As filed with the Securities and Exchange Commission on March 1, 2000
Registration No. 33-45758
File No. 811-6566
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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. 12 [X]
and/or
REGISTRATION STATEMENT
Under
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 13 [X]
(Check appropriate box or boxes.)
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Phoenix-Goodwin Multi-Sector Short Term Bond Fund
(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--Shareholder Services
(800) 243-1574
(Registrant's Telephone Number including Area Code)
-------------
Pamela S. Sinofsky
Assistant Vice President and Assistant Counsel
Phoenix Investment Partners, Ltd.
56 Prospect Street
Hartford, Connecticut 06115
(Name and Address of Agent for Service)
-------------
It is proposed that this filing will become effective (check appropriate box):
[ ] 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.
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<PAGE>
PHOENIX-GOODWIN MULTI-SECTOR SHORT TERM BOND FUND
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, Risk 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 Highlight 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. Calculation 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 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
2EX-
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
supports your share value will increase. If the value of fund
investments decreases, your share value will decrease.
Interest Rate Risk
The value of your shares will be directly affected by trends in
interest rates. If interest rates rise, the value of debt
securities generally will fall. Because the fund may hold
securities with longer maturities, the net asset value of the
fund may experience greater price fluctuations in response to
changes in interest rates than funds that hold only securities
with short-term maturities. Prices of longer-term securities are
affected more by interest rate changes than prices of
shorter-term securities.
Credit Risk
Credit risk pertains to the issuer's ability to make scheduled
interest or principal payments. Generally, securities rated below
investment grade (high yield-high risk securities) have a
greater chance that the issuer will be unable to make such
payments when due.
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 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
supports your share value will increase. If the value of fund
investments decreases, your share value will decrease.
Interest Rate Risk
The value of your shares will be directly affected by trends in
interest rates. If interest rates rise, the value of debt
securities generally will fall. Because the fund may hold
securities with longer maturities, the net asset value of the
fund may experience greater price fluctuations in response to
changes in interest rates than funds that hold only securities
with short-term maturities. Prices of longer-term securities are
affected more by interest rate changes than prices of
shorter-term securities.
Credit Risk
Credit risk pertains to the issuer's ability to make scheduled
interest or principal payments. Generally, securities rated below
investment grade (high yield-high risk securities) have a
greater chance that the issuer will be unable to make such
payments when due.
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.
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
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 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 fund's 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 the 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>
[This page intentionally left blank]
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 SHORT TERM BOND FUND
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 Short Term Bond Fund (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 Phoenix Funds, c/o State
Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
The Fund ...................................... 2
Investment Objective and Policies ............. 2
Investment Restrictions ....................... 2
Investment Techniques ......................... 3
Performance Information ....................... 10
Portfolio Transactions and Brokerage .......... 11
Services of the Adviser ....................... 12
Net Asset Value ............................... 13
How To Buy Shares ............................. 13
Investor Account Services ..................... 16
Tax Sheltered Retirement Plans ................ 18
How To Redeem Shares .......................... 18
Dividends, Distributions and Taxes ............ 19
The Distributor ............................... 22
Distribution Plans ............................ 23
Management of the Fund ........................ 24
Other Information ............................. 30
Appendix ...................................... 32
</TABLE>
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunication Device TTY: (800) 243-1926
PXP 694B (2/00)
1
<PAGE>
THE FUND
Phoenix-Goodwin Multi-Sector Short Term Bond Fund is a diversified
open-end, management investment company, consisting currently of one series,
with three classes of shares. The Fund was organized as a business trust under
Massachusetts law on February 20, 1992. On November 19, 1998, the Trustees
voted to change the Fund's name to Phoenix-Goodwin Multi-Sector Short Term Bond
Fund, which change became effective on August 27, 1999. On February 22, 1996,
the Trustees voted to change the Fund's name to Phoenix Multi-Sector Short Term
Bond Fund to more accurately reflect its present investment policies and
objectives. Prior to this revision, the Fund's name was "Phoenix Asset
Reserve."
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide high current income relative
to other short-term investment alternatives, while attempting to limit
fluctuations in the net asset value of Fund shares resulting from movements in
interest rates. 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 approval by holders of a "majority of the outstanding voting
securities" of the Fund, which as used herein means the vote of the lesser of
(i) 67% or more of the outstanding voting securities of the Fund present at a
meeting, if the holders of more than 50% of the outstanding voting securities
of the Fund are present or represented by proxy, or (ii) more than 50% of the
outstanding voting securities of the Fund. The term "voting securities" as used
in this paragraph has the same meaning as in the 1940 Act.
The Fund may not:
(1) with respect to 75% of the total assets of the Fund (taken at market
value at the time of purchase), invest more than 5% of the value of its
total assets in the securities of any one issuer, or, with respect to 100%
of the total assets of the Fund, own more than 10% of the outstanding
voting securities of any one issuer, in each case other than U.S.
Government securities (as defined in the 1940 Act);
(2) invest 25% or more of the value of its total assets in securities of
issuers engaged in any one industry (excluding U.S. Government securities
as defined in the 1940 Act);
(3) purchase or sell real estate (although it may purchase securities
secured by real estate or interests therein, or securities issued by
companies which invest in real estate, or interests therein (other than
real estate limited partnership interests));
(4) purchase or sell commodities or commodities contracts or oil, gas or
mineral programs. This restriction shall not prohibit the Fund, subject to
restrictions described in the Prospectus and elsewhere in this Statement of
Additional Information, from purchasing, selling or entering into futures
contracts, options on futures contracts, foreign currency forward
contracts, foreign currency options, or any interest rate or foreign
currency-related hedging instrument, subject to compliance with any
applicable provisions of the federal securities or commodities laws.
(5) purchase securities on margin, except for use of short-term credit
necessary for clearance of purchases and sales of portfolio securities, but
it may make margin deposits in connection with transactions in options,
futures and options on futures;
(6) borrow money, issue senior securities, or pledge, mortgage or
hypothecate its assets, except that the Fund 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 each borrowing there is asset coverage of 300% and (ii)
enter into transactions in options, futures and options on futures as
described in the Prospectus and in this 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 a Fund's assets);
(7) lend any funds or other assets, except that the Fund may, consistent
with its investment objective and policies: (a) invest in debt obligations
including bonds, debentures or other debt securities, bankers' acceptances
and commercial paper, even though purchase of such obligations may be
deemed to be the making of loans; (b) enter into repurchase agreements; and
(c) lend its portfolio securities in an amount not to exceed 1/3 of the
value of its total assets, provided such loans are made in accordance with
applicable guidelines established by the Securities and Exchange Commission
and the Trustees;
(8) act as an underwriter of securities of other issuers, except to the
extent that in connection with the disposition of portfolio securities, it
may be deemed to be an underwriter under the federal securities laws; or
(9) maintain a short position, or purchase, write or sell puts, calls,
straddles, spreads or combinations thereof, except as set forth in the
Prospectus and in this Statement of Additional Information for transactions
in options, futures, and options on futures.
2
<PAGE>
Non-Fundamental Policies
The following restrictions of the Fund are not fundamental policies and
may be changed by the Board of Trustees of the Fund without shareholder
approval. The Fund may not:
(A) invest for the purpose of exercising control or management;
(B) purchase securities of other investment companies, except that the Fund
may, for temporary purposes, purchase shares of money market mutual funds,
subject to such restrictions as may be imposed by the 1940 Act and rules
thereunder, or by any State in which shares of the Fund are registered;
(C) invest more than 15% of the net assets of the Fund (taken at market
value at the time of the investment) in "illiquid securities". Illiquid
securities may include securities subject to legal or contractual
restrictions on resale (which may include private placements), repurchase
agreements maturing in more than seven days, certain options traded over
the counter that the Fund has purchased, certain securities being used to
cover options the Fund has written, securities for which market quotations
are not readily available, or other securities which legally or in the
Adviser's or Trustees' opinion are not deemed liquid;
(D) invest in a security if, as a result of such investment, more than 5%
of its total assets (taken at market value at the time of such investment)
would be invested in securities of issuers (other than issuers of Federal
agency obligations) having a record, together with predecessors or
unconditional guarantors, of less than three years of continuous operation;
(E) purchase or retain securities of any issuer if 5% of the securities of
such issuer are owned by those officers and directors or trustees of the
Fund or of the Adviser who each own beneficially more than 1/2 of 1% of its
securities;
(F) purchase securities for the Fund from, or sell portfolio securities to,
any of the officers and directors or trustees of the Fund or of the
Adviser; or
(G) borrow any amount in excess of 10% of the Fund's total assets or make
additional investments when the Fund's borrowings are in excess of 5% of
the Fund's total assets.
Notwithstanding the provisions of restriction (G), the Fund has no current
intention of borrowing money from banks or other financial institutions, other
than on a temporary basis for emergency or extraordinary purposes, provided,
however, that the provisions of restriction (G) shall not be deemed to apply to
reverse repurchase agreements and other investment techniques which may be
deemed to constitute borrowings for purposes of the 1940 Act.
Unless otherwise indicated, all percentage limitations listed above apply
to the Fund only at the time a transaction is entered into. Accordingly, if a
percentage restriction is adhered to at the time of investment, a later
increase or decrease in the percentage which results from a relative change in
values or from a change in the Fund's net assets will not be considered a
violation.
INVESTMENT TECHNIQUES
The Fund may utilize the following practices or techniques in pursuing its
investment objective.
Mortgage-Related Securities
GNMA Certificates. The Government National Mortgage Association ("GNMA")
is a wholly owned corporate instrumentality of the United States within the
Department of Housing and Urban Development. The National Housing Act of 1934,
as amended (the "Housing Act"), authorizes GNMA to guarantee the timely payment
of the principal of and interest on certificates that are based on and backed
by a pool of mortgage loans insured by the Federal Housing Administration under
the Housing Act, or Title V of the Housing Act of 1949 ("FHA Loans"), or
guaranteed by the Department of Veterans Affairs under the Servicemen's
Readjustment Act of 1944, as amended ("VA Loans"), or by pools of other
eligible mortgage loans. The Housing Act provides that the full faith and
credit of the United States government is pledged to the payment of all amounts
that may be required to be paid under any guaranty. In order to meet its
obligations under such guaranty, GNMA is authorized to borrow from the U.S.
Treasury with no limitations as to amount.
The GNMA Certificates in which the Fund will invest will represent a pro
rata interest in one or more pools of the following types of mortgage loans:
(i) fixed rate level payment mortgage loans; (ii) fixed rate graduated payment
mortgage loans; (iii) fixed rate growing equity mortgage loans; (iv) fixed rate
mortgage loans secured by manufactured (mobile) homes; (v) mortgage loans on
multifamily residential properties under construction; (vi) mortgage loans on
completed multifamily projects; (vii) fixed rate mortgage loans as to which
escrowed funds are used to reduce the borrower's monthly payments during the
early years of the mortgage loans ("buydown" mortgage loans); (viii) mortgage
loans that provide for adjustments in payments based on periodic changes in
interest rates or in other payment terms of the mortgage loans; and (ix)
mortgage-backed serial notes. All of these mortgage loans will be FHA Loans or
VA Loans and, except as otherwise specified above, will be fully-amortizing
loans secured by first liens on one-to four-family housing units.
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FNMA Certificates. The Federal National Mortgage Association ("FNMA") is a
federally chartered and privately owned corporation organized and existing
under the Federal National Mortgage Association Charter Act of 1938. The
obligations of FNMA are not backed by the full faith and credit of the U.S.
government.
Each FNMA Certificate will represent a pro rata interest in one or more
pools of FHA Loans, VA Loans or conventional mortgage loans (i.e., mortgage
loans that are not insured or guaranteed by any governmental agency) of the
following types: (i) fixed rate level payment mortgage loans; (ii) fixed rate
growing equity mortgage loans; (iii) fixed rate graduated payment mortgage
loans; (iv) variable rate California mortgage loans; (v) other adjustable rate
mortgage loans; and (vi) fixed rate and adjustable mortgage loans secured by
multifamily projects.
FHLMC Certificates. The Federal Home Loan Mortgage Corporation ("FHLMC")
is a corporate instrumentality of the United States created pursuant to the
Emergency Home Finance Act of 1970, as amended (the "FHLMC Act"). The
obligations of FHLMC are obligations solely of FHLMC and are not backed by the
full faith and credit of the U.S. government.
FHLMC Certificates represent a pro rata interest in a group of mortgage
loans (a "FHLMC Certificate group") purchased by FHLMC. The mortgage loans
underlying the FHLMC Certificates will consist of fixed rate or adjustable rate
mortgage loans with original terms to maturity of between 10 and 30 years,
substantially all of which are secured by first liens on one-to-four family
residential properties or multifamily projects. Each mortgage loan must meet
the applicable standards set forth in the FHLMC Act. A FHLMC Certificate group
may include whole loans, participation interests in whole loans and undivided
interests in whole loans and participations comprising another FHLMC
Certificate group.
Adjustable Rate Mortgages--Interest Rate Indices. The One Year Treasury
Index is the figure derived from the average weekly quoted yield on U.S.
Treasury Securities adjusted to a constant maturity of one year. The Cost of
Funds Index reflects the monthly weighted average cost of funds of savings and
loan associations and savings banks whose home offices are located in Arizona,
California and Nevada (the "FHLB Eleventh District") that are member
institutions of the Federal Home Loan Bank of San Francisco (the "FHLB of San
Francisco"), as computed from statistics tabulated and published by the FHLB of
San Francisco. The FHLB of San Francisco normally announces the Cost of Funds
Index on the last working day of the month following the month in which the
cost of funds was incurred.
A number of factors affect the performance of the Cost of Funds Index and
may cause the Cost of Funds Index to move in a manner different from indices
based upon specific interest rates, such as the One Year Treasury Index.
