AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 28, 2000
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. 29 |X|
AND/OR
REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 31
(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
ASSISTANT VICE PRESIDENT
AND ASSISTANT COUNSEL
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)
[ ] on pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
================================================================================
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
Cross Reference Sheet Pursuant to Rule 495(a)
THIS REGISTRATION STATEMENT CONTAINS THREE PROSPECTUSES
AND THREE STATEMENTS OF ADDITIONAL INFORMATION. THESE
ARE IDENTIFIED AS VERSION A, VERSION B AND VERSION C OF EACH.
PART A
INFORMATION REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER FORM N-1A, PART A PROSPECTUS CAPTION
- ----------------------------- ------------------
<S> <C> <C>
1. Front and Back Cover Pages............................... Cover Page, Back Cover Page
2. Risk/Return Summary: Investments, Risks, Performance..... Investment Risk and Return Summary
3. Risk/Return Summary: Fee Table........................... Fund Expenses
4. Investment Objectives, Principal Investment Strategies,
and Related Risks........................................ Investment Risk and Return Summary; Additional
Investment Techniques
5. Management's Discussion of Fund Performance.............. Performance Tables
6. Management, Organization, and Capital Structure.......... Management of the Fund
7. Shareholder Information.................................. Pricing of Fund Shares; Sales Charges; Your
Account; How to Buy Shares; How to Sell Shares;
Things to Know When Selling Shares; Account
Policies; Investor Services; Tax Status of Distributions
8. Distribution Arrangements................................ Sales Charges
9. Financial Highlights Information......................... Financial Highlights
PART B
INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
ITEM NUMBER FORM N-1A, PART B STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ----------------------------- -------------------------------------------
10. Cover Page and Table of Contents......................... Cover Page, Table of Contents
11. Fund History............................................. The Fund
12. Description of the Fund and Its Investment Risks......... Investment Objectives and Policies; Investment
Restrictions
13. Management of the Fund................................... Management of the 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
February 28, 2000
----------- [logo] Aberdeen
Phoenix-Aberdeen
International Fund
----------- [logo] Duff & Phelps
Phoenix-Duff & Phelps
Real Estate Securities Fund
----------- [logo] Goodwin
Phoenix-Goodwin
Emerging Markets Bond Fund
Phoenix-Goodwin
Tax-Exempt Bond 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, the Phoenix-
Duff & Phelps Real Estate Securities Fund, the
Phoenix-Goodwin Emerging Markets Bond Fund, and
the Phoenix-Goodwin Tax-Exempt Bond Fund. Please
read it carefully and retain it for future
reference.
[logo]Phoenix
Investment Partners
<PAGE>
[Version A]
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Phoenix-Aberdeen International Fund
Investment Risk and Return Summary............... 1
Fund Expenses.................................... 4
Management of the Fund........................... 5
Phoenix-Duff & Phelps Real Estate Securities Fund
Investment Risk and Return Summary............... 7
Fund Expenses.................................... 10
Management of the Fund........................... 11
Phoenix-Goodwin Emerging Markets Bond Fund
Investment Risk and Return Summary............... 13
Fund Expenses.................................... 17
Management of the Fund........................... 18
Phoenix-Goodwin Tax-Exempt Bond Fund
Investment Risk and Return Summary............... 20
Fund Expenses.................................... 24
Management of the Fund........................... 25
Additional Investment Techniques.................... 26
Pricing of Fund Shares.............................. 29
Sales Charges....................................... 31
Your Account........................................ 33
How to Buy Shares................................... 34
How to Sell Shares.................................. 34
Things You Should Know When Selling Shares.......... 35
Account Policies.................................... 37
Investor Services................................... 38
Tax Status of Distributions......................... 38
Financial Highlights................................ 40
Additional Information.............................. 46
[arrow] Phoenix
Multi-
Portfolio
Fund
<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] Under normal circumstances, at least 80% of the fund's total assets are
invested in foreign (non-U.S.) issuers located in three or more foreign
countries. From time to time, the fund may have more than 25% of its
assets invested in any major industrial or developed country.
[arrow] The fund invests primarily in common stocks of established foreign
companies believed to have potential for growth of capital, income or
both. At any time, the fund may invest exclusively or primarily either
for growth or income.
[arrow] The adviser manages the fund's investment program and general operation
of the fund, and the subadviser manages the investments of the fund.
The subadviser's process begins by selecting the amount of assets to
allocate to countries and geographic regions for investment based on
the following factors:
[bullet] prospects for relative economic growth among
countries;
[bullet] expected levels of inflation;
[bullet] governmental policies influencing business decisions;
[bullet] relative price levels of the various capital markets;
[bullet] the outlook for currency relationships; and
[bullet] the range of individual investment opportunities
available.
[arrow] Within the designated country allocations, the subadviser uses primary
research to select individual securities for investment based on
factors such as industry growth, management strength and treatment of
minority shareholders, financial soundness, market share, company
valuation and earnings strength.
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.
Phoenix-Aberdeen International Fund 1
<PAGE>
Please refer to "Additional Investment Techniques" for other investment
techniques of the fund.
RISKS RELATED TO PRINCIPAL INVESTMENT STRATEGIES
If you invest in this fund, you risk that you may lose your investment.
GENERAL
The value of the fund's investments that supports your share value can decrease.
If between the time you purchase shares and the time you sell shares the value
of the fund's investments decreases, you will lose money.
Investment values can decrease for a number of reasons. Conditions affecting the
overall economy, specific industries or companies in which the fund invests can
be worse than expected and investments may fail to perform as the adviser
expects. As a result, the value of your shares may decrease.
FOREIGN INVESTING
Investing in securities of non-U.S. companies involves special risks and
considerations not typically associated with investing in U.S. companies, such
as:
[bullet] less publicly available information about foreign countries;
[bullet] political and economic instability within countries;
[bullet] differences in financial reporting standards and transaction
settlement systems;
[bullet] the possibility of expropriation or confiscatory taxation; and
[bullet] changes in investment or exchange regulations.
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 rates.
Exchange rate fluctuations can cause the value of your shares to decrease or
increase. Generally, when the value of the U.S. dollar increases against the
foreign currency in which an investment is denominated, the security tends to
decrease in value which, in turn, may cause the value of your shares to
decrease.
GROWTH STOCKS
Because growth stocks typically make little or no dividend payments to
shareholders, investment return is based on a stock's capital appreciation,
making return more dependent on market increases and decreases. Growth stocks
are therefore more volatile than non-growth stocks to market changes, tending to
rise faster when markets rise and drop more sharply when markets fall.
2 Phoenix-Aberdeen International Fund
<PAGE>
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 a 10-year period.(1)
The table shows how the fund's average annual returns compare to those of a
broad-based securities market index. The fund's past performance is not
necessarily an indication of how the fund will perform in the future.
INTERNATIONAL FUND
(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).
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
1999 27.27
(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).
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Average Annual Total Returns
(for the periods ending 12/31/99)(1) One Year Five Years Ten Years Life of the Fund(2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares 21.22% 16.87% 10.70% N/A
- ----------------------------------------------------------------------------------------------------------------
Class B Shares 22.39% 17.13% N/A 14.68%
- ----------------------------------------------------------------------------------------------------------------
The Morgan Stanley Capital
International EAFE Index(3) 27.30% 13.15% 7.33% 11.71%
- ----------------------------------------------------------------------------------------------------------------
</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 B Shares since July 15, 1994.
(3) 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.
Performance information is not included for Class C Shares because the class has
not had annual returns for at least one calendar year.
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
------ ------ ------
<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 0.53% 0.53% 0.53%
---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.53% 2.28% 2.28%
==== ==== ====
</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 $623 $935 $1,270 $2,212
- -----------------------------------------------------------------------------------------------------------------
Class B $631 $912 $1,220 $2,427
- -----------------------------------------------------------------------------------------------------------------
Class C $331 $712 $1,220 $2,615
- -----------------------------------------------------------------------------------------------------------------
</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 B $231 $712 $1,220 $2,427
- -----------------------------------------------------------------------------------------------------------------
Class C $231 $712 $1,220 $2,615
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
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, 1999,
Phoenix had $25.7 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 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 Phoenix-Aberdeen New
Asia Fund, Phoenix-Aberdeen Global Small Cap Fund and the Aberdeen New Asia
Series of The Phoenix Edge Series Fund since their inception in 1996. 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, 1999, Aberdeen Asset Management PLC had $30 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-Aberdeen International Fund 5
<PAGE>
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>
$1+ billion
$1st billion through $2 billion $2+ billion
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee 0.75% 0.70% 0.65%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Phoenix pays Aberdeen a subadvisory fee at the following rates:
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
$1+ billion
$1st billion through $2 billion $2+ billion
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Subadvisory Fee 0.375% 0.35% 0.325%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
During the fund's last fiscal year, the fund paid total management fees of
$1,408,005. The ratio of management fees to average net assets for the fiscal
year ended November 30, 1999 was 0.75%.
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.
6 Phoenix-Aberdeen International Fund
<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] Under normal circumstances, the fund invests 75% of its assets in
publicly-traded real estate investment trusts (REITs) and companies
that are principally engaged in the real estate industry. An issuer is
considered principally engaged in the real estate industry if at least
50% of the gross revenues or net profits come from the ownership,
development, construction, financing, management or sale of real
estate. The fund, however, does not make direct investments in real
estate.
[arrow] The fund may invest more than 25% of its assets in the real estate
industry. The fund is also non-diversified under the federal securities
laws.
[arrow] The fund intends to invest principally in equity REITs. Generally,
REITs are publicly-traded companies that manage portfolios of real
estate to earn profits for shareholders through investments in
commercial and residential real estate. Equity REITs own real estate
directly. The fund may also invest in mortgage REITs. Mortgage REITs
make short-term construction or real estate development loans or invest
in long-term mortgages or mortgage pools.
[arrow] Securities are selected using a two-tiered screening process. First the
adviser screens the universe of eligible securities for those that it
believes offer 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] Securities are evaluated for sale if their 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.
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.
Phoenix-Duff & Phelps Real Estate Securities Fund 7
<PAGE>
Please refer to "Additional Investment Techniques" for other investment
techniques of the fund.
RISKS RELATED TO PRINCIPAL INVESTMENT STRATEGIES
If you invest in this fund, you risk that you may lose your money.
GENERAL
The value of the fund's investments that supports your share value can decrease.
If between the time you purchase shares and the time you sell shares the value
of the fund's investments decreases, you will lose money.
Investment values can decrease for a number of reasons. Conditions affecting the
overall economy, the real estate industry and specific companies in which the
fund invests can be worse than expected and investments may fail to perform as
the adviser expects. As a result, the value of your shares may decrease.
NON-DIVERSIFICATION
As a non-diversified investment company, the fund is not limited in the
proportion of assets that it may invest in the securities of any one issuer.
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 INDUSTRY CONCENTRATION
Concentrating its investments in the real estate industry presents additional
risk. Securities of companies in other industries may provide greater investment
return in certain market conditions as compared to companies in the real estate
industry. Moreover, conditions that negatively impact the real estate industry
will have a greater impact on this fund as compared to a fund that does not
concentrate in one 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 operated. A decline in real estate value may have
a negative impact on the value of your shares.
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.
8 Phoenix-Duff & Phelps Real Estate Securities Fund
<PAGE>
REIT SECURITIES
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. Equity REITs may be affected by changes in the value of the
underlying property owned by the REITs. Mortgage REITs may be affected by the
quality of any credit extended and are affected by changes in interest rates.
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 the underlying
real estate investment which may result in a lower price when the fund sells its
shares in the REIT. REITs may trade less frequently and in lower volume than
securities of other larger companies which may also contribute to REIT
securities losing value. REITs are dependent on management skills, are not
diversified, and are subject to the possibilities of failing to qualify for the
federal tax exemption on distributed income and failing to maintain their
exemptions under the 1940 Act. Assets invested in REITs incur a layering of
expenses paid by the REIT that you, as a shareholder in the fund, indirectly
bear.
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 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
1999 4.12
(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).
Phoenix-Duff & Phelps Real Estate Securities Fund 9
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
Average Annual Total Returns
(for the periods ending 12/31/99)(1) One Year Life of the Fund(2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A Shares (0.83)% 8.87%
- -----------------------------------------------------------------------------------------------------------------
Class B Shares (0.65)% 8.85%
- -----------------------------------------------------------------------------------------------------------------
S&P 500 Stock Index(3) 21.14% 28.14%
- -----------------------------------------------------------------------------------------------------------------
NAREIT Index (4) (4.62)% 8.31%
- -----------------------------------------------------------------------------------------------------------------
</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 Class B Shares since March 1, 1995.
(3) The S&P 500 Stock Index is an unmanaged but commonly used measure of common
stock total return performance. The S&P's performance does not reflect sales
charges.
(4) 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.
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 0.75% 0.75%
---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES (a) 1.75% 2.50%
==== ====
</TABLE>
- ---------------
(a) The fund's investment adviser has agreed to reimburse through March 31, 2001
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 were 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").
10 Phoenix-Duff & Phelps Real Estate Securities Fund
<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 $644 $1,000 $1,379 $2,439
- -----------------------------------------------------------------------------------------------------------------
Class B $653 $979 $1,331 $2,652
- -----------------------------------------------------------------------------------------------------------------
</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 B $253 $779 $1,331 $2,652
- -----------------------------------------------------------------------------------------------------------------
</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.
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,
1999, Duff & Phelps had approximately $14.7 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
Phoenix-Duff & Phelps Real Estate Securities Fund 11
<PAGE>
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>
During the fund's last fiscal year, the fund paid total management fees of
$270,694. The ratio of management fees to average net assets for the fiscal year
ended November 30, 1999 was 0.75%.
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, 2000,
to the extent that such expenses exceed 0.30% of the average annual net asset
values 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 20 years
experience in the real estate industry.
12 Phoenix-Duff & Phelps Real Estate Securities Fund
<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] Under normal circumstances, the fund invests at least 65% of its total
assets in debt securities issued by governments, government-related
entities and corporations located in emerging markets. An issuer is
deemed to be located in an emerging market if the issuer is organized
under the laws of an emerging market country; the issuer's principal
securities trading market is in an emerging market country; or at least
50% of the issuer's non-current assets, capitalization, gross revenue
or profit in any one of the two most recent fiscal years has been
derived from emerging market country activities. The adviser considers
emerging markets to be any country that is defined as an emerging or
developing economy by the World Bank, International Finance
Corporation, or The United Nations or its authorities.
[arrow] The fund is non-diversified under federal securities laws, invests in
issuers in three or more countries, and may invest up to 40% of its
assets in issuers of a single country.
[arrow] Fund investments are predominantly in high yield-high risk securities
("junk bonds"). To reduce currency risk, the fund also invests at least
65% of its assets in U.S. dollar denominated debt securities.
[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] Interest rate risk is managed by a duration neutral strategy. The
adviser attempts to maintain the duration of the fund at a level
similar to that of its benchmark. Duration measures the interest rate
sensitivity of a fixed income security by assessing and weighting the
present value of the security's payment pattern. Generally, the longer
the maturity the greater the duration and therefore the greater effect
interest rate changes have on the price of the security. By maintaining
the duration of the fund at a level similar to that of the fund's fixed
income benchmark, the JP Morgan Emerging Markets Bond Index, the
adviser believes that the fund's exposure to interest rate risk is less
than that of a fund that attempts to predict future interest rate
changes. On
Phoenix-Goodwin Emerging Markets Bond Fund 13
<PAGE>
January 31, 2000 the modified adjusted duration of the JP Morgan
Emerging Markets Bond Index was 4.48 years.
[arrow] Securities considered for portfolio investment may be of any maturity.
However, the adviser attempts to maintain a maturity composition
similar to that of its benchmark in an effort to reduce the portfolio's
exposure to interest rate risk. Maturity composition refers to the
percentage of securities within specific maturity ranges as well as the
aggregate weighted average portfolio maturity. On January 31, 2000 the
maturity of the JP Morgan Emerging Markets Bond Index was 13.3 years.
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
objective.
Please refer to "Additional Investment Techniques" for other investment
techniques of the fund.
RISKS RELATED TO PRINCIPAL INVESTMENT STRATEGIES
If you invest in this fund, you risk that you may lose your investment.
GENERAL
The value of your shares and the level of income you receive are subject to
risks associated with the types of securities selected for fund investment.
Neither the fund nor the adviser can assure you that a particular level of
income will consistently be achieved or that the value of the fund's investments
that supports your share value will increase. If the value of fund investments
decreases, your share value will decrease.
INTEREST RATE RISK
The value of your shares will be directly affected by trends in interest rates.
If interest rates rise, the value of debt securities generally will fall.
Because the fund may hold securities with longer maturities, the net asset value
of the fund may experience greater price fluctuations in response to changes in
interest rates than funds that hold only securities with short-term maturities.
Prices of longer-term securities are affected more by interest rate changes than
prices of shorter-term securities.
CREDIT RISK
Credit risk pertains to the issuer's ability to make scheduled interest or
principal payments. Generally, securities rated below investment grade (high
yield-high risk securities) have a greater chance that the issuer will be unable
to make such payments when due.
NON-DIVERSIFICATION
As a non-diversified investment company, the fund is not limited in the
proportion of assets that it may invest in the securities of any one issuer.
Diversifying a fund's portfolio can reduce
14 Phoenix-Goodwin Emerging Markets Bond Fund
<PAGE>
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.
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 may be required in some
developing countries for the release of investment income, capital and sale
proceeds to foreign investors and some developing countries may limit the extent
of foreign investment in domestic companies. Emerging market countries often
suffer from currency devaluation and higher rates of inflation.
Developing countries may be adversely affected by trade barriers, exchange
controls, managed adjustments in relative currency values and other
protectionist measures imposed by countries with which they trade and may also
be affected by economic conditions in such countries. 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."
HIGH YIELD-HIGH RISK SECURITIES
High yield-high risk securities entail greater price volatility and credit and
interest rate risk than investment grade securities. Analysis of the
creditworthiness of high yield-high risk issuers is more complex than for
higher-grade securities, making it more difficult for the adviser to accurately
predict risk. There is a greater risk with high yield-high risk securities that
an issuer will not be able to make principal and interest payments when due. If
the fund pursues missed payments, there is a risk that fund expenses could
increase. In addition, lower-rated securities may not trade as often and may be
less liquid than higher-rated securities.
FOREIGN INVESTING
Foreign markets and currencies may not perform as well as U.S. markets.
Political and economic uncertainty in foreign countries, as well as less public
information about foreign investments, may negatively impact the fund's
portfolio. Dividends and other income payable on foreign securities may be
subject to foreign taxes. Some investments may be made in currencies other than
U.S. dollars that will fluctuate in value as a result of changes in the currency
exchange rate.
LONG-TERM MATURITIES
Securities with longer maturities may be subject to greater price fluctuations
due to interest rate, tax law and general market changes.
Phoenix-Goodwin Emerging Markets Bond Fund 15
<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 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
1999 40.04
(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>
- -----------------------------------------------------------------------------------------------------------------
Life of the Fund(2)
<CAPTION>
Average Annual Total Returns -----------------------------------------------------
(for the periods ending 12/31/99)(1) One Year Class A Class B Class C
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares 33.39% 13.68% -- --
- -----------------------------------------------------------------------------------------------------------------
Class B Shares 35.21% -- 13.85% --
- -----------------------------------------------------------------------------------------------------------------
Class C Shares 39.02% -- -- (8.23)%
- -----------------------------------------------------------------------------------------------------------------
JP Morgan Emerging Markets
Bond Index Plus (3) 25.05% 16.04% 16.04% 0.95%
- -----------------------------------------------------------------------------------------------------------------
</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 Class B Shares since September 5, 1995, and Class C Shares since
March 26, 1998.
(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.
16 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 None None
Dividends None
Redemption Fee None None None
Exchange Fee None None None
-------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees (c) 0.25% 1.00% 1.00%
Other Expenses 0.56% 0.56% 0.56%
---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.56% 2.31% 2.31%
==== ==== ====
</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 17
<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 $626 $944 $1,285 $2,243
- -----------------------------------------------------------------------------------------------------------------
Class B $634 $921 $1,235 $2,458
- -----------------------------------------------------------------------------------------------------------------
Class C $334 $721 $1,235 $2,646
- -----------------------------------------------------------------------------------------------------------------
</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 B $234 $721 $1,235 $2,458
- -----------------------------------------------------------------------------------------------------------------
Class C $234 $721 $1,235 $2,646
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
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, 1999,
Phoenix had $25.7 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:
18 Phoenix-Goodwin Emerging Market Bond Fund
<PAGE>
<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
$700,590. The ratio of management fees to average net assets for the fiscal year
ended November 30, 1999 was 0.75%.
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.
Phoenix-Goodwin Emerging Markets bond Fund 19
<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] Under normal circumstances, the fund invests at least 80% of its net
assets in municipal securities, the income of which is fully exempt
from federal income taxation.
[arrow] "Municipal securities" means obligations, including municipal bonds,
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, and certain industrial development bonds, the
interest from which is, in the opinion of counsel to the issuers of
such securities, exempt from federal income taxation.
[arrow] The fund may, from time to time, invest more than 25% of its total
assets in a particular segment of the municipal securities market.
[arrow] Municipal securities selected for investment have credit ratings within
the four highest rating categories, or, if unrated, are of comparable
quality in the adviser's opinion.
[arrow] Under normal circumstances, at least 65% of total assets will be
invested in municipal bonds, the income of which is fully exempt from
federal taxation.
[arrow] Securities are selected using a "sector rotation" approach. The adviser
seeks to adjust the proportion of fund investment in various "sectors"
(such as water and sewer, education, transportation and electrical
utilities) and the selections within sectors to obtain higher relative
returns. Sectors are analyzed by the adviser for attractive values and
geographic opportunities. Securities within sectors are selected based
on the structure of the security, such as the coupon rate, calls, and
maturity, and the adviser's belief that the security offers potential
for total return based on risk-to-reward tradeoff.
[arrow] Interest rate risk is managed by a duration neutral strategy. The
adviser attempts to maintain the duration of the fund at a level
similar to that of its benchmark. Duration measures the interest rate
sensitivity of a fixed income security by assessing and weighting the
present value of the security's payment pattern. Generally, the longer
the maturity the greater the duration and therefore the greater effect
interest rate changes have on the price of the security. By maintaining
the duration of the fund at a level similar to that of the fund's fixed
income benchmark, the Lehman Brothers Municipal
20 Phoenix-Goodwin Tax-Exempt Bond Fund
<PAGE>
Bond Index, the adviser believes that the fund's exposure to interest
rate risk is less than that of a fund that attempts to predict future
interest rate changes. On January 31, 2000 the modified adjusted
duration of the Lehman Brothers Municipal Bond Index was 7.61 years.
[arrow] Fixed income securities considered for portfolio investment may be of
any maturity. However, the adviser attempts to maintain a maturity
composition similar to that of its benchmark in an effort to reduce the
portfolio's exposure to interest rate risk. Maturity composition refers
to the percentage of securities within specific maturity ranges as well
as the aggregate weighted average portfolio maturity. On January 31,
2000 the maturity of the Lehman Brothers Municipal Bond Index was 13.32
years.
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 dealers considered by the fund to be
trustworthy for temporary defensive purposes. In such instances, the fund may
not achieve its stated objective.
Please refer to "Additional Investment Techniques" for taxable securities in
which the fund may invest, as well as other investment techniques of the fund.
RISKS RELATED TO PRINCIPAL INVESTMENT STRATEGIES
If you invest in this fund, you risk that you may lose your investment.
GENERAL
The value of your shares and the level of income you receive are subject to
risks associated with the types of securities selected for fund investment.
Neither the fund nor the adviser can assure you that a particular level of
income will consistently be achieved or that the value of the fund's investments
that supports your share value will increase. If the value of fund investments
decreases, your share value will decrease.
INTEREST RATE RISK
The value of your shares will be directly affected by trends in interest rates.
If interest rates rise, the value of debt securities generally will fall.
Because the fund may hold securities with longer maturities, the net asset value
of the fund may experience greater price fluctuations in response to changes in
interest rates than funds that hold only securities with short-term maturities.
Prices of longer-term securities are affected more by interest rate changes than
prices of shorter-term securities.
CREDIT RISK
Credit risk pertains to the issuer's ability to make scheduled interest or
principal payments. Generally, securities rated below investment grade (high
yield-high risk securities) have a greater chance that the issuer will be unable
to make such payments when due. Credit risk is
Phoenix-Goodwin Tax-Exempt Bond Fund 21
<PAGE>
determined at the date of investment. If after the date of purchase the rating
declines, the fund is not obligated to sell the security.
MUNICIPAL SECURITIES
Principal and interest payments on municipal securities 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. General
conditions in the financial markets and the size of a particular offering may
also negatively affect municipal securities' returns.
INDUSTRY CONCENTRATION
Concentration in a particular segment of the municipal securities industry may
subject the fund to additional risks. Securities in other segments may provide
greater investment return in certain market conditions, and conditions which
negatively impact the concentrated segment will have a greater impact on this
fund as compared to a fund which does not concentrate in one segment.
22 Phoenix-Goodwin Tax-Exempt Bond Fund
<PAGE>
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 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 (%)
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
1999 -3.65
(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).
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
Average Annual Total Returns
(for the periods ending 12/31/99)(1) One Year Five Years Ten Years Life of the Fund(2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares (8.22)% 4.54% 5.57% N/A
- -----------------------------------------------------------------------------------------------------------------
Class B Shares (8.10)% 4.79% N/A 3.30%
- -----------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal
Bond Index(3) (2.07)% 6.91% 6.89% 5.20%(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 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 February 28, 1994.
Phoenix-Goodwin Tax-Exempt Bond Fund 23
<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% (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 0.31% 0.31%
---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.01% 1.76%
==== ====
</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").
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>
<S> <C> <C> <C> <C>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------------
Class A $573 $781 $1,006 $1,653
- ------------------------------------------------------------------------------------------------------------------
Class B $579 $754 $954 $1,875
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
24 Phoenix-Goodwin Tax-Exempt Bond Fund
<PAGE>
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 B $179 $554 $954 $1,875
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
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, 1999,
Phoenix had $25.7 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
$473,237. The ratio of management fees to average net assets for the fiscal year
ended November 30, 1999 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-Goodwin 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.
Phoenix-Good Tax-Exempt Bond Fund 25
<PAGE>
ADDITIONAL INVESTMENT TECHNIQUES
- --------------------------------------------------------------------------------
In addition to the Principal Investment Strategies and Risks, the
Phoenix-Aberdeen International Fund ("International"), Phoenix-Duff & Phelps
Real Estate Securities Fund ("Real Estate"), Phoenix-Goodwin Emerging Markets
Bond Fund ("Emerging Markets") and Phoenix-Goodwin Tax-Exempt Bond Fund
("Tax-Exempt") may engage in the following investment techniques as indicated:
DEBT SECURITIES
In addition to common stocks, International may invest in any other type of
securities, including preferred stocks, convertible securities, bonds, notes and
debt securities of any maturity and credit quality subject to such limitations
as are included in the fund's prospectus and statement of additional
information.
Real Estate may invest up to 25% of its total assets in debt securities of
companies principally engaged in the real estate industry having credit ratings
within the four highest rating categories and of any maturity.
Emerging Markets may invest up to 35% of its total assets in debt obligations of
any maturity other than emerging market debt obligations, such as debt
securities and money market instruments issued by corporations and governments
based in developed markets.
Typically, debt obligations will decrease in value when interest rates rise.
Credit risk for debt obligations generally increases as the rating declines.
Securities with lower credit ratings have a greater chance of principal and
interest payment default. Debt obligations with longer maturities may be subject
to price fluctuations due to interest rates, tax laws and other general market
factors. Credit risk is determined at the date of investment. If the rating
declines after the date of purchase, the fund is not obligated to sell the
security.
SHORT-TERM INVESTMENTS
Real Estate may invest up to 25% of its total assets in short-term securities,
including money market instruments, repurchase agreements, certificates of
deposits and bankers' acceptances. Emerging Markets may invest in money market
instruments issued by corporations and governments based in developed markets.
Default or insolvency of the other party to a repurchase agreement presents a
risk to the funds.
U.S. AND FOREIGN GOVERNMENT OBLIGATIONS
International may invest in obligations of U.S. and foreign governments and
their political subdivisions. Government obligations are not guaranteed to make
the value of your shares rise. Foreign obligations are subject to foreign
investing risks.
26 Phoenix Multi-Portfolio Fund
<PAGE>
TAXABLE SECURITIES
Tax-Exempt may invest up to 20% of its assets in taxable debt securities,
including private activity industrial development bonds and corporate bonds
having credit ratings within the four highest rating categories, commercial
paper, certificates of deposit, repurchase agreements, and obligations issued or
guaranteed by the U.S. Government, its agencies, authorities and
instrumentalities.
CONVERTIBLE SECURITIES
International and Real Estate may invest in convertible securities. Convertible
securities may be subject to redemption at the option of the issuer. If a
security is called for redemption, the fund may have to redeem the security,
convert it into common stock or sell it to a third party at a price and time
that it not beneficial for the fund. In addition, securities convertible into
common stocks may have higher yields than common stocks, but lower yields than
comparable nonconvertible securities.
DEPOSITORY RECEIPTS
International may invest in American Depository Receipts (ADRs), European
Depository Receipts (EDRs), and ADRs not sponsored by U.S. banks. While
investment in ADRs and EDRs may eliminate some of the risk associated with
foreign investments, it does not eliminate all the risks inherent in investing
in securities of foreign issuers. EDRs, and ADRs which are not sponsored by U.S.
banks, are subject to the same investment risks as foreign securities.
CMOS, REMICS AND OTHER PASS-THROUGH SECURITIES
Real Estate may invest up to 25% of its total assets in mortgaged-backed
securities, such as collateralized mortgage obligations (CMOs) and real estate
mortgage investment conduits (REMICs). The values of pass-through securities may
fluctuate to a greater degree than other debt securities in response to changes
in interest rates. Early payoffs on the underlying loans in mortgage-backed and
asset-backed pass-through securities and CMOs may result in the fund receiving
less income than originally anticipated. The variability in prepayments will
tend to limit price gains when interest rates drop and exaggerate price declines
when interest rates rise. In the event of high prepayments, the fund may be
required to invest the proceeds at lower interest rates, causing the fund to
earn less than if the prepayments had not occurred.
NON-PERFORMING SECURITIES
Emerging Markets may invest up to 5% of its net assets in non-performing
securities whose quality is comparable to securities rated as low as D by
Standard & Poor's or C by Moody's.
MUTUAL FUND INVESTING
International may invest up to 10% of its total assets in shares of other mutual
funds. Emerging Markets may invest up to 10% of its total assets in shares of
closed-end investment companies
Phoenix Multi-Portfolio Fund 27
<PAGE>
that invest primarily in emerging market debt securities. Assets invested in
other mutual funds incur a layering of expenses including operating costs,
advisory fees and administrative fees that you, as a shareholder in the funds,
indirectly bear.
OPTIONS, DERIVATIVES AND HEDGING TRANSACTIONS
All funds, except Real Estate, may enter into options transactions, financial
futures and related options for hedging purposes, and International and Emerging
Markets may enter into forward foreign currency contracts. Derivatives may be
less liquid than other securities and the counterparty to such transaction may
not perform as expected. In addition, futures involve market risk in excess of
their value, hedging transactions may limit returns, and premiums paid could be
lost.
EMERGING MARKET INVESTING
International may invest in emerging markets. Investments in less-developed
countries whose markets are still emerging generally present risks in greater
degree than those presented by investments in foreign issuers based in countries
with developed securities markets and more advanced regulatory systems. Prior
governmental approval may be required in some developing countries for the
release of investment income, capital and sale proceeds to foreign investors,
and some developing countries may limit the extent of foreign investment in
domestic companies.
HIGH YIELD-HIGH RISK SECURITIES
International may invest up to 20% of its total assets in high yield-high risk
securities. High yield-high risk securities (junk bonds) typically entail
greater price volatility and principal and interest rate risk than
investment-grade securities. There is a greater chance that an issuer will not
be able to make principal and interest payments on time. Analysis of the
creditworthiness of issuers of high yield securities may be complex, and as a
result, it may be more difficult for the subadviser to accurately predict risk.
UNRATED FIXED INCOME SECURITIES
The funds may invest in unrated securities. Unrated securities may not be lower
in quality than rated securities but due to their perceived risk, they may not
have as broad a market as rated securities. Analysis of unrated securities is
more complex than for rated securities, making it more difficult for the
subadviser to accurately predict risk.
VARIABLE AND FLOATING RATE SECURITIES
Tax-Exempt may invest in securities with variable and floating rates. Securities
with variable and floating rates are more susceptible to interest rate
fluctuations and it is more difficult for the adviser to assess their potential
return.
28 Phoenix Multi-Portfolio Fund
<PAGE>
SECURITIES LENDING
Each fund, except Real Estate, may lend up to 25% of its total assets at market
value to increase its investment returns. If the borrower is unwilling or unable
to return the borrowed securities when due, the fund can suffer losses.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES
Tax-Exempt and Emerging Markets may purchase securities on a when-issued or
delayed-delivery basis. The value of the security on settlement date may be more
or less than the price paid as a result of changes in interest rates and market
conditions. If the value on settlement date is less, the value of your shares
may decline.
ZERO COUPON BONDS
Emerging Markets may invest in debt obligations that do not make any interest or
principal payments for a specified time prior to maturity or at maturity. The
market prices of such bonds generally are more volatile than the market prices
of securities that pay interest on a regular basis and may require the fund to
make distributions from other sources since the fund does not receive cash
payments earned on these securities on a current basis. This may result in
higher portfolio turnover rates and the sale of securities at a time that is
less favorable.
BRADY BONDS
Emerging Markets may invest in Brady Bonds. Brady Bonds have an uncollateralized
component, and countries issuing such bonds have a history of defaults making
the bonds speculative in nature.
BORROWING
The funds may each borrow up to 10% of the value of its total assets.
The funds may buy other types of securities or employ other portfolio management
techniques. Please refer to the Statement of Additional Information for more
detailed information about these and other investment techniques of the funds.
PRICING OF FUND SHARES
- --------------------------------------------------------------------------------
HOW IS THE SHARE PRICE DETERMINED?
Each fund calculates a share price for each class of its shares. The share price
is based on the net assets of the fund and the number of outstanding shares. In
general, each fund calculates net asset value by:
[bullet] adding the values of all securities and other assets of the
fund,
Phoenix Multi-Portfolio Fund 29
<PAGE>
[bullet] subtracting liabilities, and
[bullet] dividing by the total number of outstanding shares of the
fund.
Asset Value: The funds' investments are valued at market value. If market
quotations are not available, the funds determine a "fair value" for an
investment according to rules and procedures approved by the Trustees. Foreign
and domestic debt securities (other than short-term investments) are valued on
the basis of broker quotations or valuations provided by a pricing service
approved by the Trustees when such prices are believed to reflect the fair value
of such securities. Foreign and domestic equity securities are valued at the
last sale price or, if there has been no sale that day, at the last bid price,
generally. Short-term investments having a remaining maturity of sixty days or
less are valued at amortized cost, which the Trustees have determined
approximates market value.
Liabilities: Class specific expenses, distribution fees, service fees and other
liabilities are deducted from the assets of each class. Expenses and liabilities
that are not class specific (such as management fees) are allocated to each
class in proportion to each class' net assets, except where an alternative
allocation can be more fairly made.
Net Asset Value: The liability allocated to a class plus any other expenses are
deducted from the proportionate interest of such class in the assets of the
fund. The resulting amount for each class is then divided by the number of
shares outstanding of that class to produce each class' net asset value per
share.
The net asset value per share of each class of each fund is determined on days
when the New York Stock Exchange (the "NYSE") is open for trading as of the
close of trading (normally 4:00 PM eastern time). A fund will not calculate its
net asset values per share on days when the NYSE is closed for trading. If a
fund holds securities that are traded on foreign exchanges that trade on
weekends or other holidays when the funds do not price their shares, the net
asset value of the funds' shares may change on days when shareholders will not
be able to purchase or redeem the funds' shares.
AT WHAT PRICE ARE SHARES PURCHASED?
All investments received by the funds' authorized agents prior to the close of
regular trading on the NYSE (normally 4:00 PM eastern time) will be executed
based on that day's net asset value. Shares credited to your account from the
reinvestment of fund distributions will be in full and fractional shares that
are purchased at the closing net asset value on the next business day on which
the funds' net asset value is calculated following the dividend record date.
30 Phoenix Multi-Portfolio Fund
<PAGE>
SALES CHARGES
- --------------------------------------------------------------------------------
WHAT ARE THE CLASSES AND HOW DO THEY DIFFER?
Each of the funds presently offers at least 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 funds to pay distribution and service
fees for the sale of their shares and for services provided to shareholders.
WHAT ARRANGEMENT IS BEST FOR YOU?
The different classes permit you to choose the method of purchasing shares that
is most beneficial to you. In choosing a class, consider the amount of your
investment, the length of time you expect to hold the shares, whether you decide
to receive distributions in cash or to reinvest them in additional shares, and
any other personal circumstances. Depending upon these considerations, the
accumulated distribution and service fees and contingent deferred sales charges
of one class may be more or less than the initial sales charge and accumulated
distribution and service fees of another class of shares bought at the same
time. Because distribution and service fees are paid out of a fund's assets on
an ongoing basis, over time these 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 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. (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
Phoenix Multi-Portfolio Fund 31
<PAGE>
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 Initial Sales Charges: Combination Purchase Privilege" in the
Statement of Additional Information). Shares purchased based on the automatic
reinvestment of income dividends or capital gains distributions are not subject
to any sales charges. The sales charge is divided between your investment dealer
and the funds' underwriter (Phoenix Equity Planning Corporation or "PEPCO").
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 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%
32 Phoenix Multi-Portfolio Fund
<PAGE>
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.
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.
Phoenix Multi-Portfolio Fund 33
<PAGE>
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 additional shares and capital gain
distributions in cash;
[bullet] Receive dividends in cash and capital gain distributions in
additional shares; or
[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 and may set
different minimum investments or limitations on buying shares.
- ----------------------------------- ----------------------------------------------------------------------------
Through the mail Complete a New Account Application and send it with a check payable to the
fund. Mail them to: State Street Bank, P.O. Box 8301, Boston, MA
02266-8301.
- ----------------------------------- ----------------------------------------------------------------------------
By Federal Funds wire Call us at (800)243-1574 (press 1, then 0).
- ----------------------------------- ----------------------------------------------------------------------------
Through express delivery Complete a New Account Application and send it with a check payable to the
fund. Send them to: Boston Financial Data Services, Attn: Phoenix Funds,
66 Brooks Drive, Braintree, MA 02184.
- ----------------------------------- ----------------------------------------------------------------------------
By Investo-Matic Complete the appropriate section on the application and send it with your
initial investment payable to the fund. Mail them to: State Street Bank,
P.O. Box 8301, Boston, MA 02266-8301.
- ----------------------------------- ----------------------------------------------------------------------------
By telephone exchange Call us at (800)243-1574 (press 1, then 0).
- ----------------------------------- ----------------------------------------------------------------------------
</TABLE>
HOW TO SELL SHARES
- --------------------------------------------------------------------------------
You have the right to have the funds buy back shares at the net asset value next
determined after receipt of a redemption order by the funds' Transfer Agent or
an authorized agent. In the
34 Phoenix Multi-Portfolio Fund
<PAGE>
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 funds do not charge any redemption
fees. Payment for shares redeemed is made within seven days; however, redemption
proceeds will not be disbursed until each check used for purchases of shares has
been cleared for payment by your bank, which may take up to 15 days after
receipt of the check.
<TABLE>
- ------------------------------------ -----------------------------------------------------------------------------
<CAPTION>
TO SELL SHARES
- ------------------------------------ -----------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee and may set
different minimums on redemptions of accounts.
- ------------------------------------ -----------------------------------------------------------------------------
Through the mail Send a letter of instruction and any share certificates (if you hold
certificate shares) to: State Street Bank, P.O. Box 8301, Boston, MA
02266-8301. Be sure to include the registered owner's name, fund and
account number, number of shares or dollar value you wish to sell.
- ------------------------------------ -----------------------------------------------------------------------------
Through express delivery Send a letter of instruction and any share certificates (if you hold
certificate shares) to: Boston Financial Data Services, Attn: Phoenix
Funds, 66 Brooks Drive, Braintree, MA 02184. Be sure to include the
registered owner's name, fund and account number.
- ------------------------------------ -----------------------------------------------------------------------------
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 Fund and If you selected the checkwriting feature, you may write checks for amounts
Emerging Markets Bond Fund only) of $500 or more. Checks may not be used to close an account.
- ------------------------------------ -----------------------------------------------------------------------------
</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 funds. Each fund reserves the right to pay large
redemptions "in-kind" (in securities owned by the fund rather than in cash).
Large redemptions are those over $250,000 or 1% of the fund's net assets.
Additional documentation will be required for redemptions by organizations,
fiduciaries, or retirement plans, or if redemption is requested by anyone but
the shareholder(s) of record. Transfers between broker-dealer "street" accounts
are governed by the accepting broker-dealer. Questions regarding this type of
transfer should be directed to your financial advisor. Redemption requests will
not be honored until all required documents in proper form
Phoenix Multi-Portfolio Fund 35
<PAGE>
have been received. To avoid delay in redemption or transfer, shareholders
having questions about specific requirements should contact the funds' Transfer
Agent at (800) 243-1574.
REDEMPTIONS BY MAIL
[arrow] If you are selling shares held individually, jointly, or as custodian
under the Uniform Gifts to Minors Act or Uniform Transfers to Minors
Act.
Send a clear letter of instructions if all of these apply:
[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.
If required, the signature guarantee on your request must be made by an eligible
guarantor institution as defined by the funds' Transfer Agent in accordance with
its signature guarantee procedures. Currently, such procedures generally permit
guarantees by banks, broker dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
SELLING SHARES BY TELEPHONE
The Transfer Agent will use reasonable procedures to confirm that telephone
instructions are genuine. Address and bank account information are verified,
redemption instructions are taped, and all redemptions are confirmed in writing.
The individual investor bears the risk from instructions given by an
unauthorized third-party that the Transfer Agent reasonably believed to be
genuine.
The Transfer Agent may modify or terminate the telephone redemption privilege at
any time with 60 days notice to shareholders.
During times of drastic economic or market changes, telephone redemptions may be
difficult to make or temporarily suspended.
36 Phoenix Multi-Portfolio Fund
<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 funds reserve 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 funds' underwriter has entered into
agreements with certain timing firms permitting them to
exchange by telephone. These privileges are limited, and the
funds' distributor has the right to reject or suspend them.
Phoenix Multi-Portfolio Fund 37
<PAGE>
RETIREMENT PLANS
Shares of the funds may be used as investments under the following qualified
prototype retirement plans: traditional IRA, rollover IRA, SIMPLE IRA, Roth IRA,
401(k) plans, profit-sharing, money purchase plans, and 403(b) plans. For more
information, call (800)243-4361.
INVESTOR SERVICES
- --------------------------------------------------------------------------------
INVESTO-MATIC is a systematic investment plan that allows you to have a
specified amount automatically deducted from your checking or savings account
and then deposited into your mutual fund account. Just complete the
Investo-Matic Section on the application and include a voided check.
SYSTEMATIC EXCHANGE allows you to automatically move money from one Phoenix Fund
to another on a monthly, quarterly, semiannual or annual basis. Shares of one
Phoenix Fund will be exchanged for shares of the same class of another fund at
the interval you select. To sign up, just complete the Systematic Exchange
Section on the application.
TELEPHONE EXCHANGE lets you exchange shares of one fund for the same class of
shares in another fund, using our customer service telephone service. See the
Telephone Exchange Section on the application.
SYSTEMATIC WITHDRAWAL PROGRAM allows you to periodically redeem a portion of
your account on a predetermined monthly, quarterly, semiannual, or annual basis.
Sufficient shares will be redeemed on the 15th of the month at the closing net
asset value so that the payment is made about the 20th of the month. The program
also provides for redemptions on or about the 10th, 15th, or 25th with proceeds
directed through Automated Clearing House (ACH) to your bank. The minimum
withdrawal is $25, and minimum account balance requirements continue.
Shareholders in the program must own fund shares worth at least $5,000.
TAX STATUS OF DISTRIBUTIONS
The funds plan to make distributions from net investment income at intervals
stated on the table below and to distribute net realized capital gains, if any,
at least annually.
38 Phoenix Multi-Portfolio Fund
<PAGE>
- --------------------------------------------------------------------------------
FUND DIVIDEND PAID
- --------------------------------------------------------------------------------
International Fund Semiannually
- --------------------------------------------------------------------------------
Real Estate Securities Fund Quarterly
- --------------------------------------------------------------------------------
Emerging Markets Bond Fund Monthly
- --------------------------------------------------------------------------------
Tax-Exempt Bond Fund Monthly
- --------------------------------------------------------------------------------
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 a 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.
Phoenix Multi-Portfolio Fund 39
<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.
PHOENIX-ABERDEEN INTERNATIONAL FUND
<TABLE>
CLASS A
--------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
<CAPTION>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.98 $13.89 $14.48 $12.20 $12.63
INCOME FROM INVESTMENT OPERATIONS(3)
Net investment income (loss) 0.04(1) 0.06(1) 0.03(1) 0.04(1) 0.03(1)
Net realized and unrealized gain 2.49 3.27 1.01 2.28 0.42
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 2.53 3.33 1.04 2.32 0.45
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.07) -- (0.29) -- --
Dividends from net realized gains (3.11) (1.24) (1.34) (0.04) (0.88)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (3.18) (1.24) (1.63) (0.04) (0.88)
------ ------ ------ ------ ------
Change in net asset value (0.65) 2.09 (0.59) 2.28 (0.43)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $15.33 $15.98 $13.89 $14.48 $12.20
====== ====== ====== ====== ======
Total return(2) 19.22% 26.17% 8.21% 19.03% 4.12%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $151,016 $171,463 $131,338 $135,524 $129,352
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.53% 1.37% 1.56% 1.57% 1.70%
Net investment income (loss) 0.27% 0.40% 0.22% 0.33% 0.23%
Portfolio turnover 77% 104% 167% 151% 236%
</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.
(4) Annualized.
(5) Not annualized.
40 Phoenix Multi-Portfolio Fund
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
PHOENIX-ABERDEEN INTERNATIONAL FUND
<TABLE>
CLASS B
--------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
<CAPTION>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.44 $13.56 $14.22 $12.07 $12.60
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss) (0.07)(1) (0.05)(1) (0.08)(1) (0.05)(1) (0.07)(1)
Net realized and unrealized gain
(loss) 2.40 3.17 1.00 2.24 0.42
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 2.33 3.12 0.92 2.19 0.35
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.02) -- (0.24) -- --
Dividends from net realized gains (3.11) (1.24) (1.34) (0.04) (0.88)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (3.13) (1.24) (1.58) (0.04) (0.88)
------ ------ ------ ------ ------
Change in net asset value (0.80) 1.88 (0.66) 2.15 (0.53)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.64 $15.44 $13.56 $14.22 $12.07
====== ====== ====== ====== ======
Total return(2) 18.45% 25.17% 7.37% 18.16% 3.28%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $23,694 $17,315 $10,159 $6,955 $3,261
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.29% 2.11% 2.31% 2.31% 2.50%
Net investment income (loss) (0.51)% (0.34)% (0.55)% (0.39)% (0.61)%
Portfolio turnover 77% 104% 167% 151% 236%
</TABLE>
CLASS C
----------
FROM
INCEPTION
3/30/99 TO
11/30/99
--------
Net asset value, beginning of period $12.82
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss) (0.08)(1)
Net realized and unrealized gain
(loss) 1.93
------
TOTAL FROM INVESTMENT OPERATIONS 1.85
------
LESS DISTRIBUTIONS
Dividends from net investment income (0.02)
Dividends from net realized gains --
------
TOTAL DISTRIBUTIONS (0.02)
------
Change in net asset value 1.83
------
NET ASSET VALUE, END OF PERIOD $14.65
======
Total return(2) 14.41%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $1,137
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.30%(3)
Net investment income (loss) (0.85)%(3)
Portfolio turnover 77%
- ---------------
(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.
