As filed with the Securities and Exchange Commission on February 24, 2000
Registration No. 33-31243
File No. 811-5909
================================================================================
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 16 [X]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 18 [X]
(Check appropriate box or boxes)
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Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
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101 Munson Street, Greenfield, Massachusetts 01301
(Address of Principal Executive Offices) (Zip Code)
c/o Phoenix Equity Planning Corporation--Customer Service
(800) 243-1574
(Registrant's Telephone Number)
-------------
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):
[ ] immediately upon filing pursuant to paragraph (b)
[X] on February 28, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on pursuant to paragraph (a)(2) 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-GOODWIN MULTI-SECTOR FIXED INCOME FUND, INC.
Cross Reference Sheet Pursuant to Rule 495
PART A
<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, Investment Risk and Return Summary
and Related Risks ........................................
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
8. Distribution Arrangements ................................ Sales Charges
9. Financial Highlights Information ......................... Financial Highlights
</TABLE>
PART B
<TABLE>
<CAPTION>
Item Number Form N-1A, Part B Statement of Additional Information Caption
- ----------------------------- -------------------------------------------
<S> <C> <C>
10. Cover Page and Table of Contents ............................. Cover Page, Table of Contents
11. Fund History ................................................. The Fund
12. Description of the Fund and Its Investment Risks ............. Investment Objectives and Policies; Investment
Restrictions
13. Management of the Fund ....................................... Management of the Fund
14. Control Persons and Principal Holders of Securities .......... Management of the Fund
15. Investment Advisory and Other Services ....................... Services of the Adviser; The Distributor; Distribution
Plans; Other Information
16. Brokerage Allocation and Other Practices ..................... Portfolio Transactions and Brokerage
17. Capital Stock and Other Securities ........................... Other Information
18. Purchase, Redemption, and Pricing of Shares .................. Net Asset Value; How to Buy Shares; Investor Account
Services; Redemption of Shares; Tax Sheltered
Retirement Plans
19. Taxation of the Fund ......................................... Dividends, Distributions and Taxes
20. Underwriters ................................................. The Distributor
21. Calculations of Performance Data ............................. Performance Information
22. Financial Statements ......................................... Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C of this registration statement.
<PAGE>
Phoenix Investment Partners
Prospectus
February 28, 2000
Goodwin
Phoenix-Goodwin
Multi-Sector Fixed Income Fund
Phoenix-Goodwin
Multi-Sector Short Term Bond Fund
[Graphic: Logo; PHOENIX
INVESTMENT PARTNERS]
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-Goodwin Multi-Sector Fixed Income Fund, Inc. and the
Phoenix-Goodwin Multi-Sector Short Term Bond Fund. Please read it carefully and
retain it for future reference.
<PAGE>
Table of Contents
- -----------------------------------------------
<TABLE>
<S> <C>
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
Investment Risk and Return Summary ................. 1
Fund Expenses ...................................... 5
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
Investment Risk and Return Summary ................. 7
Fund Expenses ...................................... 11
Additional Investment Techniques .................... 13
Management of the Funds ............................. 15
Pricing of Fund Shares .............................. 16
Sales Charges ....................................... 17
Your Account ........................................ 20
How to Buy Shares ................................... 21
How to Sell Shares .................................. 22
Things You Should Know When Selling Shares .......... 22
Account Policies .................................... 24
Investor Services ................................... 25
Tax Status of Distributions ......................... 25
Financial Highlights ................................ 26
Additional Information .............................. 32
</TABLE>
> Multi-
Sector
Funds
<PAGE>
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
Investment Risk and Return Summary
- -------------------------------------------------
Investment Objective
Phoenix-Goodwin Multi-Sector Fixed Income Fund has a primary
objective to maximize current income while preserving capital.
There is no guarantee that the fund will achieve its objective.
Principal Investment Strategies
> Under normal circumstances, the fund invests at least 65% of
its total assets in the following sectors of fixed income
securities:
o Securities issued or guaranteed as to principal and
interest by the U.S. Government, its agencies,
authorities or instrumentalities, including CMOs,
REMICs and other pass-through securities;
o Debt securities issued by foreign issuers, including
foreign governments and their political subdivisions;
o Investment grade securities, including short term
securities; and
o High yield, high risk fixed income securities of U.S.
issuers (so called "junk bonds"), up to a limit of 50%
of fund assets.
> Except for the limitation on "junk bonds," the fund may
invest any amount of its assets in any of these sectors or
may not invest in a sector at all.
> Securities are selected using a "sector rotation" approach.
The adviser seeks to adjust the proportion of fund
investments in the "sectors" described above and the
selections within sectors to obtain higher relative returns.
Sectors are analyzed by the adviser for attractive values.
Securities within sectors are selected based on general
economic and financial conditions, and the issuer's
business, management, cash, assets, earnings and stability.
Securities selected for investment are those that the
adviser believes offer the best potential for total return
based on risk-to-reward tradeoff.
> Interest rate risk is managed by a duration neutral
strategy. 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 its benchmark, the
Lehman Brothers Aggregate 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 Aggregate Bond Index was 4.94 years.
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc. 1
<PAGE>
> 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
Aggregate Bond Index was 8.84 years.
> The adviser's investment strategies may result in a higher
portfolio turnover rate for the fund. High portfolio
turnover rates may increase costs to the fund, may
negatively affect fund performance, and may increase capital
gains distributions, resulting in greater tax liability to
you.
Temporary Defensive Strategy: During periods of rising interest
rates, unstable pricing and currency exchange, or in response to
extreme market fluctuations, the adviser, at its discretion, may
invest part or all of the fund's assets in cash or cash
equivalents. When this happens, the fund may not achieve its
investment objective.
Please refer to "Additional Investment Techniques" for other
investment techniques of the fund.
Principal Risks
If you invest in this fund, you risk that you may lose your
investment.
General
The value of 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 support
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.
2 Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
<PAGE>
U.S. Government Obligations
Obligations issued or guaranteed by the U.S. Government and its
agencies, authorities and instrumentalities only guarantee
principal and interest will be timely paid to holders of the
securities. They do not guarantee that the value of fund shares
will increase.
CMOs, REMICs and Other Pass-Through Securities
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
prepayments had not occurred.
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
currency exchange rates.
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.
High Yield-High Risk Fixed Income Securities
High yield-high risk securities (junk bonds) typically entail
greater price volatility and principal and interest rate risk.
There is a greater risk 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
adviser to accurately predict risk.
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 Multi-Sector Fixed Income Fund, Inc. 3
<PAGE>
Performance Tables
The bar chart and table below provide some indication of the
risks of investing in the Phoenix-Goodwin Multi-Sector Fixed
Income Fund, Inc. The bar chart shows changes in the fund's Class
A Shares performance from year to year over a 10-year period.(1)
The table below shows how the fund's average annual returns
compare to those of a broad-based securities market index. The
fund's past performance is not necessarily an indication of how
the fund will perform in the future.
[Bar chart data]
Phoenix-Goodwin Multi-Sector Fixed Income Fund
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5.29% 28.25% 12.06% 15.56% -6.71% 19.18% 13.55% 8.99% -6.87% 8.22%
</TABLE>
(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 9.95% (quarter ending June 30,
1995) and the lowest return for a quarter was (11.70)% (quarter ending September
30, 1998).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Life of the Fund(2)
---------------------------
Average Annual Total Returns One Year Five Years Ten Years Class B Class C
(for the periods ending 12/31/99)(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares 3.08% 7.32% 8.79% -- --
- ------------------------------------------------------------------------------------------------------------------
Class B Shares 3.43% 7.56% N/A 6.80% --
- ------------------------------------------------------------------------------------------------------------------
Class C Shares 7.37% N/A N/A -- (1.43)%
- ------------------------------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond (0.83)% 7.73% 7.70% 6.54%(4) 4.22%(5)
Index(3)
- ------------------------------------------------------------------------------------------------------------------
</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 and C Shares.
(2) Class B Shares since January 3, 1992, and Class C Shares since October 14,
1997.
(3) The Lehman Brothers Aggregate Bond Index is an unmanaged but commonly used
measure of bond performance. It is a combination of several Lehman Brothers
Fixed Income indexes. The index's performance does not include sales charges.
(4) Index performance since December 31, 1991.
(5) Index performance since October 31, 1997.
4 Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
<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 None 5%(a) 1%(b)
of the value redeemed or the amount invested)
Maximum Sales Charge (load) Imposed on Reinvested Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
-------------------------------------
<CAPTION>
Class A Class B Class C
Shares Shares Shares
------ ------ ------
<S> <C> <C> <C>
Annual Fund Operating Expenses (expenses that are
deducted from fund assets)
Management Fees 0.55% 0.55% 0.55%
Distribution and Service (12b-1) Fees(c) 0.25% 1.00% 1.00%
Other Expenses 0.34% 0.34% 0.34%
----- ----- -----
Total Annual Fund Operating Expenses 1.14% 1.89% 1.89%
===== ===== =====
</TABLE>
----------------
(a) The maximum deferred sales charge is imposed on Class B
Shares redeemed during the first year; thereafter, it decreases
1% annually to 2% during the fourth and fifth years and to 0%
after the fifth year.
(b) The deferred sales charge is imposed on Class C Shares
redeemed during the first year only.
(c) Distribution and Service Fees represent an asset-based sales
charge that, for a long-term shareholder, may be higher than the
maximum front-end sales charge permitted by the National
Association of Securities Dealers, Inc. ("NASD").
Example
This example is intended to help you compare the cost of
investing in the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the
time periods indicated and then redeem all of your shares at the
end of those periods. The example also assumes that your
investment has a 5% return each year and that the fund's
operating expenses remain the same. In the case of Class B
Shares, it is assumed that your shares are converted to Class A
after eight years. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
- --------------------------------------------------
Class 1 year 3 years 5 years 10 years
- --------------------------------------------------
<S> <C> <C> <C> <C>
Class A $586 $820 $1,073 $1,795
- --------------------------------------------------
Class B $592 $794 $1,021 $2,016
- --------------------------------------------------
Class C $292 $594 $1,021 $2,212
- --------------------------------------------------
</TABLE>
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc. 5
<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 $192 $594 $1,021 $2,016
- --------------------------------------------------
Class C $192 $594 $1,021 $2,212
- --------------------------------------------------
</TABLE>
6 Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
<PAGE>
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
Investment Risk and Return Summary
- -------------------------------------------------
Investment Objective
Phoenix-Goodwin Multi-Sector Short Term Bond Fund has a primary
objective to provide high current income while attempting to
limit changes in the fund's net asset value per share caused by
interest rate changes. There is no guarantee that the fund will
achieve its objective.
Principal Investment Strategies
> Under normal circumstances, the fund invests at least 65% of
its assets in investment grade securities which are rated at
the time of investment BBB or above by Standard and Poor's
Corporation ("S&P") or Duff & Phelps Credit Rating Company
("D&P") or Baa or above by Moody's Investor's Services, Inc.
(Moody's) or unrated securities determined by the adviser to
be of the same comparable, limited quality. The fund may
continue to hold securities whose credit quality falls below
investment grade.
> The fund seeks to achieve its objective by investing in a
diversified portfolio of primarily short term fixed income
securities having an expected weighted average maturity of
three years or less and that are in one of the following
market sectors:
o Securities issued or guaranteed as to principal and
interest by the U.S. Government, its agencies,
authorities or instrumentalities, including CMOs,
REMICs and other pass-through securities;
o Debt securities issued by foreign issuers, including
foreign governments and their political subdivisions,
up to a limit of 35% of fund assets;
o Investment grade securities; and
o High yield-high risk securities, up to a limit of 35%
of fund assets.
> The fund may invest in any of these sectors up to prescribed
limitations if any, or may not invest in a sector at all.
> Securities are selected using a "sector rotation" approach.
The adviser seeks to adjust the proportion of fund
investment in the "sectors" described above and the
selections within sectors to obtain higher relative returns.
Sectors are analyzed by the adviser for attractive values.
Securities within sectors are selected based on general
economic and financial conditions, and the issuer's
business, management, cash, assets, earnings and stability.
Securities selected for investment are those that the
adviser believes offer the best potential for total return
based on risk-to-reward tradeoff.
> Interest rate risk is managed by a duration neutral
strategy. 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
Phoenix-Goodwin Multi-Sector Short Term Bond Fund 7
<PAGE>
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 its
benchmark, the Merrill Lynch Medium Quality Corporate
Short-Term 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
Merrill Lynch Medium Quality Corporate Short-Term Bond Index
was 1.83 years.
> The adviser's investment strategies may result in a higher
portfolio turnover rate for the fund. High portfolio
turnover rates may increase costs to the fund, may
negatively affect fund performance, and may increase capital
gains distributions, resulting in greater tax liability to
you.
Please refer to "Additional Investment Techniques" for other
investment techniques of the fund.
Principal Risks
If you invest in this fund, you risk that you may lose your
investment.
General
The value of 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 support
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.
U.S. Government Obligations
Obligations issued or guaranteed by the U.S. Government and its
agencies, authorities and instrumentalities only guarantee
principal and interest will be timely paid to holders of the
securities. They do not guarantee that that the value of fund
shares will increase.
8 Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<PAGE>
CMOs, REMICs and Other Pass-Through Securities
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.
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.
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.
High Yield-High Risk Fixed Income Securities
High yield-high risk securities (junk bonds) typically entail
greater price volatility and principal and interest rate risk.
There is a greater risk 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
adviser to accurately predict risk.
Phoenix-Goodwin Multi-Sector Short Term Bond Fund 9
<PAGE>
Performance Tables
The bar chart and table below provide some indication of the
risks of investing in the Phoenix-Goodwin Multi-Sector Short Term
Bond Fund. The bar chart shows changes in the fund's Class A
Shares performance from year to year over the life of the
fund.(1) The table below shows how the fund's average annual
returns compare to those of a broad-based securities market
index. The fund's past performance is not necessarily an
indication of how the fund will perform in the future.
[Bar chart data]
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
8.95% -1.86% 13.64% 11.30% 9.49% 1.30% 4.49%
</TABLE>
(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 5.38% (quarter ending June 30, 1995)
and the lowest return for a quarter was (5.50)% (quarter ending September 30,
1998).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Life of the Fund(2)
----------------------------------
Average Annual Total Returns One Year Five Years Class A Class B Class C
(for the periods ending 12/31/99)(1)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares 2.14% 7.46% 6.03% -- --
- ---------------------------------------------------------------------------------------------------------
Class B Shares 2.52% 7.36% -- 5.78% --
- ---------------------------------------------------------------------------------------------------------
Class C Shares 4.23% N/A -- -- 2.56%
- ---------------------------------------------------------------------------------------------------------
Merrill Lynch Medium Quality Corporate
Short-Term Bond Index(3) 4.01% 7.12% 6.33%(4) 6.33%(4) 5.64%
- ---------------------------------------------------------------------------------------------------------
</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 and C Shares.
(2) Class A and Class B Shares since July 6, 1992 and Class C Shares since
October 1, 1997.
(3) The Merrill Lynch Medium Quality Corporate Short-Term Bond Index is an
unmanaged but commonly used index that tracks the returns of corporate issues
rated between BBB and A by Standard & Poor's, with maturities from 1 to 3 years.
The index's performance does not reflect sales charges.
(4) Index performance since June 30, 1992.
10 Phoenix-Goodwin Multi-Sector Short Term 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) 2.25% None None
Maximum Deferred Sales Charge (load) (as a percentage of None 2%(b) None
the lesser of the value redeemed or the amount invested)
Maximum Sales Charge (load) Imposed on Reinvested
Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
------------------------------------------
<CAPTION>
Class A Class B Class C
Shares Shares Shares
------ ------ ------
<S> <C> <C> <C>
Annual Fund Operating Expenses (expenses that are
deducted from fund assets)
Management Fees 0.55% 0.55% 0.55%
Distribution and Service (12b-1) Fees(c) 0.25% 0.75% 0.50%
Other Expenses 0.68% 0.68% 0.68%
----- ----- -----
Total Annual Fund Operating Expenses(a) 1.48% 1.98% 1.73%
===== ===== =====
</TABLE>
----------------
(a) The fund's investment adviser has agreed to reimburse through
February 28, 2001 the Phoenix-Goodwin Multi-Sector Short Term
Bond Fund's operating expenses, other than Management Fees and
Distribution and Service Fees, to the extent that such expenses
exceed 0.20% for each class of shares. Total Annual Operating
Expenses for the fund, after expense reimbursement, are: 1.00%
for Class A Shares, 1.50% for Class B Shares, and 1.25% for Class
C Shares.
(b) The maximum deferred sales charge is imposed on Class B
Shares redeemed during the first year; thereafter, it decreases
0.50% annually to 1% during the third year and to 0% after the
third year.
(c) Distribution and Service Fees represent an asset based sales
charge that, for a long-term shareholder, may be higher than the
maximum front-end sales charge permitted by the National
Association of Securities Dealers, Inc. ("NASD").
Example
This example is intended to help you compare the cost of
investing in the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the
time periods indicated and then redeem all of your shares at the
end of those periods. The example also assumes that your
investment has a 5% return each year and that the fund's
operating expenses remain the same. In the case of Class B
Shares, it is assumed that your shares are converted to Class A
after six years. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
Phoenix-Goodwin Multi-Sector Short Term Bond Fund 11
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------
Class 1 year 3 years 5 years 10 years
- -------------------------------------------------
<S> <C> <C> <C> <C>
Class A $372 $681 $1,013 $1,950
- -------------------------------------------------
Class B $351 $622 $1,069 $2,053
- -------------------------------------------------
Class C $176 $544 $ 937 $2,038
- -------------------------------------------------
</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 $201 $622 $1,069 $2,053
- -------------------------------------------------
</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.
12 Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<PAGE>
Additional Investment Techniques
- -----------------------------------------------
In addition to the Principal Investment Strategies and Risks,
each of the funds may engage in the following investment
techniques as indicated below:
Investment Grade Securities
Investment grades securities of U.S. issuers in which the funds
may invest are all types of long- or short-term debt obligations.
In addition to the securities mentioned in the Principal
Strategies section, the funds may also invest in bonds,
debentures, notes, municipal bonds, equipment lease certificates,
equipment trust certificates, conditional sales contracts and
commercial paper.
Municipal Securities
The funds may invest in taxable municipal securities. Principal
and interest payments on municipal securities may not be
guaranteed by the issuing body and may be payable only from
monies (revenue) derived from a particular source. 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.
Unrated Securities
The funds may invest in unrated securities. Unrated securities
may not be lower in quality then 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 adviser to
accurately predict risk.
Borrowing
Each fund may borrow from banks in amounts up to one third the
value of its net assets for emergency and extraordinary purposes.
Interest on money borrowed is an expense of the fund. Because
such expense would not have otherwise been incurred, the net
investment income of the fund is not expected to be as high as it
otherwise would be during periods when borrowings for investment
purposes are substantial. The funds do not intend to borrow more
than 10% of assets.
Zero Coupon, Step Coupon and PIK Bonds
The Multi-Sector Fixed Income Fund may invest up to 15% of its
assets in any combination of zero coupon and step coupon bonds
and bonds on which interest is payable in kind. 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 because
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.
Phoenix-Goodwin Multi-Sector Short Term Bond Fund 13
<PAGE>
When-Issued and Delayed-Delivery Securities
The funds 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.
Repurchase Agreements
The funds may invest in repurchase agreements with commercial
banks, brokers and dealers considered by the adviser to be
creditworthy. Default or insolvency of the other party presents a
risk to the fund.
Illiquid Securities
Each fund may invest up to 15% of its net assets in illiquid
securities. The inability of the funds to dispose of such
securities in a timely manner and at a fair price at a time when
it might be necessary or advantageous to do so may harm the
funds.
Options, Derivatives and Other Hedging Transactions
The Multi-Sector Fixed Income Fund may write and purchase
options, including over the counter options, foreign currency
exchange transactions involving interest rate futures contracts
and options thereon. The Multi-Sector Short Term Bond Fund may
enter into various hedging transactions, such as interest rate
swaps and the purchase and sale of interest rate collars, caps
and floors. Futures and options involve market risk in excess of
their value and may not be as liquid as other securities.
Derivatives purchased for hedging transactions may be less liquid
than other securities and the counterparty to such transaction
may not perform as expected.
The adviser may buy other types of securities or employ other
portfolio management techniques on behalf of each fund. Please
refer to the Statement of Additional Information for more
detailed information about these and other investment techniques
of the fund.
14 Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<PAGE>
Management of the Funds
- --------------------------------------
The Adviser
Phoenix Investment Counsel, Inc. ("Phoenix") is the investment
adviser to the funds 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 additional
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 funds' Board of
Directors/Trustees, Phoenix is responsible for managing the
funds' investment programs and the day-to-day management of each
fund's portfolio. Phoenix manages each fund's assets to conform
with the investment policies as described in this prospectus.
Each fund pays Phoenix a monthly investment management fee that
is accrued daily against the value of the funds' net assets at
the following rates.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
1st billion $1+ billion through $2 billion $2+ billion
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Multi-Sector Fixed Income Fund 0.55% 0.50% 0.45%
- --------------------------------------------------------------------------------------------------------------
Multi-Sector Short Term Bond Fund 0.55% 0.50% 0.45%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Phoenix has voluntarily agreed to assume operating expenses of
the Multi-Sector Short Term Bond Fund (excluding management fees,
distribution and service fees, interest, taxes, brokerage fees,
commissions and extraordinary expenses) until February 28, 2001,
to the extent that such expenses exceed 0.20% of the average
annual net asset values for the fund.
During the last fiscal year, the Multi-Sector Fixed Income Fund
paid total management fees of $1,437,307; the Multi-Sector Short
Term Bond Fund paid total management fees of $283,982. The ratio
of management fees to average net assets for the fiscal year
ended October 31, 1999 was 0.55% for the Multi-Sector Fixed
Income Fund and 0.55% for the Multi-Sector Short Term Bond Fund.
Portfolio Management
David L. Albrycht is portfolio manager of the funds, and as such,
is primarily responsible for the day-to-day management of the
funds' portfolios. Mr. Albrycht co-managed the Multi-Sector Fixed
Income Fund since March 1994, and assumed full management of that
fund in April 1995. He has been portfolio manager of the
Multi-Sector Short Term Bond Fund since August 1993. Mr. Albrycht
is a Managing Director, Fixed Income, of Phoenix. He held various
investment management positions with Phoenix Home Life Mutual
Insurance Company, an affiliate of Phoenix, from 1989 through
1995.
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc. 15
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<PAGE>
Pricing of Fund Shares
- -------------------------------------
How is the Share Price determined?
Each fund calculates a share price for each class of its shares.
The share price is based on the net assets of the fund and the
number of outstanding shares. In general, each fund calculates
net asset value by:
o adding the values of all securities and other assets of
the fund,
o subtracting liabilities, and
o dividing by the total number of outstanding shares of
the fund.
Asset Value: Each fund's investments are valued at market value.
If market quotations are not available, a 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 Directors/
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 a 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 the funds
hold 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
funds' shares.
16 Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<PAGE>
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.
Sales Charges
- ----------------------------
What are the classes and how do they differ?
Each fund presently offers three classes of shares that have
different sales and distribution charges (see "Fund Expenses"
previously in this prospectus). Each fund has 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 the
funds' 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 of the
Multi-Sector Fixed Income Fund, 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). If you purchase Class A Shares of the
Multi-Sector Short Term Bond Fund, you will pay a sales charge at
the time of purchase equal to 2.25% of the offering price (2.30%
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 of the Multi-Sector Fixed Income Fund within the first 5
years after they are purchased, you will pay a sales charge of up
to 5% of your shares' value. If you sell your Class B Shares of
the Multi-Sector Short Term Bond Fund within the first 3 years
after they are purchased, you will pay a sales charge of up to 2%
of your shares' value. See "Deferred Sales Charge
Alternative--Class B and C Shares" below. These charges decline
to 0% over a period of 5 years for the Multi-Sector Fixed Income
Fund and a period of
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc. 17
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<PAGE>
3 years for the Multi-Sector Short Term Bond Fund. The sales
charge may be waived under certain conditions. Class B shares
have higher distribution and service fees (1.00% for the
Multi-Sector Fixed Income Fund and 0.75% for the Multi-Sector
Short Term Bond Fund) and pay lower dividends than Class A
Shares. Class B Shares automatically convert to Class A Shares 8
years after purchase for the Multi-Sector Fixed Income Fund and 6
years after purchase for the Multi-Sector Short Term Bond Fund.
