) (45,991)
------------
NET ASSETS--100.0% $ 6,175,672
------------
------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $129,122 and gross
depreciation of $1,243,108 for federal income tax purposes. At November 30,
1998, the aggregate cost of securities for federal income tax purposes was
$7,335,649.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At November 30,
1998, these securities amounted to a value of $877,899 or 14.2% of net
assets.
(c) Variable or step coupon security; the interest rate shown reflects the rate
currently in effect.
(d) As rated by Standard & Poor's, Fitch, or Duff & Phelps.
(e) Non-income producing
(f) Par value represents Argentine Pesos.
(g) Par value represents Polish Zloty.
(h) Security in default.
(i) Security defaulted subsequent to November 30, 1998.
(j) All or a portion segregated as collateral.
54 See Notes to Financial Statements
<PAGE>
Phoenix Strategic Income Portfolio
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $7,313,182) $ 6,221,663
Cash 56,387
Receivables
Investments securities sold 61,134
Interest 135,762
Receivable from advisor 40,123
--------------
Total assets 6,515,069
--------------
LIABILITIES
Payables
Investment securities purchased 262,430
Transfer agent fee 17,104
Trustees' fee 5,515
Financial agent fee 2,710
Distribution fee 329
Accrued expenses 51,309
--------------
Total liabilities 339,397
--------------
NET ASSETS $ 6,175,672
--------------
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 7,421,422
Undistributed net investment income 23,078
Accumulated net realized loss (177,309)
Net unrealized depreciation (1,091,519)
--------------
NET ASSETS $ 6,175,672
--------------
--------------
CLASS X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $5,652,819) 705,966
Net asset value and offering price per share $8.01
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $182,530) 22,833
Net asset value per share $7.99
Offering price per share $7.99/(1-4.75%) $8.39
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $223,804) 28,030
Net asset value and offering price per share $7.98
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $116,519) 14,591
Net asset value and offering price per share $7.99
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 628,142
Dividends 9,183
--------------
Total investment income 637,325
--------------
EXPENSES
Investment advisory fee 35,019
Distribution fee, Class A 416
Distribution fee, Class B 1,468
Distribution fee, Class C 759
Financial agent 57,015
Transfer agent 47,732
Registration 34,649
Professional 22,398
Printing 15,781
Trustees 14,032
Custodian 7,813
Miscellaneous 1,794
--------------
Total expenses 238,876
Less expenses borne by the advisor (185,168)
--------------
Net expenses 53,708
--------------
NET INVESTMENT INCOME 583,617
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (159,654)
Net realized loss on foreign currency transactions (923)
Net change in unrealized appreciation (depreciation) on
investments (1,069,496)
--------------
NET LOSS ON INVESTMENTS (1,230,073)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (646,456)
--------------
--------------
</TABLE>
See Notes to Financial Statements 55
<PAGE>
Phoenix Strategic Income Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, November 30,
1998 1997
-------------- --------------
<S> <C> <C>
FROM OPERATIONS
Net investment income $ 583,617 $ 466,575
Net realized gain (loss) (160,577) 251,177
Net change in unrealized appreciation
(depreciation) (1,069,496) (194,058)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS (646,456) 523,694
-------------- --------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class X (555,887) (459,335)
Net investment income, Class A (14,411) --
Net investment income, Class B (13,521) --
Net investment income, Class C (6,781) --
Net realized gains, Class X (241,425) (72,586)
Net realized gains, Class A -- --
Net realized gains, Class B -- --
Net realized gains, Class C -- --
-------------- --------------
DECREASE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS (832,025) (541,921)
-------------- --------------
FROM SHARE TRANSACTIONS
CLASS X
Proceeds from sales of shares (0 and 27,068
shares, respectively) -- 263,374
Net asset value of shares issued from
reinvestment of distributions
(87,775 and 54,582 shares, respectively) 797,305 541,924
Cost of shares repurchased (30,675 and 27,376
shares, respectively) (300,006) (273,623)
-------------- --------------
Total 497,299 531,675
-------------- --------------
CLASS A
Proceeds from sales of shares (52,172 and 0
shares, respectively) 490,240 --
Net asset value of shares issued from
reinvestment of distributions
(1,541 and 0 shares, respectively) 13,240 --
Cost of shares repurchased (30,880 and 0 shares,
respectively) (234,729) --
-------------- --------------
Total 268,751 0
-------------- --------------
CLASS B
Proceeds from sales of shares (38,952 and 0
shares, respectively) 370,835 --
Net asset value of shares issued from
reinvestment of distributions
(863 and 0 shares, respectively) 7,274 --
Cost of shares repurchased (11,785 and 0 shares,
respectively) (107,605) --
-------------- --------------
Total 270,504 0
-------------- --------------
CLASS C
Proceeds from sales of shares (24,153 and 0
shares, respectively) 209,622 --
Net asset value of shares issued from
reinvestment of distributions
(807 and 0 shares, respectively) 6,779 --
Cost of shares repurchased (10,369 and 0 shares,
respectively) (78,932) --
-------------- --------------
Total 137,469 0
-------------- --------------
INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS 1,174,023 531,675
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS (304,458) 513,448
NET ASSETS
Beginning of period 6,480,130 5,966,682
-------------- --------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET
INVESTMENT INCOME OF $23,078 AND $14,837,
RESPECTIVELY) $ 6,175,672 $ 6,480,130
-------------- --------------
-------------- --------------
</TABLE>
56 See Notes to Financial Statements
<PAGE>
Phoenix Strategic Income Portfolio
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS X
----------------------------------------------------------------------
YEAR ENDED NOVEMBER 30
----------------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.99 $ 10.03 $ 9.45 $ 8.97 $ 10.12
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.83(2) 0.74(2)(8) 0.78(2) 0.91(2) 0.63(2)
Net realized and unrealized gain
(loss) (1.62) 0.09 0.59 0.51 (1.13)
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS (0.79) 0.83 1.37 1.42 (0.50)
----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment
income (0.82) (0.75) (0.79) (0.94) (0.59)
Dividends from net realized gains (0.37) (0.12) -- -- (0.06)
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS (1.19) (0.87) (0.79) (0.94) (0.65)
----- ----- ----- ----- -----
Change in net asset value (1.98) (0.04) 0.58 0.48 (1.15)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 8.01 $ 9.99 $ 10.03 $ 9.45 $ 8.97
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Total return(1) (8.63)% 8.58% 15.32% 16.65% (5.26)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $5,653 $6,480 $5,967 $5,170 $1,780
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 0.72%(6) 0.65% 0.65% 0.65% 0.65%
Net investment income 8.92%(6) 7.45% 8.11% 7.60% 6.64%
Portfolio turnover 138% 194% 231% 618% 124%
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------- ---------- ----------
FROM FROM FROM
INCEPTION INCEPTION INCEPTION
3/27/98 TO 3/27/98 TO 3/27/98 TO
11/30/98 11/30/98 11/30/98
---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.78 $ 9.78 $ 9.78
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.55(3)(8) 0.50(4)(8) 0.50(5)(8)
Net realized and unrealized gain
(loss) (1.79) (1.77) (1.76)
----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS (1.24) (1.27) (1.26)
----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment
income (0.55) (0.53) (0.53)
Dividends from net realized gains -- -- --
----- ----- -----
TOTAL DISTRIBUTIONS (0.55) (0.53) (0.53)
----- ----- -----
Change in net asset value (1.79) (1.80) (1.79)
----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 7.99 $ 7.98 $ 7.99
----- ----- -----
----- ----- -----
Total return(1) (12.89)%(7) (13.25)%(7) (13.15)%(7)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $183 $224 $117
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.00%(6) 1.75%(6) 1.75%(6)
Net investment income 8.79%(6) 8.37%(6) 8.47%(6)
Portfolio turnover 138%(7) 138%(7) 138%(7)
</TABLE>
(1) Maximum sales charges are not included in total return calculation.
(2) Includes reimbursement of operating expenses by investment adviser of
$0.26, $0.22, $0.15, $0.40, $0.34 and $0.35, respectively.
(3) Includes reimbursement of operating expenses by investment adviser of
$0.20.
(4) Includes reimbursement of operating expenses by investment adviser of
$0.20.
(5) Includes reimbursement of operating expenses by investment adviser of
$0.20.
(6) Annualized.
(7) Not annualized.
(8) Computed using average shares outstanding.
See Notes to Financial Statements 57
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix Multi-Portfolio 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. To date, six
Portfolios are offered for sale: Tax-Exempt Bond Portfolio, Mid Cap Portfolio,
International Portfolio, Real Estate Securities Portfolio, Emerging Markets Bond
Portfolio, and Strategic Income Portfolio (formerly the Diversified Income
Portfolio.) Each Portfolio has distinct investment objectives. The Tax-Exempt
Bond Portfolio seeks as high a level of current income exempt from federal
income taxation as is consistent with preservation of capital. The Mid Cap
Portfolio seeks as its investment objective long-term appreciation of capital.
