PHOENIX EQUITY TRUST (Form: 485BPOS, Received: 03/10/2008 14:25:48)

As filed with the Securities and Exchange Commission on March 10, 2008

Registration Nos. 002-16590

811-945

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


		FORM N-1A
		REGISTRATION STATEMENT
		*Under the*
		*SECURITIES ACT OF 1933*		x
		Pre-Effective Amendment No.		¨
		Post-Effective Amendment No. 88		x
		and/or
		REGISTRATION STATEMENT
		*Under the*
		*INVESTMENT COMPANY ACT OF 1940*		x
		Amendment No. 89		x
		(Check appropriate box or boxes.)

Phoenix Equity Trust

(Exact Name of Registrant as Specified in Declaration of Trust)

101 Munson Street, Greenfield, Massachusetts 01301

(Address of Principal Executive Offices) (Zip Code)

c/o Phoenix Equity Planning

Corporation — Shareholder Services

(800) 243-1574

(Registrant’s Telephone Number, including Area Code)

Counsel and Chief Legal Officer:

Kevin J. Carr, Esq.

Vice President and Counsel

Phoenix Life Insurance Company

One American Row

Hartford, Connecticut 06102-5056

John H. Beers, Esq.

Vice President and Clerk

Phoenix Life Insurance Company

One American Row

Hartford, Connecticut 06102-5056

(Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box)

immediately upon filing pursuant to paragraph (b)

on pursuant to paragraph (b) of Rule 485

60 days after filing pursuant to paragraph (a)(i)

on pursuant to paragraph (a)(i)

75 days after filing pursuant to paragraph (a)(ii)

on pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

this post-effective amendment designates a new effective date for a previously filed post-effective amendment.

LOGO

Prospectus

Phoenix All-Cap Growth Fund

Phoenix Balanced Fund

Phoenix Capital Growth Fund

Phoenix Growth & Income Fund

Phoenix Growth Opportunities Fund

Phoenix Income & Growth Fund

Phoenix Mid-Cap Growth Fund

Phoenix Mid-Cap Value Fund

Phoenix Quality Small-Cap Fund

Phoenix Small-Cap Growth Fund

Phoenix Small-Cap Sustainable Growth Fund

Phoenix Small-Cap Value Fund

Phoenix Small-Mid Cap Fund

Phoenix Strategic Growth Fund

Phoenix Value Opportunities Fund


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PHOENIX EQUITY TRUST	March 10, 2008


Not FDIC Insured	No Bank Guarantee	May Lose Value

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This prospectus contains important information that you should know before investing in Phoenix Equity Trust Funds. Please read it carefully and retain it for future reference.

Phoenix Equity Trust


Table of Contents

Phoenix Equity Funds

Introduction to Equity Funds		1

Phoenix All-Cap Growth Fund		2

Phoenix Balanced Fund		4

Phoenix Capital Growth Fund		7

Phoenix Growth & Income Fund		9

Phoenix Growth Opportunities Fund		11

Phoenix Income & Growth Fund		13

Phoenix Mid-Cap Growth Fund		16

Phoenix Mid-Cap Value Fund		18

Phoenix Quality Small-Cap Fund		20

Phoenix Small-Cap Growth Fund		22

Phoenix Small-Cap Sustainable Growth Fund		24

Phoenix Small-Cap Value Fund		26

Phoenix Small-Mid Cap Fund		28

Phoenix Strategic Growth Fund		30

Phoenix Value Opportunities Fund		32

Risks Related to Principal Investment Strategies		34

Fund Fees and Expenses		38

Additional Investment Techniques		46

Management of the Funds		50

Pricing of Fund Shares		57

Sales Charges		58

Your Account		62

How to Buy Shares		63

How to Sell Shares		64

Things You Should Know When Selling Shares		65

Account Policies		66

Investor Services and Other Information		68

Tax Status of Distributions		69

Financial Highlights		70

Phoenix Equity Funds

Introduction to Equity Funds

Equity Funds invest in stocks, which represent partial ownership in a company. They generally pursue capital appreciation; that is, an increase in a fund’s share value. In some cases, these funds also seek dividend income.

If you invest in an Equity Fund, you risk losing your investment.

The value of the fund’s investments that supports your share value may decrease. If between the time you purchase shares and the time you sell shares the value of the fund’s investments decreases, you will lose money. Investment values can decrease for a number of reasons. Conditions affecting the overall economy, specific industries or companies in which the fund invests can be worse than expected and investments may fail to perform as the adviser or subadviser expects. As a result, the value of your shares may decrease.

Generally, 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 (such as changes in inflation or consumer demand) and to events that affect particular issuers (such as news about the success or failure of a new product).

Each Equity Fund’s investment objective is not fundamental and may be changed by the Board of Trustees without approval by fund shareholders. There is no guarantee that a fund will achieve its objective.

Temporary Defensive Strategy: During periods of adverse market conditions, each of the Equity Funds may take temporary defensive positions that are inconsistent with its principal investment strategies by holding all or part of its assets in cash and short-term money market instruments, including obligations of the U.S. Government, high-quality commercial paper, certificates of deposit, bankers’ acceptances, bank interest-bearing demand accounts, and repurchase agreements secured by U.S. Government securities. When this allocation happens, a fund may not achieve its objective.

Each Equity Fund’s principal risks are provided in an alphabetical listing within the fund description that follows. These risks are discussed in greater detail under “Risks Related to Principal Investment Strategies” beginning on page 34.


Phoenix Equity Funds		1

Phoenix All-Cap Growth Fund

Investment Objective

The Phoenix All-Cap Growth Fund has an investment objective of long-term growth of capital. There is no guarantee that the fund will achieve its objective. The fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategies

The fund focuses on purchasing common stocks of domestic corporations with rapidly growing earnings. The companies may be of any capitalization and may be unseasoned or established. The subadviser may select stocks of companies that may not be experiencing rapid growth but, in the opinion of the subadviser, are undervalued by other criteria of their fundamental net worth. As of December 31, 2007, the market capitalization of the issuers in which the fund was invested ranged from $89.4 million to $333 billion.

With respect to the small-cap portion of the fund’s portfolio, the subadviser selects companies that it believes to have the following characteristics: 1) high future earnings per share growth, 2) high or improving return on invested capital, and 3) strong competitive advantage and sustainability characteristics. The subadviser conducts fundamental research on these companies, which includes face-to-face meetings with company management.

Generally, small-cap stocks are sold when the characteristics and factors used to select a security change, such as a reduction in the expected earnings growth rate, a loss of competitive advantage or the security has appreciated to the point where it is no longer attractive.

For large-cap investing, the subadviser uses a bottom-up, fundamental approach focusing primarily on profit acceleration. A screening process is utilized to select stocks of companies that it believes are growing earnings at accelerated rates; producing quality, sustainable earnings; reasonably valued relative to their growth rate; well managed; and have potential to exceed earnings expectations. Surviving companies are subjected to rigorous fundamental analysis.

With respect to the large-cap portion of the fund’s portfolio, the subadviser seeks to control risk through adequate diversification, position and volatility constraints, valuation constraints, and ongoing and intensive fundamental research.

Large-cap stocks are reviewed for sale if a deterioration in fundamentals results in an earnings disappointment; valuation levels are unsustainable; earnings acceleration peaks; or if the subadviser feels a better opportunity is available.

In pursuit of its investment objective, the fund may invest a significant portion of its assets in one or more sectors of the equity securities market, such as technology, healthcare, natural resources, etc.

Please see “Additional Investment Techniques” for other investment techniques of the fund.

Risks Related to Principal Investment Strategies

Growth Stocks Risk —The risk that the fund’s focus on growth investing will cause the fund to underperform when value investing is in favor.

Large Company Risk —The risk that the value of investments in larger companies may not rise as much as smaller companies, as larger companies tend to be less volatile.

Sector Investing Risk —The risk that conditions that negatively affect the sector(s) in which the fund invests may have a greater impact on the fund and may provide less investment return as compared to securities in other sector(s).

Small and Unseasoned Company Risk —The risk that investments in smaller unseasoned companies may be more volatile than investments in larger companies.

For a more detailed description of the above risks, see Risks Related to Principal Investment Strategies, page 34.


2		Phoenix All-Cap Growth Fund

Performance Tables

The Phoenix All-Cap Growth Fund, a series of Phoenix Equity Trust (“Successor Fund”), is the successor of the Phoenix All-Cap Growth Fund, a series of Phoenix Investment Trust 06 (“Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Successor Fund on March 10, 2008. The Predecessor Fund and the Successor Fund have identical investment objectives and strategies. The Successor Fund has adopted the past performance of the Predecessor Fund as its own. Therefore the performance tables below include the performance of the shares of the Predecessor Fund prior to the Phoenix All-Cap Growth Fund’s commencement date.

The bar chart and table below provide some indication of the risks of investing in the Phoenix All-Cap Growth Fund. The bar chart shows changes in the fund’s Class A Shares performance from year to year over a 10-year period. ⁽¹⁾ The table shows how the fund’s average annual returns compare to those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. The fund’s past performance, before and after taxes, is not necessarily an indication of how the fund will perform in the future.

LOGO

Calendar Year


Average Annual Total Returns (for the periods ended 12/31/07) ⁽²⁾	1 Year	5 Years	10 Years
Class A
Return Before Taxes	6.91%	12.32%	3.35%
Return After Taxes on Distributions ⁽³⁾	3.76%	11.16%	2.02%
Return After Taxes on Distributions and Sale of Fund Shares ⁽³⁾⁽⁴⁾	7.92%	10.67%	2.69%
Class B
Return Before Taxes	8.99%	12.84%	3.19%
Class C
Return Before Taxes	12.66%	12.84%	3.19%
S&P 500 ^® Index ⁽⁵⁾	5.49%	12.83%	5.92%
Russell 3000 ^® Growth Index ⁽⁶⁾	11.40%	12.42%	3.83%

(2) The fund’s average annual returns in the table above reflect the deduction of the maximum sales charge for an investment in the fund’s Class A Shares and a full redemption in the fund’s Class B Shares and Class C Shares.

(3) After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. The after-tax returns shown in the table above are for only one class of shares offered by the prospectus (Class A); after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.

(4) The Return After Taxes on Distributions and Sale of Fund Shares may be greater for a period than the Return After Taxes on Distributions for the same period if there was a tax loss realized on sale of fund shares. The benefit of the tax loss (to the extent it can be used to offset other gains) may result in a higher return.

(5) The S&P 500 ^® Index is a free-float market capitalization-weighted index of 500 of the largest U.S. companies. The index is calculated on a total-return basis with dividends reinvested. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.

(6) The Russell 3000 ^® Growth Index is a market capitalization-weighted index of growth-oriented stocks of U.S. companies. The index is calculated on a total-return basis with dividends reinvested. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.


Phoenix All-Cap Growth Fund		3

Phoenix Balanced Fund

Investment Objectives

The Phoenix Balanced Fund has investment objectives of reasonable income, long-term capital growth and conservation of capital. There is no guarantee that the fund will achieve its objectives. The fund’s investment objectives may be changed without shareholder approval.

Principal Investment Strategies

Under normal market circumstances, the fund invests at least 65% of its assets in common stocks and fixed income securities of both U.S. and foreign issuers, including issuers in “emerging market” countries, and may invest in companies of any size. Generally, the fund invests approximately 60% in equity securities and 40% in fixed income securities.

The adviser uses a quantitative approach coupled with fundamental analysis in its equity security selection process. The 1,500 largest capitalized stocks are ranked based on valuation, momentum and earnings related factors. As of December 31, 2007, the market capitalization range of the pool of securities from which the fund selects its equity investments was $1 billion to $511.9 billion. The adviser seeks a desired balance of risk and return potential, including a targeted yield greater than that of the S&P 500 ^® Index. The adviser does not guarantee that the targeted yield will exceed the S&P 500 ^® Index.

The subadviser uses a sector rotation approach for selecting fixed income securities, seeking to adjust the proportion of fund investments in various sectors (such as agency mortgage-backed securities, investment grade corporate bonds, municipal securities and commercial mortgage-backed securities) and the selections within sectors to obtain higher relative returns. The subadviser selects those sectors that it believes offer attractive values. Securities within sectors are selected based on general economic and financial conditions, and the issuer’s business, management, cash, assets, earnings and stability. Securities selected for investment are those that the subadviser believes offer the best potential for total return based on risk-reward tradeoff.

Interest rate risk is managed by a duration neutral strategy. The subadviser attempts to maintain the duration of the fund at a level similar to that of its fixed income benchmark, the Lehman Brothers Aggregate Bond Index. Duration measures the interest rate sensitivity of a fixed income security by assessing and weighting the present value of the security’s payment pattern. Generally, the longer the maturity, the greater the duration and therefore the greater effect interest rate changes have on the price of the security. By maintaining the duration of the fund at a level similar to that of the fund’s fixed income benchmark, the subadviser believes that the fund’s exposure to interest rate risk is more consistent with that benchmark’s risk profile than that of a fund that attempts to predict future interest rate changes. On December 31, 2007, the modified adjusted duration of the Lehman Brothers Aggregate Bond Index was 4.41 years; the modified adjusted duration of the fund was 4.28 years. Typically, for a fund maintaining a modified adjusted duration of 4.28 years, a one percent increase in interest rates would cause a 4.28% decrease in the value of the fund’s fixed income assets. Similarly, a one percent decrease in interest rates typically would cause the value of the fund’s fixed income assets to increase by 4.28%.

Fixed income securities selected for portfolio investment may be of any maturity. However, the subadviser attempts to maintain a maturity composition similar to that of its fixed income benchmark in an effort to maintain an interest rate risk profile consistent with its benchmark. Maturity composition refers to the percentage of securities within specific maturity ranges as well as the aggregate weighted average portfolio maturity. On December 31, 2007, the average maturity of the Lehman Brothers Aggregate Bond Index was 7.05 years; the average adjusted maturity of the fund was 5.84 years.

As to the fixed income portion of the fund’s portfolio, the fund primarily invests in investment-grade securities, including corporate bonds, municipal bonds, agency and non-agency mortgage-backed securities, asset-backed securities and U.S. Treasury securities. The fund may also invest in high yield-high risk securities, commonly referred to as “junk bonds.” If after the time of investment a security’s rating declines, the fund is not obligated to sell the security.

Please see “Additional Investment Techniques” for other investment techniques of the fund.

Risks Related to Principal Investment Strategies

Credit Risk —The risk that an issuer of a security will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of the security to decline.


4		Phoenix Balanced Fund

Emerging Markets Risk —The risk that prices of emerging markets securities may be more volatile than those of their counterparts in more established foreign markets.

Foreign Securities Risk —The risk that the prices of foreign securities may be more volatile than those of their domestic counterparts.

High Yield Securities (Junk Bond) Risk —The risk that lower rated securities generally have a higher incidence of default and may be less liquid than higher rated securities.

Interest Rate Risk —The risk that bond prices overall will decline because of rising interest rates.

Large Company Risk —The risk that the value of investments in larger companies may not rise as much as smaller companies, as larger companies tend to be less volatile.

Long-Term Maturities/Durations Risk —The risk of greater price fluctuations than would be associated with securities having shorter maturities or durations.

Municipal Market Risk —The risk that certain factors may negatively affect the value of municipal securities and, as a result, the share price of the fund.

Prepayment Risk —The risk that issuers will prepay fixed rate obligations when interest rates fall, forcing the fund to re-invest in obligations with lower interest rates than the original obligations.

Small and Medium Company Risk —The risk that investments in smaller companies may be more volatile than investments in larger companies.

U.S. Government Securities Risk —The risk that certain of these securities are only guaranteed as to the timely payment of principal and interest.

For a more detailed description of the above risks, see Risks Related to Principal Investment Strategies, page 34.


Phoenix Balanced Fund		5

Performance Tables

The Phoenix Balanced Fund, a series of Phoenix Equity Trust (“Successor Fund”), is the successor of the Phoenix Balanced Fund, a series of Phoenix Series Fund (“Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Successor Fund on March 10, 2008. The Predecessor Fund and the Successor Fund have identical investment objectives and strategies. The Successor Fund has adopted the past performance of the Predecessor Fund as its own. Therefore, the performance tables below include the performance of the shares of the Predecessor Fund prior to the Phoenix Balanced Fund’s commencement date.

The bar chart and table below provide some indication of the risks of investing in the Phoenix Balanced Fund. The bar chart shows changes in the fund’s Class A Shares performance from year to year over a 10-year period. ⁽¹⁾ The table shows how the fund’s average annual returns compare to those of two broad-based securities market indices and to a “balanced” benchmark. The fund’s past performance, before and after taxes, is not necessarily an indication of how the fund will perform in the future.

LOGO

Calendar Year


Average Annual Total Returns (for the periods ended 12/31/07) ⁽²⁾							Since Inception ⁽³⁾
	1 Year		5 Years		10 Years		Class C
Class A
Return Before Taxes	-0.21	%	7.73	%	5.51	%	—
Return After Taxes on Distributions ⁽⁴⁾	-2.02	%	6.24	%	3.76	%	—
Return After Taxes on Distributions and Sale of Fund Shares ⁽⁴⁾⁽⁵⁾	1.10	%	6.16	%	3.95	%	—
Class B
Return Before Taxes	1.18	%	8.20	%	5.35	%	—
Class C
Return Before Taxes	5.05	%	—		—		7.56	%
Lehman Brothers Aggregate Bond Index ⁽⁶⁾	6.97	%	4.42	%	5.97	%	4.76	%
S&P 500 ^® Index ⁽⁷⁾	5.49	%	12.83	%	5.92	%	11.46	%
Balanced Benchmark ⁽⁸⁾	6.22	%	9.51	%	6.27	%	8.82	%

(3) Class C Shares since April 19, 2005.

(4) After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. The after-tax returns shown in the table above are for only one class of shares offered by the prospectus (Class A); after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.

(5) The Return After Taxes on Distributions and Sale of Fund Shares for a period may be greater than the Return After Taxes on Distributions for the same period if there was a tax loss realized on sale of fund shares. The benefit of the tax loss (to the extent it can be used to offset other gains) may result in a higher return.

(6) The Lehman Brothers Aggregate Bond Index measures the U.S. investment grade fixed rate bond market. The index is calculated on a total-return basis. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.

(7) The S&P 500 ^® Index is a free-float market capitalization-weighted index of 500 of the largest U.S. companies. The index is calculated on a total-return basis with dividends reinvested. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.

(8) The Balanced Benchmark is a composite index consisting of 60% S&P 500 ^® Index and 40% Lehman Brothers Aggregate Bond Index. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.


6		Phoenix Balanced Fund

Phoenix Capital Growth Fund

Investment Objective

The Phoenix Capital Growth Fund has an investment objective of long-term capital appreciation. There is no guarantee that the fund will achieve its objective. The fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategies

Under normal circumstances, the fund invests at least 80% of its assets in common stocks that, at the time of initial purchase, have market capitalizations similar to the range of companies included in the Russell 1000 ^® Growth Index. Because the capitalization range is defined by reference to an index, the market capitalization of companies in which the fund invests may vary with market conditions. As of December 31, 2007, the market capitalization range of companies included in the Russell 1000 ^® Growth Index was $624 million to $527.8 billion.

The subadviser’s approach to equity management is process driven, applying quantitative analytics combined with a fundamental overlay to provide consistent, superior performance results. Based on internal research and extensive academic studies, the subadviser focuses on those companies exhibiting improving fundamentals, attractive valuations and increasing investor interest.

Stocks may be sold if the ranking from the multi-factor model deteriorates or if there is deterioration in a company’s fundamentals and outlook.

Please see “Additional Investment Techniques” for other investment techniques of the fund.

Risks Related to Principal Investment Strategies

Growth Stocks Risk —The risk that the fund’s focus on growth investing will cause the fund to underperform when value investing is in favor.

Large Company Risk —The risk that the value of investments in larger companies may not rise as much as smaller companies, as larger companies tend to be less volatile.

Medium Company Risk —The risk that investments in smaller companies may be more volatile than investments in larger companies.

For a more detailed description of the above risks, see Risks Related to Principal Investment Strategies, page 34.


Phoenix Capital Growth Fund		7

Performance Tables

The Phoenix Capital Growth Fund, a series of Phoenix Equity Trust (“Successor Fund”), is the successor of the Phoenix Capital Growth Fund, a series of Phoenix Series Fund (“Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Successor Fund on March 10, 2008. The Predecessor Fund and the Successor Fund have identical investment objectives and strategies. The Successor Fund has adopted the past performance of the Predecessor Fund as its own. Therefore, the performance tables below include the performance of the shares of the Predecessor Fund prior to the Phoenix Capital Growth Fund’s commencement date.

The bar chart and table below provide some indication of the risks of investing in the Phoenix Capital Growth Fund. The bar chart shows changes in the fund’s Class A Shares performance from year to year over a 10-year period. ⁽¹⁾ The table shows how the fund’s average annual returns compare to those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. The fund’s past performance, before and after taxes, is not necessarily an indication of how the fund will perform in the future.

LOGO

Calendar Year


Average Annual Total Returns (for the periods ended 12/31/07) ⁽²⁾	1 Year	5 Years	10 Years	Since Inception ⁽³⁾
	1 Year	5 Years	10 Years	Class C
Class A
Return Before Taxes	4.11%	7.46%	-0.52%	—
Return After Taxes on Distributions ⁽⁴⁾	4.11%	7.45%	-1.06%	—
Return After Taxes on Distributions and Sale of Fund Shares ⁽⁴⁾⁽⁵⁾	2.67%	6.47%	-0.45%	—
Class B
Return Before Taxes	5.61%	7.92%	-0.68%	—
Class C
Return Before Taxes	9.57%	—	—	6.87%
S&P 500 ^® Index ⁽⁶⁾	5.49%	12.83%	5.92%	6.20%
Russell 1000 ^® Growth Index ⁽⁷⁾	11.81%	12.11%	3.83%	10.50%

(3) Class C Shares since November 21, 2006.

(6) The S&P 500 ^® Index is a free-float market capitalization-weighted index of 500 of the largest U.S. companies. The index is calculated on a total-return basis with dividends reinvested. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.

(7) The Russell 1000 ^® Growth Index is a market capitalization-weighted index of growth-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. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.


8		Phoenix Capital Growth Fund

Phoenix Growth & Income Fund

Investment Objective

The Phoenix Growth & Income Fund has an investment objective of seeking capital appreciation and current income. There is no guarantee that the fund will achieve its objective. The fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategies

The fund invests in equity securities, primarily common stocks. Under normal circumstances, the fund will invest at least 65% of its assets in common stocks; however, the adviser intends to invest nearly all of the fund’s assets in common stocks, rather than holding significant amounts of cash and short-term investments.

The adviser uses a quantitative approach coupled with fundamental analysis in its equity securities selection process. The 1,500 largest capitalized stocks are ranked based on valuation, momentum and earnings related factors. As of December 31, 2007, the market capitalization range of the pool of securities from which the fund selects its investments was $1 billion to $511.9 billion. The adviser seeks a desired balance of risk and return potential, including a targeted yield greater than that of the Standard & Poor’s 500 ^® Index (“S&P 500 ^® Index”). The adviser does not guarantee that the fund’s total return will exceed that of the S&P 500 ^® Index.

Please see “Additional Investment Techniques” for other investment techniques of the fund.

Risks Related to Principal Investment Strategies

Fully Invested in Equity Securities Risk —The risk that equity securities may decrease more quickly as compared to a fund that holds larger cash positions.

Large Company Risk —The risk that the value of investments in larger companies may not rise as much as smaller companies, as larger companies tend to be less volatile.

S&P 500 ^® Index Comparison Risk —The risk that the S&P 500 ^® Index can have negative returns.

Small and Medium Company Risk —The risk that investments in smaller companies may be more volatile than investments in larger companies.

For a more detailed description of the above risks, see Risks Related to Principal Investment Strategies, page 34.


Phoenix Growth & Income Fund		9

Performance Tables

The Phoenix Growth & Income Fund, a series of Phoenix Equity Trust (“Successor Fund”), is the successor of the Phoenix Growth & Income Fund, a series of Phoenix Equity Series Fund (“Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Successor Fund on March 10, 2008. The Predecessor Fund and the Successor Fund have identical investment objectives and strategies. The Successor Fund has adopted the past performance of the Predecessor Fund as its own. Therefore, the performance tables below include the performance of the shares of the Predecessor Fund prior to the Phoenix Growth & Income Fund’s commencement date.

The bar chart and table below provide some indication of the risks of investing in the Phoenix Growth & Income Fund. The bar chart shows changes in the fund’s Class A Shares performance from year to year over a 10-year period. ⁽¹⁾ The table shows how the fund’s average annual returns compare to those of a broad-based securities market index. The fund’s past performance, before and after taxes, is not necessarily an indication of how the fund will perform in the future.

LOGO

Calendar Year


Average Annual Total Returns (for the periods ended 12/31/07) ⁽²⁾
	1 Year	5 Years	10 Years
Class A Shares
Return Before Taxes	-0.03%	11.40%	5.77%
Return After Taxes on Distributions ⁽³⁾	-0.10%	11.29%	5.63%
Return After Taxes on Distributions and Sale of Fund Shares ⁽³⁾⁽⁴⁾	0.07%	9.95%	5.00%
Class B Shares
Return Before Taxes	1.23%	11.87%	5.60%
Class C Shares
Return Before Taxes	5.23%	11.89%	5.59%
S&P 500 ^® Index ⁽⁵⁾	5.49%	12.83%	5.92%

(4) The Return After Taxes on Distributions and Sale of Fund Shares for a period may be greater than the Return After Taxes on Distributions for the same period if there was a tax loss realized on sale of fund shares. The benefit of the tax loss (to the extent it can be used to offset other gains) may result in a higher return.

(5) The S&P 500 ^® Index is a free-float adjusted market capitalization-weighted index of 500 of the largest U.S. companies. The index is calculated on a total-return basis with dividends reinvested. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.

Class I Shares have been in existence only since November 13, 2007 and have not had a full year of investment operations. Therefore, performance information for Class I Shares is not included.


10		Phoenix Growth & Income Fund

Phoenix Growth Opportunities Fund

Investment Objective

The Phoenix Growth Opportunities Fund has an investment objective of capital appreciation. There is no guarantee that the fund will achieve its objective. The fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategies

Under normal circumstances, the fund invests primarily in common stocks and other equity securities (such as rights and warrants) of U.S. companies with medium to large market capitalizations that the subadviser believes have strong earnings growth potential. Medium to large capitalization companies are defined for this purpose as companies with market capitalizations, at the time of purchase, in the range of those companies included in the Russell 1000 ^® Growth Index (the “Growth Index”). Because medium to large cap companies are defined by reference to an index, the market capitalization of companies in which the fund may invest may vary with market conditions. As of December 31, 2007, the market capitalization range of companies included in the Growth Index was $624 million to $527.8 billion. The fund may also purchase securities of other medium to large capitalization companies that fall outside of this range that the subadviser believes offer strong earnings growth potential. It is not expected that the fund will own a substantial amount of securities that pay dividends.

The subadviser invests fund assets in securities of companies in a variety of economic sectors, and generally will not invest more than 50% of its assets in any one sector of the economy (for example, technology or industrial). It will not invest more than 25% in any one industry or group of industries. Although the fund is non-diversified, portfolio exposure is generally limited to 5% of assets in any single issuer, subject to exceptions for the most heavily weighted securities in the Growth Index. The fund may participate in Initial Public Offerings (“IPOs”).

The subadviser pursues a bottom-up strategy that blends quantitative, fundamental and technical analysis to find growth companies with superior earnings prospects, reasonable valuations, and favorable trading-volume and price patterns. The subadviser focuses on companies that it believes have market dominance, strong management with a commitment to shareholders, financial strength and a favorable long-term outlook.

Generally, a security becomes a sell candidate if the holding gets a poor ranking from the quantitative model, has a downward revision in earnings estimates, or an unattractive technical pattern. Positions may also be trimmed to adhere to capitalization or capacity constraints, to maintain sector neutrality or to adjust stock position size relative to the target index.

The subadviser’s investment strategies may result in a higher portfolio turnover rate for the fund. A high portfolio turnover rate increases brokerage and other transaction costs to the fund, negatively affects fund performance, and may increase capital gain distributions, resulting in greater tax liability to you.

Please see “Additional Investment Techniques” for other investment techniques of the fund.

Risks Related to Principal Investment Strategies

Growth Stocks Risk —The risk that the fund’s focus on growth investing will cause the fund to underperform when value investing is in favor.

IPO Risk —The risk that the fund’s participation in IPOs may result in higher portfolio turnover rates because of varying patterns of trading volume.

Large Company Risk —The risk that the value of investments in larger companies may not rise as much as smaller companies, as larger companies tend to be less volatile.

Limited Number of Investments Risk —The risk that the fund is potentially more volatile due to negative conditions as compared with a fund holding a greater number of securities positions.

Medium Company Risk —The risk that investments in smaller companies may be more volatile than investments in larger companies.

Non-Diversification Risk —The risk that the fund may be more susceptible to any single economic, political or regulatory event due to the fund investing in a smaller number of issuers.

For a more detailed description of the above risks, see Risks Related to Principal Investment Strategies, page 34.


Phoenix Growth Opportunities Fund		11

Performance Tables

The Phoenix Growth Opportunities Fund, a series of Phoenix Equity Trust (“Successor Fund”), is the successor of the Phoenix Growth Opportunities Fund, a series of Phoenix Opportunities Trust (“Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Successor Fund on March 10, 2008. The Predecessor Fund and the Successor Fund have identical investment objectives and strategies. The Successor Fund has adopted the past performance of the Predecessor Fund as its own. The performance tables also include the performance history of a prior fund that was reorganized into the Predecessor Fund on June 9, 2006 (the “Prior Fund”). From January 31, 1997, when the Prior Fund commenced operations, to June 9, 2006, the Prior Fund’s investment program and general operations were managed by a different investment adviser. Therefore, the performance tables below include the performance of the shares of the Predecessor Fund and the Prior Fund prior to the Phoenix Growth Opportunities Fund’s commencement date.

The bar chart and table below provide some indication of the risks of investing in the Phoenix Growth Opportunities Fund. The bar chart shows changes in the fund’s Class A Shares performance from year to year over a 10-year period. ⁽¹⁾ The table shows how the fund’s average annual returns compare with those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. The fund’s past performance, before and after taxes, is not necessarily an indication of how the fund will perform in the future.

LOGO

Calendar Year

(1) The fund’s annual returns in the chart above do not reflect the deduction of any sales charges. The returns would have been less than those shown if sales charges were deducted. During the period shown in the chart above, the highest return for a quarter was 41.30% (quarter ending December 31, 1999) and the lowest return for a quarter was -27.31% (quarter ending December 29, 2000). On June 9, 2006, Phoenix Investment Counsel, Inc. became the investment adviser to the Predecessor Fund. Since inception, whether as adviser (until June 9, 2006) or as subadviser, Turner Investment Partners has provided day-to-day management of the Predecessor Fund’s portfolio.


Average Annual Total Returns (for the periods ended 12/31/07) ⁽²⁾						Since Inception ⁽³⁾
	1 Year	5 Years		10 Years		Class C
Class A Shares
Return Before Taxes	20.69%	17.68	%	6.59	%	—
Return After Taxes on Distributions ⁽⁴⁾	20.69%	17.68	%	5.23	%	—
Return After Taxes on Distributions and Sale of Fund Shares ⁽⁴⁾⁽⁵⁾	13.45%	15.64	%	4.92	%	—
Class C Shares
Return Before Taxes	27.17%	—		—		22.90	%
S&P 500 ^® Index ⁽⁶⁾	5.49%	12.83	%	5.92	%	12.83	%
Russell 1000 ^® Growth Index ⁽⁷⁾	11.81%	12.11	%	3.83	%	14.61	%

(3) Class C Shares since June 9, 2006.

(6) The S&P 500 ^® Index is a free float market capitalization-weighted index of 500 of the largest U.S. companies and is provided for general comparative purposes. The index is calculated on a total-return basis with dividends reinvested. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.


12		Phoenix Growth Opportunities Fund

Phoenix Income & Growth Fund

Investment Objectives

The Phoenix Income & Growth Fund has a primary investment objective of investing in a diversified group of securities that are selected for current yield consistent with the preservation of capital. The fund has a secondary investment objective to achieve capital appreciation when it is consistent with the fund’s primary objective. There is no guarantee that the fund will achieve its objectives. The fund’s investment objectives may be changed without shareholder approval.

Principal Investment Strategies

To pursue its investment objectives, the fund invests in income-producing securities including common stocks, convertible securities, mutual funds and all types of fixed income securities, including high yield-high risk (so called “junk bonds”), mortgage-backed and asset-backed, government, corporate and municipal debt obligations. The fund may invest in both U.S. and foreign (non-U.S.) securities, including issuers in “emerging market” countries and may invest in companies of any size. Under normal circumstances, at least 65% of the fund’s assets will be invested in securities that produce income and achieve capital growth.

The adviser uses a quantitative approach coupled with fundamental analysis in its equity security selection process. The 1,500 largest capitalized stocks are ranked based on valuation, momentum and earnings related factors. As of December 31, 2007, the range of the pool of securities from which the fund selects its equity investments was $1 billion to $511.9 billion. The adviser seeks a desired balance of risk and return potential, including a targeted yield greater than that of the S&P 500 ^® Index. The adviser does not guarantee that the targeted yield will exceed the S&P 500 ^® Index.

The subadviser uses a sector rotation approach for selecting fixed income securities, seeking to adjust the proportion of fund investment in various “sectors” (types of debt securities) and the selections within sectors to obtain higher relative returns. The subadviser selects those sectors that it believes offer attractive values. Securities within sectors are selected based on general economic and financial conditions, and the issuer’s business, management, cash, assets, earnings and stability. Securities selected for investment are those that the subadviser believes offer the best potential for total return based on risk-reward tradeoff.

Interest rate risk is managed by a duration neutral strategy. The subadviser attempts to maintain the duration of the fixed income portion of the fund at a level similar to that of its fixed income benchmark, the Lehman Brothers Aggregate Bond Index. Duration measures the interest rate sensitivity of a fixed income security by assessing and weighting the present value of the security’s payment pattern. Generally, the longer the maturity the greater the duration and therefore the greater effect interest rate changes have on the price of the security. By maintaining the duration of the fund at a level similar to that of its fixed income benchmark, the subadviser believes that the fund’s exposure to interest rate risk is more consistent with its benchmark’s risk profile than that of a fund that attempts to predict future interest rate changes. On December 31, 2007 the modified adjusted duration of the Lehman Brothers Aggregate Bond Index was 4.41 years; the modified adjusted duration of the fund was 4.29 years. Typically, for a fund maintaining a modified adjusted duration of 4.29 years, a 1% increase in interest rates would cause a 4.29% decrease in the value of the fund’s assets. Similarly, a 1% decrease in interest rates typically would cause the value of the fund’s assets to increase by 4.29%.

Fixed income securities selected for fund investment may be of any maturity. However, the subadviser attempts to maintain a maturity composition similar to that of its fixed income benchmark in an effort to maintain an interest rate risk profile consistent with its benchmark. Maturity composition refers to the percentage of securities within specific maturity ranges as well as the aggregate weighted average portfolio maturity. On December 31, 2007 the average maturity of the Lehman Brothers Aggregate Bond Index was 7.05 years; the average adjusted maturity of the fund was 5.74 years.

Please see “Additional Investment Techniques” for other investment techniques of the fund.

Risks Related to Principal Investment Strategies

Emerging Markets Risk —The risk that prices of emerging markets securities may be more volatile than those of their counterparts in more established foreign markets.


Phoenix Income & Growth Fund		13

Foreign Securities Risk —The risk that the prices of foreign securities may be more volatile than those of their domestic counterparts.

High Yield Securities (Junk Bond) Risk —The risk that lower rated securities generally have a higher incidence of default and may be less liquid than higher rated securities.

Interest Rate Risk —The risk that bond prices overall will decline because of rising interest rates.

Large Company Risk —The risk that the value of investments in larger companies may not rise as much as smaller companies, as larger companies tend to be less volatile.

Long-Term Maturities/Durations Risk —The risk of greater price fluctuations than would be associated with securities having shorter maturities or durations.

Municipal Market Risk —The risk that certain factors may negatively affect the value of municipal securities and, as a result, the share price of the fund.

Small and Medium Company Risk —The risk that investments in smaller companies may be more volatile than investments in larger companies, as smaller companies generally experience higher growth and failure rates.

U.S. Government Securities Risk —The risk that certain of these securities are only guaranteed as to the timely payment of principal and interest.

For a more detailed description of the above risks, see Risks Related to Principal Investment Strategies, page 34.


14		Phoenix Income & Growth Fund

Performance Tables

The Phoenix Income & Growth Fund, a series of Phoenix Equity Trust (“Successor Fund”), is the successor of the Phoenix Income & Growth Fund, a series of Phoenix Investment Series Fund (“Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Successor Fund on March 10, 2008. The Predecessor Fund and the Successor Fund have identical investment objectives and strategies. The Successor Fund has adopted the past performance of the Predecessor Fund as its own. Therefore, the performance tables below include the performance of the shares of the Predecessor Fund prior to the Phoenix Income & Growth Fund’s commencement date.

The bar chart and table below provide some indication of the risks of investing in Phoenix Income & Growth Fund. The bar chart shows changes in the fund’s Class A Shares performance from year to year over a 10-year period. ⁽¹⁾ The table shows how the fund’s average annual returns compare with two broad-based securities market indexes and with a “balanced” benchmark. The fund’s past performance, before and after taxes, is not necessarily an indication of how the fund will perform in the future.

LOGO

Calendar Year


Average Annual Total Returns (for the periods ended 12/31/07) ⁽²⁾	1 Year	5 Years	10 Years		Since Inception ⁽³⁾
	1 Year	5 Years	10 Years		Class C
Class A Shares
Return Before Taxes	-0.63%	7.11%	4.36	%	—
Return After Taxes on Distributions ⁽⁴⁾	-2.32%	6.00%	2.80	%	—
Return After Taxes on Distributions and Sale of Fund Shares ⁽⁴⁾⁽⁵⁾	0.92%	5.72%	2.93	%	—
Class B Shares
Return Before Taxes	0.77%	7.56%	4.18	%	—
Class C Shares
Return Before Taxes	4.69%	7.57%	—		3.59	%
S&P 500 ^® Index ⁽⁶⁾	5.49%	12.83%	5.92	%	2.58	%
Lehman Brothers Aggregate Bond Index ⁽⁷⁾	6.97%	4.42%	5.97	%	6.23	%
Balanced Benchmark ⁽⁸⁾	6.38%	8.67%	6.29	%	4.69	%

(3) Class C Shares since August 26, 1999.

(6) The S&P 500 ^® Index is a free-float adjusted market capitalization-weighted index of 500 of the largest U.S. companies and is provided for general comparative purposes. The index is calculated on a total-return basis with dividends reinvested. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.

(7) The Lehman Brothers Aggregate Bond Index measures the U.S. investment grade fixed rate bond market. The index is calculated on a total-return basis. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.

(8) The Balanced Benchmark is a composite index consisting of 50% S&P 500 ^® Index and 50% Lehman Brothers Aggregate Bond Index. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.


Phoenix Income & Growth Fund		15

Phoenix Mid-Cap Growth Fund

Investment Objective

The Phoenix Mid-Cap Growth Fund has an investment objective of capital appreciation. There is no guarantee that the fund will achieve its objective. The fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategies

Under normal circumstances, the fund invests at least 80% of its assets in common stocks that, at the time of initial purchase, have market capitalizations within the range of companies included in the Russell Midcap ^® Growth Index. Because mid-capitalization companies are defined by reference to an index, the market capitalization of companies in which the fund invests may vary with market conditions. As of December 31, 2007, the market capitalization range of companies included in the Russell Midcap ^® Growth Index was $624 million to $42.1 billion. The fund’s policy of investing 80% of its assets in medium capitalization companies may be changed only upon 60 days written notice to shareholders.

Stocks may be sold if the ranking from the multi-factor model deteriorates or if there is deterioration in a company’s fundamentals and outlook.

Please see “Additional Investment Techniques” for other investment techniques of the fund.

Risks Related to Principal Investment Strategies

Growth Stocks Risk —The risk that the fund’s focus on growth investing will cause the fund to underperform when value investing is in favor.

Medium Company Risk —The risk that investments in smaller companies may be more volatile than investments in larger companies.

For a more detailed description of the above risks, see Risks Related to Principal Investment Strategies, page 34.


16		Phoenix Mid-Cap Growth Fund

Performance Tables

The Phoenix Mid-Cap Growth Fund, a series of Phoenix Equity Trust (“Successor Fund”), is the successor of the Phoenix Mid-Cap Growth Fund, a series of Phoenix Series Fund (“Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Successor Fund on March 10, 2008. The Predecessor Fund and the Successor Fund have identical investment objectives and strategies. The Successor Fund has adopted the past performance of the Predecessor Fund as its own. Therefore, the performance tables below include the performance of the shares of the Predecessor Fund prior to the Phoenix Mid-Cap Growth Fund’s commencement date.

The bar chart and table below provide some indication of the risks of investing in the Phoenix Mid-Cap Growth Fund. The bar chart shows changes in the fund’s Class A Shares performance from year to year over a 10-year period. ⁽¹⁾ The table shows how the fund’s average annual returns compare to those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. The fund’s past performance, before and after taxes, is not necessarily an indication of how the fund will perform in the future.

LOGO

Calendar Year


Average Annual Total Returns (for the periods ended 12/31/07) ⁽²⁾					Since Inception ⁽³⁾
	1 Year	5 Years	10 Years		Class C
Class A
Return Before Taxes	-4.43%	9.54%	3.04	%	—
Return After Taxes on Distributions ⁽⁴⁾	-4.43%	9.54%	2.58	%	—
Return After Taxes on Distributions and Sale of Fund Shares ⁽⁴⁾⁽⁵⁾	-2.88%	8.31%	2.54	%	—
Class B
Return Before Taxes	-3.39%	10.04%	2.89	%	—
Class C
Return Before Taxes	0.61%	10.01%	—		-3.85	%
S&P 500 ^® Index ⁽⁶⁾	5.49%	12.83%	5.92	%	3.72	%
Russell Midcap ^® Growth Index ⁽⁷⁾	11.43%	17.90%	7.59	%	5.25	%

(3) Class C Shares since January 2, 2001.

(7) The Russell Midcap ^® Growth Index is a market capitalization-weighted index of medium-capitalization, growth-oriented stocks of U.S. companies. The index is calculated on a total-return basis with dividends reinvested. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.

Class I Shares have been in existence only since September 13, 2007 and have not had a full calendar year of investment operations. Therefore, performance information for Class I Shares is not included.


Phoenix Mid-Cap Growth Fund		17

Phoenix Mid-Cap Value Fund

Important Notice: The Phoenix Mid-Cap Value Fund is available for purchase by current shareholders and new investors on a limited basis. Please refer to “How to Buy Shares” for details.

Investment Objective

The Phoenix Mid-Cap Value Fund has an investment objective of long-term growth of capital. There is no guarantee that the fund will achieve its objective. The fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategies

Under normal circumstances, the fund invests at least 80% of its assets in securities of mid-capitalization companies that, at the time of initial purchase, have market capitalizations within the range of companies included in the Russell Midcap ^® Index. Because mid-capitalization companies are defined by reference to an index, the market capitalization of companies in which the fund invests may vary with market conditions. As of December 31, 2007, the market capitalization range of companies included in the Russell Midcap ^® Index was $479 million to $42.1 billion. The fund’s policy of investing at least 80% of its assets in mid-capitalization companies may be changed only upon 60 days written notice to shareholders.

The subadviser utilizes a “bottom-up” investment approach. The subadviser looks for companies that are both selling at a substantial discount to their private market value and that have restructuring and turnaround potential. The subadviser also looks for companies where there is potential for significant increase in earnings over a three-year period and for significant price appreciation over a three-year period.

The subadviser employs a sell discipline pursuant to which it will sell a position when the price of the stock reaches the subadviser’s target price, when it has diminished confidence that management can execute the turnaround strategy, or when key management departs.

Please see “Additional Investment Techniques” for other investment techniques of the fund.

Risks Related to Principal Investment Strategies

Medium Company Risk —The risk that investments in smaller companies may be more volatile than investments in larger companies.

Value Stocks Risk —The risk that the fund’s focus on value investing will cause the fund to underperform when growth investing is in favor.

For a more detailed description of the above risks, see Risks Related to Principal Investment Strategies, page 34.


18		Phoenix Mid-Cap Value Fund

Performance Tables

The Phoenix Mid-Cap Value Fund (“Successor Fund”) is the successor of the FMI Sasco Contrarian Value Fund (the “Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Phoenix Mid-Cap Value Fund on October 22, 2004. The Predecessor Fund, which commenced operations on December 30, 1997, offered only one class of shares. The Phoenix Mid-Cap Value Fund treats the past performance of the Predecessor Fund as its own. Therefore the performance tables below include the performance of the shares of the Predecessor Fund prior to the Phoenix Mid-Cap Value Fund’s commencement date.

The bar chart and table below provide some indication of the risks of investing in the Phoenix Mid-Cap Value Fund. The bar chart shows changes in the fund’s performance from year to year over a 10-year period. ⁽¹⁾ The table shows how the fund’s average annual returns compare with those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. The fund’s past performance, before and after taxes, is not necessarily an indication of how the fund will perform in the future.

LOGO

Calendar Year

(1) Annual returns in the chart above do not reflect the deduction of any sales charges. The returns would have been less than those shown if sales charges were deducted. During the period shown in the chart above, the highest return for a quarter was 22.09% (quarter ending December 31, 2003) and the lowest return for a quarter was -19.91% (quarter ending September 30, 2002). For the 1998 through 2000 calendar years, Resource Capital Advisers, Inc. was the investment adviser to the Predecessor Fund. On October 15, 2001, Fiduciary Management, Inc. became the investment adviser to the Predecessor Fund. Since its inception on October 22, 2004, Phoenix Investment Counsel, Inc. has been the investment adviser to the Successor Fund. Since the Predecessor Fund’s inception, the subadviser to the fund has been Sasco Capital Inc. (“Sasco”) and since inception, Sasco has been the subadviser to the Successor Fund.


Average Annual Total Returns (for the periods ended 12/31/07) ⁽²⁾	1 Year	5 Years		10 Years		Since Inception ⁽³⁾
	1 Year	5 Years		10 Years		Class C
Class A
Return Before Taxes	-8.02%	15.69	%	9.52	%	—
Return After Taxes on Distributions ⁽⁴⁾	-8.85%	15.45	%	9.14	%	—
Return After Taxes on Distributions and Sale of Fund Shares ⁽⁴⁾ ⁽⁵⁾	-4.50%	13.79	%	8.25	%	—
Class C
Return Before Taxes	-3.16%	—		—		10.22	%
Russell Midcap ^® Index ⁽⁶⁾	5.60%	18.21	%	9.91	%	15.07	%
Russell Midcap ^® Value Index ⁽⁷⁾	-1.42%	17.92	%	10.18	%	14.17	%

(2) The Predecessor Fund’s average annual returns have been restated to reflect the deduction of the maximum sales charge for an investment in Class A Shares and a full redemption in Class C Shares.

(3) [Class A Shares restated to reflect performance since inception of the Predecessor Fund on December 30, 1997;] Class C Shares since October 22, 2004.

(4) The after-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. The after-tax returns shown in the table above are for only one class of shares offered by the prospectus (Class A, formerly the sole class of the Predecessor Fund); after-tax returns for the classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax deferred arrangements, such as 401(k) plans or individual retirement accounts.

(6) The Russell Midcap ^® Index is a market capitalization-weighted index of medium-capitalization stocks of U.S. companies. The index is calculated on a total-return basis with dividends reinvested. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.

(7) The Russell Midcap ^® Value Index is a market capitalization-weighted index of medium-capitalization, value-oriented stocks of U.S. companies. The index is calculated on a total-return basis with dividends reinvested. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.

Class I Shares have been in existence only since the date of this prospectus and have not had a full calendar year of investment operations. Therefore, performance information for Class I Shares is not included.


Phoenix Mid-Cap Value Fund		19

Phoenix Quality Small-Cap Fund

Investment Objective

The Phoenix Quality Small-Cap Fund has an investment objective to seek long term capital appreciation. There is no guarantee that the fund will achieve its objective. The fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategies

Under normal circumstances, the fund invests at least 80% of its assets in common stocks of small capitalization companies that, at the time of initial purchase, have market capitalizations within the range of companies included in the Russell 2000 ^® Value Index. Because small capitalization companies are defined by reference to an index, the market capitalization of companies in which the fund may invest may vary with market conditions. As of December 31, 2007, the market capitalization range of companies included in the Russell 2000 ^® Value Index was $27 million to $6.1 billion. The fund’s policy of investing 80% of its assets in small capitalization companies may be changed only upon 60 days written notice to shareholders.

The subadviser uses a strategy emphasizing consistently growing, highly profitable, low debt companies in mature industries with rising cash flows which the subadviser deems to be of high quality. If a company meets these criteria, the subadviser researches and analyzes that company’s strength of management, relative competitive position in the industry and its financial structure. A proprietary model is used to determine relative value. Generally, the fund invests in approximately 20-35 securities at any given time.

The subadviser’s sell discipline seeks to dispose of holdings that, among other things, achieve a target price, are the subject of negative developments individually or as an industry, or which are necessary to meet diversification requirements.

Please see “Additional Investment Techniques” for other investment techniques of the fund.

Risks Related to Principal Investment Strategies

Limited Number of Investments Risk —The risk that the fund is potentially more volatile due to negative conditions as compared with a fund holding a greater number of security positions.

Small and Unseasoned Company Risk —The risk that investments in smaller companies may be more volatile than investments in larger companies.

Value Stocks Risk —The risk that the fund’s focus on value investing will cause the fund to underperform when growth investing is in favor.

For a more detailed description of the above risks, see Risks Related to Principal Investment Strategies, page 34.


20		Phoenix Quality Small-Cap Fund

Performance Tables

The Phoenix Quality Small-Cap Fund, a series of Phoenix Equity Trust (“Successor Fund”), is the successor of the Phoenix Quality Small-Cap Fund, a series of Phoenix Investment Trust 97 (“Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Successor Fund on March 10, 2008. The Predecessor Fund and the Successor Fund have identical investment objectives and strategies. The Successor Fund has adopted the past performance of the Predecessor Fund as its own. Therefore, the performance tables below include the performance of the shares of the Predecessor Fund prior to the Phoenix Quality Small-Cap Fund’s commencement date.

The bar chart and table below provide some indication of the risks of investing in the Phoenix Quality Small-Cap Fund. The bar chart shows the fund’s Class A Shares performance. ⁽¹⁾ The table shows how the fund’s average annual returns compare to those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. The fund’s past performance, before and after taxes, is not necessarily an indication of how the fund will perform in the future.

LOGO

(1) The fund’s annual return in the chart above does not reflect the deduction of any sales charges. The return would have been less than that shown if sales charges were deducted. During the period shown in the chart above, the highest return for a quarter was 4.11% (quarter ending September 30, 2007) and the lowest return for a quarter was -7.17% (quarter ending December 31, 2007).


Average Annual Total Return (for the period ended 12/31/07) ⁽²⁾	1 Year	Since Inception ⁽³⁾
Class A Shares
Return Before Taxes	-5.51%	4.60%
Return After Taxes on Distributions ⁽⁴⁾	-5.65%	4.44%
Return After Taxes on Distributions and Sale of Fund Shares ⁽⁴⁾ ⁽⁵⁾	-3.40%	3.92%
Class C Shares
Return Before Taxes	-0.45%	8.02%
Class I Shares
Return Before Taxes	0.52%	9.07%
S&P 500 ^® Index ⁽⁶⁾	5.49%	13.62%
Russell 2000 ^® Value Index ⁽⁷⁾	-9.78%	3.90%

(3) Since June 28, 2006.

(7) The Russell 2000 ^® Value Index is a market capitalization-weighted index of value-oriented stocks of the smallest 2,000 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. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.


Phoenix Quality Small-Cap Fund		21

Phoenix Small-Cap Growth Fund

Investment Objective

The Phoenix Small-Cap Growth Fund has an investment objective of long-term growth of capital. There is no guarantee that the fund will achieve its objective. The fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategies

Under normal circumstances, the fund invests at least 80% of its assets in equity securities of companies that have market capitalizations of below $2.5 billion at the time of purchase. As of December 31, 2007, the market capitalization of the issuers in which the fund was invested ranged from $89.4 million to $4.1 billion. The fund’s policy of investing 80% of its assets in small capitalization companies may be changed only upon 60 days written notice to shareholders.

The fund emphasizes the purchase of common stocks of domestic corporations with rapidly growing earnings per share. The subadviser may also select stocks of companies that may not be experiencing rapid growth but, in the opinion of the subadviser, are undervalued by other criteria of their fundamental net worth.

The subadviser uses a bottom-up selection process to select stocks for the fund.

Generally, stocks are sold when the characteristics and factors used to select a security change, such as a reduction in the expected earnings growth rate, a loss of competitive advantage or the security has appreciated to the point where it is no longer attractive.

Please see “Additional Investment Techniques” for other investment techniques of the fund.

Risks Related to Principal Investment Strategies

Growth Stocks Risk —The risk that the fund’s focus on growth investing will cause the fund to underperform when value investing is in favor.

Small and Unseasoned Company Risk —The risk that investments in smaller unseasoned companies may be more volatile than investments in larger companies.

For a more detailed description of the above risks, see Risks Related to Principal Investment Strategies, page 34.


22		Phoenix Small-Cap Growth Fund

Performance Tables

The Phoenix Small-Cap Growth Fund, a series of Phoenix Equity Trust (“Successor Fund”), is the successor of the Phoenix Small-Cap Growth Fund, a series of Phoenix Investment Trust 06 (“Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Successor Fund on March 10, 2008. The Predecessor Fund and the Successor Fund have identical investment objectives and strategies. The Successor Fund has adopted the past performance of the Predecessor Fund as its own. Therefore, the performance tables below include the performance of the shares of the Predecessor Fund prior to the Phoenix Small-Cap Growth Fund’s commencement date.

The bar chart and table below provide some indication of the risks of investing in the Phoenix Small-Cap Growth Fund. The bar chart shows changes in the fund’s Class A Shares performance from year to year over a 10-year period. ⁽¹⁾ The table shows how the fund’s average annual returns compare to those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. The fund’s past performance, before and after taxes, is not necessarily an indication of how the fund will perform in the future.

LOGO

Calendar Year


Average Annual Total Returns (for the periods ended 12/31/07) ⁽²⁾	1 Year	5 Years	10 Years
Class A
Return Before Taxes	2.38%	13.71%	5.24%
Return After Taxes on Distributions ⁽³⁾	2.38%	13.71%	5.24%
Return After Taxes on Distributions and Sale of Fund Shares ⁽³⁾⁽⁴⁾	1.55%	12.05%	4.59%
Class B
Return Before Taxes	3.82%	14.20%	5.07%
Class C
Return Before Taxes	7.82%	14.21%	5.07%
S&P 500 ^® Index ⁽⁵⁾	5.49%	12.83%	5.92%
Russell 2000 ^® Growth Index ⁽⁶⁾	7.05%	16.50%	4.32%

(6) The Russell 2000 ^® Growth Index is a market capitalization-weighted index of growth-oriented stocks of the smallest 2,000 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. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.


Phoenix Small-Cap Growth Fund		23

Phoenix Small-Cap Sustainable Growth Fund

Investment Objective

The Phoenix Small-Cap Sustainable Growth Fund has an investment objective to seek long-term capital appreciation. There is no guarantee that the fund will achieve its objective. The fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategies

Under normal circumstances, the fund invests at least 80% of its assets in common stocks of small capitalization companies that, at the time of initial purchase, have market capitalizations within the range of companies included in the Russell 2000 ^® Growth Index. Because small capitalization companies are defined by reference to an index, the market capitalization of companies in which the fund may invest may vary with market conditions. As of December 31, 2007, the market capitalization range of companies included in the Russell 2000 ^® Growth Index was $47 million to $8.4 billion. The fund’s policy of investing 80% of its assets in small capitalization companies may be changed only upon 60 days written notice to shareholders.

The subadviser uses a strategy emphasizing consistently growing, highly profitable, low debt companies with rising cash flows which the subadviser deems to be of high quality. If a company meets these criteria, the subadviser researches and analyzes that company’s strength of management, relative competitive position in the industry and its financial structure. A proprietary model is used to determine relative value. Generally, the fund invests in approximately 20-35 securities at any given time.

Please see “Additional Investment Techniques” for other investment techniques of the fund.

Risks Related to Principal Investment Strategies

Growth Stocks Risk —The risk that the fund’s focus on growth investing will cause the fund to underperform when value investing is in favor.

Limited Number of Investments Risk —The risk that the fund is potentially more volatile as compared with a fund holding a greater number of security positions.

Small and Unseasoned Company Risk —The risk that investments in smaller companies may be more volatile than investments in larger companies.

For a more detailed description of the above risks, see Risks Related to Principal Investment Strategies, page 34.


24		Phoenix Small-Cap Sustainable Growth Fund

Performance Tables

The Phoenix Small-Cap Sustainable Growth Fund, a series of Phoenix Equity Trust (“Successor Fund”), is the successor of the Phoenix Small-Cap Sustainable Growth Fund, a series of Phoenix Investment Trust 97 (“Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Successor Fund on March 10, 2008. The Predecessor Fund and the Successor Fund have identical investment objectives and strategies. The Successor Fund has adopted the past performance of the Predecessor Fund as its own. Therefore, the performance tables below include the performance of the shares of the Predecessor Fund prior to the Phoenix Small-Cap Sustainable Growth Fund’s commencement date.

The bar chart and table below provide some indication of the risks of investing in the Phoenix Small-Cap Sustainable Growth Fund. The bar chart shows the fund’s Class A Shares performance. ⁽¹⁾ The table shows how the fund’s average annual returns compare to those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. The fund’s past performance, before and after taxes, is not necessarily an indication of how the fund will perform in the future.

LOGO

(1) The fund’s annual return in the chart above does not reflect the deduction of any sales charges. The return would have been less than that shown if sales charges were deducted. During the period shown in the chart above, the highest return for a quarter was 2.23% (quarter ending June 30, 2007) and the lowest return for a quarter was -4.44% (quarter ending December 31, 2007).


Average Annual Total Return (for the period ended 12/31/07) ⁽²⁾	1 Year	Since Inception ⁽³⁾
Class A Shares
Return Before Taxes	-8.55%	-3.08%
Return After Taxes on Distributions ⁽⁴⁾	-8.55%	-3.08%
Return After Taxes on Distributions and Sale of Fund Shares ⁽⁴⁾ ⁽⁵⁾	-5.56%	-2.62%
Class C Shares
Return Before Taxes	-3.66%	0.07%
Class I Shares
Return Before Taxes	-2.68%	1.06%
S&P 500 ^® Index ⁽⁶⁾	5.49%	13.62%
Russell 2000 ^® Growth Index ⁽⁷⁾	7.05%	13.37%

(3) Since June 28, 2006.

(7) The Russell 2000 ^® Growth Index is a market capitalization-weighted index of growth-oriented stocks of the smallest 2,000 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. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.


Phoenix Small-Cap Sustainable Growth Fund		25

Phoenix Small-Cap Value Fund

Investment Objective

The Phoenix Small-Cap Value Fund has an investment objective to seek long-term capital appreciation. There is no guarantee that the fund will achieve its objective. The fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategies

Under normal circumstances, the fund invests at least 80% of its assets in securities of small capitalization companies that, at the time of initial purchase, have market capitalizations within the range of companies included in the Russell 2000 ^® Value Index. Because small capitalization companies are defined by reference to an index, the market capitalization of companies in which the fund may invest may vary with market conditions. As of December 31, 2007, the market capitalization range of companies included in the Russell 2000 ^® Value Index was $27 million to $6.1 billion. The fund invests in a portfolio of common stocks and securities convertible into common stocks of primarily domestic (U.S.) companies. Generally, the fund will invest in securities traded on the New York Stock Exchange, the American Stock Exchange and in over-the-counter markets. The fund’s policy of investing at least 80% of its assets in securities of issuers with small capitalizations may be changed only upon 60 days written notice to shareholders.

The subadviser applies a quantitative security selection process that screens a universe of stocks that generally fall within the Russell 2000 ^® Value Index. The screening process utilizes a proprietary model that looks at indicators such as price to earnings, price to cash flow, growth in earnings and cash flow, earnings momentum, and a variety of other similar metrics. The subadviser then selects the stocks that exhibit the best characteristics and highest rankings within the models and creates, in its opinion, a well diversified portfolio of small capitalization value stocks in a broad array of industry groups and sectors.

Generally, the subadviser sells when a stock’s target price is reached, when the issuer or industry suffers negative changes, or when there is a change in the investment criteria that prompted the initial purchase.

The fund’s investment strategies may lead to a higher portfolio turnover rate. A high portfolio turnover rate increases brokerage and other transaction costs to the fund, negatively affects fund performance, and may increase capital gain distributions, resulting in greater tax liability to you.

Please see “Additional Investment Techniques” for other investment techniques of the fund.

Risks Related to Principal Investment Strategies

Convertible Securities Risk —The risk that the fund may have to redeem and sell the security at a price and time not beneficial to the fund.

Small and Unseasoned Company Risk —The risk that investments in smaller companies may be more volatile than investments in larger companies.

Value Stocks Risk —The risk that the fund’s focus on value investing will cause the fund to underperform when growth investing is in favor.

For a more detailed description of the above risks, see Risks Related to Principal Investment Strategies, page 34.


26		Phoenix Small-Cap Value Fund

Performance Tables

The Phoenix Small-Cap Value Fund, a series of Phoenix Equity Trust (“Successor Fund”), is the successor of the Phoenix Small-Cap Value Fund, a series of Phoenix Investment Trust 97 (“Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Successor Fund on March 10, 2008. The Predecessor Fund and the Successor Fund have identical investment objectives and strategies. The Successor Fund has adopted the past performance of the Predecessor Fund as its own. Therefore, the performance tables below include the performance of the shares of the Predecessor Fund prior to the Phoenix Small-Cap Value Fund’s commencement date.

The bar chart and table below provide some indication of the risks of investing in the Phoenix Small-Cap Value Fund. The bar chart shows changes in the fund’s Class A Shares performance from year to year over a 10-year period. ⁽¹⁾ The table shows how the fund’s average annual returns compare with those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. The fund’s past performance, before and after taxes, is not necessarily an indication of how the fund will perform in the future.

LOGO

Calendar Year


Average Annual Total Returns (for the periods ended 12/31/07) ⁽²⁾	1 Year	5 Years	10 Years
Class A
Return Before Taxes	-14.02%	13.32%	9.06%
Return After Taxes on Distributions ⁽³⁾	-16.10%	11.82%	7.36%
Return After Taxes on Distributions and Sale of Fund Shares ⁽³⁾⁽⁴⁾	-6.37%	11.65%	7.31%
Class B
Return Before Taxes	-12.39%	13.84%	8.90%
Class C
Return Before Taxes	-9.47%	13.82%	8.89%
S&P 500 ^® Index ⁽⁵⁾	5.49%	12.83%	5.92%
Russell 2000 ^® Value Index ⁽⁶⁾	-9.78%	15.80%	9.06%

(6) The Russell 2000 ^® Value Index is a market capitalization-weighted index of value-oriented stocks of the smallest 2,000 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. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.


Phoenix Small-Cap Value Fund		27

Phoenix Small-Mid Cap Fund

Investment Objective

The Phoenix Small-Mid Cap Fund has an investment objective of long-term capital appreciation, with dividend income a secondary consideration. There is no guarantee that the fund will achieve its objective. The fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategies

Under normal circumstances, the fund invests at least 80% of its assets in common stocks of small and mid capitalization companies that, at the time of initial purchase, have market capitalizations within the range of companies included in the Russell 2500™ Index. Because small and mid capitalization companies are defined by reference to an index, the market capitalization of companies in which the fund may invest may vary with market conditions. As of December 31, 2007, the market capitalization range of companies included in the Russell 2500™ Index was $27 million to $20.6 billion. The fund’s policy of investing 80% of its assets in small and mid capitalization companies may be changed only upon 60 days written notice to shareholders.

The subadviser uses a blended growth and value strategy when selecting securities for investment.

The subadviser uses proprietary models to assist in its analysis.

Generally, the fund invests in approximately 20 to 40 securities at any given time.

The subadviser will utilize a sell discipline that seeks to dispose of holdings that, among other things, achieve a target price, are the subject of negative developments individually or as an industry, or which are necessary to meet diversification requirements.

Please see “Additional Investment Techniques” for other investment techniques of the fund.

Risks Related to Principal Investment Strategies

Growth Stocks Risk —The risk that the fund’s focus on growth investing will cause the fund to underperform when value investing is in favor.

Limited Number of Investments Risk —The risk that the fund is potentially more volatile as compared with a fund holding a greater number of security positions.

Small and Medium Company Risk —The risk that investments in smaller companies may be more volatile than investments in larger companies.

Value Stocks Risk —The risk that the fund’s focus on value investing will cause the fund to underperform when growth investing is in favor.

For a more detailed description of the above risks, see Risks Related to Principal Investment Strategies, page 34.


28		Phoenix Small-Mid Cap Fund

Performance Tables

The Phoenix Small-Mid Cap Fund, a series of Phoenix Equity Trust (“Successor Fund”), is the successor of the Phoenix Small-Mid Cap Fund, a series of Phoenix Asset Trust (“Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Successor Fund on March 10, 2008. The Predecessor Fund and the Successor Fund have identical investment objectives and strategies. The Successor Fund has adopted the past performance of the Predecessor Fund as its own. Therefore, the performance tables below include the performance of the shares of the Predecessor Fund prior to the Phoenix Small-Mid Cap Fund’s commencement date.

The bar chart and table below provide some indication of the risks of investing in the Phoenix Small-Mid Cap Fund. The bar chart shows changes in the fund’s Class I Shares performance from year to year over a 10-year period. ⁽¹⁾ The table shows how the fund’s average annual returns compare with those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. The fund’s past performance, before and after taxes, is not necessarily an indication of how the fund will perform in the future.

LOGO

Calendar Year


Average Annual Total Returns (for the periods ended 12/31/07) ⁽²⁾					Since Inception ⁽³⁾
	1 Year	5 Years	10 Years		Class A		Class B		Class C
Class I
Return Before Taxes	-0.11%	10.71%	7.97	%	—		—		—
Return After Taxes on Distributions ⁽⁴⁾	-1.73%	9.75%	7.03	%	—		—		—
Return After Taxes on Distributions and Sale of Fund Shares ⁽⁴⁾⁽⁵⁾	2.16%	9.35%	6.77	%	—		—		—
Class A
Return Before Taxes	-6.05%	9.13%	—		7.23	%	—		—
Class B
Return Before Taxes	-4.55%	9.66%	—		—		7.66	%	—
Class C
Return Before Taxes	-1.09%	9.68%	—		—		—		7.68	%
S&P 500 ^® Index ⁽⁶⁾	5.49%	12.83%	5.92	%	11.26	%	11.26	%	11.26	%
Russell 2500 ^TM Index ⁽⁷⁾	1.38%	16.99%	9.01	%	15.43	%	15.43	%	15.43	%

(3) Class A Shares, Class B Shares and Class C Shares since August 30, 2002.

(4) After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. The after-tax returns shown in the table above are for only one class of shares offered by the prospectus (Class I) after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.

(7) The Russell 2500 ^™ Index is a market capitalization-weighted index of the 2500 smallest companies in the Russell Universe, which comprises the 3000 largest U.S. companies. The index is calculated on a total-return basis with dividends reinvested. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.


Phoenix Small-Mid Cap Fund		29

Phoenix Strategic Growth Fund

Investment Objective

The Phoenix Strategic Growth Fund has an investment objective of long-term capital growth. There is no guarantee that the fund will achieve its objective. The fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategies

Under normal circumstances, the fund invests at least 65% of its assets in stocks of large capitalization companies that, at the time of initial purchase, have market capitalizations within the range of companies included in the Russell 1000 ^® Growth Index. The fund may invest in stocks of small and medium capitalization companies. Because large capitalization companies are defined by reference to an index, the market capitalization of companies in which the fund may invest may vary with market conditions. As of December 31, 2007, the market capitalization range of companies included in the Russell 1000 ^® Growth Index was $624 million to $527.8 billion.

The subadviser uses a bottom-up, fundamental approach focusing primarily on profit acceleration. A screening process is utilized to select stocks of companies that it believes are growing earnings at accelerated rates; producing quality, sustainable earnings; reasonably valued relative to their growth rate; well managed; and have potential to exceed earnings expectations. Surviving companies are subjected to rigorous fundamental analysis.

The subadviser seeks to control risk through adequate diversification, position and volatility constraints, valuation constraints, and ongoing and intensive fundamental research.

Stocks are reviewed for sale if a deterioration in fundamentals results in an earnings disappointment; valuation levels are unsustainable; earnings acceleration peaks; or if the subadviser feels a better investment opportunity is available.

The subadviser’s investment strategy may result in a higher portfolio turnover rate for the fund. A high portfolio turnover rate increases brokerage and other transaction costs to the fund, negatively affects fund performance, and may increase capital gain distributions, resulting in greater tax liability to you.

Please see “Additional Investment Techniques” for other investment techniques of the fund.

Risks Related to Principal Investment Strategies

Growth Stocks Risk —The risk that the fund’s focus on growth investing will cause the fund to underperform when value investing is in favor.

Large Company Risk —The risk that the value of investments in larger companies may not rise as much as smaller companies, as larger companies tend to be less volatile.

Small and Medium Company Risk —The risk that investments in smaller companies may be more volatile than investments in larger companies.

For a more detailed description of the above risks, see Risks Related to Principal Investment Strategies, page 34.


30		Phoenix Strategic Growth Fund

Performance Tables

The Phoenix Strategic Growth Fund, a series of Phoenix Equity Trust (“Successor Fund”), is the successor of the Phoenix Strategic Growth Fund, a series of Phoenix Strategic Equity Series Fund (“Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Successor Fund on March 10, 2008. The Predecessor Fund and the Successor Fund have identical investment objectives and strategies. The Successor Fund has adopted the past performance of the Predecessor Fund as its own. Therefore, the performance tables below include the performance of the shares of the Predecessor Fund prior to the Phoenix Strategic Growth Fund’s commencement date.

The bar chart and table below provide some indication of the risks of investing in the Phoenix Strategic Growth Fund. The bar chart shows changes in the fund’s Class A Shares performance from year to year over a 10-year period. ⁽¹⁾ The table shows how the fund’s average annual returns compare with those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. The fund’s past performance, before and after taxes, is not necessarily an indication of how the fund will perform in the future.

LOGO

Calendar Year


Average Annual Total Returns (for the periods ended 12/31/07) ⁽²⁾							Since Inception ⁽³⁾
	1 Year		5 Years		10 Years		Class I
Class A Shares
Return Before Taxes	6.28	%	9.34	%	3.38	%	—
Return After Taxes on Distributions ⁽⁴⁾	6.28	%	9.34	%	1.68	%	—
Return After Taxes on Distributions and Sale of Fund Shares ⁽⁴⁾⁽⁵⁾	4.08	%	8.14	%	2.10	%	—
Class B Shares
Return Before Taxes	7.96	%	9.80	%	3.21	%	—
Class C Shares
Return Before Taxes	11.95	%	9.82	%	3.23	%	—
Class I Shares
Return Before Taxes	13.06	%	—		—		13.21	%
S&P 500 ^® Index ⁽⁶⁾	5.49	%	12.83	%	5.92	%	9.89	%
Russell 1000 ^® Growth Index ⁽⁷⁾	11.81	%	12.11	%	3.83	%	14.44	%

(3) Class I Shares since September 29, 2006.


Phoenix Strategic Growth Fund		31

Phoenix Value Opportunities Fund

Investment Objective

The Phoenix Value Opportunities Fund has an investment objective of long-term capital appreciation. There is no guarantee that the fund will achieve its objective. The fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategies

Under normal circumstances, the fund invests principally in the equity securities of domestic companies that the subadviser believes to have appreciation potential. The fund invests principally in larger capitalization stocks of companies with market capitalizations of over $5 billion at initial purchase, however, the fund may invest in issuers of any capitalization.

The subadviser employs a value approach to constructing the fund’s portfolio, utilizing quantitative screening to identify attractively valued securities. All stocks in the equity universe are evaluated across multiple quantitative factors, such as valuation, earnings and quality.

Research is focused on identifying the factors most closely associated with outperforming stocks. Factors must have statistical significance, but also must meet the “common sense” test of having a logical connection to the attributes of a successful company.

A portfolio optimization program is used to balance the expected return of the stocks with such considerations as the portfolio’s benchmark, desired level of risk and transaction cost estimates.

A stock is sold if its expected return deteriorates to the point where it can be replaced by a more attractive stock that plays an equally useful diversification role and the expected return of the new stock covers the transaction costs of the sell and purchase.

Please see “Additional Investment Techniques” for other investment techniques of the fund.

Risks Related to Principal Investment Strategies

Large Company Risk —The risk that the value of investments in larger companies may not rise as much as smaller companies, as larger companies tend to be less volatile.

Small and Medium Company Risk —The risk that investments in smaller companies may be more volatile than investments in larger companies.

Value Stocks Risk —The risk that the fund’s focus on value investing will cause the fund to underperform when growth investing is in favor.

For a more detailed description of the above risks, see Risks Related to Principal Investment Strategies, page 34.