Purchases 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 of the Multi-Sector Fixed Income Fund within the first
year after they are purchased, you will pay a sales charge of 1%.
You will not pay any sales charges on Class C Shares of the
Multi-Sector Short Term Bond Fund when you sell them. See
"Deferred Sales Charge Alternative--Class B and C Shares" below.
Class C Shares of the Multi-Sector Fixed Income Fund have the
same distribution and service fees (1.00%) and pay comparable
dividends as Class B Shares. Class C Shares of the Multi-Sector
Short Term Bond Fund have lower distribution and service fees and
pay higher dividends than Class C 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 fund's underwriter
(Phoenix Equity Planning Corporation or "PEPCO").
Sales Charge you may pay to purchase Class A Shares
<TABLE>
<CAPTION>
Sales Charge as
Multi-Sector Fixed Income Fund a percentage of
------------------------
Amount of Net
Transaction Offering Amount
at Offering Price Price Invested
- --------------------------------------------------------------
<S> <C> <C>
Under $50,000 4.75% 4.99%
$50,000 but under $100,000 4.50 4.71
$100,000 but under $250,000 3.50 3.63
$250,000 but under $500,000 3.00 3.09
$500,000 but under $1,000,000 2.00 2.04
$1,000,000 or more None None
</TABLE>
18 Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<PAGE>
<TABLE>
<CAPTION>
Sales Charge as
Multi-Sector Short Term Bond Fund a percentage of
------------------------
Amount of Net
Transaction Offering Amount
at Offering Price Price Invested
- -----------------------------------------------------------------
<S> <C> <C>
Under $50,000 2.25% 2.30%
$50,000 but under $100,000 1.25 1.27
$100,000 but under $500,000 1.00 1.01
$500,000 but under $1,000,000 0.75 0.76
$1,000,000 or more None None
</TABLE>
Deferred Sales Charge Alternative--Class B and C Shares
Class B and C Shares are purchased without an initial sales
charge; however, shares sold within a specified time period are
subject to a declining contingent deferred sales charge ("CDSC")
at the rates listed below. Class C Shares of the Multi-Sector
Short Term Bond Fund are purchased without an initial sales
charge and are not subject to a deferred sales charge. 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
Multi-Sector Fixed Income Fund
<TABLE>
<CAPTION>
Year 1 2 3 4 5 6+
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CDSC 5% 4% 3% 2% 2% 0%
</TABLE>
Multi-Sector Short Term Bond Fund
<TABLE>
<CAPTION>
Year 1 2 3 4+
----------------------------------------------------------------
<S> <C> <C> <C> <C>
CDSC 2% 1.5% 1% 0%
</TABLE>
Deferred Sales Charge you may pay to sell Class C Shares
Multi-Sector Fixed Income Fund
<TABLE>
<CAPTION>
Year 1 2+
----------------------------------------------------------------
<S> <C> <C>
CDSC 1% 0%
</TABLE>
You will not pay any deferred sales charge to sell Class C Shares
of the Multi-Sector Short Term Bond Fund.
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc. 19
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<PAGE>
Your Account
- -----------------------------
Opening an Account
Your financial advisor can assist you with your initial purchase
as well as all phases of your investment program. If you are
opening an account by yourself, please follow the instructions
outlined below.
Step 1.
Your first choice will be the initial amount you intend to
invest.
Minimum initial investments:
o $25 for individual retirement accounts, or accounts
that use the systematic exchange privilege, or accounts
that use the Investo-Matic program (see below for more
information on the Investo-Matic program).
o There is no initial dollar requirement for defined
contribution plans, profit-sharing plans, or employee
benefit plans. There is also no minimum for reinvesting
dividends and capital gains into another account.
o $500 for all other accounts.
Minimum additional investments:
o $25 for any account.
o There is no minimum for defined contribution plans,
profit-sharing plans, or employee benefit plans. There
is also no minimum for reinvesting dividends and
capital gains into an existing account.
Step 2.
Your second choice will be what class of shares to buy. Each 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.
20 Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<PAGE>
Step 3.
Your next choice will be how you want to receive any dividends
and capital gain distributions. Your options are:
o Receive both dividends and capital gain distributions
in additional shares;
o Receive dividends in additional shares and capital gain
distributions in cash;
o Receive dividends in cash and capital gain
distributions in additional shares; or
o Receive both dividends and capital gain distributions
in cash.
No interest will be paid on uncashed distribution checks.
How To Buy Shares
- --------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
To Open An Account
- ---------------------------------------------------------------------------------------------------------
<S> <C>
Contact your advisor. Some advisors may charge a fee and may set
Through a financial advisor different minimum investments or limitations on buying shares.
- ---------------------------------------------------------------------------------------------------------
Complete a New Account Application and send it with a check payable
Through the mail to the fund. Mail them to: State Street Bank, P.O. Box 8301, Boston,
MA 02266-8301.
- ---------------------------------------------------------------------------------------------------------
Complete a New Account Application and send it with a check payable
Through express delivery to the fund. Send them to: Boston Financial Data Services, Attn:
Phoenix Funds, 66 Brooks Drive, Braintree, MA 02184.
- ---------------------------------------------------------------------------------------------------------
By Federal Funds wire Call us at (800) 243-1574 (press 1, then 0).
- ---------------------------------------------------------------------------------------------------------
Complete the appropriate section on the application and send it with your
By Investo-Matic 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-Goodwin Multi-Sector Fixed Income Fund, Inc. 21
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<PAGE>
How to Sell Shares
- ---------------------------------
You have the right to have the funds buy back shares at the net
asset value next determined after receipt of a redemption order
by the funds' Transfer Agent or an authorized agent. In the case
of a Class B or 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>
Contact your advisor. Some advisors may charge a fee and may set
Through a financial advisor different minimums on redemptions of accounts.
- -----------------------------------------------------------------------------------------------------
Send a letter of instruction and any share certificates (if you hold
certificate shares) to: State Street Bank, P.O. Box 8301, Boston, MA
Through the mail 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.
- -----------------------------------------------------------------------------------------------------
Send a letter of instruction and any share certificates (if you hold
certificate shares) to: Boston Financial Data Services, Attn: Phoenix
Through express delivery Funds, 66 Brooks Drive, Braintree, MA 02184. Be sure to include the
registered owner's name, fund and account number.
- -----------------------------------------------------------------------------------------------------
For sales up to $50,000, requests can be made by calling
By telephone (800) 243-1574.
- -----------------------------------------------------------------------------------------------------
By telephone exchange Call us at (800) 243-1574 (press 1, then 0).
- -----------------------------------------------------------------------------------------------------
If you selected the checkwriting feature, you may write checks for
By check amounts 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 reserve
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
22 Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<PAGE>
advisor. Redemption requests will not be honored until all
required documents in proper form have been received. To avoid
delay in redemption or transfer, shareholders having questions
about specific requirements should contact the funds' Transfer
Agent at (800) 243-1574.
Redemptions by Mail
> If you are selling shares held individually, jointly, or as
custodian under the Uniform Gifts to Minors Act or Uniform
Transfers to Minors Act.
Send a clear letter of instructions if all of these apply:
o The proceeds do not exceed $50,000.
o The proceeds are payable to the registered owner at the
address on record.
Send a clear letter of instructions with a signature
guarantee when any of these apply:
o You are selling more than $50,000 worth of shares.
o The name or address on the account has changed within
the last 60 days.
o You want the proceeds to go to a different name or
address than on the account.
> 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 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.
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc. 23
Phoenix-Goodwin Multi-Sector Short Term Bond 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.
o You may exchange shares for another fund in the same
class of shares; e.g., Class A for Class A.
o Exchanges may be made by phone ((800) 243-1574) or by
mail (State Street Bank, P.O. Box 8301, Boston, MA
02266-8301).
o The amount of the exchange must be equal to or greater
than the minimum initial investment required.
o The exchange of shares is treated as a sale and
purchase for federal income tax purposes.
o 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 market timing firms permitting them to exchange
by telephone. These privileges are limited, and the
funds' distributor has the right to reject or suspend
them.
Retirement Plans
Shares of the funds may be used as investments under the
following qualified prototype retirement plans: traditional IRA,
rollover IRA, SIMPLE IRA, Roth IRA, 401(k) plans, profit-sharing,
money purchase plans, and 403(b) plans. For more information,
call (800) 243-4361.
24 Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<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, semi-annual
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
- ------------------------------------------
Distributions from net investment income will be declared daily
and paid monthly. The funds will 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 a fund as
capital gain distributions, are taxable to shareholders as
long-term capital gain distributions regardless of the length of
time you have owned your shares.
Unless you elect to receive distributions in cash, dividends and
capital gain distributions are paid in additional shares. All
distributions, cash or additional shares, are subject to federal
income tax and may be subject to state, local and other taxes.
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc. 25
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<PAGE>
Financial Highlights
- -----------------------------------
This table is intended to help you understand the funds'
financial performance for the past 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 funds
(assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP,
independent accountants. Their report, together with the fund's
financial statements, are included in the funds' most recent
Annual Report, which is available upon request.
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------------------------
Year Ended October 31,
----------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.20 $13.50 $13.27 $12.56 $11.94
Income from investment operations:
Net investment income (loss) 0.96 1.07 1.03 0.94 0.96
Net realized and unrealized gain (loss) (0.30) (1.88) 0.18 0.72 0.61
-------- -------- -------- -------- --------
Total from investment operations 0.66 (0.81) 1.21 1.66 1.57
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (1.00) (1.07) (0.98) (0.95) (0.95)
Dividends from net realized gains -- (0.36) -- -- --
In excess of net investment income (0.01) -- -- -- --
In excess of net realized gains -- (0.06) -- -- --
-------- -------- -------- -------- --------
Total distributions (1.01) (1.49) (0.98) (0.95) (0.95)
-------- -------- -------- -------- --------
Change in net asset value (0.35) (2.30) 0.23 0.71 0.62
-------- -------- -------- -------- --------
Net asset value, end of period $10.85 $11.20 $13.50 $13.27 $12.56
======== ======== ======== ======== ========
Total return(1) 5.97% (6.86)% 9.22% 13.75% 13.83%
Ratios/supplemental data:
Net assets, end of period (thousands) $125,931 $156,317 $191,486 $169,664 $168,875
Ratio to average net assets of:
Operating expenses 1.14%(3) 1.08% 1.04%(2) 1.07% 1.10%
Net investment income 8.59% 8.17% 7.28% 7.56% 8.10%
Portfolio turnover 133% 157% 295% 255% 201%
</TABLE>
----------------
(1) Maximum sales charges are not reflected in the total return
calculation.
(2) For the year ended October 31, 1997, the ratio of operating
expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were
included, the ratio would not significantly differ.
(3) For the year ended October 31, 1999, the ratio of operating
expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were
included, the ratio would be 1.13%.
26
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
<TABLE>
Class B
-----------------------------------------------------------------------------------
Year Ended October 31,
----------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.18 $13.48 $13.25 $12.54 $11.93
Income from investment operations:
Net investment income (loss) 0.87 0.96 0.92 0.85 0.86
Net realized and unrealized gain (loss) (0.29) (1.87) 0.18 0.71 0.61
------- -------- -------- -------- --------
Total from investment operations 0.58 (0.91) 1.10 1.56 1.47
------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.91) (0.97) (0.87) (0.85) (0.86)
Dividends from net realized gains -- (0.36) -- -- --
In excess of net investment income (0.01) -- -- -- --
In excess of net realized gains -- (0.06) -- -- --
------- -------- -------- -------- --------
Total distributions (0.92) (1.39) (0.87) (0.85) (0.86)
------- -------- -------- -------- --------
Change in net asset value (0.34) (2.30) 0.23 0.71 0.61
------- -------- -------- -------- --------
Net asset value, end of period $10.84 $11.18 $13.48 $13.25 $12.54
======= ======== ======== ======== ========
Total return(1) 5.15% (7.51)% 8.42% 12.84% 12.96%
Ratios/supplemental data:
Net assets, end of period (thousands) $92,725 $124,075 $154,989 $142,869 $144,020
Ratio to average net assets of:
Operating expenses 1.89%(3) 1.84% 1.79%(2) 1.82% 1.85%
Net investment income 7.83% 7.36% 6.52% 6.80% 7.30%
Portfolio turnover 133% 157% 295% 255% 201%
</TABLE>
----------------
(1) Maximum sales charges are not reflected in the total return
calculation.
(2) For the year ended October 31, 1997, the ratio of operating
expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were
included, the ratio would not significantly differ.
(3) For the year ended October 31, 1999, the ratio of operating
expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were
included, the ratio would be 1.88%.
27
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
<TABLE>
<CAPTION>
Class C
----------------------------------------------------------
From
Year Ended October 31, Inception
---------------------- 10/14/97 to
1999 1998 10/31/97
---- ---- --------
<S> <C> <C> <C>
Net asset value, beginning of period $11.21 $13.48 $14.22
------ ------ ------
Income from investment operations:
Net investment income (loss) 0.88 0.97 0.04
Net realized and unrealized gain (loss) (0.30) (1.85) (0.74)
------ ------ ------
Total from investment operations 0.58 (0.88) (0.70)
------ ------ ------
Less distributions:
Dividends from net investment income (0.91) (0.97) (0.04)
Dividends from net realized gains -- (0.36) --
In excess of net investment income (0.01) -- --
In excess of net realized gains -- (0.06) --
------ ------ ------
Total distributions (0.92) (1.39) (0.04)
------ ------ ------
Change in net asset value (0.34) (2.27) (0.74)
------ ------ ------
Net asset value, end of period $10.87 $11.21 $13.48
====== ====== ======
Total return(1) 5.23% (7.36)% (5.00)%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $7,145 $5,937 $284
Ratio to average net assets of:
Operating expenses 1.89%(5) 1.88% 1.62%(2)(4)
Net investment income 7.83% 7.46% 4.75%(4)
Portfolio turnover 133% 157% 295%(3)
</TABLE>
----------------
(1) Maximum sales charges are not reflected in the total return
calculation.
(2) For the year ended October 31, 1997, the ratio of operating
expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were
included, the ratio would not significantly differ.
(3) Not annualized
(4) Annualized
(5) For the year ended October 31, 1999, the ratio of operating
expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were
included, the ratio would be 1.88%.
28
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------------------------
Year Ended October 31,
----------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $4.66 $5.06 $4.91 $4.74 $ 4.61
Income from investment operations:
Net investment income (loss) 0.33(2) 0.34(2) 0.34(2) 0.33(2) 0.33(2)
Net realized and unrealized gain (loss) (0.08) (0.29) 0.14 0.17 0.13
------- ------- ------- ------- ------
Total from investment operations 0.25 0.05 0.48 0.50 0.46
------- ------- ------- ------- ------
Less distributions:
Dividends from net investment income (0.34) (0.34) (0.33) (0.33) (0.33)
Dividends from net realized gains -- (0.11) -- -- --
In excess of net investment income 0.00 (4) -- -- -- --
------- ------- ------- ------- ------
Total distributions (0.34) (0.45) (0.33) (0.33) (0.33)
------- ------- ------- ------- ------
Change in net asset value (0.09) (0.40) 0.15 0.17 0.13
------- ------- ------- ------- ------
Net asset value, end of period $4.57 $4.66 $5.06 $4.91 $ 4.74
======= ======= ======= ======= =======
Total return(1) 5.57% 0.85% 10.08% 10.91% 10.27%
Ratios/supplemental data:
Net assets, end of period (thousands) $26,071 $33,212 $28,557 $13,702 $9,303
Ratio to average net assets of:
Operating expenses 1.00%(3) 1.00% 1.00% 1.00% 1.00%
Net investment income 7.21% 6.90% 6.54% 6.88% 7.07%
Portfolio turnover 122% 126% 246% 232% 344%
</TABLE>
----------------
(1) Maximum sales charges are not reflected in the total return
calculation.
(2) Includes reimbursement of operating expenses by investment
adviser of $0.02, $0.03, $0.04, $0.06 and $0.08,
respectively.
(3) For the year ended October 31, 1999, the ratio of operating
expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were
included, the ratio would not significantly differ.
(4) Amount is less than $0.01.
29
<PAGE>
Financial Highlights (continued)
- ---------------------------------------------
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<TABLE>
<CAPTION>
Class B
--------------------------------------------------------------------------------
Year Ended October 31,
--------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $4.65 $5.06 $ 4.91 $4.74 $4.61
------- ------- ------- ------ ------
Income from investment operations:
Net investment income (loss) 0.31(2) 0.31(2) 0.31(2) 0.31(2) 0.30(2)
Net realized and unrealized gain (loss) (0.08) (0.29) 0.15 0.17 0.13
------- ------- ------- ------ ------
Total from investment operations 0.23 0.02 0.46 0.48 0.43
------- ------- ------- ------ ------
Less distributions:
Dividends from net investment income (0.32) (0.32) (0.31) (0.31) (0.30)
Dividends from net realized gains -- (0.11) -- -- --
In excess of net investment income 0.00(4) -- -- -- --
------- ------- ------- ------ ------
Total distributions (0.32) (0.43) (0.31) (0.31) (0.30)
------- ------- ------- ------ ------
Change in net asset value (0.09) (0.41) 0.15 0.17 0.13
------- ------- ------- ------ ------
Net asset value, end of period $4.56 $4.65 $5.06 $4.91 $4.74
======= ======= ======= ====== ======
Total return(1) 5.04% 0.12% 9.51% 10.36% 9.71%
Ratios/supplemental data:
Net assets, end of period (thousands) $10,957 $12,225 $10,318 $5,943 $4,659
Ratio to average net assets of:
Operating expenses 1.50%(3) 1.50% 1.50% 1.50% 1.50%
Net investment income 6.70% 6.44% 6.05% 6.38% 6.59%
Portfolio turnover 122% 126% 246% 232% 344%
</TABLE>
----------------
(1) Maximum sales charges are not reflected in the total return
calculation.
(2) Includes reimbursement of operating expenses by investment
adviser of $0.02, $0.03, $0.04, $0.06 and $0.08,
respectively.
(3) For the year ended October 31, 1999, the ratio of operating
expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were
included, the ratio would not significantly differ.
(4) Amount is less than $0.01.
30
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
<TABLE>
<CAPTION>
Class C
--------------------------------------------------------
From
Year Ended October 31, Inception
--------------------------------- 10/1/97 to
1999 1998 10/31/97
---- ---- --------
<S> <C> <C> <C>
Net asset value, beginning of period $4.66 $5.06 $5.15
------ ------- -----
Income from investment operations:
Net investment income (loss) 0.33(2) 0.34(2) 0.03(2)
Net realized and unrealized gain (loss) (0.10) (0.30) (0.09)
------ ------- -----
Total from investment operations 0.23 0.04 (0.06)
------ ------- -----
Less distributions:
Dividends from net investment income (0.33) (0.33) (0.03)
Dividends from net realized gains -- (0.11) --
In excess of net investment income 0.00(6) -- --
------ ------- -----
Total distributions (0.33) (0.44) (0.03)
------ ------- -----
Change in net asset value (0.10) (0.40) (0.09)
------ ------- -----
Net asset value, end of period $4.56 $4.66 $5.06
====== ======= =====
Total return(1) 5.07% 0.59% (1.30)%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $9,025 $10,665 $575
Ratio to average net assets of:
Operating expenses 1.25%(5) 1.25% 1.25%(3)
Net investment income 6.95% 6.70% 5.51%(3)
Portfolio turnover 122% 126% 246%(4)
</TABLE>
----------------
(1) Maximum sales charges are not reflected in the total return
calculation.
(2) Includes reimbursement of operating expenses by investment
adviser of $0.02, $0.03 and $0.04, respectively.
(3) Annualized
(4) Not annualized
(5) For the year ended October 31, 1999, the ratio of operating
expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were
included, the ratio would not significantly differ.
(6) Amount is less than $0.01.
31
<PAGE>
Additional Information
- -------------------------------------
Statement of Additional Information
Each fund has filed a Statement of Additional Information about the fund
dated February 28, 2000 with each Securities and Exchange Commission. The
Statement contains more detailed information about each fund. Each is
incorporated into this prospectus by reference and is legally part of the
prospectus. You may obtain a free copy of the Statements:
o by writing to Phoenix Equity Planning Corporation, 100 Bright
Meadow Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
o by calling (800) 243-4361.
You may also obtain information about the funds from the Securities and
Exchange Commission:
o through its internet site (http://www.sec.gov),
o by visiting its Public Reference Room in Washington, DC,
o by writing to its Public Reference Section, Washington, DC
20549-0102 (a fee may be charged); or
o 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
Each fund semiannually mails to its shareholders detailed reports
containing information about the fund's investments. Each fund's Annual
Report contains a detailed discussion of the market conditions and
investment strategies that significantly affected the fund's performance
from November 1 through October 31. You may request a free copy of a fund's
Annual and Semiannual Reports:
o by writing to Phoenix Equity Planning Corporation, 100 Bright
Meadow Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
o 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
Multi-Sector Fixed Income Fund SEC File Nos. 33-31243 and 811-5909
Multi-Sector Short Term Bond Fund SEC File Nos. 33-45758 and 811-6566
[Recycle logo] Printed on recycled paper using soybean ink
32
<PAGE>
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33
<PAGE>
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34
<PAGE>
[This page intentionally left blank]
35
<PAGE>
- --------------
PRSRT STD
U.S. Postage
PAID
Andrew
Associates
- --------------
Phoenix Equity Planning Corporation
PO Box 2200
Enfield CT 06083-2200
[Graphic: 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 694 (2/00)
<PAGE>
PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME FUND, INC.
101 Munson Street
Greenfield, Massachusetts 01301
Statement of Additional Information
February 28, 2000
This Statement of Additional Information is not the Prospectus but expands
upon and supplements the information contained in the current Prospectus of
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc. (the "Fund"), dated
February 28, 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 Blvd., P.O. Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
The Fund ...................................... 1
Investment Objective and Policies ............. 1
Investment Restrictions ....................... 1
Investment Techniques ......................... 2
Performance Information ....................... 8
Portfolio Transactions and Brokerage .......... 9
Services of the Adviser ....................... 10
Net Asset Value ............................... 11
How to Buy Shares ............................. 11
Investor Account Services ..................... 14
Tax Sheltered Retirement Plans ................ 15
How to Redeem Shares .......................... 16
Dividends, Distributions and Taxes ............ 17
The Distributor ............................... 19
Distribution Plans ............................ 21
Management of the Fund ........................ 22
Other Information ............................. 28
Appendix ...................................... 29
</TABLE>
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
TTY: (800) 243-1926
PXP 695B (2/00)
<PAGE>
THE FUND
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc. is a diversified
open-end, management investment company which was organized as a corporation
under Maryland law on September 20, 1989. Prior to August 27, 1999, the Fund was
known as Phoenix Multi-Sector Fixed Income Fund, Inc.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to maximize current income consistent with
the preservation of capital. The Fund will seek to achieve its objective by
investing in U.S. Government Securities, Foreign Securities, Investment Grade
Securities and High Yield-High Risk Securities (as such terms are defined in the
Prospectus). There is no assurance that the Fund will achieve its investment
objective.
INVESTMENT RESTRICTIONS
Fundamental Policies
The following investment restrictions are fundamental policies that cannot
be changed without the approval of the holders of a majority of the Fund's
outstanding voting securities (i.e., the lesser of (a) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares are
represented, or (b) more than 50% of the outstanding shares.)
The Fund may not:
1. Underwrite the sale of securities of other issuers.
2. Deal in real estate, but it may purchase marketable securities of
companies which deal in real estate investment trusts.
3. Deal in commodities or commodity contracts, except that the Fund may,
subject to the limitations and conditions set forth herein, enter into
interest rate futures contracts and foreign currency futures contracts on
domestic and foreign exchanges, purchase and write put and call options on
interest rate futures contracts and foreign currency and write covered call
options.
4. Make loans to other persons but may, however, lend portfolio securities
(up to 33% of net assets at the time the loan is made) to brokers or
dealers or other financial institutions not affiliated with the Fund or the
Adviser subject to conditions established by the Adviser (See "Lending
Portfolio Securities").
5. Enter into repurchase agreements and purchase or hold participations in
loans in excess of 5% of net assets, respectively.
6. Borrow money, issue senior securities as defined in the Investment
Company Act of 1940, or pledge, mortgage or hypothecate its assets, except
that it may (i) borrow from banks, enter into reverse repurchase agreements
or employ similar investment techniques, and pledge its assets in
connection therewith, but only if immediately after such borrowing there is
asset coverage of 300%; and (ii) enter into transactions in options,
futures, and options on futures as described in the Fund's Prospectus and
Statement of Additional Information (the deposit of assets in escrow in
connection with the writing of covered put and call options and the
purchase of securities on a when-issued or delayed delivery basis and
collateral arrangements with respect to initial or variation margin
deposits for futures contracts will not be deemed to be pledges of the
Fund's assets).