Phoenix Multi-Portfolio Fund 41
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES FUND
<TABLE>
CLASS A
--------------------------------------------------------------------------
<CAPTION>
FROM
INCEPTION
YEAR ENDED NOVEMBER 30, 3/1/95 TO
1999 1998 1997 1996 11/30/95
---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.25 $16.39 $13.14 $10.72 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.51(4)(5) 0.55(4)(5) 0.49(4)(5) 0.53(5) 0.43(4)(5)
Net realized and unrealized gain
(loss) (1.07) (3.18) 3.52 2.50 0.55
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.56) (2.63) 4.01 3.03 0.98
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.58) (0.44) (0.51) (0.59) (0.26)
Dividends from net realized gains -- (1.07) (0.25) (0.02) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.58) (1.51) (0.76) (0.61) (0.26)
------ ------ ------ ------ ------
Change in net asset value (1.14) (4.14) 3.25 2.42 0.72
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $11.11 $12.25 $16.39 $13.14 $10.72
====== ====== ====== ====== ======
Total return(1) (4.69)% (17.42)% 31.44% 29.20% 9.87%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $17,014 $24,686 $36,336 $22,872 $13,842
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.30% 1.31% 1.30% 1.30% 1.30%(2)
Net investment income 4.30% 3.79% 3.34% 4.55% 5.79%(2)
Portfolio turnover 22% 11% 54% 24% 9%(3)
</TABLE>
<TABLE>
CLASS B
--------------------------------------------------------------------------
<CAPTION>
FROM
INCEPTION
YEAR ENDED NOVEMBER 30, 3/1/95 TO
1999 1998 1997 1996 11/30/95
---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.19 $16.32 $13.10 $10.68 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.42(4)(6) 0.43(4)(5) 0.38(4)(5) 0.46(5) 0.36(4)(5)
Net realized and unrealized gain (loss) (1.06) (3.15) 3.50 2.47 0.56
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.64) (2.72) 3.88 2.93 0.92
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.51) (0.34) (0.41) (0.49) (0.24)
Dividends from net realized gains -- (1.07) (0.25) (0.02) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.51) (1.41) (0.66) (0.51) (0.24)
------ ------ ------ ------ ------
Change in net asset value (1.15) (4.13) 3.22 2.42 0.68
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $11.04) $12.19 $16.32 $13.10 $10.68
====== ====== ====== ====== ======
Total return(1) (5.38)% (18.01)% 30.44% 28.25% 9.21%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $12,241 $18,237 $23,091 $8,259 $2,239
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.05% 2.06% 2.05% 2.05% 2.05%(2)
Net investment income 3.54% 3.07% 2.55% 3.95% 5.03%(2)
Portfolio turnover 22% 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 $0.05,
$0.02, $0.04, $0.07 and $0.12, respectively.
(6) Includes reimbursement of operating expenses by investment advisor of $0.05,
$0.02, $0.04, $0.07 and $0.12, respectively.
42 Phoenix Multi-Portfolio Fund
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
PHOENIX-GOODWIN EMERGING MARKETS BOND FUND
<TABLE>
CLASS A
--------------------------------------------------------------------------
<CAPTION>
FROM
INCEPTION
YEAR ENDED NOVEMBER 30, 9/5/95 TO
1999 1998 1997 1996 11/30/95
---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.20 $12.84 $14.80 $10.18 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 1.23 1.32 1.38(4) 1.26(5) 0.25(4)(5)
Net realized and unrealized gain
(loss) 0.04 (4.22) 0.17 4.56 0.18
----- ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.63 (2.90) 1.55 5.82 0.43
----- ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (1.14) (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 (1.14) (2.74) (3.51) (1.20) (0.25)
----- ------ ------ ------ ------
Change in net asset value 0.49 (5.64) (1.96) 4.62 0.18
----- ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $7.69 $ 7.20 $12.84 $14.80 $10.18
===== ====== ====== ====== ======
Total return(1) 25.63% (27.20)% 11.91% 60.18% 4.40%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $54,849 $41,725 $67,875 $29,661 $12,149
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.56%(7) 1.43% 1.40%(7) 1.50% 1.50%(2)
Net investment income 17.96% 13.74% 9.90% 10.41% 10.48%(2)
Portfolio turnover 326% 405% 614% 378% 38%(3)
</TABLE>
<TABLE>
CLASS B
--------------------------------------------------------------------------
<CAPTION>
FROM
INCEPTION
YEAR ENDED NOVEMBER 30, 9/5/95 TO
1999 1998 1997 1996 11/30/95
---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.13 $12.77 $14.78 $10.18 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 1.17 1.23 1.26(4) 1.19(6) 0.22(4)(6)
Net realized and unrealized gain (loss) 0.40 (4.18) 0.18 4.53 0.20
----- ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.57 (2.95) 1.44 5.72 0.42
----- ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (1.10) (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 (1.10) (2.69) (3.45) (1.12) (0.24)
----- ------ ------ ------ ------
Change in net asset value 0.47 (5.64) (2.01) 4.60 0.18
----- ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $7.60 $7.13 $12.77 $14.78 $10.18
===== ===== ====== ====== ======
Total return(1) 24.52% (27.86)% 11.07% 58.94% 4.22%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $58,453 $37,270 $38,673 $9,713 $596
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.13%(7) 2.20% 2.15%(7) 2.25% 2.25%(2)
Net investment income 17.04% 12.98% 9.14% 9.79% 10.29%(2)
Portfolio turnover 326% 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) The ratio of expenses to average net assets excludes the effect of expense
offsets for custodian fees; if expense offsets were included, the ratio
would not significantly differ.
Phoenix Multi-Portfolio Fund 43
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
PHOENIX-GOODWIN EMERGING MARKETS BOND FUND
CLASS C
---------------------------------
YEAR ENDED FROM INCEPTION
NOVEMBER 30, 3/26/98 TO
1999 11/30/98
---- --------
Net asset value, beginning of period $ 7.17 $12.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income 1.17 0.85(4)
Net realized and unrealized gain (loss) 0.39 (5.10)
------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.56 (4.25)
------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (1.10) (0.66)
Dividends from net realized gains -- --
Distributions in excess of net
realized gains -- --
Return of capital -- (0.17)
------ ------
TOTAL DISTRIBUTIONS (1.10) (0.83)
------ ------
Change in net asset value 0.46 (5.08)
------ ------
NET ASSET VALUE, END OF PERIOD $ 7.63 $ 7.17
====== ======
Total return(1) 24.40% (35.33)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $3,010 $1,205
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.31%(5) 2.29%(2)
Net investment income 16.47% 15.59%(2)
Portfolio turnover 326% 405%(3)
- ---------------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) The ratio of expenses to average net assets excludes the effect of expense
offsets for custodian fees; if expense offsets were included, the ratio
would not significantly differ.
44 Phoenix Multi-Portfolio Fund
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
PHOENIX-GOODWIN TAX-EXEMPT BOND FUND
<TABLE>
CLASS A
-----------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
<CAPTION>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.21 $11.17 $11.28 $11.40 $10.09
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.52 0.57 0.59 0.60 0.61
Net realized and unrealized gain
(loss) (0.92) 0.20 0.05 (0.12) 1.34
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.40) 0.77 0.64 0.48 1.95
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.44) (0.53) (0.59) (0.60) (0.61)
Dividends in excess of net
investment income (0.08) (0.11) -- -- --
Dividends from net realized gains -- (0.09) (0.16) -- (0.03)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.52) (0.73) (0.75) (0.60) (0.64)
------ ------ ------ ------ ------
Change in net asset value (0.92) 0.04 (0.11) (0.12) 1.31
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.29 $11.21 $11.17 $11.28 $11.40
====== ====== ====== ====== ======
Total return(1) (3.66)% 5.75% 6.04% 4.30% 19.87%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $88,770 $107,371 $122,763 $136,558 $147,821
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.01% 0.97% 0.96% 0.94% 0.97%
Net investment income 4.25% 4.77% 5.36% 5.42% 5.65%
Portfolio turnover 18% 14% 15% 27% 25%
</TABLE>
<TABLE>
CLASS B
-----------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
<CAPTION>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.25 $11.22 $11.32 $11.44 $10.12
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.45 0.48 0.50 0.52 0.53
Net realized and unrealized gain
(loss) (0.93) 0.19 0.06 (0.12) 1.35
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.48) 0.67 0.56 0.40 1.88
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.37) (0.45) (0.50) (0.52) (0.53)
Dividends in excess of net
investment income (0.06) (0.10) -- -- --
Dividends from net realized gains -- (0.09) (0.16) -- (0.03)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.43) (0.64) (0.66) (0.52) (0.56)
------ ------ ------ ------ ------
Change in net asset value (0.91) 0.03 (0.10) (0.12) 1.32
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.34 $11.25 $11.22 $11.32 $11.44
====== ====== ====== ====== ======
Total return(1) (4.35)% 4.97% 5.13% 3.60% 19.07%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $5,651 $7,001 $5,797 $4,762 $3,142
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.76% 1.69% 1.71% 1.69% 1.72%
Net investment income 3.51% 3.98% 4.60% 4.68% 4.90%
Portfolio turnover 18% 14% 15% 27% 25%
</TABLE>
- ---------------
(1) Maximum sales charges are not reflected in the total return calculation.
Phoenix Multi-Portfolio Fund 45
<PAGE>
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
The funds have filed a Statement of Additional Information about the funds,
dated February 28, 2000 with the Securities and Exchange Commission. The
Statement contains more detailed information about the funds. It is incorporated
into this prospectus by reference and is legally part of the prospectus. You may
obtain a free copy of the Statement:
[arrow] by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
[arrow] by calling (800) 243-4361.
You may also obtain information about the funds from the Securities and Exchange
Commission:
[arrow] through its internet site (http://www.sec.gov),
[arrow] by visiting its Public Reference Room in Washington, DC,
[arrow] by writing to its Public Reference Section, Washington, DC 20549-0102
(a fee may be charged), or
[arrow] by electronic request at [email protected] (a fee may be charged).
Information about the operation of the Public Reference Room may be obtained by
calling (202) 942-8090.
SHAREHOLDER REPORTS
The funds semiannually mail to shareholders detailed reports containing
information about each fund's investments. The funds' Annual Report contains a
detailed discussion of the market conditions and investment strategies that
significantly affected the funds' performance from December 1 through November
30. You may request a free copy of the funds' Annual and Semiannual Reports:
[arrow] by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
[arrow] by calling (800) 243-4361.
CUSTOMER SERVICE: (800) 243-1574
MARKETING: (800) 243-4361
TELEPHONE ORDERS: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY): (800) 243-1926
<TABLE>
<S> <C>
SEC File Nos. 33-19423 and 811-5436 [recycle logo] Printed on recycled paper using soybean ink
</TABLE>
46 Phoenix Multi-Portfolio Fund
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
PO Box 2200
Enfield CT 06083-2200
[logo] PHOENIX
INVESTMENT PARTNERS
For more information about
Phoenix mutual funds, please call
your financial representative or
contact us at 1-800-243-4361 or
www.phoenixinvestments.com.
PXP 467 (2/00)
<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
101 Munson Street
Greenfield, Massachusetts 01301
STATEMENT OF ADDITIONAL INFORMATION
February 28, 2000
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 February 28, 2000, and should
be read in conjunction with it. The Trust's Prospectus may be obtained by
calling Phoenix Equity Planning Corporation ("Equity Planning") at (800)
243-4361 or by writing to Equity Planning at 100 Bright Meadow Boulevard, P.O.
Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
PAGE
The Trust ............................................................... 1
Investment Objectives and Policies ...................................... 1
Investment Restrictions ................................................. 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 ....................................................... 20
Alternative Purchase Arrangements ....................................... 21
Investor Account Services ............................................... 24
How to Redeem Shares .................................................... 25
Tax Sheltered Retirement Plans .......................................... 26
Dividends, Distributions and Taxes ...................................... 27
The Distributor ......................................................... 30
Distribution Plans....................................................... 31
Management of the Trust.................................................. 32
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 (02/00)
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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-Aberdeen International Fund (the "International Fund"), the Phoenix-Duff
& Phelps Real Estate Securities Fund (the "Real Estate Fund"), the
Phoenix-Goodwin Emerging Markets Bond Fund (the "Emerging Markets Fund") and the
Phoenix-Goodwin Tax-Exempt Bond Fund (the "Bond Fund"), (each, a "Fund" and,
together, the "Funds"), four 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-Seneca Tax Sensitive
Growth 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 a fundamental policy, 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 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:
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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.
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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 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 International Fund may invest up to 20% of its 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 its total assets in these bonds.
The International Fund did not invest in any bonds considered less than
investment-grade for the fiscal year ended November 30, 1999.
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.
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WRITING AND PURCHASING OPTIONS ON SECURITIES AND SECURITIES INDICES
The Bond, 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 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 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, 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 times during
the option period. The Funds will write call options on indices only to hedge in
an economically appropriate way portfolio securities
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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.
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
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
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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, 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
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, 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 are currently
traded with respect to the Standard & Poor's 500 Composite Stock Price Index and
such other broad-based stock market indices as the New York Stock Exchange
Composite Stock Index and the Value Line Composite Stock Price Index. A clearing
corporation associated with the exchange or board of trade on which a financial
futures contract trades assumes responsibility for the completion of
transactions and also guarantees that open futures contracts will be performed.
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In contrast to the situation 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.
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 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.
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Utilization of futures contracts by a Fund involves the risk of imperfect
correlation in movements in the price of futures contracts and movements in the
price of the securities 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 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.
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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
The Bond and Emerging Markets Funds may purchase securities on a when-issued
or forward-commitment basis. 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. A 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 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 a 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 a 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 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 SECURITIES
The Fund may invest in U.S. dollar- or foreign currency-denominated corporate
debt securities of foreign issuers (including preferred or preference stock),
certain foreign bank obligations and U.S. dollar- or foreign
currency-denominated obligations of foreign governments or their subdivisions,
agencies and instrumentalities, international agencies and supranational
entities and may invest up to 20% of its total assets directly in common stocks
issued by foreign companies or in securities represented by ADRs. The Fund will
limit its investment in securities denominated in foreign currencies to no more
than 20% of the Fund's total assets.
Investing in the securities of foreign issuers involves special risks and
considerations not typically associated with investing in U.S. companies. These
include differences in accounting, auditing and financial reporting standards,
generally higher commission rates on foreign portfolio transactions, the
possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations (which may include suspension of the
ability to transfer currency from a country), political instability which may
affect U.S. investments in foreign countries and potential restrictions on the
flow of international capital. In addition, foreign securities and dividends
interest payable on those securities may be subject to foreign taxes, including
taxes withheld from payments on those securities. Foreign securities often trade
with less frequency and volume than domestic securities and therefore may
exhibit greater price volatility. Changes in foreign exchange rates will affect
the value of those securities which are denominated or quoted in currencies
other than the U.S. dollar.
ADRs are dollar-denominated receipts issued generally by domestic banks and
representing the deposit with the bank of a security of a foreign issuer, and
are publicly traded on exchanges or over-the-counter in the United States. ADRs
may be issued as sponsored or unsponsored programs. In sponsored programs, an
issuer has made arrangements to have its securities trade in the form of ADRs.
In unsponsored programs, the issuer may not be directly involved in the creation
of the program. Although regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, in some cases it may be easier to
obtain financial information from an issuer that has participated in the
creation of a sponsored program.
FOREIGN CURRENCY TRANSACTIONS
The International and Emerging Markets Funds (each a "Foreign Currency Fund")
each may engage in foreign currency transactions. The following is a description
of these transactions.
Forward Foreign Currency Exchange Contracts. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days ("term") from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded directly between currency traders (usually
large commercial banks) and their customers.
No Fund 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
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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, 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
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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
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
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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 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.
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<PAGE>
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.
--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.
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<PAGE>
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.
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
14
<PAGE>
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.
(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
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<PAGE>
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, 1999, the yield for the Bond Fund
Class A shares and Class B shares was 4.14% and 3.60%, respectively and the
Emerging Markets Fund Class A shares, Class B shares and Class C shares was
9.38%, 9.09%, and 9.08%, respectively.
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, 1999.
<TABLE>
<CAPTION>
Average Annual Total Return as of November 30, 1999
PERIODS ENDED
---------------------------------------------------------
FUND 1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION(1)
---- ------ ------ ------- ------------------
<S> <C> <C> <C> <C>
Bond
Class A (8.24)% 5.17% 5.74% 6.48%
Class B (8.02)% 5.43% N/A 3.52%
International
Class A 13.55% 13.95% 10.12% 10.50%
Class B 14.66% 14.20% N/A 12.80%
Class C N/A N/A N/A 13.41%
Real Estate
Class A (9.21)% N/A N/A 7.32%
Class B (9.00)% N/A N/A 7.29%
Emerging Markets
Class A 19.67% N/A N/A 12.22%
Class B 20.52% N/A N/A 12.38%
Class C 24.40% N/A N/A (12.13)%
</TABLE>
- ---------------
(1)The Bond and International Fund's Class A Shares commenced operations on
July 15, 1988, and November 1, 1989, respectively. Bond Fund's Class B Shares
commenced operations on March 16, 1994. International Fund Class B commenced
operations on July 15, 1994. The Real Estate and Emerging Markets Funds'
Class A and B Shares 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. The International Fund's Class C Shares
commenced operations on March 30, 1999.
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<PAGE>
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
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
17
<PAGE>
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.
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.
The Adviser may use its broker/dealer affiliates, or other firms that sell
shares of the Funds, to buy and sell securities for the Funds, provided they
have the execution capability and that their commission rates are comparable to
those of other unaffiliated broker/dealers. Directors of PXP Securities Corp. or
its affiliates receive indirect benefits from the Funds as a result of its usual
and customary brokerage commissions that PXP Securities Corp. may receive for
acting as broker to the Funds in the purchase and sale of portfolio securities.
The investment advisory agreement does not provide for a reduction of the
advisory fee by any portion of the brokerage fees generated by portfolio
transactions of the Funds that PXP Securities Corp. may receive.
For the fiscal years ended November 30, 1997, 1998 and 1999, brokerage
commissions paid by the Trust on portfolio transactions totaled $2,269,745,
$2,904,276 and $1,649,397, respectively. In the fiscal year ended November 30,
1999, no brokerage commissions were paid to affiliates for portfolio
transactions. Brokerage commissions of $592,803 paid during the fiscal year
ended November 30, 1999, were paid on fund transactions aggregating $235,932,659
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, 1999, PIC had approximately $25.7 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.
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<PAGE>
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning" or "Distributor"), a subsidiary of Phoenix
Investment Partners, Ltd. ("PXP"). Phoenix Home Life Mutual Insurance Company
("Phoenix Home Life") of Hartford, Connecticut is a majority shareholder of PXP.
Phoenix Home Life is in the business of writing ordinary and group life and
health insurance and annuities. Its principal offices are located at One
American Row, Hartford, Connecticut, 06115-2520. Equity Planning, a mutual fund
distributor, acts as the national distributor of the 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 a publicly traded, independent
registered advisory firm and has served investors for over 70 years. It manages
approximately $64.4 billion (as of December 31, 1999) 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 funds and as adviser to institutional clients. As of December
31, 1999, Duff & Phelps had approximately $14.7 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, the Core Bond Fund of Phoenix
Series Fund 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, 1999, Aberdeen Asset Management PLC had $30 billion in assets under
management.
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,
International and Emerging Markets Funds, PIC is entitled to a fee, payable
monthly, at the following annual rates:
FUND 1ST $1 BILLION $1-2 BILLION $2+ BILLION
---- -------------- ------------ -----------
Bond 0.45% 0.40% 0.35%
International 0.75% 0.70% 0.65%
Emerging Markets 0.75% 0.70% 0.65%
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.
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For its services to the Bond, International and Emerging Markets Funds of the
Trust during the fiscal years ended November 30, 1997, 1998 and 1999, PIC
received a fee of $2,233,080, $2,625,781 and $2,581,832. Of this total, PIC
received fees from each Fund as follows:
FUND 1997 1998 1999
---- ---- ---- ----
Bond $ 593,217 $ 544,278 $ 473,237
International 1,062,391 1,350,786 1,408,005
Emerging Markets 577,472 730,717 700,590
The Real Estate Fund, during the fiscal years ended November 30, 1997, 1998
and 1999, paid management fees of $355,100, $398,336 and $270,694, respectively.
For the fiscal years 1997, 1998 and 1999, the Adviser bore ordinary operating
expenses of the Real Estate Fund of $112,306, $111,386 and $162,984,
respectively. Accordingly, the fees which the Adviser would otherwise have been
entitled were reduced to $242,794 in fiscal year 1997, $286,950 in fiscal year
1998, and $107,710 in fiscal year 1999.
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,
Presidents' 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.
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
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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.
CLASS B SHARES
Class B Shares do not incur a sales charge when they are purchased, but they
are subject to a sales charge if they are redeemed within five years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions.
Class B Shares are subject to ongoing distribution and 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.
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<PAGE>
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.
CLASS A SHARES--REDUCED INITIAL SALES CHARGES
Investors choosing Class A Shares may be entitled to reduced sales charges.
The ways in which sales charges may be avoided or reduced are described below.
QUALIFIED PURCHASERS. If you fall within any one of the following categories,
you will not have to pay a sales charge on your purchase of Class A Shares: (1)
trustee, director or officer of the Phoenix Funds, the Phoenix-Engemann Funds,
Phoenix-Seneca Funds or any other mutual fund advised, subadvised or distributed
by the Adviser, Distributor or any of their corporate affiliates (an "Affiliated
Phoenix Fund"); (2) any director or officer, or any full-time employee or sales
representative (for at least 90 days) of the Adviser or Distributor; (3)
registered representatives and employees of securities dealers with whom
Distributor has sales agreements; (4) any qualified retirement plan exclusively
for persons described above; (5) any officer, director or employee of a
corporate affiliate of the Adviser or Distributor; (6) any spouse, child,
parent, grandparent, brother or sister of any person named in (1), (2), (3) or
(5) above; (7) employee benefit plans for employees of the Adviser, Distributor
and/or their corporate affiliates; (8) any employee or agent who retires from
Phoenix Home Life, Distributor and/or their corporate affiliates; (9) any
account held in the name of a qualified employee benefit plan, endowment fund or
foundation if, on the date of the initial investment, the plan, fund or
foundation has assets of $10,000,000 or more or at least 100 eligible employees;
(10) any person with a direct rollover transfer of shares from an established
Phoenix Fund, 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; (19) 401(k) participants in the Merrill Lynch
Daily K Plan (the "Plan") if the Plan has at least $3 million in assets or 500
or more eligible employees; or (20) clients of investment advisors or financial
planners who buy shares for their own accounts but only if their accounts are
linked to a master account of their investment advisor or financial planner on
the books and records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements (each of the investors
described in (17) through (20) may be charged a fee by the broker, agent or
financial intermediary for purchasing shares).
COMBINATION PURCHASE PRIVILEGE. Your purchase of any class of shares of this
or any other Affiliated Phoenix Fund (other than Phoenix Money Market Fund
Series Class A Shares), if made at the same time by the same "person," will be
added together to determine whether the combined sum entitles you to an
immediate reduction in sales charges. A "person" is defined in this and the
following sections as (a) any individual, their spouse and minor children
purchasing shares for his or their own account (including an IRA account)
including his or their own trust; (b) a trustee or other fiduciary purchasing
for a single trust, estate or single fiduciary account (even though more than
one beneficiary may exist); (c) multiple employer trusts or Section 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.
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<PAGE>
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)
from the Merrill Lynch Daily K Plan ("Plan") invested in Class B Shares, in
which such shares the Distributor has not paid the dealer the Class B sales
commission; (f) based on the exercise of exchange privileges among Class B and C
Shares of this or any other Affiliated Phoenix Fund; (g) based on any direct
rollover transfer of shares from an established Affiliated Phoenix Fund
qualified plan into an Affiliated Phoenix Fund IRA by participants terminating
from the qualified plan; and (h) based on the systematic withdrawal program
(Class B Shares only). If, as described in condition (a) above, an account is
transferred to an account registered in the name of a deceased's estate, the
CDSC will be waived on any redemption from the estate account occurring within
one year of the death. If the Class B or C Shares are not redeemed within one
year of the death, they will remain subject to the applicable CDSC.
CONVERSION FEATURE--CLASS B SHARES
Class B Shares will automatically convert to Class A Shares of the same Fund
eight years after they are bought. Conversion will be on the basis of the then
prevailing net asset value of Class A and B Shares. There is no sales load, fee
or other charge for this feature. Class B Shares acquired through dividend or
distribution reinvestments will be 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.
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(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.
Broker/dealers may impose their own restrictions and limits on accounts held
through the broker/dealer. Please consult your broker/dealer for account
restriction and limit information.
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
24
<PAGE>
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.
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<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.
MERRILL LYNCH DAILY K PLAN
Class A Shares of a Fund are made available to Merrill Lynch Daily K Plan
(the "Plan") participants at NAV without an initial sales charge if:
(i) the Plan is recordkept on a daily valuation basis by Merrill Lynch and,
on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service
Agreement, the Plan has $3 million or more in assets invested in broker/dealer
funds not advised or managed by Merrill Lynch Asset Management L.P. ("MLAM")
that are made available pursuant to a Service Agreement between
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<PAGE>
Merrill Lynch and the fund's principal underwriter or distributor and in funds
advised or managed by MLAM (collectively, the "Applicable Investments");
(ii) the Plan is recordkept on a daily valuation basis by an independent
recordkeeper whose services are provided through a contract or alliance
arrangement with Merrill Lynch, and, on the date the Plan Sponsor signs the
Merrill Lynch Recordkeeping Service Agreement, the Plan has $3 million or more
in assets, excluding money market funds, invested in Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by a Merrill
Lynch plan conversion manager, on the date the Plan Sponsor signs the Merrill
Lynch Recordkeeping Service Agreement.
Alternatively, Class B Shares of a Fund are made available to Plan
participants at NAV without a CDSC if the Plan conforms with the requirements
for eligibility set forth in (i) through (iii) above but either does not meet
the $3 million asset threshold or does not have 500 or more eligible employees.
Plans recordkept on a daily basis by Merrill Lynch or an independent
recordkeeper under a contract with Merrill Lynch that are currently investing in
Class B Shares of a Fund convert to Class A Shares once the Plan has reached $5
million invested in Applicable Investments, or after the normal holding period
of seven years from the initial date of purchase.
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. 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% test, 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
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<PAGE>
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).
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 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
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<PAGE>
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 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.
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<PAGE>
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 and William R. Moyer, 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. 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, 1997, 1998 and
1999, purchasers of shares of the Funds paid aggregate sales charges of
$2,114,382, $4,260,271 and $1,269,311, respectively, of which the Distributor
received net commission of $494,335, $545,050 and $500,085, respectively, for
its services, the balance being paid to dealers. For the fiscal year ended
November 30, 1999, the distributor received net commission of $97,677 for Class
A Shares and deferred sales charges of $402,408 for Class B and C Shares.
DEALER CONCESSIONS
Dealers with whom the Distributor has entered into sales agreements receive a
discount or commission as described below.
<TABLE>
<CAPTION>
AMOUNT OF
TRANSACTION SALES CHARGE AS A PERCENTAGE SALES CHARGE AS A PERCENTAGE DEALER DISCOUNT
AT OFFERING PRICE OF OFFERING PRICE OF AMOUNT INVESTED PERCENTAGE OF OFFERING PRICE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Under $50,000 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. This sales commission will not be paid to
dealers for sales of Class B or Class C Shares purchased by 401(k) participants
of the Merrill Lynch Daily K Plan (the "Plan") due to waiver of the CDSC for
these Plan participants' purchases. Your broker, dealer or investment adviser
may also charge you additional commissions or fees for their services in selling
shares to you provided they notify the Distributor of their intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of the
Trust and/or for providing other shareholder services. Such fees are in addition
to the sales commissions referenced above and may be based upon the amount of
sales of fund shares by a dealer; the provision of assistance in marketing of
fund shares; access to sales personnel and information dissemination services;
provision of recordkeeping and administrative services to qualified employee
benefit plans; and other criteria as established by the Distributor. Depending
on the nature of the services, these fees may be paid either from the 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
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<PAGE>
year of the investment date, the broker/dealer will refund to the Distributor
such amounts paid with respect to the investment. In addition, the Distributor
may pay the entire applicable sales charge on purchases of Class A Shares to
selected dealers and agents. From its own resources, the Distributor intends to
pay the following additional compensation to Merrill Lynch, Pierce, Fenner &
Smith, Incorporated: 0.25% on sales of Class A and B Shares, 0.10% on sales of
Class C Shares, 0.10% on sales of Class A shares sold at net asset value, and
0.10% annually on the average daily net asset value of fund shares on which
Merrill Lynch is broker of record and which such shares exceed the amount of
assets on which Merrill Lynch is broker of record as of July 1, 1999. Any dealer
who receives more than 90% of a sales charge may be deemed to be an
"underwriter" under the Securities Act of 1933. Equity Planning reserves the
right to discontinue or alter such fee payment plans at any time.
ADMINISTRATIVE SERVICES
Equity Planning also acts as administrative agent of the Trust and as such
performs administrative, bookkeeping and pricing functions for the Funds. For
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, 1997, 1998 and 1999, the
Financial Agent received fees of $541,814, $654,165 and $726,919, 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
31
<PAGE>
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, 1999 the Trust paid Rule 12b-1 Fees in
the amount of $2,607,375, of which the Distributor received $1,060,487,
unaffiliated broker-dealers received $1,310,508 and W.S. Griffith & Co., Inc.,
an affiliate, received $236,380. The Rule 12b-1 payments were used for (1)
compensating dealers, $2,815,291, (2) compensating sales personnel, $2,221,997,
(3) advertising, $1,317,627, (4) printing and mailing of prospectuses to other
than current shareholders, $32,904, (5) service costs, $216,769 and (6) other,
$446,543. The Distributor's expenses from selling and servicing Class B Shares
may be more than the payments received from contingent deferred sales charges
collected on redeemed shares and from the Trust under the Class B Plan. Those
expenses may be carried over and paid in future years. At November 30, 1999, the
end of the last Plan year, the Distributor had incurred unreimbursed expenses
under the Class B Plan of $6,065,679 (equal to 0.40% of the Trust's net assets)
which have been carried over into the present Class B Plan year. 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 (65) 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).
</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>
E. Virgil Conway (70) Trustee Chairman, Metropolitan Transportation Authority (1992-present).
9 Rittenhouse Road Trustee/Director, Consolidated Edison Company of New York, Inc.
Bronxville, NY 10708 (1970-present), Pace University (1978-present), Atlantic Mutual
Insurance Company (1974-present), HRE Properties (1989-present),
Greater New York Councils, Boy Scouts of America (1985-present),
Union Pacific Corp. (1978-present), Blackrock Freddie Mac Mortgage
Securities Fund (Advisory Director) (1990-present), Centennial
Insurance Company (1974-present), Josiah Macy, Jr., Foundation
(1975-present), The Harlem Youth Development Foundation
(1987-present; Chairman, 1998-present), Accuhealth (1994-present),
Trism, Inc. (1994-present), Realty Foundation of New York
(1972-present), Vice Chairman, The Academy of Political Science
(1985-present) and New York Housing Partnership Development Corp.
(Chairman) (1981-present). Director/Trustee, Phoenix Funds
(1993-present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Duff & Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present).
Chairman/Member, Audit Committee of the City of New York
(1981-1996). Advisory Director, Blackrock Fannie Mae Mortgage
Securities Fund (1989-1996) and Fund Directions (1993-1998).
Chairman, Financial Accounting Standards Advisory Council
(1992-1995).
Harry Dalzell-Payne (70) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
The Flat Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Elmore Court Institutional Mutual Funds (1996-present). Director, Duff & Phelps
Elmore, GLO5, 9623NT Utilities Tax-Free Income Inc. and Duff & Phelps Utility and
U.K. Corporate Bond Trust Inc. (1995-present). Trustee, Phoenix-Seneca
Funds (1999-present). Formerly a Major General of the British Army.
*Francis E. Jeffries (69) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
8477 Bay Colony Dr. Phoenix-Aberdeen Series Inc. and Phoenix Duff & Phelps
#902 Institutional Mutual Funds (1996-present). Director, Duff & Phelps
Naples, FL 34108 Utilities Income Inc. (1987-present), Duff & Phelps Utilities
Tax-Free Income Inc. (1991-present) and Duff & Phelps Utility and
Corporate Bond Trust Inc. (1993-present). Director, The Empire
District Electric Company (1984-present). Director (1989-1997),
Chairman of the Board (1993-1997), President (1989-1993), and
Chief Executive Officer (1989-1995), Phoenix Investment Partners,
Ltd.
Leroy Keith, Jr. (61) Trustee Chairman (1995-present) and Chief Executive Officer (1995-1999),
Chairman Carson Products Company. Director/Trustee, Phoenix Funds
Carson Product Company (1980-present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
64 Ross Road Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Savannah, GA 30750 Equifax Corp. (1991-present) and Evergreen International Fund,
Inc. (1989-present). Trustee, Evergreen Liquid Trust, Evergreen
Tax Exempt Trust, Evergreen Tax Free Fund, Master Reserves Tax
Free Trust, and Master Reserves Trust.
</TABLE>
33
<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 (53) Trustee and Chairman (1997-present), Vice Chairman (1995-1997) and Chief
President Executive Officer (1995-present), Phoenix Investment Partners,
Ltd. Director (1994-present) and Executive Vice President,
Investments (1988-present), Phoenix Home Life Mutual Insurance
Company. Director/Trustee and President, Phoenix Funds
(1989-present). Trustee and President, Phoenix-Aberdeen Series
Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Duff & Phelps Utilities Tax-Free Income
Inc. (1995-present) and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1995-present). Trustee, Phoenix-Seneca Funds
(1999-present). Director (1983-present) and Chairman
(1995-present), Phoenix Investment Counsel, Inc. Director
(1984-present) and President (1990-present), Phoenix Equity
Planning Corporation. Chairman and Chief Executive Officer, Zweig
Glaser Advisors LLC (1999-present). 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
(1992-present) and President (1992-1994), W.S. Griffith & Co.,
Inc. Director, PHL Associates, Inc. (1995-present).
Everett L. Morris (71) Trustee Vice President, W.H. Reaves and Company (1993-present). Director/
164 Laird Road Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
Colts Neck, 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 (53) 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). Director, Investors Financial Service
Corporation (1995-present), Investors Bank & Trust Corporation
(1995-present), Plymouth Rubber Co. (1995-present), Stifel
Financial (1996-present), Command Systems, Inc. (1998-present),
Connecticut River Bancorp (1998-present) and Endowment for
Health, Inc. (1999-present). Member, Chief Executives
Organization (1996-present). Vice Chairman, Massachusetts
Housing-Partnership (1998-2000). Director, Blue Cross and Blue
Shield of New Hampshire (1994-1999).
*Calvin J. Pedersen (57) Trustee Director (1986-present), President (1993-2000) and Executive Vice
Phoenix Investment President (1992-1993), Phoenix Investment Partners, Ltd.
Partners, Ltd. 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).
</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>
Herbert Roth, Jr. (71) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
P.O. Box 909 Institutional Mutual Funds (1996-present). Director, Boston
Sherborn, MA 01770 Edison Company (1978-present), Landauer, Inc. (medical services)
(1970-present), Tech Ops./ Sevcon, Inc. (electronic controllers)
(1987-present), and Mark IV Industries (diversified manufacturer)
(1985-present). Member, Directors Advisory Council, Phoenix Home
Life Mutual Insurance Company (1998-present). Director, Phoenix
Home Life Mutual Insurance Company (1972-1998).
Richard E. Segerson (54) Trustee Managing Director, Northway Management Company (1998-present).
102 Valley Road Director/Trustee, Phoenix Funds (1993-present). Trustee,
New Canaan, CT 07840 Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Managing Director,
Mullin Associates (1993-1998).
Lowell P. Weicker, Jr. (68) Trustee Trustee/Director, Phoenix Funds (1995-present). Trustee,
731 Lake Avenue Phoenix-Aberdeen Series Fund 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 (42) 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,
Phoenix Equity Planning Corporation (1995-present). Senior Vice
President, Securities Investments, Phoenix Home Life Mutual
Insurance Company (1993-1995). Various other positions with
Phoenix Home Life Mutual Insurance Company (1990-1993).
John F. Sharry (47) Executive President, Retail Division (1999-present), Executive Vice
Vice President, Retail Division (1997-present), Phoenix Investment
President Partners, Ltd. Managing Director, Retail Distribution, Phoenix
Equity Planning Corporation (1995-1997). Executive Vice President,
Phoenix Funds (1998-present), The Phoenix Edge Series Fund
(1998-present) and Phoenix-Aberdeen Series Fund (1998-present).
Managing Director, Director and National Sales Manager, Putnam
Mutual Funds
(1993-1995).
Gail P. Seneca (46) Senior Vice President and Chief Executive and Investment Officer, Seneca
President Capital Management LLC (1996-present). Managing Director,
Equities, Phoenix Investment Counsel, Inc. (1998-present). Senior
Vice President, Phoenix Duff & Phelps Institutional Mutual Funds
(1999-present), The Phoenix Edge Series Fund (1998-present),
Phoenix Multi-Portfolio Fund (1998-present) and Phoenix Strategic
Equity Series Fund (1998-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 (1990-1996). President, GenCap, Inc.
(1994-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>
James D. Wehr (42) Senior Vice Senior Vice President (1998-present), Managing Director
President (1996-1998), Fixed Income, Vice President (1991-1996), Phoenix
Investment Counsel, Inc. Senior Vice President and Chief Investment
Officer, Duff & Phelps Utilities Tax Free Income, Inc. (1997-present).
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-Goodwin 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-Goodwin Multi-Sector Fixed Income Fund, Inc.,
Phoenix-Goodwin Multi-Sector Short Term Bond Fund, Phoenix-Oakhurst
Income & Growth Fund and Phoenix-Oakhurst Strategic Allocation Fund,
Inc. Managing Director, Public Fixed Income, Phoenix Home Life
Insurance Company (1991-1995).
David L. Albrycht (38) Vice Managing Director, Fixed Income (1996-present) and Vice President
President (1995-1996), Phoenix Investment Counsel, Inc. Vice President,
Phoenix Multi-Portfolio Fund (1993-present), Phoenix-Goodwin
Multi-Sector Short Term Bond Fund (1993-present), Phoenix-Goodwin
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).
Robert A. Driessen (52) Vice President Vice President, Compliance, Phoenix Investment Partners, Ltd.
(1999-present). Vice President, Phoenix Funds, Phoenix-Aberdeen
Series Fund, Phoenix-Duff & Phelps Institutional Mutual Funds and
Phoenix Seneca Funds (1999-present). Vice President, Risk
Management Liaison, Bank of America (1996-1999). Vice President,
Securities Compliance, The Prudential Insurance Company of America
(1993-1996). Branch Chief/Financial Analyst, Securities and
Exchange Commission, Division of Investment Management (1972-1993).
Timothy M. Heaney (35) 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), Phoenix-Goodwin California
Tax Exempt Bonds, Inc. (1996-present) and Duff & Phelps Utilities
Tax Free Income, Inc. (1997-present). Investment Analyst, Phoenix
Home Life Mutual Insurance Company (1992-1994).
Ron K. Jacks (34) Vice Equity Portfolio Manager, Seneca Capital Management LLC
President (1996-present). General Partner and Equity Portfolio Manager,
GMG/Seneca Capital Management LP (1995-present). Managing
Director, Equities, Phoenix Investment Counsel, Inc.
(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 (1996-1998) and Trustee (1996-1997), Phoenix-Seneca
Funds.
Peter S. Lannigan (39) Vice Managing Director, Fixed Income (1997-present), Director, Fixed
President Income Research (1996-1997), Vice President (1995-1996), Phoenix
Investment Counsel, 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).
</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>
William R. Moyer (55) Vice Executive Vice President and Chief Financial Officer
100 Bright Meadow Blvd. President (1999-present), Senior Vice President and Chief Financial Officer,
PO Box 2200 Phoenix Duff & Phelps Corporation (1995-1999). Senior Vice
Enfield, CT 06083-2200 President, Finance (1990-present), Director (1998-present),
Treasurer (1998-present 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 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, Investment Products Finance, Phoenix
Home Life Mutual Insurance Company (1990-1995).
Richard D. Little (51) Vice General Partner, Seneca Capital Management LP (1989-present).
President Managing Director, Equities, Phoenix Investment Counsel, Inc.
(1998-present). Vice President, The Phoenix Edge Series Fund
(1998-present), Phoenix Strategic Equity Series Fund (1998-present),
Phoenix Multi-Portfolio Fund (1998-present) and Phoenix Duff & Phelps
Institutional Mutual Funds (1999-present).
Michael Schatt (52) Vice Managing Director, Phoenix Investment Partners, Ltd.
Phoenix Investment President (1994-present). Senior Vice President, Phoenix Realty Securities,
Partners, Ltd. Inc. (1997-present) and Duff & Phelps Investment Management Co.
55 East Monroe St. (1996-present). Vice President, Duff & Phelps Utilities Income,
Suite 3600 Inc. (1997-present), The Phoenix Edge Series Fund (1997-present),
Chicago, IL 60603 and Phoenix Multi-Portfolio Fund (1997-present). Director, Real
Estate Advisory Practice, Coopers & Lybrand (1990-1994).
Nancy G. Curtiss (47) Treasurer Vice President, Fund Accounting (1994-present) and Treasurer
(1996-present), Phoenix Equity Planning Corporation. Treasurer,
Phoenix Funds (1994-present), Phoenix Duff & Phelps Institutional
Mutual Funds (1995-present) and Phoenix-Aberdeen Series Fund
(1996-present). Second Vice President and Treasurer, Fund
Accounting, Phoenix Home Life Mutual Insurance Company
(1994-1995). Various positions with Phoenix Home Life Insurance
Company (1987-1994).
G. Jeffrey Bohne (52) Secretary Vice President and General Manager, Phoenix Home Life Mutual
101 Munson Street Insurance Co. (1993-present). Senior Vice President (1999-present)
Greenfield, MA 01301 and Vice President (1996-1999), Mutual Fund Customer Service; Vice
President, Transfer Agent Operations (1993-1996), 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,
1999, the Trustees received an aggregate of $91,462. 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
37
<PAGE>
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 $8,662 $63,750
E. Virgil Conway+ $11,250 $83,250
Harry Dalzell-Payne+ $10,162 $95,000
Francis E. Jeffries $8,250* $61,000
Leroy Keith, Jr. $8,662 None None $63,750
Philip R. McLoughlin+ $ 0 for any for any $ 0
Everett L. Morris+ $7,500 Trustee Trustee $57,750
James M. Oates+ $9,750 $72,250
Calvin J. Pedersen $ 0 $ 0
Herbert Roth, Jr.+ $8,100 $59,250
Richard E. Segerson $9,750* $72,000
Lowell P. Weicker $9,375 $68,750
</TABLE>
*This compensation (and the earnings thereon) will be deferred pursuant to the
Deferred Compensation Plan. At December 31, 1999, the total amount of
deferred compensation (including interest and other accumulation earned on
the original amounts deferred) accrued for Messrs. Jeffries, Morris, Roth and
Segerson was $432,136.70, $179,151.26, $174,057.08 and $80,254.57,
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 February 4, 2000, 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 February 4, 2000 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 Real Estate Class A 556,076 36.64%
One American Row
Attn: Bonnie Malley
Hartford, CT 06115
Phoenix Home Life Ermerging Markets Class A 2,083,489 29.80%
Attn: Pam Levesque
One American Row
Hartford, CT 06115-2521
MLPF&S for the sole benefit Emerging Markets Class B 660,685 8.46%
of its customers Emerging Markets Class C 30,157 10.36%
ATTN: Fund Administration International Class B 220,662 11.43%
4800 Deer Lake Dr E 3rd FL International Class C 20,996 17.00%
Jacksonville, FL 32246-6484 Tax-Exempt Bond Class B 137,903 25.58%
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER NAME OF FUND NUMBER OF SHARES PERCENT OF CLASS
- ------------------- ------------ ---------------- ----------------
<S> <C> <C> <C>
Phoenix Equity Planning Corp International Class C 9,307 7.53%
c/o Gene Charon, Controller
100 Bright Meadow Blvd
Enfield, CT 06082-1957
State Street Bank & Trust Co International Class C 9,236 7.48%
Cust for Bruce Geller
5 Plymouth Rd
East Rockaway, NY 11518-1313
A G Edwards & Sons Inc Cust International Class C 8,544 6.92%
FBO Karl Sweitzer
6 Mendonshire Dr
Honeoye Falls, NY 14472-9762
PaineWebber Emerging Markets Class A 674,595 6.95%
FBO S.D. Rescue Mission & N. County
Interfaith Council Unitrust
George R. Wynhoff-TTEE
17474 Frondoso Dr
San Diego, CA 92128-1313
Wexford Clearing Services Corp F Emerging Markets Class C 18,868 6.48%
Frank Marshall Yost, Jr.
Margaret Bacigalupi Yost
Co-TTEES, The Yost Family Trust
UA DTD 05/12/92
Wawona, CA 95389
Elmer J Krauss Partner Emerging Markets Class C 41,407 14.22%
Krauss Portfolio Ltd
715 N Sherrill St
Tampa, FL 33609-1109
Wexford Clearing Services Corp Emerging Markets Class C 18,573 6.38%
Nubar Tokatian
Ann Tokatian
Co-TTEES, The Tokatian Family Trust
UA DTD 06/04/96
Fresno, CA 93720
Paul L. Blais Emerging Markets Bond 17,139 5.89%
Yvette C. Blais JT-TEN Class C
1 Thomas Ave.
Baltic, CT 06330-1032
Don M. Sears Emerging Markets Bond 15,408 5.29%
Glenda R. Sears, JT-WROS Class C
1526 S. 105th St.
Omaha, NE 68124-1012
</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.
39
<PAGE>
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, 1999,
appearing in the Fund's 1999 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 Tax Sensitive Growth 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>
Phoenix Investment Partners
Prospectus
March 1, 2000
----------- [logo] Seneca
Phoenix-Seneca
Tax Sensitive Growth 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-Seneca Tax Sensitive Growth Fund. Please
read it carefully and retain it for future
reference.
[logo]Phoenix
Investment Partners
<PAGE>
[Version B]
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Investment Risk and Return Summary........... 1
Fund Expenses................................ 3
Additional Investment Techniques............. 4
Management of the Fund....................... 5
Pricing of Fund Shares....................... 9
Sales Charges................................ 10
Your Account................................. 12
How to Buy Shares............................ 14
How to Sell Shares........................... 14
Things You Should Know When Selling Shares... 15
Account Policies............................. 16
Investor Services............................ 18
[arrow] Phoenix-Seneca Tax Status of Distributions.................. 18
Tax Sensitive Financial Highlights......................... 19
Growth Fund Additional Information....................... 20
<PAGE>
PHOENIX-SENECA TAX SENSITIVE GROWTH FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
Phoenix-Seneca Tax Sensitive Growth Fund has an investment objective to seek
capital appreciation consistent with maximizing after tax returns. There is no
guarantee that the fund will achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] Under normal circumstances, the fund invests at least 65% of its total
assets in common stocks, primarily common stocks of domestic (U.S.)
growth companies of any size.