32		Phoenix Value Opportunities Fund

Performance Tables

The bar chart and table below provide some indication of the risks of investing in the Phoenix Value Opportunities Fund. The bar chart shows changes in the fund’s Class A Share performance over the life of the fund. ⁽¹⁾ The table shows how the fund’s average annual returns compare with those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. The fund’s past performance, before and after taxes, is not necessarily an indication of how the fund will perform in the future.

LOGO


Average Annual Total Returns (for the period ended 12/31/07) ⁽²⁾	1 Year	Since Inception ⁽³⁾
Class A
Return Before Taxes	1.49%	9.98%
Return After Taxes on Distributions ⁽⁴⁾	0.82%	9.23%
Return After Taxes on Distributions and Sale of Fund Shares ⁽⁴⁾ ⁽⁵⁾	1.22%	8.24%
Class C
Return Before Taxes	6.91%	11.96%
S&P 500 ^® Index ⁽⁶⁾	5.49%	9.48%
Russell 1000 ^® Value Index ⁽⁷⁾	0.17%	9.56%

(3) Since July 29, 2005.

(5) The Return After Taxes on Distributions and Sale of Fund Shares for a period may be greater than the Return After Taxes on Distributions for the same period if there was a loss realized on sale of fund shares. The benefit of the tax loss (to the extent it can be used to offset other gains) may result in a higher return.

(6) The S&P 500 ^® Index is a free-float adjusted market capitalization-weighted index of 500 of the largest U.S. companies. The index is calculated on a total-return basis with dividends reinvested. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.

(7) The Russell 1000 ^® 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. The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the fees, expenses or taxes associated with the active management of an actual portfolio.


Phoenix Value Opportunities Fund		33

Risks Related To Principal Investment Strategies

Generally, the value of a fund’s investments that supports your share value may decrease. If between the time you purchase shares, and the time you sell shares the value of such fund’s investments decreases, you will lose money. Investment values can decrease for a number of reasons. Conditions affecting the overall economy, specific industries or companies in which the fund invests can be worse than expected and investments may fail to perform as the subadviser expects. As a result, the value of your shares may decrease.

Specific risks of investing in the various funds are indicated in the chart below and described in detail following the chart.

Risks For One
Or More Funds

All-
Cap
Growth
Fund

Balanced
Fund

Capital
Growth
Fund

Growth
&
Income
Fund

Growth
Opportunities
Fund

Income
&
Growth
Fund

Mid-
Cap
Growth
Fund

Mid-
Cap
Value
Fund

Quality
Small-
Cap
Fund

Small-
Cap
Growth
Fund

Small-
Cap
Sustainable
Growth
Fund

Small-
Cap
Value
Fund

Small-
Mid
Cap
Fund

Strategic
Growth
Fund

Value
Opportunities
Fund

Convertible Securities

Credit

Emerging Markets

Foreign Securities

Fully Invested in Equity Securities

Growth Stocks

High Yield Securities (Junk Bonds)

Initial Public Offerings (IPOs)

Interest Rate

Large Company

Limited Number of Investments

Long-Term Maturities/Durations

Medium Company

Municipal Market

Non-Diversification

Prepayment

S&P 500 ^® Index Comparison

Sector Investing

Small and Unseasoned Company

Small and Medium Company

U.S. Government Securities

Value Stocks

Convertible Securities Risk

Convertible securities may be subject to redemption at the option of the issuer. If a security is called for redemption, the fund may have to redeem the security, convert it into common stock or sell it to a third party at a price and time that is not beneficial for the fund. In addition, securities convertible into common stocks may have higher yields than common stocks but lower yields than comparable nonconvertible securities.

Credit Risk

The risk that an issuer of a security will fail to pay interest or principal in a timely manner, or that negative perceptions of the issuer’s ability to make such payments will cause the price of the security to decline. Debt securities rated below investment-grade are especially susceptible to this risk.


34		Phoenix Equity Trust

Emerging Markets Risk

The risk that prices of emerging markets securities may be more volatile than those of their counterparts in more established foreign markets. Investments in less-developed countries whose markets are still emerging generally present risks in greater degree than those presented by investments in foreign issuers based in countries with developed securities markets and more advanced regulatory systems. Prior governmental approval may be required in some developing countries for the release of investment income, capital and sale proceeds to foreign investors, and some developing countries may limit the extent of foreign investment in domestic companies.

Emerging market countries often suffer from currency devaluation and higher rates of inflation. Developing countries may be adversely affected by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed by countries with which they trade and may also be affected by economic conditions in such countries. In addition, a negative situation or condition that affects the market in one emerging market region may have a negative impact on all emerging market regions due to the so-called “ripple effect.”

Foreign Securities Risk

The risk that the prices of foreign securities may be more volatile than those of their domestic counterparts owing in part to possible political or economic instability; limits on repatriation of capital; exchange controls or exchange rate fluctuations; less publicly available information as a result of accounting, auditing, and financial reporting standards different from those used in the U.S.; more volatile markets; less securities regulation; less favorable tax provisions; war or expropriation.

Fully Invested in Equity Securities Risk

The net asset value of a fund that intends to be fully invested in securities will decrease more quickly if the value of such securities decreases as compared to a fund that holds larger cash positions.

Growth Stocks Risk

Because growth stocks typically make little or no dividend payments to shareholders, investment return is based on a stock’s capital appreciation, making return more dependent on market increases and decreases. Growth stocks are therefore more susceptible than non-growth stocks to market changes, tending to drop more sharply when markets fall. Growth-oriented funds typically underperform when value investing is in favor.

High Yield Securities (Junk Bond) Risk

Securities rated “BB” or below by S&P or “Ba” or below by Moody’s are known as “high yield” securities and are commonly referred to as “junk bonds”. These securities involve greater risk of loss due to credit deterioration and are less liquid, especially during periods of economic uncertainty or change, than higher-quality debt securities. Lower-rated debt securities generally have a higher risk that the issuer of the security may default and not make the payment of interest or principal.

Initial Public Offerings (IPOs) Risk

IPOs typically have less available information. Investment returns from IPOs may be highly volatile, 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 fund may purchase IPOs and then immediately sell them. This practice will increase portfolio turnover rates and increase costs to the fund, affect fund performance, and may increase capital gain distributions, resulting in greater tax liability to you.

Interest Rate Risk

The risk that bond prices overall will decline because of rising interest rates. With fixed-rate securities, an increase in prevailing interest rates typically causes the value of those securities to fall, while a decline in prevailing interest rates generally produces an increase in the market value of the securities. As interest rates increase, slower than expected principal payments may extend the average life of fixed income securities. This will have the effect of locking in a below-market interest rate, increasing a fund’s duration and reducing the value of such a security. If a fund invests in asset-backed and mortgage-backed securities, it is more vulnerable to this risk. Changes in interest rates will affect the value of longer-term fixed income securities more than shorter-term securities and lower quality securities more than higher quality securities.


Phoenix Equity Trust		35

Large Company Risk

The risk that companies with large market 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, the fund’s value may not rise as much as the value of funds that emphasize companies with smaller market capitalizations.

Limited Number of Investments Risk

Conditions that negatively affect securities in the portfolio will have greater impact on the fund as compared with a fund that holds a greater number of security positions. In addition, the fund may be more sensitive to changes in the market value of a single issuer in its portfolio, making the value of your shares potentially more volatile.

Long-Term Maturities/Durations Risk

Fixed income securities with longer maturities or durations may be subject to greater price fluctuations due to interest rate, tax law, and general market changes than securities with shorter maturities or durations .

Medium Company Risk

Companies with medium market capitalizations are often companies with a limited operating history or companies in industries that have recently emerged due to cultural, economic, regulatory or technological developments. Such developments can have a significant impact or negative effect on medium market capitalization companies and their stock performance and can make investment returns highly volatile. Product lines are often less diversified and more susceptible to competitive threats. Medium market capitalization stocks are subject to varying patterns of trading volume and may, at times, be difficult to sell.

Municipal Market Risk

The risk that certain factors may negatively affect the value of municipal securities, and, as a result, the share price of a fund that invests in them. These factors include political or legislative changes, uncertainties related to the tax status of the securities or the rights of investors in the securities. A fund may invest in municipal obligations that are related in such a way (e.g., multiple apparently unrelated issues that depend on the financial rating or support of a single government unit) that an economic, business or political development or change that affects one of these obligations would also affect the others.

Non-Diversification Risk

As a non-diversified investment company under the Investment Company Act of 1940, the fund can invest a greater proportion of its assets in the securities of a small number of issuers than a diversified investment company. Diversifying a fund’s portfolio can reduce the risks of investing. As a non-diversified investment company, the fund may be more susceptible to any single economic, political or regulatory event affecting an issuer than is a diversified investment company. If the fund takes concentrated positions in a small number of issuers, changes in the price of those securities may cause the fund’s return to fluctuate more than that of a diversified investment company.

Prepayment Risk

The risk that issuers will prepay fixed rate obligations when interest rates fall, forcing a fund to re-invest in obligations with lower interest rates than the original obligations. As interest rates decline, the issuers of securities held by a fund may prepay principal earlier than scheduled, forcing a fund to reinvest in lower yielding securities. This prepayment may reduce a fund’s income. If a fund invests in asset-backed and mortgage-backed securities, it is more vulnerable to this risk.

S&P 500 ^® Index Comparison Risk

The performance of the S&P 500 ^® Index can be negative. Although the fund may outperform the S&P 500 ^® Index, the fund may still have a negative return.

Sector Investing Risk

The risk that securities in other sectors may provide greater investment return in certain market conditions as compared to the companies in the sector(s) in which the fund is invested. Moreover, conditions that negatively affect the sector(s) in which the fund is invested will have a greater impact on the fund as compared to a fund that is not significantly invested in such sector(s).


36		Phoenix Equity Trust

Small and Unseasoned Company Risk

Companies with smaller market capitalizations are often companies with a limited operating history or companies in industries that have recently emerged due to cultural, economic, regulatory or technological developments. The trading volume of small company securities is normally lower than that of larger companies. Changes in the demand for the securities of smaller companies generally have a disproportionate effect on their market price, tending to make prices rise more in response to buying demand and fall more in response to selling pressure.

Small and Medium Company Risk

Companies with small and medium market capitalizations are often companies with a limited operating history or companies in industries that have recently emerged due to cultural, economic, regulatory or technological developments. Such developments can have a significant impact or negative effect on small and medium market capitalization companies and their stock performance and can make investment returns highly volatile. Product lines are often less diversified and more susceptible to competitive threats. Small and medium market capitalization stocks are subject to varying patterns of trading volume and may, at times, be difficult to sell.

U.S. Government Securities Risk

Obligations issued or guaranteed by the U.S. Government, its agencies, authorities and instrumentalities and backed by the full faith and credit of the United States only guarantee principal and interest will be timely paid to holders of the securities. The entities do not guarantee that the value of fund shares will increase. In addition, not all U.S. Government securities are backed by the full faith and credit of the United States, but rather are the obligation solely of the entity through which they are issued.

Value Stocks Risk

Value stocks involve 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. Value-oriented funds typically underperform when growth investing is in favor.


Phoenix Equity Trust		37

Fund Fees and Expenses

The tables below illustrate all fees and expenses that you may pay if you buy and hold Class A Shares, Class B Shares, Class C Shares or Class I Shares of the funds.


	Class A Shares	Class B Shares	Class C Shares	Class I Shares
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)	5.75%	None	None	None
Maximum Deferred Sales Charge (load) (as a percentage of the lesser of the value redeemed or the amount invested)	None ^(a)(b)	5.00% ^(c)	1.00% ^(d)	None
Maximum Sales Charge (load) Imposed on Reinvested Dividends	None	None	None	None
Redemption Fee	None	None	None	None
Exchange Fee	None	None	None	None

(a) A contingent deferred sales charge of 1% may apply on certain redemptions made within one year following purchases on which a finder’s fee has been paid. The one-year period begins on the last day of the month preceding the month in which the purchase was made.

(b) Shareholders of the Phoenix Growth Opportunities Fund who became shareholders originally through the reorganization of the Prior Fund with the Predecessor Fund are not required to pay a sales load for new purchases of Class A Shares of the Phoenix Growth Opportunities Fund.

(c) The maximum deferred sales charge is imposed on Class B Shares redeemed during the first year; thereafter, it decreases 1% annually to 2% during the fourth and fifth years and to 0% after the fifth year.

(d) The deferred sales charge is imposed on Class C Shares redeemed during the first year only.


Annual Fund Operating Expenses (expenses that are deducted from Fund assets)

Class A Shares

	All-Cap Growth		Balanced		Capital Growth		Growth & Income		Growth Opportunities		Income & Growth		Mid-Cap Growth
Management Fees	0.85%		0.55%		0.70%		0.75%		0.75%		0.70%		0.83%
Distribution and Shareholder Servicing (12b-1) Fees ^(e)	None		0.25%		0.25%		0.25%		0.25%		0.25%		0.25%
Shareholder Services Fee	0.25%	^(f)	None		None		None		None		None		None
Other Expenses	0.43%	⁽ ^g)	0.32%	^(g)	0.46%	^(g)	0.42%	⁽ ^g)	0.87%	^(g)	0.35%	^(g)	0.47%	^(g)

Total Annual Fund Operating Expenses	1.53%		1.12%		1.41%		1.42%	⁽ ⁱ ⁾	1.87%	⁽ ⁱ ⁾	1.30%		1.55%	⁽ ⁱ ⁾


	Mid-Cap Value		Quality Small-Cap		Small-Cap Growth		Small-Cap Sustainable Growth		Small-Cap Value		Small-Mid Cap		Strategic Growth		Value Opportunities
Management Fees	0.75%		0.90%		0.93%		0.90%		0.90%		0.85%		0.70%		0.75%
Distribution and Shareholder Servicing (12b-1) Fees ^(e)	0.25%		0.25%		None		0.25%		0.25%		0.25%		0.25%		0.25%
Shareholder Services Fee	None		None		0.25%	^(f)	None		None		None		None		None
Other Expenses	0.38%		1.04%	^(g)	0.54%	^(g)	1.01%	^(g)	0.41%	^(g)	0.35%	^(g)	0.46%	^(g)	0.57%

Total Annual Fund Operating Expenses	1.38%	^(h)	2.19%	⁽ⁱ⁾	1.72%	^(h)	2.16%	⁽ⁱ⁾	1.56%	⁽ⁱ⁾	1.45%		1.41%		1.57%	⁽ⁱ⁾

(e) Distribution and Shareholder Servicing (12b-1) Fees represent an asset-based sales charge that, for a long-term shareholder, over time may be higher than the maximum front-end sales charge permitted by the Financial Industry Regulatory Authority (“FINRA”).

(f) All-Cap Growth Fund and Small-Cap Growth Fund have a separate shareholder service fee plan.

(g) Estimated based on respective Predecessor Fund’s most recent fiscal year.


38		Phoenix Equity Trust

(h) Actual Total Annual Fund Operating Expenses, after expense reimbursement under arrangements previously in effect, was 1.27% for Class A Shares of the Mid-Cap Value Fund and 1.60% for Class A Shares of the Small-Cap Growth Fund. The fund’s investment adviser may recapture operating expenses reimbursed or waived under previous expense limitation or waiver arrangements and made subsequent to August 23, 2007, for a period of three years following the end of the fiscal year in which such reimbursements or waivers occurred.

(i) The funds’ investment adviser has agreed to limit the total operating expenses (excluding interest, taxes and extraordinary expenses) of certain of the funds as indicated below.


Fund Name	Class A Expense Cap	Type*	Expiration Date	Actual Total Annual Fund Expenses After Reimbursement
Growth & Income Fund	1.25%	V	December 31, 2008	1.28%
Growth Opportunities Fund	1.25%	C	May 31, 2008	1.26%
Mid-Cap Growth Fund	1.45%	V	September 30, 2008	1.55%
Quality Small-Cap Fund	1.40%	V	May discontinue at any time	1.40%
Small-Cap Sustainable Growth Fund	1.40%	V	May discontinue at any time	1.40%
Small-Cap Value Fund	1.40%	V	May discontinue at any time	1.43%
Value Opportunities Fund	1.35%	C	June 30, 2008	1.41%

*C=Contractual; V=Voluntary

Following expiration of the periods specified in the table, the adviser may discontinue any reimbursement arrangements. The adviser may recapture operating expenses reimbursed under these arrangements and made subsequent to August 23, 2007, for a period of three years following the end of the fiscal year in which such reimbursements occurred.

Example

This example is intended to help you compare the cost of investing in a fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in Class A Shares of a fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:


Fund	1 year	3 years	5 years	10 years
All-Cap Growth	$722	$1,031	$1,361	$2,294
Balanced	$683	$911	$1,156	$1,860
Capital Growth	$710	$996	$1,302	$2,169
Growth & Income	$711	$998	$1,307	$2,179
Growth Opportunities	$735	$1,111	$1,510	$2,624
Income & Growth	$700	$963	$1,247	$2,053
Mid-Cap Growth	$724	$1,036	$1,371	$2,314
Mid-Cap Value	$707	$987	$1,287	$2,137
Quality Small-Cap	$784	$1,221	$1,682	$2,954
Small-Cap Growth	$740	$1,086	$1,455	$2,488
Small-Cap Sustainable Growth	$781	$1,212	$1,668	$2,925
Small-Cap Value	$725	$1,039	$1,376	$2,325
Small-Mid Cap	$714	$1,007	$1,322	$2,210
Strategic Growth	$710	$996	$1,302	$2,169
Value Opportunities	$726	$1,042	$1,381	$2,335


Phoenix Equity Trust		39

Note: The example does not include the effects of the expense reimbursement obligations of the adviser, if any; therefore your actual expenses may be lower than those shown.

Class B Shares


	All-Cap Growth		Balanced		Capital Growth		Growth & Income		Income & Growth		Mid-Cap Growth		Small-Cap Growth		Small-Cap Value		Small-Mid Cap		Strategic Growth
Management Fees	0.85%		0.55%		0.70%		0.75%		0.70%		0.83%		0.93%		0.90%		0.85%		0.70%
Distribution and Shareholder Servicing (12b-1) Fees ⁽ ⁱ ⁾	0.75%		1.00%		1.00%		1.00%		1.00%		1.00%		0.75%		1.00%		1.00%		1.00%
Shareholder Services Fee	0.25%	^(j)	None		None		None		None		None		0.25%	^(j)	None		None		None
Other Expenses	0.43%	⁽ ^k)	0.32%	^(k)	0.46%	^(k)	0.42%	^(k)	0.34%	^(k)	0.46%	^(k)	0.54%	⁽ ^k)	0.41%	⁽ ^k)	0.35%	⁽ ^k)	0.46%	^(k)

Total Annual Fund Operating Expenses	2.28%		1.87%		2.16%		2.17%	^(m)	2.04%		2.29%	^(m)	2.47%	⁽ ^l)	2.31%	^(m)	2.20%		2.16%

(i) Distribution and Shareholder Servicing (12b-1) Fees represent an asset-based sales charge that, for a long-term shareholder, over time may be higher than the maximum front-end sales charge permitted by the FINRA.

(j) All-Cap Growth Fund and Small-Cap Growth Fund have a separate shareholder service fee plan.

(k) Estimated based on respective Predecessor Fund’s most recent fiscal year.

(l) Actual Total Annual Fund Operating Expenses, after expense reimbursement under arrangements previously in effect, was 2.35% for Class B Shares of the Small-Cap Growth Fund. The fund’s investment adviser may recapture operating expenses reimbursed or waived under previous expense limitation or waiver arrangements and made subsequent to August 23, 2007, for a period of three years following the end of the fiscal year in which such reimbursements or waivers occurred.

(m) The funds’ investment adviser has agreed to limit the total operating expenses (excluding interest, taxes and extraordinary expenses) of certain of the funds as indicated below.


Fund Name	Class B Expense Cap	Type*	Expiration Date	Actual Total Annual Fund Expenses After Reimbursement
Growth & Income Fund	2.00%	V	December 31, 2008	2.03%
Mid-Cap Growth Fund	2.20%	V	September 30, 2008	2.29%
Small-Cap Value Fund	2.15%	V	May discontinue at any time	2.18%

*C=Contractual; V=Voluntary

Example

This example is intended to help you compare the cost of investing in a fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in Class B Shares of a fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, that the fund’s operating expenses remain the same and that the Class B Shares are converted to Class A Shares after eight years. Although your actual costs may be higher or lower, based on these assumptions your costs would be:


Fund	1 year	3 years	5 years	10 years
All-Cap Growth	$631	$912	$1,220	$2,427
Balanced	$590	$788	$1,011	$1,995
Capital Growth	$619	$876	$1,159	$2,303
Growth & Income	$620	$879	$1,164	$2,313
Income & Growth	$607	$840	$1,098	$2,176


40		Phoenix Equity Trust


Fund	1 year	3 years	5 years	10 years
Mid-Cap Growth	$632	$915	$1,225	$2,438
Small-Cap Growth	$650	$970	$1,316	$2,621
Small-Cap Value	$634	$921	$1,235	$2,458
Small-Mid Cap	$623	$888	$1,180	$2,344
Strategic Growth	$619	$876	$1,159	$2,303

You would pay the following expenses if you did not redeem your shares:


Fund	1 year	3 years	5 years	10 years
All-Cap Growth	$231	$712	$1,220	$2,427
Balanced	$190	$588	$1,011	$1,995
Capital Growth	$219	$676	$1,159	$2,303
Growth & Income	$220	$679	$1,164	$2,313
Income & Growth	$207	$640	$1,098	$2,176
Mid-Cap Growth	$232	$715	$1,225	$2,438
Small-Cap Growth	$250	$770	$1,316	$2,621
Small-Cap Value	$234	$721	$1,235	$2,458
Small-Mid Cap	$223	$688	$1,180	$1,735
Strategic Growth	$219	$676	$1,159	$2,303

Note: The example does not include the effects of the expense reimbursement obligations of the adviser, if any; therefore your actual expenses may be lower than those shown.


Phoenix Equity Trust		41

Class C Shares


	All-Cap Growth		Balanced		Capital Growth		Growth & Income		Growth Opportunities		Income & Growth		Mid-Cap Growth
Management Fees	0.85%		0.55%		0.70%		0.75%		0.75%		0.70%		0.83%
Distribution and Shareholder Servicing (12b-1) Fees ^(m)	0.75%		1.00%		1.00%		1.00%		1.00%		1.00%		1.00%
Shareholder Services Fee	0.25%	⁽ⁿ⁾	None		None		None		None		None		None
Other Expenses	0.43%	⁽ ^o)	0.32%	^(o)	0.46%	^(o)	0.42%	^(o)	0.91%	^(o)	0.34%	^(o)	0.37%	^(o)

Total Annual Fund Operating Expenses	2.28%		1.87%		2.16%		2.17%	^(q)	2.66%	^(q)	2.04%		2.20%	^(q)


	Mid-Cap Value		Quality Small-Cap		Small-Cap Growth		Small-Cap Sustainable Growth		Small-Cap Value		Small-Mid Cap		Strategic Growth		Value Opportunities
Management Fees	0.75%		0.90%		0.93%		0.90%		0.90%		0.85%		0.70%		0.75%
Distribution and Shareholder Servicing (12b-1) Fees ^(m)	1.00%		1.00%		0.75%		1.00%		1.00%		1.00%		1.00%		1.00%
Shareholder Services Fee	None		None		0.25%	⁽ⁿ⁾	None		None		None		None		None
Other Expenses	0.38%		1.55%	^(o)	0.54%	^(o)	2.41%	^(o)	0.41%	^(o)	0.35%	^(o)	0.46%	^(o)	0.52%

Total Annual Fund Operating Expenses	2.13%	^(p)	3.45%	^(q)	2.47%	^(p)	4.31%	^(q)	2.31%	^(q)	2.20%		2.16%		2.27%	^(q)

(m) Distribution and Shareholder Servicing (12b-1) Fees represent an asset-based sales charge that, for a long-term shareholder, over time may be higher than the maximum front-end sales charge permitted by the FINRA.

(n) All-Cap Growth Fund and Small-Cap Growth Fund have a separate shareholder service fee plan.

(o) Estimated based on respective Predecessor Fund’s most recent fiscal year.

(p) Actual Total Annual Fund Operating Expenses, after expense reimbursement under arrangement previously in effect, was 2.01% for Class C Shares of the Mid-Cap Value Fund and 2.35% for Class C Shares of the Small-Cap Growth Fund. The fund’s investment adviser may recapture operating expenses reimbursed or waived under previous expense limitation or waiver arrangements and made subsequent to August 23, 2007, for a period of three years following the end of the fiscal year in which such reimbursements or waivers occurred.

(q) The funds’ investment adviser has agreed to limit the total operating expenses (excluding interest, taxes and extraordinary expenses) of certain of the funds as indicated below.


Fund Name	Class C Expense Cap	Type*	Expiration Date	Actual Total Annual Fund Expenses After Reimbursement
Growth & Income Fund	2.00%	V	December 31, 2008	2.03%
Growth Opportunities Fund	2.00%	C	May 31, 2008	2.06%
Mid-Cap Growth Fund	2.20%	V	September 30, 2008	2.20%
Quality Small-Cap Fund	2.15%	V	May discontinue at any time	2.16%
Small-Cap Sustainable Growth Fund	2.15%	V	May discontinue at any time	2.15%
Small-Cap Value Fund	2.15%	V	May discontinue at any time	2.18%
Value Opportunities Fund	2.10%	C	June 30, 2008	2.16%

*C=Contractual; V=Voluntary


42		Phoenix Equity Trust

Example

This example is intended to help you compare the cost of investing in a fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in Class C Shares of a fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:


Fund	1 year	3 years	5 years	10 years
All-Cap Growth	$331	$712	$1,220	$2,615
Balanced	$290	$588	$1,011	$2,190
Capital Growth	$318	$673	$1,154	$2,483
Growth & Income	$320	$684	$1,183	$2,610
Growth Opportunities	$349	$807	$1,392	$2,978
Income & Growth	$307	$640	$1,098	$2,369
Mid-Cap Growth	$323	$688	$1,180	$2,534
Mid-Cap Value	$316	$667	$1,144	$2,462
Quality Small-Cap	$448	$1,059	$1,793	$3,730
Small-Cap Growth	$350	$770	$1,316	$2,806
Small-Cap Sustainable Growth	$532	$1,306	$2,192	$4,462
Small-Cap Value	$334	$721	$1,235	$2,646
Small-Mid Cap	$323	$688	$1,180	$2,534
Strategic Growth	$319	$676	$1,159	$2,493
Value Opportunities	$330	$709	$1,215	$2,605

You would pay the following expenses if you did not redeem your shares:


Fund	1 year	3 years	5 years	10 years
All-Cap Growth	$231	$712	$1,220	$2,615
Balanced	$190	$588	$1,011	$2,190
Capital Growth	$218	$673	$1,154	$2,483
Growth & Income	$280	$684	$1,183	$2,610
Growth Opportunities	$249	$807	$1,392	$2,978
Income & Growth	$207	$640	$1,098	$2,369
Mid-Cap Growth	$223	$688	$1,180	$2,584
Mid-Cap Value	$216	$667	$1,144	$2,462
Quality Small-Cap	$348	$1,059	$1,793	$3,730
Small-Cap Growth	$250	$770	$1,316	$2,806
Small-Cap Sustainable Growth	$432	$1,306	$2,192	$4,462


Phoenix Equity Trust		43


Fund	1 year	3 years	5 years	10 years
Small-Cap Value	$234	$721	$1,235	$2,646
Small-Mid Cap	$223	$688	$1,180	$1,735
Strategic Growth	$219	$676	$1,159	$2,493
Value Opportunities	$230	$709	$1,215	$2,605

Note: The example does not include the effects of the expense reimbursement obligations of the adviser, if any; therefore your actual expenses may be lower than those shown.

Class I Shares


	Growth & Income		Mid-Cap Growth		Mid-Cap Value		Quality Small-Cap		Small-Cap Sustainable Growth		Small-Mid Cap		Strategic Growth
Management Fees	0.75%		0.83%		0.75%		0.90%		0.90%		0.85%		0.70%
Distribution and Shareholder Servicing (12b-1) Fees ^(q)	None		None		None		None		None		None		None
Other Expenses	0.42%	^(r)	0.26%	^(r)	0.38%		1.64%	⁽ ^r)	2.04%	⁽ ^r)	0.37%	⁽ ^r)	0.46%	^(r)

Total Annual Fund Operating Expenses	1.17%	^(t)	1.09%	^(t)	1.13%	^(s)	2.54%	^(t)	2.94%	^(t)	1.22%		1.16%

(q) Distribution and Shareholder Servicing (12b-1) Fees represent an asset-based sales charge that, for a long-term shareholder, over time may be higher than the maximum front-end sales charge permitted by the FINRA.

(r) Estimated based on Predecessor Fund’s fiscal year ended August 31, 2007.

(s) Class I Shares have been in existence only since the date of this Prospectus; therefore expense information for Class I Shares is estimated.

(t) The funds’ investment adviser has agreed to limit the total operating expenses (excluding interest, taxes and extraordinary expenses) of certain of the funds as indicated below.


Fund Name	Class I Expense Cap	Type*	Expiration Date	Actual Total Annual Fund Expenses After Reimbursement
Growth & Income Fund	1.00%	V	December 31, 2008	1.03%
Mid-Cap Growth Fund	1.20%	V	September 30, 2008	1.20%
Quality Small-Cap Fund	1.15%	V	May discontinue at any time	1.15%
Small-Cap Sustainable Growth Fund	1.15%	V	May discontinue at any time	1.16%

*C=Contractual; V=Voluntary

Following expiration of the periods specified in the table, the adviser may discontinue any reimbursement arrangements. The adviser may recapture operating expenses reimbursements under these arrangements and made subsequent to August 23, 2007, for a period of three years following the end of the fiscal year in which such reimbursements occurred.

Example

This example is intended to help you compare the cost of investing in a fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in Class I Shares of a fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:


Fund	1 year	3 years	5 years	10 years
Growth & Income	$119	$372	$644	$1,420
Mid-Cap Growth	$111	$341	$584	$1,255


44		Phoenix Equity Trust


Fund	1 year	3 years	5 years	10 years
Mid-Cap Value	$115	$359	$622	$1,375
Quality Small-Cap	$257	$791	$1,350	$2,875
Small-Cap Sustainable Growth	$297	$910	$1,548	$3,261
Small-Mid Cap	$122	$381	$660	$1,455
Strategic Growth	$118	$368	$638	$1,409


Phoenix Equity Trust		45

Additional Investment Techniques

In addition to the Principal Investment Strategies and Related Risks, each of the funds may engage in additional investment techniques that present additional risks to a fund as indicated in the chart and described below. Many of the additional investment techniques that a fund may use, as well as other investment techniques that are relied upon to a lesser degree, are more fully described in the Statement of Additional Information.

Risks For One Or More Funds

All-
Cap
Growth
Fund

Balanced
Fund

Capital
Growth
Fund

Growth
&
Income
Fund

Growth
Opportunities
Fund

Income
&
Growth
Fund

Mid-
Cap
Growth
Fund

Mid-
Cap
Value
Fund

Quality
Small-
Cap
Fund

Small-
Cap
Growth
Fund

Small-
Cap
Sustainable
Growth
Fund

Small-
Cap
Value
Fund

Small-
Mid
Cap
Fund

Strategic
Growth
Fund

Value
Opportunities
Fund

Borrowing

Debt Securities

Depositary Receipts

Derivatives

Financial Futures & Related Options

Foreign Securities

Forward Foreign Currency Exchange Contracts

High Yield-High Risk Securities (Junk Bonds)

Illiquid and Restricted Securities

Initial Public Offerings (IPOs)

Large Company

Loan Participations

Mortgage- and Asset-Backed Securities

Mutual Fund Investing

Preferred Stocks

Private Placements

Securities Lending

Short-Term Instruments

Small and Medium Company

Special Situations

U.S. and Foreign Government Securities

Unrated Fixed Income Securities

Variable and Floating Rate Securities

When-Issued and Delayed-Delivery Securities

Zero Coupon and Deferred Coupon Bonds

Borrowing

The fund may obtain fixed interest rate loans in amounts up to one third the value of its net assets and invest the loan proceeds in other assets. If the securities purchased with such borrowed money decrease in value or do not increase enough to cover interest and other borrowing costs, the fund will suffer greater losses than if no borrowing took place.

Debt Securities

The fund may invest in nonconvertible or convertible debt securities of U.S. and foreign (non-U.S.) issuers including corporate notes, bonds and debentures that are rated within the three highest rating categories at the time of investment, or if unrated, are deemed by the respective subadviser to be of comparable quality. Generally, if interest rates rise, the value of debt securities will fall. Credit risk for debt obligations generally increases as the rating declines. Securities with lower credit ratings have a greater chance of principal and interest payment default. Debt obligations with longer maturities may be subject to price fluctuations due to


46		Phoenix Equity Trust

interest rates, tax laws and other general market factors. Credit risk is determined at the date of investment. If the rating declines after the date of purchase, the fund is not obligated to sell the security. In addition, debt securities convertible into common stocks may have higher yields than common stocks but lower yields than comparable nonconvertible securities.

In addition to credit and interest rate risk, investing in debt securities carries certain other risks, including:

Redemption Risk—Debt securities sometime contain provisions that allow for redemption in the event of tax or security law changes, in addition to call features at the option of the issuer. In the event of a redemption, the fund may not be able to reinvest the proceeds at comparable rates of return. If a convertible debt security is called for redemption, the funds 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 funds.

Limited Voting Rights—Debt securities typically do not provide any voting rights, except in cases when interest payments have not been made and the issuer is in default.

Liquidity—Certain debt securities may be substantially less liquid than many other securities such as U.S. Government securities or common stocks.

Depositary Receipts

The fund may invest in American Depositary Receipts (ADRs) sponsored by U.S. banks, European Depositary Receipts (EDRs) and ADRs not sponsored by U.S. banks. While investment in ADRs and EDRs may eliminate some of the risk associated with foreign investments, it does not eliminate all the risks inherent in investing in securities of foreign issuers. EDRs and ADRs which are not sponsored by U.S. banks are subject to the same investment risks as foreign securities.

Derivatives

Each of the funds may enter into derivative transactions (contracts whose value is derived from the value of an underlying asset, index or rate) including futures, options, non-deliverable forwards, forward foreign currency exchange contracts and swap agreements. The funds may use derivatives to hedge against factors that affect the value of their investments such as interest rates and foreign currency exchange rates. The funds may also utilize derivatives as part of their overall investment technique to gain or lessen exposure to various securities, markets and currencies.

Derivatives typically involve greater risks than traditional investments. It is generally more difficult to ascertain the risk of, and to properly value, derivative contracts. Derivative contracts are usually less liquid than traditional securities and are subject to counterparty risk (the risk that the other party to the contract will default or otherwise not be able to perform its contractual obligations). In addition, some derivatives transactions may involve potentially unlimited losses. Derivatives contracts entered into for hedging purposes may also subject the fund to losses if the contracts do not correlate with the assets, index or rates they were designed to hedge. Gains and losses derived from hedging transactions are, therefore, more dependent upon the adviser’s or subadviser’s ability to correctly predict the movement of the underlying asset prices, indexes or rates.

Financial Futures and Related Options

The funds may use financial futures contracts and related options for hedging purposes. Futures and options involve market risk in excess of their value and may not be as liquid as other securities.

Foreign Securities

Investments in non-U.S. companies involve additional risks and conditions, including differences in accounting standards, generally higher commission rates, differences in transaction settlement systems, political instability, and the possibility of confiscatory or expropriation taxes. Political and economic uncertainty in foreign countries, as well as less public information about foreign investments, may negatively impact the fund’s portfolio. Dividends and other income payable on foreign securities may also be subject to foreign taxes. Some investments may be made in currencies other than the U.S. dollar that will fluctuate in value as a result of changes in the currency exchange rate. Foreign markets and currencies may not function as well as U.S. markets.

Risks associated with foreign investments may be intensified in emerging market countries. Developing countries and companies doing business in such countries may not have the same range of opportunities and have more obstacles to financial success than their counterparts in developed nations.


Phoenix Equity Trust		47

Forward Foreign Currency Exchange Contracts

The fund may invest in forward foreign currency exchange contracts. Such contracts may limit potential exchange rate gains, may incur higher transaction costs and may not protect the fund against future currency exchange fluctuation as anticipated by the investment adviser or subadviser.

High Yield-High Risk Securities (Junk Bonds)

High yield-high risk fixed income securities entail greater price volatility and credit and interest rate risk than investment-grade securities. Analysis of the creditworthiness of high yield-high risk fixed income issuers is more complex than for higher-rated securities, making it more difficult for the subadviser to accurately predict risk. There is a greater risk with high yield-high risk fixed income securities that an issuer will not be able to make principal and interest payments when due. If the fund pursues missed payments, there is a risk that fund expenses could increase. In addition, lower-rated securities may not trade as often and may be less liquid than higher-rated securities.

Illiquid and Restricted Securities

The fund may invest in illiquid and restricted securities, including restricted securities. Illiquid and restricted securities may include repurchase agreements with maturities of greater than seven days. Illiquid and restricted securities may be difficult to sell or may be sold only pursuant to certain legal restrictions. Difficulty in selling securities may result in a loss to a fund or entail expenses not normally associated with the sale of a security.

Initial Public Offerings (IPOs)

The fund may invest in IPOs, which typically have less available information. Investment returns from IPOs may be highly volatile, 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 funds may purchase IPOs and then immediately sell them. This practice will increase portfolio turnover rates and increase costs to the fund, affect fund performance, and may increase capital gain distributions, resulting in greater tax liability to you.

Large Market Capitalization Companies

The fund may invest in securities with large market capitalizations. Companies with large market 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, the fund’s value may not rise as much as the value of funds that emphasize companies with smaller market capitalizations.

Loan Participations

The fund may invest in loan participations. A loan participation agreement involves the purchase of a share of a loan made by a bank to a company in return for a corresponding share of borrower’s principal and interest payments. The principal credit risk associated with acquiring loan participation interests is the credit risk associated with the underlying corporate borrower. There is also a risk that there may not be a readily available market for loan participation interests and, in some cases, this could result in the fund disposing of such securities at a substantial discount from face value or holding such securities until maturity.

Mortgage- and Asset-Backed Securities

Early payoffs on the underlying loans in mortgage-backed and asset-backed securities may result in the fund receiving less income than originally anticipated. The variability in prepayments will tend to limit price gains when interest rates drop and exaggerate price declines when interest rates rise. In the event of high prepayments, the fund may be required to invest proceeds at lower interest rates, causing the fund to earn less than if the prepayments had not occurred.

Mutual Fund Investing

The fund may invest in shares of other mutual funds. Assets invested in other mutual funds incur a layering of expenses, including operating costs, advisory fees and administrative fees that you, as a shareholder in the fund, indirectly bear.


48		Phoenix Equity Trust

Preferred Stocks

Preferred stocks involve credit risk, which is the risk that a preferred stock will decline in price, or fail to pay dividends when expected, because the issuer experiences a decline in its financial status. In addition to credit risk, investment in preferred stocks involves certain other risks, including skipping or deferring distributions, and redemption in the event of certain legal or tax changes or at the issuer’s call. Preferred stocks are subordinated to bonds and other debt instruments in a company’s capital structure in terms of priority to corporate income and liquidation payments, and therefore will be subject to greater credit risk than those debt instruments. Preferred stocks may be significantly less liquid than many other securities, such as U.S. Government securities, corporate debt or common stock.

Private Placements

The fund may purchase securities which have been privately issued to qualified institutional investors under special rules adopted by the Securities and Exchange Commission (“SEC”). Such securities may offer higher yields than comparable publicly traded securities. Privately issued securities ordinarily can be sold by the fund in secondary market transactions to certain qualified investors pursuant to rules established by the SEC or in privately negotiated transactions to a limited number of purchasers. Therefore, sales of such securities by the fund may involve significant delays and expense.

Securities Lending

The fund may loan portfolio securities to increase investment returns. If the borrower is unwilling or unable to return the borrowed securities when due, the fund can suffer losses.

Short-Term Instruments

The fund may invest in short-term securities, including money market instruments, repurchase agreements, certificates of deposits and bankers’ acceptances. Default or insolvency of the other party to a repurchase agreement presents a risk to the funds.

Small and Medium Market Capitalization Companies

The fund may invest in issuers having small or medium market capitalizations. Companies with smaller market capitalizations are often companies with a limited operating history or companies in industries that have recently emerged due to cultural, economic, regulatory or technological developments. Such developments can have a significant impact or negative effect on small and medium market capitalization companies and their stock performance and can make investment returns highly volatile. Product lines are often less diversified and more susceptible to competitive threats. Smaller market capitalization stocks are subject to varying patterns of trading volume and may, at times, be difficult to sell.

Special Situations

The fund may invest in special situations. Special situations are created by developments, such as liquidations, reorganizations technological breakthroughs and new management, that apply solely to a particular company. Special situations may involve greater risks than ordinary investment securities. The companies involved often are smaller, unseasoned companies and the securities may not perform as the subadviser expects. Analysis of special situations is more complex than for ordinary investments, making it more difficult for the subadviser to accurately predict risk and return.

U.S and Foreign Government Securities

The fund may invest in Treasury bills, notes and bonds issued by the U.S. Government, its agencies and instrumentalities, and securities issued by foreign governments and supranational agencies (such as the World Bank). Not all government securities are backed by the full faith and credit of the issuing country, including the United States, but rather are the obligation solely of the entity through which they are issued.

Unrated Fixed Income Securities

The fund may invest in unrated securities. Unrated securities may not be lower in quality than rated securities, but due to their perceived risk they may not have as broad a market as rated securities. Analysis of unrated securities is more complex than for rated securities, making it more difficult for the adviser or subadviser to accurately predict risk.


Phoenix Equity Trust		49

Variable and Floating Rate and Variable Amount Securities

The fund may invest in securities with variable and floating rates or variable amount securities. These securities are more susceptible to interest rate fluctuations and it is more difficult for the subadviser to assess their potential return.

When-Issued and Delayed-Delivery Securities

The fund may purchase securities on a when-issued or delayed-delivery basis. The value of the security on settlement date may be more or less than the price paid as a result of changes in interest rates and market conditions. If the value on settlement date is less, the value of your shares may decline.

Zero Coupon and Deferred Coupon Bonds

The fund may invest in debt obligations that do not make any interest payments for a specified period of time (zero coupon or deferred coupon bonds). The market prices of these bonds generally are more volatile than the market prices of securities that pay interest on a regular basis. Since the fund will not receive cash payments earned on these securities on a current basis, the fund may be required to make distributions from other sources. This may result in higher portfolio turnover rates and the sale of securities at a time that is less favorable.

The funds may buy other types of securities or employ other portfolio management techniques. Please refer to the Statement of Additional Information for more detailed information about these and other investment techniques of the funds.

Management of the Funds

The Adviser

Phoenix Investment Counsel, Inc. (“Phoenix”) is the investment adviser to each fund and is located at 56 Prospect Street, Hartford, CT 06115. Phoenix acts as the investment adviser for over 50 mutual funds and as adviser to institutional clients. As of December 31, 2007, Phoenix had approximately $1.7 billion in assets under management. Phoenix has acted as an investment adviser for over 70 years.

Subject to the direction of the fund’s Board of Trustees, Phoenix is responsible for managing each fund’s investment program and for the general operations of the funds, including oversight of each fund’s subadviser, and for certain of the funds, recommending its hiring, termination and replacement. Phoenix is responsible for the day-to-day portfolio management of the Balanced Fund (equity portion), Growth & Income Fund and the Income & Growth Fund (equity portion).

Phoenix has appointed and oversees the activities of each of the subadvisers for the funds as follows. Each subadviser manages the investments of that fund.


Fund		Subadviser
All-Cap Growth Fund		Engemann Asset Management, Inc. (“Engemann”)
Balanced Fund (fixed income portion)		Goodwin Capital Advisers, Inc. (“Goodwin”)
Capital Growth Fund		Harris Investment Management, Inc. (“Harris”)
Growth Opportunities Fund		Turner Investment Partners, Inc.
Income & Growth Fund (fixed income portion)		Goodwin
Mid-Cap Growth Fund		Harris
Mid-Cap Value Fund		Sasco Capital Inc.
Quality Small-Cap Fund		Kayne Anderson Rudnick Investment Management, LLC (“Kayne”)
Small-Cap Growth Fund		Engemann
Small-Cap Sustainable Growth Fund		Kayne


50		Phoenix Equity Trust


Fund		Subadviser
Small-Cap Value Fund		Euclid Advisors LLC
Small-Mid Cap Fund		Kayne
Strategic Growth Fund		SCM Advisors LLC
Value Opportunities Fund		Acadian Asset Management LLC

Each fund pays Phoenix an investment management fee that is accrued daily against the value of the fund’s net assets at the following annual rates:

Management Fees


Mid-Cap Value Fund		0.75%
Small-Mid Cap Fund		0.85%


	First $50 million	Next $450 million	Over $500 million
All-Cap Growth Fund	0.90%	0.80%	0.70%
Small-Cap Growth Fund	1.00%	0.90%	0.80%


	First $400 million	$400+ million through $1billion	$1+ billion
Quality Small-Cap Fund	0.90%	0.85%	0.80%
Small-Cap Sustainable Growth Fund	0.90%	0.85%	0.80%


	First $500 million	Over $500 million
Mid-Cap Growth Fund	0.80%	0.70%


	First $1 billion	$1+ billion through $2 billion	$2+ billion
Balanced Fund	0.55%	0.50%	0.45%
Capital Growth Fund	0.70%	0.65%	0.60%
Growth & Income Fund	0.75%	0.70%	0.65%
Growth Opportunities Fund	0.75%	0.70%	0.65%
Income & Growth Fund	0.70%	0.65%	0.60%
Small-Cap Value Fund	0.90%	0.85%	0.80%
Strategic Growth Fund	0.70%	0.65%	0.60%
Value Opportunities Fund	0.75%	0.70%	0.65%


Phoenix Equity Trust		51

Phoenix has agreed to limit the total operating expenses (excluding interest, taxes and extraordinary expenses) of certain of the funds so that such expenses do not exceed, on an annualized basis, the amounts indicated in the following table.

Class A

Class B

Class C

Class I

Type*

Through Date

Growth & Income Fund

1.25%

2.00%

1.00%

December 31, 2008

Growth Opportunities Fund

1.25%

N/A

2.00%

N/A

May 31, 2008

Mid-Cap Growth Fund

1.45%

2.20%

1.20%

September 30, 2008

Quality Small-Cap Fund

1.40%

N/A

2.15%

1.15%

May discontinue at
any time

Small-Cap Sustainable Growth Fund

1.40%

N/A

2.15%

1.15%

May discontinue at
any time

Small-Cap Value Fund

1.40%

2.15%

N/A

May discontinue at
any time

Value Opportunities Fund

1.35%

N/A

2.10%

N/A

June 30, 2008

*C=Contractual; V=Voluntary

Following the expiration of the periods specified in the table, the adviser may discontinue any reimbursements. The adviser may recapture operating expenses reimbursed under these (and previous) arrangements made subsequent to August 23, 2007, for a period of three years following the end of the fiscal year in which such reimbursements occurred.

The Subadvisers

Acadian Asset Management LLC (“Acadian”) is located at One Post Office Square, 20 ^th Floor, Boston, MA 02109. Acadian is a subsidiary of Old Mutual Asset Managers (US) LLC (“OMAM”), which is an indirectly wholly owned subsidiary of Old Mutual plc, a UK-listed financial services company. Acadian acts as adviser to institutions and individuals. As of December 31, 2007, Acadian had approximately $83 billion in assets under management. Acadian has been an investment adviser since 1977.

Engemann Asset Management, Inc. (“Engemann”), an affiliate of Phoenix, is located at 600 North Rosemead Boulevard, Pasadena, CA 91107. Engemann acts as subadviser to two mutual funds and as adviser to institutional clients. As of December 31, 2007, Engemann had approximately $394.5 million in assets under management. Engemann has been an investment adviser since 1969.

Euclid Advisors LLC (“Euclid”), an affiliate of Phoenix, is located at 900 Third Avenue, New York, NY 10022. Euclid serves as subadviser to one mutual fund and may act as investment adviser for other accounts. As of December 31, 2007, Euclid had approximately $213.3 million in assets under management.

Goodwin Capital Advisers, Inc. (“Goodwin”), an affiliate of Phoenix, is located at 56 Prospect Street, Hartford, CT 06115. Goodwin acts as subadviser for 11 mutual funds and manages fixed income assets for individuals and institutions. As of December 31, 2007, Goodwin had approximately $17.7 billion in assets under management.

Harris Investment Management, Inc. (“Harris”) is located at 190 South LaSalle Street, 4 ^th Floor, P.O. Box 755, Chicago, IL 60690. Harris has been an investment adviser since 1989. Harris is a wholly-owned subsidiary of Harris Bankcorp, Inc., which is wholly-owned by Harris Financial Corp. Harris Financial Corp. is wholly-owned by Bank of Montreal, a publicly traded Canadian banking institution. As of December 31, 2007, Harris had approximately $16.7 billion in assets under management.

Kayne Anderson Rudnick Investment Management, LLC (“Kayne”), an affiliate of Phoenix, is located at 1800 Avenue of the Stars, 2 ^nd Floor, Los Angeles, CA 90067. Kayne acts as subadviser to three mutual funds and as investment adviser to institutions and individuals. As of December 31, 2007, Kayne had approximately $5.2 billion in assets under management.

Sasco Capital Inc. (“Sasco”) is located at 10 Sasco Hill Road, Fairfield, CT 06824. Sasco has been an investment adviser since 1985 and as of December 31, 2007, Sasco had approximately $4.4 billion in assets under management.

SCM Advisors LLC (“SCM Advisors”), an affiliate of Phoenix, is located at 909 Montgomery Street, San Francisco, CA 94133. SCM Advisors acts as subadviser to five mutual funds and as investment adviser to institutions and individuals. As of December 31, 2007, SCM Advisors had approximately $10.3 billion in assets under management. SCM Advisors has been an investment adviser since 1989.

Turner Investment Partners, Inc. (“Turner”) is located at 1205 Westlakes Drive, Suite 100, Berwyn, PA 19312. Turner is a professional investment management firm founded in March 1990. Turner has provided investment advisory services to investment companies since 1992. As of December 31, 2007, Turner had approximately $29.1 billion in assets under management.


52		Phoenix Equity Trust

Phoenix pays each subadviser a subadvisory fee which is calculated on the fund’s average daily net assets at the following annual rates:


	First $166 million	Excess Over $166 million
Small-Cap Value Fund	0.10%	0.40%


	First $400 million	$400+ million through $1 billion	$1+ billion
Quality Small-Cap Fund	0.45%	0.425%	0.40%
Small-Cap Sustainable Growth Fund	0.45%	0.425%	0.40%


	First $1 billion	$1+ billion through $2 billion	$2+ billion
Growth Opportunities Fund	0.375%	0.35%	0.325%


All-Cap Growth Fund		50% of gross investment management fee
Balanced Fund		50% of gross investment management fee
Capital Growth Fund		50% of gross investment management fee
Income & Growth Fund		50% of gross investment management fee
Mid-Cap Growth Fund		50% of gross investment management fee
Mid-Cap Value Fund		47.5% of gross investment management fee
Small-Cap Growth Fund		50% of gross investment management fee
Small-Mid Cap Fund		0.425%
Strategic Growth Fund		50% of gross investment management fee
Value Opportunities Fund		50% of gross investment management fee

A discussion regarding the basis for the Board of Trustees approving the advisory and subadvisory agreements is available in each fund’s semiannual report covering the period July 1, 2007 through December 31, 2007.

Except for Phoenix Mid-Cap Value Fund, the funds and Phoenix have received an exemptive order from the Securities and Exchange Commission that permits Phoenix, subject to certain conditions, and without the approval of shareholders to: (a) employ a new unaffiliated subadviser for a fund pursuant to the terms of a new subadvisory agreement, in each case either as a replacement for an existing subadviser or as an additional subadviser; (b) change the terms of any subadvisory agreement; and (c) continue the employment of an existing subadviser on the same subadvisory agreement terms where an agreement has been assigned because of a change in control of the subadviser. In such circumstances, shareholders would receive notice of such action, including the information concerning the new subadviser that normally is provided in a proxy statement.

Portfolio Management

Acadian

A team of investment professionals manages the Value Opportunities Fund’s portfolio and each team member is jointly and primarily responsible for the day-to-day management of the fund’s portfolio.


Phoenix Equity Trust		53

Brendan O. Bradley. Mr. Bradley has served on the fund’s portfolio management team since July 2005. He is a Senior Vice President and a senior member of the investment research team. He also manages the Phoenix International Strategies Fund and the Phoenix Worldwide Strategies Fund (international portion). Prior to joining Acadian in 2004, Mr. Bradley was a Vice President at Upstream Technologies (2002-2004), where he designed and implemented quantitative investment management systems and strategies. His professional background also includes work as a research analyst and consultant at Samuelson Portfolio Strategies (1999-2002).

John R. Chisholm, CFA. Mr. Chisholm has served on the fund’s portfolio management team since July 2005. He is Co-Chief Investment Officer and Executive Vice President of Acadian. Mr. Chisholm has been affiliated with Acadian since 1984, first in a consulting capacity (1984-1987), as a quantitative research analyst (1987-1989), and as a portfolio manager (since 1989). He became Co-Chief Investment Officer in 1997.

Matthew J. Cohen, CFA. Mr. Cohen has served on the fund’s portfolio management team since July 2005. He is a Senior Vice President and Portfolio Manager of Acadian. Mr. Cohen specializes in quantitative equity valuation techniques and manages the processes and data that drive Acadian’s investment approach. Prior to joining Acadian in 1994, he worked as a senior systems analyst and project manager for Digital Equipment Corporation.

Raymond F. Mui. Mr. Mui has served on the fund’s portfolio management team since July 2005. He is a Senior Vice President specializing in multi-factor equity valuation frameworks and the development of investment strategies for both the developed and emerging equity markets. Prior to joining Acadian in 1991, Mr. Mui was a member of the senior technical staff at Hughes Aircraft, where he developed prototypes of command, communications and information systems.

Brian K. Wolahan, CFA. Mr. Wolahan has served on the fund’s portfolio management team since July 2005. He is Co-Director of Research and a Senior Portfolio Manager responsible for developing and applying quantitative techniques to evaluate markets and securities. Before joining Acadian in 1990, Mr. Wolahan worked in the Systems Planning Group at Bank of New England, and as a Senior Systems Analyst at Mars Incorporated with responsibilities for Corporate Systems.

Engemann

A team of equity investment professionals is responsible for the day-to-day management of one or both of the All-Cap Growth Fund and Small-Cap Growth Fund’s portfolios. The members of the investment team and their areas of responsibility and expertise are as follows:

Douglas Couden, CFA. Mr. Couden has served on the All-Cap Growth Fund’s portfolio management team since June 2006 and is primarily responsible for large-cap investing. Mr. Couden is a Senior Portfolio Manager and Director of Equity at Engemann (since June 2006) and at Seneca Capital Management, LLC, an affiliate of Engemann. Prior to joining Seneca in 1996, he was a business analyst with PaineWebber, Inc.

Lou Holtz, CFA. Mr. Holtz has served on the All-Cap Growth Fund (since 2002) and the Small-Cap Growth Fund (since 2000) portfolio management team and is primarily responsible for small-cap investing. He is a Vice President and Portfolio Manager at Engemann and has been with Engemann since 1996.

Yossi Lipsker, CFA. Mr. Lipsker has served as a co-portfolio manager of the Small-Cap Growth Fund (since 2000). He is a Vice President and Portfolio Manager of Engemann and has been with Engemann since 1995.

Euclid

Carlton Neel and David Dickerson manage the Small-Cap Value Fund’s portfolio (since 2003) and are jointly and primarily responsible for the day-to-day management of the fund’s investments.

Mr. Neel is a Senior Vice President of Phoenix, Euclid and Phoenix/Zweig Advisers, LLC (“PZA”). As well as lead Portfolio Manager of the fund, he also serves as Portfolio Manager for The Zweig Fund, Inc., The Zweig Total Return Fund, Inc., two closed-end funds managed by PZA. For the period from July 2002 until returning to Euclid and PZA in April 2003, Mr. Neel co-founded and managed a hedge fund based on a market neutral strategy. While previously employed by PZA from 1995 until July 2002, Mr. Neel served as Senior Portfolio Manager for a number of the former Phoenix-Zweig mutual funds.

Mr. Dickerson is a Senior Vice President of Phoenix, Euclid and PZA. As well as Portfolio Manager of the fund, he also serves as Portfolio Manager for The Zweig Fund, Inc. and The Zweig Total Return Fund, Inc., two closed-end funds managed by PZA.


54		Phoenix Equity Trust

For the period from July 2002 until returning to Euclid and PZA in April 2003, Mr. Dickerson, along with Mr. Neel, co-founded and managed a hedge fund based on a market neutral strategy. While previously employed by PZA from 1993 until July 2002, Mr. Dickerson served as Assistant Portfolio Manager for a number of the former Phoenix-Zweig mutual funds.

Goodwin

David L. Albrycht, CFA makes the investment and trading decisions for the fixed income portion of the Balanced Fund and Income & Growth Fund’s portfolios.

Mr. Albrycht has served as portfolio manager of the fixed income portion of the funds since 1997. He also serves as the senior portfolio manager for the Phoenix Low-Duration Core Plus Bond Fund, the Phoenix Multi-Sector Fixed Income Fund and the Phoenix Multi-Sector Short Term Bond Fund. He is a Senior Managing Director, Fixed Income, of Goodwin. Previously, he was associated with Phoenix, an affiliate of Goodwin, and has managed fixed income portfolios since 1992. Mr. Albrycht joined Phoenix in 1981 and since then has held positions of increasing responsibility.

Harris

The following individuals are the members of the team of equity investment professionals jointly and primarily responsible for the day-to-day management of one or both of the Capital Growth Fund and Mid-Cap Growth Fund.

T. Andrew Janes, JD, CFA. Mr. Janes joined Harris in 1999. He has served as lead manager of the Capital Growth Fund and as a portfolio manager for the Mid-Cap Growth Fund since June 2006. He is also a portfolio manager for the Phoenix Insight Core Equity Fund and Phoenix Insight Value Equity Fund. Mr. Janes has 22 years of portfolio management, investment research and trust administration experience.

C. Thomas Johnson, CFA. Mr. Johnson joined Harris in 1990. He has served as lead manager of the Mid-Cap Growth Fund since January 2008. He is also a portfolio manager for the Phoenix Insight Balanced Fund. Mr. Johnson has 38 years of experience in portfolio management.

Thomas P. Lettenberger, CFA. Mr. Lettenberger was appointed as a manager of the Mid-Cap Growth Fund in February 2008. Prior to joining Harris in 2005, Mr. Lettenberger was a portfolio manager at an asset management firm from 2000 to 2005 with responsibility for institutional and mutual fund accounts. He is also a portfolio manager for the Phoenix Insight Small-Cap Growth Fund, Phoenix Insight Small-Cap Opportunity Fund and Phoenix Insight Small-Cap Value Fund. Mr. Lettenberger has 10 years of investment management experience.

Daniel L. Sido. Mr. Sido has served as a portfolio manager of the Capital Growth and Mid-Cap Growth Funds since June 2006. He is also a portfolio manager for the Phoenix Insight Balanced Fund, Phoenix Insight Core Equity Fund, Phoenix Insight Equity Fund, Phoenix Insight Index Fund and Phoenix Insight Small-Cap Opportunity Fund. Mr. Sido is a Senior Partner and Portfolio Manager at Harris. Prior to joining Harris in 1994, he was a portfolio manager for a St. Louis investment management company, managing equity and fixed income portfolios. Mr. Sido has 24 years of investment management experience.

Kayne

Sandi Gleason, CFA and Robert Schwarzkopf, CFA, have served as Co-Portfolio Managers of the Quality Small-Cap Fund (since inception in June 2006), the Small-Cap Sustainable Growth Fund (since inception in June 2006) and the Small-Mid Cap Fund (since 1998) and are jointly and primarily responsible for the day-to-day management of each fund’s portfolio.

Ms. Gleason is a portfolio manager for the Small and Mid Cap Equity Portfolios (since 1998). Before joining Kayne in 1993, Ms. Gleason was a senior consultant with Peterson Consulting Limited Partnership, a national litigation-consulting firm. She has over 12 years of investment industry experience.

Mr. Schwarzkopf is Chief Investment Officer (since April 2007), a portfolio manager for the Small and Mid Cap Equity Portfolios (since 1992), and a member of the Executive Management Committee. Before joining Kayne in 1991, Mr. Schwarzkopf was a member of the Investment Policy Committee at the Pilgrim Group of Mutual Funds and portfolio manager for Pilgrim Regional Bankshares. He has approximately 26 years of investment industry experience.


Phoenix Equity Trust		55

Phoenix

Steven L. Colton manages the Growth & Income Fund’s portfolio (since 1997), and the Balanced Fund (equity portion) (since 1999) and Income & Growth Fund (since 1997) portfolios and has overall responsibility for the day-to-day management of each fund’s investments.

Mr. Colton also serves as portfolio manager for the Phoenix Worldwide Strategies Fund (domestic portion). Mr. Colton is a Senior Vice President and Senior Portfolio Manager of Phoenix (since June 2006) and was Senior Vice President and Senior Portfolio Manager of Engemann Asset Management (“Engemann”), an affiliate of Phoenix (January 2005 to October 2006). Prior to joining Engemann, Mr. Colton was Managing Director, Senior Portfolio Manager of Phoenix (1997-2005).

Sasco

Bruce Bottomley, Mark Helderman and Daniel Leary are jointly and primarily responsible for the day-to-day management of the Mid-Cap Value Fund’s portfolio.

Since its inception on October 22, 2004, Mr. Bottomley has served as a portfolio manager of the fund and previously served as portfolio manager of the Predecessor Fund since its inception in 1997. He is Managing Director and Portfolio Manager of Sasco. Mr. Bottomley has 35 years of investment experience and was a founding partner of Sasco in 1986.

Since its inception on October 22, 2004, Mr. Helderman has served as a portfolio manager of the fund. He is Managing Director and Portfolio Manager of Sasco. Mr. Helderman has 21 years of investment experience and joined Sasco in 1997.

Since its inception on October 22, 2004, Mr. Leary has served as a portfolio manager of the fund and previously served as portfolio manager of the Predecessor Fund since its inception in 1997. He is Managing Director and Portfolio Manager of Sasco. Mr. Leary has 36 years of investment experience and was a founding partner of Sasco in 1986.

SCM Advisors

Douglas Couden, CFA, manages the Strategic Growth Fund and is primarily responsible for the day-to-day management of the fund’s portfolio.

Mr. Couden has served on the fund’s portfolio management team since 2005. Mr. Couden is a Senior Portfolio Manager and Director of Equity at SCM Advisors focused primarily on the industrial, telecom, consumer and information technology sectors. Prior to joining SCM Advisors in 1996, he was a business analyst with PaineWebber, Inc. Mr. Couden has 14 years of investment experience.

Turner

The Growth Opportunities Fund is managed by a team led by Robert E. Turner, CFA, with co-managers Mark Turner, Heather Flick McMeekin, CFA and Robb J. Parlanti, CFA.

Heather Flick McMeekin has served on the fund’s portfolio management team since July 2007. She is a Portfolio Manager/Security Analyst and joined Turner in 2001. Prior to joining Turner, Ms. McMeekin was employed with USB Paine Webber and Donaldson, Lufkin & Jenrette. She has 12 years of investment experience.

Robb Parlanti has served on the fund’s portfolio management team since its inception in May 2006 and previously served on the portfolio management team of the Turner Strategic Growth Fund (the Predecessor Fund). He is Senior Portfolio Manager/Security Analyst and joined Turner in 1993. Prior to 1993, Mr. Parlanti was Assistant Vice-President and Portfolio Manager at PNC Bank. He has 19 years of investment experience.

Mark Turner has served on the portfolio management team of the fund since its inception in May 2006 and previously served on the portfolio management team of the Turner Strategic Growth Fund (the Predecessor Fund). He is Vice Chairman, Senior Portfolio Manager/Security Analyst at Turner, and co-founded the firm in 1990. Prior to 1990, Mr. Turner was Vice-President and Senior Portfolio Manager with First Maryland Asset Management. He has 23 years of investment experience.


56		Phoenix Equity Trust

Robert Turner has led the portfolio management team of the fund since its inception in May 2006 and previously served on the portfolio management team of the Turner Strategic Growth Fund (the Predecessor Fund). He is Chairman and Chief Investment Officer of Turner, and founded Turner in 1990. Prior to his current position, Mr. Turner was Senior Investment Manager with Meridian Investment Company. He has 24 years of investment experience.

Please refer to the Statement of Additional Information for additional information about the funds’ portfolio managers, including the structure of and method of computing compensation, other accounts they manage and their ownership of shares of the funds.

Pricing of Fund Shares

How is the Share Price determined?

Each fund calculates a share price for each class of its shares. The share price for each class is based on the net assets of the fund and the number of outstanding shares of that class. In general, each fund calculates a share price for each class by:

adding the values of all securities and other assets of the fund;

subtracting liabilities; and

dividing the result by the total number of outstanding shares of that class.

Assets: Equity securities are valued at the official closing price (typically last sale) on the exchange on which the securities are primarily traded, or, if no closing price is available, at the last bid price. Shares of other investment companies are valued at such companies’ net asset values. Debt securities (other than short-term investments) are valued on the basis of broker quotations or valuations provided by a pricing service, which in determining value utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities. Short-term investments having a remaining maturity of 60 days or less are valued at amortized cost, which approximates market value. As required, some securities and assets are valued at fair value as determined in good faith by, or under the direction of, the Board of Trustees. Other assets, such as accrued interest, accrued dividends and cash are also included in determining a fund’s net asset value.

Liabilities: Accrued liabilities for class specific expenses (if any), distribution fees, service fees and other liabilities are deducted from the assets of each class. Accrued expenses and liabilities that are not class specific (such as management fees) are allocated to each class in proportion to each class’s net assets except where an alternative allocation can be more appropriately made.

Net Asset Value: The liabilities allocated to a class are deducted from the proportionate interest of such class in the assets of the applicable fund. The resulting amount for each class is then divided by the number of shares outstanding of that class to produce each class’s net asset value per share.

The net asset value per share of each class of each fund is determined as of the close of regular trading (normally 4:00 PM eastern time) on days when the New York Stock Exchange (the “NYSE”) is open for trading. A fund will not calculate its net asset value per share class on days when the NYSE is closed for trading. If a fund holds securities that are traded on foreign exchanges that trade on weekends or other holidays when the funds do not price their shares, the net asset value of the fund’s shares may change on days when shareholders will not be able to purchase or redeem the fund’s shares.

How are securities fair valued?

If market quotations are not readily available or where available prices are not reliable, the fund determines a “fair value” for an investment according to policies and procedures approved by the Board of Trustees. The types of assets for which such pricing might be required include: (i) securities whose trading has been suspended; (ii) securities where the trading market is unusually thin or trades have been infrequent; (iii) debt securities that have recently gone into default and for which there is no current market quotation; (iv) a security whose market price is not available from an independent pricing source and for which otherwise reliable quotes are not available; (v) securities of an issuer that has entered into a restructuring; (vi) a security whose price as provided by any pricing source, does not, in the opinion of the adviser/subadviser, reflect the security’s market value; (vii) foreign securities subject to trading collars for which no or limited trading takes place; and (viii) securities where the market quotations are not readily available as a result of “significant” events. This list is not inclusive of all situations that may require a security to be fair valued, nor is it intended to be conclusive in determining whether a specific event requires fair valuation.


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The value of any portfolio security held by the fund for which market quotations are not readily available shall be determined in good faith and in a manner that assesses the security’s “fair value” on the valuation date (i.e., the amount that the fund might reasonably expect to receive for the security upon its current sale), based on a consideration of all available facts and all available information, including, but not limited to, the following: (i) the fundamental analytical data relating to the investment; (ii) an evaluation of the forces which influence the market in which these securities are purchased and sold (e.g., the existence of merger proposals or tender offers that might affect the value of the security); (iii) price quotes from dealers and/or pricing services; (iv) an analysis of the issuer’s financial statements; (v) trading volumes on markets, exchanges or among dealers; (vi) recent news about the security or issuer; (vii) changes in interest rates; (viii) information obtained from the issuer, analysts, other financial institutions and/or the appropriate stock exchange (for exchange traded securities); (ix) whether two or more dealers with whom the adviser/subadviser regularly effects trades are willing to purchase or sell the security at comparable prices; (x) other news events or relevant matters; and (xi) government (domestic or foreign) actions or pronouncements.

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, 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 regular trading on the NYSE) that may impact the value of securities traded in these foreign markets. In such 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.

The value of a security, as determined using the fund’s fair valuation procedures, may not reflect such security’s market value.

At what price are shares purchased?

All investments received by the funds’ authorized agents prior to the close of regular trading on the NYSE (normally 4:00 PM eastern time) will be executed based on that day’s net asset value. Shares credited to your account from the reinvestment of a fund’s distributions will be in full and fractional shares that are purchased at the closing net asset value on the next business day on which the fund’s net asset value is calculated following the dividend record date.

Sales Charges

What are the classes and how do they differ?

Each fund offers from two to four classes of shares. With the exception of Class I Shares, the shares have different sales and distribution charges. (See “Fund Fees and Expenses” previously in this prospectus.) For certain classes of shares, the funds have adopted distribution and service plans allowed under Rule 12b-1 of the Investment Company Act of 1940, as amended (the “1940 Act”), that authorize the funds to pay distribution and service fees for the sale of their shares and for services provided to shareholders.

What arrangement is best for you?

The different classes of shares permit you to choose the method of purchasing shares that is most beneficial to you. In choosing a class of shares, consider the amount of your investment, the length of time you expect to hold the shares, whether you decide to receive distributions in cash or to reinvest them in additional shares, and any other personal circumstances. Depending upon these considerations, the accumulated distribution and service fees and contingent deferred sales charges of one class of shares may be more or less than the initial sales charge and accumulated distribution and service fees of another class of shares bought at the same time. Because distribution and service fees are paid out of a fund’s assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.

Your financial representative should recommend only those arrangements that are suitable for you based on known information. In certain instances, you may be entitled to a reduction or waiver of sales charges. For instance, you may be entitled to a sales charge discount on Class A Shares if you purchase more than certain breakpoint amounts. You should inform or inquire of your financial representative whether or not you may be entitled to a sales charge discount attributable to your total holdings in a fund or affiliated funds. To determine eligibility for a sales charge discount, you may aggregate all of your accounts (including joint accounts, IRAs,


58		Phoenix Equity Trust

non-IRAs, etc.) and those of your spouse and minor children. The financial representative may request you to provide an account statement or other holdings information to determine your eligibility for a breakpoint and to make certain all involved parties have the necessary data.

Additional information about the classes of shares offered, sales charges, breakpoints and discounts follows in this section and also may be found in the Statement of Additional Information in the section entitled “How to Buy Shares.” This information is available free of charge, and in a clear and prominent format, at the Individual Investors section of the Phoenix Funds’ Web sites at PhoenixFunds.com or PhoenixInvestments.com. Please be sure that you fully understand these choices before investing. If you or your financial representative require additional assistance, you may also contact Mutual Fund Services by calling toll-free (800) 243-1574.

Class A Shares. If you purchase Class A Shares, you will pay a sales charge at the time of purchase equal to 5.75% of the offering price (6.10% of the amount invested). ⁽ ¹⁾ The sales charge may be reduced or waived under certain conditions. (See “Initial Sales Charge Alternative—Class A Shares” below.) Generally, Class A Shares are not subject to any charges by the funds when redeemed; however, a 1% contingent deferred sales charge (“CDSC”) may be imposed on redemptions within one year on purchases on which a finder’s fee has been paid. The one-year period begins on the last day of the month preceding the month in which the purchase was made. Class A Shares have lower distribution and service fees (0.25%) and pay higher dividends than Class B Shares and Class C Shares.

Class B Shares (All-Cap Growth, Balanced, Capital Growth, Growth & Income, Income & Growth, Mid-Cap Growth, Small-Cap Growth, Small-Cap Value, Small-Mid Cap and Strategic Growth Funds only). If you purchase Class B Shares, you will not pay a sales charge at the time of purchase. If you sell your Class B Shares within the first five years after they are purchased, you will pay a deferred sales charge of up to 5% of your shares’ value. (See “Deferred Sales Charge Alternative—Class B Shares and Class C Shares” below.) This charge declines to 0% over a period of five years and may be waived under certain conditions. Class B Shares have higher distribution and service fees (1.00%) and pay lower dividends than Class A Shares. Class B Shares automatically convert to Class A Shares eight years after purchase. Purchases of Class B Shares may be inappropriate for any investor who may qualify for reduced sales charges of Class A Shares and anyone who is over 85 years of age. The underwriter may decline purchases of Class B Shares in such situations.

Class C Shares. If you purchase Class C Shares, you will not pay a sales charge at the time of purchase. If you sell your Class C Shares within the first year after they are purchased, you will pay a deferred sales charge of 1%. (See “Deferred Sales Charge Alternative—Class B Shares and Class C Shares” below.) Class C Shares have the same distribution and service fees (1.00%) and pay comparable dividends as Class B Shares. Class C Shares do not convert to any other class of shares of the funds, so the higher distribution and service fees paid by Class C Shares continue for the life of the account.