The International Portfolio seeks a high total return consistent with reasonable
risk through investment in an internationally diversified portfolio of equity
securities. The Real Estate Securities Portfolio seeks capital appreciation and
income with approximately equal emphasis. The Emerging Markets Bond Portfolio
seeks to achieve high current income with a secondary objective of long-term
capital appreciation. The Strategic Income Portfolio seeks to maximize current
income by investing in debt securities, with a secondary objective of capital
appreciation.
The Trust offers both Class A and Class B shares on each Portfolio and one
additional class of shares Class C on Emerging Markets Bond Portfolio and Class
C and Class X on the Strategic Income Portfolio. 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. Class X are currently
closed to new investors. Each class of shares has 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 Portfolio are
borne pro rata by the holders of each class 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. 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 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. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date or, in the case of certain foreign securities, as soon as the Portfolio is
notified. Realized gains and losses are determined on the identified cost basis.
The Trust does not amortize premiums but does amortize discounts except for the
Tax-Exempt Bond Portfolio which amortizes both premiums and discounts over the
life of the respective securities using the effective interest method.
C. INCOME TAXES:
Each of the Portfolios is treated as a separate taxable entity. It is the
policy of each Portfolio in the Trust to comply with the requirements of the
Internal Revenue Code (the Code), applicable to regulated investment companies,
and to distribute substantially all of its taxable and tax-exempt income to its
shareholders. In addition, each Portfolio 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 Portfolio 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, 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
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:
The Mid Cap Portfolio, the Emerging Markets Bond Portfolio, the International
Portfolio and the Strategic Income Portfolio may enter
58
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998 (CONTINUED)
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 Portfolio as an unrealized gain (or loss). When the
contract is closed or offset with the same counterparty, the Portfolio 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. FUTURES CONTRACTS:
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Each Portfolio (other than the Real
Estate Securities Portfolio) may enter into financial futures contracts as a
hedge against anticipated changes in the market value of their portfolio
securities. Upon entering into a futures contract, the Portfolios are required
to pledge to the broker an amount of cash and/or securities equal to the
"initial margin" requirements of the futures exchange on which the contract is
traded. Pursuant to the contract, the Portfolios agree to receive from or pay to
the broker an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as daily variation margin and are
recorded by the Portfolio as unrealized gains or losses. When the contract is
closed, the Portfolio records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at the
time it was closed. The potential risk to the Portfolio is that the change in
value of the futures contract may not correspond to the change in value of the
hedged instruments.
H. OPTIONS:
Each Portfolio (other than the Real Estate Securities Portfolio), 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 Portfolio 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 Portfolios may purchase options which are included in the Portfolio'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.
I. LOAN AGREEMENTS:
The Trust may invest in direct debt instruments which are interests in amounts
owed by a corporate, governmental, or other borrower to lenders or lending
syndicates. The Trust's investments in loans may be in the form of
participations in loans or assignments of all or a portion of loans from third
parties. A loan is often administered by a bank or other financial institution
(the lender) that acts as agent for all holders. The agent administers the terms
of the loan, as specified in the loan agreement. When investing in a loan
participation, the Trust has the right to receive payments of principal,
interest and any fees to which it is entitled only from the lender selling the
loan agreement and only upon receipt by the lender of payments from the
borrower. The Trust generally has no right to enforce compliance with the terms
of the loan agreement with the borrower. As a result, the Trust may be subject
to the credit risk of both the borrower and the lender that is selling the loan
agreement. When the Trust purchases assignments from lenders it acquires direct
rights against the borrower on the loan. Direct indebtedness of emerging
countries involves a risk that the government entities responsible for the
repayment of the debt may be unable, or unwilling to pay the principal and
interest when due.
J. SECURITY LENDING:
The Trust (with the exception of the Real Estate Securities Portfolio) loans
securities to qualified brokers through an agreement with State Street Bank &
Trust (the Custodian) and Brown Brothers, Harriman, custodian for the
International Portfolio. Under the terms of the agreement, the Trust receives
collateral with a market value not less than 100% of the market value of loaned
securities. Collateral consists of cash, securities issued or guaranteed by the
U.S. Government or its agencies and the sovereign debt of foreign countries.
Interest earned on the collateral and premiums paid by the borrower are recorded
as income by the Trust net of fees charged by the Custodian for its services in
connection with this securities lending program. Lending portfolio securities
involves a risk of delay in the recovery of the loaned securities or in the
foreclosure on collateral. At November 30, 1998, the Trust had the following
market value of security loans and collateral:
<TABLE>
<CAPTION>
Value of
Securities Value of
on Loan Collateral
---------- ----------
<S> <C> <C>
Mid Cap Portfolio........................ $6,719,029 $6,957,460
</TABLE>
59
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998 (CONTINUED)
K. EXPENSES:
Expenses incurred by the Trust with respect to any two or more Portfolios are
allocated in proportion to the net assets of each Portfolio, except where
allocation of direct expense to each Portfolio or an alternative allocation
method can be more fairly made.
L. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS:
The Trust may engage in when-issued or delayed delivery transactions. The
Trust records when-issued securities on the trade date and maintains collateral
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis begin earning interest on the settlement date.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Trust, the Advisers, Phoenix
Investment Counsel, Inc., an indirect majority-owned subsidiary of Phoenix Home
Life Insurance Company ("PHL"), and Duff & Phelps Investment Management ("DPIM")
Co., an indirect wholly-owned subsidiary of PHL, the Adviser for the Real Estate
Securities Portfolio, are entitled to a fee, based upon the following annual
rates as a percentage of the average daily net assets of each Portfolio:
<TABLE>
<CAPTION>
1st $1-2 $2+
$1 Billion Billion Billion
------------ ---------- ----------
<S> <C> <C> <C>
Tax-Exempt Bond Portfolio.............. 0.45% 0.40% 0.35%
Mid Cap Portfolio...................... 0.75% 0.70% 0.65%
International Portfolio................ 0.75% 0.70% 0.65%
Real Estate Securities Portfolio....... 0.75% 0.70% 0.65%
Emerging Markets Bond Portfolio........ 0.75% 0.70% 0.65%
Strategic Income Portfolio............. 0.55% 0.50% 0.45%
</TABLE>
The respective Advisers have agreed to reimburse the Real Estate Securities
Portfolio and the Strategic Income Portfolio to the extent that total expenses
(excluding interest, taxes, brokerage fees and commissions, and extraordinary
expenses) exceed 1.30% and 1.00%, respectively, of the average daily net assets
for Class A shares, and 2.05% and 1.75%, for Class B shares and 1.75% and 0.75%
for Class C and Class X of Strategic Income Portfolio, respectively. Prior to
March 27, 1998, the advisory and reimbursement rates for Strategic Income
Portfolio Class X were 0.50% and 0.65%, respectively.
Effective October 27, 1998, Seneca Capital Management LLC ("Seneca") was
appointed subadvisor to the Phoenix Mid Cap Portfolio, a majority of the equity
interests of Seneca is owned by Phoenix Investment Partners, Ltd. For its
services, Seneca is paid a fee by the Adviser ranging from 0.375% through 0.20%
of the average daily net assets of the Phoenix Mid Cap Portfolio.
Effective October 27, 1998, Aberdeen Fund Managers, Inc. ("Aberdeen") was
appointed subadvisor to the Phoenix International Portfolio, Aberdeen is a
subsidiary of Aberdeen Asset Management PLC. For its services, Aberdeen is paid
a fee by the Adviser equal to 0.375% of the average daily net assets of the
Phoenix International Portfolio up to $1 billion, 0.35% between $1 billion and
$2 billion, and 0.325% in excess of $2 billion.
Phoenix Equity Planning Corporation ("PEPCO") an indirect majority-owned
subsidiary of PHL, which serves as the national distributor of the Trust's
shares has advised the Trust that it retained net selling commissions of
$122,184 for Class A shares and deferred sales charges of $422,549 for Class B
shares and $318 for Class C shares for the year ended November 30, 1998. In
addition, each Portfolio pays PEPCO a distribution fee at an annual rate of
0.25% for Class A shares and 1.00% for Class B and Class C shares applied to the
average daily net assets of each Portfolio. The distributor has advised the
Trust that of the total amount expensed for the year ended November 30, 1998,
$1,025,897 was retained by the Distributor and $1,404,016 was paid out to
unaffiliated Participant and $278,168 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 Fund. 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 November 30, 1998, transfer
agent fees were $1,130,180 of which PEPCO retained $526,661 which is net of fees
paid to State Street.
