As filed with the Securities and Exchange Commission on August 6, 2004
Registration No. 333-116764
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[X] Pre-Effective Amendment No. _1_ [ ] Post-Effective Amendment No. ___
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THE PHOENIX EDGE SERIES FUND
(Exact Name of Registrant as Specified in Charter)
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c/o Variable Products Operations
Phoenix Life Insurance Company
101 Munson Street, Greenfield, Massachusetts 01301
(Address of Principal Executive Offices)
(800) 541-0171
(Registrant's Telephone Number, including Area Code)
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John R. Flores, Esq.
c/o Phoenix Life Insurance Company
One American Row, Hartford, Connecticut 06102-5056
(Name and address of Agent for Service)
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Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Registration Statement.
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Registrant is relying on Section 24(f) of the Investment Company Act
of 1940, as amended, which permits registration of an indefinite number of
shares of beneficial interest of the Phoenix-Oakhurst Value Equity Series.
Accordingly, no filing fee is due in connection with this Registration
Statement.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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THE PHOENIX EDGE SERIES FUND
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
Caption or Location in
Form N-14 Item No. and Caption Prospectus/Proxy Statement
- ------------------------------ --------------------------
Part A: Information Required in Prospectus/Proxy Statement
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1. Beginning of Registration Statement Cover Page
and Outside Front Cover Page of Prospectus
2. Beginning and Outside Back Cover Table of Contents
Page of Prospectus
3. Fee Table, Synopsis Information and Risk Synopsis; Principal Risk Factors; Comparison of
Factors Investment Objectives and Policies
4. Information about the Transaction Synopsis; The Proposed Reorganization; Comparative
Information on Shareholder Rights; Appendix A (Form of
Agreement and Plan of Reorganization)
5. Information about the Registrant Cover Page; Synopsis; Principal Risk Factors; Comparison
of Investment Objectives and Policies; The Proposed
Reorganization; Comparative Information on Purchases and
Exchanges; Comparative Information on Distributions and
Redemptions; Comparative Information on Shareholder
Rights; Management and Other Service Providers;
Additional Information About The Series; Prospectus of
Registrant dated May 1, 2004
6. Information about the Company Being Synopsis; Comparison of Investment Objectives and
Acquired Policies; The Proposed Reorganization; Comparative
Information on Purchases and Exchanges; Comparative
Information on Distributions and Redemptions;
Comparative Information on Shareholder Rights;
Additional Information About The Series; Prospectus of
the Registrant dated May 1, 2004
7. Voting Information Synopsis; The Proposed Reorganization; Comparative
Information on Shareholder Rights; Voting Information
8. Interest of Certain Persons and Experts The Proposed Reorganization
9. Additional Information Required for Not Applicable
Reoffering By Persons Deemed to be
Underwriters
Caption or Location in
Form N-14 Item No. and Caption Prospectus/Proxy Statement
- ---------------------------------------- ----------------------------------
Part B: Information Required in Statement of Additional Information
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. Additional Information about the Registrant Cover Page; Statement of Additional Information of
Registrant, dated May 1, 2004
13. Additional Information about the See item 12
Company Being Acquired
14. Financial Statements Annual Report of the Registrant for the year ended
December 31, 2003; and ProForma Financial Statements
for the period ended December 31, 2003
Part C: Other Information
15. Indemnification Indemnification
16. Exhibits Exhibits
17. Undertakings Undertakings
PART A
PHOENIX-MFS VALUE SERIES
A SERIES OF
THE PHOENIX EDGE SERIES FUND
C/O PHOENIX VARIABLE PRODUCTS MAIL OPERATIONS
P.O. BOX 8027
BOSTON, MA 02266-8027
(800) 541-0171
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AUGUST 6, 2004
Dear Contract/Policyholder:
The Phoenix-MFS Value Series (the "Merging Series"), a series of The
Phoenix Edge Series Fund (the "Trust"), will hold a Special Meeting of
Shareholders at 10:30 a.m., local time, on September 14, 2004, at One American
Row, Hartford, Connecticut 06102. At the Special Meeting, Phoenix Life Insurance
Company ("PLIC") and its affiliates will vote on an Agreement and Plan of
Reorganization (the "Agreement" or "Plan") under which the Merging Series will
be combined with the Phoenix-Oakhurst Value Equity Series (the "Surviving
Series"), another series of the Trust (the "Reorganization"). The Surviving
Series has a similar investment objective to that of the Merging Series. If the
Agreement is implemented, the separate accounts holding shares of the Merging
Series will receive shares of the Surviving Series with an aggregate net asset
value equal to the aggregate net asset value of the investment in the Merging
Series. No sales charge will be imposed in connection with the Reorganization.
PLIC will pay all costs of the Reorganization. The Reorganization is conditioned
upon receipt of an opinion of counsel indicating that the Reorganization will
qualify as a tax-free reorganization for Federal income tax purposes.
The Board of Trustees of the Trust believes that the Reorganization offers
you the opportunity to pursue your goals in a larger Series. The Board of
Trustees has carefully considered and has unanimously approved the proposed
Reorganization, as described in the accompanying materials, and believes that
the Reorganization is in the best interests of the Merging Series and its
shareholders.
As an owner of a variable annuity or variable life insurance contract
issued by PLIC or one of its affiliated insurance companies (together,
"Phoenix"), you have the contractual right to instruct the insurance company how
to vote the shares of the Merging Series at this meeting. Although you are not
directly a shareholder of the Merging Series, some or all of your contract value
is invested in the Merging Series pursuant to your policy or contract. For the
limited purposes of this Prospectus/Proxy Statement, the term "shareholder"
refers to you as the contract/policyholder, unless the context otherwise
requires. Therefore, the Board of Trustees recommends that you vote in favor of
the Agreement. It is very important that you vote and that your vote be received
no later than September 14, 2004. If the Voting Instructions Card is executed
and no direction is made, you will be considered as voting FOR the proposal and,
in the discretion of the insurance company, upon such other business as may
properly come before the Special Meeting.
We have enclosed a copy of the Notice of Special Meeting of Shareholders,
the Prospectus/Proxy Statement and a card entitled "Voting Instructions". This
card should be used to register your vote on the proposals to be acted upon at
the Special Meeting. It is important for you to provide voting instructions with
respect to the issues described in the accompanying Prospectus/Proxy Statement.
We recommend that you read the Prospectus/Proxy Statement in its entirety as the
explanations will help you to decide what voting instructions you would like to
provide.
Voting instructions executed by you may be revoked at any time prior to
Phoenix voting the shares represented thereby: by written notice of a Voting
Instructions Card's revocation to the Secretary of the Trust at the address
above prior to the meeting; or by the subsequent execution and return of another
Voting Instructions Card prior to the meeting; or by use of any electronic,
telephonic or other alternative means authorized by the Trustees for authorizing
the proxy to act; or by being present and voting in person at the meeting and
giving oral notice of revocation to the Chairman of the meeting.
As a convenience, you can provide voting instructions in any one of four
ways:
o THROUGH THE INTERNET - www.proxyweb.com
o BY TELEPHONE - 800-690-6903
o BY MAIL - using the enclosed Voting Instructions Card(s) and
postage-paid envelope
o IN PERSON - at the Special Meeting
We encourage you to vote by telephone or Internet; have your Voting
Instructions Card in hand, and call the number or go to the Web Site and follow
the instructions given there. Use of telephone or Internet voting will reduce
the time and costs of this proxy solicitation. Whichever method you choose,
please read the enclosed Prospectus/Proxy Statement carefully before you vote.
Your vote on these matters is important. Please complete the Voting
Instructions Card and return it promptly in the envelope provided or vote using
one of the other methods described above. Please respond. In order to avoid the
additional expense of further solicitation, we ask that you vote promptly. It is
important that your policy or contract be represented.
Sincerely,
/s/ Philip R. McLoughlin
Philip R. McLoughlin
President
PHOENIX-MFS VALUE SERIES
A SERIES OF
THE PHOENIX EDGE SERIES FUND
101 MUNSON STREET
GREENFIELD, MASSACHUSETTS 01301
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 14, 2004
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To The Contract and Policy Holders:
The Phoenix-MFS Value Series, a series of The Phoenix Edge Series Fund (the
"Trust"), a Massachusetts business trust, will hold a Special Meeting of
Shareholders at One American Row, Hartford, Connecticut 06102, on September 14,
2004, at 10:30 a.m., local time, for the following purposes:
1. To consider and act upon a proposal to approve the Agreement and
Plan of Reorganization, dated September 14, 2004, and the
transactions it contemplates, including (a) the transfer of all of
the assets of the Phoenix-MFS Value Series (the "Merging Series")
to the Phoenix-Oakhurst Value Equity Series (the "Surviving
Series"), another series of the Trust, in exchange solely for
shares of the Surviving Series and the assumption by the Surviving
Series of all liabilities of the Merging Series and (b) the
distribution of the shares of the Surviving Series so received to
shareholders of the Merging Series in complete liquidation of the
Merging Series. A vote in favor of the Agreement and Plan of
Reorganization is a vote in favor of termination of the Merging
Series.
2. To consider and act upon any other business as may properly come
before the meeting and any adjournment(s) thereof.
The Board of Trustees of the Trust has fixed the close of business on July
20, 2004 as the record date for determining shareholders entitled to notice of
and to vote at the Special Meeting and any adjournment or postponement thereof.
You are cordially invited to attend the Special Meeting.
Contract/Policyholders who do not expect to attend the Special Meeting are asked
to respond promptly via Internet or telephone or by returning a completed Voting
Instructions Card. The Board of Trustees of the Trust is soliciting the enclosed
proxy.
By Order of the Board of Trustees of
The Phoenix Edge Series Fund
RICHARD J. WIRTH
SECRETARY
Hartford, Connecticut
August 6, 2004
THIS PAGE LEFT INTENTIONALLY BLANK.
PHOENIX-MFS VALUE SERIES
PHOENIX-OAKHURST VALUE EQUITY SERIES
EACH A SERIES OF
THE PHOENIX EDGE SERIES FUND
101 MUNSON STREET
GREENFIELD, MASSACHUSETTS 01301
1-800-541-0171
PROSPECTUS/PROXY STATEMENT
DATED AUGUST 6, 2004
The Phoenix Edge Series Fund (the "Trust"), a Massachusetts business trust,
serves as an investment vehicle for use in connection with variable life
insurance policies and variable annuity contracts (collectively, "Contracts")
issued by Phoenix Life Insurance Company ("PLIC"), PHL Variable Insurance
Company ("PHL Variable"), Phoenix Life and Annuity Company ("PLAC")
(collectively, "Phoenix"), and their separate accounts. Phoenix and the separate
accounts are the sole shareholders of record of the Trust.
This Prospectus/Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Trustees of the Trust, for use at the
Special Meeting of Shareholders of the Phoenix-MFS Value Series (the "Merging
Series") to be held at 10:30 a.m., local time, on September 14, 2004, at the
offices of the Phoenix Life Insurance Company located at One American Row,
Hartford, Connecticut 06102, and at any adjournment(s) thereof.
The purpose of the meeting is to consider approval of an Agreement and Plan
of Reorganization (the "Agreement" or "Plan") that would effect the
reorganization (the "Reorganization") of the Merging Series into the
Phoenix-Oakhurst Value Equity Series, another series of the Trust (the
"Surviving Series"), as described below. Under the Agreement, all of the assets
of the Merging Series would be transferred to the Surviving Series in exchange
solely for shares of beneficial interest in the Surviving Series and the
assumption by the Surviving Series of all liabilities of the Merging Series.
These shares of the Surviving Series would then be distributed pro rata to the
separate accounts of the insurance companies then holding shares of the Merging
Series, and then the Merging Series would be liquidated. As a result of the
proposed transactions, the separate accounts would receive a number of full and
fractional shares of the Surviving Series with an aggregate net asset value
equal to the aggregate net asset value of the Merging Series shares on the
closing date of the Reorganization.
The Surviving Series and the Merging Series are each a series of the Trust,
an open-end management investment company. The Surviving Series has an
investment objective of long-term capital appreciation with a secondary
objective of current income. The Merging Series has investment objectives of
capital appreciation and reasonable income. Phoenix Investment Counsel, Inc.
("PIC"), is employed as the investment advisor for the Surviving Series, and
Phoenix Variable Advisors, Inc. ("PVA"), is employed as the investment advisor
for the Merging Series. Massachusetts Financial Services Company, doing business
as MFS Investment Management ("MFS") is employed as the investment subadvisor
for the Merging Series.
This Prospectus/Proxy Statement, which you should retain for future
reference, sets forth concisely the information that you should know about the
Merging Series, the Surviving Series, and the transactions contemplated by the
Agreement. As used in this Prospectus/Proxy Statement, the term "Series" refers
individually and collectively to the Merging Series and the Surviving Series.
A Prospectus, as supplemented, and a Statement of Additional Information
("SAI"), as supplemented, for the Series dated May 1, 2004 (File No. 33-05033),
have been filed with the Securities and Exchange Commission ("SEC") and are
incorporated by reference in this Prospectus/Proxy Statement. This means that
such information is legally considered to be part of this Prospectus/Proxy
Statement. A copy of the prospectus and periodic reports have been sent to
shareholders; however, copies of the above-referenced documents are available
upon
oral request or written request and without charge by contacting Phoenix
Variable Products Mail Operations, P.O. Box 8027, Boston, Massachusetts
02266-8027, or by calling toll-free at 1-800-541-0171.
The Trust files reports, proxy materials and other information with the
SEC. Information about the Trust, including the SAI for the Trust, can be
reviewed and copied at the SEC's Public Reference Room in Washington, D.C. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 202-942-8090. Reports and other information about the Trust are
available on the EDGAR Database on the SEC's Internet site at
http://www.sec.gov. Copies of the information may be obtained, after paying a
duplicating fee, by electronic request at the following e-mail address:
publicinfo@sec.gov or by writing the SEC Public Reference Section, Washington,
D.C. 20549-0102.
This Prospectus/Proxy Statement constitutes the proxy statement of the
Merging Series for the Special Meeting and the prospectus for shares of the
Surviving Series that have been registered with the SEC and are being issued in
connection with the Reorganization. The Statement of Additional Information for
this Prospectus/Proxy Statement dated August 6, 2004 is incorporated by
reference. (File No. 333-116764). Both the Prospectus/Proxy Statement and
Statement of Additional Information have been filed with the SEC and are
available upon oral request or written request and without charge by contacting
Phoenix Variable Products Mail Operations at the address above or by calling the
toll-free number above. This Prospectus/Proxy Statement is expected to first be
sent to shareholders on or about August 17, 2004.
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THE SECURITIES OF THE SURVIVING SERIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SEC NOR HAS THE SEC DETERMINED IF THIS PROSPECTUS/PROXY STATEMENT IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
Page
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SYNOPSIS.................................................................. 1
PRINCIPAL RISK FACTORS.................................................... 5
THE PROPOSED REORGANIZATION............................................... 7
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES.......................... 10
COMPARATIVE INFORMATION ON PURCHASES AND EXCHANGES........................ 14
COMPARATIVE INFORMATION ON DISTRIBUTIONS AND REDEMPTIONS.................. 14
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS............................. 14
FISCAL YEAR............................................................... 16
MANAGEMENT AND OTHER SERVICE PROVIDERS.................................... 16
VOTING INFORMATION........................................................ 19
ADDITIONAL INFORMATION ABOUT THE SERIES................................... 21
MISCELLANEOUS............................................................. 22
SURVIVING SERIES FINANCIAL HIGHLIGHTS..................................... 26
OTHER BUSINESS............................................................ 27
APPENDIX A................................................................ A-1
THIS PAGE LEFT INTENTIONALLY BLANK.
SYNOPSIS
The following synopsis is a summary, and is qualified by later discussion
in this Prospectus/Proxy Statement. For additional information on the topics
described below, please refer to the respective section of this Prospectus/Proxy
Statement.
BACKGROUND
The proposed Reorganization is the outcome of deliberations by the Board of
Trustees of the Trust (the "Trustees"). Management recommended that the Trustees
consider the benefits that the Series shareholders would realize if the Merging
Series were to be combined with the Surviving Series. In response to their
recommendation, the independent Trustees of the Trust requested that management
outline a specific Reorganization proposal for their consideration and provide
an analysis of the specific benefits that shareholders would realize from the
proposal. Independent Trustees are Trustees who are not "interested persons" of
the Trust (as defined in Section 2(a)(19) of the Investment Company Act of 1940,
as amended (the "1940 Act")). After considering the specific Reorganization
proposal, and the specific benefits that shareholders are expected to realize
from the proposal, the Trustees, including the independent Trustees, at a
special meeting held on May 11, 2004, unanimously approved the Reorganization
subject to approval by the Merging Series shareholders.
SUMMARY OF THE PROPOSED REORGANIZATION
The Reorganization will be effected in accordance with the terms of an
Agreement, a form of which is attached to this Prospectus/Proxy Statement as
Appendix A. The Reorganization Agreement provides for:
o the acquisition by the Surviving Series, on the closing date of the
Reorganization, of all of the assets of the Merging Series in exchange
solely for shares of the Surviving Series and the assumption by the
Surviving Series of all liabilities of the Merging Series;
o the pro rata distribution of shares of the Surviving Series to the
shareholders of the Merging Series in exchange for their respective
shares of the Merging Shares; and
o the complete liquidation of the Merging Series as provided in the
Agreement and Plan of Reorganization.
The Reorganization is anticipated to occur on or about September 24, 2004.
If the Agreement is implemented, the insurance company separate accounts holding
shares of the Merging Series will receive a number of full and fractional shares
of the Surviving Series shares with an aggregate net asset value equal to the
aggregate net asset value of their shares of the Merging Series as of the
closing date of the Reorganization.
The implementation of the Agreement is subject to a number of conditions
set forth in the Agreement. See "The Proposed Reorganization." The following are
significant conditions (which may not be waived):
o the receipt by the Trust of an opinion of counsel that, for Federal
income tax purposes, the Reorganization will qualify as a tax-free
reorganization described in Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"); and
o the approval of the Agreement by the shareholders of the Merging
Series.
The Agreement provides that PLIC will bear all costs and expenses of the
Reorganization, including the costs of the Special Meeting, the costs and
expenses incurred in the preparation and mailing of the notice, this
Prospectus/Proxy Statement and the proxy, and the tabulation of voting
instructions.
1
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and principal investment strategies of the
Merging Series and the Surviving Series are similar:
o the Merging Series has an investment objective of capital appreciation
and reasonable income. The Surviving Series has an investment objective
of long-term capital appreciation with current income as a secondary
objective; and
o under normal market conditions, the Merging Series invests at least 65%
of its assets in income-producing equity securities of companies which
the subadvisor believes are undervalued in the market relative to their
long-term potential. Under normal circumstances, the Surviving Series
invests at least 80% of its assets in common stocks.
See "Principal Risk Factors" and "Comparison of Investment Objectives and
Policies" below for further information on the similarities and differences
between the investment objectives, policies and risks of the Surviving Series
and the Merging Series. You can also find additional information for the
Surviving Series in its Prospectus.
DIVIDENDS AND DISTRIBUTIONS
The Merging Series and the Surviving Series distribute net income
quarterly. Both Series distribute net realized capital gains, if any, at least
annually. All dividends and distributions of the Merging Series and the
Surviving Series are paid in additional shares of the respective Series. You can
also find additional information on dividends and distributions for the
Surviving Series in its Prospectus.
PURCHASES AND EXCHANGES
The shares of the Trust are not offered directly to the public. Shares of
the Trust currently are offered through certain separate accounts owned by
Phoenix to fund the Contracts. A person can invest in the Trust only by
purchasing a Contract and directing the allocation of the purchase payment(s) to
the subaccount(s) corresponding to the Series in which the person wishes to
invest. The subaccounts, in turn, invest in shares of the Trust. Not all Series
may be available through a particular Contract. At this time, Phoenix does not
charge for subaccount transfers; however, Phoenix does reserve the right to
charge a fee of up to $20 per transfer after the first twelve transfers in each
Contract year.
Because excessive trading with a Series can hurt performance and therefore
be detrimental to all contract/policyholders, Phoenix does reserve the right to
temporarily or permanently terminate trading privileges or reject any specific
order from anyone whose transactions seem to follow a timing pattern, including
those who request more than one trade out of a subaccount within any 30-day
period. Phoenix will not accept batch transfer instructions from registered
representatives (acting under powers of attorney for multiple Contract owners),
unless Phoenix has entered into a third-party transfer service agreement with
the registered representative's broker-dealer firm.
Both Series currently offer shareholders identical exchange privileges.
Shareholders of either Series may exchange their shares for shares of another
series of the Trust at any time.
REDEMPTION PROCEDURES
As a person owning a Contract issued by Phoenix, you have the right to
instruct the insurance company how to vote and redeem the shares of the Merging
Series and the Surviving Series. Shareholders of both Series may redeem their
shares at a redemption price equal to the net asset value of the shares (minus
any applicable product surrender charge) as next determined following the
receipt of a redemption order in proper form. Ordinarily, payments of redemption
proceeds for redeemed shares are made within seven days after receipt of a
redemption request in proper form. See "Comparative Information on Distributions
and Redemptions" for more information. You can also find additional information
on the Surviving Series' redemption procedures in its Prospectus.