Class I Shares (Growth & Income, Mid-Cap Growth, Mid-Cap Value, Quality Small-Cap, Small-Cap Sustainable Growth, Small-Mid Cap and Strategic Growth Funds only). Class I Shares are offered primarily to institutional investors, such as pension and profit sharing plans, other employee benefit trusts, endowments, foundations and corporations who purchase at or above the minimum amount; to private clients of, or referred by, the adviser, subadviser and their affiliates; to clients of registered investment advisers who charge an advisory, consulting or other fee for their services; or through certain wrap programs with which the Distributor has an arrangement. If you are eligible to purchase and do purchase Class I Shares, you will pay no sales charge at any time. There are no distribution and service fees applicable to Class I Shares. For additional information about purchasing Class I Shares, please contact Mutual Fund Services by calling (800) 243-1574.

Initial Sales Charge Alternative—Class A Shares

The public offering price of Class A Shares is the net asset value plus a sales charge that varies depending on the size of your purchase. (See “Class A Shares—Reduced Initial Sales Charges” in the Statement of Additional Information.) Shares purchased based on the automatic reinvestment of income dividends or capital gain distributions are not subject to any sales charges. The sales charge is divided between your investment dealer and the funds’ underwriter (Phoenix Equity Planning Corporation, “PEPCO” or “Distributor”).

(1) Shareholders of the former FMI Sasco Contrarian Value Fund who became shareholders of the Mid-Cap Value Fund through the reorganization are not required to pay a sales load for new purchases of Class A Shares of the Mid-Cap Value Fund. Shareholders of the Phoenix Growth Opportunities Fund who originally became shareholders originally through the reorganization of the Prior Fund with the Predecessor Fund are not required to pay a sales load for new purchases of Class A Shares of the Growth Opportunities Fund.


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Sales Charge you may pay to purchase Class A Shares


	Sales Charge as a percentage of
Amount of Transaction at Offering Price	Offering Price		Net Amount Invested
Under $50,000	5.75	%	6.10	%
$50,000 but under $100,000	4.75		4.99
$100,000 but under $250,000	3.75		3.90
$250,000 but under $500,000	2.75		2.83
$500,000 but under $1,000,000	2.00		2.04
$1,000,000 or more	None		None

Class A Sales Charge Reductions and Waivers

Investors may reduce or eliminate sales charges applicable to purchases of Class A Shares through utilization of Combination Purchase Privilege, Letter of Intent, Right of Accumulation, Purchase by Associations or the Account Reinstatement Privilege. These programs are summarized below and are described in greater detail in the Statement of Additional Information. Investors buying Class A Shares on which a finder’s fee has been paid may incur a 1% deferred sales charge if they redeem their shares within one year of purchase.

Combination Purchase Privilege. Your purchase of any class of shares of these funds or any other Phoenix Fund (other than any Phoenix money market fund), if made at the same time by the same person, will be added together with any existing Phoenix Fund account values to determine whether the combined sum entitles you to an immediate reduction in sales charges. A “person” is defined in this and the following sections as: (a) any individual, their spouse and minor children purchasing shares for his or their own account (including an IRA account) including his or their own trust; (b) a trustee or other fiduciary purchasing for a single trust, estate or single fiduciary account (even though more than one beneficiary may exist); (c) multiple employer trusts or Section 403(b) plans for the same employer; (d) multiple accounts (up to 200) under a qualified employee benefit plan or administered by a third party administrator; or (e) trust companies, bank trust departments, registered investment advisers, and similar entities placing orders or providing administrative services with respect to accounts over which they exercise discretionary investment authority and which are held in a fiduciary, agency, custodial or similar capacity, provided all shares are held of record in the name, or nominee name, of the entity placing the order.

Letter of Intent. If you sign a Letter of Intent, your purchase of any class of shares of these funds or any other Phoenix Fund (other than any Phoenix money market fund), if made by the same person within a 13-month period, will be added together to determine whether you are entitled to an immediate reduction in sales charges. Sales charges are reduced based on the overall amount you indicate that you will buy under the Letter of Intent. The Letter of Intent is a mutually non-binding arrangement between you and the Distributor. Shares worth 5% of the amount of each purchase will be held in escrow (while remaining registered in your name) to secure payment of the higher sales charges applicable to the shares actually purchased in the event the full intended amount is not purchased.

Right of Accumulation. The value of your account(s) in any class of shares of these funds or any other Phoenix Fund (other than any Phoenix money market fund) if made over time by the same person, may be added together at the time of each purchase to determine whether the combined sum entitles you to a prospective reduction in sales charges. You must provide certain account information to the Distributor at the time of purchase to exercise this right.

Purchase by Associations. Certain groups or associations may be treated as a “person” and qualify for reduced Class A Share sales charges. The group or association must: (1) have been in existence for at least six months; (2) have a legitimate purpose other than to purchase mutual fund shares at a reduced sales charge; (3) work through an investment dealer; or (4) not be a group whose sole reason for existing is to consist of members who are credit card holders of a particular company, policyholders of an insurance company, customers of a bank or a broker-dealer or clients of an investment adviser.

Account Reinstatement Privilege. Subject to the funds’ policies and procedures regarding market timing, for 180 days after you sell your Class A, Class B or Class C Shares on which you have previously paid a sales charge, you may purchase Class A Shares of any Phoenix Fund at net asset value, with no sales charge, by reinvesting all or part of your proceeds, but not more.


60		Phoenix Equity Trust

Sales at Net Asset Value. In addition to the programs summarized above, the funds may sell their Class A Shares at net asset value without an initial sales charge to certain types of accounts or account holders, including, but not limited to: trustees of the Phoenix Funds; directors, officers, employees and sales representatives of the adviser, subadviser (if any) or Distributor or a corporate affiliate of the adviser, subadviser or Distributor; private clients of an adviser or subadviser to any of the Phoenix Funds; registered representatives and employees of dealers with which the Distributor has sales agreements; and certain qualified employee benefit plans, endowment funds or foundations. Please see the Statement of Additional Information for more information about qualifying for purchases of Class A Shares at net asset value.

Deferred Sales Charge Alternative—Class B and Class C Shares

Class B Shares and Class C Shares are purchased without an initial sales charge; however, shares sold within a specified time period are subject to a declining CDSC at the rates listed below. The sales charge will be multiplied by the then current market value or the initial cost of the shares being redeemed, whichever is less. No sales charge will be imposed on increases in net asset value or on shares purchased through the reinvestment of income dividends or capital gain distributions. To minimize the sales charge, shares not subject to any charge will be redeemed first, followed by shares held the longest time. To calculate the number of shares owned and time period held, all Class B Shares purchased in any month are considered purchased on the last day of the preceding month, and all Class C Shares are considered purchased on the trade date.

Deferred Sales Charge you may pay to sell Class B Shares


Year	1		2		3		4		5		6+
CDSC	5	%	4	%	3	%	2	%	2	%	0	%

Deferred Sales Charge you may pay to sell Class C Shares
Year	1		2+
CDSC	1	%	0	%

Compensation to Dealers

Dealers with whom the Distributor has entered into sales agreements receive a discount or commission on Class A Shares as described below.


Amount of Transaction at Offering Price	Sales Charge as a Percentage of Offering Price		Sales Charge as a Percentage of Amount Invested		Dealer Discount as a Percentage of Offering Price
Under $50,000	5.75	%	6.10	%	5.00	%
$50,000 but under $100,000	4.75		4.99		4.25
$100,000 but under $250,000	3.75		3.90		3.25
$250,000 but under $500,000	2.75		2.83		2.25
$500,000 but under $1,000,000	2.00		2.04		1.75
$1,000,000 or more	None		None		None

In addition to the dealer discount on purchases of Class A Shares, the Distributor intends to pay investment dealers a sales commission of 4% of the sale price of Class B Shares and a sales commission of 1% of the sale price of Class C Shares sold by such dealers. (This sales commission will not be paid to dealers for sales of Class B Shares or Class C Shares purchased by 401(k) participants of the Merrill Lynch Daily K Plan due to a waiver of the CDSC for these plan participants’ purchases.) Your broker, dealer or financial advisor may also charge you additional commissions or fees for their services in selling shares to you provided they notify the Distributor of their intention to do so.

Dealers and other entities that enter into special arrangements with the Distributor may receive compensation for the sale and promotion of shares of the funds and/or for providing other shareholder services. Such fees are in addition to the sales commissions referenced above and may be based upon the amount of sales of fund shares by a dealer; the provision of assistance in marketing of fund shares; access to sales personnel and information dissemination services; provision of recordkeeping and administrative services to qualified employee benefit plans; and other criteria as established by the Distributor. Depending on the nature of the services, these fees may be paid either from the funds through distribution fees, service fees or transfer agent fees or, in some cases, the


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Distributor may pay certain fees from its own profits and resources. From its own profits and resources, the Distributor does intend to: (a) from time to time, pay special incentive and retention fees to qualified wholesalers, registered financial institutions and third party marketers; (b) pay broker-dealers a finder’s fee in an amount equal to 1% of the first $3 million of Class A Share purchases by an account held in the name of a qualified employee benefit plan with at least 100 eligible employees, 0.50% on the next $3 million, plus 0.25% on the amount in excess of $6 million; and (c) excluding purchases as described in (b) above, pay broker-dealers an amount equal to 1.00% of the amount of Class A Shares sold from $1,000,000 to $3,000,000, 0.50% on amounts of $3,000,001 to $10,000,000 and 0.25% on amounts greater than $10,000,000. If part or all of such investment as described in (b) and (c) above, including investments by qualified employee benefit plans, is subsequently redeemed within one year, a 1% CDSC may apply, except for redemptions of shares purchased on which a finder’s fee would have been paid where such investor’s dealer of record, due to the nature of the investor’s account, notifies the Distributor prior to the time of the investment that the dealer waives the finder’s fee otherwise payable to the dealer, or agrees to receive such finder’s fee ratably over a 12-month period. For purposes of determining the applicability of the CDSC, the one-year CDSC period begins on the last day of the month preceding the month in which the purchase was made. Any dealer who receives more than 90% of a sales charge may be deemed to be an “underwriter” under the Securities Act of 1933. PEPCO reserves the right to discontinue or alter such fee payment plans at any time.

From its own resources or pursuant to the distribution and shareholder servicing plans, and subject to the dealers’ prior approval, the Distributor may provide additional compensation to registered representatives of dealers in the form of travel expenses, meals, and lodging associated with training and educational meetings sponsored by the Distributor. The Distributor may also provide gifts amounting in value to less than $100, and occasional meals or entertainment, to registered representatives of dealers. Any such travel expenses, meals, lodging, gifts or entertainment paid will not be preconditioned upon the registered representatives’ or dealers’ achievement of a sales target. The Distributor may, from time to time, reallow the entire portion of the sales charge on Class A Shares which it normally retains to individual selling dealers. However, such additional reallowance generally will be made only when the selling dealer commits to substantial marketing support such as internal wholesaling through dedicated personnel, internal communications and mass mailings.

The Distributor has agreed to pay fees to certain distributors for preferred marketing opportunities. These arrangements may be viewed as creating a conflict of interest between these distributors and investors. Investors should make due inquiry of their selling agents to ensure that they are receiving the requisite point of sale disclosures and suitable recommendations free of any influence by reason of these arrangements.

Your Account

Opening an Account

Your financial advisor can assist you with your initial purchase as well as all phases of your investment program. If you are opening an account by yourself, please follow the instructions outlined below. These procedures do not apply to purchases of Class I Shares. For information about purchasing Class I Shares, please contact the funds’ Transfer Agent at (800) 243-1574.

The funds have established the following preferred methods of payment for fund shares:

Checks drawn on an account in the name of the investor and made payable to Phoenix Funds;

Checks drawn on an account in the name of the investor’s company or employer and made payable to Phoenix Funds; or

Wire transfers or Automated Clearing House (ACH) transfers from an account in the name of the investor, or the investor’s company or employer.

Payment in other forms may be accepted at the discretion of the funds. Please specify the name(s) of the fund or funds in which you would like to invest on the check or transfer instructions.

To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. Accordingly, when you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may check the information you provide against publicly available databases, information obtained from consumer reporting agencies, other financial institutions or other sources. If, after reasonable effort, we cannot verify your identity, we reserve the right to close the account and redeem the shares at net asset value next calculated after the decision is made by us to close the account.


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Step 1.

Your first choice will be the initial amount you intend to invest in each fund.

Minimum initial investments:

$25 for individual retirement accounts (IRAs), accounts that use the systematic exchange privilege, or accounts that use the Systematic Purchase program. (See below for more information on the Systematic Purchase program.)

There is no initial dollar requirement for defined contribution plans, asset-based fee programs, profit-sharing plans, or employee benefit plans. There is also no minimum for reinvesting dividends and capital gains into another account.

$500 for all other accounts.

Minimum additional investments:

$25 for any account.

There is no minimum additional investment requirement for defined contribution plans, asset-based fee programs, profit-sharing plans, or employee benefit plans. There is also no minimum additional investment requirement for reinvesting dividends and capital gains into an existing account.

The funds reserve the right to refuse any purchase order for any reason.

Step 2.

Your second choice will be what class of shares to buy. Each share class, except Class I Shares, has different sales and distribution charges. Because all future investments in your account will be made in the share class you choose when you open your account, you should make your decision carefully. Your financial advisor can help you pick the share class that makes the most sense for your situation.

Step 3.

Your next choice will be how you want to receive any dividends and capital gain distributions. Your options are:

Receive both dividends and capital gain distributions in additional shares;

Receive dividends in additional shares and capital gain distributions in cash;

Receive dividends in cash and capital gain distributions in additional shares; or

Receive both dividends and capital gain distributions in cash.

No interest will be paid on uncashed distribution checks.

How to Buy Shares


		To Open An Account (Class A, Class B and Class C Shares only)
Through a financial advisor		Contact your advisor. Some advisors may charge a fee and may set different minimum investments or limitations on buying shares.
Through the mail		Complete a New Account Application and send it with a check payable to the funds. Mail them to: State Street Bank, P.O. Box 8301, Boston, MA 02266-8301.
Through express delivery		Complete a New Account Application and send it with a check payable to the funds. Send them to: Boston Financial Data Services, Attn.: Phoenix Funds, 30 Dan Road, Canton, MA 02021-2809.
By Federal Funds wire		Call us at (800) 243-1574 (press 1, then 0).


Phoenix Equity Trust		63


		To Open An Account (Class A, Class B and Class C Shares only)
By Systematic Purchase		Complete the appropriate section on the application and send it with your initial investment payable to the funds. Mail them to: State Street Bank, P.O. Box 8301, Boston, MA 02266-8301.
By telephone exchange		Call us at (800) 243-1574 (press 1, then 0).

The price at which a purchase is effected is based on the net asset value determined after the receipt of a purchase order by the funds’ Transfer Agent.

Important Information about the Phoenix Mid-Cap Value Fund

The Phoenix Mid-Cap Value Fund is available for purchase by current shareholders and new investors on a limited basis, as described below.

Current shareholders of the fund may add to their accounts through the purchase of additional shares and through the reinvestment of dividends and capital gains.

Exchanges into the fund may be made by current shareholders and qualified new investors.

An investor who has previously entered into a letter of intent with the distributor may fulfill the obligation.

Trustees of the fund, employees of Phoenix and of Sasco, and their family members, may open new accounts.

Defined Contribution and Defined Benefit plans, and other plans or accounts may purchase the fund at the Distributor’s discretion.

New investors may purchase the fund through a registered broker, dealer, financial planner, consultant, registered investment adviser, or other financial intermediary with which Phoenix has made arrangements to continue to offer the fund.

The fund reserves the right to refuse any order that may disrupt the efficient management of the fund.

How to Sell Shares

You have the right to have the funds buy back shares at the net asset value next determined after receipt of a redemption request in good order by the fund’s Transfer Agent or an authorized agent. In the case of a Class B Share, Class C Share redemption and certain Class A Share redemptions, you will be subject to the applicable contingent deferred sales charge, if any, for such shares. Subject to certain restrictions, shares may be redeemed by telephone or in writing. In addition, shares may be sold through securities dealers, brokers or agents who may charge customary commissions or fees for their services. The funds do not charge any redemption fees. Payment for shares redeemed is made within seven days; however, redemption proceeds will not be disbursed until each check used for purchases of shares has been cleared for payment by your bank, which may take up to 15 days after receipt of the check.

For information about selling Class I Shares, please contact the funds’ Transfer Agent at (800) 243-1574.


		To Sell Shares (Class A, Class B and Class C Shares only)
Through a financial advisor		Contact your advisor. Some advisors may charge a fee and may set different minimums on redemptions of accounts.
Through the mail		Send a letter of instruction and any share certificates (if you hold certificate shares) to: State Street Bank, P.O. Box 8301, Boston, MA 02266-8301. Be sure to include the registered owner’s name, fund and account number, and number of shares or dollar value you wish to sell.


64		Phoenix Equity Trust


		To Sell Shares (Class A, Class B and Class C Shares only)
Through express delivery		Send a letter of instruction and any share certificates (if you hold certificate shares) to: Boston Financial Data Services, Attn.: Phoenix Funds, 30 Dan Road, Canton, MA 02021-2809. Be sure to include the registered owner’s name, fund and account number, and number of shares or dollar value you wish to sell.
By telephone		For sales up to $50,000, requests can be made by calling (800) 243-1574.
By telephone exchange		Call us at (800) 243-1574 (press 1, then 0).

Things You Should Know When Selling Shares

You may realize a taxable gain or loss (for federal income tax purposes) if you redeem shares of the funds. Each fund reserves the right to pay large redemptions “in-kind” (i.e., in securities owned by the fund) rather than in cash. Large redemptions are those that exceed $250,000 or 1% of the applicable fund’s net assets, whichever is less, over any 90-day period. Additional documentation will be required for redemptions by organizations, fiduciaries, or retirement plans, or if a redemption is requested by anyone but the shareholder(s) of record. Transfers between broker-dealer “street” accounts are governed by the accepting broker-dealer. Questions regarding this type of transfer should be directed to your financial advisor. Redemption requests will not be honored until all required documents, in proper form, have been received. To avoid delay in redemption or transfer, shareholders having questions about specific requirements should contact the funds’ Transfer Agent at (800) 243-1574.

Redemptions by Mail

If you are selling shares held individually, jointly, or as custodian under the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act:

Send a clear letter of instructions if all of these apply:

The proceeds do not exceed $50,000.

The proceeds are payable to the registered owner at the address on record.

Send a clear letter of instructions with a signature guarantee when any of these apply:

You are selling more than $50,000 worth of shares.

The name or address on the account has changed within the last 30 days.

You want the proceeds to go to a different name or address than on the account.

If you are selling shares held in a corporate or fiduciary account, please contact the funds’ Transfer Agent at (800) 243-1574.

If required, the signature guarantee must be a STAMP 2000 Medallion guarantee and be made by an eligible guarantor institution as defined by the funds’ Transfer Agent in accordance with its signature guarantee procedures. Guarantees using previous technology medallions will not be accepted. Currently, the Transfer Agent’s signature guarantee procedures generally permit guarantees by banks, broker-dealers, credit unions, national securities exchanges, registered securities associations, clearing agencies and savings associations.

Selling Shares by Telephone

The Transfer Agent will use reasonable procedures to confirm that telephone instructions are genuine. Address and bank account information are verified, redemption instructions are taped, and all redemptions are confirmed in writing.

The individual investor bears the risk from instructions given by an unauthorized third party that the Transfer Agent reasonably believed to be genuine.


Phoenix Equity Trust		65

The Transfer Agent may modify or terminate the telephone redemption privilege at any time with 60 days notice to shareholders, except for instances of disruptive trading or market timing; in such cases, the telephone redemption privilege may be suspended immediately, followed by written notice. (See “Disruptive Trading and Market Timing” in this Prospectus.)

During times of drastic economic or market changes, telephone redemptions may be difficult to make or temporarily suspended.

Account Policies

Account Reinstatement Privilege

Subject to the funds’ policies and procedures regarding market timing, for 180 days after you sell your Class A Shares, Class B Shares or Class C Shares on which you previously paid a sales charge, you may purchase Class A Shares of any Phoenix Fund at net asset value, with no sales charge, by reinvesting all or part of your proceeds, but not more. Send your written request to State Street Bank, P.O. Box 8301, Boston, MA 02266-8301. You can call us at (800) 243-1574 for more information.

Please remember, a redemption and reinvestment are considered to be a sale and purchase for tax-reporting purposes. Class B and Class C shareholders who have had the contingent deferred sales charge waived because they are in the Systematic Withdrawal Program are not eligible for this reinstatement privilege.

Redemption of Small Accounts

Due to the high cost of maintaining small accounts, if your redemption activity causes your account balance to fall below $200, you may receive a notice requesting you to bring the balance up to $200 within 60 days. If you do not, the shares in the account will be sold at net asset value, and a check will be mailed to the address of record. Any applicable sales charges will be deducted.

Distributions of Small Amounts

Distributions in amounts less than $10 will automatically be reinvested in additional shares of the applicable fund.

Uncashed Checks

If any correspondence sent by the fund is returned by the postal or other delivery service as “undeliverable,” your dividends or any other distribution may be automatically reinvested in the fund.

If your distribution check is not cashed within six months, the distribution may be reinvested in the fund at the current net asset value. You will not receive any interest on uncashed distribution or redemption checks. This provision may not apply to certain retirement or qualified accounts.

Exchange Privileges

You should read the prospectus of the Phoenix Fund(s) into which you want to make an exchange before deciding to make an exchange. You can obtain a prospectus from your financial advisor or by calling us at (800) 243-4361 or accessing our Web sites at PhoenixFunds.com or PhoenixInvestments.com.

You may exchange shares of one fund for the same class of shares of another Phoenix Fund; e.g., Class A Shares for Class A Shares. Class C Shares are also exchangeable for Class T Shares of those Phoenix Funds offering them. Exchange privileges may not be available for all Phoenix Funds and may be rejected or suspended.

Exchanges may be made by telephone ((800) 243-1574) or by mail (State Street Bank, P.O. Box 8301, Boston, MA 02266-8301).

The amount of the exchange must be equal to or greater than the minimum initial investment required.

The exchange of shares is treated as a sale and purchase for federal income tax purposes.


66		Phoenix Equity Trust

Disruptive Trading and Market Timing

These funds are not suitable for market timers and market timers are discouraged from becoming investors. Your ability to make exchanges among funds is subject to modification if we determine, in our sole opinion, that your exercise of the exchange privilege may disadvantage or potentially harm the rights or interests of other shareholders.

Frequent purchases, redemptions and exchanges, programmed exchanges, exchanges into and then out of a fund in a short period of time, and exchanges of large amounts at one time may be indicative of market timing and otherwise disruptive trading (“Disruptive Trading”) which can have risks and harmful effects for other shareholders. These risks and harmful effects include:

dilution of the interests of long-term investors, if market timers or others exchange into a fund at prices that are below the true value or exchange out of a fund at prices that are higher than the true value;

an adverse effect on portfolio management, as determined by portfolio management in its sole discretion, such as causing the fund to maintain a higher level of cash than would otherwise be the case, or causing the fund to liquidate investments prematurely; and

reducing returns to long-term shareholders through increased brokerage and administrative expenses.

In order to attempt to protect our shareholders from the potential harmful effects of Disruptive Trading, the funds’ Board of Trustees has adopted market timing policies and procedures designed to discourage Disruptive Trading. The Board has adopted these policies and procedures as a preventive measure to protect all shareholders from the potential effects of Disruptive Trading, while also abiding by any rights that shareholders may have to make exchanges and provide reasonable and convenient methods of making exchanges that do not have the potential to harm other shareholders.

Excessive trading activity is measured by the number of roundtrip transactions in an account. A roundtrip transaction is one where a shareholder buys and then sells, or sells and then buys, shares of any fund within 30 days. Shareholders of the funds are limited to one roundtrip transaction within any rolling 30-day period. Roundtrip transactions are counted at the shareholder level. In considering a shareholder’s trading activity, the funds may consider, among other factors, the shareholder’s trading history both directly and, if known, through financial intermediaries, in the funds, in other funds within the Phoenix Fund complex, in non-Phoenix mutual funds or in accounts under common control or ownership. We do not include exchanges made pursuant to the dollar cost averaging or other similar programs when applying our market timing policies. Systematic withdrawal and/or contribution programs, mandatory retirement distributions, and transactions initiated by a plan sponsor also will not count towards the roundtrip limits. The funds may permit exchanges that they believe, in the exercise of their judgement, are not disruptive. The size of the fund and the size of the requested transaction may be considered when determining whether or not the transaction would be disruptive.

Shareholders holding shares for at least 30 days following investment will ordinarily be in compliance with the funds’ policies regarding excessive market timing. The funds may, however, take action if activity is deemed disruptive even if shares are held longer than 30 days, such as a request for a transaction of an unusually large size. The size of the fund and the size of the requested transaction may be considered when determining whether or not the transaction would be disruptive.

Under our market timing policies, we may modify your exchange privileges for some or all of the funds by not accepting an exchange request from you or from any person, asset allocation service, and/or market timing services made on your behalf. We may also limit the amount that may be exchanged into or out of any fund at any one time or could revoke your right to make Internet, telephone or facsimile exchanges. We may reinstate Internet, telephone and facsimile exchange privileges after they are revoked, but we will not reinstate these privileges if we have reason to believe that they might be used thereafter for Disruptive Trading.

The funds currently do not charge exchange or redemption fees, or any other administrative charges on fund exchanges. The funds reserve the right to impose such fees and/or charges in the future.

Orders for the purchase of fund shares are subject to acceptance by the relevant fund. We reserve the right to reject, without prior notice, any exchange request into any fund if the purchase of shares in the corresponding fund is not accepted for any reason.

The funds do not have any arrangements with any person, organization or entity to permit frequent purchases and redemptions of fund shares.


Phoenix Equity Trust		67

We may, without prior notice, take whatever action we deem appropriate to comply with or take advantage of any state or federal regulatory requirement. The funds reserve the right to reject any purchase or exchange transaction at any time. If we reject a purchase or exchange for any reason, we will notify you of our decision in writing.

The funds cannot guarantee that their policies and procedures regarding market timing will be effective in detecting and deterring all Disruptive Trading.

Retirement Plans

Shares of the funds may be used as investments under the following retirement plans: Individual Retirement Account (IRA), rollover IRA, SIMPLE IRA, Roth IRA, 401(k) plans, profit-sharing, money purchase plans, and 403(b) plans. For more information, call (800) 243-4361.

Investor Services and Other Information

Systematic Purchase is a systematic investment plan that allows you to have a specified amount automatically deducted from your checking or savings account and then deposited into your mutual fund account. Just complete the Systematic Purchase Section on the application and include a voided check.

Systematic Exchange allows you to automatically move money from one Phoenix Fund to another on a monthly, quarterly, semiannual or annual basis. Shares of one Phoenix Fund will be exchanged for shares of the same class of another Phoenix Fund at the interval you select. To sign up, just complete the Systematic Exchange Section on the application. Exchange privileges may not be available for all Phoenix Funds and may be rejected or suspended.

Telephone Exchange lets you exchange shares of one Phoenix Fund for the same class of shares in another Phoenix Fund, using our customer service telephone number ((800) 243-1574). (See the “Telephone Exchange” section on the application.) Exchange privileges may not be available for all Phoenix Funds and may be rejected or suspended.

Systematic Withdrawal allows you to periodically redeem a portion of your account on a predetermined monthly, quarterly, semiannual, or annual basis. Sufficient shares from your account will be redeemed at the closing net asset value on the applicable payment date, with proceeds to be mailed to you or sent through ACH to your bank (at your selection). For payments to be mailed, shares will be redeemed on the 15 ^th of the month so that the payment is made about the 20 ^th of the month. For ACH payments, you may select the day of the month for the payments to be made; if no date is specified, the payments will occur on the 15 ^th of the month. The minimum withdrawal is $25, and minimum account balance requirements continue to apply. Shareholders in the program must own Phoenix Fund shares worth at least $5,000. Sales charges on systematic withdrawals are waived, subject to certain limitations as described in the Statement of Additional Information.

Disclosure of Fund Holdings. The funds make available on the Phoenix Funds’ Web sites, PhoenixFunds.com or PhoenixInvestments.com, information with respect to each fund’s top 10 holdings and summary composition data derived from portfolio holdings information. This information is posted to the Web sites at the end of each month with respect to the top 10 holdings, and at the end of each quarter with respect to summary composition information, generally within 10 business days. This information will remain available on the Web sites until full portfolio holdings information becomes publicly available. A full listing of each fund’s portfolio holdings becomes publicly available (i) as of the end of its second and fourth fiscal quarters in shareholder reports, which are sent to all shareholders and are filed with the SEC on Form N-CSR, and (ii) at the end of its first and third fiscal quarters by filing with the SEC a Form N-Q. The funds’ shareholder reports are available without charge on Phoenix’s Web site at PhoenixFunds.com (also accessible at PhoenixInvestments.com). The funds’ Form N-Q filings are available on the SEC’s Internet site at sec.gov. A more detailed description of the funds’ policies and procedures with respect to the disclosure of the funds’ portfolio securities is also available in the Statement of Additional Information.


68		Phoenix Equity Trust

Tax Status of Distributions

The funds plan to make distributions from net investment income at intervals stated in the table below and to distribute net realized capital gains, if any, at least annually.


Fund		Dividend Paid
All-Cap Growth Fund		Semiannually
Balanced Fund		Quarterly
Capital Growth Fund		Semiannually
Growth & Income Fund		Semiannually
Growth Opportunities Fund		Semiannually
Income & Growth Fund		Quarterly
Mid-Cap Growth Fund		Semiannually
Mid-Cap Value Fund		Semiannually
Quality Small-Cap Fund		Semiannually
Small-Cap Growth Fund		Semiannually
Small-Cap Sustainable Growth Fund		Semiannually
Small-Cap Value Fund		Semiannually
Small-Mid Cap Fund		Semiannually
Strategic Growth Fund		Semiannually
Value Opportunities Fund		Semiannually

Distributions of short-term capital gains (gains on securities held for a year or less) and interest net investment income are taxable to shareholders as ordinary income. Under the Jobs and Growth Tax Reconciliation Act of 2003, certain distributions of long-term capital gains and certain dividends are taxable at a lower rate than ordinary income for a limited number of years. This lower rate terminates for tax years after 2010. After that time, long-term capital gains rates are scheduled to increase. Long-term capital gains, if any, distributed to shareholders and which are designated by the funds as capital gain distributions, are taxable to shareholders as long-term capital gain distributions regardless of the length of time you have owned your shares. Tax rates, including differences, if any between rates for ordinary income and long-term capital gains, are subject to change based on congressional action. As of February 2008, there were proposals pending in Congress that would impact the relative tax rates.

Unless you elect to receive distributions in cash, dividends and capital gain distributions are paid in additional shares. All distributions, cash or additional shares, are subject to federal income tax and may be subject to state, local and other taxes. There are proposals pending in Congress to modify the tax treatment of distributions paid in additional shares.


Phoenix Equity Trust		69

Financial Highlights

This table is intended to help you understand the funds’ financial performance for the past five years or since inception. Some of the information reflects financial information for a single fund share. The total returns in the tables represent the rate that an investor would have earned or lost on an investment in the funds (assuming reinvestment of all dividends and distributions). This information has been audited (except as indicated below) by PricewaterhouseCoopers LLP, the funds’ independent registered public accounting firm. Their report, together with the fund’s financial statements, is included in the funds’ most recent Annual Report, which is available upon request.

For each of the funds, except as otherwise noted below, the tables present performance of the respective Predecessor Fund. No information is presented for the Successor Funds since each commenced operations on the date of this prospectus. The information is intended to help you understand the respective Predecessor Fund’s financial performance for the past five years or since inception. Some of this information reflects financial information for a single share. The total returns in the tables represent the rate that a Predecessor Fund shareholder would have earned or lost on an investment in the Predecessor Fund (assuming reinvestment of all dividends and distributions). This information has been audited (except as indicated below) by PricewaterhouseCoopers LLP, the independent registered public accounting firm for each of the Predecessor Funds. Their report, together with each Predecessor Fund’s financial statements, are included in each Predecessor Fund’s most recent Annual Report, which is available upon request.

Phoenix Growth Opportunities Fund

The Phoenix Growth Opportunities Fund is the successor of the Turner Strategic Growth Fund (the “Predecessor Fund”) resulting from a reorganization of the Predecessor Fund with the Growth Opportunities Fund on June 9, 2006. The Growth Opportunities Fund treats the past performance of the Predecessor Fund as its own. Prior to June 9, 2006, the Predecessor Fund offered only one class of shares, which is now called Class A Shares. The performance of Class A Shares of the Predecessor Fund in the table below has not been adjusted to reflect the expenses of the Growth Opportunities Fund. Financial highlights for the fiscal years ended September 30, 2005, 2004 and 2003 were audited by the Predecessor Fund’s auditors.

Phoenix Mid-Cap Value Fund

The Mid-Cap Value Fund is the successor of the FMI Sasco Contrarian Value Fund (the “Predecessor Fund”) resulting from a reorganization of the Predecessor Fund with the Mid-Cap Value Fund on October 22, 2004. The Mid-Cap Value Fund treats the past performance of the Predecessor Fund as its own. Prior to October 22, 2004, the Predecessor Fund offered only one class of shares, which is now called Class A Shares. The performance of Class A Shares of the Predecessor Fund in the table below has not been adjusted to reflect the expenses of the Mid-Cap Value Fund. Financial highlights for the fiscal years ended June 30, 2003 and 2004 were audited by the Predecessor Fund’s auditor.


70		Phoenix Equity Trust

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix All-Cap Growth Fund


	Class A
	Year Ended December 31,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$15.45		$16.75		$16.51		$15.10		$10.74
Income from investment operations
Net investment income (loss) ⁽¹⁾	(0.08	)	(0.11	)	(0.12	)	(0.05	)	(0.11	)
Net realized and unrealized gain (loss)	2.13		0.26		1.39		1.46		4.47

Total from investment operations	2.05		0.15		1.27		1.41		4.36

Less distributions
Distributions from net realized gains	(3.02	)	(1.45	)	(1.03	)	—		—

Total distributions	(3.02	)	(1.45	)	(1.03	)	—		—

Change in net asset value	(0.97	)	(1.30	)	0.24		1.41		4.36

Net asset value, end of period	$14.48		$15.45		$16.75		$16.51		$15.10

Total return ⁽²⁾	13.43	%	1.09	%	7.62	%	9.34	%	40.60	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$88,631		$99,699		$135,930		$168,498		$185,964
Ratio to average net assets of:
Operating expenses	1.53	%	1.50	%	1.46	%	1.43	%	1.48	%
Net investment income (loss)	(0.51	)%	(0.68	)%	(0.73	)%	(0.32	)%	(0.87	)%
Portfolio turnover	57	%	73	%	69	%	47	%	42	%

	Class B
	Year Ended December 31,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$13.16		$14.59		$14.61		$13.46		$9.64
Income from investment operations
Net investment income (loss) ⁽¹⁾	(0.18	)	(0.20	)	(0.22	)	(0.15	)	(0.18	)
Net realized and unrealized gain (loss)	1.81		0.22		1.23		1.30		4.00

Total from investment operations	1.63		0.02		1.01		1.15		3.82

Less distributions
Distributions from net realized gains	(3.02	)	(1.45	)	(1.03	)	—		—

Total distributions	(3.02	)	(1.45	)	(1.03	)	—		—

Change in net asset value	(1.39	)	(1.43	)	(0.02	)	1.15		3.82

Net asset value, end of period	$11.77		$13.16		$14.59		$14.61		$13.46

Total return ⁽²⁾	12.57	%	0.34	%	6.84	%	8.54	%	39.63	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$5,402		$6,798		$10,476		$12,316		$15,635
Ratio to average net assets of:
Operating expenses	2.28	%	2.25	%	2.21	%	2.18	%	2.23	%
Net investment income (loss)	(1.27	)%	(1.43	)%	(1.48	)%	(1.10	)%	(1.62	)%
Portfolio turnover	57	%	73	%	69	%	47	%	42	%

⁽¹⁾ Computed using average shares outstanding.

⁽²⁾ Sales charges are not reflected in the total return calculation.

See Notes to Financial Statements


Phoenix Equity Trust		71

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix All-Cap Growth Fund


	Class C
	Year Ended December 31,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$13.15		$14.59		$14.61		$13.46		$9.64
Income from investment operations
Net investment income (loss) ⁽¹⁾	(0.18	)	(0.20	)	(0.22	)	(0.15	)	(0.19	)
Net realized and unrealized gain (loss)	1.82		0.21		1.23		1.30		4.01

Total from investment operations	1.64		0.01		1.01		1.15		3.82

Less distributions
Distributions from net realized gains	(3.02	)	(1.45	)	(1.03	)	—		—

Total distributions	(3.02	)	(1.45	)	(1.03	)	—		—

Change in net asset value	(1.38	)	(1.44	)	(0.02	)	1.15		3.82

Net asset value, end of period	$11.77		$13.15		$14.59		$14.61		$13.46

Total return ⁽²⁾	12.66	%	0.27	%	6.84	%	8.54	%	39.63	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$6,845		$7,509		$10,307		$12,830		$14,748
Ratio to average net assets of:
Operating expenses	2.28	%	2.25	%	2.21	%	2.18	%	2.23	%
Net investment income (loss)	(1.26	)%	(1.43	)%	(1.48	)%	(1.09	)%	(1.62	)%
Portfolio turnover	57	%	73	%	69	%	47	%	42	%

⁽¹⁾ Computed using average shares outstanding.

⁽²⁾ Sales charges are not reflected in the total return calculation.

See Notes to Financial Statements


72		Phoenix Equity Trust

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Balanced Fund


	Class A
	Year Ended October 31,
	2007		2006		2005		2004		2003 ⁽³⁾
Net asset value, beginning of period	$15.74		$14.55		$14.98		$14.31		$12.82
Income from investment operations
Net investment income (loss) ⁽²⁾	0.35		0.34		0.32		0.29		0.28
Net realized and unrealized gain (loss)	1.16		1.53		0.18		0.69		1.49

Total from investment operations	1.51		1.87		0.50		0.98		1.77

Less distributions
Dividends from net investment income	(0.35	)	(0.34	)	(0.32	)	(0.31	)	(0.28	)
Distributions from net realized gains	(1.42	)	(0.34	)	(0.61	)	—		—

Total distributions	(1.77	)	(0.68	)	(0.93	)	(0.31	)	(0.28	)

Change in net asset value	(0.26	)	1.19		(0.43	)	0.67		1.49

Net asset value, end of period	$15.48		$15.74		$14.55		$14.98		$14.31

Total return ⁽¹⁾	10.26	%	13.29	%	3.21	%	6.91	%	13.98	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$919,363		$973,751		$1,000,790		$926,383		$999,427
Ratio to average net assets of:
Net operating expenses	1.12	%	1.08	%	1.05	%	1.06	%	1.07	%
Net investment income (loss)	2.31	%	2.29	%	2.16	%	1.98	%	2.10	%
Portfolio turnover	54	%	78	%	58	%	68	%	92	%

	Class B
	Year Ended October 31,
	2007		2006		2005		2004		2003 ⁽³⁾
Net asset value, beginning of period	$15.69		$14.50		$14.93		$14.26		$12.78
Income from investment operations
Net investment income (loss) ⁽²⁾	0.24		0.23		0.21		0.18		0.18
Net realized and unrealized gain (loss)	1.13		1.53		0.18		0.69		1.48

Total from investment operations	1.37		1.76		0.39		0.87		1.66

Less distributions
Dividends from net investment income	(0.23	)	(0.23	)	(0.21	)	(0.20	)	(0.18	)
Distributions from net realized gains	(1.42	)	(0.34	)	(0.61	)	—		—

Total distributions	(1.65	)	(0.57	)	(0.82	)	(0.20	)	(0.18	)

Change in net asset value	(0.28	)	1.19		(0.43	)	0.67		1.48

Net asset value, end of period	$15.41		$15.69		$14.50		$14.93		$14.26

Total return ⁽¹⁾	9.41	%	12.43	%	2.47	%	6.12	%	13.09	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$15,013		$20,676		$19,970		$16,814		$21,374
Ratio to average net assets of:
Net operating expenses	1.87	%	1.83	%	1.80	%	1.80	%	1.82	%
Net investment income (loss)	1.58	%	1.54	%	1.39	%	1.23	%	1.37	%
Portfolio turnover	54	%	78	%	58	%	68	%	92	%

⁽¹⁾ Sales charges are not reflected in the total return calculation.

⁽²⁾ Computed using average shares outstanding.

⁽³⁾ In accordance with changes in generally accepted accounting principles, the Fund reclassified periodic payments made under high yield debt Instruments, previously included within interest income, as a component of realized gain (loss) in the statement of operations. There was no impact on either the per share net investment income or the net realized and unrealized gain (loss) or the investment income ratios for the year ended October 31, 2003.

See Notes to Financial Statements


Phoenix Equity Trust		73

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Balanced Fund


	Class C
	Year Ended October 31,						From Inception April 19, 2005 to October 31, 2005
	2007			2006			From Inception April 19, 2005 to October 31, 2005
Net asset value, beginning of period	$	15.68		$	14.49		$	14.47
Income from investment operations
Net investment income (loss) ⁽²⁾		0.23			0.23			0.10
Net realized and unrealized gain (loss)		1.14			1.53			0.01

Total from investment operations		1.37			1.76			0.11

Less distributions
Dividends from net investment income		(0.23	)		(0.23	)		(0.09	)
Distributions from net realized gains		(1.42	)		(0.34	)		—

Total distributions		(1.65	)		(0.57	)		(0.09	)

Change in net asset value		(0.28	)		1.19			0.02

Net asset value, end of period	$	15.40		$	15.68		$	14.49

Total return ⁽¹⁾		9.42	%		12.44	%		0.75	% ⁽⁴⁾
Ratios/supplemental data:
Net assets, end of period (thousands)		$71,326			$76,874			$81,111
Ratio to average net assets of:
Net operating expenses		1.87	%		1.83	%		1.80	% ⁽³⁾
Net investment income (loss)		1.56	%		1.54	%		1.22	% ⁽³⁾
Portfolio turnover		54	%		78	%		58	% ⁽⁴⁾

⁽¹⁾ Sales charges are not reflected in the total return calculation.

⁽²⁾ Computed using average shares outstanding.

⁽³⁾ Annualized.

⁽⁴⁾ Not annualized.

See Notes to Financial Statements


74		Phoenix Equity Trust

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Capital Growth Fund


	Class A
	Year Ended October 31,
	2007			2006			2005			2004			2003
Net asset value, beginning of period		$15.78			$14.89			$14.21			$13.90			$11.89
Income from investment operations
Net investment income (loss) ⁽²⁾		(0.03	)		(0.05	)		0.07			(0.06	)		(0.06	)
Net realized and unrealized gain (loss)		2.43			1.02			0.61			0.37			2.07

Total from investment operations		2.40			0.97			0.68			0.31			2.01

Less distributions
Dividends from net investment income		—			(0.08	)		—			—			—

Total distributions		—			(0.08	)		—			—			—

Change in net asset value		2.40			0.89			0.68			0.31			2.01

Net asset value, end of period		$18.18			$15.78			$14.89			$14.21			$13.90

Total return ⁽¹⁾		15.21	%		6.54	%		4.79	%		2.23	%		16.90	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$	493,633		$	486,845		$	580,058		$	844,523		$	896,872
Ratio to average net assets of:
Operating expenses		1.41	%		1.37	%		1.36	%		1.34	%		1.36	%
Net investment income (loss)		(0.16	)%		(0.31	)%		0.45	%		(0.39	)%		(0.49	)%
Portfolio turnover		90	%		167	%		67	%		57	%		39	%

	Class B
	Year Ended October 31,
	2007			2006			2005			2004			2003
Net asset value, beginning of period		$14.47			$13.69			$13.16			$12.96			$11.17
Income from investment operations
Net investment income (loss) ⁽²⁾		(0.14	)		(0.15	)		(0.05	)		(0.15	)		(0.14	)
Net realized and unrealized gain (loss)		2.22			0.93			0.58			0.35			1.93

Total from investment operations		2.08			0.78			0.53			0.20			1.79

Less distributions
Dividends from net investment income		—			—			—			—			—

Total distributions		—			—			—			—			—

Change in net asset value		2.08			0.78			0.53			0.20			1.79

Net asset value, end of period		$16.55			$14.47			$13.69			$13.16			$12.96

Total return ⁽¹⁾		14.37	%		5.70	%		4.03	%		1.54	%		16.03	%
Ratios/supplemental data:
Net assets, end of period (thousands)		$10,937			$9,038			$11,918			$16,314			$23,730
Ratio to average net assets of:
Operating expenses		2.16	%		2.12	%		2.11	%		2.09	%		2.11	%
Net investment income (loss)		(0.93	)%		(1.06	)%		(0.34	)%		(1.13	)%		(1.24	)%
Portfolio turnover		90	%		167	%		67	%		57	%		39	%

⁽¹⁾ Sales charges are not reflected in the total return calculation.

⁽²⁾ Computed using average shares outstanding.

See Notes to Financial Statements


Phoenix Equity Trust		75

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Capital Growth Fund


	Class C
	From Inception November 21, 2006 to October 31, 2007
Net asset value, beginning of period	$15.95
Income from investment operations
Net investment income (loss) ⁽²⁾	(0.16	)
Net realized and unrealized gain (loss)	2.27

Total from investment operations	2.11

Change in net asset value	2.11

Net asset value, end of period	$18.06

Total return ⁽¹⁾	13.23	% ⁽⁴⁾
Ratios/supplemental data:
Net assets, end of period (thousands)	$4,546
Ratio to average net assets of:
Operating expenses	2.15	% ⁽³⁾
Net investment income (loss)	(1.03	)% ⁽³⁾
Portfolio turnover	90	% ⁽⁴⁾

⁽¹⁾ Sales charges are not reflected in the total return calculation.

⁽²⁾ Computed using average shares outstanding.

⁽³⁾ Annualized

⁽⁴⁾ Not Annualized.

See Notes to Financial Statements


76		Phoenix Equity Trust

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Growth & Income Fund


	Class A
	Year Ended August 31
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$15.96		$14.74		$13.15		$11.86		$10.86
Income from investment operations
Net investment income (loss) ⁽¹⁾	0.10		0.13		0.12		0.09		0.09
Net realized and unrealized gain (loss)	2.20		1.19		1.57		1.30		0.91

Total from investment operations	2.30		1.32		1.69		1.39		1.00

Less distributions
Dividends from net investment income	(0.18	)	(0.10	)	(0.10	)	(0.10	)	—

Total distributions	(0.18	)	(0.10	)	(0.10	)	(0.10	)	—

Change in net asset value	2.12		1.22		1.59		1.29		1.00

Net asset value, end of period	$18.08		$15.96		$14.74		$13.15		$11.86

Total return ⁽²⁾	14.43	%	9.02	%	12.85	%	11.74	%	9.21	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$188,479		$168,209		$178,557		$201,330		$131,169
Ratio to average net assets of:
Net operating expenses	1.28	%	1.25	%	1.25	%	1.25	%	1.25	%
Gross operating expenses	1.42	%	1.39	%	1.40	%	1.38	%	1.45	%
Net investment income (loss)	0.60	%	0.86	%	0.84	%	0.68	%	0.82	%
Portfolio turnover	37	%	33	%	41	%	53	%	59	%

	Class B
	Year Ended August 31
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$15.26		$14.13		$12.61		$11.38		$10.50
Income from investment operations
Net investment income (loss) ⁽¹⁾	(0.02	)	0.01		0.01		(0.01	)	0.01
Net realized and unrealized gain (loss)	2.10		1.14		1.51		1.25		0.87

Total from investment operations	2.08		1.15		1.52		1.24		0.88

Less distributions
Dividends from net investment income	(0.03	)	(0.02	)	—		(0.01	)	—

Total distributions	(0.03	)	(0.02	)	—		(0.01	)	—

Change in net asset value	2.05		1.13		1.52		1.23		0.88

Net asset value, end of period	$17.31		$15.26		$14.13		$12.61		$11.38

Total return ⁽²⁾	13.64	%	8.18	%	12.05	%	10.90	%	8.38	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$24,731		$41,863		$58,869		$68,637		$72,051
Ratio to average net assets of:
Net operating expenses	2.03	%	2.00	%	2.00	%	2.00	%	2.00	%
Gross operating expenses	2.17	%	2.14	%	2.15	%	2.14	%	2.20	%
Net investment income (loss)	(0.14	)%	0.09	%	0.10	%	(0.07	)%	0.08	%
Portfolio turnover	37	%	33	%	41	%	53	%	59	%

⁽¹⁾ Computed using average shares outstanding.

⁽²⁾ Sales charges are not reflected in total return calculation.

See Notes to Financial Statements


Phoenix Equity Trust		77

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Growth & Income Fund


	Class C
	Year Ended August 31
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$15.26		$14.13		$12.62		$11.38		$10.50
Income from investment operations
Net investment income (loss) ⁽¹⁾	(0.03	)	0.01		0.01		(0.01	)	0.01
Net realized and unrealized gain (loss)	2.11		1.14		1.50		1.26		0.87

Total from investment operations	2.08		1.15		1.51		1.25		0.88

Less distributions
Dividends from net investment income	(0.03	)	(0.02	)	—		(0.01	)	—

Total distributions	(0.03	)	(0.02	)	—		(0.01	)	—

Change in net asset value	2.05		1.13		1.51		1.24		0.88

Net asset value, end of period	$17.31		$15.26		$14.13		$12.62		$11.38

Total return ⁽²⁾	13.64	%	8.18	%	12.05	%	10.80	%	8.48	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$53,854		$57,345		$68,432		$78,570		$52,466
Ratio to average net assets of:
Net operating expenses	2.03	%	2.00	%	2.00	%	2.00	%	2.00	%
Gross operating expenses	2.17	%	2.14	%	2.15	%	2.13	%	2.20	%
Net investment income (loss)	(0.15	)%	0.10	%	0.10	%	(0.07	)%	0.08	%
Portfolio turnover	37	%	33	%	41	%	53	%	59	%

⁽¹⁾ Computed using average shares outstanding.

⁽²⁾ Sales charges are not reflected in total return calculation.

See Notes to Financial Statements


78		Phoenix Equity Trust

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Growth Opportunities Fund


	Class A ⁽³⁾
	Year Ended September 30,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$12.22		$11.68		$9.88		$9.35		$6.59
Income from investment operations
Net investment income (loss)	(0.09	) ⁽¹⁾	(0.07	) ⁽¹⁾	(0.07	) ⁽¹⁾	(0.07	)	(0.06	)
Realized and unrealized gains (losses) on investments	3.85		0.61		1.87		0.60		2.82

Total from investment operations	3.76		0.54		1.80		0.53		2.76

Change in net asset value	3.76		0.54		1.80		0.53		2.76

Net asset value, end of period	$15.98		$12.22		$11.68		$9.88		$9.35

Total return ⁽²⁾	30.77	%	4.62	%	18.22	%	5.67	%	41.88	%
Ratios/supplemental data
Net assets, end of period (thousands)	$34,039		$8,253		$7,158		$4,430		$3,551
Ratio to average net assets of:
Net operating expenses	1.26	%	1.25	%	1.25	%	1.25	%	1.25	%
Gross operating expenses	1.87	%	2.01	%	1.73	%	1.83	%	1.53	%
Net investment income (loss)	(0.62	)%	(0.56	)%	(0.64	)%	(0.70	)%	(0.77	)%
Portfolio turnover	143	%	189	%	206	%	262	%	282	%


	Class C
	Year Ended September 30,		From Inception June 9, 2006 to September 30,
	2007		2006
Net asset value, beginning of period	$12.19		$11.87
Income from investment operations
Net investment income (loss) ⁽¹⁾	(0.22	)	(0.05	)
Realized and unrealized gains (loss)	3.84		0.37

Total from investment operations	3.62		0.32

Change in net asset value	3.62		0.32

Net asset value, end of period	$15.81		$12.19

Total return ⁽²⁾	29.78	%	2.70	% ⁽⁵⁾
Ratios/supplemental data
Net assets, end of period (thousands)	$5,170		$120
Ratio to average net assets of:
Net operating expenses	2.06	%	2.00	% ⁽⁴⁾
Gross operating expenses	2.66	%	3.72	% ⁽⁴⁾
Net investment income (loss)	(1.48	)%	(1.28	)% ⁽⁴⁾
Portfolio turnover	143	%	189	% ⁽⁵⁾

⁽¹⁾ Computed using average shares outstanding.

⁽²⁾ Sales charges are not reflected in total return calculation.

⁽³⁾ Due to a reorganization on June 9, 2006, the Growth Opportunities Fund is the successor of the Turner Strategic Growth Fund. Class A treats the past performance of the Turner Strategic Growth Fund as its own.

⁽⁴⁾ Annualized.

⁽⁵⁾ Not annualized.


Phoenix Equity Trust		79

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Income & Growth Fund


	Class A
	Six Months Ended October 31, 2007		Year Ended April 30,
	(Unaudited)		2007		2006		2005		2004 ⁽³⁾		2003
Net asset value, beginning of period	$9.71		$9.18		$8.90		$8.66		$7.92		$8.41
Income from investment operations
Net investment income (loss) ⁽²⁾	0.12		0.23		0.22		0.22		0.22		0.24
Net realized and unrealized gain (loss)	0.21		0.75		0.44		0.26		0.76		(0.48	)

Total from investment operations	0.33		0.98		0.66		0.48		0.98		(0.24	)

Less distributions
Dividends from net investment income	(0.11	)	(0.24	)	(0.24	)	(0.24	)	(0.24	)	(0.25	)
Distributions from net realized gains	—		(0.21	)	(0.14	)	—		—		—

Total distributions	(0.11	)	(0.45	)	(0.38	)	(0.24	)	(0.24	)	(0.25	)

Change in net asset value	0.22		0.53		0.28		0.24		0.74		(0.49	)

Net asset value, end of period	$9.93		$9.71		$9.18		$8.90		$8.66		$7.92

Total return ⁽¹⁾	3.47	% ⁽⁵⁾	10.93	%	7.33	%	5.53	%	12.40	%	(2.70	)%
Ratios/supplemental data:
Net assets, end of period (thousands)	$285,158		$296,354		$318,318		$350,609		$381,423		$380,101
Ratio to average net assets of:
Operating expenses	1.30	% ⁽⁴⁾	1.34	%	1.28	%	1.28	%	1.29	%	1.28	%
Net investment income (loss)	2.36	% ⁽⁴⁾	2.47	%	2.38	%	2.46	%	2.54	%	3.10	%
Portfolio turnover	24	% ⁽⁵⁾	46	%	72	%	59	%	83	%	93	%

	Class B
	Six Months Ended October 31, 2007		Year Ended April 30,
	(Unaudited)		2007		2006		2005		2004 ⁽³⁾		2003
Net asset value, beginning of period	$9.77		$9.23		$8.95		$8.71		$7.96		$8.43
Income from investment operations
Net investment income (loss) ⁽²⁾	0.08		0.16		0.15		0.15		0.16		0.18
Net realized and unrealized gain (loss)	0.22		0.76		0.44		0.26		0.76		(0.47	)

Total from investment operations	0.30		0.92		0.59		0.41		0.92		(0.29	)

Less distributions
Dividends from net investment income	(0.08	)	(0.17	)	(0.17	)	(0.17	)	(0.17	)	(0.18	)
Distributions from net realized gains	—		(0.21	)	(0.14	)	—		—		—

Total distributions	(0.08	)	(0.38	)	(0.31	)	(0.17	)	(0.17	)	(0.18	)

Change in net asset value	0.22		0.54		0.28		0.24		0.75		(0.47	)

Net asset value, end of period	$9.99		$9.77		$9.23		$8.95		$8.71		$7.96

Total return ⁽¹⁾	3.07	% ⁽⁵⁾	10.04	%	6.58	%	4.69	%	11.61	%	(3.42	)%
Ratios/supplemental data:
Net assets, end of period (thousands)	$6,123		$7,059		$10,997		$16,145		$24,228		$34,234
Ratio to average net assets of:
Operating expenses	2.04	% ⁽⁴⁾	2.08	%	2.03	%	2.03	%	2.04	%	2.03	%
Net investment income (loss)	1.62	% ⁽⁴⁾	1.73	%	1.62	%	1.71	%	1.82	%	2.37	%
Portfolio turnover	24	% ⁽⁵⁾	46	%	72	%	59	%	83	%	93	%

⁽¹⁾ Sales charges are not reflected in the total return calculation.

⁽²⁾ Computed using average shares outstanding.

⁽³⁾ In accordance with changes in generally accepted accounting principles, the Fund reclassified periodic payments made under interest rate swap agreements, previously included within interest income, as a component of realized gain (loss) in the statement of operations. The effect of this reclassification was to reduce the net investment income per share by $0.00 and $0.00 and the net investment income ratio for the period ending April 30, 2004 by 0.04% and 0.03% for Class A and Class B, respectively. Prior to May 1, 2003, the Fund did not hold any debt index securities.

⁽⁴⁾ Annualized.

⁽⁵⁾ Not Annualized.

See Notes to Financial Statements


80		Phoenix Equity Trust

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Income & Growth Fund


	Class C
	Six Months Ended October 31, 2007		Year Ended April 30,
	(Unaudited)		2007		2006		2005		2004 ⁽³⁾		2003
Net asset value, beginning of period	$9.86		$9.31		$9.02		$8.78		$8.02		$8.49
Income from investment operations
Net investment income (loss) ⁽²⁾	0.08		0.16		0.15		0.15		0.15		0.19
Net realized and unrealized gain (loss)	0.22		0.77		0.45		0.26		0.78		(0.48	)

Total from investment operations	0.30		0.93		0.60		0.41		0.93		(0.29	)

Less distributions
Dividends from net investment income	(0.08	)	(0.17	)	(0.17	)	(0.17	)	(0.17	)	(0.18	)
Distributions from net realized gains	—		(0.21	)	(0.14	)	—		—		—

Total distributions	(0.08	)	(0.38	)	(0.31	)	(0.17	)	(0.17	)	(0.18	)

Change in net asset value	0.22		0.55		0.29		0.24		0.76		(0.47	)

Net asset value, end of period	$10.08		$9.86		$9.31		$9.02		$8.78		$8.02

Total return ⁽¹⁾	3.04	% ⁽⁵⁾	10.06	%	6.64	%	4.65	%	11.64	%	(3.39	)%
Ratios/supplemental data:
Net assets, end of period (thousands)	$1,518		$1,652		$1,888		$1,988		$1,980		$1,374
Ratio to average net assets of:
Operating expenses	2.04	% ⁽⁴⁾	2.09	%	2.03	%	2.03	%	2.04	%	2.04	%
Net investment income (loss)	1.61	% ⁽⁴⁾	1.72	%	1.63	%	1.71	%	1.77	%	2.35	%
Portfolio turnover	24	% ⁽⁵⁾	46	%	72	%	59	%	83	%	93	%

⁽¹⁾ Sales charges are not reflected in the total return calculation.

⁽²⁾ Computed using average shares outstanding.

⁽³⁾ In accordance with changes in generally accepted accounting principles , the Fund reclassified periodic payments made under interest rate swap agreements, previously included within interest income, as a component of realized gain (loss) in the statement of operations. The effect of this reclassification was to reduce the net investment income per share by $0.01 and the net investment income ratio for the period ending April 30, 2004 by 0.04% for Class C. Prior to May 1, 2003, the Fund did not hold any debt index securities.

⁽⁴⁾ Annualized.

⁽⁵⁾ Not Annualized.

See Notes to Financial Statements


Phoenix Equity Trust		81

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Mid-Cap Growth Fund


	Class A
	Year Ended October 31,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$16.33		$15.42		$13.40		$13.97		9.94
Income from investment operations
Net investment income (loss) ⁽²⁾	(0.10	)	(0.08	)	(0.16	)	(0.17	)	(0.14	)
Net realized and unrealized gain (loss)	1.75		0.99		2.18		(0.40	)	4.17

Total from investment operations	1.65		0.91		2.02		(0.57	)	4.03

Change in net asset value	1.65		0.91		2.02		(0.57	)	4.03

Net asset value, end of period	$17.98		$16.33		$15.42		$13.40		$13.97

Total return ⁽¹⁾	10.10	%	5.90	%	15.07	%	(4.08	)%	40.54	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$130,028		$127,160		$142,651		$166,244		$198,602
Ratio to average net assets of:
Operating expenses	1.55	%	1.52	%	1.53	%	1.50	%	1.56	%
Net investment income (loss)	(0.60	)%	(0.50	)%	(1.06	)%	(1.22	)%	(1.24	)%
Portfolio turnover	77	%	124	%	46	%	181	%	175	%

	Class B
	Year Ended October 31,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$14.61		$13.91		$12.18		$12.78		$9.16
Income from investment operations
Net investment income (loss) ⁽²⁾	(0.24	)	(0.18	)	(0.25	)	(0.25	)	(0.20	)
Net realized and unrealized gain (loss)	1.60		0.88		1.98		(0.35	)	3.82

Total from investment operations	1.36		0.70		1.73		(0.60	)	3.62

Change in net asset value	1.36		0.70		1.73		(0.60	)	3.62

Net asset value, end of period	$15.97		$14.61		$13.91		$12.18		$12.78

Total return ⁽¹⁾	9.31	%	5.03	%	14.20	%	(4.69	)%	39.52	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$15,407		$10,102		$12,776		$15,549		$20,497
Ratio to average net assets of:
Operating expenses	2.29	%	2.27	%	2.28	%	2.24	%	2.31	%
Net investment income (loss)	(1.53	)%	(1.24	)%	(1.81	)%	(1.97	)%	(1.99	)%
Portfolio turnover	77	%	124	%	46	%	181	%	175	%

⁽¹⁾ Sales charges are not reflected in the total return calculation.

⁽²⁾ Computed using average shares outstanding.

See Notes to Financial Statements


82		Phoenix Equity Trust

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Mid-Cap Growth Fund


	Class C
	Year Ended October 31,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$14.60		$13.89		$12.16		$12.77		$9.16
Income from investment operations
Net investment income (loss) ⁽²⁾	(0.41	)	(0.19	)	(0.25	)	(0.24	)	(0.21	)
Net realized and unrealized gain (loss)	1.77		0.90		1.98		(0.37	)	3.82

Total from investment operations	1.36		0.71		1.73		(0.61	)	3.61

Change in net asset value	1.36		0.71		1.73		(0.61	)	3.61

Net asset value, end of period	$15.96		$14.60		$13.89		$12.16		$12.77

Total return ⁽¹⁾	9.32	%	5.11	%	14.23	%	(4.78	)%	39.41	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$6,853		$530		$418		$350		$508
Ratio to average net assets of:
Operating expenses	2.20	%	2.27	%	2.28	%	2.24	%	2.30	%
Net investment income (loss)	(2.60	)%	(1.29	)%	(1.81	)%	(1.97	)%	(1.99	)%
Portfolio turnover	77	%	124	%	46	%	181	%	175	%

	Class I
	From Inception September 13,2007 to October 31, 2007
Net asset value, beginning of period	$17.25
Income from investment operations
Net investment income (loss) ⁽²⁾	(0.09	)
Net realized and unrealized gain (loss)	0.83

Total from investment operations	0.74

Payment by non-affiliate	—	⁽³⁾⁽⁴⁾
Change in net asset value	0.74

Net asset value, end of period	$17.99

Total return	4.29	% ⁽⁶⁾
Ratios/supplemental data:
Net assets, end of period (thousands)	$2,086
Ratio to average net assets of:
Operating expenses	1.09	% ⁽⁵⁾
Net investment income (loss)	(3.85	)% ⁽⁵⁾
Portfolio turnover	77	% ⁽⁶⁾

⁽¹⁾ Sales charges are not reflected in the total return calculation.

⁽²⁾ Computed using average shares outstanding.

⁽³⁾ Payment by non-affiliate.

⁽⁴⁾ Amount is less than $0.01.

⁽⁵⁾ Annualized.

⁽⁶⁾ Not annualized.

See Notes to Financial Statements


Phoenix Equity Trust		83

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Mid-Cap Value Fund


	Class A ⁽¹⁾
	Six Months Ended December 31, 2007		Year Ended June 30,
	(Unaudited)		2007		2006		2005		2004		2003
Net asset value, beginning of period	$27.40		$21.72		$19.63		$17.04		$12.18		$13.21
Income from investment operations
Net investment income (loss) ⁽²⁾	0.04		0.18		0.10		0.08		(0.01	)	0.01
Net realized and unrealized gain (loss)	(2.90	)	5.66		2.05		2.55		4.88		(1.04	)

Total from investment operations	(2.86	)	5.84		2.15		2.63		4.87		(1.03	)

Less distributions
Dividends from net investment income	(0.03	)	(0.10	)	(0.05	)	(0.04	)	(0.01	)	—
Distributions from net realized gains	(1.07	)	(0.06	)	(0.01	)	—		—		—

Total distributions	(1.10	)	(0.16	)	(0.06	)	(0.04	)	(0.01	)	—

Change in net asset value	(3.96	)	5.68		2.09		2.59		4.86		(1.03	)

Net asset value, end of period	$23.44		$27.40		$21.72		$19.63		$17.04		$12.18

Total return ⁽³⁾	(10.43	)% ⁽⁵⁾	26.91	%	11.07	%	15.39	%	40.03	%	(7.80	)%
Ratios/supplemental data:
Net assets, end of period (thousands)	$614,896		$842,524		$187,701		$97,771		$6,404		$3,800
Ratio to average net assets of:
Net operating expenses	1.29	% ⁽⁴⁾	1.27	%	1.25	%	1.25	%	1.30	%	1.30	%
Gross operating expenses	1.38	% ⁽⁴⁾	1.31	%	1.42	%	1.65	%	2.76	%	3.05	%
Net investment income (loss)	0.27	% ⁽⁴⁾	0.68	%	0.50	%	0.49	%	(0.06	)%	0.09	%
Portfolio turnover	10	% ⁽⁵⁾	7	%	16	%	9	%	53	%	23	%



	Class C
	Six Months Ended December 31, 2007 (Unaudited)			Year Ended June 30, 2007			Year Ended June 30, 2006			From Inception October 22, 2004 to June 30, 2005
Net asset value, beginning of period		$27.04			$21.53			$19.54			$17.77
Income from investment operations
Net investment income (loss) ⁽²⁾		(0.06	)		(0.03	)		(0.05	)		(0.04	)
Net realized and unrealized gain (loss)		(2.85	)		5.60			2.05			1.84

Total from investment operations		(2.91	)		5.57			2.00			1.80

Less distributions
Dividends from net investment income		—			—			—			(0.03	)
Distributions from net realized gains		(1.07	)		(0.06	)		(0.01	)		—

Total distributions		(1.07	)		(0.06	)		(0.01	)		(0.03	)

Change in net asset value		(3.98	)		5.51			1.99			1.77

Net asset value, end of period		$23.06			$27.04			$21.53			$19.54

Total return ⁽³⁾		(10.76	)% ⁽⁵⁾		25.89	%		10.26	%		10.13	% ⁽⁵⁾
Ratios/supplemental data:
Net assets, end of period (thousands)	$	179,910		$	229,293		$	99,987		$	37,934
Ratio to average net assets of:
Net operating expenses		2.04	% ⁽⁴⁾		2.01	%		2.00	%		2.00	% ⁽⁴⁾
Gross operating expenses		2.13	% ⁽⁴⁾		2.06	%		2.17	%		2.29	% ⁽⁴⁾
Net investment income (loss)		(0.47	)% ⁽⁴⁾		(0.11	)%		(0.25	)%		(0.28	)% ⁽⁴⁾
Portfolio turnover		10	% ⁽⁵⁾		7	%		16	%		9	% ⁽⁵⁾

⁽¹⁾ Due to a reorganization on October 22, 2004, the Mid-Cap Value Fund is the successor of The FMI Sasco Contrarian Value Fund. The Mid-Cap Value Fund Class A treats the past performance of the FMI Sasco Contrarian Value Fund as its own.

⁽²⁾ Computed using average shares outstanding.

⁽³⁾ Sales charges are not reflected in the total return calculation.

⁽⁴⁾ Annualized.

⁽⁵⁾ Not annualized.

See Notes to Financial Statements


84		Phoenix Equity Trust

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Quality Small-Cap Fund



	Class A
	Year Ended August 31, 2007		From Inception June 28, 2006 to August 31, 2006
Net asset value, beginning of period	$10.05		$10.00
Income from investment operations
Net investment income (loss) ⁽¹⁾	0.25		0.03
Net realized and unrealized gain (loss)	1.51		0.02

Total from investment operations	1.76		0.05

Less distributions
Dividends from net investment income	(0.05	)	—
Distributions from net realized gains	(0.02	)	—

Total distributions	(0.07	)	—

Change in net asset value	1.69		0.05

Net asset value, end of period	$11.74		$10.05

Total return ⁽²⁾	17.51	%	0.50	% ⁽⁴⁾
Ratios/supplemental data:
Net assets, end of period (thousands)	$8,506		$101
Ratio to average net assets of:
Net operating expenses	1.40	%	1.40	% ⁽³⁾
Gross operating expenses	2.19	%	26.39	% ⁽³⁾
Net investment income (loss)	2.14	%	1.82	% ⁽³⁾
Portfolio turnover	17	%	7	% ⁽⁴⁾

	Class C
	Year Ended August 31, 2007		From Inception June 28, 2006 to August 31, 2006
Net asset value, beginning of period	$10.04		$10.00
Income from investment operations
Net investment income (loss) ⁽¹⁾	0.10		0.02
Net realized and unrealized gain (loss)	1.57		0.02

Total from investment operations	1.67		0.04

Less distributions
Dividends from net investment income	(0.01	)	—
Distributions from net realized gains	(0.02	)	—

Total distributions	(0.03	)	—

Change in net asset value	1.64		0.04

Net asset value, end of period	$11.68		$10.04

Total return ⁽²⁾	16.61	%	0.40	% ⁽⁴⁾
Ratios/supplemental data:
Net assets, end of period (thousands)	$1,354		$138
Ratio to average net assets of:
Net operating expenses	2.16	%	2.15	% ⁽³⁾
Gross operating expenses	3.45	%	25.96	% ⁽³⁾
Net investment income (loss)	0.89	%	1.38	% ⁽³⁾
Portfolio turnover	17	%	7	% ⁽⁴⁾

⁽¹⁾ Computed using average shares outstanding.

⁽²⁾ Sales charges are not reflected in total return calculation.

⁽³⁾ Annualized.

⁽⁴⁾ Not annualized.

See Notes to Financial Statements


Phoenix Equity Trust		85

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Quality Small-Cap Fund


	Class I
	Year Ended August 31, 2007		From Inception June 23, 2006 to August 31, 2006
Net asset value, beginning of period	$10.06		$10.00
Income from investment operations
Net investment income (loss) ⁽¹⁾	0.21		0.07
Net realized and unrealized gain (loss)	1.57		(0.01	)

Total from investment operations	1.78		0.06

Less distributions
Dividends from net investment income	(0.06	)	—
Distributions from net realized gains	(0.02	)	—

Total distributions	(0.08	)	—

Change in net asset value	1.70		0.06

Net asset value, end of period	$11.76		$10.06

Total return	17.74	%	0.60	% ⁽³⁾
Ratios/supplemental data:
Net assets, end of period (thousands)	$10,691		$1,070
Ratio to average net assets of:
Net operating expenses	1.15	%	1.15	% ⁽²⁾
Gross operating expenses	2.54	%	21.32	% ⁽²⁾
Net investment income (loss)	1.82	%	3.85	% ⁽²⁾
Portfolio turnover	17	%	7	% ⁽³⁾

⁽¹⁾ Computed using average shares outstanding.

⁽²⁾ Annualized.

⁽³⁾ Not annualized.

See Notes to Financial Statements


86		Phoenix Equity Trust

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Small-Cap Growth Fund


	Class A
	Year Ended December 31,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$34.30		$32.53		$29.65		$27.39		$18.47
Income from investment operations
Net investment income (loss) ⁽¹⁾	(0.41	)	(0.39	)	(0.35	)	(0.31	)	(0.30	)
Net realized and unrealized gain (loss)	3.37		2.16		3.23		2.57		9.22

Total from investment operations	2.96		1.77		2.88		2.26		8.92

Change in net asset value	2.96		1.77		2.88		2.26		8.92

Net asset value, end of period	$37.26		$34.30		$32.53		$29.65		$27.39

Total return ⁽²⁾	8.63	%	5.41	%	9.75	%	8.25	%	48.29	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$104,135		$120,953		$168,527		$255,698		$237,347
Ratio to average net assets of:
Net operating expenses	1.67	%	1.60	%	1.58	%	1.58	%	1.58	%
Gross operating expenses	1.72	%	1.68	%	1.69	%	1.68	%	1.71	%
Net investment income (loss)	(1.12	)%	(1.16	)%	(1.18	)%	(1.15	)%	(1.35	)%
Portfolio turnover	35	%	22	%	12	%	38	%	35	%

⁽¹⁾ Computed using average shares outstanding.

⁽²⁾ Sales charges are not reflected in the total return calculation.