[arrow] The adviser manages the fund's investment program and general operation
of the fund and the subadviser manages the investments of the fund. The
subadviser seeks to maximize after-tax returns while promoting growth
with controlled risk.
[arrow] The subadviser seeks to maximize after-tax returns by employing any or
all of the following strategies:
[bullet] selecting securities the subadviser believes may achieve high
pre-tax returns with emphasis on the likelihood of long-term
returns rather than short-term returns;
[bullet] limiting turnover when it is believed to be appropriate;
[bullet] holding securities to achieve long-term capital gain status
when possible; and
[bullet] matching any losses with gains when the subadviser believes it
to be advantageous.
[arrow] The growth strategy involves investing in two types of growth stocks:
well-established companies that have long and proven records of
financial success through full economic cycles and companies that are
growing rapidly and that the subadvisor believes have the potential to
exceed earnings expectations. The former are generally large,
well-known companies that have established histories of profitability
and/or dividend payment. The latter are generally mid-range
capitalization companies with high growth potential. Using statistical
modeling and fundamental analysis, the subadvisor evaluates earnings
strength, quality and sustainability, as well as stock valuations and
quality of company management. Approximately 30-50 securities are
selected for the fund's portfolio.
Temporary Defensive Strategy: If the subadviser believes that market conditions
are not favorable to the fund's principal strategies, the fund may invest
without limit in cash and cash equivalents. In such instances, the fund may not
achieve its investment objective.
Please refer to "Additional Investment Techniques" for other investment
techniques of the fund.
Phoenix-Seneca Tax Sensitive Growth Fund 1
<PAGE>
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
GENERAL
The value of the fund's investments that supports your share value can decrease.
If between the time you purchase shares and the time you sell shares the value
of the fund's investments decreases, you will lose money.
Investment values can decrease for a number of reasons. Conditions affecting the
overall economy, specific industries or companies in which the fund invests can
be worse than expected and investments may fail to perform as the adviser
expects. As a result, the value of your shares may decrease.
GROWTH STOCKS
Because growth stocks typically make little or no dividend payments to
shareholders, investment return is based on a stock's capital appreciation,
making return more dependent on market increases and decreases. Growth stocks
are therefore more volatile than non-growth stocks to market changes, tending to
rise faster when markets rise and drop more sharply when markets fall.
SMALL AND MEDIUM CAPITALIZATIONS
Companies with smaller capitalizations are often companies with a limited
operating history or companies in industries that have recently emerged due to
cultural, economic, regulatory or technological developments. Such developments
can have a significant impact or negative effect on small and medium
capitalization companies and their stock performance and can make investment
returns highly volatile. Product lines are often less diversified and subject to
competitive threats. Smaller capitalization stocks are subject to varying
patterns of trading volume and may, at times, be difficult to sell.
TAX MANAGEMENT STRATEGY
There is no guarantee that strategies aimed at avoiding the recognition of large
capital gains will be successful. As a result, the fund may have taxable gains
from time to time. In addition, certain tax advantages currently available to
reduce after-tax returns may be negatively affected by future state and federal
tax legislation.
PERFORMANCE TABLES
Performance tables are not included for the Phoenix-Seneca Tax Sensitive Growth
Fund because the fund has not had annual returns for at least one calendar year.
2 Phoenix-Seneca Tax Sensitive Growth 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 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) 5.75% None None None
Maximum Deferred Sales Charge (load) (as a percentage of
the lesser of the value redeemed or the amount invested) None 5% (c) 1% (d) 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)(A)
Management Fees 0.75% 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees(e) 0.25% 1.00% 1.00% None
Other Expenses 0.64% 0.64% 0.64% 0.64%
---- ---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES(B) 1.64% 2.39% 2.39% 1.39%
==== ==== ==== ====
</TABLE>
- ----------------------
(a) As of the date of this prospectus, the fund had not commenced investment
operations. The percentages indicated are estimates and actual expenses may be
more or less than the amounts shown.
(b) The fund's investment adviser has agreed to reimburse through March 31, 2001
the Phoenix-Seneca Tax Sensitive Growth Fund's expenses, other than Management
Fees and Distribution and Service Fees, to the extent that such expenses exceed
0.35% for each Class of Shares. Actual Total Fund Operating Expenses, after
expense reimbursement, would be 1.35% for Class A Shares, 2.10% for Class B
Shares, 2.10% for Class C Shares, and 1.10% for Class X Shares.
(c) 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.
(d) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(e) 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. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
Phoenix-Seneca Tax Sensitive Growth Fund 3
<PAGE>
- --------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
Class A $732 $1063
- --------------------------------------------------------------------------------
Class B $642 $945
- --------------------------------------------------------------------------------
Class C $342 $745
- --------------------------------------------------------------------------------
Class X $142 $440
- --------------------------------------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
- --------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
Class B $242 $745
- --------------------------------------------------------------------------------
Class C $242 $745
- --------------------------------------------------------------------------------
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.
ADDITIONAL INVESTMENT TECHNIQUES
- --------------------------------------------------------------------------------
In addition to the Principal Investment Strategies and Risks, the Phoenix-Seneca
Tax Sensitive Growth Fund may engage in the following investment techniques as
indicated:
DEBT SECURITIES
The fund may invest in preferred stocks, warrants and other debt instruments,
including bonds convertible into common stocks. The value of debt instruments is
inversely related to interest rates. Generally, if interest rates rise, the
value of fixed income securities will fall. Should the fund invest in debt
securities with lower credit ratings and/or longer maturities, the risk of
negative price effects and default increases.
SECURITIES LENDING
The fund may lend up to 25% of its total assets at market value to increase its
investment returns. If the borrower is unwilling or unable to return the
borrowed securities when due, the fund can suffer losses.
4 Phoenix-Seneca Tax Sensitive Growth Fund
<PAGE>
UNRATED FIXED INCOME SECURITIES
The fund may invest in unrated securities. Unrated securities may not be lower
in quality than rated securities but due to their perceived risk, they may not
have as broad a market as rated securities. Analysis of unrated securities is
more complex than for rated securities, making it more difficult for the
subadviser to accurately predict risk.
FOREIGN INVESTING
The fund may invest up to 20% of its assets in securities of foreign (non-U.S.)
issuers. Foreign investment will primarily be through American Depository
Receipts (ADRs). Foreign markets and currencies may not perform as well as U.S.
markets, and dividends and other income payable on foreign securities may be
subject to foreign taxes.
OPTIONS, DERIVATIVES AND HEDGING TRANSACTIONS
The fund may invest up to 20% of its net assets in options transactions,
financial futures and related options. The fund intends to invest in the
securities primarily for hedging purposes but may invest up to 5% of its assets
in these securities as an investment unrelated to hedging. Derivatives may be
less liquid than other securities and the counterparty to such transaction may
not perform as expected. Futures involve market risk in excess of their value,
hedging transactions may limit returns, and premiums paid could be lost.
The fund may buy other types of securities or employ other portfolio management
techniques. Please refer to the Statement of Additional Information for more
detailed information about these and other investment techniques of 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, 1999,
Phoenix had $25.7 billion in assets under management. Phoenix has acted as an
investment adviser for over sixty years.
Seneca Capital Management LLC ("Seneca") is the investment subadviser to the
fund and is located at 909 Montgomery Street, San Francisco, California 94133.
Seneca acts as a subadviser to nine other mutual funds and as investment adviser
to institutions and individuals. As of December 31, 1999, Seneca had $9.2
billion in assets under management. Seneca has been (with its predecessor,
GMG/Seneca Capital Management LP ("GMG/Seneca")) an investment adviser since
1989.
Phoenix-Seneca Tax Sensitive Growth Fund 5
<PAGE>
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%
- -----------------------------------------------------------------------------------------------------------------
Phoenix pays Seneca a subadvisory fee at the following rates:
- -----------------------------------------------------------------------------------------------------------------
$1st billion $1+ billion through $2 billion $2+ billion
- -----------------------------------------------------------------------------------------------------------------
Subadvisory Fee 0.375% 0.350% 0.325%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The adviser has voluntarily agreed to assume total fund operating expenses of
the fund excluding interest, taxes, brokerage fees, commissions and
extraordinary expenses, until March 31, 2001, to the extent that such expenses
exceed the following percentages of the average annual net asset values for the
fund:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Class A Class B Class C Class X
Shares Shares Shares Shares
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Sensitive
Growth Fund 1.35% 2.10% 2.10% 1.10%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
PORTFOLIO MANAGEMENT
Investment and trading decisions for the fund are made by a team of managers and
analysts headed by Gail P. Seneca. The team leaders, which include Ms. Seneca,
Richard D. Little and Ronald K. Jacks, are primarily responsible for the
day-to-day decisions related to the fund.
Gail P. Seneca. Ms. Seneca serves as Co-Manager of the fund. Ms. Seneca also
serves as Co-Manager of Phoenix-Seneca Equity Opportunities Fund and
Phoenix-Seneca Strategic Theme Fund of Phoenix Strategic Equity Series Fund, the
Phoenix-Seneca Mid Cap Fund of Phoenix Multi-Portfolio Fund and the Phoenix Duff
& Phelps Institutional Growth Stock Portfolio of Phoenix Duff & Phelps
Institutional Mutual Funds. Ms. Seneca also serves as a team leader for each of
the Phoenix-Seneca Funds. Ms. Seneca has been the Chief Executive and Investment
Officer of Seneca or GMG/Seneca since November 1989. From October 1987 until
October 1989, she was Senior Vice President of the Asset Management Division of
Wells Fargo Bank,
6 Phoenix-Seneca Tax Sensitive Growth Fund
<PAGE>
and, from October 1983 to September 1987, she was Investment Strategist and
Portfolio Manager for Chase Lincoln Bank, heading the fixed income division.
Richard D. Little. Mr. Little serves as Co-Manager of the fund. Mr. Little
serves as Co-Manager of Phoenix-Seneca Equity Opportunities Fund and
Phoenix-Seneca Strategic Theme Fund of Phoenix Strategic Equity Series Fund, the
Phoenix-Seneca Mid Cap Fund of Phoenix Multi-Portfolio Fund and the Phoenix Duff
& Phelps Institutional Growth Stock Portfolio of Phoenix Duff & Phelps
Institutional Mutual Funds. Mr. Little also serves as a Portfolio Manager for
Phoenix-Seneca Growth Fund and Phoenix-Seneca Mid-Cap "EDGE"[service mark] Fund
of Phoenix-Seneca 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 serves as Co-Manager of the fund. He also serves as
Co-Manager of the Phoenix-Seneca Equity Opportunities Fund and Phoenix-Seneca
Strategic Theme Fund of Phoenix Strategic Equity Series Fund, the Phoenix-Seneca
Mid Cap Fund of Phoenix Multi-Portfolio Fund and the Phoenix Duff & Phelps
Institutional Growth Stock Portfolio of Phoenix Duff & Phelps Institutional
Mutual Funds. Mr. Jacks also serves as a Portfolio Manager for Phoenix-Seneca
Growth Fund and Phoenix-Seneca Mid-Cap "EDGE"[service mark] Fund of
Phoenix-Seneca Funds. Mr. Jacks was Secretary of the Phoenix-Seneca Funds from
February 1996 through February 1998. Mr. Jacks was a Trustee of Seneca Funds
from February 1996 through June 1997. Mr. Jacks has been a Portfolio Manager
with Seneca or GMG/Seneca since July 1990.
PRIOR INVESTMENT PERFORMANCE OF SENECA
The following table sets forth composite performance data relating to the
historical performance of substantially all of the private accounts managed by
Seneca investment professionals that have substantially the same investment
objectives, policies, strategies and risks as the fund. The data is provided to
illustrate the past performance of Seneca in managing substantially similar
accounts as compared to the S&P 500. Investors should not consider this
performance data as an indication of past or future performance of the fund or
of Seneca.
Seneca has calculated its composite performance data in compliance with the
Performance Presentation Standards of the Association for Investment Management
and Research ("AIMR-PPS[trademark]"), except that net, rather than gross,
information was used. AIMR has not been involved with the preparation or review
of this illustration. AIMR is a non-profit membership and education organization
with more than 60,000 members worldwide that, among other things, has formulated
a set of performance presentation standards for investment advisers. These AIMR
performance presentation standards are intended to promote full and fair
presentations by investment advisers of their performance results and ensure
uniformity in reporting so that performance results of investment advisers are
directly comparable.
AIMR composite performance figures are a quarterly aggregate of monthly returns
of a group of similar accounts which are time weighted and asset weighted.
Quarterly and yearly composite
Phoenix-Seneca Tax Sensitive Growth Fund 7
<PAGE>
returns are the result of geometrically linking monthly and quarterly returns,
respectively. (Each composite return figure is compounded by the successive
period's composite return.)
All returns presented were calculated on a total return basis and include all
dividends, interest, accrued income and realized and unrealized gains and
losses. All returns reflect the deduction of the maximum advisory fee of 1.00%
of assets under management, brokerage commissions and execution costs paid by
Seneca's private accounts, without provision for income taxes. Only those
private accounts where Seneca exercised full discretionary investment authority
have been included in the composite performance data. The private accounts
included in Seneca's composite performance data are not subject to the same
expenses and specific tax restrictions applicable to regulated investment
companies, such as the Phoenix-Seneca Tax Sensitive Growth Fund, under
Subchapter M of the Internal Revenue Code and are not subject to Investment
Company Act of 1940 restrictions on investment limitations and diversification.
Consequently, Seneca's performance results would have been lower had fund
expenses been used and could have been adversely affected had these regulations
applied to the private accounts.
There are some differences between AIMR composites and the SEC standardized
formula. The SEC standardized formula (average annual total return) is
calculated net of portfolio fees and expenses as well as investment commissions
while AIMR composites are net of portfolio expenses but gross of management
fees. (Although the fund used AIMR composites, net rather than gross information
was used.) A composite return is the aggregate total return of a group of
similar accounts while the SEC formula is applied to only one account (mutual
fund). The time weighting of the composite differs from the SEC formula in that
the monthly total returns calculated for each account within the composite are
adjusted for cash flows and income accruals by assuming that these flows occur
mid-month. Consequently, composite performance is not overstated as a result of
new investments nor penalized by withdrawals. Mutual funds, in contrast,
calculate their net asset value daily and no adjustments would therefore be
required when calculating total returns. For AIMR composites, accounts are
dollar weighted to reflect the proportionate effect of account size on total
return within the composite.
The composite performance data presented below has been prepared in accordance
with the AIMR Performance Presentation Standards. The investment results
presented below could be calculated using different methods thereby producing
different results. The performance below reflects past performance of Seneca for
periods ending September 30, 1999 for similarly managed private accounts and is
not indicative of future results for the Phoenix-Seneca Tax Sensitive Growth
Fund.
- ------------------------------------------------------------------------------
Period Adviser's Composite S&P 500
- ------------------------------------------------------------------------------
One Year 41.45% 27.73%
- ------------------------------------------------------------------------------
Three Years 28.61% 25.17%
- ------------------------------------------------------------------------------
Since Inception (1/1/96) 27.88% 23.84%
- ------------------------------------------------------------------------------
8 Phoenix-Seneca Tax Sensitive Growth Fund
<PAGE>
The private accounts whose composite returns are shown above were managed by a
team of Seneca professionals lead by Ms. Seneca, Mr. Little and Mr. Jacks. The
fund similarly is managed by a team lead by these same individuals.
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' 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' 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. If
the fund holds securities that are traded on foreign exchanges that trade on
weekends or other holidays when the funds do not price their shares,
Phoenix-Seneca Tax Sensitive Growth Fund 9
<PAGE>
the net asset value of the fund's shares may change on days when shareholders
will not be able to purchase or redeem the fund's shares.
AT WHAT PRICE ARE SHARES PURCHASED?
All investments received by the 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 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 four 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.
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 5.75% of the offering price (6.10% of the amount
invested). The sales charge may be reduced or waived under certain conditions.
Class A Shares are not subject to any charges by the fund when redeemed. Class A
Shares have lower distribution and service fees (0.25%) and pay higher dividends
than any other class.
10 Phoenix-Seneca Tax Sensitive Growth Fund
<PAGE>
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 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 offered primarily to institutional investors
such as pension and profit sharing plans, other employee benefit trusts,
investment advisers, endowments, foundations and corporations. If you are
eligible to purchase and do purchase Class X Shares, you will pay no sales
charge at any time. There are no distribution and services fees applicable to
Class X Shares. For additional information about purchasing Class X Shares,
please contact Customer Service by calling (800) 243-1574.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
The public offering price of Class A Shares is the net asset value plus a sales
charge that varies depending on the size of your purchase (see "Class A
Shares--Reduced Initial Sales Charges: Combination Purchase Privilege" in the
Statement of Additional Information). Shares purchased based on the automatic
reinvestment of income dividends or capital gains distributions are not subject
to any sales charges. The sales charge is divided between your investment dealer
and the 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 5.75% 6.10%
$50,000 but under $100,000 4.75 4.99
$100,000 but under $250,000 3.75 3.90
$250,000 but under $500,000 2.75 2.83
$500,000 but under $1,000,000 2.00 2.04
$1,000,000 or more None None
Phoenix-Seneca Tax Sensitive Growth Fund 11
<PAGE>
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.
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. These procedures do not apply to
Class X Shares.
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.
12 Phoenix-Seneca Tax Sensitive Growth Fund
<PAGE>
[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.
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 additional shares and capital gain
distributions in cash;
[bullet] Receive dividends in cash and capital gain distributions in
additional shares; or
[bullet] Receive both dividends and capital gain distributions in cash.
No interest will be paid on uncashed distribution checks.
Phoenix-Seneca Tax Sensitive Growth Fund 13
<PAGE>
HOW TO BUY SHARES
-------------------------------------------------------------------------------
TO OPEN AN ACCOUNT
(CLASS A, CLASS B AND CLASS C SHARES)
--------------------------------- --------------------------------------------
Through a financial advisor Contact your advisor. Some advisors may
charge a fee and may set different minimum
investments or limitations on buying shares.
--------------------------------- --------------------------------------------
Through the mail Complete a New Account Application and send
it with a check payable to the fund. Mail
them to: State Street Bank, P.O. Box 8301,
Boston, MA 02266-8301.
---------------------------------- --------------------------------------------
By Federal Funds wire Call us at (800)243-1574 (press 1, then 0).
---------------------------------- --------------------------------------------
Through express delivery Complete a New Account Application and send
it with a check payable to the fund. Send
them to: Boston Financial Data Services,
Attn: Phoenix Funds, 66 Brooks Drive,
Braintree, MA 02184.
---------------------------------- --------------------------------------------
By Investo-Matic Complete the appropriate section on the
application and send it with your initial
investment payable to the fund. Mail them
to: State Street Bank, P.O. Box 8301,
Boston, MA 02266-8301.
---------------------------------- --------------------------------------------
By telephone exchange Call us at (800)243-1574 (press 1, then 0).
---------------------------------- --------------------------------------------
HOW TO SELL SHARES
- --------------------------------------------------------------------------------
You have the right to have the 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.
14 Phoenix-Seneca Tax Sensitive Growth Fund
<PAGE>
- ----------------------------------- --------------------------------------------
TO SELL SHARES
(CLASS A, CLASS B AND CLASS C SHARES)
- ----------------------------------- --------------------------------------------
Through a financial advisor Contact your advisor. Some advisors may
charge a fee and may set different minimums
on redemptions of accounts.
- ----------------------------------- --------------------------------------------
Through the mail Send a letter of instruction and any share
certificates (if you hold certificate
shares) to: State Street Bank, P.O. Box
8301, Boston, MA 02266-8301. Be sure to
include the registered owner's name, fund
and account number, number of shares or
dollar value you wish to sell.
- ----------------------------------- --------------------------------------------
Through express delivery Send a letter of instruction and any share
certificates (if you hold certificate
shares) to: Boston Financial Data Services,
Attn: Phoenix Funds, 66 Brooks Drive,
Braintree, MA 02184. Be sure to include the
registered owner's name, fund and account
number.
- ----------------------------------- --------------------------------------------
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,
Fund and Emerging Markets you may write checks for amounts of $500
Bond Fund only) 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 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.
Phoenix-Seneca Tax Sensitive Growth Fund 15
<PAGE>
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.
If required, the signature guarantee on your request must be made 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.
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,
16 Phoenix-Seneca Tax Sensitive Growth Fund
<PAGE>
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.
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.
Phoenix-Seneca Tax Sensitive Growth Fund 17
<PAGE>
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 annually, and to
distribute net realized capital gains, if any, at least annually.
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.
18 Phoenix-Seneca Tax Sensitive Growth Fund
<PAGE>
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.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Phoenix-Seneca Tax Sensitive Growth Fund is a new fund and as such has no
financial performance to report as of the effective date of this prospectus.
Phoenix-Seneca Tax Sensitive Growth Fund 19
<PAGE>
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
The fund has filed a Statement of Additional Information about the fund, dated
February 28, 2000 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,
[arrow] by writing to its Public Reference Section, Washington, DC 20549-0102
(a fee may be charged), or
[arrow] by electronic request at [email protected] (a fee may be charged).
Information about the operation of the Public Reference Room may be obtained by
calling 1-202-942-8090.
SHAREHOLDER REPORTS
The 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 [recycle logo] Printed on recycled
paper using soybean ink
20 Phoenix-Seneca Tax Sensitive Growth Fund
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
PO Box 2200
Enfield CT 06083-2200
[logo] PHOENIX
INVESTMENT PARTNERS
For more information about
Phoenix mutual funds, please call
your financial representative or
contact us at 1-800-243-4361 or
www.phoenixinvestments.com.
PXP 1345 (2/00)
<PAGE>
[VERSION B]
PHOENIX-SENECA TAX SENSITIVE GROWTH FUND
101 Munson Street
Greenfield, Massachusetts 01301
STATEMENT OF ADDITIONAL INFORMATION
March 1, 2000
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current Prospectus of
Phoenix-Seneca Tax Sensitive Growth Fund (the "Fund") of Phoenix Multi-Portfolio
(the "Trust"), dated March 1, 2000, and should be read in conjunction with it.
The Fund's Prospectus may be obtained by calling Phoenix Equity Planning
Corporation ("Equity Planning") at (800) 243-4361 or by writing to Equity
Planning at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
PAGE
The Trust ..................................................... 1
Investment Objectives and Policies............................. 1
Investment Restrictions ....................................... 10
Performance ................................................... 11
Performance Comparisons ....................................... 12
Portfolio Turnover ............................................ 12
Portfolio Transactions ........................................ 12
The Investment Advisers ....................................... 14
Determination of Net Asset Value............................... 15
How to Buy Shares ............................................. 15
Alternative Purchase Arrangements ............................. 15
Investor Account Services ..................................... 19
How to Redeem Shares .......................................... 20
Tax Sheltered Retirement Plans ................................ 21
Dividends, Distributions and Taxes............................. 21
The Distributor ............................................... 23
Distribution Plans............................................. 25
Management of the Trust........................................ 26
Additional Information ........................................ 33
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunication Device (TTY): (800) 243-1926
PXP 1346 (3/00)
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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-Seneca Tax Sensitive Growth Fund (the "Tax
Sensitive Growth Fund" or the "Fund"), describes the investment objectives of
the Fund and summarizes the investment policies and investment techniques the
Fund will employ in seeking to achieve its investment objective. (A separate
prospectus and Statement of Additional Information apply to four other funds of
the Trust.) The following discussion supplements the description of the 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 of the Fund.
Investment restrictions described in this Statement of Additional Information
are fundamental policies of the Trust and may not be changed as to the Fund
without the approval of the Fund's shareholders.
WRITING AND PURCHASING OPTIONS ON SECURITIES AND SECURITIES INDICES
The 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 the Fund may be below,
equal to or above the current market value of the underlying security or
securities index at the time the option is written.
During the option period, the Fund may be assigned an exercise notice by the
broker-dealer through which the call option was sold, requiring the Fund to
deliver the underlying security (or cash in the case of securities index calls)
against payment of the exercise price. This obligation is terminated upon the
expiration of the option period or at such earlier time as the Fund effects a
closing purchase transaction. A closing purchase transaction cannot be effected
with respect to an option once the Fund has received an exercise notice.
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 Fund 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 the 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 the Fund may increase its portfolio turnover rate
and the amount of brokerage commissions paid. The 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 Fund 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 Fund has adopted procedures for engaging in OTC options for the
purpose of reducing any potential adverse effect of such transactions upon the
liquidity of the Fund. A brief description of such procedures is set forth
below.
The Fund will engage in OTC options transactions only with dealers that meet
certain credit and other criteria. The Fund and PIC believe that the approved
dealers present minimal credit risks to the Fund and, therefore, should be able
to enter into closing transactions if necessary. The 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
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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 Fund anticipates entering into agreements with dealers to which the Funds
sell OTC options. Under these agreements the Fund 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 Fund, 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 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.
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 the 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
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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 a 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 Fund 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 Fund may also 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
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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 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.
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
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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 the Fund to incur additional brokerage
commissions and may cause an increase in the 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 the 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 the 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 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 the 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 the Fund. No more than an aggregate of 10% of the
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,
the 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
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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 25% of the market or other fair value for its
total assets, provided that such loans are callable at any time by the Fund 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
The Fund may purchase securities on a when-issued or forward-commitment
basis. 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 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 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
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 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 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 SECURITIES
The Fund may invest in U.S. dollar- or foreign currency-denominated corporate
debt securities of foreign issuers (including preferred or preference stock),
certain foreign bank obligations and U.S. dollar- or foreign
currency-denominated obligations of foreign governments or their subdivisions,
agencies and instrumentalities, international agencies and supranational
entities and may invest up to 20% of its total assets directly in common stocks
issued by foreign companies or in securities represented by ADRs. The Fund will
limit its investment in securities denominated in foreign currencies to no more
than 20% of the Fund's total assets.
Investing in the securities of foreign issuers involves special risks and
considerations not typically associated with investing in U.S. companies. These
include differences in accounting, auditing and financial reporting standards,
generally higher commission rates on foreign portfolio transactions, the
possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations (which may include suspension of the
ability to transfer currency from a country), political instability which may
affect U.S. investments in foreign countries and potential restrictions on the
flow of international capital. In addition, foreign securities and dividends
interest payable on those securities may be subject to foreign taxes, including
taxes withheld from
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payments on those securities. Foreign securities often trade with less frequency
and volume than domestic securities and therefore may exhibit greater price
volatility. Changes in foreign exchange rates will affect the value of those
securities which are denominated or quoted in currencies other than the U.S.
dollar.
ADRs are dollar-denominated receipts issued generally by domestic banks and
representing the deposit with the bank of a security of a foreign issuer, and
are publicly traded on exchanges or over-the-counter in the United States. ADRs
may be issued as sponsored or unsponsored programs. In sponsored programs, an
issuer has made arrangements to have its securities trade in the form of ADRs.
In unsponsored programs, the issuer may not be directly involved in the creation
of the program. Although regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, in some cases it may be easier to
obtain financial information from an issuer that has participated in the
creation of a sponsored program.
FOREIGN CURRENCY TRANSACTIONS
The 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
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
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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.
Foreign currency warrants. Foreign currency warrants such as Currency
Exchange Warrants ("CEWs") are warrants that entitle the holder to receive from
the issuer an amount of cash (generally, for warrants issued in the United
States, in U.S. dollars) that is calculated pursuant to a predetermined formula
and based on the exchange rate between a specified foreign currency and the U.S.
dollar as of the exercise date of the warrant. Foreign currency warrants
generally are exercisable upon their issuance and expire as of a specified date
and time. Foreign currency warrants have been issued in connection with U.S.
dollar-denominated debt offerings by major corporate issuers in an attempt to
reduce the foreign currency exchange risk that, from the point of view of
prospective purchases of the securities, is inherent in the international
fixed-income marketplace. Foreign currency warrants may be used to reduce the
foreign exchange risk assumed by purchasers of a security by, for example,
providing for a supplemental payment in the event the U.S. dollar depreciates
against the value of a major foreign currency such as the Japanese Yen or German
Deutschemark. The formula used to determine the amount payable upon exercise of
a foreign currency warrant may make the warrant worthless unless the applicable
foreign currency exchange rate moves in a particular direction (e.g., unless the
U.S. dollar appreciates or depreciates against the particular foreign currency
to which the warrant is linked or indexed). Foreign currency warrants are
severable from the debt obligations with which they may be offered, and may be
listed on exchanges. Foreign currency warrants may be exercisable only in
certain minimum amounts, and an investor wishing to exercise warrants who
possesses less than the minimum number required for exercise may be required
either to sell the warrants or to purchase additional warrants, thereby
incurring additional transaction costs. Upon exercise of warrants, there may be
a delay between the time the holder gives instructions to exercise and the time
the exchange rate relating to exercise is determined, thereby affecting both the
market and cash settlement values of the warrants being exercised. The
expiration date of the warrants may be accelerated if the warrants should be
delisted from an exchange or if their trading should be suspended permanently,
which would result in the loss of any remaining "time value" of the warrants
(i.e., the difference between the current market value and the exercise value of
the warrants), and, if the warrants were "out-of-the-money," in a total loss of
the purchase price of the warrants. Warrants are generally unsecured obligations
of their issuers and are not standardized foreign currency options issued by the
OCC. Unlike foreign currency options issued by OCC, the terms of foreign
exchange warrants generally will not be amended in the event of governmental or
regulatory actions affecting exchange rates or in the event of the imposition of
other regulatory controls affecting the international currency markets. The
initial public offering price of foreign currency warrants is generally
considerably in excess of the price that a commercial user of foreign currencies
might pay in the interbank market for a comparable option involving
significantly larger amounts of foreign currencies. Foreign currency warrants
are subject to significant foreign exchange risk, including risks arising from
complex political or economic factors.
Principal exchange rate linked securities. Principal exchange rate linked
securities (or "PERLS") are debt obligations the principal on which is payable
at maturity in an amount that may vary based on the exchange rate between the
U.S. dollar and a particular foreign currency at or about that time. The return
on "standard" principal exchange rate linked securities is enhanced if the
foreign currency to which the security is linked appreciates against the U.S.
dollar, and is adversely affected by increases in the foreign exchange value of
the U.S. dollar, "reverse" PERLS are like the "standard" securities, except that
their return is enhanced by increases in the value of the U.S. dollar and
adversely impacted by increases in the value of foreign currency. Interest
payments on the securities are generally made in U.S. dollars at rates that
reflect the degree of foreign currency risk assumed or given up by the purchaser
of the notes (i.e., at relatively higher interest rates if the purchaser has
assumed some of the foreign exchange risk, or relatively lower interest rates if
the issuer has assumed some of the foreign exchange risk, based on the
expectations of the current market). PERLS may in limited cases be subject to
acceleration of maturity (generally, not without the consent of the holders of
the securities), which may have an adverse impact on the value of the principal
payment to be made at maturity.
Performance indexed paper. Performance indexed paper (or "PIPs") is U.S.
dollar-denominated commercial paper the yield of which is linked to certain
foreign exchange rate movements. The yield to the investor on performance
indexed paper is established at maturity as a function of spot exchange rates
between the U.S. dollar and a designated currency as of or about the time
(generally, the index maturity two days prior to maturity). The yield to the
investor will be within a range stipulated at the time of purchase of the
obligation, generally with a guaranteed minimum rate of return that is below,
and a potential maximum rate of return that is above, market yields on U.S.
dollar-denominated commercial paper, with both the minimum and maximum rates of
return on the investment corresponding to the minimum and maximum values of the
spot exchange rate two business days prior to maturity.
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REAL ESTATE INVESTMENT TRUSTS
The Fund may 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.
--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 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 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.
WARRANTS TO PURCHASE SECURITIES
The Fund may invest in or acquire warrants to purchase equity or fixed income
securities. Bonds with warrants attached to purchase equity securities have many
characteristics of convertible bonds and their prices may, to some degree,
reflect the performance of the underlying stock. Bonds also may be issued with
warrants attached to purchase additional fixed income securities at the same
coupon rate. A decline in interest rates would permit the Fund to buy additional
bonds at the favorable rate or to sell the warrants at a profit. If interest
rates rise, the warrants would generally expire with no value.
The Fund will not invest more than 5% of its net assets, valued at the lower
of cost or market, in warrants to purchase securities. Included within that
amount, but not to exceed 2% of the Fund's net assets, may be warrants that are
not listed on the New York Stock Exchange or American Stock Exchange. Warrants
acquired in units or attached to securities will be deemed to be without value
for purposes of this restriction.
SHORT SALES
The Fund may sell securities short as part of their overall portfolio
management strategies involving the use of derivative instruments and to offset
potential declines in long positions in similar securities. A short sale is a
transaction in which a Fund sells a security it does not own or have the right
to acquire (or that it owns but does not wish to deliver) in anticipation that
the market price of that security will decline.
SWAP AGREEMENTS
The Fund may enter into interest rate, index and currency exchange rate swap
agreements in attempts to obtain a particular desired return at a lower cost to
the Fund than if the Fund had invested directly in an instrument that yielded
that desired return. Swap agreements are two-party contracts entered into
primarily by institutional investors for periods ranging from a few weeks to
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more than one year. In a standard "swap" transaction, two parties agree to
exchange the returns (or differentials in rates of return) earned or realized on
particular predetermined investments or instruments. The gross returns to be
exchanged or "swapped" between the parties are calculated with respect to a
"notional amount," i.e., the return on or increase in value of a particular
dollar amount invested at a particular interest rate, in a particular foreign
currency, or in a "basket" of securities representing a particular index. The
"notional amount" of the swap agreement is only a fictive basis on which to
calculate the obligations the parties to a swap agreement have agreed to
exchange. The Fund's obligations (or rights) under a swap agreement will
generally be equal only to the amount to be paid or received under the agreement
based on the relative values of the positions held by each party to the
agreement (the "net amount"). The Fund's obligations under a swap agreement will
be accrued daily (offset against any amounts owing to the Fund) and any accrued
but unpaid net amounts owed to a swap counterparty will be covered by the
maintenance of a segregated account consisting of liquid assets to avoid
leveraging of the Fund's portfolio. The Fund will not enter into a swap
agreement with any single party if the net amount owed or to be received under
existing contracts with that party would exceed 5% of the Fund's assets.
Whether the Fund's use of swap agreements enhance the Fund's total return
will depend on the Subadviser's ability to correctly predict whether certain
types of investments are likely to produce greater returns than other
investments. Because they are two-party contracts and may have terms of greater
than seven days, swap agreements may be considered to be illiquid. Moreover, a
Fund bears the risk of loss of the amount expected to be received under a swap
agreement in the event of the default or bankruptcy of a swap agreement
counterparty. The Subadviser will cause a Fund to enter into swap agreements
only with counterparties that would be eligible for consideration as repurchase
agreement counterparties under the Funds' repurchase agreement guidelines.
Certain restrictions imposed on the Funds by the Internal Revenue Code may limit
the Funds' ability to use swap agreements. The swaps market is a relatively new
market and is largely unregulated. It is possible that developments in the swaps
market, including potential government regulation, could adversely affect the
Fund's ability to terminate existing swap agreements or to realize amounts to be
received under such agreements.
Certain swap agreements are exempt from most provisions of the Commodity
Exchange Act ("CEA") and, therefore, are not regulated as futures or commodity
option transactions under the CEA, pursuant to regulations of the CFTC. To
qualify for this exemption, a swap agreement must be entered into by "eligible
participants," which include the following, provided the participants' total
assets exceed established levels: a bank or trust company, savings association
or credit union, insurance company, investment company subject to regulation
under the Investment Company Act of 1940 (the "1940 Act"), commodity pool,
corporation, partnership, proprietorship, organization, trust or other entity,
employee benefit plan, governmental entity, broker-dealer, futures commission
merchant, natural person, or regulated foreign person. To be eligible, natural
persons and most other entities must have total assets exceeding $10 million;
commodity pools and employees benefit plans must have assets exceeding $5
million. In addition, an eligible swap transaction must meet three conditions.
First, the swap agreement may not be part of a fungible class of agreements that
are standardized as to their material economic terms. Second, the
creditworthiness of parties with actual or potential obligations under the swap
agreement must be a material consideration in entering into or determining the
terms of the swap agreement, including pricing, cost or credit enhancement
terms. Third, swap agreements may not be entered into and traded on or through a
multilateral transaction execution facility.
INVESTMENT RESTRICTIONS
The investment restrictions described below are fundamental policies and may
not be changed as to the Tax Sensitive Growth 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. 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, 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, 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 the Fund's existing
futures and related options positions and the premiums paid for related
options would not exceed 5% of its total assets.
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(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, a 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 the 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) 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.
(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) With respect to 75% of its assets, 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.
(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.
(13) 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 the Fund's total 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.
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) may appear in
advertisements, sales literature, or reports to shareholders or prospective
shareholders. Performance information in advertisements and sales literature may
be expressed as "average annual total return" and "total return."
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
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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.
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
Fund, both as a percentage and as a dollar amount based on a hypothetical
$10,000 investment for various periods other than those noted below. Such data
will be computed as described above, except that (1) the rates of return
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
charge will not be included with respect to annual, annualized or aggregate rate
of return calculations.
PERFORMANCE COMPARISONS
The Fund or a 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, the
Fund may compare its performance results to other investment or savings vehicles
(such as certificates of deposit) and may refer to results published in various
publications such as Changing Times, Forbes, Fortune, Money, Barrons, Business
Week, 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.
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
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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.
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.
The Adviser may use its broker/dealer affiliates, or other firms that sell
shares of the Funds, to buy and sell securities for the Funds, provided they
have the execution capability and that their commission rates are comparable to
those of other unaffiliated broker/dealers. Directors of PXP Securities Corp. or
its affiliates receive indirect benefits from the Funds as a result of its usual
and customary brokerage commissions that PXP Securities Corp. may receive for
acting as broker to the Funds in the purchase and sale of portfolio securities.
The investment advisory agreement does not provide for a reduction of the
advisory fee by any portion of the brokerage fees generated by portfolio
transactions of the Funds that PXP Securities Corp. may receive.
For the fiscal years ended November 30, 1997, 1998 and 1999, brokerage
commissions paid by the Trust on portfolio transactions totaled $2,269,745,
$2,904,276 and $1,649,397, respectively. In the fiscal year ended November 30,
1999, no brokerage commissions were paid to affiliates for portfolio
transactions. Commissions of $592,803 paid during the fiscal year ended November
30, 1999, were paid on fund transactions aggregating $235,932,659 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 the 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
the adviser (or subadviser) are simultaneously engaged in the purchase or sale
of the same security, the transactions are allocated among the funds in a manner
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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 Tax Sensitive Growth 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
September 30, 1999, PIC had approximately $23.4 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"). 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 a publicly traded, independent
registered advisory firm, and has served investors for over 70 years. It manages
approximately $64.4 billion (as of December 31, 1999) 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.
Seneca Capital Management LLC ("Seneca") is the subadviser to the Tax
Sensitive Growth Fund and is located at 909 Montgomery Street, San Francisco,
California 94133. Seneca acts as a subadviser to four other mutual funds and as
investment adviser to institutions and individuals. As of December 31, 1999,
Seneca had $9.2 billion in assets under management. Seneca has been (with its
predecessor, GMG/Seneca Capital Management LP ("GMG/Seneca")) an investment
adviser since 1989.
The 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 Tax
Sensitive Growth Fund, PIC 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 adviser has agreed to reimburse through
December 31, 2000 the fund's expenses (other than Management Fees and
Distribution and Services Fees to the extent that such expenses exceed 0.35% for
each class of shares.
The investment advisory agreement also provides that the 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
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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 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 the Fund and
(2) the terms and any renewal of the agreement with respect to the 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 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 the
Fund by the Trustees or by the adviser and may be terminated as to the Fund by a
vote of the majority of the outstanding shares of the 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,
Presidents' 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 the Fund which invests in
foreign securities contemporaneously with the determination of the prices of the
majority of the portfolio securities of the 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. The minimum initial investment for Class
X Shares is $250,000, and the minimum subsequent investment for Class X Shares
is $10,000. Completed applications for the purchase of shares should be mailed
to: Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8301.
The Trust has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased from investment dealers at a price equal to their net
asset value per share, plus a sales charge which, at the election of the
purchaser, may be imposed either (i) at the time of the purchase (the "initial
sales charge alternative") or (ii) on a
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contingent deferred basis (the "deferred sales charge alternative"). The Fund
also offers one class of shares (Class X Shares) that may be purchased by
certain institutional investors at a price equal to their net asset value per
share. 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.
CLASS B SHARES
Class B Shares do not incur a sales charge when they are purchased, but they
are subject to a sales charge if they are redeemed within five years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions.
Class B Shares are subject to ongoing distribution and 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.
CLASS X SHARES
Class X Shares are offered without any sales charges to institutional
investors, such as pension and profit sharing plans, other employee benefit
trusts, investment advisers, endowments, foundations and corporations, and
others who purchase the minimum amounts.
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CLASS A SHARES--REDUCED INITIAL SALES CHARGES
Investors choosing Class A Shares may be entitled to reduced sales charges.
The ways in which sales charges may be avoided or reduced are described below.
QUALIFIED PURCHASERS. If you fall within any one of the following categories,
you will not have to pay a sales charge on your purchase of Class A Shares: (1)
trustee, director or officer of the Phoenix Funds, the Phoenix-Engemann Funds,
Phoenix-Seneca Funds or any other mutual fund advised, subadvised or distributed
by the Adviser, Distributor or any of their corporate affiliates (an "Affiliated
Phoenix Fund"); (2) any director or officer, or any full-time employee or sales
representative (for at least 90 days) of the Adviser or Distributor; (3)
registered representatives and employees of securities dealers with whom
Distributor has sales agreements; (4) any qualified retirement plan exclusively
for persons described above; (5) any officer, director or employee of a
corporate affiliate of the Adviser or Distributor; (6) any spouse, child,
parent, grandparent, brother or sister of any person named in (1), (2), (3) or
(5) above; (7) employee benefit plans for employees of the Adviser, Distributor
and/or their corporate affiliates; (8) any employee or agent who retires from
Phoenix Home Life, Distributor and/or their corporate affiliates; (9) any
account held in the name of a qualified employee benefit plan, endowment fund or
foundation if, on the date of the initial investment, the plan, fund or
foundation has assets of $10,000,000 or more or at least 100 eligible employees;
(10) any person with a direct rollover transfer of shares from an established
Phoenix Fund, 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; (19) 401(k) participants in the Merrill Lynch
Daily K Plan (the "Plan") if the Plan has at least $3 million in assets or 500
or more eligible employees; or (20) clients of investment advisors or financial
planners who buy shares for their own accounts but only if their accounts are
linked to a master account of their investment advisor or financial planner on
the books and records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements (each of the investors
described in (17) through (20) may be charged a fee by the broker, agent or
financial intermediary for purchasing shares).
COMBINATION PURCHASE PRIVILEGE. Your purchase of any class of shares of this
or any other Affiliated Phoenix Fund (other than Phoenix Money Market Fund
Series Class A Shares), if made at the same time by the same "person," will be
added together to determine whether the combined sum entitles you to an
immediate reduction in sales charges. A "person" is defined in this and the
following sections as (a) any individual, their spouse and minor children
purchasing shares for his or their own account (including an IRA account)
including his or their own trust; (b) a trustee or other fiduciary purchasing
for a single trust, estate or single fiduciary account (even though more than
one beneficiary may exist); (c) multiple employer trusts or Section 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 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
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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)
from the Merrill Lynch Daily K Plan ("Plan") invested in Class B Shares, in
which such shares the Distributor has not paid the dealer the Class B sales
commission; (f) based on the exercise of exchange privileges among Class B and C
Shares of this or any other Affiliated Phoenix Fund; (g) based on any direct
rollover transfer of shares from an established Affiliated Phoenix Fund
qualified plan into an Affiliated Phoenix Fund IRA by participants terminating
from the qualified plan; and (h) based on the systematic withdrawal program
(Class B Shares only). If, as described in condition (a) above, an account is
transferred to an account registered in the name of a deceased's estate, the
CDSC will be waived on any redemption from the estate account occurring within
one year of the death. If the Class B or C Shares are not redeemed within one
year of the death, they will remain subject to the applicable CDSC.
CONVERSION FEATURE--CLASS B SHARES
Class B Shares will automatically convert to Class A Shares of the same Fund
eight years after they are bought. Conversion will be on the basis of the then
prevailing net asset value of Class A and B Shares. There is no sales load, fee
or other charge for this feature. Class B Shares acquired through dividend or
distribution reinvestments will be 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.
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.
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<PAGE>
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.
Broker/dealers may impose their own restrictions and limits on accounts held
through the broker/dealer. Please consult your broker/dealer for account
restriction and limit information.
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.
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
19
<PAGE>
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 Fund which has been in existence for at least
one year and has a value of less than $200 may be redeemed upon the giving of
not less than 30 days written notice to the shareholder mailed to the address of
record. During the 60-day period the shareholder has the right to add to the
account to bring its value to $200 or more. See the Fund's current Prospectus
for more information.
BY MAIL
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds, c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the possession of the shareholder, they must be mailed or
presented, duly endorsed in the full name of the account, with a written request
to Equity Planning that the Trust redeem the shares. See the Funds' current
Prospectus for more information.
TELEPHONE REDEMPTIONS
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Funds' current Prospectus for
additional information.
REDEMPTION IN KIND
To the extent consistent with state and federal law, the 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
20
<PAGE>
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.
MERRILL LYNCH DAILY K PLAN
Class A Shares of a Fund are made available to Merrill Lynch Daily K Plan
(the "Plan") participants at NAV without an initial sales charge if:
(i) the Plan is recordkept on a daily valuation basis by Merrill Lynch and,
on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service
Agreement, the Plan has $3 million or more in assets invested in broker/dealer
funds not advised or managed by Merrill Lynch Asset Management L.P. ("MLAM")
that are made available pursuant to a Service Agreement between Merrill Lynch
and the fund's principal underwriter or distributor and in funds advised or
managed by MLAM (collectively, the "Applicable Investments");
(ii) the Plan is recordkept on a daily valuation basis by an independent
recordkeeper whose services are provided through a contract or alliance
arrangement with Merrill Lynch, and, on the date the Plan Sponsor signs the
Merrill Lynch Recordkeeping Service Agreement, the Plan has $3 million or more
in assets, excluding money market funds, invested in Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by a Merrill
Lynch plan conversion manager, on the date the Plan Sponsor signs the Merrill
Lynch Recordkeeping Service Agreement.
Alternatively, Class B Shares of a Fund are made available to Plan
participants at NAV without a CDSC if the Plan conforms with the requirements
for eligibility set forth in (i) through (iii) above but either does not meet
the $3 million asset threshold or does not have 500 or more eligible employees.
Plans recordkept on a daily basis by Merrill Lynch or an independent
recordkeeper under a contract with Merrill Lynch that are currently investing in
Class B Shares of a Fund convert to Class A Shares once the Plan has reached $5
million invested in Applicable Investments, or after the normal holding period
of seven years from the initial date of purchase.
DIVIDENDS, DISTRIBUTIONS AND TAXES
QUALIFICATION AS A REGULATED INVESTMENT COMPANY ("RIC")
The Fund is treated as a separate entity for federal income tax purposes. The
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 the 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 the 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. The 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 the
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 the 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
21
<PAGE>
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.
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% test, in order to qualify as a RIC the 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. The Fund intends to make distributions to shareholders
that will be sufficient to meet the 90% distribution requirement.