7. Purchase on margin, except that for purposes of this restriction, the
deposit or payment of initial or variation margin in connection with
futures contracts will not be deemed to be a purchase of securities on
margin.
8. Sell short, except that the Fund may enter into short sales against the
box.
9. Invest more than 25% of its assets in any one industry or group of
industries.
10. As a diversified investment company, at least 75% of the Fund's total
assets must be represented by cash or cash items, government securities,
securities of other investment companies and other securities limited in
respect of any one issuer to an amount not greater than 5% of the value of
the total assets of the Fund.
11. Make an investment for the purpose of exercising control or management,
nor may it invest in real estate limited partnerships, or invest in oil,
gas or other mineral leases.
12. Invest more than 50% of its assets, determined at the time of purchase,
in High Yield-High Risk Securities.
1
<PAGE>
Non-Fundamental Policies
The following restrictions of the Fund are not fundamental policies and may
be changed by the Board of Directors of the Fund without shareholder approval:
1. The Fund will not invest more than 15% of its net assets in illiquid
securities. See "Other Policies--Illiquid Securities."
2. The Fund may invest no more than 15% of its assets in any combination of
zero coupon bonds, step coupon bonds and payment-in-kind ("PIK") bonds.
3. The Fund does not intend to borrow any amount in excess of 10% of its
assets, and would do so only for temporary emergency or administrative
purposes. In addition, to avoid the potential leveraging of its assets, the
Fund will not make additional investments when its borrowings are in excess
of 5% of its total assets.
INVESTMENT TECHNIQUES
The Fund may utilize the following practices or techniques in pursuing its
investment objectives.
Options and Other Hedging Activities
The Fund may write and purchase options, including over-the-counter
options, for hedging purposes. The Fund may also engage in the writing of
covered call option contracts on securities owned at such times and from time to
time as the Adviser shall determine to be appropriate and consistent with the
investment objectives of the Fund. Such options must be listed on an organized
national securities exchange. The aggregate value of the securities underlying
the calls will be limited to not more than 25% of the net assets of the Fund.
The Fund may enter into other hedging transactions, such as interest rate swaps,
and the purchase and sale of interest rate collars, caps and floors.
A call option gives the purchaser of the option the right to buy the
underlying security from the writer at the exercise price at any time prior to
the expiration of the contract, regardless of the market price of the security
during the option period. The premium paid to the writer is the consideration
for undertaking the obligations under the option contract. The writer forgoes
the opportunity to profit from an increase in the market price of the underlying
security above the exercise price except insofar as the premium represents such
a profit. The Fund will write only call option contracts and will receive a
premium from the writing of such contracts, and it is believed that total return
to the Fund can be increased through such premiums consistent with the Fund's
investment objective.
The Fund may also write covered call options on securities indexes. Through
the writing of call index options the Fund can achieve many of the same
objectives as through the use of call options on individual securities. Call
options on securities indexes are similar to call options on a security except
that, rather than the right to take delivery of a security at a specified price,
a call option on a securities index gives the holder the right to receive, upon
exercise of the option, an amount of cash if the closing level of the securities
index upon which the call option is based is greater than the exercise price of
the option. The writing of such index call options would be subject to the
present limitation of covered call option writing.
The Fund may purchase options to close out a position, i.e., a "closing
purchase transaction"--the purchase of a call option on the same security with
the same exercise price and expiration date as the call option which it has
previously written on a particular security. When a security is sold from the
Fund's portfolio, the Fund will effect a closing purchase transaction so as to
close out any existing call option on that security, realizing a profit or loss
depending on whether the amount paid to purchase a call option is less or more
than the amount received from the sale thereof. In addition, the Fund may wish
to purchase a call option to hedge its portfolio against an anticipated increase
in the price of securities it intends to purchase or to purchase a put option to
hedge its portfolio against an anticipated decline in securities prices. No more
than 5% of the assets of the Fund may be invested in the purchase of put and
call options, including index options.
The Fund may also engage in foreign currency exchange transactions and in
transactions involving interest rate futures contracts and options thereon as a
hedge against changes in exchange and interest rates. Hedging is a means of
transferring risk that an investor does not desire to assume in an uncertain
interest or exchange rate environment. The Adviser believes it is possible to
reduce the effects of interest and exchange rate fluctuations on the value of
the Fund's portfolio, or sectors thereof, through the use of such strategies.
The costs of, and possible losses incurred from, the foregoing activities
may reduce the Fund's current income and involve a loss of principal. Any
incremental return earned by the Fund resulting from options transactions and
from its hedging activities would be expected to offset anticipated losses or a
portion thereof, and will be treated as long term or short term capital gains.
See "Dividends, Distributions and Taxes."
The Fund will not engage in the foregoing activities for speculative
purposes but only as a hedge against changes resulting from market conditions in
the values of securities in its portfolio, or sectors thereof, or that it
intends to acquire.
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Futures Contracts, Options on Futures Contracts and Forward Contracts
The Fund may enter into futures contracts to purchase and sell the security
or foreign currency underlying the contracts and is permitted to purchase put
and call options on the contracts. The Fund will engage in these transactions
solely for the purpose of hedging against the effects of changes in the value of
its portfolio securities or those it intends to purchase due to anticipated
changes in interest rates and currency values, and not for purposes of
speculation. In order for the Fund to qualify as a regulated investment company
under the Internal Revenue Code of 1986, as amended (the "Code"), it must, among
other things, derive less than 30% of its gross income each taxable year as
gains (without deduction for losses) from the sale or other disposition of
securities held for less than three months. Accordingly, the Fund may have to
limit its ability to trade in futures contracts and related options in order to
comply with this test.
The Fund may enter into both interest rate futures contracts and foreign
currency futures contracts on domestic and foreign exchanges. Entering into a
futures contract to sell a debt security or foreign currency, which may be
referred to as entering into a "short" futures position, creates an obligation
by the seller to deliver a specified amount of the underlying security or
foreign currency at a specified future time and at an agreed upon price.
Entering into a futures contract to purchase a debt security or foreign
currency, which may be referred to as entering into a "long" futures position,
creates an obligation by the purchaser to take delivery of a specified amount of
the underlying security or foreign currency at a specified future time and at a
stated price. The specified instruments delivered or taken at the delivery date
are determined in accordance with the rules of the exchange on which the futures
contract is effected. Although the terms of futures contracts specify actual
delivery or receipt of the underlying commodity, futures contracts generally are
closed out before the delivery date without making delivery or receiving the
underlying instruments. Instead, the futures position is terminated by entering
into an opposite position in the same commodity on the same (or a linked)
exchange.
Upon entering into a futures contract, the Fund will be required to deposit
with a broker an amount of cash or cash equivalent equal to approximately 1% to
5% of the contract price, which amount is subject to change by the exchange on
which the contract is traded or by the brokers. This amount, which is known as
"initial margin," does not involve the borrowing of funds to finance the
transactions; rather, it is in the nature of a performance bond or good faith
deposit on the contract that will be returned to the Fund upon termination of
the futures contract, assuming all contractual obligations have been satisfied.
Subsequent payments, known as "variation margin," to and from the broker, will
be made daily as the price of the instrument underlying the futures contract
fluctuates, making the long and short positions in the futures contract more or
less valuable, a process known as "marking-to-market." Upon the liquidation of a
futures position, final determinations of variation margin are then made, any
additional cash is paid by the Fund or released to it and a loss or gain is
realized.
An interest rate futures contract provides for the future sale by one party
and the purchase by the other party of a certain amount of a specified debt
security at a stated date, time, place and price. Among the debt securities on
which interest rate futures contracts currently are based are futures contracts
for the purchase or sale of U.S. Government Securities, including long-term
Treasury Bonds, Treasury Notes, three-month Treasury Bills and Government
National Mortgage Association modified pass-through mortgage-backed securities
("GNMA pass-through securities") and 90-day commercial paper. Interest rate
futures contracts currently are traded in the United States primarily on the
floors of the Chicago Board of Trade ("CBT") and the International Monetary
Market of the Chicago Mercantile Exchange ("CME"). Interest rate futures also
are traded on foreign exchanges such as the London International Financial
Futures Exchange ("LIFFE") and the Singapore International Monetary Exchange
("SIMEX").
The Fund may enter into interest rate futures contracts to protect against
fluctuations in interest rates affecting the value of debt securities that the
Fund either holds or intends to acquire. If interest rates are expected to
increase, the Fund may enter into short interest rate futures contracts on debt
securities that correlate historically with the value of the portfolio
securities of the Fund to hedge against a decline in the value of these
securities. In the event that interest rates increase as anticipated, the value
of the interest rate futures contracts would increase at a similar rate thus
mitigating any decline in the value of the Fund's portfolio securities and
resulting in a higher net asset value than would have occurred without the sale
of the futures contracts. Although the Fund could accomplish a similar result by
selling certain of its debt securities, the liquidity of the futures market
permits it to maintain a defensive position without selling its portfolio
securities.
When the Fund anticipates that interest rates may decline, it may purchase
interest rate futures contracts to hedge against a rise in the price of debt
securities it intends to purchase. The value of certain futures contracts may
fluctuate at approximately the same rate as the value of the debt securities the
Fund intends to purchase, thus permitting the Fund to benefit from the
appreciating cost of the debt securities without actually buying them until the
market has stabilized. The Fund may liquidate the futures contract by offset and
buy the securities in the cash market. When the Fund enters into futures
contracts to hedge against the increasing cost of debt securities it might
purchase in the future, it will maintain any asset, including equity securities
and non-investment grade debt so long as the asset is liquid, unencumbered and
marked to market daily, in a pledged asset account with its custodian sufficient
to cover the obligations of the Fund with respect to the futures contracts.
A foreign currency futures contract provides for the future sale and
purchase by the respective parties of a certain amount of a specified foreign
currency at a stated date, time, place and price. At present, foreign currency
futures contracts are based on
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British pounds, German deutsche marks, Canadian dollars, Japanese yen, French
francs, Swiss francs, and European Currency Units (ECUs). Foreign currency
futures contracts currently are traded on CME, MidAmerica Commodity Exchange,
the Philadelphia Board of Trade, LIFFE and SIMEX.
The Fund may enter into foreign currency futures contracts to attempt to
establish the rate at which it would be entitled to make a future exchange of
U.S. dollars for another currency. If the Fund anticipates that the value of a
foreign currency may decline against the U.S. dollar, it may enter into futures
contracts to sell that foreign currency in order to attempt to hedge against a
decline in the U.S. dollar value of those of its securities payable in those
currencies.
The Fund may also attempt to establish the price in U.S. dollars of
securities it intends to acquire at a future date by entering into futures
contracts to purchase foreign currencies in which those securities are
denominated to hedge against an increase in price, in U.S. dollars, of those
securities.
The Fund may purchase and write put and call options on interest rate
futures contracts as a hedge against changes in interest rates and on foreign
currency futures contracts as a hedge against fluctuating currency values, in
lieu of purchasing and writing options directly on the underlying security or
currency or purchasing and selling the underlying futures contracts. The Fund
may enter into closing transactions with respect to these options to terminate
existing positions.
When an option is exercised, the writer of the option will deliver to the
holder of the option the futures position together with the accumulated balance
in the option writer's futures margin account. The futures margin account
balance represents the amount by which the market price of the futures contract
exceeds (in the case of a call option) or is less than (in the case of a put
option) the exercise price of the option on the futures contract. The potential
loss related to the purchase of an option on a futures contract is limited to
the premium paid for the option plus related transaction costs.
The purchase of an option on an interest rate futures contract will give
the Fund the right to enter into a futures contract to purchase (in the case of
a call option) or sell (in the case of a put option) a particular debt security
at a specified exercise price at any time prior to the expiration date of the
option. Options on interest rate futures contracts currently are available with
respect to Treasury Bonds, Treasury Notes, and Eurodollars.
The Fund may purchase a put option on an interest rate futures contract to
hedge against a decline in the value of its portfolio securities as a result of
rising interest rates. Purchasing put options on futures contracts is similar to
purchasing put options on the portfolio securities themselves. As interest rates
rise, the value of debt securities generally declines, thus making put options
on interest rate futures more valuable. The Fund may purchase a call option on
an interest rate futures contract to hedge against the risk of an increase in
the price of securities it intends to purchase resulting from declining interest
rates. The purchase of call options in those situations generally would have the
same effect as purchasing call options on the debt securities. The Fund may
write put and call options on interest rates futures contracts as part of
closing sale transactions to terminate its option positions.
The purchase of options on foreign currency futures contracts gives the
Fund the right to enter into a futures contract to purchase (in the case of a
call option) or sell (in the case of a put option) a particular currency at a
specified price at any time during the period before the option expires. Options
on foreign currency futures contracts are available with respect to British
pounds, German deutsche marks and Swiss francs. The Fund may purchase options on
foreign currency futures as a hedge against fluctuating currency values.
The Fund is permitted to engage in foreign currency exchange transactions
in order to protect against uncertainty in the level of future exchange rates.
The Fund may conduct its currency exchange transactions on a "spot" (i.e., cash)
basis at the rate then prevailing in the currency exchange market, or on a
forward basis, by entering into futures (as previously discussed) or forward
contracts to purchase or sell currency. The Fund's dealings in foreign currency
exchange contracts is limited to hedging involving either specific transactions
or portfolio positions.
Transaction hedging is the purchase or sale of foreign currency with
respect to specific receivables or payables of the Fund generally arising in
connection with the purchase or sale of its portfolio securities and accruals of
interest receivable and the Fund's expenses. The Fund may engage in transaction
hedging to protect against a change in the foreign currency exchange rate
between the date on which the Fund contracts to purchase or sell the security
and the settlement date, or to "lock in" the U.S. dollar equivalent of a
dividend or interest payment in a foreign currency. In such circumstances, the
Fund will purchase or sell a foreign currency on a spot basis at the prevailing
spot rate.
Position hedging is the purchase or sale of currency with respect to
portfolio security positions denominated or quoted in that currency. The Fund
may engage in position hedging to protect against a decline in the value of the
currencies in which its portfolio securities are denominated or quoted. To
engage in position hedging, the Fund will enter into foreign currency futures
and related options (as described above), forward foreign currency contracts,
and options on foreign currencies. The Fund also will purchase or sell foreign
currency on a spot basis.
The Fund will not position hedge with respect to a particular currency for
an amount greater than the aggregate market value, determined at the time of
sale of foreign currency, of the securities held (or to be held) in its
portfolio denominated or quoted
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in or currently convertible into that currency. If the Fund enters into a
position hedging transaction, it will place in a pledged account with its
custodian 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 the total assets the Fund committed to the consummation of the
forward contract. If the value of the securities placed in the pledged account
declines, additional cash or securities will be placed in the account so that
the value of the account would equal the amount of assets the Fund committed to
the currency contract.
A forward foreign currency contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract as agreed upon by the parties, at a price set at
the date of the contract. The holder of a forward contract containing a
cancellation provision has the unilateral right to cancel the contract at
maturity by paying a specified fee. Forward contracts are entered into in the
interbank market conducted directly between currency dealers, which usually are
large commercial banks and brokerage houses, and their customers. Forward
currency contracts are conducted on a principal basis and therefore generally
involve no margin, commissions or other fees. Instead, bid and ask prices are
quoted by dealers who profit from the difference in the spread between those
prices.
Although the use of forward currency contracts does not eliminate
fluctuations in the underlying price of securities, it will establish a rate of
exchange that can be achieved in the future. Forward contracts limit the risk
of loss due to a decline in the value of the hedged currency but also limit any
potential gain that might result in the event the value of the currency
increases.
Unlike a foreign currency futures contract, which has a predetermined
maturity date in any month, a forward currency contract matures any fixed number
of days from the date of the contract agreed upon by the parties. At the
maturity of a forward contract, the Fund may either take or make delivery of the
currency specified in the contract, or, at or prior to maturity, it may enter
into a closing transaction involving the purchase or sale of an offsetting
contract. Because these contracts will be entered into on a principal basis
rather than on an exchange, closing transactions for forward contracts will be
effected with the currency dealer who was a party to the original forward
contract.
The Fund may also purchase or write put and call options on exchanges for
the purpose of hedging against changes in future currency exchange rates. An
option on a foreign currency gives the purchaser, in return for a premium paid
plus related transaction costs, the right to sell (in the case of a put option)
and buy (in the case of a call option), the underlying currency at a specified
price until the option expires. Currency options traded on United States or
other exchanges may be subject to position limits, which may affect the ability
of the Fund to hedge its positions. Foreign currency options currently are
traded on the Philadelphia Stock Exchange, the International Options Clearing
Corp. and LIFFE. The Fund will purchase and sell options on foreign exchanges to
the extent permitted by the Commodity Futures Trading Commission ("CFTC").
The Fund may purchase or write options on currency only when the Adviser
believes that a liquid secondary market exists for these options; however, no
assurance can be given that a liquid secondary market will exist for a
particular option at any specific time.
The value of an option on foreign currency depends upon the value of the
foreign currency when compared to the value of the U.S. dollar. Transactions in
foreign currency options generally involve smaller amounts than those on the
interbank market and therefore option investors may have to deal at prices for
the underlying foreign currencies that are less favorable than those for larger
transactions. In addition, the foreign currency market has neither a systematic
reporting of last sale information nor a regulatory requirement that available
quotations be firm or revised on a timely basis. Available quotation information
usually represents large transactions in the interbank market and may not
reflect transactions valued at less than $1 million. Because the interbank
market in foreign currencies is a global, around-the-clock market, significant
price and rate movements may take place during periods when the U.S. options
markets are closed and therefore may not be reflected in the U.S. options
markets.
The Fund will not use leverage when it enters into long futures contracts
or related options. For each long position the Fund enters into, it will deposit
any asset, including equity securities and non-investment grade debt so long as
the asset is liquid, unencumbered and marked to market daily, having a value
equal to the market value of the contract as collateral in a pledged account
with the custodian of the Fund. The Fund will not enter into futures contracts
and related options if as a result the aggregate of the initial margin deposits
on the Fund's existing futures and premiums paid for unexpired options exceeds
5% of the fair market value of the Fund's assets.
Using futures contracts and related options involves certain risks,
including (1) the risk of imperfect correlation between fluctuations in the
value of a futures contract and the portfolio security that is being hedged; (2)
the risk that in its use of futures and related options the Fund may not
outperform a fund that does not make use of those instruments; (3) the fact that
no assurance can be given that active markets will be available to offset
positions; (4) the fact that futures contracts and options on futures may be
closed out, by entering into an offsetting position, only on the exchange on
which the contracts were entered into or through a linked exchange; (5) the risk
that the value of the assets underlying the futures contract on the date of
delivery will vary significantly from the amount which the Fund has agreed to
pay or the price at which the Fund has agreed to sell under such contract,
thereby subjecting the Fund to losses; and (6) the fact that successful use of
futures contracts and related options for hedging purposes will depend upon the
ability of the Adviser to predict correctly movements in the direction of the
overall interest rate and foreign currency markets.
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Certain exchanges on which futures are traded may establish daily limits in
the amount that the price of a futures or related option contract may fluctuate
from the previous day's settlement price. When a daily limit has been reached in
a particular contract, no trades may be made that day at a price beyond that
limit. If a daily limit were reached, the Fund could be prevented from
liquidating unfavorable positions and thus could be subject to losses. In
certain situations, the Fund would be unable to close a position and also would
have to make daily cash payments of variation margin. Although an increase in
the price of securities could partially or completely offset those losses, no
assurance can be given that the price of the underlying securities will
correlate with the price of the futures contracts and thus offset any losses on
the contracts.
Foreign currency futures contracts and related options, forward foreign
currency contracts and options on foreign currency may be traded on foreign
exchanges. The regulation of transactions on those exchanges may be less
extensive than the regulation of U.S. exchanges. The Fund only would trade those
options approved by the CFTC. Transactions on foreign exchanges also may not
involve a clearing mechanism and related guarantees and may be subject to the
risk of governmental actions affecting trading in, or the prices of, foreign
securities. The value of such positions also could be affected adversely by (1)
other foreign political, legal and economic factors; (2) less information being
available on which to make trading decisions than is available in the U.S.; (3)
a delay in the ability to act on significant events occurring in the foreign
markets during non-business hours in the United States; (4) different exercise
and settlement terms and margin requirements from those imposed domestically;
and (5) less trading volume than on U.S. exchanges.
An additional risk of foreign exchange transactions is that foreign
exchanges offer less protection against defaults in the forward trading of
currencies than is available on a United States exchange. Because a forward
foreign currency contract is not guaranteed by an exchange or clearinghouse, a
default on the contract would deprive the Fund of unrealized profits or would
force the Fund to cover its commitments for purchase or resale, if any, at the
current market price.
Interest Rate Transactions
Interest rate swaps involve the exchange with another party of commitments
to pay or receive interest, e.g., an exchange of floating rate payments for
fixed rate payments. The purchase of an interest rate cap entitles the
purchaser, to the extent that a specified index exceeds a predetermined interest
rate, to receive payments of interest on a notional principal amount from the
party selling such interest rate cap. The purchase of an interest rate floor
entitles the purchaser, to the extent that a specified index falls below a
predetermined interest rate, to receive payments of interest on a notional
principal amount from the party selling such interest rate floor. An interest
rate collar combines the elements of purchasing a cap and selling a floor. The
collar protects against an interest rate rise above the maximum amount but gives
up the benefit of an interest rate decline below the minimum amount. The net
amount of the excess, if any, of the Fund's obligations over its entitlements
with respect to each interest rate swap will be accrued on a daily basis and any
asset, including equity securities and non-investment grade debt so long as the
asset is liquid, unencumbered and marked to market daily having an aggregate net
asset value at least equal to the accrued excess will be maintained in a pledged
account by the Fund's custodian. If there is a default by the other party to
such a transaction, the Fund will have contractual remedies pursuant to the
agreements related to the transaction.
Zero Coupon, Step Coupon and PIK Bonds
The Fund may invest up to 15% of its assets, determined at the time of
investment, in any combination of zero coupon bonds, step coupon bonds and bonds
on which interest is payable in kind ("PIK bonds"), in the aggregate. A zero
coupon bond is a bond that does not pay interest currently for its entire life.
Step coupon bonds frequently do not entitle the holder to any periodic payments
of interest for some initial period after the issuance of the obligation;
thereafter, step coupon bonds pay interest for fixed periods of time at
particular interest rates (a "step coupon bond"). In the case of a zero coupon
bond, the nonpayment of interest on a current basis may result from the bond's
having no stated interest rate, in which case the bond pays only principal at
maturity and is initially issued at a discount from face value. Alternatively, a
zero coupon obligation may provide for a stated rate of interest, but provide
that such interest is not payable until maturity, in which case the bond may
initially be issued at par. The value to the investor of a zero coupon or step
coupon bond is represented by the economic accretion either of the difference
between the purchase price and the nominal principal amount (if no interest is
stated to accrue) or of accrued, unpaid interest during the bond's life or
payment deferral period. PIK bonds are obligations which provide that the issuer
thereof may, at its option, pay interest on such bonds in cash or in the form of
additional debt securities. Such securities benefit the issuer by mitigating its
need for cash to meet debt service, but also require a higher rate of return to
attract investors who are willing to defer receipt of such cash. The Funds will
accrue income on such investments for tax and accounting purposes, which is
distributable to shareholders from available cash or liquidated assets.
Zero coupon and step coupon bonds are issued and traded at a discount from
their face amounts. The amount of the discount varies depending on such factors
as the time remaining until maturity of the bonds, prevailing interest rates,
the liquidity of the security and the perceived credit quality of the issuer.
The market prices of zero coupon, step coupon and PIK bonds generally are more
volatile than the market prices of securities that pay interest periodically and
are likely to respond to changes in interest rates to a greater degree than do
bonds on which regular cash payments of interest are being made that have
similar maturities and credit quality. In order to satisfy a requirement for
qualification as a "regulated investment company" under the Code, the Fund must
distribute its investment company taxable income, including the original issue
discount accrued on zero coupon or
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step coupon bonds or interest paid in additional debt obligations on PIK bonds.
Because the Fund will not receive on a current basis cash payments in respect of
accrued original issue discount on zero coupon bonds, step coupon bonds during
the period before interest payments commence or interest paid in additional debt
obligations on PIK bonds, the Fund may have to distribute cash obtained from
other sources in order to satisfy the distribution requirement under the Code.