60
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998 (CONTINUED)
At November 30, 1998 PHL and its affiliates held Phoenix Multi-Portfolio Fund
shares which aggregated the following:
<TABLE>
<CAPTION>
Aggregate
Net Asset
Shares Value
---------- ------------
<S> <C> <C>
Tax-Exempt Bond Portfolio
--Class A..................... 163,803 $1,836,229
International
--Class A..................... 1,521,314 24,310,598
Real Estate Securities Portfolio
--Class A..................... 514,562 6,303,379
--Class B..................... 12,290 149,814
Emerging Markets Bond Portfolio
--Class A..................... 2,083,489 15,001,120
--Class B..................... 17,508 124,832
--Class C..................... 8,484 60,830
Strategic Income Portfolio
--Class X..................... 699,738 5,604,901
--Class A..................... 10,902 87,107
--Class B..................... 10,870 86,743
--Class C..................... 10,870 86,851
</TABLE>
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended November 30, 1998
(excluding U.S. Government and agency securities, short-term securities, futures
contracts and forward currency contracts) aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
------------- -------------
<S> <C> <C>
Tax-Exempt Bond Portfolio......... $ 16,534,538 $ 29,372,392
Mid Cap Portfolio................. 1,072,164,078 1,125,149,460
International Portfolio........... 204,714,991 175,987,086
Real Estate Securities
Portfolio........................ 5,551,422 8,306,157
Emerging Markets Bond Portfolio... 377,244,699 388,087,244
Strategic Income Portfolio........ 8,497,008 7,675,230
</TABLE>
Purchase and sales of U.S. Government and agency securities during the year
ended November 30, 1998, aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
--------- ---------
<S> <C> <C>
Strategic Income Portfolio.................. $ 807,704 $ 967,484
</TABLE>
At November 30, 1998, the Tax-Exempt Bond Portfolio had entered into futures
contracts as follows:
<TABLE>
<CAPTION>
Value of
Contracts Market Net
Number of when Value of Unrealized
Description Contracts Opened Contracts Depreciation
- - --------------------------- ------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury Bond Dec 98
(Short)................... 8 $1,009,191 $1,038,750 $ (29,559)
</TABLE>
Written option activity for the year ended November 30, 1998 aggregated the
following:
<TABLE>
<CAPTION>
Call Options
------------------------
Number of Amount
Emerging Markets Bond Portfolio Options of Premiums
- - ------------------------------------------- ----------- -----------
<S> <C> <C>
Options outstanding at November 30, 1997... -- $ --
Options written............................ 21.0 84,804
Options canceled in closing purchase
transactions.............................. (5.0) (36,547)
Options expired............................ (16.0) (48,257)
Options exercised.......................... -- --
--- -----------
Options outstanding at November 30, 1998... -- $ --
--- -----------
--- -----------
</TABLE>
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. Given the uncertain economic condition of Russia and
the defaults that have occurred, there is no guarantee that continued payments
on Russian government bonds will be made.
5. CAPITAL LOSS CARRYOVERS
The following Portfolios have capital loss carryforwards which may be used to
offset future capital gains.
<TABLE>
<CAPTION>
Strategic Emerging Real
Expiration Date Tax-Exempt Income Markets Estate
- - ------------------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
2006............... $ 381,648 $ 154,841 $42,735,153 $ 70,513
----------- --------- ----------- ---------
Total............ $ 381,648 $ 154,841 $42,735,153 $ 70,513
----------- --------- ----------- ---------
----------- --------- ----------- ---------
</TABLE>
6. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Portfolios of the Trust have
recorded several reclassifications in the capital accounts. These
reclassifications have no impact on the net asset value of the Portfolios and
are designed generally to present undistributed income and realized gains on a
tax basis which is
61
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998 (CONTINUED)
considered to be more informative to the shareholder. As of November 30, 1998,
the Portfolios recorded the following reclassifications to increase (decrease)
the accounts listed below:
<TABLE>
<CAPTION>
Undistributed Accumulated Capital paid
net net realized in on shares
investment gain of beneficial
income (loss) interest
------------- ---------------- ----------------
<S> <C> <C> <C>
Tax-Exempt Bond Portfolio... $ 479,932 $ 51,664 $ (531,596)
Mid Cap Portfolio........... 467,524 (467,524) --
International Portfolio..... 525,955 (525,955) --
Emerging Markets Bond
Portfolio................. (3,921,630 ) 3,921,630 --
Strategic Income
Portfolio................. 15,224 (16,732) 1,508
</TABLE>
TAX NOTICE (UNAUDITED)
For the fiscal year ended November 30, 1998, the Tax-Exempt Bond Portfolio
distributed $5,465,095 of exempt-interest dividends.
For the fiscal year ended November 30, 1998, the following Portfolios
distributed long-term capital gains dividends as follows:
<TABLE>
<CAPTION>
28% 20%
----------- ----------
<S> <C> <C>
Tax-Exempt Bond Portfolio............... $ 94,830 --
Mid Cap Portfolio....................... 14,325,003 $8,224,856
International Portfolio................. 8,680,892 4,099,040
Real Estate Securities Portfolio........ 1,022,237 1,500,701
Emerging Markets Bond Portfolio......... 420,839 --
Strategic Income Portfolio.............. 33,264 4,400
</TABLE>
This report is not authorized for distribution to prospective investors in
the Phoenix Multi-Portfolio Fund unless preceded or accompanied by an effective
prospectus which includes information concerning the sales charge, the Fund's
record and other pertinent information.
62
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO]
To the Trustees and Shareholders of
Phoenix Multi-Portfolio 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 Tax-Exempt Bond Portfolio, the Mid Cap Portfolio, the International
Portfolio, the Real Estate Securities Portfolio, the Emerging Markets Bond
Portfolio and the Strategic Income Portfolio (formerly Diversified Income
Portfolio) (constituting series of the Phoenix Multi-Portfolio Fund, hereafter
referred to as the "Fund") at November 30, 1998 and the results of each of their
operations, the changes in each of their net assets and the financial highlights
for each of the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at November 30, 1998 by correspondence with the
custodians and brokers provide a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
January 21, 1999
63
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
PART C--OTHER INFORMATION
ITEM 23. EXHIBITS
a.1 Agreement and Declaration of Trust, previously filed with the
Registration Statement on December 31, 1987 and filed via EDGAR
as Exhibit 1.1 with Post-Effective Amendment No. 20 and
incorporated herein by reference.
a.2 Amendment to Declaration of Trust, filed with Post-Effective
Amendment No. 2 on September 1, 1989, and filed via EDGAR as
Exhibit 1.2 with Post-Effective Amendment No. 20 and
incorporated herein by reference.
a.3 Amendment to Declaration of Trust, filed with Post-Effective
Amendment No. 8 on April 8, 1993, and filed via EDGAR as
Exhibit 1.3 with Post-Effective Amendment No. 20 and
incorporated herein by reference.
a.4 Amendment to Declaration of Trust adding the Phoenix Real
Estate Securities Portfolio, filed with Post-Effective
Amendment No. 14 on March 1, 1995, and filed via EDGAR as
Exhibit 1.4 with Post-Effective Amendment No. 20 and
incorporated herein by reference.
a.5 Amendment to Declaration of Trust designating Classes of
Shares, filed with Post-Effective Amendment No. 14 on March 1,
1995, and filed via EDGAR as Exhibit 1.5 with Post-Effective
Amendment No. 20 and incorporated herein by reference.
a.6 Amendment to Declaration of Trust adding the Phoenix Emerging
Markets Bond Portfolio filed via EDGAR as Exhibit 1.6 with
Post-Effective Amendment No. 17 on August 29, 1995 and
incorporated herein by reference.
a.7 Amendment to Declaration of Trust changing the name of the
Phoenix Endowment Fixed-Income Portfolio to Phoenix Diversified
Income Portfolio, filed via EDGAR as Exhibit 1.7 with
Post-Effective Amendment No. 19 on April 19, 1996 and
incorporated herein by reference.
a.8 Amendment to Declaration of Trust changing the name of the
Phoenix Capital Appreciation Portfolio to Phoenix Mid Cap
Portfolio dated May 22, 1996 and filed via EDGAR as Exhibit 1.8
with Post-Effective Amendment No. 20 and incorporated herein
by reference.
a.9 Amendment to Declaration of Trust changing the name of Phoenix
Diversified Income Portfolio to Phoenix-Strategic Income Fund
and designating Classes of Shares, filed via EDGAR as Exhibit
1.9 with Post-Effective Amendment No. 22 on January 26, 1998
and incorporated herein by reference.
a.10* Amendment to Declaration of Trust abolishing Class M Shares
filed via EDGAR herewith.
a.11* Amendment to Declaration of Trust changing the names of each
of the portfolios filed via EDGAR herewith.
b. None.
c. Reference is made to Article III of Registrant's Agreement and
Declaration of Trust, as amended, and filed with those
Registration Statements referred to in Exhibit 1, above.
d.1 Form of Investment Advisory Agreement between the Registrant
and Phoenix Investment Counsel, Inc. covering the Phoenix
Tax-Exempt Bond, Phoenix Capital Appreciation, Phoenix
International, Phoenix Endowment Equity and Phoenix Endowment
Fixed Income Portfolios, filed with Post-Effective Amendment
No. 12 on April 1, 1994, and filed via EDGAR as Exhibit 5.1
with Post-Effective Amendment No. 20 and incorporated herein by
reference.
d.2 Investment Advisory Agreement between Registrant and Phoenix
Realty Securities, Inc. dated February 28, 1995, and assigned
March 2, 1998 to Duff & Phelps Investment Management Co., filed
via EDGAR as Exhibit 5.2 with Post-Effective Amendment No. 23
on March 27, 1998 and incorporated herein by reference.
d.3 Investment Advisory Agreement between the Registrant and
Phoenix Investment Counsel, Inc. dated October 30, 1997
covering the Phoenix Strategic Income Fund, and filed via EDGAR
as Exhibit 5.3 with Post-Effective Amendment No. 22 on January
26, 1998 and incorporated herein by reference.
d.4 Subadvisory Agreement dated November 19, 1997 among the
Registrant, Phoenix Realty Securities, Inc. and Duff & Phelps
Investment Management Co., covering the Real Estate Securities
Portfolio filed via EDGAR as Exhibit5.4 with Post-Effective
Amendment No. 23 on March 27, 1998 and incorporated herein by
reference.
d.5 Subadvisory Agreement dated June 26, 1998 between Registrant
and Seneca Capital Management LLC, covering Phoenix-Seneca Mid
Cap Fund, filed via EDGAR with Post-Effective Amendment No. 24
on January 27, 1999 and incorporated herein by reference.