2
FEDERAL TAX CONSEQUENCES OF PROPOSED REORGANIZATION
At the closing of the Reorganization, the Trust will receive an opinion of
counsel, subject to customary assumptions and representations, that, for Federal
income tax purposes, the Reorganization will qualify as a tax-free
reorganization described in Section 368(a) of the Code. Accordingly:
o no gain or loss will be recognized by the Merging Series on the
transfer of the assets of the Merging Series to the Surviving Series
solely in exchange for Surviving Series shares and the assumption by
the Surviving Series of all liabilities of the Merging Series or upon
the distribution of Surviving Series shares to the Merging Series
insurance company shareholders in exchange for their shares of the
Merging Series;
o the tax basis of the Merging Series' assets acquired by the Surviving
Series will be the same as the tax basis of such assets to the Merging
Series immediately prior to the Reorganization, and the holding period
of the assets of the Merging Series in the hands of the Surviving
Series will include the period during which those assets were held by
the Merging Series; and
o no gain or loss will be recognized by the Surviving Series upon the
receipt of the assets of the Merging Series solely in exchange for the
Surviving Series shares and the assumption by the Surviving Series of
all liabilities of the Merging Series.
We also believe that the Reorganization should not adversely impact the tax
treatment of your variable life or variable annuity contract. Shareholders of
the Merging Series should consult their tax advisors regarding the effect, if
any, of the proposed Reorganization in light of their individual circumstances.
See "The Proposed Reorganization--Federal Income Tax Consequences" for more
information.
RISK FACTORS
An investment in the Surviving Series is subject to specific risks arising
from the types of securities in which the Surviving Series invests and general
risks arising from investing in any mutual fund type of investment. The primary
risks to which the Surviving Series is subject include the risks of investing in
equity securities, including value investing risk; interest rate risk; and
portfolio turnover risk. Investors can lose money by investing in the Surviving
Series. There is no assurance that the Surviving Series will meet its investment
objectives. The Surviving Series' investment objectives and policies are similar
to those of the Merging Series. An investment in the Surviving Series is subject
to some of the same risks as an investment in the Merging Series. In addition,
the Merging Series is subject to larger market capitalization risk; foreign
investment risk, including foreign currency risk; over-the-counter risk; and
convertible securities investment risk. See "Principal Risk Factors" for further
information concerning the principal risks associated with an investment in the
Surviving Series.
MANAGEMENT AND OTHER SERVICE PROVIDERS
PIC is the investment advisor to the Surviving Series and is responsible
for its day-to-day portfolio management. PVA is the investment advisor to the
Merging Series. PVA has entered into a subadvisory agreement with MFS, who
provides day-to-day portfolio management for the Merging Series.
COMPARATIVE FEE TABLES
The tables below are designed to assist you in understanding the various
direct and indirect costs and expenses associated with an investment in each
Series. The table and the example do not include any fees or sales charges
imposed under the Contracts for which the Series is an investment option. If
these fees and sales charges were reflected, the total expenses associated with
an investment in each Series shown in the tables would be higher. Each table
also includes pro forma information for the combined Surviving Series resulting
from the Reorganization, assuming the Reorganization took place on December 31,
2003, and after adjusting such information to reflect current fees. The expense
information for the Surviving Series and the Merging Series is based upon
expenses for the period ended December 31, 2003.
3
There are no load charges or fees imposed upon shareholders of the Series.
However, contractual charges do apply. As indicated in the table below,
immediately upon effectiveness of the Reorganization, the "Total Annual Series
Operating Expenses" for the combined Surviving Series are expected to be lower
than the "Total Annual Series Operating Expenses" for the Merging Series.
ANNUAL SERIES OPERATING EXPENSES
- --------------------------------
(expenses that are deducted, from PRO FORMA
assets) SURVIVING SERIES (A) MERGING SERIES (B) COMBINED SERIES
-------------------- ------------------ ---------------
Management Fees 0.70% 0.75% 0.70%
Distribution and service (12b-1 Fees) None None None
Other Expenses 0.32% 0.88% 0.31%
Total Annual Series Operating Expenses 1.02% 1.63% 1.01%
(a) The Surviving Series' investment advisor has voluntarily agreed to
reimburse the Surviving Series' expenses, other than the management
fees, to the extent that such expenses exceed 0.25% of the Surviving
Series' average net assets (the "expense cap"). Therefore, the
Surviving Series' operating expenses after reimbursement were 0.95% for
the year ended December 31, 2003. The expense cap noted above may be
changed or eliminated at any time without notice.
(b) The Merging Series' investment advisor has voluntarily agreed to
reimburse the Merging Series' expenses, other than the management fees,
to the extent that such expenses exceed 0.25% of the Merging Series'
average net assets (the "expense cap"). Therefore, the Merging Series'
operating expenses after reimbursement were 1.00% for the year ended
December 31, 2003. The expense cap noted above may be changed or
eliminated at any time without notice.
The following example illustrates the impact of the above fees and expenses
on an account with an initial investment of $10,000, based on the expenses shown
above. It assumes a 5% annual return, the reinvestment of all dividends and
distributions and "Annual Trust Operating Expenses" remaining the same each
year. The example is offered to show the costs of investing in the Surviving and
Merging Series as compared with investing in other mutual funds. This example is
hypothetical; actual Trust expenses and returns vary from year to year and may
be higher or lower than those shown.
Fees and expenses if you redeemed your shares at the end of each time
period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Surviving Series $ 104 $ 325 $ 563 $ 1,248
Merging Series $ 166 $ 515 $ 887 $ 1,935
Pro Forma Combined Surviving Series $ 103 $ 321 $ 558 $ 1,236
Note: Actual expenses for both the Merging Series and the Surviving Series
may be lower than those shown in the examples above since the expense levels
used to calculate the figures shown do not include the reimbursement of expenses
over certain levels by each Series' advisor.
The purpose of the tables above is to help the investor understand the
various costs and expenses that the investor will bear directly or indirectly.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN SHOWN.
4
PRINCIPAL RISK FACTORS
The Surviving Series' investment objective, policies and risk factors are
similar to those of the Merging Series. The following highlights the principal
similarities and differences between the principal risk factors associated with
an investment in the Surviving Series as contrasted with those associated with
the Merging Series and is qualified in its entirety by the more extensive
discussion of risk factors in the Prospectuses and Statements of Additional
Information of the Surviving Series and the Merging Series, respectively.
There are differences between the risks of investing in the Merging Series
and investing in the Surviving Series. Each series has equity securities
investing risk, interest rate risk, and value investing risk. These risks are
described below. An investment in the Surviving Series has portfolio turnover
risk, while the Merging Series does not. This could cause the Surviving Series
to have higher expenses, and for there to be higher taxable gains to the
shareholder upon distribution. Several investment risks caused by an investment
in the Merging Series, including larger market capitalization risk, foreign
investment risk, foreign currency risk, over-the-counter risk, and convertible
securities risk are not found in the Surviving Series.
An investment in the Surviving Series is subject to specific risks arising
from the types of securities in which the Surviving Series invests and general
risks arising from investing in any mutual fund. You can lose money by investing
in the Surviving Series. There is no assurance that the Surviving Series will
meet its investment objectives.
GENERAL
The value of the investments of the Merging Series and the Surviving Series
that supports your share value can decrease. If between the time you purchase
shares and the time you sell shares the value of your Series' investments
decrease, you will lose money.
Investment values can decrease for a number of reasons. Conditions
affecting the overall economy, specific industries or companies in which your
Series invests can be worse than expected and investments may fail to perform as
the Series' investment advisor expects. As a result, the value of your shares
may decrease.
The following chart indicates the primary investment risks of the Surviving
Series and the Merging Series. Descriptions of the risks of the Surviving Series
can be found below.
SURVIVING SERIES MERGING SERIES
---------------- --------------
Equity Securities Investment Risk Equity Securities Investment Risk
Interest Rate Risk Larger Market Capitalization Risk
Portfolio Turnover Risk Foreign Investment Risk
Value Investing Risk Foreign Currency Risk
Interest Rate Risk (for income-producing
equity securities)
Over-the-Counter Risk
Convertible Securities Investment Risk
Value Investing Risk
Convertible Securities Investment Risk
A convertible security is a bond, debenture, note, preferred stock or other
security that may be converted into or exchanged for a prescribed amount of
common stock of the issuer at a predetermined time(s), price(s) or price
formula(s). A convertible security entitles the owner to receive interest paid
or accrued on a debt security or dividends paid on preferred stock until the
security matures or is converted to common stock. Convertible securities have
several unique investment characteristics, such as: (i) yields higher than
common stocks but lower than comparable nonconvertible securities; (ii)
typically less fluctuation in value than the "underlying" common stock, that is,
the common stock that the investor receives if he or she converts; and (iii) the
potential for capital appreciation if the market price of the underlying common
stock increases.
5
Convertible securities may be subject to redemption at the option of the
issuer. If a security is called for redemption, the series may have to redeem
the security, convert it into common stock or sell it to a third party at a
price and time that is not beneficial for the Series.
Equity Securities Investment Risk
In general, prices of equity securities are more volatile than those of
fixed-income securities. The prices of equity securities will rise and fall in
response to a number of different factors. In particular, equity securities will
respond to events that affect entire financial markets or industries (changes in
inflation or consumer demand, for example) and to events that affect particular
issuers (news about the success or failure of a new product, for example). The
Surviving Series may invest in stock offered in Initial Public Offerings
("IPOs"), which typically have less available public information. Investment
returns from IPOs may be highly volatile, and may be subject to varying patterns
of trading volume; and these securities may, at times, be difficult to sell. In
addition, from time to time, the Surviving Series may purchase shares in IPOs
and then immediately sell them. This practice will increase portfolio turnover
rates and may increase costs to the Surviving Series, affecting Series
performance.
Foreign Investment Risk
Foreign investments could be more difficult to sell than U.S. investments.
They also may subject a Series to risks different from investing in domestic
securities. Investments in foreign securities involve difficulties in receiving
or interpreting financial and economic information, possible imposition of
taxes, higher brokerage and custodian fees, possible currency exchange controls
or other government restrictions, including possible seizure or nationalization
of foreign deposits or assets. Foreign securities may also be less liquid and
more volatile than U.S. securities. There may also be difficulty in invoking
legal protections across borders. In addition, investment in emerging-market
countries presents risks in greater degree than those presented by investment in
foreign issuers in countries with developed securities markets and more advanced
regulatory systems.
Some foreign securities are issued by companies organized outside the
United States and are traded only or primarily in trading markets outside the
United States. These foreign securities can be subject to most, if not all, of
the risks of foreign investing. Some foreign securities are issued by companies
organized outside the United States but are traded in U.S. securities markets
and are denominated in U.S. dollars. For example, American Depositary Receipts
and shares of some large foreign-based companies are traded on principal U.S.
exchanges. Other securities are not traded in the United States but are
denominated in U.S. dollars. These securities are not subject to all the risks
of foreign investing. For example, foreign trading market or currency risks will
not apply to dollar-denominated securities traded in U.S. securities markets.
Foreign Currency Risk
Changes in foreign exchange rates will affect the value of those securities
denominated or quoted in currencies other than the U.S. dollar. The forces of
supply and demand in the foreign exchange markets determine exchange rates and
these forces are in turn affected by a range of economic, political, financial,
governmental and other factors. Exchange rate fluctuations can affect the
Series' net asset value (share price) and dividends either positively or
negatively depending upon whether foreign currencies are appreciating or
depreciating in value relative to the U.S. dollar. Exchange rates fluctuate over
both the short and long terms. In addition, when certain foreign countries
experience economic difficulties, there is an increased risk that the foreign
government may impose restrictions on the free exchange of its currency.
Interest Rate Risk
The value of fixed-income securities will be directly affected by trends in
interest rates. For example, in times of rising interest rates, the value of
these types of securities tends to decrease. When interest rates fall, the value
of these securities tends to rise. Interest-rate changes have a greater effect
on the price of fixed-income securities with longer durations.
6
Interest Rate Risk (for income-producing equity securities)
Income producing equity securities may react like fixed-income securities
to changes in interest rates. Thus, when interest rates rise, the prices of
income-producing equity securities may fall. Conversely, a decrease in interest
rates may cause these securities to increase in value.
Larger Market Capitalization Risk
Companies with large capitalizations go in and out of favor based on market
and economic conditions. Larger companies tend to be less volatile than
companies with smaller market capitalizations. In exchange for this potentially
lower risk, a Series' value may not rise as much as the value of series that
emphasize companies with smaller market capitalizations.
Over-The-Counter risk
Over-the-counter ("OTC") transactions involve risks in addition to those
associated with transactions in securities traded on exchanges. OTC-listed
companies may have limited product lines, markets or financial resources. Many
OTC stocks trade less frequently and in smaller volume than exchange-listed
stocks. The values of these stocks may be more volatile than exchange-listed
stocks, and the Series may experience difficulty in buying and selling these
stocks at prevailing market prices.
Portfolio Turnover Risk
The Surviving Series may, consistent with its investment policies, purchase
and sell securities without regard to the effect on portfolio turnover. High
portfolio turnover (e.g., over 100%) involves correspondingly greater expenses
to the Series, including brokerage commissions or dealer mark-ups and other
transaction costs on the sale of securities and reinvestments in other
securities. The trading costs associated with portfolio turnover may adversely
affect the Surviving Series' performance.
Value Investing Risk
The value approach to investing involves the risk that the value of the
security will not be recognized for an unexpectedly long period of time, and
that the security is not undervalued but is appropriately priced due to
fundamental problems not yet apparent.
THE PROPOSED REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION
The terms and conditions under which the proposed Reorganization may be
consummated are set forth in the Agreement. Significant provisions of the
Agreement are summarized below. This summary, however, is qualified in its
entirety by reference to the Agreement, a form of which is attached to this
Prospectus/Proxy Statement as Appendix A.
The Agreement contemplates:
o the acquisition by the Surviving Series, on the closing date of the
Reorganization, of all of the assets of the Merging Series in exchange
solely for shares of the Surviving Series and the assumption by the
Surviving Series of all liabilities of the Merging Series;
o the pro rata distribution of shares of the Surviving Series to the
shareholders of the Merging Series in exchange for their respective
shares of the Merging Series; and
o the complete liquidation of the Merging Series as provided in the
Agreement.
The assets of the Merging Series to be acquired by the Surviving Series
include all property, including, without limitation, all cash, securities, and
dividends or interest receivables which are owned by the Merging Series and any
deferred or prepaid expenses shown as an asset on the books of the Merging
Series on the closing date of the
7
Reorganization. The Surviving Series will assume all liabilities of the Merging
Series as of the closing date, including all accrued expenses, costs, charges,
and reserves of the Merging Series reflected on the unaudited statement of
assets and liabilities as of the closing date. The closing of the Reorganization
will occur following satisfaction (or waiver) of the conditions to closing set
forth in the Agreement or such later date as the parties may agree.
The value of the Merging Series' assets to be acquired and the Merging
Series' liabilities to be assumed by the Surviving Series, and the net asset
value of shares of the Surviving Series, will be determined immediately after
the close of regular trading on the New York Stock Exchange on the closing date,
using the valuation procedures set forth in the Series' then-current Prospectus
and Statement of Additional Information. The number of shares of the Surviving
Series to be issued to the Shareholders of each Merging Series will be
determined by dividing (a) the value of the aggregate net assets of the Merging
Series by (b) the net asset value of one share of the Surviving Series.
On the closing date, the Merging Series will liquidate and distribute pro
rata to its shareholders of record the Surviving Series shares received by the
Merging Series in exchange for their respective shares in the Merging Series.
This liquidation and distribution will be accomplished by opening an account on
the books of the Surviving Series in the name of each shareholder of record of
the Merging Series and by crediting to each such account the shares due pursuant
to the Reorganization. Every Merging Series shareholder will own shares of the
Surviving Series immediately after the Reorganization, the value of which will
be equal to the value of the shareholder's Merging Series shares on the Closing
Date.
At or prior to the closing date, the Merging Series will declare a dividend
or dividends that, together with all previous such dividends, will have the
effect of distributing to the Merging Series shareholders of record all of the
Merging Series' investment company taxable income for all taxable years ending
at or prior to the closing date and all of its net capital gains realized (after
reduction for any capital loss carry-forward) in all taxable years ending at or
prior to the closing date.
Subject to certain limitations on liability, the Surviving Series has
agreed to indemnify and hold harmless those Trustees who are not "interested
persons" of the advisor or distributor of the Merging Series (the "Independent
Trustees") from and against any and all claims, costs, expenses (including
reasonable attorneys' fees), losses and liabilities of any sort or kind
(collectively "Liability") which may be asserted against them or for which the
Independent Trustees may become liable arising out of or attributable to the
transactions contemplated by the Agreement, provided that any Independent
Trustee seeking the benefit of this indemnification shall not have materially
contributed to the creation of such Liability by acting in a manner contrary to
his or her fiduciary duties as a trustee under the 1940 Act.
The consummation of the Reorganization is subject to a number of conditions
set forth in the Agreement. Certain of these conditions may be waived by the
Board of Trustees or by an authorized officer of the Trust, as appropriate.
The significant conditions which may not be waived are: (a) the receipt by
the Trust of an opinion of counsel that the Reorganization will qualify as a
tax-free reorganization described in Section 368(a) of the Code for Federal
income tax purposes, and (b) the approval of the Agreement by the shareholders
of the Merging Series. The Agreement may be terminated and the Reorganization
abandoned at any time, before or after approval by the shareholders of the
Merging Series, prior to the closing date, by resolution of the Board of
Trustees. In addition, the Agreement may be amended by mutual agreement, except
that no amendment may be made to the Agreement subsequent to the Special Meeting
that would change the provisions for determining the number of Surviving Series
shares to be issued to shareholders of the Merging Series without their further
approval.
REASONS FOR THE REORGANIZATION
The proposed Reorganization is the outcome of the deliberations by the
Trustees of the Trust. Management recommended that the Trustees consider the
benefits that shareholders would realize if the Merging Series were to be
combined with the Surviving Series. In response to this recommendation, the
Independent Trustees of the Trust requested that management outline a specific
Reorganization proposal for their consideration and provide an analysis of the
specific benefits to be realized by shareholders from the proposal.
8
In the course of their review, the Trustees of the Trust noted that the
Reorganization would be a means of combining two series with similar investment
objectives and principal investment strategies and would permit the shareholders
of the Merging Series to pursue their investment goals in a Series which, after
the Reorganization, is anticipated to be larger than the Merging Series. In
reaching this conclusion, the Board considered a number of additional factors,
including, but not limited to, the following:
o the potential benefits of the Reorganization to shareholders of the
Surviving Series and the Merging Series, including that the
Reorganization could result in economies of scale through the spreading
of fixed costs over a larger asset base;
o the terms and conditions of the proposed Agreement, and that the
proposed Agreement will not result in dilution of shareholder
interests;
o the total expense ratio of the combined Surviving Series following the
Reorganization is projected to be lower than the current total expense
ratio of the Merging Series;
o the compatibility of investment objectives, policies, restrictions and
investment holdings among the Merging Series and the Surviving Series;
o the ability to better manage asset flows in the Surviving Series
because of its anticipated greater size;
o the comparable performance of the Series;
o the terms and conditions of the Agreement will have minimal affect upon
the price of the outstanding shares of each Series;
o the Reorganization provides for continuity of distribution and
shareholder servicing arrangements; and
o the Reorganization is not expected to result in the recognition of any
gain or loss for Federal income tax purposes either to the Merging
Series or the Surviving Series and should not adversely impact the tax
treatment of the variable contracts invested in whole or in part in
either of the Series.
After considering these and other factors, the Board of Trustees, including
the Independent Trustees, unanimously concluded at a special meeting held on May
11, 2004 that the Reorganization is fair and reasonable and would be in the best
interests of both the Merging Series and the Surviving Series and their
respective shareholders and that the interests of either Series' shareholders
will not be diluted as a result of the transactions contemplated by the
Reorganization recognizing that there can be no assurance that any operating
efficiencies or other benefits will in fact be realized. The Trustees
unanimously voted to approve the Reorganization and authorized the officers of
the Trust to submit the Reorganization proposal to shareholders of the Merging
Series for consideration.
FEDERAL INCOME TAX CONSEQUENCES
McDermott Will & Emery LLP, special tax counsel to the Trust, is to opine
that, subject to customary assumptions and representations, on the basis of the
existing provisions of the Internal Revenue Code (the "Code"), the Treasury
Regulations promulgated thereunder and current administrative and judicial
interpretations thereof, for Federal income tax purposes, the Reorganization
will qualify as a tax-free reorganization described in Section 368(a) of the
Code. Accordingly:
o no gain or loss will be recognized by the Merging Series on the
transfer of the assets of the Merging Series to the Surviving Series
solely in exchange for Surviving Series shares and the assumption by
the Surviving Series of all liabilities of the Merging Series or upon
the distribution of Surviving Series shares to the Merging Series
insurance company shareholders in exchange for their shares of the
Merging Series;
o the tax basis of the Merging Series' assets acquired by the Surviving
Series will be the same as the tax basis of such assets to the Merging
Series immediately prior to the Reorganization, and the holding period
of the assets of the Merging Series in the hands of the Surviving
Series will include the period during which those assets were held by
the Merging Series; and
9
o no gain or loss will be recognized by the Surviving Series upon the
receipt of the assets of the Merging Series solely in exchange for the
Surviving Series shares and the assumption by the Surviving Series of
all liabilities of the Merging Series.