Because of the various origination dates and maturities of the liabilities of
member institutions of the FHLB Eleventh District upon which the Cost of Funds
Index is based, among other things, at any time the Cost of Funds Index may not
reflect the average prevailing market interest rates on new liabilities of
similar maturities. There can be no assurance that the Cost of Funds Index will
necessarily move in the same direction or at the same rate as prevailing
interest rates since as longer term deposits or borrowings mature and are
renewed at market interest rates, the Cost of Funds Index will rise or fall
depending upon the differential between the prior and the new rates on such
deposits and borrowings. In addition, dislocations in the thrift industry in
recent years have caused and may continue to cause the cost of funds of thrift
institutions to change for reasons unrelated to changes in general interest
rate levels. Furthermore, any movement in the Cost of Funds Index as compared
to other indices based upon specific interest rates may be affected by changes
instituted by the FHLB of San Francisco in the method used to calculate the
Cost of Funds Index. To the extent that the Cost of Funds Index may reflect
interest changes more slowly than other indices, mortgage loans which adjust in
accordance with the Cost of Funds Index may produce a higher yield later than
would be produced by such other indices, and in a period of declining interest
rates, the Cost of Funds Index may remain higher than other market interest
rates which may result in a higher level of principal prepayments on mortgage
loans which adjust in accordance with the Cost of Funds Index than mortgage
loans which adjust in accordance with other indices.
LIBOR, the London Interbank Offered Rate, is the interest rate that the
most creditworthy international banks dealing in U.S. dollar-denominated
deposits and loans charge each other for large dollar-denominated loans. LIBOR
is also usually the base rate for large dollar-denominated loans in the
international market. LIBOR is generally quoted for loans having rate
adjustments at one, three, six or twelve month intervals.
Stripped Mortgage-Related Securities
The cash flows and yields on interest-only ("IO") and principal-only
("PO") classes are extremely sensitive to the rate of principal payments
(including prepayments) on the related underlying mortgage assets. For example,
a rapid or slow rate of principal payments may have a material adverse effect
on the yield to maturity of IOs or POs, respectively. If the underlying
mortgage assets experience greater than anticipated prepayments of principal,
an investor may fail to recoup fully its initial investment in an IO class of a
stripped mortgage-backed security, even if the IO class is rated AAA or Aaa.
Conversely, if the underlying Mortgage Assets experience slower than
anticipated prepayments of principal, the yield on the PO class will be
affected more severely than would be the case with a traditional
Mortgage-Backed Security.
Borrowing and Reverse Repurchase Agreements
The Fund may borrow for temporary administrative or emergency purposes.
This borrowing may be unsecured. The Investment Company Act of 1940, as amended
(the "1940 Act") requires the Fund to maintain continuous asset coverage (that
is, total assets including borrowings, less liabilities exclusive of
borrowings) of 300% of the amount borrowed. If the 300% asset coverage should
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decline as a result of market fluctuations or other reasons, the Fund may be
required to sell some of its portfolio holdings within three days to reduce the
debt and restore the 300% asset coverage, even though it may be disadvantageous
from an investment standpoint to sell securities at that time. To avoid the
potential leveraging effects of the Fund's borrowings, additional investment
will not be made while unsecured bank borrowing is in excess of 5% of the
Fund's total assets. Borrowing may exaggerate the effect on net asset value of
any increase or decrease in the market value of the portfolio. Money borrowed
will be subject to interest costs which may or may not be recovered by
appreciation of the securities purchased. The Fund also may be required to
maintain minimum average balances in connection with such borrowing or to pay a
commitment or other fee to maintain a line of credit; either of these
requirements would increase the cost of borrowing over the stated interest
rate.
Among the forms of investments in which the Fund may engage, and which may
be deemed to constitute borrowings, is the entry into reverse repurchase
agreements. A reverse repurchase agreement involves the sale of a
portfolio-eligible security by a Fund, coupled with its agreement to repurchase
the instrument at a specified time and price. The Fund will maintain a pledged
account with its Custodian consisting of 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 its obligations under reverse repurchase
agreements with broker-dealers and banks. However, reverse repurchase
agreements involve the risk that the market value of securities retained by the
Fund may decline below the repurchase price of the securities sold by the Fund
which it is obligated to repurchase.
The Fund also may enter into "mortgage dollar rolls," which are similar to
reverse repurchase agreements in certain respects. In a "dollar roll"
transaction, the Fund sells a mortgage-related security (such as a GNMA
security) to a dealer and simultaneously agrees to purchase a similar security
(but not the same security) in the future at a pre-determined price. A "dollar
roll" can be viewed, like a reverse repurchase agreement, as a collateralized
borrowing in which the Fund pledges a mortgage-related security to a dealer to
obtain cash. Unlike in the case of reverse repurchase agreements, the dealer
with which the Fund enters into a dollar roll transaction is not obligated to
return the same securities as those originally sold by the Fund, but only
securities which are "substantially identical." To be considered "substantially
identical," the securities returned to the Fund generally must: (1) be
collateralized by the same types of underlying mortgages; (2) be issued by the
same agency and be part of the same program; (3) have a similar original stated
maturity; (4) have identical net coupon rates; (5) have similar market yields
(and therefore price); and (6) satisfy "good delivery" requirements, meaning
that the aggregate principal amount of the securities received back must be
within 2.5% of the initial amount delivered.
The Fund's obligations under a dollar roll agreement must be covered by
cash or high quality debt securities equal in value to the securities subject
to repurchase by the Fund, maintained in a pledged account. Dollar roll
transactions are treated as borrowings by the Fund, and therefore the Fund's
entry into dollar roll transactions is subject to the Fund's overall
limitations on borrowing. Furthermore, because dollar roll transactions may be
for terms ranging between one and six months, dollar roll transactions may be
deemed "illiquid" and subject to the Fund's overall limitations on investment
in illiquid securities.
Lending Portfolio Securities
The Fund may make secured loans of its portfolio securities to
broker-dealers and other financial institutions. The 1940 Act requires that (a)
the borrower pledge and maintain collateral consisting of cash, a letter of
credit issued by a domestic U.S. bank, or securities issued or guaranteed by
the U.S. government having a value at all times not less than 100% of the value
of the securities loaned; (b) the borrower add to such collateral whenever the
price of the securities borrowed rises (i.e., the value of the loan is "marked
to the market" on a daily basis); (c) the loan be made subject to termination
by the Fund at any time; and (d) the Fund receives reasonable interest on the
loan (which may include the investing of any cash collateral in high quality
interest-bearing liquid investments), any distributions on the loaned
securities, and any increase in their market value. In addition, voting rights
may pass with the loaned securities, but if a material event were to occur, the
loan must be called and the securities voted by the Fund.
Hedging
The Fund may enter into various hedging transactions, such as interest
rate swaps, and the purchase and sale of interest rate collars, caps and
floors. The Fund reserves the right, but has no current intention, to enter
into futures contracts, and to write and purchase options, including foreign
currency options and over-the-counter options.
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,
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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.
The Fund may write and purchase options, including over-the-counter
options, for hedging purposes. 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, respectively. 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 hedging 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
hedging activities would be expected to offset anticipated losses or a portion
thereof. See "Dividends, Distributions and Taxes."
The Fund will not enter into options or futures transactions for
speculative purposes, but only as a hedge against changes in the values of
securities in its portfolio, or sectors thereof, or in securities that it
intends to acquire resulting from market conditions.
Options on Securities and Indexes
The Fund may purchase and sell both put and call options on debt or other
securities or indexes in standardized contracts traded on foreign or national
securities exchanges, boards of trade, or similar entities, or quoted on NASDAQ
or on a regulated foreign over-the-counter market, and agreements, sometimes
called cash puts, which may accompany the purchase of a new issue of bonds from
a dealer.
An option on a security (or index) is a contract that gives the holder of
the option, in return for a premium, the right to buy from (in the case of a
call) or sell to (in the case of a put) the writer of the option, the security
underlying the option (or the cash value of the index) at a specified exercise
price at any time during the term of the option. The writer of an option on a
security has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price or to pay the exercise
price upon delivery of the underlying security. Upon exercise, the writer of an
option on an index is obligated to pay the difference between the cash value of
the index and the exercise price multiplied by the specified multiplier for the
index option. (An index is designed to reflect specified facets of a particular
financial or securities market, a specified group of financial instruments or
securities, or certain economic indicators.)
The Fund will write call options and put options only if they are
"covered." In the case of a call option on a security, the option is "covered"
if the Fund owns the security underlying the call or has an absolute and
immediate right to acquire that security without additional cash consideration
(or, if additional cash consideration is required, cash or cash equivalents in
such amount are placed in a segregated account by its custodian) upon
conversion or exchange of other securities held by the Fund. For a call option
on an index, the option is covered if the Fund maintains with its custodian
cash or cash equivalents equal to the contract value. A call option is also
covered if the Fund holds a call on the same security or index as the call
written where the exercise price of the call held is (i) equal to or less than
the exercise price of the call written, or (ii) greater than the exercise price
of the call written, provided the difference is maintained by the Fund in cash
or cash equivalents in a segregated account with its custodian. A put option on
a security or an index is "covered" if the Fund maintains cash or cash
equivalents equal to the exercise price in a segregated account with its
custodian. A put option is also covered if the Fund holds a put on the same
security or index as the put written where the exercise price of the put held
is (i) equal to or greater than the exercise price of the put written, or (ii)
less than the exercise price of the put written, provided the difference is
maintained by the Fund in cash or cash equivalents in a segregated account with
its custodian.
If an option written by the Fund expires, the Fund realizes a capital gain
equal to the premium received at the time the option was written. If an option
purchased by the Fund expires unexercised, the Fund realizes a capital loss
equal to the premium paid.
Prior to the earlier of exercise or expiration, an option may be closed
out by an offsetting purchase or sale of an option of the same series (type,
exchange, underlying security or index, exercise price, and expiration). There
can be no assurance, however, that a closing purchase or sale transaction can
be effected when the Fund desires.
The Fund will realize a capital gain from a closing purchase transaction
if the cost of the closing option is less than the premium received from
writing the option, or, if it is more, the Fund will realize a capital loss. If
the premium received from a closing sale transaction is more than the premium
paid to purchase the option, the Fund will realize a capital gain or, if it is
less, the Fund will realize a capital loss. The principal factors affecting the
market value of a put or a call option include supply and demand, interest
rates, the current market price of the underlying security or index in relation
to the exercise price of the option, the volatility of the underlying security
or index, and the time remaining until the expiration date.
The premium paid for a put or call option purchased by the Fund is an
asset of the Fund. The premium received for an option written by the Fund is
recorded as a deferred credit. The value of an option purchased or written is
marked to market daily and is valued at the closing price on the exchange on
which it is traded or, if not traded on an exchange or no closing price is
available, at the last bid prices.
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Risks Associated with Options on Securities and Indexes
There are several risks associated with transactions in options on
securities and on indexes. For example, there are significant differences
between the securities and options markets that could result in an imperfect
correlation between these markets, causing a given transaction not to achieve
its objectives. A decision as to whether, when and how to use options involves
the exercise of skill and judgment, and even a well-conceived transaction may
be unsuccessful to some degree because of market behavior or unexpected events.
There can be no assurance that a liquid market will exist when the Fund
seeks to close out an option position. If the Fund were unable to close out an
option that it had purchased on a security, it would have to exercise the
option in order to realize any profit or the option may expire worthless. If
the Fund were unable to close out a covered call option that it had written on
a security, it would not be able to sell the underlying security unless the
option expired without exercise. As the writer of a covered call option, the
Fund forgoes, during the option's life, the opportunity to profit from
increases in the market value of the security covering the call option above
the sum of the premium and the exercise price of the call.
If trading were suspended in an option purchased by the Fund, the Fund
would not be able to close out the option. If restrictions on exercise were
imposed, the Fund might be unable to exercise an option it has purchased.
Except to the extent that a call option on an index written by the Fund is
covered by an option on the same index purchased by the Fund, movements in the
index may result in a loss to the Fund; however, such losses may be mitigated
by changes in the value of the Fund's securities during the period the option
was outstanding.
Foreign Currency Options
The Fund may buy or sell put and call options on foreign currencies either
on exchanges or in the over-the-counter market. A put option on a foreign
currency gives the purchaser of the option the right to sell a foreign currency
at the exercise price until the option expires. Currency options traded on U.S.
or other exchanges may be subject to position limits which may limit the
ability of the Fund to reduce foreign currency risk using such options.
Over-the-counter options differ from traded options in that they are two-party
contracts with price and other terms negotiated between buyer and seller, and
generally do not have as much market liquidity as exchange-traded options.
Futures Contracts and Options on Futures Contracts
The Fund may use interest rate, foreign currency or index futures
contracts. An interest rate, foreign currency or index futures contract
provides for the future sale by one party and purchase by another party of a
specified quantity of a financial instrument, foreign currency or the cash
value of an index at a specified price and time. A futures contract on an index
is an agreement pursuant to which two parties agree to take or make delivery of
an amount of cash equal to the difference between the value of the index at the
close of the last trading day of the contract and the price at which the index
contract was originally written. Although the value of an index might be a
function of the value of certain specified securities, no physical delivery of
these securities is made. A public market exists in futures contracts covering
several indexes as well as a number of financial instruments and foreign
currencies, including: the S&P 500; the S&P 100; the NYSE composite; U.S.
Treasury bonds; U.S. Treasury notes; GNMA Certificates; three month U.S.
Treasury bills; 90-day commercial paper; bank certificates of deposit;
Eurodollar certificates of deposit; the Australian dollar; the Canadian dollar;
the British pound; the German mark; the Japanese yen; the French franc; the
Swiss franc; the Mexican peso; and certain multinational currencies, such as
the European Currency Unit ("ECU"). It is expected that other futures contracts
will be developed and traded in the future.
The Fund may purchase and write call and put options on futures. Futures
options possess many of the same characteristics as options on securities and
indexes (discussed above). A futures option gives the holder the right, in
return for the premium paid, to assume a long position (call) or short position
(put) in a futures contract at a specified exercise price at any time during
the period of option. Upon exercise of a call option, the holder acquires a
long position in the futures contract and the writer is assigned the opposite
short position. In the case of a put option, the opposite is true.
As long as required by regulatory authorities, the Fund will limit its use
of futures contracts and futures options to hedging transactions. For example,
the Fund might use futures contracts to hedge against anticipated changes in
interest rates that might adversely affect either the value of the Fund's
securities or the price of the securities which the Fund intends to purchase.
The Fund's hedging activities may include sales of futures contracts as an
offset against the effect of expected increases in interest rates, and
purchases of futures contracts as an offset against the effect of expected
declines in interest rates. Although other techniques could be used to reduce
the Fund's exposure to interest rate fluctuations, the Fund may be able to
hedge its exposure more effectively and perhaps at a lower cost by using
futures contracts and futures options.