C-1
<PAGE>
d.6 Subadvisory Agreement dated October 27, 1998 between Registrant
and Aberdeen Fund Managers Inc., covering Phoenix-Aberdeen
International Fund, filed via EDGAR with Post-Effective
Amendment No. 24 on January 27, 1999 and incorporated herein by
reference.
e.1 Underwriting Agreement between Registrant and Phoenix Equity
Planning Corporation dated November 19, 1997 and filed via
EDGAR as Exhibit 6.1 with Post-Effective Amendment No. 22 on
January 26, 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. 23 on March 27, 1998 and
incorporated herein by reference.
e.3 Form of Supplement to Phoenix Family of Funds Sales Agreement
filed via EDGAR as Exhibit 6.3 with Post-Effective Amendment
No. 22 on January 26, 1998 and 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. 22 on January 26, 1998 and
incorporated herein by reference.
f. None.
g.1 Custodian Contract between Registrant and State Street Bank and
Trust Company dated May 1, 1997, filed via EDGAR as Exhibit 8.1
with Post-Effective Amendment No. 22 on January 26, 1998 and
incorporated herein by reference.
g.2 Custodian Agreement between Registrant and Brown Brothers
Harriman & Co. covering the Phoenix International Portfolio,
filed with Post-Effective Amendment No. 13 on December 12, 1994
and filed via EDGAR as Exhibit 8.2 with Post-Effective
Amendment No. 20 and incorporated herein by reference.
h.1 A corrected Amended and Restated Financial Agent Agreement
between Registrant and Phoenix Equity Planning Corporation
dated November 19, 1997 and filed via EDGAR as Exhibit 9.1 with
Post-Effective Amendment No. 23 on March 27, 1998 and
incorporated herein by reference.
h.2 Transfer Agency and Service Agreement between Registrant and
Phoenix Equity Planning Corporation, filed with Post-Effective
Amendment No. 13 on December 12, 1994 and filed via EDGAR as
Exhibit 9.2 with Post-Effective Amendment No. 20 and
incorporated herein by reference.
h.3 Sub-Transfer Agency Agreement between Phoenix Equity Planning
Corporation and State Street Bank and Trust Company, filed with
Post-Effective Amendment No. 13 on December 12, 1994 and filed
via EDGAR as Exhibit 9.3 with Post-Effective Amendment No. 20
and incorporated herein by reference.
i.1 Opinion and Consent of Counsel covering shares of the Phoenix
Tax-Exempt Bond Portfolio, filed with Pre-Effective Amendment
No. 2 on July 7, 1988, and filed via EDGAR as Exhibit 10.1 with
Post-Effective Amendment No. 22 on January 26, 1998 and
incorporated herein by reference.
i.2 Opinion and Consent of Counsel covering shares of the Phoenix
Capital Appreciation Portfolio and the Phoenix International
Portfolio, filed with Post-Effective Amendment No. 3 on October
30, 1989 and filed via EDGAR as Exhibit 10.2 with
Post-Effective Amendment No. 22 on January 26, 1998 and
incorporated herein by reference.
i.3 Opinion and Consent of Counsel covering shares of the Phoenix
Endowment Equity Portfolio and Endowment Fixed-Income
Portfolio, filed with Post-Effective Amendment No. 8 on April
8, 1993, and filed via EDGAR as Exhibit 10.3 with
Post-Effective Amendment No. 22 on January 26, 1998 and
incorporated herein by reference.
i.4 Opinion and Consent of Counsel covering shares of the Phoenix
Real Estate Securities Portfolio, filed with Post-Effective
Amendment No. 14 on March 1, 1995, and filed via EDGAR as
Exhibit 10.4 with Post-Effective Amendment No. 20 and
incorporated herein by reference.
i.5 Opinion and Consent of Counsel covering shares of the Phoenix
Strategic Income Fund filed via EDGAR as Exhibit 10.5 with
Post-Effective Amendment No. 23 on March 27, 1998 and
incorporated herein by reference.
j.* Consent of Independent Accountants.
k. Not applicable.
l. Initial Capital Agreement, filed with Pre-Effective Amendment
No. 2 on July 7, 1988, and filed via EDGAR as Exhibit 13 with
Post-Effective Amendment No. 22 on January 26, 1998 and
incorporated herein by reference.
m.1 Class A Shares Amended and Restated Distribution Plan pursuant
to Rule 12b-1 under the Investment Company Act of 1940, filed
via EDGAR as Exhibit 15.1 with Post-Effective Amendment No. 22
on January 26, 1998 and incorporated herein by reference.
C-2
<PAGE>
m.2 Class B Shares Amended and Restated Distribution Plan pursuant
to Rule 12b-1 under the Investment Company Act of 1940, filed
via EDGAR as Exhibit 15.2 with Post-Effective Amendment No. 22
on January 26, 1998 and incorporated herein by reference.
m.3 Class C Shares Amended and Restated Distribution Plan pursuant
to Rule 12b-1 under the Investment Company Act of 1940, filed
via EDGAR as Exhibit 15.3 with Post-Effective Amendment No. 22
on January 26, 1998 and incorporated herein by reference.
n.27* Financial Data Schedules, reflected on EDGAR as Exhibit 27.
o.1 Amended and Restated Rule 18f-3 Dual Distribution Plan
effective November 19, 1997 filed via EDGAR as Exhibit 18.1
with Post-Effective Amendment No. 22 on January 26, 1998 and
incorporated herein by reference.
p.1 Powers of Attorney for Ms. Curtiss and Messrs. Chesek, Conroy,
Dalzell-Payne, Jeffries, Keith, Morris, Oates, Pedersen, Roth,
Segerson and Weicker filed via EDGAR with Post-Effective
Amendment No. 24 on January 27, 1999 and incorporated herein by
reference.
- ----------
* Filed herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND.
None.
ITEM 25. INDEMNIFICATION
Under the Agreement and Declaration of Trust establishing the Registrant any
present or former Trustee or officer of the Registrant and any person who serves
at the Registrant's request as a director, officer or trustee of another
organization in which the Registrant has any interest as a shareholder, creditor
or otherwise is indemnified against all liabilities incurred in connection with
the defense or disposition of any action, suit or other proceeding in which he
may be or may have been involved as a party or otherwise by reason of being or
having been such a Trustee, officer or director, except with respect to any
matter as to which he shall have been finally adjudicated in any such action,
suit or other proceeding not to have acted in good faith in the reasonable
belief that his action was in or not opposed to the best interest of the
Registrant and with respect to any liability to the Registrant or its
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISERS
See "Management of the Fund" in the Prospectus and "The Investment Advisers"
and "Trustees and Officers" in the Statement of Additional Information for
information regarding the business of the Advisers. For information as to the
business, profession, vocation or employment of a substantial nature of
directors and officers of the Advisers, reference is made to the Advisers'
current Form ADV (SEC File Nos. 801-5995 (PIC) and 801-14813 (DPIM)) filed under
the Investment Advisers Act of 1940, incorporated herein by reference.
ITEM 27. PRINCIPAL UNDERWRITER
(a) Equity Planning also serves as the principal underwriter for the
following other registrants:
Phoenix-Aberdeen Worldwide Opportunities Fund, Phoenix-Aberdeen Series Fund,
Phoenix California Tax Exempt Bonds, Inc., Phoenix Duff & Phelps Institutional
Mutual Funds, Phoenix-Engemann Funds, Phoenix Equity Series Fund, Phoenix Income
and Growth Fund, Phoenix Investment Trust 97, Phoenix Multi-Sector Fixed Income
Fund, Inc., Phoenix Multi-Sector Short Term Bond Fund, Phoenix-Seneca Funds,
Phoenix Series Fund, Phoenix Strategic Allocation Fund, Inc., Phoenix Strategic
Equity Series Fund, 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.