The receipt of such an opinion that the Reorganization will qualify as a
tax-free reorganization described in Section 368(a) of the Code is a condition
to the consummation of the Reorganization. The Trust has not obtained an
Internal Revenue Service ("IRS") private letter ruling regarding the Federal
income tax consequences of the Reorganization and the IRS is not bound by advice
of counsel. You are not directly a shareholder of the Merging Series but,
instead, some or all of your variable life insurance policy or variable annuity
contract is invested in the Merging Series. We also believe, however, that the
Reorganization should not adversely affect the tax treatment of your variable
contract.
It is possible, although unlikely in our view, that, because the Merging
Series will no longer be an available Series underlying your variable contract,
your Contract could be considered changed in a manner that causes the contract
or policy to be considered newly issued for Federal income tax purposes. In such
a case, your Contract would be subject to the Federal income tax rules in effect
on the effective date of the Reorganization instead of the Federal income tax
rules in effect on the issue date of your Contract, which could have been more
favorable.
Shareholders of the Merging Series should consult their tax advisors
regarding the effect, if any, of the proposed Reorganization in light of their
individual circumstances. Since the foregoing discussion relates only to the
Federal income tax consequences of the Reorganization, shareholders of the
Merging Series should also consult tax advisors as to state and local tax
consequences, if any, of the Reorganization.
It is also possible that if the reorganization were not tax-free, which as
indicated above is not expected, and the Surviving Series as a result failed to
qualify as a regulated investment company, the diversification rules of Code
Section 817(h) might be violated. In such a case, income on your contract could
be currently taxable to you.
CAPITALIZATION
The following table sets forth the capitalization of the Surviving Series
and the Merging Series, and on a pro forma basis for the combined Surviving
Series as of December 31, 2003, giving effect to the proposed acquisition of net
assets of the Merging Series at net asset value.
PRO FORMA
SURVIVING SERIES MERGING SERIES COMBINED SERIES
---------------- -------------- ---------------
Net assets $92,805,254 $30,180,919 $122,986,173
Net asset value per share $11.77 $11.10 $11.77
Shares outstanding 7,882,010 2,719,586 10,446,234
The table set forth above should not be relied on to determine the number
of Surviving Series shares to be received in the Reorganization. The actual
number of shares to be received will depend upon the net asset value and number
of shares outstanding of the Merging Series and the Surviving Series at the time
of the Reorganization.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The following discussion is a summary of some of the more significant
similarities and differences in the investment objectives, policies and
restrictions of the Surviving Series and the Merging Series. The discussion
below is qualified in its entirety by the discussion elsewhere in this
Prospectus/Proxy Statement and in the Trust's Prospectus and Statement of
Additional Information.
10
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Surviving Series and the Merging Series
are similar. The investment objectives of the Surviving Series and the Merging
Series are "fundamental policies" which may not be changed without the approval
of the holders of at least a "majority of the outstanding voting shares" of the
respective Series. A majority of the outstanding voting shares is defined in the
1940 Act as the lesser of (a) the vote of the holders of 67% or more of the
outstanding voting shares of the Series present in person or by proxy, if the
holders of more than 50% of the outstanding voting shares of that Series are
present in person or by proxy, or (b) the vote of the holders of more than 50%
of the outstanding voting shares of the Series.
The principal investment strategies of the Surviving Series are also
similar to the principal investment strategies of the Merging Series. There are
some differences, however, between the investment strategies of the Merging and
Surviving Series. The Merging Series may invest up to 35% of its assets in
foreign securities, while foreign investment is not a principal investment
strategy of the Surviving Series. The adviser's portfolio selection method for
the Surviving Series may result in a higher portfolio turnover rate. High
portfolio turnover rates may increase costs to the Surviving Series and may
negatively affect fund performance. Furthermore, the Surviving Series does not
share the Merging Series' focus on investment in the equity securities of
companies with larger market capitalizations. This strategy could make an
investment in the Surviving Series more volatile than an investment in the
Merging Series, as smaller companies may be affected to a greater extent than
larger companies by changes in general economic conditions and conditions in
particular industries.
SURVIVING SERIES
- ----------------------------------------------------------------------------------------------------------------------
Investment Objective Long-term capital appreciation. Current income is a
secondary objective.
- ------------------------------------------------------------ ---------------------------------------------------------
Principal Investment Strategies Under normal circumstances the Surviving Series invests
at least 80% of its assets in common stocks.
The Surviving Series invests in a diversified portfolio
of securities of primarily domestic (U.S.) companies.
Generally, the Surviving Series invests in securities
traded on the New York Stock Exchange, or the American
Stock Exchange, and in over-the-counter markets.
The advisor applies a security selection process that
selects stocks meeting certain investment criteria
relating to valuation, profitability, near term momentum,
long term growth and financial stability. For the few
hundred of the approximately 1,500 companies that survive
this screening process, the advisor projects future
growth in earnings and dividends, earnings momentum and
relative undervaluation based on individual company
prospects, industry trends and macroeconomic conditions.
From this analysis, the advisor develops target prices
and value ranges and selects a diversified portfolio of
top-rated securities for purchase.
With certain exceptions, the advisor sells when a stock's
target price is reached, the issuer or its industry
suffer negative changes, or there is a change in the
investment criteria that prompted the initial purchase.
The advisor may choose to continue to hold a security
that it believes is suitable for the series' objectives
even if it no longer meets these criteria.
The advisor's portfolio selection method may result in a
higher portfolio turnover rate. High portfolio turnover
rates may increase costs to the Surviving Series and may
negatively affect fund performance.
- ----------------------------------------------------------------------------------------------------------------------
11
MERGING SERIES
- ----------------------------------------------------------------------------------------------------------------------
Investment Objective Capital appreciation and reasonable income.
- ------------------------------------------------------------ ---------------------------------------------------------
Principal Investment Strategies The Merging Series invests, under normal market
conditions, at least 65% of its assets in
income-producing equity securities of companies which the
subadvisor believes are undervalued in the market
relative to their long term potential. Equity securities
include common stocks and related securities, such as
preferred stocks, convertible securities and depository
receipts for those securities.
While the Merging Series may invest in companies of any
size, the Series generally focuses on undervalued
companies with large market capitalizations. The equity
securities of these companies may be undervalued because:
o they are temporarily out of favor in the market due
to a decline in the market, poor economic conditions,
or developments that have affected or may affect the
issuer of the securities or the issuer's industry; or
o the market has overlooked them
Undervalued equity securities generally have low
price-to-book, price-to-sales and/or price-to-earnings
ratios.
The Merging Series seeks to achieve a gross yield that
exceeds that of the S&P 500 Index.
Equity securities may be listed on a securities exchange
or traded in the over-the-counter markets.
The subadvisor uses a bottom-up, as opposed to a
top-down, investment style in managing the Merging
Series. This means that securities are selected based
upon fundamental analysis (such as an analysis of
earnings, cash flows, competitive position and
management's abilities) performed by the Series'
portfolio manager and the subadvisor's large group of
equity research analysts.
The Merging Series may invest up to 35% of its assets in
foreign securities through which it may have exposure to
foreign currencies.
- ----------------------------------------------------------------------------------------------------------------------
12
CERTAIN INVESTMENT RESTRICTIONS
The Series are subject to identical investment restrictions that restrict
the scope of their investments. These investment restrictions are "fundamental"
policies. A "fundamental" policy is defined in the 1940 Act to mean that the
restriction cannot be changed without the vote of a "majority of the outstanding
voting shares" of a Series (as that term is defined in the 1940 Act).
Neither Series may:
(1) with respect to 75% of its total assets, purchase securities of an
issuer (other than the U.S. Government, its agencies, instrumentalities
or authorities or repurchase agreements collateralized by U.S.
Government securities and other investment companies), if: (a) such
purchase would, at the time, cause more than 5% of the Series' total
assets, taken at market value, to be invested in the securities of such
issuer; or (b) such purchase would, at the time, result in more than
10% of the outstanding voting securities of such issuer being held by
the Series;
(2) purchase securities in a given industry if, after giving effect to the
purchase, more than 25% of its total assets would be invested in the
securities of one or more issuers conducting business activities in the
same industry (excluding the U.S. Government or its agencies or
instrumentalities);
(3) issue senior securities in contravention of the 1940 Act. Activities
permitted by SEC exemptive orders or staff interpretations shall not be
deemed prohibited by this restriction;
(4) borrow money, except (i) in amounts not to exceed one third of the
value of the Series' total assets (including the amount borrowed) from
banks, and (ii) up to an additional 5% of its total assets from banks
or other lenders for temporary purposes. For purposes of this
restriction, (a) investment techniques such as margin purchases, short
sales, forward commitments, and roll transactions, (b) investments in
instruments such as futures contracts, swaps, and options, and (c)
short-term credits extended in connection with trade clearances and
settlement shall not constitute borrowing;
(5) underwrite the securities issued by other persons, except to the extent
that, in connection with the disposition of portfolio securities, a
Series may be deemed to be an underwriter under the applicable law;
(6) purchase or sell real estate, except that a Series may (i) acquire or
lease office space for its own use, (ii) invest in securities of
issuers that invest in real estate or interests therein, (iii) invest
in mortgage-related securities and other securities that are secured by
real estate or interests therein, or (iv) hold and sell real estate
acquired by the Series as a result of the ownership of securities;
(7) make loans, except that a Series may (i) lend portfolio securities,
(ii) enter into repurchase agreements, (iii) purchase all or a portion
of an issue of debt securities, bank loan participation interests, bank
certificates of deposit, bankers' acceptances, debentures or other
securities, whether or not the purchase is made upon the original
issuance of the securities, and (iv) participate in an interfund
lending program with other registered investment companies; and/or
(8) purchase or sell commodities or commodity contracts, except a Series
may purchase and sell derivatives (including, but not limited to,
options, futures contracts and options on futures contracts) whose
value is tied to the value of a financial index or a financial
instrument or other asset (including, but not limited to, securities
indices, interest rates, securities, currencies and physical
commodities).
If any percentage restriction described above for the Series is adhered to
at the time of investment, a subsequent increase or decrease in the percentage
resulting from a change in the value of the Series' assets will not constitute a
violation of the restriction.
13
COMPARATIVE INFORMATION ON PURCHASES AND EXCHANGES
The shares of the Trust are not offered directly to the public. Shares of
the Trust currently are offered to certain separate accounts in order to fund
variable accumulation annuity contracts or variable life insurance policies
issued by Phoenix Life Insurance Company, PHL Variable Insurance Company and
Phoenix Life and Annuity Company and their separate accounts. Investments in the
Trust may occur only by purchasing a Contract and directing the allocation of
your purchase payment(s) to the subaccount(s) corresponding to a Series. The
subaccounts, in turn, invest in shares of the Trust. Not all Series may be
offered through a particular Contract.
Phoenix Equity Planning Corporation ("PEPCO") is an indirect subsidiary of
The Phoenix Companies, Inc. ("PNX"). PNX is the parent company of PLIC. PEPCO is
also a broker-dealer registered with relevant regulators and serves as national
distributor of variable products issued by Phoenix. Variable products may be
purchased through broker-dealers registered with applicable regulatory
authorities and who have entered into a sales agreement with PEPCO. Sales
commissions will be paid to registered representatives based on the amount of
premiums received in connection with the sale of variable products, subject to
governing law. PLIC and its insurance company affiliates also pay commissions to
PEPCO based on the amount of premiums received in connection with the sale of
variable products, subject to governing law.
There are no load charges or fees imposed upon shareholders of the Series.
However, contractual charges do apply. In connection with the proposed
Reorganization, no sales charges are imposed. Shares of the Series are offered
to the separate accounts at a price equal to their respective net asset value
per share.
Because excessive trading can hurt fund performance and therefore be
detrimental to all policyholders, Phoenix reserves the right to temporarily or
permanently terminate exchange privileges or reject any specific order from
anyone whose transactions seem to follow a timing pattern, including those who
request more than one exchange out of a subaccount within any 30-day period.
Phoenix will not accept batch transfer instructions from registered
representatives (acting under powers of attorney for multiple contract owners),
unless we have entered into a third-party transfer service agreement with the
registered representative's broker-dealer firm.
COMPARATIVE INFORMATION ON DISTRIBUTION AND REDEMPTION
Both Series offer the same distribution and redemption services. The
Merging Series and the Surviving Series distribute net income quarterly. Both
Series distribute net realized capital gains, if any, at least annually. All
dividends and distributions with respect to the shares of the Merging Series and
the Surviving Series are paid in additional shares of the respective Series. The
number of shares received in connection with any reinvestment of dividends will
be based upon the net asset value per share of the applicable Series in effect
on the record date. Both Series currently offer shareholders identical exchange
privileges. Shareholders of either Series may exchange their shares for shares
of a corresponding Series of the Trust.
Shares of the Surviving Series and the Merging Series may be redeemed at a
redemption price equal to the net asset value of the shares as next determined
following the receipt of a redemption order and any other required documentation
in proper form. Payment of redemption proceeds for redeemed shares is generally
made within seven days after receipt of a redemption request in proper form and
documentation, provided that each check used for purchases of shares has been
cleared for payment.
Because each Series offer the same distribution and redemption services,
after the closing, the same services will continue to be available to the
shareholders of the Merging Series but in their capacity as shareholders of the
Surviving Series.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS
The following is a summary of certain provisions of the Amended Declaration of
Trust of the Merging Series and the Surviving Series.
14
FORM OF ORGANIZATION
Each Series is a series of The Phoenix Edge Series Fund, a business trust
organized under the laws of the Commonwealth of Massachusetts, pursuant to a
Declaration of Trust dated February 18, 1986, as amended. The operations of
these Series are governed by the Declaration of Trust and by Massachusetts law.
The shares of the Trust are registered with the SEC as an open-end management
investment company and are subject to the provisions of the 1940 Act and the
rules and regulations of the SEC thereunder. The Trustees may generally
authorize mergers, consolidations, share exchanges and reorganizations of a new
Series or of each respective Series with another Series or other business
organization.
SHARES
The Declaration of Trust authorizes the Trustees to issue an unlimited
number of shares of beneficial interest of each Series. The Trust currently has
thirty-two series outstanding. The Trustees of the Trust may also create
additional series in the future without shareholder approval. When issued, the
shares are fully paid and non-assessable, have no preference, preemptive or
similar rights unless designated by the Trustees, and are freely transferable.
Shares (including fractional shares) of each Series have equal rights with
regard to voting redemptions, dividends, distributions and liquidations with
respect to that Series. All voting rights of the separate accounts as
shareholders are passed through to the contract/policyholders. The assets and
proceeds received by the Trust from the issue or sale of shares of a Series are
allocated to that Series and constitute the rights of that Series, subject only
to the rights of creditors. Any underlying assets of a Series are required to be
segregated on the books of account of the Trust. These assets are to be used to
pay the expenses of the Series as well as a share of the general expenses of the
Trust.
MEETINGS
Under the Declaration of Trust and Massachusetts business trust laws, the
Trust is not required to hold annual shareholder meetings. The Trustees or
President of the Trust may call shareholder meetings as necessary. To the extent
required by the 1940 Act, meetings held for the purpose of voting on the removal
of any Trustee shall be called by the Trustees or upon written request by
shareholders holding at least ten percent of the outstanding shares entitled to
vote.
SHAREHOLDER LIABILITY
Unlike the stockholders of a corporation, under certain circumstances
shareholders of a business trust may be held personally liable for the debts,
claims or other obligations of a business trust. However, the Declaration of
Trust limits shareholder liability. The Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts or
obligations of the Trust and that every written agreement, undertaking or
obligation made or issued by the Trust shall contain a provision to that effect.
The Declaration of Trust provides for indemnification out of the Trust's
property for any shareholder and any former shareholder who is exposed to
liability by reason of a claim or demand relating to such person being a
shareholder. Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability, which is considered remote, is limited to
circumstances in which the Trust itself would be unable to meet its obligations.
LIABILITY OF TRUSTEES
The Declaration of Trust provides that Trustees will generally be
personally liable only for willful misfeasance, bad faith, gross negligence or
reckless disregard of duties. The Trust may purchase insurance for Trustees to
cover potential liabilities and will generally indemnify a Trustee against such
claims. The Trust may also advance payments to a Trustee in connection with
indemnification.
LIQUIDATION OR DISSOLUTION
In the event of the liquidation or dissolution of either Series, the
Trustees shall distribute the assets of the Series to the shareholders,
according to their respective rights, after accounting for the liabilities of
the Trust.
15
FISCAL YEAR
The Series each operate on a fiscal year that ends December 31.
MANAGEMENT AND OTHER SERVICE PROVIDERS
Responsibility for the overall supervision of both Series rests with
Trustees of the Trust.
PIC is the investment advisor to the Surviving Series and is responsible
for the day-to-day portfolio management. Steven L. Colton and Dong Zhang are the
portfolio managers for the Surviving Series. Steven L. Colton joined PIC in June
1997. Previously, Mr. Colton was portfolio manager for the American Century
Income & Growth Fund ("ACIGF") from its inception on December 1990 through May
1997. Dong Zhang is the portfolio manager and is primarily responsible for the
day-to-day operation of the Surviving series. Mr. Zhang joined PIC in June 1997.
Mr. Zhang also was a member of the portfolio management team for ACIGF from June
1996 through June 1997.
PVA is the investment advisor to the Merging Series. PVA has entered into a
subadvisory agreement with MFS to provide day-to-day portfolio management. MFS
is the subadvisor to the Phoenix-MFS Investors Growth Stock Series, Phoenix-MFS
Investors Trust Series, and Phoenix-MFS Value Series. MFS and its predecessor
organizations have a history of money management dating from 1924 and the
founding of the first mutual fund.
Legal Proceedings. On March 31, 2004, MFS settled an administrative
proceeding with the SEC regarding disclosure of brokerage allocation practices
in connection with the sale of funds sponsored by MFS (including the series).
Under the terms of the settlement, in which MFS neither admitted nor denied any
wrongdoing. MFS agreed to pay (one dollar) $1.00 in disgorgement and $50 million
in penalty to certain MFS funds, pursuant to a plan to be approved by an
independent distribution consultant. The agreement with the SEC is reflected in
an order of the SEC. The settlement order states that MFS failed to adequately
disclose to the Boards of Trustees and to shareholders of the MFS funds the
specifics of its preferred arrangements with certain brokerage firms selling MFS
fund shares. The settlement order states that MFS had in place policies designed
to obtain best execution of all fund trades.
As part of the settlement, MFS also agreed to retain an independent
compliance consultant to review the completeness of its disclosure to fund
trustees and to fund shareholders of strategic alliances between MFS or its
affiliates and broker-dealers and other financial advisers who support the sale
of fund shares. The brokerage allocation practices which were the subject of
this proceeding were discontinued by MFS in November 2003. In addition, in
February 2004, MFS reached agreement with the Securities and Exchange Commission
("SEC"), the New York Attorney General ("NYAG") and the Bureau of Securities
Regulation of the State of New Hampshire ("NH") to settle administrative
proceedings alleging false and misleading information in certain MFS retail fund
prospectuses regarding market timing and related matters (the "February
Settlements"). These regulators alleged that prospectus language for certain MFS
retail funds was false and misleading because, although the prospectuses for
those funds in the regulators' view indicated that the funds prohibited market
timing. MFS did not limit trading activities in 11 domestic large cap stock,
high grade bond and money market retail funds. MFS' former Chief Executive
officer, John W. Ballen, and former President, Kevin R. Parke, have also reached
an agreement with the SEC (Messrs. Ballen and Parke resigned their director and
officer positions with MFS in February 2004). Under the terms of the February
Settlements, MFS and the executives neither admit nor deny wrongdoing.
Under the terms of these February Settlements, a $225 million pool has been
established for distribution to shareholders in certain of the MFS funds offered
to retail investors ("Retail Funds"), which has been funded by MFS and of which
$50 million is characterized as a penalty. This pool will be distributed in
accordance with a methodology developed by an independent distribution
consultant in consultation with MFS and the Boards of Trustees of the Retail
Funds, and acceptable to the SEC. MFS has further agreed with the NYAG to reduce
its management fees in the aggregate amount of approximately $25 million
annually over the next five years, and not to increase certain management fees
during this period. MFS has also paid an administrative fine to NH in the amount
of $1 million, which will be used for investor education purposes (NH will
retain $250,000 and $750,000 will be contributed to the North American
Securities Administrative Association's Investor Protection Trust).
16
In addition, under the terms of the February Settlements, MFS is in the
process of adopting certain governance changes, which include, among others:
o formation of a Code of Ethics Oversight Committee, comprised of senior
executives of MFS' operating businesses, to oversee all matters
relating to issues arising under MFS' Code of Ethics;
o establishment of an Internal Compliance Controls Committee, chaired by
MFS' Chief Compliance Officer and comprised of senior executive of MFS'
operating businesses, to review compliance issues as they may arise
from time to time, endeavor to develop solutions to those issues, and
oversee implementation of those solutions;
o establishment of a company ombudsman to whom MFS employees may convey
concerns about MFS business matters that they believe involve matters
of ethics or questionable practices;
o establishment of a full-time senior-level position reporting to MFS'
Chief Compliance Officer whose responsibilities include compliance
matters relating to conflicts of interest; this officer or another
designated compliance officer will implement and oversee the funds'
excessive trading policies and compliance procedures;
o engagement of an Independent Compliance Consultant to conduct a
comprehensive review of MFS supervisory, compliance, and other policies
and procedures designed to prevent and detect conflicts of interest,
breaches of fiduciary duty, breaches of the MFS Code of Ethics and
federal securities law violations by MFS and its employees; and
o commencing in 2006, and at least once every year thereafter, MFS shall
undergo a compliance review by an independent third party.