See Notes to Financial Statements


Phoenix Equity Trust		87

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Small-Cap Growth Fund


	Class B
	Year Ended December 31,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$31.71		$30.30		$27.82		$25.90		$17.60
Income from investment operations
Net investment income (loss) ⁽¹⁾	(0.64	)	(0.59	)	(0.54	)	(0.50	)	(0.44	)
Net realized and unrealized gain (loss)	3.12		2.00		3.02		2.42		8.74

Total from investment operations	2.48		1.41		2.48		1.92		8.30

Change in net asset value	2.48		1.41		2.48		1.92		8.30

Net asset value, end of period	$34.19		$31.71		$30.30		$27.82		$25.90

Total return ⁽²⁾	7.82	%	4.62	%	8.95	%	7.41	%	47.16	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$19,320		$27,138		$41,105		$58,574		$83,515
Ratio to average net assets of:
Net operating expenses	2.42	%	2.35	%	2.34	%	2.33	%	2.33	%
Gross operating expenses	2.47	%	2.44	%	2.44	%	2.42	%	2.47	%
Net investment income (loss)	(1.87	)%	(1.91	)%	(1.93	)%	(1.93	)%	(2.10	)%
Portfolio turnover	35	%	22	%	38	%	35	%	40	%

	Class C
	Year Ended December 31,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$31.70		$30.29		$27.81		$25.88		$17.59
Income from investment operations
Net investment income (loss) ⁽¹⁾	(0.64	)	(0.59	)	(0.54	)	(0.49	)	(0.44	)
Net realized and unrealized gain (loss)	3.12		2.00		3.02		2.42		8.73

Total from investment operations	2.48		1.41		2.48		1.93		8.29

Change in net asset value	2.48		1.41		2.48		1.93		8.29

Net asset value, end of period	$34.18		$31.70		$30.29		$27.81		$25.88

Total return ⁽²⁾	7.82	%	4.66	%	8.92	%	7.46	%	47.13	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$15,352		$18,426		$23,653		$30,280		$38,514
Ratio to average net assets of:
Net operating expenses	2.42	%	2.36	%	2.34	%	2.33	%	2.33	%
Gross operating expenses	2.47	%	2.43	%	2.44	%	2.42	%	2.47	%
Net investment income (loss)	(1.87	)%	(1.91	)%	(1.93	)%	(1.92	)%	(2.10	)%
Portfolio turnover	35	%	22	%	38	%	35	%	40	%

⁽¹⁾ Computed using average shares outstanding.

⁽²⁾ Sales charges are not reflected in the total return calculation.

See Notes to Financial Statements


88		Phoenix Equity Trust

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Small-Cap Sustainable Growth Fund


	Class A
	Year Ended August 31, 2007		From Inception June 28, 2006 to August 31, 2006
Net asset value, beginning of period	$9.79		$10.00
Income from investment operations
Net investment income (loss) ⁽¹⁾	(0.10	)	(0.01	)
Net realized and unrealized gain (loss)	0.65		(0.20	)

Total from investment operations	0.55		(0.21	)

Change in net asset value	0.55		(0.21	)

Net asset value, end of period	$10.34		$9.79

Total return ⁽²⁾	5.62	%	(2.10	)% ⁽⁴⁾
Ratios/supplemental data:
Net assets, end of period (thousands)	$10,222		$100
Ratio to average net assets of:
Net operating expenses	1.40	%	1.40	% ⁽³⁾
Gross operating expenses	2.16	%	28.32	% ⁽³⁾
Net investment income (loss)	(0.96	)%	(0.87	)% ⁽³⁾
Portfolio turnover	26	%	4	% ⁽⁴⁾

	Class C
	Year Ended August 31, 2007		From Inception June 28, 2006 to August 31, 2006
Net asset value, beginning of period	$9.77		$10.00
Income from investment operations
Net investment income (loss) ⁽¹⁾	(0.18	)	(0.03	)
Net realized and unrealized gain (loss)	0.66		(0.20	)

Total from investment operations	0.48		(0.23	)

Change in net asset value	0.48		(0.23	)

Net asset value, end of period	$10.25		$9.77

Total return ⁽²⁾	4.81	%	(2.20	)% ⁽⁴⁾
Ratios/supplemental data:
Net assets, end of period (thousands)	$174		$98
Ratio to average net assets of:
Net operating expenses	2.15	%	2.15	% ⁽³⁾
Gross operating expenses	4.31	%	29.09	% ⁽³⁾
Net investment income (loss)	(1.78	)%	(1.61	)% ⁽³⁾
Portfolio turnover	26	%	4	% ⁽⁴⁾

⁽¹⁾ Computed using average shares outstanding.

⁽²⁾ Sales charges are not reflected in total return calculation.

⁽³⁾ Annualized.

⁽⁴⁾ Not annualized.

See Notes to Financial Statements


Phoenix Equity Trust		89

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Small-Cap Sustainable Growth Fund


	Class I
	Year Ended August 31, 2007		From Inception June 28, 2006 to August 31, 2006
Net asset value, beginning of period	$9.79		$10.00
Income from investment operations
Net investment income (loss) ⁽¹⁾	(0.08	)	(0.01	)
Net realized and unrealized gain (loss)	0.66		(0.20	)

Total from investment operations	0.58		(0.21	)

Change in net asset value	0.58		(0.21	)

Net asset value, end of period	$10.37		$9.79

Total return	5.92	%	(2.10	)% ⁽³⁾
Ratios/supplemental data:
Net assets, end of period (thousands)	$6,231		$898
Ratio to average net assets of:
Net operating expenses	1.16	%	1.15	% ⁽²⁾
Gross operating expenses	2.94	%	23.99	% ⁽²⁾
Net investment income (loss)	(0.77	)%	(0.61	)% ⁽²⁾
Portfolio turnover	26	%	4	% ⁽³⁾

⁽¹⁾ Computed using average shares outstanding.

⁽²⁾ Annualized.

⁽³⁾ Not annualized.

See Notes to Financial Statements


90		Phoenix Equity Trust

Financial Highlights (continued)

(Selected data for a share outstanding throughout the Indicated period)

Phoenix Small-Cap Value Fund


	Class A
	Year Ended August 31,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$18.45		$19.45		$15.08		$13.42		$11.30
Income from investment operations
Net investment income (loss) ⁽¹⁾	0.02		(0.05	)	(0.03	)	(0.06	)	— ⁽³	⁾
Net realized and unrealized gain (loss)	0.38		1.01		4.40		1.72		2.12

Total from investment operations	0.40		0.96		4.37		1.66		2.12

Less distributions
Distributions from net realized gains	(3.13	)	(1.96	)	—		—		—

Total distributions	(3.13	)	(1.96	)	—		—		—

Change in net asset value	(2.73	)	(1.00	)	4.37		1.66		2.12

Net asset value, end of period	$15.72		$18.45		$19.45		$15.08		$13.42

Total return ⁽²⁾	0.97	%	5.32	%	28.98	%	12.37	%	18.76	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$103,875		$135,436		$147,132		$124,165		$76,783
Ratio to average net assets of:
Net operating expenses	1.43	%	1.40	%	1.40	%	1.40	%	1.40	%
Gross operating expenses	1.56	%	1.50	%	1.56	%	1.57	%	1.71	%
Net investment income (loss)	0.10	%	(0.28	)%	(0.17	)%	(0.38	)%	0.04	%
Portfolio turnover	205	%	121	%	102	%	150	%	241	%

	Class B
	Year Ended August 31,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$17.07		$18.26		$14.27		$12.79		$10.85
Income from investment operations
Net investment income (loss) ⁽¹⁾	(0.11	)	(0.18	)	(0.15	)	(0.16	)	(0.08	)
Net realized and unrealized gain (loss)	0.39		0.95		4.14		1.64		2.02

Total from investment operations	0.28		0.77		3.99		1.48		1.94

Less distributions
Distributions from net realized gains	(3.13	)	(1.96	)	—		—		—

Total distributions	(3.13	)	(1.96	)	—		—		—

Change in net asset value	(2.85	)	(1.19	)	3.99		1.48		1.94

Net asset value, end of period	$14.22		$17.07		$18.26		$14.27		$12.79

Total return ⁽²⁾	0.26	%	4.57	%	27.96	%	11.57	%	17.88	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$19,552		$30,567		$42,081		$43,801		$40,696
Ratio to average net assets of:
Net operating expenses	2.18	%	2.15	%	2.15	%	2.15	%	2.15	%
Gross operating expenses	2.31	%	2.25	%	2.31	%	2.33	%	2.46	%
Net investment income (loss)	(0.66	)%	(1.04	)%	(0.91	)%	(1.15	)%	(0.71	)%
Portfolio turnover	205	%	121	%	102	%	150	%	241	%

⁽¹⁾ Computed using average shares outstanding.

⁽²⁾ Sales charges are not reflected in total return calculation.

⁽³⁾ Amount is less than $0.01.

See Notes to Financial Statements


Phoenix Equity Trust		91

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Small-Cap Value Fund


	Class C
	Year Ended August 31,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$17.07		$18.26		$14.27		$12.79		$10.85
Income from investment operations
Net investment income (loss) ⁽¹⁾	(0.11	)	(0.18	)	(0.15	)	(0.16	)	(0.08	)
Net realized and unrealized gain (loss)	0.39		0.95		4.14		1.64		2.02

Total from investment operations	0.28		0.77		3.99		1.48		1.94

Less distributions
Distributions from net realized gains	(3.13	)	(1.96	)	—		—		—

Total distributions	(3.13	)	(1.96	)	—		—		—

Change in net asset value	(2.85	)	(1.19	)	3.99		1.48		1.94

Net asset value, end of period	$14.22		$17.07		$18.26		$14.27		$12.79

Total return ⁽²⁾	0.26	%	4.57	%	27.96	%	11.57	%	17.88	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$47,422		$61,878		$69,957		$71,296		$51,559
Ratio to average net assets of:
Net operating expenses	2.18	%	2.15	%	2.15	%	2.15	%	2.15	%
Gross operating expenses	2.31	%	2.25	%	2.31	%	2.32	%	2.46	%
Net investment income (loss)	(0.65	)%	(1.03	)%	(0.91	)%	(1.14	)%	(0.72	)%
Portfolio turnover	205	%	121	%	102	%	150	%	241	%

⁽¹⁾ Computed using average shares outstanding.

⁽²⁾ Sales charges are not reflected in total return calculation.

See Notes to Financial Statements


92		Phoenix Equity Trust

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Small-Mid Cap Fund


	Class I
	Year Ended December 31,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$19.70		$21.31		$20.70		$18.17		$14.34
Income from investment operations
Net investment income (loss) ⁽²⁾	(0.08	)	(0.07	)	(0.04	)	(0.06	)	(0.05	)
Net realized and unrealized gain (loss)	0.11		2.55		0.65		2.59		3.88

Total from investment operations	0.03		2.48		0.61		2.53		3.83

Less distributions
Distributions from net realized gains	(2.13	)	(4.09	)	—		—		—

Total distributions	(2.13	)	(4.09	)	—		—		—

Change in net asset value	(2.10	)	(1.61	)	0.61		2.53		3.83

Net asset value, end of period	$17.60		$19.70		$21.31		$20.70		$18.17

Total return	(0.11	)%	12.05	%	2.95	%	13.92	%	26.71	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$42,525		$64,361		$78,290		$92,838		$103,269
Ratio to average net assets of:
Operating expenses	1.20	%	1.22	%	1.17	%	1.15	%	1.26	%
Net investment income (loss)	(0.38	)%	(0.30	)%	(0.18	)%	(0.32	)%	(0.35	)%
Portfolio turnover	18	%	26	%	22	%	16	%	17	%

	Class A
	Year Ended December 31,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$19.46		$21.15		$20.59		$18.12		$14.34
Income from investment operations
Net investment income (loss) ⁽²⁾	(0.12	)	(0.12	)	(0.09	)	(0.10	)	(0.09	)
Net realized and unrealized gain (loss)	0.10		2.52		0.65		2.57		3.87

Total from investment operations	(0.02	)	2.40		0.56		2.47		3.78

Less distributions
Distributions from net realized gains	(2.13	)	(4.09	)	—		—		—

Total distributions	(2.13	)	(4.09	)	—		—		—

Change in net asset value	(2.15	)	(1.69	)	0.56		2.47		3.78

Net asset value, end of period	$17.31		$19.46		$21.15		$20.59		$18.12

Total return ⁽¹⁾	(0.32	)%	11.70	%	2.72	%	13.63	%	26.36	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$25,534		$33,383		$38,170		$73,825		$39,656
Ratio to average net assets of:
Operating expenses	1.45	%	1.47	%	1.42	%	1.41	%	1.51	%
Net investment income (loss)	(0.63	)%	(0.55	)%	(0.45	)%	(0.55	)%	(0.60	)%
Portfolio turnover	18	%	26	%	22	%	16	%	17	%

⁽¹⁾ Sales charges are not reflected in the total return calculation.

⁽²⁾ Computed using average shares outstanding.

See Notes to Financial Statements


Phoenix Equity Trust		93

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Small-Mid Cap Fund


	Class B
	Year Ended December 31,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$18.76		$20.67		$20.27		$17.94		$14.30
Income from investment operations
Net investment income (loss) ⁽²⁾	(0.26	)	(0.28	)	(0.23	)	(0.24	)	(0.20	)
Net realized and unrealized gain (loss)	0.11		2.46		0.63		2.57		3.84

Total from investment operations	(0.15	)	2.18		0.40		2.33		3.64

Less distributions
Distributions from net realized gains	(2.13	)	(4.09	)	—		—		—

Total distributions	(2.13	)	(4.09	)	—		—		—

Change in net asset value	(2.28	)	(1.91	)	0.40		2.33		3.64

Net asset value, end of period	$16.48		$18.76		$20.67		$20.27		$17.94

Total return ⁽¹⁾	(1.04	)%	10.88	%	1.97	%	12.99	%	25.45	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$2,136		$3,024		$3,960		$4,404		$2,709
Ratio to average net assets of:
Operating expenses	2.20	%	2.22	%	2.19	%	2.16	%	2.26	%
Net investment income (loss)	(1.39	)%	(1.30	)%	(1.19	)%	(1.31	)%	(1.35	)%
Portfolio turnover	18	%	26	%	22	%	16	%	17	%

	Class C
	Year Ended December 31,
	2007		2006		2005		2004		2003
Net asset value, beginning of period	$18.79		$20.69		$20.30		$17.96		$14.31
Income from investment operations
Net investment income (loss) ⁽²⁾	(0.26	)	(0.28	)	(0.23	)	(0.24	)	(0.20	)
Net realized and unrealized gain (loss)	0.10		2.47		0.62		2.58		3.85

Total from investment operations	(0.16	)	2.19		0.39		2.34		3.65

Less distributions
Distributions from net realized gains	(2.13	)	(4.09	)	—		—		—

Total distributions	(2.13	)	(4.09	)	—		—		—

Change in net asset value	(2.29	)	(1.90	)	0.39		2.34		3.65

Net asset value, end of period	$16.50		$18.79		$20.69		$20.30		$17.96

Total return ⁽¹⁾	(1.09	)%	10.93	%	1.92	%	13.03	%	25.59	%
Ratios/supplemental data:
Net assets, end of period (thousands)	$8,590		$11,646		$14,102		$17,845		$12,565
Ratio to average net assets of:
Operating expenses	2.20	%	2.22	%	2.19	%	2.16	%	2.26	%
Net investment income (loss)	(1.38	)%	(1.30	)%	(1.19	)%	(1.31	)%	(1.35	)%
Portfolio turnover	18	%	26	%	22	%	16	%	17	%

⁽¹⁾ Sales charges are not reflected in the total return calculation.

⁽²⁾ Computed using average shares outstanding.

See Notes to Financial Statements


94		Phoenix Equity Trust

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Strategic Growth Fund



	Class A
	Six Months Ended October 31, 2007 (Unaudited)		Year Ended April 30,
	Six Months Ended October 31, 2007 (Unaudited)		2007		2006		2005		2004		2003
Net asset value, beginning of period	$9.99		$9.78		$8.59		$8.64		$7.17		$9.06
Income from investment operations
Net investment income (loss) ⁽²⁾	(0.02	)	(0.06	)	(0.06	)	(0.06	)	(0.06	)	(0.07	)
Net realized and unrealized gain (loss)	(1.40	)	0.27		1.25		0.01		1.53		(1.82	)

Total from investment operations	1.38		0.21		1.19		(0.05	)	1.47		(1.89	)

Change in net asset value	1.38		0.21		1.19		(0.05	)	1.47		(1.89	)

Net asset value, end of period	$11.37		$9.99		$9.78		$8.59		$8.64		$7.17

Total return ⁽¹⁾	13.81	% ⁽⁴⁾	2.15	%	13.85	%	(0.58	)%	20.50	%	(20.86	)%
Ratios/supplemental data:
Net assets, end of period (thousands)	$167,770		$161,396		$106,693		$128,426		$162,974		$156,017
Ratio to average net assets of:
Operating expenses	1.41	% ⁽³⁾	1.61	%	1.62	%	1.56	%	1.52	%	1.60	%
Net investment income (loss)	(0.48	)% ⁽³⁾	(0.61	)%	(0.66	)%	(0.67	)%	(0.73	)%	(0.95	)%
Portfolio turnover	54	% ⁽⁴⁾	81	%	63	%	107	%	167	%	119	%

	Class B
	Six Months Ended October 31, 2007 (Unaudited)		Year Ended April 30,
	Six Months Ended October 31, 2007 (Unaudited)		2007		2006		2005		2004		2003
Net asset value, beginning of period	$8.98		$8.86		$7.84		$7.94		$6.64		$8.46
Income from investment operations
Net investment income (loss) ⁽²⁾	(0.06	)	(0.12	)	(0.12	)	(0.11	)	(0.11	)	(0.11	)
Net realized and unrealized gain (loss)	1.26		0.24		1.14		0.01		1.41		(1.71	)

Total from investment operations	1.20		0.12		1.02		(0.10	)	1.30		(1.82	)

Change in net asset value	1.20		0.12		1.02		(0.10	)	1.30		(1.82	)

Net asset value, end of period	$10.18		$8.98		$8.86		$7.84		$7.94		$6.64

Total return ⁽¹⁾	13.36	% ⁽⁴⁾	1.35	%	13.01	%	(1.26	)%	19.58	%	(21.51	)%
Ratios/supplemental data:
Net assets, end of period (thousands)	$9,144		$9,932		$7,885		$11,006		$24,989		$30,755
Ratio to average net assets of:
Operating expenses	2.16	% ⁽³⁾	2.36	%	2.37	%	2.32	%	2.27	%	2.34	%
Net investment income (loss)	(1.22	)% ⁽³⁾	(1.36	)%	(1.41	)%	(1.40	)%	(1.48	)%	(1.71	)%
Portfolio turnover	54	% ⁽⁴⁾	81	%	63	%	107	%	167	%	119	%

⁽¹⁾ Sales charges are not reflected in the total return calculation.

⁽²⁾ Computed using average shares outstanding.

⁽³⁾ Annualized.

⁽⁴⁾ Not annualized.

See Notes to Financial Statements


Phoenix Equity Trust		95

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Strategic Growth Fund



	Class C
	Six Months Ended October 31, 2007 (Unaudited)		Year Ended April 30,
	Six Months Ended October 31, 2007 (Unaudited)		2007		2006		2005		2004		2003
Net asset value, beginning of period	$8.99		$8.87		$7.85		$7.95		$6.65		$8.47
Income from investment operations
Net investment income (loss) ⁽²⁾	(0.06	)	(0.11	)	(0.12	)	(0.11	)	(0.12	)	(0.11	)
Net realized and unrealized gain (loss)	1.26		0.23		1.14		0.01		1.42		(1.71	)

Total from investment operations	1.20		0.12		1.02		(0.10	)	1.30		(1.82	)

Change in net asset value	1.20		0.12		1.02		(0.10	)	1.30		(1.82	)

Net asset value, end of period	$10.19		$8.99		$8.87		$7.85		$7.95		$6.65

Total return ⁽¹⁾	13.35	% ⁽⁴⁾	1.35	%	12.99	%	(1.26	)%	19.55	%	(21.49	)%
Ratios/supplemental data:
Net assets, end of period (thousands)	$4,648		$4,843		$1,490		$2,371		$3,713		$3,260
Ratio to average net assets of:
Operating expenses	2.16	% ⁽³⁾	2.32	%	2.37	%	2.31	%	2.27	%	2.34	%
Net investment income (loss)	(1.22	)% ⁽³⁾	(1.30	)%	(1.42	)%	(1.42	)%	(1.48	)%	(1.71	)%
Portfolio turnover	54	% ⁽⁴⁾	81	%	63	%	107	%	167	%	119	%

	Class I
	Six Months Ended October 31, 2007 (Unaudited)		From Inception September 29, 2006 to April 30, 2007
Net asset value, beginning of period	$10.01		$9.26
Income from investment operations
Net investment income (loss) ⁽²⁾	(0.01	)	(0.01	)
Net realized and unrealized gain (loss)	1.41		0.76

Total from investment operations	1.40		0.75

Change in net asset value	1.40		0.75

Net asset value, end of period	$11.41		$10.01

Total return	13.99	% ⁽⁴⁾	8.10	% ⁽⁴⁾
Ratios/supplemental data:
Net assets, end of period (thousands)	$6,950		$7,208
Ratio to average net assets of:
Operating expenses	1.16	% ⁽³⁾	1.27	% ⁽³⁾
Net investment income (loss)	(0.22	)% ⁽³⁾	(0.24	)% ⁽³⁾
Portfolio turnover	54	% ⁽⁴⁾	81	% ⁽⁴⁾

⁽¹⁾ Sales charges are not reflected in the total return calculation.

⁽²⁾ Computed using average shares outstanding.

⁽³⁾ Annualized.

⁽⁴⁾ Not annualized.

See Notes to Financial Statements


96		Phoenix Equity Trust

Financial Highlights (continued)

(Selected data for a share outstanding throughout the indicated period)

Phoenix Value Opportunities Fund


	Class A
	Six Months Ended December 31, 2007 (Unaudited)		Year Ended June 30, 2007		From Inception July 29, 2005 to June 30, 2006
Net asset value, beginning of period	$13.67		$11.20		$10.00
Income from investment operations
Net investment income (loss) ⁽²⁾	0.01		0.06		0.07
Net realized and unrealized gain (loss)	(0.86	)	2.86		1.17

Total from investment operations	(0.85	)	2.92		1.24

Less distributions
Dividends from net investment income	(0.01	)	(0.05	)	(0.04	)
Dividends from net realized gains	(0.32	)	(0.40	)	—

Total distributions	(0.33	)	(0.45	)	(0.04	)

Change in net asset value	(1.18	)	2.47		1.20

Net asset value, end of period	$12.49		$13.67		$11.20

Total return ⁽¹⁾	(6.18	)% ⁽⁴⁾	26.71	%	12.41	% ⁽⁴⁾
Ratios/supplemental data:
Net assets, end of period (thousands)	$82,453		$50,788		$3,292
Ratio to average net assets of:
Net operating expenses	1.57	% ⁽³⁾⁽⁷⁾	1.41	%	1.40	% ⁽³⁾⁽⁶⁾
Gross operating expenses	1.57	% ⁽³⁾	1.60	%	7.45	% ⁽³⁾
Net investment income (loss)	0.17	% ⁽³⁾	0.46	%	0.72	% ⁽³⁾
Portfolio turnover	32	% ⁽⁴⁾	101	%	136	% ⁽⁴⁾

	Class C
	Six Months Ended December 31, 2007 (Unaudited)		Year Ended June 30, 2007		From Inception July 29, 2005 to June 30, 2006
Net asset value, beginning of period	$13.60		$11.18		$10.00
Income from investment operations
Net investment income (loss) ⁽²⁾	(0.04	)	(0.03	)	— ⁽⁵	⁾
Net realized and unrealized gain (loss)	(0.86	)	2.85		1.19

Total from investment operations	(0.90	)	2.82		1.19

Less distributions
Dividends from net investment income	—		— ⁽⁵	⁾	(0.01	)
Dividends from net realized gains	(0.32	)	(0.40	)	—

Total distributions	(0.32	)	(0.40	)	(0.01	)

Change in net asset value	(1.22	)	2.42		1.18

Net asset value, end of period	$12.38		$13.60		$11.18

Total return ⁽¹⁾	(6.53	)% ⁽⁴⁾	25.77	%	11.85	% ⁽⁴⁾
Ratios/supplemental data:
Net assets, end of period (thousands)	$9,509		$1,128		$183
Ratio to average net assets of:
Net operating expenses	2.27	% ⁽³⁾⁽⁷⁾	2.16	%	2.15	% ⁽³⁾⁽⁶⁾
Gross operating expenses	2.27	% ⁽³⁾	2.58	%	8.19	% ⁽³⁾
Net investment income (loss)	(0.60	)% ⁽³⁾	(0.22	)%	(0.05	)% ⁽³⁾
Portfolio turnover	32	% ⁽⁴⁾	101	%	136	% ⁽⁴⁾

⁽¹⁾ Sales charges are not reflected in the total return calculation.

⁽²⁾ Computed using average shares outstanding.

⁽³⁾ Annualized.

⁽⁴⁾ Not annualized.

⁽⁵⁾ Amount is less than $0.01.

⁽⁶⁾ The ratio of net operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would have been 0.05% lower than the ratio shown in the table.

⁽⁷⁾ The ratio of net operating expenses includes extraordinary expenses, if these expenses were excluded the ratio would have been 1.35% for Class A and 2.10% for Class C.

See Notes to Financial Statements


Phoenix Equity Trust		97

LOGO

Phoenix Equity Planning Corporation

P.O. Box 150480

Hartford, CT 06115-0480

ADDITIONAL INFORMATION

You can find more information about the Funds in the following documents:

Annual and Semiannual Reports

Annual and semiannual reports contain more information about the Funds’ investments. The annual report discusses the market conditions and investment strategies that significantly affected the Funds’ performance during the last fiscal year.

Statement of Additional Information (SAI)

The SAI contains more detailed information about the Funds. It is incorporated by reference and is legally part of the prospectus.

To obtain free copies of these documents, you can download copies from the Individual Investors section of our Web site, phoenixfunds.com, or you can request copies by calling us toll-free at 1-800-243-1574.

Information about the Funds (including the SAI) can be reviewed and copied at the Securities and Exchange Commission’s (SEC) Public Reference Room in Washington, DC. For information about the operation of the Public Reference Room, call 1-202-551-8090. This information is also available on the SEC’s Internet site at sec.gov. You may also obtain copies upon payment of a duplicating fee by writing the Public Reference Section of the SEC, Washington, DC 20549-6009 or by electronic request at publicinfo@sec.gov.

Mutual Fund Services: 1-800-243-1574

Text Telephone: 1-800-243-1926

Investment Company Act File No. 811-945


PXP691 BPD34168		2-08

PHOENIX EQUITY TRUST

Phoenix All-Cap Growth Fund

Phoenix Balanced Fund

Phoenix Capital Growth Fund

Phoenix Growth & Income Fund

Phoenix Growth Opportunities Fund

Phoenix Income & Growth Fund

Phoenix Mid-Cap Growth Fund

Phoenix Mid-Cap Value Fund

Phoenix Quality Small-Cap Fund

Phoenix Small-Cap Growth Fund

Phoenix Small-Cap Sustainable Growth Fund

Phoenix Small-Cap Value Fund

Phoenix Small-Mid Cap Fund

Phoenix Strategic Growth Fund

Phoenix Value Opportunities Fund

101 Munson Street

Greenfield, MA 01301

Statement of Additional Information

March 10, 2008

The Statement of Additional Information (“SAI”) is not a prospectus, but expands upon and supplements the information contained in the Prospectus for the Phoenix Equity Trust (the “Trust”) dated March 10, 2008, and should be read in conjunction with it. The SAI incorporates by reference certain information that appears in the Trust’s annual and semiannual reports, which are delivered to all investors. You may obtain a free copy of the Trust’s Prospectus, annual or semiannual reports by visiting the Phoenix Funds Web sites at PhoenixFunds.com or PhoenixInvestments.com, by calling Phoenix Equity Planning Corporation (“PEPCO”) at (800) 243-4361 or by writing to PEPCO at One American Row, P.O. Box 5056, Hartford, CT 06102-5056.

Mutual Fund Services: (800) 243-1574

Adviser Consulting Group: (800) 243-4361

Telephone Orders: (800) 367-5877

Text Telephone: (800) 243-1926

PXP 691B (3/08)

TA BLE OF CONTENTS


		PAGE
The Trust		3
Investment Restrictions		3
Investment Techniques and Risks		5
Performance Information		34
Portfolio Turnover		35
Portfolio Transactions and Brokerage		35
Disclosure of Fund Holdings		37
Services of the Adviser and Subadvisers		38
Portfolio Managers		44
Net Asset Value		50
How to Buy Shares		51
Alternative Purchase Arrangements		51
Investor Account Services		54
How to Redeem Shares		56
Dividends, Distributions and Taxes		57
Tax Sheltered Retirement Plans		61
The Distributor		61
Distribution Plans		63
Management of the Trust		64
Additional Information		72

THE TRUST

The Trust was originally incorporated in New York in 1956, and on January 13, 1992, the Trust was reorganized as a Massachusetts business trust under the name of “National Worldwide Opportunities Fund”. It was reorganized as a Delaware statutory trust in October 2000. The Trust has operated as an open-end, diversified management investment company since May 1960. On June 30, 1993, the Trustees voted to change the name of the Trust to “Phoenix Worldwide Opportunities Fund” to reflect the purchase of the former adviser by Phoenix Life Insurance Company and the affiliation with other Phoenix Funds. On November 18, 1998, the Trustees voted to change the name of the Trust to “Phoenix-Aberdeen Worldwide Opportunities Fund.” On June 28, 2004 the Trust changed its name to Phoenix Equity Trust. The Trust consists of 16 Funds: the Phoenix All-Cap Growth Fund (“All-Cap Growth Fund”); the Phoenix Balanced Fund (“Balanced Fund”); the Phoenix Capital Growth Fund (“Capital Growth Fund”); the Phoenix Growth & Income Fund (“Growth & Income Fund”); the Phoenix Growth Opportunities Fund (“Growth Opportunities Fund”); the Phoenix Income & Growth Fund (“Income & Growth Fund”); the Phoenix Mid-Cap Growth Fund (“Mid-Cap Growth Fund”); the Phoenix Mid-Cap Value Fund (“Mid-Cap Value Fund”); the Phoenix Quality Small-Cap Fund (“Quality Small-Cap Fund”); the Phoenix Small-Cap Growth Fund (“Small-Cap Growth Fund”); the Phoenix Small-Cap Sustainable Growth Fund (“Small-Cap Sustainable Growth Fund”); the Phoenix Small-Cap Value Fund (“Small-Cap Value Fund”); the Phoenix Small-Mid Cap Fund (“Small-Mid Cap Fund”); the Phoenix Strategic Growth Fund (“Strategic Growth Fund”); and the Phoenix Value Opportunities Fund (“Value Opportunities Fund”) ( each a “Fund” and collectively, the “Funds”).

The Trust’s Prospectus describes the investment objectives of the Funds and the strategies that the Funds will employ in seeking to achieve their investment objectives. The respective investment objectives for the All-Cap Growth Fund and the Small-Cap Growth Fund are fundamental policies any may not be changed without the vote of a majority of the outstanding voting securities of that Fund. The respective investment objectives for the remaining Funds are non-fundamental policies and may be changed without shareholder approval, upon 60 days notice. The following discussion supplements the disclosure in the Prospectus.

INVESTMENT RESTRICTIONS

Fundamental Investment Restrictions

The following investment restrictions have been adopted by the Funds. Except as otherwise stated, these investment restrictions are “fundamental” policies. A “fundamental” policy is defined in the Investment Company Act of 1940, as amended, (the “1940 Act”) to mean that the restriction cannot be changed without the vote of a “majority of the outstanding voting securities” of the Fund. A “majority of the outstanding voting securities” is defined in the 1940 Act as the lesser of (a) 67% or more of the voting securities present at a meeting if the holders of more than 50% of the outstanding voting securities are present or represented by proxy, or (b) more than 50% of the outstanding voting securities.

With respect to all of the Funds, each Fund may not:

(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 Fund’s 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 Fund.

(2) Purchase securities if, after giving effect to the purchase, more than 25% of its respective total assets would be invested in the securities of one or more issuers conducting their principal business activities in the same industry (excluding the U.S. Government, its agencies or instrumentalities).

(3) Borrow money, except (i) in amounts not to exceed one third of the value of the Fund’s 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 clearance and settlement, shall not constitute borrowing.

(4) Issue “senior securities” in contravention of the 1940 Act. Activities permitted by exemptive orders or staff interpretations of the Securities and Exchange Commission (“SEC”) shall not be deemed to be prohibited by this restriction.

(5) Underwrite the securities issued by other persons, except to the extent that, in connection with the disposition of portfolio securities, the Funds may be deemed to be underwriters under applicable law.

(6) Purchase or sell real estate, except that the Funds may (i) acquire or lease office space for their 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, and (iv) hold and sell real estate acquired by the Funds as a result of the ownership of securities.

(7) Purchase or sell commodities or commodity contracts, except the Funds 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 indexes, interest rates, securities, currencies and physical commodities).

(8)(a) Make loans, except that the Funds 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. (Applicable to Mid-Cap Value Fund.)

(8)(b) Lend securities or make any other loans if, as a result, more than 33 1/3% of its total assets would be lent to other parties, except that the fund may purchase debt securities, may enter into repurchase agreements, may lend portfolio securities and may acquire loans, loan participations and assignments (both funded and unfunded) and other forms of debt instruments. (Applicable to all funds, except Mid-Cap Value Fund.)

Except with respect to investment restriction (3) above, if any percentage restriction described above for the Funds 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 Funds’ assets will not constitute a violation of the restriction. With respect to investment restriction (3), in the event that asset coverage for all borrowings shall at any time fall below 300 per centum, the Fund shall, within three days thereafter (not including Sundays and holidays) or such longer period as the SEC may prescribe by rules and regulations, reduce the amount of its borrowings to an extent that the asset coverage of such borrowings shall be at least 300 per centum.

Non-Fundamental Investment Restrictions

The Trustees have adopted additional investment restrictions for some of the Funds, which act as operating policies for said Funds. The additional investment restrictions may be changed by the Trustees without shareholder approval.

The additional investment restrictions adopted by the Trustees include the following for the Small-Mid Cap Fund. The Fund my not:

(a) purchase or write put, call, straddle or spread options except as described in the Prospectus or Statement of Additional Information;

(b) make short sales (except covered or “against the box” short sales) or purchases on margin, except that the Fund may obtain short-term credits necessary for the clearance of purchases and sales of its portfolio securities and, as required in connection with permissible options, futures, short selling and leveraging activities as described elsewhere in the Prospectus and Statement of Additional Information;

(c) mortgage, hypothecate, or pledge any of its assets as security for any of its obligations, except as required for otherwise permissible borrowings (including reverse repurchase agreements, dollar roll transactions, short sales, financial options and other hedging activities);

(d) purchase the securities of any company for the purpose of exercising management or control (but this restriction shall not restrict the voting of any proxy);

(e) purchase more than 10% of the outstanding voting securities of any one issuer;

(f) purchase the securities of other investment companies, except as permitted by the 1940 Act and except as otherwise provided in the Prospectus (the Fund reserves the right to invest all of its assets in shares of another investment company);

(g) participate on a joint basis in any trading account in securities, although the adviser may aggregate orders for the sale or purchase of securities with other accounts it manages to reduce brokerage costs or to average prices;

(h) invest, in the aggregate, more than 10% of its net assets in illiquid securities;

(i) invest more than 5% of its net assets in indexed securities.

INVESTMENT TECHNIQUES AND RISKS

The following pages contain more detailed information about types of instruments in which a Fund may invest, strategies the Adviser and/or Subadvisers may employ in pursuit of a Fund’s investment objective, and a summary of related risks. The Funds may not buy all of these instruments or use all of these techniques.

Throughout this section, the term adviser may be used to refer to a subadviser, if any.

Borrowing, Reverse Repurchase Agreements and Mortgage Dollar Rolls

The Fund may borrow money and invest the loan proceeds in other assets. This borrowing may be unsecured. The 1940 Act requires the Funds to maintain continuous asset coverage (that is, total assets including borrowings, less liabilities exclusive of borrowings) of 300% of the amount borrowed. If the 300% asset coverage should decline as a result of market fluctuations or other reasons, the Fund may be required to sell some of its portfolio holdings within three days to reduce the debt and restore the 300% asset coverage, even though it may be disadvantageous from an investment standpoint to sell securities at that time. Borrowing may exaggerate the effect on net asset value of any increase or decrease in the market value of the portfolio. Money borrowed will be subject to interest costs which may or may not be recovered by appreciation of the securities purchased. The Fund also may be required to maintain minimum average balances in connection with such borrowing or to pay a commitment or other fee to maintain a line of credit; either of these requirements would increase the cost of borrowing over the stated interest rate.

Among the forms of investments in which the Fund may engage, and which may be deemed to constitute borrowings, is the entry into reverse repurchase agreements. A reverse repurchase agreement involves the sale of a portfolio-eligible security by a Fund, coupled with its agreement to repurchase the instrument at a specified time and price. The Fund will maintain a pledged account with its Custodian consisting of any asset, including equity securities and non-investment grade debt so long as the asset is liquid, unencumbered and marked to market daily, equal to its obligations under reverse repurchase agreements with broker-dealers and banks. However, reverse repurchase agreements involve the risk that the market value of securities retained by the Fund may decline below the repurchase price of the securities sold by the Fund which it is obligated to repurchase.

The Fund also may enter into “mortgage dollar rolls,” which are similar to reverse repurchase agreements in certain respects. In a “dollar roll” transaction, the Fund sells a mortgage-related security (such as a Government National Mortgage Association (“GNMA”) security) to a dealer and simultaneously agrees to purchase a similar security (but not the same security) in the future at a pre-determined price. A “dollar roll” can be viewed, like a reverse repurchase agreement, as a collateralized borrowing in which the Fund pledges a mortgage-related security to a dealer to obtain cash. Unlike in the case of reverse repurchase agreements, the dealer with which the Fund enters into a dollar roll transaction is not obligated to return the same securities as those originally sold by the Fund, but only securities which are “substantially identical.” To be considered “substantially identical,” the securities returned to the Fund generally must: (1) be collateralized by the same types of underlying mortgages; (2) be issued by the same agency and be part of the same program; (3) have a similar original stated maturity; (4) have identical net coupon rates; (5) have similar market yields (and therefore price); and (6) satisfy “good delivery” requirements, meaning that the aggregate principal amount of the securities received back must be within 2.5% of the initial amount delivered.

The Fund’s obligation under a dollar roll agreement must be covered by cash or high quality debt securities equal in value to the securities subject to repurchase by the Fund, maintained in a pledged account. Dollar roll transactions are treated as borrowings by the Fund, and therefore the Fund’s entry into dollar roll transactions is subject to the Fund’s overall limitations on borrowing. Furthermore, because dollar roll transactions may be for terms ranging between one and six months, dollar roll transactions may be deemed “illiquid” and subject to the Fund’s overall limitations on investment in illiquid securities.

Currency Hedging and Risk Management Practices

The Fund does not expect to engage actively in hedging practices. However, from time to time when deemed appropriate by the Adviser, it may seek to protect against the effect of adverse changes in currency exchange rates that are adverse to the present or prospective position of the Fund by employing forward currency exchange contracts or options (sometimes called “derivatives”). A forward currency contract is individually negotiated and privately traded by currency traders and their customers and creates an obligation to purchase or sell a specific currency for an agreed-upon price at a future date.

The Fund generally enters into forward contracts only under two circumstances. First, if the Fund enters into a contract for the purchase of a security denominated in a foreign currency, it may desire to “lock in” the U.S. dollar price of the security by entering in a forward contract to buy the amount of a foreign currency needed to settle the transaction. Second, if the Adviser believes that the currency of a particular foreign country will substantially rise or fall against the U.S. dollar, it may enter in a forward contract to buy or sell the currency approximating the value of some or all of a Fund’s portfolio securities denominated in such currency. Although forward contracts are used primarily to protect the Fund from adverse currency movements, they involve the risk that currency movements will not be accurately anticipated.

The Fund also may purchase a put or call option on a currency in an effort to hedge its current or prospective investments. The Fund will not enter into any futures contracts or related options if the sum of initial margin deposits on futures contracts, related options (including options on securities, securities indices and currencies) and premiums paid for any such related options would exceed 5% of the its total assets. There can be no assurance that hedging transactions by a Fund, if employed, will be successful. Despite their limited use, the Fund may enter into hedging transactions when, in fact, it is inopportune to do so and, conversely, when it is more opportune to enter into hedging transactions, the Fund might not enter into such transactions. Such inopportune timing of utilization of hedging practices could result in substantial losses to the Fund.

Debt Securities

The Fund may invest in debt securities. Generally, the Fund will invest in debt securities rated BBB or better by Standard & Poor’s Corporation (“S&P”) or Baa or better by Moody’s Investor Service, Inc. (“Moody’s”) or, if not rated, are judged to be of comparable quality as determined by the adviser. After a purchase, the rating of a debt security may be reduced below the minimum rating acceptable for purchase by a Fund. A subsequent downgrade does not require the sale of the security, but the adviser will consider such an event in determining whether to continue to hold the obligation.

The value of a Fund’s investments in debt securities will change as interest rates fluctuate. When interest rates decline, the values of such securities generally can be expected to increase and when interest rates rise, the values of such securities can generally be expected to decrease. The lower-rated and comparable unrated debt securities described above are subject to greater risks of loss of income and principal than are higher-rated fixed income securities. The market value of lower- rated securities generally tends to reflect the market’s perception of the creditworthiness of the issuer and short-term market developments to a greater extent than is the case with more highly rated securities, which reflect primarily functions in general levels of interest rates.

Corporate Debt Securities . A Fund’s investments in debt securities of domestic or foreign corporate issuers are limited to bonds, debentures, notes and other similar corporate debt instruments, including convertible securities that meet the Fund’s minimum ratings criteria or if unrated are, in the adviser’s opinion, comparable in quality to corporate debt securities that meet those criteria. The rate of return or return of principal on some debt obligations may be linked or indexed to the level of exchange rates between the U.S. dollar and a foreign currency or currencies or to the value of commodities, such as gold.

Convertible Securities. A convertible security is a bond, debenture, note, or other security that entitles the holder to acquire common stock or other equity securities of the same or a different issuer. It generally entitles the holder to receive interest paid or accrued until the security matures or is redeemed, converted, or exchanged. Before conversion, convertible securities have characteristics similar to nonconvertible debt securities. Convertible securities rank senior to common stock in a corporation’s capital structure and, therefore, generally entail less risk than the corporation’s common stock, although the extent to which this is true depends in large measure on the degree to which the convertible security sells above its value as a fixed-income security.

A convertible security may be subject to redemption or conversion at the option of the issuer at a predetermined price. If a convertible security held by a Fund is called for redemption, the Fund could be required to permit the issuer to redeem the security and convert it to the underlying common stock. The Fund generally would invest in convertible securities for their favorable price characteristics and total return potential and would normally not exercise an option to convert. The Fund might be more willing to convert such securities to common stock.

Convertible Low-Rated Securities (Junk Bonds). The Fund may also invest in convertible securities (debt securities or preferred stocks of corporations which are convertible into or exchangeable for common stocks). A Fund’s adviser or subadviser, as the case may be, will select only those convertible securities for which it believes (a) the underlying common stock is a suitable investment for the Fund and (b) a greater potential for total return exists by purchasing the convertible security because of its higher yield and/or favorable market valuation. Each of the Funds may invest in convertible debt securities rated less than investment grade. Debt securities rated less than investment grade are commonly referred to as “junk bonds.” See High Yield-High Risk Securities (Junk Bonds).

General Obligation Bonds . Issuers of general obligation bonds include states, counties, cities, towns and regional districts. The proceeds of these obligations are used to fund a wide range of public projects, including construction or improvement of schools, highways and roads, and water and sewer systems. The basic security behind general obligation bonds is the issuer’s pledge of its full faith, credit and taxing power for the payment of principal and interest. The taxes that can be levied for the payment of debt service may be limited or unlimited as to the rate or amount of special assessments.

Industrial Development Bonds. Industrial development bonds, which may pay tax-exempt interest, are, in most cases, revenue bonds and are issued by or on behalf of public authorities to raise money to finance various privately operated facilities for business manufacturing, housing, sports, and pollution control. These bonds also are used to finance public facilities, such as airports, mass transit systems, ports and parking. The payment of the principal and interest on such bonds is dependent solely on the ability of the facility’s user to meet its financial obligations and the pledge, if any, of the real and personal property so financed as security for such payment. As a result of 1986 federal tax legislation, industrial revenue bonds may no longer be issued on a tax-exempt basis for certain previously permissible purposes, including sports and pollution control facilities.

Revenue Bonds. A revenue bond is not secured by the full faith, credit and taxing power of an issuer. Rather, the principal security for a revenue bond is generally the net revenue derived from a particular facility, group of facilities or, in some cases, the proceeds of a special excise or other specific revenue source. Revenue bonds are issued to finance a wide variety of capital projects, including electric, gas, water, and sewer systems; highways, bridges, and tunnels; port and airport facilities; colleges and universities; and hospitals. Although the principal security behind these bonds may vary, many provide additional security in the form of a debt service reserve fund that may be used to make principal and interest payments on the issuer’s obligations. Housing finance authorities have a wide range of security, including partially or fully insured mortgages, rent subsidized and/or collateralized mortgages, and/or the net revenues from housing or other public projects. Some authorities provide further security in the form of a governmental assurance (although without obligation) to make up deficiencies in the debt service reserve fund.

Inverse Floaters. Inverse floaters are debt instruments whose interest bears an inverse relationship to the interest rate on another security. No Fund will invest more than 5% of its assets in inverse floaters. Similar to variable and floating rate obligations, effective use of inverse floaters requires skills different from those needed to select most portfolio securities. If movements in interest rates are incorrectly anticipated, a Fund could lose money or its NAV could decline by the use of inverse floaters.

Payable in Kind (“PIK”) Bonds . PIK bonds are obligations which provide that the issuer thereof may, at its option, pay interest on such bonds in cash or in the form of additional debt securities. Such securities benefit the issuer by mitigating its need for cash to meet debt service, but also require a higher rate of return to attract investors who are willing to defer receipt of such cash. The Fund will accrue income on such investments for tax and accounting purposes, which is distributable to shareholders from available cash or liquidated assets as described above during the time interest payments are not made.

Standby Commitments. These instruments, which are similar to a put, give a Fund the option to obligate a broker-dealer or bank to repurchase a security held by that Fund at a specified price.

Step Coupon Bonds. Step coupon bonds are bonds that frequently do not entitle the holder to any periodic payments of interest for some initial period after the issuance of the obligation; thereafter, step coupon bonds pay interest for fixed periods of time at particular interest rates. The Fund will accrue income on such investments for tax and accounting purposes, which is distributable to shareholders from available cash or liquidated assets as described above during the time interest payments are not made.

Strip Bonds . Strip bonds are debt securities that are stripped of their interest (usually by a financial intermediary) after the securities are issued. The market value of these securities generally fluctuates more in response to changes in interest rates than interest-paying securities of comparable maturity.

Tender Option Bonds. Tender option bonds are relatively long-term bonds that are coupled with the option to tender the securities to a bank, broker-dealer or other financial institution at periodic intervals and receive the face value of the bond. This investment structure is commonly used as a means of enhancing a security’s liquidity.

Variable and Floating Rate Obligations. These types of securities have variable or floating rates of interest and, under certain limited circumstances, may have varying principal amounts. Variable and floating rate securities pay interest at rates that are adjusted periodically according to a specific formula, usually with reference to some interest rate index or market interest rate (the “underlying index”). The floating rate tends to decrease the security’s price sensitivity to changes in interest rates. These types of securities are relatively long-term instruments that often carry demand features permitting the holder to demand payment of principal at any time or at specified intervals prior to maturity. Accordingly, as interest rates decrease or increase, the potential for capital appreciation or depreciation is less than for fixed-rate obligations.

In order to most effectively use these investments, a portfolio manager must correctly assess probable movements in interest rates. This involves different skills than those used to select most portfolio securities. If the adviser incorrectly forecasts such movements, a Fund could be adversely affected by the use of variable or floating rate obligations.

Variable Rate Demand Securities are Variable Rate Securities which have demand features entitling the purchaser to resell the securities to the issuer at an amount approximately equal to amortized cost or the principal amount thereof plus accrued interest, which may be more or less than the price that the Fund paid for them. The interest rate on Variable Rate Demand Securities also varies either according to some objective standard, such as an index of short-term, tax-exempt rates, or according to rates set by or on behalf of the issuer.

Zero Coupon Bonds . A zero coupon bond is a debt obligation that does not make any interest payments for a specified period of time prior to maturity or until maturity. The nonpayment of interest on a current basis may result from the bond’s having no stated interest rate, in which case the bond pays only principal at maturity and is initially issued at a discount from face value. Alternatively, a zero coupon obligation may provide for a stated rate of interest, but provide that such interest is not payable until maturity, in which case the bond may initially be issued at par. Even though zero coupon bonds may not pay current interest in cash, the Fund is required to accrue interest income on such investments and to distribute such amounts to shareholders. Thus, the Fund would not be able to purchase income-producing securities to the extent cash is used to pay such distributions, and, therefore, the Fund’s current income could be less than it otherwise would have been. Instead of using cash, the Fund might liquidate investments in order to satisfy these distribution requirements. The value of zero coupon bonds fluctuates more in response to interest rate changes, if they are of the same maturity, than does the value of debt obligations that make current interest payments.

The value to the investor of these types of bonds is represented by the economic accretion either of the difference between the purchase price and the nominal principal amount (if no interest is stated to accrue) or of accrued, unpaid interest during the bond’s life or payment deferral period.

Depositary Receipts

The Fund may invest in sponsored and unsponsored American Depositary Receipts (“ADRs”), which are receipts issued by an American bank or trust company evidencing ownership of underlying securities issued by a foreign issuer. ADRs, in registered form, are designed for use in U. S. securities markets. Unsponsored ADRs may be created without the participation of the foreign issuer. Holders of these ADRs generally bear all the costs in a sponsored ADR. The bank or trust company depositary of an unsponsored ADR may be under no obligation to distribute shareholder communications received from the foreign issuer or to pass through voting rights. The Fund may also invest in European Depositary Receipts (“EDRs”), Global Depositary Receipts (“GDRs”) and in other similar instruments representing securities of foreign companies. EDRs and GDRs are securities that are typically issued by foreign banks or foreign trust companies, although U.S. banks or U. S. trust companies may issue them. EDRs and GDRs are structured similarly to the arrangements of ADRs. EDRs, in bearer form, are designed for use in European securities markets.

Depositary receipts are generally subject to the same sort of risks as direct investments in a foreign country, such as currency risk, political and economic risk, and market risk, because their values depend on the performance of a foreign security denominated in its home currency. The risks of foreign investing are addressed under the heading “Foreign Securities.”

Derivative Investments

In order to seek to hedge various portfolio positions, including to hedge against price movements in markets in which a Fund anticipates increasing its exposure, the Fund may invest in certain instruments which may be characterized as derivative investments. A Fund may also utilize these instruments as part of its overall investment technique to gain or lessen exposure to various securities, market or currencies. These investments include various types of interest rate transactions, options and futures, as describe below. Such investments also may consist of indexed securities, including inverse securities. The Fund may have express limitations on the percentage of its assets that may be committed to these investments. Some of these investments have no express quantitative limitations, are not for speculation, and may in some cases require limitations as to the type of permissible counter-party to the transaction. Interest rate transactions involve the risk of an imperfect correlation between the index used in the hedging transactions and that pertaining to the securities which are the subject of such transactions. Similarly, utilization of options and futures transactions involves the risk of imperfect correlation in movements in the price of options and futures and movements in the price of the securities or interest rates which are the subject of the hedge. Investments in indexed securities, including inverse securities, subject a Fund to the risks associated with changes in the particular indices, which may include reduced or eliminated interest payments and losses of invested principal.

Credit Linked Notes

Credit linked notes are a derivative transaction used to transfer credit risk. The performance of the notes is linked to the performance of the underlying reference obligation or reference portfolio (“reference entities”). The notes are usually issued by a special purpose vehicle (“SPV”) that sells credit protection through a credit default swap (“CDS”) transaction in return for a premium and an obligation to pay the transaction sponsor should a reference entity experience a credit event, such as bankruptcy. The SPV invests the proceeds from the notes to cover its contingent obligation. Revenue from the investments and the money received as premium are used to pay interest to note holders. The main risk of credit linked notes is the risk of default to the reference obligation of the CDS. Should a default occur, the SPV would have to pay the transaction sponsor, subordinating payments to the note holders. Credit linked notes also may not be liquid and may be subject to currency and interest rate risks as well.

Foreign Currency Transactions.

The Fund may engage in certain foreign currency exchange and option transactions. These transactions involve investment risks and transaction costs to which the Fund would not be subject absent the use of these strategies. If the adviser’s predictions of

movements in the direction of securities prices or currency exchange rates are inaccurate, the adverse consequences to the Fund may leave the Fund in a worse position than if it had not used such strategies. Risks inherent in the use of option and foreign currency forward and futures contracts include: (1) dependence on the adviser’s ability to correctly predict movements in the direction of securities prices and currency exchange rates; (2) imperfect correlation between the price of options and futures contracts and movements in the prices of the securities or currencies being hedged; (3) the fact that the skills needed to use these strategies are different from those needed to select portfolio securities; (4) the possible absence of a liquid secondary market for any particular instrument at any time; and (5) the possible need to defer closing out certain hedged positions to avoid adverse tax consequences. The Fund’s ability to enter into futures contracts is also limited by the requirements of the Code for qualification as a regulated investment company.

The Funds may engage in currency exchange transactions to protect against uncertainty in the level of future currency exchange rates. In addition, the Funds may write covered put and call options on foreign currencies for the purpose of increasing its return.

Generally, the Fund may engage in both “transaction hedging” and “position hedging.” When it engages in transaction hedging, the Fund enters into foreign currency transactions with respect to specific receivables or payables, generally arising in connection with the purchase or sale of portfolio securities. The Fund will engage in transaction hedging when it desires to “lock in” the U.S. dollar price of a security it has agreed to purchase or sell, or the U.S. dollar equivalent of a dividend or interest payment in a foreign currency. By transaction hedging, the Fund will attempt to protect itself against a possible loss resulting from an adverse change in the exchange rate between the U.S. dollar and the applicable foreign currency during the period between the date on which the security is purchased or sold, or on which the dividend or interest payment is declared, and the date on which such payments are made or received.

The Fund may purchase or sell a foreign currency on a spot (or cash) basis at the prevailing spot rate in connection with the settlement of transactions in portfolio securities denominated in that foreign currency. The Fund may also enter into contracts to purchase or sell foreign currencies at a future date (“forward contracts”) and purchase and sell foreign currency futures contracts.

For transaction hedging purposes, the Fund may also purchase exchange-listed and over-the-counter put and call options on foreign currency futures contracts and on foreign currencies. A put option on a futures contract gives the Fund the right to assume a short position in the futures contract until the expiration of the option. A put option on a currency gives the Fund the right to sell the currency at an exercise price until the expiration of the option. A call option on a futures contract gives the Fund the right to assume a long position in the futures contract until the expiration of the option. A call option on a currency gives the Fund the right to purchase the currency at the exercise price until the expiration of the option.

When engaging in position hedging, the Fund enters into foreign currency exchange transactions to protect against a decline in the values of the foreign currencies in which its portfolio securities are denominated (or an increase in the values of currency for securities which the Fund expects to purchase, when the Fund holds cash or short-term investments). In connection with position hedging, the Fund may purchase put or call options on foreign currency and on foreign currency futures contracts and buy or sell forward contracts and foreign currency futures contracts. The Fund may also purchase or sell foreign currency on a spot basis.

The precise matching of the amounts of foreign currency exchange transactions and the value of the portfolio securities involved will not generally be possible since the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the dates the currency exchange transactions are entered into and the dates they mature.

It is also impossible to forecast with precision the market value of portfolio securities at the expiration or maturity of a forward or futures contract. Accordingly, it may be necessary for the Fund to purchase additional foreign currency on the spot market (and bear the expense of such purchase) if the market value of the security or securities being hedged is less than the amount of foreign currency the Fund is obligated to deliver and a decision is made to sell the security or securities and make delivery of the foreign currency. Conversely, it may be necessary to sell on the spot market some of the foreign currency received upon the sale of the portfolio security or securities if the market value of such security or securities exceeds the amount of foreign currency the Fund is obligated to deliver.

Transaction and position hedging do not eliminate fluctuations in the underlying prices of the securities which the Fund owns or intends to purchase or sell. They simply establish a rate of exchange which one can achieve at some future point in time. Additionally, although these techniques tend to minimize the risk of loss due to a decline in the value of the hedged currency, they tend to limit any potential gain which might result from the increase in value of such currency.

The Fund may seek to increase its return or to offset some of the costs of hedging against fluctuations in currency exchange rates by writing covered put options and covered call options on foreign currencies. The Fund receives a premium from writing a put or call option, which increases the Fund’s current return if the option expires unexercised or is closed out at a net profit. The Fund may terminate an option that it has written prior to its expiration by entering into a closing purchase transaction in which it purchases an option having the same terms as the option written.

The Fund’s currency hedging transactions may call for the delivery of one foreign currency in exchange for another foreign currency and may at times not involve currencies in which its portfolio securities are then denominated. The adviser will engage in such “cross hedging” activities when it believes that such transactions provide significant hedging opportunities for the Fund. Cross hedging transactions by the Fund involve the risk of imperfect correlation between changes in the values of the currencies to which such transactions relate and changes in the value of the currency or other asset or liability which is the subject of the hedge.

Forward Foreign Currency Exchange Contracts . A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days (“term”) from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are traded directly between currency traders (usually large commercial banks) and their customers. The holder of a cancelable forward contract has the unilateral right to cancel the contract at maturity by paying a specified fee. A forward contract generally has no deposit requirement, and no commissions are charged at any stage for trades. A foreign currency futures contract is a standardized contract for the future delivery of a specified amount of a foreign currency at a future date at a price set at the time of the contract. Foreign currency futures contracts traded in the United States are designed by and traded on exchanges regulated by the CFTC, such as the New York Mercantile Exchange.

Forward foreign currency exchange contracts differ from foreign currency futures contracts in certain respects. For example, the maturity date of a forward contract may be any fixed number of days from the date of the contract agreed upon by the parties, rather than a predetermined date in a given month. Forward contracts may be in any amounts agreed upon by the parties rather than predetermined amounts. Also, forward foreign exchange contracts are traded directly between currency traders so that no intermediary is required. A forward contract generally requires no margin or other deposit.

At the maturity of a forward or futures contract, the Fund either may accept or make delivery of the currency specified in the contract, or at or prior to maturity enter into a closing transaction involving the purchase or sale of an offsetting contract. Closing transactions with respect to forward contracts are usually effected with the currency trader who is a party to the original forward contract. Closing transactions with respect to futures contracts are effected on a commodities exchange; a clearing corporation associated with the exchange assumes responsibility for closing out such contracts.

Although the Fund intends to purchase or sell foreign currency futures contracts only on exchanges or boards of trade where there appears to be an active market, there is no assurance that a market on an exchange or board of trade will exist for any particular contract or at any particular time. In such event, it may not be possible to close a futures position and, in the event of adverse price movements, the Fund would continue to be required to make daily cash payments of variation margin.

When the Fund enters into a contract for the purchase or sale of a security denominated in a foreign currency, it may want to establish the United States dollar cost or proceeds, as the case may be. By entering into a forward contract in United States dollars for the purchase or sale of the amount of foreign currency involved in the underlying security transaction, it is able to protect itself against a possible loss between trade and settlement dates resulting from an adverse change in the relationship between the United States dollar and such foreign currency. However, this tends to limit potential gains which might result from a positive change in such currency relationships. Utilizing this investment technique may also hedge the foreign currency exchange rate risk by engaging in currency financial futures and options transactions.

When the adviser believes that the currency of a particular foreign country may suffer a substantial decline against the U.S. dollar, it may enter into a forward contract to sell an amount of foreign currency approximating the value of some or all of a Fund’s portfolio securities denominated in such foreign currency. The forecasting of short-term currency market movement is extremely difficult and whether such a short-term hedging strategy will be successful is highly uncertain.

It is impossible to forecast with precision the market value of portfolio securities at the expiration of a contract. Accordingly, it may be necessary to purchase additional currency on the spot market (and bear the expense of such purchase) if the market value of the security is less than the amount of foreign currency the Fund is obligated to deliver when a decision is made to sell the security and make delivery of the foreign currency in settlement of a forward contract. Conversely, it may be necessary to sell on the spot market some of the foreign currency received upon the sale of the portfolio security if its market value exceeds the amount of foreign currency the Fund is obligated to deliver.

If the Fund retains the portfolio security and engages in an offsetting transaction, the Fund will incur a gain or a loss (as described below) to the extent that there has been movement in forward contract prices. If the Fund engages in an offsetting transaction, it may subsequently enter into a new forward contract to sell the foreign currency. Should forward prices decline during the period between the Fund entering into a forward contract for the sale of a foreign currency and the date it enters into an offsetting contract for the purchase of the foreign currency, the Fund would realize gains to the extent the price of the currency it has agreed to sell exceeds the price of the currency it has agreed to purchase. Should forward prices increase, the Fund would suffer a loss to the extent the price of the currency it has agreed to purchase exceeds the price of the currency it has agreed to sell. Although such contracts tend to minimize the risk of loss due to a decline in the value of the hedged currency, they also tend to limit any potential gain which might result should the value of such currency increase. The Fund will have to convert its holdings of foreign currencies into United States dollars from time to time. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference (the “spread”) between the prices at which they are buying and selling various currencies.

The Fund will not enter into such forward contracts or maintain a net exposure in such contracts where it would be obligated to deliver an amount of foreign currency in excess of the value of its portfolio securities and other assets denominated in that currency. The adviser believes that it is important to have the flexibility to enter into such forward contracts when it determines that to do so is in the best interests of the Fund. The Fund will specifically designate on its accounting records any asset, including equity securities and non-investment-grade debt so long as the asset is liquid, unencumbered and marked to market daily in an amount not less than the value of a Fund’s total assets committed to forward foreign currency exchange contracts entered into for the purchase of a foreign currency. If the value of the securities specifically designated declines, additional cash or securities will be added so that the specifically designated amount is not less than the amount of the Fund’s commitments with respect to such contracts.

Foreign Currency Options . In general, options on foreign currencies operate similarly to options on securities and are subject to many similar risks. A foreign currency option provides the option buyer with the right to buy or sell a stated amount of foreign currency at the exercise price at a specified date or during the option period. A call option gives its owner the right, but not the obligation, to buy the currency, while a put option gives its owner the right, but not the obligation, to sell the currency. The option seller (writer) is obligated to fulfill the terms of the option sold if it is exercised. However, either seller or buyer may close its position during the option period for such options any time prior to expiration.

A call rises in value if the underlying currency appreciates. Conversely, a put rises in value if the underlying currency depreciates. While purchasing a foreign currency option can protect a Fund against an adverse movement in the value of a foreign currency, it does not limit the gain which might result from a favorable movement in the value of such currency. For example, if a Fund were holding securities denominated in an appreciating foreign currency and had purchased a foreign currency put to hedge against a decline in the value of the currency, it would not have to exercise its put. Similarly, if a Fund had entered into a contract to purchase a security denominated in a foreign currency and had purchased a foreign currency call to hedge against a rise in the value of the currency but instead the currency had depreciated in value between the date of purchase and the settlement date, the Fund would not have to exercise its call but could acquire in the spot market the amount of foreign currency needed for settlement.

Foreign currency options are traded primarily in the over-the-counter market, although options on foreign currencies have recently been listed on several exchanges. Options are traded not only on the currencies of individual nations, but also on the European Currency Unit, which is composed of amounts of a number of currencies and is the official medium of exchange of the European Community’s European Monetary System.

The Fund will only purchase or write foreign currency options when the adviser believes that a liquid market exists for such options. There can be, however, no assurance that a liquid market will exist for a particular option at any specific time. Options on foreign currencies are affected by all of those factors which influence foreign exchange rates and investments generally.

The value of any currency, including U.S. dollars and foreign currencies, may be affected by complex political and economic factors applicable to the issuing country. In addition, the exchange rates of foreign currencies (and therefore the values of foreign currency options) may be affected significantly, fixed, or supported directly or indirectly, by U.S. and foreign government actions. Government intervention may increase risks involved in purchasing or selling foreign currency options, since exchange rates may not be free to fluctuate in response to other market forces.

The value of a foreign currency option reflects the value of an exchange rate, which in turn reflects the relative values of two currencies, generally the U.S. dollar and the foreign currency in question. Because foreign currency transactions occurring in the interbank market involve substantially larger amounts than those that may be involved in the exercise of foreign currency options, investors may be disadvantaged by having to deal in an odd-lot market for the underlying foreign currencies in connection with options at prices that are less favorable than for round lots. Foreign governmental restrictions or taxes could result in adverse changes in the cost of acquiring or disposing of foreign currencies.

There is no systematic reporting of last sale information for foreign currencies and there is no regulatory requirement that quotations available through dealers or other market sources be firm or revised on a timely basis. Available quotation information is generally representative of very large round-lot transactions in the interbank market and thus may not reflect exchange rates for smaller odd-lot transactions (less than $1 million) where rates may be less favorable. The interbank market in foreign currencies is a global, around-the-clock market. To the extent that options markets are closed while the markets for the underlying currencies remain open, significant price and rate movements may take place in the underlying markets that cannot be reflected in the options markets.

Foreign Currency Futures Transactions.

The Fund may use foreign currency futures contracts and options on such futures contracts. Through the purchase or sale of such contracts, a Fund may be able to achieve many of the same objectives attainable through the use of foreign currency forward contracts, but more effectively and possibly at a lower cost.

Unlike forward foreign currency exchange contracts, foreign currency futures contracts and options on foreign currency futures contracts are standardized as to amount and delivery period and are traded on boards of trade and commodities exchanges. It is anticipated that such contracts may provide greater liquidity and lower cost than forward foreign currency exchange contracts.

Foreign currency warrants. Foreign currency warrants such as currency exchange warrants (“CEWs”) are warrants that entitle the holder to receive from the issuer an amount of cash (generally, for warrants issued in the United States, in U.S. dollars) that is calculated pursuant to a predetermined formula and based on the exchange rate between a specified foreign currency and the U.S. dollar as of the exercise date of the warrant. Foreign currency warrants generally are exercisable upon their issuance and expire as of a specified date and time. Foreign currency warrants have been issued in connection with U.S. dollar-denominated debt offerings by major corporate issuers in an attempt to reduce the foreign currency exchange risk that, from the point of view of prospective purchases of the securities, is inherent in the international fixed-income marketplace.

Foreign currency warrants may be used to reduce the foreign exchange risk assumed by purchasers of a security by, for example, providing for a supplemental payment in the event the U.S. dollar depreciates against the value of a major foreign currency such as the Japanese Yen or Euro. The formula used to determine the amount payable upon exercise of a foreign currency warrant may make the warrant worthless unless the applicable foreign currency exchange rate moves in a particular direction ( e.g. , unless the U.S. dollar appreciates or depreciates against the particular foreign currency to which the warrant is linked or indexed).

Foreign currency warrants are severable from the debt obligations with which they may be offered, and may be listed on exchanges. Foreign currency warrants may be exercisable only in certain minimum amounts, and an investor wishing to exercise warrants who possesses less than the minimum number required for exercise may be required either to sell the warrants or to purchase additional warrants, thereby incurring additional transaction costs. Upon exercise of warrants, there may be a delay between the time the holder gives instructions to exercise and the time the exchange rate relating to exercise is determined, thereby affecting both the market and cash settlement values of the warrants being exercised. The expiration date of the warrants may be accelerated if the warrants should be delisted from an exchange or if their trading should be suspended permanently, which would result in the loss of any remaining “time value” of the warrants ( i.e. , the difference between the current market value and the exercise value of the warrants), and, if the warrants were “out-of-the-money,” in a total loss of the purchase price of the warrants.

Warrants are generally unsecured obligations of their issuers and are not standardized foreign currency options issued by the Options Clearing Corporation (“OCC”). Unlike foreign currency options issued by OCC, the terms of foreign exchange warrants generally will not be amended in the event of governmental or regulatory actions affecting exchange rates or in the event of the imposition of other regulatory controls affecting the international currency markets. The initial public offering price of foreign currency warrants is generally considerably in excess of the price that a commercial user of foreign currencies might pay in the interbank market for a comparable option involving significantly larger amounts of foreign currencies. Foreign currency warrants are subject to significant foreign exchange risk, including risks arising from complex political or economic factors.

Principal exchange rate linked securities. Principal exchange rate linked securities (or “PERLS”) are debt obligations the principal on which is payable at maturity in an amount that may vary based on the exchange rate between the U.S. dollar and a particular foreign currency at or about that time. The return on “standard” principal exchange rate linked securities is enhanced if the foreign currency to which the security is linked appreciates against the U.S. dollar, and is adversely affected by increases in the foreign exchange value of the U.S. dollar, “reverse” PERLS are like the “standard” securities, except that their return is enhanced by increases in the value of the U.S. dollar and adversely impacted by increases in the value of foreign currency. Interest payments on the securities are generally made in U.S. dollars at rates that reflect the degree of foreign currency risk assumed or given up by the purchaser of the notes ( i.e. , at relatively higher interest rates if the purchaser has assumed some of the foreign exchange risk, or relatively lower interest rates if the issuer has assumed some of the foreign exchange risk, based on the expectations of the current market). PERLS may in limited cases be subject to acceleration of maturity (generally, not without the consent of the holders of the securities), which may have an adverse impact on the value of the principal payment to be made at maturity.

Performance indexed paper. Performance indexed paper (or “PIP”) is U.S. dollar-denominated commercial paper the yield of which is linked to certain foreign exchange rate movements. The yield to the investor on performance indexed paper is established at maturity as a function of spot exchange rates between the U.S. dollar and a designated currency as of or about the time (generally, the index maturity two days prior to maturity). The yield to the investor will be within a range stipulated at the time of purchase of the obligation, generally with a guaranteed minimum rate of return that is below, and a potential maximum rate of return that is above, market yields on U.S. dollar-denominated commercial paper, with both the minimum and maximum rates of return on the investment corresponding to the minimum and maximum values of the spot exchange rate two business days prior to maturity.

Regulatory Restrictions . To the extent required to comply with SEC Release No. IC-10666, when purchasing a futures contract or writing a put option, the Fund will specifically designate on its accounting records any asset, including equity securities and non-investment-grade debt so long as the asset is liquid, unencumbered and marked to market daily equal to the value of such contracts.

To the extent required to comply with CFTC Regulation 4.5 and thereby avoid “commodity pool operator” status, a Fund will not enter into a futures contract or purchase an option thereon if immediately thereafter the initial margin deposits for futures contracts (including foreign currency and all other futures contracts) held by the Fund plus premiums paid by it for open options on futures would exceed 5% of the Fund’s total assets, or, in the alternative, the Fund will engage in transactions in financial futures contracts or options thereon for speculation, but only to attempt to hedge against changes in market conditions affecting the values of securities which the Fund holds or intends to purchase (bonafide hedging purposes). When futures contracts or options thereon are purchased to protect against a price increase on securities intended to be purchased later, it is anticipated that at least 75% of such intended purchases will be completed. When other futures contracts or options thereon are purchased, the underlying value of such contracts will at all times not exceed the sum of: (1) accrued profit on such contracts held by the broker; (2) cash or high quality money market instruments set aside in an identifiable manner; and (3) cash proceeds from investments due in 30 days.

Settlement procedures . Settlement procedures relating to the Fund’s investments in foreign securities and to the Fund’s foreign currency exchange transactions may be more complex than settlements with respect to investments in debt or equity securities of U.S. issuers, and may involve certain risks not present in the Fund’s domestic investments. For example, settlement of transactions involving foreign securities or foreign currency may occur within a foreign country, and the Fund may be required to accept or make delivery of the underlying securities or currency in conformity with any applicable U.S. or foreign restrictions or regulations, and may be required to pay any fees, taxes or charges associated with such delivery. Such investments may also involve the risk that an entity involved in the settlement may not meet its obligations. Settlement procedures in many foreign countries are less established than those in the United States, and some foreign country settlement periods can be significantly longer than those in the United States.

Foreign currency conversion . Although foreign exchange dealers do not charge a fee for currency conversion, they do realize a profit based on the difference (the “spread”) between prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at one rate, while offering a lesser rate of exchange should the Fund desire to resell that currency to the dealer.

Foreign Exchange-Traded Options, Futures and Forward Currency Exchange Contracts—Additional Risks. Options on securities, futures contracts, options on futures contracts, currencies and options on currencies may be traded on foreign exchanges. Such transactions may not be regulated as effectively as similar transactions in the United States; may not involve a clearing mechanism and related guarantees; and are subject to the risk of governmental actions affecting trading in, or the prices of, foreign securities. The value of such positions also could be adversely affected by (i) other complex foreign political, legal and economic factors, (ii) lesser availability than in the United States of data on which to make trading decisions, (iii) delays in the Fund’s ability to act upon economic events occurring in foreign markets during non-business hours in the United States, (iv) the imposition of different exercise and settlement terms and procedures and margin requirements than in the United States, and (v) lesser trading volume.

Futures Contracts and Options on Futures Contracts.

The Fund may use interest rate, foreign currency or index futures contracts. An interest rate, foreign currency (see “Foreign Currency Transactions” above) or index futures contract provides for the future sale by one party and purchase by another party of a specified quantity of a financial instrument, foreign currency or the cash value of an index at a specified price and time. A futures contract on an index is an agreement pursuant to which two parties agree to take or make delivery of an amount of cash equal to the difference between the value of the index at the close of the last trading day of the contract and the price at which the index contract was originally written. Although the value of an index might be a function of the value of certain specified securities, no physical delivery of these securities is made. A public market exists in futures contracts covering several indexes as well as a number of financial instruments and foreign currencies, including: the S&P 500; the S&P 100; the New York Stock Exchange (“NYSE”) composite; U.S. Treasury bonds; U.S. Treasury notes; GNMA Certificates; three month U.S. Treasury bills; 90-day commercial paper; bank certificates of deposit; Eurodollar certificates of deposit; the Australian dollar; the Canadian dollar; the British pound; the German mark; the Japanese yen; the French franc; the Swiss franc; the Mexican peso; and certain multinational currencies, such as the European Currency Unit (“ECU”). It is expected that other futures contracts will be developed and traded in the future. Interest rate futures contracts currently are traded in the United States primarily on the floors of the Chicago Board of Trade (“CBT”) and the International Monetary Market of the Chicago Mercantile Exchange (“CME”). Interest rate futures also are traded on foreign exchanges such as the London International Financial Futures Exchange (“LIFFE”) and the Singapore International Monetary Exchange (“SIMEX”).