The Fund will only enter into futures contracts and futures options which
are standardized and traded on a U.S. or foreign exchange, board of trade, or
similar entity, or quoted on an automated quotation system.
When a purchase or sale of a futures contract is made by the Fund, the
Fund is required to deposit with its custodian (or broker, if legally
permitted) a specified amount of cash or U.S. Government securities ("initial
margin"). The margin required for a futures
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contract is set by the exchange on which the contract is traded and may be
modified during the term of the contract. The initial margin is in the nature
of a performance bond or good faith deposit on the futures contract which is
returned to the Fund upon termination of the contract, assuming all contractual
obligations have been satisfied. The Fund expects to earn interest income on
its initial margin deposits. A futures contract held by the Fund is valued
daily at the official settlement price of the exchange on which it is traded.
Each day the Fund pays or receives cash, called "variation margin," equal to
the daily change in value of the futures contract. This process is known as
"marking to market." Variation margin does not represent a borrowing or loan by
the Fund but is instead a settlement between the Fund and the broker of the
amount one would owe the other if the futures contract expired. In computing
daily net asset value, the Fund will mark to market its open futures positions.
The Fund is also required to deposit and maintain margin with respect to
put and call options on futures contracts written by it. Such margin deposits
will vary depending on the nature of the underlying futures contract (and the
related initial margin requirements), the current market value of the option,
and other futures positions held by the Fund.
Although some futures contracts call for making or taking delivery of the
underlying securities, generally these obligations are closed out prior to
delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index, and delivery month). If an offsetting
purchase price is less than the original sale price, the Fund realizes a
capital gain, or if it is more, the Fund realizes a capital loss. Conversely,
if an offsetting sales price is more than the original purchase price, the Fund
realizes a capital gain, or if it is less, the Fund realizes a capital loss.
The transaction costs must also be included in these calculations.
Limitations on Use of Futures and Futures Options
The Fund will not enter into a futures contract or futures options
contract if, immediately thereafter, the aggregate initial margin deposits
relating to such positions plus premiums paid by it for open futures option
positions, less the amount by which any such options are "in-the-money," would
exceed 5% of the Fund's total assets. A call option is "in-the-money" if the
value of the futures contract that is the subject of the option exceeds the
exercise price. A put option is "in-the-money" if the exercise price exceeds
the value of the futures contract that is the subject of the option.
When entering into a futures contract, the Fund will maintain with its
custodian (and mark-to-market on a daily basis) cash, U.S. Government
securities, or other highly liquid debt securities that, when added to the
amount deposited with a futures commission merchant as margin, are equal to the
market value of the futures contract. Alternatively, the Fund may "cover" its
position by purchasing a put option on the same futures contract with a strike
price as high or higher than the price of the contract held by the Fund.
When selling a futures contract, the Fund will maintain with its custodian
(and mark-to-market on a daily basis) liquid assets that, when added to the
amount deposited with a futures commission merchant as margin, are equal to the
market value of the instruments underlying the contract. Alternatively, the
Fund may "cover" its position by owning the instruments underlying the contract
(or, in the case of an index futures contract, a portfolio with a volatility
substantially similar to that of the index on which the futures contract is
based), or by holding a call option permitting the Fund to purchase the same
futures contract at a price no higher than the price of the contract written by
the Fund (or at a higher price if the difference is maintained in liquid assets
with the Fund's custodian).
When selling a call option on a futures contract, the Fund will maintain
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 that, when added to the amounts deposited with a futures commission
merchant as margin, equal the total market value of the futures contract
underlying the call option. Alternatively, the Fund may cover its position by
entering into a long position in the same futures contract at a price no higher
than the strike price of the call option, by owning the instruments underlying
the futures contract, or by holding a separate call option permitting the Fund
to purchase the same futures contract at a price not higher than the strike
price of the call option sold by the Fund.
When selling a put option on a futures contract, the Fund will maintain
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 that equal the purchase price of the futures contract, less any margin on
deposit. Alternatively, the Fund may cover the position either by entering into
a short position in the same futures contract, or by owning a separate put
option permitting it to sell the same futures contract so long as the strike
price of the put option is the same or higher than the strike price of the put
option sold by the Fund.
In order to comply with applicable regulations of the Commodity Futures
Trading Commission ("CFTC") pursuant to which the Fund avoids being deemed a
"commodity pool," the Fund is limited in its futures trading activities to
positions which constitute "bona fide hedging" positions within the meaning and
intent of applicable CFTC rules, or to positions which qualify under an
alternative test. Under this alternative test, the "underlying commodity value"
of each long position in a commodity contract in which the Fund invests may not
at any time exceed the sum of: (1) the value of short-term U.S. debt
obligations or other U.S. dollar-denominated high quality short-term money
market instruments and cash set aside in an identifiable manner, plus any Funds
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deposited as margin on the contract; (2) unrealized appreciation on the
contract held by the broker; and (3) cash proceeds from existing investments
due in not more than 30 days. "Underlying commodity value" means the size of
the contract multiplied by the daily settlement price of the contract.
The requirements for qualification as a regulated investment company also
may limit the extent to which the Fund may enter into futures, futures options
or forward contracts.
Risks Associated with Futures and Futures Options
There are several risks associated with the use of futures contracts and
futures options as hedging techniques. A purchase or sale of a futures contract
may result in losses in excess of the amount invested in the futures contract.
There can be no guarantee that there will be a correlation between price
movements in the hedging vehicle and in the Fund securities being hedged. In
addition, there are significant differences between the securities and futures
markets that could result in an imperfect correlation between the markets,
causing a given hedge not to achieve its objectives. The degree of imperfection
of correlation depends on circumstances such as variations in speculative
market demand for futures and futures options on securities, including
technical influences in futures trading and futures options, and differences
between the financial instruments being hedged and the instruments underlying
the standard contracts available for trading in such respects as interest rate
levels, maturities, and creditworthiness of issuers. A decision as to whether,
when and how to hedge involves the exercise of skill and judgment, and even a
well-conceived hedge may be unsuccessful to some degree because of market
behavior or unexpected interest rate trends.
Futures exchanges may limit the amount of fluctuation permitted in certain
futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of the
current trading session. Once the daily limit has been reached in a futures
contract subject to the limit, no more trades may be made on that day at a
price beyond that limit. The daily limit governs only price movements during a
particular trading day and therefore does not limit potential losses because
the limit may work to prevent the liquidation of unfavorable positions. For
example, futures prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing
liquidation of positions and subjecting some holders of futures contracts to
substantial losses.
There can be no assurance that a liquid market will exist at a time when
the Fund seeks to close out a futures or a futures option position, and the
Fund would remain obligated to meet margin requirements until the position is
closed. In addition, many of the contracts discussed above are relatively new
instruments without a significant trading history. As a result, there can be no
assurance that an active secondary market will develop or continue to exist.
Additional Risks of Foreign Exchange-Traded Options, Futures and Forward
Currency Exchange Contracts
Options on securities, futures contracts, options on futures contracts,
currencies and options on currencies may be traded on foreign exchanges. Such
transactions may not be regulated as effectively as similar transactions in the
United States; may not involve a clearing mechanism and related guarantees; and
are subject to the risk of governmental actions affecting trading in, or the
prices of, foreign securities. The value of such positions also could be
adversely affected by (i) other complex foreign political, legal and economic
factors, (ii) lesser availability than in the United States of data on which to
make trading decisions, (iii) delays in the Fund's ability to act upon economic
events occurring in foreign markets during non-business hours in the United
States, (iv) the imposition of different exercise and settlement terms and
procedures and margin requirements than in the United States, and (v) lesser
trading volume.
Zero Coupon Bonds
The Fund will not invest more than 3% of its assets in zero coupon bonds.
A zero coupon bond is a bond that does not pay interest currently for its
entire life. For 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 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. 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 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 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 bonds. Because the Fund will not receive
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on a current basis cash payments in respect of accrued original issue discount
on zero coupon bonds during the period before interest payments commence, the
Fund may have to distribute cash obtained from other sources in order to
satisfy the distribution requirement under the Code.
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 Fund disposing of such
securities at a substantial discount from face value or holding such securities
until maturity.
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 Class A, Class B and Class C 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 7.01%, the Class B Shares yield was 6.67% and the
Class C shares yield was 6.94%.
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:
n
P(1 + T) = ERV
Where: P = 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 quoted for Class C Shares covering periods prior to the
inception of Class C Shares will reflect historical performance of Class A
Shares adjusted for the higher operating expenses applicable to Class C Shares.
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, Merrill Lynch Medium Quality Corporate
Short-Term Bond Index, and Salomon Brothers Corporate Bond and Government Bond
Indices.
For the one year and five year periods ended October 31, 1999, and from
inception, July 6, 1992 through October 31, 1999, the average annual total
return of the Class A Shares was 3.19%, 6.98% and 6.00%, respectively. For the
one year and five year periods ended October 31, 1999, and since inception,
July 6, 1992 through October 31, 1999 for the Class B Shares, the average
annual total return was 3.57%, 6.88% and 5.76%, respectively. For the one year
period ended October 31, 1999 and since inception October 1, 1997 through
October 31, 1999, the Class C Shares average annual total return was 5.07% and
2.05%, 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 total return is determined by
dividing the net asset value of this account at the end of the specified period
by the value of the initial investment and is expressed as a percentage.
Calculation of aggregate total return reflects payment of the Class A Share's
maximum sales charge of 2.25% and assumes reinvestment of all income dividends
and capital gain distributions during the period.
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The Fund also may quote annual, average annual and annualized total return
and aggregate total return performance data, for each class of shares of the
Fund, both as a percentage and as a dollar amount based on a hypothetical
$10,000 investment for various periods other than those noted above. Such data
will be computed as described above, except that (1) the rates of return
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
charge will not be included with respect to annual, annualized or aggregate
rate of return calculations.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser places orders for the purchase and sale of securities,
supervises their execution and negotiates brokerage commissions on behalf of
the 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 diverse firms and that the long-term interests of
shareholders of the Fund are best served by their 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 attitude
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 execution 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 Trustees will annually review these procedures or
as frequently as shall appear appropriate.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, 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
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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.
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 of 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.
The Fund paid no brokerage commissions for the fiscal years ended October
31, 1997, 1998, and 1999.
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 Board of Trustees 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
Trustees who are not interested persons of the parties thereto, as defined in
the 1940 Act, and by either (a) the Board of Trustees 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
Trustees 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.
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As compensation for its services the Adviser receives a fee which is
accrued daily against the value of the Fund's net assets and is paid by the
Fund monthly. The fee is computed at the annual rate of 0.55% of the Fund's
average daily net assets up to $1 billion; 0.50% of the Fund's average daily
net assets from $1 billion to $2 billion; and 0.45% 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 $159,118, $270,259 and
$283,982, respectively, a portion of which amounts were waived by the Adviser.
The Adviser makes its personnel available to serve as officers and
"interested" Trustees of the Fund. The Fund has not directly compensated any of
its officers or Trustees for services in such capacities except to pay fees to
the Trustees who are not otherwise affiliated with the Fund. The Trustees 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.
In addition to the management fee, expenses paid by the Fund include: fees
of Trustees 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
Massachusetts business trust.
The Adviser has agreed to reimburse the Fund's operating expenses, other
than Management Fees and Rule 12b-1 Fees, related to each Class of Shares for
the amount, if any, by which such operating expenses for the fiscal year ended
February 28, 2001, exceed 0.20% of the average net assets. The Total Fund
Operating Expenses for Class A, Class B and Class C Shares were 1.48%, 1.98%
and 1.73%, respectively, absent such waiver or reimbursement for the fiscal
year ended October 31, 1999. The Adviser has not undertaken to extend the
reimbursement beyond February 28, 2001.
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 Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world,
the calculation of net asset value may not take place for the Fund if it
invests in foreign securities contemporaneously with the determination of the
prices of the majority of the portfolio securities of the Fund. All assets and
liabilities initially expressed in foreign currency values will be converted
into United States dollar values at the mean between the bid and ask quotations
of such currencies against United States dollars as last quoted by any
recognized dealer. If an event were to occur after the value of an investment
was so established but before the net asset value per share was determined,
which was likely to materially change the net asset value, then the instrument
would be valued using fair value considerations by the Trustees or their
delegates. If at any time the Fund has investments where market quotations are
not readily available, such investments are valued at the fair value thereof as
determined in good faith by the Trustees although the actual calculations may
be made by persons acting pursuant to the direction of the Trustees.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent
investment is $25. However, both the minimum initial and subsequent investment
amounts are $25 for investments pursuant to the "Investo-Matic" plan, a bank
draft investing program administered by Distributor, or pursuant to the
Systematic Exchange privilege or for an individual retirement account (IRA). In
addition, there are no subsequent investment minimum amounts in connection with
the reinvestment of dividend or capital gain distributions. 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.
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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
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. Dividends paid by the
Fund, if any, with respect to each Class will be calculated in the same manner
at the same time on the same day, except that the higher distribution and
services fee relating to Class B and C shares will be borne exclusively by that
class. See "Dividends, Distributions and Taxes."
Shares of the Fund may be purchased from investment dealers at a price
equal to their net asset value per share ("Class C Shares"), or with a sales
charge which, at the election of the purchaser, may be imposed either (i) at
the time of the purchase ("Class A Shares"), or (ii) on a contingent deferred
basis ("Class B Shares"). 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.
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 three 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 .75% 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 six years
after the end of the calendar month in which the shareholder's order to
purchase was accepted. The purpose of the conversion feature is to relieve the
holders of the Class B shares that have been outstanding for a period of time
sufficient for the Adviser and the Distributor to have been compensated for
distribution expenses related to the Class B shares from most of the burden of
such distribution related expenses.
Class B shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period ending
six 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 purchased through the
reinvestment of dividends and distributions paid in respect of Class B shares
in a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class B shares in the shareholder's Fund account
(other than those in the sub-account) convert to Class A, an equal pro rata
portion of the Class B shares in the sub-account will also convert to Class A.
Class C Shares
Class C Shares are purchased without an initial sales charge and are not
subject to any sales charge when shares are redeemed. All purchases, including
reinvestments of dividend and capital gain distributions, and redemptions are
made at the net asset value per share of the Fund. Class C Shares are subject
to an ongoing distribution and services fee at an annual rate of 0.50% of the
Fund's aggregate average daily net assets attributable to the Class C Shares.