In addition, under the terms of the February Settlements, MFS has
undertaken to use its best efforts to cause the Retail Funds to operate in
accordance with the following governance policies and practices:
o at least 75% of the Retail Funds' Boards of Trustees will be
independent of MFS and will not have been directors, officers or
employees of MFS at any point during the preceding 10 years (a standard
to which the Retail Funds' Boards currently adhere);
o the chair of the Retail Funds' Board of Trustees will be independent of
MFS and will not have been a director, officer or employee of MFS at
any point during the preceding 10 years (a standard to which the Retail
Funds' Boards currently adhere);
o all action taken by the Retail Funds' Boards of Trustees or a committee
thereof will be approved by a majority of the independent trustees of
the Boards or committee, respectively;
o commencing in 2005 and not less than every fifth calendar year
thereafter, the Retail Funds will hold shareholder meetings at which
the Board of Trustees will be elected; and
o the Retail Funds will designate an independent compliance officer
reporting to the Board of Trustees responsible for assisting the Boards
in monitoring compliance by MFS with the federal securities laws, its
fiduciary duties to fund shareholders and its Code of Ethics in all
matters relevant to the operations of the funds.
Although the terms of the February Settlements apply only to the Retail
Funds, all funds overseen by the Retail Funds' Board of Trustees have undertaken
to observe these governance policies and practices.
Under the terms of the NYAG settlement, MFS has undertaken, on behalf of
the funds, that:
o the funds will retain a senior office responsible for assisting in the
review of fee arrangements and administering the funds' compliance
policies and procedures, and the Board of Trustees of the funds has
determined that MFS shall reimburse the funds for the expenses of this
senior officer; and
17
o certain statements sent by MFS to fund shareholders will disclose fees
and costs in actual dollar amounts charged to each investor on his or
her actual investment based upon the investor's most recent quarterly
closing balance and on a hypothetical $10,000 investment held for ten
years.
Messrs. Ballen and Parke have agreed to suspensions from association with
any investment adviser or registered investment company for periods of 9 months
and 6 months, respectively. Upon completion of these suspensions, for periods of
27 months (Mr. Ballen) and 30 months (Mr. Parke). Messrs. Ballen and Parke have
agreed not to serve as an employee, officer or trustee of any registered
investment company; not to serve as chairman, director or as an officer of an
investment adviser; and to otherwise perform only limited functions for an
investment adviser, which may include strategic planning and analysis, portfolio
management and non-mutual fund marketing. Messrs. Ballen and Parke will pay
approximately $315,000 each to the SEC, $250,000 of which is characterized as a
penalty. In addition, Messrs. Ballen and Parke resigned as trustees of the
funds' Board of Trustees, and Mr. Ballen resigned as the funds' President,
effective February 2004. Messrs. Ballen and Parke will not be returning to
MFS or the MFS funds after their suspensions.
Since December 2003, MFS, Sun Life Financial Inc., various MFS funds, the
Trustees of these MFS funds, and certain officers of MFS have been named as
defendants in multiple lawsuits filed in federal and state courts. The lawsuits
variously have been commenced as class actions or individual actions on behalf
of investors who purchased, held or redeemed shares of the funds during
specified periods, as class actions on behalf of participants in certain
retirement plan accounts, or as derivative actions on behalf of the MFS funds.
The lawsuits generally allege that some or all of the defendants (i) permitted
or acquiesced in market timing and/or late trading in some of the MFS funds,
inadequately disclosed MFS' internal policies concerning market timing and such
matters, and received excessive compensation as fiduciaries to the MFS funds, or
(ii) permitted or acquiesced in the improper use of fund assets of MFS to
support the distribution of fund shares and inadequately disclosed MFS' use of
fund assets in this manner. The actions assert that some or all of the
defendants violated the federal securities laws, including the Securities Act of
1933 and the Securities Exchange Act of 1934, the Investment Company Act of 1940
and the Investment Advisers Act of 1940, the Employee Retirement Income Security
Act of 1974, as well as fiduciary duties and other violations of common law. The
lawsuits seek unspecified compensatory damages. Insofar as any of the actions is
appropriately brought derivatively on behalf of any of the MFS funds, any
recovery will inure to the benefit of the funds. The defendants are reviewing
the allegations of the multiple complaints and will respond appropriately.
Additional lawsuits based on similar allegations may be filed in the future.
Any potential resolutions of these matters may include, but not be limited
to, judgments or settlements for damages against MFS, the MFS funds, or any
other named defendant. As noted above, as part of the regulatory settlements,
MFS has established a restitution pool in the amount of $225 million to
compensate certain shareholders of the Retail Funds for damages that they
allegedly sustained as a result of market timing or late trading in certain of
the funds, and will pay $50 million to compensate certain MFS funds based upon
the amount of brokerage commissions allocated in recognition of fund sales. It
is not clear whether these amounts will be sufficient to compensate shareholders
for all of the damages they allegedly sustained, whether certain shareholders or
putative class members may have additional claims to compensation, or whether
the damages that may be awarded in any of the actions will exceed these amounts.
In the event the MFS funds incur any losses, cost or expenses in connection with
such lawsuits, the Board of Trustees of the affected funds may pursue claims on
behalf of such funds against any party that may have liability to the funds in
respect thereof.
Review of these matters by the independent Trustees of the MFS funds and
their counsel is continuing. There can be no assurance that these regulatory
actions and lawsuits, or the adverse publicity associated with these
developments will not result in increased fund redemptions, reduced sales of
fund shares, or other adverse consequences to the funds.
Phoenix Equity Planning Corporation serves as financial agent of both
Series and, as such, performs administrative, bookkeeping and pricing functions.
State Street Bank and Trust Company serves as custodian to both Series.
PricewaterhouseCoopers LLP serves as independent registered public
accountants for both Series.
18
VOTING INFORMATION
QUORUM AND VOTING REQUIREMENTS
This Prospectus/Proxy Statement is being furnished to the shareholders of
the Merging Series in connection with the solicitation by the Board of Trustees
of the Trust of proxies to be used at the meeting. Shareholders of record of the
Merging Series at the close of business on July 20, 2004 ("Record Date") own
3,101,142.509 shares. Each share will be entitled to vote at the meeting or at
any adjournment(s) thereof. Each of the above shares is entitled to one vote,
with proportionate voting for fractional shares. The record owners of the shares
of each separate Series of the Trust include the Phoenix Life Variable Universal
Life Account, Phoenix Life and Annuity Variable Universal Life Account and the
PHLVIC Variable Universal Life Account (collectively, the "VUL Accounts"), which
fund variable life insurance policies, and the Phoenix Life Variable
Accumulation Account and the PHL Variable Accumulation Account (collectively,
the "VA Accounts"), which fund variable annuity contracts.
Each shareholder of record at the close of business on the Record Date is
entitled to a notice of the meeting and will be asked to instruct Phoenix how to
vote at the Special Meeting or any adjourned or postponed session. No
shareholder, to the Trust's knowledge, owns Contracts which are funded by more
than five percent of the outstanding voting shares of the Trust or of any
Series. The number of votes with respect to which each shareholder will be
entitled to instruct Phoenix will be determined by applying the shareholder's
percentage interest in a subaccount to the total number of votes attributable to
the subaccount. In determining the number of votes, fractional shares will be
recognized. The number of votes for which a shareholder may provide instructions
will be determined as of the Record Date.
In accordance with its view of applicable law, Phoenix will vote the shares
of the Merging Series for which Phoenix receives voting instructions from the
shareholder in accordance with those instructions. Phoenix will vote shares for
which it has not received timely voting instructions from shareholders and any
shares held by Phoenix or its affiliates for their own accounts in the same
proportion as the shares for which shareholders have provided voting
instructions to Phoenix.
In addition to the proxy solicitation by mail, officers and regular
employees of Phoenix or one of its affiliates may solicit voting instructions
personally, by telephone or telegram. Phoenix will, upon request, reimburse
banks, brokers, fiduciaries and nominees for their reasonable expenses in
sending proxy materials. The cost of solicitation of voting instructions will be
borne indirectly by PLIC. You can provide voting instructions in any one of four
ways:
o THROUGH THE INTERNET - www.proxyweb.com
o BY TELEPHONE - 800-690-6903
o BY MAIL - using the enclosed Voting Instructions Card(s) and postage
paid envelope
o IN PERSON - at the Special Meeting
Proxies executed by shareholders may be revoked at any time before they are
exercised by a written revocation received by the Secretary of the Trust, by
properly executing a later-dated proxy (in writing, or by telephone or by the
Internet) or by voting in person at the meeting and giving oral notice of
revocation to the Chairman of the meeting.
We encourage you to vote by telephone or by Internet; have your Voting
Instruction Card in hand, and call the number or go to the website and follow
the instructions given there. These voting methods will reduce the time and
costs of this proxy solicitation. Whichever method you choose, please read the
enclosed proxy statement carefully before you vote.
As of the Record Date, Phoenix, through its VUL Accounts and VA Accounts,
owned 3,101,142.509 shares of the Merging Series and 7,627,182.299 shares of the
Surviving Series. No one Contract/Policyholder owns beneficially of record 5% or
more of the outstanding shares of the Merging Series, Surviving Series, or the
combined Surviving Series assuming consummation of the Reorganization, based on
holdings and total shares as of July 20, 2004. As of the Record Date, less than
1% of the outstanding shares of beneficial interest of either Series
19
were held of record or beneficially owned under a contract or policy by the
Trustees or nominees for election as Trustee and by the executive officers of
the Trust, as a group.
A COPY OF THE TRUST'S MOST RECENT ANNUAL REPORT, DATED DECEMBER 31, 2003
HAS BEEN FURNISHED TO SHAREHOLDERS. THE TRUST WILL FURNISH, WITHOUT CHARGE, TO
ANY SHAREHOLDER, UPON REQUEST, A COPY OF THE 2003 ANNUAL REPORT. SUCH REQUESTS
MAY BE DIRECTED TO PHOENIX VARIABLE PRODUCTS OPERATIONS, P.O. BOX 8027, BOSTON,
MA 02266-8027. SHAREHOLDERS MAY ALSO CALL TOLL-FREE AT (800) 541-0171.
The Board knows of no business, other than that mentioned in the Notice of
Special Meeting, that will be presented for consideration at the Special
Meeting. If any other matter is properly presented, it is the intention of the
persons named on the enclosed Voting Instructions Card(s) to vote in accordance
with their best judgment.
A majority of the outstanding voting shares of a Series entitled to vote
shall constitute a quorum for the meeting. Because Phoenix, through its VUL
Accounts and VA Accounts are the record owners of the Merging Series, Phoenix's
attendance at the meeting will constitute a quorum. The affirmative vote of a
majority of the outstanding voting securities of the Trust (i.e., the lesser of
(i) 67% or more of the eligible votes of the Merging Series represented at the
meeting if more than 50% of the eligible votes of the Merging Series are present
in person or by proxy or (ii) more than 50% of the eligible votes of the Merging
Series) must approve the herein contemplated merger. For purposes of determining
the presence of a quorum for transacting business at the meeting and for
determining whether sufficient votes have been received for approval of the
proposal to be acted upon at the meeting, abstentions and broker "non-votes"
(that is, proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owner or other persons entitled to
vote shares on a particular matter with respect to which the brokers or nominees
do not have discretionary power) will be treated as shares that are present at
the meeting but which have not been voted. For this reason, abstentions and
broker non-votes will assist the Merging Series in obtaining a quorum, but both
have the practical effect of a "no" vote for purposes of obtaining the requisite
vote for approval of the proposal.
If either (a) a quorum is not present at the meeting or (b) a quorum is
present but sufficient votes in favor of the Reorganization proposal have not
been obtained, then the persons named as proxies may propose one or more
adjournment(s) of the meeting without further notice to shareholders to permit
further solicitation of proxies provided such persons determine, after
consideration of all relevant factors, including the nature of the proposal, the
percentage of votes then cast, the percentage of negative votes then cast, the
nature of the proposed solicitation activities and the nature of the reasons for
such further solicitation, that an adjournment and additional solicitation is
reasonable and in the interests of shareholders. The persons named as proxies
will vote those proxies that are required to be voted FOR the Reorganization
proposal in favor of such an adjournment and will vote those proxies required to
be voted AGAINST the Reorganization proposal against such adjournment.
The meeting may be adjourned from time to time by the vote of a majority of
the shares represented at the meeting, whether or not a quorum is present. If
the meeting is adjourned to another time or place, notice need not be given of
the adjourned meeting at which the adjournment is taken unless a new record date
of the adjourned meeting is fixed or unless the adjournment is for more than
sixty (60) days from the date set for the original meeting, in which case the
Trustees shall set a new record date. Notice of any such adjourned meeting shall
be given to each shareholder of record entitled to vote at the adjourned
meeting. At any adjourned meeting, the Trust may transact any business which
might have been transacted at the original meeting.
The individuals named as proxies on the enclosed voting instruction card
will vote in accordance with the shareholder's direction, as indicated thereon,
if the voting instruction card is received and is properly executed. If the
shareholder properly executes a voting instruction card and gives no voting
instructions with respect to the Reorganization proposal, the shares will be
voted in favor of the Reorganization proposal. The individuals named as proxies
on the enclosed voting instruction card, in their discretion, may vote upon such
other matters as may properly come before the meeting. The Board of Trustees of
the Trust is not aware of any other matters to come before the meeting.
Approval of the Reorganization proposal by the shareholders of the Merging
Series is a condition of the consummation of the Reorganization. If the
Reorganization is not approved, the Merging Series will continue as a series of
the Trust and the Board of Trustees of the Trust may consider other alternatives
in the best interests of the shareholders of the Merging Series.
20
REVOCATION OF PROXIES
Any shareholder who has given an instruction card has the right to revoke
the proxy any time prior to its exercise:
o by written notice of the an instruction card's revocation to the
Secretary of the Trust at the above address prior to the meeting;
o by the subsequent execution and return of another instruction card
prior to the meeting;
o by use of any electronic, telephonic or other alternative means
authorized by the Trustees for authorizing the proxy to act; or
o by being present and voting in person at the meeting and giving oral
notice of revocation to the Chairman of the meeting.
NO APPRAISAL RIGHTS
The staff of the SEC has taken the position that any rights to appraisal
arising under state law are preempted by the provisions of the 1940 Act and Rule
22c-1 thereunder, which generally requires that shares of a registered open-end
investment company be valued at their next determined net asset value.
SOLICITATION OF PROXIES
In addition to solicitation of proxies by mail, officers and employees of
PLIC or its affiliates may solicit proxies personally or by telephone or by
telegram. PLIC or other representatives of the Trust may also use one or more
proxy solicitation firms to assist with the mailing and tabulation effort and
any special personal solicitation of instruction cards. Banks, brokers,
fiduciaries and nominees will, upon request, be reimbursed by PLIC for their
reasonable expenses in sending proxy material to beneficial owners of shares of
the Merging Series. The cost of the tabulation of proxies will be borne by PLIC.
If a shareholder wishes to participate in the meeting but does not wish to
authorize the execution of an instruction card by telephone or Internet, the
shareholder may still submit the completed Voting Instruction Card form included
with this Prospectus/Proxy Statement in the postage-paid return envelope or
attend the meeting in person.
THE BOARD OF TRUSTEES OF THE TRUST, INCLUDING THE INDEPENDENT TRUSTEES OF
THE TRUST, RECOMMEND YOU APPROVE THE PLAN OF REORGANIZATION.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE RESPOND PROMPTLY BY
INTERNET OR BY TELEPHONE OR BY RETURNING THE VOTING INSTRUCTIONS CARD IN THE
POSTAGE-PAID RETURN ENVELOPE.
ADDITIONAL INFORMATION ABOUT THE SERIES
Additional information about the Series is included in the Trust's
Prospectus as supplemented and Statement of Additional Information as
supplemented dated May 1, 2004 (File No. 033-05033), which have been filed with
the SEC and are incorporated by reference herein. A copy of the Prospectus for
the Trust and Statement of Additional Information may be obtained without charge
by contacting Phoenix Variable Products Mail Operations, P.O. Box 8027, Boston,
Massachusetts 02266-8027, or by calling toll-free at 1-800-541-0171.
21
MISCELLANEOUS
AVAILABLE INFORMATION
Both Series and the Trust are each registered under the 1940 Act and are
subject to the informational requirements of the Securities Exchange Act of
1934, as amended, and the 1940 Act and, in accordance therewith, file reports,
proxy materials and other information with the SEC. Information about the Trust,
including the SAI for the Trust, can be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. You can obtain information on the operation
of the Public Reference Room by calling the SEC at 202-942-8090. Reports and
other information about the Trust are available on the EDGAR Database on the
SEC's Internet site at http://www.sec.gov. Copies of the information may be
obtained, after paying a duplicating fee, by electronic request at the following
e-mail address: publicinfo@sec.gov, or by writing the SEC Reference Section,
Washington, D.C. 20549-0102.
22
PERFORMANCE FOR THE PERIOD ENDING DECEMBER 31, 2003
The following table compares investment performance for both Series for the
period ending December 31, 2003 and compares the same against relevant
benchmarks. The Series' past performance is not necessarily an indication of how
the Series will perform in the future. The Series' performance does not reflect
insurance contract expenses. If these expenses were included, the Series'
performance shown in the table would be lower.
AVERAGE ANNUAL TOTAL RETURNS (FOR THE PERIOD
- ---------------------------- LIFE OF DATE OF
ENDING DECEMBER 31, 2003) 1 YEAR 5 YEARS THE SERIES INCEPTION
------ ------- ---------- ---------
Surviving Series
o Phoenix-Oakhurst Value Equity Series 23.87% 5.45% 6.50% 03/02/98
o Russell 1000(R)Value Index(1) 30.03% 3.56% 4.69% 03/02/98
o S&P 500(R)Index(2) 28.71% (0.57)% 2.52% 03/02/98
Merging Series
o Phoenix-MFS Value Series 24.85% -- 6.10% 10/29/01
o Russell 1000(R)Value Index(1) 30.03% -- 7.53% 10/29/01
o S&P 500(R)Index(2) 28.71% -- 3.19% 10/29/01
GROWTH OF $10,000(3) (FOR THE PERIOD ENDING DECEMBER 31, 2003)
PHOENIX-OAKHURST VALUE
YEAR EQUITY SERIES RUSSELL 1000(R)VALUE INDEX (1) S&P 500(R) INDEX(2)
---- ------------- ------------------------------ -------------------
03/02/98 $10,000 $10,000 $10,000
12/31/98 $11,079 $10,965 $11,895
12/31/99 $13,775 $11,771 $14,409
12/29/00 $18,205 $12,597 $13,086
12/31/01 $14,935 $11,893 $11,532
12/31/02 $11,660 $10,047 $ 8,983
12/31/03 $14,443 $13,064 $11,562
PHOENIX-MFS VALUE
YEAR SERIES RUSSELL 1000(R)VALUE INDEX (1) S&P 500(R) INDEX(2)
---- ------ ------------------------------ -------------------
10/29/01 $10,000 $10,000 $10,000
12/31/01 $10,573 $10,658 $10,677
12/31/02 $ 9,109 $ 9,004 $ 8,317
12/31/03 $11,373 $11,708 $10,705
- ----------------------------
(1) The Russell 1000(R) Value Index is a market capitalization-weighted index of
value-oriented stocks of thE 1,000 largest companies in the Russell
Universe, which comprises the 3,000 largest U.S. companies. The index is
calculated on a total-return basis with dividends reinvested.
(2) The S&P 500(R) Index is an unmanaged, commonly used measure of stock market
total return performance and is provided for general comparative purposes.
(3) This chart assumes an initial investment of $10,000 made on the inception
dates noted in the tables above.
The indexes are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active
management of an actual portfolio.