The 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.
The 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 the 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 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 Fund designates 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 the Fund will be qualifying dividend
distributions. Distributions by the 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 Fund 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 the 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.
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
22
<PAGE>
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 Fund or who, to the Fund's knowledge, have furnished an incorrect
number.
FOREIGN SHAREHOLDERS
Dividends paid by the 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 the 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 the
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 and William R. Moyer, 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. 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, 1997, 1998 and
1999, purchasers of shares of the Funds paid aggregate sales charges of
$2,114,382, $4,260,271 and $1,269,310, respectively, of which the Distributor
received net commission of $494,335, $545,050 and $500,085, respectively, for
its services, the balance being paid to dealers. For the fiscal year ended
November 30, 1999, the distributor received net commission of $97,677 for Class
A Shares and deferred sales charges of $402,408 for Class B and C Shares.
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<PAGE>
DEALER CONCESSIONS
Dealers with whom the Distributor has entered into sales agreements receive a
discount or commission as described below.
<TABLE>
<CAPTION>
AMOUNT OF
TRANSACTION SALES CHARGE AS A PERCENTAGE SALES CHARGE AS A PERCENTAGE DEALER DISCOUNT
AT OFFERING PRICE OF OFFERING PRICE OF AMOUNT INVESTED PERCENTAGE OF OFFERING PRICE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Under $50,000 5.75% 6.10% 5.25%
$50,000 but under $100,000 4.75 4.99 4.25
$100,000 but under $250,000 3.75 3.90 3.25
$250,000 but under $500,000 2.75 2.83 2.25
$500,000 but under $1,000,000 2.00 2.04 1.75
$1,000,000 or more None None None
</TABLE>
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sale price of
Class C Shares sold by such dealers. This sales commission will not be paid to
dealers for sales of Class B or Class C Shares purchased by 401(k) participants
of the Merrill Lynch Daily K Plan (the "Plan") due to waiver of the CDSC for
these Plan participants' purchases. Your broker, dealer or investment adviser
may also charge you additional commissions or fees for their services in selling
shares to you provided they notify the Distributor of their intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of the
Trust and/or for providing other shareholder services. Such fees are in addition
to the sales commissions referenced above and may be based upon the amount of
sales of fund shares by a dealer; the provision of assistance in marketing of
fund shares; access to sales personnel and information dissemination services;
provision of recordkeeping and administrative services to qualified employee
benefit plans; and other criteria as established by the Distributor. Depending
on the nature of the services, these fees may be paid either from the 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. From its own
resources, the Distributor intends to pay the following additional compensation
to Merrill Lynch, Pierce, Fenner & Smith, Incorporated: 0.25% on sales of Class
A and B Shares, 0.10% on sales of Class C Shares, 0.10% on sales of Class A
shares sold at net asset value, and 0.10% annually on the average daily net
asset value of fund shares on which Merrill Lynch is broker of record and which
such shares exceed the amount of assets on which Merrill Lynch is broker of
record as of July 1, 1999. Any dealer who receives more than 90% of a sales
charge may be deemed to be an "underwriter" under the Securities Act of 1933.
Equity Planning reserves the right to discontinue or alter such fee payment
plans at any time.
ADMINISTRATIVE SERVICES
Equity Planning also acts as administrative agent of the Trust and as such
performs administrative, bookkeeping and pricing functions for the Funds. For
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.
24
<PAGE>
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, 1997, 1998 and 1999, the
Financial Agent received fees of $541,814, $654,165 and $726,919, 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 other than
Class X (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 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
25
<PAGE>
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, 1999 the Trust paid Rule 12b-1 Fees in
the amount of $2,607,375, of which the Distributor received $1,060,487,
unaffiliated broker-dealers received $1,310,508 and W.S. Griffith & Co., Inc.,
an affiliate, received $236,380. The Rule 12b-1 payments were used for (1)
compensating dealers, $2,815,291, (2) compensating sales personnel, $2,221,997,
(3) advertising, $1,317,627, (4) printing and mailing of prospectuses to other
than current shareholders, $32,904, (5) service costs, $216,769 and (6) other,
$446,543. The Distributor's expenses from selling and servicing Class B Shares
may be more than the payments received from contingent deferred sales charges
collected on redeemed shares and from the Trust under the Class B Plan. Those
expenses may be carried over and paid in future years. At November 30, 1999, the
end of the last Plan year, the Distributor had incurred unreimbursed expenses
under the Class B Plan of $6,065,679 (equal to 0.40% of the Trust's net assets)
which have been carried over into the present Class B Plan year. 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 (65) 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).
E. Virgil Conway (70) Trustee Chairman, Metropolitan Transportation Authority (1992-present).
9 Rittenhouse Road Trustee/Director, Consolidated Edison Company of New York, Inc.
Bronxville, NY 10708 (1970-present), Pace University (1978-present), Atlantic Mutual
Insurance Company (1974-present), HRE Properties (1989-present),
Greater New York Councils, Boy Scouts of America (1985-present),
Union Pacific Corp. (1978-present), Blackrock Freddie Mac Mortgage
Securities Fund (Advisory Director) (1990-present), Centennial
Insurance Company (1974-present), Josiah Macy, Jr., Foundation
(1975-present), The Harlem Youth Development Foundation
(1987-present; Chairman, 1998-present), Accuhealth (1994-present),
Trism, Inc. (1994-present), Realty Foundation of New York
(1972-present), Vice Chairman, The Academy of Political Science
(1985-present) and New York Housing Partnership Development Corp.
(Chairman) (1981-present). Director/Trustee, Phoenix Funds
(1993-present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Duff & Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present).
Chairman/Member, Audit Committee of the City of New York
(1981-1996). Advisory Director, Blackrock Fannie Mae Mortgage
Securities Fund (1989-1996) and Fund Directions (1993-1998).
Chairman, Financial Accounting Standards Advisory Council
(1992-1995).
Harry Dalzell-Payne (70) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
The Flat Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Elmore Court Institutional Mutual Funds (1996-present). Director, Duff & Phelps
Elmore, GLO5, 9623NT Utilities Tax-Free Income Inc. and Duff & Phelps Utility and
U.K. Corporate Bond Trust Inc. (1995-present). Trustee, Phoenix-Seneca
Funds (1999-present). Formerly a Major General of the British Army.
</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>
*Francis E. Jeffries (69) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
8477 Bay Colony Dr. Phoenix-Aberdeen Series Inc. and Phoenix Duff & Phelps
#902 Institutional Mutual Funds (1996-present). Director, Duff & Phelps
Naples, FL 34108 Utilities Income Inc. (1987-present), Duff & Phelps Utilities
Tax-Free Income Inc. (1991-present) and Duff & Phelps Utility and
Corporate Bond Trust Inc. (1993-present). Director, The Empire
District Electric Company (1984-present). Director (1989-1997),
Chairman of the Board (1993-1997), President (1989-1993), and
Chief Executive Officer (1989-1995), Phoenix Investment Partners,
Ltd.
Leroy Keith, Jr. (61) Trustee Chairman (1995-present) and Chief Executive Officer (1995-1999),
Chairman Carson Products Company. Director/Trustee, Phoenix Funds
Carson Product Company (1980-present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
64 Ross Road Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Savannah, GA 30750 Equifax Corp. (1991-present) and Evergreen International Fund,
Inc. (1989-present). Trustee, Evergreen Liquid Trust, Evergreen
Tax Exempt Trust, Evergreen Tax Free Fund, Master Reserves Tax
Free Trust, and Master Reserves Trust.
*Philip R. McLoughlin (53) Trustee and Chairman (1997-present), Vice Chairman (1995-1997) and Chief
President Executive Officer (1995-present), Phoenix Investment Partners,
Ltd. Director (1994-present) and Executive Vice President,
Investments (1988-present), Phoenix Home Life Mutual Insurance
Company. Director/Trustee and President, Phoenix Funds
(1989-present). Trustee and President, Phoenix-Aberdeen Series
Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Duff & Phelps Utilities Tax-Free Income
Inc. (1995-present) and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1995-present). Trustee, Phoenix-Seneca Funds
(1999-present). Director (1983-present) and Chairman
(1995-present), Phoenix Investment Counsel, Inc. Director
(1984-present) and President (1990-present), Phoenix Equity
Planning Corporation. Chairman and Chief Executive Officer, Zweig
Glaser Advisors LLC (1999-present). 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
(1992-present) and President (1992-1994), W.S. Griffith & Co.,
Inc. Director, PHL Associates, Inc. (1995-present).
Everett L. Morris (71) Trustee Vice President, W.H. Reaves and Company (1993-present). Director/
164 Laird Road Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
Colts Neck, 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).
</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>
*James M. Oates (53) 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). Director, Investors Financial Service
Corporation (1995-present), Investors Bank & Trust Corporation
(1995-present), Plymouth Rubber Co. (1995-present), Stifel
Financial (1996-present), Command Systems, Inc. (1998-present),
Connecticut River Bancorp (1998-present) and Endowment for
Health, Inc. (1999-present). Member, Chief Executives
Organization (1996-present). Vice Chairman, Massachusetts
Housing-Partnership (1998-2000). Director, Blue Cross and Blue
Shield of New Hampshire (1994-1999).
*Calvin J. Pedersen (57) Trustee Director (1986-present), President (1993-2000) and Executive Vice
Phoenix Investment President (1992-1993), Phoenix Investment Partners, Ltd.
Partners, Ltd. 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. (71) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
P.O. Box 909 Institutional Mutual Funds (1996-present). Director, Boston
Sherborn, MA 01770 Edison Company (1978-present), Landauer, Inc. (medical services)
(1970-present), Tech Ops./ Sevcon, Inc. (electronic controllers)
(1987-present), and Mark IV Industries (diversified manufacturer)
(1985-present). Member, Directors Advisory Council, Phoenix Home
Life Mutual Insurance Company (1998-present). Director, Phoenix
Home Life Mutual Insurance Company (1972-1998).
Richard E. Segerson (54) Trustee Managing Director, Northway Management Company (1998-present).
102 Valley Road Director/Trustee, Phoenix Funds (1993-present). Trustee,
New Canaan, CT 07840 Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Managing Director,
Mullin Associates (1993-1998).
Lowell P. Weicker, Jr. (68) Trustee Trustee/Director, Phoenix Funds (1995-present). Trustee,
731 Lake Avenue Phoenix-Aberdeen Series Fund 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>
28
<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 (42) 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,
Phoenix Equity Planning Corporation (1995-present). Senior Vice
President, Securities Investments, Phoenix Home Life Mutual
Insurance Company (1993-1995). Various other positions with
Phoenix Home Life Mutual Insurance Company (1990-1993).
John F. Sharry (47) Executive President, Retail Division (1999-present), Executive Vice
Vice President, Retail Division (1997-present), Phoenix Investment
President Partners, Ltd. Managing Director, Retail Distribution, Phoenix
Equity Planning Corporation (1995-1997). Executive Vice President,
Phoenix Funds (1998-present), The Phoenix Edge Series Fund
(1998-present) and Phoenix-Aberdeen Series Fund (1998-present).
Managing Director, Director and National Sales Manager, Putnam
Mutual Funds
(1993-1995).
Gail P. Seneca (46) Senior Vice President and Chief Executive and Investment Officer, Seneca
President Capital Management LLC (1996-present). Managing Director,
Equities, Phoenix Investment Counsel, Inc. (1998-present). Senior
Vice President, Phoenix Duff & Phelps Institutional Mutual Funds
(1999-present), The Phoenix Edge Series Fund (1998-present),
Phoenix Multi-Portfolio Fund (1998-present) and Phoenix Strategic
Equity Series Fund (1998-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 (1990-1996). President, GenCap, Inc.
(1994-present).
James D. Wehr (42) Senior Vice Senior Vice President (1998-present), Managing Director (1996-1998),
President Fixed Income, Vice President (1991-1996), Phoenix Investment Counsel,
Inc. Senior Vice President and Chief Investment Officer, Duff &
Phelps Utilities Tax Free Income, Inc. (1997-present). 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-Goodwin 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-Goodwin Multi-Sector Fixed
Income Fund, Inc., Phoenix-Goodwin Multi-Sector Short Term Bond
Fund, Phoenix-Oakhurst Income & Growth Fund and Phoenix-Oakhurst
Strategic Allocation Fund, Inc. Managing Director, Public Fixed
Income, Phoenix Home Life Insurance Company (1991-1995).
</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>
David L. Albrycht (38) Vice Managing Director, Fixed Income (1996-present) and Vice President
President (1995-1996), Phoenix Investment Counsel, Inc. Vice President,
Phoenix Multi-Portfolio Fund (1993-present), Phoenix-Goodwin
Multi-Sector Short Term Bond Fund (1993-present), Phoenix-Goodwin
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).
Robert A. Driessen (52) Vice President Vice President, Compliance, Phoenix Investment Partners, Ltd.
(1999-present). Vice President, Phoenix Funds, Phoenix-Aberdeen
Series Fund, Phoenix-Duff & Phelps Institutional Mutual Funds and
Phoenix Seneca Funds (1999-present). Vice President, Risk
Management Liaison, Bank of America (1996-1999). Vice President,
Securities Compliance, The Prudential Insurance Company of America
(1993-1996). Branch Chief/Financial Analyst, Securities and
Exchange Commission, Division of Investment Management (1972-1993).
Timothy M. Heaney (35) 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), Phoenix-Goodwin California
Tax Exempt Bonds, Inc. (1996-present) and Duff & Phelps Utilities
Tax Free Income, Inc. (1997-present). Investment Analyst, Phoenix
Home Life Mutual Insurance Company (1992-1994).
Ron K. Jacks (34) Vice Equity Portfolio Manager, Seneca Capital Management LLC
President (1996-present). General Partner and Equity Portfolio Manager,
GMG/Seneca Capital Management LP (1995-present). Managing
Director, Equities, Phoenix Investment Counsel, Inc.
(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 (1996-1998) and Trustee (1996-1997), Phoenix-Seneca
Funds.
Peter S. Lannigan (39) Vice Managing Director, Fixed Income (1997-present), Director, Fixed
President Income Research (1996-1997), Vice President (1995-1996), Phoenix
Investment Counsel, 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 (55) Vice Executive Vice President and Chief Financial Officer
100 Bright Meadow Blvd. President (1999-present), Senior Vice President and Chief Financial Officer,
PO Box 2200 Phoenix Duff & Phelps Corporation (1995-1999). Senior Vice
Enfield, CT 06083-2200 President, Finance (1990-present), Director (1998-present),
Treasurer (1998-present 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 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, Investment Products Finance, Phoenix
Home Life Mutual Insurance Company (1990-1995).
</TABLE>
30
<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 (51) Vice General Partner, Seneca Capital Management LP (1989-present).
President Managing Director, Equities, Phoenix Investment Counsel, Inc.
(1998-present). Vice President, The Phoenix Edge Series Fund
(1998-present), Phoenix Strategic Equity Series Fund
(1998-present), Phoenix Multi-Portfolio Fund (1998-present) and
Phoenix Duff & Phelps Institutional Mutual Funds (1999-present).
Michael Schatt (52) Vice Managing Director, Phoenix Investment Partners, Ltd.
Phoenix Investment President (1994-present). Senior Vice President, Phoenix Realty Securities,
Partners, Ltd. Inc. (1997-present) and Duff & Phelps Investment Management Co.
55 East Monroe St. (1996-present). Vice President, Duff & Phelps Utilities Income,
Suite 3600 Inc. (1997-present), The Phoenix Edge Series Fund (1997-present),
Chicago, IL 60603 and Phoenix Multi-Portfolio Fund (1997-present). Director, Real
Estate Advisory Practice, Coopers & Lybrand (1990-1994).
Nancy G. Curtiss (47) Treasurer Vice President, Fund Accounting (1994-present) and Treasurer
(1996-present), Phoenix Equity Planning Corporation. Treasurer,
Phoenix Funds (1994-present), Phoenix Duff & Phelps Institutional
Mutual Funds (1995-present) and Phoenix-Aberdeen Series Fund
(1996-present). Second Vice President and Treasurer, Fund
Accounting, Phoenix Home Life Mutual Insurance Company
(1994-1995). Various positions with Phoenix Home Life Insurance
Company (1987-1994).
G. Jeffrey Bohne (52) Secretary Vice President and General Manager, Phoenix Home Life Mutual
101 Munson Street Insurance Co. (1993-present). Senior Vice President (1999-present)
Greenfield, MA 01301 and Vice President (1996-1999), Mutual Fund Customer Service; Vice
President, Transfer Agent Operations (1993-1996), 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,
1999, the Trustees received an aggregate of $91,462. 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.
31
<PAGE>
For the Trust's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
PENSION OR FROM FUND AND
AGGREGATE RETIREMENT BENEFITS ESTIMATED FUND COMPLEX
COMPENSATION ACCRUED AS PART ANNUAL BENEFITS (14 FUNDS)
NAME FROM FUND OF FUND EXPENSES UPON RETIREMENT PAID TO TRUSTEES
- ---------------------- --------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Robert Chesek $8,662 $63,750
E. Virgil Conway+ $11,250 $83,250
Harry Dalzell-Payne+ $10,162 $95,000
Francis E. Jeffries $8,250* $61,000
Leroy Keith, Jr. $8,662 None None $63,750
Philip R. McLoughlin+ $ 0 for any for any $ 0
Everett L. Morris+ $7,500 Trustee Trustee $57,750
James M. Oates+ $9,750 $72,250
Calvin J. Pedersen $ 0 $ 0
Herbert Roth, Jr.+ $8,100 $59,250
Richard E. Segerson $9,750* $72,000
Lowell P. Weicker $9,375 $68,750
</TABLE>
- ----------------------
*This compensation (and the earnings thereon) will be deferred pursuant to the
Deferred Compensation Plan. At December 31, 1999, the total amount of
deferred compensation (including interest and other accumulation earned on
the original amounts deferred) accrued for Messrs. Jeffries, Morris, Roth and
Segerson was $432,136.70, $179,151.26, $174,057.08 and $80,254.57,
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 February 4, 2000, 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 February 4, 2000 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 Real Estate Class A 556,076 36.64%
One American Row
Attn: Bonnie Malley
Hartford, CT 06115
Phoenix Home Life Ermerging Markets Class A 2,083,489 29.80%
Attn: Pam Levesque
One American Row
Hartford, CT 06115-2521
MLPF&S for the sole benefit Emerging Markets Class B 660,685 8.46%
of its customers Emerging Markets Class C 30,157 10.36%
ATTN: Fund Administration International Class B 220,662 11.43%
4800 Deer Lake Dr E 3rd FL International Class C 20,996 17.00%
Jacksonville, FL 32246-6484 Tax-Exempt Bond Class B 137,903 25.58%
Phoenix Equity Planning Corp International Class C 9,307 7.53%
c/o Gene Charon, Controller
100 Bright Meadow Blvd
Enfield, CT 06082-1957
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER NAME OF FUND NUMBER OF SHARES PERCENT OF CLASS
- ------------------- ------------ ---------------- ----------------
<S> <C> <C> <C>
State Street Bank & Trust Co International Class C 9,236 7.48%
Cust for Bruce Geller
5 Plymouth Rd
East Rockaway, NY 11518-1313
A G Edwards & Sons Inc Cust International Class C 8,544 6.92%
FBO Karl Sweitzer
6 Mendonshire Dr
Honeoye Falls, NY 14472-9762
PaineWebber Emerging Markets Class A 674,595 6.95%
FBO S.D. Rescue Mission & N. County
Interfaith Council Unitrust
George R. Wynhoff-TTEE
17474 Frondoso Dr
San Diego, CA 92128-1313
Wexford Clearing Services Corp F Emerging Markets Class C 18,868 6.48%
Frank Marshall Yost, Jr.
Margaret Bacigalupi Yost
Co-TTEES, The Yost Family Trust
UA DTD 05/12/92
Wawona, CA 95389
Elmer J Krauss Partner Emerging Markets Class C 41,407 14.22%
Krauss Portfolio Ltd
715 N Sherrill St
Tampa, FL 33609-1109
Wexford Clearing Services Corp Emerging Markets Class C 18,573 6.38%
Nubar Tokatian
Ann Tokatian
Co-TTEES, The Tokatian Family Trust
UA DTD 06/04/96
Fresno, CA 93720
Paul L. Blais Emerging Markets Bond 17,139 5.89%
Yvette C. Blais JT-TEN Class C
1 Thomas Ave.
Baltic, CT 06330-1032
Don M. Sears Emerging Markets Bond 15,408 5.29%
Glenda R. Sears, JT-WROS Class C
1526 S. 105th St.
Omaha, NE 68124-1012
</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
33
<PAGE>
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, 1999,
appearing in the Fund's 1999 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 Tax Sensitive Growth 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.
34
<PAGE>
Phoenix Investment Partners
Prospectus
February 28, 2000
----------- [logo] 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-Seneca Tax Sensitive Growth Fund. Please
read it carefully and retain it for future
reference.
[logo]Phoenix
Investment Partners
<PAGE>
[Version C]
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Investment Risk and Return Summary.................. 1
Fund Expenses....................................... 4
Investment Strategies............................... 5
Risks Related to Principal Investment Strategies.... 6
Management of the Fund.............................. 7
Pricing of Fund Shares.............................. 9
Sales Charges....................................... 10
Your Account........................................ 12
How to Buy Shares................................... 13
How to Sell Shares.................................. 14
Things You Should Know When Selling Shares.......... 15
Account Policies.................................... 16
Investor Services................................... 17
Tax Status of Distributions......................... 18
Financial Highlights................................ 18
Additional Information.............................. 20
[arrow] Phoenix-
Seneca
Mid Cap
Fund
<PAGE>
PHOENIX-SENECA MID CAP FUND
- --------------------------------------------------------------------------------
IMPORTANT NOTICE TO INVESTORS
On August 25, 1999, the Board of Trustees of Phoenix Multi-Portfolio Fund (the
"Trust") unanimously approved an Agreement and Plan of Reorganization (the
"Agreement") relating to the proposed combination of the Phoenix-Seneca Mid Cap
Fund of the Trust and the Phoenix-Seneca Strategic Theme Fund of Phoenix
Strategic Equity Series Fund.
Pursuant to the Agreement, the Mid Cap Fund will transfer all or substantially
all of its assets to the Strategic Theme Fund in exchange for shares of the
Strategic Theme Fund and the assumption by the Strategic Theme Fund of certain
identified liabilities of the Mid Cap Fund. Following the exchange, the Mid Cap
Fund will distribute the shares of the Strategic Theme Fund to its shareholders
pro rata, in liquidation of the Mid Cap Fund. The effectiveness of these
transactions is subject to the satisfaction of a number of conditions, including
approval by shareholders of the Mid Cap Fund. The required meeting of
shareholders is scheduled to be held on February 25, 2000.
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
Phoenix-Seneca Mid Cap Fund 1
<PAGE>
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 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.
2 Phoenix-Seneca Mid Cap Fund
<PAGE>
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 a 10-year period.(1) The table
shows how the fund's average annual returns compare to those of a broad-based
securities market index. The fund's past performance is not necessarily an
indication of how the fund will perform in the future.
MID CAP FUND
[graphic omitted]
CALENDAR YEAR ANNUAL REPORT (%)
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
1999 53.74
(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 52.04% (quarter ending
December 31, 1999) and the lowest return for a quarter was (16.14)% (quarter
ending September 30, 1998).
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
Average Annual Total Returns
(for the periods ending 12/31/99)(1) One Year Five Years Ten Years Life of the Fund(2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares 46.43% 23.04% 19.13% N/A
- -----------------------------------------------------------------------------------------------------------------
Class B Shares 48.65% 23.32% N/A 21.32%
- -----------------------------------------------------------------------------------------------------------------
S&P MidCap 400 Index(3) 14.72% 25.05% 17.32% 20.50%
- -----------------------------------------------------------------------------------------------------------------
</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 B Shares since July 18, 1994.
(3) The S&P MidCap 400 Index is an unmanaged commonly used measure of total
return performance of mid-capitalization companies. The Index is not available
for direct investment.
Phoenix-Seneca Mid Cap Fund 3
<PAGE>
FUND EXPENSES
- --------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<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 0.41% 0.41%
---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.41% 2.16%
==== ====
</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").
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-Seneca Mid Cap Fund
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $612 $900 $1,209 $2,086
- ------------------------------------------------------------------------------------------------------------------
Class B $619 $876 $1,159 $2,303
- ------------------------------------------------------------------------------------------------------------------
</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 B $219 $676 $1,159 $2,303
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The 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.
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.
Phoenix-Seneca Mid Cap Fund 5
<PAGE>
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 PRINCIPAL 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 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
6 Phoenix-Seneca Mid Cap Fund
<PAGE>
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.
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, 1999,
Phoenix had $25.7 billion in assets under management. Phoenix has acted as an
investment adviser for over sixty years.
Seneca Capital Management LLC ("Seneca") is the investment subadviser to the
fund and is located at 909 Montgomery Street, San Francisco, California 94133.
Seneca acts as a subadviser to nine other mutual funds and as investment adviser
to institutions and individuals. As of December 31, 1999, Seneca had $9.2
billion in assets under management. Seneca has been (with its predecessor,
GMG/Seneca Capital Management LP ("GMG/Seneca")) an investment adviser since
1989.
Subject to the direction of the fund's Board of Trustees, Phoenix is responsible
for managing the fund's investment program and the general operations of the
fund. Seneca, as subadviser, is responsible for day-to-day management of the
fund's portfolio. Seneca manages the fund's
Phoenix-Seneca Mid Cap Fund 7
<PAGE>
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
$2,261,328. The ratio of management fees to average net assets for the fiscal
year ended November 30, 1999 was 0.75%.
PORTFOLIO MANAGEMENT
Investment and trading decisions for the fund are made by a team of managers and
analysts headed by Gail P. Seneca. The team leaders are primarily responsible
for the day-to-day decisions related to the fund.
Gail P. Seneca. Ms. Seneca has served as Co-Manager of the fund since June 1998.
Ms. Seneca serves as Co-Manager of Phoenix-Seneca Equity Opportunities Fund and
Phoenix-Seneca Strategic Theme Fund of Phoenix Strategic Equity Series 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. Mr. Little has served as Co-Manager of the fund since June
1998. Mr. Little serves as Co-Manager of Phoenix-Seneca Equity Opportunities
Fund and Phoenix-Seneca Strategic Theme Fund of Phoenix Strategic Equity Series
Fund. Mr. Little also serves as a Portfolio Manager for Phoenix-Seneca Growth
Fund and Phoenix-Seneca Mid-Cap "EDGE" [service mark] Fund of Phoenix-Seneca
Funds. Mr. Little has been Director of Equities with Seneca or GMG/Seneca since
December 1989. Before he joined GMG/Seneca, Mr. Little held positions as an
analyst, board member, and regional manager with Smith Barney, NatWest
Securities, and Montgomery Securities.
8 Phoenix-Seneca Mid Cap Fund
<PAGE>
Ronald K. Jacks. Mr. Jacks has served as Co-Manager of the fund since June 1998.
He serves as Co-Manager of Phoenix-Seneca Equity Opportunities Fund and
Phoenix-Seneca Strategic Theme Fund of Phoenix Strategic Equity Series Fund. Mr.
Jacks also serves as a Portfolio Manager for Phoenix-Seneca Growth Fund and
Phoenix-Seneca Mid-Cap "EDGE"[service mark] Fund of Phoenix-Seneca Funds. Mr.
Jacks was Secretary of the Phoenix-Seneca Funds from February 1996 through
February 1998. Mr. Jacks was a Trustee of Seneca Funds from February 1996
through June 1997. Mr. Jacks has been a Portfolio Manager with Seneca or
GMG/Seneca since July 1990.
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.
Phoenix-Seneca Mid Cap Fund 9
<PAGE>
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. If
the fund holds securities that are traded on foreign exchanges that trade on
weekends or other holidays when the funds do not price their shares, the net
asset value of the fund's shares may change on days when shareholders will not
be able to purchase or redeem the fund's shares.
AT WHAT PRICE ARE SHARES PURCHASED?
All investments received by the 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 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 two 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.
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.
10 Phoenix-Seneca Mid Cap Fund
<PAGE>
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 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.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
The public offering price of Class A Shares is the net asset value plus a sales
charge that varies depending on the size of your purchase (see "Class A
Shares--Reduced Initial Sales Charges: Combination Purchase Privilege" in the
Statement of Additional Information). Shares purchased based on the automatic
reinvestment of income dividends or capital gains distributions are not subject
to any sales charges. The sales charge is divided between your investment dealer
and the 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 SHARES
Class B 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
Phoenix-Seneca Mid Cap Fund 11
<PAGE>
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.
DEFERRED SALES CHARGE YOU MAY PAY TO SELL CLASS B SHARES
<TABLE>
Year 1 2 3 4 5 6+
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CDSC 5% 4% 3% 2% 2% 0%
</TABLE>
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.
12 Phoenix-Seneca Mid Cap Fund
<PAGE>
STEP 2.
Your second choice will be what class of shares to buy. The fund offers two
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 additional shares and capital gain
distributions in cash;
[bullet] Receive dividends in cash and capital gain distributions in
additional shares; or
[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 and may set
different minimum investments or limitations on buying shares.
- ----------------------------------- ----------------------------------------------------------------------------
Through the mail Complete a New Account Application and send it with a check payable to the
fund. Mail them to: State Street Bank, P.O. Box 8301, Boston, MA
02266-8301.
- ----------------------------------- ----------------------------------------------------------------------------
By Federal Funds wire Call us at (800)243-1574 (press 1, then 0).
- ----------------------------------- ----------------------------------------------------------------------------
Through express delivery Complete a New Account Application and send it with a check payable to the
fund. Send them to: Boston Financial Data Services, Attn: Phoenix Funds,
66 Brooks Drive, Braintree, MA 02184.
- ----------------------------------- ----------------------------------------------------------------------------
By Investo-Matic Complete the appropriate section on the application and send it with your
initial investment payable to the fund. Mail them to: State Street Bank,
P.O. Box 8301, Boston, MA 02266-8301.
- ----------------------------------- ----------------------------------------------------------------------------
By telephone exchange Call us at (800)243-1574 (press 1, then 0).
- ----------------------------------- ----------------------------------------------------------------------------
</TABLE>
Phoenix-Seneca Mid Cap Fund 13
<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 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 and may set
different minimums on redemptions of accounts.
- ------------------------------------ -----------------------------------------------------------------------------
Through the mail Send a letter of instruction and any share certificates (if you hold
certificate shares) to: State Street Bank, P.O. Box 8301, Boston, MA
02266-8301. Be sure to include the registered owner's name, fund and
account number, number of shares or dollar value you wish to sell.
- ------------------------------------ -----------------------------------------------------------------------------
Through express delivery Send a letter of instruction and any share certificates (if you hold
certificate shares) to: Boston Financial Data Services, Attn: Phoenix
Funds, 66 Brooks Drive, Braintree, MA 02184. Be sure to include the
registered owner's name, fund and account number.
- ------------------------------------ -----------------------------------------------------------------------------
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 Fund and If you selected the checkwriting feature, you may write checks for amounts
Emerging Markets Bond Fund only) of $500 or more. Checks may not be used to close an account.
- ------------------------------------ -----------------------------------------------------------------------------
</TABLE>
14 Phoenix-Seneca Mid Cap Fund
<PAGE>
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 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.
If required, the signature guarantee on your request must be made 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.
Phoenix-Seneca Mid Cap Fund 15
<PAGE>
The individual investor bears the risk from instructions given by an
unauthorized third-party that the Transfer Agent reasonably believed to be
genuine.
The Transfer Agent may modify or terminate the telephone redemption privilege at
any time with 60 days notice to shareholders.
During times of drastic economic or market changes, telephone redemptions may be
difficult to make or temporarily suspended.
ACCOUNT POLICIES
- --------------------------------------------------------------------------------
ACCOUNT REINSTATEMENT PRIVILEGE
For 180 days after you sell your Class A or B 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.
16 Phoenix-Seneca Mid Cap Fund
<PAGE>
[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.
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.
Phoenix-Seneca Mid Cap Fund 17
<PAGE>
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 semiannually,
and to distribute net realized capital gains, if any, at least annually.
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.
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.
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 funds' financial statements, are included in the
funds' most recent Annual Report, which is available upon request.
18 Phoenix-Seneca Mid Cap Fund
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
PHOENIX-SENECA MID CAP FUND
<TABLE>
CLASS A
-------------------------------------------------------------------
<CAPTION>
YEAR ENDED NOVEMBER 30,
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.90 $20.64 $21.65 $22.03 $18.03
INCOME FROM INVESTMENT OPERATIONS(3)
Net investment income (loss) (0.16)(1) 0.01 (0.02)(1) (0.03)(1) 0.05(1)
Net realized and unrealized gain 7.10 1.18 1.52 2.53 4.74
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 6.94 1.19 1.50 2.50 4.79
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- (0.06)
Dividends from net realized gains (4.22) (1.93) (2.51) (2.88) (0.73)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (4.22) (1.93) (2.51) (2.88) (0.79)
------ ------ ------ ------ ------
Change in net asset value 2.72 (0.74) (1.01) (0.38) 4.00
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $22.62 $19.90 $20.64 $21.65 $22.03
====== ====== ====== ====== ======
Total return(2) 42.14% 6.64% 8.12% 13.52% 27.87%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $320,460 $279,326 $360,053 $451,474 $487,674
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.41%(3) 1.30% 1.33% 1.35% 1.42%
Net investment income (loss) (0.86)% (0.10)% (0.08)% (0.17)% 0.28%
Portfolio turnover 177% 379% 161% 242% 218%
</TABLE>
<TABLE>
CLASS B
-------------------------------------------------------------------
<CAPTION>
YEAR ENDED NOVEMBER 30,
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.18 $20.11 $21.30 $21.85 $17.97
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss) (0.28)(1) (0.18) (0.16)(1) (0.18)(1) (0.12)(1)
Net realized and unrealized gain 6.76 1.18 1.47 2.51 4.75
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 6.48 1.00 1.31 2.33 4.63
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- (0.02)
Dividends from net realized gains (4.22) (1.93) (2.50) (2.88) (0.73)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (4.22) (1.93) (2.50) (2.88) (0.75)
------ ------ ------ ------ ------
Change in net asset value 2.26 (0.93) (1.19) (0.55) 3.88
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $21.44 $19.18 $20.11 $21.30 $21.85
====== ====== ====== ====== ======
Total return(2) 41.06% 5.80% 7.27% 12.75% 26.92%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $18,977 $15,688 $18,583 $17,599 $10,908
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.16%(3) 2.04% 2.08% 2.11% 2.18%
Net investment income (loss) (1.61)% (0.85)% (0.85)% (0.92)% (0.58)%
Portfolio turnover 177% 379% 161% 242% 218%
</TABLE>
- ---------------
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) The ratio of expenses to average net assets excludes the effect of expense
offsets for custodian fees; if expense offsets were included, the ratio would
not significantly differ.
(4) 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-Seneca Mid Cap Fund 19
<PAGE>
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
The fund has filed a Statement of Additional Information about the fund, dated
February 28, 2000 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,
[arrow] by writing to its Public Reference Section, Washington, DC 20549-0102
(a fee may be charged), or
[arrow] by electronic request at [email protected] (a fee may be charged).
Information about the operation of the Public Reference Room may be obtained by
calling 1-202-942-8090.
SHAREHOLDER REPORTS
The 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
20 Phoenix-Seneca Mid Cap fund
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
PO Box 2200
Enfield CT 06083-2200
[logo] PHOENIX
INVESTMENT PARTNERS
PXP 1347 (2/00)
<PAGE>
[Version C]
PHOENIX-SENECA MID CAP FUND
101 Munson Street
Greenfield, Massachusetts 01301
STATEMENT OF ADDITIONAL INFORMATION
February 28, 2000
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current Prospectus of
Phoenix-Seneca Mid Cap Fund of Phoenix Multi-Portfolio Fund (the "Trust"), dated
February 28, 2000, and should be read in conjunction with it. The Trust's
Prospectus may be obtained by calling Phoenix Equity Planning Corporation
("Equity Planning") at (800) 243-4361 or by writing to Equity Planning at 100
Bright Meadow Boulevard, P.O. Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
PAGE
The Trust ................................................................. 1
Investment Objectives and Policies ........................................ 1
Investment Restrictions ................................................... 8
Performance ............................................................... 10
Performance Comparisons ................................................... 10
Portfolio Turnover ........................................................ 11
Portfolio Transactions .................................................... 11
The Investment Advisers ................................................... 12
Determination of Net Asset Value .......................................... 13
How to Buy Shares ......................................................... 14
Alternative Purchase Arrangements ......................................... 14
Investor Account Services ................................................. 17
How to Redeem Shares ...................................................... 18
Tax Sheltered Retirement Plans ............................................ 19
Dividends, Distributions and Taxes ........................................ 20
The Distributor ........................................................... 21
Distribution Plans......................................................... 23
Management of the Trust.................................................... 24
Additional Information .................................................... 32
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunication Device (TTY): (800) 243-1926
PXP 1348 (2/00)
<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-Seneca Mid Cap Fund (the "Mid Cap Fund" or the
"Fund"), describes the investment objectives of the Fund and summarizes the
investment policies and investment techniques the Fund will employ in seeking to
achieve its investment objective. (A separate prospectus and Statement of
Additional Information apply to five other funds of the Trust.) The following
discussion supplements the description of the 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 of the Fund.
Investment restrictions described in this Statement of Additional Information
are fundamental policies of the Trust and may not be changed as to the Fund
without the approval of the Fund's shareholders.
TAXABLE SECURITIES
The income from investments (either in the form of dividends or interest)
made by the Mid Cap Fund are expected to be taxable as ordinary income.
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.
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 Fund 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 Fund may invest up to 10% of its total assets in bonds considered
to be less than investment-grade, commonly known as "junk" bonds. The Mid Cap
Fund did not invest in any bonds considered less than investment-grade for the
fiscal year ended November 30, 1999.
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.
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WRITING AND PURCHASING OPTIONS ON SECURITIES AND SECURITIES INDICES
The 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 the Fund may be below,
equal to or above the current market value of the underlying security or
securities index at the time the option is written.
During the option period, the Fund may be assigned an exercise notice by the
broker-dealer through which the call option was sold, requiring the Fund to
deliver the underlying security (or cash in the case of securities index calls)
against payment of the exercise price. This obligation is terminated upon the
expiration of the option period or at such earlier time as the Fund effects a
closing purchase transaction. A closing purchase transaction cannot be effected
with respect to an option once the Fund has received an exercise notice.
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 Fund 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 the 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 the Fund may increase its portfolio turnover rate
and the amount of brokerage commissions paid. The 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 Fund 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 Fund has adopted procedures for engaging in OTC options for the
purpose of reducing any potential adverse effect of such transactions upon the
liquidity of the Fund. A brief description of such procedures is set forth
below.
The Fund will engage in OTC options transactions only with dealers that meet
certain credit and other criteria. The Fund and PIC believe that the approved
dealers present minimal credit risks to the Fund and, therefore, should be able
to enter into closing transactions if necessary. The 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 Fund anticipates entering into agreements with dealers to which the Funds
sell OTC options. Under these agreements the Fund 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 Fund, 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 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.
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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.
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 the 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
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 a 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
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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 Fund 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 Fund may also 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 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
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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.
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 the Fund to incur additional brokerage
commissions and may cause an increase in the 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 the 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 the 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
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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 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 the 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 the Fund. No more than an aggregate of 10% of the
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,
the 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 Fund 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 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.
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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
The Fund may purchase securities on a when-issued or forward-commitment
basis. 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 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 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
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 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 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 SECURITIES
The Fund may invest in U.S. dollar- or foreign currency-denominated corporate
debt securities of foreign issuers (including preferred or preference stock),
certain foreign bank obligations and U.S. dollar- or foreign
currency-denominated obligations of foreign governments or their subdivisions,
agencies and instrumentalities, international agencies and supranational
entities and may invest up to 20% of its total assets directly in common stocks
issued by foreign companies or in securities represented by ADRs. The Fund will
limit its investment in securities denominated in foreign currencies to no more
than 20% of the Fund's total assets.
Investing in the securities of foreign issuers involves special risks and
considerations not typically associated with investing in U.S. companies. These
include differences in accounting, auditing and financial reporting standards,
generally higher commission rates on foreign portfolio transactions, the
possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations (which may include suspension of the
ability to transfer currency from a country), political instability which may
affect U.S. investments in foreign countries and potential restrictions on the
flow of international capital. In addition, foreign securities and dividends
interest payable on those securities may be subject to foreign taxes, including
taxes withheld from payments on those securities. Foreign securities often trade
with less frequency and volume than domestic securities and therefore may
exhibit greater price volatility. Changes in foreign exchange rates will affect
the value of those securities which are denominated or quoted in currencies
other than the U.S. dollar.
ADRs are dollar-denominated receipts issued generally by domestic banks and
representing the deposit with the bank of a security of a foreign issuer, and
are publicly traded on exchanges or over-the-counter in the United States. ADRs
may be issued as sponsored or unsponsored programs. In sponsored programs, an
issuer has made arrangements to have its securities trade in the form of ADRs.
In unsponsored programs, the issuer may not be directly involved in the creation
of the program. Although regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, in some cases it may be easier to
obtain financial information from an issuer that has participated in the
creation of a sponsored program.
FOREIGN CURRENCY TRANSACTIONS
The Fund may engage in foreign currency transactions, although it 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.
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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
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.
INVESTMENT RESTRICTIONS
The investment restrictions described below are fundamental policies and may
not be changed as to the Mid Cap 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. 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.
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(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, 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, 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 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, a Fund may
be deemed to be an underwriter. The Fund (with respect to up to one-third
of its assets) 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 the 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) 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.
(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 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. 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 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 except that the Fund 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 the 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.
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(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.
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) may appear in
advertisements, sales literature, or reports to shareholders or prospective
shareholders. Performance information in advertisements and sales literature may
be expressed as "average annual total return" and "total return."
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 1, 5 and 10-year periods ended November 30, 1999.
AVERAGE ANNUAL TOTAL RETURN AS OF NOVEMBER 30, 1999
PERIODS ENDED
-------------------------------------------
FUND 1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION(1)
---- ------ ------ ------- ------------------
Mid Cap
Class A 35.39% 17.77% 16.97% 17.15%
Class B 37.06% 18.03% N/A 17.04%
- ---------------
(1) Class A Shares commenced operations on November 1, 1989. Class B commenced
operations on July 18, 1994.
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
Fund, both as a percentage and as a dollar amount based on a hypothetical
$10,000 investment for various periods other than those noted below. Such data
will be computed as described above, except that (1) the rates of return
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
charge will not be included with respect to annual, annualized or aggregate rate
of return calculations.
PERFORMANCE COMPARISONS
The Fund or a 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,
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Inc., and rating services such as Morningstar, Inc. Additionally, the
Fund may compare its performance results to other investment or savings vehicles
(such as certificates of deposit) and may refer to results published in various
publications such as Changing Times, Forbes, Fortune, Money, Barrons, Business
Week, 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 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.
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.
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
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<PAGE>
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.
The Adviser may use its broker/dealer affiliates, or other firms that sell
shares of the Funds, to buy and sell securities for the Funds, provided they
have the execution capability and that their commission rates are comparable to
those of other unaffiliated broker/dealers. Directors of PXP Securities Corp. or
its affiliates receive indirect benefits from the Funds as a result of its usual
and customary brokerage commissions that PXP Securities Corp. may receive for
acting as broker to the Funds in the purchase and sale of portfolio securities.
The investment advisory agreement does not provide for a reduction of the
advisory fee by any portion of the brokerage fees generated by portfolio
transactions of the Funds that PXP Securities Corp. may receive.
For the fiscal years ended November 30, 1997, 1998 and 1999, brokerage
commissions paid by the Trust on portfolio transactions totaled $2,269,745,
$2,904,276 and $1,649,397, respectively. In fiscal year ended November 30, 1999,
no brokerage commissions were paid to affiliates for portfolio transactions.
Brokerage commissions of $592,803 paid during the fiscal year ended November 30,
1999, were paid on fund transactions aggregating $235,932,659 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 the 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
the adviser (or 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 Mid Cap 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, 1999, PIC had
approximately $25.7 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"). 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 a publicly traded independent
registered advisory firm, and has served investors for over 70 years. It manages
approximately $64.4 billion (as of December 31, 1999) 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.
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 four other mutual funds and as investment adviser
to institutions
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and individuals. As of December 31, 1999, Seneca had $9.2 billion in assets
under management. Seneca has been (with its predecessor, GMG/Seneca Capital
Management LP ("GMG/Seneca")) an investment adviser since 1989.
The 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 Mid Cap
Fund, PIC 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. For its services to the Mid Cap Fund for the fiscal years ended
November 30, 1997, 1998 and 1999, PIC received fees of $3,027,757, $2,476,987
and $2,261,328.
The investment advisory agreement also provides that the 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 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 the Fund and
(2) the terms and any renewal of the agreement with respect to the 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 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 the
Fund by the Trustees or by the adviser and may be terminated as to the Fund by a
vote of the majority of the outstanding shares of the 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,
Presidents' 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 the Fund which invests in
foreign securities contemporaneously with the determination of the prices of the
majority of the portfolio securities of the Fund. All assets and liabilities
initially expressed in foreign currency values will be converted into United
States dollar values at the mean
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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.
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.
CLASS B SHARES
Class B Shares do not incur a sales charge when they are purchased, but they
are subject to a sales charge if they are redeemed within five years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions.
Class B Shares are subject to ongoing distribution and 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.
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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 A SHARES--REDUCED INITIAL SALES CHARGES
Investors choosing Class A Shares may be entitled to reduced sales charges.
The ways in which sales charges may be avoided or reduced are described below.
QUALIFIED PURCHASERS. If you fall within any one of the following categories,
you will not have to pay a sales charge on your purchase of Class A Shares: (1)
trustee, director or officer of the Phoenix Funds, the Phoenix-Engemann Funds,
Phoenix-Seneca Funds or any other mutual fund advised, subadvised or distributed
by the Adviser, Distributor or any of their corporate affiliates (an "Affiliated
Phoenix Fund"); (2) any director or officer, or any full-time employee or sales
representative (for at least 90 days) of the Adviser or Distributor; (3)
registered representatives and employees of securities dealers with whom
Distributor has sales agreements; (4) any qualified retirement plan exclusively
for persons described above; (5) any officer, director or employee of a
corporate affiliate of the Adviser or Distributor; (6) any spouse, child,
parent, grandparent, brother or sister of any person named in (1), (2), (3) or
(5) above; (7) employee benefit plans for employees of the Adviser, Distributor
and/or their corporate affiliates; (8) any employee or agent who retires from
Phoenix Home Life, Distributor and/or their corporate affiliates; (9) any
account held in the name of a qualified employee benefit plan, endowment fund or
foundation if, on the date of the initial investment, the plan, fund or
foundation has assets of $10,000,000 or more or at least 100 eligible employees;
(10) any person with a direct rollover transfer of shares from an established
Phoenix Fund, 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; (19) 401(k) participants in the Merrill Lynch
Daily K Plan (the "Plan") if the Plan has at least $3 million in assets or 500
or more eligible employees; or (20) clients of investment advisors or financial
planners who buy shares for their own accounts but only if their accounts are
linked to a master account of their investment advisor or financial planner on
the books and records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements (each of the investors
described in (17) through (20) may be charged a fee by the broker, agent or
financial intermediary for purchasing shares).