The Fund may purchase and write call and put options on futures. Futures options possess many of the same characteristics as options on securities and indexes (discussed above). A futures option gives the holder the right, in return for the premium paid, to assume a long position (call) or short position (put) in a futures contract at a specified exercise price at any time during the period of option. Upon exercise of a call option, the holder acquires a long position in the futures contract and the writer is assigned the opposite short position. In the case of a put option, the opposite is true.

The Fund will limit its use of futures contracts and futures options to hedging transactions and in an attempt to increase total return, in accordance with federal regulations. The adviser believes it is possible to reduce the effect of interest or exchange rate

fluctuations on the value of the Fund’s portfolio, or sectors thereof, through the use of such strategies. For example, the Fund might use futures contracts to hedge against anticipated changes in interest rates that might adversely affect either the value of the Fund’s securities or the price of the securities which the Fund intends to purchase. The Fund’s hedging activities may include sales of futures contracts as an offset against the effect of expected increases in interest rates, and purchases of futures contracts as an offset against the effect of expected declines in interest rates. Although other techniques could be used to reduce the Fund’s exposure to interest rate fluctuations, the Fund may be able to hedge its exposure more effectively and perhaps at a lower cost by using futures contracts and futures options. The costs of and possible losses incurred from futures contracts and options thereon may reduce the Fund’s current income and involve a loss of principal. Any incremental return earned by the Fund resulting from these transactions would be expected to offset anticipated losses or a portion thereof.

The Fund will only enter into futures contracts and futures options which are standardized and traded on a U.S. or foreign exchange, board of trade, or similar entity, or quoted on an automated quotation system.

When a purchase or sale of a futures contract is made by the Fund, the Fund is required to deposit with its custodian (or broker, if legally permitted) a specified amount of cash or U.S. Government securities (“initial margin”). The margin required for a futures contract is set by the exchange on which the contract is traded and may be modified during the term of the contract. The initial margin is in the nature of a performance bond or good faith deposit on the futures contract which is returned to the Fund upon termination of the contract, assuming all contractual obligations have been satisfied. The Fund expects to earn interest income on its initial margin deposits. A futures contract held by the Fund is valued daily at the official settlement price of the exchange on which it is traded. Each day the Fund pays or receives cash, called “variation margin,” equal to the daily change in value of the futures contract. This process is known as “marking to market.” Variation margin does not represent a borrowing or loan by the Fund but is instead a settlement between the Fund and the broker of the amount one would owe the other if the futures contract expired. In computing daily net asset value, the Fund will mark to market its open futures positions.

The Fund is also required to deposit and maintain margin with respect to put and call options on futures contracts written by it. Such margin deposits will vary depending on the nature of the underlying futures contract (and the related initial margin requirements), the current market value of the option, and other futures positions held by the Fund.

Although some futures contracts call for making or taking delivery of the underlying securities, generally these obligations are closed out prior to delivery by offsetting purchases or sales of matching futures contracts (same exchange, underlying security or index, and delivery month). If an offsetting purchase price is less than the original sale price, the Fund realizes a capital gain, or if it is more, the Fund realizes a capital loss. Conversely, if an offsetting sales price is more than the original purchase price, the Fund realizes a capital gain, or if it is less, the Fund realizes a capital loss. The transaction costs must also be included in these calculations.

Limitations on Use of Futures and Futures Options . When entering into a futures contract, the Fund will specifically designate on its accounting records (and mark-to-market on a daily basis) cash, U.S. Government securities, or other highly liquid debt securities that, when added to the amount deposited with a futures commission merchant as margin, are equal to the market value of the futures contract. Alternatively, the Fund may “cover” its position by purchasing a put option on the same futures contract with a strike price as high or higher than the price of the contract held by the Fund.

When selling a futures contract, the Fund will specifically designate on its accounting records (and mark-to-market on a daily basis) liquid assets that, when added to the amount deposited with a futures commission merchant as margin, are equal to the market value of the instruments underlying the contract. Alternatively, the Fund may “cover” its position by owning the instruments underlying the contract (or, in the case of an index futures contract, a portfolio with a volatility substantially similar to that of the index on which the futures contract is based), or by holding a call option permitting the Fund to purchase the same futures contract at a price no higher than the price of the contract written by the Fund (or at a higher price if the difference is maintained in liquid assets with the Fund’s custodian).

When selling a call option on a futures contract, the Fund will specifically designate on its accounting records any asset, including equity securities and non-investment grade debt so long as the asset is liquid, unencumbered and marked to market daily that, when added to the amounts deposited with a futures commission merchant as margin, equal the total market value of the futures contract underlying the call option. Alternatively, the Fund may cover its position by entering into a long position in the same futures contract at a price no higher than the strike price of the call option, by owning the instruments underlying the futures contract, or by holding a separate call option permitting the Fund to purchase the same futures contract at a price not higher than the strike price of the call option sold by the Fund.

When selling a put option on a futures contract, the Fund will specifically designate on its accounting records any asset, including equity securities and non-investment grade debt so long as the asset is liquid, unencumbered and marked to market daily that equal the purchase price of the futures contract, less any margin on deposit. Alternatively, the Fund may cover the position either by entering into a short position in the same futures contract, or by owning a separate put option permitting it to sell the same futures contract so long as the strike price of the put option is the same or higher than the strike price of the put option sold by the Fund.

In order to comply with applicable regulations of the Commodity Futures Trading Commission (“CFTC”) pursuant to which the Fund avoids being deemed a “commodity pool,” the Fund is limited in its futures trading activities to positions which constitute “bona fide hedging” positions within the meaning and intent of applicable CFTC rules, or to positions which qualify under an alternative test. Under this alternative test, the “underlying commodity value” of each long position in a commodity contract in which the Fund invests may not at any time exceed the sum of: (1) the value of short-term U.S. debt obligations or other U.S. dollar-denominated high quality short-term money market instruments and cash set aside in an identifiable manner, plus any funds deposited as margin on the contract; (2) unrealized appreciation on the contract held by the broker; and (3) cash proceeds from existing investments due in not more than 30 days. “Underlying commodity value” means the size of the contract multiplied by the daily settlement price of the contract.

The requirements of the Internal Revenue Code of 1986 (the “Code”) for qualification as a regulated investment company (“RIC”) also may limit the extent to which the Fund may enter into futures, futures options or forward contracts. (See “Dividends, Distributions and Taxes.”)

Risks Relating to Futures Contracts and Related Options. Positions in futures contracts and related options may be closed out only on an exchange which provides a secondary market for such contracts or options. A Fund will enter into an option or futures position only if there appears to be a liquid secondary market. However, there can be no assurance that a liquid secondary market will exist for any particular option or futures contract at any specific time. Thus, it may not be possible to close out a futures or related option position. In the case of a futures position, in the event of adverse price movements a Fund would continue to be required to make daily margin payments. In this situation, if a Fund has insufficient cash to meet daily margin requirements it may have to sell portfolio securities to meet its margin obligations at a time when it may be disadvantageous to do so. In addition, a Fund may be required to take or make delivery of the securities underlying the futures contracts it holds. The inability to close out futures positions also could have an adverse impact on a Fund’s ability to hedge its portfolio effectively.

There are several risks in connection with the use of futures contracts as a hedging device. While hedging can provide protection against an adverse movement in market prices, it can also limit a hedger’s opportunity to benefit fully from a favorable market movement. In addition, investing in futures contracts and options on futures contracts will cause a Fund to incur additional brokerage commissions and may cause an increase in a Fund’s portfolio turnover rate.

The successful use of futures contracts and related options also depends on the ability of the adviser or subadviser to forecast correctly the direction and extent of market movements, interest rates and other market factors within a given time frame. To the extent market prices remain stable during the period a futures contract or option is held by a Fund or such prices move in a direction opposite to that anticipated, a Fund may realize a loss on the hedging transaction which is not offset by an increase in the value of its portfolio securities. Options and futures may also fail as a hedging technique in cases where the movements of the securities underlying the options and futures do not follow the price movements of the hedged portfolio securities. As a result, a Fund’s total return for the period may be less than if it had not engaged in the hedging transaction. The loss from investing in futures transactions is potentially unlimited.

Utilization of futures contracts by a Fund involves the risk of imperfect correlation in movements in the price of futures contracts and movements in the price of the securities which are being hedged. If the price of the futures contract moves more or less than the price of the securities being hedged, a Fund will experience a gain or loss which will not be completely offset by movements in the price of the securities. It is possible that, where a Fund has sold futures contracts to hedge its portfolio against a decline in the market, the market may advance and the value of securities held in the Fund’s portfolio may decline. If this occurred, a Fund would lose money on the futures contract and would also experience a decline in value in its portfolio securities. Where futures are purchased to hedge against a possible increase in the prices of securities before a Fund is able to invest its cash (or cash equivalents) in securities (or options) in an orderly fashion, it is possible that the market may decline; if a Fund then determines not to invest in securities (or options) at that time because of concern as to possible further market decline or for other reasons, a Fund will realize a loss on the futures that would not be offset by a reduction in the price of the securities purchased.

The market prices of futures contracts may be affected if participants in the futures market elect to close out their contracts through off-setting transactions rather than to meet margin deposit requirements. In such case, distortions in the normal relationship between the cash and futures markets could result. Price distortions could also result if investors in futures contracts opt to make or take delivery of the underlying securities rather than to engage in closing transactions because such action would reduce the liquidity of the futures market. In addition, from the point of view of speculators, because the deposit requirements in the futures markets are less onerous than margin requirements in the cash market, increased participation by speculators in the futures market could cause temporary price distortions. Due to the possibility of price distortions in the futures market and because of the imperfect correlation between movements in the prices of securities and movements in the prices of futures contracts, a correct forecast of market trends may still not result in a successful hedging transaction.

Compared to the purchase or sale of futures contracts, the purchase of put or call options on futures contracts involves less potential risk for a Fund because the maximum amount at risk is the premium paid for the options plus transaction costs. However, there may be circumstances when the purchase of an option on a futures contract would result in a loss to a Fund while the purchase or sale of the futures contract would not have resulted in a loss, such as when there is no movement in the price of the underlying securities.

Interest Rate Transactions.

The Fund may enter into interest rate swaps, and the purchase and sale of interest rate collars, caps and floors.

Interest rate swaps involve the exchange with another party of commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling such interest rate floor. An interest rate collar combines the elements of purchasing a cap and selling a floor. The collar protects against an interest rate rise above the maximum amount but gives up the benefit of an interest rate decline below the minimum amount. The net amount of the excess, if any, of the Fund’s obligations over its entitlements with respect to each interest rate swap will be accrued on a daily basis and any asset, including equity securities and non-investment grade debt so long as the asset is liquid, unencumbered and marked to market daily having an aggregate net asset value at least equal to the accrued excess will be specifically designated on the accounting records of the Fund. If there is a default by the other party to such a transaction, the Fund will have contractual remedies pursuant to the agreements related to the transaction.

Options.

The Fund may purchase and sell (write) both put options and call options on securities, securities indexes, and foreign currencies. The purpose of writing covered put and call options generally is to hedge against fluctuations in the market value of a Fund’s portfolio securities and as an attempt to increase total return. The Fund may purchase or sell call and put options on securities indices for a similar purpose. A hedge is limited to the degree that the extent of the price change of the underlying security is less than the difference between the option premium received by the Fund and the option strike price. To the extent the underlying security’s price change exceeds this amount, written put and call options will not provide an effective hedge.

Writing Call Options . Each Fund may write (sell) covered call options on securities (“calls”) when the adviser considers such sales appropriate. When a Fund writes a call, it receives a premium and grants the purchaser the right to buy the underlying security at any time during the call period (usually between three and nine months) at a fixed exercise price regardless of market price changes during the call period. If the call is exercised, the Fund forgoes any gain but is not subject to any loss on any change in the market price of the underlying security relative to the exercise price. A Fund will write such options subject to any applicable limitations or restrictions imposed by law.

A written call option is covered if the Fund owns the security underlying the option. A written call option may also be covered by purchasing an offsetting option or any other option which, by virtue of its exercise price or otherwise, reduces the Fund’s net exposure on its written option position. In addition, the Fund may cover such options by specifically designating on its accounting records any assets, including equity securities and non-investment grade debt so long as the assets are liquid, unencumbered and marked to market daily (“liquid assets”), in amounts sufficient to ensure that it is able to meet its obligations under the written call should it be exercised. This method does not reduce the potential loss to the Fund should the value of the underlying security increase and the option be exercised.

Purchasing Call Options . The Fund may purchase a call option when the adviser believes the value of the underlying security will rise or to effect a “closing purchase transaction” as to a call option the Fund has written (sold). A Fund will realize a profit (or loss) from a closing purchase transaction if the amount paid to purchase a call is less (or more) than the amount received from the sale thereof.

Writing Put Options . A put option written by a Fund obligates the Fund to purchase the specified security at a specified price if the option is exercised at any time before the expiration date. A written put option may be covered by specifically designating on the accounting records of the Fund liquid assets with a value at least equal to the exercise price of the put option. While this may help ensure that a Fund will have sufficient assets to meet its obligations under the option contract should it be exercised, it will not reduce the potential loss to the Fund should the value of the underlying security decrease and the option be exercised.

Purchasing Put Options . A Fund may purchase a put option when the subadviser believes the value of the underlying security will decline. A Fund may purchase put options on securities in its portfolio in order to hedge against a decline in the value of such securities (“protective puts”) or to effect closing purchase transactions as to puts it has written. A Fund will realize a profit (or loss) from a closing purchase transaction if the amount paid to purchase a put is less (or more) than the amount received from the sale thereof.

Combined Option Positions . The Fund may purchase and write options in combination with each other to adjust the risk and return characteristics of the overall position. For example, a Fund may purchase a put option and write a call option on the same underlying instrument, in order to construct a combined position whose risk and return characteristics are similar to selling a futures

contract. Another possible combined position would involve writing a call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written call option in the event of a substantial price increase. Because combined options involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out.

The purchase and writing of options involves certain risks . During the option period, the covered call writer has, in return for the premium on the option, given up the opportunity to profit from a price increase in the underlying securities above the exercise price, but, as long as its obligation as a writer continues, has retained the risk of loss should the price of the underlying security decline. The writer of an option has no control over the time when it may be required to fulfill its obligation as a writer of the option. Once an option writer has received an exercise notice, it cannot effect a closing purchase transaction in order to terminate its obligation under the option and must deliver the underlying securities at the exercise price. If a call option purchased by a fund is not sold when it has remaining value, and if the market price of the underlying security remains less than or equal to the exercise price, the fund will lose its entire investment in the option. Also, where an option on a particular security is purchased to hedge against price movements in a related security, the price of the option may move more or less than the price of the related security. There can be no assurance that a liquid market will exist when the funds seek to close out an option position. Furthermore, if trading restrictions or suspensions are imposed on the options market, the funds may be unable to close out an option position.

Correlation of Price Changes . Because there are a limited number of types of exchange-traded options and futures contracts, it is likely that the standardized contracts available will not match the applicable Fund’s current or anticipated investments. The Fund may invest in options based on securities which differ from the securities in which it typically invests. This involves a risk that the options will not track the performance of the Fund’s investments.

Options and futures prices can also diverge from the prices of their underlying instruments, even if the underlying instruments match the applicable Fund’s investments well. Options and future prices are affected by such factors as current and anticipated short-term interest rates, changes in volatility of the underlying instrument, and the time remaining until expiration of the contract, which may not affect security prices the same way. Imperfect correlation may also result from differing levels of demand in the options and futures markets and the securities markets, from structural differences in how options and futures and securities are traded, or from imposition of daily price fluctuation limits or trading halts. The Fund may purchase or sell options with a greater or less value than the securities it wishes to hedge or intends to purchase in order to attempt to compensate for differences in historical volatility between the contract and the securities, although this may not be successful in all cases. If price changes in the applicable Fund’s options are poorly correlated with its other investments, the positions may fail to produce anticipated gains or result in losses that are not offset by gains in other investments. Successful use of these techniques requires skills different from those needed to select portfolio securities.

Liquidity of Options . There is no assurance a liquid secondary market will exist for any particular option at any particular time. Options may have relatively low trading volume and liquidity if their strike prices are not close to the underlying instruments’ current price. In addition, exchanges may establish daily price fluctuation limits for options, and may halt trading if an option’s price moves upward or downward more than the limit in a given day. On volatile trading days when the price fluctuation limit is reached or a trading halt is imposed, it may be impossible for a Fund to enter into new positions or close out existing positions. If the secondary market for an option is not liquid because of price fluctuation limits or otherwise, it could prevent prompt liquidation of unfavorable positions, and potentially could require the applicable Fund to continue to hold a position until delivery or expiration regardless of changes in its value. As a result, such Fund’s access to other assets held to cover its options could also be impaired.

Options on Securities Indices . Unlike a stock option, which gives the holder the right to purchase or sell a specified stock at a specified price, an option on a securities index gives the holder the right to receive a cash “exercise settlement amount” equal to (i) the difference between the exercise price of the option and the value of the underlying securities index on the exercise date multiplied by (ii) a fixed “index multiplier.” Like an option on a specific security, when a Fund purchases a put or a call option on an index, it places the entire amount of the premium paid at risk, for if, at the expiration date, the value of the index has decreased below the exercise price (in the case of a call) or increased above the exercise price (in the case of a put), the option will expire worthless.

A securities index fluctuates with changes in the market values of the stocks included in the index. For example, some securities index options are based on a broad market index such as the Standard & Poor’s 500 ^® Index (the “S&P 500 ^® Index”). Others are based on a narrower market index such as the Standard & Poor’s 100 Stock Index. Indices may also be based on an industry or market segment such as the AMEX Oil and Gas Index or the Computer and Business Equipment Index. Options on securities indices are currently traded on the Chicago Board Options Exchange, the NYSE and the American Stock Exchange (AMEX”).

The Fund may purchase put options on securities indices to hedge against an anticipated decline in stock market prices that might adversely affect the value of a Fund’s portfolio securities. If a Fund purchases such a put option, the amount of the payment it would receive upon exercising the option would depend on the extent of any decline in the level of the securities index below the exercise price. Such payments would tend to offset a decline in the value of the Fund’s portfolio securities. However, if the level of the securities index increases and remains above the exercise price while the put option is outstanding, a Fund will not be able to profitably exercise the option and will lose the amount of the premium and any transaction costs. Such loss may be partially or wholly offset by an increase in the value of a Fund’s portfolio securities.

A Fund may purchase call options on securities indices in order to participate in an anticipated increase in stock market prices or to offset anticipated price increases on securities that it intends to buy in the future. If a Fund purchases a call option on a securities index, the amount of the payment it would receive upon exercising the option would depend on the extent of any increase in the level of the securities index above the exercise price. Such payments would in effect allow the Fund to benefit from stock market appreciation even though it may not have had sufficient cash to purchase the underlying stocks. Such payments may also offset increases in the prices of stocks that the Fund intends to purchase. If, however, the level of the securities index declines and remains below the exercise price while the call option is outstanding, a Fund will not be able to exercise the option profitably and will lose the amount of the premium and transaction costs. Such loss may be partially or wholly offset by a reduction in the price a Fund pays to buy additional securities for its portfolio.

The Fund may write (sell) covered call or put options on a securities index. Such options may be covered by purchasing an offsetting option which, by virtue of its exercise price or otherwise, reduces the Fund’s net exposure on its written option position or by owning securities whose price changes are expected to be similar to those of the underlying index or by having an absolute and immediate right to acquire such securities without additional cash consideration or for additional cash consideration (held in a segregated account by its custodian) upon conversion or exchange of other securities in their respective portfolios. In addition, the Fund may cover such options by specifically designating on its accounting records liquid assets with a value equal to the exercise price or by using the other methods described above.

The extent to which options on securities indices will provide a Fund with an effective hedge against interest rate or stock market risk will depend on the extent to which the stocks comprising the indices correlate with the composition of the Fund’s portfolio. Moreover, the ability to hedge effectively depends upon the ability to predict movements in interest rates or the stock market. Some options on securities indices may not have a broad and liquid secondary market, in which case options purchased by the Fund may not be closed out and the Fund could lose more than its option premium when the option expires.

The purchase and sale of option contracts is a highly specialized activity that involves investment techniques and risks different from those ordinarily associated with investment companies. Transaction costs relating to options transactions may tend to be higher than the costs of transactions in securities. In addition, if a Fund were to write a substantial number of option contracts that are exercised, the portfolio turnover rate of that Fund could increase.

Limitations on Options on Securities and Securities Indices . The Fund may write call options only if they are covered and remain covered for as long as the Fund is obligated as a writer. Thus, if a Fund utilizing this investment technique writes a call option on an individual security, the Fund must own the underlying security or other securities that are acceptable for a pledged account at all times during the option period. The Fund will write call options on indices only to hedge in an economically appropriate way portfolio securities which are not otherwise hedged with options or financial futures contracts. Call options on securities indices written by a Fund will be “covered” by identifying the specific portfolio securities being hedged.

To secure the obligation to deliver the underlying security, the writer of a covered call option on an individual security is required to deposit the underlying security or other assets in a pledged account in accordance with clearing corporation and exchange rules. In the case of an index call option written by a Fund, the Fund will be required to deposit qualified securities. A “qualified security” is a security against which the Fund has not written a call option and which has not been hedged by the Fund by the sale of a financial futures contract. If at the close of business on any day the market value of the qualified securities falls below 100% of the current index value times the multiplier times the number of contracts, the Fund will deposit an amount of cash, U.S. Government Securities or other liquid high quality debt obligations equal in value to the difference. In addition, when the Fund writes a call on an index which is “in-the-money” at the time the call is written, the Fund will specifically designate on its accounting records cash, U.S. Government securities or other liquid high quality debt obligations equal in value to the amount by which the call is “in-the-money” times the multiplier times the number of contracts. Any amount otherwise specifically designated may be applied to the Fund’s other obligations to specifically designate assets in the event that the market value of the qualified securities falls below 100% of the current index value times the multiplier times the number of contracts.

A Fund may sell a call option or a put option which it has previously purchased prior to the purchase (in the case of a call) or the sale (in the case of a put) of the underlying security. Any such sale of a call option or a put option would result in a net gain or loss, depending on whether the amount received on the sale is more or less than the premium and other transaction costs paid.

Risks Relating to Options on Securities . During the option period, the writer of a call option has, in return for the premium received on the option, given up the opportunity for capital appreciation above the exercise price should the market price of the underlying security increase, but has retained the risk of loss should the price of the underlying security decline. The writer has no control over the time within the option period when it may be required to fulfill its obligation as a writer of the option.

The risk of purchasing a call option or a put option is that the Fund utilizing this investment technique may lose the premium it paid plus transaction costs, if the Fund does not exercise the option and is unable to close out the position prior to expiration of the option.

An option position may be closed out on an exchange only if the exchange provides a secondary market for an option of the same series. Although the Funds utilizing this investment technique will write and purchase options only when the investment adviser believes that a liquid secondary market will exist for options of the same series, there can be no assurance that a liquid secondary market will exist for a particular option at a particular time and that any Fund, if it so desires, can close out its position by effecting a

closing transaction. If the writer of a covered call option is unable to effect a closing purchase transaction, it cannot sell the underlying security until the option expires or the option is exercised. Accordingly, a covered call writer may not be able to sell the underlying security at a time when it might otherwise be advantageous to do so.

Possible reasons for the absence of a liquid secondary market on an exchange include the following: (i) insufficient trading interest in certain options; (ii) restrictions on transactions imposed by an exchange; (iii) trading halts, suspensions or other restrictions imposed with respect to particular classes or series of options or underlying securities; (iv) inadequacy of the facilities of an exchange or the clearing corporation to handle trading volume; and (v) a decision by one or more exchanges to discontinue the trading of options in general or of particular options or impose restrictions on orders.

Each exchange has established limitations governing the maximum number of call options, whether or not covered, which may be written by a single investor acting alone or in concert with others (regardless of whether such options are written on the same or different exchanges or are held or written on one or more accounts or through one or more brokers). An exchange may order the liquidation of positions found to be in violation of these limits and it may impose other sanctions or restrictions. The investment adviser believes that the position limits established by the exchanges will not have any adverse impact upon the Funds.

Risks of Options on Securities Indices . Because the value of an index option depends upon movements in the level of the index rather than movements in the price of a particular security, whether a Fund utilizing this investment technique will realize a gain or loss on the purchase or sale of an option on an index depends upon movements in the level of prices in the market generally or in an industry or market segment (depending on the index option in question). Accordingly, successful use by a Fund of options on indices will be subject to the investment adviser’s ability to predict correctly movements in the direction of the market generally or in the direction of a particular industry. This requires different skills and techniques than predicting changes in the prices of individual securities.

Index prices may be distorted if trading of certain securities included in the index is interrupted. Trading in index options also may be interrupted in certain circumstances, such as if trading were halted in a substantial number of securities included in the index. If this occurred, a Fund utilizing this investment technique would not be able to close out options which it had written or purchased and, if restrictions on exercise were imposed, might be unable to exercise an option it purchased, which would result in substantial losses to the Fund. However, it is the Trust’s policy to write or purchase options only on indices which include a sufficient number of securities so that the likelihood of a trading halt in the index is minimized.

Because the exercise of an index option is settled in cash, an index call writer cannot determine the amount of its settlement obligation in advance and, unlike call writing on portfolio securities, cannot provide in advance for its potential settlement obligation by holding the underlying securities. Consequently, the Funds will write call options only on indices which meet the interim described above.

Price movements in securities held by a Fund utilizing this investment technique will not correlate perfectly with movements in the level of the index and, therefore, the Fund bears the risk that the price of the securities held by the Fund might not increase as much as the level of the index. In this event, the Fund would bear a loss on the call which would not be completely offset by movements in the prices of the securities held by the Fund. It is also possible that the index might rise when the value of the securities held by the Fund does not. If this occurred, the Fund would experience a loss on the call which would not be offset by an increase in the value of its portfolio and might also experience a loss in the market value of its portfolio securities.

Unless a Fund utilizing this investment technique has other liquid assets which are sufficient to satisfy the exercise of a call on an index, the Fund will be required to liquidate securities in order to satisfy the exercise. Because an exercise must be settled within hours after receiving the notice of exercise, if the Fund fails to anticipate an exercise, it may have to borrow from a bank (in an amount not exceeding 10% of the Fund’s total assets) pending settlement of the sale of securities in its portfolio and pay interest on such borrowing.

When a Fund has written a call on an index, there is also a risk that the market may decline between the time the Fund has the call exercised against it, at a price which is fixed as of the closing level of the index on the date of exercise, and the time the Fund is able to sell its securities. As with options on its securities, the Fund will not learn that a call has been exercised until the day following the exercise date but, unlike a call on a security where the Fund would be able to deliver the underlying security in settlement, the Fund may have to sell some of its securities in order to make settlement in cash, and the price of such securities may decline before they can be sold.

If a Fund exercises a put option on an index which it has purchased before final determination of the closing index value for that day, it runs the risk that the level of the underlying index may change before closing. If this change causes the exercised option to fall “out-of-the-money” the Fund will be required to pay the difference between the closing index value and the exercise price of the option (multiplied by the applicable multiplier) to the assigned writer. Although the Fund may be able to minimize this risk by withholding exercise instructions until just before the daily cutoff time or by selling rather than exercising an option when the index level is close to the exercise price, it may not be possible to eliminate this risk entirely because the cutoff times for index options may be earlier than those fixed for other types of options and may occur before definitive closing index values are announced.

Special Considerations and Risks Related to Options and Futures Transactions . Exchange markets in options on certain securities are a relatively new and untested concept. It is impossible to predict the amount of trading interest that may exist in such options, and there can be no assurance that viable exchange markets will develop or continue.

The exchanges will not continue indefinitely to introduce new expirations to replace expiring options on particular issues because trading interest in many issues of longer duration tends to center on the most recently auctioned issues. The expirations introduced at the commencement of options trading on a particular issue will be allowed to run out, with the possible addition of a limited number of new expirations as the original expirations expire. Options trading on each issue of securities with longer durations will thus be phased out as new options are listed on more recent issues, and a full range of expirations will not ordinarily be available for every issue on which options are traded.

In the event of a shortage of the underlying securities deliverable on exercise of an option, the OCC has the authority to permit other, generally comparable, securities to be delivered in fulfillment of option exercise obligations. It may also adjust the exercise prices of the affected options by setting different prices at which otherwise ineligible securities may be delivered. As an alternative to permitting such substitute deliveries, the OCC may impose special exercise settlement procedures.

The hours of trading for options on securities may not conform to the hours during which the underlying securities are traded. To the extent the markets for underlying securities close before the options markets, significant price and rate movements can take place in the options markets that cannot be reflected in the underlying markets. In addition, to the extent that the options markets close before the markets for the underlying securities, price and rate movements can take place in the underlying markets that cannot be reflected in the options markets.

Prior to exercise or expiration, an option position can be terminated only by entering into a closing purchase or sale transaction. This requires a secondary market on an exchange for call or put options of the same series. Similarly, positions in futures may be closed out only on an exchange which provides a secondary market for such futures. There can be no assurance that a liquid secondary market will exist for any particular call or put option or futures contract at any specific time. Thus, it may not be possible to close an option or futures position. In the event of adverse price movements, a Fund would continue to be required to make daily payments of maintenance margin for futures contracts or options on futures contracts positions written by that Fund. A Fund may have to sell portfolio securities at a time when it may be disadvantageous to do so if it has insufficient cash to meet the daily maintenance margin requirements. In addition, a Fund may be required to take or make delivery of the instruments underlying futures contracts it holds. The inability to close options and futures positions also could have an adverse impact on a Fund’s ability to effectively hedge its portfolios.

Each of the exchanges has established limitations governing the maximum number of call or put options on the same underlying security (whether or not covered) that may be written by a single investor, whether acting alone or in concert with others (regardless of whether such options are written on the same or different exchanges or are held or written on one or more accounts or through one or more brokers). An exchange may order the liquidation of positions found to be in violation of applicable trading limits and it may impose other sanctions or restrictions. The Trust and other clients advised by the adviser and its affiliates may be deemed to constitute a group for these purposes. In light of these limits, the Trustees may determine, at any time, to restrict or terminate the Funds’ transactions in options. The adviser does not believe that these trading and position limits will have any adverse effect on investment techniques for hedging the Trust’s portfolios.

Over-the-counter (“OTC”) options are purchased from or sold to securities dealers, financial institutions or other parties (“Counterparties”) through direct agreement with the counterparty. In contrast to exchange-listed options, which generally have standardized terms and performance mechanics, all the terms of an OTC option, including such terms as method of settlement, term, exercise price, premium, guarantees and security, are set by negotiation of the parties.

Unless the parties provide for it, there is no central clearing or guaranty function in the OTC option market. As a result, if the counterparty fails to make delivery of the security or other instrument underlying an OTC option it has entered into with a Fund or fails to make a cash settlement payment due in accordance with the terms of that option, the Fund will lose any premium it paid for the option as well as any anticipated benefit of the transaction. Accordingly, the adviser must assess the creditworthiness of each such counterparty or any guarantor or credit enhancement of the counterparty’s credit to determine the likelihood that the terms of the OTC option will be satisfied. The staff of the SEC currently takes the position that OTC options purchased by a Fund, and portfolio securities “covering” the amount of a Fund’s obligation pursuant to an OTC option sold by it (the cost of the sell-back plus the in-the-money amount, if any) are illiquid, and are subject to each Fund’s limitation on investing no more than 15% of its assets in illiquid securities. However, for options written with “primary dealers” in U.S. Government securities pursuant to an agreement requiring a closing transaction at the formula price, the amount considered to be illiquid may be calculated by reference to a formula price.

The loss from investing in futures transactions is potentially unlimited. Gains and losses on investments in options and futures depend on the adviser’s ability to predict correctly the direction of stock prices, interest rates and other economic factors. In addition, utilization of futures in hedging transactions may fail where there is an imperfect correlation in movements in the price of futures contracts and movements in the price of the securities which are the subject of a hedge. If the price of the futures contract moves more or less than the price of the security, a Fund will experience a gain or loss that will not be completely offset by movements in the price of the securities which are the subject of a hedge. There is also a risk of imperfect correlation where the securities underlying futures contracts have different maturities than the portfolio securities being hedged. Transactions in options on futures contracts involve similar risks.

Swap Agreements.

The Fund may enter into interest rate, index and currency exchange rate swap agreements in attempts to obtain a particular desired return at a lower cost to the Fund than if the Fund had invested directly in an instrument that yielded that desired return. Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a “notional amount,” i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a “basket” of securities representing a particular index. The “notional amount” of the swap agreement is only a fixed basis on which to calculate the obligations the parties to a swap agreement have agreed to exchange. The Fund’s obligations (or rights) under a swap agreement will generally be equal only to the amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the “net amount”). The Fund’s obligations under a swap agreement will be accrued daily (offset against any amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counter-party will be covered by specifically designating on the accounting records of the Fund liquid assets to avoid leveraging of the Fund’s portfolio.

Because swap agreements are two-party contracts and may have terms of greater than seven days, they may be considered to be illiquid. Moreover, a Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counter-party. The Subadviser will cause a Fund to enter into swap agreements only with counter-parties that would be eligible for consideration as repurchase agreement counter-parties under the Funds’ repurchase agreement guidelines. Certain restrictions imposed on the Funds by the Code may limit the Funds’ ability to use swap agreements. The swaps market is a relatively new market and is largely unregulated. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements.

Certain swap agreements are exempt from most provisions of the Commodity Exchange Act (“CEA”) and, therefore, are not regulated as futures or commodity option transactions under the CEA, pursuant to regulations of the CFTC. To qualify for this exemption, a swap agreement must be entered into by “eligible participants,” which include the following, provided the participants’ total assets exceed established levels: a bank or trust company, savings association or credit union, insurance company, investment company subject to regulation under the 1940 Act, commodity pool, corporation, partnership, proprietorship, organization, trust or other entity, employee benefit plan, governmental entity, broker-dealer, futures commission merchant, natural person, or regulated foreign person. To be eligible, natural persons and most other entities must have total assets exceeding $10 million; commodity pools and employees benefit plans must have assets exceeding $5 million. In addition, an eligible swap transaction must meet three conditions. First, the swap agreement may not be part of a fungible class of agreements that are standardized as to their material economic terms. Second, the creditworthiness of parties with actual or potential obligations under the swap agreement must be a material consideration in entering into or determining the terms of the swap agreement, including pricing, cost or credit enhancement terms. Third, swap agreements may not be entered into and traded on or through a multilateral transaction execution facility.

Credit Default Swap Agreements . The “buyer” in a credit default contract is obligated to pay the “seller” a periodic stream of payments over the term of the contract provided no event of default has occurred. In the event of default, the seller must pay the buyer the “par value” (full notional value) of the reference obligation in exchange for the reference obligation (typically emerging market debt). The fund may be either the buyer or seller in the transaction. If the fund is a buyer and no event of default occurs, the fund loses its investment and recovers nothing. However, if an event of default occurs, the buyer receives full notional value for a reference obligation that may have little or no value. As a seller, the fund receives a fixed rate of income throughout the term of the contract, which typically is between six months and three years, provided there is no default event. If an event of default occurs, the seller must pay the buyer the full notional value of the reference obligation.

Emerging Market Securities

The Fund may invest in countries or regions with relatively low gross national product per capita compared to the world’s major economies, and in countries or regions with the potential for rapid economic growth (emerging markets). Emerging markets will

include any country: (i) having an “emerging stock market” as defined by the International Finance Corporation; (ii) with low-to-middle-income economies according to the International Bank for Reconstruction and Development (the “World Bank”); (iii) listed in World Bank publications as developing; or (iv) determined by the Adviser to be an emerging market as defined above. The Emerging Markets Fund may also invest in securities of: (i) companies the principal securities trading market for which is an emerging market country; (ii) companies organized under the laws of, and with a principal office in, an emerging market country, or (iii) companies whose principal activities are located in emerging market countries.

The risks of investing in foreign securities may be intensified in the case of investments in emerging markets. Securities of many issuers in emerging markets may be less liquid and more volatile than securities of comparable domestic issuers. Emerging markets also have different clearance and settlement procedures, and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Delays in settlement could result in temporary periods when a portion of the assets of the Funds are uninvested and no return is earned thereon. The inability of the Funds to make intended security purchases due to settlement problems could cause the Funds to miss attractive investment opportunities. Inability to dispose of portfolio securities due to settlement problems could result either in losses to the Funds due to subsequent declines in value of portfolio securities or, if the Funds have entered into a contract to sell the security, in possible liability to the purchaser. Securities prices in emerging markets can be significantly more volatile than in the more developed nations of the world, reflecting the greater uncertainties of investing in less established markets and economies. In particular, countries with emerging markets may have relatively unstable governments, present the risk of nationalization of businesses, restrictions on foreign ownership, or prohibitions of repatriation of assets, and may have less protection of property rights than more developed countries. The economies of countries with emerging markets may be predominantly based on only a few industries, may be highly vulnerable to changes in local or global trade conditions, and may suffer from extreme and volatile debt burdens or inflation rates. Local securities markets may trade a small number of securities and may be unable to respond effectively to increases in trading volume, potentially making prompt liquidation of substantial holdings difficult or impossible at times. Securities of issuers located in countries with emerging markets may have limited marketability and may be subject to more abrupt or erratic price movements.

Certain emerging markets may require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. In addition, if deterioration occurs in an emerging market’s balance of payments or for other reasons, a country could impose temporary restrictions on foreign capital remittances. The Funds could be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation of capital, as well as by the application to the Funds of any restrictions on investments.

Investments in certain foreign emerging market debt obligations may be restricted or controlled to varying degrees. These restrictions or controls may at times preclude investment in certain foreign emerging market debt obligations and increase the expenses of the Funds.

Additional Risk Factors. As a result of its investments in foreign securities, the Funds may receive interest or dividend payments, or the proceeds of the sale or redemption of such securities, in the foreign currencies in which such securities are denominated. In that event, the Fund may convert such currencies into dollars at the then current exchange rate. Under certain circumstances, however, such as where the Adviser believes that the applicable rate is unfavorable at the time the currencies are received or the Adviser anticipates, for any other reason, that the exchange rate will improve, the Fund may hold such currencies for an indefinite period of time.

In addition, the Fund may be required to receive delivery of the foreign currency underlying forward foreign currency contracts it has entered into. This could occur, for example, if an option written by the Fund is exercised or the Fund is unable to close out a forward contract. The Fund may hold foreign currency in anticipation of purchasing foreign securities. The Fund may also elect to take delivery of the currencies’ underlying options or forward contracts if, in the judgment of the Adviser, it is in the best interest of the Fund to do so. In such instances as well, the Fund may convert the foreign currencies to dollars at the then current exchange rate, or may hold such currencies for an indefinite period of time.

While the holding of currencies will permit the Fund to take advantage of favorable movements in the applicable exchange rate, it also exposes the Fund to risk of loss if such rates move in a direction adverse to the Fund’s position. Such losses could reduce any profits or increase any losses sustained by the Fund from the sale or redemption of securities, and could reduce the dollar value of interest or dividend payments received. In addition, the holding of currencies could adversely affect the Fund’s profit or loss on currency options or forward contracts, as well as its hedging strategies.

Eurodollar Instruments

The Fund may make investments in Eurodollar instruments. Eurodollar instruments are U.S. dollar-denominated futures contracts or options thereon which are linked to the London Interbank Offering Rate (“LIBOR”), although foreign currency-denominated instruments are available from time to time. Eurodollar futures contracts enable purchasers to obtain a fixed rate for the lending of funds and sellers to obtain a fixed rate for borrowings. A Fund might use Eurodollar futures contracts and options thereon to hedge against changes in LIBOR, to which many interest rate swaps and fixed-income instruments are linked.

Foreign Securities

The Fund may invest in the securities of foreign issuers. The Fund may invest in a broad range of foreign securities including equity, debt and convertible securities and foreign government securities. The Fund may purchase the securities of issuers from various countries, including countries commonly referred to as “emerging markets.” The Fund may also invest in domestic securities denominated in foreign currencies.

Investing in the securities of foreign companies involves special risks and considerations not typically associated with investing in U.S. companies. These include differences in accounting, auditing and financial reporting standards, generally higher commission rates on foreign portfolio transactions, the possibility of expropriation or confiscatory taxation, adverse changes in investment or exchange control regulations, political instability which could affect U.S. investments in foreign countries, and potential restrictions on the flow of international capital. Additionally, dividends payable on foreign securities may be subject to foreign taxes withheld prior to distribution. Foreign securities often trade with less frequency and volume than domestic securities and therefore may exhibit greater price volatility. Changes in foreign exchange rates will affect the value of those securities which are denominated or quoted in currencies other than the U.S. dollar. Many of the foreign securities held by the Fund will not be registered with, nor the issuers thereof be subject to the reporting requirements of, the SEC. Accordingly, there may be less publicly available information about the securities and about the foreign company or government issuing them than is available about a domestic company or government entity. Moreover, individual foreign economies may differ favorably or unfavorably from the United States economy in such respects as growth of Gross National Product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payment positions.

Certain foreign countries are less stable politically than the United States. The possibility exists that certain foreign governments may adopt policies providing for expropriation or nationalization of assets, confiscatory taxation, currency blockage or limitations on the use or removal of monies or other assets of an investment company. Finally, the Funds may encounter difficulty in obtaining and enforcing judgments against issuers of foreign securities. The economies of developing countries generally are heavily dependent upon international trade and, accordingly, have been and may continue to be adversely affected by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade. These economies also have been and may continue to be adversely affected by economic conditions in the countries with which they trade.

Certain emerging market countries are either comparatively underdeveloped or are in the process of becoming developed and may consequently be economically based on a relatively few or closely interdependent industries. A high proportion of the securities of many emerging market issuers may also be held by a limited number of large investors trading significant blocks of securities. While the adviser will strive to be sensitive to publicize reversals of economic conditions, political unrest and adverse changes in trading status, unanticipated political and social developments may affect the values of the Fund’s investments in such countries and the availability of additional investments in such countries.

When investing in securities denominated in foreign currencies, the Funds will be subject to the additional risk of currency fluctuations. An adverse change in the value of a particular foreign currency as against the U.S. dollar, to the extent that such change is not offset by a gain in other foreign currencies, will result in a decrease in the Fund’s assets. Any such change may also have the effect of decreasing or limiting the income available for distribution. Foreign currencies may be affected by revaluation, adverse political and economic developments, and governmental restrictions. Although the Funds will invest only in securities denominated in foreign currencies that are fully convertible into U.S. dollars without legal restriction at the time of investment, no assurance can be given that currency exchange controls will not be imposed on any particular currency at a later date.

Securities of U.S. issuers denominated in foreign currencies may be less liquid and their prices more volatile than securities issued by domestic issuers and denominated in U.S. dollars. In addition, investing in securities denominated in foreign currencies often entails costs not associated with investment in U.S. dollar-denominated securities of U.S. issuers, such as the cost of converting foreign currency to U.S. dollars, higher brokerage commissions, custodial expenses and other fees. Non-U.S. dollar denominated securities may be subject to certain withholding and other taxes of the relevant jurisdiction, which may reduce the yield on the securities to the Fund and which may not be recoverable by the Fund or its investors.

The Fund will calculate its net asset value and complete orders to purchase, exchange or redeem shares only on a Monday-Friday basis (excluding holidays on which the NYSE is closed). Foreign securities in which the Funds may invest may be primarily listed on foreign stock exchanges which may trade on other days (such as Saturdays). As a result, the net asset value of each Fund’s portfolio may be affected by such trading on days when a shareholder has no access to the Fund.

The Trust may use a foreign custodian in connection with its purchases of foreign securities and may maintain cash and cash equivalents in the care of a foreign custodian. The amount of cash or cash equivalents maintained in the care of eligible foreign custodians will be limited to an amount reasonably necessary to effect the Trust’s foreign securities transactions. The use of a foreign custodian invokes considerations which are not ordinarily associated with domestic custodians. These considerations include the possibility of expropriations, restricted access to books and records of the foreign custodian, inability to recover assets that are lost while under the control of the foreign custodian, and the impact of political, social or diplomatic developments.

The Fund may invest in dollar-denominated instruments issued by foreign branches of U.S. banks and U.S. branches of foreign banks. Since these instruments are dollar-denominated, they are not affected by variations in currency exchange rates. They are influenced primarily by interest rate levels in the United States and by the financial condition of the issuer, or of the issuer’s foreign parent. These instruments may be subject to levels of risk that differ from their fully domestic counterparts.

High Yield-High Risk Securities (Junk Bonds)

Investments in below-investment grade securities (see Appendix for an explanation of the various ratings) generally provide greater income (leading to the name “high-yield” securities) and opportunity for capital appreciation than investments in higher quality securities, but they also typically entail greater price volatility, liquidity, and principal and income risk. These securities are regarded as predominantly speculative as to the issuer’s continuing ability to meet principal and interest payment obligations. Analysis of the creditworthiness of issuers of lower-quality debt securities may be more complex than for issuers of higher-quality debt securities.

Effect of Interest Rates and Economic Changes . Interest-bearing securities typically experience appreciation when interest rates decline and depreciation when interest rates rise. The market values of low-rated securities tend to reflect individual corporate developments to a greater extent than do higher-rated securities, which react primarily to fluctuations in the general level of interest rates. Low-rated securities also tend to be more sensitive to economic conditions than higher-rated securities. As a result, they generally involve more credit risks than securities in the higher-rated categories. During an economic downturn or a sustained period of rising interest rates, highly leveraged issuers of low-rated securities may experience financial stress and may not have sufficient revenues to meet their payment obligations. The issuer’s ability to service its debt obligations may also be adversely affected by specific corporate developments, the issuer’s inability to meet specific projected business forecasts or the unavailability of additional financing. The risk of loss due to default by an issuer of low-rated securities is significantly greater than issuers of higher-rated securities because such securities are generally unsecured and are often subordinated to other creditors. Further, if the issuer of a low-rated security defaulted, the applicable Fund might incur additional expenses in seeking recovery. Periods of economic uncertainty and changes would also generally result in increased volatility in the market prices of low-rated securities and thus in the applicable Fund’s net asset value.

As previously stated, the value of a low-rated security generally will decrease in a rising interest rate market, and accordingly, so normally will the applicable Fund’s net asset value. If the Fund experiences unexpected net redemptions in such a market, it may be forced to liquidate a portion of its portfolio securities without regard to their investment merits. Due to the limited liquidity of low-rated securities (discussed below), the Fund may be forced to liquidate these securities at a substantial discount. Any such liquidation would reduce the Fund’s asset base over which expenses could be allocated and could result in a reduced rate of return for the Fund.

Payment Expectations . Low-rated securities typically contain redemption, call or prepayment provisions which permit the issuer of such securities containing such provisions to, at their discretion, redeem the securities. During periods of falling interest rates, issuers of low-rated securities are likely to redeem or prepay the securities and refinance them with debt securities with a lower interest rate. To the extent an issuer is able to refinance the securities or otherwise redeem them, the applicable Fund may have to replace the securities with a lower yielding security which would result in lower returns for the Fund.

Liquidity and Valuation . A Fund may have difficulty disposing of certain low-rated securities because there may be a thin trading market for such securities. Because not all dealers maintain markets in all low-rated securities, there is no established retail secondary market for many of these securities. The Fund anticipates that such securities could be sold only to a limited number of dealers or institutional investors. To the extent a secondary trading market does exist, it is generally not as liquid as the secondary market for higher-rated securities. The lack of a liquid secondary market may have an adverse impact on the market price of the security, and accordingly, the net asset value of a particular Fund and its ability to dispose of particular securities when necessary to meet its liquidity needs, or in response to a specific economic event, or an event such as a deterioration in the creditworthiness of the issuer. The lack of a liquid secondary market for certain securities may also make it more difficult for a Fund to obtain accurate market quotations for purposes of valuing its respective portfolio. Market quotations are generally available on many low-rated issues only from a limited number of dealers and may not necessarily represent firm bids of such dealers or prices for actual sales. During periods of thin trading, the spread between bid and asked prices is likely to increase significantly. In addition, adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of low-rated securities, especially in a thinly-traded market.

Illiquid and Restricted Securities

The Fund may invest in securities for which there is no readily available market (“illiquid securities”), including certain securities whose disposition would be subject to legal restrictions (“restricted securities”). However, certain restricted securities that may be resold pursuant to Rule 144A under the Securities Act of 1933 may be considered liquid. The Board of Trustees of the Trust

has delegated to the adviser the day-to-day determination of the liquidity of a security although it has retained oversight and ultimate responsibility for such determinations. Although no definite quality criteria are used, the Board of Trustees has directed the adviser to consider such factors as (i) the nature of the market for a security (including the institutional private resale markets); (ii) the terms of these securities or other instruments allowing for the disposition to a third party or the issuer thereof (e.g. certain repurchase obligations and demand instruments); (iii) and availability of market quotations; and (iv) other permissible factors.

If illiquid securities exceed 15% of a Fund’s net assets after the time of purchase, the Fund will take steps to reduce in an orderly fashion its holdings of illiquid securities. Because illiquid securities may not be readily marketable, the subadviser may not be able to dispose of them in a timely manner. As a result, the Fund may be forced to hold illiquid securities while their price depreciates. Depreciation in the price of illiquid securities may cause the net asset value of the Fund to decline. A security that is determined by the subadviser to be liquid may subsequently revert to being illiquid if not enough buyer interest exists.

Restricted securities may be sold in privately negotiated or other exempt transactions or in a public offering with respect to which a registration statement is in effect under the Securities Act. When registration is required, a Fund may be obligated to pay all or part of the registration expenses and a considerable time may elapse between the decision to sell and the sale date. If, during such period, adverse market conditions were to develop, the Fund might obtain a less favorable price than the price which prevailed when it decided to sell. Restricted securities will be priced at fair value as determined in good faith by the Board of Trustees. (See “Private Placements and Rule 144A Securities” below.)

Indexed Securities

The Fund may purchase securities whose prices are indexed to the prices of other securities, securities indices, currencies, precious metals or other commodities, or other financial indicators. The Fund will not invest more than 5% of its net assets in indexed securities. Indexed securities typically, but not always, are debt securities or deposits whose value at maturity or coupon rate is determined by reference to a specific instrument or statistic. Gold-indexed securities, for example, typically provide for a maturity value that depends on the price of gold, resulting in a security whose price tends to rise and fall together with gold prices. Currency-indexed securities typically are short-term to intermediate-term debt securities whose maturity values or interest rates are determined by reference to the values of one or more specified foreign currencies, and may offer higher yields than U.S. dollar-denominated securities of equivalent issuers. Currency-indexed securities may be positively or negatively indexed; for example, their maturity value may increase when the specified currency value increases, resulting in a security whose price characteristics are similar to a call option on the underlying currency. Currency-indexed securities also may have prices that depend on the values of a number of different foreign currencies relative to each other.

The performance of indexed securities depends to a great extent on the performance of the security, currency, commodity or other instrument to which they are indexed, and also may be influenced by interest rate changes in the U.S. and abroad. At the same time, indexed securities are subject to the credit risks associated with the issuer of the security, and their values may decline substantially if the issuer’s creditworthiness deteriorates. Recent issuers of indexed securities have included banks, corporations, and certain U.S. Government agencies.

Loan and Debt Participations and Assignments

A loan participation agreement involves the purchase of a share of a loan made by a bank to a company in return for a corresponding share of the borrower’s principal and interest payments. Loan participations of the type in which the Fund may invest include interests in both secured and unsecured corporate loans. When the Fund purchases loan assignments from lenders, it will acquire direct rights against the borrower, but these rights and the Fund’s obligations may differ from, and be more limited than, those held by the assignment lender. The principal credit risk associated with acquiring loan participation and assignment interests is the credit risk associated with the underlying corporate borrower. There is also a risk that there may not be a readily available market for participation loan interests and, in some cases, this could result in the Fund disposing of such securities at a substantial discount from face value or holding such securities until maturity.

In the event that a corporate borrower failed to pay its scheduled interest or principal payments on participations held by the Fund, the market value of the affected participation would decline, resulting in a loss of value of such investment to the Fund. Accordingly, such participations are speculative and may result in the income level and net assets of the Fund being reduced. Moreover, loan participation agreements generally limit the right of a participant to resell its interest in the loan to a third party and, as a result, loan participations and assignments will be deemed by the Fund to be illiquid investments. The Fund will invest only in participations with respect to borrowers whose creditworthiness is, or is determined by the subadviser to be, substantially equivalent to that of issuers whose senior unsubordinated debt securities are rated B or higher by Moody’s or S&P.

A Fund may purchase from banks participation interests in all or part of specific holdings of debt obligations. Each participation interest is backed by an irrevocable letter of credit or guarantee of the selling bank that the subadviser has determined meets the prescribed quality standards of each Fund. Thus, even if the credit of the issuer of the debt obligation does not meet the quality standards of the Fund, the credit of the selling bank will. Loan participations and assignments may be illiquid.

Money Market Instruments

Certificates of Deposit . Certificates of deposit are generally short-term, interest-bearing negotiable certificates issued by banks or savings and loan associations against funds deposited in the issuing institution.

Time Deposits . Time deposits are deposits in a bank or other financial institution for a specified period of time at a fixed interest rate for which a negotiable certificate is not received.

Bankers’ Acceptances . A bankers’ acceptance is a time draft drawn on a commercial bank by a borrower usually in connection with an international commercial transaction (to finance the import, export, transfer or storage of goods). The borrower, as well as the bank, is liable for payment, and the bank unconditionally guarantees to pay the draft at its face amount on the maturity date. Most acceptances have maturities of six months or less and are traded in secondary markets prior to maturity.

Commercial Paper . Commercial paper refers to short-term, unsecured promissory notes issued by corporations to finance short-term credit needs. Commercial paper is usually sold on a discount basis and has a maturity at the time of issuance not exceeding nine months.

Corporate Debt Securities . Corporate debt securities with a remaining maturity of less than one year tend to become extremely liquid and are traded as money market securities.

U.S. Government Obligations . Securities issued or guaranteed as to principal and interest by the United States Government include a variety of Treasury securities, which differ only in their interest rates, maturities, and times of issuance. Treasury bills have maturities of one year or less. Treasury notes have maturities of one to ten years, and Treasury bonds generally have maturities of greater than ten years.

Agencies of the United States Government which issue or guarantee obligations include, among others, Export-Import Banks of the United States, Farmers Home Administration, Federal Housing Administration, Government National Mortgage Association, Maritime Administration, Small Business Administration and The Tennessee Valley Authority. Obligations of instrumentalities of the United States Government include securities issued or guaranteed by, among others, the Federal National Mortgage Association, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal Intermediate Credit Banks, Banks for Cooperatives, and the U.S. Postal Service. Some of these securities are supported by the full faith and credit of the U.S. Government; others are supported by the right of the issuer to borrow from the Treasury, while still others are supported only by the credit of the instrumentality. There is no guarantee that the U.S. Government will provide financial support to its agencies or instrumentalities, now or in the future, if it is not obligated to do so by law.

Mortgage-Related and Other Asset-Backed Securities

Mortgage Pass-through Securities. These are interests in pools of mortgage loans, assembled and issued by various governmental, government-related, and private organizations. Unlike other forms of debt securities, which normally provide for periodic payment of interest in fixed amounts with principal payments at maturity or specified call dates, these securities provide a monthly payment consisting of both interest and principal payments. In effect, these payments are a “pass-through” of the monthly payments made by the individual borrowers on their residential or commercial mortgage loans, net of any fees paid to the issuer or guarantor of such securities. Additional payments are caused by repayments of principal resulting from the sale of the underlying property, refinancing or foreclosure, net of fees or costs. “Modified pass-through” securities (such as securities issued by the GNMA) entitle the holder to receive all interest and principal payments owed on the mortgage pool, net of certain fees, at the scheduled payment dates regardless of whether or not the mortgagor actually makes the payment.

The principal governmental guarantor of mortgage-related securities is GNMA. GNMA is a wholly-owned United States Government corporation within the Department of Housing and Urban Development. GNMA is authorized to guarantee, with the full faith and credit of the United States Government, the timely payment of principal and interest on securities issued by institutions approved by GNMA (such as savings and loan institutions, commercial banks and mortgage bankers) and backed by pools of Federal Housing Administration insured or Veterans Administration guaranteed mortgages.

Government-related guarantors whose obligations are not backed by the full faith and credit of the United States Government include the Federal National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage Corporation (“FHLMC”). FNMA is a government-sponsored corporation owned entirely by private stockholders. It is subject to general regulation by the Secretary of Housing and Urban Development. FNMA purchases conventional (i.e., not insured or guaranteed by any government agency) residential mortgages from a list of approved seller/servicers which include state and federally chartered savings and loan

associations, mutual savings banks, commercial banks and credit unions and mortgage bankers. FHLMC is a government-sponsored corporation formerly owned by the twelve Federal Home Loan Banks and now owned entirely by private stockholders. FHLMC issues Participation Certificates (“PCs”) that represent interests in conventional mortgages from FHLMC’s national portfolio. FNMA and FHLMC guarantee the timely payment of interest and ultimate collection of principal on securities they issue, but their guarantees are not backed by the full faith and credit of the United States Government.

Commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers also create pass-through pools of conventional residential mortgage loans. Such issuers may, in addition, be the originators and/or servicers of the underlying mortgage loans as well as the guarantors of the mortgage-related securities. Pools created by such non-governmental issuers generally offer a higher rate of interest than government and government-related pools because there are no direct or indirect government or agency guarantees of payments for such securities. However, timely payment of interest and principal of these pools may be supported by various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance and letters of credit. The insurance and guarantees are issued by governmental entities, private insurers and the mortgage poolers. Such insurance and guarantees and the creditworthiness of the issuers thereof will be considered in determining whether a mortgage-related security meets a Fund’s investment quality standards. There can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. Funds may buy mortgage-related securities without insurance or guarantees if, through an examination of the loan experience and practices of the originator/servicers and poolers, the subadviser determines that the securities meet the Funds’ quality standards. Securities issued by certain private organizations may not be readily marketable.

Mortgage-backed securities that are issued or guaranteed by the U.S. Government, its agencies or instrumentalities, are not subject to the Funds’ industry concentration restrictions, set above below under “Investment Restrictions,” by virtue of the exclusion from the test available to all U.S. Government securities. The Funds will take the position that privately-issued, mortgage-related securities do not represent interests in any particular “industry” or group of industries. The assets underlying such securities may be represented by a portfolio of first lien residential mortgages (including both whole mortgage loans and mortgage participation interests) or portfolios of mortgage pass-through securities issued or guaranteed by GNMA, FNMA or FHLMC. Mortgage loans underlying a mortgage-related security may in turn be insured or guaranteed by the Federal Housing Administration or the Department of Veterans Affairs. In the case of private issue mortgage-related securities whose underlying assets are neither U.S. Government securities nor U.S. Government-insured mortgages, to the extent that real properties securing such assets may be located in the same geographical region, the security may be subject to a greater risk of default than other comparable securities in the event of adverse economic, political or business developments that may affect such region and, ultimately, the ability of residential homeowners to make payments of principal and interest on the underlying mortgages.

Collateralized Mortgage Obligations (“CMOs”). A CMO is similar to a bond in that interest and prepaid principal is paid, in most cases, semiannually. CMOs may be collateralized by whole mortgage loans or by portfolios of mortgage pass-through securities guaranteed by entities such as GNMA, FHLMC, or FNMA, and their income streams.

CMOs are typically structured in multiple classes, each bearing a different stated maturity. Actual maturity and average life will depend upon the prepayment experience of the collateral. CMOs provide for a modified form of call protection through a de facto breakdown of the underlying pool of mortgages according to how quickly the loans are repaid. Monthly payment of principal received from the pool of underlying mortgages, including prepayments, is first returned to investors holding the shortest maturity class. Investors holding the longer maturity classes typically receive principal only after the first class has been retired. An investor may be partially guarded against a sooner than desired return of principal because of the sequential payments.

FHLMC CMOs are debt obligations of FHLMC issued in multiple classes having different maturity dates and are secured by the pledge of a pool of conventional mortgage loans purchased by FHLMC. Unlike FHLMC PCs, payments of principal and interest on the CMOs are made semiannually rather than monthly. The amount of principal payable on each semiannual payment date is determined in accordance with FHLMC’s mandatory sinking fund schedule. Sinking fund payments in the CMOs are allocated to the retirement of the individual classes of bonds in the order of their stated maturities. Payments of principal on the mortgage loans in the collateral pool in excess of the amount of FHLMC’s minimum sinking fund obligation for any payment date are paid to the holders of the CMOs as additional sinking-fund payments. Because of the “pass-through” nature of all principal payments received on the collateral pool in excess of FHLMC’s minimum sinking fund requirement, the rate at which principal of the CMOs is actually repaid is likely to be such that each class of bonds will be retired in advance of its scheduled maturity date. If collection of principal (including prepayments) on the mortgage loans during any semiannual payment period is not sufficient to meet FHLMC’s minimum sinking fund obligation on the next sinking fund payment date, FHLMC agrees to make up the deficiency from its general funds.

CMO Residuals . CMO residuals are derivative mortgage securities issued by agencies or instrumentalities of the U.S. Government or by private originators of, or investors in, mortgage loans. As described above, the cash flow generated by the mortgage assets underlying a series of CMOs is applied first to make required payments of principal and interest on the CMOs and second to pay the related administrative expenses of the issuer. The “residual” in a CMO structure generally represents the interest in any excess cash flow remaining after making the foregoing payments. Each payment of such excess cash flow to a holder of the related CMO

residual represents income and/or a return of capital. The amount of residual cash flow resulting from a CMO will depend on, among other things, the characteristics of the mortgage assets, the coupon rate of each class of CMO, prevailing interest rates, the amount of administrative expenses and, in particular, the prepayment experience on the mortgage assets. In addition, if a series of a CMO includes a class that bears interest at an adjustable rate, the yield to maturity on the related CMO residual will also be extremely sensitive to changes in the level of the index upon which interest rate adjustments are based. As described below with respect to stripped mortgage-backed securities, in certain circumstances a Fund may fail to recoup fully its initial investment in a CMO residual.

CMO residuals are generally purchased and sold by institutional investors through several investment banking firms acting as brokers or dealers. The CMO residual market has only very recently developed and CMO residuals currently may not have the liquidity of other more established securities trading in other markets. CMO residuals may be subject to certain restrictions on transferability, may be deemed “illiquid,” and may be subject to a Fund’s limitations on investment in illiquid securities.

Stripped Mortgage-backed Securities . Stripped mortgage-backed securities (“SMBS”) are derivative multi-class mortgage securities. They may be issued by agencies or instrumentalities of the U.S. Government, or by private originators of, or investors in, mortgage loans. SMBS are usually structured with two classes that receive different proportions of the interest and principal distributions on a pool of mortgage assets. A common type of SMBS will have one class receiving some of the interest and most of the principal from the mortgage assets, while the other class will receive most of the interest and the remainder of the principal. In the most extreme case, one class will receive all of the interest (the interest-only or “IO” class), while the other class will receive all of the principal (the principal-only or “PO” class). The yield to maturity on an IO class security is extremely sensitive to the rate of principal payments (including prepayments) on the related underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on a Fund’s yield to maturity from these securities. If the underlying mortgage assets experience greater than anticipated prepayments of principal, a Fund may fail to recoup fully its initial investment in these securities even if the security is in one of the highest rating categories.

Although SMBS are purchased and sold by institutional investors through several investment banking firms acting as brokers or dealers, these securities were only recently developed. As a result, established trading markets have not yet developed and, accordingly, these securities may be deemed “illiquid” and subject to a Fund’s limitations on investment in illiquid securities.

A Fund may invest in other mortgage-related securities with features similar to those described above, to the extent consistent with the Fund’s investment objectives and policies.

Adjustable Rate Mortgages—Interest Rate Indices . The One Year Treasury Index is the figure derived from the average weekly quoted yield on U.S. Treasury Securities adjusted to a constant maturity of one year. The Cost of Funds Index reflects the monthly weighted average cost of funds of savings and loan associations and savings banks whose home offices are located in Arizona, California and Nevada (the “FHLB Eleventh District”) that are member institutions of the Federal Home Loan Bank of San Francisco (the “FHLB of San Francisco”), as computed from statistics tabulated and published by the FHLB of San Francisco. The FHLB of San Francisco normally announces the Cost of Funds Index on the last working day of the month following the month in which the cost of funds was incurred.

A number of factors affect the performance of the Cost of Funds Index and may cause the Cost of Funds Index to move in a manner different from indices based upon specific interest rates, such as the One Year Treasury Index. Because of the various origination dates and maturities of the liabilities of member institutions of the FHLB Eleventh District upon which the Cost of Funds Index is based, among other things, at any time the Cost of Funds Index may not reflect the average prevailing market interest rates on new liabilities of similar maturities. There can be no assurance that the Cost of Funds Index will necessarily move in the same direction or at the same rate as prevailing interest rates since as longer term deposits or borrowings mature and are renewed at market interest rates, the Cost of Funds Index will rise or fall depending upon the differential between the prior and the new rates on such deposits and borrowings. In addition, dislocations in the thrift industry in recent years have caused and may continue to cause the cost of funds of thrift institutions to change for reasons unrelated to changes in general interest rate levels. Furthermore, any movement in the Cost of Funds Index as compared to other indices based upon specific interest rates may be affected by changes instituted by the FHLB of San Francisco in the method used to calculate the Cost of Funds Index. To the extent that the Cost of Funds Index may reflect interest changes more slowly than other indices, mortgage loans which adjust in accordance with the Cost of Funds Index may produce a higher yield later than would be produced by such other indices, and in a period of declining interest rates, the Cost of Funds Index may remain higher than other market interest rates which may result in a higher level of principal prepayments on mortgage loans which adjust in accordance with the Cost of Funds Index than mortgage loans which adjust in accordance with other indices.

LIBOR, the London Interbank Offered Rate, is the interest rate that the most creditworthy international banks dealing in U.S. dollar-denominated deposits and loans charge each other for large dollar-denominated loans. LIBOR is also usually the base rate for large dollar-denominated loans in the international market. LIBOR is generally quoted for loans having rate adjustments at one, three, six or twelve month intervals.

Other Asset-backed Securities . Through trusts and other special purpose entities, various types of securities based on financial assets other than mortgage loans are increasingly available, in both pass-through structures similar to mortgage pass-through securities described above and in other structures more like CMOs. As with mortgage-related securities, these asset-backed securities are often backed by a pool of financial assets representing the obligations of a number of different parties. They often include credit-enhancement features similar to mortgage-related securities.

Financial assets on which these securities are based include automobile receivables; credit card receivables; loans to finance boats, recreational vehicles, and mobile homes; computer, copier, railcar, and medical equipment leases; and trade, healthcare, and franchise receivables. In general, the obligations supporting these asset-backed securities are of shorter maturities than mortgage loans and are less likely to experience substantial prepayments. However, obligations such as credit card receivables are generally unsecured and the obligors are often entitled to protection under a number of state and federal consumer credit laws granting, among other things, rights to set off certain amounts owed on the credit cards, thus reducing the balance due. Other obligations that are secured, such as automobile receivables, may present issuers with difficulties in perfecting and executing on the security interests, particularly where the issuer allows the servicers of the receivables to retain possession of the underlying obligations, thus increasing the risk that recoveries on defaulted obligations may not be adequate to support payments on the securities.

Asset-backed securities may be subject to greater risk of default during periods of economic downturn than other instruments. Also, while the secondary market for asset-backed securities is ordinarily quite liquid, in times of financial stress, the secondary market may not be as liquid as the market for other types of securities, which could cause the Fund to experience difficulty in valuing or liquidating such securities.

The adviser expects additional assets will be “securitized” in the future. A Fund may invest in any such instruments or variations on them to the extent consistent with the Fund’s investment objectives and policies.

Interest Rate Considerations . The market value of debt securities that are interest rate sensitive is inversely related to changes in interest rates. That is, an interest rate decline produces an increase in a security’s market value and an interest rate increase produces a decrease in value. The longer the remaining maturity of a security, the greater the effect of interest rate changes. Changes in the ability of an issuer to make payments of interest and principal and in the market’s perception of its creditworthiness also affect the market value of that issuer’s debt securities.

Prepayments of principal of mortgage-related securities by mortgagors or mortgage foreclosures affect the average life of the mortgage-related securities in a fund’s portfolio. Mortgage prepayments are affected by the level of interest rates and other factors, including general economic conditions and the underlying location and age of the mortgage. In periods of rising interest rates, the prepayment rate tends to decrease, lengthening the average life of a pool of mortgage-related securities. In periods of falling interest rates, the prepayment rate tends to increase, shortening the average life of a pool. Because prepayments of principal generally occur when interest rates are declining, it is likely that a fund, to the extent that it retains the same percentage of debt securities, may have to reinvest the proceeds of prepayments at lower interest rates than those of its previous investments. If this occurs, that fund’s yield will correspondingly decline. Thus, mortgage-related securities may have less potential for capital appreciation in periods of falling interest rates than other fixed-income securities of comparable duration, although they may have a comparable risk of decline in market value in periods of rising interest rates. To the extent that a fund purchases mortgage-related securities at a premium, unscheduled prepayments, which are made at par, result in a loss equal to any unamortized premium.

Duration is one of the fundamental tools used by the adviser in managing interest rate risks including prepayment risks. Traditionally, a debt security’s “term to maturity” characterizes a security’s sensitivity to changes in interest rates. “Term to maturity,” however, measures only the time until a debt security provides its final payment, taking no account of prematurity payments. Most debt securities provide interest (“coupon”) payments in addition to a final (“par”) payment at maturity, and some securities have call provisions allowing the issuer to repay the instrument in full before maturity date, each of which affect the security’s response to interest rate changes. “Duration” is considered a more precise measure of interest rate risk than “term to maturity.” Determining duration may involve the adviser’s estimates of future economic parameters, which may vary from actual future values. Fixed-income securities with effective durations of three years are more responsive to interest rate fluctuations than those with effective durations of one year. For example, if interest rates rise by 1%, the value of securities having an effective duration of three years will generally decrease by approximately 3%.

Mutual Fund Investing

The Fund is authorized to invest in the securities of other investment companies subject to the limitations contained in the 1940 Act. In certain countries, investments by the Fund may only be made through investments in other investment companies that, in turn, are authorized to invest in the securities that are issued in such countries. Investors should recognize that the Fund’s purchase of the securities of such other investment companies results in the layering of expenses such that investors indirectly bear a proportionate part of the expenses for such investment companies including operating costs and investment advisory and administrative fees.

Investment companies in which the Fund may invest may include index-based investments such as exchange-traded funds (“ETFs”), which hold substantially all of their assets in securities representing their specific index. Accordingly, the main risk of investing in index-based investments is the same as investing in a portfolio of equity securities comprising the index. As a shareholder of another investment company, a Fund would bear its pro rata portion of the other investment company’s expenses, including advisory fees, in addition to the expenses a Fund bears directly in connection with its own operations. The market prices of index-based investments will fluctuate in accordance with both changes in the market value of their underlying portfolio securities and due to supply and demand for the instruments on the exchanges on which they are traded (Which may result in their trading at a discount or premium to their NAVs). Index-based investments may not replicate exactly the performance of their specific index because of transaction costs and because of the temporary unavailability of certain component securities of the index.

Preferred Stocks

The Fund may invest in preferred stocks. Preferred stocks have a preference over common stocks in liquidation (and generally dividends as well) but are subordinated to the liabilities of the issuer in all respects. As a general rule, the market value of preferred stocks with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit risks while the market price of convertible preferred stock generally also reflects some element of conversion value. Because preferred stock is junior to debt securities and other obligations of the issuer, deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similarly stated yield characteristics. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.

Private Placements and Rule 144A Securities

The Fund may purchase securities which have been privately issued and are subject to legal restrictions on resale or which are issued to qualified institutional investors under special rules adopted by the SEC. Such securities may offer higher yields than comparable publicly traded securities. Such securities ordinarily can be sold by the Fund in secondary market transactions to certain qualified investors pursuant to rules established by the SEC, in privately negotiated transactions to a limited number of purchasers or in a public offering made pursuant to an effective registration statement under the Securities Act of 1933 (The “1933 Act”). Public sales of such securities by the Fund may involve significant delays and expense. Private sales often require negotiation with one or more purchasers and may produce less favorable prices than the sale of similar unrestricted securities. Public sales generally involve the time and expense of the preparation and processing of a registration statement under the 1933 Act (the possible decline in value of the securities during such period) and may involve the payment of underwriting commissions. In some instances, the Fund may have to bear certain costs of registration in order to sell such shares publicly. Except in the case of securities sold to qualifying institutional investors under special rules adopted by the SEC for which the Trustees of the Fund determine the secondary market is liquid, Rule 144A securities will be considered illiquid. Trustees of the Fund may determine the secondary market is liquid based upon the following factors which will be reviewed periodically as required pursuant to procedures adopted by the Fund; the number of dealers willing to purchase or sell the security; the frequency of trades; dealer undertakings to make a market in the security, and the nature of the security and its market. Investing in Rule 144A Securities could have the effect of increasing the level of the Fund’s illiquidity to the extent that qualified institutional buyers become, for a time, uninterested in purchasing these securities. (See “Illiquid and Restricted Securities” above.)