Class C Shares do not convert to another Class of Shares and long term
investors may therefore pay more through accumulated distribution fees than the
economic equivalent of any applicable sales charge and accumulated distribution
fees in the other classes.
The distribution expenses incurred by the Distributor in connection with
the sale of the shares will be paid, in the case of Class A shares, from the
proceeds of the initial sales charge and the ongoing distribution and services
fee. In the case of Class B shares, distribution expenses incurred by the
Distributor in connection with the sale of the shares will be paid from the
proceeds of the ongoing distribution and services fee and the contingent
deferred sales charge incurred upon redemption within three years of
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purchase. For Class C Shares, the ongoing distribution and services fee will be
used to pay for the distribution expenses incurred by the Distributor. Sales
personnel of broker-dealers distributing the Fund's shares may receive
differing compensation for selling Class A, Class B or Class C shares.
Investors should understand that the purpose and function of the contingent
deferred sales charge and ongoing distribution and services fee with respect to
the Class B shares are the same as those of the initial sales charge and
ongoing distribution and services fees with respect to the Class A 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, 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,
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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 Shares--Waiver of Sales Charges
The CDSC is waived on the redemption (sale) of Class B Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to
Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section
72(m)(7); (c) as a mandatory distribution upon reaching age 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 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 Shares are not redeemed
within one year of the death, they will remain subject to the applicable CDSC
when redeemed. Class C Shares are not subject to any sales charge when
redeemed.
Automatic Conversion of Class B Shares
Class B Shares will automatically convert to Class A Shares of the same
Fund six 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. Class A Shares of the Fund held under six months are not
eligible for the exchange privilege. Under certain circumstances, shares of any
Phoenix Fund may be exchanged for shares of the same class of 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 minimum initial
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investment requirements of the designated Series, Fund, 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
succeeding business day), without sales charge.
Dividend Reinvestment Across Accounts. If you maintain an account balance
of at least $5,000, or $2,000 for tax qualified retirement benefit plans
(calculated on the basis of the net asset value of the shares held in a single
account), you may direct that any dividends and distributions paid with respect
to shares in that account be automatically reinvested in a single account of
one of the other Phoenix Funds or any other Affiliated Phoenix Fund at net
asset value. You should obtain a current prospectus and consider the objectives
and policies of each Fund carefully before directing dividends and
distributions to another Fund. Reinvestment election forms and prospectuses are
available from Equity Planning. Distributions may also be mailed to a second
payee and/or address. Requests for directing distributions to an alternate
payee must be made in writing with a signature guarantee of the registered
owner(s). To be effective with respect to a particular dividend or
distribution, notification of the new distribution option must be received by
the Transfer Agent at least three days prior to the record date of such
dividend or distribution. If all shares in your account are repurchased or
redeemed or transferred between the record date and the payment date of a
dividend or distribution, you will receive cash for the dividend or
distribution regardless of the distribution option selected.
Invest-By-Phone. This expedited investment service allows 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, Equity Planning 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 Equity Planning 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 Equity Planning'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 Equity Planning. Equity Planning 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 Equity Planning reserve the right to modify or terminate the
Invest-by-Phone service for any reason or to institute charges for maintaining
an Invest-by-Phone account.
Systematic Withdrawal Program. The Systematic Withdrawal Program allows
you to periodically redeem a portion of your account on a predetermined
monthly, quarterly, semiannual or annual basis. A sufficient number of full and
fractional shares will be redeemed so that the designated payment is made on or
about the 20th day of the month. Shares are tendered for redemption by the
Transfer Agent, as agent for the shareowner, on or about the 15th of the month
at the closing net asset value on the date of redemption. The Systematic
Withdrawal Program also provides for redemptions to be tendered on or about the
10th, 15th or 25th of the month with proceeds to be directed through Automated
Clearing House (ACH) to your bank account. In addition to the limitations
stated below, withdrawals may not be less than $25 and minimum account balance
requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of a Fund worth $5,000 or more, as determined by the then current net
asset value per share, and elect to have all dividends reinvested. Participants
in the Program redeeming Class C Shares will be subject to any applicable
contingent deferred sales charge. The purchase of shares while participating in
the withdrawal program will ordinarily be disadvantageous to the Class A Shares
investor since a sales charge will be paid by the investor on the purchase of
Class A Shares at the same time as other shares are being redeemed. For this
reason, investors in Class A Shares may not participate in an automatic
investment program while participating in the Systematic Withdrawal Program.
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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, prospective investors 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");
(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 a Fund convert to Class A Shares once the Plan has reached
$5 million invested in Applicable Investments, or after the normal holding
period of five 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 Fund's 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 Fund's 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.
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Redemption of Small Accounts
Each shareholder account in the Funds which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the
giving of not less than 30 days written notice to the shareholder mailed to the
address of record. During the 60 day period the shareholder has the right to
add to the account to bring its value to $200 or more. See the Fund's current
Prospectus for more information.
By Mail
Shareholders may redeem shares by making written request, executed in 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 Fund's
current Prospectus for more 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 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 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.
Telephone Redemptions
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Funds' current Prospectus for
additional information.
Redemption in Kind
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. However, the Fund
has elected to pay in cash all requests for redemption by any shareholder of
record, limited in respect 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 of 1986, as
amended (the "Code"). If the Fund so qualifies, it will not be subject to
federal income tax on the investment company taxable income (which includes
dividends, interest and the excess of net short-term capital gains over net
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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) meet certain diversification
requirements imposed under the Code at the end of each quarter of the taxable
year. 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 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 regulated investment
companies, such as the Fund, if the Fund 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 each regulated
investment company does not meet the foregoing distribution requirements.
The Code provides that any dividends 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 a 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 foregoing, the Fund's policy will be to distribute to its
shareholders at least 90% of investment company taxable income and any net
realized capital gains for each year, so that the Fund generally will pay no
taxes on net investment income and net realized capital gains paid to
shareholders. As described above, less than 30% of the Fund's gross income must
be derived from gains from the sale or other disposition of certain investments
held for less than three months. Accordingly, the Fund may be restricted with
respect to certain activities, including the following activities, all of which
may produce such gains: writing of options on securities which have been held
less than three months; writing of options which expire in less than three
months; effecting closing purchase transactions with respect to options which
have been written less than three months prior to such transactions; and
transactions involving futures and forward contracts.
The Fund intends to declare dividends daily and to pay dividends monthly.
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 the shares have been owned by the
shareholder. Net short-term capital gains are net realized short-term capital
gains, generally 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 generally 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 investment 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
generally apply to such contracts
20
<PAGE>
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.
Under the Code, gains or losses attributable to fluctuations in exchange
rates which occur between the time the Fund accrues interest or other
receivables or accrues expenses or other liabilities denominated in a foreign
currency and the time it actually collects such receivables or pays such
liabilities generally are treated as ordinary gain or loss. Similarly, on
disposition of debt securities denominated in a foreign currency and on
disposition of certain futures contracts, forward contracts and options, gains
or losses attributable to fluctuations in the value of the foreign currency
between the date of acquisition of the security or contract and the date of
disposition also are treated as ordinary gain or loss. These gains and losses,
referred to under the Code as section 988 gains or losses, may increase or
decrease the amount of the Fund's investment company taxable income to be
distributed to its shareholders as ordinary income.
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.
Certain offsetting positions held by the Fund (including certain positions
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
position in such a straddle may 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 tax consequences of certain investments and other activities that the
Fund may make or undertake (such as, but not limited to, dollar roll
agreements) are not entirely clear. While the Fund will endeavor to treat the
tax items arising from these transactions in a manner which it believes to be
appropriate, assurance cannot be given that the Internal Revenue Service or a
court will agree with the Fund's treatment and that adverse tax consequences
will not ensue.
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.
It is expected that the Fund will not be eligible to elect to pass-through
to its shareholders the amount of foreign income and similar taxes paid by it,
so that shareholders will not be eligible to claim a foreign tax credit or to
deduct their pro rata share of such foreign taxes. Such foreign taxes generally
will reduce the net income of the Fund distributable to shareholders. If the
Fund were eligible to make the pass-through election, and so elected,
shareholders would be notified regarding the relevant items to be taken into
account by the shareholders.
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 certified social security or
taxpayer identification number, certifies as to exemption from backup
withholding, and otherwise complies with applicable requirements of the Code.
Backup withholding is not an additional tax. Any amount withheld may be
credited against the shareholder's U.S. federal tax liability.
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. 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.
Under certain circumstances, the sales charge incurred in acquiring shares
of the Fund may not be taken into account in determining the gain or loss on
the disposition of those shares. This rule applies if shares of the Fund are
exchanged within 90 days after the date they were purchased and new shares of a
regulated investment company are acquired without a sales charge or at a
reduced sales charge. In that case, the gain or loss recognized on the exchange
will be determined by excluding from the tax basis of the shares exchanged all
or a portion of the amount of the sales charge incurred in acquiring those
shares. This exclusion applies to the extent that the otherwise applicable
sales charge with respect to the newly acquired shares is reduced as a result
of having incurred the sales charge initially. The portion of the sales charge
affected by this rule will be treated as an amount paid for the new shares.
21
<PAGE>
Dividends, distributions and redemption proceeds also may be subject to
state, local and foreign taxes depending upon each shareholder's particular
situation. In addition, foreign shareholders may be subject to federal income
tax rules that differ from those described above. Shareholders are advised to
consult with their tax advisers or attorneys.
The Fund is organized as a Massachusetts business trust. 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
Commonwealth of Massachusetts.
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 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 $127,340, $95,205, and $62,529, respectively, of
which the principal underwriter received net commissions of $19,763, $21,888,
and $36,908, respectively, for its services, the balance being paid to dealers.
For the fiscal year ended October 31, 1999, the Distributor received net
commissions of $3,113 for Class A Shares and deferred sales charges of $33,795
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 Trustees 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.
Dealers with whom the Distributor has entered into sales agreements
receive a discount or commission as set forth below:
<TABLE>
<CAPTION>
Sales Charge as
a percentage of
----------------------------------------
Amount of Transaction at Dealer Discount Percentage
Offering Price Offering Price Net Amount Invested of Offering Price
- ---------------------------------- ---------------- --------------------- ---------------------------
<S> <C> <C> <C>
Under $50,000 2.25% 2.30% 2.00%
$50,000 but under $100,000 1.25 1.27 1.00
$100,000 but under $500,000 1.00 1.01 1.00
$500,000 but under $1,000,000 0.75 0.76 0.75
$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 2% of the
sale price of Class B 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;
(e) subject to certain exclusions, pay broker/dealers an amount equal to 0.50%
of the amount of Class C Shares sold above $250,000 but under $3 million plus
0.25% on the amount in excess of $3 million. If part or all of such investment,
including investments by qualified employee benefit plans, is subsequently
redeemed within one year of the investment date, the broker-dealer will refund
to the Distributor such amounts paid with respect to the investment. In
addition, the Distributor may pay the entire applicable sales charge on
purchases of Class A Shares to selected dealers and agents. From its own
resources, the Distributor intends to pay the
22
<PAGE>
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 amounts of assets on
which Merrill Lynch is broker of record as of July 1, 1999." Any dealer who
receives more than 90% of a sales charge may be deemed to be an "underwriter"
under the Securities Act of 1933. Equity Planning reserves the right to
discontinue or alter such fee payment plans at any time.
Administrative Services
Equity Planning also acts as administrative agent of the 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 cost 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.
First $200 million .085%
$200 million to $400 million .05%
$400 million to $600 million .03%
$600 million to $800 million .02%
$800 million to $1 billion .015%
Greater than $1 billion .0125%
Percentage rates are applied to the aggregate daily net asset values of
the Fund. PFPC Inc. also charges minimum fees and additional fees for each
additional class of fund shares. Equity Planning retains PFPC Inc. as subagent
for each of the funds for which Equity Planning serves as 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
$76,005.
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," 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 Fund may reimburse the Distributor for actual
expenses of the Distributor up to 0.75% annually of the average daily net
assets of the Fund's Class B shares and up to 0.25% annually of the average
daily net assets of the Fund's 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 Trustees of the Fund determine 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 Class C Shares, 0.25% of the average annual net asset value of
each class, respectively.
Expenses not reimbursed during any year, because of the limitations on
reimbursements, may be carried over and paid in future years when actual
expenses are less than the respective limits under each Plan. If a
reimbursement appears probable, it will be accounted for as a current expense
of the Fund regardless of the time period over which the reimbursement may
actually be paid
23
<PAGE>
by the Fund. 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, including payments for expenses carried over from previous years, will
cease and the Fund will not be required to make any payments past the date on
which the Plans terminate.
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.
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.
For the fiscal year ended October 31, 1999, the Fund paid 12b-1 fees in
the amount of $213,117 ($74,420 under the Class A Plan; $88,111 under the Class
B Plan and $50,586 under the Class C Plan), of which the Distributor of the
Fund received $84,933, W.S. Griffith & Co., Inc., an affiliate, received
$18,127 and unaffiliated broker-dealers received $110,057. The 12b-1 payments
were used for (1) compensating dealers, $161,901, (2) compensating sales
personnel, $243,863, (3) advertising, $214,682, (4) printing and mailing of
prospectuses to other than current shareholders, $13,173, (5) service costs,
$42,797 and (6) other, $71,746. 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 $444,642 (equal to 0.97% of the
Fund's net assets) which have been carried over into the present Class B Plan
year.
On a quarterly basis, the Fund's Trustees review a report on expenditures
under the Plans and the purposes for which expenditures were made. The Trustees
conduct an additional, more extensive review annually in determining whether
the Plans will be continued. By its terms, continuation of the Plans from year
to year is contingent on annual approval by a majority of the Fund's Trustees
and by a majority of the Trustees who are not "interested persons" (as defined
in the 1940 Act) and who have no direct or indirect financial interest in the
operation of the Plans or any related agreements (the "Plan Trustees"). The
Plans provides 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 Trustees by vote cast in
person at a meeting called for the purpose of considering such amendments. The
Plans further provide that while they are in effect, the selection and
nomination of Trustees who are not "interested persons" shall be committed to
the discretion of the Trustees who are not "interested persons." The Plans may
be terminated at any time by vote of the Plan Trustees 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 Trustees to
suspend distribution fees or amend the Plans.