COMBINATION PURCHASE PRIVILEGE. Your purchase of any class of shares of this
or any other Affiliated Phoenix Fund (other than Phoenix Money Market Fund
Series Class A Shares), if made at the same time by the same "person," will be
added together to determine whether the combined sum entitles you to an
immediate reduction in sales charges. A "person" is defined in this and the
following sections as (a) any individual, their spouse and minor children
purchasing shares for his or their own account (including an IRA account)
including his or their own trust; (b) a trustee or other fiduciary purchasing
for a single trust, estate or single fiduciary account (even though more than
one beneficiary may exist); (c) multiple employer trusts or Section 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.
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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 B
Shares. 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 SHARES--WAIVER OF SALES CHARGES
The CDSC is waived on the redemption (sale) of Class B Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to
Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section 72(m)(7);
(c) as a mandatory distribution upon reaching age 70 1/2 under any retirement
plan qualified under Code Sections 401, 408 or 403(b) or resulting from the
tax-free return of an excess contribution to an IRA; (d) by 401(k) plans using
an approved participant tracking system for participant hardships, death,
disability or normal retirement, and loans which are subsequently repaid; (e)
from the Merrill Lynch Daily K Plan ("Plan") invested in Class B Shares, in
which such shares the Distributor has not paid the dealer the Class B sales
commission; (f) based on the exercise of exchange privileges among Class B
Shares of this or any other Affiliated Phoenix Fund; (g) based on any direct
rollover transfer of shares from an established Affiliated Phoenix Fund
qualified plan into an Affiliated Phoenix Fund IRA by participants terminating
from the qualified plan; and (h) based on the systematic withdrawal program. If,
as described in condition (a) above, an account is transferred to an account
registered in the name of a deceased's estate, the CDSC will be waived on any
redemption from the estate account occurring within one year of the death. If
the Class B Shares are not redeemed within one year of the death, they will
remain subject to the applicable CDSC.
CONVERSION FEATURE--CLASS B SHARES
Class B Shares will automatically convert to Class A Shares of the same Fund
eight years after they are bought. Conversion will be on the basis of the then
prevailing net asset value of Class A and B Shares. There is no sales load, fee
or other charge for this feature. Class B Shares acquired through dividend or
distribution reinvestments will be 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:
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(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.
Broker/dealers may impose their own restrictions and limits on accounts held
through the broker/dealer. Please consult your broker/dealer for account
restriction and limit information.
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.
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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.
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 shareholders will be subject to the applicable
deferred sales charge, if any.
REDEMPTION OF SMALL ACCOUNTS
Each shareholder account in the Fund which has been in existence for at least
one year and has a value of less than $200 may be redeemed upon the giving of
not less than 30 days written notice to the shareholder mailed to the address of
record. During the 60-day period the shareholder has the right to add to the
account to bring its value to $200 or more. See the Fund's current Prospectus
for more information.
BY MAIL
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds, c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the
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possession of the shareholder, they must be mailed or presented, duly endorsed
in the full name of the account, with a written request to Equity Planning that
the Trust redeem the shares. See the Funds' current Prospectus for more
information.
TELEPHONE REDEMPTIONS
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Funds' current Prospectus for
additional information.
REDEMPTION IN KIND
To the extent consistent with state and federal law, the 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.
MERRILL LYNCH DAILY K PLAN
Class A Shares of a Fund are made available to Merrill Lynch Daily K Plan
(the "Plan") participants at NAV without an initial sales charge if:
(i) the Plan is recordkept on a daily valuation basis by Merrill Lynch and,
on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service
Agreement, the Plan has $3 million or more in assets invested in broker/dealer
funds not advised or managed by Merrill Lynch Asset Management L.P. ("MLAM")
that are made available pursuant to a Service Agreement between Merrill Lynch
and the fund's principal underwriter or distributor and in funds advised or
managed by MLAM (collectively, the "Applicable Investments");
(ii) the Plan is recordkept on a daily valuation basis by an independent
recordkeeper whose services are provided through a contract or alliance
arrangement with Merrill Lynch, and, on the date the Plan Sponsor signs the
Merrill Lynch Recordkeeping Service Agreement, the Plan has $3 million or more
in assets, excluding money market funds, invested in Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by a Merrill
Lynch plan conversion manager, on the date the Plan Sponsor signs the Merrill
Lynch Recordkeeping Service Agreement.
Alternatively, Class B Shares of a Fund are made available to Plan
participants at NAV without a CDSC if the Plan conforms with the requirements
for eligibility set forth in (i) through (iii) above but either does not meet
the $3 million asset threshold or does not have 500 or more eligible employees.
Plans recordkept on a daily basis by Merrill Lynch or an independent
recordkeeper under a contract with Merrill Lynch that are currently investing in
Class B Shares of a Fund convert to Class A Shares once the Plan has reached $5
million invested in Applicable Investments, or after the normal holding period
of seven years from the initial date of purchase.
19
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
QUALIFICATION AS A REGULATED INVESTMENT COMPANY ("RIC")
The Fund is treated as a separate entity for federal income tax purposes. The
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 the 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 the 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. The 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 the
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 the 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.
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% test, in order to qualify as a RIC the 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. The Fund intends to make distributions to shareholders
that will be sufficient to meet the 90% distribution requirement.
The 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.
The 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 the 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 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 Fund designates 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 the Fund will be qualifying dividend
distributions. Distributions by the 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 Fund 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 the Fund by
written notice mailed to shareholders within 60 days after the close of the
year, even if such amounts are not actually distributed
20
<PAGE>
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.
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 Fund or who, to the Fund's knowledge, have furnished an incorrect
number.
FOREIGN SHAREHOLDERS
Dividends paid by the 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 the 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 the
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
21
<PAGE>
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 and William
R. Moyer, 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. 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, 1997, 1998 and
1999, purchasers of shares of the Funds paid aggregate sales charges of
$2,114,382, $4,260,271 and $1,269,311, respectively, of which the Distributor
received net commission of $494,335, $545,050 and $500,085, respectively, for
its services, the balance being paid to dealers. For the fiscal year ended
November 30, 1999, the distributor received net commission of $97,677 for Class
A Shares and deferred sales charges of $402,408 for Class B and C Shares.
DEALER CONCESSIONS
Dealers with whom the Distributor has entered into sales agreements receive a
discount or commission as described below.
<TABLE>
<CAPTION>
AMOUNT OF
TRANSACTION SALES CHARGE AS A PERCENTAGE SALES CHARGE AS A PERCENTAGE DEALER DISCOUNT
AT OFFERING PRICE OF OFFERING PRICE OF AMOUNT INVESTED PERCENTAGE OF OFFERING PRICE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Under $50,000 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. This sales commission will not be paid to
dealers for sales of Class B or Class C Shares purchased by 401(k) participants
of the Merrill Lynch Daily K Plan (the "Plan") due to waiver of the CDSC for
these Plan participants' purchases. Your broker, dealer or investment adviser
may also charge you additional commissions or fees for their services in selling
shares to you provided they notify the Distributor of their intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of the
Trust and/or for providing other shareholder services. Such fees are in addition
to the sales commissions referenced above and may be based upon the amount of
sales of fund shares by a dealer; the provision of assistance in marketing of
fund shares; access to sales personnel and information dissemination services;
provision of recordkeeping and administrative services to qualified employee
benefit plans; and other criteria as established by the Distributor. Depending
on the nature of the services, these fees may be paid either from the 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. From its own
resources, the Distributor intends to pay the following additional compensation
to Merrill Lynch, Pierce, Fenner & Smith, Incorporated: 0.25%
22
<PAGE>
on sales of Class A and B Shares, 0.10% on sales of Class C Shares, 0.10% on
sales of Class A shares sold at net asset value, and 0.10% annually on the
average daily net asset value of fund shares on which Merrill Lynch is broker of
record and which such shares exceed the amount of assets on which Merrill Lynch
is broker of record as of July 1, 1999. Any dealer who receives more than 90% of
a sales charge may be deemed to be an "underwriter" under the Securities Act of
1933. Equity Planning reserves the right to discontinue or alter such fee
payment plans at any time.
ADMINISTRATIVE SERVICES
Equity Planning also acts as administrative agent of the Trust and as such
performs administrative, bookkeeping and pricing functions for the Funds. For
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, 1997, 1998 and 1999, the
Financial Agent received fees of $541,814, $654,165 and $726,919, 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.
23
<PAGE>
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, 1999 the Trust paid Rule 12b-1 Fees in
the amount of $2,607,375, of which the Distributor received $1,060,487,
unaffiliated broker-dealers received $1,310,508 and W.S. Griffith & Co., Inc.,
an affiliate, received $236,380. The Rule 12b-1 payments were used for (1)
compensating dealers, $2,815,291, (2) compensating sales personnel, $2,221,997,
(3) advertising, $1,317,627, (4) printing and mailing of prospectuses to other
than current shareholders, $32,904, (5) service costs, $216,769 and (6) other,
$446,543. The Distributor's expenses from selling and servicing Class B Shares
may be more than the payments received from contingent deferred sales charges
collected on redeemed shares and from the Trust under the Class B Plan. Those
expenses may be carried over and paid in future years. At November 30, 1999, the
end of the last Plan year, the Distributor had incurred unreimbursed expenses
under the Class B Plan of $6,065,679 (equal to 0.40% of the Trust's net assets)
which have been carried over into the present Class B Plan year. 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 (65) 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).
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
E. Virgil Conway (70) Trustee Chairman, Metropolitan Transportation Authority (1992-present).
9 Rittenhouse Road Trustee/Director, Consolidated Edison Company of New York, Inc.
Bronxville, NY 10708 (1970-present), Pace University (1978-present), Atlantic Mutual
Insurance Company (1974-present), HRE Properties (1989-present),
Greater New York Councils, Boy Scouts of America (1985-present),
Union Pacific Corp. (1978-present), Blackrock Freddie Mac Mortgage
Securities Fund (Advisory Director) (1990-present), Centennial
Insurance Company (1974-present), Josiah Macy, Jr., Foundation
(1975-present), The Harlem Youth Development Foundation
(1987-present; Chairman, 1998-present), Accuhealth (1994-present),
Trism, Inc. (1994-present), Realty Foundation of New York
(1972-present), Vice Chairman, The Academy of Political Science
(1985-present) and New York Housing Partnership Development Corp.
(Chairman) (1981-present). Director/Trustee, Phoenix Funds
(1993-present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Duff & Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present).
Chairman/Member, Audit Committee of the City of New York
(1981-1996). Advisory Director, Blackrock Fannie Mae Mortgage
Securities Fund (1989-1996) and Fund Directions (1993-1998).
Chairman, Financial Accounting Standards Advisory Council
(1992-1995).
Harry Dalzell-Payne (70) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
The Flat Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Elmore Court Institutional Mutual Funds (1996-present). Director, Duff & Phelps
Elmore, GLO5, 9623NT Utilities Tax-Free Income Inc. and Duff & Phelps Utility and
U.K. Corporate Bond Trust Inc. (1995-present). Trustee, Phoenix-Seneca
Funds (1999-present). Formerly a Major General of the British Army.
*Francis E. Jeffries (69) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
8477 Bay Colony Dr. Phoenix-Aberdeen Series Inc. and Phoenix Duff & Phelps
#902 Institutional Mutual Funds (1996-present). Director, Duff & Phelps
Naples, FL 34108 Utilities Income Inc. (1987-present), Duff & Phelps Utilities
Tax-Free Income Inc. (1991-present) and Duff & Phelps Utility and
Corporate Bond Trust Inc. (1993-present). Director, The Empire
District Electric Company (1984-present). Director (1989-1997),
Chairman of the Board (1993-1997), President (1989-1993), and
Chief Executive Officer (1989-1995), Phoenix Investment Partners,
Ltd.
Leroy Keith, Jr. (61) Trustee Chairman (1995-present) and Chief Executive Officer (1995-1999),
Chairman Carson Products Company. Director/Trustee, Phoenix Funds
Carson Product Company (1980-present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
64 Ross Road Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Savannah, GA 30750 Equifax Corp. (1991-present) and Evergreen International Fund,
Inc. (1989-present). Trustee, Evergreen Liquid Trust, Evergreen
Tax Exempt Trust, Evergreen Tax Free Fund, Master Reserves Tax
Free Trust, and Master Reserves Trust.
</TABLE>
25
<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 (53) Trustee and Chairman (1997-present), Vice Chairman (1995-1997) and Chief
President Executive Officer (1995-present), Phoenix Investment Partners,
Ltd. Director (1994-present) and Executive Vice President,
Investments (1988-present), Phoenix Home Life Mutual Insurance
Company. Director/Trustee and President, Phoenix Funds
(1989-present). Trustee and President, Phoenix-Aberdeen Series
Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Duff & Phelps Utilities Tax-Free Income
Inc. (1995-present) and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1995-present). Trustee, Phoenix-Seneca Funds
(1999-present). Director (1983-present) and Chairman
(1995-present), Phoenix Investment Counsel, Inc. Director
(1984-present) and President (1990-present), Phoenix Equity
Planning Corporation. Chairman and Chief Executive Officer, Zweig
Glaser Advisors LLC (1999-present). 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
(1992-present) and President (1992-1994), W.S. Griffith & Co.,
Inc. Director, PHL Associates, Inc. (1995-present).
Everett L. Morris (71) Trustee Vice President, W.H. Reaves and Company (1993-present). Director/
164 Laird Road Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
Colts Neck, 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 (53) 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). Director, Investors Financial Service
Corporation (1995-present), Investors Bank & Trust Corporation
(1995-present), Plymouth Rubber Co. (1995-present), Stifel
Financial (1996-present), Command Systems, Inc. (1998-present),
Connecticut River Bancorp (1998-present) and Endowment for
Health, Inc. (1999-present). Member, Chief Executives
Organization (1996-present). Vice Chairman, Massachusetts
Housing-Partnership (1998-2000). Director, Blue Cross and Blue
Shield of New Hampshire (1994-1999).
*Calvin J. Pedersen (57) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
Phoenix Investment Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Partners, Ltd. Institutional Mutual Funds (1996-present). President and Chief
55 East Monroe Street Executive Officer, Duff & Phelps Utilities Tax-Free Income Inc.
Suite 3600 (1995-present), Duff & Phelps Utilities Income Inc.
Chicago, IL 60603 (1994-present) and Duff & Phelps Utility and Corporate Bond Trust
Inc. (1995-present). Director (1986-present), President
(1993-2000) and Executive Vice President (1992-1993), Phoenix
Investment Partners, Ltd.
</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>
Herbert Roth, Jr. (71) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
P.O. Box 909 Institutional Mutual Funds (1996-present). Director, Boston
Sherborn, MA 01770 Edison Company (1978-present), Landauer, Inc. (medical services)
(1970-present), Tech Ops./ Sevcon, Inc. (electronic controllers)
(1987-present), and Mark IV Industries (diversified manufacturer)
(1985-present). Member, Directors Advisory Council, Phoenix Home
Life Mutual Insurance Company (1998-present). Director, Phoenix
Home Life Mutual Insurance Company (1972-1998).
Richard E. Segerson (54) Trustee Managing Director, Northway Management Company (1998-present).
102 Valley Road Director/Trustee, Phoenix Funds (1993-present). Trustee,
New Canaan, CT 07840 Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Managing Director,
Mullin Associates (1993-1998).
Lowell P. Weicker, Jr. (68) Trustee Trustee/Director, Phoenix Funds (1995-present). Trustee,
731 Lake Avenue Phoenix-Aberdeen Series Fund 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 (42) 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,
Phoenix Equity Planning Corporation (1995-present). Senior Vice
President, Securities Investments, Phoenix Home Life Mutual
Insurance Company (1993-1995). Various other positions with
Phoenix Home Life Mutual Insurance Company (1990-1993).
John F. Sharry (47) Executive President, Retail Division (1999-present), Executive Vice
Vice President, Retail Division (1997-present), Phoenix Investment
President Partners, Ltd. Managing Director, Retail Distribution, Phoenix
Equity Planning Corporation (1995-1997). Executive Vice President,
Phoenix Funds (1998-present), The Phoenix Edge Series Fund
(1998-present) and Phoenix-Aberdeen Series Fund (1998-present).
Managing Director, Director and National Sales Manager, Putnam
Mutual Funds
(1993-1995).
Gail P. Seneca (46) Senior Vice President and Chief Executive and Investment Officer, Seneca
President Capital Management LLC (1996-present). Managing Director,
Equities, Phoenix Investment Counsel, Inc. (1998-present). Senior
Vice President, Phoenix Duff & Phelps Institutional Mutual Funds
(1999-present), The Phoenix Edge Series Fund (1998-present),
Phoenix Multi-Portfolio Fund (1998-present) and Phoenix Strategic
Equity Series Fund (1998-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 (1990-1996). President, GenCap, Inc.
(1994-present).
</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>
James D. Wehr (42) Senior Vice Senior Vice President (1998-present), Managing Director
President (1996-1998), Fixed Income, Vice President (1991-1996), Phoenix
Investment Counsel, Inc. Senior Vice President and Chief
Investment Officer, Duff & Phelps Utilities Tax Free
Income, Inc. (1997-present). 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-Goodwin 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-Goodwin
Multi-Sector Fixed Income Fund, Inc., Phoenix-Goodwin
Multi-Sector Short Term Bond Fund, Phoenix-Oakhurst
Income & Growth Fund and Phoenix-Oakhurst Strategic
Allocation Fund, Inc. Managing Director, Public Fixed Income,
Phoenix Home Life Insurance Company (1991-1995).
David L. Albrycht (38) Vice Managing Director, Fixed Income (1996-present) and Vice President
President (1995-1996), Phoenix Investment Counsel, Inc. Vice President,
Phoenix Multi-Portfolio Fund (1993-present), Phoenix-Goodwin
Multi-Sector Short Term Bond Fund (1993-present), Phoenix-Goodwin
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).
Robert A. Driessen (52) Vice President Vice President, Compliance, Phoenix Investment Partners, Ltd.
(1999-present). Vice President, Phoenix Funds, Phoenix-Aberdeen
Series Fund, Phoenix-Duff & Phelps Institutional Mutual Funds and
Phoenix Seneca Funds (1999-present). Vice President, Risk
Management Liaison, Bank of America (1996-1999). Vice President,
Securities Compliance, The Prudential Insurance Company of America
(1993-1996). Branch Chief/Financial Analyst, Securities and
Exchange Commission, Division of Investment Management (1972-1993).
Timothy M. Heaney (35) 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), Phoenix-Goodwin California
Tax Exempt Bonds, Inc. (1996-present) and Duff & Phelps Utilities
Tax Free Income, Inc. (1997-present). Investment Analyst, Phoenix
Home Life Mutual Insurance Company (1992-1994).
Ron K. Jacks (34) Vice Equity Portfolio Manager, Seneca Capital Management LLC
President (1996-present). General Partner and Equity Portfolio Manager,
GMG/Seneca Capital Management LP (1995-present). Managing
Director, Equities, Phoenix Investment Counsel, Inc.
(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 (1996-1998) and Trustee (1996-1997), Phoenix-Seneca
Funds.
Peter S. Lannigan (39) Vice Managing Director, Fixed Income (1997-present), Director, Fixed
President Income Research (1996-1997), Vice President (1995-1996), Phoenix
Investment Counsel, 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).
</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>
William R. Moyer (55) Vice Executive Vice President and Chief Financial Officer
100 Bright Meadow Blvd. President (1999-present), Senior Vice President and Chief Financial Officer,
PO Box 2200 Phoenix Duff & Phelps Corporation (1995-1999). Senior Vice
Enfield, CT 06083-2200 President, Finance (1990-present), Director (1998-present),
Treasurer (1998-present 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 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, Investment Products Finance, Phoenix
Home Life Mutual Insurance Company (1990-1995).
Richard D. Little (51) Vice General Partner, Seneca Capital Management LP (1989-present).
President Managing Director, Equities, Phoenix Investment Counsel, Inc.
(1998-present). Vice President, The Phoenix Edge Series Fund
(1998-present), Phoenix Strategic Equity Series Fund
(1998-present), Phoenix Multi-Portfolio Fund (1998-present)
and Phoenix Duff & Phelps Institutional Mutual Funds
(1999-present).
Michael Schatt (52) Vice Managing Director, Phoenix Investment Partners, Ltd.
Phoenix Investment President (1994-present). Senior Vice President, Phoenix Realty Securities,
Partners, Ltd. Inc. (1997-present) and Duff & Phelps Investment Management Co.
55 East Monroe St. (1996-present). Vice President, Duff & Phelps Utilities Income,
Suite 3600 Inc. (1997-present), The Phoenix Edge Series Fund (1997-present),
Chicago, IL 60603 and Phoenix Multi-Portfolio Fund (1997-present). Director, Real
Estate Advisory Practice, Coopers & Lybrand (1990-1994).
Nancy G. Curtiss (47) Treasurer Vice President, Fund Accounting (1994-present) and Treasurer
(1996-present), Phoenix Equity Planning Corporation. Treasurer,
Phoenix Funds (1994-present), Phoenix Duff & Phelps Institutional
Mutual Funds (1995-present) and Phoenix-Aberdeen Series Fund
(1996-present). Second Vice President and Treasurer, Fund
Accounting, Phoenix Home Life Mutual Insurance Company
(1994-1995). Various positions with Phoenix Home Life Insurance
Company (1987-1994).
G. Jeffrey Bohne (52) Secretary Vice President and General Manager, Phoenix Home Life Mutual
101 Munson Street Insurance Co. (1993-present). Senior Vice President (1999-present)
Greenfield, MA 01301 and Vice President (1996-1999), Mutual Fund Customer Service; Vice
President, Transfer Agent Operations (1993-1996), 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,
1999, the Trustees received an aggregate of $91,462. 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.
29
<PAGE>
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 $ 8,662 $63,750
E. Virgil Conway+ $11,250 $83,250
Harry Dalzell-Payne+ $10,162 $95,000
Francis E. Jeffries $ 8,250* $61,000
Leroy Keith, Jr. $ 8,662 None None $63,750
Philip R. McLoughlin+ $ 0 for any for any $ 0
Everett L. Morris+ $ 7,500 Trustee Trustee $57,750
James M. Oates+ $ 9,750 $72,250
Calvin J. Pedersen $ 0 $ 0
Herbert Roth, Jr.+ $ 8,100 $59,250
Richard E. Segerson $ 9,750* $72,000
Lowell P. Weicker $ 9,375 $68,750
</TABLE>
- ---------------
* This compensation (and the earnings thereon) will be deferred pursuant to the
Deferred Compensation Plan. At December 31, 1999, the total amount of deferred
compensation (including interest and other accumulation earned on the original
amounts deferred) accrued for Messrs. Jeffries, Morris, Roth and Segerson was
$432,136.70, $179,151.26, $174,057.08 and $80,254.57, 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 February 4, 2000, 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 February 4, 2000 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 Real Estate Class A 556,076 36.64%
One American Row
Attn: Bonnie Malley
Hartford, CT 06115
Phoenix Home Life Ermerging Markets Class A 2,083,489 29.80%
Attn: Pam Levesque
One American Row
Hartford, CT 06115-2521
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER NAME OF FUND NUMBER OF SHARES PERCENT OF CLASS
- ------------------- ------------ ---------------- ----------------
<S> <C> <C> <C>
MLPF&S for the sole benefit Emerging Markets Class B 660,685 8.46%
of its customers Emerging Markets Class C 30,157 10.36%
ATTN: Fund Administration International Class B 220,662 11.43%
4800 Deer Lake Dr E 3rd FL International Class C 20,996 17.00%
Jacksonville, FL 32246-6484 Tax-Exempt Bond Class B 137,903 25.58%
Phoenix Equity Planning Corp International Class C 9,307 7.53%
c/o Gene Charon, Controller
100 Bright Meadow Blvd
Enfield, CT 06082-1957
State Street Bank & Trust Co International Class C 9,236 7.48%
Cust for Bruce Geller
5 Plymouth Rd
East Rockaway, NY 11518-1313
A G Edwards & Sons Inc Cust International Class C 8,544 6.92%
FBO Karl Sweitzer
6 Mendonshire Dr
Honeoye Falls, NY 14472-9762
PaineWebber Emerging Markets Class A 674,595 6.95%
FBO S.D. Rescue Mission & N. County
Interfaith Council Unitrust
George R. Wynhoff-TTEE
17474 Frondoso Dr
San Diego, CA 92128-1313
Wexford Clearing Services Corp F Emerging Markets Class C 18,868 6.48%
Frank Marshall Yost, Jr.
Margaret Bacigalupi Yost
Co-TTEES, The Yost Family Trust
UA DTD 05/12/92
Wawona, CA 95389
Elmer J Krauss Partner Emerging Markets Class C 41,407 14.22%
Krauss Portfolio Ltd
715 N Sherrill St
Tampa, FL 33609-1109
Wexford Clearing Services Corp Emerging Markets Class C 18,573 6.38%
Nubar Tokatian
Ann Tokatian
Co-TTEES, The Tokatian Family Trust
UA DTD 06/04/96
Fresno, CA 93720
Paul L. Blais Emerging Markets Bond 17,139 5.89%
Yvette C. Blais JT-TEN Class C
1 Thomas Ave.
Baltic, CT 06330-1032
Don M. Sears Emerging Markets Bond 15,408 5.29%
Glenda R. Sears, JT-WROS Class C
1526 S. 105th St.
Omaha, NE 68124-1012
</TABLE>
31
<PAGE>
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, 1999
appearing in the Fund's 1999 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 Tax Sensitive Growth 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.
32
<PAGE>
Phoenix-Aberdeen International Fund
INVESTMENTS AT NOVEMBER 30, 1999
SHARES VALUE
---------- -----------
FOREIGN COMMON STOCKS--96.6%
ARGENTINA--0.1%
Perez Companc SA Sponsored ADR (Oil & Gas
(Exploration & Production)) .......................... 13,500 $ 143,119
AUSTRALIA--1.3%
Australian Gas Light Co., Ltd. (Natural Gas) ......... 200,000 1,113,463
QBE Insurance Group Ltd. (Insurance
(Property-Casualty)) ................................. 298,000 1,185,855
-----------
2,299,318
-----------
BRAZIL--0.6%
Tele Centro Sul Participacoes SA ADR
(Telecommunications (Long Distance)) ................. 4,500 307,125
Tele Norte Leste Participacoes SA ADR
(Telecommunications (Long Distance)) ................. 15,000 267,187
Tele Sudeste Celular Participacoes SA ADR
(Telecommunications (Cellular/Wireless)) ............. 13,000 267,312
Telesp Participacoes SA ADR (Telecommunications
(Long Distance)) ..................................... 15,500 279,000
-----------
1,120,624
-----------
CANADA--5.1%
Nortel Networks Corp. (Communications Equipment) ..... 67,000 4,958,000
Seagram Co., Ltd (The) (Entertainment). .............. 43,000 1,873,187
Toronto-Dominion Bank (The) (Banks (Money Center)) ... 88,000 2,123,000
-----------
8,954,187
-----------
DENMARK--1.0%
Danisco A/S (Foods)................................... 15,992 653,722
Tele Danmark A/S (Telephone).......................... 17,567 1,131,847
-----------
1,785,569
-----------
FINLAND--3.1%
Helsingin Puhelin Oyj (Telephone) .................... 17,157 1,140,161
Nokia Oyj Class A (Communications Equipment) ......... 21,891 3,099,072
SHARES VALUE
---------- -----------
FINLAND--CONTINUED
Stora Enso Oyj (Paper & Forest Products) ............. 46,044 $ 654,155
UPM-Kymmene Oyj (Paper & Forest Products) ............ 16,744 559,729
-----------
5,453,117
-----------
FRANCE--11.2%
Air Liquide (Chemicals (Specialty)).... .............. 4,063 596,465
Alcatel (Communications Equipment)..... .............. 7,826 1,516,880
Alstom (Engineering & Construction).... .............. 21,830 619,846
Axa (Insurance (Multi-Line))........... .............. 10,742 1,448,260
Canal Plus (Broadcasting (Television, Radio &
Cable)) .............................................. 7,041 582,047
Carrefour SA (Retail (Food Chains)).... .............. 6,994 1,218,295
Castorama Dubois (Retail (Building Supplies)) ........ 4,795 1,245,630
Christian Dior SA (Beverages (Alcoholic)) ............ 4,669 839,157
Coflexip SA (Metal Fabricators) ...................... 13,150 1,085,726
Compagnie de Saint Gobain (Manufacturing
(Diversified)) ....................................... 2,156 366,873
Dexia France (Banks (Major Regional)) ................ 4,909 808,644
Lafarge SA (Construction (Cement & Aggregates)) ...... 13,712 1,292,973*
Pechiney SA Class A (Containers & Packaging (Paper)) . 16,965 983,060
Renault SA (Automobiles) ............................. 14,102 619,508
Sanofi-Synthelabo SA (Health Care (Diversified))(b) .. 15,931 656,065
Schneider SA (Electrical Equipment) .................. 10,560 712,393
Societe Generale Class A (Banks (Major Regional)) .... 3,805 819,878
Suez Lyonnaise des Eaux (Engineering &
Construction) ........................................ 2,859 421,152
Total Fina SA Class B (Oil & Gas (Refining &
Marketing)) .......................................... 16,147 2,147,709
Valeo SA (Auto Parts & Equipment) .................... 11,762 787,560
Vivendi (Manufacturing (Diversified)) ................ 11,951 956,648
-----------
19,724,769
-----------
See Notes to Financial Statements
6
<PAGE>
Phoenix-Aberdeen International Fund
SHARES VALUE
---------- -----------
GERMANY--7.2%
Allianz AG Vinkulierte Registered Shares
(Insurance (Multi-Line)) ............................ 3,412 $ 998,871
BASF AG (Chemicals (Diversified)) ................... 24,251 1,122,008
Bayer AG (Chemicals (Diversified)) .................. 15,779 667,282
Bayerische Vereinsbank AG (Banks
(Major Regional)) ................................... 15,636 969,811
Bewag AG (Electric Companies) ....................... 25,268 287,495
DaimlerChrysler AG (Automoblies) .................... 15,969 1,086,939
Deutsche Bank AG (Banks (Major Regional)) ........... 12,935 852,426
Deutsche Lufthansa AG (Airlines) .................... 61,306 1,349,379
Deutsche Telekom AG (Telephone) ..................... 8,080 466,173
Mannesmann AG (Manufacturing (Diversified)) ......... 7,961 1,654,467
Metro AG (Retail (Speciality)) ...................... 18,105 969,820
Muenchener Rueckversicherungs-Gesellschaft AG
(Insurance (Multi-Line)) ............................ 5,769 1,202,407
RWE AG (Manufacturing (Diversified)) ................ 18,730 714,756
Volkswagen AG (Automobiles) ......................... 5,719 268,341
-----------
12,610,175
-----------
GREECE--0.2%
Hellenic Telecommunications Organization SA
(Telephone) ......................................... 18,700 400,432
HONG KONG--2.0%
Swire Pacific Ltd. Class B (Manufacturing
Diversified)) ....................................... 4,150,000 3,526,717
HUNGARY--0.3%
Magyar Tavkozlesi Rt Sponsored ADR
(Telecommunications (Long Distance)) ................ 17,300 522,244
INDIA--0.8%
BSES Ltd. GDR (Electric Companies)(b) ............... 30,000 393,000
Mahanagar Telephone Nigam Ltd. Sponsored GDR
(Telecommunications (Long Distance)) ................ 115,000 1,020,625
-----------
1,413,625
-----------
INDONESIA--0.4%
PT Indosat (Telecommunications (Long Distance)) ..... 110,000 153,864
PT Indosat ADR (Telecommunications
(Long Distance)) .................................... 41,000 568,875
-----------
722,739
-----------
ISRAEL--0.2%
Bank Hapoalim Ltd. (Banks (Major Regional)) ......... 121,000 319,311
ITALY--2.4%
Assicurazioni Generali (Insurance (Life/Health)) .... 21,854 629,329
Banca Intesa SPA (Banks (Major Regional)) ........... 402,214 747,196
Beni Stabili SPA (Financial (Diversified))(b) ....... 59,900 21,049
Eni SPA (Oil (Domestic Integrated)) ................. 135,739 743,506
San Paolo-IMI SPA (Banks (Major Regional)) .......... 53,778 671,440
SHARES VALUE
---------- -----------
ITALY--CONTINUED
Telecom Italia Mobile SPA (Telephone).. ............. 56,119 $ 440,743
Telecom Italia SPA (Telephone)......... ............. 80,173 883,133
-----------
4,136,396
-----------
JAPAN--17.6%
Asahi Bank Ltd. (The) (Banks (Major Regional)) ...... 190,000 1,329,451
Canon, Inc. (Office Equipment & Supplies) ........... 48,000 1,409,208
Circle K Japan Co., Ltd. (Retail (Food Chains)) ..... 34,000 1,497,284
Dai Nippon Printing Co., Ltd. (Specialty Printing) .. 85,000 1,476,488
Fuji Photo Film Co. (Photography/Imaging) ........... 39,000 1,583,891
Fujitsu Ltd. (Computers (Hardware)).... ............. 26,000 921,074
Hitachi Credit Corp. (Consumer Finance) ............. 63,000 1,436,512
Ito-Yokado Co., Ltd. (Retail (Food Chains)) ......... 16,000 1,722,366
Kao Corp. (Household Products (Non-Durable)) ........ 49,000 1,452,953
Mabuchi Motor Co., Ltd. (Electrical Equipment) ...... 9,000 1,127,367
NTT Mobile Communications Network, Inc.
(Telecommunications (Cellular/Wireless)) ............ 70 2,452,414
Nikko Securities Co., Ltd. (The) (Investment
Banking/Brokerage) .................................. 130,000 1,615,697
Rinnai Corp. (Household Furnishings & Appliances)) .. 55,400 1,138,523
Rohm Co., Ltd. (Electronics (Semiconductors)) ....... 7,000 1,896,168
Sankyo Co., Ltd. (Health Care (Drugs-Major
Pharmaceuticals)) ................................... 60,000 1,473,797
Sanwa Bank Ltd. (The) (Banks (Major Regional)) ...... 110,000 1,334,833
Secom Co., Ltd. (Services (Commercial &
Consumer)) .......................................... 10,000 1,125,409
Sharp Corp. (Household Furnishings & Appliances) .... 94,000 1,917,991
Shin-Etsu Chemical Co., Ltd. (Chemicals (Speciality)) 35,000 1,380,339
Suzuki Motor Corp. (Automobiles)....... ............. 96,000 1,408,269
Yamato Transport Co. Ltd. (Air Freight) ............. 37,000 1,231,100
-----------
30,931,134
-----------
MALAYSIA--0.3%
Carlsberg Brewery Malaysia Berhad
(Beverages (Alcoholic)) ............................. 125,000 358,550
Malaysian Oxygen Berhad (Chemicals (Speciality)) .... 85,000 174,472
-----------
533,022
-----------
MEXICO--0.8%
Cemex SA de C.V. Sponsored ADR (Construction
(Cement & Aggregates))(b) ........................... 15,000 368,437
Coca-Cola Femsa SA Sponsored ADR (Beverages
(Non-Alcoholic)) .................................... 29,000 445,875
Grupo Televisa SA Sponsored GDR (Broadcasting
(Television, Radio & Cable))(b) ..................... 6,300 307,519
Telefonos de Mexico SA Sponsored ADR Class L
(Telecommunications (Long Distance)) ................ 4,000 370,250
-----------
1,492,081
-----------
NETHERLANDS--6.3%
ASM Lithography Holding NV (Equipment
(Semiconductor))(b) ................................. 8,747 849,899
Elsevier NV (Publishing)............... ............. 46,625 459,133
See Notes to Financial Statements
7
<PAGE>
Phoenix-Aberdeen International Fund
SHARES VALUE
---------- -----------
NETHERLANDS--CONTINUED
Equant NV (Services (Data Processing))(b) ........... 7,603 $ 734,915
Fortis (NL) NV (Financial (Diversified)) ............ 26,795 918,114
Heineken NV (Beverages (Alcoholic)).... ............. 14,275 689,919
IHC Caland NV (Oil & Gas (Drilling & Equipment)) .... 9,228 356,796
ING Groep NV (Financial (Diversified)). ............. 20,613 1,159,165
KPN NV (Telephone)..................... ............. 12,012 668,838
Koninklijke (Royal) Philips Electronics NV (Electronics
(Component Distributors)) ........................... 10,970 1,334,855
Royal Dutch Petroleum Co. (Oil (Domestic
Integrated)) ........................................ 16,281 957,851
STMicroelectronics Desighns NV (Electronics
(Semiconductors)) ................................... 9,395 1,277,060
Unilever NV - CVA (Foods) ........................... 16,534 910,639
United Pan-Europe Communications NV (Broadcasting
(Television, Radio & Cable))(b) ..................... 4,040 396,613
Wolters Klumer NV (Publishing) ...................... 10,098 304,518
-----------
11,018,315
-----------
NEW ZEALAND--0.2%
Telecom Corporation of New Zealand Ltd.
(Telephone) ......................................... 100,000 427,126
PHILIPPINES--0.5%
Ayala Land, Inc. (Financial (Diversified)) .......... 3,510,000 830,413
POLAND--0.2%
Elektrim Spolka Akcyjna SA (Distributors
(Food & Health))(b) ................................. 37,800 282,331
PORTUGAL--0.2%
Portugal Telecom SA (Telephone) ..................... 45,345 436,027
SINGAPORE--1.6%
Singapore Airlines (Airlines) ....................... 160,000 1,619,067
United Overseas Bank Ltd. (Banks (Major Regional)) .. 141,504 1,263,444
-----------
2,882,511
-----------
SOUTH AFRICA--0.6%
BOE Ltd. (Financial (Diversified)) .................. 222,320 176,416
De Beers (Metals Mining) ............................ 16,324 441,476
Metro Cash and Carry Ltd. (Retail (Specialty)) ...... 443,000 417,533
-----------
1,035,425
-----------
SOUTH KOREA--1.3%
Kookmin Bank (Banks (Major Regional)) ............... 33,013 549,623
Pohang Iron & Steel Co., Ltd. (Iron & Steel) ........ 12,700 1,740,551
-----------
2,290,174
-----------
SPAIN--2.8%
Argentaria, Caja Postal y Banco Hipotecario de
Espana SA (Banks (Major Regional)) .................. 27,292 623,795
Banco Popular Espanol SA (Banks (Major Regional)) ... 15,423 996,976
Banco Santander Central Hispano SA (Banks
(Major Regional)) ................................... 49,342 542,029
SHARES VALUE
---------- -----------
SPAIN--CONTINUED
Groupo Dragados SA (Engineering & Construction) ..... 31,611 $ 289,641
Iberdrola SA (Electric Companies)...... ............. 39,163 545,749
Repsol SA (Oil & Gas (Refining & Marketing)) ........ 33,903 740,762
Telefonica SA (Telephone)(b)........... ............. 54,753 1,140,090
Telefonica SA New Shares (Telephone)(b) ............. 1,095 18,247
-----------
4,897,289
-----------
SWEDEN--4.2%
ABB Ltd. (Electrical Equipment)(b)..... ............. 6,618 650,820
AstraZeneca Group PLC (Health Care (Drugs-Major
Pharmaceuticals)) ................................... 8,304 371,192
Electrolux AB (Household Furnishings & Appliances) .. 42,860 836,928
SKF AB (Metal Fabricators)............. ............. 16,160 360,229
SSAB Svenskt Stal AB Series A (Iron & Steel) ........ 58,408 748,905
Sandvik AB Class B (Machinery (Diversified)) ........ 15,068 428,056
Skandia Forsakrings AB (Insurance (Life/Health) ..... 53,330 1,276,627
Skandinaviska Enskilda Banken Class A (Banks
(Major Regional)) ................................... 75,303 717,505
Telefonaktiebolaget LM Ericsson Class B
(Communications Equipment) .......................... 40,624 1,971,218
-----------
7,361,480
-----------
SWITZERLAND--5.1%
Credit Suisse Group (Banks (Major Regional)) ........ 5,571 1,041,796
Nestle SA Registered (Foods)........... ............. 661 1,189,142
Novartis AG Registered Shares (Health Care
(Drugs-Major Pharmaceuticals)) ...................... 1,095 1,706,291
Roche Holding AG (Health Care (Drugs-Major
Pharmaceuticals)) ................................... 155 1,870,663
Swisscom AG (Telephone)................ ............. 1,095 371,681
Synthes-Stratec, Inc. (Health Care (Medical Products
& Supplies))(b) ..................................... 1,020 397,516
UBS AG (Banks (Major Regional))........ ............. 5,807 1,587,829
Zurich Allied AG (Financial (Diversified)) .......... 1,294 740,995
-----------
8,905,913
-----------
TAIWAN--0.2%
Standard Foods Taiwan Ltd. GDR (Foods)(b) ........... 54,837 301,603
THAILAND--0.2%
Bec World Public Co. Ltd. (Entertainment) ........... 55,000 338,505
TURKEY--0.3%
Haci Omer Sabanci Holding (Investment
Management) ......................................... 5,544,000 179,239
Yapi ve Kredi Bankasi AS (Banks (Major Regional)) ...17,600,000 322,724
-----------
501,963
-----------
UNITED KINGDOM--18.3%
3i Group PLC (Investment Banking/Brokerage) ......... 67,085 1,086,635
AstraZeneca Group PLC (Health Care (Drugs-Major
Pharmaceuticals)) ................................... 34,239 1,525,829
BG PLC (Natural Gas)................... ............. 81,302 426,672
BOC Group PLC (Chemicals (Specialty)).. ............. 21,297 438,585
See Notes to Financial Statements
8
<PAGE>
Phoenix-Aberdeen International Fund
SHARES VALUE
---------- -----------
UNITED KINGDOM--CONTINUED
BP Amoco PLC (Oil (Domestic Integrated)) ............ 289,644 $ 2,943,218
Bank of Scotland (Banks (Major Regional)) ........... 73,882 873,132
Barclays PLC (Banks (Major Regional)).. ............. 32,390 933,742
Bass PLC (Beverages (Alcoholic))....... ............. 40,758 458,954
Berkeley Group PLC (The) (Homebuilding) ............. 40,339 424,361
British Aerospace PLC (Aerospace/Defense) ........... 83,869 479,215
British American Tobacco PLC (Tobacco). ............. 56,845 357,171
British Telecommunications PLC (Telephone)..... ..... 112,208 2,249,128
Cable & Wireless PLC (Telephone) .................... 50,805 651,388
Colt Telecom Group PLC (Telephone)(b) ............... 10,700 403,385
Compass Group PLC (Services (Commercial &
Consumer)) .......................................... 24,852 300,824
Diageo PLC (Beverages (Alcoholic)) .................. 36,921 334,010
FirstGroup PLC (Services (Commercial &
Consumer)) .......................................... 99,803 432,364
Glaxo Wellcome PLC (Health Care (Drugs-Major
Pharmaceuticals) .................................... 63,369 1,895,438
Granada Group PLC (Restaurants) ..................... 44,347 363,755
HSBC Holdings PLC (Financial (Diversified)).... ..... 72,000 928,296
Hilton Group PLC (Gaming, Lottery & Pari-mutuel
Companies) .......................................... 117,902 378,385
Invensys Siebe PLC (Machinery (Diversified))... ..... 111,147 516,913
Kingfisher PLC (Retail (Speciality)) ................ 62,498 576,344
Legal & General Group PLC (Insurance (Multi-Line)) .. 257,622 707,798
Lloyds TSB Group PLC (Financial (Diversified)). ..... 104,525 1,335,988
Logica PLC (Services (Data Processing))........ ..... 46,943 1,132,715
National Westminster Bank PLC (Banks (Major
Regional)) .......................................... 47,573 1,091,847
Norwich Union PLC (Insurance (Life/Health)).... ..... 72,751 514,179
Orange PLC (Telecommunications
(Cellular/Wireless))(b) ............................. 7,131 215,568
PowerGen PLC (Electric Companies).................... 46,317 397,987
RMC Group PLC (Construction (Cement &
Aggregates)) ........................................ 35,643 439,392
Reuters Holdings Group PLC (Publishing)........ ..... 29,128 325,443
Rio Tinto PLC (Metals Mining) .. ........... 33,737 660,920
Royal & Sun Alliance Insurance Group PLC
(Insurance (Multi-Line)) ............................ 78,961 484,813
Schroders PLC (Investment Banking/Brokerage)... ..... 21,241 398,188
Serco Group PLC (Services (Commercial &
Consumer)) .......................................... 13,553 416,071
Shell Transport & Trading Co. PLC (Oil (Domestic
Integrated)) ........................................ 133,370 1,023,864
SmithKline Beecham PLC (Health Care (Drugs-Major
Pharmaceuticals)) ................................... 82,270 1,098,051
SHARES VALUE
---------- -----------
UNITED KINGDOM--CONTINUED
Smiths Industries PLC (Aerospace/Defense)...... ..... 20,452 $ 270,365
Thames Water PLC (Water Utilities) .. ........... 21,104 292,934
Vodafone Group PLC (Telecommunications
(Cellular/Wireless)) ................................ 459,019 2,158,528
Woolwich PLC (Consumer Finance) ..................... 55,069 317,507
-----------
32,259,902
-----------
- - -----------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCK
(IDENTIFIED COST $143,872,870) 169,857,556
- - -----------------------------------------------------------------------------
WARRANTS--0.0%
GERMANY--0.0%
Muenchener Rueckversicherungs-Gesellschaft AG
Warrants (Insurance (Multi-Line))(b) ................ 176 6,380
- - -----------------------------------------------------------------------------
TOTAL WARRANTS
(IDENTIFIED COST $0) 6,380
- - -----------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--96.6%
(IDENTIFIED COST $143,872,870) 169,863,936
- - -----------------------------------------------------------------------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------ ---------
SHORT TERM OBLIGATIONS--3.4%
COMMERCIAL PAPER--1.4%
Corporate Asset Funding Co., Inc. 5.70%,
12/2/99 ................................. A-1+ $2,500 $ 2,499,604
FEDERAL AGENCY SECURITIES--2.0%
Federal Home Loan Mortgage Corp.
Discount Note 5.61%, 12/1/99 ............ 3,430 3,430,000
- - -----------------------------------------------------------------------------
TOTAL SHORT TERM OBLIGATIONS
(IDENTIFIED COST $5,929,604) 5,929,604
- - -----------------------------------------------------------------------------
TOTAL INVESTMENTS--100.0%
(IDENTIFIED COST $149,802,474) 175,793,540(a)
Cash and receivables, less liabilities--0.0% 52,988
------------
NET ASSETS--100.0% $175,846,528
============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $33,309,849 and gross
depreciation of $8,196,343 for federal income tax purposes. At November 30,
1999, the aggregate cost of securities for federal income tax purposes was
$150,680,034.
(b) Non-income producing.