23
SECTOR WEIGHTINGS (as a percentage of bond holdings as of December 31, 2003)
PHOENIX-MFS VALUE SERIES PHOENIX-OAKHURST VALUE EQUITY SERIES
------------------------ ------------------------------------
Consumer Discretionary $2,863,233 9.69% Consumer Discretionary $15,063,754 16.57%
Consumer Staples $3,271,201 11.07% Consumer Discretionary $5,403,207 5.95%
Exchange Traded Funds -- 0.00% Exchange Traded Funds $963,105 1.06%
Energy $3,828,216 12.95% Energy $7,182,665 7.90%
Financials $8,674,317 29.34% Financials $31,281,531 34.42%
Health Care $2,602,044 8.80% Health Care $7,442,685 8.19%
Industrials $1,898,150 6.42% Industrials $10,236,996 11.26%
Information Technology $979,692 3.31% Information Technology $9,100,601 10.01%
Materials $2,460,504 8.32% Materials $1,757,350 1.93%
Telecommunication Services $1,513,797 5.12% Telecommunication Services $2,461,930 2.71%
Utilities $1,473,596 4.98% Utilities -- 0.00%
SUM OF EQUITY HOLDINGS $29,564,750 100% SUM OF EQUITY HOLDINGS $90,893,824 100.00%
ASSET MIX (as a percentage of total assets as of December 31, 2003)
PHOENIX-MFS VALUE SERIES PHOENIX-OAKHURST VALUE EQUITY SERIES
------------------------ ------------------------------------
Common Stock 88.16% Common Stock 93.95%
Foreign Common Stock 9.80% Foreign Common Stock 2.95%
Mutual Funds 0.00% Mutual Funds 1.04%
Short Term Obligations 2.12% Short Term Obligations 2.13%
Other assets and liabilities, net (0.08)% Other assets and liabilities, net (0.07)%
TOTAL NET ASSETS 100.00% TOTAL NET ASSETS 100.00%
TEN LARGEST HOLDINGS (as a percentage of total net assets as of December 31, 2003)
PHOENIX-MFS VALUE SERIES PHOENIX-OAKHURST VALUE EQUITY SERIES
------------------------ ------------------------------------
Citigroup, Inc. 3.2% Citigroup, Inc. 4.1%
Exxon Mobil Corp. 2.9% Bank of America Corp. 3.7%
FleetBoston Financial Corp. 2.8% Exxon Mobil Corp. 3.5%
Altria Group, Inc. 2.7% Wells Fargo & Co. 3.2%
Bank of America Corp. 2.5% Merrill Lynch & Co., Inc. 2.5%
Johnson & Johnson 2.4% J.P. Morgan Chase & Co. 2.4%
SunTrust Banks, Inc. 2.3% Neiman Marcus Group, Inc. (The Class A) 2.4%
BP plc ADR 2.3% CIT Group, Inc. 2.1%
SBC Communications, Inc. 2.2% Franklin Resources, Inc. 2.0%
Pfizer, Inc. 2.2% Morgan Stanley 1.9%
24
LEGAL MATTERS
Matthew A. Swendiman, Counsel for PLIC and Assistant Secretary to the
Trust, has passed upon certain legal matters in connection with the issuance of
the shares of the Surviving Series.
ADDITIONAL FINANCIAL INFORMATION
The table set forth below presents certain financial information for the
Surviving Series. The financial highlights for each year ended December 31 are
derived from the Surviving Series' audited financial statements for that year.
The data should be read in conjunction with the audited financial statements and
related notes, which are incorporated by reference to the Statement of
Additional Information related to this Prospectus/Proxy Statement. The financial
statements for the Surviving Series for prior periods are contained in the
Surviving Series' Annual Report to Shareholders, which are incorporated by
reference in the Statement of Additional Information related to this
Prospectus/Proxy Statement.
25
FINANCIAL HIGHLIGHTS
(SELECTED DATA FROM A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
The financial highlights table is intended to help you understand the
Phoenix-Oakhurst Value Equity Series' financial performance throughout the
periods indicated. Certain information reflects financial results for a single
share. The total returns in the table represent the rate that an investor would
have earned (or lost) on an investment in the Surviving Series (assuming
reinvestment of all dividends and distributions). These figures do not include
the imposition of separate account fees and expenses. If such fees or expenses
were imposed, total return would be lower. The information has been audited by
PricewaterhouseCoopers LLP. The Report of Independent Auditors and the Surviving
Series' financial statements are included in the December 31, 2003 Annual Report
and are incorporated by reference in the Statement of Additional Information.
SURVIVING SERIES
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
2003 2002 2001 2000 1999
---- ---- ---- ---- ----
Net asset value, beginning of period $9.59 $12.41 $15.34 $12.91 $11.03
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.09 0.10 0.11 0.07 0.04
Net realized and unrealized gain (loss) 2.19 (2.82) (2.86) 3.98 2.63
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 2.28 (2.72) (2.75) 4.05 2.67
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.10) (0.10) (0.09) (0.08) (0.04)
Distributions from net realized gains -- -- (0.09) (1.54) (0.75)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.10) (0.10) (0.18) (1.62) (0.79)
------ ------ ------ ------ ------
CHANGE IN NET ASSET VALUE 2.18 (2.82) (2.93) 2.43 1.88
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $11.77 $ 9.59 $12.41 $15.34 $12.91
====== ====== ====== ====== ======
Total return 23.87% (21.93)% (17.96)% 32.16% 24.33%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousand) $92,805 $71,684 $84,159 $45,461 $17,470
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(1) 0.95%(2) 0.93%(2) 0.85%(2) 0.85% 0.85%
Net investment income 0.88% 0.96% 1.11% 0.79% 0.41%
Portfolio turnover 393% 210% 245% 166% 168%
- ----------------------
(1) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.02%,
1.01%, 1.00%, 1.33% and 2.03% for the periods ended December 31, 2003,
2002, 2001, 2000 and 1999, respectively.
(2) 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.
26
FUTURE SHAREHOLDER MEETINGS
As a Massachusetts business trust, the Trust does not hold shareholder
meetings unless required by the 1940 Act. There will be a Special Meeting of
Phoenix-Lazard U.S. Multi-Cap Series Shareholders, September 14, 2004; a Special
Meeting of Phoenix-Sanford Bernstein Global Value Series Shareholders, September
14, 2004; and a Special Meeting of Phoenix-Alliance/Bernstein Growth + Value
Series and Phoenix-MFS Investors Trust Series Shareholders, September 14, 2004
to consider proposals to approve other Agreements and Plans of Reorganization.
Other than these meetings, the Trust does not anticipate holding a meeting of
shareholders of the Series in 2004. Shareholders who wish to present a proposal
for action at the next meeting should submit the proposal to:
Richard J. Wirth
Secretary, The Phoenix Edge Series Fund
c/o Phoenix Life Insurance Company
One American Row
P.O. Box 5056
Hartford, CT 06102-5056
Proposals must be received a reasonable time prior to the date of the
shareholder meeting to be considered for inclusion in the proxy materials for
the meeting. Timely submission of a proposal does not, however, necessarily mean
that the proposal will be submitted for consideration by shareholders.
OTHER BUSINESS
The Board of Trustees of the Trust knows of no business to be brought
before the Special Meeting other than the matters set forth in this
Prospectus/Proxy Statement. Should any other matter requiring a vote of Merging
Series' shareholders arise, however, the proxies will vote thereon according to
their best judgment in the interests of the Merging Series and the shareholders
of the Merging Series.
By Order of the Board of Trustees,
RICHARD J. WIRTH
Secretary
Hartford, Connecticut
August 6, 2004
27
APPENDIX A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this 14th day of September, 2004, by and between The Phoenix Edge Series
Fund, a Massachusetts business trust (the "Trust"), with its principal place of
business at 101 Munson Street, Greenfield, Massachusetts 01301, on behalf of the
Phoenix-Oakhurst Value Equity Series (the "Surviving Series"), a separate series
of the Trust, and the Trust, on behalf of the Phoenix-MFS Value Series (the
"Merging Series"), another separate series of the Trust.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of the transfer of all of the
assets of the Merging Series to the Surviving Series in exchange solely for
voting shares of beneficial interest of the Surviving Series (the "Surviving
Series Shares"), the assumption by the Surviving Series of all liabilities of
the Merging Series, and the distribution of the Surviving Series Shares to the
shareholders of the Merging Series in complete liquidation of the Merging Series
as provided herein, all upon the terms and conditions hereinafter set forth in
this Agreement.
The Merging Series and the Surviving Series are separate series of the
Trust, an open-end, registered investment company of the management type. The
Merging Series owns securities that generally are assets of the character in
which the Surviving Series is permitted to invest.
The Trustees of the Trust have determined, with respect to the
Surviving Series, that the exchange of all of the assets of the Merging Series
for Surviving Series Shares and the assumption of all liabilities of the Merging
Series by the Surviving Series is in the best interests of the Surviving Series
and its shareholders and that the interests of the existing shareholders of the
Surviving Series would not be diluted as a result of this transaction.
The Trustees of the Trust, have also determined, with respect to the
Merging Series, that the exchange of all of the assets of the Merging Series for
Surviving Series Shares and the assumption of all liabilities of the Merging
Series by the Surviving Series is in the best interests of the Merging Series
and its shareholders and that the interests of the existing shareholders of the
Merging Series would not be diluted as a result of this transaction.
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE MERGING SERIES TO THE SURVIVING SERIES IN
EXCHANGE FOR THE SURVIVING SERIES SHARES, THE ASSUMPTION OF ALL MERGING
SERIES LIABILITIES AND THE LIQUIDATION OF THE MERGING SERIES
1.1 Subject to the requisite approval of the Merging Series
shareholders and the other terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Merging Series
agrees to transfer all of the Merging Series' assets, as set forth in paragraph
1.2, to the Surviving Series, and the Surviving Series agrees in exchange
therefor: (i) to deliver to the Merging Series the number of full and fractional
Surviving Series Shares, determined by dividing the value of the Merging Series'
net assets, computed in the manner and as of the time and date set forth in
paragraph 2.1, by the net asset value of one Surviving Series Share, computed in
the manner and as of the time and date set forth in paragraph 2.2; and (ii) to
assume all liabilities of the Merging Series, as set forth in paragraph 1.3.
Such transactions shall take place at the closing provided for in paragraph 3.1
(the "Closing Date").
1.2 The assets of the Merging Series to be acquired by the Surviving
Series shall consist of all assets and property, including, without limitation,
all cash, securities, commodities and futures interests and dividends or
interests receivable, that are owned by the Merging Series, and any deferred or
prepaid expenses shown as an asset on the books of the Merging Series, on the
Closing Date (collectively, the "Assets").
1.3 The Merging Series will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. The Surviving Series
shall also assume all of the liabilities of the Merging Series, whether accrued
A-1
or contingent, known or unknown, existing at the Valuation Date, as defined in
paragraph 2.1 (collectively, "Liabilities"). On or as soon as practicable prior
to the Closing Date, the Merging Series will declare and pay to its shareholders
of record one or more dividends and/or other distributions so that it will have
distributed substantially all (and in no event less than 98%) of its investment
company taxable income and realized net capital gain, if any, for the current
taxable year through the Closing Date.
1.4 Immediately after the transfer of Assets provided for in
paragraph 1.1, the Merging Series will distribute to the Merging Series'
shareholders of record, determined as of immediately after the close of business
on the Closing Date (the "Merging Series Shareholders"), on a pro rata basis,
the Surviving Series Shares received by the Merging Series pursuant to paragraph
1.1, and will completely liquidate. Such distribution and liquidation will be
accomplished, with respect to the Merging Series' shares, by the transfer of the
Surviving Series Shares then credited to the account of the Merging Series on
the books of the Surviving Series to open accounts on the share records of the
Surviving Series in the names of the Merging Series Shareholders. The aggregate
net asset value of Surviving Series Shares to be so credited to Merging Series
Shareholders shall be equal to the aggregate net asset value of the Merging
Series shares owned by such shareholders on the Closing Date. All issued and
outstanding shares of the Merging Series will simultaneously be canceled on the
books of the Merging Series.
1.5 Ownership of Surviving Series Shares will be shown on the books
of the Surviving Series or its transfer agent, as defined in paragraph 3.3.
1.6 Any reporting responsibility of the Merging Series including,
but not limited to, the responsibility for filing of regulatory reports, tax
returns, or other documents with the U.S. Securities and Exchange Commission
(the "Commission"), any state securities commission, and any federal, state or
local tax authorities or any other relevant regulatory authority, is and shall
remain the responsibility of the Merging Series.
2. VALUATION
2.1 The value of the Assets shall be the value computed as of
immediately after the close of business of the New York Stock Exchange and after
the declaration of any dividends on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures
established by the Trust's Board of Trustees, which shall be described in the
then-current prospectus and statement of additional information with respect to
the Surviving Series.
2.2 The net asset value of Surviving Series Shares shall be the net
asset value per share computed as of the Valuation Date, using the valuation
procedures established by the Trust's Board of Trustees, which shall be
described in the Surviving Series' then-current prospectus and statement of
additional information.
2.3 The number of Surviving Series Shares to be issued (including
fractional shares, if any) in exchange for the Merging Series' Assets shall be
determined by dividing the value of the net assets with respect to the shares of
the Merging Series determined using the same valuation procedures referred to in
paragraph 2.1, by the net asset value of a Surviving Series Share, determined in
accordance with paragraph 2.2.
2.4 All computations of value shall be made by Phoenix Equity
Planning Corporation, in its capacity as financial agent for the Trust.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be September 24, 2004, or such other date
as the parties may agree. All acts taking place at the closing of the
transaction (the "Closing") shall be deemed to take place simultaneously as of
immediately after the close of business on the Closing Date unless otherwise
agreed to by the parties. The close of business on the Closing Date shall be as
of 4:00 p.m., Eastern Time. The Closing shall be held at the offices of the
Trust or at such other time and/or place as the parties may agree.
3.2 The Trust shall direct State Street Bank and Trust Company, as
custodian for the Merging Series (the "Custodian"), to deliver, on the next
business day after the Closing, a certificate of an authorized officer stating
that (i) the Assets have been delivered in proper form to the Surviving Series
on the next business day following the Closing Date, and (ii) all necessary
taxes in connection with the delivery of the Assets, including all applicable
A-2
federal and state stock transfer stamps, if any, have been paid or provision for
payment has been made. The Merging Series' portfolio securities represented by a
certificate or other written instrument shall be presented by the Custodian to
the custodian for the Surviving Series for examination no later than on the next
business day following the Closing Date, and shall be transferred and delivered
by the Merging Series on the next business day following the Closing Date for
the account of the Surviving Series duly endorsed in proper form for transfer in
such condition as to constitute good delivery thereof. The Custodian shall
deliver as of the Closing Date by book entry, in accordance with the customary
practices of such depositories and the Custodian, the Merging Series' portfolio
securities and instruments deposited with a securities depository, as defined in
Rule 17f-4 under the Investment Company Act of 1940, as amended (the "1940
Act"). The cash to be transferred by the Merging Series shall be delivered by
wire transfer of federal funds on the Closing Date.
3.3 The Trust shall direct the Variable Products Operations Unit of
Phoenix Life Insurance Company (the "Transfer Agent"), on behalf of the Merging
Series, to deliver on the next business day following the Closing, a certificate
of an authorized officer stating that its records contain the names and
addresses of the Merging Series Shareholders, and the number and percentage
ownership of outstanding shares owned by each such shareholder immediately prior
to the Closing. The Surviving Series shall issue and deliver to the Secretary of
the Surviving Series a confirmation evidencing the Surviving Series Shares to be
credited on the Closing Date, or provide evidence satisfactory to the Merging
Series that such Surviving Series Shares have been credited to the Merging
Series' account on the books of the Surviving Series. At the Closing each party
shall deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as such other party or its
counsel may reasonably request.
3.4 In the event that on the Valuation Date (a) the New York Stock
Exchange or another primary trading market for portfolio securities of the
Surviving Series or the Merging Series shall be closed to trading or trading
thereupon shall be restricted, or (b) trading or the reporting of trading on
such Exchange or elsewhere shall be disrupted so that, in the judgment of the
Board of Trustees of the Trust, accurate appraisal of the value of the net
assets of the Surviving Series or the Merging Series, respectively, is
impracticable, the Closing Date shall be postponed until the first Friday after
the day when trading shall have been fully resumed and reporting shall have been
restored.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Trust, on behalf of the Merging Series, represents and
warrants as follows:
(a) The Merging Series is duly organized as a series of the Trust,
which is a business trust duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts, with power under the
Trust's Declaration of Trust, as amended ("Declaration of Trust"), to own all of
its Assets and to carry on its business as it is now being conducted;
(b) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act, and the registration of
shares of the Merging Series under the Securities Act of 1933, as amended ("1933
Act"), is in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Merging Series of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act"),
and the 1940 Act and such as may be required by state securities laws;
(d) The current prospectus and statement of additional information
of the Merging Series and each prospectus and statement of additional
information of the Merging Series used at all times previous to the date of this
Agreement conforms or conformed at the time of its use in all material respects
to the applicable requirements of the 1933 Act and the 1940 Act and the rules
and regulations of the Commission thereunder; and does not or did not at the
time of its use include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not materially misleading;
A-3
(e) On the Closing Date, the Trust, on behalf of the Merging Series,
will have good and marketable title to the Assets and full right, power, and
authority to sell, assign, transfer and deliver such Assets hereunder free of
any liens or other encumbrances; and upon delivery and payment for such Assets;
the Trust, on behalf of the Surviving Series, will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act, other than as
disclosed to the Surviving Series;
(f) The Merging Series is not engaged currently, and the execution,
delivery and performance of this Agreement will not result, in (i) a material
violation of the Declaration of Trust or of any agreement, indenture,
instrument, contract, lease or other undertaking to which the Trust on behalf of
the Merging Series is a party or by which it is bound, or (ii) the acceleration
of any obligation, or the imposition of any penalty, under any agreement,
indenture, instrument, contract, lease, judgment or decree to which the Trust on
behalf of the Merging Series is a party or by which it is bound;
(g) All material contracts or other commitments of the Merging
Series (other than this Agreement and certain investment contracts, including
options, futures and forward contracts) will terminate without liability to the
Merging Series on or prior to the Closing Date;
(h) Except as otherwise disclosed in writing to and accepted by the
Trust, on behalf of the Surviving Series, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or, to its knowledge, threatened against the Trust on behalf
of the Merging Series or any of its properties or assets that, if adversely
determined, would materially and adversely affect its financial condition or the
conduct of its business. The Trust, on behalf of the Merging Series, knows of no
facts which might form the basis for the institution of such proceedings and is
not a party to or subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely affects its
business or its ability to consummate the transactions herein contemplated;
(i) The Statement of Assets and Liabilities, Statements of
Operations and Changes in Net Assets, and Schedule of Investments of the Merging
Series at December 31, 2003, have been audited by PricewaterhouseCoopers LLP
("PWC"), independent registered public accountants, and are in accordance with
generally accepted accounting principles ("GAAP") consistently applied, and such
statements (copies of which have been furnished to the Surviving Series) present
fairly, in all material respects, the financial condition of the Merging Series
as of such date in accordance with GAAP, and there are no known contingent
liabilities of the Merging Series required to be reflected on a balance sheet
(including the notes thereto) in accordance with GAAP as of such date not
disclosed therein;
(j) Since December 31, 2003, there has not been any material adverse
change in the Merging Series' financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of business, or
any incurrence by the Merging Series of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Surviving Series. For the purposes of this subparagraph (j),
a decline in net asset value per share of the Merging Series due to declines in
market values of securities in the Merging Series' portfolio, the discharge of
Merging Series liabilities, or the redemption of Merging Series Shares by
shareholders of the Merging Series shall not constitute a material adverse
change;
(k) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Merging Series required by
law to have been filed by such date (including any extensions) shall have been
filed and are or will be correct in all material respects, and all Federal and
other taxes shown as due or required to be shown as due on said returns and
reports shall have been paid or provision shall have been made for the payment
thereof, and to the best of the Merging Series' knowledge, no such return is
currently under audit and no assessment has been asserted with respect to such
returns;
(l) For each taxable year of its operation (including the taxable
year ending on the Closing Date), the Merging Series has met (or will meet) the
requirements of Subchapter M of the Code for qualification as a regulated
investment company, has been (or will be) eligible to and has computed (or will
compute) its federal income tax under Section 852 of the Code, and will have
distributed all of its investment company taxable income and net capital gain
(as defined in the Code) that has accrued through the Closing Date, and before
the Closing Date will
A-4
have declared dividends sufficient to distribute all of its investment company
taxable income and net capital gain for the period ending on the Closing Date;
(m) All issued and outstanding shares of the Merging Series are, and
on the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable and have been offered and sold in every state and the
District of Columbia in compliance in all material respects with applicable
registration requirements of the 1933 Act and state securities laws. All of the
issued and outstanding shares of the Merging Series will, at the time of
Closing, be held by the persons and in the amounts set forth in the records of
the Transfer Agent, on behalf of the Merging Series, as provided in paragraph
3.3. The Merging Series does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the shares of the Merging Series, nor
is there outstanding any security convertible into any of the Merging Series
shares;
(n) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action, if
any, on the part of the Trustees of the Trust, on behalf of the Merging Series,
and, subject to the approval of the shareholders of the Merging Series, this
Agreement will constitute a valid and binding obligation of the Merging Series,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
(o) The information to be furnished by the Merging Series for use in
registration statements, proxy materials and other documents filed or to be
filed with any Federal, state or local regulatory authority (including the NASD,
Inc.), which may be necessary in connection with the transactions contemplated
hereby, shall be accurate and complete in all material respects and shall comply
in all material respects with Federal securities and other laws and regulations
thereunder applicable thereto; and
(p) The proxy statement of the Merging Series (the "Proxy
Statement") to be included in the Registration Statement referred to in
paragraph 5.6, insofar as it relates to the Merging Series, will, on the
effective date of the Registration Statement and on the Closing Date (i) not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not materially