MANAGEMENT OF THE FUND
The Trustees are responsible for the overall supervision of the operations
of the Fund and perform the duties imposed on Trustees by the 1940 Act and
Massachusetts business trust law.
Trustees and Officers
The following table sets forth information concerning the Trustees 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 Trustee is 56 Prospect Street, Hartford, Connecticut, 06115-0480.
24
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
Robert Chesek (65) Trustee Trustee/Director (1981-present) and Chairman (1989-1994),
49 Old Post Road Phoenix Funds. Trustee, Phoenix-Aberdeen Series Fund and
Wethersfield, CT 06109 Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present).
E. Virgil Conway (70) Trustee Chairman, Metropolitan Transportation Authority (1992-present).
9 Rittenhouse Road Trustee/Director, Consolidated Edison Company of New York,
Bronxville, NY 10708 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.
Harry Dalzell-Payne (70) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
The Flat, Elmore Court Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Elmore Gl05, 962 3NT Institutional Mutual Funds (1996-present). Director, Duff &
U.K. Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
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) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
8477 Bay Colony Dr. Phoenix-Aberdeen Series Inc. and Phoenix Duff & Phelps
#902 Institutional Mutual Funds (1996-present). Director, Duff &
Naples, FL 34108 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).
(1984-present). Director (1989-1997), Chairman of the Board
(1993-1997), President (1989-1993), and Chief Executive
Officer (1989-1995), Phoenix Investment Partners, Ltd.
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
Leroy Keith, Jr. (61) Trustee Chairman (1995-present) and Chief Executive Officer
Chairman (1995-1999), Carson Products Company. Director/Trustee,
Carson Product Company Phoenix Funds (1980-present). Trustee, Phoenix-Aberdeen
64 Ross Road Series Fund and Phoenix Duff & Phelps Institutional Mutual
Savannah, GA 30750 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) Trustee and Chairman (1997-present), Director (1995-present), Vice
56 Prospect Street President Chairman (1995-1997) and Chief Executive Officer
Hartford, CT 06115 (1995-1997), 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,
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) Trustee Vice President, W.H. Reaves and Company (1993-present).
164 Laird Road Director/Trustee, Phoenix Funds (1995-present). Trustee, Duff
Colts Neck, NJ 07722 & Phelps Mutual Funds (1994-present). Trustee, Phoenix-
Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director, Duff &
Phelps Utilities Tax-Free Income Inc. (1991-present) and
Duff & Phelps Utility and Corporate Bond Trust Inc.
(1993-present).
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
*James M. Oates (53) Trustee Chairman, IBEX Capital Markets, Inc., formerly IBEX Capital
Managing Director Markets LLC (1997-present). Managing Director, Wydown
The Wydown Group Group (1994-present). Director, Phoenix Investment Partners,
IBEX Capital Markets, Inc. Ltd. (1995-present). Director/Trustee, Phoenix Funds (1987-
60 State Street present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Suite 950 Duff & Phelps Institutional Mutual Funds (1996-present).
Boston, MA 02109 Director, AIB Govett Funds (1991-present), Investors
Financial Service Corporation (1995-present), Investors Bank
& Trust Corporation (1995-present), Plymouth Rubber Co.
(1995-present), Stifel Financial (1996-present), Command
Systems, Inc. (1998-present), Connecticut River Bancorp
(1998-present) and Endowment for Health (1999-present).
Member, Chief Executives Organization (1996-present). Vice
Chairman, Massachusetts Housing Partnership (1992-2000).
Director, Blue Cross and Blue Shield of New Hampshire
(1994-present).
*Calvin J. Pedersen (58) Trustee Director (1986-present), President (1993-2000) and
Phoenix Investment Partners, Ltd. Executive Vice President (1992-1993), Phoenix Investment
55 East Monroe Street Partners, Ltd. Director/Trustee, Phoenix Funds
Suite 3600 (1995-present). Trustee, Phoenix-Aberdeen Series Fund and
Chicago, IL 60603 Phoenix Duff & Phelps Institutional Mutual Funds
(1996-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) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
P.O. Box 909 Institutional Mutual Funds (1996-present). Director, Boston
Sherborn, MA 01770 Edison Company (1978-present), Landauer, Inc. (medical
services) (1970-present), Tech Ops./Sevcon, Inc. (electronic
controllers) (1987-present), and Mark IV Industries
(diversified manufacturer) (1985-present). Member, Directors
Advisory Council, Phoenix Home Life Mutual Insurance
Company (1998-present). Director, Phoenix Home Life Mutual
and Insurance Company (1972-1998).
Richard E. Segerson (54) Trustee Management Director, Northway Management Company
102 Valley Road (1998-present). Director/Trustee, Phoenix Funds,
New Canaan, CT 06840 (1993-present). 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) Trustee Trustee/Director, Phoenix Funds (1995-present). Trustee,
731 Lake Avenue Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Greenwich, CT 06830 Institutional Mutual Funds (1996-present). Director, UST Inc.
(1995-present), HPSC Inc. (1995-present), Compuware
(1996-present) and Burroughs Wellcome Fund
(1966-present). Visiting Professor, University of Virginia
(1997-present). Director, Duty Free International (1997).
Chairman, Dresing, Lierman, Weicker (1995-1996). Governor
of the State of Connecticut (1991-1995).
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
Michael E. Haylon (42) Executive Director and Executive Vice President-Investments, Phoenix
Vice Investment Partners, Ltd. (1995-present). Senior Vice
President President, Securities Investments, Phoenix Home Life Mutual
Insurance Company (1993-1995). 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).
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 Short Term Bond Fund, Phoenix-Goodwin Multi-Sector
Fixed Income Fund, Phoenix-Oakhurst Income & 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 Director, Public Fixed Income,
Phoenix Home Life Insurance Company (1991-1995).
David L. Albrycht (38) Vice Managing Director, Fixed Income (1996-present), Vice
President President (1995-1996), Phoenix Investment Counsel, Inc.
Vice President, Phoenix Multi-Portfolio Fund (1993-present),
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
(1993-present), Phoenix-Goodwin Multi-Sector Fixed Income
Fund, Inc. (1994-present). Portfolio Manager, Phoenix Home
Life Mutual Insurance Company (1989-1995).
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
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. Director
Enfield, CT 06083-2200 (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 and Chief Financial Officer (1993-1995)
and Treasurer (1994-1995), W.S. Griffith & Co., Inc. and
Townsend Financial Advisors, Inc. 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 Treasurer (1996-present), Vice President, Fund Accounting
(1994-1996), 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 Insurance Company (1987-1994).
G. Jeffrey Bohne (52) Secretary Vice President and General Manager, Phoenix Home Life Mutual
101 Munson Street Insurance Co. (1993-present). Vice President, Mutual Fund
Greenfield, MA 01301 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 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
29
<PAGE>
of the Boards. Each Trustee who serves on the Audit Committee receives a
retainer at the annual rate of $2,000 and a fee of $2,000 per joint Audit
Committee meeting attended. Each Trustee who serves on the Nominating Committee
receives a retainer at the annual rate of $1,000 and a fee of $1,000 per joint
Nominating Committee meeting attended. Each Trustee who serves on the Executive
Committee and who is not an interested person of the Fund receives a retainer
at the annual rate of $2,000 and $2,000 per joint Executive Committee meeting
attended. The function of the Executive Committee is to serve as a contract
review, compliance review and performance review delegate of the full Board of
Trustees. 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 Trustees 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.
<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 253,542.0740 11.21%
ATTN: Fund Administration
4800 Deer Lake Dr. E 3rd Fl.
Jacksonville, FL 32246-6484
Trustees of Phoenix Savings and Investment Plan Class A 314,570.1410 6.18%
100 Bright Meadow Blvd.
P.O. Box 1900
Enfield, CT 06083-1900
</TABLE>
OTHER INFORMATION
Capital Stock
The Declaration of Trust, as amended, provides that the Trustees are
authorized to create an unlimited number of series and, with respect to each
series, to issue an unlimited number of full and fractional shares of
beneficial interest of one or more classes
30
<PAGE>
and to divide or combine the shares into a greater or lesser number of shares
without thereby changing the proportionate beneficial interests in the series.
All shares have equal voting rights, except that only shares of the respective
series or separate classes within a series are entitled to vote on matters
concerning only that series or class. At the date of this Prospectus, there is
only one existing series of the Fund, having three classes of shares.
The shares of the Fund, when issued, will be fully paid and
non-assessable, have no preference, preemptive, or similar rights, and will be
freely transferable. There will normally be no meetings of shareholders for the
purpose of electing Trustees unless and until such time as less than a majority
of the Trustees holding office have been elected by shareholders, at which time
the Trustees then in office will call a shareholders' meeting for the election
of Trustees. Shareholders may, in accordance with the Declaration of Trust,
cause a meeting of shareholders to be held for the purpose of voting on the
removal of Trustees. Meetings of the shareholders may be called upon written
request of shareholders holding in the aggregate not less than 10% of the
outstanding shares having voting rights. The Trustees 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 and
subject to the 1940 Act, the Trustees will continue to hold office and appoint
successor Trustees. Shares do not have cumulative voting rights and the holders
of more than 50% of the shares of the Fund voting for the election of Trustees
can elect all of the Fund's Trustees if they choose to do so and in such event
the holders of the remaining shares would not be able to elect any Trustees.
Shareholders are entitled to redeem their shares as set forth under "How to
Redeem Shares."
The Declaration of Trust establishing the Fund (a copy of which, together
with all amendments thereto, is on file in the office of the Secretary of the
Commonwealth of Massachusetts), provides that the name "Phoenix-Goodwin
Multi-Sector Short Term Bond Fund" refers to the Trustees under the Declaration
of Trust collectively as Trustees, but not as individuals or personally; and no
Trustee, shareholder, officer, employee or agent of the Fund shall be held to
any personal liability, nor shall resort be had to their personal property for
the satisfaction of any obligation or claim of said Fund but the "Trust
Property" only shall be liable.
Independent Accountants
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110, has been
selected as 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 the shareholders at least semiannually. 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 Fund's Annual Report to Shareholders, are incorporated herein
by reference.
31
<PAGE>
APPENDIX
Description of Certain Bond Ratings
Moody's Investor's Service, Inc.
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A: Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations;
i.e., they are neither highly protective nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Note: Those bonds in the Aa, A and Baa groups which Moody's believes
possess the strongest investment attributes are designated by the symbols Aa1,
A1 and Baa1.
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 safe
guarded 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 Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
and interest.
Standard & Poor's Corporation
AAA: Bonds rated AAA have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A: Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds
in this category than for bonds in the A category.
BB, B, CCC: Bonds rated BB, B, 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 exposure to adverse conditions.
Duff & Phelps Credit Rating Co.
Duff & Phelps Credit Rating Co. ("D&P") is an unaffiliated Nationally
Recognized Statistical Rating Organization by the SEC as well as State
Commissions and insurance regulatory bodies. Ratings qualify for SEC Rule 2a-7
provisions and broker/dealer capital computation guidelines on commercial paper
inventory. D&P ratings also qualify for NAIC rating designations and for ERISA
guidelines governing asset-backed securities as stated by the Department of
Labor.
32
<PAGE>
Rating Scale:
D&P offers ratings for short-term and long-term debt, preferred stock,
structured financings, and insurer's claims paying ability. D&P ratings are
specific to credit quality, i.e., the likelihood of timely payment for
principal, interest, and in the case of a preferred stock rating, preferred
stock dividends. The insurance company claims paying ability ratings reflect an
insurer's ability to meet its claims obligations.
<TABLE>
<CAPTION>
Long-Term Ratings
- ------------------------------------------------------------
<S> <C>
AAA Highest Quality
AA+, AA, AA- High Quality
A+, A, A- Good Quality
BBB+, BBB, BBB- Satisfactory Quality (investment grade)
BB+, BB, BB- Non-Investment Grade
B+, B, B- Non-Investment Grade
CCC Speculative
Short-Term Ratings
- ---------------------------------------------------------------
Duff 1+
Duff 1 X A-1/P-1
Duff 1-
Duff 2 A-2/P-2
Duff 3 A-3/P-3
Duff 4 Non-Investment Grade
Duff 5 Defaulted
</TABLE>
Fitch Investor Services, Inc.
AAA: Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA: Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA". Because bonds rated
in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated "F-1+."
A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
Plus (+) Minus (-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the "AAA" category.
NR: Indicates that Fitch does not rate the specific issue.
Conditional: A conditional rating is premised on the successful completion
of a project or the occurrence of a specific event.
Suspended: A rating is suspended when Fitch deems the amount of
information available from the issuer to be inadequate for rating purposes.
Withdrawn: A rating will be withdrawn when an issue matures or is called
or refinanced and, at Fitch's discretion, when an issuer fails to furnish
proper and timely information.
FitchAlert: Ratings are placed on FitchAlert to notify investors of an
occurrence that is likely to result in a rating change and the likely direction
of such change. These are designated as "Positive", indicating a potential
upgrade; "Negative"; for potential downgrade, or "Evolving", where ratings may
be raised or lowered. FitchAlert is relatively short-term, and would be
resolved within 12 months.
Credit Trend: Credit Trend indicators show whether credit fundamentals are
improving, stable, declining or uncertain, as follows:
Improving
Stable
Declining
Uncertain
33
<PAGE>
Credit Trend indicators are not predictions that any rating change will
occur, and have a longer-term time frame than issues placed on FitchAlert.
Fitch speculative grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
("BB" to "C") represent Fitch's assessment of the likelihood of timely payment
of principal and interest in accordance with the terms of obligation for bond
issuers not in default. For defaulted bonds, the rating ("DDD" to "D") is an
assessment of the potential recovery value through reorganization or
liquidation.
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor
as well as the economic and political environment, that might affect the
issuer's futures financial strength.
Bonds that have the same rating are of similar but not necessarily
identical credit quality since rating categories cannot fully reflect the
differences in degrees of credit risk.
BB: Bonds are considered speculative. The obligor's 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 requirements.
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.
DDD, DD, and D: Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be valued on the
basis of their ultimate recovery value in liquidation or reorganization of the
obligor. "DDD" represents the highest potential for recovery on these bonds,
and "D" represents the lowest potential for recovery.
Plus (+) Minus (-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs however, are not used in the "DDD", "DD", or "D" categories.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.