See Notes to Financial Statements
9
<PAGE>
Phoenix-Aberdeen International Fund
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1999
ASSETS
Investment securities at value
(Identified cost $149,802,474) $175,793,540
Cash 3,071
Foreign currency at value
(Identified cost $217,870) 217,915
Receivables
Investment securities sold 1,122,813
Fund shares sold 282,675
Tax reclaim 192,720
Dividends and interest 157,501
Prepaid expenses 3,295
------------
Total assets 177,773,530
------------
LIABILITIES
Payables
Fund shares repurchased 1,271,447
Investment securities purchased 217,870
Investment advisory fee 109,167
Distribution fee 51,520
Transfer agent fee 48,325
Financial agent fee 13,805
Trustees' fee 4,258
Accrued expenses 210,610
------------
Total liabilities 1,927,002
------------
NET ASSETS $175,846,528
============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $122,172,507
Undistributed net investment income 594,884
Accumulated net realized gain 27,103,528
Net unrealized appreciation 25,975,609
------------
NET ASSETS $175,846,528
============
CLASS A
Shares of beneficial interest outstanding, $1 par value
unlimited authorization (Net Assets $151,015,828) 9,850,682
Net asset value per share $15.33
Offering price per share $ 15.33/(1-4.75%) $16.09
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $23,693,556) 1,618,852
Net asset value and offering price per share $14.64
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $1,137,144) 77,640
Net asset value and offering price per share $14.65
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1999
INVESTMENT INCOME
Dividends $ 3,316,330
Interest 309,301
Foreign taxes withheld (255,652)
------------
Total investment income 3,369,979
------------
EXPENSES
Investment advisory fee 1,408,005
Distribution fee, Class A 417,142
Distribution fee, Class B 204,980
Distribution fee, Class C 3,791
Financial agent fee 193,466
Transfer agent 379,777
Custodian 239,565
Printing 97,709
Professional 37,482
Registration 19,843
Trustees 17,000
Miscellaneous 14,071
------------
Total expenses 3,032,831
------------
NET INVESTMENT INCOME 337,148
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on securities 27,528,737
Net realized gain on foreign currency transactions 180,553
Net change in unrealized appreciation (depreciation) on
investments 7,642,088
Net change in unrealized appreciation (depreciation) on
foreign currency and foreign currency transactions (37,398)
------------
NET GAIN ON INVESTMENTS 35,313,980
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $35,651,128
============
See Notes to Financial Statements
11
<PAGE>
Phoenix-Aberdeen International Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
11/30/99 11/30/98
---------- ----------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 337,148 $ 612,150
Net realized gain (loss) 27,709,290 39,589,902
Net change in unrealized appreciation (depreciation) 7,604,690 (634,648)
----------- -----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 35,651,128 39,567,404
----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (965,436) --
Net investment income, Class B (53,315) --
Net investment income, Class C (618) --
Net realized capital gains, Class A (34,216,232) (12,005,464)
Net realized capital gains, Class B (3,256,281) (942,871)
----------- -----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (38,491,882) (12,948,335)
----------- -----------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (43,335,908 and 14,403,040 shares, respectively) 603,284,388 222,721,708
Net asset value of shares issued from reinvestment of distributions
(2,295,281 and 829,298 shares, respectively) 30,104,837 10,631,599
Cost of shares repurchased (46,511,696 and 13,954,794 shares, respectively) (650,782,676) (218,052,596)
------------ ------------
Total (17,393,451) 15,300,711
------------ ------------
CLASS B
Proceeds from sales of shares (2,376,201 and 1,090,651 shares, respectively) 31,785,116 16,507,911
Net asset value of shares issued from reinvestment of distributions
(225,595 and 68,327 shares, respectively)2,838,109 852,722
Cost of shares repurchased (2,104,335 and 786,659 shares, respectively) (28,370,576) (12,000,603)
------------ ------------
Total 6,252,649 5,360,030
------------ ------------
CLASS C
Proceeds from sales of shares (89,026 and 0 shares, respectively) 1,216,206 --
Net asset value of shares issued from reinvestment of distributions
(29 and 0 shares, respectively) 396 --
Cost of shares repurchased (11,415 and 0 shares, respectively) (166,015) --
------------ ------------
Total 1,050,587 --
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS (10,090,215) 20,660,741
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS (12,930,969) 47,279,810
NET ASSETS
Beginning of period 188,777,497 141,497,687
------------ -----------
END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME
OF $594,884 AND $805,667, RESPECTIVELY] $175,846,528 $188,777,497
============ ============
</TABLE>
See Notes to Financial Statements
12
<PAGE>
Phoenix-Aberdeen International Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------
YEAR ENDED NOVEMBER 30
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1999 1998 1997 1996 1995
Net asset value, beginning of period $15.98 $13.89 $14.48 $12.20 $12.63
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income 0.04(1) 0.06(1) 0.03(1) 0.04(1) 0.03(1)
Net realized and unrealized gain 2.49 3.27 1.01 2.28 0.42
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 2.53 3.33 1.04 2.32 0.45
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.07) -- (0.29) -- --
Dividends from net realized gains (3.11) (1.24) (1.34) (0.04) (0.88)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (3.18) (1.24) (1.63) (0.04) (0.88)
------ ------ ------ ------ ------
Change in net asset value (0.65) 2.09 (0.59) 2.28 (0.43)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $15.33 $15.98 $13.89 $14.48 $12.20
====== ====== ====== ====== ======
Total return(2) 19.22% 26.17% 8.21% 19.03% 4.12%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $151,016 $171,463 $131,338 $135,524 $129,352
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.53% 1.37% 1.56% 1.57% 1.70%
Net investment income 0.27% 0.40% 0.22% 0.33% 0.23%
Portfolio turnover 77% 104% 167% 151% 236%
</TABLE>
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------------- ---------
FROM
YEAR ENDED NOVEMBER 30 INCEPTION
------------------------------------------------------- 3/30/99 to
1999 1998 1997 1996 1995 11/30/99
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.44 $13.56 $14.22 $12.07 $12.60 $12.82
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss) (0.07)(1) (0.05)(1) (0.08)(1) (0.05)(1) (0.07)(1) (0.08)(1)
Net realized and unrealized gain 2.40 3.17 1.00 2.24 0.42 1.93
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 2.33 3.12 0.92 2.19 0.35 1.85
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.02) -- (0.24) -- -- (0.02)
Dividends from net realized gains (3.11) (1.24) (1.34) (0.04) (0.88) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (3.13) (1.24) (1.58) (0.04) (0.88) (0.02)
------ ------ ------ ------ ------ ------
Change in net asset value (0.80) 1.88 (0.66) 2.15 (0.53) 1.83
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.64 $15.44 $13.56 $14.22 $12.07 $14.65
====== ====== ====== ====== ====== ======
Total return(2) 18.45% 25.17 % 7.37 % 18.16 % 3.28 % 14.41 %(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $23,694 $17,315 $10,159 $6,955 $3,261 $1,137
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.29 % 2.11 % 2.31 % 2.31 % 2.50 % 2.30 %(3)
Net investment income (0.51)% (0.34)% (0.55)% (0.39)% (0.61)% (0.85)%(3)
Portfolio turnover 77 % 104 % 167 % 151 % 236 % 77 %
<FN>
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in total return calculation. (3)
(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.
</FN>
</TABLE>
See Notes to Financial Statements
13
<PAGE>
Phoenix-Duff & Phelps Real Estate Securities Fund
INVESTMENTS AT NOVEMBER 30, 1999
SHARES VALUE
------------ ----------
COMMON STOCK--99.7%
REAL ESTATE INVESTMENT TRUST--97.1%
DIVERSIFIED--8.2%
Colonial Properties Trust ........................... 25,000 $ 615,625
Vornado Realty Trust ................................ 56,500 1,783,281
----------
2,398,906
----------
INDUSTRIAL/OFFICE--40.6%
INDUSTRIAL--7.6%
CenterPoint Properties Corp. ........................ 31,500 1,094,625
First Industrial Realty Trust, Inc. ................. 44,000 1,122,000
----------
2,216,625
----------
MIXED--9.2%
Duke-Weeks Realty Corp. ............................. 54,474 1,007,769
Reckson Associates Realty Corp. ..................... 82,700 1,669,506
----------
2,677,275
----------
OFFICE--23.8%
Alexandria Real Estate Equities, Inc. ............... 30,000 879,375
Boston Properties, Inc. ............................. 72,200 2,044,163
Equity Office Properties Trust ...................... 25,000 548,438
Highwoods Properties, Inc. .......................... 10,000 220,000
Mack-Cali Realty Corp. .............................. 47,900 1,182,531
Spieker Properties, Inc. ............................ 60,000 2,100,000
----------
6,974,507
----------
- - -----------------------------------------------------------------------------
TOTAL INDUSTRIAL/OFFICE 11,868,407
- - -----------------------------------------------------------------------------
SHARES VALUE
------------ ----------
RESIDENTIAL--26.5%
APARTMENTS--22.8%
Apartment Investment & Management Co ................ 48,000 $1,785,000
Avalonbay Communities, Inc. ......................... 40,700 1,317,662
Equity Residential Properties Trust ................. 35,800 1,438,712
Essex Property Trust, Inc. .......................... 47,400 1,537,537
Smith, Charles E. Residential Realty, Inc ........... 18,000 585,000
----------
6,663,911
----------
MANUFACTURED HOMES--3.7%
Manufactured Home Communities, Inc .................. 21,500 509,281
Sun Communities, Inc. ............................... 19,200 583,200
----------
1,092,481
----------
- - -----------------------------------------------------------------------------
TOTAL RESIDENTIAL 7,756,392
- - -----------------------------------------------------------------------------
RETAIL--20.3%
OUTLET CENTERS--2.6%
Chelsea GCA Realty, Inc. ............................ 25,000 773,438
REGIONAL MALLS--11.1%
CBL & Associates Properties, Inc .................... 44,000 959,750
General Growth Properties, Inc. ..................... 23,000 688,563
Macerich Co. (The) .................................. 43,800 870,525
Urban Shopping Centers, Inc. ........................ 28,000 722,750
----------
3,241,588
----------
STRIP CENTERS--6.6%
Developers Diversified Realty Corp. ................. 49,200 685,725
JDN Realty Corp. .................................... 25,000 410,938
Kimco Realty Corp. .................................. 25,000 831,250
----------
1,927,913
----------
- - -----------------------------------------------------------------------------
TOTAL RETAIL 5,942,939
- - -----------------------------------------------------------------------------
See Notes to Financial Statements
18
<PAGE>
Phoenix-Duff & Phelps Real Estate Securities Fund
SHARES VALUE
------------ ----------
SELF STORAGE--1.5%
Storage USA, Inc. ................................... 16,700 $ 450,900
- - -----------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUST
(IDENTIFIED COST $31,402,094) 28,417,544
- - -----------------------------------------------------------------------------
REAL ESTATE OPERATING COMPANY--2.6%
DIVERSIFIED--0.1%
Vornado Operating Inc.(b) ........................... 4,075 23,686
INDUSTRIAL OFFICE--2.5%
Reckson Services Industries, Inc.(b) ................ 26,636 732,490
- - -----------------------------------------------------------------------------
TOTAL REAL ESTATE OPERATING COMPANIES 756,176
- - -----------------------------------------------------------------------------
TOTAL COMMON STOCK
(IDENTIFIED COST $31,435,010) 29,173,720
- - -----------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--99.7%
(IDENTIFIED COST $31,474,427) 29,173,720
- - -----------------------------------------------------------------------------
PAR
(000) VALUE
------------ ----------
SHORT-TERM OBLIGATIONS--0.7%
FEDERAL AGENCY SECURITIES--0.7%
Federal Home Loan Mortgage Corp.
Discount Note 5.61%, 12/1/99 ....................... $210 $ 210,000
- - -----------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $210,000) 210,000
- - -----------------------------------------------------------------------------
TOTAL INVESTMENTS--100.4%
(IDENTIFIED COST $31,684,427) 29,383,720(a)
Cash and receivables, less liabilities--(0.4%) (128,209)
----------
NET ASSETS--100.0% .................................. $29,255,511
==========
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $1,406,902 and gross
depreciation of $3,707,609 for federal income tax purposes. At November 30,
1999, the aggregate cost of securities for federal income tax purposes was
$31,684,427.
(b) Non-income producing.
See Notes to Financial Statements
19
<PAGE>
Phoenix-Duff & Phelps Real Estate Securities Fund
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1999
ASSETS
Investment securities at value
(Identified cost $31,684,427) $ 29,383,720
Receivables
Dividends and interest 38,018
Fund shares sold 6,710
Receivable from advisor 5,376
Prepaid expense 788
-------------
Total assets 29,434,612
-------------
LIABILITIES
Custodian 301
Payables
Fund shares repurchased 75,349
Transfer agent fee 15,880
Distribution fee 14,109
Financial agent fee 5,099
Trustees' fee 4,258
Accrued expenses 64,105
-------------
Total liabilities 179,101
-------------
NET ASSETS $29,255,511
=============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $33,276,244
Undistributed net investment income 239,751
Accumulated net realized loss (1,959,777)
Net unrealized depreciation (2,300,707)
-------------
NET ASSETS $29,255,511
=============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $17,014,442) 1,531,091
Net asset value per share $11.11
Offering price per share $11.11/(1-4.75%) $11.66
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $12,241,069) 1,108,654
Net asset value and offering price per share $11.04
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1999
INVESTMENT INCOME
Dividends $ 1,982,990
Interest 36,561
--------------
Total investment income 2,019,551
--------------
EXPENSES
Investment advisory fee 270,694
Distribution fee, Class A 52,327
Distribution fee, Class B 151,623
Financial agent fee 64,365
Transfer agent 93,814
Printing 31,091
Professional 23,191
Registration 22,666
Trustees 16,998
Custodian 11,062
Miscellaneous 7,795
--------------
Total expenses 745,626
Less expenses borne by investment adviser (162,984)
--------------
Net expenses 582,642
--------------
NET INVESTMENT INCOME 1,436,909
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (1,888,259)
Net change in unrealized appreciation (depreciation) on
investments (1,322,055)
--------------
NET LOSS ON INVESTMENTS (3,210,314)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(1,773,405)
==============
See Notes to Financial Statements
20
<PAGE>
Phoenix-Duff & Phelps Real Estate Securities Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
11/30/99 11/30/98
------------- -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 1,436,909 $ 1,854,142
Net realized gain (loss) (1,888,259) (70,514)
Net change in unrealized appreciation (depreciation) (1,322,055) (12,098,214)
----------- ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (1,773,405) (10,314,586)
----------- ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (1,076,704) (967,687)
Net investment income, Class B (688,451) (535,003)
Net realized gains, Class A -- (2,254,756)
Net realized gains, Class B -- (1,514,857)
----------- ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (1,765,155) (5,272,303)
----------- ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (149,096 and 445,657 shares, respectively) 1,804,294 6,419,885
Net asset value of shares issued from reinvestment of distributions
(85,480 and 207,094 shares, respectively) 990,008 3,035,928
Cost of shares repurchased (718,769 and 855,051 shares, respectively) (8,384,839) (11,951,570)
----------- ------------
Total (5,590,537) (2,495,757)
----------- ------------
CLASS B
Proceeds from sales of shares (167,405 and 362,036 shares, respectively) 2,005,746 5,231,142
Net asset value of shares issued from reinvestment of distributions
(47,858 and 120,031 shares, respectively) 551,622 1,757,836
Cost of shares repurchased (602,692 and 400,698 shares, respectively) (7,096,425) (5,408,854)
----------- ------------
Total (4,539,057) 1,580,124
----------- ------------
DECREASE IN NET ASSETS FROM SHARE TRANSACTIONS (10,129,594) (915,633)
----------- ------------
NET DECREASE IN NET ASSETS (13,668,154) (16,502,522)
NET ASSETS
Beginning of period 42,923,665 59,426,187
----------- ------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$239,751 AND $563,936, RESPECTIVELY) $29,255,511 $ 42,923,665
=========== ============
</TABLE>
See Notes to Financial Statements
21
<PAGE>
Phoenix-Duff & Phelps Real Estate Securities Fund
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
<S> <C> <C> <C> <C> <C>
1999 1998 1997 1996 11/30/95
----------
Net asset value, beginning of period $12.25 $16.39 $13.14 $10.72 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.51(4)(5) 0.55(4)(5) 0.49(4)(5) 0.53(5) 0.43(4)(5)
Net realized and unrealized gain (loss) (1.07) (3.18) 3.52 2.50 0.55
------ ------ ------ ------ -----
TOTAL FROM INVESTMENT OPERATIONS (0.56) (2.63) 4.01 3.03 0.98
------ ------ ------ ------ -----
LESS DISTRIBUTIONS
Dividends from net investment income (0.58) (0.44) (0.51) (0.59) (0.26)
Dividends from net realized gains -- (1.07) (0.25) (0.02) --
------ ------ ------ ------ -----
TOTAL DISTRIBUTIONS (0.58) (1.51) (0.76) (0.61) (0.26)
------ ------ ------ ------ -----
Change in net asset value (1.14) (4.14) 3.25 2.42 0.72
------ ------ ------ ------ -----
NET ASSET VALUE, END OF PERIOD $11.11 $12.25 $16.39 $13.14 $10.72
====== ====== ====== ====== =====
Total return(1) (4.69)% (17.42)% 31.44% 29.20% 9.87%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $17,014 $24,686 $36,336 $22,872 $13,842
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.30% 1.31% 1.30% 1.30% 1.30%(2)
Net investment income 4.30% 3.79% 3.34% 4.55% 5.79%(2)
Portfolio turnover 22% 11% 54% 24% 9%(3)
CLASS B
---------------------------------------------------------
FROM
YEAR ENDED NOVEMBER 30 INCEPTION
-------------------------------------------- 3/1/95 TO
<S> <C> <C> <C> <C> <C>
1999 1998 1997 1996 11/30/95
---------
Net asset value, beginning of period $12.19 $16.32 $13.10 $10.68 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.42(4)(6) 0.43(4)(6) 0.38(4)(6) 0.46(6) 0.36(4)(6)
Net realized and unrealized gain (loss) (1.06) (3.15) 3.50 2.47 0.56
------ ------ ------ ------ -----
TOTAL FROM INVESTMENT OPERATIONS (0.64) (2.72) 3.88 2.93 0.92
------ ------ ------ ------ -----
LESS DISTRIBUTIONS
Dividends from net investment income (0.51) (0.34) (0.41) (0.49) (0.24)
Dividends from net realized gains -- (1.07) (0.25) (0.02) --
------ ------ ------ ------ -----
TOTAL DISTRIBUTIONS (0.51) (1.41) (0.66) (0.51) (0.24)
------ ------ ------ ------ -----
Change in net asset value (1.15) (4.13) 3.22 2.42 0.68
------ ------ ------ ------ -----
NET ASSET VALUE, END OF PERIOD $11.04 $12.19 $16.32 $13.10 $10.68
====== ====== ====== ====== =====
Total return(1) (5.38)% (18.01)% 30.44% 28.25% 9.21%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $12,241 $18,237 $23,091 $8,259 $2,239
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.05% 2.06% 2.05% 2.05% 2.05%(2)
Net investment income 3.54% 3.07% 2.55% 3.95% 5.03%(2)
Portfolio turnover 22% 11% 54% 24% 9%(3)
<FN>
(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
$0.05, $0.02, $0.04, $0.07 and $0.12, respectively.
(6) Includes reimbursement of operating expenses by investment adviser of
$0.05, $0.02, $0.04, $0.07 and $0.12, respectively.
</FN>
</TABLE>
See Notes to Financial Statements
22
<PAGE>
Phoenix-Goodwin Emerging Markets Bond Fund
INVESTMENTS AT NOVEMBER 30, 1999
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ---------- -----------
CORPORATE BONDS--0.3%
TELECOMMUNICATIONS (LONG DISTANCE)--0.3%
Metromedia International Group, Inc.
10.50%, 9/30/07 .......................... NR $ 756 $ 377,778
- - -----------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $794,850) 377,778
- - -----------------------------------------------------------------------------
FOREIGN GOVERNMENT SECURITIES--75.0%
ALGERIA--2.6%
Algeria Tranche 3 1.125%, 3/4/10(h) ...... NR 300,000 1,541,322
Algeria Tranche 3 6%, 3/4/10 ............. NR 2,000 1,430,000
-----------
2,971,322
-----------
ARGENTINA--15.6%
Republic of Argentina 11.75%, 4/7/09 ..... B 4,000 3,897,500
Republic of Argentina Bearer FRB
6.813%, 3/31/05(b) ....................... B 5,280 4,612,080
Republic of Argentina Bocon Pro1 M1, PIK
interest capitalization, 2.786%, 4/1/07(b)(d)(e) BBB- 3,585 2,435,981
Republic of Argentina 9.75%, 9/19/27 ..... B 3,000 2,505,000
Republic of Argentina RegS
11.75%, 2/12/07(e) ....................... B 5,300 4,684,484
-----------
18,135,045
-----------
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- --------- -----------
BRAZIL--22.5%
Brazil MYDFA Trust Certificates RegS
6.8125%, 9/15/07(b) ...................... NR $ 8,241 $ 6,202,056
Republic of Brazil Global Bearer
14.5%, 10/15/09 .......................... B 1,000 1,042,500
Republic of Brazil 6%, 9/15/13 ........... B 3,733 2,501,324
Republic of Brazil FLRB Bearer
5%, 4/15/09(b) ........................... B 6,200 4,231,500
Republic of Brazil C Bond, PIK interest
capitalization, 8%, 4/15/14(b) ........... B 1,820 1,236,906
Republic of Brazil DCB-L Euro
7%, 4/15/12(b) ........................... B 2,500 1,676,562
Republic of Brazil NMB-L 7%, 4/15/09(b) .. B 1,500 1,129,687
Republic of Brazil NMB-L Reg
7%, 4/15/09(b) ........................... B 10,800 8,133,750
-----------
26,154,285
-----------
BULGARIA--2.0%
Republic of Bulgaria FLIRB Bearer Series A
2.75%, 7/28/12(b) ........................ B 1,606 1,128,866
Republic of Bulgaria FLIRB Reg A
2.75%, 7/28/12(b) ........................ B 1,250 878,125
Republic of Bulgaria FLIRB Series B
3.25%, 7/28/12(b) ........................ B 508 356,921
-----------
2,363,912
-----------
See Notes to Financial Statements
25
<PAGE>
Phoenix-Goodwin Emerging Markets Bond Fund
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ---------- -----------
COLOMBIA--1.1%
Republic of Colombia 9.75%, 4/23/09 ...... Ba $ 1,500 $ 1,317,188
-----------
ECUADOR--1.3%
Republic of Ecuador 4%, 2/28/25(b)(f) .... Caa 2,000 702,500
Republic of Ecuador Series Disc
0%, 2/28/25(f) ........................... Caa 2,000 773,750
-----------
1,476,250
-----------
IVORY COAST--0.5%
Ivory Coast PDI Series F 1.90%, 3/29/18(i) NR 606 23,968
Ivory Coast FLIRB Series FRF
2%, 3/29/18(i) ........................... NR 15,950 514,145
-----------
538,113
-----------
MEXICO--9.7%
United Mexican States 6.63%, 12/31/19(l)(n) Ba 8,250 1,049,501
United Mexican States Global Bond
11.375%, 9/15/16 ......................... Ba 6,500 7,166,250
United Mexican States Global Bond
11.50%, 5/15/26 .......................... Ba 1,500 1,737,375
United Mexican States NMB
6.76%, 3/25/05(b) ........................ Ba 1,375 1,292,500
-----------
11,245,626
-----------
NIGERIA--0.7%
Nigeria Promissory Notes Series RC
5.092%, 1/5/10 ........................... NR 1,271 824,646
PERU--1.2%
Republic of Peru FLIRB 3.75%, 3/17/17(b) . Ba 2,400 1,399,500
RUSSIA--10.4%
City of St Petersburg RegS 9.5%, 6/18/02 . Caa 2,000 1,290,000
Russia Principal Loans PIK interest
capitalization 0%, 6/24/08(f) ............ NR 25,000 3,406,250
Russia Treasury Bill OFZ Linked Notes
14%, 9/12/01(g) .......................... NR 52,885 891,320
Russian Federal Loan Bond OFZ Series 25022
15%, 2/23/00(g) .......................... NR 25,556 899,724
Russian Federal Loan Bond OFZ Series 25030
0%, 12/15/01(g) .......................... NR 4,679 48,280
Russian Federal Loan Bond OFZ Series 27001
25%, 2/6/02(b)(g) ........................ NR 1,365 25,050
Russian Federal Loan Bond OFZ Series 27002
25%, 5/22/02(b)(g) ....................... NR 1,365 23,521
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ---------- -----------
RUSSIA--CONTINUED
Russian Federal Loan Bond OFZ Series 27003
25%, 6/5/02(b)(g) ........................ NR $ 1,365 $ 23,358
Russian Federal Loan Bond OFZ
Series 27004 25%, 9/18/02(b)(g) ......... NR 1,365 22,070
Russian Federal Loan Bond OFZ
Series 27005 25%, 10/9/02(b)(g) .......... NR 1,365 21,313
Russian Federal Loan Bond OFZ
Series 27006 25%, 1/22/03(b)(g) .......... NR 1,365 20,337
Russian Federal Loan Bond OFZ
Series 27007 25%, 2/5/03(b)(g) ........... NR 1,365 20,199
Russian Federal Loan Bond OFZ
Series 27008 25%, 5/21/03(b)(g) ......... NR 1,365 19,826
Russian Federal Loan Bond OFZ
Series 27009 25%, 6/4/03(b)(g) ........... NR 1,365 19,749
Russian Federal Loan Bond OFZ
Series 27010 25%, 9/17/03(b)(g) .......... NR 1,365 19,059
Russian Federal Loan Bond OFZ
Series 27011 25%, 10/8/03(b)(g) .......... NR 1,365 18,604
Russian Federal Loan Bond OFZ
Series 28001 25%, 1/21/04(b)(g) .......... NR 1,365 18,426
Russian Federation 144A 12.75%,
6/24/28(c) ............................... B 5,000 3,087,500
Russian Federation RegS 9.25%, 11/27/01 .. B 1,000 737,500
Russian Federation RegS 12.75%, 6/24/28 .. B 2,500 1,543,750
-----------
12,155,836
-----------
TURKEY--0.9%
Republic of Turkey 11.875%, 11/5/04 ...... B 1,000 1,023,750
VENEZUELA--6.5%
Republic of Venezuela 13.625%, 8/15/18 ... B 5,000 4,475,000
Republic of Venezuela FLIRB Series A
6.875%, 3/31/07(b) ....................... B 714 548,210
Republic of Venezuela FLIRB Series B
6.875%, 3/31/07(b) ....................... B 1,786 1,370,525
Republic of Venezuela NMB-A
6.438%, 12/18/05(b) ...................... B 1,529 1,208,258
-----------
7,601,993
-----------
- -------------------------------------------------------------------------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(IDENTIFIED COST $87,305,172) 87,207,466
- -------------------------------------------------------------------------------
See Notes to Financial Statements
26
<PAGE>
Phoenix-Goodwin Emerging Markets Bond Fund
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ---------- -----------
FOREIGN CORPORATE BONDS--10.3% 1
ARGENTINA--0.8%
Imasac SA RegS 11%,5/2/05
(Iron & Steel) ........................... B $ 1,500 $ 892,500
BRAZIL--0.9%
Localiza Rent a Car 10.25%, 10/1/05 (Services
(Commercial & Consumer)) ................. B 1,500 1,072,500
COLOMBIA--0.3%
Transtel Pass-Thru Trust 12.50%, 11/1/07
(Communications Equipment) ............... B 500 280,000
MEXICO--5.7%
Azteca Holdings SA 11%, 6/15/02
(Broadcasting (Television, Radio & Cable)) B 1,000 867,500
International de Ceramica S.A.
9.75%, 8/1/02 (Household Furniture &
Appliances) .............................. NR 2,000 1,540,000
Nacional Finaniciera SNC 22%, 5/20/02
(Financial (Diversified))(k) ............. NR 20,000 2,198,794
Transporte Maritma Yankee Senior Notes
10%, 11/15/06 (Truckers) ................. Ba 1,300 1,020,500
Vicap SA 11.375%, 5/15/07
(Housewares) ............................. Ba 1,100 1,014,750
-----------
6,641,544
-----------
NETHERLANDS--2.6%
Astra O/S Fin BV Asiiij Float 6.50%, 6/30/05
(Automobiles) ............................ NR 2,061 1,319,194
Mosenergo Finance 8.375%, 10/9/02
(Financial (Diversified))(d) ............. CCC 2,500 1,725,000
-----------
3,044,194
-----------
- - -----------------------------------------------------------------------------
TOTAL FOREIGN CORPORATE BONDS
(IDENTIFIED COST $11,467,595) 11,930,738
- - -----------------------------------------------------------------------------
SHARES VALUE
---------- ----------
FOREIGN COMMON STOCKS--7.7%
ARGENTINA--1.1%
Banco de Galicia y Buenos Aires SA de CV
Sponsored ADR (Banks (Money Center)) ................ 60,112 $ 1,228,539
HUNGARY--0.7%
Magyar Tavkozlesi Rt. Sponsored ADR
(Telecommunications (Long Distance) ................. 25,700 775,819
INDONESIA--0.3%
PT Telekomunikasi Indonesia Sponsored
ADR (Telecommunications (Long
Distance) ........................................... 42,500 358,594
MEXICO--1.3%
Cemex S.A. de C.V.Sponsored ADR
(Construction (Cement & Aggregates) ................. 20,000 491,250
Telefonos de Mexico S.A. Sponsored ADR
(Telecommunications (Long Distance)) ................ 11,700 1,082,981
-----------
1,574,231
-----------
RUSSIA--2.5%
Lukoil Holding Sponsored ADR (Oil (Domestic
Integrated)) ........................................ 50,000 1,712,500
Surgutneftegaz Sponsored ADR (Oil
(International Integrated)) ......................... 1 30,000 1,235,000
-----------
2,947,500
-----------
SINGAPORE--0.2%
Asia Pulp & Paper Co., Ltd. Sponsored ADR
(Paper & Forest Products)(m) ........................ 23,200 197,200
TAIWAN--0.6%
Taiwan Semiconductor Manufacturing Co.,
Ltd. Sponsored ADR (Electronics
(Semiconductors)) ................................... 20,000 716,250
TURKEY--0.7%
Haci Omer Sabanchi Holding AS ADR
(Conglomerates) ..................................... 1 00,000 805,000
VENEZUELA--0.3%
Compania Anonima Nacional Telefonos de
Venezuela - ADR (Telecommunications
(Long Distance)) .................................... 15,000 359,063
- - -----------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $8,418,956) 8,962,196
- - -----------------------------------------------------------------------------
See Notes to Financial Statements
27
<PAGE>
Phoenix-Goodwin Emerging Markets Bond Fund
SHARES VALUE
---------- ----------
MUTUAL FUNDS--1.7%
HONG KONG--0.3%
Tracker Fund of Hong Kong (Financial
(Diversified))(m) ................................... 150,000 $ 294,537
UNITED STATES--1.4%
Morgan Stanley Dean Witter India Investment
Fund (Financial (Diversified))(m) ................... 39,300 530,550
Webs - Japan Index Series (Financial
(Diversified)) ...................................... 33,000 503,250
Webs - Malaysia Index Series (Financial
(Diversified)) ...................................... 45,000 241,875
Webs - Singapore Index Series (Financial
(Diversified)) ...................................... 43,000 360,125
-----------
1,635,800
-----------
- - -----------------------------------------------------------------------------
TOTAL MUTUAL FUNDS
(IDENTIFIED COST $1,910,451) 1,930,337
- - -----------------------------------------------------------------------------
WARRANTS--1.0%
First Com Corp. 144A Warrants(c) .................... 70,000 1,207,500
- - -----------------------------------------------------------------------------
TOTAL WARRANTS
(IDENTIFIED COST $0) 1,207,500
- - -----------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--96.0%
(IDENTIFIED COST $109,897,024) 111,616,015
- - -----------------------------------------------------------------------------
PAR
VALUE
(000) VALUE
---------- ----------
SHORT TERM OBLIGATIONS--1.2%
FEDERAL AGENCY SECURITIES--1.2%
Federal Home Loan Mortgage Corp.
Discount Note 5.61%, 12/1/99 ........................ $ 1,445 $ 1,445,000
- - -----------------------------------------------------------------------------
TOTAL SHORT TERM OBLIGATIONS
(IDENTIFIED COST $1,445,000) 1,445,000
- - -----------------------------------------------------------------------------
TOTAL INVESTMENTS--97.2%
(IDENTIFIED COST $111,342,024) 113,061,015(a)
Cash and receivables, less liabilities--2.8% 3,251,210
------------
NET ASSETS--100.0% $116,312,225
============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $9,649,022 and gross
depreciation of $8,030,860 for federal income tax purposes. At November 30,
1999, the aggregate cost of securities for federal income tax purposes was
$111,442,853
(b) Variable or step coupon security; interest rate shown 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,
1999, these securities amounted to a value of $4,295,000 or 3.7% of net
assets.
(d) As rated by Standard & Poors, Fitch or Duff & Phelps.
(e) Par value represents Argentine Pesos.
(f) Securities in default.
(g) Par value represents Russian Rubles.
(h) Par value represents Japanese Yens.
(i) Par value represents Euro.
(j) Par value represents Turkish Liras rounded in millions.
(k) Par value represents Mexican Pesos.
(l) Rights incorporated as a unit.
(m) Non-income producing.
(n) Par value represents French Francs.
See Notes to Financial Statements
28
<PAGE>
Phoenix-Goodwin Emerging Markets Bond Fund
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1999
ASSETS
Investment securities at value
(Identified cost $111,342,024) $113,061,015
Foreign currency at value
(Identified cost $540,200) 536,883
Net unrealized appreciation on forward
foreign currency contracts 59,950
Receivables
Investment securities sold 17,313,149
Dividends and interest 2,539,208
Fund shares sold 139,415
Prepaid expense 1,522
------------
Total assets 133,651,142
------------
LIABILITIES
Custodian 39,013
Payables
Investment securities purchased 16,792,003
Fund shares repurchased 233,570
Investment advisory fee 71,822
Distribution fee 61,887
Transfer agent fee 27,242
Financial agent fee 10,340
Trustees' fee 4,258
Accrued expenses 98,782
------------
Total liabilities 17,338,917
------------
NET ASSETS $116,312,225
============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $160,495,907
Undistributed net investment income 1,088,309
Accumulated net realized loss (47,041,028)
Net unrealized appreciation 1,769,037
------------
NET ASSETS $116,312,225
============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $54,848,923) 7,129,598
Net asset value per share $7.69
Offering price per share $7.69/(1-4.75%) $8.07
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $58,453,075) 7,694,088
Net asset value and offering price per share $7.60
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $3,010,227) 394,454
Net asset value and offering price per share $7.63
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1999
INVESTMENT INCOME
Interest $ 18,113,849
Dividends 27,744
Foreign taxes withheld (752)
-------------
Total investment income 18,140,841
-------------
EXPENSES
Investment advisory fee 700,590
Distribution fee, Class A 115,593
Distribution fee, Class B 449,257
Distribution fee, Class C 22,491
Financial agent fee 110,201
Transfer agent 196,275
Custodian 60,748
Printing 46,778
Professional 29,628
Trustees 15,167
Registration 31,232
Miscellaneous 33,107
-------------
Total expenses 1,811,067
Custodian fees paid indirectly (1,520)
-------------
Net expenses 1,809,547
-------------
NET INVESTMENT INCOME 16,331,294
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 1,174,456
Net realized gain on foreign currency transactions 38,778
Net change in unrealized appreciation (depreciation) on
investments 4,685,310
Net change in unrealized appreciation (depreciation) on
foreign currency and foreign currency transactions 87,512
-------------
NET GAIN ON INVESTMENTS 5,986,056
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $22,317,350
=============
See Notes to Financial Statements
29
<PAGE>
Phoenix-Goodwin Emerging Markets Bond Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
11/30/99 11/30/98
------------- -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $16,331,294 $13,088,232
Net realized gain (loss) 1,213,234 (43,148,647)
Net change in unrealized appreciation (depreciation) 4,772,822 1,569,334
------------- -------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 22,317,350 (28,491,081)
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (7,416,057) (5,581,936)
Net investment income, Class B (7,042,619) (3,942,930)
Net investment income, Class C (347,153) (54,521)
Net realized gains, Class A -- (1,201,906)
Net realized gains, Class B -- (697,910)
Net realized gains, Class C -- --
In excess of net investment income, Class A -- (6,002,330)
In excess of net investment income, Class B -- (3,485,367)
In excess of net investment income, 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 (14,805,829) (24,309,159)
------------- -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (3,556,835 and 2,907,456 shares, respectively) 25,142,286 27,208,118
Net asset value of shares issued from reinvestment of distributions
(351,670 and 1,029,832 shares, respectively) 2,480,258 10,935,153
Cost of shares repurchased (2,574,617 and 3,428,413 shares, respectively) (18,206,934) (34,342,515)
------------- -------------
Total 9,415,610 3,800,756
------------- -------------
CLASS B
Proceeds from sales of shares (3,425,208 and 3,220,244 shares, respectively) 24,265,446 30,065,148
Net asset value of shares issued from reinvestment of distributions
(446,690 and 492,109 shares, respectively) 3,123,762 4,864,295
Cost of shares repurchased (1,401,581 and 1,516,158 shares, respectively) (9,790,280) (13,762,067)
------------- -------------
Total 17,598,928 21,167,376
------------- -------------
CLASS C
Proceeds from sales of shares (462,019 and 170,364 shares, respectively) 3,316,816 1,509,747
Net asset value of shares issued from reinvestment of distributions
(17,681 and 2,515 shares, respectively) 126,396 19,878
Cost of shares repurchased (253,300 and 4,825 shares, respectively) (1,856,218) (46,423)
------------- -------------
Total 1,586,994 1,483,202
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 28,601,532 26,451,334
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS 36,113,053 (26,348,906)
NET ASSETS
Beginning of period 80,199,172 106,548,078
------------- -------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME AND DISTRIBUTIONS
IN EXCESS OF NET INVESTMENT INCOME OF $1,088,309 AND ($50,697), RESPECTIVELY) $116,312,225 $ 80,199,172
============ =============
</TABLE>
See Notes to Financial Statements
30
<PAGE>
Phoenix-Goodwin Emerging Markets Bond Fund
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
1999 1998 1997 1996 11/30/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 7.20 $12.84 $14.80 $10.18 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 1.23 1.32 1.38(4) 1.26(5) 0.25(4)(5)
Net realized and unrealized gain (loss) 0.40 (4.22) 0.17 4.56 0.18
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.63 (2.90) 1.55 5.82 0.43
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (1.14) (1.00) (1.28) (1.20) (0.25)
Dividends from net realized gains -- (0.23) (2.23) -- --
Dividends in excess of net investment income -- (1.16) -- -- --
Return of capital -- (0.35) -- -- --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.14) (2.74) (3.51) (1.20) (0.25)
------ ------ ------ ------ ------
Change in net asset value 0.49 (5.64) (1.96) 4.62 0.18
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 7.69 $ 7.20 $12.84 $14.80 $10.18
====== ====== ====== ====== ======
Total return(1) 25.63% (27.20)% 11.91% 60.18% 4.40%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $54,849 $41,725 $67,875 $29,661 $12,149
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.56%(7) 1.43% 1.40%(7) 1.50% 1.50%(2)
Net investment income 17.96% 13.74% 9.90% 10.41% 10.48%(2)
Portfolio turnover 326% 405% 614% 378% 38%(3)
CLASS B
------------------------------------------------------
FROM
YEAR ENDED NOVEMBER 30 INCEPTION
------------------------------------------ 9/5/95 TO
1999 1998 1997 1996 11/30/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 7.13 $12.77 $14.78 $10.18 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 1.17 1.23 1.26(4) 1.19(6) 0.22(4)(6)
Net realized and unrealized gain (loss) 0.40 (4.18) 0.18 4.53 0.20
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.57 (2.95) 1.44 5.72 0.42
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (1.10) (0.97) (1.22) (1.12) (0.24)
Dividends from net realized gains -- (0.23) (2.23) -- --
Dividends in excess of net investment income -- (1.16) -- -- --
Return of capital -- (0.33) -- -- --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.10) (2.69) (3.45) (1.12) (0.24)
------ ------ ------ ------ ------
Change in net asset value 0.47 (5.64) (2.01) 4.60 0.18
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 7.60 $ 7.13 $12.77 $14.78 $10.18
====== ====== ====== ====== ======
Total return (1) 24.52% (27.86)% 11.07% 58.94% 4.22%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $58,453 $37,270 $38,673 $9,713 $596
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.31%(7) 2.20% 2.15%(7) 2.25% 2.25%(2)
Net investment income 17.04% 12.98% 9.14% 9.79% 10.29%(2)
Portfolio turnover 326% 405% 614% 378% 38%(3)
<FN>
(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) The ratio of expenses to average net assets excludes the effect of expense
offsets for custodian fees; if expense offsets were included, the ratio
would not significantly differ.
</FN>
</TABLE>
See Notes to Financial Statements
31
<PAGE>
Phoenix-Goodwin Emerging Markets Bond Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS C
------------------
FROM
YEAR INCEPTION
ENDED 3/26/98 TO
11/30/99 11/30/98
Net asset value, beginning of period $ 7.17 $12.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 1.17 0.85(4)
Net realized and unrealized gain (loss) 0.39 (5.10)
------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.56 (4.25)
------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (1.10) (0.66)
Dividends from net realized gains -- --
Dividends in excess of net investment income -- --
Return of capital -- (0.17)
------ ------
TOTAL DISTRIBUTIONS (1.10) (0.83)
------ ------
Change in net asset value 0.46 (5.08)
------ ------
NET ASSET VALUE, END OF PERIOD $ 7.63 $ 7.17
====== ======
Total return(1) 24.40% (35.33)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $3,010 $1,205
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.31%(5) 2.29%(2)
Net investment income 16.47% 15.59%(2)
Portfolio turnover 326% 405%(3)
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) The ratio of expenses to average net assets excludes the effect of expense
offsets for custodian fees; if expense offsets were included, the ratio
would not significantly differ.
See Notes to Financial Statements
32
<PAGE>
Phoenix-Goodwin Tax-Exempt Bond Fund
INVESTMENTS AT NOVEMBER 30, 1999
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ---------- -----------
MUNICIPAL BONDS--97.4%
ALASKA--1.3%
Valdez Marine Terminal Revenue
7%, 12/1/25(c) .......................... AA+ $1,125 $1,192,500
ARIZONA--1.1%
Pima County Sewer Revenue Pre-refunded
6.75%, 7/1/15 (FGIC Insured) ............ AAA 460 481,850
Pima County Sewer Revenue Unrefunded
6.75%, 7/1/15 (FGIC Insured) ............ AAA 540 560,925
----------
1,042,775
----------
ARKANSAS--1.2%
Drew County Public Facilities Board Series A-2
7.90%, 8/1/11 (FNMA Collateralized) ..... Aaa(b) 211 222,473
Jacksonville Residential Housing Facilities
Board Series A-2 7.90%, 1/1/11 (FNMA
Collateralized) ......................... Aaa(b) 364 380,941
Lonoke County Residential Housing Facilities
Board Series A-2 7.90%, 4/1/11 (FNMA
Collateralized) ......................... Aaa(b) 345 369,598
Stuttgart Public Facilities Board Series A-2
7.90%, 9/1/11 (FNMA Collateralized) ..... Aaa(b) 171 177,824
----------
1,150,836
----------
CALIFORNIA--7.5%
Pittsburg Redevelopment Agency Series A
4.625%, 8/1/21 (AMBAC Insured) .......... AAA 1,650 1,383,937
Riverside County Series B
8.625%, 5/1/16 (GNMA Collateralized) .... AAA 4,300 5,719,000
----------
7,102,937
----------
COLORADO--3.0%
Arapahoe County Capital Improvement
Series E Pre-refunded 6.90%, 8/31/15 .... Aaa(b) 2,500 2,828,125
CONNECTICUT--4.0%
Mashantucket Western Pequot Tribe
Special Revenue Series A Pre-refunded 144A
6.50%, 9/1/05(d) ........................ AAA 845 922,106
Mashantucket Western Pequot Tribe
Special Revenue Series A Pre-refunded 144A
6.50%, 9/1/06(d) ........................ AAA 495 543,881
Mashantucket Western Pequot Tribe Special
Revenue Series A 144A 5.50%, 9/1/28(d) .. Baa(b) 1,500 1,312,500
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ---------- -----------
CONNECTICUT--CONTINUED
Mashantucket Western Pequot Tribe Special
Revenue Series B 144A 5.60%, 9/1/09(d) .. Baa(b) $1,000 983,750
----------
3,762,237
----------
GEORGIA--8.8%
Atlanta Water and Wastewater Revenue
Series A 5%, 11/1/29 (FGIC Insured) ..... AAA 2,000 1,715,000
Atlanta Water and Wastewater Revenue
Series A 5%, 11/1/38 (FGIC Insured) ..... AAA 1,000 837,500
Cartersville Development Authority Revenue
5.625%, 5/1/09 .......................... A+ 2,000 2,035,000
Georgia Municipal Electric Authority Power
Revenue Series Z 5.50%, 1/1/20
(FGIC Insured) .......................... AAA 2,000 1,940,000
Georgia State General Obligation Series A
7.45%, 1/1/09 ........................... AAA 1,500 1,762,500
----------
8,290,000
----------
ILLINOIS--8.0%
Chicago Board of Education Series A
6%, 1/1/20 (MBIA Insured) ............... AAA 500 509,375
Chicago Gas Supply Revenue Series B
7.50%, 3/1/15 ........................... AA- 1,000 1,027,060
Chicago O'Hare International Airport Special
Facility Revenue 8.85%, 5/1/18 .......... BB+ 835 885,543
Cook County Series A 5%, 11/15/28
(FGIC Insured) .......................... AAA 2,000 1,692,500
Illinois Development Finance Authority
Pollution Control Revenue Series B
7.60%, 9/1/13 ........................... A+ 2,000 2,054,180
Illinois Health Facilities Authority Revenue
Series C 7%, 4/1/08 (FSA Insured) ....... AAA 1,100 1,236,125
Illinois Housing Development Authority
Residential Mortgage Revenue Series A
7%, 8/1/17 .............................. AA 70 70,214
Metropolitan Pier & Exposition Authority
Revenue Unrefunded 6.50%, 6/15/07
(FGIC Insured) .......................... AAA 30 32,250
----------
7,507,247
----------
See Notes to Financial Statements
36
<PAGE>
Phoenix-Goodwin Tax-Exempt Bond Fund
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ---------- -----------
INDIANA--3.7%
Indianapolis Public Local Improvement
Revenue Series C 0%, 1/1/03 ............. A(b) $2,500 $2,162,500
Indianapolis Public Local Improvement
Revenue Series A 0%, 2/1/05 ............. Aa(b) 1,765 1,370,081
----------
3,532,581
----------
KENTUCKY--3.2%
Kentucky State Turnpike Authority Economic
Development Revenue 0%, 1/1/10
(FGIC Insured) .......................... AAA 3,300 1,947,000
Perry County Solid Waste Disposal Revenue
7%, 6/1/24 .............................. NR 1,000 1,035,000
----------
2,982,000
----------
LOUISIANA--1.5%
Louisiana Environmental Facilities Community
Development Revenue 5.25%, 12/1/18
(AMBAC Insured) ......................... AAA 1,500 1,406,250
St. Tammany Public Transportation Financing
Authority Revenue Series A 7%, 6/1/02
(FNMA Collateralized) ................... Aaa(b) 47 48,174
----------
1,454,424
----------
MARYLAND--0.6%
Baltimore General Obligation 7%, 10/15/09
(MBIA Insured) .......................... AAA 500 573,750
MASSACHUSETTS--3.8%
Massachusetts Bay Transportation Authority
Revenue Series B 6.20%, 3/1/16 .......... AA- 1,000 1,050,000
Massachusetts State Industrial Financing
Agency Revenue 0%, 8/1/05 ............... A+ 1,100 827,750
Massachusetts State Turnpike Authority
Highway Revenue 5%, 1/1/39
(AMBAC Insured) ......................... AAA 2,000 1,667,500
----------
3,545,250
----------
MICHIGAN--2.7%
St. Johns Public Schools 5.10%, 5/1/25
(FGIC Insured) .......................... AAA 1,000 898,750
Williamston Michigan Community School
General Obligation 5.50%, 5/1/25
(MBIA Insured) .......................... AAA 1,725 1,640,906
----------
2,539,656
----------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ---------- -----------
MISSISSIPPI--1.7%
Lowndes County Solid Waste Disposal &
Pollution Control Revenue Project A
6.80%, 4/1/22 ........................... A $1,450 $1,578,687
NEVADA--1.8%
Clark County School District General Obligation
Series B 0%, 6/1/03 (MBIA Insured) ...... AAA 2,000 1,697,500
NEW JERSEY--1.7%
Camden County Municipal Utilities Authority
Sewer Revenue Bond Series B 0%, 9/1/11
(FGIC Insured) .......................... AAA 3,000 1,582,500
NEW YORK--9.0%
New York State Dormitory Authority Revenue
Series U Pre-refunded 6.375%, 7/1/08 .... BBB+ 575 613,094
Niagara Falls Bridge Commission Toll Revenue
Series B 5.25%, 10/1/15 (FGIC Insured) .. AAA 4,000 3,870,000
Port Authority of New York & New Jersey
Special Obligation Revenue 6.75%, 10/1/11 NR 3,000 3,161,250
Suffolk County Industrial Development
Agency Revenue 5.50%, 1/1/23 ............ NR 1,000 878,750
----------
8,523,094
----------
NORTH CAROLINA--1.6%
North Carolina Municipal Power Agency
Revenue Bond 6%, 1/1/09 (AMBAC
Insured) ................................ AAA 1,385 1,469,831
PENNSYLVANIA--9.3%
Delaware Valley Regional Finance Authority
Revenue Series B 5.70%, 7/1/27 (AMBAC
Insured) ................................ AAA 2,000 1,945,000
New Castle Area Hospital Authority Revenue
Series A 6.50%, 11/15/09 ................ Baa(b) 1,000 1,013,750
Pennsylvania Economic Development Financing
Authority Resource Recovery Revenue
Series A 6.40%, 1/1/09 .................. BBB- 1,500 1,520,625
Pennsylvania State Finance Authority Revenue
6.60%, 11/1/09 .......................... A 4,000 4,280,000
----------
8,759,375
----------
SOUTH CAROLINA--2.4%
Spartanburg Sanitation Sewer Revenue
Series B 5%, 3/1/24 ..................... AAA 2,520 2,220,750
TENNESSEE--1.6%
Metropolitan Government Nashville & Davidson
County Health & Educational Facilities Board
Revenue 6%, 12/1/16 (AMBAC Isured) ...... AAA 1,500 1,556,250
See Notes to Financial Statements
37
<PAGE>
Phoenix-Goodwin Tax-Exempt Bond Fund
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ---------- -----------
TEXAS--5.0%
Alliance Airport Authority Special Facilities
Revenue 7%, 12/1/11 ..................... BBB- $1,100 $1,192,125
Colorado River Municipal District Water
Revenue Pre-refunded 8.25%, 1/1/15 ...... NR 540 562,432
Hurst Euless Bedford Independent School
District General Obligation 4.75%, 8/15/28 AAA 2,000 1,625,000
San Antonio Electric & Gas Revenue
5%, 2/1/12 .............................. AA 20 19,300
San Antonio Electric & Gas Revenue
Pre-refunded 5%, 2/1/12 ................. AA 15 14,588
Texas State Public Finance Authority Building
Revenue 6.25%, 8/1/09 (MBIA Insured) .... AAA 1,250 1,350,000
----------
4,763,445
----------
VIRGINIA--6.3%
Pittsylvania County Industrial Development
Authority Revenue Series A 7.30%, 1/1/04 NR 935 961,881
Pittsylvania County Industrial Development
Authority Revenue Series A 7.45%, 1/1/09 NR 3,000 3,142,500
Upper Occoquan Regional Sewer Authority
Revenue Series A 5.15%, 7/1/20
(MBIA Insured) .......................... AAA 2,000 1,867,500
----------
5,971,881
----------
WEST VIRGINIA--3.2%
Upshur County Solid Waste Disposal Revenue
7%, 7/15/25 ............................. NR 2,000 2,070,000
West Virginia State Housing Development
Fund Revenue 6.625%, 7/1/20
(FHA Insured) ........................... AA 1,000 1,001,620
----------
3,071,620
----------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ---------- -----------
WISCONSIN--1.7%
Wisconsin State Clean Water Revenue
Series 1 6.875%, 6/1/11 ................. AA+ $ 750 $ 852,188
Wisconsin State Health & Education Facilities
Authority Revenue 5.125%, 8/15/28 ....... A- 1,000 805,000
----------
1,657,188
----------
OTHER TERRITORIES--1.7%
Puerto Rico Commonwealth Highway &
Transportation Authority Revenue Series V
6.625%, 7/1/12 .......................... A 1,500 1,584,375
- - -----------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(IDENTIFIED COST $89,169,932) 91,940,814
- - -----------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--97.4%
(IDENTIFIED COST $89,169,932) 91,940,814
- - -----------------------------------------------------------------------------
SHORT TERM OBLIGATIONS--1.5%
FEDERAL AGENCY SECURITIES--1.5%
Federal Home Loan Mortgage Corp.