misleading; provided, however, that the representations and warranties in this
subparagraph (p) shall not apply to statements in or omissions from the Proxy
Statement and the Registration Statement made in reliance upon and in conformity
with information that was furnished by the Surviving Series for use therein, and
(ii) comply in all material respects with the provisions of the 1933 Act, the
1934 Act and the 1940 Act and the rules and regulations thereunder.
4.2 The Trust, on behalf of the Surviving Series, represents and
warrants as follows:
(a) The Surviving Series is duly organized as a series of the Trust,
which is a business trust duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts with power under the Trust's
Declaration of Trust to own all of its Assets and to carry on its business as it
is now being conducted;
(b) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act and the registration of
shares of the Surviving Series under the 1933 Act, is in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Surviving Series
of the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state
securities laws;
(d) The current prospectus and statement of additional information
of the Surviving Series and each prospectus and statement of additional
information of the Surviving Series used during the three years previous to the
date of this Agreement conforms or conformed at the time of its use in all
material respects to the applicable requirements of the 1933 Act and the 1940
Act and the rules and regulations of the Commission thereunder and does not or
did not at the time of its use include any untrue statement of a material fact
or omit to state any material fact
A-5
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not materially
misleading;
(e) On the Closing Date, the Trust, on behalf of the Surviving
Series will have good and marketable title to the Surviving Series' assets, free
of any liens of other encumbrances, except those liens or encumbrances as to
which the Merging Series has received notice and necessary documentation at or
prior to the Closing;
(f) The Surviving Series is not engaged currently, and the
execution, delivery and performance of this Agreement will not result, in (i) a
material violation of the Declaration of Trust or of any agreement, indenture,
instrument, contract, lease or other undertaking to which the Trust on behalf of
the Surviving Series is a party or by which it is bound, or (ii) the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
the Trust on behalf of the Surviving Series is a party or by which it is bound;
(g) Except as otherwise disclosed in writing to and accepted by the
Trust, on behalf of the Merging Series, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or, to its knowledge, threatened against the Trust on behalf
of the Surviving Series or any of the Surviving Series' properties or assets
that, if adversely determined, would materially and adversely affect the
Surviving Series' financial condition or the conduct of the Surviving Series'
business. The Trust on behalf of the Surviving Series knows of no facts which
might form the basis for the institution of such proceedings and is not a party
to or subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects the Surviving Series'
business or the Surviving Series' ability to consummate the transactions herein
contemplated;
(h) The Statement of Assets and Liabilities, Statements of
Operations and Changes in Net Assets and Schedule of Investments of the
Surviving Series at December 31, 2003, have been audited by PWC, independent
registered public accountants, and are in accordance with GAAP consistently
applied, and such statements (copies of which have been furnished to the Merging
Series) present fairly, in all material respects, the financial condition of the
Surviving Series as of such date in accordance with GAAP, and there are no known
contingent liabilities of the Surviving Series required to be reflected on a
balance sheet (including the notes thereto) in accordance with GAAP as of such
date not disclosed therein;
(i) Since December 31, 2003, there has not been any material adverse
change in the Surviving Series' financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of business, or
any incurrence by the Surviving Series of indebtedness maturing more than one
year from the date such indebtedness was incurred, except as otherwise disclosed
to and accepted by the Merging Series. For purposes of this subparagraph (i), a
decline in net asset value per share of the Surviving Series due to declines in
market values of securities in the Surviving Series' portfolio, the discharge of
Surviving Series liabilities, or the redemption of Surviving Series Shares by
shareholders of the Surviving Series, shall not constitute a material adverse
change;
(j) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Surviving Series required
by law to have been filed by such date (including any extensions) shall have
been filed and are or will be correct in all material respects, and all Federal
and other taxes shown as due or required to be shown as due on said returns and
reports shall have been paid or provision shall have been made for the payment
thereof, and to the best of the Surviving Series' knowledge no such return is
currently under audit and no assessment has been asserted with respect to such
returns;
(k) For each taxable year of its operation (including the taxable year
including the Closing Date), the Surviving Series has met (or will meet) the
requirements of Subchapter M of the Code for qualification as a regulated
investment company has been eligible to and has computed (or will compute) its
Federal income tax under Section 852 of the Code;
(l) All issued and outstanding Surviving Series Shares are, and on
the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable (recognizing that, under Massachusetts law, it is
theoretically possible that shareholders of the Merging Series could, under
certain circumstances, be held personally
A-6
liable for obligations of the Merging Series) and have been offered and sold in
every state and the District of Columbia in compliance in all material respects
with applicable registration requirements of the 1933 Act. The Surviving Series
does not have outstanding any options, warrants or other rights to subscribe for
or purchase any Surviving Series Shares, nor is there outstanding any security
convertible into any Surviving Series Shares;
(m) The execution, delivery and performance of this Agreement will
have been fully authorized prior to the Closing Date by all necessary action, if
any, on the part of the Trustees of the Trust on behalf of the Surviving Series
and this Agreement will constitute a valid and binding obligation of the Trust
on behalf of the Surviving Series, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles;
(n) Surviving Series Shares to be issued and delivered to the
Merging Series, for the account of the Merging Series Shareholders, pursuant to
the terms of this Agreement, will on the Closing Date have been duly authorized
and, when so issued and delivered, will be duly and validly issued Surviving
Series Shares, and will be fully paid and non-assessable (recognizing that,
under Massachusetts law, it is theoretically possible that shareholders of the
Merging Series could, under certain circumstances, be held personally liable for
obligations of the Merging Series);
(o) The information to be furnished by the Trust for use in the
registration statements, proxy materials and other documents that may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations applicable
thereto; and
(p) That insofar as it relates to the Surviving Series, the
Registration Statement relating to the Surviving Series Shares issuable
hereunder, and the proxy materials of the Merging Series to be included in the
Registration Statement, and any amendment or supplement to the foregoing, will,
from the effective date of the Registration Statement through the date of the
meeting of shareholders of the Merging Series contemplated therein (i) not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
misleading; provided, however, that the representations and warranties in this
subparagraph (p) shall not apply to statements in or omissions from the
Registration Statement made in reliance upon and in conformity with information
that was furnished by the Merging Series for use therein, and (ii) comply in all
material respects with the provisions of the 1933 Act, the 1934 Act and the 194
Act and the rules and regulations thereunder.
5. COVENANTS OF THE TRUST ON BEHALF OF THE SURVIVING SERIES AND THE
MERGING SERIES
5.1 The Surviving Series and the Merging Series each will operate
its business in the ordinary course between the date hereof and the Closing
Date, it being understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions, and any other
distribution that may be advisable.
5.2 The Trust will call a meeting of the shareholders of the Merging
Series to consider and act upon this Agreement and to take all other action
necessary to obtain approval of the transactions contemplated herein.
5.3 The Merging Series covenants that the Surviving Series Shares to
be issued hereunder are not being acquired for the purpose of making any
distribution thereof, other than in accordance with the terms of this Agreement.
5.4 Subject to the provisions of this Agreement, the Surviving
Series and the Merging Series will each take, or cause to be taken, all action,
and do or cause to be done, all things reasonably necessary, proper or advisable
to consummate and make effective the transactions contemplated by this
Agreement.
5.5 As soon as is reasonably practicable after the Closing, the
Merging Series will make a liquidating distribution to its shareholders
consisting of the Surviving Series Shares received at the Closing.
A-7
5.6 The Surviving Series and the Merging Series shall each use its
reasonable best efforts to fulfill or obtain the fulfillment of the conditions
precedent to effect the transactions contemplated by this Agreement as promptly
as practicable.
5.7 The Trust, on behalf of the Merging Series, covenants that it
will, from time to time, as and when reasonably requested by the Trust on behalf
of the Surviving Series, execute and deliver or cause to be executed and
delivered all such assignments and other instruments, and will take or cause to
be taken such further action as the Trust on behalf of the Surviving Series may
reasonably deem necessary or desirable in order to vest in and confirm (a) the
Trust's, on behalf of the Merging Series', title to and possession of the
Surviving Series Shares to be delivered hereunder, and (b) the Trust's, on
behalf of the Surviving Series', title to and possession of all the assets, and
to carry out the intent and purpose of this Agreement.
5.8 The Surviving Series will use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act and such
of the state blue sky or securities laws as may be necessary in order to
continue its operations after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE MERGING SERIES
The obligations of the Trust, on behalf of the Merging Series, to
consummate the transactions provided for herein shall be subject, at the Trust's
election, to the performance by the Trust, on behalf of the Surviving Series, of
all the obligations to be performed by it hereunder on or before the Closing
Date, and, in addition thereto, the following further conditions:
6.1 All representations and warranties of the Trust, on behalf of
the Surviving Series, contained in this Agreement shall be true and correct in
all material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;
6.2 The Trust, on behalf of the Surviving Series, shall have
performed all of the covenants and complied with all of the provisions required
by this Agreement to be performed or complied with by the Trust, on behalf of
the Surviving Series on or before the Closing Date; and
6.3 The Merging Series and the Surviving Series shall have agreed on
the number of full and fractional Surviving Series Shares to be issued in
connection with the Reorganization after such number has been calculated in
accordance with paragraph 1.1.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SURVIVING SERIES
The obligations of the Trust, on behalf of the Surviving Series, to
complete the transactions provided for herein shall be subject, at the Trust's
election, to the performance by the Trust, on behalf of the Merging Series, of
all of the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the Trust, on behalf of
the Merging Series, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;
7.2 The Trust shall have delivered to the Surviving Series a
statement of the Merging Series' assets and liabilities, as of the Closing Date,
certified by the Treasurer of the Trust;
7.3. The Trust, on behalf of the Merging Series, shall have
performed all of the covenants and complied with all of the provisions required
by this Agreement to be performed or complied with by Trust, on behalf of the
Merging Series, on or before the Closing Date;
A-8
7.4 The Merging Series and the Surviving Series shall have agreed on
the number of full and fractional Surviving Series Shares to be issued in
connection with the Reorganization after such number has been calculated in
accordance with paragraph 1.1; and
7.5 The Merging Series shall have declared and paid a distribution
or distributions prior to the Closing that, together with all previous
distributions, shall have the effect of distributing to its shareholders (i) all
of its investment company taxable income and all of its net realized capital
gains, if any, for the period from the close of its last fiscal year to 4:00
p.m. Eastern time on the Closing; and (ii) any undistributed investment company
taxable income and net realized capital gains from any period to the extent not
otherwise already distributed.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SURVIVING SERIES AND
THE MERGING SERIES
If any of the conditions set forth below have not been satisfied on or
before the Closing Date with respect to the Trust, on behalf of the Merging
Series, or the Trust, on behalf of the Surviving Series, the other party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
8.1 The Agreement and the transactions contemplated herein shall
have been approved by the requisite vote of the holders of the outstanding
shares of the Merging Series in accordance with the provisions of the
Declaration of Trust, applicable Massachusetts law and the 1940 Act.
Notwithstanding anything herein to the contrary, the Trust may not waive the
conditions set forth in this paragraph 8.1;
8.2 On the Closing Date no action, suit or other proceeding shall be
pending or, to its knowledge, threatened before any court or governmental agency
in which it is sought to restrain or prohibit, or obtain damages or other relief
in connection with, this Agreement or the transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
the Trust to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order or permit would not involve a risk of a material adverse
effect on the assets or properties of the Surviving Series or the Merging
Series, provided that either party hereto may for itself waive any of such
conditions;
8.4 The Registration Statement shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 1933 Act; and
8.5 The parties shall have received the opinion of McDermott Will &
Emery LLP, special tax counsel to the Trust, addressed to the Trust
substantially to the effect that, based upon certain facts, assumptions, and
representations, the transaction contemplated by this Agreement, shall for
Federal income tax purposes, qualify as a tax-free reorganization described in
Section 368(a) of the Code. The delivery of such opinion is conditioned upon
receipt of representations McDermott Will & Emery LLP shall request of the
Trust. Notwithstanding anything herein to the contrary, the Trust may not waive
the condition set forth in this paragraph 8.5.
9. BROKERAGE FEES AND EXPENSES
9.1 The Trust on behalf of the Merging Series and the Trust on
behalf of the Surviving Series represent and warrant to each other that there
are no brokers or finders entitled to receive any payments in connection with
the transactions provided for herein.
9.2 The expenses relating to the proposed Reorganization will be
borne by Phoenix Life Insurance Company. The costs of the Reorganization shall
include, but not be limited to, costs associated with obtaining any necessary
order of exemption from the 1940 Act, preparation of the Registration Statement,
printing and distributing the Surviving Series' prospectus and the Merging
Series' proxy materials, legal fees, accounting fees, securities registration
fees, and expenses of holding shareholders' meetings. Notwithstanding any of the
foregoing, expenses will in any event be paid by the party directly incurring
such expenses if and to the extent that the payment by
A-9
another person of such expenses would result in the disqualification of such
party as a "regulated investment company" within the meaning of Section 851 of
the Code.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Trust has not made any representation, warranty or covenant
not set forth herein; this Agreement constitutes the entire agreement between
the parties.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing shall survive the Closing.
11. TERMINATION
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned (i) by mutual agreement of the parties, (ii) by either
party if the Closing shall not have occurred on or before December 31, 2004
unless such date is extended by mutual agreement of the parties, or (iii) by
either party if the other party shall have materially breached its obligations
under this Agreement or made a material and intentional misrepresentation herein
or in connection herewith. In the event of any such termination, this Agreement
shall become void and there shall be no liability hereunder on the part of any
party or their respective Trustees or officers, except for any such material
breach or intentional misrepresentation, as to each of which all remedies at law
or in equity of the party adversely affected shall survive.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be deemed necessary or advisable by the authorized officers of the Trust;
provided, however, that following the meeting of the shareholders of the Merging
Series called by the Merging Series pursuant to paragraph 5.2 of this Agreement,
no such amendment may have the effect of changing the provisions for determining
the number of the Surviving Series Shares to be issued to the Merging Series
Shareholders under this Agreement to the detriment of such shareholders without
their further approval.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by
facsimile, personal service or prepaid or certified mail addressed to The
Phoenix Edge Series Fund, One American Row, P. O. Box 5056, Hartford, CT
06102-5056, Attn: Richard J. Wirth, Esq.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF
LIABILITY
14.1 The Article and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
14.3 This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts without regard to
its principles of conflicts of laws.
14.4 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
14.5 It is expressly agreed that the obligations of the parties
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents, or employees of the Trust personally, but shall bind only the
trust property of the Merging Series and the Surviving Series, as provided in
the Declaration of Trust of the Trust.
A-10
The execution and delivery by such officers shall not be deemed to have been
made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of such party as provided in
the Declaration of Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its President or Vice President and its seal to be
affixed thereto and attested by its Secretary or Assistant Secretary.
Attest: THE PHOENIX EDGE SERIES FUND ON BEHALF OF ITS
PHOENIX-MFS VALUE SERIES
_________________________________ By: _______________________________
SECRETARY
Title: ______________________________
Attest: THE PHOENIX EDGE SERIES FUND ON BEHALF OF ITS
PHOENIX-OAKHURST VALUE EQUITY SERIES
_________________________________ By: _______________________________
SECRETARY
Title: ______________________________
A-11
PART B
STATEMENT OF ADDITIONAL INFORMATION
ACQUISITION OF THE ASSETS OF
PHOENIX-MFS VALUE SERIES
BY AND IN EXCHANGE FOR SHARES OF
PHOENIX-OAKHURST VALUE EQUITY SERIES
EACH A SERIES OF
THE PHOENIX EDGE SERIES FUND
101 Munson Street
Greenfield, Massachusetts 01301
800-541-0171
August 6, 2004
This Statement of Additional Information, relating specifically to the
proposed transfer of all of the assets and liabilities of the Phoenix-MFS Value
Series (the "Merging Series") to the Phoenix-Oakhurst Value Equity Series (the
"Surviving Series") each a series of The Phoenix Edge Series Fund, consists of
this cover page and the following described documents:
1) the Statement of Additional Information of The Phoenix Edge
Series Fund, as filed via EDGAR on Form N-1A (File No.
033-05033) on April 30, 2004 with Post-Effective Amendment No.
47 to the Prospectus dated May 1, 2004 and incorporated by
reference;
2) the Annual Report of The Phoenix Edge Series Fund for the year
ended December 31, 2003, as filed via EDGAR on Form N-CSR
(File No. 811-04642) on March 8, 2004 and incorporated by
reference; and
3) the Pro Forma Financial Statements filed herewith.
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the Prospectus/Proxy
Statement dated August 6, 2004. A copy of the Prospectus/Proxy Statement may
be obtained without charge by calling Variable Products Operations ("VPO") at
800-541-0171 or by writing to Phoenix Variable Products Mail Operations at PO
Box 8027, Boston, Massachusetts 02266-8027.
The date of this Statement of Additional Information is August 6,
2004.