C-3
<PAGE>
(b) Directors and executive officers of Phoenix Equity Planning Corporation
are as follows:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS 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 President Trustee and President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Senior Vice President Vice President
100 Bright Meadow Boulevard and Chief Financial Officer
P.O. Box 2200
Enfield, CT 06083-2200
John F. Sharry Executive Vice President, Executive
56 Prospect St. Retail Distribution Vice President
P.O. Box 150480
Hartford, CT 06115-0480
Leonard J. Saltiel Managing Director, Vice President
56 Prospect St. Operations and Services
P.O. Box 150480
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President, Mutual Fund Secretary
101 Munson Street Customer Service
P.O. Box 810
Greenfield, MA 01302-0810
Nancy G. Curtiss Vice President and Treasurer, Treasurer
56 Prospect St. Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Counsel and Assistant Secretary
56 Prospect St. Secretary
P.O. Box 150480
Hartford, CT 06115-0480
Jacqueline M. Porter Assistant Vice President, Assistant Treasurer
56 Prospect Street Financial Reporting
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an affiliated
person of the Registrant or an affiliated person of such affiliated person,
directly or indirectly, from the Registrant during the Registrant's last fiscal
year.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Persons maintaining physical possession of accounts, books and other
documents required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder include Registrant's investment
advisers, Phoenix Investment Counsel, Inc. and Duff & Phelps Investment
Management Co.; Registrant's financial agent, transfer agent and principal
underwriter, Phoenix Equity Planning Corporation; Registrant's dividend
disbursing agent, State Street Bank and Trust Company; and Registrant's
custodians, State Street Bank and Trust Company and Brown Brothers Harriman &
Co. (custodian for the Phoenix International Portfolio). 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; and Duff & Phelps Investment Management Co. is 55 East Monroe
Street, Suite 3600, Chicago, Illinois 60603; 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; the address of
custodian State Street Bank and Trust Company is P.O. Box 351, Boston,
Massachusetts 02101; and the address for the custodian of the Phoenix
International Portfolio is Brown Brothers Harriman & Co., 40 Water Street,
Boston, Massachusetts 02109.
C-4
<PAGE>
ITEM 29. MANAGEMENT SERVICES
The information required by this Item is included in the Statement of
Additional Information.
ITEM 30. UNDERTAKINGS
Not Applicable.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Fund certifies that it meets all of the
requirements for effectiveness of this registration statement under Rule 485(b)
of the Securities Act and has duly caused this Amendment to the registration
statement to be signed on its behalf by the undersigned, duly authorized, in the
City of Hartford, and State of Connecticut on the 30th day of March, 1999.
PHOENIX MULTI-PORTFOLIO FUND
ATTEST: /S/ THOMAS N. STEENBURG BY: /S/ PHILIP R. MCLOUGHLIN
------------------- -------------------------
THOMAS N. STEENBURG PHILIP R. MCLOUGHLIN
ASSISTANT SECRETARY PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities indicated, on this 30th day of March, 1999.
SIGNATURE TITLE
--------- -----
--------------------------------------- Trustee
Robert Chesek*
--------------------------------------- Trustee
E. Virgil Conway*
/s/ Nancy G. Curtiss Treasurer (principal
--------------------------------------- financial and
Nancy G. Curtiss accounting officer)
--------------------------------------- Trustee
Harry Dalzell-Payne*
--------------------------------------- Trustee
Francis E. Jeffries*
--------------------------------------- Trustee
Leroy Keith, Jr.*
/s/ Philip R. McLoughlin Trustee and
--------------------------------------- President
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, Attorney-in-fact
pursuant to powers of attorney
previously filed.
S-1(c)
EXHIBIT a.10
CERTIFICATE OF AMENDMENT TO DECLARATION OF TRUST
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
CERTIFICATE OF AMENDMENT TO DECLARATION OF TRUST
The undersigned, individually as Trustee of Phoenix Multi-Portfolio
Fund, a Massachusetts business trust (the "Trust") under an Agreement and
Declaration of Trust dated October 15, 1987, as amended (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 26, 1998, executed by each
of such Trustees, a copy of which is attached hereto, hereby certifies that at
duly held meeting of the Board of Trustees of the Trust, at which a quorum was
present, the Board of Trustees acting in accordance with certain implied powers
vested in the Board of Trustees pursuant to Article II, Section 2.2 and the
authority conferred pursuant to Article III, Section 3.1 and Article VI, Section
6.3 of the Declaration for the purpose of abolishing the class of shares
designated as "Class M Shares" voted to further amend said Declaration of Trust
effective on October 30, 1998, as follows:
Article III Section 3.8 is hereby amended and restated to read as follows:
Section 3.8 Multi-Class Distribution System. Without in any
manner limiting the rights of the Trustees pursuant to Section 3.7,
above, the Trustees hereby divide the Shares of each of the Series
designated and hereafter to be designated by the Trustees pursuant to
Section 3.2, above, as amended, into four classes. The classes of each
such respective Series, so established, shall be designated as "Class A
Shares", "Class B Shares", "Class C Shares" and "Class X Shares". All
shares of Phoenix Diversified Income Portfolio outstanding as of
November 19, 1997 shall be deemed Class X Shares. The following
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption shall pertain to all Shares in each of the foregoing
classes:
(a) The assets belonging to each class shall be invested
in the same investment portfolio of the Trust.
(b) The dividends and distributions of investment income
and capital gains with respect to each class shall be
in such amounts as may be declared from time to time
by the Trustees, and the dividends and distributions
of each class of a Series may vary from dividends and
distributions of investment income and capital gains
with respect to the other classes of that Series to
reflect differing allocations of the expenses of the
Trust between the holders of the classes of such
Series and any resultant differences between the net
asset value per share of each class of such Series,
to such extend and for such purposes as the Trustees
may deem appropriate. The allocation of investment
income or capital gains and expenses and liabilities
of the Trust among the classes of each Series shall
be determined by the Trustees in a manner that is
consistent with the order dated September 13, 1993
(Investment Company Act of 1940 Release No. IC-19706)
issued by the Securities and Exchange Commission in
connection with the application for exemption filed
by National Multi-Sector Fixed Income Fund,
<PAGE>
Inc. et al, any amendment to such order or any rule
or interpretation under the Investment Company Act of
1940 that modifies or supercedes such order.
(c) Class A Shares (including fractional shares thereof)
may be subject to an initial sales charge pursuant to
the terms of the issuance of such Shares.
(d) The proceeds of the redemption of Class B and Class C
Shares (including a fractional share thereof) shall
be reduced by the amount of any contingent deferred
sales charge payable on such redemption pursuant to
the terms of the issuance of such Shares.
(e) The holders of each class of shares shall have (I)
exclusive voting rights with respect to provisions of
any distribution plan adopted by the Trust pursuant
to Rule 12b-1 under the Investment Company Act of
1940 (a "Plan") applicable to the respective class of
a particular Series, and (ii) no voting rights with
respect to provisions of any Plan applicable to any
other class of that Series, or with regard to any
other matter submitted to a vote of shareholders
which does not affect holders of that respective
class of such Series.
(f) (i) Each Class B Share, other than a share
purchases through the automatic reinvestment
of a dividend or a distribution with respect
to Class B Shares, shall be converted
automatically, and without any action or
choice on the part of the holder thereof,
into Class A Shares of the same Series on the
date that is the first business day following
the month in which the eighth anniversary
date of the date of issuance of the Class B
Share falls (the "Conversion Date"). With
respect to Class B Shares issued in an
exchange or series of exchanges for shares of
beneficial interest or common stock, as the
case may be, of another investment company or
class or series thereof registered under the
Investment Company Act of 1940 pursuant to an
exchange privilege granted by the Trust, the
date of issuance of the Class B Shares for
purposes of the immediately preceding
sentence shall be the date of issuance of the
original shares of beneficial interest or
common stock, as the case may be.
(ii) Each Class B Share acquired through the
automatic reinvestment of a dividend of a
distribution with respect to Class B Shares
shall be segregated in a separate
sub-account. Each time any Class B Shares in
shareholder's Fund account (other than those
described in the aforedescribed applicable
sub-account) convert to Class A Shares of the
same Series, an equal pro rata portion of the
Class B Shares then in the sub-account will
also convert to Class A Shares of the same
Series without any action or choice on the
part of the holder thereof. The portion will
be determined by the ratio that the
shareholder's Class B shares converting to
Class A Shares bears to the shareholder's
total Class B Shares not acquired through
dividends and distributions.
(iii) The conversion of Class B Shares to Class A
Shares is subject to the continuing
availability of an opinion of counsel or a
ruling of the Internal Revenue Service that
payment of different dividends on Class A
and Class B Shares does not result in the
Trust's dividends or distributions
constituting "preferential dividends" under
the Internal Revenue Code of
<PAGE>
1986, as amended, and that the conversion of
shares does not constitute a taxable event
under federal income tax law.
(iv) The number of shares of Class A Shares into
which a share of Class B Shares is converted
pursuant to paragraphs (f)(I) and (f)(ii)
hereof shall equal the number (including for
this purpose fractions of a share) obtained
by dividing the net asset value per share of
the Class B Shares (for purposes of sales
and redemptions thereof on the Conversion
Date) by the net asset value per share of
the Class A Shares of the same Series (for
purposes of sales and redemptions thereof on
the Conversion Date).
(v) On the Conversion Date, the Class B Shares
converted into shares of Class A Shares will
cease to accrue dividends and will no longer
be deemed outstanding and the rights of the
holders thereof (except the right to receive
(I) the number of Class A Shares of the same
Series into which the Class B Shares have
been converted and (ii) declared but unpaid
dividends to the Conversion Date) will cease.
Certificates representing Class A Shares
resulting from the conversion need not be
issued until certificates representing Class
B Shares converted, if such certificates have
been issued, have been received by the Trust
or its agent duly endorsed for transfer.
IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of
November, 1998.
/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, Herbert Roth, Jr.,
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 26, 1998
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 26th day of August 1998.
/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 /s/ Herbert Roth, Jr.
- -------------------------- ---------------------------
Harry Dalzell-Payne Herbert 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 a.11
CERTIFICATE OF AMENDMENT TO DECLARATION OF TRUST
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
CERTIFICATE OF AMENDMENT TO DECLARATION OF TRUST
The undersigned, individually and as Trustee of Phoenix Multi-Portfolio
Fund, a Massachusetts business trust (the "Trust") under an Agreement and
Declaration of Trust dated October 15, 1987, as amended (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 26, 1998, 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 held November 18, 1998,
at which a quorum was present, the Board of Trustees acting in accordance with
certain implied powers vested in the Board of Trustees pursuant to Article II,
Section 2.2 and the authority conferred pursuant to Article VI, Section 6.3 of
the Declaration, for the purpose of changing the names of the Series designated
Phoenix Tax-Exempt Bond Portfolio, Phoenix Mid Cap Portfolio, Phoenix
International Portfolio, Phoenix Strategic Income Portfolio, Phoenix Real Estate
Securities Portfolio and Emerging Markets Bond Portfolio voted to further amend
said Declaration of Trust effective on March 26, 1999 as follows:
The first paragraph of Section 3.2 of Article III of the Declaration
is hereby amended and restated to read as follows:
"Without limiting the authority of the Trustees set forth in Section 3.1 to
establish and designate any further Series, the following six Series are hereby
established and designated: Phoenix-Goodwin Tax Exempt Bond Fund, Phoenix-Seneca
Mid Cap Fund, Phoenix-Aberdeen International Fund, Phoenix-Goodwin Strategic
Income Fund, Phoenix-Duff & Phelps Real Estate Securities Fund and
Phoenix-Goodwin Emerging Markets Bond Fund."
IN WITNESS WHEREOF, I have hereunto set my hand this 11th day of March, 1999.
/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, Herbert Roth, Jr.,
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 26, 1998
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 26th day of August 1998.
/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 /s/ Herbert Roth, Jr.
- ------------------------- -------------------------
Harry Dalzell-Payne Herbert 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 j
CONSENT OF INDEPENDENT ACCOUNTANTS
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses and
Statements of Additional Information constituting parts of this Post-Effective
Amendment No. 25 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated January 21, 1999, relating to the financial
statements and financial highlights appearing in the November 30, 1998 Annual
Report to Shareholders of the Phoenix Multi-Portfolio Fund, which are also
incorporated by reference into the Registration Statement. We also consent to
the reference to us under the heading "Financial Highlights" in the Prospectuses
and under the heading "Additional Information - Independent Accountants" in the
Statements of Additional Information.
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 25, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000826737
<NAME> PHOENIX MULTIPORTFOLIO FUND
<SERIES>
<NUMBER> 011
<NAME> TAX EXEMPT BOND PORTFOLIO - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 105087
<INVESTMENTS-AT-VALUE> 113270
<RECEIVABLES> 1880
<ASSETS-OTHER> 90
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 115240
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 868
<TOTAL-LIABILITIES> 868
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 106685
<SHARES-COMMON-STOCK> 9582
<SHARES-COMMON-PRIOR> 10986
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (114)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (352)
<ACCUM-APPREC-OR-DEPREC> 8153
<NET-ASSETS> 114372
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6943
<OTHER-INCOME> 0
<EXPENSES-NET> (1218)
<NET-INVESTMENT-INCOME> 5725
<REALIZED-GAINS-CURRENT> (409)
<APPREC-INCREASE-CURRENT> 1555
<NET-CHANGE-FROM-OPS> 6871
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5342)
<DISTRIBUTIONS-OF-GAINS> (97)
<DISTRIBUTIONS-OTHER> (567)
<NUMBER-OF-SHARES-SOLD> 3800
<NUMBER-OF-SHARES-REDEEMED> (5491)
<SHARES-REINVESTED> 287
<NET-CHANGE-IN-ASSETS> (15392)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 107
<OVERDISTRIB-NII-PRIOR> (124)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 544
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1218
<AVERAGE-NET-ASSETS> 120995
<PER-SHARE-NAV-BEGIN> 11.17
<PER-SHARE-NII> 0.57
<PER-SHARE-GAIN-APPREC> 0.20
<PER-SHARE-DIVIDEND> (0.64)
<PER-SHARE-DISTRIBUTIONS> (0.09)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.21
<EXPENSE-RATIO> 0.97
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000826737
<NAME> PHOENIX MULTIPORTFOLIO FUND
<SERIES>
<NUMBER> 012
<NAME> TAX EXEMPT BOND PORTFOLIO - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 105087
<INVESTMENTS-AT-VALUE> 113270
<RECEIVABLES> 1880
<ASSETS-OTHER> 90
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 115240
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 868
<TOTAL-LIABILITIES> 868
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 106685
<SHARES-COMMON-STOCK> 622
<SHARES-COMMON-PRIOR> 517
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (114)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (352)
<ACCUM-APPREC-OR-DEPREC> 8153
<NET-ASSETS> 114372
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6943
<OTHER-INCOME> 0
<EXPENSES-NET> (1218)
<NET-INVESTMENT-INCOME> 5725
<REALIZED-GAINS-CURRENT> (409)
<APPREC-INCREASE-CURRENT> 1555
<NET-CHANGE-FROM-OPS> 6871
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (259)
<DISTRIBUTIONS-OF-GAINS> (4)
<DISTRIBUTIONS-OTHER> (28)
<NUMBER-OF-SHARES-SOLD> 259
<NUMBER-OF-SHARES-REDEEMED> (166)
<SHARES-REINVESTED> 12
<NET-CHANGE-IN-ASSETS> 1204
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 107
<OVERDISTRIB-NII-PRIOR> (124)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 544
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1218
<AVERAGE-NET-ASSETS> 120995
<PER-SHARE-NAV-BEGIN> 11.22
<PER-SHARE-NII> 0.48
<PER-SHARE-GAIN-APPREC> 0.19
<PER-SHARE-DIVIDEND> (0.55)
<PER-SHARE-DISTRIBUTIONS> (0.09)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.25
<EXPENSE-RATIO> 1.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000826737
<NAME> PHOENIX MULTIPORTFOLIO FUND
<SERIES>
<NUMBER> 021
<NAME> MID CAP PORTFOLIO - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 283437
<INVESTMENTS-AT-VALUE> 300541
<RECEIVABLES> 4867
<ASSETS-OTHER> 4
<OTHER-ITEMS-ASSETS> 6957
<TOTAL-ASSETS> 312369
<PAYABLE-FOR-SECURITIES> 9462
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7893
<TOTAL-LIABILITIES> 17355
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 216742
<SHARES-COMMON-STOCK> 14036
<SHARES-COMMON-PRIOR> 17445
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 61168
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17104
<NET-ASSETS> 295014
<DIVIDEND-INCOME> 1154
<INTEREST-INCOME> 2654
<OTHER-INCOME> 142
<EXPENSES-NET> (4418)
<NET-INVESTMENT-INCOME> (468)
<REALIZED-GAINS-CURRENT> 61746
<APPREC-INCREASE-CURRENT> (38514)
<NET-CHANGE-FROM-OPS> 22764
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (33085)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2824
<NUMBER-OF-SHARES-REDEEMED> (8014)
<SHARES-REINVESTED> 1781
<NET-CHANGE-IN-ASSETS> (80727)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 34750
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2477
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4418
<AVERAGE-NET-ASSETS> 330259
<PER-SHARE-NAV-BEGIN> 20.64
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 1.18
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.93)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.90
<EXPENSE-RATIO> 1.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000826737
<NAME> PHOENIX MULTIPORTFOLIO FUND
<SERIES>
<NUMBER> 022
<NAME> MID CAP PORTFOLIO - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 283437
<INVESTMENTS-AT-VALUE> 300541
<RECEIVABLES> 4867
<ASSETS-OTHER> 4
<OTHER-ITEMS-ASSETS> 6957
<TOTAL-ASSETS> 312369
<PAYABLE-FOR-SECURITIES> 9462
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7893
<TOTAL-LIABILITIES> 17355
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 216742
<SHARES-COMMON-STOCK> 818
<SHARES-COMMON-PRIOR> 924
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 61168
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17104