Lending Portfolio Securities
The Fund may lend portfolio securities to broker-dealers or other
institutional borrowers, but only when the borrower pledges cash, U.S.
government securities, or other liquid high-grade debt securities as collateral
to the Fund and agrees to maintain such collateral so that it amounts at all
times to at least 100% of the value of the securities loaned. While securities
are on loan, the borrower will pay the Fund any income earned thereon and the
Fund may invest any cash collateral in portfolio securities, thereby earning
additional income, or receive an agreed-upon amount of income from a borrower
who has delivered equivalent collateral. Furthermore, the Fund may terminate
such loans at any time, and must receive reasonable interest on the collateral
as well as dividends, interest, or other distributions paid on the security
during the loan period. Upon expiration of the loan the borrower of the
securities will be obligated to return to the Fund the same number and kind of
securities as those loaned together with duly executed stock powers. The Fund
must be permitted to vote the proxies if a material event affecting the value of
the security is to occur. The Fund may pay reasonable fees in connection with
the loan, including reasonable fees to the Fund's Custodian for its services. In
the event that the borrower defaults on its obligation to return borrowed
securities because of insolvency or otherwise, the Fund could experience delays
and costs in gaining access to the collateral and could suffer a loss to the
extent that the value of the collateral falls below the market value of the
borrowed securities.
Loan Participations
The Fund may invest up to 5% of its net assets, determined at the time of
investment, in loan participations. A loan participation agreement involves the
purchase of a share of a loan made by a bank to a company in return for a
corresponding share of the borrower's principal and interest payments. Loan
participations of the type in which the Fund may invest include interests in
both secured and unsecured corporate loans. When the Fund purchases loan
assignments from lenders, it will acquire direct rights against the borrower,
but these rights and the Fund's obligations may differ from, and be more limited
than, those held by the assignment lender. The principal credit risk associated
with acquiring loan participation and assignment interests is the credit risk
associated with the underlying corporate borrower. There is also a risk that
there may not be a readily available market for participation loan interests
and, in some cases, this could result in the Funds disposing of such securities
at a substantial discount from face value or holding such securities until
maturity.
In the event that a corporate borrower failed to pay its scheduled interest
or principal payments on participations held by the Fund, the market value of
the affected participation would decline, resulting in a loss of value of such
investment to the Fund. Accordingly, such participations are speculative and may
result in the income level and net assets of the Fund being reduced. Moreover,
loan participation agreements generally limit the right of a participant to
resell its interest in the loan to a third party and, as a result, loan
participations will be deemed by the Fund to be illiquid investments. The Fund
will invest only in participations with respect to borrowers whose
creditworthiness is, or is determined by the Adviser to be, substantially
equivalent to that of issuers whose senior unsubordinated debt securities are
rated B or higher by Moody's Investor's Service, Inc. ("Moody's") or Standard &
Poor's Corporation ("S&P").
Illiquid Securities
The fund will not invest more than 15% of its net assets in illiquid
securities. Illiquid securities are those that the Fund would not likely be able
to sell in any given seven day period. Securities such as private placements and
other restricted securities, loan participations, securities with legal or
contractual restrictions on resale, repurchase agreements that mature in more
than seven days and OTC options tend to be illiquid. The Board of Directors of
the Fund has adopted procedures for evaluating the liquidity of securities. The
procedures take into account the frequency of trades and quotes for the
security, the number of dealers willing to purchase and sell the security and
the number of other, qualified purchasers, dealer undertakings to make a market
in the security, and the nature of the marketplace for effecting trades (i.e.
the time needed to dispose of the security, the method of soliciting offers, and
the mechanics of transfer).
Liquidity issues arise most frequently in two cases. "Rule 144A" securities
and OTC options.
"Rule 144A" securities are restricted securities (those not originally
issued in a public offering) that generally may not be traded. Pursuant to Rule
144A under the Securities Act of 1933, however, these securities can be readily
bought and sold by and among certain types of institutional investors, including
mutual funds. The liquidity procedures adopted by the Fund's Board of Directors
recognize the significance of Rule 144A and the institutional marketplace it has
produced for restricted securities.
The staff of the Securities and Exchange Commission (the "Commission") has
taken the position that purchased OTC options and the assets that "cover" for
written OTC options are illiquid securities unless certain procedures are
followed. The Fund intends to follow those procedures. Thus, the Fund will sell
OTC options only to qualified dealers who agree that the Fund may repurchase any
OTC options it writes for a maximum price to be calculated by a predetermined
formula. In such cases, the OTC option would
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<PAGE>
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option. The Fund may also
follow certain procedures from time to time which have been adopted by the
Fund's Board of Directors for the purpose of making determinations regarding the
liquidity of securities issued pursuant to Rule 144A under the Securities Act of
1933.
In determining whether a Rule 144A security is liquid, the Board of
Directors may take into account the frequency of trades and quotes for the
security, the number of dealers willing to purchase or sell the security and the
number of other potential purchasers, dealer undertakings to make a market in
the security, and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers, and the mechanics of
transfer).
Participation on Creditors' Committees
The Fund may from time to time participate on committees formed by
creditors to negotiate with the management of financially troubled issuers of
securities held by the Fund. Such participation may subject the Fund to expenses
such as legal fees and may make the fund an "insider" of the issuer for purposes
of the federal securities laws, and therefore may restrict the fund's ability to
purchase or sell a particular security when it might otherwise desire to do so.
Participation by the Fund on such committees also may expose the Fund to
potential liabilities under the federal bankruptcy laws or other laws governing
the rights of creditors and debtors. The Fund will participate on such
committees only when the Adviser believes that such participation is necessary
or desirable to enforce the Fund's rights as a creditor or to protect the value
of securities held by the Fund.
PERFORMANCE INFORMATION
The Fund may, from time to time, quote its "yield" and/or its "total
return" in advertisements, sales literature or reports to shareholders or
prospective investors. Average annual return and yield are computed separately
for each Class of Shares in accordance with the formulas specified by the
Commission. The yield will be computed by dividing the Fund's net investment
income over a 30-day period by an average value (using the average number of
shares entitled to receive dividends and the maximum offering price per share at
the end of the period) all in accordance with applicable regulatory
requirements. Such amount will be compounded for six months and then annualized
for a 12-month period to derive the Fund's yield. Calculated pursuant to this
formula, for the 30-day period ending October 31, 1999, the Class A Shares yield
was 8.32%, the Class B Shares yield was 7.97%, and the Class C Shares yield was
7.95%.
Average annual total return quotations will be computed by finding the
average annual compounded rates of return over the 1, 5 and 10 year periods that
would equate the initial amount invested to the ending redeemable value,
according to the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years;
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the 1, 5, or 10 year periods at the end of the
1, 5, or 10 year periods (or fractional portion thereof).
Performance data quoted for a Class of Shares covering periods prior to the
inception of such Class of Shares will reflect historical performance of Class A
shares adjusted for the higher operating expenses applicable to such Class of
Shares.
Advertisements, sales literature and other communications may contain
information about the Fund and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Fund to
respond quickly to changing market and economic conditions. From time to time
the Fund may include specific portfolio holdings or industries, in such
communications. To illustrate components of overall performance, the Fund may
separate its cumulative and average annual returns into income and capital gains
components; or cite separately as a return figure the equity or bond portion of
the Fund's portfolio; or compare the Fund's equity or bond figures to well-known
indices of market performance, including, but not limited to: the S&P 500 Index,
Dow Jones Industrial Average, Lehman Brothers Aggregate Bond Index, CS First
Boston High Yield Index and Salomon Brothers Corporate Bond and Government Bond
Indices.
For the 1 and 5 year periods ended October 31, 1999, and from inception,
December 18, 1989, through October 31, 1999, the average annual total return of
the Class A was 0.94%, 5.86% and 8.36%, respectively. For the 1 and 5 year
periods ended October 31, 1999 and since inception, January 3, 1992, through
October 31, 1999, for Class B Shares, the average annual total return was 1.27%,
6.09%, and 6.34%, respectively. For Class C Shares for the one year period ended
October 31, 1999 and since inception, October 14, 1997, through October 31, 1999
the average annual total return was 5.23% and (3.68)%, respectively.
The Fund may also compute aggregate total return for specified periods
based on a hypothetical Class A, Class B or Class C account with an assumed
initial investment of $10,000. The aggregate return is determined by dividing
the net asset value of this account at the end of the specified period by the
value of the initial investment and is expressed as a percentage. Calculation of
aggregate total return reflects payment of the Class A maximum sales charge of
4.75% and assumes reinvestment of all income dividends and capital gain
distributions during the period.
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PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser places orders for the purchase and sale of securities,
supervises their execution and negotiates brokerage commissions on behalf of the
Fund. It is the practice of the Adviser to seek the best prices and execution of
orders and to negotiate brokerage commissions which in its opinion are
reasonable in relation to the value of the brokerage services provided by the
executing broker. Brokers who have executed orders for the Fund are asked to
quote a fair commission for their services. If the execution is satisfactory and
if the requested rate approximates rates currently being quoted by the other
brokers selected by the Adviser, the rate is deemed by the Adviser to be
reasonable. Brokers may ask for higher rates of commission if all or a portion
of the securities involved in the transaction are positioned by the broker, if
the broker believes it has brought the Fund an unusually favorable trading
opportunity, or if the broker regards its research services as being of
exceptional value. Payment of such commissions is authorized by the Adviser
after the transaction has been consummated. If the Adviser more than
occasionally differs with the broker's appraisal of opportunity or value, the
broker would not be selected to execute trades in the future.
The Adviser believes that the Fund benefits with a securities industry
comprised of many and diverse firms and that the long-term interests of
shareholders of the Fund are best served by its brokerage policies which will
include paying a fair commission rather than seeking to exploit its leverage to
force the lowest possible commission rate. The primary factors considered in
determining the firms to which brokerage orders are given are the Adviser's
appraisal of: the firm's ability to execute the order in the desired manner, the
value of research services provided by the firm, and the firm's attitudes toward
and interest in mutual funds in general including those managed and sponsored by
the Adviser. The Adviser does not offer or promise to any broker an amount or
percentage of brokerage commissions as an inducement or reward for the sale of
shares of the Fund. Over-the-counter purchases and sales are transacted directly
with principal market makers except in those circumstances where, in the opinion
of the Adviser, better prices and executions are available elsewhere. In the
over-the-counter market, securities are usually traded on a "net" basis with
dealers acting as principal for their own accounts without a stated commission,
although the price of the security usually contains a profit to the dealer. The
Fund also expects that securities will be purchased at times in underwritten
offerings where the price includes a fixed amount of compensation, usually
referred to as the underwriter's concession or discount. The foregoing
discussion does not relate to transactions effected on foreign securities
exchanges which do not permit the negotiation of brokerage commissions and where
the Adviser would, under the circumstances, seek to obtain best price and
execution on orders for the Fund.
The Fund has adopted a policy and procedures governing the execution of
aggregated advisory client orders ("bunching procedures") in an attempt to lower
commission costs on a per-share and per-dollar basis. According to the bunching
procedures, the Adviser shall aggregate transactions unless it believes in its
sole discretion that such aggregation is inconsistent with its duty to seek best
execution (which shall include the duty to seek best price) for the Fund. No
advisory account of the Adviser is to be favored over any other account and each
account that participates in an aggregated order is expected to participate at
the average share price for all transactions of the Adviser in that security on
a given business day, with all transaction costs shared pro rata based on the
Fund's participation in the transaction. If the aggregated order is filled in
its entirety, it shall be allocated among the Adviser's accounts in accordance
with the allocation order, and if the order is partially filled, it shall be
allocated pro rata based on the allocation order. Notwithstanding the foregoing,
the order may be allocated on a basis different from that specified in the
allocation order if all accounts of the Adviser whose orders are allocated
receive fair and equitable treatment and the reason for such different
allocation is explained in writing and is approved in writing by the Adviser's
compliance officer as soon as practicable after the opening of the markets on
the trading day following the day on which the order is executed. If an
aggregated order is partially filled and allocated on a basis different from
that specified in the allocation order, no account that is benefited by such
different allocation may intentionally and knowingly effect any purchase or sale
for a reasonable period following the execution of the aggregated order that
would result in it receiving or selling more shares than the amount of shares it
would have received or sold had the aggregated order been completely filled. The
Directors will annually review these procedures or as frequently as shall appear
appropriate.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller firms
in general tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. In addition, several firms monitor federal,
state, local and foreign political developments. Many of the brokers also
provide access to outside consultants. The outside research assistance is
particularly useful to the Adviser's staff since the brokers, as a group, tend
to monitor a broader universe of securities and other matters than the Adviser's
staff can follow. In addition, it provides the Adviser with a diverse
perspective on financial markets. Research and investment information is
provided by these and other brokers at no cost to the Adviser and is available
for the benefit of other accounts advised by the Adviser and its affiliates and
not all of this information will be used in connection with the Fund. While this
information may be useful in varying degrees and may tend to reduce the
Adviser's expenses, it is not possible to estimate its value and in the opinion
of the Adviser it does not reduce the Adviser's expenses in a determinable
amount. The extent to which the Adviser makes use of statistical, research and
other services furnished by brokers is considered by the Adviser in the
allocation of brokerage business but there is no formula by which such business
is allocated. The Adviser does so in accordance with its judgment of the best
interest of the Fund and its shareholders.
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The Adviser may use its broker/dealer affiliates, or other firms that sell
shares of the Fund, to buy and sell securities for the Fund, provided they have
the execution capability and that their commission rates are comparable to those
of other unaffiliated broker/dealers. Directors PXP Securities Corp. or its
affiliates receive indirect benefits from the Fund as a result of its usual and
customary brokerage commissions that PXP Securities Corp. may receive for acting
as broker to the Fund 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 Fund that PXP Securities Corp. may receive.
During the fiscal years ended October 31, 1997, 1998 and 1999 the Fund paid
no brokerage commissions.
SERVICES OF THE ADVISER
Phoenix Investment Counsel, Inc. ("PIC" or "Adviser") serves as investment
adviser to the Fund. PIC is located at 56 Prospect Street, Hartford, Connecticut
06115.
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning" or "Distributor"), a subsidiary of Phoenix
Investment Partners, Ltd. ("PXP"). Phoenix Home Life Mutual Insurance Company
("Phoenix Home Life") of Hartford, Connecticut is a majority shareholder of PXP.
Phoenix Home Life is in the business of writing ordinary and group life and
health insurance and annuities. Its principal offices are located at One
American Row, Hartford, Connecticut, 06115-2520. Equity Planning, a mutual fund
distributor, acts as the national distributor of the Fund's shares and as
Financial Agent of the Fund. The principal office of Equity Planning is located
at 100 Bright Meadow Boulevard, Enfield, Connecticut, 06082.
PXP is a publicly-traded independent registered investment advisory firm
and has served investors for over 70 years. It manages over $64 billion in
assets (as of December 31, 1999) through its investment partners: Aberdeen Fund
Managers, Inc. (Aberdeen) in Aberdeen, London, Singapore and Fort Lauderdale;
Duff & Phelps Investment Management Co. (Duff & Phelps) in Chicago and
Cleveland; Roger Engemann & Associates, Inc. (Engemann) in Pasadena; Seneca
Capital Management LLC (Seneca) in San Francisco; Zweig/Glaser Advisers (Zweig)
in New York; and Phoenix Investment Counsel, Inc. (Goodwin, Hollister, and
Oakhurst divisions) in Hartford, Sarasota and Scotts Valley, CA, respectively.
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 Fund, is a director of PIC. All other executive
officers of the Fund are officers of PIC.
The Adviser provides certain services and facilities required to carry on
the day-to-day operations of the Fund (for which it receives a management fee)
other than the costs of printing and mailing proxy materials, reports and
notices to shareholders; outside legal and auditing services; regulatory filing
fees and expenses of printing the Fund's registration statements (but the
Distributor purchases such copies of the Fund's prospectuses and reports and
communications to shareholders as it may require for sales purposes); insurance
expense; association membership dues; brokerage fees; and taxes.
The current Management Agreement was approved by the Directors of the Fund
on March 16, 1993 and by the shareholders of the Fund on May 7, 1993. The
Management Agreement became effective on May 14, 1993, and it will continue in
effect until lapsed or terminated. The Management Agreement will continue in
effect from year to year if specifically approved annually by a majority of the
Directors who are not interested persons of the parties thereto, as defined in
the Investment Company Act of 1940, as amended ("1940 Act"), and by either (a)
the Directors of the Fund or (b) the vote of a majority of the outstanding
voting securities of the Fund (as defined in the 1940 Act). The Agreement may be
terminated without penalty at any time by the Directors or by a vote of a
majority of the outstanding voting securities of the Fund or by the Adviser upon
60 days' written notice and will automatically terminate in the event of its
"assignment" as defined in Section 2(a)(4) of the 1940 Act.
The Management Agreement provides that the Adviser is not liable for any
act or omission in the course of, or in connection with, rendering services
under the Agreement in the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties under the Agreement.
The Agreement permits the Adviser to render services to others and to engage in
other activities.
As compensation for its services, the Adviser receives a fee, which is
accrued daily against the value of the Fund's average daily net assets and is
paid by the Fund monthly. The fee is computed at the annual rate of .55% of the
Fund's average daily net assets of up to $1 billion, .50% of the Fund's average
daily net assets from $1 billion to $2 billion, and .45% of the Fund's average
daily net assets in excess of $2 billion. Total management fees for the fiscal
years ended October 31, 1997, 1998 and 1999 amounted to $1,860,360, $1,875,258
and $1,437,307, respectively.
The Adviser makes its personnel available to serve as officers and
"interested" Directors of the Fund. The Fund has not directly compensated any of
its officers or Directors for services in such capacities except to pay fees to
the Directors who are not otherwise affiliated with the Fund. The Directors of
the Fund are not prohibited from authorizing the payment of salaries to the
officers pursuant to the Management Agreement, including out-of-pocket expenses,
at some future time.
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In addition to the management fee, expenses paid by the Fund include: fees
of Directors who are not "interested persons," interest charges, taxes, fees and
commissions of every kind, including brokerage fees, expenses of issuance,
repurchase or redemption of shares, expenses of registering or qualifying shares
for sale (including the printing and filing of the Fund's registration
statements, reports and prospectuses excluding those copies used for sales
purposes which the Distributor purchases), accounting services fees, insurance
expenses, litigation expenses, association membership dues, all charges of
custodians, transfer agents, registrars, auditors and legal counsel, expenses of
preparing, printing and distributing all proxy material, reports and notices to
shareholders, and all costs incident to the Fund's existence as a Maryland
corporation.
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 Fund does not price securities on
weekends or United States national holidays, the net asset value of the Fund's
foreign assets may be significantly affected on days when the investor has no
access to the Fund. The net asset value per share of the Fund is determined by
adding the values of all securities and other assets of the Fund, subtracting
liabilities, and dividing by the total number of outstanding shares of the Fund.
Assets and liabilities are determined in accordance with generally accepted
accounting principles and applicable rules and regulations of the Securities and
Exchange Commission. The total liability allocated to a class, plus that class's
distribution fee and any other expenses allocated solely to that class, are
deducted from the proportionate interest of such class in the assets of the
Fund, and the resulting amount of each is divided by the number of shares of
that class outstanding to produce the net asset value per share.
A security that is listed or traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary exchange for such
security by the Directors 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 if it 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 Directors 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 Directors although the actual calculations may be made by
persons acting pursuant to the direction of the Directors.
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 Fund 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 Fund's behalf.
The Fund 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 Fund's net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
Alternative Purchase Arrangements
Shares may be purchased from investment dealers at a price equal to their
net asset value per share, plus a sales charge which, at the election of the
purchaser, may be imposed either (i) at the time of the purchase (the "initial
sales charge alternative") or (ii) on a contingent deferred basis (the "deferred
sales charge alternative"). Orders received by dealers prior to the close of
trading on the New York Stock Exchange are confirmed at the offering price
effective at that time, provided the order is received by the Distributor prior
to its close of business.
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is more beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Fund, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the Fund,
the accumulated continuing distribution and services fee and
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contingent deferred sales charges on Class B or C Shares would be less than the
initial sales charge and accumulated distribution and services fee on Class A
Shares purchased at the same time.
Dividends paid by the Fund, if any, with respect to each Class of Shares
will be calculated in the same manner at the same time on the same day, except
that fees such as higher distribution and services fee 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 an ongoing distribution and services fee at an annual rate
of up to 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 an ongoing distribution and services fee at
an annual rate of up to 1.00% of the Fund's aggregate average daily net assets
attributable to the Class B Shares. Class B Shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment is
made. The higher ongoing distribution and services fee paid by Class B Shares
will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than those related to Class A
Shares. Class B Shares will automatically convert to Class A Shares eight years
after the end of the calendar month in which the shareholder's order to purchase
was accepted, in the circumstances and subject to the qualifications described
in the Fund's Prospectus. The purpose of the conversion feature is to relieve
the holders of the Class B Shares that have been outstanding for a period of
time sufficient for the 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 fee. Such
conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge.
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 Trust 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 an ongoing distribution and services fee
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 circumstances under 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 funds advised,
subadvised or distributed by the Adviser, Distributor or any of their corporate
affiliates (an "Affiliated Phoenix Fund"); (2) any director or officer, or any
full-time employee or sales representative (for at least 90 days), of the
Adviser or Distributor; (3) registered representatives and employees of
securities dealers with whom Distributor has sales agreements; (4) any qualified
retirement plan exclusively for persons described above; (5) any officer,
director or employee of a corporate affiliate of the Adviser or Distributor; (6)
any spouse, child, parent, grandparent, brother or sister of any person named in
(1), (2), (3) or (5) above; (7) employee benefit plans for employees of the
Adviser, Distributor and/or their corporate affiliates; (8) any employee or
agent who retires from Phoenix Home Life, Distributor and/or their corporate
affiliates; (9) any account held in the name of a qualified employee benefit
plan, endowment fund or foundation if, on the date of the initial investment,
the plan, fund or foundation has assets of $10,000,000 or more or at least 100
eligible employees; (10) any person with a direct rollover transfer of shares
from an established Phoenix Fund or any other Affiliated Phoenix Fund qualified
plan; (11) any Phoenix Home Life separate account which funds group annuity
contracts offered to qualified employee benefit plans; (12) any state, county,
city,
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department, authority or similar agency prohibited by law from paying a sales
charge; (13) any fully matriculated student in any U.S. service academy; (14)
any unallocated account held by a third party administrator, registered
investment adviser, trust company, or bank trust department which exercises
discretionary authority and holds the account in a fiduciary, agency, custodial
or similar capacity, if in the aggregate such accounts held by such entity equal
or exceed $1,000,000; (15) any person who is investing redemption proceeds from
investment companies other than the Phoenix Funds or any other Affiliated
Phoenix Fund if, in connection with the purchases or redemption of the redeemed
shares, the investor paid a prior sales charge provided such investor supplies
verification that the redemption occurred within 90 days of the Phoenix Fund
purchase and that a sales charge was paid; (16) any deferred compensation plan
established for the benefit of any Phoenix Fund or any other Affiliated Phoenix
Fund trustee or director; provided that sales to persons listed in (1) through
(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 advisors and financial planners who charge an advisory,
consulting or other fee for their services and buy shares for their own accounts
or the accounts of their clients; (18) retirement plans and deferred
compensation plans and trusts used to fund those plans (including, for example,
plans qualified or created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own accounts, in
each case if those purchases are made through a broker or agent or other
financial intermediary that has made special arrangements with the Distributor
for such purchases; or (19) 401(k) participants in the Merrill Lynch Daily K
Plan (the "Plan") if the Plan has at least $3 million in assets or 500 or more
eligible employees; (20) clients of investment advisors or financial planners
who buy shares for their own accounts but only if their accounts are linked to a
master account of their investment advisor or financial planner on the books and
records of the broker, agent or financial intermediary with which the
Distributor has made such special arrangements (each of the investors described
in (17) through (20) may be charged a fee by the broker, agent or financial
intermediary for purchasing shares).