Ratings

If the rating of a security purchased by a Fund is subsequently reduced below the minimum rating required for purchase or a security purchased by the Fund ceases to be rated, neither event will require the sale of the security. However, the Adviser, as applicable, will consider any such event in determining whether the Fund should continue to hold the security. To the extent that ratings established by Moody’s or S&P may change as a result of changes in such organizations or their rating systems, the Funds will invest in securities which are deemed by the Fund’s adviser to be of comparable quality to securities whose current ratings render them eligible for purchase by the Fund.

Credit ratings issued by credit rating agencies evaluate the safety of principal and interest payments of rated securities. They do not, however, evaluate the market value risk of low-rated securities and therefore may not fully reflect the true risks of an investment. In addition, credit rating agencies may or may not make timely changes in a rating to reflect changes in the economy or in the condition of the issuer that affect the market value of the security. Consequently, credit ratings are used only as a preliminary indicator of investment quality.

Real Estate Investment Trusts (REITs)

REITs pool investors’ funds for investment primarily in income producing commercial real estate or real estate related loans. A REIT is not taxed on income distributed to shareholders if it complies with several requirements relating to its organization, ownership, assets, and income and a requirement that it distribute to its shareholders at least 95% of its taxable income (other than net capital gains) for each taxable year.

REITs can generally be classified as follows:

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Equity REITs, which invest the majority of their assets directly in real property and derive their income primarily from rents. Equity REITs can also realize capital gains by selling properties that have appreciated in value.

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Mortgage REITs, which invest the majority of their assets in real estate mortgages and derive their income primarily from interest payments.

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Hybrid REITs, which combine the characteristics of both equity REITs and mortgage REITs.

REITs are like closed-end investment companies in that they are essentially holding companies which rely in a fund that invests in REITS should realize that by investing in REITs indirectly through the Fund, he will bear not only his proportionate share of the expenses of the Fund, but also, indirectly, similar expenses of underlying REITs.

Risks of Investment in Real Estate Securities. Selecting REITs requires an evaluation of the merits of each type of asset a particular REIT owns, as well as regional and local economics. Due to the proliferation of REITs in recent years and the relative lack of sophistication of certain REIT managers, the quality of REIT assets has varied significantly. The Real Estate Fund will not invest in real estate directly, but only in securities issued by real estate companies. However, the Fund may be subject to risks similar to those associated with the direct ownership of real estate because of its policy of concentrating in the securities of companies in the real estate industry. These include declines in the value of real estate, risks related to general and local economic conditions, dependence on management skill, cash flow dependence, possible lack of availability of long-term mortgage funds, over-building, extended vacancies of properties, decreased occupancy rates and increased competition, increases in property taxes and operating expenses, changes in neighborhood values and the appeal of the properties to tenants and changes in interest rates.

In addition to these risks, equity REITs may be affected by changes in the value of the underlying properties they own, while mortgage REITs may be affected by the quality of any credit extended. Further, equity and mortgage REITs are dependent upon management skills and generally are not diversified. Equity and mortgage REITs are also subject to potential defaults by borrowers, self-liquidation, and the possibility of failing to qualify for tax-free status of income under the Code and failing to maintain exemption from the Investment Company Act of 1940. In the event of a default by a borrower or lessee, the REIT may experience delays in enforcing its rights as a mortgagee or lessor and may incur substantial costs associated with protecting its investments. In addition, investment in REITs could cause the Fund to possibly fail to qualify as a regulated investment company.

Repurchase Agreements

The Fund may enter into repurchase agreements with banks, broker-dealers or other financial institutions in order to generate additional current income. Under a repurchase agreement, a Fund acquires a security from a seller subject to resale to the seller at an agreed upon price and date. The resale price reflects an agreed upon interest rate effective for the time period the security is held by the Fund. The repurchase price may be higher than the purchase price, the difference being income to the Fund, or the purchase and repurchase price may be the same, with interest payable to the Fund at a stated rate together with the repurchase price on repurchase. In either case, the income to the Fund is unrelated to the interest rate on the security. Typically, repurchase agreements are in effect for one week or less, but may be in effect for longer periods of time. Repurchase agreements of more than one week’s duration are subject to each Fund’s limitation on investments in illiquid securities.

Repurchase agreements are considered by the SEC to be loans by the purchaser collateralized by the underlying securities. In an attempt to reduce the risk of incurring a loss on a repurchase agreement, the Funds will generally enter into repurchase agreements only with domestic banks with total assets in excess of one billion dollars, primary dealers in U.S. Government securities reporting to the Federal Reserve Bank of New York or broker-dealers approved by the Trustees of the Trust. The subadviser will monitor the value of the underlying securities throughout the term of the agreement to attempt to ensure that their market value always equals or exceeds the agreed-upon repurchase price to be paid to a Fund. Each Fund will maintain a segregated account with its custodian, or a subcustodian for the securities and other collateral, if any, acquired under a repurchase agreement for the term of the agreement.

In addition to the risk of the seller’s default or a decline in value of the underlying security, a Fund also might incur disposition costs in connection with liquidating the underlying securities. If the seller becomes insolvent and subject to liquidation or reorganization under the Bankruptcy Code or other laws, a court may determine that the underlying security is collateral for a loan by a Fund not within the control of that Fund and therefore subject to sale by the seller’s trustee in bankruptcy. Finally, it is possible that a Fund may not be able to perfect its interest in the underlying security and may be deemed an unsecured creditor of the seller. While the Trustees of the Trust acknowledge these risks, it is expected that they can be controlled through careful structuring of repurchase agreement transactions to meet requirements for treatment as a purchase and sale under the bankruptcy laws and through monitoring procedures designed to assure the creditworthiness of counter-parties to such transactions.

Securities Lending

A Fund may lend portfolio securities to broker-dealers and other financial institutions, provided that such loans are callable at any time by the Fund utilizing this investment technique and are at all times secured by collateral held by the Fund at least equal to the market value, determined daily, of the loaned securities. The Fund utilizing this investment technique will continue to receive any income on the loaned securities, and at the same time will earn interest on cash collateral or a securities lending fee in the case of collateral in the form of U.S. Government securities. A loan may be terminated at any time by either the Fund or the borrower. Upon termination of a loan, the borrower will be required to return the securities to the Fund, and any gain or loss in the market price during the period of the loan would accrue to the Fund. If the borrower fails to maintain the requisite amount of collateral, the loan will automatically terminate, and the Fund may use the collateral to replace the loaned securities while holding the borrower liable for any excess of the replacement cost over the amount of the collateral.

When voting or consent rights which accompany loaned securities pass to the borrower, the Fund will follow the policy of calling the loan, in whole or in part as may be appropriate, in order to exercise such rights if the matters involved would have a material effect on the Fund’s investment in the securities which are the subject of the loan. The Fund may pay reasonable finders, administrative and custodial fees in connection with loans of its portfolio securities.

As with any extension of credit, there are risks of delay in recovery of the loaned securities and in some cases loss of rights in the collateral should the borrower of the securities fail financially. However, loans of portfolio securities will be made only to firms considered by the Trust to be creditworthy and when the Adviser believes the consideration to be earned justifies the attendant risks.

Short Sales

The Fund may sell securities short as part of its overall portfolio management strategies involving the use of derivative instruments and to offset potential declines in long positions in similar securities. A short sale is a transaction in which a Fund sells a security it does not own or have the right to acquire (or that it owns but does not wish to deliver) in anticipation that the market price of that security will decline.

When a Fund makes a short sale, the broker-dealer through which the short sale is made must borrow the security sold short and deliver it to the party purchasing the security. The Fund is required to make a margin deposit in connection with such short sales; the Fund may have to pay a fee to borrow particular securities and will often be obligated to pay over any dividends and accrued interest on borrowed securities.

If the price of the security sold short increases between the time of the short sale and the time the Fund covers its short position, the Fund will incur a loss; conversely, if the price declines, the Fund will realize a capital gain. Any gain will be decreased, and any loss increased, by the transaction costs described above. The successful use of short selling may be adversely affected by imperfect correlation between movements in the price of the security sold short and the securities being hedged.

To the extent a Fund sells securities short, it will provide collateral to the broker-dealer and (except in the case of short sales “against the box”) will maintain additional asset coverage in the form of liquid assets with its custodian in a segregated account in an amount at least equal to the difference between the current market value of the securities sold short and any amounts required to be deposited as collateral with the selling broker (not including the proceeds of the short sale). A short sale is “against the box” to the extent the Fund contemporaneously owns, or has the right to obtain at no added cost, securities identical to those sold short.

Small Cap Companies

Market capitalizations of small market capitalization companies are determined at the time of purchase. While the issuers in which the Fund will primarily invest may offer greater opportunities for capital appreciation than larger market capitalization issuers, investments in smaller companies may involve greater risks and thus may be considered speculative. For example, small companies may have limited product lines, markets or financial resources, or they may be dependent on a limited management group. Full development of these companies takes time and, for this reason, the Fund should be considered as a long-term investment and not as a vehicle for seeking short-term profits, nor should an investment in the Fund be considered a complete investment program. In addition, many small company stocks trade less frequently and in smaller volume, and may be subject to more abrupt or erratic price movements than stocks of large companies. The securities of small companies may also be more sensitive to market changes than the securities of large companies. These factors may result in above-average fluctuations in the net asset value of the Fund’s shares.

Special Situations

The Fund may invest in special situations that the adviser believes present opportunities for capital growth. Such situations most typically include corporate restructurings, mergers, and tender offers.

A special situation arises when, in the opinion of the adviser, the securities of a particular company will, within a reasonably estimable period of time, be accorded market recognition at an appreciated value solely by reason of a development particularly or uniquely applicable to that company and regardless of general business conditions or movements of the market as a whole. Developments creating special situations might include, among others, the following: liquidations, reorganizations, recapitalizations, mergers, or tender offers; material litigation or resolution thereof; technological breakthroughs; and new management or management policies. Although large and well-known companies may be involved, special situations often involve much greater risk than is inherent in ordinary investment securities.

Unseasoned Companies

As a matter of operating policy, the Fund may invest to a limited extent in securities of unseasoned companies and new issues. The adviser regards a company as unseasoned when, for example, it is relatively new to or not yet well established in its primary line of business. Such companies generally are smaller and younger than companies whose shares are traded on the major stock exchanges. Accordingly, their shares are often traded over-the-counter and their share prices may be more volatile than those of larger, exchange-listed companies. In order to avoid undue risks, a Fund will not invest more than 5% of its total assets in securities of any one company with a record of fewer than three years’ continuous operation (including that of predecessors).

Warrants or Rights to Purchase Securities

The Fund may invest in or acquire warrants or rights, valued at the lower of cost or market, to purchase equity or fixed income securities, during a specific period of time. A fund will make such investments only if the underlying securities are deemed appropriate by the Fund’s portfolio manager for inclusion in the Fund’s portfolio. Included are warrants and rights whose underlying securities are not traded on principal domestic or foreign exchanges. Bonds with warrants attached to purchase equity securities have many characteristics of convertible bonds and their prices may, to some degree, reflect the performance of the underlying stock. Bonds also may be issued with warrants attached to purchase additional fixed income securities at the same coupon rate. A decline in interest rates would permit a Fund to buy additional bonds at the favorable rate or to sell the warrants at a profit. If interest rates rise, the warrants would generally expire with no value.

The Fund may purchase put warrants and call warrants whose values vary depending on the change in the value of one or more specified securities indices (“index warrants”). Index warrants are generally issued by banks or other financial institutions and give the holder the right, at any time during the term of the warrant, to receive upon exercise of the warrant a cash payment from the issuer based on the value of the underlying index at the time of exercise. In general, if the value of the underlying index rises above the exercise price of the index warrant, the holder of a call warrant will be entitled to receive a cash payment from the issuer upon exercise based on the difference between the value of the index and the exercise price of the warrant; if the value of the underlying index falls, the holder of a put warrant will be entitled to receive a cash payment from the issuer upon exercise based on the difference between the exercise price of the warrant and the value of the index. The holder of a warrant would not be entitled to any payments from the issuer at any time when, in the case of a call warrant, the exercise price is greater than the value of the underlying index, or, in the case of a put warrant, the exercise price is less than the value of the underlying index. If the Fund were not to exercise an index warrant prior to its expiration, then the Fund would lose the amount of the purchase price paid by it for the warrant.

The Fund will normally use index warrants in a manner similar to its use of options on securities indices. The risks of the Fund’s use of index warrants are generally similar to those relating to its use of index options. Unlike most index options, however, index warrants are issued in limited amounts and are not obligations of a regulated clearing agency, but are backed only by the credit of the bank or other institution which issues the warrant. Also, index warrants generally have longer terms than index options. Although the Fund will normally invest only in exchange listed warrants, index warrants are not likely to be as liquid as certain index options backed by a recognized clearing agency. In addition, the terms of index warrants may limit the Fund’s ability to exercise the warrants at such time, or in such quantities, as the Fund would otherwise wish to do.

When-Issued and Delayed-Delivery Transactions

The Fund may purchase securities on a when-issued or forward commitment basis. These transactions are also known as delayed-delivery transactions. (The phrase “delayed delivery” is not intended to include purchases where a delay in delivery involves only a brief period required by the selling party solely to locate appropriate certificates and prepare them for submission for clearance and settlement in the customary way.) Delayed-delivery transactions involve a commitment by a Fund to purchase or sell securities at a future date (ordinarily up to 90 days later). The price of the underlying securities (usually expressed in terms of yield) and the date when the securities will be delivered and paid for (the settlement date) are fixed at the time the transaction is negotiated. When-issued purchases and forward commitments are negotiated directly with the selling party.

When-issued purchases and forward commitments enable a Fund to lock in what is believed to be an attractive price or yield on a particular security for a period of time, regardless of future changes in interest rates. For example, in periods of rising interest rates and falling bond prices, a Fund might sell debt securities it owns on a forward commitment basis to limit its exposure to falling prices. In periods of falling interest rates and rising prices, a Fund might sell securities it owns and purchase the same or similar securities on a when-issued or forward commitment basis, thereby obtaining the benefit of currently higher yields. A Fund will not enter into such transactions for the purpose of leverage.

The value of securities purchased on a when-issued or forward commitment basis and any subsequent fluctuations in their value will be reflected in the Fund’s net asset value starting on the date of the agreement to purchase the securities, and the Fund will be subject to the rights and risks of ownership of the securities on that date. A Fund will not earn interest on securities it has committed to purchase until they are paid for and received. A seller’s failure to deliver securities to a Fund could prevent the Fund from realizing a price or yield considered to be advantageous.

When a Fund makes a forward commitment to sell securities it owns, the proceeds to be received upon settlement will be included in the Fund’s assets. Fluctuations in the market value of the underlying securities will not be reflected in the Fund’s net asset value as long as the commitment to sell remains in effect. Settlement of when-issued purchases and forward commitment transactions generally takes place up to 90 days after the date of the transaction, but a Fund may agree to a longer settlement period.

A Fund will make commitments to purchase securities on a when-issued basis or to purchase or sell securities on a forward commitment basis only with the intention of completing the transaction and actually purchasing or selling the securities. If deemed advisable as a matter of investment strategy, however, a Fund may dispose of or renegotiate a commitment after it is entered into. A Fund also may sell securities it has committed to purchase before those securities are delivered to the Fund on the settlement date. The Fund may realize a capital gain or loss in connection with these transactions.

When a Fund purchases securities on a when-issued or forward-commitment basis, the Fund will specifically designate on its accounting records securities having a value (determined daily) at least equal to the amount of the Fund’s purchase commitments. These procedures are designed to ensure that each Fund will maintain sufficient assets at all times to cover its obligations under when- issued purchases and forward commitments.

PERFORMANCE INFORMATION

Performance information for the Funds (and any class of the Funds) may be included in advertisements, sales literature or reports to shareholders or prospective investors. Performance information in advertisements and sales literature may be expressed as a yield of a class of shares and as a total return of a class of shares.

The Funds may from time to time include in advertisements containing total return the ranking of those performance figures relative to such figures for groups of mutual funds having similar investment objectives as categorized by ranking services such as Lipper Analytical Services, Inc., CDA Investment Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar, Inc. Additionally, each Fund may compare its performance results to other investment or savings vehicles (such as certificates of deposit) and may refer to results published in various publications such as Changing Times, Forbes, Fortune, Money, Barrons, Business Week and Investor’s Daily, Stanger’s Mutual Fund Monitor, The Stanger Register, Stanger’s Investment Adviser, The Wall Street Journal, The New York Times, Consumer Reports, Registered Representative, Financial Planning, Financial Services Weekly, Financial World, US. News and World Report, Standard & Poor’s The Outlook, and Personal Investor. The Funds may from time to time illustrate the benefits of tax deferral by comparing taxable investments to investments made through tax-deferred retirement plans. The total return may also be used to compare the performance of each Fund against certain widely acknowledged outside standards or indices for stock and bond market performance, such as the S&P 500 ^® Index, Dow Jones Industrial Average, Lehman Brothers Aggregate Bond Index, Dow Jones Wilshire Real Estate Securities Index (Full Cap), Russell Mid Cap Growth Index, Europe Australia Far East Index (EAFE), Consumer Price Index, Lehman Brothers Corporate Index, and the Lehman Brothers T-Bond Index.

Advertisements, sales literature and other communications may contain information about the Funds and advisers’ current investment strategies and management style. Current strategies and style may change to allow the Funds to respond quickly to changing market and economic conditions. From time to time the Funds may include specific portfolio holdings or industries in such communications. To illustrate components of overall performance, each Fund may separate its cumulative and average annual returns into income and capital gains components.

Performance information reflects only the performance of a hypothetical investment in each class during the particular time period on which the calculations are based. Performance information should be considered in light of a Fund’s investment objectives and policies, characteristics and quality of the portfolio, and the market condition during the given time period, and should not be considered as a representation of what may be achieved in the future.

Total Return

Standardized quotations of average annual total return for Class A Shares, Class B Shares, Class C Shares or Class I Shares will be expressed in terms of the average annual compounded rate of return for a hypothetical investment in either Class A Shares, Class B Shares, Class C Shares or Class I Shares over periods of 1, 5 and 10 years or up to the life of the class of shares), calculated for each class separately pursuant to the following formula: P((1+T)(n)) = ERV (where P = a hypothetical initial payment of $1,000, T = the average annual total return, n = the number of years, and ERV = the ending redeemable value of a hypothetical $1,000 payment made at the beginning of the period). All total return figures reflect the deduction of a proportional share of each class’s expenses (on an annual basis), deduction of the maximum initial sales load in the case of Class A Shares and the maximum contingent deferred sales charge applicable to a complete redemption of the investment in the case of Class B Shares and Class C Shares, and assume that all dividends and distributions on Class A Shares, Class B Shares, Class C Shares or Class I Shares are reinvested when paid.

For average “after-tax” total return, the SEC rules mandate several assumptions, including that the calculations use the historical highest individual federal marginal income tax rates at the time of reinvestment, and that the calculations do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. These returns, for instance, assume that an investor has sufficient capital gains of the same character from other investments to offset any capital losses from the redemption. As a result, returns after taxes on distributions and sale of Fund shares may exceed returns after taxes on distributions (but before sale of Fund shares). These returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements.

The Funds may also compute cumulative total return for specified periods based on a hypothetical Class A, Class B, Class C or Class I account with an assumed initial investment of $10,000. The cumulative total return is determined by dividing the net asset value of this account at the end of the specified period by the value of the initial investment and is expressed as a percentage. Calculation of cumulative total return reflects payment of the Class A Share’s maximum sales charge of 5.75% and assumes reinvestment of all income dividends and capital gain distributions during the period.

The Funds also may quote annual, average annual and annualized total return and cumulative total return performance data, for any class of shares of the Funds, both as a percentage and as a dollar amount based on a hypothetical $10,000 investment for various periods other than those noted above. Such data will be computed as described above, except that (1) the rates of return calculated will not be average annual rates, but rather, actual annual, annualized or cumulative rates of return and (2) the maximum applicable sales charge will not be included with respect to annual, annualized or cumulative rates of return calculations.

PORTFOLIO TURNOVER

Portfolio turnover is calculated by dividing the lesser of purchases or sales of portfolio securities during the fiscal year by the monthly average of the value of a Fund’s securities (excluding from the computation all securities, including options, with maturities at the time of acquisition of one year or less). A high rate of portfolio turnover generally involves correspondingly greater brokerage commission expenses, which must be borne directly by the Fund. Turnover rates may vary greatly from year to year as well as within a particular year and may also be affected by cash requirements for redemptions of Fund shares and by requirements which enable the Fund to receive certain favorable tax treatment (see “Dividends, Distributions and Taxes” of this SAI). Historical annual rates of portfolio turnover for the Funds can be found in the Funds’ Prospectus under the heading “Financial Highlights.”

PORTFOLIO TRANSACTIONS AND BROKERAGE

The adviser or subadviser, as appropriate, (throughout this section, “adviser”), places orders for the purchase and sale of securities, supervises their execution and negotiates brokerage commissions on behalf of the Funds. It is the practice of the adviser to seek the best prices and execution of orders and to negotiate brokerage commissions which in its opinion are reasonable in relation to the value of the brokerage services provided by the executing broker. Brokers who have executed orders for the Funds are asked to quote a fair commission for their services. If the execution is satisfactory and if the requested rate approximates rates currently being quoted by the other brokers selected by the adviser, the rate is deemed by the adviser to be reasonable. Brokers may ask for higher rates of commission if all or a portion of the securities involved in the transaction are positioned by the broker, if the broker believes it has brought the Funds an unusually favorable trading opportunity, or if the broker regards its research services as being of exceptional value. Payment of such commissions is authorized by the adviser after the transaction has been consummated. If the adviser more than occasionally differs with the broker’s appraisal of opportunity or value, the broker would not be selected to execute trades in the future.

The adviser and subadvisers believe that the Funds benefit with a securities industry comprised of many diverse firms and that the long-term interests of shareholders of the Funds are best served by their brokerage policies which include paying a fair commission rather than seeking to exploit their leverage to force the lowest possible commission rate. The primary factors considered

in determining the firms to which brokerage orders are given are the adviser’s appraisal of: the firm’s ability to execute the order in the desired manner, the value of research services provided by the firm, and the firm’s attitudes toward and interest in mutual funds in general. The adviser does not offer or promise to any broker an amount or percentage of brokerage commissions as an inducement or reward for the sale of shares of the Funds. Over-the-counter purchases and sales are transacted directly with principal market-makers except in those circumstances where, in the opinion of the adviser, better prices and executions are available elsewhere. In the over-the-counter market, securities are usually traded on a “net” basis with dealers acting as principal for their own accounts without a stated commission, although the price of the security usually contains a profit to the dealer. The Funds also expect that securities will be purchased at times in underwritten offerings where the price includes a fixed amount of compensation, usually referred to as the underwriter’s concession or discount. The foregoing discussion does not relate to transactions effected on foreign securities exchanges which do not permit the negotiation of brokerage commissions and where the adviser would, under the circumstances, seek to obtain best price and execution on orders for the Funds.

In general terms, the nature of research services provided by brokers encompasses statistical and background information, and forecasts and interpretations with respect to U.S. and foreign economies, U.S. and foreign money markets, fixed income markets and equity markets, specific industry groups, and individual issues. Research services will vary from firm to firm, with broadest coverage generally from the large full-line firms. Smaller firms in general tend to provide information and interpretations on a smaller scale, frequently with a regional emphasis. In addition, several firms monitor federal, state, local, and foreign political developments. Many of the brokers also provide access to outside consultants. The outside research assistance is particularly useful to the adviser’s staff since the brokers, as a group, tend to monitor a broader universe of securities and other matters than the adviser’s staff can follow. In addition, it provides the adviser with a diverse perspective on financial markets. Research and investment information is provided by these and other brokers at no cost to the adviser and is available for the benefit of other accounts advised by the adviser and its affiliates and not all of the information will be used in connection with the Funds. While this information may be useful in varying degrees and may tend to reduce the adviser’s expenses, it is not possible to estimate its value and in the opinion of the adviser it does not reduce the adviser’s expenses in a determinable amount. The extent to which the adviser makes use of statistical, research and other services furnished by brokers is considered by the adviser in the allocation of brokerage business but there is no formula by which such business is allocated. The adviser does so in accordance with its judgment of the best interests of the Funds and their shareholders.

The Trust has implemented, and the Board of Trustees has approved, policies and procedures reasonably designed to prevent (i) the adviser’s and/or subadviser’s personnel responsible for the selection of broker-dealers to effect fund portfolio securities transactions from taking into account, in making those decisions, broker-dealer’s promotion or sales efforts, and (ii) the Trust, its adviser, and distributor from entering into any agreement or other understanding under which the Funds direct brokerage transactions or revenue generated by those transactions to a broker-dealer to pay for distribution of fund shares. These policies and procedures are designed to prevent the Trust from entering into informal arrangements to direct portfolio securities transactions to a particular broker.

The Funds have adopted a policy and procedures governing the execution of aggregated advisory client orders (“bunching procedures”) in an attempt to lower commission costs on a per-share and per-dollar basis. According to the bunching procedures, the adviser shall aggregate transactions unless it believes in its sole discretion that such aggregation is inconsistent with its duty to seek best execution (which shall include the duty to seek best price) for the Funds. No advisory account of the adviser is to be favored over any other account and each account that participates in an aggregated order is expected to participate at the average share price for all transactions of the adviser in that security on a given business day, with all transaction costs shared pro rata based on the Funds’ participation in the transaction. If the aggregated order is filled in its entirety, it shall be allocated among the adviser’s accounts in accordance with the allocation order, and if the order is partially filled, it shall be allocated pro rata based on the allocation order. Notwithstanding the foregoing, the order may be allocated on a basis different from that specified in the allocation order if all accounts of the adviser whose orders are allocated receive fair and equitable treatment and the reason for such different allocation is explained in writing and is approved in writing by the adviser’s compliance officer as soon as practicable after the opening of the markets on the trading day following the day on which the order is executed. If an aggregated order is partially filled and allocated on a basis different from that specified in the allocation order, no account that is benefited by such different allocation may intentionally and knowingly effect any purchase or sale for a reasonable period following the execution of the aggregated order that would result in it receiving or selling more shares than the amount of shares it would have received or sold had the aggregated order been completely filled. The Trustees will annually review these procedures or as frequently as they deem appropriate.

For the fiscal years ended June 30, 2005, 2006 and 2007, brokerage commissions paid by the Trust on portfolio transactions totaled $480,229, $717,630 and $1,279,831, respectively. In the fiscal years ended June 30, 2005, 2006 and 2007, the Funds paid no brokerage commissions to any affiliate of its Distributor. Brokerage commissions of $595,775 paid during the fiscal year ended June 30, 2007, were paid on portfolio transactions aggregating $310,102,833 executed by brokers who provided research and other statistical information.

DISCLOSURE OF FUND HOLDINGS

The Trustees of the Trust have adopted policies with respect to the disclosure of the Funds’ portfolio holdings by the Funds, Phoenix (generally, the Funds’ investment adviser), or their affiliates. These policies provide that the Funds’ portfolio holdings information generally may not be disclosed to any party prior to the information becoming public. Certain limited exceptions are described below. Additionally, the Funds’ policies prohibit Phoenix and the Funds’ other service providers from entering into any agreement to disclose Fund portfolio holdings in exchange for any form of compensation or consideration. These policies apply to disclosures to all categories of persons, including individual investors, institutional investors, intermediaries who sell shares of the Fund, third parties providing services to the Funds (accounting agent, print vendors, etc.), rating and ranking organizations (Lipper, Morningstar, etc.) and affiliated persons of the Funds.

The Board of Trustees has delegated to the Holdings Disclosure Committee (the “HDC”) the authority to make decisions regarding requests for information on portfolio holdings prior to public disclosure. The HDC will authorize the disclosure of portfolio holdings only if it determines such disclosure to be in the best interests of Fund shareholders. The HDC is composed of the Funds’ Compliance Officer, and officers of the Funds’ advisers and principal underwriter representing the areas of portfolio management, fund control, institutional marketing, retail marketing, and distribution.

The Funds’ Compliance Officer is responsible for monitoring the use of portfolio holdings information, for the Funds’ compliance with these policies and for providing regular reports (at least quarterly) to the Board of Trustees regarding their compliance, including information with respect to any potential conflicts of interest between the interests of Fund shareholders and those of Phoenix and its affiliates identified during the reporting period and how such conflicts were resolved.

Public Disclosures

In accordance with rules established by the SEC, each Fund sends semiannual and annual reports to shareholders that contain a full listing of portfolio holdings as of the second and fourth fiscal quarters, respectively, within 60 days of quarter end. The Funds also disclose complete portfolio holdings as of the end of the first and third fiscal quarters on Form N-Q, which is filed with the SEC within 60 days of quarter end. The Fund’s shareholder reports are available on Phoenix’s Web sites at www.PhoenixFunds.com or www.PhoenixInvestments.com. Additionally, each Fund provides its top 10 holdings and summary composition data derived from portfolio holdings information on Phoenix’s Web sites. This information is posted to the Web sites at the end of each month with respect to the top 10 holdings, and at the end of the quarter with respect to the summary composition information, generally within 10 business days. This information will be available on the Web sites until full portfolio holdings information becomes publicly available as described above. The Funds also provide publicly available portfolio holdings information directly to ratings agencies, the frequency and timing of which is determined under the terms of the contractual arrangements with such agencies.

Other Disclosures

The HDC may authorize the disclosure of non-public portfolio holdings information under certain limited circumstances. The Funds’ policies provide that non-public disclosures of a Fund’s portfolio holdings may only be made if (i) the Fund has a legitimate business purpose for making such disclosure and (ii) the party receiving the non-public information enters into a confidentiality agreement, which includes a duty not to trade on the non-public information. The HDC will consider any actual or potential conflicts of interest between Phoenix and its mutual fund shareholders and will act in the best interest of the Funds’ shareholders with respect to any such disclosure of portfolio holdings information. If a potential conflict can be resolved in a manner that does not present detrimental effects to Fund shareholders, the HDC may authorize release of portfolio holdings information. Conversely, if the potential conflict cannot be resolved in a manner that does not present detrimental effects to Fund shareholders, the HDC will not authorize such release.

Ongoing Arrangements to Disclose Portfolio Holdings

As previously authorized by the Funds’ Board of Trustees and/or the Fund’s executive officers, the Funds periodically disclose non-public portfolio holdings on a confidential basis to various service providers that require such information in order to assist the Funds in their day-to-day operations, as well as public information to certain ratings organizations. In addition to Phoenix and its affiliates, these entities are described in the following table. The table also includes information as to the timing of these entities receiving the portfolio holdings information from the Funds.

Non-Public Portfolio Holdings Information


Type of Service Provider	Name of Service Provider	Timing of Release of Portfolio Holdings Information
Adviser (to all Funds)	Phoenix Investment Counsel, Inc.	Daily

Subadviser to Value Opportunities Fund	Acadian Asset Management LLP	Daily

Subadviser to All-Cap Growth and Small-Cap Growth Funds	Engemann Asset Management, Inc.	Daily


Type of Service Provider	Name of Service Provider	Timing of Release of Portfolio Holdings Information
Subadviser to Small-Cap Value Fund	Euclid Advisors LLC	Daily

Subadviser to Balanced and Income & Growth Funds	Goodwin Capital Advisers, Inc.	Daily

Subadviser to Capital Growth and Mid-Cap Growth Fund	Harris Investment Management, Inc.	Daily

Subadviser to Quality Small-Cap, Small-Cap Sustainable Growth and Small-Mid Cap Funds	Kayne Anderson Rudnick Investment Management, LLC	Daily

Subadviser to Mid-Cap Value Fund	Sasco Capital, Inc.	Daily

Subadviser to Strategic Growth Fund	SCM Advisors LLC	Daily

Subadviser to Growth Opportunities Fund	Turner Investment Partners, Inc.	Daily

Distributor	Phoenix Equity Planning Corporation	Daily

Custodian	State Street Bank and Trust Company	Daily

Sub-Financial Agent	PFPC Inc.	Daily

Independent Registered Public Accounting Firm	PricewaterhouseCoopers LLP	Annual Reporting Period: within 15 business days of end of reporting period Semiannual Reporting Period: within 31 business days of end of reporting period

Typesetting Firm for Financial Reports and Forms N-Q	GCom Solutions	Monthly on first business day following month end

Printer for Financial Reports	R.R. Donnelley & Sons Co.	Annual and Semiannual Reporting Period: within 45 days after end of reporting period

Proxy Voting Service	Institutional Shareholder Services	Twice weekly on an ongoing basis

Intermediary Selling Shares of the Fund	Merrill Lynch	Quarterly within 10 days of quarter end

Third-Party Class B Share Financer	SG Constellation LLC	Weekly based on prior week end

Public Portfolio Holdings Information

Portfolio Redistribution Firms	Bloomberg, Standard & Poor’s and Thompson Financial Services	Quarterly, 60 days after fiscal quarter end

Rating Agencies	Lipper Inc. and Morningstar	Quarterly, 60 days after fiscal quarter end

These service providers are required to keep all non-public information confidential and are prohibited from trading based on the information or otherwise using the information except as necessary in providing services to the Funds.

There is no guarantee that the Funds’ policies on use and dissemination of holdings information will protect the Funds from the potential misuse of holdings by individuals or firms in possession of such information.

SERVICES OF THE ADVISER AND SUBADVISERS

The Adviser

The investment adviser to each of the Funds is Phoenix Investment Counsel, Inc. (“PIC” or “Adviser”), which is located at 56 Prospect Street, Hartford, Connecticut 06115-0480. All of the outstanding stock of PIC is owned by PEPCO, a subsidiary of Phoenix Investment Partners, Ltd. (“PXP”). The Phoenix Companies, Inc. (“PNX”) of Hartford, Connecticut is the sole shareholder of PXP. PNX is a leading provider of wealth management products and services to individuals and businesses. PNX’s primary place of business is One American Row, Hartford, CT 06102. PEPCO, a mutual fund distributor, acts as the national distributor of the Fund’s shares and as Financial Agent of the Funds. The principal office of PEPCO is located at One American Row, Hartford, CT 06102. PIC acts as the investment adviser for over 50 mutual funds and as adviser to institutional clients.

PXP has served investors for over 70 years. As of December 31, 2007, PXP had approximately $55.5 billion in assets under management. PXP’s money management is provided by affiliated investment advisers, as well as through subadvisory arrangements with outside managers, each specializing in particular investment styles and asset classes.

PIC provides certain services and facilities required to carry on the day-to-day operations of each of the Funds (for which it receives a management fee). Each Fund will pay expenses incurred in its own operation and will also pay a portion of the Trust’s general administration expenses allocated on the basis of the asset values of the respective Funds.

PIC manages the day-to-day investments for the Balanced Fund (equity portion), the Growth & Income Fund and the Income & Growth Fund (equity portion) and is located at 56 Prospect Street, Hartford, CT 06115. PIC acts as the investment adviser for over 50 mutual funds and as adviser to institutional clients. As of December 31, 2007, PIC had approximately $1.7 billion in assets under management.

The Adviser provides certain services and facilities required to carry on the day-to-day operations of each of the Funds (for which it receives a management fee) other than the costs of printing and mailing proxy materials, reports and notices to shareholders; outside legal and auditing services; regulatory filing fees and expenses of printing the Trust’s registration statements (but the Distributor purchases such copies of the Trust’s prospectuses and reports and communications to shareholders as it may require for sales purposes); insurance expense; association membership dues; brokerage fees; and taxes.

The Investment Advisory Agreements will continue in effect from year-to-year if specifically approved annually by a majority of the Trustees who are not interested persons of the parties thereto, as defined in the 1940 Act, and by either (a) the Trustees of the Fund or (b) the vote of a majority of the outstanding voting securities of the applicable Fund (as defined in the 1940 Act). The Agreement may be terminated without penalty at any time by the Trustees or by a vote of a majority of the outstanding voting securities of the applicable Fund or by the Phoenix upon 60 days written notice and will automatically terminate in the event of its “assignment” as defined in Section (2)(a)(4) of the 1940 Act.

Each Agreement provides that the Adviser is not liable for any act or omission in the course of, or in connection with, rendering services under the Agreement in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties under the Agreements. Each Agreement permits the Adviser to render services to others and to engage in other activities.

As compensation for its services to the below Funds, the Adviser receives a fee, which is accrued daily against the value of each Fund’s net assets and paid monthly at the following rates:


Mid-Cap Value Fund	0.75	%
Small-Mid Cap Fund	0.85	%

	First $50 Million		Next $450 Million		Over $500 Million
All-Cap Growth Fund	0.90	%	0.80	%	0.70	%
Small-Cap Growth Fund	1.00	%	0.90	%	0.80	%

	First $400 Million		$400+ Million through $1 Billion		$1+ Billion
Quality Small-Cap Fund	0.90	%	0.85	%	0.80	%
Small-Cap Sustainable Growth Fund	0.90	%	0.85	%	0.80	%

	First $500 Million		Over $500 Million
Mid-Cap Growth Fund	0.80	%	0.70	%

	First $1 Billion		$1+ Billion through $2 Billion		$2+ Billion
Balanced Fund	0.55	%	0.50	%	0.45	%
Capital Growth Fund	0.70	%	0.65	%	0.60	%
Growth & Income Fund	0.75	%	0.70	%	0.65	%
Growth Opportunities Fund	0.75	%	0.70	%	0.65	%
Income & Growth Fund	0.70	%	0.65	%	0.60	%
Small-Cap Value Fund	0.90	%	0.85	%	0.80	%
Strategic Growth Fund	0.70	%	0.65	%	0.60	%
Value Opportunities Fund	0.75	%	0.70	%	0.65	%

The Adviser has contractually (and/or voluntarily, where indicated) agreed to limit the following fund’s total operating expenses (excluding interest, taxes and extraordinary expenses) through the dates indicated, so that such expenses do not exceed, on an annualized basis, the amounts indicated in the following table.


	Class A		Class B		Class C		Class I		Type*	Expiration Date
Growth & Income Fund	1.25	%	2.00	%	2.00	%	1.00	%	V	December 31, 2008
Growth Opportunities Fund	1.25	%	N/A		2.00	%	N/A		C	May 31, 2008
Mid-Cap Growth Fund	1.45	%	2.20	%	2.20	%	1.20	%	C	September 30, 2008
Quality Small-Cap Fund	1.40	%	N/A		2.15	%	1.15	%	V	May be discontinued at any time.
Small-Cap Sustainable Growth Fund	1.40	%	N/A		2.15	%	1.15	%	V	May be discontinued at any time.
Small-Cap Value Fund	1.40	%	2.15	%	2.15	%	N/A		V	May be discontinued at any time.
Value Opportunities Fund	1.35	%	N/A		2.10	%	N/A		C	June 30, 2008

* C = Contractual; V = Voluntary.

The Adviser may voluntarily extend these expense limitations, but may discontinue them at any time in the future. The Adviser may recapture operating expenses reimbursed under these and previous arrangements made subsequent to August 23, 2007, for a period of three years following the end of the fiscal period in which such reimbursements occurred.

For services to the Funds during the fiscal years ended June 30, 2005, 2006 and 2007, the Adviser received fees of $26,662,401, $26,350,031, and $26,600,880, respectively, under the investment advisory agreements in effect. Of these totals, the Adviser received fees from the Funds, including Predecessor Funds, as follows:


Fund Name	2005		2006		2007
Phoenix All-Cap Growth Fund	$	1,493,894	$	1,298,618	$	969,043
Phoenix Balanced Fund		5,490,172		6,032,086		5,783,537
Phoenix Capital Growth Fund		5,638,798		4,085,209		3,415,339
Phoenix Growth & Income Fund		2,613,058		2,232,403		2,032,744
Phoenix Growth Opportunities Fund		N/A		4,403		87,838
Phoenix Income & Growth Fund		2,702,502		2,425,012		2,172,952
Phoenix Mid-Cap Growth Fund		1,447,494		1,333,527		1,125,509
Phoenix Mid-Cap Value Fund		297,657		1,723,498		4,614,218
Phoenix Quality Small-Cap Fund		N/A		N/A		42,581
Phoenix Small-Cap Growth Fund		2,840,043		2,352,358		1,565,444
Phoenix Small-Cap Sustainable Growth Fund		N/A		N/A		39,297
Phoenix Small-Cap Value Fund		1,802,574		2,283,425		2,016,659
Phoenix Small-Mid Cap Fund		1,130,966		1,178,058		948,728
Phoenix Strategic Growth Fund		1,205,243		920,091		1,184,856
Phoenix Value Opportunities Fund		N/A		19,190		182,055

The Adviser makes its personnel available to serve as officers and “interested” Trustees of the Trust. The Trust has not directly compensated any of their officers or Trustees for services in such capacities except to pay fees to the Trustees who are not otherwise affiliated with the Trust by reason of their being employed by the Adviser or its affiliates. The Trust reimburses all Trustees for their out-of-pocket expenses. The Trustees of the Trust are not prohibited from authorizing the payment of salaries to the officers pursuant to the Agreements, including out-of-pocket expenses, at some future time.

In addition to the management fee, expenses paid by the Funds include: fees of Trustees who are not compensated by reason of being employees of the Adviser or its affiliates, interest charges, taxes, fees and commissions of every kind, including brokerage fees, expenses of issuance, repurchase or redemption of shares, expenses of registering or qualifying shares for sale (including the printing and filing of the Trust’s registration statements, reports and prospectuses excluding those copies used for sales purposes which the Distributor purchases at printer’s over-run cost), accounting services fees, insurance expenses, association membership dues, all charges of custodians, transfer agents, registrars, auditors and legal counsel, expenses of preparing, printing and distributing all proxy material, reports and notices to shareholders, and, all costs incident to the Trust’s existence as a Delaware statutory trust.

The Trust, the Adviser, the respective subadvisers and the Distributor have each adopted a Code of Ethics pursuant to Rule 17j-1 under the 1940 Act. Personnel subject to the Codes of Ethics may purchase and sell securities for their personal accounts, including securities that may be purchased, sold or held by the Funds, subject to certain restrictions and conditions. Generally, personal securities transactions are subject to preclearance procedures, reporting requirements and holding period rules. The Codes also restrict personal securities transactions in private placements, initial public offerings and securities in which the Funds have a pending order. The Trust has also adopted a Senior Management Code of Ethics as required by Section 406 of the Sarbanes-Oxley Act of 2002.

The Subadvisers

Acadian Asset Management LLP (“Acadian”)

Acadian is the Subadviser to the Value Opportunities Fund and is located at One Post Office Square, 20th Floor, Boston, MA 02109. Acadian is a subsidiary of Old Mutual Asset Managers (US) LLC (“OMAM”), which is an indirectly wholly owned subsidiary of Old Mutual plc, a UK-listed financial services company. OMAM owns 100% of the class A (voting) shares of Acadian. Ownership of the class B shares, which provide financial participation in the profitability of the firm, are divided with just over 71% owned by Old Mutual and the remainder owned by a Key Employee Limited Partnership composed of Acadian employee and consultants. Acadian acts as adviser to institutions and individuals. As of December 31, 2007, Acadian had approximately $83 billion in assets under management. Acadian has been an investment adviser since 1977. The firm has been registered with the SEC since 1986.

The Subadvisory Agreement provides that the Adviser, PIC, will delegate to Acadian the performance of certain of its investment management services under the Investment Advisory Agreement with the Value Opportunities Fund. Acadian will furnish at is own expense the office facilities and personnel necessary to perform such services.

For its services as Subadviser, PIC will pay Acadian compensation at the rate of 50% of the gross management fee.

Engemann Asset Management (“Engemann”)

Engemann, an affiliate of PIC, is the Subadviser to the All-Cap Growth and Small-Cap Growth Funds and is located at 600 North Rosemead Boulevard, Pasadena, CA 911007. Engemann acts as subadviser to two mutual funds and as adviser to institutional clients. As of December 31, 2007, Engemann had approximately $394.5 million in assets under management.

The Subadvisory Agreement provides that the Adviser, PIC, will delegate to Engemann the performance of certain of its investment management services under the Investment Advisory Agreement with the All-Cap Growth and Small-Cap Growth Funds. Engemann will furnish at is own expense the office facilities and personnel necessary to perform such services.

For its services as Subadviser, PIC will pay Engemann compensation at the annual rate of 50% of the gross management fee.

Euclid Advisors LLC (“Euclid”)

Euclid, an affiliate of PIC, is the subadviser to the Small-Cap Value Fund and is located at 900 Third Avenue, New York, NY 10022. Euclid is a wholly-owned subsidiary of Phoenix/Zweig Advisers, LLC, which is a wholly-owned subsidiary of Phoenix Investment Partners, Ltd. (“PXP”). Euclid serves as subadviser to two mutual funds and may act as investment adviser for other accounts. As of December 31, 2007, Euclid had approximately $213.3 million in assets under management.

The Subadvisory Agreement provides that the adviser, PIC, will delegate to Euclid the performance of certain of its investment management services under the Investment Advisory Agreement with the Small-Cap Value Fund. Euclid will furnish at its own expense the office facilities and personnel necessary to perform such services.

For its services as Subadviser, PIC pays Euclid an annual fee at the following rates:


	First $166 million		Excess Over $166 million
Small-Cap Value Fund	0.10	%	0.40	%

Goodwin Capital Advisers, Inc. (“Goodwin”)

Goodwin, an affiliate of PIC, is the Subadviser to the Balanced and Income & Growth Funds (fixed income portions) and is located at 56 Prospect Street, Hartford, CT 06115. Goodwin acts as subadviser to 11 mutual funds and manages fixed income assets for individuals and institutions. As of December 31, 2007, Goodwin had approximately $17.7 billion in assets under management.

The Subadvisory Agreement provides that the adviser, PIC, will delegate to Goodwin the performance of certain of its investment management services under the Investment Advisory Agreements with the Balanced and Income & Growth Funds. Goodwin will furnish at its own expense the office facilities and personnel necessary to perform such services.

For its services as Subadviser, PIC pays Goodwin at the rate of 50% of the gross management fee on the portion of each of the Balanced and Income & Growth Fund’s assets that Goodwin manages.

Harris Investment Management, Inc. (“Harris”)

Harris is the Subadviser to the Capital Growth and Mid-Cap Growth Funds and is located at 190 South LaSalle Street, 4 ^th Floor, P.O. Box 755, Chicago, IL 60690. Harris has been an investment adviser since 1989. Harris is a wholly-owned subsidiary of Harris Bankcorp, Inc., which is wholly-owned by Harris Financial Corp. Harris Financial Corp. is wholly-owned by Bank of Montreal, a publicly traded Canadian banking institution. As of December 31, 2007, Harris had approximately $16.7 billion in assets under management.

The Subadvisory Agreement provides that the adviser, PIC, will delegate to Harris the performance of certain of its investment management services under the Investment Advisory Agreement with the Capital Growth and Mid-Cap Growth Funds. Harris will furnish at its own expense the office facilities and personnel necessary to perform such services.

For its services as Subadviser, PIC pays Harris at the rate of 50% of the gross management fee.

Kayne Anderson Rudnick Investment Management, LLC (“Kayne”)

Kayne, an affiliate of PIC, is the Subadviser to the Quality Small-Cap, Small-Cap Sustainable Growth and Small-Mid Cap Funds and is located at 1800 Avenue of the Stars, 2 ^nd Floor, Los Angeles, CA 90067. Kayne acts as subadviser to three mutual funds and as investment adviser to institutions and individuals. As of December 31, 2007, Kayne had approximately $5.2 billion in assets under management.

The Subadvisory Agreement provides that the adviser, PIC, will delegate to Kayne the performance of certain of its investment management services under the Investment Advisory Agreement with the Quality Small-Cap, Small-Cap Sustainable Growth and Small-Mid Cap Funds. Kayne will furnish at its own expense the office facilities and personnel necessary to perform such services.

For its services as Subadviser, PIC pays Kayne at the rate of 50% of the gross investment management fee for each of the Quality Small-Cap and Small-Cap Sustainable Growth Funds and at the annual rate of 0.425% of the average daily net assets of the Small-Mid Cap Fund.

Sasco Capital Inc. (“Sasco”)

Sasco is the Subadviser to the Mid-Cap Value Fund. Sasco’s principal offices are located at 10 Sasco Hill Road, Fairfield, CT 06824. Sasco has been an investment adviser since 1985, and as of December 31, 2007, had approximately $4.4 billion in assets under management.

The Subadvisory Agreement provides that the Adviser, PIC, will delegate to Sasco the performance of certain of its investment management services under the Investment Advisory Agreement with the Mid-Cap Value Fund. Sasco will furnish at its own expense the office facilities and personnel necessary to perform such services.

For its services as Subadviser, Phoenix pays Sasco at the rate of 47.5% of the gross investment management fee (without regard to capping of expenses or other waivers or reimbursements).

SCM Advisors LLC (“SCM Advisors”)

SCM Advisors, an affiliate of PIC, is the Subadviser to Strategic Growth Fund and is located at 909 Montgomery Street, San Francisco, CA 94133. SCM Advisors acts as subadviser to five mutual funds and as investment adviser to institutions and individuals. As of December 31, 2007, SCM Advisors had approximately $10.3 billion in assets under management. SCM Advisors has been an investment adviser since 1989.

The Subadvisory Agreement provides that the adviser, PIC, will delegate to SCM Advisors the performance of certain of its investment management services under the Investment Advisory Agreement with the Strategic Growth Fund. SCM Advisors will furnish at its own expense the office facilities and personnel necessary to perform such services.

For its services as Subadviser, PIC pays SCM Advisors at the rate of 50% of the gross management fee.

Turner Investment Partners, Inc. (“Turner”)

Turner is the Subadviser to the Growth Opportunities Fund and is located at 1205 Westlakes Drive, Suite 100, Berwyn, PA 19312. Turner is a professional investment firm founded in March 1990. Turner has provided investment advisory services to investment companies since 1992. As of December 31, 2007, Turner had approximately $29.1 billion in assets under management.

The Subadvisory Agreement provides that the adviser, PIC, will delegate to Turner the performance of certain of its investment management services under the Investment Advisory Agreement with the Growth Opportunities Fund. Turner will furnish at its own expense the office facilities and personnel necessary to perform such services.

For its services as Subadviser, PIC pays Turner a fee at the following annual rates:


	First $1 billion		$1+ billion through $2 billion		$2+ billion
Growth Opportunities Fund	0.375	%	0.35	%	0.325	%

Total subadvisory fees paid by PIC to the respective Subadvisers for managing the Funds (including Predecessor Funds) for the fiscal years ended June 30, 2005, 2006 and 2007 were as follows:


Fund Name	2005		2006		2007
Phoenix All-Cap Growth Fund		N/A		N/A	$	95,499
Phoenix Balanced Fund	$	788,343	$	1,779,348		574,900
Phoenix Capital Growth Fund		3,001,355		3,004,124		1,722,417
Phoenix Growth & Income Fund		N/A		N/A		N/A
Phoenix Growth Opportunities Fund		N/A		N/A		43,919
Phoenix Income & Growth Fund		319,198		600,454		224,714
Phoenix Mid-Cap Growth Fund		835,232		836,001		562,754
Phoenix Mid-Cap Value Fund		142,916		818,661		2,191,754
Phoenix Quality Small-Cap Fund		N/A		N/A		21,394
Phoenix Small-Cap Growth Fund		N/A		N/A		638,211
Phoenix Small-Cap Sustainable Growth Fund		N/A		N/A		19,753
Phoenix Small-Cap Value Fund		513,424		516,857		398,293
Phoenix Small-Mid Cap Fund		N/A		N/A		391,352
Phoenix Strategic Growth Fund		881,439		881,439		316,490
Phoenix Value Opportunities Fund		N/A		9,595		91,028

Each Subadvisory Agreement will continue in effect from year to year if specifically approved by the Trustees, including a majority of the independent Trustees.

Board of Trustees’ Consideration of Advisory and Subadvisory Agreements

Mid-Cap Value Fund and Value Opportunities Fund

A discussion regarding the basis for the Board of Trustees approving the investment advisory and subadvisory agreements is available in the Funds’ semiannual report covering the period July 1, 2007 through December 31, 2007.

All Other Funds

A discussion regarding the basis for the Board of Trustees approving the investment advisory and subadvisory agreements is expected to be available in the Funds’ annual report covering the period July 1, 2007 through March 31, 2008.

Description of Proxy Voting Policy

The Trust has adopted, on behalf of the Funds, a Statement of Policy with Respect to Proxy Voting (the “Policy”) stating the Trust’s intention to exercise stock ownership rights with respect to portfolio securities in a manner that is reasonably anticipated to further the best economic interests of shareholders of the Funds. The Funds have committed to analyze and vote all proxies that are likely to have financial implications, and where appropriate, to participate in corporate governance, shareholder proposals, management communications and legal proceedings. The Funds must also identify potential or actual conflicts of interest in voting proxies and must address any such conflict of interest in accordance with the Policy.

The Policy stipulates that the Funds’ Adviser will vote proxies or delegate such responsibility to a subadviser. The Adviser or applicable Subadviser will vote proxies in accordance with this Policy, or its own policies and procedures, which in no event will conflict with the Trust’s Policy. Any Adviser or Subadviser may engage a qualified, independent organization to vote proxies on its behalf (a “delegate”). Matters that may affect substantially the rights and privileges of the holders of securities to be voted will be analyzed and voted on a case-by-case basis taking into consideration such relevant factors as enumerated in the Policy. The views of management of a portfolio company will be considered.

The Policy specifies certain factors that will be considered when analyzing and voting proxies on certain issues, including, but not limited to:

•

Corporate Governance Matters—tax and economic benefits of changes in the state of incorporation; dilution or improved accountability associated with anti-takeover provisions such as staggered boards, poison pills and supermajority provisions.

•

Changes to Capital Structure—dilution or improved accountability associated with such changes.

•

Stock Option and Other Management Compensation Issues—executive pay and spending on perquisites, particularly in conjunction with sub-par performance and employee layoffs.

•

Social and Corporate Responsibility Issues—the Adviser or Subadvisers will generally vote against shareholder social and environmental issue proposals.

The Funds and their delegates seek to avoid actual or perceived conflicts of interest of Fund shareholders, on the one hand, and those of the Adviser, Subadvisers, delegate, principal underwriter, or any affiliated person of the Funds, on the other hand. Depending on the type and materiality, any conflicts of interest will be handled by (i) relying on the recommendations of an established, independent third party proxy voting vendor; (ii) voting pursuant to the recommendation of the delegate; (iii) abstaining; or (iv) where two or more delegates provide conflicting requests, voting shares in proportion to the assets under management of each delegate. The Policy requires each Adviser, Subadviser or delegate to notify the President of the Trust of any actual or potential conflict of interest. No Adviser, Subadviser or delegate may waive any conflict of interest or vote any conflicted proxies without the prior written approval of the Board of Trustees or the President of the Trust.

The Policy further imposes certain record keeping and reporting requirements on each Adviser, Subadviser or delegate. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ending June 30, is available free of charge by calling, toll-free, (800)243-1574, or on the SEC’s Internet site at http://www.sec.gov.

PORTFOLIO MANAGERS

Compensation of Portfolio Managers of Phoenix Investment Counsel, Inc. (Adviser to Balanced Fund, Growth & Income Fund and Income & Growth Fund), of Engemann (Subadviser to All-Cap Growth Fund and Small-Cap Growth Fund), of Euclid (Subadviser to Small-Cap Value Fund) and of Goodwin (Subadviser to Balanced Fund and Income & Growth Fund)

Phoenix Investment Partners, Ltd. and its affiliated investment management firms (collectively, “PXP”), believe that the firm’s compensation program is adequate and competitive to attract and retain high-caliber investment professionals. Investment

professionals at PXP receive a competitive base salary, an incentive bonus opportunity and a benefits package. Managing Directors and portfolio investment professionals who supervise and manage others also participate in a management incentive program reflecting their personal contribution and team performance. Highly compensated individuals can also take advantage of a long-term Incentive Compensation program to defer their compensation and potentially reduce their taxes.

The bonus package for portfolio managers is based upon how well the individual manager meets or exceeds assigned goals and a subjective assessment of contribution to the team effort. Their incentive bonus also reflects a performance component for achieving and/or exceeding performance competitive with peers managing similar strategies. Such component is further adjusted to reward investment personnel for managing within the stated framework and for not taking unnecessary risks. This ensures that investment personnel will remain focused on managing and acquiring securities that correspond to a fund’s mandate and risk profile. It also avoids the temptation for portfolio managers to take on more risk and unnecessary exposure to chase performance for personal gain.

Finally, portfolio managers and investment professionals may also receive PNX stock options and/or be granted PNX restricted stock at the direction of the parent’s Board of Directors.

Following is a more detailed description of the compensation structure of the funds’ portfolio managers identified in the funds’ prospectus.

Base Salary . Each portfolio manager is paid a fixed base salary, which is determined by PXP and is designed to be competitive in light of the individual’s experience and responsibilities. PXP management uses compensation survey results of investment industry compensation conducted by an independent third party in evaluating competitive market compensation for its investment management professionals.

Incentive Bonus. Generally, the current Performance Incentive Plan for portfolio managers at PXP is made up of three components:

(1)

Seventy percent of the target incentive is based on achieving investment area investment goals and individual performance. The Investment Incentive pool will be established based on actual pre-tax investment performance compared with specific peer group or index measures established at the beginning of each calendar year. Performance of the funds managed is measured over one, three and five-year periods against specified benchmarks and/or peer groups (as indicated in the table below) for each fund managed. Performance of the PNX general account and growth of revenue, if applicable to a particular portfolio manager, is measured on a one-year basis. Generally, individual manager’s participation is based on the performance of each fund/account managed as weighted roughly by total assets in each of those funds/accounts.


Fund(s)		Benchmark(s) and/or Peer Groups
All-Cap Growth Fund		Russell 3000 ^® Growth Index
Balanced Fund (fixed income portion)		Lehmann Brothers Aggregate Bond Index
Balanced Fund (equity portion)		Lipper Large Cap Core Funds
Growth & Income Fund		Lipper Large Cap Core Funds
Income & Growth Fund (fixed income portion)		Lehmann Brothers Aggregate Bond Index
Income & Growth Fund (equity portion)		Lipper Large Cap Core Funds
Small-Cap Growth Fund		Russell 2000 ^® Growth Index
Small-Cap Value Fund		Lipper Small Cap Value Funds

(2)	Fifteen percent of the target incentive is based on the profitability of the investment management division with which the portfolio manager is associated. This component of the plan is paid in restricted stock units of The Phoenix Companies, Inc., which vest over three years.

(3)	Fifteen percent of the target incentive is based on the manager’s investment area’s competencies and on individual performance. This pool is funded based on The Phoenix Companies, Inc.’s return on equity.

The Performance Incentive Plan applicable to some portfolio managers may vary from the description above. For instance, plans applicable to certain portfolio managers (i) may specify different percentages of target incentive that is based on investment goals and individual performance and on The Phoenix Companies, Inc. return on equity, (ii) may not contain the component that is based on the profitability of the management division with which the portfolio manager is associated, or (iii) may contain a guarantee payout percentage of certain portions of the Performance Incentive Plan.

Long-Term Incentive Bonus. Certain portfolio managers are eligible for a long-term incentive plan that is paid in restricted stock units of The Phoenix Companies, Inc. which vest over three years. Awards under this plan are contingent upon PNX achieving its cash return on equity objective, generally over a three-year period. Target award opportunities for eligible participants are determined by PNX’s Compensation Committee.

Other Benefits. Portfolio managers are also eligible to participate in broad-based plans offered generally to the firm’s employees, including broad-based retirement, 401(k), health and other employee benefit plans.

Compensation of Portfolio Managers of Acadian (Subadviser to the Value Opportunities Fund)

The Investment Professionals at Acadian receive a fixed base salary, discretionary bonus, deferred compensation and a benefits package. Acadian designs a portfolio manager’s base salary to be competitive in light of the individual’s experience and responsibilities. Acadian management uses compensation survey results of investment industry compensation conducted by an independent third party in evaluating competitive market compensation for its investment management professionals.

Overall firm profitability, including the profitability of Acadian’s parent company, Old Mutual Asset Managers LLC, determines the total amount of incentive compensation pool that is available for investment professionals, and individual compensation is determined through a subjective process that evaluates numerous qualitative and quantitative factors. Acadian’s investment professionals are rewarded based on the extent to which client objectives are met in terms of Acadian’s performance and other goals as well as client’s service expectations, teamwork, contribution of investment ideas, leadership and overall success of the firm and the investment products. Not all of these factors will be applicable to each investment professional and there is no particular weighting or formula for considering the factors. Portfolio manager compensation is not based on the performance of any specific portfolio but his or her contribution to and the performance of the Acadian investment team as a whole.

Compensation of Portfolio Managers of Harris (Subadviser to Capital Growth Fund and Mid-Cap Growth Fund)

The compensation program for investment professionals of Harris is designed to provide a total compensation package that (a) serves to align employees’ interests with those of their clients, and (b) helps management to attract and retain high quality investment professionals.

All investment professionals are compensated through a combination of a fixed base salary and bonus. Senior management retains a national compensation consultant to undertake a study, at least annually, to determine appropriate levels of base compensation for the firm’s investment professionals. Bonus amounts are determined by many factors including: the pre-tax investment performance of the portfolio manager compared to the performance of benchmarks relevant to their managed investment strategies and performance of a peer group of funds and investment managers over a rolling one- and three-year performance period. The relevant benchmarks and peer groups for the Phoenix Equity Trust funds subadvised by Harris are set forth below:


Fund(s)	Benchmark	Peer Group
Capital Growth Fund	Russell 1000 ^® Growth Index	Lipper Large Cap Growth Funds
Mid-Cap Growth Fund	Russell Mid-Cap Growth Index	Lipper Mid-Cap Growth Funds

Additional factors include each individual’s contributions to the success of the firm, and certain other factors at the discretion of senior management. The objective with regard to each component of compensation is to provide competitive compensation to investment professionals.

Harris also has a deferred incentive compensation program (nonqualified plan) which provides that certain key employees (currently, those who have been designated a Partner or Senior Partner of Harris, and including portfolio managers, analysts, and certain non-investment personnel) are granted incentive awards annually and elect to defer receipt of the award and earnings thereon until a future date. The award for each participant, expressed as a percentage of the pre-tax, pre-long-term incentive profits of Harris or an amount otherwise determined by senior management, and is communicated to participants early in each award year. The awards vest after a period of three years from the end of the specific year for which the awards are granted, and are payable to participants based on the provisions of the program and the elections of the participants.

Compensation of Portfolio Managers of Kayne (Subadviser to Quality Small-Cap Fund, Small-Cap Sustainable Growth Fund and Small-Mid Cap Fund)

Phoenix Investment Partners, Ltd. and its affiliated investment management firms, including the Adviser (collectively, “PXP”), believe that the firm’s compensation program is adequate and competitive to attract and retain high-caliber investment professionals. Investment professionals at PXP receive a competitive base salary, an incentive bonus opportunity, and a benefits package. Managing Directors and portfolio investment professionals who supervise and manage others also participate in a management incentive program reflecting their personal contribution and team performance.

The bonus amount for a portfolio manager is based upon how well the individual manager performs in his or her assigned products versus industry benchmarks, achieves growth in total assets under management including but not limited to these funds and a subjective assessment of contribution to the team effort. The performance component is further adjusted to reward investment personnel for managing within the stated framework and for not taking unnecessary risks. This ensures that investment personnel remain focused on managing and acquiring securities that correspond to a fund’s mandate and risk profile. It also avoids the temptation for portfolio managers to take on more risk and unnecessary exposure to chase performance for personal gain.

Following is a more detailed description of the compensation structure of the funds’ portfolio managers identified in the funds’ prospectus.

Base Salary. Each portfolio manager is paid a fixed base salary, which is determined by PXP and is designed to be competitive in light of the individual’s experience and responsibilities. PXP management uses compensation survey results of investment industry compensation conducted by an independent third party in evaluating competitive market compensation for its investment management professionals.

Incentive Bonus. Generally, the current Performance Incentive Plan for portfolio managers at PXP has several components:

(1)

Up to seventy-five percent of the base salary can be awarded based upon relative total return or performance. The Investment Incentive pool is established based on actual pre-tax investment performance compared with specific peer group or index measures (as indicated in the table below) established at the beginning of each calendar year. Performance of the funds managed is measured over one, three, and five-year periods against specified benchmarks for each fund managed. Generally, an individual manager’s participation is based on the performance of each fund or separately managed account overseen and is weighted roughly by total assets in each of those funds or separately managed accounts.


Fund(s)		Benchmark(s) and/or Peer Groups
Quality Small-Cap Fund		Russell 2000 ^® Value Index
Small-Cap Sustainable Growth Fund		Russell 2000 ^® Growth Index

(2)	Up to twenty-five percent of base salary can be awarded based upon the achievement of qualitative goals of the investment management division with which the portfolio manager is associated.

(3)	Up to an additional one hundred percent of base salary can be awarded based upon the growth in assets under management in the portfolio manager’s investment area.

The Performance Incentive Plan applicable to some portfolio managers varies from the description above. For instance, plans applicable to certain portfolio managers (i) may have an override based upon revenues generated, (ii) may contain the component that is based on the profitability of the management division with which the portfolio manager is associated, or (iii) may contain a guarantee payout.

Long-Term Incentive Bonus. No portfolio managers of Kayne are eligible for a long-term incentive plan that is paid in restricted stock units of The Phoenix Companies, Inc. which vest over three years.

Other Benefits. Portfolio managers are also eligible to participate in broad-based plans offered generally to the firm’s employees, 401(k), health, and other employee benefit plans.

Compensation of Portfolio Managers of Sasco (Subadviser to the Mid-Cap Value Fund)

Sasco is independently owned by its employees. All key investment professionals’ compensation is directly tied to the profitability of the firm since each have direct stock ownership, or an ownership profit interest in the firm. Each receives a fixed base salary plus bonus, or profit distribution, based on individual contribution and profitability of the firm. Bonuses can exceed 100% of base salary. Profits, after all expenses, are distributed and not retained in the business. Sasco has an employee Target Benefit Plan for all of its employees, including its portfolio managers. The Plan is administered by an independent actuarial firm. All compensation is pre-tax. There is no difference between the method used to determine compensation with respect to management of the Mid-Cap Value Fund and the other accounts managed by the portfolio managers.

Compensation of Portfolio Managers of SCM Advisors LLC (Subadviser to the Strategic Growth Fund)

SCM Advisors LLC (“SCM Advisors”) believes that the firm’s compensation program is adequate and competitive to attract and retain high-caliber investment professionals. Investment professionals at SCM Advisors receive a competitive base salary, an incentive bonus opportunity and a benefits package.

Following is a more detailed description of the compensation structure of SCM Advisors’s portfolio managers.

Base Salary. Each portfolio manager is paid a fixed base salary, which is determined by SCM Advisors and is designed to be competitive in light of the individual’s experience and responsibilities.

Incentive Bonus. Bonus payments are based on a number of factors including the profitability of SCM Advisors and the portfolio team member’s long-term contributions to the firm. SCM Advisors’s principles emphasize teamwork and a focus on client needs, and bonuses are structured to emphasize those principles. All full-time employees of SCM Advisors participate in the annual bonus program. Bonuses are not linked to the volume of assets managed or to measurements of relative or absolute investment returns. Bonus payments are generally determined based on considerations of SCM Advisors’s working capital requirements and on estimated tax liabilities.

The Compensation Committee has discretion over the measurement of the components.

Compensation of Portfolio Managers of Turner Investment Partners, Inc. (Subadviser to the Growth Opportunities Fund)

Turner’s investment professionals receive a base salary commensurate with their level of experience. Turner’s goal is to maintain competitive base salaries through review of industry standards, market conditions, and salary surveys. Bonus compensation, which is a multiple of base salary, is computed annually based on the one year performance of each individual’s sector and portfolio management assignments relative to appropriate market benchmarks. In addition, each employee is eligible for equity ownership and equity owners share the firm’s profits. Most of the members of the investment team and all portfolio managers are equity owners of Turner.

The objective performance criteria noted above accounts for 90% of the bonus calculation. The remaining 10% is based upon subjective, “good will” factors including teamwork, interpersonal relations, the individual’s contribution to the overall success of the firm, media and client relations, presentation skills, and professional development. Portfolio managers/analysts are reviewed on an annual basis. The Chief Investment Officer of Turner is responsible for setting base salaries, bonus targets, and making all subjective judgments related to an investment professional’s compensation. The Chief Investment Officer is also responsible for identifying investment professionals that should be considered for equity ownership on an annual basis.

Other Accounts Managed by Portfolio Managers of the Funds and Potential Conflicts of Interest

There may be certain inherent conflicts of interest that arise in connection with the portfolio managers’ management of each fund’s investments and the investments of any other accounts they manage. Such conflicts could include aggregation of orders for all accounts managed by a particular portfolio manager, the allocation of purchases across all such accounts, the allocation of IPOs and any soft dollar arrangements that the adviser may have in place that could benefit the funds and/or such other accounts. The Board of Trustees has adopted on behalf of the funds policies and procedures designed to address any such conflicts of interest to ensure that all transactions are executed in the best interest of the funds’ shareholders. The adviser and subadviser are required to certify their compliance with these procedures to the Board of Trustees on a quarterly basis. There have been no material compliance issues with respect to any of these policies and procedures during the funds’ most recent fiscal year. Also, there are no material conflicts of interest since portfolio managers generally manage funds and other accounts having similar investment strategies.

The following table provides information as of June 30, 2007, or as of footnoted date, regarding any other accounts managed by the portfolio managers and portfolio management team members for each of the Funds as named in the Prospectus. As noted in the table, the portfolio managers managing the Funds may also manage or be members of management teams for other mutual funds within the Phoenix Fund complex or other similar accounts.


Portfolio Manager	Number of and Total Assets of Registered Investment Companies	Number of and Total Assets of Other Pooled Investment Vehicles (PIVs)	Number of and Total Assets of Other Accounts
David L. Albrycht ⁽³⁾	8/$2.96 billion	None	None
Bruce Bottomley	None	None	29/$5 billion ⁽⁵⁾
Brendan O. Bradley	12/$5.7 billion	50/$13 billion	172/$58.3 billion ⁽⁶⁾
John R. Chisholm	12/$5.7 billion	50/$13 billion	172/$58.3 billion ⁽⁶⁾
Matthew J. Cohen	12/$5.7 billion	50/$13 billion	172/$58.3 billion ⁽⁶⁾
Steven L. Colton ⁽³⁾	6/$1.2 billion	None	5/$226.1 million
Douglas Couden ⁽⁴⁾	2/$275.8 million	None	77/$150.4 million


Portfolio Manager		Number of and Total Assets of Registered Investment Companies	Number of and Total Assets of Other Pooled Investment Vehicles (PIVs)	Number of and Total Assets of Other Accounts
David Dickerson ⁽¹⁾		4/$1.2 billion	None	None
Sandi Gleason ^{(4) (7)}		6/$211.9 million	None	16,061/$3.4 billion
Mark Helderman		None	None	29/$5 billion ⁽⁵⁾
Lou Holtz ⁽⁴⁾		2/$239.8 million	None	225/$154.9 million
T. Andrew Janes ⁽³⁾		6/$1.6 billion	8/$1.1 billion	12/$204.6 million
C. Thomas Johnson ⁽³⁾		1/$87.5 million	None	31/$2.8 billion
Daniel Leary		None	None	29/$5 billion ⁽⁵⁾
Thomas P. Lettenberger ⁽³⁾		3/451 million	None	300/$151.4 million
Yossi Lipsker ⁽⁴⁾		1/$138.8 million	None	225/$154.9 million
Heather F. McMeekin ⁽⁴⁾		5/$1.2 billion	17/$385 million	28/$1.6 billion
Raymond F. Mui		12/$5.7 billion	50/$13 billion	172/$58.3 billion ⁽⁶⁾
Carlton Neel ⁽¹⁾		4/$1.2 billion	None	None
Robb J. Parlanti ⁽⁴⁾		13/$2.1 billion	28/$1.3 billion	90/$10.0 billion
Robert Schwarzkopf ^{(4) (7)}		6/$211.9 million	None	16,061/$3.4 billion
Daniel L. Sido ⁽³⁾		7/$1.7 billion	8/$1.5 billion	3/$233.7 million
Mark Turner ^{(4) (8)}		15/$3.2 billion	31/$1.3 billion	93/$10.2 billion
Robert E. Turner ^{(4) (9)}		17/$3.4 billion	36/$1.4 billion	98/$11.9 billion
Brian K. Wolahan		12/$5.7 billion	50/$13 billion	172/$58.3 billion ⁽⁶⁾

Note:	Registered Investment Companies include all open and closed-end mutual funds. Pooled Investment Vehicles (PIVs) include, but are not limited to, securities of issuers exempt from registration under Section 3(c) of the Investment Company Act, such as private placements and hedge funds. Other accounts would include, but are not limited to, individual managed accounts, separate accounts, institutional accounts, pension funds, collateralized bond obligations and collateralized debt obligations.


⁽¹⁾		As of August 31, 2007.
⁽²⁾		As of September 30, 2007.
⁽³⁾		As of October 31, 2007.
⁽⁴⁾		As of December 31, 2007.
⁽⁵⁾		The advisory fee for one of these other accounts is based upon performance. Assets under management in this account total $1.9 billion.
⁽⁶⁾		The advisory fee for 42 of these other accounts is based upon performance. Assets under management in these accounts total $21.9 million.
⁽⁷⁾		These investment professionals function as a team and are not segregated along product lines or by client type. The portfolio managers work on all products and the data shown for these managers reflects firm-level numbers of accounts and assets under management segregated by investment vehicle type.
⁽⁸⁾		Mr. Mark Turner is Portfolio Manager for one registered investment company which has a performance based fee. The value of that fund on December 31, 2007 was $1.1 million.
⁽⁹⁾		Mr. Robert Turner is Portfolio Manager for two registered investment companies which have a performance based fee. The value of the funds as of December 31, 2007 was $1.2 billion.