The short-term rating places greater emphasis than a long-term rating on
the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
Fitch's short-term ratings are as follows:
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1: Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-l+."
F-2: Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as for issues assigned "F-1+" and "F-1" ratings.
F-3: Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate,
however, near-term adverse changes could cause these securities to be rated
below investment grade.
F-5: Weak Credit Quality. Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are vulnerable
to near-term adverse changes in financial and economic conditions.
D: Default. Issues assigned this rating are in actual or imminent payment
default.
LOC: The symbol LOC indicates that the rating is based on a letter of
credit issued by a commercial bank.
34
<PAGE>
INVESTMENTS AT OCTOBER 31, 1999
<TABLE>
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------ -----------
<S> <C> <C> <C>
AGENCY MORTGAGE-BACKED SECURITIES--1.5%
GNMA 6.50%, 6/15/28..................... Aaa $ 735 $ 702,481
- - ---------------------------------------------------------------------------
TOTAL AGENCY MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $731,361) 702,481
- - ---------------------------------------------------------------------------
MUNICIPAL BONDS--13.8%
CALIFORNIA--0.9%
San Diego County Pension Obligation
Revenue Taxable Series A 6.24%,
8/15/02................................. Aaa 400 396,000
FLORIDA--1.1%
Tampa Solid Waste System Revenue Taxable
Series A 6.18%, 10/1/04................. Aaa 500 486,875
ILLINOIS--1.9%
Chicago O'Hare International Airport
Revenue Taxable 6.47%, 1/1/00........... Aaa 150 150,022
Chicago Tax Increment Taxable 6.25%,
6/1/02.................................. Aaa 750 743,438
-----------
893,460
-----------
MASSACHUSETTS--0.8%
Massachusetts State Port Authority
Revenue Taxable Series C 6.05%,
7/1/02.................................. Aa 400 394,000
MISSISSIPPI--1.9%
Mississippi State Taxable Series T
7.50%, 11/1/00.......................... Aa 855 864,901
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------ -----------
<S> <C> <C> <C>
NEW JERSEY--1.6%
New Jersey State Taxable Series G
6.375%, 8/1/03.......................... Aa $ 750 $ 742,500
OKLAHOMA--2.0%
Oklahoma City Airport Trust Taxable 10%,
7/1/12.................................. Aaa 900 918,738
PENNSYLVANIA--1.5%
Delaware River Port Authority PA & NJ
Revenue Taxable Series A 5.91%,
1/1/02.................................. Aaa 700 689,500
TEXAS--2.1%
Texas Water Resources Finance Authority
Revenue Taxable 6%, 8/15/02............. Aaa 1,000 983,750
- - ---------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(IDENTIFIED COST $6,489,522) 6,369,724
- - ---------------------------------------------------------------------------
ASSET-BACKED SECURITIES--12.3%
Advanta Equipment Receivables 98-1, A4
5.98%, 12/15/06......................... Aaa 500 491,953
Capita Equipment Receivables Trust 97-1,
B 6.45%, 8/15/02........................ Aa 375 371,824
ContiMortgage Home Equity Loan Trust
98-1, B 7.86%, 4/15/29.................. Baa 952 870,782
Continental Airlines, Inc. Series 97-2D
7.522%, 6/30/01......................... Ba 215 213,634
</TABLE>
See Notes to Financial Statements 5
<PAGE>
PHOENIX-GOODWIN MULTI-SECTOR SHORT TERM BOND FUND
<TABLE>
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------ -----------
<S> <C> <C> <C>
EQCC Home Equity Loan Trust 96-4, A4
6.47%, 8/15/10.......................... Aaa $ 103 $ 101,399
Fleetwood Credit Corp. Grantor Trust
96-A, B 6.95%, 10/17/11................. A 155 155,366
Ford Credit Auto Owner Trust 96-B, CTFS
6.55%, 2/15/02.......................... A 250 250,234
Garanti Grantor Trust 97-A 144A 7.31%
4/15/02(b).............................. BBB-(c) 416 390,852
Green Tree Home Improvement Loan Trust
99-E, A3 7.18%, 6/15/15................. AAA(c) 750 748,238
MBNA Master Credit Card Trust 98-C, C
144A 6.35%, 11/15/05(b)................. BBB(c) 525 507,937
Premier Auto Trust 97-3, B 6.52%,
1/6/03.................................. A 250 250,038
Premier Auto Trust 97-2, B 6.53%,
12/6/03................................. A 500 499,995
Triangle Funding Ltd. 98-2A, 3 144A
8.03%, 10/15/04(b)(d)................... BBB(c) 800 795,000
- - ---------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(IDENTIFIED COST $5,763,915) 5,647,252
- - ---------------------------------------------------------------------------
CORPORATE BONDS--22.2%
AUTO PARTS & EQUIPMENT--1.0%
Collins & Aikman Corp. 11.50%, 4/15/06.. B 500 475,000
AUTOMOBILES--1.1%
Titan Tire Corp. 7%, 2/11/00............ NR 500 496,250
BANKS (MONEY CENTER)--0.5%
First Union Institutional Capital I
8.04%, 12/1/26.......................... A 250 237,188
BROADCASTING (TELEVISION, RADIO & CABLE)--2.2%
Century Communications Corp. 9.75%,
2/15/02................................. B 1,000 1,016,250
BUILDING MATERIALS--1.6%
Nortek, Inc. 9.875%, 3/1/04............. B 750 736,875
COMMUNICATIONS EQUIPMENT--1.1%
Williams Communications Group, Inc.
10.875%, 10/1/09........................ B 500 513,750
ELECTRIC COMPANIES--1.1%
CalEnergy Co., Inc. 7.52%, 9/15/08...... Baa 500 499,375
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------ -----------
<S> <C> <C> <C>
ENTERTAINMENT--0.3%
SFX Entertainment, Inc. 9.125%,
12/1/08................................. B $ 140 $ 129,500
FOODS--1.7%
SUPERVALU, Inc. 9.75%, 6/15/04.......... B 750 796,875
GAMING, LOTTERY & PARI-MUTUEL COMPANIES--1.7%
Horseshoe Gaming LLC Series B 9.375%,
6/15/07................................. B 500 497,500
International Game Technology 7.875%,
5/15/04................................. Ba 300 288,000
-----------
785,500
-----------
INSURANCE (MULTI-LINE)--1.1%
Willis Corroon Corp. 9%, 2/1/09......... Ba 600 531,000
MANUFACTURING (SPECIALIZED)--0.7%
Fisher Scientific International, Inc.
9%, 2/1/08.............................. B 325 307,125
OIL & GAS (EXPLORATION & PRODUCTION)--0.7%
Benton Oil & Gas Co. 9.375%, 11/1/07.... B 500 314,375
PAPER & FOREST PRODUCTS--1.2%
S.D. Warren Co. Series B 12%,
12/15/04................................ B 500 550,000
PUBLISHING--1.0%
News America, Inc. 6.625%, 1/9/08....... Baa 500 467,500
RETAIL (FOOD CHAINS)--2.2%
Safeway, Inc. 7%, 9/15/02............... Baa 1,000 999,120
RETAIL (SPECIALTY)--1.2%
Musicland Group, Inc. 9%, 6/15/03....... B 600 550,500
SERVICES (COMMERCIAL & CONSUMER)--0.7%
Anthony Crane Rentals LP Series B
10.375%, 8/1/08......................... B 350 304,500
TELECOMMUNICATIONS (LONG DISTANCE)--1.1%
Global Crossing Holdings Ltd. 9.625%,
5/15/08................................. Ba 500 506,250
- - ---------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $10,660,221) 10,216,933
- - ---------------------------------------------------------------------------
NON-AGENCY MORTGAGE-BACKED
SECURITIES--24.7%
BTC Mortgage Investors Trust 97-S1, D
144A 6.95%, 12/31/09(b)................. BBB(c) 750 744,375
</TABLE>
6 See Notes to Financial Statements
<PAGE>
PHOENIX-GOODWIN MULTI-SECTOR SHORT TERM BOND FUND
<TABLE>
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------ -----------
<S> <C> <C> <C>
Bear Stearns Mortgage Securities, Inc.
95-1, 1B3 144A 6.441%, 5/25/10(b)....... NR $ 533 $ 493,268
Bear Stearns Mortgage Securities, Inc.
95-1, 2B3 144A 7.40%, 7/25/10(b)........ NR 421 403,759
CS First Boston Mortgage Securities
Corp. 97-SPCE C 144A 7.077%,
2/20/07(b).............................. NR 750 723,984
CS First Boston Mortgage Securities
Corp. 98-C2, E 7.13%, 1/15/12........... Baa 250 212,656
Countrywide Funding Corp. 99-3, AF5
7.73%, 9/25/27.......................... Aaa 600 603,194
Criimi Mae Trust I 96-C1, A2 144A 7.56%,
6/30/33(b).............................. BBB(c) 400 379,750
G.E. Capital Mortgage Services, Inc.
94-26, B2 6.91%, 7/25/09(d)............. Baa 221 212,473
G.E. Capital Mortgage Services, Inc.
96-8, 1M 7.25%, 5/25/26................. AA(c) 289 280,192
IMPAC CMB Trust 98-2, M3 7.25%,
4/25/28................................. A(c) 572 568,544
Merrill Lynch Mortgage Investors, Inc.
95-C3, A2 6.805%, 12/26/25(d)........... AAA(c) 1,400 1,388,625
Norwest Asset Securities Corp. 99-10, B1
6.25%, 4/25/14.......................... AA(c) 513 473,547
PNC Mortgage Securities Corp. 97-6, A1
6.49%, 10/25/26......................... Aaa 144 144,461
PNC Mortgage Securities Corp. 96-3, B2
8%, 12/25/26............................ A 972 968,845
Prudential Securities Secured Financing
Corp. 98-C1, A1A1 6.105%, 11/15/02...... Aaa 834 825,520
Residential Funding Mortgage Securities
I 93-S23, M3 6.50%, 6/25/08............. BBB+(c) 620 597,301
Residential Funding Mortgage Securities
I 93-S29, M3 7%, 8/25/08................ AA+(c) 465 451,749
Residential Funding Mortgage Securities
I 96-S8, A4 6.75%, 3/25/11.............. AAA(c) 84 82,217
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------ -----------
<S> <C> <C> <C>
Resolution Trust Corp. 92-C3, B 9.05%,
8/25/23................................. AA(c) $ 101 $ 100,171
Resolution Trust Corp. 94-C1, C 8%,
6/25/26................................. A(c) 500 501,250
Structured Asset Securities Corp. 95-C1,
D 7.375%, 9/25/24....................... BBB(c) 1,000 993,125
Structured Asset Securites Corp. 95-C4,
E 144A 8.71%, 6/25/26(b)................ BB(c) 250 240,230
- - ---------------------------------------------------------------------------
TOTAL NON-AGENCY MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $11,566,088) 11,389,236
- - ---------------------------------------------------------------------------
FOREIGN GOVERNMENT SECURITIES--10.3%
ALGERIA--0.5%
Algeria Unaffected Loan, 6.75%,
3/4/00.................................. NR 250 246,875
ARGENTINA--1.9%
Republic of Argentina Series B 0%,
4/15/01................................. BBB(c) 1,000 888,500
BULGARIA--0.7%
Republic of Bulgaria FLIRB Series A
Bearer 2.75%, 7/28/12(d)................ B 500 337,500
COLOMBIA--1.7%
Republic of Colombia 10.875%, 3/9/04.... Ba 750 755,625
COSTA RICA--1.4%
Republic of Costa Rica 144A 9.335%,
5/15/09(b).............................. Ba 650 658,125
CROATIA--1.5%
Croatia Series B 6.456%, 7/31/06(d)..... Baa 519 445,918
Croatia Series A 6.456%, 7/31/10(d)..... Baa 300 243,000
-----------
688,918
-----------
PANAMA--1.6%
Republic of Panama RegS 7.875%,
2/13/02................................. Ba 750 727,500
POLAND--1.0%
Poland Bearer PDI 6%, 10/27/14(d)....... Baa 500 443,750
- - ---------------------------------------------------------------------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(IDENTIFIED COST $4,713,901) 4,746,793
- - ---------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements 7
<PAGE>
PHOENIX-GOODWIN MULTI-SECTOR SHORT TERM BOND FUND
<TABLE>
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------ -----------
<S> <C> <C> <C>
FOREIGN CORPORATE BONDS--13.2%
CHILE--0.5%
Banco Santiago SA 7%, 7/18/07........... Baa $ 250 $ 221,250
COLOMBIA--1.6%
Financiera Energetica Nacional SA EMTN
9%, 11/8/99............................. BB+(c) 750 751,875
MEXICO--5.3%
Banco Nacional de Mexico SA US$
Remittance Master Trust 144A 7.57%,
12/31/00(b)............................. BBB+(c) 321 321,083
Empresas ICA Sociedad Series 2 Tranche A
RegS 144A 11.875%, 5/30/01(b)........... B 250 240,000
Gruma SA de C.V. 7.625%, 10/15/07....... Ba 250 221,250
Grupo Elektra SA de C.V. 12.75%,
5/15/01................................. B(c) 500 482,500
Grupo Industrial Durango 12.625%,
8/1/03.................................. B 350 341,687
Nacional Financiera SNC RegS 22%,
5/20/02................................. Ba 5,000 517,128
Vicap SA 10.25%, 5/15/02................ Ba 350 325,063
-----------
2,448,711
-----------
POLAND--1.1%
TPSA Finance BV 144A 7.125%,
12/10/03(b)............................. Baa 500 490,000
SOUTH KOREA--2.6%
Korea Development Bank 7.125%, 4/22/04.. Baa 500 488,750
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------ -----------
<S> <C> <C> <C>
SOUTH KOREA--CONTINUED
Korea Development Bank 7.375%, 9/17/04.. Baa $ 750 $ 731,250
-----------
1,220,000
-----------
UNITED KINGDOM--1.1%
Bridas Corp. 12.50%, 11/15/99........... B 500 502,500
VENEZUELA--1.0%
PDVSA Finance Ltd. Series 98-1 6.45%,
2/15/04................................. A 500 451,305
- - ---------------------------------------------------------------------------
TOTAL FOREIGN CORPORATE BONDS
(IDENTIFIED COST $6,220,763) 6,085,641
- - ---------------------------------------------------------------------------
<CAPTION>
SHARES
------
PREFERRED STOCKS--0.6%
<S> <C> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)--0.6%
Global Crossing Holdings Ltd. PIK
10.50%.................................. 2,500 263,750
- - ---------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(IDENTIFIED COST $248,125) 263,750
- - ---------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--98.6%
(IDENTIFIED COST $46,393,896) 45,421,810(a)
Cash and receivables, less liabilities--1.4% 630,714
--------------------
NET ASSETS--100.0% $ 46,052,524
====================
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $259,195 and gross
depreciation of $1,231,281 for federal income tax purposes. At October 31,
1999, the aggregate cost of securities for federal income tax purposes was
$46,393,896.