Phoenix-Oakhurst Value Equity Series/Phoenix-MFS Value Series
Pro Forma Combined Schedule of Investments
December 31, 2003 (Unaudited)
Shares or Par Value Value
============== ============ ============ ====================================== ============== ============== =============
Phoenix-
Oakhurst Pro Forma Phoenix- Pro Forma
Value Equity Phoenix-MFS Combined Oakhurst Value Phoenix-MFS Combined
Series Value Series Portfolios DESCRIPTION Equity Series Value Series Portfolios
============== ============ ============ ====================================== ============== ============== =============
COMMON STOCKS--92.6%
128,800 - 128,800 Agere Systems, Inc. Class A (b) $ 392,840 $ - $ 392,840
- 6,960 6,960 Air Products and Chemicals, Inc. - 367,697 367,697
14,700 - 14,700 Airgas, Inc. 315,756 - 315,756
68,200 - 68,200 Alliance Gaming Corp. (b) 1,681,130 - 1,681,130
- 8,640 8,640 Allstate Corp. (The) - 371,693 371,693
- 14,860 14,860 Altria Group, Inc. - 808,681 808,681
- 6,910 6,910 American Express Co. - 333,269 333,269
10,500 - 10,500 American International Group, Inc. 695,940 - 695,940
24,200 - 24,200 Anadarko Petroleum Corp. 1,234,442 - 1,234,442
21,200 - 21,200 Applied Materials, Inc. (b) 475,940 - 475,940
39,400 - 39,400 ARAMARK Corp. Class B 1,080,348 - 1,080,348
- 28,710 28,710 Archer Daniels Midland Co. - 436,966 436,966
- 19,840 19,840 AT&T Wireless Services, Inc. (b) - 158,522 158,522
51,300 - 51,300 AVX Corp. 852,606 - 852,606
10,500 2,400 12,900 Baker Hughes, Inc. 337,680 77,184 414,864
24,200 - 24,200 Ball Corp. 1,441,594 - 1,441,594
42,400 9,510 51,910 Bank of America Corp. 3,410,232 764,889 4,175,121
30,400 6,420 36,820 Bank One Corp. 1,385,936 292,688 1,678,624
- 5,250 5,250 BellSouth Corp. - 148,575 148,575
31,200 - 31,200 Belo Corp. Class A 884,208 - 884,208
12,100 - 12,100 BJ Services Co. (b) 434,390 - 434,390
28,000 - 28,000 Boston Scientific Corp. (b) 1,029,280 - 1,029,280
- 2,940 2,940 Bowater, Inc. - 136,152 136,152
45,500 - 45,500 Bristol-Myers Squibb Co. 1,301,300 - 1,301,300
14,800 - 14,800 Cendant Corp. (b) 329,596 - 329,596
9,100 3,220 12,320 ChevronTexaco Corp. 786,149 278,176 1,064,325
- 3,640 3,640 Chubb Corp. (The) - 247,884 247,884
- 5,500 5,500 Cinergy Corp. - 213,455 213,455
24,200 - 24,200 Cisco Systems, Inc. (b) 587,818 - 587,818
53,000 - 53,000 CIT Group, Inc. 1,905,350 - 1,905,350
78,800 20,150 98,950 Citigroup, Inc. 3,824,952 978,081 4,803,033
- 10,510 10,510 Comcast Corp. Special Class A (b) - 328,753 328,753
31,500 - 31,500 Computer Sciences Corp. (b) 1,393,245 - 1,393,245
- 8,860 8,860 ConocoPhillips - 580,950 580,950
- 9,970 9,970 Cox Communications, Inc. Class A (b) - 343,466 343,466
- 3,440 3,440 Deere & Co. - 223,772 223,772
12,900 - 12,900 Dell, Inc. (b) 438,084 - 438,084
- 2,040 2,040 Devon Energy Corp. - 116,810 116,810
48,500 - 48,500 Dial Corp. (The) 1,380,795 - 1,380,795
- 2,100 2,100 Dominion Resources, Inc. - 134,043 134,043
- 7,680 7,680 Dow Chemical Co. (The) - 319,257 319,257
64,100 - 64,100 E*TRADE Financial Corp. (b) 810,865 - 810,865
27,300 - 27,300 EMC Corp.(b) 352,716 - 352,716
- 6,300 6,300 Emerson Electric Co. - 407,925 407,925
34,800 - 34,800 Emulex Corp. (b) 928,464 - 928,464
- 7,160 7,160 Energy East Corp. - 160,384 160,384
- 1,380 1,380 Entergy Corp. - 78,839 78,839
78,800 21,670 100,470 Exxon Mobil Corp. 3,230,800 888,470 4,119,270
- 8,180 8,180 Fannie Mae - 613,991 613,991
9,100 - 9,100 FedEx Corp. 614,250 - 614,250
- 2,120 2,120 FirstEnergy Corp. - 74,624 74,624
42,900 - 42,900 Fisher Scientific International, Inc. (b) 1,774,773 - 1,774,773
16,600 19,540 36,140 FleetBoston Financial Corp. 724,590 852,921 1,577,511
15,100 - 15,100 Fortune Brands, Inc. 1,079,499 - 1,079,499
- 1,730 1,730 FPL Group, Inc. - 113,177 113,177
35,800 - 35,800 Franklin Resources, Inc. 1,863,748 - 1,863,748
13,600 - 13,600 General Electric Co. 421,328 - 421,328
7,500 6,600 14,100 Goldman Sachs Group, Inc. (The) 740,475 651,618 1,392,093
- 1,010 1,010 Guidant Corp. - 60,802 60,802
37,900 - 37,900 Harte-Hanks, Inc. 824,325 - 824,325
- 4,290 4,290 Hartford Financial Services Group, Inc. (The) - 253,239 253,239
- 3,080 3,080 Hasbro, Inc. - 65,542 65,542
- 8,250 8,250 Heinz (H.J.) Co. - 300,547 300,547
- 4,130 4,130 Hewlett-Packard Co. - 94,866 94,866
- 1,700 1,700 Honeywell International, Inc. - 56,831 56,831
- 3,960 3,960 International Business Machines Corp. - 367,013 367,013
1
Shares or Par Value Value
============== ============ ============ ====================================== ============== ============== =============
Phoenix-
Oakhurst Pro Forma Phoenix- Pro Forma
Value Equity Phoenix-MFS Combined Oakhurst Value Phoenix-MFS Combined
Series Value Series Portfolios DESCRIPTION Equity Series Value Series Portfolios
============== ============ ============ ====================================== ============== ============== =============
- 5,940 5,940 International Paper Co. - 256,073 256,073
60,600 - 60,600 J.P. Morgan Chase & Co. 2,225,838 - 2,225,838
- 980 980 Janus Capital Group, Inc. - 16,082 16,082
- 13,780 13,780 Johnson & Johnson - 711,875 711,875
21,200 17,170 38,370 Kellogg Co. 807,296 653,834 1,461,130
- 3,060 3,060 KeySpan Corp. - 112,608 112,608
- 10,920 10,920 Kimberly-Clark Corp. - 645,263 645,263
11,900 - 11,900 Knight-Ridder, Inc. 920,703 - 920,703
- 3,340 3,340 Lockheed Martin Corp. - 171,676 171,676
25,800 - 25,800 Mandalay Resort Group 1,153,776 - 1,153,776
- 1,670 1,670 Marsh & McLennan Cos., Inc. - 79,976 79,976
39,400 - 39,400 Marvel Enterprises, Inc. (b) 1,146,934 - 1,146,934
13,200 - 13,200 McClatchy Co. (The) 908,160 - 908,160
- 3,850 3,850 McDonald's Corp. - 95,596 95,596
22,700 17,540 40,240 Mellon Financial Corp. 728,897 563,209 1,292,106
39,100 7,960 47,060 Merrill Lynch & Co., Inc. 2,293,215 466,854 2,760,069
34,800 15,480 50,280 MetLife, Inc. 1,171,716 521,212 1,692,928
6,800 - 6,800 Mettler-Toledo International, Inc. (b) 287,028 - 287,028
- 8,850 8,850 Microsoft Corp. - 243,729 243,729
- 500 500 Monsanto Co. - 14,390 14,390
30,800 - 30,800 Morgan Stanley 1,782,396 - 1,782,396
- 19,480 19,480 Motorola, Inc. - 274,084 274,084
- 3,590 3,590 National Fuel Gas Co. - 87,740 87,740
41,200 - 41,200 Neiman Marcus Group, Inc.(The) Class A (b) 2,211,204 - 2,211,204
- 7,250 7,250 Newell Rubbermaid, Inc. - 165,082 165,082
- 7,040 7,040 Noble Corp. (b) - 251,891 251,891
- 5,230 5,230 Northrop Grumman Corp. - 499,988 499,988
- 2,950 2,950 NSTAR - 143,075 143,075
40,900 - 40,900 Omnicare, Inc. 1,651,951 - 1,651,951
69,100 - 69,100 Oracle Corp. (b) 912,120 - 912,120
54,600 - 54,600 Pall Corp. 1,464,918 - 1,464,918
15,100 - 15,100 Patterson-UTI Energy, Inc. (b) 497,092 - 497,092
33,400 2,300 35,700 PepsiCo, Inc. 1,557,108 107,226 1,664,334
- 18,700 18,700 Pfizer, Inc. - 660,671 660,671
- 4,420 4,420 PNC Financial Services Group, Inc. (The) - 241,906 241,906
- 7,330 7,330 PPG Industries, Inc. - 469,267 469,267
- 3,190 3,190 PPL Corp. - 139,563 139,563
- 2,490 2,490 Praxair, Inc. - 95,118 95,118
16,600 - 16,600 Procter & Gamble Co. (The) 1,658,008 - 1,658,008
27,500 - 27,500 Provide Commerce, Inc. (b) 417,175 - 417,175
22,700 - 22,700 Prudential Financial, Inc. 948,179 - 948,179
37,900 - 37,900 Reebok International Ltd. 1,490,228 - 1,490,228
40,900 - 40,900 Ryder System, Inc. 1,396,735 - 1,396,735
- 2,220 2,220 Safeway, Inc. (b) - 48,640 48,640
39,400 25,430 64,830 SBC Communications, Inc. 1,027,158 662,960 1,690,118
12,100 - 12,100 Schein (Henry), Inc. (b) 817,718 - 817,718
- 26,290 26,290 Schering-Plough Corp. - 457,183 457,183
12,100 4,930 17,030 Schlumberger Ltd. 662,112 269,770 931,882
- 3,860 3,860 Sears, Roebuck and Co. - 175,591 175,591
- 7,810 7,810 Smurfit-Stone Container Corp. (b) - 145,032 145,032
- 4,430 4,430 SouthTrust Corp. - 144,994 144,994
- 9,670 9,670 SunTrust Banks, Inc. - 691,405 691,405
59,100 - 59,100 Swift Transportation Co., Inc. (b) 1,242,282 - 1,242,282
78,800 17,900 96,700 Time Warner, Inc. (b) 1,417,612 322,021 1,739,633
19,500 - 19,500 Toro Co. (The) 904,800 - 904,800
47,100 23,695 70,795 Travelers Property Casualty Corp. Class A (b) 790,338 397,602 1,187,940
18,000 8,540 26,540 Tribune Co. 928,800 440,664 1,369,464
- 9,110 9,110 TXU Corp. - 216,089 216,089
- 3,780 3,780 Tyson Foods, Inc. Class A - 50,047 50,047
39,400 - 39,400 U.S. Bancorp 1,173,332 - 1,173,332
- 7,280 7,280 Union Pacific Corp. - 505,814 505,814
42,400 - 42,400 United Defense Industries, Inc. (b) 1,351,712 - 1,351,712
15,100 - 15,100 United Technologies Corp. 1,431,027 - 1,431,027
- 11,120 11,120 Unocal Corp. - 409,550 409,550
40,900 15,500 56,400 Verizon Communications, Inc. 1,434,772 543,740 1,978,512
- 12,290 12,290 Viacom, Inc. Class B - 545,430 545,430
42,400 - 42,400 Vishay Intertechnology, Inc. (b) 970,960 - 970,960
2
Shares or Par Value Value
============== ============ ============ ====================================== ============== ============== =============
Phoenix-
Oakhurst Pro Forma Phoenix- Pro Forma
Value Equity Phoenix-MFS Combined Oakhurst Value Phoenix-MFS Combined
Series Value Series Portfolios DESCRIPTION Equity Series Value Series Portfolios
============== ============ ============ ====================================== ============== ============== =============
45,500 - 45,500 Waters Corp. (b) 1,508,780 - 1,508,780
49,800 3,240 53,040 Wells Fargo & Co. 2,932,722 190,804 3,123,526
============== ============== =============
TOTAL COMMON STOCKS 87,190,246 26,607,076 113,797,322
FOREIGN COMMON STOCKS--4.6%
11,200 - 11,200 China Life Insurance Co. Ltd. ADR (b) 369,264 - 369,264
15,300 - 15,300 Teva Pharmaceutical Industries Ltd. ADR 867,663 - 867,663
36,300 - 36,300 ACE Ltd. 1,503,546 - 1,503,546
- 16,720 16,720 Diageo plc - 219,996 219,996
- 23,650 23,650 BHP Billiton plc - 206,606 206,606
- 4,620 4,620 Rio Tinto plc - 127,614 127,614
- 4,800 4,800 Syngenta AG - 323,299 323,299
- 13,830 13,830 BP plc ADR - 682,510 682,510
- 2,950 2,950 Total SA ADR - 272,905 272,905
- 8,140 8,140 Novartis AG Registered Shares - 369,566 369,566
- 3,390 3,390 Roche Holding AG - 341,947 341,947
- 45,560 45,560 Reed Elsevier plc - 381,087 381,087
- 1,380 1,380 Finning International, Inc. - 32,144 32,144
============== ============== =============
TOTAL FOREIGN COMMON STOCKS 2,740,473 2,957,674 5,698,147
EXCHANGE TRADED FUNDS--0.8%
16,500 - 16,500 iShares Russell 1000 Value Index Fund 963,105 - 963,105
============== ============== =============
TOTAL EXCHANGE TRADED FUNDS 963,105 - 963,105
SHORT-TERM OBLIGATIONS--2.1%
1,975,000 641,000 2,616,000 FHLB Discount Note 0.75%, 1/2/04 1,974,959 640,987 2,615,946
============== ============== =============
TOTAL SHORT-TERM OBLIGATIONS 1,974,959 640,987 2,615,946
1,448,795 TOTAL INVESTMENTS--100.1% 92,868,783 30,205,737 123,074,520 (a)
(Identified cost $86,033,633,
$25,347,551 and $111,381,184)
Other assets and liabilities,
net---(0.1)% (63,529) (24,818) (88,347)
============== ============== =============
NET ASSETS--100.0% $ 92,805,254 $ 30,180,919 $122,986,173
============== ============== =============
(a) Federal Income Tax Information:
Net unrealized appreciation of
investment securities is comprised
of gross appreciation of $12,175,742
and gross depreciation of $949,278
for federal income tax purposes.At
December 31, 2003, the aggregate
cost of securities for federal
income tax purposes was $111,848,056.
(b) Non income producing.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
3
Phoenix-Oakhurst Value Equity/Phoenix-MFS Value Series
Pro Forma Combined Statement of Assets and Liabilities
December 31, 2003 (Unaudited)
================== ================= ================ ================
Phoenix-Oakhurst Phoenix-MFS Pro Forma
Value Series Value Series Adjustments Combined
Portfolios
================== ================= ================ ================
ASSETS
Investment securities at value
(Identified cost $86,033,633, $25,347,551
and $111,381,184) $ 92,868,783 $ 30,205,737 $ 123,074,520
Cash 47 2,514 2,561
Receivables
Investment securities sold - 35,097 35,097
Fund shares sold 86,024 30,759 116,783
Dividends and interest 62,442 52,399 114,841
Prepaid expenses 1,199 397 1,596
----------------- --------------- --------------- --------------
Total assets 93,018,495 30,326,903 - 123,345,398
----------------- --------------- --------------- --------------
LIABILITIES
Payables
Investment securities purchased - 5,699 5,699
Fund shares repurchased 79,572 64,618 144,190
Investment advisory fee 59,739 8,991 68,730
Administration fee 5,875 2,048 7,923
Financial agent fee 7,675 4,781 12,456
Printing fee 22,567 14,000 36,567
Professional fee 28,283 29,787 58,070
Trustees' fee 2,360 2,360 4,720
Accrued expenses 7,170 13,700 20,870
----------------- --------------- --------------- --------------
Total liabilities 213,241 145,984 - 359,225
----------------- --------------- --------------- --------------
NET ASSETS $ 92,805,254 30,180,919 - $ 122,986,173
================= =============== ================ ================
Net Assets Consist of:
Capital paid in on shares of beneficial interest $ 103,108,117 $ 25,785,022 $ (462,978) $ 128,430,161
Undistributed net investment income 82,341 - - 82,341
Accumulated net realized gain (loss) (17,220,354) (462,978) 462,978 (b) (17,220,354)
Net unrealized appreciation 6,835,150 4,858,875 - 11,694,025
----------------- --------------- --------------- --------------
Net Assets $ 92,805,254 $ 30,180,919 $ - $ 122,986,173
================= =============== ================ ================
Shares of beneficial interest outstanding,
$1 par value, unlimited authorization 7,882,010 2,719,586 (155,362)(a) 10,446,234
Net assets $ 92,805,254 $ 30,180,919 $ 122,986,173
Net asset value per share $ 11.77 $ 11.10 $ 11.77
(a) Adjustment reflects additional shares issued in conversion.
(b) Adjustment reflects closing entry of capital accounts for target fund.
See Notes to Pro Forma Financial Statements.
4
Phoenix-Oakhurst Value Equity/Phoenix-MFS Value Series
Pro Forma Combined Statement of Operations
January 1, 2003 through December 31, 2003 (Unaudited)
================== ================== ================== ==================
Phoenix-Oakhurst Phoenix-MFS Pro Forma
Value Equity Series Value Series Adjustments Combined
Portfolios
================== ================== ================== ==================
INVESTMENT INCOME
Interest $ 22,260 $ 10,851 $ - $ 33,111
Dividends 1,394,962 620,217 - 2,015,179
Foreign taxes Withheld (6,299) (6,630) - (12,929)
----------------- ----------------- ---------------- ------------------
Total investment income 1,410,923 624,438 - 2,035,361
----------------- ----------------- ---------------- ------------------
EXPENSES
Investment advisory fee 539,766 191,624 (12,775) 718,615
Financial agent fee 85,127 52,744 (28,700) 109,171
Administration fee 59,374 (a) 19,673 (a) 3,080 (a) 82,127
Printing 35,784 23,663 (16,109) 43,338
Professional 17,920 27,189 (13,609) 31,500
Custodian 31,541 86,383 (86,921) 31,003
Trustees 5,479 5,931 (4,743) 6,667
Miscellaneous 11,593 9,669 (7,287) 13,975
----------------- ----------------- ---------------- ------------------
Total expenses 786,584 416,876 (167,064) 1,036,396
Custodian fees paid indirectly (16) (7) - (23)
Less expenses borne by investment advisor (54,028) (161,371) 154,290 (61,109)
----------------- ----------------- ---------------- ------------------
Net expenses 732,540 255,498 (12,774) 975,264
----------------- ----------------- ---------------- ------------------
NET INVESTMENT INCOME (LOSS) 678,383 368,940 12,774 1,060,097
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) on securities 9,178,276 347,665 - 9,525,941
Net realized gain (loss) on foreign
currency transactions - 478 - 478
Net change in unrealized appreciation
(depreciation) on investments 7,192,582 5,677,657 - 12,870,239
Net change in unrealized appreciation
(depreciation) on foreign currency and
foreign currency transactions - 637 - 637
----------------- ---------------- ---------------- ------------------
Net gain (loss) on investments 16,370,858 6,026,437 - 22,397,295
----------------- ---------------- ---------------- ------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 17,049,241 $ 6,395,377 $ 12,774 $ 23,457,392
================= ================= ================ ==================
Adjustments:
(a) Reflects administration fees of 0.077% for a twelve month period, 1/1/03 -
12/31/03. Effective 1/1/04, the fee is 0.08%. The adjustment column reflects
what the annual fee would be based on combined assets at the new rate of 0.08%.
Note: The expenses for Phoenix-Oakhurst Value Equity Series are based on the
expense schedule which became effective 2/29/04.
See Notes to Pro Forma Financial Statements.
5
PHOENIX-OAKHURST VALUE EQUITY SERIES/PHOENIX-MFS VALUE SERIES
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2003 (UNAUDITED)
1. BASIS OF COMBINATION
The unaudited Pro Forma Combined Portfolio of Investments, Pro Forma Combined
Statement of Assets and Liabilities and Pro Forma Combined Statement of
Operations give effect to the proposed merger of the Phoenix-MFS Value Series
("MFS Value") into the Phoenix-Oakhurst Value Equity Series ("Value Equity").
The proposed merger will be accounted for by the method of accounting for
tax-free mergers of investment companies. The merger provides for the transfer
of all of the assets of MFS Value to Value Equity and the subsequent liquidation
of MFS Value. The accounting survivor in the proposed merger will be Value
Equity. This is because the Surviving Series will invest in a style that is
similar to the way in which Value Equity is currently operated (including
hedging and investment in debt securities). Additionally, Value Equity has a
significantly larger asset base than MFS Value.
The pro forma combined statements should be read in conjunction with the
historical financial statements of the constituent fund and the notes thereto
incorporated by reference in the Registration Statement filed on Form N-14. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses. Actual results could differ from those
estimates.
MFS Value and Value Equity are both, open-end, management investment companies
registered under the Investment Company Act of 1940, as amended.
2. SHARES OF BENEFICIAL INTEREST
The Pro Forma net asset value per share assumes the issuance of additional
shares of Value Equity which would have been issued at December 31, 2003 in
connection with the proposed reorganization. The amount of additional shares
assumed to be issued was calculated based on the net assets, as of December 31,
2003, of MFS Value of $30,180,919 and the net asset value of Value Equity of
$11.77. The Pro Forma Statement of Assets & Liabilities reflects the combined
Pro Forma shares outstanding as calculated above.
3. PRO FORMA OPERATIONS
Pro Forma operating expenses are based on the expense schedule of Value Equity
which became effective February 29, 2004, the actual expenses of MFS Value and
the combined Series, with certain expenses adjusted to reflect the expected
expenses of the combined entity. The investment advisory and financial agent
fees have been calculated for the combined Fund based on the fee schedule in
effect for Value Equity at the combined level of average net assets for the
period ended December 31, 2003.
4. PORTFOLIO VALUATION
Equity securities are valued at the last sale price, or if there had been no
sale that day, at the last bid price. Debt securities are valued on the basis of
broker quotations or valuations provided by a pricing service which utilizes
information with respect to recent sales, market transactions in comparable
securities, quotations from dealers, and various relationships between
securities in determining value. Short-term investments having a remaining
maturity of 60 days or less are valued at amortized cost which approximates
market. All other securities and assets are valued at fair value as determined
in good faith by or under the direction of the Trustees. Certain foreign common
stocks may be fair valued in cases where closing prices are not readily
available or are deemed not reflective of readily available market prices. For
example, significant events (such as movement in the U.S. securities market, or
other regional and local developments) may occur between the time that foreign
markets close (where the security is principally traded) and the time that the
Fund calculates its net asset value (generally, the close of the NYSE) that may
impact the value of securities traded in these foreign markets. In these cases,
information from an external vendor may be utilized to adjust closing market
prices of certain foreign common stocks to reflect their fair value. Because the
frequency of significant events is not predictable, fair valuation of certain
foreign common stocks may occur on a frequent basis.
5. COMPLIANCE
As of September 14, 2004, all the securities held by the Merging Series would
comply with the compliance guidelines, investment restrictions and
diversification requirements under the Investment Company Act of 1940, as
amended. The Surviving Series has elected to be taxed as a "regulated investment
company" under the requirements of Subchapter M of the Internal Revenue Code
("IRC"). After the acquisition, the Surviving Series intends to continue to
qualify as a regulated investment company by complying with the provisions
available to certain investment companies, as defined in applicable sections of
the IRC, and to make distributions of taxable income sufficient to relieve it
from all, or substantially all, Federal income taxes.
6. FEDERAL INCOME TAX INFORMATION
The Series have capital loss carryovers which may be used to offset future
capital gains, as follows:
Expiration Date Surviving Series Merging Series
Phoenix-Oakhurst Phoenix-MFS
Value Equity Series Value Series
2010 $16,820,901 $159,310
In addition, the Series have deferred post-October losses as follows:
Surviving Series Phoenix-Oakhurst Value Equity Series $236,249
Merging Series Phoenix-MFS Value Series $0
The Series may not realize the benefit of these losses to the extent each Series
does not realize gains on investments prior to the expiration of the capital
loss carryover.
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
The Amended Declaration of Trust provides that the Trust shall
indemnify each of its Trustees and officers (hereinafter referred to as a
"Covered Person") against all liabilities, including but not limited to amounts
paid in satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any action, suit
or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which Covered Person may be or may have
been involved as a party or otherwise or with which such person may be or may
have been threatened, while in office or thereafter, by reason of being or
having been such a Trustee or officer, except with respect to any matter as to
which such Covered Person shall have been finally adjudicated in any such
action, suit or other proceeding not to have acted in good faith in the
reasonable belief that such Covered Person's action was in or not opposed to the
best interests of the Trust and except that no Covered Person shall be
indemnified against any liability to the Trust or its Shareholders to which such
Covered Person would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office. Expenses, including accountants' and
counsel fees so incurred by any such Covered Person (but excluding amounts paid
in satisfaction of judgments, in compromise or as fines or penalties), may be
paid from time to time by the Trust in advance of the final disposition of any
such action, suit of proceeding upon receipt of an undertaking by or on behalf
of such Covered Person to repay amounts so paid to the Trust if it is ultimately
determined that indemnification of such expenses is not authorized under said
article of the Declaration of Trust.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 16. EXHIBITS
(1) Amended Declaration of Trust.
1. Declaration of Trust of the Registrant establishing the Big
Edge Series Fund dated February 18, 1986, filed with the
Registration Statement on Form N-1A on April 18, 1986 and
filed via Edgar with Post-Effective Amendment No. 18 (File No.