<NET-ASSETS> 295014
<DIVIDEND-INCOME> 1154
<INTEREST-INCOME> 2654
<OTHER-INCOME> 142
<EXPENSES-NET> (4418)
<NET-INVESTMENT-INCOME> (468)
<REALIZED-GAINS-CURRENT> 61746
<APPREC-INCREASE-CURRENT> (38514)
<NET-CHANGE-FROM-OPS> 22764
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1776)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 92
<NUMBER-OF-SHARES-REDEEMED> (295)
<SHARES-REINVESTED> 97
<NET-CHANGE-IN-ASSETS> (2895)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 34750
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2477
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4418
<AVERAGE-NET-ASSETS> 330259
<PER-SHARE-NAV-BEGIN> 20.11
<PER-SHARE-NII> (0.18)
<PER-SHARE-GAIN-APPREC> 1.18
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.93)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.18
<EXPENSE-RATIO> 2.04
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000826737
<NAME> PHOENIX MULTIPORTFOLIO FUND
<SERIES>
<NUMBER> 031
<NAME> INTERNATIONAL PORTFOLIO - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 171836
<INVESTMENTS-AT-VALUE> 190185
<RECEIVABLES> 4938
<ASSETS-OTHER> 1786
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 196909
<PAYABLE-FOR-SECURITIES> 2144
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5988
<TOTAL-LIABILITIES> 8132
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 132065
<SHARES-COMMON-STOCK> 10731
<SHARES-COMMON-PRIOR> 9454
<ACCUMULATED-NII-CURRENT> 805
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 37536
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 18371
<NET-ASSETS> 188777
<DIVIDEND-INCOME> 2663
<INTEREST-INCOME> 516
<OTHER-INCOME> 0
<EXPENSES-NET> (2567)
<NET-INVESTMENT-INCOME> 612
<REALIZED-GAINS-CURRENT> 39590
<APPREC-INCREASE-CURRENT> (635)
<NET-CHANGE-FROM-OPS> 39567
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (12005)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14403
<NUMBER-OF-SHARES-REDEEMED> (13955)
<SHARES-REINVESTED> 829
<NET-CHANGE-IN-ASSETS> 40124
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 11420
<OVERDISTRIB-NII-PRIOR> (332)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1351
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2567
<AVERAGE-NET-ASSETS> 180105
<PER-SHARE-NAV-BEGIN> 13.89
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 3.27
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.24)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.98
<EXPENSE-RATIO> 1.37
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000826737
<NAME> PHOENIX MULTIPORTFOLIO FUND
<SERIES>
<NUMBER> 032
<NAME> INTERNATIONAL PORTFOLIO - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 171836
<INVESTMENTS-AT-VALUE> 190185
<RECEIVABLES> 4938
<ASSETS-OTHER> 1786
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 196909
<PAYABLE-FOR-SECURITIES> 2144
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5988
<TOTAL-LIABILITIES> 8132
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 132065
<SHARES-COMMON-STOCK> 1121
<SHARES-COMMON-PRIOR> 749
<ACCUMULATED-NII-CURRENT> 805
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 37536
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 18371
<NET-ASSETS> 188777
<DIVIDEND-INCOME> 2663
<INTEREST-INCOME> 516
<OTHER-INCOME> 0
<EXPENSES-NET> (2567)
<NET-INVESTMENT-INCOME> 612
<REALIZED-GAINS-CURRENT> 39590
<APPREC-INCREASE-CURRENT> (635)
<NET-CHANGE-FROM-OPS> 39567
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (943)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1091
<NUMBER-OF-SHARES-REDEEMED> (787)
<SHARES-REINVESTED> 68
<NET-CHANGE-IN-ASSETS> 7155
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 11420
<OVERDISTRIB-NII-PRIOR> (332)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1351
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2567
<AVERAGE-NET-ASSETS> 180105
<PER-SHARE-NAV-BEGIN> 13.56
<PER-SHARE-NII> (0.05)
<PER-SHARE-GAIN-APPREC> 3.17
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.24)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.44
<EXPENSE-RATIO> 2.11
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000826737
<NAME> PHOENIX MULTIPORTFOLIO FUND
<SERIES>
<NUMBER> 061
<NAME> REAL ESTATE SECURITIES PORTFOLIO - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 44155
<INVESTMENTS-AT-VALUE> 43176
<RECEIVABLES> 76
<ASSETS-OTHER> 4
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 43256
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 332
<TOTAL-LIABILITIES> 332
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 43410
<SHARES-COMMON-STOCK> 2015
<SHARES-COMMON-PRIOR> 2218
<ACCUMULATED-NII-CURRENT> 564
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (71)
<ACCUM-APPREC-OR-DEPREC> (979)
<NET-ASSETS> 42924
<DIVIDEND-INCOME> 2674
<INTEREST-INCOME> 41
<OTHER-INCOME> 0
<EXPENSES-NET> (861)
<NET-INVESTMENT-INCOME> 1854
<REALIZED-GAINS-CURRENT> (71)
<APPREC-INCREASE-CURRENT> (12098)
<NET-CHANGE-FROM-OPS> (10315)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (968)
<DISTRIBUTIONS-OF-GAINS> (2255)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 445
<NUMBER-OF-SHARES-REDEEMED> (855)
<SHARES-REINVESTED> 207
<NET-CHANGE-IN-ASSETS> (11649)
<ACCUMULATED-NII-PRIOR> 212
<ACCUMULATED-GAINS-PRIOR> 3769
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 398
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 972
<AVERAGE-NET-ASSETS> 53092
<PER-SHARE-NAV-BEGIN> 16.39
<PER-SHARE-NII> 0.55
<PER-SHARE-GAIN-APPREC> (3.18)
<PER-SHARE-DIVIDEND> (0.44)
<PER-SHARE-DISTRIBUTIONS> (1.07)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.25
<EXPENSE-RATIO> 1.31
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000826737
<NAME> PHOENIX MULTIPORTFOLIO FUND
<SERIES>
<NUMBER> 062
<NAME> REAL ESTATE SECURITIES PORTFOLIO - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 44155
<INVESTMENTS-AT-VALUE> 43176
<RECEIVABLES> 76
<ASSETS-OTHER> 4
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 43256
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 332
<TOTAL-LIABILITIES> 332
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 43410
<SHARES-COMMON-STOCK> 1496
<SHARES-COMMON-PRIOR> 1415
<ACCUMULATED-NII-CURRENT> 564
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (71)
<ACCUM-APPREC-OR-DEPREC> (979)
<NET-ASSETS> 42924
<DIVIDEND-INCOME> 2674
<INTEREST-INCOME> 41
<OTHER-INCOME> 0
<EXPENSES-NET> (861)
<NET-INVESTMENT-INCOME> 1854
<REALIZED-GAINS-CURRENT> (71)
<APPREC-INCREASE-CURRENT> (12098)
<NET-CHANGE-FROM-OPS> (10315)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (535)
<DISTRIBUTIONS-OF-GAINS> (1515)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 362
<NUMBER-OF-SHARES-REDEEMED> (401)
<SHARES-REINVESTED> 120
<NET-CHANGE-IN-ASSETS> (4853)
<ACCUMULATED-NII-PRIOR> 212
<ACCUMULATED-GAINS-PRIOR> 3769
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 398
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 972
<AVERAGE-NET-ASSETS> 53092
<PER-SHARE-NAV-BEGIN> 16.32
<PER-SHARE-NII> 0.43
<PER-SHARE-GAIN-APPREC> (3.15)
<PER-SHARE-DIVIDEND> (0.34)
<PER-SHARE-DISTRIBUTIONS> (1.07)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.19
<EXPENSE-RATIO> 2.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000826737
<NAME> PHOENIX MULTIPORTFOLIO FUND
<SERIES>
<NUMBER> 071
<NAME> EMERGING MARKETS BOND PORTFOLIO - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 81196
<INVESTMENTS-AT-VALUE> 78230
<RECEIVABLES> 6769
<ASSETS-OTHER> 1094
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 86093
<PAYABLE-FOR-SECURITIES> 5394
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 500
<TOTAL-LIABILITIES> 5894
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 131968
<SHARES-COMMON-STOCK> 5796
<SHARES-COMMON-PRIOR> 5287
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (50)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (48715)
<ACCUM-APPREC-OR-DEPREC> (3004)
<NET-ASSETS> 80199
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14793
<OTHER-INCOME> 0
<EXPENSES-NET> (1705)
<NET-INVESTMENT-INCOME> 13088
<REALIZED-GAINS-CURRENT> (43148)
<APPREC-INCREASE-CURRENT> 1569
<NET-CHANGE-FROM-OPS> (28491)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5582)
<DISTRIBUTIONS-OF-GAINS> (7204)
<DISTRIBUTIONS-OTHER> (1984)
<NUMBER-OF-SHARES-SOLD> 2907
<NUMBER-OF-SHARES-REDEEMED> (3428)
<SHARES-REINVESTED> 1030
<NET-CHANGE-IN-ASSETS> (26150)
<ACCUMULATED-NII-PRIOR> 362
<ACCUMULATED-GAINS-PRIOR> 1900
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 731
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1705
<AVERAGE-NET-ASSETS> 97636
<PER-SHARE-NAV-BEGIN> 12.84
<PER-SHARE-NII> 1.32
<PER-SHARE-GAIN-APPREC> (4.22)
<PER-SHARE-DIVIDEND> (1.00)
<PER-SHARE-DISTRIBUTIONS> (1.39)
<RETURNS-OF-CAPITAL> (0.35)
<PER-SHARE-NAV-END> 7.20
<EXPENSE-RATIO> 1.43
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000826737
<NAME> PHOENIX MULTIPORTFOLIO FUND