(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 $6,388,363 or 13.9% of net
assets.
(c) As rated by Standard & Poor's, Fitch or Duff & Phelps.
(d) Variable or step coupon security; interest rate shown reflects the rate
currently in effect.
8 See Notes to Financial Statements
<PAGE>
PHOENIX-GOODWIN MULTI-SECTOR SHORT TERM BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $46,393,896) $ 45,421,810
Receivables
Investment securities sold 369,449
Interest and dividends 830,793
Fund shares sold 89,836
Receivable from adviser 67,122
Prepaid expenses 1,011
--------------
Total assets 46,780,021
--------------
LIABILITIES
Payables
Custodian 74,206
Investment securities purchased 352,980
Fund shares repurchased 67,121
Income distribution payable 53,676
Distribution fee 16,285
Transfer agent fee 13,911
Financial agent fee 8,699
Trustees' fee 5,641
Accrued expenses 134,978
--------------
Total liabilities 727,497
--------------
NET ASSETS $ 46,052,524
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 50,646,566
Undistributed net investment loss (4,395)
Accumulated net realized loss (3,616,548)
Net unrealized depreciation (973,099)
--------------
NET ASSETS $ 46,052,524
==============
CLASS A
Shares of beneficial interest outstanding, $0.01 par value,
unlimited authorization (Net Assets $26,071,039) 5,710,746
Net asset value per share $4.57
Offering price per share $4.57/(1-2.25%) $4.68
CLASS B
Shares of beneficial interest outstanding, $0.01 par value,
unlimited authorization (Net Assets $10,956,673) 2,405,345
Net asset value and offering price per share $4.56
CLASS C
Shares of beneficial interest outstanding, $0.01 par value,
unlimited authorization (Net Assets $9,024,812) 1,977,548
Net asset value and offering price per share $4.56
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 4,228,359
Dividends 13,050
--------------
Total investment income 4,241,409
--------------
EXPENSES
Investment advisory fee 283,982
Distribution fee, Class A 74,420
Distribution fee, Class B 88,111
Distribution fee, Class C 50,586
Financial agent fee 76,005
Transfer agent 85,732
Registration 39,466
Professional 36,089
Custodian 24,454
Printing 24,425
Trustees 17,008
Miscellaneous 47,003
--------------
Total expenses 847,281
Less expenses borne by investment adviser (245,212)
Custodian fees paid indirectly (1,361)
--------------
Net expenses 600,708
--------------
NET INVESTMENT INCOME 3,640,701
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (1,221,900)
Net realized loss on foreign currency transactions (33,555)
Net change in unrealized appreciation (depreciation) on
foreign currency and foreign currency transactions (1,013)
Net change in unrealized appreciation (depreciation) on
investments 405,264
--------------
NET LOSS ON INVESTMENTS (851,204)
--------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 2,789,497
==============
</TABLE>
See Notes to Financial Statements 9
<PAGE>
PHOENIX-GOODWIN MULTI-SECTOR SHORT TERM BOND FUND
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) $ 3,640,701 $ 3,323,904
Net realized gain (loss) (1,255,455) (2,207,274)
Net change in unrealized appreciation
(depreciation) 404,251 (1,377,771)
----------- -----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 2,789,497 (261,141)
----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (2,209,345) (2,076,744)
Net investment income, Class B (807,843) (750,987)
Net investment income, Class C (720,412) (439,980)
In excess of net investment income,
Class A (9,014) --
In excess of net investment income,
Class B (3,296) --
In excess of net investment income,
Class C (2,939) --
Net realized gains, Class A -- (623,397)
Net realized gains, Class B -- (231,491)
Net realized gains, Class C -- (40,577)
----------- -----------
DECREASE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS (3,752,849) (4,163,176)
----------- -----------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(3,582,772 and 6,014,412 shares,
respectively) 16,755,923 29,551,389
Net asset value of shares issued from
reinvestment of distributions
(377,128 and 481,339 shares,
respectively) 1,757,357 2,357,562
Cost of shares repurchased (5,376,778
and 5,014,505 shares, respectively) (25,115,199) (24,593,058)
----------- -----------
Total (6,601,919) 7,315,893
----------- -----------
CLASS B
Proceeds from sales of shares (757,791
and 1,098,057 shares, respectively) 3,535,661 5,370,293
Net asset value of shares issued from
reinvestment of distributions
(126,951 and 150,247 shares,
respectively) 589,906 735,674
Cost of shares repurchased (1,109,023
and 656,994 shares, respectively) (5,162,766) (3,148,967)
----------- -----------
Total (1,037,199) 2,957,000
----------- -----------
CLASS C
Proceeds from sales of shares
(1,484,770 and 3,178,002 shares,
respectively) 6,906,958 15,654,043
Net asset value of shares issued from
reinvestment of distributions
(124,900 and 90,036 shares,
respectively) 581,636 436,654
Cost of shares repurchased (1,922,094
and 1,091,595 shares, respectively) (8,935,139) (5,287,237)
----------- -----------
Total (1,446,545) 10,803,460
----------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS (9,085,663) 21,076,353
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS (10,049,015) 16,652,036
NET ASSETS
Beginning of period 56,101,539 39,449,503
----------- -----------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
($4,395) AND $96,898, RESPECTIVELY] $46,052,524 $56,101,539
=========== ===========
</TABLE>
10 See Notes to Financial Statements
<PAGE>
PHOENIX-GOODWIN MULTI-SECTOR SHORT TERM BOND FUND
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 $ 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.
See Notes to Financial Statements
11
<PAGE>
PHOENIX-GOODWIN MULTI-SECTOR SHORT TERM BOND FUND
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 $ 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(7) -- -- -- --
--------- --------- --------- --------- ---------
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%(6) 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>
<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(3) 0.34(3) 0.03(3)
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(7) -- --
--------- --------- --------
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)%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $9,025 $10,665 $575
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.25%(6) 1.25% 1.25 %(4)
Net investment income 6.95% 6.70% 5.51 %(4)
Portfolio turnover 122% 126% 246 %(5)
</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) Includes reimbursement of operating expenses by investment adviser of
$0.02, $0.03 and $0.04, respectively.
(4) Annualized
(5) Not annualized
(6) 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.
(7) Amount is less than $0.01.
12
See Notes to Financial Statements
<PAGE>
PHOENIX-GOODWIN MULTI-SECTOR SHORT TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix-Goodwin Multi-Sector Short Term Bond Fund (the "Fund") is organized as
a Massachusetts business trust and is registered under the Investment Company
Act of 1940, as amended, as a diversified open-end management investment
company. The Fund's investment objective is to provide high current income
relative to short-term alternatives, while attempting to limit fluctuations in
the net asset value of Fund shares resulting from movements in interest rates.
The Fund offers Class A, Class B and Class C shares. Class A shares are sold
with a front-end sales charge of up to 2.25%. Class B shares are sold with a
contingent deferred sales charge which declines from 2% to zero depending on the
period of time the shares are held. Class C shares are sold with no sales
charge. 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 amount 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 Trustees.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Interest income is
recorded on the accrual basis. 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, 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.
13
<PAGE>
PHOENIX-GOODWIN MULTI-SECTOR SHORT TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999 (CONTINUED)
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% of the average daily net assets of the Fund. The Adviser has agreed to
assume expenses of the Fund in excess of 1.00%, 1.50% and 1.25% of the average
aggregate daily net asset value of Class A, Class B and Class C shares,
respectively. For the year ended October 31, 1999, the Adviser has reimbursed
the Fund $245,212 for such expenses.
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 $3,113 for Class A shares and deferred sales
charges of $33,795 for Class B 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, 0.75% for Class B shares and 0.50% 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, $84,933 was retained by the Distributor, $110,057 was paid to
unaffiliated participants, and $18,127 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 to PEPCO
to provide financial reporting, tax services and oversight of subagent's
performance. The current fee schedule of PFPC Inc. ranges from 0.085% to 0.0125%
of the average daily net asset values of the Fund. Certain minimum fees and fee
waivers may apply.
PEPCO serves as the Fund's Transfer Agent with State Street Bank and Trust as
sub-transfer agent. For the year ended October 31, 1999, transfer agent fees
were $85,732 of which PEPCO retained $6,504 which is net of the fees paid to
State Street.
At October 31, 1999, PHL and affiliates held 33,059 Class A shares with a
value of $151,080.
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 $51,127,928 and $57,240,898, respectively. Purchases and sales of
long-term U.S. Government and agency securities amounted to $10,400,545 and
$11,439,480, respectively.
4. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risk than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a Fund's ability to
repatriate such amounts.
5. CAPITAL LOSS CARRYOVERS
The Fund has capital loss carryover of $3,616,548 comprised of $2,039,934 and
$1,576,614 expiring in 2006 and 2007, respectively, which may be used to offset
future capital gains.
6. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Fund has recorded
reclassifications in the capital accounts. 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 increased
undistributed net investment income by $10,855, and increased accumulated net
realized loss by $10,855.
This report is not authorized for distribution to prospective investors in the
Phoenix Multi-Sector Short Term Bond Fund unless preceded or accompanied by an
effective prospectus which includes information concerning the sales charge,
Fund's record and other pertinent information.
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO]
To the Trustees and Shareholders of
Phoenix-Goodwin Multi-Sector Short Term Bond Fund
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 Short Term Bond Fund (formerly known as Phoenix
Multi-Sector Short Term Bond Fund) (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
15
<PAGE>
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PART C--OTHER INFORMATION
Item 23. Exhibits
<TABLE>
<S> <C>
a.1. Declaration of Trust as amended of the Registrant, filed via EDGAR as Exhibit 1 with Post-Effective
Amendment No. 6 on February 25, 1997, and incorporated herein by reference.
a.2. Amendment to Declaration of Trust changing name of Trust, filed via EDGAR as Exhibit 1.1 with Post-
Effective Amendment No. 6 on February 25, 1997, and incorporated herein by reference.
a.3. Amendment to Declaration of Trust changing name of Trust, filed via EDGAR as Exhibit 1.2 with Post-
effective Amendment No. 5 on February 28, 1996, and incorporated herein by reference.
a.4. Amendment to Declaration of Trust establishing Class C Shares, filed via EDGAR as Exhibit 1.3 with
Post-Effective Amendment No. 9 on February 25, 1998 and incorporated herein by reference.
a.5.* Amendment to Declaration of Trust changing name of Trust, filed via EDGAR herewith.
b. By-laws of the Registrant, filed via EDGAR as Exhibit 2 with Post-Effective Amendment No. 6 on
February 25, 1997, and incorporated herein by reference.
c. Reference is made to Article V of the Registrant's Declaration of Trust, as amended, and filed with the
Registration Statement referred to in Exhibit a.1
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. 6 on February 25, 1997 and incorporated herein by
reference.
d.2. Amendment to Management Agreement dated January 1, 1994, filed via EDGAR as Exhibit 5.1 with
Post-Effective Amendment No. 6 on February 25, 1997, and incorporated herein by reference.
e.1. Underwriting Agreement between Registrant and Phoenix Equity Planning Corporation ("Equity Planning")
dated November 19, 1997, filed via EDGAR as Exhibit 6.1 with Post-Effective Amendment No. 9 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. 9 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. 9 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. 9 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 8.1 with Post Effective Amendment No. 9 on February 25, 1998 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 9.1 with Post-Effective Amendment No. 6 on February
25, 1997, and incorporated 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 9.2 with Post Effective Amendment No. 9 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 9.3 with Post Effective Amendment
No. 9 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. 11 on March 1, 1999 and incorporated herein 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. 11 on March 1, 1999 and incorporated herein by reference.
i. Opinion as to legality of the shares, filed via EDGAR as Exhibit 10 with Post-Effective Amendment No. 6
on February 25, 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. 9 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. 9 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 as Exhibit 18.1 with Post-Effective Amendment No. 9 on February 25, 1998 and incorporated
herein by reference.
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. 11 on March 1, 1999 and incorporated herein by
reference.
p.1. Powers of attorney, filed via EDGAR with Post-Effective Amendment No. 10 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
Registrant's indemnification provision is set forth in Pre-Effective
Amendment No. 3 filed with the Securities and Exchange Commission on July 6,
1992, and is incorporated herein by reference.
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. the Adviser, reference is made to the Adviser's current Form ADV (SEC File
No. 801-5995) filed under the Investment Advisers Act of 1940 and incorporated
herein by reference.
Item 27. Principal Underwriter
(a) Equity Planning also serves as the principal underwriter for the
following other registrants: Phoenix-Aberdeen Series Fund, Phoenix-Aberdeen
Worldwide Opportunities Fund, Phoenix-Goodwin California Tax Exempt Bonds,
Inc., Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc., Phoenix Duff &
Phelps Institutional Mutual Funds, Phoenix-Engemann Funds, Phoenix Equity
Series Fund, Phoenix-Euclid Funds, Phoenix-Oakhurst Income & Growth Fund,
Phoenix Investment Trust 97, Phoenix Multi-Portfolio Fund, Phoenix Series Fund,
Phoenix-Oakhurst Strategic Allocation Fund, Inc., Phoenix Strategic Equity
Series Fund, Phoenix-Zweig Trust, Phoenix Home Life Variable Universal Life
Account, Phoenix Home Life Variable Accumulation Account, PHL Variable
Accumulation Account, Phoenix Life and Annuity Variable Universal Life Account
and PHL Variable Separate Account MVA1.