033-05033) on June 20, 1996.
2. Amendment to Declaration of Trust effective February 28, 1990,
establishing the International Series, filed with
Post-Effective Amendment No. 7 on March 2, 1992 and filed via
Edgar with Post-Effective Amendment No. 20 (File No.
033-05033) on April 29, 1997.
3. Amendment to Declaration of Trust effective November 14, 1991,
conforming the Fund's borrowing restrictions to California
Department's Borrowing Guidelines, filed with Post-Effective
Amendment No. 7 on March 2, 1992 and filed via Edgar with
Post-Effective Amendment No. 20 (File No. 033-05033) on April
29, 1997.
C-1
4. Amendment to Declaration of Trust effective May 1, 1992,
changing the name of the Trust to The Phoenix Edge Series
Fund, establishing the Balanced Series, and changing the names
of Stock Series to Growth Series and Total-Vest Series to
Total Return Series filed with Post-Effective Amendment No. 8
on April 28, 1992 and filed via Edgar with Post-Effective
Amendment No. 20 (File No. 033-05033) on April 29, 1997.
5. Amendment to Declaration of Trust effective January 1, 1995,
establishing the Real Estate Securities Series, filed with
Post-Effective Amendment No. 12 on February 16, 1995 and filed
via Edgar with Post-Effective Amendment No. 20 (File No.
033-05033) on April 29, 1997.
6. Amendment to Declaration of Trust effective November 15, 1995,
establishing the Strategic Theme Series, filed via Edgar with
Post-Effective Amendment No. 16 (File No. 033-05033) on
January 29, 1996.
7. Amendment to Declaration of Trust effective February 21, 1996,
changing the name of the Series currently designated "Bond
Series" to the "Multi-Sector Fixed Income Series," filed via
Edgar with Post-Effective Amendment No. 17 (File No.
033-05033) on April 17, 1996.
8. Amendment to Declaration of Trust effective August 21, 1996,
establishing the Aberdeen New Asia Series and changing the
name of the Total Return Series to Strategic Allocation
Series, filed via Edgar with Post-Effective Amendment No. 19
(File No. 033-05033) on September 3, 1996.
9. Amendment to Declaration of Trust effective May 28, 1997,
establishing the Research Enhanced Index Series, filed via
Edgar with Post-Effective Amendment No. 22 (File No.
033-05033) on July 15, 1997.
10. Amendment to Declaration of Trust effective February 27, 1998,
establishing the Engemann Nifty Fifty Series, Seneca Mid-Cap
Series, Phoenix Growth and Income Series, Phoenix Value Equity
Series and Schafer Mid-Cap Value Series, filed via Edgar with
Post-Effective Amendment No. 46 (File No. 033-05033) on April
30, 2003.
11. Amendment to Declaration of Trust dated May 1, 1998 for
Scribner's error in Amendment filed February 27, 1998, filed
via Edgar with Post-Effective Amendment No. 46 (File No.
033-05033) on April 30, 2003.
12. Amendment to Declaration of Trust effective May 1, 1999,
changing the name of the Series currently designated as
Balanced Series, Multi-Sector Fixed Income Series, Money
Market Series, Strategic Allocation Series, Growth Series,
International Series, Real Estate Securities Series, Strategic
Theme Series, Aberdeen New Asia Series, Research Enhanced
Index Series, Engemann Nifty Fifty Series, Schafer Mid-Cap
Value Series, Seneca Mid-Cap Growth Series, Phoenix Value
Equity Series, and Phoenix Growth and Income Series to
Phoenix-Goodwin Balanced Series, Phoenix-Goodwin Multi-Sector
Fixed Income Series, Phoenix-Goodwin Money Market Series,
Phoenix-Goodwin Strategic Allocation Series, Phoenix-Goodwin
Growth Series, Phoenix-Aberdeen International Series,
Phoenix-Duff & Phelps Real Estate Securities Series,
Phoenix-Goodwin Strategic Theme Series, Phoenix-Aberdeen New
Asia Series, Phoenix Research Enhanced Index Series,
Phoenix-Engemann Nifty Fifty Series, Phoenix-Schafer Mid-Cap
Value Series, Phoenix-Seneca Mid-Cap Growth Series,
Phoenix-Hollister Value Equity Series, and Phoenix-Oakhurst
Growth and Income Series, filed via Edgar with Post-Effective
Amendment No. 46 (File No. 033-05033) on April 30, 2003.
C-2
13. Amendment to Declaration of Trust effective December 1, 1999,
establishing the Phoenix-Bankers Trust Dow 30 Series,
Phoenix-Federated U.S. Government Bond Series, Phoenix-Janus
Equity Income Series, Phoenix-Janus Flexible Income Series,
Phoenix-Janus Growth Series and Phoenix-Morgan Stanley Focus
Equity Series, filed via Edgar with Post-Effective Amendment
No. 35 (File No. 033-05033) on November 15, 2000.
14. Amendment to Declaration of Trust effective December 1, 1999,
changing names of Phoenix-Goodwin Growth Series to
Phoenix-Engemann Capital Growth Series, Phoenix-Goodwin
Strategic Theme Series to Phoenix-Seneca Strategic Theme
Series, Phoenix-Goodwin Balanced Series to Phoenix-Oakhurst
Balanced Series, and Phoenix-Goodwin Strategic Allocation
Series to Phoenix-Oakhurst Strategic Allocation Series, filed
via Edgar with Post-Effective Amendment No. 35 (File No.
033-05033) on November 15, 2000.
15. Amendment to Declaration of Trust effective April 21, 2000,
changing name of Phoenix-Research Enhanced Index Series to
Phoenix-J.P. Morgan Research Enhanced Index Series, filed via
Edgar with Post-Effective Amendment No. 46 (File No.
033-05033) on April 30, 2003.
16. Amendment to Declaration of Trust effective July 26, 2000,
establishing the Phoenix-Bankers Trust Nasdaq-100 Index(R)
Series and Phoenix-Engemann Small & Mid-Cap Growth Series,
filed via Edgar with Post-Effective Amendment No. 35 (File No.
033-05033) on November 15, 2000.
17. Amendment to Declaration of Trust effective September 29,
2000, establishing the "Phoenix-Sanford Bernstein Global Value
Series" and "Phoenix-Sanford Bernstein Small-Cap Value Series"
and changing the name of "Phoenix-Schafer Mid-Cap Value
Series" to "Phoenix-Sanford Bernstein Mid-Cap Value Series",
filed via Edgar with Post-Effective Amendment No. 35 (File No.
033-05033) on November 15, 2000.
18. Amendment to Declaration of Trust effective May 1, 2001,
changing the name of "Phoenix-Bankers Trust Dow 30 Series" to
"Phoenix-Deutsche Dow 30 Series", and "Phoenix-Bankers Trust
Nasdaq-100 Index Series" to "Phoenix-Deutsche Nasdaq-100 Index
Series", filed via Edgar with Post-Effective Amendment No. 46
(File No. 033-05033) on April 30, 2003.
19. Amendment to Declaration of Trust effective August 31, 2001
establishing the "Phoenix-AIM Mid-Cap Equity Series",
"Phoenix-Alliance/Bernstein Growth + Value Series",
"Phoenix-MFS Investors Growth Stock Series", "Phoenix-MFS
Investors Trust Series" and "Phoenix-MFS Value Series", and
changing the name of "Phoenix-Janus Equity Income Series" to
"Phoenix-Janus Core Equity Series", filed via Edgar with
Post-Effective Amendment No. 46 (File No. 033-05033) on April
30, 2003.
20. Amendment to Declaration of Trust effective as of October 29,
2001 amending the fundamental investment restrictions of each
Series, filed via Edgar with Post-Effective Amendment No. 41
(File No. 811-04642) on March 1, 2002.
21. Amendment to Declaration of Trust effective as of March 18,
2002, merging of Phoenix-Oakhurst Balanced Series into
Phoenix-Oakhurst Strategic Allocation Series, Phoenix-Engemann
Nifty Fifty Series into Phoenix-Engemann Growth Series, and
Phoenix-Janus Core Equity Series Income Series into
Phoenix-Janus Growth Series, filed via Edgar with
Post-Effective Amendment No. 42 (File No. 033-05033) on April
29, 2002.
22. Amendment to Declaration of Trust effective May 10, 2002,
changing the name of "Phoenix-Morgan Stanley Focus Equity
Series" to "Phoenix-Van Kampen Focus Equity Series", filed via
Edgar with Post-Effective Amendment No. 43 (File No.
033-05033) on May 24, 2002.
C-3
23. Amendment to Declaration of Trust effective August 9, 2002,
establishing "Phoenix-Kayne Large-Cap Core Series",
"Phoenix-Kayne Small-Cap Quality Value Series", "Phoenix-Lord
Abbett Large-Cap Value Series", 'Phoenix-Lord Abbett Mid-Cap
Value Series", "Phoenix-Lord Abbett Bond-Debenture Series",
"Phoenix-Lazard International Equity Select Series",
"Phoenix-Lazard Small-Cap Value Series", "Phoenix-Lazard U.S.
Multi-Cap Series" and "Phoenix-State Street Research Small-Cap
Growth Series" and amending Section 4.2 of Article IV list of
Series as described in Trust's registration statement, filed
via Edgar with Post-Effective Amendment No. 46 (File No.
033-05033) on April 30, 2003.
24. Amendment to Declaration of Trust effective as of October 25,
2002 deleting reference to Phoenix-Federated U.S. Government
Bond Series, filed via Edgar with Post-Effective Amendment No.
45 (File No. 033-05033) on February 24, 2003.
(2) Not Applicable.
(3) Not Applicable.
(4) Agreement and Plan of Reorganization (included as Appendix A to the
Prospectus/Proxy Statement contained in Part A of this Registration
Statement).
(5) Reference is hereby made to Registrant's Amended Declaration of Trust
referenced in Exhibit 1 above.
(6) (a) Investment Advisory Agreements.
(1) Investment Advisory Agreement by and between
Registrant and Phoenix Investment Counsel, Inc. dated
January 1, 1993 (currently pertaining to the
Phoenix-Aberdeen International Series (f/k/a
International Series), Phoenix-Engemann Capital
Growth Series (f/k/a Growth Series), Phoenix-Goodwin
Money Market Series (f/k/a Money Market Series),
Phoenix-Goodwin Multi-Sector Fixed Income Series
(f/k/a Bond Series), Phoenix-Oakhurst Balanced Series
(f/k/a Balanced Series), and Phoenix-Oakhurst
Strategic Allocation Series (f/k/a Total Return
Series) previously filed with Post-Effective
Amendment No. 11 on May 2, 1994 and filed via Edgar
with Post-Effective Amendment No. 20 (File No.
033-05033) on April 29, 1997.
(2) Instrument to Amend Investment Advisory Agreement
between Registrant and Phoenix Investment Counsel,
Inc. pertaining to Phoenix-Seneca Strategic Theme
Series (f/k/a Phoenix Strategic Theme Series)
effective January 23, 1996, filed via Edgar with
Post-Effective Amendment No. 46 (File No. 033-05033)
on April 30, 2003.
(3) Second Amendment to Investment Advisory Agreement
between Registrant and Phoenix Investment Counsel,
Inc., dated August 9, 2002 covering the Phoenix-Kayne
Large-Cap Core Series and Phoenix-Kayne Small-Cap
Quality Value Series and deleting reference to
Phoenix-Oakhurst Balanced Series (f/k/a Balanced
Series) and Phoenix-Engemann Nifty Fifty Series,
filed via Edgar with Post-Effective Amendment No. 46
(File No. 033-05033) on April 30, 2003.
(4) Third Amendment to Investment Advisory Agreement
between Registrant and Phoenix Investment Counsel,
Inc. dated November 12, 2002 to reflect duties to
proxy voting and reflect investment program designed
to manage cash, cash equivalents and short-term
investments, filed via Edgar with Post-Effective
Amendment No. 46 (File No. 033-05033) on April 30,
2003.
C-4
(5) Fourth Amendment to Investment Advisory Agreement
between Registrant and Phoenix Investment Counsel,
Inc. dated May 9, 2003 (pertaining to addition of new
series named Phoenix-Goodwin Multi-Sector Short Term
Bond Series), filed via EDGAR with Form N-14 (File
No. 333-111961) on January 16, 2004.
(6) Fifth Amendment to Investment Advisory Agreement
between Registrant and Phoenix Investment Counsel,
Inc. dated August 12, 2003 (pertaining to addition of
new series named Phoenix-Goodwin Multi-Sector Short
Term Series - change in fee schedule from Fourth
Amendment), filed via EDGAR with Form N-14 (File No.
333-111961) on January 16, 2004.
(7) Sixth Amendment to Investment Advisory Agreement
between Registrant and Phoenix Investment Counsel,
Inc. dated October 23, 2004 (pertaining to name
change from Phoenix-Kayne Large-Cap Core Series to
Phoenix-Kayne Rising Dividends Series), filed via
EDGAR with Post-Effective Amendment NO. 47 (File No.
033-05033) on April 30, 2004.
(7) Not Applicable.
(8) Not Applicable.
(9) Custodian Agreement.
a. Master Custodian Agreement between Registrant and State Street
Bank and Trust Company dated May 1, 1997 via EDGAR with
Post-Effective Amendment No. 23 (File No. 033-05033) on
December 12, 1997.
b. Amendment to Master Custodian Contract between Registrant and
State Street Bank and Trust Company dated February 10, 2000,
filed via EDGAR with Form N-14 (Form No. 333-116764) on June
23, 2004.
c. Amendment to the Master Custodian Contract between Registrant
and State Street Bank and Trust Company, effective July 2,
2001 filed via EDGAR with Post-Effective Amendment No. 42
(File No. 033-05033) on April 29, 2002.
d. Amendment to Master Custodian Contract between Registrant and
State Street Bank and Trust Company dated May 10, 2002, filed
via EDGAR with Form N-14 (Form No. 333-116764) on June 23,
2004.
e. Letter Amendment to the Master Custodian Contract between
Registrant and State Street Bank and Trust Company, covering
the Phoenix-Kayne Large-Cap Core, Phoenix-Kayne Small-Cap
Quality Value, Phoenix-Lazard Small-Cap Value, Phoenix-Lazard
U.S. Multi-Cap, Phoenix-Lord Abbett Bond-Debenture,
Phoenix-Lord Abbett Mid-Cap Value, Phoenix-Lord Abbett
Large-Cap Value, and Phoenix-State Street Research Small-Cap
Growth Series, previously filed via EDGAR with Post-Effective
Amendment No.44 (File No. 033-05033) on August 9, 2002.
(10) Not Applicable.
(11) Opinion and Consent of Matthew A. Swendiman, Esq., with respect to the
legality of the shares being issued, filed herewith.
(12) Opinion and Consent of McDermott Will & Emery, LLP, special tax counsel
to the Trust, with respect to a tax-free reorganization (to be filed by
Amendment).
C-5
(13) (a) Financial Agent Agreement between Registrant and Phoenix
Home Life Mutual Insurance Company with respects to Phoenix
Home Life Variable Accumulation Account (VA) and Phoenix Home
Life Variable Universal Life Account dated November 15, 1995,
filed via Edgar with Post-Effective Amendment No. 16 (File No.
033-05033) on January 29, 1996.
(b) Transfer Agency Agreement between Registrant and Phoenix
Equity Planning Corporation dated August 29, 1988 filed via
Edgar with Post-Effective Amendment No. 20 (File No.
033-05033) on April 29, 1997.
(c) Financial Agent Agreement between Registrant and Phoenix
Equity Planning Corporation dated December 11, 1996, filed via
Edgar with Post-Effective Amendment No. 20 (File No.
033-05033) on April 29, 1997.
(d) First Amendment to Financial Agent Agreement between
Registrant and Phoenix Equity Planning Corporation effective
February 27, 1998, filed via Edgar with Post-Effective
Amendment No. 25 (File No. 033-05033) on April 29, 1998.
(e) Second Amendment to Financial Agent Agreement between
Registrant and Phoenix Equity Planning Corporation effective
June 1, 1998, filed via EDGAR with Form N-14 (File No.
333-111961) on January 16, 2004.
(f) Third Amendment to Financial Agent Agreement between
Registrant and Phoenix Equity Planning Corporation effective
October 29, 2001, filed via EDGAR with Form N-14 (File No.
333-111961) on January 16, 2004.
(g) Fourth Amendment to Financial Agent Agreement between
Registrant and Phoenix Equity Planning Corporation effective
August 9, 2002, filed via EDGAR with Form N-14 (File No.
333-111961) on January 16, 2004.
(h) Fifth Amendment to Financial Agent Agreement between
Registrant and Phoenix Equity Planning Corporation effective
January 1, 2003, filed via EDGAR with Form N-14 (File No.
333-111961) on January 16, 2004.
(i) Service Agreement between the Registrant, Phoenix Life
Insurance Company, PHL Variable Insurance Company and Phoenix
Life and Annuity Company dated January 1, 2003, filed via
EDGAR with Form N-14 (File No. 333-111961) on January 16,
2004.
(i) (1) First Amendment to Service Agreement between
Registrant, Phoenix Life Insurance Company, PHL
Variable Insurance Company and Phoenix Life and
Annuity Company dated November 11, 2003, filed via
EDGAR with Form N-14 (Form No. 333-116764) on June
23, 2004.
(i) (2) Second Amendment to Service Agreement between
Registrant, Phoenix Life Insurance Company, PHL
Variable Insurance Company and Phoenix Life and
Annuity Company dated February 27, 2004, filed via
EDGAR with Post-Effective Amendment No. 47 (File No.
033-05033) on April 30, 2004.
(j) Code of Ethics Amended and Restated for The Phoenix Edge
Series Fund and Phoenix Variable Advisors, Inc., filed via
EDGAR with Form N-14 (File No. 333-111961) on January 16,
2004.
(k) Amended and Restated Code of Ethics for Phoenix Funds, Phoenix
Institutional Mutual Funds, Phoenix-Engemann Funds,
Phoenix-Partners Funds and The Phoenix Edge Series Fund, filed
via EDGAR with Form N-14 (Form No. 333-116764) on June 23,
2004.
(14) Consent of PricewaterhouseCoopers LLP, filed herewith.
C-6
(15) Not Applicable.
(16) Power of Attorney, filed via EDGAR with Form N-14 (Form No. 333-116764)
on June 23, 2004.
(17) (a) Form of Voting Instructions Card and Proxy Card for
Phoenix-MFS Value Series, filed via EDGAR with Form N-14 (Form
No. 333-116764) on June 23, 2004.
(b) Prospectus of The Phoenix Edge Series Fund, as filed via Edgar
on Form N-1A on April 30, 2004 with Post-Effective Amendment
No. 47 (File No. 33-05033) and supplement to Prospectus dated
July 6, 2004 as filed via EDGAR on Form 497 (File No.
333-05033) on July 7, 2004, and incorporated by reference.
- -------------
ITEM 17. UNDERTAKINGS
(1) The undersigned Registrant agrees that prior to any
public reoffering of the securities registered
through the use of a prospectus which is a part of
this Registration Statement by any person or party
who is deemed to be an underwriter within the meaning
of Rule 145(c) of the Securities Act of 1933, the
reoffering prospectus will contain the information
called for by the applicable registration form for
reofferings by persons who may be deemed
underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every
prospectus that is filed under paragraph (1) above
will be filed as a part of an amendment to the
registration statement and will not be used until the
amendment is effective, and that, in determining any
liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to be a new
registration statement for the securities offered
therein, and the offering of the securities at that
time shall be deemed to be the initial bona fide
offering of them.
(3) The undersigned Registrant agrees to file, by
post-effective amendment, an Opinion of Counsel or a
copy of an IRS ruling supporting the tax consequences
of the Reorganization within a reasonable time after
receipt of such opinion or ruling.
C-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on behalf of the Registrant in the City
of Hartford and State of Connecticut on the 6th day of August, 2004.
THE PHOENIX EDGE SERIES FUND
Attest: /s/ Richard J. Wirth By: /s/ Philip R. McLoughlin
-------------------------- -------------------------------------
Richard J. Wirth Name: Philip R. McLoughlin
Secretary Title: President
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities indicated on this 6th
day of August, 2004.
Signature Title
/s/Nancy G. Curtiss
- ----------------------------------
Nancy G. Curtiss Vice President, Treasurer and
Principal Financial and Accounting
Officer
- ----------------------------------
Frank M. Ellmer* Trustee
- ----------------------------------
John A. Fabian* Trustee
- ----------------------------------
Roger A. Gelfenbien* Trustee
- ----------------------------------
Philip K. Polkinghorn* Trustee and Executive Vice President
- ----------------------------------
Eunice S. Groark* Trustee
- ----------------------------------
Frank E. Grzelecki* Trustee
- ----------------------------------
John R. Mallin* Trustee
S-1
/s/Philip R. McLoughlin
- -----------------------
Philip R. McLoughlin Trustee and President, Chief Executive
Officer and Chairman
(Principal Executive Officer)
*By:/s/ Philip R. McLoughlin
------------------------
*Pursuant to power of attorney, filed via EDGAR with Form N-14 (Form No.
333-116764) on June 23, 2004.
S-2
INDEX TO EXHIBITS
(11) Opinion and Consent
(14) Consent of PricewaterhouseCoopers LLP