Combination Purchase Privilege. Your purchase of any class of shares of the
Funds or any other Affiliated Phoenix Fund (other than Phoenix-Goodwin Money
Market Fund Series Class A Shares), if made at the same time by the same
"person," will be added together to determine whether the combined sum entitles
you to an immediate reduction in sales charges. A "person" is defined in this
and the following sections as (a) any individual, their spouse and minor
children purchasing shares for his or their own account (including an IRA
account) including his or their own trust; (b) a trustee or other fiduciary
purchasing for a single trust, estate or single fiduciary account (even though
more than one beneficiary may exist); (c) multiple employer trusts or Section
403(b) plans for the same employer; (d) multiple accounts (up to 200) under a
qualified employee benefit plan or administered by a third party administrator;
or (e) trust companies, bank trust departments, registered investment advisers,
and similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority and
which are held in a fiduciary, agency, custodial or similar capacity, provided
all shares are held of record in the name, or nominee name, of the entity
placing the order.
Letter of Intent. If you sign a Letter of Intent, your purchase of any
class of shares of the Funds or any other Affiliated Phoenix Fund (other than
Phoenix-Goodwin Money Market Fund Series Class A Shares), if made by the same
person within a thirteen 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 the Funds 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,
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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 701/2 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, on 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 the Funds 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 when redeemed.
Automatic Conversion of Class B Shares
Class B Shares will automatically convert to Class A Shares of the same
Fund eight years after they are purchased. Conversion will be on the basis of
the then prevailing net asset value of Class A and B Shares. There is no sales
load, fee or other charge for this feature. Class B Shares acquired through
dividend or distribution reinvestments will be converted into Class A Shares at
the same time that other Class B Shares are converted based on the proportion
that the reinvested shares bear to purchased Class B Shares. The conversion
feature is subject to the continuing availability of an opinion of counsel or a
ruling of the Internal Revenue Service that the assessment of the higher
distribution fees and associated costs with respect to Class B Shares does not
result in any dividends or distributions constituting "preferential dividends"
under the Code, and that the conversion of shares does not constitute a taxable
event under federal income tax law. If the conversion feature is suspended,
Class B Shares would continue to be subject to the higher distribution fee for
an indefinite period. Even if the Fund was unable to obtain such assurances, it
might continue to make distributions if doing so would assist in complying with
its general practice of distributing sufficient income to reduce or eliminate
federal taxes otherwise payable by the Fund.
INVESTOR ACCOUNT SERVICES
The Fund offers 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 Fund, Series, or Portfolio, except if
made in connection with the Systematic Exchange privilege. Shareholders may
exchange shares held in book-entry form for an equivalent number (value) of the
same class of shares of any other Affiliated Phoenix Fund, if currently offered.
On exchanges with share classes that carry a contingent deferred sales charge,
the CDSC schedule of the original shares purchased continues to apply. The
exchange of shares is treated as a sale and purchase for federal income tax
purposes (see also "Dividends, Distributions and Taxes").
Systematic Exchanges. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Affiliated Phoenix Fund automatically on a
monthly, quarterly, semi-annual or annual basis or may cancel this privilege at
any time. If you maintain an account balance of at least $5,000, or $2,000 for
tax qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that shares be
automatically exchanged at predetermined intervals for shares of the same class
of another 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. On Class B and C Share exchanges, the CDSC
schedule of the original shares purchased continues to apply.
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
14
<PAGE>
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 you to make an
investment in an account by requesting a transfer of funds from the balance of
your bank account. Once a request is phoned in, the Transfer Agent will initiate
the transaction by wiring a request for monies to your commercial bank, savings
bank or credit union via Automated Clearing House (ACH). Your bank, which must
be an ACH member, will in turn forward the monies to the Transfer Agent for
credit to your account. ACH is a computer based clearing and settlement
operation established for the exchange of electronic transactions among
participating depository institutions. This service may also be used to sell
shares of the Fund and direct proceeds of sale through ACH to your bank account.
To establish this service, please complete the Invest-by-Phone Application
and attach a voided check. Upon the Transfer Agent's acceptance of the
authorization form (usually within two weeks) you may call toll free (800)
367-5877 prior to 3:00 p.m. (Eastern Time) to place your purchase request.
Instructions as to the account number and amount to be invested must be
communicated to the Transfer Agent. The Transfer Agent will then contact your
bank via ACH with appropriate instructions. The purchase is normally credited to
your account the day following receipt of the verbal instructions. The Fund may
delay the mailing of a check for redemption proceeds of Fund shares purchased
with a check or via Invest-by-Phone service until the Fund has assured itself
that good payment has been collected for the purchase of the shares, which may
take up to 15 days. The Fund and the Transfer Agent 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 the
purchase.
TAX SHELTERED RETIREMENT PLANS
Shares of the Fund and other Affiliated Phoenix Funds may be offered in
connection with employer-sponsored 401(k) plans. Phoenix Home Life and its
affiliates may provide administrative services to these plans and to their
participants, in addition to the services that the Adviser and its affiliates
provide to the Phoenix Funds, and may receive compensation therefor. For
information on the terms and conditions applicable to employee participation in
such plans, including information on applicable plan administrative charges and
expenses, you should consult the plan documentation and employee enrollment
information which is available from participating employers.
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");
15
<PAGE>
(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 for 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 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.
HOW TO REDEEM SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefor postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for the Trust to dispose of its securities or to determine fairly the value of
its net assets or during any other period permitted by order of the Securities
and Exchange Commission for the protection of investors. Furthermore, the
Transfer Agent will not mail redemption proceeds until checks received for
shares purchased have cleared, which may take up to 15 days or more after
receipt of the check. See the Funds' current Prospectus for further information.
The Trust has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
Redemptions by Class B and Class C shareholders will be subject to the
applicable deferred sales charge, if any.
Redemption of Small Accounts
Each shareholder account in the Funds which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the giving
of not less than 30 days written notice to the shareholder mailed to the address
of record. During the 60 day period the shareholder has the right to add to the
account to bring its value to $200 or more. See the Funds' current Prospectus
for more information.
By Mail
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the possession of the shareholder, they must be mailed or
presented, duly endorsed in the full name of the account, with a written request
to Equity Planning that the Trust redeem the shares. See the Funds' current
Prospectus for more information.
Telephone Redemptions
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Funds' current Prospectus for
additional information.
By Check
You may elect to redeem shares held in your account by check. Checks will
be sent to you upon receipt by Equity Planning of a completed application and
signature card (attached to the application). If the signature card accompanies
your initial account application, the signature guarantee section of the form
may be disregarded. However, the Fund 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 your account is $500 or more.
When a check is presented to Equity Planning for payment, a sufficient
number of full and fractional shares in your 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
16
<PAGE>
check is received by the Transfer Agent. Presently there is no charge to you 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 you 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. You should make sure that there
are sufficient shares in your 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 Fund 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. You may
not close your 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 Fund may make
payment of the redemption price either in cash or in kind. However, the Fund has
elected to pay in cash all requests for redemption by any shareholder of record,
limited in respect to each shareholder during any 90-day period to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of such
period. This election has been made pursuant to Rule 18f-1 under the Investment
Company Act of 1940 and is irrevocable while the Rule is in effect unless the
Securities and Exchange Commission, by order, permits the withdrawal thereof. In
case of a redemption in kind, securities delivered in payment for shares would
be readily marketable and valued at the same value assigned to them in computing
the net asset value per share of the Fund. A shareholder receiving such
securities would incur brokerage costs when he sold the securities.
Account Reinstatement Privilege
Shareholders who may have overlooked features of their investment at the
time they redeemed have a privilege of reinvestment of their investment at net
asset value. See the Funds' current Prospectus for more information and
conditions attached to this privilege.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to continue to qualify as a regulated investment company
("RIC") under certain provisions of the Internal Revenue Code (as amended the
"Code"). If the Fund so qualifies, it will not be subject to federal income tax
on its investment company taxable income (which includes dividends, interest and
the excess of net short-term capital gains over net long-term capital losses)
that it distributes to shareholders. To qualify for treatment as a regulated
investment company, the Fund generally must, among other things, (a) derive in
each taxable year at least 90% of its gross income from dividends, interest,
payments with respect to security loans and gains from the sale or disposition
of stock or securities or foreign currencies and other income (including but not
limited to gains from options, futures and forward contracts) derived with
respect to its business of investing in such stock, securities or currencies;
and (b) diversify its holdings so that, at the end of each quarter of the
taxable year (i) at least 50% of the market value of the Fund's assets are
represented by cash, U.S. Government securities, securities of other regulated
investment companies and other securities, with such other securities of any one
issuer limited for the purposes of this calculation to an amount not greater
than 5% of the Fund's total assets and 10% of the outstanding voting securities
of any one issuer; and (ii) not more than 25% of the value of its total assets
is invested in the securities of any one issuer (other than U.S. Government
securities or the securities of other regulated investment companies). If in any
taxable year the Fund does not qualify as a regulated investment company, all of
its taxable income will be taxed to the Fund at corporate rates.
Under certain state tax laws, the Fund must also comply with the
"short-short" test to qualify for treatment as a RIC for state tax purposes.
Under the "short-short" test the Fund must derive less than 30% of its gross
income each taxable year as gains (without deduction for losses) from the sale
or other disposition of securities for less than three months. If in any taxable
year 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.
Dividends paid by the Fund will be taxable to shareholders as ordinary
income, except for (a) such portion as may exceed a shareholder's ratable share
of the Fund's earnings and profits, which excess will be applied against and
reduce the shareholder's cost or other tax basis for his shares and (b) amounts
representing a distribution of net capital gains, if any, which are designated
by the Fund as capital gain dividends. If the amount described in (a) above
exceeds the shareholder's tax basis for his shares, the excess over basis will
be treated as gain from the sale or exchange of such shares. The excess of any
net long-term capital gains over net short-term capital losses recognized and
distributed by the Fund and designated by the Fund as a capital gain
17
<PAGE>
dividend, is taxable to shareholders as long-term capital gain regardless of the
length of time a particular shareholder may have held his shares in the Fund.
Dividends and distributions are taxable as described, whether received in cash
or reinvested in additional shares of the Fund.
The Code imposes a 4% nondeductible excise tax on a regulated investment
company, such as the Fund, if it does not distribute to its shareholders (or is
deemed not to have distributed) during the calendar year an amount equal to 98%
of the Fund's ordinary income, with certain adjustments, for such calendar year,
plus 98% of the Fund's capital gains net income (adjusted for certain losses, as
prescribed in the Code) for the 12-month period ending on October 31 of such
calendar year. In addition, an amount equal to any undistributed investment
company taxable income or capital gain net income from the previous calendar
year must also be distributed to avoid the excise tax. The excise tax is imposed
on the amount by which the regulated investment company does not meet the
foregoing distribution requirements.
The Code provides that any dividend declared by the Fund in October,
November or December of any calendar year to shareholders of record on a date in
such month will be deemed to have been received by the shareholder on December
31 of that calendar year, provided that the dividend is actually paid by the
Fund during January of the following year.
Based on the aforementioned, the Fund's policy will be to distribute to its
shareholders at least 90% of net investment company taxable income as defined
above and in the Code and any net realized capital gains for each year and
consistent therewith to meet the distribution requirement of Part I of
subchapter M, including the requirements with respect to diversification of
assets and sources of income, so that the Fund will pay no taxes on net
investment income and net realized capital gains paid to shareholders.
The Fund intends to declare dividends daily. Dividends may be paid from net
investment income. Distribution of net realized short-term and long-term capital
gains will be distributed at least annually. Income dividends will be paid on
the last business day of the month and reinvested in additional shares at net
asset value, unless the shareholder elects to receive dividends in cash. Whether
received in shares or cash, dividends paid by the Fund from net investment
income and distributions from any net short- term capital gains are taxable to
shareholders as ordinary income. Distributions of net long-term capital gains,
if any, realized on sales of investments for the fiscal year normally will be
distributed following the end of the Fund's fiscal year. Distributions of net
long-term capital gains are taxable to shareholders as such, whether paid in
cash or additional shares of the Fund and regardless of the length of time Fund
shares have been owned by the shareholder. Net short-term capital gains are net
realized short-term capital gains, including net premiums from expired options,
net gains from closing purchase transactions, and net short- term gains from
securities sold upon the exercise of options or otherwise, less any net realized
long-term capital losses. Distributions paid by the Fund are subject to taxation
as of the date of payment, whether received by shareholders in cash or in shares
of the Fund, and whether representing an ordinary distribution or a long-term
capital gains distribution. No dividends or distributions will be made to a
shareholder on shares for which no payment has been received. It is not
anticipated that any of the dividends paid by the Fund will qualify for the 70%
dividends received deduction available to corporate shareholders of the Fund.
The Fund's investments in any regulated futures contracts, non-equity
options, or foreign currency contracts, as those terms are defined in the Code,
are considered section 1256 contracts. The principles of marking-to-market apply
to such contracts such that the contracts are treated as having been sold for
their fair market value on the last business day of the Fund's taxable year.
Generally, 60% of any net gain or loss recognized on the deemed sale, as well as
60% of the gain or loss with respect to any actual termination (including
expiration), will be treated as long-term capital gain or loss and the remaining
40% will be treated as short- term capital gain or loss. However, the gain or
loss on certain foreign currency contracts may be treated as ordinary income
under section 988 of the Code.
Premiums from expired call options written by the Fund and net gain or loss
from closing purchase transactions, which are not section 1256 contracts, are
generally treated as short-term capital gain or loss for federal income tax
purposes and are taxable to shareholders as ordinary income. If a written call
option is exercised, the premium is added to the proceeds of sale of the
underlying security, and the gain or loss from such sale will be short or
long-term, depending upon the period such security was held.
Payments which are classified as long-term capital gains distributions will
be taxed to shareholders as long-term capital gains regardless of how long
shareholders have held shares of the Fund. However, if a shareholder holds
shares of the Fund for six months or less, any loss on the sale of the shares
will be treated as a long-term capital loss to the extent of the long-term
capital gains distributions received by such shareholder.
Offsetting positions held by the Fund involving financial futures and
options transactions may be considered, for tax purposes, to constitute
"straddles." Depending on whether certain elections are available and made by
the Fund, losses realized by the Fund on one or more positions in such a
straddle will be deferred to the extent of unrealized gain in the offsetting
position. Moreover, short-term capital losses on straddle positions may be
re-characterized as long-term capital losses, and long-term capital gains may be
treated as short-term capital gains.
The Fund may have to limit its use of futures contracts and related options
in order to comply with the 30% test previously described above.
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<PAGE>
Under the Code, a shareholder who does not fall within one of certain
exempt categories may be subject to backup withholding at the rate of 31% with
respect to dividends and capital gains distributions paid to shareholders or
reinvested by the Fund and other amounts distributed by it including proceeds of
redemptions, unless such shareholder provides a social security or taxpayer
identification number, certifies as to exemption from backup withholding, and
otherwise complies with applicable requirements of the Code.
Sales and redemptions of shares of the Fund may result in gains or losses
for tax purposes to the extent of the difference between the proceeds from the
shares relinquished and the shareholder's adjusted tax basis for such shares. If
any shares have been held as a capital asset for more than one year, the gain or
loss realized will be long-term capital gain or loss.
The Fund may be subject to a tax on dividend or interest income received
from securities of non-U.S. issuers withheld by a foreign country at the source.
The United States has entered into tax treaties with many foreign countries
which entitle the Fund to a reduced rate of tax or exemption from tax on such
income. It is impossible to determine the effective rate of foreign tax in
advance since the amount of the Fund's assets to be invested within various
countries is not known. The Fund intends to operate so as to qualify for treaty
tax benefits where applicable. To the extent that the Fund is liable for foreign
income taxes withheld at the source, the Fund may operate so as to meet the
requirements of the Code to "pass through" to the Fund's shareholders tax
benefits attributable to foreign income taxes paid by the Fund. If more than 50%
of the value of the Fund's total assets at the close of its taxable year is
comprised of securities issued by foreign corporations, the Fund may file an
election with the Internal Revenue Service to "pass through" to the Fund's
shareholders the amount of foreign income taxes paid by the Fund. Pursuant to
this election, shareholders will be required to (i) include in gross income,
even though not actually received, their respective pro rata share of foreign
taxes paid by the Fund; (ii) treat their pro rata share of foreign taxes as paid
by them; and (iii) either deduct their pro rata share of foreign taxes in
computing their taxable income, or use such share as a foreign tax credit
against U.S. income taxes (but not both). No deduction for foreign taxes may be
claimed by a non-corporate shareholder who does not itemize deductions. The Fund
may meet the requirements to "pass through" to its shareholders foreign income
taxes paid, but there can be no assurance that the Fund will be able to do so.
Each shareholder will be notified within 60 days after the close of each taxable
year of the Fund if the foreign taxes paid by the Fund will "pass through" for
that year, and, if so, the amount of each shareholder's pro rata share (by
country) of (i) the foreign taxes paid and (ii) the Fund's gross income from
foreign sources. Shareholders who are not liable for federal income taxes will
not be affected by any such "pass through" of foreign tax credits.
Distributions and the transactions referred to in the preceding paragraphs
may be subject to state and local income taxes, and the treatment thereof may
differ from the federal income tax consequences discussed herein. Shareholders
are advised to consult with their tax advisers or attorneys.
The Fund is organized as a Maryland corporation. Under current law, as long
as it qualifies for the federal income tax treatment described above, the Fund
itself is not liable for any income or franchise tax in the State of Maryland.
THE DISTRIBUTOR
Phoenix Equity Planning Corporation ("Equity Planning") acts as the
Distributor for the Fund and as such will conduct a continuous offering pursuant
to a "best efforts" arrangement requiring it to take and pay for only such
securities as may be sold to the public. Equity Planning is an indirect less
than wholly-owned subsidiary of Phoenix Home Life Mutual Insurance Company and
an affiliate of the Adviser. Shares of the Fund may be purchased through
investment dealers who have sales agreements with the Distributor. During the
fiscal years ended October 31, 1997, 1998 and 1999, purchasers of shares of the
Fund paid aggregate sales charges of $1,111,355, $747,037 and $392,137,
respectively, of which the Distributor received net commissions of $481,975,
$281,876 and $248,168, respectively, for its services, the balance being paid to
dealers. For the fiscal year ended October 31, 1999, the Distributor received
net commissions of $18,370 for Class A Shares and deferred sales charges of
$229,798 for Class B and C Shares.
The Underwriting Agreement may be terminated at any time on not more than
60 days written notice, without payment of a penalty, by the Distributor, by
vote of a majority of the outstanding voting securities of the Fund, or by vote
of a majority of the Fund's Directors who are not "interested persons" of the
Fund and who have no direct or indirect financial interest in the operation of
the Distribution Plan or in any related agreements. The Underwriting Agreement
will terminate automatically in the event of its assignment.
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Dealers with whom the Distributor has entered into sales agreements
received a discount or commission as set forth below:
<TABLE>
<CAPTION>
Sales Charge as
a percentage of
-------------------------------------------
Amount of Net Dealer Discount
Transaction Offering Amount Percentage of
at Offering Price Price Invested Offering Price
- ------------------------------------------------------------------------------------------------
<S> <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>
Dealer Concessions
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 due to a 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
Funds 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 Funds
through distribution fees, service fees or transfer agent fees or, in some
cases, the Distributor may pay certain fees from its own profits and resources.
From its own profits and resources, the Distributor does intend to: (a) sponsor
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.
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. In addition, the Distributor may pay the
entire applicable sales charge on purchases of Class A Shares to selected
dealers and agents. Any dealer who receives more than 90% of a sales charge may
be deemed to be an "underwriter" under the Securities Act of 1933. 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 Fund and as such
performs administrative, bookkeeping and pricing functions for the Fund. 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 Fund, at the following incremental
annual rates.
<TABLE>
<S> <C>
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%
</TABLE>
Percentage rates are applied to the aggregate daily net asset values of the
Fund. 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
20
<PAGE>
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 its services during the Fund's fiscal year
ended October 31, 1999, Equity Planning received $214,077.
DISTRIBUTION PLANS
The Fund has adopted separate amended and restated distribution plans under
Rule 12b-1 of the 1940 Act for each class of shares of the Fund (the "Class A
Plan," the "Class B Plan" and the "Class C Plan," and collectively the "Plans").
The Plans permit the Fund to reimburse the Distributor for expenses incurred in
connection with activities intended to promote the sale of shares of each class
of shares of the Fund.
Pursuant to the Plans, the Funds may reimburse the Distributor for actual
expenses of the Distributor up to 0.75% of the average daily net assets of the
Fund's Class B and of Class C Shares. Expenditures under the Plans shall consist
of: (i) commissions to sales personnel for selling shares of the Fund (including
underwriting commissions 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 Fund;
(iv) payment of expenses incurred in sales and promotional activities, including
advertising expenditures related to the Fund; (v) the costs of preparing and
distributing promotional materials; (vi) the cost of printing the Fund's
Prospectus and Statement of Additional Information for distribution to potential
investors; and (vii) such other similar services that the Board of Directors of
the Fund determines are reasonably calculated to result in the sale of shares of
the Fund. In addition, the Fund will pay 0.25% annually of the average daily net
assets of the Fund's shares for providing services to shareholders, including
assistance in connection with inquiries related to shareholder accounts (the
"Service Fee").
From the Service Fee, the Distributor expects to pay a quarterly fee to
qualifying broker-dealer firms, as compensation for providing personal services
and/or the maintenance of shareholder accounts, with respect to shares sold by
such firms. This fee will not exceed on an annual basis 0.25% of the average
annual net asset value of such shares, and will be in addition to sales charges
on Fund shares which are reallowed to such firms. To the extent that the entire
amount of the Service Fee is not paid to such firms, the balance will serve as
compensation for personal and account maintenance services furnished by the
Distributor. The Distributor also pays to dealers, as additional compensation
with respect to sales of Class C Shares, 0.75% of the average annual net asset
value of that class.
In order to receive payments under the Plans, participants must meet such
qualifications to be established in the sole discretion of the Distributor, such
as services to the Fund's shareholders; or services providing the Fund with more
efficient methods of offering shares to coherent groups of clients, members or
prospects of a participant; or services permitting bulking of purchases or
sales, or transmission of such purchases or sales by computerized tape or other
electronic equipment; or other processing. If the Plans are terminated in
accordance with their terms, the obligations of the Fund to make payments to the
Distributor pursuant to the Plans will cease and the Fund will not be required
to make any payments past the date on which either Plan terminates.
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.
The Directors have concluded that there is a reasonable likelihood that the
Plans will benefit the Fund and its shareholders. For the fiscal year ended
October 31, 1999, the Fund paid 12b-1 fees in the amount of $1,526,052 ($355,679
under the Distribution Plan for Class A shares; $1,099,295 under the
Distribution Plan for Class B shares; and $71,078 under the Distribution Plan
for Class C shares), of which the Distributor of the Fund received $949,721,
W.S. Griffith & Co., Inc., an affiliate, received $47,437 and unaffiliated
broker-dealers received $528,894. The 12b-1 payments were used for: (1)
compensating dealers, $780,647, (2) compensating sales personnel, $373,701, (3)
advertising, $210,778, (4) printing and mailing prospectuses to other than
current shareholders, $14,511, (5) service cost, $62,797 and (6) other, $83,618.
The Distributor's expenses from selling and servicing Class B Shares may be more
than the payments received from contingent deferred sales charges collected on
redeemed shares and from the Fund under the Class B Plan. Those expenses may be
carried over and paid in future years. At October 31, 1999, the end of the last
Plan year, Distributor had incurred unreimbursed expenses under the Class B Plan
of $704,384 (equal to 0.31% of the Fund's net assets) which have been carried
over into the present Class B Plan year.
21
<PAGE>
On a quarterly basis, the Fund's Directors review a report on expenditures
under the Plans and the purposes for which expenditures were made. The Directors
conduct an additional, more extensive review annually in determining whether the
Plans will be continued. By their terms, continuation of the Plans from year to
year is contingent on annual approval by a majority of the Fund's Directors and
by a majority of the Directors who are not "interested persons" (as defined in
the 1940 Act) and who have no direct or indirect financial interest in the
operation of the Plans or any related agreements (the "Plan Directors"). The
Plans provide that they may not be amended to increase materially the costs
which the Fund may bear pursuant to the Plans without approval of the
shareholders of that class of the Fund and that other material amendments to the
Plans must be approved by a majority of the Plan Directors by vote cast in
person at a meeting called for the purpose of considering such amendments. The
Plans further provide that while they are in effect, the selection and
nomination of Directors who are not "interested persons" shall be committed to
the discretion of the Directors who are not "interested persons." The Plans may
be terminated at any time by vote of a majority of the Plan Directors or a
majority of the outstanding shares of the relevant class of the Fund.
The National Association of Securities Dealers, Inc. (the "NASD") regards
certain distribution fees as asset-based sales charges subject to NASD sales
load limits. The NASD's maximum sales charge rule may require the Directors to
suspend distribution fees or amend the Plans.