(b) Directors and Executive Officers of Phoenix Equity Planning Corporation
are as follows:
C-2
<PAGE>
<TABLE>
<CAPTION>
Name and Position and Offices Position and Offices
Principal Address with Distributor with Registrant
- ------------------------- --------------------------------------- -------------------------
<S> <C> <C>
Michael E. Haylon Director Executive Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Trustee and President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Senior Vice President and Vice President
100 Bright Meadow Blvd. Chief Financial Officer
P.O. Box 2200
Enfield, CT 06083-2200
John F. Sharry President, Executive Vice President
100 Bright Meadow Blvd. Retail Division
P.O. Box 2200
Enfield, CT 06083-2200
G. Jeffrey Bohne Vice President, Secretary
101 Munson Street Mutual Fund
Greenfield, MA 01301 Customer Service
Nancy G. Curtiss Vice President and Treasurer, Treasurer
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Counsel and Secretary None
55 East Monroe St.
Chicago, IL 60603
Jacqueline M. Porter Assistant Vice President, Assistant Treasurer
56 Prospect Street Financial Reporting
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an affiliated
person of the Registrant or an affiliated person of such affiliated person,
directly or indirectly, from the Registrant during the Registrant's last fiscal
year.
Item 28. Location of Accounts and Records
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 Registrant's
investment adviser, Phoenix Investment Counsel, Inc., 56 Prospect Street,
Hartford, CT 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 its registration
statement to be signed on its behalf by the undersigned, duly authorized, in
the City of Hartford, and State of Connecticut on the 1st day of March, 2000.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
ATTEST: /s/ Pamela S. Sinofsky By: /s/ Philip R. McLoughlin
------------------------------- -----------------------------------
Pamela S. Sinofsky Philip R. McLoughlin
Assistant Secretary President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below by the following persons in
the capacities indicated, on the 1st day of March, 2000.
<TABLE>
<CAPTION>
Signature Title
- ------------------------------- -----------------------------------
<S> <C>
Trustee
- ----------------------------
Robert Chesek*
Trustee
- ----------------------------
E. Virgil Conway*
/s/ Nancy G. Curtiss Treasurer (Principal Financial and
- ---------------------------- Accounting Officer)
Nancy G. Curtiss
Trustee
- ----------------------------
Harry Dalzell-Payne*
Trustee
- ----------------------------
Francis E. Jeffries*
Trustee
- ----------------------------
Leroy Keith, Jr.*
/s/ Philip R. McLoughlin President and Trustee (Principal
- ---------------------------- Executive Officer)
Philip R. McLoughlin
Trustee
- ----------------------------
Everett L. Morris*
Trustee
- ----------------------------
James M. Oates*
Trustee
- ----------------------------
Calvin J. Pedersen*
Trustee
- ----------------------------
Herbert Roth, Jr.*
Trustee
- ----------------------------
Richard E. Segerson*
Trustee
- ----------------------------
Lowell P. Weicker, Jr.*
By: /s/ Philip R. McLoughlin
-------------------------
Philip R. McLoughlin
</TABLE>
*Philip R. McLoughlin, Attorney-in-fact pursuant to powers of attorney
filed previously.
S-1
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
Certificate of Amendment to Declaration of Trust
The undersigned, individually as Trustee of Phoenix Multi-Sector Short
Term Bond Fund, a Massachusetts business trust (the "Trust") under a Declaration
of Trust dated February 20, 1992, as amended from time to time (the
"Declaration"), and as attorney-in-fact for each of the other Trustees of the
Trust pursuant to a certain Delegation and Power of Attorney dated August 26,
1998, executed by each of such Trustees, a copy of which is attached hereto, do
hereby certify that at a duly held meeting of the Board of Trustees of the Trust
held November 18, 1998, at which a quorum was present, the Board of Trustees
acting in accordance with certain implied powers vested in the Board of Trustees
pursuant to Article II, Section 2.1 and the authority conferred pursuant to
Article VIII, Section 8.3 of said Declaration for the purpose of changing the
name of the Trust currently designated "Phoenix Multi-Sector Short Term Bond
Fund" to "Phoenix-Goodwin Multi-Sector Short Term Bond Fund" voted to further
amend said Declaration effective on August 27, 1999 by deleting the first
paragraph of Section 1.1 of Article 1 thereof and by inserting in lieu of such
paragraph the following paragraph:
"Section 1.1 Name. The name of the Trust created hereby is
"Phoenix-Goodwin Multi-Sector Short Term Bond Fund".
IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of July, 1999.
/s/ Philip R. McLoughlin
-----------------------------------
Philip R. McLoughlin, individually
and as attorney-in-fact for Robert
Chesek, E. Virgil Conway, Harry
Dalzell-Payne, Francis E. Jefferies,
Leroy Keith, Jr., Everett L. Morris,
James M. Oates, Calvin J. Pedersen,
Herbert Roth, Jr., Richard E. Segerson,
and Lowell P. Weicker, Jr.
<PAGE>
DELEGATION AND POWER OF ATTORNEY
PHOENIX-ABERDEEN SERIES FUND
THE PHOENIX EDGE SERIES FUND
PHOENIX EQUITY SERIES FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX INVESTMENT TRUST 97
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC EQUITY SERIES FUND
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
SHORT TERM BOND FUND
(the "Fund")
CLASS B SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have entered
into a Distribution Agreement pursuant to which the Distributor will act as
principal underwriter of each class of shares of the Fund for sale to the
permissible purchasers. The Trustees of the Fund have determined to adopt this
Distribution Plan (the "Plan"), in accordance with the requirements of Section
12b-1 of the Investment Company Act of 1940, as amended (the "Act") with respect
to Class B shares of the Fund and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its Class B shareholders.
2. Rule 12b-1 Fees
---------------
The Fund shall reimburse the Distributor, at the end of each month, up
to a maximum on an annual basis of 0.50% of the average daily value of the net
assets of the Fund's Class B shares, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc., for
distribution expenditures incurred by Distributor subsequent to the
effectiveness of this Plan, in connection with the sale and promotion of the
Class B shares of the Fund and the furnishing of services to Class B
shareholders of the Fund (the "Distribution Fee"). Such expenditures shall
consist of: (i) commissions to sales personnel for selling Class B shares of the
Fund (including underwriting commissions and finance charges related to the
payment of commissions); (ii) compensation, sales incentives and payments to
sales, marketing and service personnel; (iii) payments to broker-dealers and
other financial institutions which have entered into selling agreements with the
Distributor for services rendered in connection with the sale and distribution
of Class B shares of the Fund; (iv) payment of expenses incurred in sales and
promotional activities, including advertising expenditures related to the Class
B shares of the Fund; (v) the costs of preparing and distributing promotional
materials; (vi) the cost of printing the Fund's Prospectus and Statement of
Additional Information for distribution to potential investors; and (vii) such
other similar services that the Trustees of the Fund determine are reasonably
calculated to result in the sale of Class B shares of the Fund.] The Fund shall
also pay the Distributor, at the end of each month, an amount on an annual basis
equal to 0.25% of the average daily value of the net assets of the Fund's Class
B shares, as compensation for providing personal service to shareholders,
including assistance in connection with inquiries relating to shareholder
accounts, and for maintaining shareholder accounts (the "Service Fee").
<PAGE>
Any reduction to amounts payable under this Plan shall first be to the
extent of the Service Fee, and then from the balance of the 12b-1 Fee.
Amounts paid or payable by the Fund under this Plan or any agreement
with any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
Any Distribution Agreement in respect of Class B shares may provide
that (I) the Distributor in respect of such Distribution Agreement will be
deemed to have fully earned its Allocable Portion (as hereinafter defined) of
the Distribution Fee in respect of Class B shares of such series upon the sale
of each "Initial Issue Commission Share" (as hereinafter defined) of such series
taken into account in determining the Distributor's Allocable Portion of such
Distribution Fee; (II) except as provided in (III) below, the Fund's obligation
to pay such Distributor its Allocable Portion of the Distribution Fee payable in
respect of the Class B shares of the Fund shall be absolute and unconditional
and shall not be subject to dispute, offset, counterclaim or any defense
whatsoever (it being understood that such provision is not a waiver of the
Fund's right to pursue the Distributor and enforce such claims against the
assets of the Distributor other than its right to the Distribution Fees in
respect of the Class B shares of the Fund); (III) the Fund's obligation to pay
the Distributor its Allocable Portion of the Distribution Fee in respect to
Class B shares of the Fund shall not be terminated or modified except to the
extent required by a change in the Act or the Rules of Conduct enacted or
promulgated after November 17, 1999 (a "Change-in-Applicable-Law"), or in
connection with a Complete Termination (as hereinafter defined) of this Plan in
respect of the Class B shares of such series; (IV) the Trust will not waive or
change any CDSC in respect of the Class B shares of such series, except as
provided in the Trust's Prospectus or statement of additional information
without the consent of the Distributor (or its assigns); (V) except to the
extent required by a Change-in-Applicable-Law, neither the termination of such
Distributor's role as distributor of the Class B shares of such series, nor the
termination of such Distribution Agreement nor the termination of this Plan will
terminate such Distributor's right to its Allocable Portion of the CDSC's in
respect of Class B shares of such series sold prior to such termination; (VI)
except as provided in the Trust's Prospectus and statement of additional
information, until such Distributor has been paid its Allocable Portion of the
Distribution Fee in respect of the Class B shares of such series, the Trust will
not adopt a plan of liquidation in respect of such series without the consent of
such Distributor (or its assigns); and (VII) such Distributor may sell and
assign its right to its Allocable Portion of the Distribution Fees and CDSCs
(but not such Distributor's obligations to the Trust under the Distribution
Agreement) to raise funds to make the expenditures related to the distribution
of Class B shares of such series and in connection therewith, upon receipt of
notice of such sale and assignment, the Trust shall pay to the purchaser or
assignee such portion
<PAGE>
of the Distributor's Allocable Portion of the Distribution Fees in respect of
the Class B shares of such series so sold or assigned.
For purposes of this Plan, the term "Allocable Portion" means, in respect of
Distribution Fees payable in respect of the Class B shares of any series as
applied to any Distributor, the portion of such Distribution Fees and CDSCs
allocated to such Distributor in accordance with the Allocation Schedule (as
hereinafter defined). For purposes of this Plan, the term "Complete Termination"
of this Plan means, in respect of any series, a termination of this Plan
involving the cessation of payments of Distribution Fees hereunder in respect of
Class B shares of such series and the cessation of payments of distribution fees
pursuant to every other rule 12b-1 plan of the Trust in respect of such series
for every future class of shares which, in the good faith determination of the
Board of Trustees of the Trust, has substantially similar economic
characteristics to the Class B shares taking into account the total sales
charge, contingent deferred sales charge and other similar charges, it being
understood that the existing Class A shares and existing Class C shares do not
have substantially similar economic characteristics to the Class B shares. For
purposes of this Plan, the term "Allocation Schedule" means, in respect of the
Class B shares of any series, a schedule which shall be approved in the same
manner as this Plan as contemplated by Section 4 hereof for assigning to each
Distributor of Class B shares of such series the portion of the total
Distribution Fees payable by the Trust in respect of the Class B shares of such
series which has been earned by such Distributor, which shall be attached to and
become a part of any Distribution Agreement in respect of Class B shares
provided that where there is only one Distributor at any given time, the
Allocation Schedule shall mean all of the total Distribution Fees payable by the
Trust in respect of the Class B shares of such series which has been earned by
such Distributor. For purposes of clause (I) of the first sentence of this
Section 2, the term "Initial Issue Commission Share" shall mean, in respect of
any series, a Class B share which is a Commission Share issued by such series
under circumstances other than in connection with a permitted free exchange with
another fund. For purposes of the foregoing definition, a "Commission Share"
shall mean, in respect of any series, each Class B share of such series which is
issued under circumstances which would normally give rise to an obligation of
the holder of such Class B share to pay a CDSC upon redemption of such share,
including, without limitation, any Class B share of such Fund issued in
connection with a permitted free exchange, and any such Class B share shall not
cease to be a Commission Share prior to the redemption (including a redemption
in connection with a permitted free exchange) or conversion even though the
obligation to pay the CDSC shall have expired or conditions for thereof still
exist.
3. Reports
-------
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare and
furnish to the Trustees of the Fund for their review, and the Trustees shall
review, a written report complying with the requirements of Rule 12b-l under the
Act regarding the amounts expended under this Plan and the purposes for which
such expenditures were made.
<PAGE>
4. Required Approval
-----------------
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of this Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or any related agreement and this
Plan shall not take effect with respect to the Fund until it has been approved
by a vote of at least a majority of the outstanding voting Class B shares (as
such phrase is defined in the Act).
5. Term
----
This Plan shall remain in effect for one year from the date of its
adoption and may be continued thereafter if specifically approved at least
annually by a vote of at least a majority of the Trustees of the Fund as well as
a majority of the Disinterested Trustees. This Plan may be amended at any time,
provided that (a) the Plan may not be amended to increase materially the amount
of the distribution expenses provided in Paragraph 2 hereof (including the
Service Fee) without the approval of at least a majority of the outstanding
voting securities (as defined in the Act) of the Class B shares of the Fund and
(b) all material amendments to this Plan must be approved by a majority vote of
the Trustees of the Fund and of the Disinterested Trustees cast in person at a
meeting called for the purpose of such vote.
<PAGE>
6. Selection of Disinterested Trustees
-----------------------------------
While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
------------------
Any related agreement shall be in writing and shall provide that (a)
such agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class B shares of the Fund on not more than 60 days' written notice to the other
party to the agreement and (b) such agreement shall terminate automatically in
the event of its assignment.
8. Termination
-----------
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class B shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
9. Records
-------
The Fund shall preserve copies of this Plan and any related agreements
and all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
10. Non-Recourse
------------
The Fund's Declaration of Trust dated February 20, 1992, a copy of
which, together with the amendments thereto ("Declaration"), is on file in the
office of the Secretary of the Commonwealth of Massachusetts, refers to the
Trustees under the Declaration of Trust collectively as Trustees, but not as
individuals or personally, and no Trustee, shareholder, officer, employee or
agent of the Fund may be held to any personal liability, nor may any resort be
had to their private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of the Fund but the Fund property only
shall be liable.
[Adopted at a duly held meeting of the Board of Trustees on November 17,1999]
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. 12 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 Short Term Bond Fund,
which is also incorporated by reference into the Registration Statement. We also
consent to the references to us under the headings "Financial Highlights" in the
Prospectus and under the heading "Other Information - Independent Accountants"
in the Statement of Additional Information.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 21, 2000