<SERIES>
<NUMBER> 072
<NAME> EMERGING MARKETS BOND PORTFOLIO - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 81196
<INVESTMENTS-AT-VALUE> 78230
<RECEIVABLES> 6769
<ASSETS-OTHER> 1094
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 86093
<PAYABLE-FOR-SECURITIES> 5394
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 500
<TOTAL-LIABILITIES> 5894
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 131968
<SHARES-COMMON-STOCK> 5224
<SHARES-COMMON-PRIOR> 3028
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (50)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (48715)
<ACCUM-APPREC-OR-DEPREC> (3004)
<NET-ASSETS> 80199
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14793
<OTHER-INCOME> 0
<EXPENSES-NET> (1705)
<NET-INVESTMENT-INCOME> 13088
<REALIZED-GAINS-CURRENT> (43148)
<APPREC-INCREASE-CURRENT> 1569
<NET-CHANGE-FROM-OPS> (28491)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3943)
<DISTRIBUTIONS-OF-GAINS> (4183)
<DISTRIBUTIONS-OTHER> (1343)
<NUMBER-OF-SHARES-SOLD> 3220
<NUMBER-OF-SHARES-REDEEMED> (1516)
<SHARES-REINVESTED> 492
<NET-CHANGE-IN-ASSETS> (1403)
<ACCUMULATED-NII-PRIOR> 362
<ACCUMULATED-GAINS-PRIOR> 1900
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 731
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1705
<AVERAGE-NET-ASSETS> 97636
<PER-SHARE-NAV-BEGIN> 12.77
<PER-SHARE-NII> 1.23
<PER-SHARE-GAIN-APPREC> (4.18)
<PER-SHARE-DIVIDEND> (0.97)
<PER-SHARE-DISTRIBUTIONS> (1.39)
<RETURNS-OF-CAPITAL> (0.33)
<PER-SHARE-NAV-END> 7.13
<EXPENSE-RATIO> 2.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000826737
<NAME> PHOENIX MULTIPORTFOLIO FUND
<SERIES>
<NUMBER> 073
<NAME> EMERGING MARKETS BOND PORTFOLIO - CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 81196
<INVESTMENTS-AT-VALUE> 78230
<RECEIVABLES> 6769
<ASSETS-OTHER> 1094
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 86093
<PAYABLE-FOR-SECURITIES> 5394
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 500
<TOTAL-LIABILITIES> 5894
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 131968
<SHARES-COMMON-STOCK> 168
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (50)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (48715)
<ACCUM-APPREC-OR-DEPREC> (3004)
<NET-ASSETS> 80199
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14793
<OTHER-INCOME> 0
<EXPENSES-NET> (1705)
<NET-INVESTMENT-INCOME> 13088
<REALIZED-GAINS-CURRENT> (43148)
<APPREC-INCREASE-CURRENT> 1569
<NET-CHANGE-FROM-OPS> (28491)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (55)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (15)
<NUMBER-OF-SHARES-SOLD> 170
<NUMBER-OF-SHARES-REDEEMED> (5)
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> 1205
<ACCUMULATED-NII-PRIOR> 362
<ACCUMULATED-GAINS-PRIOR> 1900
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 731
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1705
<AVERAGE-NET-ASSETS> 97636
<PER-SHARE-NAV-BEGIN> 12.25
<PER-SHARE-NII> 0.85
<PER-SHARE-GAIN-APPREC> (5.10)
<PER-SHARE-DIVIDEND> (0.66)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (0.17)
<PER-SHARE-NAV-END> 7.17
<EXPENSE-RATIO> 2.29
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000826737
<NAME> PHOENIX MULTIPORTFOLIO FUND
<SERIES>
<NUMBER> 051
<NAME> STRATEGIC INCOME PORTFOLIO - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 7313
<INVESTMENTS-AT-VALUE> 6222
<RECEIVABLES> 237
<ASSETS-OTHER> 56
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6515
<PAYABLE-FOR-SECURITIES> 262
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 77
<TOTAL-LIABILITIES> 339
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7421
<SHARES-COMMON-STOCK> 23
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 23
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (177)
<ACCUM-APPREC-OR-DEPREC> (1091)
<NET-ASSETS> 6176
<DIVIDEND-INCOME> 9
<INTEREST-INCOME> 628
<OTHER-INCOME> 0
<EXPENSES-NET> (53)
<NET-INVESTMENT-INCOME> 584
<REALIZED-GAINS-CURRENT> (161)
<APPREC-INCREASE-CURRENT> (1069)
<NET-CHANGE-FROM-OPS> (646)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (14)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 52
<NUMBER-OF-SHARES-REDEEMED> (31)
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 183
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 35
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 238
<AVERAGE-NET-ASSETS> 6742
<PER-SHARE-NAV-BEGIN> 9.78
<PER-SHARE-NII> 0.55
<PER-SHARE-GAIN-APPREC> (1.79)
<PER-SHARE-DIVIDEND> (0.55)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.99
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000826737
<NAME> PHOENIX MULTIPORTFOLIO FUND
<SERIES>
<NUMBER> 052
<NAME> STRATEGIC INCOME PORTFOLIO - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 7313
<INVESTMENTS-AT-VALUE> 6222
<RECEIVABLES> 237
<ASSETS-OTHER> 56
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6515
<PAYABLE-FOR-SECURITIES> 262
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 77
<TOTAL-LIABILITIES> 339
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7421
<SHARES-COMMON-STOCK> 28
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 23
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (177)
<ACCUM-APPREC-OR-DEPREC> (1091)
<NET-ASSETS> 6176
<DIVIDEND-INCOME> 9
<INTEREST-INCOME> 628
<OTHER-INCOME> 0
<EXPENSES-NET> (53)
<NET-INVESTMENT-INCOME> 584
<REALIZED-GAINS-CURRENT> (161)
<APPREC-INCREASE-CURRENT> (1069)
<NET-CHANGE-FROM-OPS> (646)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (14)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 39
<NUMBER-OF-SHARES-REDEEMED> (12)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 224
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 35
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 238
<AVERAGE-NET-ASSETS> 6742
<PER-SHARE-NAV-BEGIN> 9.78
<PER-SHARE-NII> 0.50
<PER-SHARE-GAIN-APPREC> (1.77)
<PER-SHARE-DIVIDEND> (0.53)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.98
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000826737
<NAME> PHOENIX MULTIPORTFOLIO FUND
<SERIES>
<NUMBER> 053
<NAME> STRATEGIC INCOME PORTFOLIO - CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 7313
<INVESTMENTS-AT-VALUE> 6222
<RECEIVABLES> 237
<ASSETS-OTHER> 56
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6515
<PAYABLE-FOR-SECURITIES> 262
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 77
<TOTAL-LIABILITIES> 339
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7421
<SHARES-COMMON-STOCK> 15
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 23
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (177)
<ACCUM-APPREC-OR-DEPREC> (1091)
<NET-ASSETS> 6176
<DIVIDEND-INCOME> 9
<INTEREST-INCOME> 628
<OTHER-INCOME> 0
<EXPENSES-NET> (53)
<NET-INVESTMENT-INCOME> 584
<REALIZED-GAINS-CURRENT> (161)
<APPREC-INCREASE-CURRENT> (1069)
<NET-CHANGE-FROM-OPS> (646)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24
<NUMBER-OF-SHARES-REDEEMED> (10)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 116
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 35
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 238
<AVERAGE-NET-ASSETS> 6742
<PER-SHARE-NAV-BEGIN> 9.78
<PER-SHARE-NII> 0.50
<PER-SHARE-GAIN-APPREC> (1.76)
<PER-SHARE-DIVIDEND> (0.53)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.99
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000826737
<NAME> PHOENIX MULTIPORTFOLIO FUND
<SERIES>
<NUMBER> 054
<NAME> STRATEGIC INCOME PORTFOLIO - CLASS X
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 7313
<INVESTMENTS-AT-VALUE> 6222
<RECEIVABLES> 237
<ASSETS-OTHER> 56
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6515
<PAYABLE-FOR-SECURITIES> 262
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 77
<TOTAL-LIABILITIES> 339
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7421
<SHARES-COMMON-STOCK> 706
<SHARES-COMMON-PRIOR> 649
<ACCUMULATED-NII-CURRENT> 23
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (177)
<ACCUM-APPREC-OR-DEPREC> (1091)
<NET-ASSETS> 6176
<DIVIDEND-INCOME> 9
<INTEREST-INCOME> 628
<OTHER-INCOME> 0
<EXPENSES-NET> (53)
<NET-INVESTMENT-INCOME> 584
<REALIZED-GAINS-CURRENT> (161)
<APPREC-INCREASE-CURRENT> (1069)
<NET-CHANGE-FROM-OPS> (646)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (556)
<DISTRIBUTIONS-OF-GAINS> (241)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> (31)
<SHARES-REINVESTED> 88
<NET-CHANGE-IN-ASSETS> (827)
<ACCUMULATED-NII-PRIOR> 15
<ACCUMULATED-GAINS-PRIOR> 241
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 35
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 238
<AVERAGE-NET-ASSETS> 6742
<PER-SHARE-NAV-BEGIN> 9.99
<PER-SHARE-NII> 0.83
<PER-SHARE-GAIN-APPREC> (1.62)
<PER-SHARE-DIVIDEND> (0.82)
<PER-SHARE-DISTRIBUTIONS> (0.37)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.01
<EXPENSE-RATIO> 0.72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