MANAGEMENT OF THE FUND
The Directors are responsible for the overall supervision of the operations
of the Fund and perform the duties imposed on Directors by the 1940 Act and
Maryland General Corporation Law.
Directors and Officers
The following table sets forth information concerning the Directors and
executive officers of the Fund, including their principal occupations during the
past five years. Unless otherwise noted, the address of each executive officer
and Director is 56 Prospect Street, Hartford, Connecticut, 06115-0480. The
Directors and executive officers are listed below:
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
Robert Chesek (65) Director Trustee/Director (1981-present) and Chairman (1989-1994)
49 Old Post Road Phoenix Funds. Trustee, Phoenix-Aberdeen Series Fund
Wethersfield, CT 06109 and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present).
E. Virgil Conway (70) Director Chairman, Metropolitan Transportation Authority (1992-
9 Rittenhouse Road present). Trustee/Director, Consolidated Edison Company
Bronxville, NY 10708 of New York, Inc. (1970-present), Pace University (1978-
present), Atlantic Mutual Insurance Company (1974-present),
HRE Properties (1989-present), Greater New York
Councils, Boy Scouts of America (1985-present), Union
Pacific Corp. (1978-present), Blackrock Freddie Mac
Mortgage Securities Fund (Advisory Director) (1990-
present), Centennial Insurance Company (1974-present),
Josiah Macy, Jr., Foundation (1975-present), The Harlem
Youth Development Foundation (1987-present); 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). Member (1990-1995), Chairman
(1992-1995), Financial Accounting Standards Advisory
Council.
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
Harry Dalzell-Payne (70) Director 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 &
Elmore GL05, 962 3NT Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
U.K. Utility and Corporate Bond Trust Inc. (1995-present).
Trustee, Phoenix Seneca Funds (1999-present). Formerly a
Major General of the British Army.
*Francis E. Jeffries (69) Director 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,
Naples, FL 34108 Duff & Phelps Utilities Income Inc. (1987-present), Duff &
Phelps Utilities Tax-Free Income Inc. (1991-present) and
Duff & Phelps Utility and Corporate Bond Trust Inc.
(1993-present). Director, The Empire District Electric
Company (1984-present). Director (1989-1997), Chairman
of the Board (1993-1997), President (1989-1993), and
Chief Executive Officer (1989-1995), Phoenix Investment
Partners, Ltd.
Leroy Keith, Jr. (61) Director Chairman (1995-present) and Chief Executive Officer
Chairman (1995-1999), Carson Products Company. Director/Trustee,
Carson Products Company Phoenix Funds (1980-present). Trustee, Phoenix-Aberdeen
64 Ross Road Series Fund and Phoenix Duff & Phelps Institutional
Savannah, GA 30750 Mutual Funds (1996-present). Director, Equifax Corp.
(1991-present) and Evergreen International Fund, Inc.
(1989-present). Trustee, Evergreen Liquid Trust, Evergreen
Tax Exempt Trust, Evergreen Tax Free Fund, Master
Reserves Tax Free Trust, and Master Reserves Trust.
*Philip R. McLoughlin (53) Director and Chairman (1997-present), Director (1995-present), Vice
President Chairman (1995-1997) and Chief Executive Officer, (1995-
present), Phoenix Investment Partners, Ltd. Director (1994-
present) and Executive Vice President, Investments (1988-
present), Phoenix Home Life Mutual Insurance Company.
Director/Trustee and President, Phoenix Funds (1989-
present). Trustee and President, Phoenix-Aberdeen Series
Fund and Phoenix Duff & Phelps Institutional Mutual
Funds (1996-present). Director, Duff & Phelps Utilities
Tax-Free Income Inc. (1995-present) and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present).
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 Advisers 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,
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
Phoenix Charter Oak Trust Company (1996-present).
Director and Vice President, PM Holdings, Inc. (1985-
present). Director and President, Phoenix Securities Group,
Inc. (1993-1995). Director (1992-present) and President
(1992-1994), W.S. Griffith & Co., Inc. Director, PHL
Associates, Inc. (1995-present).
Everett L. Morris (71) Director Vice President, W.H. Reaves and Company (1993-present).
164 Laird Road Director/Trustee, Phoenix Funds (1995-present). Trustee,
Colts Neck, NJ 07722 Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director, Duff &
Phelps Utilities Tax-Free Income Inc. (1991-present) and
Duff & Phelps Utility and Corporate Bond Trust Inc.
(1993- present).
*James M. Oates (53) Director Chairman, IBEX Capital Markets, Inc., formerly IBEX
Managing Director Capital Markets LLC (1997-present). Managing Director,
The Wydown Group Wydown Group (1994-present). Director, Phoenix
IBEX Capital Markets, Inc. Investment Partners, Ltd. (1995-present). Director/Trustee,
60 State Street Phoenix Funds (1987-present). Trustee, Phoenix-Aberdeen
Suite 950 Series Fund and Phoenix Duff & Phelps Institutional
Boston, MA 02109 Mutual Funds (1996-present). Director, AIB Govett Funds
(1991-present), Investors Financial Service Corporation
(1995-present), Investors Bank & Trust Corporation (1995-
present), Plymouth Rubber Co. (1995-present), Stifel
Financial (1996-present) and Command Systems Inc.
(1998-present), Connecticut River Bancorp (1998-present),
and Endowment for Health (1999-present). Member, Chief
Executives Organization (1996-present). Vice Chairman,
Massachusetts Housing Partnership (1992-2000). Director,
Blue Cross and Blue Shield of New Hampshire (1994-1999).
*Calvin J. Pedersen (58) Director Director (1986-present), President (1993-2000) and
Phoenix Investment Executive Vice President (1992-1993), Phoenix Investment
Partners, Ltd. Partners, Ltd. Director/Trustee, Phoenix Funds (1995-
55 East Monroe Street present). Trustee, Phoenix-Aberdeen Series Fund and
Suite 3600 Phoenix Duff & Phelps Institutional Mutual Funds (1996-
Chicago, IL 60603 present). President and Chief Executive Officer, Duff &
Phelps Utilities Tax-Free Income Inc. (1997-present),
Duff & Phelps Utilities Income Inc. (1994-present) and
Duff & Phelps Utility and Corporate Bond Trust Inc.
(1995-present).
Herbert Roth, Jr. (71) Director 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 and Insurance Company (1972-1998).
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
Richard E. Segerson (54) Director Managing Director, Northway Management Company (1998-
102 Valley Road present), Director/Trustee, Phoenix Funds (1993-present),
New Canaan, CT 06840 Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff
& Phelps Institutional Mutual Funds (1996-present).
Managing Director, Mullin Associates (1993-1998).
Lowell P. Weicker, Jr. (68) Director 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), Compuware
(1996-present) and Burroughs Wellcome Fund (1996-
present). Visiting Professor, University of Virginia (1997-
present). Director, Duty Free International, Inc. (1997).
Chairman, Dresing, Lierman, Weicker (1995-1996).
Governor of the State of Connecticut (1991-1995).
Michael E. Haylon (42) Executive Director and Executive Vice President-Investments,
Vice Phoenix Investment Partners, Ltd. (1995-present).
President Executive Vice President, Phoenix Funds (1995-present),
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), and
Executive Vice President (1994-1995), Phoenix Investment
Counsel, Inc. Director, Phoenix Equity Planning
Corporation (1995-present). Senior Vice President,
Securities Investments, Phoenix Home Life Mutual
Insurance Company (1993-1995).
John F. Sharry (47) Executive President, Retail Division (1999-present), Executive Vice
Vice President, Retail Division (1997-1999), Phoenix Investment
President Partners, Ltd. Managing Director, Retail Distribution,
Phoenix Equity Planning Corporation (1995-present).
Executive Vice President, Phoenix Funds and Phoenix-
Aberdeen Series Funds (1998-present). Managing Director,
Director and National Sales Manager, Putnam Mutual
Funds (until 1995).
James D. Wehr (42) Senior Vice Senior Vice President, Fixed Income (1998-present),
President Managing Director, Fixed Income, (1996-1998), Vice
President (1991-1996), Phoenix Investment Counsel, Inc.
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.; Senior Vice President (1997-present), Vice
President (1996-1997), Phoenix Duff & Phelps Institutional
Mutual Funds; and Senior Vice President, Phoenix-
Goodwin Multi-Sector Fixed Income Fund, Inc,. Phoenix-
Goodwin Multi-Sector Short Term Bond Fund, Phoenix-
Oakhurst Income and Growth Fund and Phoenix-Oakhurst
Strategic Allocation Fund, Inc. (1997-present). Senior Vice
President and Chief Investment Officer, Duff & Phelps
Utilities Tax Free Income Inc. (1997-present). Managing
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
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 (1994-present). Portfolio Manager, Phoenix
Home Life Mutual Insurance Company (1990-1995).
Robert A. Driessen (52) Vice Vice President, Compliance, Phoenix Investment Partners,
President 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).
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
P.O. Box 2200 Officer (1995-1999), Phoenix Investment Partners, Ltd.
Enfield, CT 06083-2200 Director (1998-present), Senior Vice President (1990-
present), Chief Financial Officer (1996-present), Finance
(until 1996) and Treasurer (1994-1996 and 1998-present),
Phoenix Equity Planning Corporation. Director (1998-
present), Senior Vice President (1990-present), Chief
Financial Officer (1996-present), Finance (until 1996) and
Treasurer (1994-present), Phoenix Investment Counsel, Inc.
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, Phoenix Duff &
Phelps Investment Management Co. (1996-present). Vice
President, Investment Products Finance, Phoenix Home
Life Mutual Insurance Company (1990-1995). Senior Vice
President, Finance, Phoenix Securities Group, Inc. (1993-
1995). Senior Vice President and Chief Financial Officer
and W.S. Griffith & Co., Inc. (1992-1995) and Townsend
Financial Advisers, Inc. (1993-1995).
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-Aberdeen Series Fund (1996-present) and Phoenix
Duff & Phelps Institutional Mutual Funds (1995-present).
Second Vice President and Treasurer, Fund Accounting,
Phoenix Home Life Mutual Insurance Company (1994-
1995). Various positions with Phoenix Home Life Mutual
Insurance Company (1987-1994).
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
G. Jeffrey Bohne (52) Secretary Vice President and General Manager, Phoenix Home Life
101 Munson Street Mutual Insurance Co. (1993-present). Vice President,
Greenfield, MA 01301 Mutual Fund Customer Service (1996-present), Vice
President, Transfer Agent Operations (1993-1996), Phoenix
Equity Planning Corporation. Secretary/Clerk, Phoenix
Funds (1993-present), Phoenix-Aberdeen Series Fund
(1996-present) and Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present).
</TABLE>
- -----------
*Messrs. Jeffries, McLoughlin, Oates and Pedersen are "interested persons" of
the Fund within the meaning of the definition set forth in Section 2(a)(19) of
the 1940 Act.
For services rendered to the Fund for the fiscal year ended October 31,
1999, the Trustees received aggregate remuneration of $12,865. 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
Directors. Trustees costs are allocated equally to each of the Series and Funds
within the Fund complex. The foregoing fees do not include the reimbursement of
expenses incurred in connection with meeting attendance. Officers and employees
of the Adviser who are interested persons are compensated by the Adviser and
receive no compensation from the Fund.
For the Fund's last fiscal year ending October 31, 1999, 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 $1,160 $64,000
E. Virgil Conway+ $1,500 $83,250
Harry Dalzell-Payne+ $1,360 $95,250
Francis E. Jeffries $1,100* $61,000
Leroy Keith, Jr. $1,160 None None $64,000
Philip R. McLoughlin+ $ 0 for any for any $ 0
Everett L. Morris+ $1,300* Trustee Trustee $73,000
James M. Oates+ $1,300 $72,250
Calvin J. Pedersen $ 0 $ 0
Herbert Roth, Jr.+ $1,435* $78,500
Richard E. Segerson $1,300* $72,000
Lowell P. Weicker, Jr. $1,250 $68,500
</TABLE>
- -----------
*This compensation (and the earnings thereon) was deferred pursuant to the
Trustees' 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 trustee, trustee fees that are deferred are paid by the Fund to the
Distributor. The liability for the deferred compensation obligation appears
only as a liability of the Distributor.
+Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are members
of the Executive Committee.
On February 4, 2000, the Directors and officers of the Fund beneficially
owned less than 1% of the outstanding shares of the Fund.
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 Fund to own of
record or beneficially own 5% or more of any class of the Fund's equity
securities.
27
<PAGE>
<TABLE>
<CAPTION>
Name of Shareholder Class Number of Shares Percent of Class
- ---------------------------------------------- --------- ------------------ ------------------
<S> <C> <C> <C>
MLPF&S for the sole benefit of its customers Class B 1,377,612.5040 17.24%
ATTN: Fund Administration Class C 78,760.4910 12.44%
4800 Deer Lake Dr. E 3rd Fl.
Jacksonville, FL 32246-6484
</TABLE>
OTHER INFORMATION
Capital Stock
The Articles of Incorporation, as amended, provide for the issuance of up
to 500,000,000 Shares. The Fund's Shares are divided equally among three
classes, consisting of 166,666,667 Class A Shares, 166,666,667 Class B Shares
and 166,666,666 Class C Shares. The shares of the Fund, when issued, will be
fully paid and non-assessable, have no preference, preemptive, exchange or
similar rights, and will be freely transferable. There is no requirement or
intention to hold annual meetings of sharehholders. Accordingly, there will
normally be no meetings of shareholders for the purpose of electing Directors
unless and until such time as less than a majority of the Directors holding
office have been elected by shareholders, at which time the Directors then in
office will call a meeting for the election of Directors. Shareholders may, in
accordance with the Articles of Incorporation, cause a meeting of shareholders
to be held for the purpose of voting on the removal of a Director or Directors.
Meetings of the shareholders will be called upon written request of shareholders
holding in the aggregate at least 10% of the fund's outstanding shares. The
Directors will provide appropriate assistance to shareholders, in compliance
with the provisions of the 1940 Act, if such a request for a meeting is
received. Except as set forth above, the Directors will continue to hold office
and appoint successor Directors. Shares do not have cumulative voting rights and
the holders of more than 50% of the shares of the Fund voting for the election
of Directors can elect all of the Directors of the Fund if they choose to do so
and in such event the holders of the remaining shares would not be able to elect
any Directors. Shareholders are entitled to redeem their shares as set forth
under "How to Sell Shares."
Independent Accountants
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110, has been
selected independent accountants for the Fund. PricewaterhouseCoopers LLP audits
the Fund's annual financial statements and expresses an opinion thereon.
Custodian and Transfer Agent
State Street Bank and Trust Company, P. O. Box 8301, Boston, MA 02266-8301,
serves as the Fund's Custodian. Phoenix Equity Planning Corporation, 100 Bright
Meadow Boulevard, P.O. Box 2200, Enfield, CT 06083-2200, serves as the Fund's
transfer agent. As compensation, Equity Planning receives a fee equivalent to
$22.25 for each designated shareholder account plus out-of-pocket expenses.
Transfer Agent fees are also utilized to offset costs and fees paid to
subtransfer agents employed by Equity Planning. State Street Bank and Trust
Company serves as a subtransfer agent pursuant to a Subtransfer Agency
Agreement.
Reports to Shareholders
The fiscal year of the Fund ends on October 31. The Fund will send
financial statements to its shareholders at least semi-annually. An annual
report, containing financial statements audited by the Fund's independent
accountants, will be sent to shareholders each year.
Financial Statements
The Financial Statements for the Fund's fiscal year ended October 31, 1999,
appearing in the Funds Annual Report to Shareholders, are incorporated herein by
reference.
28
<PAGE>
APPENDIX Description of Certain Bond Ratings
Moody's Investor's Service, Inc.
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 a 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 are 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.
Standard & Poor's Corporation
BB, B, CCC--Bonds rated BB, B and CCC are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with terms of the obligation. BB indicates the lowest
degree of speculation and CCC the highest degree of speculation. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties of major risk exposures to adverse conditions.
Ability to pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be identified
which could assist the obligor in satisfying its debt service requirement.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
29
<PAGE>
INVESTMENTS AT OCTOBER 31, 1999
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- ------------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES--0.5%
U.S. TREASURY NOTES--0.5%
U.S. Treasury Notes 6%, 8/15/09......... AAA $ 1,000 $ 999,160
- - -----------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES
(IDENTIFIED COST $987,031) 999,160
- - -----------------------------------------------------------------------------
AGENCY MORTGAGE-BACKED SECURITIES--2.0%
Fannie Mae 6.25%, 5/15/29............... AAA 5,000 4,600,000
- - -----------------------------------------------------------------------------
TOTAL AGENCY MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $4,425,711) 4,600,000
- - -----------------------------------------------------------------------------
AGENCY NON MORTGAGE-BACKED
SECURITIES--0.2%
Fannie Mae 6.625%, 9/15/09.............. Aaa(c) 500 497,500
- - -----------------------------------------------------------------------------
TOTAL AGENCY NON MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $499,371) 497,500
- - -----------------------------------------------------------------------------
MUNICIPAL BONDS--6.9%
CALIFORNIA--2.5%
Fresno Pension Obligation Taxable 7.80%,
6/1/14.................................. AAA 500 515,625
Oakland Pension Obligation Taxable
Series A 6.95%, 12/15/08................ AAA 3,200 3,176,000
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- ------------
<S> <C> <C> <C>
CALIFORNIA--CONTINUED
Pasadena Pension Funding Taxable
Series A 7.10%, 5/15/10................. AAA $ 1,900 $ 1,881,000
------------
5,572,625
------------
CONNECTICUT--1.1%
Mashantucket Western Pequot Tribe
Revenue Taxable Series A 6.91%,
9/1/12.................................. AAA 1,400 1,363,250
Mashantucket Western Pequot Tribe
Revenue Taxable Series A 144A 6.57%,
9/1/13(b)............................... AAA 1,075 1,009,156
------------
2,372,406
------------
FLORIDA--1.2%
Palm Beach County Solid Waste Industrial
Development Project B Revenue Taxable
10.50%, 1/1/11(i)(j)(k)................. NR 2,250 675,000
University of Miami Exchangeable Revenue
Taxable Series A 7.65%, 4/1/20.......... AAA 2,000 2,012,500
------------
2,687,500
------------
ILLINOIS--0.9%
Illinois Educational Facilities
Authority-Loyola University Revenue
Taxable Series A 7.84%, 7/1/24.......... AAA 2,000 2,032,500
</TABLE>
See Notes to Financial Statements 5
<PAGE>
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- ------------
<S> <C> <C> <C>
PENNSYLVANIA--1.2%
Pittsburgh Pension General Obligation
Taxable Series B 6.35%, 3/1/13.......... AAA $ 3,000 $ 2,778,750
- - -----------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(IDENTIFIED COST $17,143,383) 15,443,781
- - -----------------------------------------------------------------------------
ASSET-BACKED SECURITIES--5.1%
ContiMortgage Home Equity Loan Trust
98-1, B 7.86%, 4/15/29.................. BBB- 8,495 7,770,270
Green Tree Financial Corp. 94-1, B2
7.85%, 4/15/19.......................... Baa(c) 2,000 1,766,370
Pennant CBO Ltd. 1A, D 13.43%,
3/14/11................................. Ba(c) 2,000 1,945,000
- - -----------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(IDENTIFIED COST $12,569,269) 11,481,640
- - -----------------------------------------------------------------------------
CORPORATE BONDS--24.8%
AEROSPACE/DEFENSE--0.5%
BE Aerospace, Inc. 9.50%, 11/1/08....... B 1,250 1,203,125
AUTO PARTS & EQUIPMENT--2.0%
Collins & Aikman Corp. 11.50%, 4/15/06.. B 4,750 4,512,500
AUTOMOBILES--0.9%
Titan Tire Corp. 7%, 2/11/00............ NR 2,000 1,985,000
BROADCASTING (TELEVISION, RADIO & CABLE)--1.6%
Century Communications Corp. 8.75%,
10/1/07................................. BB- 500 480,000
Fox/Liberty Networks LLC 8.875%,
8/15/07................................. BBB- 3,000 3,052,500
------------
3,532,500
------------
COMMUNICATIONS EQUIPMENT--3.1%
Metromedia Fiber Network, Inc. Series B
10%, 11/15/08........................... B+ 3,930 3,890,700
Williams Communications Group, Inc.
10.875%, 10/1/09........................ BB- 3,000 3,082,500
------------
6,973,200
------------
ENTERTAINMENT--0.6%
SFX Entertainment, Inc. 9.125%,
12/1/08................................. B- 1,500 1,387,500
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- ------------
<S> <C> <C> <C>
GAMING, LOTTERY & PARI-MUTUEL COMPANIES--1.1%
Horseshoe Gaming LLC Series B 9.375%,
6/15/07................................. B+ $ 1,500 $ 1,492,500
Mohegan Tribal Gaming 8.125%, 1/1/06.... BB 500 483,750
Mohegan Tribal Gaming 8.75%, 1/1/09..... BB- 500 488,750
------------
2,465,000
------------
HOMEBUILDING--0.7%
Horton (D.R.), Inc., 8%, 2/1/09......... BB 1,750 1,505,000
INSURANCE (MULTI-LINE)--3.8%
Middletown Trust Series C 11.75%,
7/15/10(k).............................. A+ 6,485 6,809,314
Willis Corroon Corp. 9%, 2/1/09......... B+ 2,100 1,858,500
------------
8,667,814
------------
LEISURE TIME (PRODUCTS)--0.5%
Bally Total Fitness Holding Corp.
Series D 9.875%, 10/15/07............... B- 1,250 1,184,375
PUBLISHING--0.8%
American Lawyer Media, Inc. Series B
9.75%, 12/15/07......................... B 2,000 1,895,000
RETAIL (SPECIALTY)--0.8%
Musicland Group, Inc. 9%, 6/15/03....... B- 2,000 1,835,000
SERVICES (COMMERCIAL & CONSUMER)--0.7%
ARA Services, Inc. 10.625%, 8/1/00...... BBB- 28 29,295
IT Group, Inc. (The) 11.25%, 4/1/09..... B+ 1,665 1,565,100
------------
1,594,395
------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.5%
Nextel Commmunications, Inc. 0%,
10/31/07(d)............................. B- 1,500 1,076,250
TELECOMMUNICATIONS (LONG DISTANCE)--4.5%
Interamericas Communications Corp. 14%,
10/27/07................................ NR 3,930 3,144,000
Metromedia International Group, Inc.
10.50%, 9/30/07......................... NR 756 377,778
NTL, Inc. Series B 10%, 2/15/07......... B- 3,000 3,060,000
RCN Corp. Series B 0%, 2/15/08(d)....... B- 5,775 3,681,563
------------
10,263,341
------------
TELEPHONE--1.4%
Teligent, Inc. 11.50%, 12/1/07.......... CCC 3,330 3,063,600
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- ------------
<S> <C> <C> <C>
TRUCKERS--1.3%
American Commercial Lines LLC Series B
10.25%, 6/30/08......................... B $ 3,150 $ 2,898,000
- - -----------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $60,449,584) 56,041,600
- - -----------------------------------------------------------------------------
NON-AGENCY MORTGAGE-BACKED
SECURITIES--27.0%
CS First Boston Mortgage Securities
Corp. 97-SPCE C 144A 7.077%,
2/20/07(b).............................. A(c) 4,000 3,861,250
CS First Boston Mortgage Securities
Corp. 98-C1, A1B 6.48%, 5/17/08......... AAA 3,000 2,832,188
CS First Boston Mortgage Securities
Corp. 98-C2, E 7.13%, 1/15/12........... Baa(c) 4,000 3,402,500
CS First Boston Mortgage Securities
Corp. 97-1R, 1M4 144A 7.362%,
2/28/22(b).............................. Baa(c) 4,866 4,724,931
Criimi Mae Trust I 96-C1, A2 144A 7.56%,
6/30/33(b).............................. BBB 5,125 4,865,547
DLJ Mortgage Acceptance Corp. 97-CF2, B2
144A 7.14%, 11/15/08(b)................. BBB- 4,000 3,507,500
First Boston Mortgage Securities Corp.