Discount Note 5.61%, 12/1/99 ............ 1,420 1,420,000
- - -----------------------------------------------------------------------------
TOTAL SHORT TERM OBLIGATIONS
(IDENTIFIED COST $1,420,000) 1,420,000
- - -----------------------------------------------------------------------------
TOTAL INVESTMENTS--98.9%
(IDENTIFIED COST $90,589,932) 93,360,814(a)
Cash and receivables, less liabilities--1.1% 1,059,543
----------
NET ASSETS--100.0% ...................... $94,420,357
==========
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $4,467,906 and gross
depreciation of $1,604,930 for federal income tax purposes. At November 30,
1999, the aggregate cost of securities for federal income tax purposes was
$90,497,838.
(b) As rated by Moodys, Fitch or Duff & Phelps.
(c) Variable or step coupon security; interest rate reflects the rate currently
in effect.
(d) 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 buyers. At November 30, 1999, these
securities amounted to a value of $3,762,237 or 4.0% of net assets.
At November 30, 1999, 44.2% of the net assets in the fund 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, 16.5%.
See Notes to Financial Statements
38
<PAGE>
Phoenix-Goodwin Tax-Exempt Bond Fund
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1999
ASSETS
Investment securities at value
(Identified cost $90,589,932) $ 93,360,814
Cash 651
Receivables
Interest 1,381,576
Fund shares sold 12,250
Prepaid expense 2,127
-------------
Total assets 94,757,418
-------------
LIABILITIES
Payables
Dividend distributions 70,945
Fund shares repurchased 120,587
Investment advisory fee 35,153
Distribution fee 23,038
Transfer agent fee 19,485
Financial agent fee 10,208
Trustees' fee 4,258
Accrued expenses 53,387
-------------
Total liabilities 337,061
-------------
NET ASSETS $94,420,357
=============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $95,075,415
Distributions in excess of net investment income (70,944)
Accumulated net realized loss (3,354,996)
Net unrealized appreciation 2,770,882
-------------
NET ASSETS $94,420,357
=============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $88,769,711) 8,623,917
Net asset value per share $10.29
Offering price per share $10.29/(1-4.75%) $10.80
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $5,650,646) 546,267
Net asset value and offering price per share $10.34
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1999
INVESTMENT INCOME
Interest $ 5,533,088
-----------
Total investment income 5,533,088
-----------
EXPENSES
Investment advisory fee 473,237
Distribution fee, Class A 246,387
Distribution fee, Class B 66,090
Financial agent fee 116,414
Transfer agent 101,381
Professional 28,160
Registration 23,574
Printing 23,347
Custodian 17,025
Trustees 17,000
-----------
Total expenses 1,112,615
-----------
NET INVESTMENT INCOME 4,420,473
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (2,933,039)
Net realized loss on future contracts (40,144)
Net change in unrealized appreciation (depreciation)
on investments (5,382,317)
-----------
NET LOSS ON INVESTMENTS (8,355,500)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(3,935,027)
===========
See Notes to Financial Statements
39
<PAGE>
Phoenix-Goodwin Tax-Exempt Bond Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
11/30/99 11/30/98
------------- ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 4,420,473 $ 5,725,389
Net realized gain (loss) (2,973,183) (409,566)
Net change in unrealized appreciation (depreciation) (5,382,317) 1,555,273
------------- ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (3,935,027) 6,871,096
------------- ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (4,019,480) (5,342,324)
Net investment income, Class B (222,784) (259,422)
Net realized gains, Class A -- (96,887)
Net realized gains, Class B -- (4,637)
In excess of net investment income, Class A (713,626) (566,555)
In excess of net investment income, Class B (39,554) (27,512)
------------- ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (4,995,444) (6,297,337)
------------- ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (1,486,070 and 3,799,813 shares, respectively) 15,836,073 42,705,753
Net asset value of shares issued from reinvestment of distributions
(241,813 and 286,921 shares,respectively) 2,604,501 3,230,781
Cost of shares repurchased (2,685,504 and 5,491,445 shares, respectively) (28,673,824) (61,903,573)
------------- ------------
Total (10,233,250) (15,967,039)
------------- ------------
CLASS B
Proceeds from sales of shares (131,152 and 259,511 shares, respectively) 1,434,341 2,940,057
Net asset value of shares issued from reinvestment of distributions
(9,781 and 12,310 shares, respectively) 105,939 139,134
Cost of shares repurchased (216,909 and 166,434 shares, respectively) (2,327,791) (1,874,018)
------------- ------------
Total (787,511) 1,205,173
------------- ------------
DECREASE IN NET ASSETS FROM SHARE TRANSACTIONS (11,020,761) (14,761,866)
------------- ------------
NET DECREASE IN NET ASSETS (19,951,232) (14,188,107)
NET ASSETS
Beginning of period 114,371,589 128,559,696
------------- ------------
END OF PERIOD (INCLUDING DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME OF
($70,944) AND ($114,135), RESPECTIVELY) $ 94,420,357 $114,371,589
============= ============
</TABLE>
See Notes to Financial Statements
40
<PAGE>
Phoenix-Goodwin Tax-Exempt Bond Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
YEAR ENDED NOVEMBER 30
-----------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.21 $11.17 $11.28 $11.40 $10.09
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.52 0.57 0.59 0.60 0.61
Net realized and unrealized gain (loss) (0.92) 0.20 0.05 (0.12) 1.34
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.40) 0.77 0.64 0.48 1.95
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.44) (0.53) (0.59) (0.60) (0.61)
Dividends in excess of net investment income (0.08) (0.11) -- -- --
Dividends from net realized gains -- (0.09) (0.16) -- (0.03)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.52) (0.73) (0.75) (0.60) (0.64)
------ ------ ------ ------ ------
Change in net asset value (0.92) 0.04 (0.11) (0.12) 1.31
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.29 $11.21 $11.17 $11.28 $11.40
====== ====== ====== ====== ======
Total return(1) (3.66)% 5.75% 6.04% 4.30% 19.87%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $88,770 $107,371 $122,763 $136,558 $147,821
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.01% 0.97% 0.96% 0.94% 0.97%
Net investment income (loss) 4.25% 4.77% 5.36% 5.42% 5.65%
Portfolio turnover 18% 14% 15% 27% 25%
CLASS B
----------------------------------------------------
YEAR ENDED NOVEMBER 30
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
1999 1998 1997 1996 1995
Net asset value, beginning of period $11.25 $11.22 $11.32 $11.44 $10.12
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.45 0.48 0.50 0.52 0.53
Net realized and unrealized gain (loss) (0.93) 0.19 0.06 (0.12) 1.35
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.48) 0.67 0.56 0.40 1.88
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.37) (0.45) (0.50) (0.52) (0.53)
Dividends in excess of net investment income (0.06) (0.10) -- -- --
Dividends from net realized gains -- (0.09) (0.16) -- (0.03)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.43) (0.64) (0.66) (0.52) (0.56)
------ ------ ------ ------ ------
Change in net asset value (0.91) 0.03 (0.10) (0.12) 1.32
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.34 $11.25 $11.22 $11.32 $11.44
====== ====== ====== ====== ======
Total return(1) (4.35)% 4.97% 5.13% 3.60% 19.07%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $5,651 $7,001 $5,797 $4,762 $3,142
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.76% 1.69% 1.71% 1.69% 1.72%
Net investment income (loss) 3.51% 3.98% 4.60% 4.68% 4.90%
Portfolio turnover 18% 14% 15% 27% 25%
<FN>
(1) Maximum sales charges are not reflected in the total return calculation.
</FN>
</TABLE>
See Notes to Financial Statements
41
<PAGE>
Phoenix-Seneca Mid Cap Fund
INVESTMENTS AT NOVEMBER 30, 1999
SHARES VALUE
---------- -----------
COMMON STOCK--97.0%
BANKS (REGIONAL)--3.3%
UnionBanCal Corp .................................... 254,730 $11,224,041
BIOTECHNOLOGY--4.6%
MedImmune, Inc.(b) .................................. 129,120 15,518,610
BROADCASTING (TELEVISION, RADIO & CABLE)--8.3%
AMFM, Inc.(b) ....................................... 199,800 14,123,362
EchoStar Communications Corp.(b) .................... 211,500 13,972,219
-----------
28,095,581
-----------
COMMUNICATIONS EQUIPMENT--9.6%
American Tower Corp., Class A(b) .................... 359,560 9,393,505
Comverse Technology, Inc.(b) ........................ 120,000 14,505,000
General Motors Corp. Class H(b) ..................... 87,500 7,492,187
TeleCorp PCS, Inc.(b) ............................... 33,550 1,209,897
-----------
32,600,589
-----------
COMPUTERS (HARDWARE)--3.8%
Copper Mountain Networks, Inc.(b) ................... 43,870 3,660,403
Extreme Networks, Inc.(b) ........................... 140,080 9,297,810
-----------
12,958,213
-----------
COMPUTERS (SOFTWARE & SERVICES)--11.6%
Ariba, Inc.(b) ...................................... 35,000 6,319,687
Exodus Communications, Inc.(b) ...................... 84,540 9,114,469
Redback Networks Inc.(b) ............................ 52,500 7,346,719
VERITAS Software Corp.(b) ........................... 181,440 16,613,100
-----------
39,393,975
-----------
SHARES VALUE
---------- -----------
ELECTRONICS (SEMICONDUCTORS)--20.6%
LSI Logic Corp.(b) .................................. 244,540 $14,779,386
PMC-Sierra, Inc.(b) ................................. 114,990 11,851,157
RF Micro Devices, Inc.(b) ........................... 203,800 13,845,663
SDL, Inc.(b) ........................................ 89,190_ 14,515,673
Xilinx, Inc.(b) ..................................... 168,170 15,051,215
-----------
70,043,094
-----------
EQUIPMENT (SEMICONDUCTOR)--10.4%
KLA-Tencor Corp.(b) ................................. 173,620 14,681,741
Lam Research Corp.(b) ............................... 125,000 9,703,125
Teradyne, Inc.(b) ................................... 250,000 10,890,625
-----------
35,275,491
-----------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--2.6%
VISX, Inc.(b) ....................................... 115,000 8,919,688
OIL & GAS (DRILLING & EQUIPMENT)--5.7%
Nabors Industries, Inc.(b) .......................... 355,690 9,448,015
Weatherford International, Inc.(b) .................. 287,000 10,027,063
-----------
19,475,078
-----------
PAPER & FOREST PRODUCTS--1.3%
Smurfit-Stone Container Corp.(b) .................... 222,700 4,273,056
RETAIL (COMPUTERS & ELECTRONICS)--3.2%
Tandy Corp .......................................... 140,970 10,801,826
RETAIL (SPECIALTY-APPAREL)--2.4%
TJX Companies, Inc. (The) ........................... 305,600 8,002,900
See Notes to Financial Statements
45
<PAGE>
Phoenix-Seneca Mid Cap Fund
SHARES VALUE
---------- -----------
SERVICES (ADVERTISING/MARKETING)--4.1%
Outdoor Systems, Inc.(b) ............................ 316,450 $14,082,025
SERVICES (COMMERICAL & CONSUMER)--5.5%
Crown Castle International Corp.(b) ................. 223,200 4,701,150
Gemstar International Group, Ltd.(b) ................ 125,000 14,093,750
-----------
18,794,900
-----------
- - -----------------------------------------------------------------------------
TOTAL COMMON STOCK
(IDENTIFIED COST $231,422,771) 329,459,067
- - -----------------------------------------------------------------------------
FOREIGN COMMON STOCKS--0.4%
PAPER & FOREST PRODUCTS--0.4%
Grupo Industrial Durango S.A. (Mexico)(b) ........... 128,600 1,374,413
- - -----------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $1,231,077) 1,374,413
- - -----------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--97.4%
(IDENTIFIED COST $232,653,848) 330,833,480
- - -----------------------------------------------------------------------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ----- -----------
SHORT-TERM OBLIGATIONS--3.8%
FEDERAL AGENCY SECURITIES--2.4%
Federal Home Loan Bank Discount Note
5.57% 12/1/99 ........................... $1,860 $ 1,860,000
Federal Home Loan Mortgage Corp.
Discount Note 5.61%, 12/1/99 ............ 6,155 6,155,000
------------
8,015,000
------------
COMMERCIAL PAPER--1.5%
Exxon Imperial, Inc. 5.50%,12/2/99 ...... A-1+ 5,000 4,999,236
- - -----------------------------------------------------------------------------
TOTAL SHORT TERM OBLIGATIONS
(IDENTIFIED COST $13,014,236) ........... 13,014,236
- - -----------------------------------------------------------------------------
TOTAL INVESTMENTS--101.3%
(IDENTIFIED COST $245,668,084) .......... 343,847,716(a)
Cash and receivables, less liabilities--(1.3%) (4,410,326)
------------
NET ASSETS--100.0% ...................... $339,437,390
============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $101,207,738 and gross
depreciation of $3,028,106 for federal income tax purposes. At November 30,
1999, the aggregate cost of securities for federal income tax purposes was
$245,668,084.
(b) Non-income producing.
See Notes to Financial Statements
46
<PAGE>
Phoenix-Seneca Mid Cap Fund
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1999
ASSETS
Investment securities at value
(Identified cost $245,668,084) $ 343,847,716
Short-Term investments held as collateral for
loaned securities 11,807,420
Cash 5,659
Receivables
Fund shares sold 151,986
Interest and dividends 16,785
Prepaid expense 5,644
--------------
Total assets 355,835,210
--------------
LIABILITIES
Payables
Collateral on securities loaned 11,807,420
Investment securities purchased 2,437,331
Fund shares repurchased 1,525,248
Investment advisory fee 208,912
Transfer agent fee 118,699
Distribution fee 81,202
Financial agent fee 19,994
Trustees' fee 4,258
Accrued expenses 194,756
--------------
Total liabilities 16,397,820
--------------
NET ASSETS 339,437,390
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest 214,654,997
Accumulated net realized gain 26,602,761
Net unrealized appreciation 98,179,632
--------------
NET ASSETS $339,437,390
==============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $320,459,977) 14,166,276
Net asset value per share $22.62
Offering price per share $22.62/(1-4.75%) $23.75
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $18,977,413) 885,335
Net asset value and offering price per share $21.44
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1999
INVESTMENT INCOME
Dividends $ 960,571
Interest 681,309
Security lending income 41,168
------------
Total investment income 1,683,048
------------
EXPENSES
Investment advisory fee 2,261,328
Distribution fee, Class A 712,470
Distribution fee, Class B 165,224
Financial agent fee 242,473
Transfer agent 679,651
Printing 194,303
Professional 47,023
Custodian 31,071
Registration 26,919
Trustees 17,000
Miscellaneous 17,352
------------
Total expenses 4,394,814
Custodian fees paid indirectly (8,980)
------------
Net expenses 4,385,834
------------
NET INVESTMENT LOSS (2,702,786)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 29,467,611
Net change in unrealized appreciation (depreciation) on
investments 81,075,738
------------
NET GAIN ON INVESTMENTS 110,543,349
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $107,840,563
============
See Notes to Financial Statements
47
<PAGE>
Phoenix-Seneca Mid Cap Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
11/30/99 11/30/98
---------- -----------
<S> <C> <C>
FROM OPERATIONS
Net investment loss $ (2,702,786) $ (467,524)
Net realized gain 29,467,611 61,746,081
Net change in unrealized appreciation (depreciation) 81,075,738 (38,514,321)
------------ ------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 107,840,563 22,764,236
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A (57,917,557) (33,084,355)
Net realized gains, Class B (3,411,419) (1,776,186)
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (61,328,976) (34,860,541)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (3,941,723 and 2,824,332 shares, respectively) 75,023,915 55,807,991
Net asset value of shares issued from reinvestment of distributions
(3,259,092 and 1,780,474 shares, respectively) 55,010,407 32,263,501
Cost of shares repurchased (7,070,190 and 8,014,004 shares, respectively) (133,053,542) (157,423,669)
------------ ------------
Total (3,019,220) (69,352,177)
------------ ------------
CLASS B
Proceeds from sales of shares (118,234 and 92,246 shares, respectively) 2,053,280 1,729,101
Net asset value of shares issued from reinvestment of distributions
(195,577 and 96,993 shares, respectively) 3,150,463 1,705,266
Cost of shares repurchased (246,309 and 295,559 shares, respectively) (4,272,459) (5,608,396)
------------ ------------
Total 931,284 (2,174,029)
------------ ------------
DECREASE IN NET ASSETS FROM SHARE TRANSACTIONS (2,087,936) (71,526,206)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 44,423,651 (83,622,511)
NET ASSETS
Beginning of period 295,013,739 378,636,250
------------ ------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $0 AND $0, RESPECTIVELY.) $339,437,390 $295,013,739
============ ============
</TABLE>
See Notes to Financial Statements
48
<PAGE>
Phoenix-Seneca Mid Cap Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------
YEAR ENDED NOVEMBER 30
------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.90 $20.64 $21.65 $22.03 $18.03
INCOME FROM INVESTMENT OPERATIONS(4)
Net investment income (loss) (0.16)(1) 0.01 (0.02)(1) (0.03)(1) 0.05(1)
Net realized and unrealized gain (loss) 7.10 1.18 1.52 2.53 4.74
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 6.94 1.19 1.50 2.50 4.79
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- (0.06)
Dividends from net realized gains (4.22) (1.93) (2.51) (2.88) (0.73)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (4.22) (1.93) (2.51) (2.88) (0.79)
------ ------ ------ ------ ------
Change in net asset value 2.72 (0.74) (1.01) (0.38) 4.00
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $22.62 $19.90 $20.64 $21.65 $22.03
====== ====== ====== ====== ======
Total return(2) 42.14% 6.64% 8.12% 13.52% 27.87%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $320,460 $279,326 $360,053 $451,474 $487,674
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.41%(3) 1.30% 1.33% 1.35% 1.42%
Net investment income (loss) (0.86)% (0.10)% (0.08)% (0.17)% 0.28%
Portfolio turnover 177% 379% 161% 242% 218%
CLASS B
------------------------------------------------------
YEAR ENDED NOVEMBER 30
------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.18 $20.11 $21.30 $21.85 $17.97
INCOME FROM INVESTMENT OPERATIONS(4)
Net investment income (loss) (0.28)(1) (0.18) (0.16)(1) (0.18)(1) (0.12)(1)
Net realized and unrealized gain (loss) 6.76 1.18 1.47 2.51 4.75
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 6.48 1.00 1.31 2.33 4.63
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- (0.02)
Dividends from net realized gains (4.22) (1.93) (2.50) (2.88) (0.73)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (4.22) (1.93) (2.50) (2.88) (0.75)
------ ------ ------ ------ ------
Change in net asset value 2.26 (0.93) (1.19) (0.55) 3.88
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $21.44 $19.18 $20.11 $21.30 $21.85
====== ====== ====== ====== ======
Total return(2) 41.06% 5.80% 7.27% 12.75% 26.92%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $18,977 $15,688 $18,583 $17,599 $10,908
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.16%(3) 2.04% 2.08% 2.11% 2.18%
Net investment income (loss) (1.61)% (0.85)% (0.85)% (0.92)% (0.58)%
Portfolio turnover 177% 379% 161% 242% 218%
<FN>
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in total return calculation.
(3) The ratio of expenses to average net assets excludes the effect of expense
offsets for custodian fees; if expense offsets were included, the ratio
would not significantly differ.
(4) 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.
</FN>
</TABLE>
See Notes to Financial Statements
49
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1999
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, five Funds are offered for sale: International Fund, Real Estate
Securities Fund, Emerging Markets Bond Fund, Tax-Exempt Bond Fund and Mid Cap
Fund. Each Fund has distinct investment objectives. The International Fund seeks
a high total return consistent with reasonable risk through investment in an
internationally diversified portfolio of equity securities. The Real Estate
Securities Fund seeks capital appreciation and income with approximately equal
emphasis. The Emerging Markets Bond Fund seeks to achieve high current income
with a secondary objective of long-term capital appreciation. The Tax-Exempt
Bond Fund seeks as high a level of current income exempt from federal income
taxation as is consistent with preservation of capital. The Mid Cap Fund seeks
as its investment objective long-term appreciation of capital.
The Trust offers both Class A and Class B shares on each Fund and one
additional class of shares, Class C on International Fund and Emerging Markets
Bond Fund. 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. 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 Fund 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 Fund 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 Fund which amortizes both premiums and discounts over the life
of the respective securities using the effective interest method.
C. INCOME TAXES:
Each Fund is treated as a separate taxable entity. It is the policy of each
Fund in the Trust to comply with the requirements of the Internal Revenue Code
(the "Code"), applicable to regulated investment companies, and to distribute
substantially all of its taxable and tax-exempt income to its shareholders. In
addition, each Fund intends to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Code. Therefore, no
provision for federal income taxes or excise taxes has been made.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by each Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, expiring
capital loss carryforwards, foreign currency gain/loss, partnerships, 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.
50
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1999 (CONTINUED)
F. FORWARD CURRENCY CONTRACTS:
The International Fund, Emerging Markets Bond Fund and Mid Cap Fund may
enter into forward currency contracts in conjunction with the planned purchase
or sale of foreign denominated securities in order to hedge the U.S. dollar cost
or proceeds. Forward currency contracts involve, to varying degrees, elements of
market risk in excess of the amount recognized in the Statement of Assets and
Liabilities. Risks arise from the possible movements in foreign exchange rates
or if the counterparty does not perform under the contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time of
the contract. These contracts are traded directly between currency traders and
their customers. The contract is marked-to-market daily and the change in market
value is recorded by each Fund as an unrealized gain (or loss). When the
contract is closed or offset with the same counterparty, the Fund records a
realized gain (or loss) equal to the change in the value of the contract when it
was opened and the value at the time it was closed or offset.
G. 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 Fund (other than Real Estate
Securities Fund) 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 Funds 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 Funds 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 Fund as
unrealized gains or losses. When the contract is closed, the Fund 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 Fund 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 Fund (other than Real Estate Securities Fund), may write covered
options or purchase options contracts for the purpose of hedging against changes
in the market value of the underlying securities or foreign currencies.
Each Fund will realize a gain or loss upon the expiration or closing of the
option transaction. Gains and losses on written options are reported separately
in the Statement of Operations. When a written option is exercised, the proceeds
on sales or amounts paid are adjusted by the amount of premium received. Options
written are reported as a liability in the Statement of Assets and Liabilities
and subsequently marked to market to reflect the current value of the option.
The risk associated with written options is that the change in value of options
contracts may not correspond to the change in value of the hedged instruments.
In addition, losses may arise from changes in the value of the underlying
instruments, or if a liquid secondary market does not exist for the contracts.
The Funds may purchase options which are included in the Fund's Schedule of
Investments and subsequently marked to market to reflect the current value of
the option. When a purchased option is exercised, the cost of the security is
adjusted by the amount of premium paid. The risk associated with purchased
options is limited to the premium paid.
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 Fund) loans
securities to qualified brokers through an agreement with State Street Bank &
Trust (the Custodian) and Brown Brothers, Harriman, custodian for the
International Fund. 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
51
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1999 (CONTINUED)
securities or in the foreclosure on collateral. At November 30, 1999, the Trust
had the following market value of security loans and collateral:
Value of
Securities Value of
on Loan Collateral
------------ -------------
Mid Cap Fund ............................. $11,498,566 $11,807,420
K. EXPENSES:
Expenses incurred by the Trust with respect to any two or more Funds are
allocated in proportion to the net assets of each Fund, except where allocation
of direct expense to each Fund or an alternative allocation method can be more
fairly made.
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 Fund, are entitled to a fee, based upon the following annual rates as
a percentage of the average daily net assets of each Fund:
1st $1-2 $2+
$1 Billion Billion Billion
---------- ------- -------
International Fund................ 0.75% 0.70% 0.65%
Real Estate Securities Fund....... 0.75% 0.70% 0.65%
Emerging Markets Bond Fund........ 0.75% 0.70% 0.65%
Tax-Exempt Bond Fund.............. 0.45% 0.40% 0.35%
Mid Cap Fund...................... 0.75% 0.70% 0.65%
The respective Advisers have agreed to reimburse the Real Estate Securities
Fund to the extent that total expenses (excluding interest, taxes, brokerage
fees and commissions, and extraordinary expenses) exceed 1.30% of the average
daily net assets for Class A shares, and 2.05% of the average daily net assets
for Class B shares.
Aberdeen Fund Managers, Inc. ("Aberdeen") is subadvisor to the
International Fund, 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 Fund up to $1 billion,
0.35% between $1 billion and $2 billion, and 0.325% in excess of $2 billion.
Seneca Capital Management LLC ("Seneca") is subadvisor to the Mid Cap Fund,
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 0.325% of the average daily net assets of the Mid Cap Fund.
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 $97,677
for Class A shares and deferred sales charges of $391,750 for Class B shares and
$10,658 for Class C shares for the year ended November 30, 1999. 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, 1999, $1,060,487
was retained by the Distributor and $1,310,508 was paid out to unaffiliated
Participant and $236,380 was paid to W.S. Griffith, an indirect subsidiary of
PHL.
As Financial Agent of the Trust, PEPCO receives a financial agent fee equal
to the sum of (1) the documented cost of fund accounting and related services
provided by PFPC Inc. (subagent to PEPCO), plus (2) the documented cost to PEPCO
to provide financial reporting, tax services and oversight of subagent's
performance. The current fee schedule of PFPC Inc. ranges from 0.085% to 0.0125%
of the average daily net asset values of the 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, 1999, transfer
agent fees were $1,462,961 of which PEPCO retained $539,147 which is net of fees
paid to State Street.
At November 30, 1999 PHL and its affiliates held Phoenix Multi-Portfolio
Fund shares which aggregated the following:
Aggregate
Net Asset
Shares Value
--------- -----------
International Fund
--Class C ........................... 7,809 $ 114,402
Real Estate Securities Fund
--Class A ........................... 540,778 6,088,044
--Class B ........................... 12,840 141,754
Emerging Markets Bond Fund
--Class A ........................... 2,083,489 16,042,865
--Class B ........................... 17,508 113,061
Tax-Exempt Bond Fund
--Class A ........................... 280 2,881
52
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1999 (CONTINUED)
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended November 30, 1999
(excluding U.S. Government and agency securities, short-term securities, futures
contracts and forward currency contracts) aggregated the following:
Purchases Sales
------------ -------------
International Fund ........................ $138,573,761 $188,343,642
Real Estate Securities Fund ............... 7,915,943 17,436,749
Emerging Markets Bond Fund ................ 312,790,341 290,272,126
Tax-Exempt Bond Fund ...................... 18,896,871 31,875,971
Mid Cap Fund .............................. 510,742,458 579,956,383
4. FORWARD CURRENCY CONTRACTS
As of November 30, 1999, the Emerging Market Bond Fund had entered into the
following forward currency contracts which contractually obligate the Fund to
deliver/buy currencies at specified dates:
Net
In Unrealized
Contracts Exchange Settlement Appreciation
To Deliver/Buy For Date Value (Depreciation)
- - ------------------ ------------- ------- ---------- --------------
JPY 1,300,000 US 11,194 3/6/00 $ 9,409 $ (1,785)
JPY 164,750,000 US 1,396,444 3/14/00 1,648,870 252,426
JPY (164,920,000) US (1,458,179) 3/14/00 (1,648,870) (190,691)
---------
$ 59,950
=========
JPY = Japanese Yen
US = U.S. Dollar
5. 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.
6. CAPITAL LOSS CARRYOVERS
The following Funds have capital loss carryovers which may be used to
offset future capital gains.
Real Estate Emerging Tax-Exempt
Securities Markets Bond
Expiration Date Fund Fund Fund
- --------------- ----------- -------- ----------
2006 ................................ $ 70,513 $42,839,795 $ 381,648
2007 ................................ 1,889,262 3,990,182 2,973,348
----------- ----------- ----------
Total ............................. $1,959,775 $46,829,977 $3,354,996
=========== =========== ==========
7. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, each Fund has recorded
several reclassifications in the capital accounts. These reclassifications have
no impact on the net asset value of the Funds and are designed generally to
present undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder. As of November 30, 1999,
the Funds recorded the following reclassifications to increase (decrease) the
accounts listed below:
Capital paid
Undistributed Accumulated in on shares
net investment net realized of beneficial
income gain (loss) interest
-------------- ------------- --------------
International Fund $ 471,438 $ (669,276) $ 197,838
Real Estate Securities Fund 4,061 0 (4,061)
Emerging Markets Bond Fund (386,459) 460,452 (73,993)
Tax-Exempt Bond Fund 618,162 (29,724) (588,438)
Mid Cap Fund 2,702,786 (2,703,765) 979
TAX NOTICE (UNAUDITED)
For the fiscal year ended November 30, 1999, the Tax-Exempt Bond Fund
distributed $4,161,165 of exempt-interest dividends. For the fiscal year ended
November 30, 1999, the following Funds distributed long-term capital gains
dividends as follows:
International Fund............................. $19,429,556
Mid Cap Fund................................... 34,894,348
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.
53
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[GRAPHIC OMITTED]
PRICEWATERHOUSECOOPERS
To the Trustees and Shareholders of
Phoenix Multi-Portfolio Fund
In our opinion, the accompanying statement of assets and liabilities,
including the schedules of investments (except for bond ratings), and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the Phoenix-Aberdeen International Fund, the Phoenix-Duff & Phelps Real Estate
Securities Fund, the Phoenix-Goodwin Emerging Markets Bond Fund, the
Phoenix-Goodwin Tax-Exempt Bond Fund and the Phoenix-Seneca Mid Cap Fund
(formerly known as Phoenix International Portfolio, Phoenix Real Estate
Securities Portfolio, Phoenix Emerging Markets Bond Portfolio, Phoenix
Tax-Exempt Bond Portfolio and Phoenix Mid Cap Portfolio) (constituting the
Phoenix Multi-Portfolio Fund, hereafter referred to as the "Fund") at November
30, 1999, and the results of each of their operations for the year then ended,
the changes in each of their net assets for each of the two years in the period
then ended and the financial highlights for each of the fiscal 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, 1999 by correspondence with the custodians and brokers, provide a
reasonable basis for the opinion expressed above.
/S/PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
January 14, 2000
54
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
PART C--OTHER INFORMATION
ITEM 23. EXHIBITS
a.1 Agreement and Declaration of Trust, filed via EDGAR as Exhibit
1.1 with Post-Effective Amendment No. 20, on March 28, 1997,
and incorporated herein by reference.
a.2 Amendment to Declaration of Trust, filed via EDGAR as Exhibit
1.2 with Post-Effective Amendment No. 20, on March 28, 1997,
and incorporated herein by reference.
a.3 Amendment to Declaration of Trust, filed via EDGAR as Exhibit
1.3 with Post-Effective Amendment No. 20, on March 28, 1997,
and incorporated herein by reference.
a.4 Amendment to Declaration of Trust adding the Phoenix Real
Estate Securities Portfolio, filed via EDGAR as Exhibit 1.4
with Post-Effective Amendment No. 20, on March 28, 1997, and
incorporated herein by reference.
a.5 Amendment to Declaration of Trust designating Classes of
Shares, filed via EDGAR as Exhibit 1.5 with Post-Effective
Amendment No. 20, on March 28, 1997, 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, filed via EDGAR as Exhibit 1.8
with Post-Effective Amendment No. 20, on March 28, 1997, 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 with Post-Effective Amendment No. 25 on March
30, 1999 and incorporated by reference.
a.11 Amendment to Declaration of Trust changing the names of each of
the portfolios filed via EDGAR with Post-Effective Amendment
No. 25 on March 30, 1999 and incorporated by reference.
a.12* Amendment to Declaration of Trust eliminating a certain
internally ambiguous provision dated July 22, 1999, filed via
EDGAR herewith.
a.13* Amendment to Declaration of Trust abolishing "Phoenix-Goodwin
Strategic Income Fund dated July 22, 1999, filed via EDGAR
herewith.
a.14* Amendment to Declaration of Trust adding the Phoenix-Seneca Tax
Sensitive Growth Fund and adding Class X Shares dated February
25, 2000, 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 and Phoenix Endowment Equity Portfolios, filed
via EDGAR as Exhibit 5.1 with Post-Effective Amendment No. 20,
on March 28, 1997, 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 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 Exhibit 5.4 with Post-Effective
Amendment No. 23 on March 27, 1998, and incorporated herein by
reference.
C-1
<PAGE>
d.4 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.
d.5 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.
d.6* Form of Investment Advisory Agreement between Registrant and
Phoenix Investment Counsel, Inc. covering Phoenix-Seneca Tax
Sensitive Growth Fund, filed via EDGAR herewith.
d.7* Form of Subadvisory Agreement between Phoenix Investment
Counsel, Inc. and Seneca Capital Management, LLC covering
Phoenix-Seneca Tax Sensitive Growth Fund, filed via EDGAR
herewith.
e.1 Underwriting Agreement between Registrant and Phoenix Equity
Planning Corporation dated November 19, 1997, 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 via EDGAR as Exhibit 8.2 with Post-Effective Amendment
No. 20, on March 28, 1997, and incorporated herein by
reference.
h.1 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 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 via
EDGAR as Exhibit 9.3 with Post-Effective Amendment No. 20, and
incorporated herein by reference.
h.4 First Amendment to Financial Agent Agreement between Registrant
and Phoenix Equity Planning Corporation dated March 23, 1998,
filed via EDGAR with Post-Effective Amendment No. 26 on
September 20, 1999, and incorporated herein by reference.
h.5 Second Amendment to Financial Agent Agreement between
Registrant and Phoenix Equity Planning Corporation dated July
31, 1998, filed via EDGAR with Post-Effective Amendment No. 26
on September 20, 1999, and incorporated herein by reference.
i.1 Opinion and Consent of Counsel covering shares of the Phoenix
Tax-Exempt Bond Portfolio, 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 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
Real Estate Securities Portfolio, filed via EDGAR as Exhibit
10.4 with Post-Effective Amendment No. 20 and incorporated
herein by reference.
i.4* Opinion and Consent of Counsel covering shares of the
Phoenix-Seneca Tax Sensitive Growth Fund, filed via EDGAR
herewith.
j.* Consent of Independent Accountants filed via EDGAR herewith.
C-2
<PAGE>
k. Not applicable.
l. Initial Capital Agreement, 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.
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 herewith.
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.
o.1* Amended and Restated Rule 18f-3 Multi-Class Distribution Plan
effective November 17, 1999, filed via EDGAR herewith.
o.*2 First Amendment to the Amended and Restated Rule 18f-3 Plan,
effective February 24, 2000, filed via EDGAR herewith.
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 Series Fund, Phoenix-Aberdeen Worldwide Opportunities Fund,
Phoenix-Duff & Phelps Institutional Mutual Funds, Phoenix-Engemann Funds,
Phoenix Equity Series Fund, Phoenix-Euclid Funds, Phoenix-Goodwin California Tax
Exempt Bonds, Inc., Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.,
Phoenix-Goodwin Multi-Sector Short Term Bond Fund,
C-3
<PAGE>
Phoenix Investment Trust 97, Phoenix-Oakhurst Income & Growth Fund,
Phoenix-Oakhurst Strategic Allocation Fund, Inc., Phoenix-Seneca Funds, Phoenix
Series Fund, Phoenix Strategic Equity Series Fund, Phoenix-Zweig Trust, Phoenix
Home Life Variable Universal Life Account, Phoenix Home Life Variable
Accumulation Account, PHL Variable Accumulation Account, Phoenix Life and
Annuity Variable Universal Life Account and PHL Variable Separate Account MVA1.
(b) Directors and executive officers of Phoenix Equity Planning Corporation
are as follows:
<TABLE>
<CAPTION>
NAME AND 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 and Vice President
100 Bright Meadow Boulevard Chief Financial Officer
P.O. Box 2200
Enfield, CT 06083-2200
John F. Sharry President, Executive
56 Prospect St. Retail Distribution Vice President
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 None
Suite 3600 Secretary
55 East Monroe St.
Chicago, IL 60603
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
C-4
<PAGE>
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.
ITEM 29. MANAGEMENT SERVICES
None.
ITEM 30. UNDERTAKINGS
None.
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 28th day of February, 2000.
PHOENIX MULTI-PORTFOLIO FUND
ATTEST: /S/ PAMELA S. SINOFSKY BY: /S/ PHILIP R. MCLOUGHLIN
------------------------------ ------------------------------
PAMELA S. SINOFSKY PHILIP R. MCLOUGHLIN
ASSISTANT SECRETARY PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below by the following persons in
the capacities indicated, on this 28th day of February, 2000.
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
Exhibit a.12
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 organized under a Declaration of Trust
dated October 15, 1987, as amended from time to time, (the "Trust"), 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, do hereby certify that at
a duly held meeting of the Board of Trustees on February 24, 1999, acting
pursuant to ARTICLE 6 Section 6.33 of said Declaration of Trust for the purpose
of curing ARTICLE 3 Section 3.2(d) which is internally ambiguous and
inconsistent with ARTICLE 3 Section 3.2(h) unanimously voted to amend said Trust
effective on February 24, 1999 by deleting in Section 3.2(d) of Article 3 the
words "subject to the approval of a Vote of a Majority of the Outstanding Voting
Securities of that Series."
IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of July, 1999.
/s/ Philip R. McLoughlin
-------------------------------------------
Philip R. McLoughlin, individually and as
attorney-in-fact for Robert Chesek, E.
Virgil Conway, William W. Crawford, Harry
Dalzell-Payne, William N. Georgeson,
Francis E. Jefferies, Leroy Keith, Jr.,
Eileen A. Moran, Everett L. Morris, James
M. Oates, Richard A. Pavia, 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 date 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.13
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 organized under a Declaration of Trust
dated October 15, 1987, as amended from time to time, (the "Trust"), 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, do hereby certify that at
a duly held meeting of the Board of Trustees on February 24, 1999, acting
pursuant to ARTICLE 6 Section 6.33 of said Declaration of Trust for the purpose
of abolishing the Series designated "Phoenix-Goodwin Strategic Income Fund
unanimously voted to amend said Trust effective on April 14, 1999 by deleting
the first paragraph of Section 3.2 of Article 3 and by inserting in lieu of such
paragraph the following paragraph:
"Without limiting the authority of the Trustees set forth in
Section 3.1 to establish and designate any further Series, the
following five Series are hereby established and designated:
Phoenix-Goodwin Tax Exempt Bond Fund, Phoenix-Seneca Mid Cap
Fund, Phoenix-Aberdeen International 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 22nd day of July, 1999.
/s/ Philip R. McLoughlin
-----------------------------------------
Philip R. McLoughlin, individually and as
attorney-in-fact for Robert Chesek, E.
Virgil Conway, William W. Crawford, Harry
Dalzell-Payne, William N. Georgeson,
Francis E. Jefferies, Leroy Keith, Jr.,
Eileen A. Moran, Everett L. Morris, James
M. Oates, Richard A. Pavia, 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 date 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.14
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 organized under a Declaration of Trust
dated October 15, 1987, as amended from time to time, (the "Trust"), 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 25, 1999, executed by each
of such Trustees, a copy of which is attached hereto, do hereby certify that at
duly held meetings of the Board of Trustees on August 25, 1999 and February
24,2000, 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 said Declaration of Trust for the
purpose of adding the Series designated "Phoenix-Seneca Tax Sensitive Growth
Fund" and to further change the current Class X designation voted to amend said
Trust effective on February 28, 2000, as follows:
1) By deleting the first paragraph of Section 3.2 of Article 3 and by
inserting in lieu of such paragraph the following paragraph:
"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-Duff &
Phelps Real Estate Securities Fund, Phoenix-Goodwin Emerging
Markets Bond Fund and Phoenix-Seneca Tax Sensitive Growth
Fund", and
2) By amending and restating Article III, Section 3.8 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". 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
<PAGE>
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 extent and for such purposes as the Trustees may
deem appropriate. The allocation of investment income
or capital gains and expenses and liabilities of the
Trust 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, 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
purchased through the automatic reinvestment
of a dividend or a distribution with respect
to Class B Shares, shall be converted
automatically, and without any action or
choice on the part of the holder thereof, into
Class A Shares 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 or 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
<PAGE>
shares converting to Class A Shares bears to
the shareholder's total Class B Shares not
acquired through dividends and distributions.
(iii) The conversion of Class B Shares to Class A
Shares is subject to the continuing
availability of an opinion of counsel or a
ruling of the Internal Revenue Service that
payment of different dividends on Class A and
Class B Shares does not result in the Trust's
dividends or distributions constituting
"preferential dividends" under the Internal
Revenue Code of 1986, as amended, and that the
conversion of shares does not constitute a
taxable event under federal income tax law.
(iv) The number of shares of Class A Shares into
which a share of Class B Shares is converted
pursuant to paragraphs (f)(I) and (f) (ii)
hereof shall equal the number (including for
this purpose fractions of a share) obtained by
dividing the net asset value per share of the
Class B Shares (for purposes of sales and
redemptions thereof on the Conversion Date) by
the net asset value per share of the Class A
Shares of the same Series (for purposes of
sales and redemptions therof 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 25th day of February, 2000.
/s/ Philip R. McLoughlin
-------------------------------------------
Philip R. McLoughlin, individually and as
attorney-in-fact for Robert Chesek, E.
Virgil Conway, Harry Dalzell-Payne, Francis
E. Jefferies, Leroy Keith, Jr., Everett L.
Morris, James M. Oates, Calvin J. Pedersen,
Richard E. Segerson, and Lowell P. Weicker,
Jr.
<PAGE>
DELEGATION AND POWER OF ATTORNEY
PHOENIX-ABERDEEN SERIES FUND
THE PHOENIX EDGE SERIES FUND
PHOENIX EQUITY SERIES FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX INVESTMENT TRUST 97
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
The undersigned, being all of the Trustees of Phoenix-Aberdeen Series, The
Phoenix Edge Series Fund, Phoenix Equity Series Fund, Phoenix Income and Growth
Fund, Phoenix Investment Trust 97, Phoenix Multi-Portfolio Fund, Phoenix
Multi-Sector Short Term Bond Fund, Phoenix Series Fund, Phoenix Strategic Equity
Series Fund, and Phoenix Worldwide Opportunities Fund (sometimes hereafter
collectively the "Funds"), other than Philip R. McLoughlin, do hereby declare,
delegate and certify as follows:
1. Pursuant to Section 2.2 of that certain Declaration of Trust dated
August 25, 1997 establishing Phoenix Investment Trust 97, pursuant
to Section 2.2 of that certain Agreement and Declaration of Trust
dated May 30, 1997, establishing Phoenix Equity Series Fund.