Except as noted, the portfolio managers did not manage any accounts with respect to which the advisory fee is based on the performance of the account, nor do they manage any hedge funds.

Ownership of Fund Securities by Portfolio Managers

The following table sets forth the dollar range of equity securities beneficially owned by each portfolio manager in the Funds described in the Prospectus that he/she manages as of June 30, 2007, or as of footnoted date:


Portfolio Manager		Dollar Range of Equity Securities Beneficially Owned in Each Fund Managed
David L. Albrycht		Balanced Fund ⁽⁴⁾ - $10,001 - $50,000 Income & Growth Fund ⁽¹⁾ - None
Bruce Bottomley		Mid-Cap Value Fund - $100,001 - $500,000
Brendan O. Bradley		Value Opportunities Fund - None


Portfolio Manager		Dollar Range of Equity Securities Beneficially Owned in Each Fund Managed
John R. Chisholm		Value Opportunities Fund - None
Matthew J. Cohen		Value Opportunities Fund - None
Steven L. Colton		Balanced Fund ⁽⁴⁾ - None Growth & Income Fund ⁽²⁾ - None Income & Growth Fund ⁽¹⁾ - None
Douglas Couden ⁽⁵⁾		All-Cap Growth Fund - $10,001 - $50,000 Strategic Growth Fund - $10,001 - $50,000
David Dickerson ⁽²⁾		Small-Cap Value Fund - $100,001- $500,000
Sandi Gleason ⁽⁵⁾		Quality Small-Cap Fund - None Small-Cap Sustainable Growth Fund - None Small-Mid Cap Fund - None
Mark Helderman		Mid-Cap Value Fund - $100,001 - $500,000
Lou Holtz ⁽⁵⁾		All-Cap Growth Fund - None Small-Cap Growth Fund - None
T. Andrew Janes ⁽⁴⁾		Capital Growth Fund - $100,001 - $500,000 Mid-Cap Growth Fund - $100,001 - $500,000
C. Thomas Johnson ⁽⁴⁾		Mid-Cap Growth Fund - $100,001 - $500,000
Daniel Leary		Mid-Cap Value Fund - Over $1,000,000
Thomas P. Lettenberger ⁽⁴⁾		Mid-Cap Growth Fund - None
Yossi Lipsker ⁽⁵⁾		Small-Cap Growth Fund - None
Heather F. McMeekin ⁽⁵⁾		Growth Opportunities Fund - None
Raymond F. Mui		Value Opportunities Fund - None
Carlton Neel ⁽²⁾		Small-Cap Value Fund - $1 - $10,000
Robb J. Parlanti ⁽⁵⁾		Growth Opportunities Fund - $100,001 - $500,000
Robert Schwarzkopf ⁽⁵⁾		Quality Small-Cap Fund - $100,001 - $500,000 Small-Cap Sustainable Growth Fund - $100,001 - $500,000 Small-Mid Cap Fund -$100,001 - $500,000
Daniel L. Sido ⁽⁴⁾		Capital Growth Fund - $100,001 - $500,000
Mark Turner ⁽⁵⁾		Growth Opportunities Fund - $100,001 - $500,000
Robert E. Turner ⁽⁵⁾		Growth Opportunities Fund - $500,001 - $1,000,000
Brian K. Wolahan		Value Opportunities Fund - None
⁽¹⁾ As of April 30, 2007. ⁽²⁾ As of August 31, 2007. ⁽³⁾ As of September 30, 2007. ⁽⁴⁾ As of October 31, 2007. ⁽⁵⁾ As of December 31, 2007

NET ASSET VALUE

The net asset value per share of each Fund is determined as of the close of regular trading of the New York Stock Exchange (the “NYSE”) on days when the NYSE is open for trading. The NYSE will be closed on the following observed national holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Since the Funds do not price securities on weekends or United States national holidays, the value of the Funds’ foreign assets may be significantly affected on days when the investor may not be able to purchase or sell shares of the Funds. The net asset value per share of each Fund is determined by adding the values of all securities and other assets of each Fund, subtracting liabilities, and dividing the result by the total number of outstanding shares of the Fund. Assets and liabilities are determined in accordance with generally accepted accounting principles and applicable rules and regulations of the SEC. The total liability allocated to a class, plus that class’ distribution fee and any other expenses allocated solely to that class, are deducted from the proportionate interest of such class in the assets of the Fund, and the resulting amount of each is divided by the number of shares of that class outstanding to produce the net asset value per share.

A security that is listed or traded on more than one exchange is valued at the official closing price on the exchange determined to be the primary exchange for such security by the Trustees or their delegates. Because of the need to obtain prices as of the close of regular trading on various exchanges throughout the world, the calculation of net asset value may not take place for the Funds which may invest in foreign securities contemporaneously with the determination of the prices of the majority of the portfolio securities of the Funds. All assets and liabilities initially expressed in foreign currency values will be converted into United States dollar values at the mean between the bid and ask quotations of such currencies against United States dollars as last quoted by any recognized dealer. If an event were to occur after the value of an investment was so established but before the net asset value per share was determined, which was likely to materially change the net asset value, then the instrument would be valued using fair value considerations by the Trustees or their delegates. If at any time the Funds have investments where market quotations are not readily available, such investments are valued at the fair value thereof as determined in good faith by the Trustees, although the actual calculations may be made by persons acting according to policies and procedures approved by the Trustees.

HOW TO BUY SHARES

For Class A Shares, Class B Shares and Class C Shares, the minimum initial investment is $500 and the minimum subsequent investment is $25. For Class I Shares, the minimum initial investment is $100,000 and there is no subsequent minimum investment. However, both the minimum initial and subsequent investment amounts are $25 for investments pursuant to the “Systematic Purchase” plan, a bank draft investing program administered by Distributor, or pursuant to the Systematic Exchange privilege or for an individual retirement account (the “IRA”). In addition, there are no subsequent investment minimum amounts in connection with the reinvestment of dividend or capital gain distributions. For purchases of Class I Shares by private clients of, or referred by, the Adviser, subadviser and their affiliates, or through certain wrap programs with which the Distributor has an arrangement, the minimum initial investment is waived. Completed applications for the purchase of shares should be mailed to: Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301.

The Trust has authorized one or more brokers to accept on its behalf purchase and redemption orders. Such brokers are authorized to designate other intermediaries to accept purchase and redemption orders on the Funds’ behalf. The Funds will be deemed to have received a purchase or redemption order when an authorized broker or, if applicable, a broker’s authorized designee, accepts the order. Customer orders will be priced at the Funds’ net asset value next computed after they are received by an authorized broker or the broker’s authorized designee.

Important Information about the Phoenix Mid-Cap Value Fund

The Phoenix Mid-Cap Value Fund is available for purchase by current shareholders and new investors on a limited basis, as described below.

•

Current shareholders of the fund may add to their accounts through the purchase of additional shares and through the reinvestment of dividends and capital gains.

•

Exchanges into the fund may be made by current shareholders and qualified new investors.

•

An investor who has previously entered into a letter of intent with the distributor may fulfill the obligation.

•

Trustees of the fund, employees of Phoenix and of Sasco, and their family members, may open new accounts.

•

Defined Contribution and Defined Benefit plans, and other plans or accounts may purchase the fund at the Distributor’s discretion.

•

The fund reserves the right to refuse any order that may disrupt the efficient management of the fund.

ALTERNATIVE PURCHASE ARRANGEMENTS

Shares may be purchased from investment dealers at a price equal to their net asset value per share, plus a sales charge which, at the election of the purchaser, may be imposed either (i) at the time of the purchase (the “initial sales charge alternative”) or (ii) on a contingent deferred basis (the “deferred sales charge alternative”). Orders received by dealers prior to the close of regular trading on the NYSE are confirmed at the offering price effective at that time, provided the order is received by the authorized broker or the broker’s authorized designee.

The alternative purchase arrangements permit an investor to choose the method of purchasing shares that is more beneficial given the amount of the purchase, the length of time the investor expects to hold the shares, whether the investor wishes to receive distributions in cash or to reinvest them in additional shares of the Funds, and other circumstances. Investors should consider whether, during the anticipated life of their investment in the Fund, the accumulated continuing distribution and service fees and contingent deferred sales charges (“CDSC”) on Class B Shares or Class C Shares would be less than the initial sales charge and accumulated distribution and service fees on Class A Shares purchased at the same time.

Dividends paid by the Funds, if any, with respect to each class of shares will be calculated in the same manner at the same time on the same day, except that fees such as higher distribution and services fees and any incremental transfer agency costs relating to each class of shares will be borne exclusively by that class. (See “Dividends, Distributions and Taxes” section of this SAI.)

Class A Shares of the Funds

Class A Shares incur a sales charge when they are purchased and enjoy the benefit of not being subject to any sales charge when they are redeemed, except that a 1% deferred sales charge may apply to shares purchased on which a finder’s fee has been paid if redeemed within one year of purchase. The one-year period begins on the last day of the month preceding the month in which the purchase was made. Such deferred sales charge may be waived under certain conditions as determined by the Distributor. Class A Shares are subject to an ongoing distribution and services fees at an annual rate of 0.25% of the Fund’s aggregate average daily net assets attributable to the Class A Shares. In addition, certain purchases of Class A Shares qualify for reduced initial sales charges. Shareholders of the Mid-Cap Value Fund who became shareholders through the reorganization of the FMI Sasco Contrarian Value Fund (the “Predecessor Fund”) received Class A Shares of the Mid-Cap Value Fund in exchange for their shares of the Predecessor Fund and will not be required to pay a sales load for new purchases of Class A Shares of the Mid-Cap Value Fund.

Class B Shares

Class B Shares do not incur a sales charge when they are purchased, but they are subject to a sales charge if they are redeemed within five years of purchase. The deferred sales charge may be waived in connection with certain qualifying redemptions. (See the “Class B Shares and Class C Shares—Waiver of Sales Charges” section in this SAI.)

Class B Shares are subject to an ongoing distribution and services fee at an aggregate annual rate of up to 1.00% of the Fund’s aggregate average daily net assets attributable to the Class B Shares. Class B Shares enjoy the benefit of permitting all of the investor’s dollars to work from the time the investment is made. The higher ongoing distribution and services fee paid by Class B Shares will cause such shares to have a higher expense ratio and to pay lower dividends, to the extent any dividends are paid, than those related to Class A Shares. Class B Shares will automatically convert to Class A Shares of the Fund eight years after the end of the calendar month in which the shareholder’s order to purchase was accepted, in the circumstances and subject to the qualifications described in the Funds’ prospectus. The purpose of the conversion feature is to relieve the holders of the Class B Shares that have been outstanding for a period of time sufficient for the adviser and the Distributor to have been compensated for distribution expenses related to the Class B Shares from most of the burden of such distribution related expenses.

Class B Shares include all shares purchased pursuant to the deferred sales charge alternative which would have been outstanding for less than the period ending eight years after the end of the month in which the shares were issued. At the end of this period, Class B Shares will automatically convert to Class A Shares and will no longer be subject to the higher distribution and services fee. Such conversion will be on the basis of the relative net asset value of the two classes without the imposition of any sales load, fee or other charge.

For purposes of conversion to Class A Shares, shares purchased through the reinvestment of dividends and distributions paid in respect of Class B Shares in a shareholder’s Fund account will be considered to be held in a separate subaccount. Each time any Class B Shares in the shareholder’s Fund account (other than those in the subaccount) convert to Class A Shares an equal pro rata portion of the Class B Share dividends in the subaccount will also convert to Class A Shares.

Class C Shares

Class C Shares are purchased without an initial sales charge but are subject to a deferred sales charge if redeemed within one year of purchase. The deferred sales charge may be waived in connection with certain qualifying redemptions. Shares issued in conjunction with the automatic reinvestment of income distributions and capital gain distributions are not subject to any sales charges. Class C Shares are subject to an ongoing distribution and services fee at an aggregate annual rate of up to 1.00% of the applicable Fund’s aggregate average daily net assets attributable to Class C Shares.

Class I Shares

Class I Shares are offered without any sales charge to institutional investors, such as pension and profit sharing plans, other employee benefit trusts, endowments, foundations and corporations who purchase at or above the minimum amounts; to private clients of, or referred by, the Adviser, subadviser and their affiliates; to clients of registered investment advisers who charge an advisory, consulting or other fee for their services; or through certain wrap programs with which the Distributor has an arrangement.

Class A Shares—Reduced Initial Sales Charges

Investors choosing Class A Shares may be entitled to reduced sales charges. The ways in which sales charges may be avoided or reduced are described below. ¹ Investors buying Class A Shares on which a finder’s fee has been paid may incur a 1% deferred sales charge if they redeem their shares within one year of purchase. The one-year period begins on the last day of the month preceding the month in which the purchase was made. Such deferred sales charge may be waived under certain conditions as determined by the Distributor.

Qualified Purchasers. If you fall within any one of the following categories, you will not have to pay a sales charge on your purchase of Class A Shares: (1) trustee, director or officer of the Phoenix Funds, or any other mutual fund advised, subadvised or distributed by the Adviser, Distributor or any of their corporate affiliates; (2) any director or officer, or any full-time employee or sales representative (for at least 90 days), of the Adviser, Subadviser (if any) or Distributor; (3) any private client of an Adviser or Subadviser to any Phoenix Fund; (4) registered representatives and employees of securities dealers with whom the Distributor has sales agreements; (5) any qualified retirement plan exclusively for persons described above; (6) any officer, director or employee of a corporate affiliate of the Adviser, Subadviser or Distributor; (7) any spouse, child, parent, grandparent, brother or sister of any person named in (1), (2), (4) or (6) above; (8) employee benefit plans for employees of the Adviser, Distributor and/or their corporate affiliates; (9) any employee or agent who retires from PNX, the Distributor and/or their corporate affiliates; (10) any account held in the name of a qualified employee benefit plan, endowment fund or foundation if, on the date of the initial investment, the plan, fund or foundation has assets of $10,000,000 or more or at least 100 eligible employees; (11) any person with a direct rollover transfer of shares from an established Phoenix Fund or qualified plan; (12) any Phoenix Life Insurance Company (or affiliate) separate account which funds group annuity contracts offered to qualified employee benefit plans; (13) any state, county, city, department, authority or similar agency prohibited by law from paying a sales charge; (14) any unallocated account held by a third party administrator, registered investment adviser, trust company, or bank trust department which exercises discretionary authority and holds the account in a fiduciary, agency, custodial or similar capacity, if in the aggregate of such accounts held by such entity equal or exceed $1,000,000; (15) any deferred compensation plan established for the benefit of any Phoenix Fund trustee or director; provided that sales to persons listed in (1) through (15) above are made upon the written assurance of the purchaser that the purchase is made for investment purposes and that the shares so acquired will not be resold except to the Fund; (16) purchasers of Class A Shares bought through investment advisers and financial planners who charge an advisory, consulting or other fee for their services and buy shares for their own accounts or the accounts of their clients; (17) retirement plans and deferred compensation plans and trusts used to fund those plans (including, for example, plans qualified or created under Sections 401(a), 403(b) or 457 of the Internal Revenue Code), and “rabbi trusts” that buy shares for their own accounts, in each case if those purchases are made through a broker or agent or other financial intermediary that has made special arrangements with the Distributor for such purchases; (18) 401(k) participants in the Merrill Lynch Daily K Plan (the “Plan”) if the Plan has at least $3 million in assets or 500 or more eligible employees; or (19) clients of investment advisors or financial planners who buy shares for their own accounts but only if their accounts are linked to a master account of their investment advisor or financial planner on the books and records of the broker, agent or financial intermediary with which the Distributor has made such special arrangements. Each of the investors described in (16) through (19) may be charged a fee by the broker, agent or financial intermediary for purchasing shares.

Combination Purchase Privilege. Your purchase of any class of shares of these Funds or any other Phoenix Fund (other than any Phoenix money market fund), if made at the same time by the same “person,” will be added together with any existing Phoenix Fund account values to determine whether the combined sum entitles you to an immediate reduction in sales charges. A “person” is defined in this and the following sections as (a) any individual, their spouse and minor children purchasing shares for his or their own account (including an IRA account) including his or their own trust; (b) a trustee or other fiduciary purchasing for a single trust, estate or single fiduciary account (even though more than one beneficiary may exist); (c) multiple employer trusts or Section 403(b) plans for the same employer; (d) multiple accounts (up to 200) under a qualified employee benefit plan or administered by a third-party administrator; or (e) trust companies, bank trust departments, registered investment advisers, and similar entities placing orders or providing administrative services with respect to accounts over which they exercise discretionary investment authority and which are held in a fiduciary, agency, custodial or similar capacity, provided all shares are held of record in the name, or nominee name, of the entity placing the order.

As previously noted, existing shareholders of the Predecessor Fund who became shareholders of the Mid-Cap Value Fund through the reorganization received Class A Shares of the Mid-Cap Value Fund in exchange for their shares of the Predecessor Fund and will not be required to pay a sales load for new purchases of Class A Shares of the Mid-Cap Value Fund.

Letter of Intent. If you sign a Letter of Intent, your purchase of any class of shares of these Funds or any other Phoenix Fund (other than any Phoenix money market fund), if made by the same person within a thirteen-month period, will be added together to determine whether you are entitled to an immediate reduction in sales charges. Sales charges are reduced based on the overall amount you indicate that you will buy under the Letter of Intent. The Letter of Intent is a mutually non-binding arrangement between you and the Distributor. Since the Distributor doesn’t know whether you will ultimately fulfill the Letter of Intent, shares worth 5% of the amount of each purchase will be set aside until you fulfill the Letter of Intent. When you buy enough shares to fulfill the Letter of Intent, these shares will no longer be restricted. If, on the other hand, you do not satisfy the Letter of Intent, or otherwise wish to sell any restricted shares, you will be given the choice of either buying enough shares to fulfill the Letter of Intent or paying the difference between any sales charge you previously paid and the otherwise applicable sales charge based on the intended aggregate purchases described in the Letter of Intent. You will be given 20 days to make this decision. If you do not exercise either election, the Distributor will automatically redeem the number of your restricted shares needed to make up the deficiency in sales charges received. The Distributor will redeem restricted Class A Shares before Class C Shares or Class B Shares. Oldest shares will be redeemed before selling newer shares. Any remaining shares will then be deposited to your account.

Right of Accumulation. The value of your account(s) in any class of shares of these Funds or any other Phoenix Fund (other than any Phoenix money market fund), may be added together at the time of each purchase to determine whether the combined sum entitles you to a prospective reduction in sales charges. You must provide certain account information to the Distributor at the time of purchase to exercise this right.

Associations. Certain groups or associations may be treated as a “person” and qualify for reduced Class A Share sales charges. The group or association must: (1) have been in existence for at least six months; (2) have a legitimate purpose other than to purchase mutual fund shares at a reduced sales charge; (3) work through an investment dealer; or (4) not be a group whose sole reason for existing is to consist of members who are credit card holders of a particular company, policyholders of an insurance company, customers of a bank or a broker-dealer or clients of an investment adviser.

Class B Shares and Class C Shares—Waiver of Sales Charges

The CDSC is waived on the redemption (sale) of Class B Shares and Class C Shares if the redemption is made (a) within one year of death (i) of the sole shareholder on an individual account, (ii) of a joint tenant where the surviving joint tenant is the deceased’s spouse, or (iii) of the beneficiary of a Uniform Gifts to Minors Act (“UGMA”), Uniform Transfers to Minors Act (“UTMA”) or other custodial account; (b) within one year of disability, as defined in Code Section 72(m)(7); (c) as a mandatory distribution upon reaching age 70 1/2 under any retirement plan qualified under Code Sections 401, 408 or 403(b) or resulting from the tax-free return of an excess contribution to an IRA; (d) by 401(k) plans using an approved participant tracking system for participant hardships, death, disability or normal retirement, and loans which are subsequently repaid; (e) from the Merrill Lynch Daily K Plan (“Plan”) invested in Class B Shares, on which such shares the Distributor has not paid the dealer the Class B sales commission; (f) based on the exercise of exchange privileges among Class B Shares and Class C Shares of these Funds or any other Phoenix Fund; (g) based on any direct rollover transfer of shares from an established Phoenix Fund qualified plan into a Phoenix Fund IRA by participants terminating from the qualified plan; and (h) based on the systematic withdrawal program (Class B Shares ). If, as described in condition (a) above, an account is transferred to an account registered in the name of a deceased’s estate, the CDSC will be waived on any redemption from the estate account occurring within one year of the death. If the Class B Shares are not redeemed within one year of the death, they will remain subject to the applicable CDSC when redeemed.

Conversion Feature—Class B Shares

Class B Shares will automatically convert to Class A Shares of the same Fund eight years after they are bought. Conversion will be on the basis of the then prevailing net asset value for Class A Shares and Class B Shares. There is no sales load, fee or other charge for this feature. Class B Shares acquired through dividend or distribution reinvestments will be converted into Class A Shares at the same time that other Class B Shares are converted based on the proportion that the reinvested shares bear to purchased Class B Shares. The conversion feature is subject to the continuing availability of an opinion of counsel or a ruling of the Internal Revenue Service (“IRS”) that the assessment of the higher distribution fees and associated costs with respect to Class B Shares does not result in any dividends or distributions constituting “preferential dividends” under the Code, and that the conversion of shares does not constitute a taxable event under federal income tax law. If the conversion feature is suspended, Class B Shares would continue to be subject to the higher distribution fee for an indefinite period. Even if the Funds were unable to obtain such assurances, it might continue to make distributions if doing so would assist in complying with its general practice of distributing sufficient income to reduce or eliminate federal taxes otherwise payable by the Funds.

INVESTOR ACCOUNT SERVICES

The Funds offer accumulation plans, withdrawal plans and reinvestment and exchange privileges. Certain privileges may not be available in connection with all classes. In most cases, changes to account services may be accomplished over the phone. Inquiries

regarding policies and procedures relating to shareholder account services should be directed to Mutual Fund Services at (800) 243-1574. Broker-dealers may impose their own restrictions and limits on accounts held through the broker-dealer. Please contact your broker-dealer for account restriction and limit information. The Funds and the Distributor reserve the right to modify or terminate these services upon reasonable notice.

Exchanges

Under certain circumstances, shares of any Phoenix Fund (except any of the Phoenix money market funds) may be exchanged for shares of the same class of any other Phoenix Fund on the basis of the relative net asset values per share at the time of the exchange. Class C Shares are also exchangeable for Class T Shares of those Phoenix Funds offering them. Exchanges are subject to the minimum initial investment requirement of the designated Fund, except if made in connection with the Systematic Exchange privilege. Shareholders may exchange shares held in book-entry form for an equivalent number (value) of the same class of shares of any other Phoenix Fund, if currently offered. On exchanges with share classes that carry a contingent deferred sales charge, the CDSC schedule of the original shares purchased continues to apply. The exchange of shares is treated as a sale and purchase for federal income tax purposes. (See the “Dividends, Distributions and Taxes” section of this SAI). Exchange privileges may not be available for all Phoenix Funds, and may be rejected or suspended.

Systematic Exchanges

If the conditions above have been met, you or your broker may, by telephone or written notice, elect to have shares exchanged for the same class of shares of another Phoenix Fund automatically on a monthly, quarterly, semiannual or annual basis or may cancel this privilege at any time. If you maintain an account balance of at least $5,000, or $2,000 for tax-qualified retirement benefit plans (calculated on the basis of the net asset value of the shares held in a single account), you may direct that shares be automatically exchanged at predetermined intervals for shares of the same class of another Phoenix Fund. This requirement does not apply to Phoenix “Self Security” program participants. Systematic exchanges will be executed upon the close of business on the 10th day of each month or the next succeeding business day. Exchanges will be based upon each Fund’s net asset value per share next computed after the close of business on the 10th day of each month (or next succeeding business day), without sales charge. Systematic exchange forms are available from the Distributor.

Dividend Reinvestment Across Accounts

If you maintain an account balance of at least $5,000, or $2,000 for tax-qualified retirement benefit plans (calculated on the basis of the net asset value of the shares held in a single account), you may direct that any dividends and distributions paid with respect to shares in that account be automatically reinvested in a single account of one of the other Phoenix Funds at net asset value. You should obtain a current prospectus and consider the objectives and policies of each Phoenix Fund carefully before directing dividends and distributions to another Phoenix Fund. Reinvestment election forms and prospectuses are available from PEPCO. Distributions may also be mailed to a second payee and/or address. Requests for directing distributions to an alternate payee must be made in writing with a signature guarantee of the registered owner(s). To be effective with respect to a particular dividend or distribution, notification of the new distribution option must be received by the Transfer Agent at least three days prior to the record date of such dividend or distribution. If all shares in your account are repurchased or redeemed or transferred between the record date and the payment date of a dividend or distribution, you will receive cash for the dividend or distribution regardless of the distribution option selected.

Invest-by-Phone

This expedited investment service allows a shareholder to make an investment in an account by requesting a transfer of funds from the balance of their bank account. Once a request is phoned in, PEPCO will initiate the transaction by wiring a request for monies to the shareholder’s commercial bank, savings bank or credit union via Automated Clearing House (ACH). The shareholder’s bank, which must be an ACH member, will in turn forward the monies to PEPCO for credit to the shareholder’s account. ACH is a computer-based clearing and settlement operation established for the exchange of electronic transactions among participating depository institutions.

To establish this service, please complete an Invest-by-Phone Application and attach a voided check if applicable. Upon PEPCO’s acceptance of the authorization form (usually within two weeks) shareholders may call toll free (800) 367-5877 prior to 3:00 p.m. (New York time) to place their purchase request. Instructions as to the account number and amount to be invested must be communicated to PEPCO. PEPCO will then contact the shareholder’s bank via ACH with appropriate instructions. The purchase is normally credited to the shareholder’s account the day following receipt of the verbal instructions. This service may also be used to request redemption of shares of the Money Market Fund, the proceeds of which are transferred to the shareholder’s bank the second day following receipt of the verbal request. The Trust may delay the mailing of a check for redemption proceeds of Fund shares purchased with a check or via Invest-by-Phone service until the Funds have assured themselves that good payment has been collected for the purchase of the shares, which may take up to 15 days. The Funds and PEPCO reserve the right to modify or terminate the Invest-by-Phone service for any reason or to institute charges for maintaining an Invest-by-Phone account.

Systematic Withdrawal Program

The Systematic Withdrawal Program (the “Program”) allows you to periodically redeem a portion of your account on a predetermined monthly, quarterly, semiannual or annual basis. A sufficient number of full and fractional shares will be redeemed so that the designated payment is made on or about the 20th day of the month. Shares are tendered for redemption by the Transfer Agent, as agent for the shareowner, on or about the 15th of the month at the closing net asset value on the date of redemption. The Program also provides for redemption with proceeds to be directed through ACH to your bank account. For ACH payments, you may select the day of the month for the payments to be made; if no date is specified, the payments will occur on the 15th of the month. In addition to the limitations stated below, withdrawals may not be less than $25 and minimum account balance requirements shall continue to apply.

Shareholders participating in the Program must own shares of a Fund worth $5,000 or more, as determined by the then current net asset value per share, and elect to have all dividends reinvested. The purchase of shares while participating in the Program will ordinarily be disadvantageous to the Class A Shares investor since a sales charge will be paid by the investor on the purchase of Class A Shares at the time as other shares are being redeemed. For this reason, investors in Class A Shares may not participate in an automatic investment program while participating in the Program.

Through the Program, Class B shareholders and Class C shareholders may withdraw up to 1% of their aggregate net investments (purchases, at initial value, to date net of non-Program redemptions) each month or up to 3% of their aggregate net investment each quarter without incurring otherwise applicable contingent deferred sales charges. Class B shareholders and Class C shareholders redeeming more shares than the percentage permitted by the withdrawal program will be subject to any applicable contingent deferred sales charge on all shares redeemed. Accordingly, the purchase of Class B Shares or Class C Shares will generally not be suitable for an investor who anticipates withdrawing sums in excess of the above limits shortly after purchase.

HOW TO REDEEM SHARES

Under the 1940 Act, payment for shares redeemed must ordinarily be made within seven days after tender. The right to redeem shares may be suspended and payment therefore postponed during periods when the NYSE is closed, other than customary weekend and holiday closings, or if permitted by rules of the SEC, during periods when trading on the NYSE is restricted or during any emergency which makes it impracticable for the Funds to dispose of their securities or to determine fairly the value of their net assets or during any other period permitted by order of the SEC for the protection of investors. Furthermore, the Transfer Agent will not mail redemption proceeds until checks received for shares purchased have cleared, which may take up to 15 days after receipt of the check. Redemptions by Class B and Class C shareholders will be subject to the applicable deferred sales charge, if any. (See the Funds’ current Prospectus for more information.)

The Trust has authorized one or more brokers to receive on its behalf purchase and redemption orders. Such brokers are authorized to designate other intermediaries to accept purchase and redemption orders on the Funds’ behalf. The Funds will be deemed to have received a purchase or redemption order when an authorized broker or, if applicable, a broker’s authorized designee, accepts the order. Customer orders will be priced at the Fund’s net asset value next computed after they are received by an authorized broker or the broker’s authorized designee.

A shareholder should contact his/her broker-dealer if he/she wishes to transfer shares from an existing broker-dealer street name account to a street name account with another broker-dealer. The Funds have no specific procedures governing such account transfers.

Redemption of Small Accounts

Each shareholder account in the Funds which has been in existence for at least one year and which has a value of less than $200 due to redemption activity may be redeemed upon the giving of not less than 60 days written notice to the shareholder mailed to the address of record. During the 60-day period following such notice, the shareholder has the right to add to the account to bring its value to $200 or more. (See the Funds’ current Prospectus for more information.)

By Mail

Shareholders may redeem shares by making written request, executed in the full name of the account, directly to Phoenix Funds c/o State Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates for shares are in the possession of the shareholder, they must be mailed or presented, duly endorsed in the full name of the account, with a written request to PEPCO that the applicable Fund redeem the shares. (See the Funds’ current Prospectus for more information.)

Telephone Redemptions

Shareholders may redeem by telephone up to $50,000 worth of their shares held in book-entry form. (See the Funds’ current Prospectus for more information.)

Redemption in Kind

To the extent consistent with state and federal law, the Funds may make payment of the redemption price either in cash or in kind. However, the Funds have elected to pay in cash all requests for redemption by any shareholder of record, limited in respect to each shareholder during any 90-day period to the lesser of $250,000 or 1% of the net asset value of the Funds at the beginning of such period. This election has been made pursuant to Rule 18f-1 under the 1940 Act and is irrevocable while the Rule is in effect unless the SEC, by order, permits the withdrawal thereof. In case of a redemption in kind, securities delivered in payment for shares would be readily marketable and valued at the same value assigned to them in computing the net asset value per share of the Funds. A shareholder receiving such securities would incur brokerage costs when selling the securities.

Account Reinstatement Privilege

Shareholders who may have overlooked features of their investment at the time they redeemed have the privilege of reinvesting their investment at net asset value. (See the Funds’ current Prospectus for more information and conditions attached to this privilege.)

DIVIDENDS, DISTRIBUTIONS AND TAXES

Qualification as a Regulated Investment Company (“RIC”)

Each Fund within the Trust is separate for investment and accounting purposes and is treated as a separate entity for federal income tax purposes. Each Fund has elected to qualify and intends to qualify as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). In each taxable year that a Fund qualifies as a RIC, it (but not its shareholders) will be relieved of federal income tax on that portion of its net investment income and net capital gains that are currently distributed (or deemed distributed) to its shareholders. To the extent that a Fund fails to distribute all of its taxable income, it will be subject to corporate income tax (currently maximum rate of 35%) on any retained ordinary investment income or short-term capital gains, and corporate income tax (currently maximum rate of 35%) on any undistributed long-term capital gains.

Each Fund intends to make timely distributions, if necessary, sufficient in amount to avoid the non-deductible 4% excise tax that is imposed on a RIC to the extent that it fails to distribute, with respect to each calendar year, at least 98% of its ordinary income (not including tax-exempt interest) for such calendar year and 98% of its net capital gain income as determined for a one-year period ending on October 31 of such calendar year (or as determined on a fiscal year basis, if the Fund so elects). In addition, an amount equal to any undistributed investment company taxable income or capital gain net income from the previous calendar year must also be distributed to avoid the excise tax. The excise tax is imposed on the amount by which the RIC does not meet the foregoing distribution requirements. If each Fund has taxable income that would be subject to the excise tax, each Fund intends to distribute such income so as to avoid payment of the excise tax. Notwithstanding the foregoing, there may be certain circumstances under which it would be appropriate for the Fund to pay the excise tax.

The Code sets forth numerous requirements that must be satisfied in order for each Fund to qualify as a RIC. If in any taxable year a Fund does not qualify as a RIC, all of its taxable income will be taxed at corporate rates and any capital gain dividend would not retain its character in the hands of the shareholder for tax purposes.

Each Fund must satisfy the following tests each year: (a) derive in each taxable year at least 90% of its gross income from dividends, interest and gains from the sale or other disposition of securities and certain other investment income; (b) meet specified diversification requirements at the end of each quarter, and (c) distribute annually to its shareholders as dividends (not including “capital gains dividends,” discussed below) at least 90% of its ordinary investment income and short-term capital gains, with certain modifications. Each Fund intends to satisfy these requirements. With respect to the diversification requirement, each Fund must also diversify its holdings so that, at the close of each quarter of its taxable year, (i) at least 50% of the value of its total assets consists of cash, cash items, U.S. Government securities, and other securities limited generally with respect to any one issuer to not more than 5% of the total assets of that Fund and not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of its assets is invested in the securities of any issuer (other than U.S. Government securities). Each Fund intends to comply with all of the foregoing criteria for qualification as a RIC; however, there can be no assurance that each Fund will so qualify and continue to maintain its status as a RIC. If a Fund were unable for any reason to maintain its status as a RIC for any taxable year, adverse tax consequences would ensue.

Taxation of Shareholders

Under the Jobs and Growth Tax Reconciliation Act of 2003, certain qualified dividend income (“QDI”) and long-term capital gains will be taxed at a lower tax rate for individual shareholders. The reduced rate applies to QDI from domestic corporations and certain qualified foreign corporations subject to various requirements and a minimum holding period by both a Fund and its shareholders. Ordinary distributions made by a Fund to its shareholders are eligible for the reduced rate to the extent the underlying income in the Fund is QDI. Under current law, the tax rate on these amounts is scheduled to increase for tax years beginning after December 31, 2010.

Distributions from ordinary investment income and net short-term capital gains will be taxed to the shareholders as ordinary dividend income to the extent of the earnings and profits of the Fund. Ordinary income dividends received by corporate shareholders will qualify for the 70% dividends-received deduction to the extent the Fund designates such amounts as qualifying dividend distributions; however, the portion that may be so designated is subject to certain limitations. Distributions by the Fund that are designated as capital gain distributions by written notice mailed to shareholders within 60 days after the close of the year will be taxed to the shareholders as capital gains, and will not be eligible for the corporate dividends-received deduction.

Dividends declared by a Fund to shareholders of record in October, November or December will be taxable to such shareholders in the year that the dividend is declared, even if it is not paid until the following year (so long as it is actually paid by the Fund prior to February 1). Also, shareholders will be taxable on the amount of long-term capital gains designated by each Fund by written notice mailed to shareholders within 60 days after the close of the year, even if such amounts are not actually distributed to them. Shareholders will be entitled to claim a credit against their own federal income tax liability for taxes paid by each Fund on such undistributed gains, if any.

Dividends and capital gain distributions will be taxable to shareholders as described above whether received in cash or in shares under a Fund’s distribution reinvestment plan. With respect to distributions received in cash or reinvested in shares purchased on the open market, the amount of the distribution for tax purposes will be the amount of cash distributed or allocated to the shareholder.

Shareholders should be aware that the price of shares of a Fund that are purchased prior to a dividend or distribution by the Fund may reflect the amount of the forthcoming dividend or distribution. Such dividend or distribution, when made, would be taxable to shareholders under the principles discussed above even though the dividend or distribution may reduce the net asset value of shares below a shareholder’s cost and thus represent a return of a shareholder’s investment in an economic sense.

A high portfolio turnover rate may result in the realization of larger amounts of short-term gains, which are taxable to shareholders as ordinary income.

Each Fund intends to accrue dividend income for federal income tax purposes in accordance with the rules applicable to RICs. In some cases, these rules may have the effect of accelerating (in comparison to other recipients of the dividend) the time at which the dividend is taken into account by the Fund as taxable income.

Shareholders should consult their own tax advisor about their tax situation.

Income and capital gain distributions are determined in accordance with Income Tax Regulations that may differ from Generally Accepted Accounting Principles (“GAAP”) in the United States.

Taxation of Debt Securities

Certain debt securities can be originally issued or acquired at a discount. Special rules apply under the Code to the recognition of income with respect to such debt securities. Under the special rules, the Fund may recognize income for tax purposes without a corresponding current receipt of cash. In addition, gain on a disposition of a debt security subject to the special rules may be treated wholly or partially as ordinary income, not capital gain.

A Fund may invest in certain investments that may cause it to realize income prior to the receipt of cash distributions, including securities bearing original issue discount. The level of such investments is not expected to affect a Fund’s ability to distribute adequate income to qualify as RIC.

Taxation of Derivatives and Foreign Currency Transactions

Certain futures contracts and foreign currency contracts entered into by a Fund and all listed non-equity options written or purchased by a Fund (including options on debt securities, options on futures contracts, options on securities indices and options on broad-based stock indices) are governed by Section 1256 of the Code. Absent a tax election to the contrary, gain or loss attributable to the lapse, exercise or closing out of any such position are treated as 60% long-term and 40% short-term capital gain or loss, and on the

last trading day of a Fund’s taxable year, (and, generally on October 31 for purposes of the 4% excise tax), all outstanding Section 1256 positions are marked to market (i.e., treated as if such positions were closed out at their closing price on such day), and any resulting gain or loss is treated as 60% long-term and 40% short-term capital gain or loss. Under certain circumstances, entry into a futures contract to sell a security may constitute a short sale for federal income tax purposes, causing an adjustment in the holding period of the underlying security or a substantially identical security in a Fund’s portfolio.

Equity options written by the Fund (covered call options on portfolio stock) will be subject to the provisions under Section 1234 of the Code. If the Fund writes a call option, no gain is recognized upon its receipt of a premium. If the option lapses or is closed out, any gain or loss is treated as a short-term capital gain or loss. If a call option is exercised, any resulting gain or loss is a short-term or long-term capital gain or loss depending on the holding period of the underlying stock.

Positions of a Fund which consist of at least one stock and at least one stock option or other position with respect to a related security which substantially diminishes the Fund’s risk of loss with respect to such stock could be treated as a “straddle” that is governed by Section 1092 of the Code, the operation of which may cause deferral of losses, adjustments in the holding periods of stock or securities and conversion of short-term capital losses into long-term capital losses. An exception to these straddle rules exists for any “qualified covered call options” on stock options written by a Fund.

Positions of a Fund which consist of at least one debt security not governed by Section 1256 and at least one futures or currency contract or listed non-equity option governed by Section 1256 which substantially diminishes the Fund’s risk of loss with respect to such debt security are treated as a “mixed straddle.” Although mixed straddles are subject to the straddle rules of Section 1092 of the Code, certain tax elections exist for them that reduce or eliminate the operation of these rules. Each Fund will monitor these transactions and may make certain tax elections in order to mitigate the operation of these rules and prevent disqualification of the Fund as a RIC for federal income tax purposes.

Under the Code, gains or losses attributable to fluctuations in exchange rates which occur between the time a Fund accrues interest or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time it actually collects such receivables or pays such liabilities generally are treated as ordinary gain or loss. Similarly, on disposition of debt securities denominated in a foreign currency and on disposition of certain futures contracts, forward contracts and options, gains or losses attributable to fluctuations in the value of the foreign currency between the date of acquisition of the security or contract and the date of disposition also are treated as ordinary gain or loss. Generally, these gains and losses, referred to under the Code as Section 988 gains or losses, may increase or decrease the amount of each Fund’s investment company taxable income to be distributed to its shareholders as ordinary income.

These special tax rules applicable to options, futures and currency transactions could affect the amount, timing and character of a Fund’s income or loss and hence of its distributions to shareholders by causing holding period adjustments, converting short-term capital losses into long-term capital losses, and accelerating a Fund’s income or deferring its losses.

The IRS has not provided guidance on the tax consequences of certain investments and other activities that the Funds may make or undertake. While the Funds will endeavor to treat the tax items arising from these transactions in a manner which it believes to be appropriate, guarantees cannot be given that the IRS or a court will concur with the Funds’ treatment and that adverse tax consequences will not ensue.

Taxation of Foreign Investments

If a Fund invests in stock of certain passive foreign investment companies, the Fund may be subject to U.S. federal income taxation on a portion of any “excess distribution” with respect to, or gain from the disposition of, such stock. The tax would be determined by allocating such distribution or gain ratably to each day of the Fund’s holding period for the stock. The distributions or gain so allocated to any taxable year of the Fund, other than the taxable year of the excess distribution or disposition, would be taxed to the Fund at the highest ordinary income rate in effect for such year, and the tax would be further increased by an interest charge to reflect the value of the tax deferral deemed to have resulted from the ownership of the foreign company’s stock. Any amount of distribution or gain allocated to the taxable year of the distribution or disposition would be included in the Fund’s investment company taxable income and, accordingly, would not be taxable to the Fund to the extent distributed by the Fund as a dividend to its shareholders. The Fund may elect to mark to market (i.e., treat as if sold at their closing market price on same day), its investments in certain passive foreign investment companies and avoid any tax and or interest charge on excess distributions.

The Funds may be subject to tax on dividend or interest income received from securities of non-U.S. issuers withheld by a foreign country at the source. The United States has entered into tax treaties with many foreign countries that entitle the Fund to a reduced rate of tax or exemption from tax on income. It is impossible to determine the effective rate of foreign tax in advance since the amount of a Fund’s assets to be invested within various countries is not known. The Fund intends to operate so as to qualify for treaty tax benefits where applicable. If more than 50% of the value of the Fund’s total assets at the close of its taxable year is comprised of stock or securities issued by foreign corporations, the Fund may elect with the IRS to “pass through” to the Fund’s shareholders the amount of foreign income taxes paid by the Fund. If the Fund does elect to “pass through”, each shareholder will be notified within 60 days after the close of each taxable year of the Fund if the foreign taxes paid by the Fund will “pass through” for that year, and, if so, the amount of each shareholder’s pro rata share (by country) or (i) the foreign taxes paid and (ii) the Fund’s gross income from foreign sources.

Sale or Exchange of Fund Shares

Gain or loss will be recognized by a shareholder upon the sale of shares in a Fund or upon an exchange of shares in a Fund for shares in another Fund. Provided that the shareholder is not a dealer in such shares, such gain or loss will generally be treated as capital gain or loss, measured by the difference between the adjusted basis of the shares and the amount realized therefrom. Under current law, capital gains (whether long-term or short-term) of individuals and corporations are fully includable in taxable income, although for certain taxpayers, the tax rate is 0% on long-term capital gains in 2008 through 2010. Capital losses (whether long-term or short-term) may offset capital gains plus (for non-corporate taxpayers only) up to $3,000 per year of ordinary income.

Redemptions, including exchanges, of shares may give rise to recognized gains or losses, except as to those investors subject to tax provisions that do not require them to recognize such gains or losses. All or a portion of a loss realized upon the redemption, including exchanges, of shares may be disallowed under “wash sale” rules in Section 1091 of the Code to the extent shares are purchased (including shares acquired by means of reinvested dividends) within a 61-day period beginning 30 days before and ending 30 days after such redemption. Any loss realized upon a shareholder’s sale, redemption or other disposition of shares with a tax holding period of six months or less will be treated as a long-term capital loss to the extent of any distribution of long-term capital gains with respect to such shares.

Under certain circumstances, the sales charge incurred in acquiring shares of a Fund may not be taken into account in determining the gain or loss on the disposition of those shares. This rule applies where shares of a Fund are disposed of within 90 days after the date on which they were acquired and new shares of a RIC are acquired without a sales charge or at a reduced sales charge. In that case, the gain or loss realized on the disposition will be determined by excluding from the tax basis of the shares disposed of all or a portion of the sales charge incurred in acquiring those shares. This exclusion applies to the extent that the otherwise applicable sales charge with respect to the newly acquired shares is reduced as a result of the shareholder having incurred a sales charge initially. The portion of the sales charge affected by this rule will be treated as a sales charge paid for the new shares.

Tax Information

Written notices will be sent to shareholders regarding the intended federal income tax status of all distributions made (or deemed to have been made) during each taxable year, including the amount of QDI for individuals, the amount qualifying for the corporate dividends-received deduction (if applicable) and the amount designated as capital gain dividends, undistributed capital gains (if any), tax credits (if applicable), and cumulative return of capital (if any).

Important Notice Regarding Taxpayer IRS Certification

Pursuant to IRS Regulations, the Fund may be required to withhold a percentage of all reportable payments, including any taxable dividends, capital gains distributions or share redemption proceeds, at the rate in effect when such payments are made, for an account which does not have a taxpayer identification number or certain required certifications. The Funds reserve the right to refuse to open an account for any person failing to provide a taxpayer identification number along with the required certifications. The Funds will furnish shareholders, within 31 days after the end of the calendar year, with the information that is required by the IRS for filing income tax returns. The Fund will also provide this same information to the IRS in the manner required by the IRS. Depending on your State of residence, the information may also be filed with your State taxing authority.

Some shareholders may be subject to withholding of federal income tax on dividends and redemption payments from the Funds (“backup withholding”) at the rate in effect when such payments are made. Corporate shareholders and certain other shareholders specified in the Code generally are exempt from such backup withholding. Generally, shareholders subject to backup withholding will be (i) those for whom a certified taxpayer identification number is not on file with the Fund, (ii) those about whom notification has been received (either by the shareholder or the Fund) from the IRS that they are subject to backup withholding or (iii) those who, to the Fund’s knowledge, have furnished an incorrect taxpayer identification number. Generally, to avoid backup withholding, a shareholder must, at the time an account is opened, certify under penalties of perjury that the taxpayer identification number furnished is correct and that he or she is not subject to backup withholding.

Foreign Shareholders

Dividends paid by the Funds from net investment income and net realized short-term capital gains to a shareholder who is a nonresident alien individual, a foreign trust or estate, a foreign corporation or a foreign partnership (a “foreign shareholder”) will be subject to United States withholding tax at a rate of 30% unless a reduced rate of withholding or a withholding exemption is provided under applicable treaty law. Foreign shareholders are urged to consult their own tax advisors concerning the applicability of the United States withholding tax and any foreign taxes.

Other Tax Consequences

In addition to the federal income tax consequences described above, there may be other federal, state or local tax considerations and estate tax considerations applicable to the circumstances of a particular investor. The foregoing discussion is based upon the Code, judicial decisions and administrative regulations, rulings and practices in effect as of June 2007, all of which are subject to change and which, if changed, may be applied retroactively to a Fund, its shareholders and/or its assets. No rulings have been sought from the IRS with respect to any of the tax matters discussed above.

From time to time, proposals have been introduced before Congress for the purpose of restricting or eliminating the federal income tax exemption for interest on municipal bonds and similar proposals may be introduced in the future. If such a proposal were enacted, the availability of tax-exempt bonds for investment by the Fund and the value of the Fund’s portfolio would be affected. The Trustees would then re-evaluate the Fund’s investment objective and policies.

The information included in the Prospectus with respect to taxes, in conjunction with the foregoing, is a general and abbreviated summary of applicable provisions of the Code and Treasury regulations now in effect as currently interpreted by the courts and the IRS. The Code and these Regulations, as well as the current interpretations thereof, may be changed at any time by legislative, judicial, or administrative action. Accordingly, prospective purchasers are urged to consult their tax advisors with specific reference to their own tax situation, including the potential application of federal, state, local and foreign taxes.

Except as expressly set forth above, the foregoing discussion of U.S. federal income tax law relates solely to the application of that law to U.S. taxpayers. Each shareholder who is not a U.S. taxpayer should consider the U.S. and foreign tax consequences of ownership of shares of the Fund, including the possibility that such a shareholder may be subject to a U.S. withholding tax on amounts constituting ordinary income received by him or her, where such amounts are treated as income from U.S. sources under the Code. It does not address the special tax rules applicable to certain classes of investors, such as insurance companies.

TAX SHELTERED RETIREMENT PLANS

Shares of the Funds are offered in connection with the following qualified prototype retirement plans: IRA, Rollover IRA, SEP-IRA, SIMPLE, IRA, Roth IRA, 401(k), Profit-Sharing, Money Purchase Pension Plans and 403(b) Retirement Plans. Write or call PEPCO (800) 243-4361 for further information about the plans.

Merrill Lynch Daily K Plan

Class A Shares of a Fund are made available to Merrill Lynch Daily K Plan (the “Plan”) participants at NAV without an initial sales charge if:

(i) the Plan is recordkept on a daily valuation basis by Merrill Lynch and, on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service Agreement, the Plan has $3 million or more in assets invested in broker-dealer funds not advised or managed by Merrill Lynch Asset Management L.P. (MLAM) that are made available pursuant to a Service Agreement between Merrill Lynch and the fund’s principal underwriter or distributor and in funds advised or managed by MLAM (collectively, the “Applicable Investments”);

(ii) the Plan is recordkept on a daily valuation basis by an independent recordkeeper whose services are provided through a contract or alliance arrangement with Merrill Lynch, and, on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service Agreement, the Plan has $3 million or more in assets, excluding money market funds, invested in Applicable Investments; or

(iii) the Plan has 500 or more eligible employees, as determined by a Merrill Lynch plan conversion manager, on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service Agreement.

Alternatively, Class B Shares are made available to Plan participants at NAV without a CDSC if the Plan conforms with the requirements for eligibility set for in (i) through (iii) above but either does not meet the $3 million asset threshold or does not have 500 or more eligible employees.

Plans recordkept on a daily basis by Merrill Lynch or an independent recordkeeper under a contract with Merrill Lynch that are currently investing in Class B Shares convert to Class A Shares once the Plan has reached $5 million invested in Applicable Investments, or after the normal holding period of seven years from the initial date of purchase.

THE DISTRIBUTOR

Pursuant to an Underwriting Agreement with the Trust, PEPCO (the “Distributor”), an indirect, wholly-owned subsidiary of The Phoenix Companies, Inc. (“PNX”) and an affiliate and the sole owner of PIC, serves as distributor of the Funds. As such, the Distributor conducts a continuous offering pursuant to a “best efforts” arrangement requiring it to take and pay for only such securities as may be sold to the public. Shares of the Funds may be purchased through investment dealers who have sales agreements with the Distributor. The address of the Distributor is One American Row, P.O. Box 5056, Hartford, Connecticut 06102-5056.

For its services under the Underwriting Agreement, PEPCO receives sales charges on transactions in Trust shares and retains such charges, less the portion thereof allowed to its registered representatives and to securities dealers and securities brokers with whom it has sales agreements. In addition, PEPCO may receive payments from the Trust pursuant to the Distribution Plans described below. During the fiscal years 2005, 2006 and 2007, purchasers of shares of the Funds paid aggregate sales charges of $818,853, $987,518 and $2,455,421, respectively, of which the Distributor received net commissions of $114,170, $176,572 and $356,778, respectively, for its services, the balance being paid to dealers. For the fiscal year ended June 30, 2007, the Distributor received net commissions of $295,274 for Class A Shares and deferred sales charges of $30,967 for Class A Shares and $30,537 for Class C Shares.

The Underwriting Agreement may be terminated at any time on not more than 60 days written notice, without payment of a penalty, by the Distributor, by vote of a majority of the outstanding voting securities of the Funds, or by vote of a majority of the Trust’s Trustees who are not “interested persons” of the Trust and who have no direct or indirect financial interest in the operation of the Distribution Plans or in any related agreements. The Underwriting Agreement will terminate automatically in the event of its “assignment,” as defined in Section 2(a)(4) of the 1940 Act.

Dealer Concessions

Dealers with whom the Distributor has entered into sales agreements receive a discount or commission on purchases of Class A Shares as set forth below.


Amount of Transaction at Offering Price	Sales Charge as Percentage of Offering Price		Sales Charge as Percentage of Amount Invested		Dealer Discount or Agency Fee as Percentage of Offering Price
Less than $50,000	5.75	%	6.10	%	5.00	%
$50,000 but under $100,000	4.75	%	4.99	%	4.25	%
$100,000 but under $250,000	3.75	%	3.90	%	3.25	%
$250,000 but under $500,000	2.75	%	2.83	%	2.25	%
$500,000 but under $1,000,000	2.00	%	2.04	%	1.75	%
$1,000,000 or more	None		None		None

In addition to the dealer discount on purchases of Class A Shares, the Distributor intends to pay investment dealers a sales commission of 4% of the sale price of Class B shares and a sales commission of 1% of the sale price of Class C Shares sold by such dealers. This sales commission will not be paid to dealers for sales of the Class B Shares or Class C Shares purchased by 401(k) participants of the Merrill Lynch Daily K Plan due to a waiver of the CDSC for these Plan participants’ purchases. Your broker, dealer or financial advisor may also charge you additional commissions or fees for their services in selling shares to you provided they notify the Distributor of their intention to do so.

Dealers and other entities who enter into special arrangements with the Distributor may receive compensation for the sale and promotion of shares of the Funds and/or for providing other shareholder services. Such fees are in addition to the sales commissions referenced above and may be used based upon the amount of sales of fund shares by a dealer; the provision of assistance in marketing of fund shares; access to sales personnel and information dissemination services; provision of recordkeeping and administrative services to qualified employee benefit plans; and other criteria as established by the Distributor. Depending on the nature of the services, these fees may be paid either from the Funds through distribution fees, service fees or transfer agent fees or in some cases, the Distributor may pay certain fees from its own profits and resources. From its own profits and resources, the Distributor does intend to: (a) from time to time pay special incentive and retention fees to qualified wholesalers, registered financial institutions and third party marketers; (b) pay broker-dealers an amount equal to 1% of the first $3 million of Class A Share purchases by an account held in the name of a qualified employee benefit plan with at least 100 eligible employees, 0.50% on the next $3 million, plus 0.25% on the amount in excess of $6 million; and (c) excluding purchases as described in (b) above, pay broker-dealers an amount equal to 1.00% of the amount of Class A Shares sold from $1,000,000 to $3,000,000, 0.50% on amounts of $3,000,001 to $10,000,000 and 0.25% on amounts greater than $10,000,000. If part or all of such investment as described in (b) and (c) above, including investments by qualified employee benefit plans, is subsequently redeemed within one year, a 1% CDSC may apply, except for redemptions of shares purchased on which a finder’s fee has been paid where such investor’s dealer of record, due to the nature of the investor’s account, notifies the Distributor prior to the time of the investment that the dealer waives the finder’s fee otherwise payable to the dealer, or agrees to receive such finder’s fee ratably over a 12-month period. For purposes of determining the applicability of the CDSC, the one-year period begins on the last day of the month preceding the month in which the purchase was made. In addition, the Distributor may pay the entire applicable sales charge on purchases of Class A shares to selected dealers and agents. Any dealer who receives more than 90% of a sales charge may be deemed to be an “underwriter” under the Securities Act of 1933 (the “1933 Act”). PEPCO reserves the right to discontinue or alter such fee payment plans at any time.

From its own resources or pursuant to the Trust’s Distribution Plan, and subject to the dealers’ prior approval, the Distributor may provide additional compensation to registered representatives of dealers in the form of travel expenses, meals, and lodging associated with training and educational meetings sponsored by the Distributor. The Distributor may also provide gifts amounting in value to less than $100, and occasional meals or entertainment, to registered representatives of dealers. Any such travel expenses, meals, lodging, gifts or entertainment paid will not be preconditioned upon the registered representatives’ or dealers’ achievement of a sales target. The Distributor may, from time-to-time, reallow the entire portion of the sales charge on Class A shares which it normally retains to individual selling dealers. However, such additional reallowance generally will be made only when the selling dealer commits to substantial marketing support such as internal wholesaling through dedicated personnel, internal communications and mass mailings.

Administrative Services

PEPCO also acts as administrative agent (“Administrator”) of the Trust. For its services as Administrator, PEPCO receives an administration fee based upon the average net assets across all non-money market funds of the Phoenix Funds and Phoenix Edge Series Funds at the following incremental rates:


First $5 billion	0.09	%
$5 billion to $15 billion	0.08	%
Greater than $15 billion	0.07	%

For the money market Funds, the fee is 0.035% of the average net assets across all Phoenix money market Funds within the Phoenix Funds and Phoenix Edge Series Funds.

Until June 30, 2006, PEPCO served as Financial Agent to the Trust. PEPCO received a fee equal to the sum of (1) the documented cost to PEPCO to provide oversight of PFPC Inc. (subagent to PEPCO) (“PFPC”), plus (2) the documented costs of fund accounting, tax services and related services provided by PFPC.

For its services to the Trust for the fiscal years ended June 30, 2005, 2006 and 2007, PEPCO received fees totaling $136,651, $399,831 and $615,881, respectively.

DISTRIBUTION PLANS

The Trust has adopted a distribution plan for each class of shares, with the exception of Class I (i.e., a plan for the Class A Shares, a plan for the Class B Shares and a plan for the Class C Shares, collectively, the “Plans”) in accordance with Rule 12b-1 under the 1940 Act, to compensate the Distributor for the services it provides and for the expenses it bears under the Underwriting Agreement. Each applicable class of shares pays a service fee at a rate of 0.25% per annum of the average daily net assets of such class of the Fund and a distribution fee based on average daily net assets at the rates of 0.75% per annum for Class B Shares and 0.75% per annum for Class C Shares.

From the Service Fee the Distributor expects to pay a quarterly fee to qualifying broker-dealer firms, as compensation for providing personal services and/or the maintenance of shareholder accounts, with respect to shares sold by such firms. In the case of shares of the Funds being sold to an affiliated fund of funds, fees payable under the Plans shall be paid to the distributor of the fund of funds. This fee will not exceed on an annual basis 0.25% of the average annual net asset value of such shares, and will be in addition to sales charges on Fund shares which are reallowed to such firms. To the extent that the entire amount of the Service Fee is not paid to such firms, the balance will serve as compensation for personal and account maintenance services furnished by the Distributor.

For the fiscal year ended June 30, 2007 the Funds paid Rule 12b-1 Fees in the amount of $2,762,419 of which the Distributor received $971,686 and unaffiliated broker-dealers received $1,790,733. The Rule 12b-1 payments were used for (1) compensation to dealers, $2,387,013; (2) compensation to sales personnel, $899,115; (3) advertising, $299,028; (4) service costs, $59,526; (5) printing and mailing of prospectuses to other than current shareholders, $22,706; and (6) other, $118,817.

On a quarterly basis, the Trust’s Trustees review a report on expenditures under the Plans and the purposes for which expenditures were made. The Trustees conduct an additional, more extensive review annually in determining whether the Plans will be continued. By their terms, continuation of the Plans from year to year is contingent on annual approval by a majority of the Trust’s Trustees and by a majority of the Trustees who are not “interested persons” (as defined in the 1940 Act) and who have no direct or indirect financial interest in the operation of the Plans or any related agreements (the “Plan Trustees”). The Plans provide that they

may not be amended to increase materially the costs which the Funds may bear pursuant to the Plans without approval of the shareholders of the Funds and that other material amendments to the Plans must be approved by a majority of the Plan Trustees by vote cast in person at a meeting called for the purpose of considering such amendments. The Plans further provide that while they are in effect, the selection and nomination of Trustees who are not “interested persons” shall be committed to the discretion of the Trustees who are not “interested persons.” The Plans may be terminated at any time by vote of a majority of the Plan Trustees or a majority of the outstanding shares of the Funds. The Trustees have concluded that there is a reasonable likelihood that the Plans will benefit the Funds and all classes of shareholders.

No interested person of the Funds and no Trustee who is not an interested person of the Funds, as that term is defined in the 1940 Act, had any direct or indirect financial interest in the operation of the Plans.

The Board of Trustees has also adopted a Plan pursuant to Rule 18f-3 under the 1940 Act permitting the issuance of shares in multiple classes.

The Financial Industry Regulatory Authority (“FINRA”) regards certain distribution fees as asset-based sales charges subject to FINRA sales load limits. FINRA’s maximum sales charge rule may require the Trustees to suspend distribution fees or amend the Plans.

MANAGEMENT OF THE TRUST

The Trust is an open-end management investment company known as a mutual fund. The Trustees of the Trust (“Trustees”) are responsible for the overall supervision of the Trust and perform the various duties imposed on Trustees by the 1940 Act and Delaware statutory trust law.

Trustees and Officers

The Trustees are responsible for the overall supervision of the Funds, including establishing the Funds’ policies, general supervision and review of their investment activities. The officers who administer the Funds’ daily operations, are appointed by the Board of Trustees. The current Trustees and officers of the Trust performing a policy-making function and their affiliations and principal occupations for the past five years are set forth below. Unless otherwise noted, the address of each individual is 56 Prospect Street, Hartford, Connecticut 06115-0480. There is no stated term of office for Trustees of the Trust.

Independent Trustees


Name, Address and Year of Birth	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Trustee	Principal Occupation(s) During Past 5 Years and Other Directorships Held by Trustee
E. Virgil Conway* YOB: 1929	Served since 1988.	53	Chairman, Rittenhouse Advisors, LLC (consulting firm) (2001-present). Director, Urstadt Biddle Property Corp. (license monitor).

Harry Dalzell-Payne* YOB: 1929	Served since 1988.	53	Retired.

Francis E. Jeffries* YOB: 1930	Served since 1995.	56	Retired.

Leroy Keith, Jr. YOB: 1939	Served since 1993.	53	Managing Director, Almanac Capital Management (commodities business) (since 2007). Partner, Stonington Partners, Inc. (private equity firm) (2001-2007). Director/Trustee, Evergreen Funds (88 portfolios).

Geraldine M. McNamara YOB: 1951	Served since 2001.	55	Retired. Managing Director, U.S. Trust Company of New York (private bank) (1982-2006).

James M. Oates YOB: 1946	Served since 1993.	53	Managing Director, Wydown Group (consulting firm) (1994-present). Chairman, Hudson Castle Group, Inc. (Formerly IBEX Capital Markets, Inc.) (financial services) (1997-2006). Director, Stifel Financial. Chairman and Trustee, John Hancock Trust (93 portfolios) and John Hancock Funds II (74 portfolios). Non-Executive Chairman, Hudson Castle Group, Inc.


Name, Address and Year of Birth	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Trustee	Principal Occupation(s) During Past 5 Years and Other Directorships Held by Trustee
Richard E. Segerson YOB: 1946	Served since 1988.	53	Managing Director, Northway Management Company (1998-present).

Ferdinand L.J. Verdonck YOB: 1942	Served since 2004.	53	Chairman, Amsterdam Molecular Therapeutics N.V. (biotechnology) (since 2007). Director, The JP Morgan European Investment Trust (1998-present), Galapagos N.V. (biotechnology) (2005-present). Director, Groupe SNEF (electrical and electronic installation) (1998-present). Managing Director, Almanij N.V. (financial holding company) (1992-2003). Director, KBC Bank and Insurance Holding Company (1992-2003), KBC Bank (1992-2003), KBC Insurance (1992-2003), Kredietbank S.A. Luxembourgeoise (1992-2003), Investco N.V. (private equity company) (1992-2003), Gevaert N.V. (industrial holding company) (1992-2003), Fidea N.V. (insurance company) (1992-2003), Almafin N.V. (real estate investment company) (1992-2003), Centea N.V. (savings bank) (1992-2003), Degussa Antwerpen N.V. (1998-2004), Santens N.V. (textiles) (1999-2004), Dictaphone Corp. (2002-2006), Banco Urquijo (Chairman) (1998-2006), EASDAQ (Chairman) (2001-2007).

* Pursuant to the Trust’s retirement policy, Mr. Conway, Mr. Dalzell-Payne and Mr. Jeffries will retire from the Board of Trustees in May 2008.

Interested Trustees

Each of the individuals listed below is an “interested person” of the Trust, as defined in Section 2(a)(19) of the 1940 Act, as amended, and the rules and regulations thereunder.


Name, Address, Position(s) with Trust and Year of Birth		Length of Time Served	Number of Portfolios in Fund Complex Overseen by Trustee	Principal Occupation(s) During Past 5 Years and Other Directorships Held by Trustee
George R. Aylward* Trustee and President YOB: 1964		Served since November 2006.	55	Senior Executive Vice President and President, Asset Management (since 2007), Senior Vice President and Chief Operating Officer, Asset Management (2004-2007), Vice President (2001-2004), The Phoenix Companies, Inc. Director and President (2006-present), Chief Operating Officer (2004-present), Executive Vice President (2004-2006), Vice President, Finance, (2001-2002), Phoenix Investment Partners, Ltd. Various senior officer and directorship positions with Phoenix affiliates. President (2006-present), Executive Vice President (2004-2006), the Phoenix Funds Family. Chairman, President and Chief Executive Officer, The Zweig Fund Inc. and The Zweig Total Return Fund Inc. (2006-present).

Philip R. McLoughlin** Chairman YOB: 1946		Served since 1993.	73	Partner, Cross Pond Partners, LLC (2006-Present). Director, Argo Group International Holding Ltd. (Insurance), World Trust Fund and KBC Asset Management, Ltd.

*	Mr. Aylward is an “interested person” as defined in the Investment Company Act of 1940, by reason of his position with Phoenix Investment Partners, Ltd. (“PXP”) and its affiliates.
**	Mr. McLoughlin is treated as an “interested person,” as defined in the 1940 Act, because of his participation in certain retirement plans maintained by PXP and its affiliates.

Officers of the Trust Who Are Not Trustees


Name, Address and Year of Birth	Position(s) Held with Trust and Length of Time Served	Principal Occupation(s) During Past 5 Years
Nancy G. Curtiss YOB: 1952	Senior Vice President since 2006.	Assistant Treasurer (2001-present), Phoenix Equity Planning Corporation. Vice President (2003-2007), Vice President, Head of Asset Management Operations (since 2007), Phoenix Investment Partners, Ltd. Ms. Curtiss is also Treasurer of various other investment companies within the Phoenix Fund Complex (1994-present).

Marc Baltuch 900 Third Avenue New York, NY 10022 YOB: 1945	Vice President and Chief Compliance Officer since 2004.	Chief Compliance Officer, Zweig-DiMenna Associates LLC (1989-present). Vice President, The Zweig Total Return Fund, Inc. (2004-present). Vice President, The Zweig Fund, Inc. (2004-present). President and Director of Watermark Securities, Inc. (1991-present). Assistant Secretary, Gotham Advisors Inc. (1990-2005).

Kevin J. Carr One American Row Hartford, CT 06102 YOB: 1954	Vice President, Counsel, Chief Legal Officer and Secretary since 2005.	Vice President and Counsel, Phoenix Life Insurance Company (2005-present). Compliance Officer of Investments and Counsel, Travelers Life & Annuity Company (January 2005-May 2005). Assistant General Counsel, The Hartford Financial Services Group (1999-2005).

W. Patrick Bradley YOB: 1972	Chief Financial Officer and Treasurer since 2006.	Vice President, Fund Administration (2007-present), Second Vice President, Fund Control & Tax (2004-2006), Phoenix Investment Partners, Ltd. Vice President, Chief Financial Officer, Treasurer and Principal Accounting Officer or Chief Financial Officer and Treasurer (2005-present), Assistant Treasurer (2004-2006), certain funds within the Phoenix Fund Complex. Senior Manager, Audit, Deloitte & Touche, LLP (1999-2004).

Committees of the Board

The Board of Trustees has established several standing committees to oversee particular aspects of the Funds’ management.

The Audit Committee. The Audit Committee is responsible for overseeing the Funds’ accounting and auditing policies and practices. The Audit Committee reviews the Funds’ financial reporting procedures, their system of internal control, the independent audit process, and the Funds’ procedures for monitoring compliance with investment restrictions and applicable laws and regulations and with the Code of Ethics. The Audit Committee is composed entirely of Independent Trustees; its members are E. Virgil Conway, Harry Dalzell-Payne, Francis E. Jeffries, Geraldine M. McNamara, James M. Oates, and Richard E. Segerson. The Committee met four times during the Trust’s last fiscal year.

The Executive Committee. The function of the Executive Committee is to act on behalf of the Board when it is not in session, subject to limitations as set by the Board. Its members are E. Virgil Conway, Harry Dalzell-Payne, Leroy Keith, Jr., Philip R. McLoughlin, Geraldine M. McNamara and James M. Oates Each of the members is an independent trustee, except Mr. McLoughlin, who is an Interested Trustee. The committee met eleven times during the Trust’s last fiscal year.

The Governance and Nominating Committee. The Governance and Nominating Committee is responsible for developing and maintaining governance principles applicable to the Funds, for nominating individuals to serve as Trustees, including as Independent Trustees and annually evaluating the Board and Committees. The Governance and Nominating Committee is composed entirely of Independent Trustees; its members are E. Virgil Conway, Harry Dalzell-Payne, Leroy Keith, Jr., Geraldine M. McNamara, James M. Oates and Ferdinand L.J. Verdonck The Committee met four times during the Trust’s last fiscal year.

The Board has adopted a policy for consideration of Trustee nominees recommended by shareholders. With regards to such policy, an individual shareholder submitting a nomination must hold for at least one full year 5% of the shares of a series of the Trust. Shareholder nominees for Trustee will be given the same consideration as any other candidate provided the nominee meets certain minimum requirements.

Compensation

Trustees who are not employed by the Adviser or its affiliates receive an annual retainer and fees and expenses for attendance at Board and Committee meetings. Officers and employees of the Adviser of the Funds who are interested persons are compensated for their services by the Adviser of the Funds, or an affiliate of the Adviser of the Funds, and receive no compensation from the Funds. The Trust does not have any retirement plan for its Trustees.

For the Trust’s fiscal year ended June 30, 2007, the Trustees received the following compensation:


Name of Trustee	Aggregate Compensation From Trust		Total Compensation From Trust and Fund Complex (74 Funds) Paid to Trustees
Independent Trustees
E. Virgil Conway	$	5,510.22	$	173,500.00
Harry Dalzell-Payne	$	5,144.84	$	163,500.00
Francis E. Jeffries*	$	3,550.39	$	128,000.00
Leroy Keith, Jr.	$	4,729.08	$	129,500.00
Geraldine M. McNamara*	$	5,291.46	$	167,500.00
James M. Oates	$	5,291.46	$	145,000.00
Richard E. Segerson*	$	3,697.01	$	102,000.00
Ferdinand L.J. Verdonck	$	3,391.56	$	93,000.00

Interested Trustees
George R. Aylward	$	0	$	0
Philip R. McLoughlin	$	5,774.34	$	257,500.00

*	These Trustees previously deferred compensation (and the earnings thereon) as of December 31, 2007 in the following amounts: Mr. Jeffries, $645,191; Ms. McNamara, $322,955 and Mr. Segerson, $125,739.

Trustee Ownership of Securities

Set forth in the table below is the dollar range of equity securities owned by each Trustee as of December 31, 2007:


Name of Trustee	Dollar Range of Equity Securities in the Trust’s Funds	Aggregate Dollar Range of Trustee Ownership in all Funds Overseen by Trustee in Family of Investment Companies
Independent Trustees
E. Virgil Conway	Capital Growth Fund - $1-$10,000 Small-Cap Sustainable Growth Fund - $50,001-$100,000	Over $100,000
Harry Dalzell-Payne	None	None
Francis E. Jeffries	None	Over $100,000
Leroy Keith, Jr.	None	$1 - $10,000
Geraldine M. McNamara	Balanced Fund - $50,001-$100,000 Growth & Income Fund - Over $100,000	Over $100,000
James M. Oates	Growth & Income Fund - $50,001-$100,000 Growth Opportunities Fund - Over $100,000 Mid-Cap Value Fund - $50,001-$100,000 Quality Small-Cap Fund - $10,001-$50,000 Small-Cap Growth Fund - $10,001-$50,000 Small-Mid Cap Fund - $50,001-$100,000	Over $100,000
Richard E. Segerson	None	Over $100,000
Ferdinand L.J. Verdonck	None	None

Interested Trustees
George R. Aylward	Balanced Fund - $1-$10,000 Capital Growth Fund - $1-$10,000 Growth & Income Fund - $1-$10,000 Mid-Cap Value Fund - $1-$10,000 Strategic Growth Fund - $1-$10,000 Value Opportunities Fund - $1-$10,000	$50,001 - $100,000
Philip R. McLoughlin	Growth & Income - Over $100,000 Mid-Cap Value Fund - Over $100,000 Value Opportunities Fund - $50,001-$100,000	Over $100,000

On February 11, 2008, the Trustees and officers of the Funds beneficially owned less than 1% of the outstanding shares of any of the Funds.