93-5, B2 7.30%, 7/25/23................. A+(c) 2,839 2,769,001
First Chicago/Lennar Trust 97-CHL1, D
144A 8.075%, 5/29/08(b)................. BB(c) 4,000 3,280,625
First Union - Lehman Brothers - Bank of
America 98-C2, A2 6.56%, 11/18/08....... AAA 500 477,428
Mortgage Capital Funding, Inc. 98-MC2, B
6.549%, 5/18/08......................... Aa(c) 2,500 2,346,875
Norwest Asset Securities Corp. 96-3, B1
7.25%, 9/25/26.......................... A(c) 3,393 3,250,197
Norwest Asset Securities Corp. 96-3, B2
7.25%, 9/25/26.......................... BBB(c) 2,263 2,101,244
Norwest Asset Securities Corp. 97-18, B2
6.75%, 12/25/27......................... BBB(c) 1,030 920,074
Norwest Asset Securities Corp. 98-2, B1
6.50%, 2/25/28.......................... A(c) 2,953 2,691,649
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- ------------
<S> <C> <C> <C>
Norwest Asset Securities Corp. 98-22, B3
6.25% 9/25/28........................... BBB(c) $ 618 $ 534,185
Norwest Asset Securities Corp. 99-12, B3
6.25%, 5/25/29.......................... BBB(c) 497 415,420
Norwest Asset Securities Corp. 99-17, B3
6.25%, 6/25/29.......................... BBB(c) 560 473,765
Norwest Asset Securities Corp. 99-3, B3
6%, 1/25/29............................. BBB(c) 744 625,774
Norwest Asset Securities Corp. 99-6, B3
6%, 3/25/29............................. BBB(c) 436 357,740
Resolution Trust Corp. 92-C3, B 9.05%,
8/25/23................................. AA 906 902,571
Ryland Mortgage Securities Corp. III
92-A, 1A 8.259%, 3/29/30................ A- 217 216,170
SASCO Floating Rate Commercial Mortgage
98-C3A, H 144A 5.959%, 4/25/03(b)(d).... Ba(c) 4,000 3,549,284
Structured Asset Securities Corp. 95-C1,
D 7.375%, 9/25/24....................... BBB 5,110 5,074,869
Structured Asset Securites Corp. 95-C4,
E 144A 8.71%, 6/25/26(b)................ BB 5,085 4,886,732
Wilshire Funding Corp. 97-WFC1, M3
7.25%, 8/25/27.......................... Baa(c) 3,319 2,914,296
- - -----------------------------------------------------------------------------
TOTAL NON-AGENCY MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $63,181,560) 60,981,815
- - -----------------------------------------------------------------------------
FOREIGN GOVERNMENT SECURITIES--20.6%
ARGENTINA--1.2%
Republic of Argentina Bearer FRB 6.813%,
3/31/05(d).............................. BB 880 781,603
Republic of Argentina RegS 11.75%,
2/12/07(g).............................. BBB- 2,350 2,042,563
------------
2,824,166
------------
BRAZIL--3.9%
Republic of Brazil 14.50%, 10/15/09..... B+ 5,500 5,678,750
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- ------------
<S> <C> <C> <C>
BRAZIL--CONTINUED
Republic of Brazil C Bond, PIK interest
capitalization, 8%, 4/15/14............. B+ $ 4,762 $ 3,190,438
------------
8,869,188
------------
BULGARIA--2.7%
Repulic of Bulgaria IAB Series PDI
6.50%, 07/28/11(d)...................... B(c) 5,900 4,513,500
Republic of Bulgaria FLIRB Series A
Bearer 2.75%, 7/28/12................... B(c) 2,250 1,518,750
------------
6,032,250
------------
COLOMBIA--1.8%
Republic of Colombia 10.875%, 3/9/04.... BB+ 4,050 4,080,375
CROATIA--1.7%
Croatia Series A 6.456%, 7/31/10(d)..... BBB- 700 567,000
Croatia Series B 6.456%, 7/31/06(d)..... BBB- 3,808 3,270,068
------------
3,837,068
------------
IVORY COAST--0.2%
Ivory Coast PDI Series FRF 1.9%,
3/29/18(d)(h)........................... NR 15,500 571,225
MEXICO--3.5%
United Mexican States Global Bond
11.375%, 9/15/16........................ BB 3,750 4,017,187
United Mexican States Global Bond
11.50%, 5/15/26......................... BB 3,025 3,943,950
------------
7,961,137
------------
MOROCCO--0.8%
Kingdom of Morocco Series A 5.906%,
1/1/09(d)............................... NR 2,000 1,742,500
PERU--1.1%
Republic of Peru PDI 4.50%, 3/7/17...... BB 4,000 2,500,000
POLAND--1.3%
Poland Bearer PDI 6%, 10/27/14(d)....... BBB 3,195 2,835,563
RUSSIA--0.3%
Russia Treasury Bill OFZ Linked Notes
14%, 9/12/01(f)......................... NR 41,898 676,018
SOUTH KOREA--0.7%
Republic of Korea 8.875%, 4/15/08....... BBB- 1,500 1,560,563
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- ------------
<S> <C> <C> <C>
TURKEY--0.4%
Republic of Turkey 11.875%, 11/5/04..... B $ 1,000 $ 1,013,750
VENEZUELA--0.9%
Republic of Venezuela DCB Series DL
6.313%, 12/18/07(d)..................... B+ 2,429 1,958,027
- - -----------------------------------------------------------------------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(IDENTIFIED COST $49,600,245) 46,461,830
- - -----------------------------------------------------------------------------
FOREIGN CORPORATE BONDS--8.1%
BRAZIL--0.5%
Globo Communicacoes e Participacoes SA
144A 10.50%, 12/20/06(b)................ B+ 1,500 1,166,700
CANADA--1.2%
MetroNet Communications Corp. 0%,
6/15/08(d).............................. BBB 3,300 2,574,000
CHILE--0.5%
Petropower I Funding Trust 144A 7.36%,
2/15/14(b).............................. BBB 1,387 1,193,033
CHINA--0.4%
Greater Beijing First Expressways Ltd.
9.50%, 6/15/07.......................... BB 1,700 850,000
GREECE--0.4%
Fage Dairy Industries SA 9%, 2/1/07..... BB 1,000 913,750
IRELAND--0.6%
Esat Telecom Group PLC 11.875%,
11/1/09(h).............................. B+ 1,300 1,409,063
MEXICO--2.2%
Banco Nacional de Mexico SA US$
Remittance Master Trust 144A 7.57%,
12/31/00(b)............................. BBB+(c) 2,827 2,825,530
Nacional Financiera SNC RegS 22%,
5/20/02(e).............................. NR 20,000 2,068,514
------------
4,894,044
------------
NETHERLANDS--0.9%
United Pan-Europe Communications NV 144A
11.25%, 11/1/09(b)(h)................... B- 2,000 2,112,609
POLAND--0.5%
TPSA Finance BV 144A 7.75%,
12/10/08(b)............................. BBB 1,175 1,108,906
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- ------------
<S> <C> <C> <C>
UNITED KINGDOM--0.9%
Orange PLC 144A 8.75%, 6/1/06(b)........ BB- $ 2,000 $ 2,060,000
- - -----------------------------------------------------------------------------
TOTAL FOREIGN CORPORATE BONDS
(IDENTIFIED COST $19,142,711) 18,282,105
- - -----------------------------------------------------------------------------
FOREIGN CONVERTIBLE BONDS--0.7%
RUSSIA--0.7%
Lukinter Finance Lukoil Cv. RegS 3.50%,
5/6/02.................................. CCC- 2,375 1,745,625
- - -----------------------------------------------------------------------------
TOTAL FOREIGN CONVERTIBLE BONDS
(IDENTIFIED COST $2,729,608) 1,745,625
- - -----------------------------------------------------------------------------
<CAPTION>
SHARES
-------
PREFERRED STOCKS--2.3%
<S> <C> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)--2.3%
Global Crossing Holdings Ltd. PIK
10.50%.................................. 50,000 5,275,000
- - -----------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(IDENTIFIED COST $4,956,875) 5,275,000
- - -----------------------------------------------------------------------------
COMMON STOCKS--0.0%
PAPER & FOREST PRODUCTS--0.0%
Northampton Pulp LLC.(j)(k)............. 3,650 50,187
- - -----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $348,720) 50,187
- - -----------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C> <C>
WARRANTS--0.4%
FOREIGN GOVERNMENT--0.0%
Republic of Argentina Warrants(j)....... 1,440 $ 3,708
Republic of Argentina Warrants(j)....... 3,500 788
------------
4,496
------------
TELECOMMUNICATIONS (LONG DISTANCE)--0.4%
FirstCom Corp. 144A Warrants(b)(j)...... 137,550 825,300
- - -----------------------------------------------------------------------------
TOTAL WARRANTS
(IDENTIFIED COST $0) 829,796
- - -----------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--98.6%
(IDENTIFIED COST $236,034,068) 222,690,039
- - -----------------------------------------------------------------------------
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------ -------
SHORT-TERM OBLIGATIONS--0.3%
<S> <C> <C> <C>
COMMERCIAL PAPER--0.3%
Koch Industries, Inc. 5.34%, 11/1/99.... A-1+ $ 715 715,000
- - -----------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $715,000) 715,000
- - -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--98.9%
(IDENTIFIED COST $236,749,068) 223,405,039(a)
Cash and receivables, less liabilities--1.1% 2,395,879
---------------------
NET ASSETS--100.0% $ 225,800,918
=====================
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $3,298,286 and gross
depreciation of $16,775,886 for federal income tax purposes. At October 31,
1999, the aggregate cost of securities for federal income tax purposes was
$236,882,639.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
1999, these securities amounted to a value of $40,977,103 or 18.1% of net
assets.
(c) As rated by Moody's, Fitch or Duff & Phelps.
(d) Variable or step coupon security; interest rate shown reflects the rate
currently in effect.
(e) Par value represents Mexican Pesos.
(f) Par value represents Russian Rubles.
(g) Par value represents Argentine Pesos.
(h) Par value represents Euro.
(i) Security in default.
(j) Non-income producing.
(k) Security valued at fair value as determined in good faith by or under the
direction of the Directors.
See Notes to Financial Statements
9
<PAGE>
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Investments securities at value
(Identified cost $236,749,068) $223,405,039
Foreign currency at value
(Identified cost $2,323,845) 2,309,070
Cash 139,942
Receivables
Interest 3,878,309
Investment securities sold 4,457,503
Fund shares sold 41,774
Other receivables 20,503
Prepaid expenses 5,144
------------
Total assets 234,257,284
------------
LIABILITIES
Payables
Investment securities purchased 7,165,129
Fund shares repurchased 466,942
Income distribution payable 327,120
Transfer agent fee 154,843
Distribution fee 112,394
Investment advisory fee 106,098
Financial agent fee 10,770
Directors' fee 3,933
Accrued expenses 109,137
------------
Total liabilities 8,456,366
------------
NET ASSETS $225,800,918
============
NET ASSETS CONSIST OF:
Capital paid in on shares of common
stock $290,158,119
Undistributed net investment loss (292,270)
Accumulated net realized loss (50,706,127)
Net unrealized depreciation (13,358,804)
------------
NET ASSETS $225,800,918
============
CLASS A
Shares of common stock outstanding,
$0.10 par value,
166,666,667 shares authorized (Net
Assets $125,931,081) 11,606,835
Net asset value per share $10.85
Offering price per share
$10.85/(1-4.75%) $11.39
CLASS B
Shares of common stock outstanding,
$0.10 par value,
166,666,667 shares authorized (Net
Assets $92,725,224) 8,556,286
Net asset value and offering price
per share $10.84
CLASS C
Shares of common stock outstanding,
$0.10 par value,
166,666,666 shares authorized (Net
Assets $7,144,613) 657,527
Net asset value and offering price
per share $10.87
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 24,937,373
Dividends 261,042
Foreign taxes withheld (1,036)
--------------
Total investment income 25,197,379
--------------
EXPENSES
Investment advisory fee 1,437,307
Distribution fee, Class A 355,679
Distribution fee, Class B 1,099,295
Distribution fee, Class C 71,078
Financial agent fee 214,077
Transfer agent 484,545
Printing 64,476
Custodian 29,329
Professional 27,311
Registration 22,309
Directors 15,300
Miscellaneous 9,527
--------------
Total expenses 3,830,233
Custodian fees paid indirectly (13,580)
--------------
Net expenses 3,816,653
--------------
NET INVESTMENT INCOME 21,380,726
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized loss on securities (39,212,910)
Net realized loss on foreign currency (577,772)
Net change in unrealized appreciation (depreciation)
on investments 33,202,090
Net change in unrealized appreciation (depreciation) on
foreign currency and foreign currency transactions 257,121
--------------
NET LOSS ON INVESTMENTS (6,331,471)
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 15,049,255
==============
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
10/31/99 10/31/98
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 21,380,726 $ 26,783,292
Net realized gain (loss) (39,790,682) (8,960,343)
Net change in unrealized appreciation (depreciation) 33,459,211 (41,335,563)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS 15,049,255 (23,512,614)
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (12,709,813) (15,872,614)
Net investment income, Class B (8,978,439) (11,337,234)
Net investment income, Class C (572,784) (293,230)
Net investment income, Class M -- (18,101)
Net realized gains, Class A -- (5,130,635)
Net realized gains, Class B -- (4,099,438)
Net realized gains, Class C -- (23,783)
Net realized gains, Class M -- (3,353)
In excess of net investment income, Class A (143,541) --
In excess of net investment income, Class B (101,400) --
In excess of net investment income, Class C (6,469) --
In excess of net realized gains, Class A -- (902,131)
In excess of net realized gains, Class B -- (720,813)
In excess of net realized gains, Class C -- (4,182)
In excess of net realized gains, Class M -- (589)
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (22,512,446) (38,406,103)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (2,210,416 and 3,001,172
shares, respectively) 24,800,587 38,782,884
Net asset value of shares issued from reinvestment of
distributions
(705,561 and 1,178,336 shares, respectively) 7,902,801 15,112,655
Cost of shares repurchased (5,266,656 and 4,402,648
shares, respectively) (58,965,528) (54,806,672)
------------ ------------
Total (26,262,140) (911,133)
------------ ------------
CLASS B
Proceeds from sales of shares (551,304 and 1,791,306
shares, respectively) 6,181,202 23,227,300
Net asset value of shares issued from reinvestment of
distributions
(372,459 and 616,801 shares, respectively) 4,168,689 7,896,496
Cost of shares repurchased (3,460,848 and 2,809,056
shares, respectively) (38,603,400) (35,444,257)
------------ ------------
Total (28,253,509) (4,320,461)
------------ ------------
CLASS C
Proceeds from sales of shares (297,288 and 595,059 shares,
respectively) 3,326,561 7,751,415
Net asset value of shares issued from reinvestment of
distributions
(32,606 and 18,346 shares, respectively) 365,221 227,373
Cost of shares repurchased (201,989 and 104,857 shares,
respectively) (2,240,507) (1,306,530)
------------ ------------
Total 1,451,275 6,672,258
------------ ------------
CLASS M
Proceeds from sales of shares (0 and 13,228 shares,
respectively) -- 176,977
Net asset value of shares issued from reinvestment of
distributions
(0 and 1,085 shares, respectively) -- 13,901
Cost of shares repurchased (0 and 23,542 shares,
respectively) -- (268,015)
------------ ------------
Total -- (77,137)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM SHARES TRANSACTIONS (53,064,374) 1,363,527
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS (60,527,565) (60,555,190)
NET ASSETS
Beginning of period 286,328,483 346,883,673
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) OF
($292,270) AND $880,311, RESPECTIVELY] $225,800,918 $286,328,483
============ ============
</TABLE>
See Notes to Financial Statements 11
<PAGE>
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------
YEAR ENDED OCTOBER 31
--------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.20 $ 13.50 $ 13.27 $ 12.56 $ 11.94
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.96 1.07 1.03 0.94 0.96
Net realized and unrealized gain
(loss) (0.30) (1.88) 0.18 0.72 0.61
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 0.66 (0.81) 1.21 1.66 1.57
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income (1.00) (1.07) (0.98) (0.95) (0.95)
Dividends from net realized gains -- (0.36) -- -- --
In excess of net investment income (0.01) -- -- -- --
In excess of net realized gains -- (0.06) -- -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (1.01) (1.49) (0.98) (0.95) (0.95)
-------- -------- -------- -------- --------
CHANGE IN NET ASSET VALUE (0.35) (2.30) 0.23 0.71 0.62
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 10.85 $ 11.20 $ 13.50 $ 13.27 $ 12.56
======== ======== ======== ======== ========
Total return(1) 5.97% (6.86)% 9.22% 13.75% 13.83%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $125,931 $156,317 $191,486 $169,664 $168,875
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.14%(3) 1.08 % 1.04%(2) 1.07% 1.10%
Net investment income 8.59% 8.17 % 7.28% 7.56% 8.10%
Portfolio turnover 133% 157 % 295% 255% 201%
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) For the year ended October 31, 1997, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
(3) For the year ended October 31, 1999, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would be 1.13%.
12
See Notes to Financial Statements
<PAGE>
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------
YEAR ENDED OCTOBER 31
--------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.18 $ 13.48 $ 13.25 $ 12.54 $ 11.93
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.87 0.96 0.92 0.85 0.86
Net realized and unrealized gain
(loss) (0.29) (1.87) 0.18 0.71 0.61
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 0.58 (0.91) 1.10 1.56 1.47
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment
income (0.91) (0.97) (0.87) (0.85) (0.86)
Dividends from net realized gains -- (0.36) -- -- --
In excess of net investment income (0.01) -- -- -- --
In excess of net realized gains -- (0.06) -- -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.92) (1.39) (0.87) (0.85) (0.86)
-------- -------- -------- -------- --------
CHANGE IN NET ASSET VALUE (0.34) (2.30) 0.23 0.71 0.61
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 10.84 $ 11.18 $ 13.48 $ 13.25 $ 12.54
======== ======== ======== ======== ========
Total return(1) 5.15% (7.51)% 8.42% 12.84% 12.96%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $92,725 $124,075 $154,989 $142,869 $144,020
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.89%(5) 1.84 % 1.79%(2) 1.82% 1.85%
Net investment income 7.83% 7.36 % 6.52% 6.80% 7.30%
Portfolio turnover 133% 157 % 295% 255% 201%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
-----------------------------------
FROM
YEAR ENDED OCTOBER 31 INCEPTION
--------------------- 10/14/97 TO
1999 1998 10/31/97
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.21 $ 13.48 $ 14.22
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.88 0.97 0.04
Net realized and unrealized gain
(loss) (0.30) (1.85) (0.74)
-------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 0.58 (0.88) (0.70)
-------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment
income (0.91) (0.97) (0.04)
Dividends from net realized gains -- (0.36) --
In excess of net investment income (0.01) -- --
In excess of net realized gains -- (0.06) --
-------- -------- --------
TOTAL DISTRIBUTIONS (0.92) (1.39) (0.04)
-------- -------- --------
CHANGE IN NET ASSET VALUE (0.34) (2.27) (0.74)
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 10.87 $ 11.21 $ 13.48
======== ======== ========
Total return(1) 5.23% (7.36)% (5.00)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 7,145 $ 5,937 $ 284
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.89%(5) 1.88 % 1.62 %(2)(4)
Net investment income 7.83% 7.46 % 4.75 %(4)
Portfolio turnover 133% 157 % 295 %(3)
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) For the year ended October 31, 1997, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
(3) Not annualized
(4) Annualized
(5) For the year ended October 31, 1999, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would be 1.88%.
See Notes to Financial Statements
13
<PAGE>
PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc. (the "Fund") is organized
as a Maryland corporation and is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end management investment company. The
Fund's investment objective is to maximize current income consistent with the
preservation of capital by investing in fixed income securities. The Fund offers
Class A, Class B and Class C shares. Class M shares have been closed. Class A
shares are sold with a front-end sales charge of up to 4.75%. Class B shares are
sold with a contingent deferred sales charge which declines from 5% to zero
depending on the period of time the shares are held. Class C shares are sold
with a 1% contingent deferred sales charge if redeemed within one year of
purchase. All classes of shares have identical voting, dividend, liquidation and
other rights and the same terms and conditions, except that each class bears
different distribution expenses and has exclusive voting rights with respect to
its distribution plan. Income and expenses of the Fund are borne pro rata by the
holders of all classes of shares, except that each class bears distribution
expenses unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
A. SECURITY VALUATION:
Debt securities are valued on the basis of broker quotations or valuations
provided by a pricing service which utilizes information with respect to recent
sales, market transactions in comparable securities, quotations from dealers,
and various relationships between securities in determining value. Short-term
investments having a remaining maturity of 60 days or less are valued at
amortized cost which approximates market. All other securities and assets are
valued at their fair value as determined in good faith by or under the direction
of the Directors.
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 ex-dividend date
or, in case of certain foreign securities, as soon as the Fund is notified.
Discounts and premiums are amortized to income using the effective interest
method. Realized gains and losses are determined on the identified cost basis.
C. INCOME TAXES:
It is the policy of the Fund to comply with the requirements of the Internal
Revenue Code (the "Code"), applicable to regulated investment companies, and to
distribute substantially all of its taxable income to its shareholders. In
addition, the 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 to shareholders are declared and recorded daily. 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 expiring capital loss carryforwards,
foreign currency gain/loss, and losses deferred due to wash sales and excise tax
regulations. Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
E. FOREIGN CURRENCY TRANSLATION:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at the
trade date. The gain or loss resulting from a change in currency exchange rates
between the trade and settlement dates of a portfolio transaction is treated as
a gain or loss on foreign currency. Likewise, the gain or loss resulting from a
change in currency exchange rates between the date income is accrued and paid is
treated as a gain or loss on foreign currency. The Fund does not separate that
portion of the results of operations arising from changes in exchange rates and
that portion arising from changes in the market prices of securities.
F. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS:
The Fund may engage in when-issued or delayed delivery transactions. The Fund
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.
G. OPTIONS:
The Fund may write covered options or purchase options contracts for the
purpose of hedging against changes in the market value of the underlying
securities or foreign currencies.
The Fund will realize a gain or loss upon the expiration or closing of the
option transaction. Gains and losses on written options are reported separately
in the Statement of Operations. When a written option is exercised, the proceeds
on sales or amounts paid are adjusted by the amount of premium received. Options
written are
14
<PAGE>
PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999 (CONTINUED)
reported as a liability in the Statement of Assets and Liabilities and
subsequently marked-to-market to reflect the current value of the option. The
risk associated with written options is that the change in value of options
contracts may not correspond to the change in value of the hedged instruments.
In addition, losses may arise from changes in the value of the underlying
instruments, or if a liquid secondary market does not exist for the contracts.
The Fund may purchase options which are included in the Schedule of
Investments and subsequently marked-to-market to reflect the current value of
the option. When a purchased option is exercised, the cost of the security is
adjusted by the amount of premium paid. The risk associated with purchased
options is limited to the premium paid.
H. SWAP AGREEMENTS:
The Fund may invest in interest rate swap agreements for the purpose of
hedging against changes in interest rates or foreign currencies. Interest rate
swap agreements involve the exchange by the Fund with another party of their
respective commitments to pay or receive interest (e.g., an exchange of floating
rate payments for fixed rate payments with respect to a notional amount of
principal). Interest rate swaps are marked to market daily based upon quotations
from market makers and the change, if any, is recorded as unrealized gain or
loss in the Statement of Operations. Net payments of interest are recorded as
interest income. Entering into these agreements involves, to varying degrees,
elements of credit and market risk in excess of the amounts recognized on the
Statement of Assets and Liabilities. Such risks involve the possibility that
there will be no liquid market for these agreements, that the counterparty to
the agreement may default on its obligation to perform and that there may be
unfavorable changes in the fluctuation of interest rates and/or exchange rates.
At October 31, 1999, the Fund had the following swaps outstanding:
<TABLE>
<CAPTION>
UNREALIZED
NOTIONAL APPRECIATION
AMOUNT (DEPRECIATION)
-------- --------------
<C> <S> <C>
$1,387,100 Agreement with Chase Manhattan
Bank terminating on November
1, 2001 to receive interest
at 14.23% in exchange for
payment of 11.875% on EUR
1,300,000.................... $14,787
2,100,000 Agreement with Morgan Stanley
Capital Services Inc.
terminating on November 1,
2004 to receive interest at
13.26% in exchange for
payment of 11.25% on
EUR 2,000,000................ 0
-------
$14,787
=======
</TABLE>
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Fund, the adviser, Phoenix Investment
Counsel, Inc. ("PIC"), an indirect majority-owned subsidiary of Phoenix Home
Life Mutual Insurance Company ("PHL"), is entitled to a fee at an annual rate of
0.55% for the first $1 billion of the average daily net assets of the Fund.