Pursuant to Section 2.2 of that certain Agreement and Declaration
of Trust dated May 31, 1996, as amended, establishing
Phoenix-Aberdeen Series Fund, pursuant to Section 2.2 of that
certain Agreement and Declaration of Trust dated February 18, 1986,
as amended, establishing The Big Edge Series Fund, now know as the
Phoenix Edge Series Fund, pursuant to Section 2.2 of that certain
Declaration of Trust of Phoenix-Chase Series Fund, as amended and
restated July 28, 1980, as further amended, now know as Phoenix
Series Fund, and Section 2.2 of that certain Agreement and
Declaration of Trust dated October 15, 1987, as amended,
establishing the Phoenix Multi-Portfolio Fund, the undersigned, and
each of them, hereby appoints PHILIP R. MCLOUGHLIN, his agent and
attorney-in-fact for a period of one (1) year from the date hereof,
to execute any and all instruments including specifically but
without limitation amendments of either of said trust instruments
and appointments of trustee(s), provided that such action as
evidenced by such instrument shall have been adopted by requisite
vote of the Trustees and, where necessary, the Shareholders of such
funds, such vote or votes to be conclusively presumed by the
execution of such instrument by such attorney-in-fact.
2. Pursuant to Section 3.6 of that certain Declaration of Trust dated
June 25, 1986, as amended, establishing National Total Income Fund,
now know as Phoenix Income and Growth Fund, pursuant to Section 3.6
of that certain
<PAGE>
DELEGATION AND POWER OF ATTORNEY
August 25, 1999
Declaration of Trust dated June 25, 1986, as amended, establishing
National Stock Fund, now known as Phoenix Strategic Equity Series
Fund, and pursuant to Section 2.5 of that certain Declaration of
Trust dated February 20, 1992, as amended, establishing National
Short-Term Income Series, now know as Phoenix Multi-Sector Short
Term Bond Fund, and pursuant to Section 2.5 of that certain
Declaration of Trust of National Worldwide Opportunities Fund dated
November 4, 1991, as amended, now know as Phoenix Worldwide
Opportunities Fund, the undersigned, and each of them, hereby
delegates to and appoints PHILIP R. MCLOUGHLIN, his agent and
attorney-in-fact for a period of one (1) year from the date hereof,
to execute any and all instruments, including specifically but
without limitation amendments of each and every said trust
instrument and appointments of trustee(s), provided that such
action as evidenced by such instrument shall have been adopted by
requisite vote of the Trustees and, where necessary, the
Shareholders of such funds, such vote or votes to be conclusively
presumed by the execution of such instrument by such
attorney-in-fact.
3. The undersigned Trustees, and each of them, hereby further declare
that a photostatic, xerographic or other similar copy of this
original instrument shall be as effective as the original, and
that, as to any such amendment of any of the aforementioned trust
agreements or declarations, such copy shall be filed with such
instrument of amendment in the records of the Office of the
Secretary of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, we have hereunto subscribed this Delegation and Power of
Attorney this 25th day of August 1999.
/s/ Robert Chesek /s/ James M. Oates
- ----------------- ------------------------------
Robert Chesek James M. Oates
/s/ E. Virgil Conway /s/ Calvin J. Pedersen
- -------------------- ------------------------------
E. Virgil Conway Calvin J. Pedersen
/s/ Harry Dalzell-Payne
- ----------------------- ------------------------------
Harry Dalzell-Payne Herbert Roth, Jr.
/s/ Francis E. Jeffries /s/ Richard E. Segersen
- ----------------------- ------------------------------
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. Morriss
- ----------------------
Everett L. Morris
Exhibit d.6
INVESTMENT ADVISORY AGREEMENT
<PAGE>
Phoenix Investment Counsel, Inc.
56 Prospect Street
Hartford, CT 06118
Ladies and Gentleman:
Please be advised that effective on March 1, 2000 the Phoenix-Seneca
Tax Sensitive Growth Fund shall be an "Additional Series" of the Phoenix
Multi-Portfolio Fund as setforth in Paragraph 2 of a certain Investment Advisory
Agreement by and between Phoenix Investment Counsel, Inc. and Phoenix
Multi-Portfolio Fund dated January 1, 1994 as amended.
Further, Paragraph 8(a) is amended to include the Phoenix Seneca Tax
Sensitive Growth Fund as follows:
<TABLE>
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<CAPTION>
Series 1st $1 Billion $1-2 Billion $2+ Billion
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
Phoenix Seneca Tax Sensitive .75% .70% .65%
Growth Fund
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>
Kindly acknowledge your agreement with the foregoing by signing in the
space provided below.
Very truly yours,
Phoenix Multi-Portfolio Fund
By: /s/ Philip R. McLoughlin
-----------------------------
Philip R. McLoughlin
President
Agreed and Consented to
Phoenix Investment Counsel, Inc.
By: /s/ Michael E. Haylon
-----------------------------
Name: Michael E. Haylon
Title: President
Exhibit d.7
SUBADVISORY AGREEMENT
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
SUBADVISORY AGREEMENT
---------------------
March 1, 2000
Seneca Capital Management LLC
909 Montgomery Street
San Francisco, California 94133
RE: SUBADVISORY AGREEMENT
Gentlemen:
Phoenix Multi-Portfolio Fund (the "Trust") is a diversified open-end investment
company of the series type registered under the Investment Company Act of 1940
(the "Act"), and is subject to the rules and regulations promulgated thereunder.
The shares of the Trust are offered or may be offered in several series,
including the Phoenix-Seneca Tax Sensitive Growth Fund (hereinafter referred to
as the "Fund").
Phoenix Investment Counsel, Inc. (the "Adviser") evaluates and recommends series
advisers for the Trust and is responsible for the overall management of the
Fund.
1. Employment as a Subadviser. The Adviser, being duly authorized, hereby
employs Seneca Capital Management LLC (the "Subadviser") as a
subadviser to invest and reinvest the assets of the Fund on the terms
and conditions set forth herein. The services of the Subadviser
hereunder are not to be deemed exclusive; the Subadviser may render
services to others and engage in other activities which do not conflict
in any material manner in the Subadviser's performance hereunder.
2. Acceptance of Employment; Standard of Performance. The Subadviser
accepts its employment as a subadviser to the Adviser and agrees to use
its best professional judgment to make investment decisions for the
Trust in accordance with the provisions of this Agreement.
3. Services of Subadviser. The Subadviser shall provide the services set
forth herein and in Schedule A attached hereto and made a part hereof.
In providing management services to the Fund, the Subadviser shall be
subject to the investment objectives, policies and restrictions of the
Trust as they apply to the Fund and as set forth in the Trust's then
current Prospectus and Statement of Additional Information (as the same
may be modified from time to time) and to the Trust's Agreement and
Declaration of Trust, to the investment and other restrictions set
forth in the Act, the Securities Act of 1933 and the Internal Revenue
Code and the rules and regulations thereunder, and to the supervision
and control of the Trustees of the Trust (the "Trustees"). The
Subadviser shall not, without the Adviser's prior approval, effect any
transactions which would cause the Trust at the time of the transaction
to be out of compliance with any of such restrictions or policies.
4. Expenses. The Subadviser shall furnish at its own expense, or pay the
expenses of the Adviser, for the following:
<PAGE>
(a) Office facilities, including office space, furniture and
equipment utilized by its employees, in the fulfillment
of Subadviser's responsibilities hereunder;
(b) Personnel necessary to perform the functions required to
manage the investment and reinvestment of the Trust's
assets (including those required for research,
statistical and investment work), and to fulfill the
other functions of the Subadviser hereunder;
(c) Personnel to serve without salaries for the Trust as
officers or agents of the Trust. The Subadviser need not
provide personnel to perform, or pay the expenses of the
Adviser for, services customarily performed for an
open-end management investment company by its national
distributor, custodian, financial agent, transfer agent,
auditors and legal counsel; and
(d) Compensation and expenses, if any, of the Trustees who
are also full-time employees of the Subadviser.
5. Transaction Procedures. All transactions for the Fund will be
consummated by payment to, or delivery by, the Custodian(s) from time
to time designated by the Trust (the "Custodian"), or such depositories
or agents as may be designated by the Custodian pursuant to its
agreement with the Trust (the "Custodian Agreement"), of all cash
and/or securities due to or from the Fund. The Subadviser shall not
have possession or custody of such cash and/or securities or any
responsibility or liability with respect to such custody. The
Subadviser shall advise the Custodian and confirm in writing to the
Trust all investment orders for the Fund placed by it with brokers and
dealers at the time and in the manner set forth in the Custodian
Agreement and in Schedule B hereto (as amended from time to time). The
Trust shall issue to the Custodian such instructions as may be
appropriate in connection with the settlement of any transaction
initiated by the Subadviser. The Trust shall be responsible for all
custodial arrangements and the payment of all custodial charges and
fees, and, upon giving proper instructions to the Custodian, the
Subadviser shall have no responsibility or liability with respect to
custodial arrangements or the acts, omissions or other conduct of the
Custodian.
6. Allocation of Brokerage. The Subadviser shall have authority and
discretion to select brokers and dealers to execute Fund transactions
initiated by the Subadviser, and to select the markets on or in which
the transactions will be executed.
A. In placing orders for the sale and purchase of securities for
the Fund, the Subadviser's primary responsibility shall be to seek the
best execution of orders at the most favorable prices. However, this
responsibility shall not obligate the Subadviser to solicit competitive
bids for each transaction or to seek the lowest available commission
cost to the Trust, so long as the Subadviser reasonably believes that
the broker or dealer selected by it can be expected to obtain "best
execution" on the particular transaction and determines in good faith
that the commission cost is reasonable in relation to the value of the
brokerage and research services (as defined in Section 28(e)(3) of the
Securities Exchange Act of 1934) provided by such broker or dealer to
the Subadviser, viewed in terms of either that particular transaction
or of the Subadviser's overall responsibilities with respect to its
clients, including the Trust, as to which the Subadviser exercises
investment discretion, notwithstanding that the Trust may not be the
direct or exclusive
2
<PAGE>
beneficiary of any such services or that another broker may be willing
to charge the Trust a lower commission on the particular transaction.
B. Subject to the requirements of paragraph A above, the Adviser
shall have the right to require that transactions giving rise to
brokerage commissions, in an amount to be agreed upon by the Adviser
and the Subadviser, shall be executed by brokers and dealers that
provide brokerage or research services to the Trust or that will be of
value to the Trust in the management of its assets, which services and
relationship may, but need not, be of direct or exclusive benefit to
the Trust. In addition, subject to paragraph A above, the applicable
Conduct Rules of the National Association of Securities Dealers, Inc.
and other applicable law, the Trust shall have the right to request
that transactions be executed by brokers and dealers by or through whom
sales of shares of the Trust are made.
C. The Subadviser shall not execute any transactions for the Trust
with a broker or dealer that is an "affiliated person" (as defined in
the Act) of the Trust, the Subadviser or the Adviser without the prior
written approval of the Trust.
7. Fees for Services. The compensation of the Subadviser for its services
under this Agreement shall be calculated and paid by the Adviser in
accordance with the attached Schedule C. Pursuant to the Investment
Advisory Agreement between the Trust and the Adviser, the Adviser is
solely responsible for the payment of fees to the Subadviser.
8. Limitation of Liability. The Subadviser shall not be liable for any
action taken, omitted or suffered to be taken by it in its best
professional judgment, in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement, or in accordance with specific directions or
instructions from the Trust, provided, however, that such acts or
omissions shall not have constituted a breach of the investment
objectives, policies and restrictions applicable to the Trust and that
such acts or omissions shall not have resulted from the Subadviser's
willful misfeasance, bad faith or gross negligence, a violation of the
standard of care established by and applicable to the Subadviser in its
actions under this Agreement or a breach of its duty or of its
obligations hereunder (provided, however, that the foregoing shall not
be construed to protect the Subadviser from liability under the Act,
other federal or state securities laws or common law).
9. Confidentiality. Subject to the duty of the Subadviser to comply with
applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Fund and the actions of
the Subadviser and the Trust in respect thereof.
10. Assignment. This Agreement shall terminate automatically in the event
of its assignment, as that term is defined in Section 2(a)(4) of the
Act. The Subadviser shall notify the Adviser in writing sufficiently in
advance of any proposed change of control, as defined in Section
2(a)(9) of the Act, as will enable the Adviser to consider whether an
assignment as defined in Section 2(a)(4) of the Act will occur and to
take the steps it deems necessary.
11. Representations, Warranties and Agreements of the Subadviser. The
Subadviser represents, warrants and agrees that:
3
<PAGE>
A. It is registered as an "investment adviser" under the
Investment Advisers Act of 1940 ("Advisers Act").
B. It will maintain, keep current and preserve on behalf of
the Trust, in the manner required or permitted by the Act and
the Rules thereunder, the records identified in Schedule D (as
amended from time to time). The Subadviser agrees that such
records are the property of the Trust, and will be surrendered
to the Trust or to the Adviser as agent of the Trust promptly
upon request of either.
C. It has a written code of ethics complying with the
requirements of Rule 17j-l under the Act and will provide the
Adviser with a copy of the code of ethics and evidence of its
adoption. Subadviser acknowledges receipt of the written code of
ethics adopted by and on behalf of the Trust (the "Code of
Ethics"). Within 10 days of the end of each calendar quarter
while this Agreement is in effect, a duly authorized compliance
officer of the Subadviser shall certify to the Trust and to the
Adviser that the Subadviser has complied with the requirements
of Rule 17j-l during the previous calendar quarter and that
there has been no violation of its code of ethics, or the Code
of Ethics, or if such a violation has occurred, that appropriate
action was taken in response to such violation. The Subadviser
shall permit the Trust and Adviser to examine the reports
required to be made by the Subadviser under Rule 17j-l(c)(1) and
this subparagraph.
D. Reference is hereby made to the Declaration of Trust
dated October 15, 1987, establishing the Trust, a copy of which
has been filed with the Secretary of the Commonwealth of
Massachusetts and elsewhere as required by law, and to any and
all amendments thereto so filed or hereafter so filed with the
Secretary of the Commonwealth of Massachusetts and elsewhere as
required by law. The name Phoenix Multi-Portfolio Fund refers to
the Trustees under said Declaration of Trust, as Trustees and
not personally, and no Trustee, shareholder, officer, agent or
employee of the Trust shall be held to any personal liability in
connection with the affairs of the Trust; only the trust estate
under said Declaration of Trust is liable. Without limiting the
generality of the foregoing, neither the Subadviser nor any of
its officers, directors, partners, shareholders or employees
shall, under any circumstances, have recourse or cause or
willingly permit recourse to be had directly or indirectly to
any personal, statutory, or other liability of any shareholder,
Trustee, officer, agent or employee of the Trust or of any
successor of the Trust, whether such liability now exists or is
hereafter incurred for claims against the trust estate.
12. Amendment. This Agreement may be amended at any time, but only by
written agreement between the Subadviser and the Adviser, which
amendment, other than amendments to Schedules B and D, is subject to
the approval of the Trustees and the Shareholders of the Trust as and
to the extent required by the Act.
13. Effective Date; Term. This Agreement shall become effective on the
date set forth on the first page of this Agreement. Unless terminated
as hereinafter provided, this Agreement shall remain in full force and
effect until December 31, 2000, and thereafter only so long as its
continuance has been specifically approved at least annually by the
Trustees in accordance with Section 15(a)
4
<PAGE>
of the Act, and by the majority vote of the disinterested Trustees in
accordance with the requirements of Section 15(c) thereof.
14. Termination. This Agreement may be terminated by either party, without
penalty, immediately upon written notice to the other party in the
event of a breach of any provision thereof by the party so notified, or
otherwise, upon sixty (60) days' written notice to the other party, but
any such termination shall not affect the status, obligations or
liabilities of either party hereto to the other party.
15. Applicable Law. To the extent that state law is not preempted by
the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement
shall be administered, construed and enforced according to the laws of
the Commonwealth of Massachusetts.
16. Severability. If any term or condition of this Agreement shall be
invalid or unenforceable to any extent or in any application, then the
remainder of this Agreement shall not be affected thereby, and each and
every term and condition of this Agreement shall be valid and enforced
to the fullest extent permitted by law.
PHOENIX INVESTMENT COUNSEL, INC.
By: /s/ Michael E. Haylon
-------------------------
Michael E. Haylon
President
ACCEPTED:
SENECA CAPITAL MANAGEMENT LLC
By: /s/ Sandra J. Monticelli
---------------------------
Sandra J. Monticelli
Chief Operating Officer
SCHEDULES: A. Subadviser Functions
B. Operational Procedures
C. Fee Schedule
D. Record Keeping Requirements
5
<PAGE>
SCHEDULE A
----------
SUBADVISER FUNCTIONS
With respect to managing the investment and reinvestment of the Fund
assets, the Subadviser shall provide, at its own expense:
(a) An investment program for the Fund consistent with its
investment objectives based upon the development, review and
adjustment of buy/sell strategies approved from time to time
by the Board of Trustees and Adviser;
(b) Implementation of the investment program for the Fund based
upon the foregoing criteria;
(c) Quarterly reports, in form and substance acceptable to the
Adviser, with respect to: i) compliance with the Code of
Ethics and the Subadviser's code of ethics; ii) compliance
with procedures adopted from time to time by the Trustees of
the Trust relative to securities eligible for resale under
Rule 144A under the Securities Act of 1933, as amended; iii)
diversification of Fund assets in accordance with the then
prevailing prospectus and statement of additional information
pertaining to the Trust and governing laws; iv) compliance
with governing restrictions relating to the fair valuation of
securities for which market quotations are not readily
available or considered "illiquid" for the purposes of
complying with the Fund limitation on acquisition of illiquid
securities; v) any and all other reports reasonably requested
in accordance with or described in this Agreement; and, vi)
the implementation of the Fund's investment program,
including, without limitation, analysis of Fund performance;
(d) Attendance by appropriate representatives of the Subadviser at
meetings requested by the Adviser or Trustees at such time(s)
and location(s) as reasonably requested by the Adviser or
Trustees; and
(e) Participation, overall assistance and support in marketing the
Fund, including, without limitation, meetings with pension
fund representatives, broker/dealers who have a sales
agreement with Phoenix Equity Planning Corporation, and other
parties requested by the Adviser.
6
<PAGE>
SCHEDULE B
----------
OPERATIONAL PROCEDURES
In order to minimize operational problems, it will be necessary for a flow of
information to be supplied to State Street Bank and Trust Company. (the
"Custodian"), the custodian for the Trust.
The Subadviser must furnish the Custodian with daily information as to executed
trades, or, if no trades are executed, with a report to that effect, no later
than 5 p.m. (Eastern Standard time) on the day of the trade (confirmation
received from broker). The necessary information can be sent via facsimile
machine to the Custodian. Information provided to the Custodian shall include
the following:
1. Purchase or sale;
2. Security name;
3. CUSIP number (if applicable);
4. Number of shares and sales price per share;
5. Executing broker;
6. Settlement agent;
7. Trade date;
8. Settlement date;
9. Aggregate commission or if a net trade;
10. Interest purchased or sold from interest bearing security;
11. Other fees;
12. Net proceeds of the transaction;
13. Exchange where trade was executed; and
14. Identified tax lot (if applicable).
When opening accounts with brokers for, and in the name of, the Trust, the
account must be a cash account. No margin accounts are to be maintained in the
name of the Trust. Delivery instructions are as specified by the Custodian. The
Custodian will supply the Subadviser daily with a cash availability report. This
will normally be done by telex so that the Subadviser will know the amount
available for investment purposes.
7
<PAGE>
SCHEDULE C
----------
SUBADVISORY FEE
For services provided to the Trust pursuant to paragraph 3 hereof, the
Adviser will pay to the Subadviser, on or before the 10th day of each month, a
fee, payable in arrears, at the annual rate of 0.375% of the average daily net
assets of the Phoenix Tax Sensitive Growth Fund up $1 billion, 0.35% of such
value between $1 billion and $2 billion, and 0.325% of such value in excess of
$2 billion. The fees shall be prorated for any month during which this agreement
is in effect for only a portion of the month. In computing the fee to be paid to
the Subadviser, the net asset value of the Trust and each Fund shall be valued
as set forth in the then current registration statement of the Trust.
8
<PAGE>
SCHEDULE D
----------
RECORDS TO BE MAINTAINED BY THE SUBADVISER
1. (Rule 31a-1(b)(5)) A record of each brokerage order, and all other
purchases and sales, given by the Subadviser on behalf of the Trust
for, or in connection with, the purchase or sale of securities, whether
executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modifications
or cancellations thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the
Trust.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within
ten (10) days after the end of the quarter, showing specifically the
basis or bases upon which the allocation of orders for the purchase and
sale of Trust securities to named broker or dealers was effected, and
the division of brokerage commissions or other compensation on such
purchase and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Trust by brokers or
dealers.
(ii) The supplying of services or benefits by brokers or
dealers to:
(a) The Trust,
(b) The Adviser (Phoenix Investment Counsel, Inc.)
(c) The Subadviser, and
(d) Any person other than the foregoing.
(iii) Any other consideration other than the technical
qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made
available.
C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
3. (Rule 3la-(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of series securities. Where an authorization is made
by a committee or group, a record shall be kept of the names of its
members who participate in the authorization. There shall be retained
as part of this record: any memorandum, recommendation or instruction
supporting or authorizing the purchase or sale of series securities and
such other information as is appropriate to support the authorization.*
- ----------
*Such information might include: current financial information, annual and
quarterly reports, press releases, reports by analysts and from brokerage firms
(including their recommendation; i.e., buy, sell, hold) or any internal reports
or subadviser review.
9
<PAGE>
4. (Rule 31a-1(f)) Such accounts, books and other documents as are
required to be maintained by registered investment advisers by rule
adopted under Section 204 of the Investment Advisers Act of 1940, to
the extent such records are necessary or appropriate to record the
Subadviser's transactions for the Trust.
10
Exhibit i.4
OPINION AND CONSENT OF COUNSEL
<PAGE>
[LETTERHEAD]
THE PHOENIX FUNDS
February 28, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Phoenix Multi-Portfolio Fund
Post-Effective Amendment No. 29 to
Registration Statement no. 33-19423
Ladies and Gentlemen:
As counsel to Phoenix Investment Counsel, I have participated in the
development of and am familiar with the Phoenix Multi-Portfolio Fund (the
"Trust"), an open end, management company whose shares are the subject of the
above-captioned registration statement on Form N-1A. Post-Effective Amendment
No. 29 to this registration statement adds a new portfolio to the Trust,
Phoenix-Seneca Tax Sensitive Growth Fund.
In rendering my opinion, I have examined such documents, records, and
matters of law as I deemed necessary for purposes of this opinion. I have
assumed the genuineness of all signatures of all parties, the authenticity of
all documents submitted as originals, the correctness of all copies and the
correctness of all written or oral statements made to me.
[Based upon this review, I am of the opinion that each class of shares
of all portfolios of Phoenix Multi-Portfolio Fund have been validly and duly
issued, fully paid and non-assessable. Furthermore,] I am of the opinion that
after effectiveness of the post-effective amendment and the registration or
qualification in the appropriate states, and upon payment of the consideration
described in the registration statement, each share of each class of shares of
Phoenix-Seneca Tax Sensitive Growth Fund, when issued, will have been validly
and duly issued, fully paid and non-assessble.
My opinion is rendered solely in connection with the Registration
Statement on Form N-1A under which the Shares will be registered and may not be
relied upon for any other purposes without my written consent. I hereby consent
to the use of this opinion as an exhibit to such Registration Statement.
Yours truly,
/s/ Nancy J. Engberg
Nancy J. Engberg
Exhibit j
Consent of Independent Accountants
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 29 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated January 14, 2000, relating to the financial
statements and financial highlights which appears in the November 30, 1999
Annual Report to Shareholders of 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 (constituting the Phoenix Multi-Portfolio Fund, hereinafter referred to
as the "Fund"), which is also incorporated by reference into the Registration
Statement. We also consent to the references to us under the headings "Financial
Highlights" in the Prospectus and under the heading "Other Information -
Independent Accountants" in the Statement of Additional Information.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 25, 2000
Exhibit m.2
CLASS B SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
(the "Fund")
CLASS B SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have entered
into a Distribution Agreement pursuant to which the Distributor will act as
principal underwriter of each class of shares of the Fund for sale to the
permissible purchasers. The Trustees of the Fund have determined to adopt this
Distribution Plan (the "Plan"), in accordance with the requirements of Section
12b-1 of the Investment Company Act of 1940, as amended (the "Act") with respect
to Class B shares of the Fund and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its Class B shareholders.
2. Rule 12b-1 Fees
---------------
The Fund shall reimburse the Distributor, at the end of each month, up
to a maximum on an annual basis of .75% of the average daily value of the net
assets of the Fund's Class B shares, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc., for
distribution expenditures incurred by Distributor subsequent to the
effectiveness of this Plan, in connection with the sale and promotion of the
Class B shares of the Fund and the furnishing of services to Class B
shareholders of the Fund (the "Distribution Fee"). Such expenditures shall
consist of: (i) commissions to sales personnel for selling Class B shares of the
Fund (including underwriting commissions and finance charges related to the
payment of commissions); (ii) compensation, sales incentives and payments to
sales, marketing and service personnel; (iii) payments to broker-dealers and
other financial institutions which have entered into selling agreements with the
Distributor for services rendered in connection with the sale and distribution
of Class B shares of the Fund; (iv) payment of expenses incurred in sales and
promotional activities, including advertising expenditures related to the Class
B shares of the Fund; (v) the costs of preparing and distributing promotional
materials; (vi) the cost of printing the Fund's Prospectus and Statement of
Additional Information for distribution to potential investors; and (vii) such
other similar services that the Trustees of the Fund determine are reasonably
calculated to result in the sale of Class B shares of the Fund. The Fund shall
also pay the Distributor, at the end of each month, an amount on an annual basis
equal to 0.25% of the average daily value of the net assets of the Fund's Class
B shares, as compensation for providing personal service to shareholders,
including assistance in connection with inquiries relating to shareholder
accounts, and for maintaining shareholder accounts (the "Service Fee").
<PAGE>
Any reduction to amounts payable under this Plan shall first be to the
extent of the Service Fee, and then from the balance of the 12b-1 Fee.
Amounts paid or payable by the Fund under this Plan or any agreement
with any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
Any Distribution Agreement in respect of Class B shares may provide
that (I) the Distributor in respect of such Distribution Agreement will be
deemed to have fully earned its Allocable Portion (as hereinafter defined) of
the Distribution Fee in respect of Class B shares of such series upon the sale
of each "Initial Issue Commission Share" (as hereinafter defined) of such series
taken into account in determining the Distributor's Allocable Portion of such
Distribution Fee; (II) except as provided in (III) below, the Fund's obligation
to pay such Distributor its Allocable Portion of the Distribution Fee payable in
respect of the Class B shares of the Fund shall be absolute and unconditional
and shall not be subject to dispute, offset, counterclaim or any defense
whatsoever (it being understood that such provision is not a waiver of the
Fund's right to pursue the Distributor and enforce such claims against the
assets of the Distributor other than its right to the Distribution Fees in
respect of the Class B shares of the Fund); (III) the Fund's obligation to pay
the Distributor its Allocable Portion of the Distribution Fee in respect to
Class B shares of the Fund shall not be terminated or modified except to the
extent required by a change in the Act or the Rules of Conduct enacted or
promulgated after November 17, 1999 (a "Change-in-Applicable-Law"), or in
connection with a Complete Termination (as hereinafter defined) of this Plan in
respect of the Class B shares of such series; (IV) the Trust will not waive or
change any CDSC in respect of the Class B shares of such series, except as
provided in the Trust's Prospectus or statement of additional information
without the consent of the Distributor (or its assigns); (V) except to the
extent required by a Change-in-Applicable-Law, neither the termination of such
Distributor's role as distributor of the Class B shares of such series, nor the
termination of such Distribution Agreement nor the termination of this Plan will
terminate such Distributor's right to its Allocable Portion of the Contingent
Deferred Sales Charges ("CDSCs") in respect of Class B shares of such series
sold prior to such termination; (VI) except as provided in the Trust's
Prospectus and statement of additional information, until such Distributor has
been paid its Allocable Portion of the Distribution Fee in respect of the Class
B shares of such series, the Trust will not adopt a plan of liquidation in
respect of such series without the consent of such Distributor (or its assigns);
and (VII) such Distributor may sell and assign its right to its Allocable
Portion of the Distribution Fees and CDSCs (but not such Distributor's
obligations to the Trust under the Distribution Agreement) to raise funds to
make the expenditures related to the distribution of Class B shares of such
series and in connection therewith, upon receipt of notice of such sale and
assignment, the Trust shall pay to the purchaser or assignee such portion of the
Distributor's Allocable Portion of the Distribution Fees in respect of the Class
B shares of such series so sold or assigned.
<PAGE>
For purposes of this Plan, the term "Allocable Portion" means, in respect of
Distribution Fees payable in respect of the Class B shares of any series as
applied to any Distributor, the portion of such Distribution Fees and CDSCs
allocated to such Distributor in accordance with the Allocation Schedule (as
hereinafter defined). For purposes of this Plan, the term "Complete Termination"
of this Plan means, in respect of any series, a termination of this Plan
involving the cessation of payments of Distribution Fees hereunder in respect of
Class B shares of such series and the cessation of payments of distribution fees
pursuant to every other rule 12b-1 plan of the Trust in respect of such series
for every future class of shares which, in the good faith determination of the
Board of Trustees of the Trust, has substantially similar economic
characteristics to the Class B shares taking into account the total sales
charge, contingent deferred sales charge and other similar charges, it being
understood that the existing Class A shares and existing Class C shares do not
have substantially similar economic characteristics to the Class B shares. For
purposes of this Plan, the term "Allocation Schedule" means, in respect of the
Class B shares of any series, a schedule which shall be approved in the same
manner as this Plan as contemplated by Section 4 hereof for assigning to each
Distributor of Class B shares of such series the portion of the total
Distribution Fees payable by the Trust in respect of the Class B shares of such
series which has been earned by such Distributor, which shall be attached to and
become a part of any Distribution Agreement in respect of Class B shares
provided that where there is only one Distributor at any given time, the
Allocation Schedule shall mean all of the total Distribution Fees payable by the
Trust in respect of the Class B shares of such series which has been earned by
such Distributor. For purposes of clause (I) of the first sentence of this
Section 2, the term "Initial Issue Commission Share" shall mean, in respect of
any series, a Class B share which is a Commission Share issued by such series
under circumstances other than in connection with a permitted free exchange with
another fund. For purposes of the foregoing definition, a "Commission Share"
shall mean, in respect of any series, each Class B share of such series which is
issued under circumstances which would normally give rise to an obligation of
the holder of such Class B share to pay a CDSC upon redemption of such share,
including, without limitation, any Class B share of such Fund issued in
connection with a permitted free exchange, and any such Class B share shall not
cease to be a Commission Share prior to the redemption (including a redemption
in connection with a permitted free exchange) or conversion even though the
obligation to pay the CDSC shall have expired or conditions for thereof still
exist.
3. Reports
-------
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare and
furnish to the Trustees of the Fund for their review, and the Trustees shall
review, a written report complying with the requirements of Rule 12b-l under the
Act regarding the amounts expended under this Plan and the purposes for which
such expenditures were made.
4. Required Approval
-----------------
<PAGE>
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of this Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or any related agreement and this
Plan shall not take effect with respect to the Fund until it has been approved
by a vote of at least a majority of the outstanding voting Class B shares (as
such phrase is defined in the Act).
5. Term
----
This Plan shall remain in effect for one year from the date of its
adoption and may be continued thereafter if specifically approved at least
annually by a vote of at least a majority of the Trustees of the Fund as well as
a majority of the Disinterested Trustees. This Plan may be amended at any time,
provided that (a) the Plan may not be amended to increase materially the amount
of the distribution expenses provided in Paragraph 2 hereof (including the
Service Fee) without the approval of at least a majority of the outstanding
voting securities (as defined in the Act) of the Class B shares of the Fund and
(b) all material amendments to this Plan must be approved by a majority vote of
the Trustees of the Fund and of the Disinterested Trustees cast in person at a
meeting called for the purpose of such vote.
<PAGE>
6. Selection of Disinterested Trustees
------------------------------------
While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
------------------
Any related agreement shall be in writing and shall provide that (a)
such agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class B shares of the Fund on not more than 60 days' written notice to the other
party to the agreement and (b) such agreement shall terminate automatically in
the event of its assignment.
8. Termination
-----------
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class B shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
9. Records
-------
The Fund shall preserve copies of this Plan and any related agreements
and all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
10. Non-Recourse
------------
The Fund's Declaration of Trust dated October 15, 1987, a copy of
which, together with the amendments thereto ("Declaration"), is on file in the
office of the Secretary of the Commonwealth of Massachusetts, refers to the
Trustees under the Declaration of Trust collectively as Trustees, but not as
individuals or personally, and no Trustee, shareholder, officer, employee or
agent of the Fund may be held to any personal liability, nor may any resort be
had to their private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of the Fund but the Fund property only
shall be liable.
[Adopted at a duly held meeting of the Board of Trustees on November 17,1999]
Exhibit o.1
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
<PAGE>
PHOENIX FUNDS
(the "Funds")
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended ("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the original effective date of this Plan, the Funds shall offer
multiple classes of shares, as described herein, pursuant to Rule 18f-3 and this
Plan.
2. The Multi-Class Structure
-------------------------
Each of the portfolios of the Funds (each a "Multi-Class Portfolio" and
collectively the "Multi-Class Portfolios") listed on Schedule A hereto shall
offer up to three classes of shares as indicated on Schedule A: Class A, Class
B, and Class C Shares of the Multi-Class Portfolios shall represent an equal pro
rata interest in the respective Multi-Class Portfolio and, generally, shall have
identical voting, dividend, liquidation, and other rights, preferences, powers,
restrictions, limitations, qualifications and terms and conditions, except that:
(a) each class shall have a different designation; (b) each class shall bear any
Class Expenses, as defined by Section 2(b), below; (c) each class shall have
exclusive voting rights on any matter submitted to shareholders that relates
solely to its distribution arrangement; and (d) each class shall have separate
voting rights on any matter submitted to shareholders in which the interests of
one class differ from the interests of any other class. In addition, Class A,
Class B, and Class C shares shall have the features described in Sections a, b,
c and d, below.
a. Distribution Plans
------------------
The Funds have adopted Distribution Plans pursuant to Rule 12b-1 with
respect to each Multi-Class Portfolio containing substantially the following
terms:
i. Class A shares of each Multi-Class Portfolio shall
reimburse Phoenix Equity Planning Corporation (the "Distributor") for costs and
expenses incurred in connection with distribution and marketing of shares
thereof, as provided in the Class A Distribution Plan and any supplements
thereto, subject to an annual limit of 0.25% of the average daily net assets of
a Multi-Class Portfolio's Class A shares.
<PAGE>
ii. Class B shares of each Multi-Class Portfolio shall
reimburse the Distributor for costs and expenses incurred in connection with
distribution and marketing of shares thereof, as provided in the Class B
Distribution Plan and any supplements thereto, subject to an annual limit of
1.00% of the average daily net assets of a Multi-Class Portfolio's Class B
shares.
iii. Class C shares of each Multi-Class Portfolio shall
reimburse the Distributor for costs and expenses incurred in connection with
distribution and marketing of shares thereof, as provided in the Class C
Distribution Plan and any supplements thereto, subject to an annual limit of
1.00%, or in some cases 0.50%, of the average daily net assets of a Multi-Class
Portfolio's Class C shares.
b. Allocation of Income and Expenses
---------------------------------
i. General.
--------
The gross income, realized and unrealized capital gains and
losses and expenses (other than Class Expenses, as defined below) of each
Multi-Class Portfolio shall be allocated to each class on the basis of its net
asset value relative to the net asset value of the Multi-Class Portfolio.
Expenses to be so allocated include expenses of the Funds that are not
attributable to a particular Multi-Class Portfolio or class of a Multi-Class
Portfolio but are allocated to a Multi- Class Portfolio ("Fund Expenses") and
expenses of a particular Multi-Class Portfolio that are not attributable to a
particular class of that Multi-Class Portfolio ("Portfolio Expenses"). Fund
Expenses include, but are not limited to, trustees' fees, insurance costs and
certain legal fees. Portfolio Expenses include, but are not limited to, certain
state registration fees, custodial fees, advisory fees and other expenses
relating to the management of the Multi-Class Portfolio's assets.
ii. Class Expenses.
---------------
Expenses attributable to a particular class ("Class Expenses")
shall be limited to: (1) transfer agency fees; (2) stationery, printing,
postage, and delivery expenses relating to preparing and distributing
shareholder reports, prospectuses, and proxy statements; (3) state Blue Sky
registration fees; (4) SEC registration fees; (5) expenses of administrative
personnel and services to the extent related to another category of
class-specific expenses; (6) trustees' fees and expenses; (7) accounting
expenses, auditors' fees, litigation expenses, and legal fees and expenses; and
(8) expenses incurred in connection with shareholder meetings. Expenses
described in subsection (a) (i),(ii) and (iii) above of this paragraph (12b-1
Expenses) must be allocated to the class for which they are incurred. All other
expenses described in this paragraph will be allocated as Class Expenses, if a
Fund's President and Treasurer have determined, subject to Board approval or
ratification, which of such categories of expenses will be treated as Class
Expenses, consistent with applicable legal principles under the 1940 Act and the
Internal Revenue Code of 1986, as amended ("Code"). The difference between the
Class Expenses (other than 12b-1 Expenses) allocated to each share of a class
during a year and the Class Expenses allocated to each share of any other class
during such year shall at all times be less than .50% of the average daily net
asset value of the class of shares with the smallest average net asset value.
2
<PAGE>
The afore-described description of Class Expenses and any amendment thereto
shall be subject to the continuing availability of an opinion of counsel or a
ruling from the Internal Revenue Service to the effect that any such allocation
of expenses or the assessment of higher distribution fees and transfer agency
costs on any class of shares does not result in any dividends or distributions
constituting "preferential dividends" under the Code.
In the event that a particular expense is no longer reasonably
allocable by class or to a particular class, it shall be treated as a Fund
Expense or Portfolio Expense as applicable, and in the event a Fund Expense or
Portfolio Expense becomes allocable as a Class Expense, it shall be so
allocated, subject to compliance with Rule 18f-3 and Board approval or
ratification.
The initial determination of expenses that will be allocated
as Class Expenses and any subsequent changes thereto as set forth in this Plan
shall be reviewed by the Board of Trustees and approved by such Board and by a
majority of the Trustees who are not "interested persons" of the Fund, as
defined in the 1940 Act ("Independent Trustees").
iii. Waivers or Reimbursements of Expenses.
--------------------------------------
Investment Advisor may waive or reimburse its management fee
in whole or in part provided that the fee is waived or reimbursed to all shares
of the Fund in proportion to the relative average daily net asset values.
Investment Advisor or a related entity who charges a fee for a
Class Expense may waive or reimburse that fee in whole or in part only if the
revised fee more accurately reflects the relative cost of providing to each
Multi-Class Portfolio the service for which the Class Expense is charged.
Distributor may waive or reimburse a Rule 12b- 1 Plan fee
payment in whole or in part.
c. Exchange Privileges
-------------------
Shareholders of a Multi-Class Portfolio may exchange shares of a
particular class for shares of the same class in another Multi-Class Portfolio,
or in another portfolio of an open-end investment company managed by the
Investment Advisor or an affiliate of the Investment Advisor that permits
corresponding exchanges, at the relative net asset values of the respective
shares to be exchanged and with no sales charge, provided the shares to be
acquired in the exchange are, as may be necessary, qualified for sale in the
shareholder's state of residence and subject to the applicable requirements, if
any, as to minimum amount. Each Multi-Class
3
<PAGE>
Portfolio reserves the right to temporarily or permanently terminate exchange
privileges, impose conditions upon the exercise of exchange privileges, or
reject any specific order for any dealer, shareholder or person whose
transactions seem to follow a timing pattern, including those who request more
than one exchange out of a Multi-Class Portfolio within any thirty (30) day
period. Each Multi-Class Portfolio reserves the right to terminate or modify
these exchange privileges at any time upon giving prominent notice to
shareholders at least 60 days in advance.
d. Conversion Feature
------------------
Class B Shares of a Multi-Class Portfolio will automatically convert to
Class A Shares of that portfolio, without sales charge, at the relative net
asset values of each such classes, not later than eight years from the
acquisition of the Class B Shares. The conversion of Class B Shares to Class A
Shares is subject to the continuing availability of an opinion of counsel or a
ruling from the Internal Revenue Service to the effect that the conversion of
shares does not constitute a taxable event under federal income tax law.
3. Board Review
------------
a. Approval of Amended and Restated Plan
-------------------------------------
The Board of Trustees, including a majority of the Independent
Trustees, at a meeting held on November 17,1999 approved the Amended and
Restated Plan based on a determination that the Plan, including the expense
allocation, is in the best interests of each class and Multi-Class Portfolio
individually and of the Funds. Their determination was based on their review of
information furnished to them which they deemed reasonably necessary and
sufficient to evaluate the Plan.
b. Approval of Amendments
----------------------
The Plan may not be amended materially unless the Board of Trustees,
including a majority of the Independent Trustees, have found that the proposed
amendment, including any proposed related expense allocation, is in the best
interests of each class and Multi-Class Portfolio individually and of the Funds.
Such funding shall be based on information required by the Board and furnished
to them that the Board deems reasonably necessary to evaluate the proposed
amendment.
c. Periodic Review
---------------
The Board shall review reports of expense allocations and such other
information as they request at such times, or pursuant to such schedule, as they
may determine consistent with applicable legal requirements.
4
<PAGE>
4. Contracts
---------
Any agreement related to the Multi-Class System shall require the
parties thereto to furnish to the Board of Trustees, upon their request, such
information as is reasonably necessary to permit the Trustees to evaluate the
Plan or any proposed amendment.
5. Effective Date
--------------
The Amended and Restated Plan, having been reviewed and approved by the
Board of Trustees and the Independent Trustees, shall take effect as of the
first day of each Fund's current fiscal year.
6. Amendments
----------
The Plan may not be amended to modify materially its terms unless such
amendment has been approved in the manner specified in Section 3(b) of this
Plan.
5
<PAGE>
SCHEDULE A
(Updated as of November 17, 1999)
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
PHOENIX-GOODWIN CALIFORNIA TAX-EXEMPT BONDS, INC. X X -
PHOENIX EQUITY SERIES FUND:
PHOENIX-DUFF & PHELPS CORE EQUITY FUND X X X
PHOENIX-OAKHURST GROWTH AND INCOME FUND X X X
PHOENIX-OAKHURST INCOME AND GROWTH FUND X X X
PHOENIX INVESTMENT TRUST 97:
PHOENIX-HOLLISTER SMALL CAP VALUE FUND X X X
PHOENIX-HOLLISTER VALUE EQUITY FUND X X X
PHOENIX MULTI-PORTFOLIO FUND:
PHOENIX-GOODWIN EMERGING MARKETS BOND FUND X X X
PHOENIX-ABERDEEN INTERNATIONAL FUND X X X
PHOENIX-SENECA MID-CAP FUND X X -
PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES FUND X X -
PHOENIX-GOODWIN TAX-EXEMPT BOND FUND X X -
PHOENIX-SENECA TAX SENSITIVE GROWTH FUND X X X
PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME FUND, INC. X X X
PHOENIX GOODWIN MULTI-SECTOR SHORT TERM BOND FUND X X X
PHOENIX SERIES FUND:
PHOENIX-ENGEMANN AGGRESSIVE GROWTH FUND X X -
PHOENIX-OAKHURST BALANCED FUND X X -
PHOENIX-ENGEMANN CAPITAL GROWTH FUND X X -
PHOENIX-GOODWIN HIGH YIELD FUND X X X
PHOENIX-GOODWIN MONEY MARKET FUND X X X
PHOENIX-DUFF & PHELPS CORE BOND FUND X X X
PHOENIX STRATEGIC EQUITY SERIES FUND:
PHOENIX-SENECA EQUITY OPPORTUNITIES FUND X X -
PHOENIX-ENGEMANN SMALL CAP FUND X X -
PHOENIX-SENECA STRATEGIC THEME FUND X X X
PHOENIX-OAKHURST STRATEGIC ALLOCATION FUND, INC. X X -
PHOENIX-ABERDEEN WORLDWIDE OPPORTUNITIES FUND X X X
</TABLE>
Exhibit o.2
FIRST AMENDMENT TO THE
AMENDED AND RESTATED PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
<PAGE>
PHOENIX FUNDS
(the "Funds")
FIRST AMENDMENT TO THE
AMENDED AND RESTATED PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
That certain Amended and Restated Plan Pursuant to Rule 18f-3 under the
Investment Company Act of 1940 duly adopted by the Board of Directors/Trustees
of the Funds on November 17, 1999, is hereby amended as follows:
The Board of Directors/Trustees has granted authority for the following
additional Fund to issue Class C Shares:
Phoenix Strategic Equity Series Fund: Phoenix-Seneca Equity
Opportunities Fund
Additionally, the Board of Directors/Trustees has granted authority for the
following Funds to issue Class X Shares:
Phoenix Multi-Portfolio Fund: Phoenix-Seneca Tax Sensitive Growth Fund
Phoenix Strategic Equity Series Fund: Phoenix-Seneca Equity
Opportunities Fund
Accordingly, Schedule A is amended as attached hereto.
This Amendment was approved by the Board of Directors/Trustees at a
meeting held on February 24, 2000.
/s/ Pamela S. Sinofsky
---------------------------
Assistant Secretary
<PAGE>
SCHEDULE A
(Updated as of February 25, 2000)
<TABLE>
<CAPTION>
Class A Class B Class C Class X
------- ------- ------ --------
<S> <C> <C> <C> <C>
PHOENIX-GOODWIN CALIFORNIA TAX-EXEMPT BONDS, INC. X X -
PHOENIX EQUITY SERIES FUND:
PHOENIX-DUFF & PHELPS CORE EQUITY FUND X X X
PHOENIX-OAKHURST GROWTH AND INCOME FUND X X X
PHOENIX-OAKHURST INCOME AND GROWTH FUND X X X
PHOENIX INVESTMENT TRUST 97:
PHOENIX-HOLLISTER SMALL CAP VALUE FUND X X X
PHOENIX-HOLLISTER VALUE EQUITY FUND X X X
PHOENIX MULTI-PORTFOLIO FUND:
PHOENIX-GOODWIN EMERGING MARKETS BOND FUND X X X
PHOENIX-ABERDEEN INTERNATIONAL FUND X X X
PHOENIX-SENECA MID-CAP FUND X X -
PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES FUND X X -
PHOENIX-GOODWIN TAX-EXEMPT BOND FUND X X -
PHOENIX-SENECA TAX SENSITIVE GROWTH FUND X X X X
PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME FUND, INC. X X X
PHOENIX GOODWIN MULTI-SECTOR SHORT TERM BOND FUND X X X
PHOENIX SERIES FUND:
PHOENIX-ENGEMANN AGGRESSIVE GROWTH FUND X X -
PHOENIX-OAKHURST BALANCED FUND X X -
PHOENIX-ENGEMANN CAPITAL GROWTH FUND X X -
PHOENIX-GOODWIN HIGH YIELD FUND X X X
PHOENIX-GOODWIN MONEY MARKET FUND X X X
PHOENIX-DUFF & PHELPS CORE BOND FUND X X X
PHOENIX STRATEGIC EQUITY SERIES FUND:
PHOENIX-SENECA EQUITY OPPORTUNITIES FUND X X X X
PHOENIX-ENGEMANN SMALL CAP FUND X X -
PHOENIX-SENECA STRATEGIC THEME FUND X X X
PHOENIX-OAKHURST STRATEGIC ALLOCATION FUND, INC. X X -
PHOENIX-ABERDEEN WORLDWIDE OPPORTUNITIES FUND X X X
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