As Distributor of the Fund's shares, Phoenix Equity Planning Corp. ("PEPCO"),
an indirect majority-owned subsidiary of PHL, has advised the Fund that it
retained net selling commissions of $18,370 for Class A shares, and deferred
sales charges of $225,596 for Class B and $4,202 for Class C shares for the year
ended October 31, 1999. In addition, the Fund pays PEPCO a distribution fee at
an annual rate of 0.25% for Class A shares, 1.00% for Class B shares and 1.00%
for Class C shares of the average daily net assets of the Fund. The Distribution
Plan for Class A shares provides for fees to be paid up to a maximum on an
annual basis of 0.30%; the Distributor has voluntarily agreed to limit the fee
to 0.25%. The Distributor has advised the Fund that of the total amount expensed
for the year ended October 31, 1999, $949,721 was retained by the Distributor,
$528,894 was paid to unaffiliated participants, and $47,437 was paid to W.S.
Griffith, an indirect subsidiary of PHL.
As Financial Agent of the Fund, 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 of
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 Fund's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent. For the year ended October 31, 1999, transfer
agent fees were $484,545 of which PEPCO retained $192,321 which is net of the
fees paid to State Street.
At October 31, 1999, PHL and affiliates held 77,931 Class A shares, and 15
Class B shares of the Fund with a combined value of $845,714.
3. PURCHASE AND SALE OF SECURITIES
During the year ended October 31, 1999, purchases and sales of investments,
excluding short-term securities and U.S. Government and agency, securities,
amounted to $277,276,807 and $329,242,897, respectively. Purchases and sales of
long-term U.S. Government and agency securities amounted to $60,832,451, and
$60,850,928, respectively.
15
<PAGE>
PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999 (CONTINUED)
4. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as the Fund's ability to
repatriate such amounts.
5. LOAN AGREEMENTS
The Fund 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 Fund'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
Fund 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 Fund generally has
no right to enforce compliance with the terms of the loan agreement with the
borrower. As a result, the Fund may be subject to the credit risk of both the
borrower and the lender that is selling the loan agreement. For loans which the
Fund is a participant, the Fund may not sell its participation in the loan
without the lender's prior consent. When the Fund 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.
6. CAPITAL LOSS CARRYOVERS
The Fund has capital loss carryover of $50,275,557 comprised of $8,655,748 and
$41,619,809 expiring in 2006 and 2007, respectively, which may be used to offset
future capital gains.
7. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Fund has recorded
reclassifications in the capital acocunts. These reclassifications have no
impact on the net asset value of the Fund 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 October 31, 1999, the Fund decreased
undistributed net investment income by $40,861, increased accumulated net
realized loss by $143,865 and increased capital paid in on shares of common
stock by $184,726.
This report is not authorized for distribution to prospective investors in the
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc. unless preceded or
accompanied by an effective Prospectus which includes information concerning the
sales charge, Fund's record and other pertinent information.
16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO]
To the Directors and Shareholders of
Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the schedule 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-Goodwin Multi-Sector Fixed Income Fund, Inc. (formerly known as
Phoenix Multi-Sector Fixed Income Fund, Inc.) (the "Fund") at October 31, 1999
and the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended and the financial
highlights for each of the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
December 16, 1999
17
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PART C--OTHER INFORMATION
Item 23. Exhibits
<TABLE>
<S> <C>
a.1. Articles of Incorporation of the Registrant and amendments thereto, filed via EDGAR as Exhibit 1 with
Post-Effective Amendment No. 10 on February 24, 1997 and herein incorporated by reference.
a.2. Articles of Amendment changing name of the corporation to Phoenix Multi-Sector Fixed Income Fund,
Inc., and Articles Supplementary reclassifying shares filed via EDGAR as Exhibit 1.1 with Post-Effective
Amendment No. 10 on February 24, 1997 and incorporated herein by reference.
a.3. Articles Supplementary reallocating authorized unissued shares among all classes filed via EDGAR as
Exhibit 1.2 with Post-Effective Amendment No. 13 on February 25, 1998 and incorporated herein by
reference.
a.4. Articles Supplementary reallocating authorized unissued shares among all classes filed via EDGAR with
Post-Effective Amendment No. 15 on March 1, 1999 and herein incorporated by reference.
a.5* Articles of Amendment changing the name of the corporation to Phoenix-Goodwin Multi-Sector Fixed
Income Fund, Inc. filed via EDGAR herewith.
b. By-laws of the Registrant, filed via EDGAR as Exhibit 2 with Post-Effective Amendment No. 10 on
February 24, 1997 and herein incorporated by reference.
c. Reference is made to Exhibit a.2, Articles Supplementary to the Articles of Incorporation reclassifying shares.
d.1. Management Agreement between Registrant and National Securities & Research Corporation dated May
14, 1993, assigned to Phoenix Investment Counsel, Inc. effective June 1, 1998, filed via EDGAR as
Exhibit 5 with Post-Effective Amendment No. 10 on February 24, 1997 and incorporated herein by
reference.
d.2. Amendment to Management Agreement dated January 1, 1994, assigned to Phoenix Investment Counsel,
Inc. effective June 1, 1998, filed via EDGAR as Exhibit 5.1 with Post-Effective Amendment No. 10 on
February 24, 1997 and incorporated herein by reference.
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. 13 on February 25, 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. 13 on February 25, 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. 13 on February 25, 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. 13 on February 25, 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 with Post-Effective Amendment No. 12 on October 14, 1997 and incorporated herein by
reference.
h.1. Transfer Agency and Service Agreement between Registrant and Phoenix Equity Planning Corporation
dated June 1, 1994, filed via EDGAR as Exhibit 9 with Post-Effective Amendment No. 10 on February 24,
1997 and incorporated herein by reference.
h.2. Sub-Transfer Agent Agreement between Phoenix Equity Planning Corporation and State Street Bank and
Trust Company, filed via EDGAR as Exhibit 9.1 with Post-Effective Amendment No. 13 on February 25,
1998 and incorporated herein by reference.
h.3. Amended and Restated Financial Agent Agreement between Registrant and Phoenix Equity Planning
Corporation dated November 19, 1997, filed via EDGAR as Exhibit 9.2 with Post-Effective Amendment
No. 13 on February 25, 1998 and incorporated herein by reference.
h.4. First Amendment to the Amended and Restated Financial Agent Agreement between Registrant and
Phoenix Equity Planning Corporation effective as of February 27, 1998 filed via EDGAR with Post-
Effective Amendment No. 15 on March 1, 1999 and herein incorporated by reference.
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
h.5. Second Amendment to Amended and Restated Financial Agent Agreement between Registrant and
Phoenix Equity Planning Corporation dated July 31, 1998 filed via EDGAR with Post-Effective
Amendment No. 15 on March 1, 1999 and herein incorporated by reference.
i. Opinion of counsel as to legality of the shares dated February 24, 1995 filed via EDGAR as Exhibit 10
with Post-Effective Amendment No. 10 on February 24, 1997 and incorporated herein by reference.
j.* Consent of Independent Accountants.
k. Not Applicable
l. None.
m.1. Amended and Restated Distribution Plan for Class A Shares, filed via EDGAR as Exhibit 15.1 with
Post-Effective Amendment No. 13 on February 25, 1998 and incorporated herein by reference.
m.2.* Amended and Restated Distribution Plan for Class B Shares, filed via EDGAR herewith.
m.3. Amended and Restated Distribution Plan for Class C Shares, filed via EDGAR as Exhibit 15.3 with
Post-Effective Amendment No. 13 on February 25, 1998 and incorporated herein by reference.
n. Financial Data Schedules.
o.1. Amended and Restated Rule 18f-3 Multi-Class Distribution Plan effective November 1, 1997, filed via
EDGAR with Post-Effective Amendment No. 13 on February 25, 1998.
o.2. First Amendment to Amended and Restated Plan pursuant to Rule 18f-3 effective August 26, 1998 filed
via EDGAR with Post-Effective Amendment No. 15 on March 1, 1999 and herein incorporated by
reference.
p.1. Powers of Attorney for Ms. Curtiss and Messrs. Chesek, Conway, Dalzell-Payne, Jeffries, Keith, Morris,
Oates, Pedersen, Roth, Segerson and Weicker, filed via EDGAR with Post-Effective Amendment No. 14 on
December 30, 1998 and incorporated herein by reference.
</TABLE>
- -----------
*Filed herewith
Item 24. Persons Controlled by or Under Common Control With the Fund
No person is controlled by, or under common control with, the Fund.
Item 25. Indemnification
Under Section 2-418 of the Maryland General Corporation Law, with respect
to any proceeding against a present or former director, officer, agent, or
employee of the Registrant (a "corporation representative"), except a proceeding
brought by or on behalf of the Registrant, the Registrant may indemnify the
corporation representative against expenses, including attorney's fees and
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by the corporate representative in connection with the proceeding, if:
(i) he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Registrant; and (ii) with respect to
any criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful.
The Registrant is also authorized under Section 2-418 of the Maryland
General Corporation Law to indemnify a corporate representative under certain
circumstances against expenses incurred in connection with the defense of a suit
or action by or in the right of the Registrant. Reference is made to Article VI
of Registrant's Articles of Incorporation, Article VI of Registrant's By-laws
and Section 2-418 of the Maryland General Corporation Law.
Item 26. Business and Other Connections of Investment Adviser
See "Management of the Funds" in the Prospectus and "Services of the
Adviser" and "Management of the Fund" in the Statement of Additional
Information, each of which is included in this Post-Effective Amendment to the
Registration Statement.
For information as to the business, profession, vocation or employment of a
substantial nature of directors and officers of Phoenix Investment Counsel,
Inc., reference is made to the Adviser's current Form ADV (SEC File No.
801-5995) filed under the Investment Advisers Act of 1940 and incorporated
herein by reference.
Item 27. Principal Underwriters
(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-Euclid Funds, Phoenix-Engemann
Funds, Phoenix Equity Series Fund, Phoenix-Goodwin California Tax
Exempt Bonds, Inc., Phoenix-Goodwin Multi-Sector Short Term Bond Fund,
Phoenix Investment Trust 97, Phoenix Multi-Portfolio Fund,
Phoenix-Oakhurst Income and Growth Fund, Phoenix-Oakhurst Strategic
Allocation Fund, Inc., 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.
C-2
<PAGE>
(b) Directors and executive officers of Phoenix Equity Planning are as
follows:
<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name and Principal Address with Distributor with Registrant
-------------------------- ---------------- ---------------
<S> <C> <C>
Michael E. Haylon Director Executive Vice President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Director and President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Senior Vice Vice President
100 Bright Meadow Blvd. President and Chief Financial
P.O. Box 1900 Officer
Enfield, CT 06083-1900
John F. Sharry President, Retail Distribution Executive Vice President
56 Prospect St.
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
55 East Monroe St. Secretary
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
The account books and other documents required to be maintained by the
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder will be maintained at the offices of the Fund, 100 Bright
Meadow Boulevard, Enfield, Connecticut 06083-1900, at the offices of
Registrant's investment adviser, Phoenix Investment Counsel, Inc., 56 Prospect
Street, Hartford, Connecticut 06115, at the offices of the Fund's Custodian,
State Street Bank and Trust Company, P.O. Box 8301, Boston, Massachusetts
02266-8301, and at the offices of the Transfer Agent, Financial Agent and
Principal Underwriter, Phoenix Equity Planning Corporation, 100 Bright Meadow
Boulevard, Enfield, Connecticut 06082-1900.
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable.
C-3
<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 24th day of February, 2000.
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
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 the 24th day of February, 2000.
<TABLE>
<CAPTION>
Signature Title
- ------------------------------------ ---------------------------------------------
<S> <C>
- ----------------------------------
Robert Chesek* Director
- ----------------------------------
E. Virgil Conway* Director
/s/ Nancy G. Curtiss Treasurer
- ---------------------------------- (Principal Financial and Accounting Officer)
Nancy G. Curtiss
- ----------------------------------
Harry Dalzell-Payne* Director
- ----------------------------------
Francis E. Jeffries* Director
- ----------------------------------
Leroy Keith, Jr.* Director
/s/ Philip R. McLoughlin President and Director
- ---------------------------------- (Principal Executive Officer)
Philip R. McLoughlin
- ----------------------------------
Everett L. Morris* Director
- ----------------------------------
James M. Oates* Director
- ----------------------------------
Calvin J. Pedersen* Director
- ----------------------------------
Herbert Roth, Jr.* Director
- ----------------------------------
Richard E. Segerson* Director
- ----------------------------------
Lowell P. Weicker, Jr.* Director
By: /s/ Philip R. McLoughlin
- ----------------------------------
</TABLE>
* Philip R. McLoughlin,
attorney-in-fact pursuant to powers of attorney filed previously.
S-1
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
ARTICLES OF AMENDMENT
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC., a Maryland corporation having
its principal Maryland office in the City of Baltimore in the State of Maryland
(hereinafter referred to as the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland, that:
FIRST: Article II of the Articles of Incorporation of the Corporation is
hereby amended by striking out the name of the Corporation and substituting
therefor the following name:
PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME FUND, INC.
SECOND: The amendment to the Articles of Incorporation of the Corporation
as hereinabove set forth has been duly approved by the Board of Directors and
approved by the stockholders of the Corporation in the manner and by the vote
required by law.
IN WITNESS WHEREOF, PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC. has caused
these Articles of Amendment to be executed in its name and on its behalf by its
duly authorized officers who acknowledge that these Articles of Amendment are
the act of the Corporation, that to the best of their knowledge, information and
belief, the matters and facts set forth herein as to authorization and approval
are true in all material respects and that this statement is made under the
penalties of perjury.
DATED this 21st day of July, 1999.
PHOENIX MULTI-SECTOR FIXED INCOME
FUND, INC. (renamed PHOENIX-GOODWIN
MULTI-SECTOR FIXED INCOME FUND, INC.)
By: /s/ Philip R. McLoughlin
------------------------
Philip R. McLoughlin
President
ATTEST:
By: /s/ P.S. Sinofsky
--------------------
Pamela Sinofsky
Assistant Secretary
<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
PHONEIX 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 28, 1998
Declaration of Trust dated June 25, 1986, as amended, establishing
National Stock Fund, now known as Phoenix Strategic Equity Series
Fund, and pursuant to Section 2.5 of that certain Declaration of Trust
dated February 20, 1992, as amended, establishing National Short-Term
Income Series, now know as Phoenix Multi-Sector Short Term Bond Fund,
and pursuant to Section 2.5 of that certain Declaration of Trust of
National Worldwide Opportunities Fund dated November 4, 1991, as
amended, now know as Phoenix Worldwide Opportunities Fund, the
undersigned, and each of them, hereby delegates to and appoints PHILIP
R. MCLOUGHLIN, his agent and attorney-in-fact for a period of one (1)
year from the date hereof, to execute any and all instruments,
including specifically but without limitation amendments of each and
every said trust instrument and appointments of trustee(s), provided
that such action as evidenced by such instrument shall have been
adopted by requisite vote of the Trustees and, where necessary, the
Shareholders of such funds, such vote or votes to be conclusively
presumed by the execution of such instrument by such attorney-in-fact.
3. The undersigned Trustees, and each of them, hereby further declare
that a photostatic, xerographic or other similar copy of this original
instrument shall be as effective as the original, and that, as to any
such amendment of any of the aforementioned trust agreements or
declarations, such copy shall be filed with such instrument of
amendment in the records of the Office of the Secretary of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, we have hereunto subscribed this Declaration 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 F. Weicker, Jr.
- -------------------------- ------------------------------
Leroy Keith, Jr. Lowell F. Weicker, Jr.
/s/ Everett L. Morris
- --------------------------
Everett L. Morris
PHOENIX GOODWIN MULTI-SECTOR
FIXED INCOME FUND, INC.
(the "Fund")
CLASS B SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have entered
into a Distribution Agreement pursuant to which the Distributor will act as
principal underwriter of each class of shares of the Fund for sale to the
permissible purchasers. The Trustees of the Fund have determined to adopt this
Distribution Plan (the "Plan"), in accordance with the requirements of Section
12b-1 of the Investment Company Act of 1940, as amended (the "Act") with respect
to Class B shares of the Fund and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its Class B shareholders.
2. Rule 12b-1 Fees
---------------
The Fund shall reimburse the Distributor, at the end of each month, up to a
maximum on an annual basis of 0.75% of the average daily value of the net assets
of the Fund's Class B shares, subject to any applicable restrictions imposed by
rules of the National Association of Securities Dealers, Inc., for distribution
expenditures incurred by Distributor subsequent to the effectiveness of this
Plan, in connection with the sale and promotion of the Class B shares of the
Fund and the furnishing of services to Class B shareholders of the Fund (the
"Distribution Fee"). Such expenditures shall consist of: (i) commissions to
sales personnel for selling Class B shares of the Fund (including underwriting
commissions and finance charges related to the payment of commissions); (ii)
compensation, sales incentives and payments to sales, marketing and service
personnel; (iii) payments to broker-dealers and other financial institutions
which have entered into selling agreements with the Distributor for services
rendered in connection with the sale and distribution of Class B shares of the
Fund; (iv) payment of expenses incurred in sales and promotional activities,
including advertising expenditures related to the Class B shares of the Fund;
(v) the costs of preparing and distributing promotional materials; (vi) the cost
of printing the Fund's Prospectus and Statement of Additional Information for
distribution to potential investors; and (vii) such other similar services that
the Trustees of the Fund determine are reasonably calculated to result in the
sale of Class B shares of the Fund. The Fund shall also pay the Distributor, at
the end of each month, an amount on an annual basis equal to 0.25% of the
average daily value of the net assets of the Fund's Class B shares, as
compensation for providing personal service to shareholders, including
assistance in connection with inquiries relating to shareholder accounts, and
for maintaining shareholder accounts (the "Service Fee").
<PAGE>
Any reduction to amounts payable under this Plan shall first be to the
extent of the Service Fee, and then from the balance of the 12b-1 Fee.
Amounts paid or payable by the Fund under this Plan or any agreement with
any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
Any Distribution Agreement in respect of Class B shares may provide that
(I) the Distributor in respect of such Distribution Agreement will be deemed to
have fully earned its Allocable Portion (as hereinafter defined) of the
Distribution Fee in respect of Class B shares of such series upon the sale of
each "Initial Issue Commission Share" (as hereinafter defined) of such series
taken into account in determining the Distributor's Allocable Portion of such
Distribution Fee; (II) except as provided in (III) below, the Fund's obligation
to pay such Distributor its Allocable Portion of the Distribution Fee payable in
respect of the Class B shares of the Fund shall be absolute and unconditional
and shall not be subject to dispute, offset, counterclaim or any defense
whatsoever (it being understood that such provision is not a waiver of the
Fund's right to pursue the Distributor and enforce such claims against the
assets of the Distributor other than its right to the Distribution Fees in
respect of the Class B shares of the Fund); (III) the Fund's obligation to pay
the Distributor its Allocable Portion of the Distribution Fee in respect to
Class B shares of the Fund shall not be terminated or modified except to the
extent required by a change in the Act or the Rules of Conduct enacted or
promulgated after November 17, 1999 (a"Change-in-Applicable-Law"), or in
connection with a Complete Termination (as hereinafter defined) of this Plan in
respect of the Class B shares of such series; (IV) the Trust will not waive or
change any CDSC in respect of the Class B shares of such series, except as
provided in the Trust's Prospectus or statement of additional information
without the consent of the Distributor (or its assigns); (V) except to the
extent required by a Change-in-Applicable-Law, neither the termination of such
Distributor's role as distributor of the Class B shares of such series, nor the
termination of such Distribution Agreement nor the termination of this Plan will
terminate such Distributor's right to its Allocable Portion of the CDSC's in
respect of Class B shares of such series sold prior to such termination; (VI)
except as provided in the Trust's Prospectus and statement of additional
information, until such Distributor has been paid its Allocable Portion of the
Distribution Fee in respect of the Class B shares of such series, the Trust will
not adopt a plan of liquidation in respect of such series without the consent of
such Distributor (or its assigns); and (VII) such Distributor may sell and
assign its right to its Allocable Portion of the Distribution Fees and CDSCs
(but not such Distributor's obligations to the Trust under the Distribution
Agreement) to raise funds to make the expenditures related to the distribution
of Class B shares of such series and in connection therewith, upon receipt of
notice of such sale and assignment, the Trust shall pay to the purchaser or
assignee such portion
<PAGE>
of the Distributor's Allocable Portion of the Distribution Fees in respect of
the Class B shares of such series so sold or assigned.
For purposes of this Plan, the term "Allocable Portion" means, in respect of
Distribution Fees payable in respect of the Class B shares of any series as
applied to any Distributor, the portion of such Distribution Fees and CDSCs
allocated to such Distributor in accordance with the Allocation Schedule (as
hereinafter defined). For purposes of this Plan, the term "Complete Termination"
of this Plan means, in respect of any series, a termination of this Plan
involving the cessation of payments of Distribution Fees hereunder in respect of
Class B shares of such series and the cessation of payments of distribution fees
pursuant to every other rule 12b-1 plan of the Trust in respect of such series
for every future class of shares which, in the good faith determination of the
Board of Trustees of the Trust, has substantially similar economic
characteristics to the Class B shares taking into account the total sales
charge, contingent deferred sales charge and other similar charges, it being
understood that the existing Class A shares and existing Class C shares do not
have substantially similar economic characteristics to the Class B shares. For
purposes of this Plan, the term "Allocation Schedule" means, in respect of the
Class B shares of any series, a schedule which shall be approved in the same
manner as this Plan as contemplated by Section 4 hereof for assigning to each
Distributor of Class B shares of such series the portion of the total
Distribution Fees payable by the Trust in respect of the Class B shares of such
series which has been earned by such Distributor, which shall be attached to and
become a part of any Distribution Agreement in respect of Class B shares
provided that where there is only one Distributor at any given time, the
Allocation Schedule shall mean all of the total Distribution Fees payable by the
Trust in respect of the Class B shares of such series which has been earned by
such Distributor. For purposes of clause (I) of the first sentence of this
Section 2, the term "Initial Issue Commission Share" shall mean, in respect of
any series, a Class B share which is a Commission Share issued by such series
under circumstances other than in connection with a permitted free exchange with
another fund. For purposes of the foregoing definition, a "Commission Share"
shall mean, in respect of any series, each Class B share of such series which is
issued under circumstances which would normally give rise to an obligation of
the holder of such Class B share to pay a CDSC upon redemption of such share,
including, without limitation, any Class B share of such Fund issued in
connection with a permitted free exchange, and any such Class B share shall not
cease to be a Commission Share prior to the redemption (including a redemption
in connection with a permitted free exchange) or conversion even though the
obligation to pay the CDSC shall have expired or conditions for thereof still
exist.
3. Reports
-------
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare and
furnish to the Trustees of the Fund for their review, and the Trustees shall
review, a written report complying with the requirements of Rule 12b-l under the
Act regarding the amounts expended under this Plan and the purposes for which
such expenditures were made.
<PAGE>
4. Required Approval
-----------------
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of this Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or any related agreement and this
Plan shall not take effect with respect to the Fund until it has been approved
by a vote of at least a majority of the outstanding voting Class B shares (as
such phrase is defined in the Act).
5. Term
----
This Plan shall remain in effect for one year from the date of its adoption
and may be continued thereafter if specifically approved at least annually by a
vote of at least a majority of the Trustees of the Fund as well as a majority of
the Disinterested Trustees. This Plan may be amended at any time, provided that
(a) the Plan may not be amended to increase materially the amount of the
distribution expenses provided in Paragraph 2 hereof (including the Service Fee)
without the approval of at least a majority of the outstanding voting securities
(as defined in the Act) of the Class B shares of the Fund and (b) all material
amendments to this Plan must be approved by a majority vote of the Trustees of
the Fund and of the Disinterested Trustees cast in person at a meeting called
for the purpose of such vote.
<PAGE>
6. Selection of Disinterested Trustees
-----------------------------------
While this Plan is in effect, the selection and nomination of Trustees who
are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
------------------
Any related agreement shall be in writing and shall provide that (a) such
agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class B shares of the Fund on not more than 60 days' written notice to the other
party to the agreement and (b) such agreement shall terminate automatically in
the event of its assignment.
8. Termination
-----------
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class B shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
9. Records
-------
The Fund shall preserve copies of this Plan and any related agreements and
all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
[Adopted at a duly held meeting of the Board of Trustees on November 17, 1999]
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. 16 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated December 16, 1999, relating to the financial
statements and financial highlights which appears in the October 31, 1999 Annual
Report to Shareholders of Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.,
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 21, 2000