Principal Shareholders

The following table sets forth information as of February 11, 2008 with respect to each person who owns of record or is known by the Trust to own of record or beneficially own 5% or more of any class of the Fund’s equity securities:


Name of Shareholder	Fund and Class	Percentage of Class		Number of Shares
Citigroup Global Markets Inc. (1)	Balanced Fund- Class C	14.71	%	686,729.746
House Account
Attn: Peter Booth 7 ^th Floor	Income & Growth Fund- Class A	5.56	%	1,640,005.486
333 W 34 ^th St
New York, NY 10001-2402	Mid-Cap Value Fund- Class C	26.02	%	929,630.126

	Small-Cap Value Fund- Class C	7.89	%	259,690.863

	Small-Mid Cap Fund- Class B	12.95	%	15,601.800

	Small-Mid Cap Fund- Class C	35.54	%	174,920.769

	Strategic Growth Fund- Class C	10.98	%	47,573.214

	Value Opportunities Fund- Class C	6.90	%	51,629.063


Charles Schwab & Co Inc. Attn: Mutual Funds/Team S 4500 Cherry Creek Dr S FL 3 Denver, CO 80246	Growth Opportunities Fund- Class A	6.62	%	174,885.006

Charles Schwab & Co Inc Reinvest Account Attn: Mutual Funds Dept 101 Montgomery St San Francisco, CA 94104-4151	Mid-Cap Growth Fund- Class I	10.38	%	10,327.356

Charles Schwab & Co Inc.	Growth & Income Fund- Class I	5.35	%	96,784.695
Special Custody Account for Benefit of
Customers	Small-Mid Cap Fund- Class A	30.04	%	426,363.119
Attn: Mutual Funds
101 Montgomery St	Small-Mid Cap Fund- Class I	13.95	%	317,810.484
San Francisco, CA 94104-4151

JPM Chase Bank, N.A. FBO 500 Stanton Christiana RD Newark, DE 19713-2105	Growth & Income Fund- Class I	12.58	%	227,626.319

JPM Chase Bank, N.A. FBO 500 Stanton Christiana RD Newark, DE 19713-2105	Growth & Income Fund- Class I	6.29	%	113,813.160

LPL Financial Services 9785 Towne Centre Dr San Diego, CA 92121-1968	Small-Cap Sustainable Growth Fund- Class C	9.52	%	1,937.984

LPL Financial Services 9785 Towne Centre Dr San Diego, CA 92121-1968	Small-Cap Sustainable Growth Fund- Class C	5.71	%	1,162.791

Mark Blank TTEE Jerry & Joan Blank Irrevocable TR FBO The Children of Mark Blank Miami, FL 33256-6388	Strategic Growth Fund- Class I	6.54	%	38,972.371

Merill Lynch Pierce Fenner & Smith Inc. Trade House Account Attn: Book Entry 4801 Deer Lake Dr E Jacksonville, FL 32246	Small-Cap Growth Fund- Class C	26.89	%	115,781.397


MLPF&S for the Sole (1)	All Cap Growth Fund- Class A	28.81	%	1,735,767.927
Benefit of its Customers
Attn: Fund Administration	All Cap Growth Fund- Class B	12.12	%	47,954.034
4800 Deer Lake Dr E FL 3
Jacksonville, FL 32246-6484	All Cap Growth Fund- Class C	38.28	%	219,106.462

	Balanced Fund- Class B	6.84	%	64,503.587

	Balanced Fund- Class C	14.71	%	686,729.746

	Capital Growth Fund- Class C	41.20	%	93,204.557

	Growth & Income Fund- Class A	5.06	%	522,690.756

	Growth & Income Fund- Class B	8.76	%	99,774.927

	Growth & Income Fund- Class C	11.67	%	349,870.012

	Growth Opportunities Fund- Class A	5.75	%	151,822.512

	Growth Opportunities Fund- Class C	77.20	%	304,573.188

	Income & Growth Fund- Class B	5.13	%	29,939.344

	Income & Growth Fund- Class C	30.91	%	63,051.759

	Mid-Cap Growth Fund- Class B	15.87	%	136,725.593

	Mid-Cap Growth Fund- Class C	35.52	%	159,397.647

	Mid-Cap Value Fund- Class A	12.17	%	2,979,608.629

	Mid-Cap Value Fund- Class C	26.02	%	1,891,331.252

	Small-Cap Growth Fund- Class A	8.34	%	230,340.106

	Small-Cap Growth Fund- Class B	14.88	%	79,430.970

	Small-Cap Value Fund- Class B	6.54	%	83,491.152

	Small-Cap Value Fund- Class C	10.26	%	337,723.289

	Small-Mid Cap Fund- Class A	5.04	%	71,494,792

	Small Mid-Cap Fund- Class B	15.07	%	18,156.481

	Small Mid-Cap Fund- Class C	28.27	%	139,166.783

	Strategic Growth Fund- Class B	6.20	%	48,653.235

	Strategic Growth Fund- Class C	17.38	%	75,301.006

	Value Opportunities Fund- Class C	13.70	%	102,491.443

NFS LLC FEBO	Growth & Income Fund- Class I	10.95	%	198,156.985
Donna K Sefton TTEE
Donna K Sefton Trust	Small-Cap Sustainable Growth Fund- Class I	10.11	%	61,959.999
San Diego, CA 92103-6624

NFS LLC FEBO FIIOC as Agent for Qualified Employee Benefit Plans (401K) FINOPS-IC Funds 100 Magellan Way KW1C Covington, KY 41015-1987	Growth & Income Fund- Class I	11.24	%	203,326.538

NFS LLC FEBO Harley K Sefton TTEE Donna K Sefton IRREV Trust San Diego, CA 92103-6624	Small-Cap Sustainable Growth Fund- Class I	11.97	%	73,366.976


NFS LLC FEBO Robert A Jarman Berkeley, CA 94707-2454	Mid-Cap Growth Fund- Class I	15.97	%	15,884.652

NFS LLC FEBO Saybrook Grad School Research Center Board Restricted Funds 747 Front ST FL 3 San Francisco, CA 94111-1920	Mid-Cap Growth Fund- Class I	12.29	%	12,225.496

NFS LLC FEBO The Northern Trust Company P.O. Box 92956 Chicago, IL 60675-0001	Strategic Growth Fund- Class I	24.97	%	148,914.185

NFS LLC FEBO The Northern Trust Company P.O. Box 92956 Chicago, IL 60675-0001	Strategic Growth Fund- Class I	24.97	%	148,914.185

Phoenix Equity Planning Corp	Small-Cap Sustainable Growth Fund- Class C	49.13	%	10,000.000
Attn: Corp Accounting
56 Prospect St	Mid-Cap Growth Fund- Class I	5.83	%	5,797.101
Hartford, CT 06103-2818
	Quality Small-Cap Fund- Class I	5.85	%	254,860.326

Phoenix Wealth Builder PHOLIO	Growth & Income Fund- Class A	7.45	%	770,287.909
Attn: Chris Wilkos
Shareholder Services Dept	Growth Opportunities Fund- Class A	16.93	%	447,428.916
c/o Phoenix Equity Planning
101 Munson St	Quality Small-Cap Fund- Class A	17.67	%	210,355.137
Greenfield, MA 01301-9684
	Small-Cap Sustainable Growth Fund- Class A	24.87	%	236,744.209

	Value Opportunities Fund- Class A	16.82	%	1,084,511.151

Phoenix Wealth Guardian PHOLIO	Growth Opportunities Fund- Class A	6.07	%	160,493.457
Attn: Chris Wilkos
Shareholder Services Dept	Quality Small-Cap Fund- Class A	6.44	%	76,693.116
c/o Phoenix Equity Planning
101 Munson St	Small-Cap Sustainable Growth Fund- Class A	9.06	%	86,295.734
Greenfield, MA 01301-9684
	Value Opportunities Fund- Class A	6.73	%	433,931.900

Prudential Investment Mgmt FBO Mutual Fund Clients 100 Mulberry ST 3 Gateway Center FL 11 Newark, NJ 07102-4000	Small-Mid Cap Fund- Class I	5.59	%	127,444.372

State Street Bank & Trust Co. Cust for the IRA of Robert S McClure Pleasanton, CA 94566-5813	Income & Growth Fund- Class C	9.55	%	19,471.932

Tony Blank TTEE Jerry & Joan Blank IRREV Trust FBO The Children of Tony Blank Coral Gables, FL 33146-2918	Strategic Growth Fund- Class I	5.92	%	35,319.151

(1)	Citigroup Global Markets Inc. and MLPF&S are the nominee accounts for many individual shareholder accounts; the Funds are not aware of the size or identity of the underlying individual accounts thereof.

ADDITIONAL INFORMATION

Capital Stock and Organization

The Trust was originally incorporated in New York in 1956 and on January 13, 1992 was reorganized as a Massachusetts business trust under the name of “National Worldwide Opportunities Fund.” The Trust’s name was changed on June 30, 1993 to “Phoenix Worldwide Opportunities Fund” to reflect the purchase of the former adviser by The Phoenix Companies, Inc. and the affiliation with the other Phoenix Funds. Effective December 16, 1998, the Trust’s name was changed to Phoenix-Aberdeen Worldwide Opportunities Fund. The Trust was reorganized as a Delaware statutory trust in October 2000. Effective June 28, 2004, the Trust changed its name to Phoenix Equity Trust.

The capitalization of the Trust consists solely of an unlimited number of shares of beneficial interest. The Trust currently offers shares in 15 series which have different classes. Holders of shares of each Fund have equal rights with regard to voting, redemptions, dividends, distributions, and liquidations with respect to that Fund. Shareholders vote on the election of Trustees. On matters affecting an individual class (such as approval of matters relating to a Plan of Distribution for a particular class of shares), a separate vote of that class is required. The Trust does not hold regular meetings of shareholders. The Trustees will call a meeting when at least 10% of the outstanding shares so request in writing. If the Trustees fail to call a meeting after being so notified, the shareholders may call the meeting. The Trustees will assist the shareholders by identifying other shareholders or mailing communications, as required under Section 16(c) of the 1940 Act.

Shares are fully paid, non assessable, redeemable and fully transferable when they are issued. Shares do not have cumulative voting rights, preemptive rights or subscription rights. The assets received by the Trust for the issue or sale of shares of the Funds, and any class thereof and all income, earnings, profits and proceeds thereof, are allocated to the Funds, and classes, respectively, subject only to the rights of creditors, and constitute the underlying assets of the Funds or classes. The underlying assets of the Funds are required to be segregated on the books of account, and are to be charged with the expenses in respect to the Funds and with a share of the general expenses of the Trust. Any general expenses of the Trust not readily identifiable as belonging to a particular class will be allocated by or under the direction of the Trustees as they determine fair and equitable.

Under Delaware law, shareholders of a Delaware statutory trust are entitled to the same limitation of personal liability extended to stockholders of Delaware corporations. As a result, to the extent that the Trust or a shareholder is subject to the jurisdiction of a court that does not apply Delaware law, there is a possibility that the shareholders of a statutory trust such as the Trust may be personally liable for debts or claims against the Trust. The Agreement and Declaration of Trust provides that shareholders shall not be subject to any personal liability for the acts or obligations of the Trust. The Agreement and Declaration of Trust provides for indemnification out of the Trust property for all losses and expenses of any shareholder held personally liable for the obligations of the Trust. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability, which is considered remote, is limited to circumstances in which a court refuses to apply Delaware law and the Trust itself would be unable to meet its obligations.

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP, serves as the independent registered public accounting firm for the Funds. PricewaterhouseCoopers LLP audits the Funds’ annual financial statements and expresses an opinion thereon.

Custodian and Transfer Agent

State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110 serves as custodian of the Funds’ assets.

PEPCO, One American Row, P.O. Box 5056, Hartford, CT 06102-5056, acts as Transfer Agent for the Trust (the “Transfer Agent”). Pursuant to a Transfer Agent and Service Agreement, PEPCO receives a fee, which is a combination of a base fee allocated among each Phoenix Fund class and a per account fee of between $6.45 and $17.30, depending on whether the account information is held directly by PEPCO or through an intermediary, plus out-of-pocket expenses. The Transfer Agent is authorized to engage

subagents to perform certain shareholder servicing functions from time to time for which such agents shall be paid a fee by the Transfer Agent. Fees paid by the Funds, in addition to the fee paid to PEPCO, will be reviewed and approved by the Board of Trustees.

Reports to Shareholders

The fiscal year of the Funds ends on March 31. The Trust will send financial statements to its shareholders at least semiannually. An annual report, containing financial statements audited by the Trust’s independent registered public accounting firm, PricewaterhouseCoopers LLP, will be sent to shareholders each year and is available without charge upon request.

Financial Statements

The financial statements for the Predecessor Fund with a former fiscal year end of April 30, 2007 are included in the Predecessor Fund’s 2007 Annual Report to Shareholders, and for the period May 1, 2007 through October 31, 2007, are included in the Predecessor Fund’s Semiannual Report to Shareholders, incorporated herein by reference.

The financial statements for the Mid-Cap Value Fund and Value Opportunities Fund with a former fiscal year end of June 30, 2007 are included in the Funds’ 2007 Annual Report to Shareholders, and for the period July 1, 2007 through December 31, 2007, are included in the Funds’ Semiannual Report to Shareholders, incorporated herein by reference.

The financial statements for the Predecessor Funds with a former fiscal year end of August 31, 2007 are included in the Predecessor Funds’ 2007 Annual Report to Shareholders, incorporated herein by reference.

The financial statements for the Predecessor Fund with a former fiscal year end of September 30, 2007 are included in the Predecessor Fund’s 2007 Annual Report to Shareholders, incorporated herein by reference.

The financial statements for the Predecessor Funds with a former fiscal year end of October 31, 2007 are included in the Predecessor Funds’ 2007 Annual Report to Shareholders, incorporated herein by reference.

The financial statements for the Predecessor Funds with a former fiscal year end of December 31, 2007 are included in the Predecessor Funds’ 2007 Annual Report to Shareholders, incorporated herein by reference.

PHOENIX EQUITY TRUST

PART C—OTHER INFORMATION

Item 23.

Exhibits


a.1.		Agreement and Declaration of Trust of the Registrant, dated August 17, 2000, filed via EDGAR with Post-Effective Amendment No. 69 (File No. 002-16590) on October 30, 2000 and incorporated herein by reference.

a.2.		Amendment to the Declaration of Trust of the Registrant, dated November 16, 2006, filed via EDGAR with Post-Effective Amendment No.85 (File No. 002-16590) on October 25, 2007 and incorporated herein by reference.

b.1.		Amended and Restated By-Laws of the Registrant dated November 16, 2005, filed via EDGAR with Post-Effective Amendment No. 84 (File No. 002-16590) on October 27, 2006 and incorporated herein by reference.

b.2.		Amendment No. 1 to the Amended and Restated By-Laws of the Registrant, dated August 23, 2006, filed via EDGAR with Post-Effective Amendment No. 84 (File No. 002-16590) on October 27, 2006 and incorporated herein by reference.

c.		Reference is made to Registrant’s Agreement and Declaration of Trust. See Exhibit a.

d.1.		Amended and Restated Investment Advisory Agreement between Registrant and Phoenix Investment Counsel, Inc. (“PIC”) effective November 20, 2002, filed via EDGAR with Post-Effective Amendment No. 74 (File No. 002-16590) on October 28, 2003, and incorporated herein by reference.

d.2.		First Amendment to the Amended and Restated Investment Advisory Agreement between Registrant and PIC, made as of October 21, 2004, filed via EDGAR with Post-Effective Amendment No. 79 (File No. 002-16590) on October 21, 2004 and incorporated herein by reference.

d.3.		Second Amendment to the Amended and Restated Investment Advisory Agreement between Registrant and PIC dated July 29, 2005, filed via EDGAR with Post-Effective Amendment No. 83 (File No. 002-16590) on October 25, 2005 and incorporated herein by reference.

d.4.		Subadvisory Agreement between PIC and Sasco Capital, Inc. (“Sasco”) dated October 21, 2004, on behalf of the Phoenix Mid-Cap Value Fund (“Mid-Cap Value Fund”), filed via EDGAR with Post-Effective Amendment No. 79 (File No. 002-16590) on October 21, 2004 and incorporated herein by reference.

d.5.		Subadvisory Agreement between PIC and Acadian, dated July 29, 2005, on behalf of the Phoenix Value Opportunities Fund filed via EDGAR with Post-Effective Amendment No. 83 (File No. 002-16590) on October 25, 2005 and incorporated herein by reference.

d.6.		First Amendment to Subadvisory Agreement between PIC and Sasco, dated September 1, 2006, filed via EDGAR with Post-Effective Amendment No. 84 (File No. 002-16590) on October 27, 2006 and incorporated herein by reference.

d.7.		Third Amendment to the Amended and Restated Investment Advisory Agreement between Registrant and PIC dated July 13, 2007, filed via EDGAR with Post-Effective Amendment No. 85 (File No. 002-16590) on October 25, 2007 and incorporated herein by reference.

d.8.		Fourth Amendment to Amended and Restated Investment Advisory Agreement between Registrant and PIC dated March 10, 2008, to be filed by amendment.

d.9.		Subadvisory Agreement between PIC and Engemann Asset Management, Inc. (“Engemann”) dated March 10, 2008, to be filed by amendment.

C-1


d.10.		Subadvisory Agreement between PIC and Euclid Advisors LLC (“Euclid”) dated March 10, 2008, to be filed by amendment.

d.11.		Subadvisory Agreement between PIC and Goodwin Capital Advisers, Inc. (“Goodwin”) dated March 10, 2008, to be filed by amendment.

d.12.		Subadvisory Agreement between PIC and Harris Investment Management, Inc. (“Harris”) dated March 10, 2008, to be filed by amendment.

d.13.		Subadvisory Agreement between PIC and Kayne Anderson Rudnick Investment Management, LLC (“Kayne”) dated March 10, 2008, to be filed by amendment.

d.14.		Subadvisory Agreement between PIC and SCM Advisors, LLC (“SCM Advisors”) dated March 10, 2008, to be filed by amendment.

d.15.		Subadvisory Agreement between PIC and Turner Investment Partners, Inc. (“Turner”) dated March 10, 2008, to be filed by amendment.

e.1.		Underwriting Agreement between Registrant and Phoenix Equity Planning Corporation (“PEPCO”), made as of November 19, 1997, filed as Exhibit 6.1 via EDGAR with Post-Effective Amendment No. 64 (File No. 002-16590) on October 6, 1998 and incorporated herein by reference.

e.2.*		Form of Sales Agreement between PEPCO and dealers, (February 2008), filed via EDGAR herewith.

f.		None.

g.1.		Master Custodian Contract between Registrant and State Street Bank and Trust Company (“State Street”) dated May 1, 1997, filed via EDGAR with Post-Effective Amendment No. 79 (File No. 002-16590) on October 21, 2004 and incorporated herein by reference.

g.2.		Amendment dated February 10, 2000 to Master Custodian Contract dated May 1, 1997 between Registrant and State Street filed via EDGAR with Post-Effective Amendment No. 79 (File No. 002-16590) on October 21, 2004 and incorporated herein by reference.

g.3.		Amendment dated July 2, 2001 to Master Custodian Contract dated May 1, 1997 between Registrant and State Street filed via EDGAR with Post-Effective Amendment No. 79 (File No. 002-16590) on October 21, 2004 and incorporated herein by reference.

g.4.		Amendment dated May 10, 2002 to Master Custodian Contract dated May 1, 1997 between Registrant and State Street filed via EDGAR with Post-Effective Amendment No. 79 (File No. 002-16590) on October 21, 2004 and incorporated herein by reference.

h.1.		Amended and Restated Transfer Agency and Service Agreement between Phoenix Funds and PEPCO, dated July 1, 2006, filed via EDGAR with Post-Effective Amendment No. 85 (File No. 002-16590) on October 25, 2007 and incorporated herein by reference.

h.2.		Sub-Transfer Agency and Service Agreement between PEPCO and Boston Financial Data Services, Inc. (“BFDS”), dated as of January 1, 2005 filed via EDGAR with Post-Effective Amendment No. 83 (File No. 002-16590) on October 25, 2005 and incorporated herein by reference.

h.3.		Amendment to Sub-Transfer Agency and Service Agreement between PEPCO and BFDS, dated as of July 1, 2006, filed via EDGAR with Post-Effective Amendment No. 85 (File No. 002-16590) on October 25, 2007 and incorporated herein by reference.

h.4.		Administration Agreement between Registrant and PEPCO dated July 1, 2006, filed via EDGAR with Post-Effective Amendment No. 85 (File No. 002-16590) on October 25, 2007 and incorporated herein by reference.

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h.5.		Amendment to Schedule A of Administration Agreement between Registrant and PEPCO effective June 27, 2007, filed via EDGAR with Post-Effective Amendment No. 85 (File No. 002-16590) on October 25, 2007 and incorporated herein by reference.

h.6.		Second Amendment to Schedule A of Administration Agreement between Registrant and PEPCO effective September 24, 2007, filed via EDGAR with Post-Effective Amendment No. 85 (File No. 002-16590) on October 25, 2007 and incorporated herein by reference.

h.7		Third Amended and Restated Expense Limitation Agreement between Registrant and PIC effective as of August 23, 2007, filed via EDGAR with Post-Effective Amendment No. 85 (File No. 002-16590) on October 25, 2007 and incorporated herein by reference.

h.8.		Fourth Amended and Restated Expense Limitation Agreement between Registrant and PIC effective as of March 10, 2008, to be filed by amendment.

h.9.*		Third Amendment to Schedule A of Administration Agreement between Registrant and PEPCO effective October 1, 2007, filed via EDGAR herewith.

h.10.*		Fourth Amendment to Schedule A of Administration Agreement between Registrant and PEPCO effective January 31, 2008, filed via EDGAR herewith.

h.11.		Fifth Amendment to Schedule A of Administration Agreement between Registrant and PEPCO effective March 10, 2008, to be filed by amendment.

h.12.*		First Amendment to Administration Agreement between Registrant and PEPCO effective November 15, 2007, filed via EDGAR herewith.

i.*		Opinion as to legality of the shares filed via EDGAR herewith.

j.*		Consent of Independent Registered Public Accounting Firm filed via EDGAR herewith.

k.		Not applicable.

l.		None.

m.1.		Class A Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the Investment Company Act of 1940 effective March 1, 2007, filed via EDGAR with Post-Effective Amendment No. 85 (File No. 002-16590) on October 25, 2007 and incorporated herein by reference.

m.2.		Class C Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the Investment Company Act of 1940 effective March 1, 2007, filed via EDGAR with Post-Effective Amendment No. 85 (File No. 002-16590) on October 25, 2007 and incorporated herein by reference.

m.3.*		Class B Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the Investment Company Act of 1940 effective March 1, 2007, filed via EDGAR herewith.

m.4.*		Amendment No. 1 to Class A Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the Investment Company Act of 1940 effective March 10, 2008, filed via EDGAR herewith.

m.5.*		Amendment No. 1 to Class B Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the Investment Company Act of 1940 effective March 10, 2008, filed via EDGAR herewith.

m.6.*		Amendment No. 1 to Class C Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the Investment Company Act of 1940 effective March 10, 2008, filed via EDGAR herewith.

n.		2007 Amended and Restated Plan Pursuant to Rule 18f-3 under the Investment Company Act of 1940, effective as of July 13, 2007, filed via EDGAR with Post-Effective Amendment No. 85 (File No. 002-16590) on October 25, 2007 and incorporated herein by reference.

C-3


o.		Reserved.

p.1.		Amended and Restated Code of Ethics of the Phoenix Funds and the Distributor (PEPCO), dated February 2007, filed via EDGAR with Post-Effective Amendment No. 85 (File No. 002-16590) on October 25, 2007 and incorporated herein by reference.

p.2.		Amended and Restated Code of Ethics of the Adviser (PIC) dated February 2007, filed via EDGAR with Post-Effective Amendment No. 85 (File No. 002-16590) on October 25, 2007 and incorporated herein by reference.

p.3.		Code of Ethics of Subadviser (Acadian) dated April 2006, filed via EDGAR with Post-Effective Amendment No. 84 (File No 002-16590) on October 27, 2006 and incorporated herein by reference.

p.4.		Amended and Restated 2004 Code of Ethics of Subadviser (Sasco) filed via EDGAR with Post-Effective Amendment No. 83 (File No. 002-16590) on October 25, 2005 and incorporated herein by reference.

p.5.		Code of Ethics of Subadviser (Engemann) dated January 31, 2005, filed via EDGAR with Post-Effective Amendment No. 86 (File No. 002-16590) on December 19, 2007 and incorporated by reference.

p.6.		Code of Ethics of Subadviser (Euclid), dated June 2005, filed via EDGAR with Post-Effective Amendment No. 86 (File No. 002-16590) on December 19, 2007 and incorporated by reference.

p.7.		Code of Ethics of Subadviser (Goodwin), dated January 2007, filed via EDGAR with Post-Effective Amendment No. 86 (File No. 002-16590) on December 19, 2007 and incorporated by reference.

p.8.		Standards of Business Conduct and Code of Ethics of Subadviser (Harris) as amended January 3, 2007 filed via EDGAR with Post-Effective Amendment No. 86 (File No. 002-16590) on December 19, 2007 and incorporated by reference.

p.9.		Code of Ethics of Subadviser (Kayne) dated January 1, 2006, filed via EDGAR with Post-Effective Amendment No. 86 (File No. 002-16590) on December 19, 2007 and incorporated by reference.

p.10.		Amended and Restated Code of Ethics of Subadviser (SCM Advisors) dated June 1, 2007, filed via EDGAR with Post-Effective Amendment No. 86 (File No. 002-16590) on December 19, 2007 and incorporated by reference.

p.11.		Code of Ethics of Subadviser (Turner) dated February 1, 2005, filed via EDGAR with Post-Effective Amendment No. 86 (File No. 002-16590) on December 19, 2007 and incorporated by reference.

q. *		Power of Attorney for all Trustees, dated February 28, 2008, filed via EDGAR herewith.

*	Filed herewith

Item 24.

Persons Controlled By or Under Common Control with the Fund

None.

Item 25.

Indemnification

The Agreement and Declaration of Trust dated August 17, 2000 and the By-Laws of the Registrant provide that no trustee or officer will be indemnified against any liability to which the Registrant would otherwise be subject by reason of or for willful misfeasance, bad faith, gross negligence or reckless disregard of such person’s duties. The

C-4

Investment Advisory Agreement, Subadvisory Agreements, Underwriting Agreement, Master Custodian Contract and Transfer Agency Agreement, as amended, each provides that the Trust will indemnify the other party (or parties, as the case may be) to the agreement for certain losses.

Insofar as indemnification for liability arising under the Securities Act of 1933, as amended (the “Act”), may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person 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 26.

Business and Other Connections of Investment Adviser and Subadvisers

See “Management of the Fund” in the Prospectus and “Services of the Adviser and Subadvisers” and “Management of the Fund” in the Statement of Additional Information which is included in this Post-Effective Amendment.

For information as to the business, profession, vocation or employment of a substantial nature of directors and officers of the Adviser and Subadvisers, reference is made to the Adviser’s and Subadvisers’ current Form ADV (SEC File No. 801-5995 for PIC; SEC File No. 801-28078 for Acadian; SEC File No. 801-11586 for Engemann; SEC File No. 801-54263 for Euclid; SEC File No. 801-8177 for Goodwin; SEC File No. 801-35533 for Harris; SEC File No. 801-24241 for Kayne; SEC File No. 801-25958 for Sasco; SEC File No. 801-51559 for SCM Advisors; SEC File No. 801-36220 for Turner) filed under the Investment Advisers Act of 1940 and incorporated herein by reference.

Item 27.

Principal Underwriter

(a) PEPCO serves as the principal underwriter for the following registrants:

Phoenix Equity Trust, Phoenix Insight Funds Trust, Phoenix Institutional Mutual Funds, Phoenix Opportunities Trust, Phoenix Life Variable Universal Life Account, Phoenix Life Variable Accumulation Account, PHL Variable Accumulation Account, Phoenix Life & Annuity Variable Universal Life Account, PHLVIC Variable Universal Life Account, PHL Variable Separate Account MVA1 and The Phoenix Edge Series Fund.

(b) Directors and Executive Officers of PEPCO are as follows:


Name and Principal Address	Positions and Offices with Distributor	Positions and Offices with Registrant
George R. Aylward 56 Prospect Street P.O. Box 150480 Hartford, CT 06115-0480	Director and Executive Vice President	President

John H. Beers One American Row P.O. Box 5056 Hartford, CT 06102-5056	Vice President and Secretary	Assistant Secretary




Kevin J. Carr One American Row P.O. Box 5056 Hartford, CT 06102-5056	Vice President and Assistant Secretary	Vice President, Counsel, Chief Legal Officer and Secretary

C-5


John R. Flores One American Row P.O. Box 5056 Hartford, CT 06102-5056	Vice President and Anti-Money Laundering Officer	Anti-Money Laundering Officer and Assistant Secretary

Stephen D. Gresham 56 Prospect Street P.O. Box 150480 Hartford, CT 06115-0480	Director and Senior Vice President	None




David Hanley 56 Prospect Street P.O. Box 150480 Hartford, CT 06102-5056	Vice President and Treasurer	None




David C. Martin One American Row P.O. Box 5056 Hartford, CT 06102-5056	Vice President and Chief Compliance Officer	None

Philip K Polkingham One American Row P.O. Box 5056 Hartford, CT 06102-5056	Director and Executive Vice President	None

Jacqueline M. Porter 56 Prospect Street P.O. Box 150480 Hartford, CT 06115-0480	Assistant Vice President	Vice President and Assistant Treasurer

Chester J. Sokolosky One American Row P.O. Box 5056 Hartford, CT 06102-5056	Vice President and Financial and Operations Principal	None

(c) To the best of the Registrant’s knowledge, no commissions or other compensation was received by any principal underwriter who is not an affiliated person of the Registrant or an affiliated person of such affiliated person, directly or indirectly, from the Registrant during the Registrant’s last fiscal year.

Item 28.

Location of Accounts and Records

Persons maintaining physical possession of accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder include:


Secretary of the Fund:		Principal Underwriter, Administrator and Transfer Agent:
Kevin J. Carr, Esq.		Phoenix Equity Planning Corporation
One American Row		One American Row
P.O. Box 5056		P.O. Box 5056
Hartford, CT 06102-5056		Hartford, CT 06102-5056

Investment Adviser:		Custodian and Dividend Dispersing Agent:
Phoenix Investment Counsel, Inc.		(All Funds, except Growth Opportunities Fund)
56 Prospect Street		State Street Bank and Trust Company
P.O. Box 150480		225 Franklin Street
Hartford, CT 06115-0480		Boston, MA 02110

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Subadviser to Value Opportunities Fund:		Custodian:
Acadian Asset Management LLC		(Growth Opportunities Fund)
One Post Office Square, 20 ^th Floor		PFPC Trust Company
Boston, MA 02109		Wilmington, DE 19809
		8800 Tinicum Boulevard
		Philadelphia, PA 19153-3111

Subadviser to All-Cap Growth and Small-Cap Growth Funds:		SubAdministrator and Fund Accountant:
Engemann Asset Management, Inc.		PFPC Inc.
600 North Rosemead Boulevard		301 Bellevue Parkway
Pasadena, CA 91107-2101		Wilmington, DE 19809

Subadviser to Balanced and Income & Growth Funds:
Goodwin Capital Advisers, Inc.
56 Prospect Street
Hartford, CT 06115
Subadviser to Small-Cap Value Fund:
Euclid Advisors LLC
900 Third Avenue
New York, NY 10022

Subadviser to Capital Growth and Mid-Cap Growth Funds:
Harris Investment Management, Inc.
190 South LaSalle Street, 4 ^th Floor
Chicago, IL 60603

Subadviser to Quality Small-Cap, Small-Cap Sustainable Growth and Small-Mid Cap Funds:
Kayne Anderson Rudnick Investment Management, LLC
1800 Avenue of the Stars, 2 ^nd Floor
Los Angeles, CA 90067

Subadviser to Mid-Cap Value Fund:
Sasco Capital, Inc.
10 Sasco Hill Road
Fairfield, CT 06824

Subadviser to Strategic Growth Fund:
SCM Advisors LLC
909 Montgomery Street, Fifth Floor
San Francisco, CA 94133

Subadviser to Growth Opportunities Fund:
Turner Investment Partners, Inc.
1205 Westlakes Drive, Suite 100
Berwyn, PA 19312-2414

Item 29.

Management Services

Not applicable.

Item 30.

Undertakings

Not applicable.

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Item		Exhibit
23.e.2.		Form of Sales Agreement between PEPCO and dealers, (February 2008).

23.h.9.		Third Amendment to Schedule A of Administration Agreement between Registrant and PEPCO effective October 1, 2007.

23.h.10.		Fourth Amendment to Schedule A of Administration Agreement between Registrant and PEPCO effective January 31, 2008.

23.h.12.		First Amendment to Administration Agreement between Registrant and PEPCO effective November 15, 2007.

23.i.		Opinion as to legality of the shares.

23.j.		Consent of Independent Registered Public Accounting Firm.

23.m.3.		Class B Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the Investment Company Act of 1940 effective March 1, 2007.

23.m.4		Amendment No. 1 to Class A Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the Investment Company Act of 1940 effective March 10, 2008.

23.m.5		Amendment No. 1 to Class B Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the Investment Company Act of 1940 effective March 10, 2008.

23.m.6.		Amendment No. 1 to Class C Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the Investment Company Act of 1940 effective March 10, 2008.

23.q.		Power of Attorney for all Trustees, dated February 28, 2008.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant certifies that it meets all of the requirements for the effectiveness of this registration statement under Rule 485(b) of the Securities Act and has duly caused this amendment to the registration statement to be signed on its behalf by the undersigned, duly authorized, in the City of Hartford, and State of Connecticut on the 10th day of March, 2008.


		PHOENIX EQUITY TRUST

	/s/ Kevin J. Carr
ATTEST:	Kevin J. Carr	By:	/s/ George R. Aylward
	Secretary		George R. Aylward
			President

Pursuant to the requirements of the Securities Act, this amendment to the registration statement has been signed below by the following persons in the capacities indicated, on this 10th day of March, 2008.


Signatures				Title

/s/ George R. Aylward				Trustee and President (principal executive
George R. Aylward				officer)

/s/ W. Patrick Bradley				Chief Financial Officer and Treasurer (principal financial and accounting officer)
W. Patrick Bradley


E. Virgil Conway*				Trustee


Harry Dalzell-Payne*				Trustee


Francis E. Jeffries*				Trustee


Leroy Keith, Jr.*				Trustee


Philip R. McLoughlin*				Trustee and Chairman


Geraldine M. McNamara*				Trustee


James M. Oates*				Trustee


Richard E. Segerson*				Trustee


Ferdinand L.J. Verdonck*				Trustee


By		/s/ George R. Aylward

*	George R. Aylward, Attorney-in-fact pursuant to a power of attorney.

C-9

LOGO

PHOENIX EQUITY PLANNING CORPORATION

56 Prospect St.

P.O. Box 150480

Hartford, CT 06115-0480

PHOENIX FUNDS

SALES AGREEMENT

To:	Dealer Name

Attention:

Address

City, State, Zip Code

Phoenix Equity Planning Corporation (“PEPCO”, “we”, “us”, or “our”) invites you to participate in the sale and distribution of shares of registered investment companies (which shall collectively be referred to hereinafter as the “Funds”) for which we are national distributor or principal underwriter, and which may be listed in Annex A hereto which such Annex may be amended by us from time to time. Upon acceptance of this agreement by PEPCO, you may offer and sell shares of each of the Funds (hereafter “Shares”) subject, however, to the terms and conditions hereof including our right to suspend or cease the sale of such shares. For the purposes hereof, the above referenced dealer shall be referred to as “you”.

You understand and agree that in all sales of Shares to the public, you shall act as dealer for your own account. All purchase orders and applications are subject to acceptance or rejection by us in our sole discretion and are effective only upon confirmation by us. Each purchase will be deemed to have been consummated in our principal office subject to our acceptance and effective only upon confirmation to you by us.

2.	You agree that all purchases of Shares by you shall be made only for the purpose of covering purchase orders already received from your customers (who may be any person other than a securities dealer or broker) or for your own bona-fide investment.

You shall offer and sell Shares purchased pursuant to this agreement for the purpose of covering purchase orders of your customers, to the extent applicable, (a) at the current public offering price (“Offering Price”) for Class A Shares or (b) at the Net Asset Value for Class B and Class C shares as set forth in the current prospectus of each of the funds. The offer and sale of Class B Shares by you is subject to Annex B hereto, “Compliance Standards for the Sale of the Phoenix Funds Under Their Alternative Purchase Arrangements”.

You shall pay us for Shares purchased within three (3) business days of the date of our confirmation to you of such purchase or within such time as required by applicable rule or law. The purchase price shall be (a) the Offering Price, less only the applicable dealer discount (Dealer Discount) for Class A Shares, if applicable, or (b) the Net Asset Value, less only the applicable sales commission (Sales Commission) for Class B or Class C Shares, if applicable, as set forth in the current prospectus at the time the purchase is received by us. We have the right, without notice, to cancel any order for which payment of good and sufficient funds has not been received by us as provided in this paragraph, in which case you may be held responsible for any loss suffered by us resulting from your failure to make payment as aforesaid.

You understand and agree that any Dealer Discount, Sales Commission or fee is subject to change from time to time without prior notice. Any orders placed after the effective date of any such change shall be subject to the Dealer Discount or Sales Commission in effect at the time such order is received by us.

6.	You understand and agree that Shares purchased by you under this Agreement will not be delivered until payment of good and sufficient funds has been received by us. Delivery of Shares will be made by credit

to a shareholder open account unless delivery of certificates is specified in the purchase order. In order to avoid unnecessary delay, it is understood that, at your request, any Shares resold by you to one of your customers will be delivered (whether by credit to a shareholder open account or by delivery of certificates) in the name of your customer.

You understand that on all purchases of Shares to which the terms of this Agreement are applicable by a shareholder for whom you are dealer of record, we will pay you an amount equal to the Dealer Discount, Sales Commission or fees which would have been paid to you with respect to such Shares if such Shares had been purchased through you. You understand and agree that the dealer of record for this purpose shall be the dealer through whom such shareholder most recently purchased Shares of such fund, unless the shareholder or you have instructed us otherwise. You understand that all amounts payable to you under this paragraph and currently payable under this agreement will be paid as of the end of the month unless specified otherwise for the total amount of Shares to which this paragraph is applicable but may be paid more frequently as we may determine in our discretion. Your request for Dealer Discount or Sales Commission reclaims will be considered if adequate verification and documentation of the purchase in question is supplied to us, and the reclaim is requested within three years of such purchase.

We appoint the transfer agent (or identified sub-transfer agent) for each of the Funds as our agent to execute the purchase transaction of Shares and to confirm such purchases to your customers on your behalf, and you guarantee the legal capacity of your customers so purchasing such Shares. You further understand that if a customer’s account is established without the customer signing the application form, you hereby represent that the instructions relating to the registration and shareholder options selected (whether on the application form, in some other document or orally) are in accordance with the customer’s instructions and you agree to indemnify the Funds, the transfer agent (or identified sub-transfer agent) and us for any loss or liability resulting from acting upon such instructions.

9.	Upon the purchase of Class A Shares pursuant to a Letter of Intent, you will promptly return to us any excess of the Dealer Discount previously allowed or paid to you over that allowable in respect to such larger purchases.

10.

Unless at the time of transmitting a purchase order you advise us to the contrary, we may consider that the investor owns no other Shares and may further assume that the investor is not entitled to any lower sales charge than that accorded to a single transaction in the amount of the purchase order, as set forth in the current prospectus.

11.

You understand and agree that if any Shares purchased by you under the terms of this Agreement are, within seven (7) business days after the date of our confirmation to you of the original purchase order for such Shares, repurchased by us as agent for such fund or are tendered to such fund for redemption, you shall forfeit the right to, and shall promptly pay over to us the amount of, any Dealer Discount or Sales Commission allowed to you with respect to such Shares. We will notify you of such repurchase or redemption within ten (10) days of the date upon which certificates are delivered to us or to such fund or the date upon which the holder of Shares held in a shareholder open account places or causes to be placed with us or with such fund an order to have such shares repurchased or redeemed.

12.

You agree that, in the case of any repurchase of any Shares made more than seven (7) business days after confirmation by us of any purchase of such Shares, except in the case of Shares purchased from you by us for your own bona fide investment, you will act only as agent for the holders of such Shares and will place the orders for repurchase only with us. It is understood that you may charge the holder of such Shares a fair commission for handling the transaction.

13.

Our obligations to you under this Agreement are subject to all the provisions of the respective distribution agreements entered into between us and each of the Funds. You understand and agree that in performing your services under this agreement you are acting in the capacity of an independent contractor, and we are in no way responsible for the manner of your performance or for any of your acts or omissions in connection therewith. Nothing in the Agreement shall be construed to constitute you or any of your agents, employees, or representatives as our agent, partner or employee, or the agent, partner of employee of any of the Funds.

In connection with the sale and distribution of shares of Phoenix Funds, you agree to indemnify and hold us and our affiliates, employees, and/or officers harmless from any damage or expense as a result of (a) the negligence, misconduct or wrongful act by you or any employee, representative, or agent of yours and/or (b) any actual or alleged violation of any securities laws, regulations or orders. Any indebtedness or obligation of yours to us whether arising hereunder or otherwise, and any liabilities incurred or moneys paid by us to any person as a result of any misrepresentation, wrongful or unauthorized act or omission, negligence of, or failure of you or your employees, representatives or agents to comply with the Sales Agreement, shall be set off against any compensation payable under this agreement. Any differential between such expenses and compensation payable hereunder shall be payable to us upon demand. The terms of this provision shall not be impaired by the termination of this agreement.

In connection with the sale and distribution of shares of Phoenix Funds, we agree to indemnify and hold you harmless from any damage or expense on account of the gross and willful negligence, misconduct or wrongful act of us or any employee, representative, or agent of ours which arises out of or is based upon any untrue statement or alleged untrue statement of material fact, or the omission or alleged omission of a material fact in: (i) any registration statement, including any prospectus or any post-effective amendment thereto; or (ii) any material prepared and/or supplied by us for use in conjunction with the offer or sale of Phoenix Funds; or (iii) any state registration or other document filed in any state or jurisdiction in order to qualify any Fund under the securities laws of such state or jurisdiction. The terms of this provision shall not be impaired by the termination of this agreement.

14.

We will supply you with reasonable quantities of the current prospectus, periodic reports to shareholders, and sales materials for each of the Funds. You agree not to use any other advertising or sales material relating to the sale of shares of any of the Funds unless other advertising or sales material is pre-approved in writing by us.

15.

You agree to offer and sell Shares only in accordance with the terms and conditions of the then current prospectus of each of the Funds and subject to the provisions of this Agreement, and you will make no representations not contained in any such prospectus or any authorized supplemental sales material supplied by us. You agree to use your best efforts in the development and promotion of sales of the Shares covered by this Agreement, and agree to be responsible for the proper instruction, training and supervision of all sales representatives employed by you in order that such Shares will be offered in accordance with the terms and conditions of this Agreement and all applicable laws, rules and regulations. All expenses incurred by you in connection with your activities under this Agreement shall be borne by you. In consideration for the extension of the right to exercise telephone exchange and redemption privileges to you and your registered representatives, you agree to bear the risk of any loss resulting from any unauthorized telephone exchange or redemption instructions from you or your registered representatives. In the event we determine to refund any amounts paid by any investor by reason of such violation on your part, you shall forfeit the right to, and pay over to us, the amount of any Dealer Discount or Sales Commission allowed to you with respect to the transaction for which the refund is made.

16.

You represent that you are properly registered as a broker or dealer under the Securities and Exchange Act of 1934 and are member of the National Association of Securities Dealers, Inc. (NASD) and agree to maintain membership in the NASD or in the alternative, that you are a foreign dealer not eligible for membership in the NASD. You agree to notify us promptly of any change, termination or suspension of the foregoing status. You agree to abide by all the rules and regulations of the NASD, including NASD Conduct Rule 2830, which is incorporated herein by reference as if set forth in full. You further agree to comply with all applicable state and Federal laws and the rules and regulations of applicable regulatory agencies. You further agree that you will not sell, or offer for sale, Shares in any jurisdiction in which such Shares have not been duly registered or qualified for sale. You agree to promptly notify us with respect to (a) the initiation and disposition of any formal disciplinary action by the NASD or any other agency or instrumentality having jurisdiction with respect to the subject matter hereof against you or any of your employees or agents; (b) the issuance of any form of deficiency notice by the NASD or any such agency regarding your training, supervision or sales practices; and (c) the effectuation of any consensual order with respect thereto.

16.1

Patriot Act. You shall employ policies and procedures designed to comply with the rules and regulations promulgated from time to time by the Office of Foreign Asset Control (including

transactions involving embargoed countries or Specifically Designated Nationals and Blocked Persons) and all other applicable money laundering restrictions, including, without limitation, such restrictions as may be adopted pursuant to the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act) of 2001 with respect to similarly situated financial institutions as PEPCO. You agree that you will perform the Customer Identification Program requirements of the USA Patriot Act, as applicable, with respect to Accounts established and transactions made pursuant to this Agreement.

16.2

Sarbanes-Oxley Act. You agree to cooperate with PEPCO and will facilitate the filing by PEPCO, each underlying registered investment companies (collectively, the “Funds”) and/or their respective officers and auditors of any and all certifications or attestations as required by the Sarbanes-Oxley Act of 2002, including, without limitation, furnishing such sub-certifications from your relevant officers with respect to the services performed by you under this Agreement as reasonably requested from time to time.

16.3

Rule 38a-1. Upon reasonable request, you agree to provide your written policies and procedures to the Funds’ chief compliance officer for review and the Funds’ board of trustees’ approval to assist our compliance with Rule 38a-1 under the Investment Company Act of 1940, as amended. You further agree to cooperate with PEPCO in its review of such written policies and procedures, including, without limitation, furnishing such certifications and sub-certifications as PEPCO shall reasonably request from time to time. You agree that you shall promptly notify PEPCO and Funds in the event that a “material compliance matter” (as such term is defined pursuant to Rule 38a-1 under the 1940 Act) arises with respect the services you provide under this Agreement.

16.4

Late Trading. You will accept no orders for the purchase and redemption of Fund shares after 4:00 p.m. Eastern time on any Business Day. For the purposes hereof, a “Business Day” shall mean any day on which the New York Stock Exchange is open for trading and on which a Fund calculates its net asset value pursuant to the rules of the Securities and Exchange Commission (hereinafter, the “SEC”), as amended from time to time, subject to such terms and conditions as may be set forth in the registration statements for the Funds as filed with the SEC, as the same shall be amended from time to time.

16.5

Market Timing. PEPCO may refuse to sell shares of any Fund (or series thereof) to any person, or suspend or terminate the offering of shares of any Fund (or series thereof), if such action is required by law or by regulatory authorities having jurisdiction with respect to PEPCO or Fund, as the case may be, or is, in the reasonable discretion of PEPCO, reasonably necessary in order to protect the best interests of its investors. You shall establish and maintain policies and procedures reasonably designed to detect, monitor and deter (including, without limitation, rejecting specific purchase orders) account owners (or their agents) whose purchase and redemption activity follows a market timing pattern, and to take such other actions as you deem necessary to discourage or reduce market timing activity. For the purposes hereof, “market timing activity” shall mean and refer to any discernable pattern of excessive trading in and out of a Fund (or series thereof) by one or more account owners (or their agents), including, without limitation, any purchase and sale (round trip) in and out of a single series of a Fund within any thirty day period. The parties acknowledge that, if necessary, such policies and procedures may include the identification of account owners engaged in such market timing activity and the imposition of restrictions on their requests to purchase or exchange Fund shares. You shall provide reasonable reports regarding your implementation and enforcement of such restrictions on purchase and redemption activity that follows a market-timing pattern upon request.

17.

Shareholder Information and SEC Rule 22c-2. If trading as an Intermediary (a broker, dealer, bank or other entity that holds securities of record issued by the Funds in nominee name; and in the case of a participant-directed employee benefit plan that owns securities issued by the Funds; a retirement plan administrator under ERISA or any entity that maintains the plan’s participant records) you hereby agree as follows:

17.1

Agreement to Provide Information. Intermediary agrees to provide the Funds, upon written request, the taxpayer information number (“TIN”), if known, of any or all Shareholder(s) of the

account and the amount, date, name or other identifier of any investment professional(s) associated with the Shareholder(s) or account (if known), and transaction type (purchase, redemption, transfer, or exchange) of every purchase, redemption, transfer, or exchange of Fund shares held through an account maintained by the Intermediary during the period covered by the request.

17.1.1

Period Covered by Request. Requests must set forth a specific period, not to exceed _180_ days from the date of the request, for which transaction information is sought. The Fund may request transaction information older than _180_ days from the date of the request as it deems necessary to investigate compliance with policies established by the Fund for the purposes of eliminating or reducing any dilution of the value of the outstanding shares issued by the Fund. If requested by the Fund, Intermediary agrees to provide the information specified in 1.1 for each trading day.

17.1.2

Form and Timing of Response. Intermediary agrees to transmit the requested information that is on its books and records to the Funds or its designee promptly, but in any event not later than 10 business days, after receipt of a request. If the requested information is not on the Intermediary’s books and records, Intermediary agrees to use reasonable efforts to: (i) promptly obtain and transmit the requested information; (ii) obtain assurances from the accountholder that the requested information will be provided directly to the Fund Agent promptly; or (iii) if directed by the Fund Agent, block further purchases of Fund shares from such accountholder. In such instance, Intermediary agrees to inform the Fund Agent whether it plans to perform (i), (ii) or (iii). Responses required by this paragraph must be communicated in writing and in format mutually agreed upon by the parties. To the extent practicable, the format for any transaction information provided to the Fund Agent should be consistent with the NSCC Standardized Data Reporting Format.

17.1.3

Limitations on Use of Information. The Fund Agent agrees not to use the information received for marketing or any other similar purpose without the prior written consent of the Intermediary.

17.2.

Agreement to Restrict Trading. Intermediary agrees to execute written instructions from the Fund Agent to restrict or prohibit further purchases or exchanges of Fund shares by a Shareholder that has been identified by the Fund Agent as having engaged in transactions of the Funds’ shares (directly or indirectly through the Intermediary’s account) that violate policies established by the Funds for the purposes of eliminating or reducing any dilution of the value of the outstanding shares issued by the Funds.

17.2.1

Form of Instructions. Instructions must include the TIN, if known, and the specific restriction(s) to be executed. If the TIN is not known, the instructions must include any equivalent identifying number of the Shareholder(s) or account(s) or other agreed upon information to which the instruction relates.

17.2.2

Timing of Response. Intermediary agrees to execute instructions as soon as reasonably practicable, but not later than five business days after receipt of the instructions by the Intermediary.

17.2.3

Confirmation by Intermediary. Intermediary must provide written confirmation to the Fund Agent that instructions have been executed. Intermediary agrees to provide confirmation as soon as reasonably practicable, but not later than ten business days after the instructions have been executed.

17.3

Definitions. For purposes of this paragraph:

17.3.1

The term “Funds” includes the fund’s principal underwriter and transfer agent. The term not does include any “excepted funds” as defined in SEC Rule 22c-2(b) under the Investment Company Act of 1940.

17.3.2

The term “Shares” means the interests of Shareholders corresponding to the redeemable securities of record issued by the Fund under the Investment Company Act of 1940 that are held by the Intermediary.

17.3.3

The term “Shareholder” means the beneficial owner of Shares, whether the Shares are held directly or by the Intermediary in nominee name or, if applicable, the Plan participant notwithstanding that the Plan may be deemed to be the beneficial owner of Shares.

18.

Either party may terminate this agreement for any reason by written or electronic notice to the other party which termination shall become effective fifteen (15) days after the date of mailing or electronically transmitting such notice to the other party. We may also terminate this agreement for cause or as a result of a violation by you, as determined by us in our discretion, of any of the provisions of this Agreement, said termination to be effective on the date of mailing written or electronic notice to you of the same. Without limiting the generality of the foregoing, your own expulsion from the NASD will automatically terminate this Agreement without notice. Your suspension from the NASD or violation of applicable state or Federal laws or rules and regulations of applicable regulatory agencies will terminate this Agreement effective upon the date of our mailing written notice or transmitting electronic notice to you of such termination. Our failure to terminate this Agreement for any cause shall not constitute a waiver of our right to so terminate at a later date.

19.	All communications and notices to you or us shall be sent to the addresses set forth at the beginning of this Agreement or to such other address as may be specified in writing from time to time.

20.

PEPCO agrees to comply with all laws, rules, regulations, and ordinances relating to privacy, confidentiality, security, data security, and the handling of customer information which may from time to time be established. PEPCO agrees not to disclose or use any consumer nonpublic personal information (including nonpublic personal financial information and nonpublic personal health information), which may be supplied by you to PEPCO in performance under this Agreement other than to: a) carry out the purpose for which the information was provided; and b) to use or disclose the information as otherwise permitted or required by law. You agree to comply with all laws, rules, regulations, and ordinances relating to privacy, confidentiality, security, data security, and the handling of customer information which may from time to time be established. You agree not to disclose or use any consumer nonpublic personal information (including nonpublic personal financial information and nonpublic personal health information), which may be supplied by PEPCO to you in performance under this Agreement other than to: a) carry out the purpose for which the information was provided; and b) to use or disclose the information as otherwise permitted or required by law. This provision will survive and continue in full force and effect after the termination of this Agreement.

21.

This agreement shall become effective upon the date of its acceptance by us as set forth herein. This agreement may be amended by PEPCO from time to time. This Agreement and all rights and obligations of the parties hereunder shall be governed by and construed under the laws of the State of Connecticut. This agreement is not assignable or transferable, except that we may assign or transfer this agreement to any successor distributor of the Shares described herein.


ACCEPTED ON BEHALF OF PHOENIX EQUITY PLANNING CORPORATION:		ACCEPTED ON BEHALF OF

		Name of Dealer Firm

Date		Date

By		By

Name	Stephen D. Gresham	Print Name

Title	Senior Vice President	Print Title

		NASD CRD Number

PEP80(8/07)

LOGO

Amended Annex A – February 2008

PhoenixFunds Sales Agreement

Phoenix Equity Planning Corporation

PhoenixFunds and Available Share Classes


EQUITY		INTERNATIONAL/GLOBAL
Phoenix All-Cap Growth Fund	A B C	Phoenix Foreign Opportunities Fund	A C I
Phoenix Capital Growth Fund	A B C	Phoenix Insight Emerging Market Fund	A C I
Phoenix Focused Value Fund	A C	Phoenix International Strategies Fund	A B C
Phoenix Growth & Income Fund	A B C I	Phoenix Worldwide Strategies Fund	A B C
Phoenix Growth Opportunities Fund	A C
Phoenix Insight Core Equity Fund	A C I	FIXED INCOME
Phoenix Insight Index Fund	A I	Phoenix Bond Fund	A B C I
Phoenix Insight Small-Cap Growth Fund	A C I	Phoenix CA Tax-Exempt Bond Fund	A I
Phoenix Insight Small-Cap Opportunity Fund	A C I	Phoenix Core Bond Fund	A B C
Phoenix Insight Small-Cap Value Fund	A C I	Phoenix High Yield Fund	A B C
Phoenix Insight Value Equity Fund	A B I	Phoenix Insight Bond Fund	A C I
Phoenix Mid-Cap Growth Fund	A B C I	Phoenix Insight Government Money Market Fund	A I
Phoenix Mid-Cap Value Fund	A C	Phoenix Insight High Yield Bond Fund	A C I
Phoenix Quality Small-Cap Fund	A C I	Phoenix Insight Intermediate Government Bond Fund	A I
Phoenix Small-Cap Growth Fund	A B C	Phoenix Insight Intermediate Tax-Exempt Bond Fund	A C I
Phoenix Small-Cap Sustainable Growth Fund	A C I	Phoenix Insight Money Market Fund	A I
Phoenix Small-Cap Value Fund	A B C	Phoenix Insight Short/Intermediate Bond Fund	A C I
Phoenix Small-Mid Cap Fund	A B C I	Phoenix Insight Tax-Exempt Bond Fund	A C I
Phoenix Strategic Growth Fund	A B C I	Phoenix Insight Tax-Exempt Money Market Fund	A I
Phoenix Value Opportunities Fund	AC	Phoenix Institutional Bond Fund	XY
		Phoenix Low-Duration Core Plus Bond Fund	XY
BALANCED		Phoenix Money Market Fund	A
Phoenix Balanced Fund	A B C	Phoenix Multi-Sector Fixed Income Fund	A B C
Phoenix Income & Growth Fund	A B C	Phoenix Multi-Sector Short Term Bond Fund	A B C T
Phoenix Insight Balanced Fund	A C I	Phoenix Senior Floating Rate Fund	A C I

PHOLIOs
Phoenix Diversifier PHOLIO ^SM	A C	ALTERNATIVE
Phoenix Wealth Accumulator PHOLIO ^SM	A C	Phoenix Global Utilities Fund	A C
Phoenix Wealth Builder PHOLIO ^SM	A C	Phoenix International Real Estate Securities Fund	A C I
Phoenix Wealth Guardian PHOLIO ^SM	A C	Phoenix Market Neutral Fund *	A B C
		Phoenix Real Estate Securities Fund	A B C I

Phoenix Equity Planning Corporation, One American Row, Hartford, CT 06102


Marketing: (800) 243-4361		Customer Service: (800) 243-1574		PhoenixFunds.com

Applicable waivers of Class A sales charges and Class B and C contingent deferred sales charges are described in the prospectus.

*	The Phoenix Market Neutral Fund currently operates under a separate sales load and dealer compensation schedule for Class B and C shares only. Please refer to the last page of this Annex A for details.

Class A Shares

Dealer Concession:


	Class A Shares Equity, Balanced, PHOLIOs, International/Global, Alternative Funds
Amount of Transaction Plus Applicable Rights of Accumulation:	Sales Charge As Percentage of Offering Price		Dealer Discount or Agency Fee As Percentage of Offering Price
Less than $50,000	5.75	%	5.00	%
$50,000 but under $100,000	4.75		4.25
$100,000 but under $250,000	3.75		3.25
$250,000 but under $500,000	2.75		2.25
$500,000 but under $1,000,000	2.00		1.75
$1,000,000 or more	None		None


	Class A Shares Fixed Income Funds*				Class A Shares Phoenix Multi-Sector Short Term Bond
Amount of Transaction Plus Applicable Rights of Accumulation:	Sales Charge As Percentage of Offering Price		Dealer Discount or Agency Fee As Percentage of Offering Price		Sales Charge As Percentage of Offering Price		Dealer Discount or Agency Fee As Percentage of Offering Price
Less than $50,000	4.75	%	4.25	%	2.25	%	2.00	%
$50,000 but under $100,000	4.50		4.00		1.25		1.00
$100,000 but under $250,000	3.50		3.00		1.00		1.00
$250,000 but under $500,000	2.75		2.25		1.00		1.00
$500,000 but under $1,000,000	2.00		1.75		0.75		0.75
$1,000,000 or more	None		None		None		None

*	Excluding All Money Market Funds and Phoenix Multi-Sector Short Term Bond Fund. Shares of the Phoenix Multi-Sector Short Term Bond Fund are offered as indicated above.

Distribution Fee: 0.10% For distribution services with respect to the Phoenix Insight Money Market Fund, Phoenix Insight Government Money Market Fund and the Phoenix Insight Tax-Exempt Money Market Fund, PEPCO intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.10% annually, based on the average daily net asset value of such Funds sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. Dealers must have an aggregate value of $50,000 in each such fund to qualify for payment.

Service Fee: 0.25% For providing shareholder services such as responding to shareholder inquiries; processing redemptions; changing dividend options, account designations, and addresses; transmitting proxy statements, annual reports, prospectuses and other correspondence from the Funds to shareholders; and providing such other information and assistance to shareholders as may be reasonably requested by such shareholders, PEPCO intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually, based on the average daily net asset value of Class A shares (except Phoenix Money Market Fund) sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. Dealers must have an aggregate value of $50,000 or more in a Fund Class to qualify for payment in that Fund Class.

Terms and Conditions for Service and Distribution Fees: The Distribution and Service Fees are paid pursuant to one or more distribution and/or service plans (“Plan”) adopted by certain of the Funds pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the “Act”). Payment of these fees will automatically terminate in the event such Plan terminates or is not continued or in the event that this Agreement terminates, is assigned or ceases to remain in effect. In addition, these fees may be terminated at any time, without the payment of any penalty, by vote of a majority of the members of the Funds’ Board of Trustees who are not interested persons of the Funds and have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan, or by vote of a majority of the outstanding voting securities of any Fund or Funds on not more than sixty days’ written notice to any other party to the Agreement.

$1 Million NAV Sales Finder’s Fee: 1% From its own profits and resources, PEPCO intends to pay a fee to dealers who are responsible for Class A share aggregate purchases of $1 million or more as indicated in the table below. The $1 Million NAV Sales Finder’s Fee is not paid on purchases eligible for the Qualified Plan Finder’s Fee (see below) or on purchases of any Money Market Fund. For Class A share purchases made prior to January 11, 2006 on which a Finder’s Fee was paid, if all or part of such investment is redeemed within one year, the broker-dealer will refund the Finder’s Fee to Phoenix Equity Planning Corp.


Eligible Class A Share Fund Sale	Breakpoint Percentage
$1,000,000 to $3,000,000	1.00	%
$3,000,001 to $10,000,000	0.50	%
Greater than $10,000,000	0.25	%

Qualified Plan Finder’s Fee: 1% From its own profits and resources, PEPCO intends to pay dealers an amount equal to 1% of the first $3 million, 0.50% on the next $3 million and 0.25% on the amount in excess of $6 million of Class A share aggregate purchases by an account held in the name of a qualified employee benefit plan with at least 100 eligible employees. The Qualified Plan Finder’s Fee is not paid on purchases eligible for the $1 Million NAV Sales Finder’s Fee (see above) or on purchases of any Money Market Fund. For Class A share purchases made prior to January 11, 2006 on which a Finder’s Fee was paid, if all or part of such investment is redeemed within one year, the broker-dealer will refund the Finder’s Fee to Phoenix Equity Planning Corp.

CDSC: For purchases made on or after January 11, 2006, a contingent deferred sales charge of 1% may apply on certain redemptions made within one year following purchases of Class A shares on which a $1 Million NAV Sales Finder’s Fee or a Qualified Plan Finder’s Fee has been paid to a dealer. The one year period begins on the last day of the month preceding the month in which the purchase was made. A deferred sales charge may be waived where the investor’s dealer of record, due to the nature of the investor’s account, notifies the Distributor prior to the time of the investment that the dealer waives the Finder’s Fee otherwise payable to the dealer, or agrees to receive such Finder’s Fee ratably over a 12 month period.

Class B Shares**


	Class B Shares (Except Phoenix Multi-Sector Short Term Bond Fund)		Phoenix Multi-Sector Short Term Bond Fund

	Sales Commission: 4.0%		Sales Commission: 2.0%

Years since Each Purchase:	Contingent Deferred Sales Charge:		Contingent Deferred Sales Charge:
First	5.0	%	2.0	%
Second	4.0		1.5
Third	3.0		1.0
Fourth	2.0		0.0
Fifth	2.0		0.0
Sixth	0.0		0.0

Dealers maintaining omnibus accounts, upon redemption of a customer account within the time frames specified above, shall charge such customer account the appropriate contingent deferred sales charge as indicated and shall forward the proceeds to PEPCO.

Service Fee*: 0.25% For providing shareholder services such as responding to shareholder inquiries; processing redemptions; changing dividend options, account designations, and addresses; transmitting proxy statements, annual reports, prospectuses and other correspondence from the Funds to shareholders; and providing such other information and assistance to shareholders as may be reasonably requested by such shareholders, PEPCO intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually, based on the average daily net asset value of Class B shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. Dealers must have an aggregate value of $50,000 or more in a Fund Class to qualify for payment in that Fund Class. The Class B Service Fee is paid beginning in the 13 ^th month following each purchase.

Class C Shares**


Sales Commission:		1% for all Class C Funds except Phoenix Multi-Sector Short Term Bond Fund
		0% for Phoenix Multi-Sector Short Term Bond Fund
		For exchanges from Phoenix Multi-Sector Short Term Bond Fund Class C to other Class C shares, the dealer will receive 1% sales commission on the exchanged amount.

CDSC: 1% Dealers maintaining omnibus accounts, upon redemption of a customer account within the time frames specified below, shall charge such customer account the appropriate contingent deferred sales charge as indicated and shall forward the proceeds to PEPCO. The CDSC on Class C shares is 1% for one year from each purchase. There is no CDSC on the Phoenix Multi-Sector Short Term Bond Fund.

Distribution Fee: 0.25% - 0.75% PEPCO intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually for Phoenix Multi-Sector Short Term Bond Fund and 0.75% annually for all other Class C Funds, based on the average daily net asset value of Class C shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. The Class C Trail Fee is paid beginning in the 13 ^th month following each purchase except for the Phoenix Multi-Sector Short Term Bond Fund. There is no hold for the Class C Trail Fee for the Phoenix Multi-Sector Short Term Bond Fund.

Service Fee*: 0.25% For providing shareholder services such as responding to shareholder inquiries; processing redemptions; changing dividend options, account designations, and addresses; transmitting proxy statements, annual reports, prospectuses and other correspondence from the Funds to shareholders; and providing such other information and assistance to shareholders as may be reasonably requested by such shareholders, PEPCO intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually, based on the average daily net asset value of Class C shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. The Class C Service Fee is paid beginning in the 13 ^th month following each purchase. There is no hold for the Class C Service Fee for the Phoenix Multi-Sector Short Term Bond Fund.

Finder’s Fee (Phoenix Multi-Sector Short Term Bond Fund Only): 0.25% - 0.50% In connection with Class C share purchases of $250,000 or more, PEPCO, from its own profits and resources, intends to pay dealers an amount equal to 0.50% of shares purchased above $250,000 but under $3 million, plus 0.25% on the amount in excess of $3 million. If all or part of such purchases are subsequently redeemed or exchanged to another C share fund within one year of the investment date, the dealer will refund to PEPCO the full Finder’s Fee paid.

Terms and Conditions for Service and Distribution Fees: The Service and Distribution Fees are paid pursuant to one or more distribution and/or service plans (“Plan”) adopted by certain of the Funds pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the “Act”). Payment of these fees will automatically terminate in the event such Plan terminates or is not continued or in the event that this Agreement terminates, is assigned or ceases to remain in effect. In addition, these fees may be terminated at any time, without the payment of any penalty, by vote of a majority of the members of the Funds’ Board of Trustees who are not interested persons of the Funds and have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan, or by vote of a majority of the outstanding voting securities of any Fund or Funds on not more than sixty days’ written notice to any other party to the Agreement.

**	The Phoenix Market Neutral Fund currently operates under a separate sales load and dealer compensation schedule for Class B and C shares only. Please refer to the last page of this Annex A for details.

Class B Shares – Phoenix Market Neutral Fund only


Class B Share Contingent Deferred Sales Charge

Years Since Purchase	CDSC		Years Since Purchase	CDSC
First	5	%	Fifth	2	%
Second	4	%	Sixth	1	%
Third	3	%	Seventh	0	%
Fourth	3	%

Class B Share Dealer Concession

4% of purchase amount

Class C Shares – Phoenix Market Neutral Fund only


Class C Share Contingent Deferred Sales Charge		Class C Share Dealer Concession
1.25% for one year		1.00%

Service Fee* Class B, and C – Phoenix Market Neutral Fund only

A Service Fee may be paid to financial services firms, for providing shareholder services such as responding to shareholder inquiries; processing redemptions; changing dividend options, account designations, and addresses; transmitting proxy statements, annual reports, prospectuses and other correspondence from the Funds to shareholders; and providing such other information and assistance to shareholders as may be reasonably requested by such shareholders. NASD member firms may also be paid a portion of the asset-based sales charges on Class C Shares, so that these dealers receive such reallowances at the following aggregate annual rates: (i) 0.25% commencing one year after purchase for the Class B Shares and (ii) 0.95% commencing one year after purchase for the Class C Shares.

Class I Shares

There is no dealer compensation payable on Class I shares.

Class T Shares – Phoenix Multi-Sector Short Term Bond Fund only

Dealer Concession: 1%

CDSC: 1% for one year from the date of each purchase.

Service Fee*: 0.25% For providing shareholder services such as responding to shareholder inquiries; processing redemptions; changing dividend options, account designations, and addresses; transmitting proxy statements, annual reports, prospectuses and other correspondence from the Funds to shareholders; and providing such other information and assistance to shareholders as may be reasonably requested by such shareholders, PEPCO intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually, based on the average daily net asset value of Class T shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. The Class T Service Fee is paid beginning in the 13 ^th month following each purchase.

Distribution Fee: 0.75% PEPCO intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.75% annually, based on the average daily net asset value of Class T shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. The Class T Distribution Fee is paid beginning in the 13 ^th month following each purchase.

Class X and Y Shares (Phoenix Institutional Bond Fund & Phoenix Low-Duration Core Plus Bond Fund Only)

Finder’s Fee: 0.10%—0.50% PEPCO may pay dealers, from its own profits and resources, a percentage of the net asset value of Class X and Class Y shares sold, equal to 0.50% on the first $5 million, 0.25% on the next $5 million, plus 0.10% on the amount in excess of $10 million. If all or part of such purchases are subsequently redeemed within one year of the investment date, the dealer will refund to PEPCO the full Finder’s Fee paid.

Class Y Service Fee*: 0.25% For providing shareholder services, PEPCO intends to pay qualifying dealers a quarterly fee at the equivalent of 0.25% annually, based on the average daily net asset value of Class Y shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. Dealers must have an aggregate value of $50,000 or more in a Fund to qualify for payment in that Fund. No Service Fee is paid on any Class X shares.

PXP 80A (2-08)

LOGO

Annex B To Dealer Agreement With

Phoenix Equity Planning Corporation

Compliance Standards for

the Sale of the Phoenix Funds

Under Their Alternative Purchase Arrangements

As national distributor or principal underwriter of the Phoenix Funds, which offer their shares on both a front-end and deferred sales charge basis, Phoenix Equity Planning Corporation (“PEPCO”) has established the following compliance standards which set forth the basis upon which shares of the Phoenix Funds may be sold. These standards are designed for those broker/dealers (“dealers”) that distribute shares of the Phoenix Funds and for each dealer’s financial advisors/registered representatives.

As shares of the Phoenix Funds are offered with two different sales arrangements for sales and distribution fees, it is important for an investor not only to choose a mutual fund that best suits his investment objectives, but also to choose the sales financing method which best suits his particular situation. To assist investors in these decisions and to ensure proper supervision of mutual fund purchase recommendations, we are instituting the following compliance standards to which dealers must adhere when selling shares of the Phoenix Funds:

1.	Any purchase of a Phoenix Fund for less than $250,000 may be either of shares subject to a front-end load (Class A shares) or subject to deferred sales charges (Class B shares).

Any purchase of a Phoenix Fund by an unallocated qualified employer sponsored plan for less than $1,000,000 may be either of shares subject to a front-end load (Class A shares) or subject to deferred sales charge (Class B shares). Class B shares sold to allocated qualified employer sponsored plans will be limited to a maximum total value of $250,000 per participant.

3.	Any purchase of a Phoenix Fund for $250,000 or more (except as noted above) or which qualifies under the terms of the prospectus for net asset value purchase of Class A shares should be for Class A shares.

General Guidelines

These are instances where one financing method may be more advantageous to an investor than the other. Class A shares are subject to a lower distribution fee and, accordingly, pay correspondingly higher dividends per share. However, because initial sales charges are deducted at the time of purchase, such investors would not have all of their funds invested initially and, therefore, would initially own fewer shares. Investors not qualifying for reduced initial sales charges who expect to maintain their investment for an extended period of time might consider purchasing Class A Shares because the accumulated continuing distribution charges on Class B Shares may exceed the initial sales charge on Class A Shares during the life of the investment.

Again, however, such investors must weigh this consideration against the fact that, because of such initial sales charge, not all of their funds will be invested initially. However, other investors might determine that it would be more advantageous to purchase Class B Shares to have all of their funds invested initially, although remaining subject to higher continuing distribution charges and, for a five-year period, being subject to a contingent deferred sales charge (three years for Asset Reserve).

A National Association of Securities Dealers rule specifically prohibits “breakpoint sales” of front-end load shares. A “breakpoint sale” is a sale to the client of an amount of front-end load (Class A) shares just below the amount which would be subject to the next breakpoint on the fund’s sales charge schedule. Because the deferred sales charge on Class B shares is reduced by 1% for each year the shares are held, a redemption of Class B shares just before an “anniversary date” is in some ways analogous to a breakpoint sale. A client might wish to redeem just before an anniversary date for tax or other reasons, and a client who chose to wait would continue to be at market risk. Nevertheless, investment executives should inform clients intending to redeem Class B shares near an anniversary date that, if the redemption were delayed, the deferred sales charge would be reduced.

Responsibilities of Branch Office Manager (or other appropriate reviewing officer).

A dealer’s branch manager or other appropriate reviewing officer (“the Reviewing Officer”) must ensure that the financial advisor/registered representative has advised the client of the available financing methods offered by the Phoenix Funds, and the impact of choosing one method over another. In certain instances, it may be appropriate for the Reviewing Officer to discuss the purchase directly with the client. The reviewing officer should review purchases for Class A or Class B shares given the relevant facts and circumstances, including but not limited to: (a) the specific purchase order dollar amount; (b) the length of time the investor expects to hold his shares; and (c) any other relevant circumstances, such as the availability of purchase under letters of intent or pursuant to rights of accumulation and distribution requirements. The foregoing guidelines, as well as the examples cited above, should assist the Reviewing Officer in reviewing and supervising purchase recommendations and orders.

Effectiveness

These compliance guidelines are effective immediately with respect to any order for shares of those Phoenix Funds which offer their shares pursuant to the alternative purchase arrangement.

Questions relating to these compliance guidelines should be directed by the dealer to its national mutual fund sales and market group or its legal department or compliance director. PEPCO will advice dealers in writing of any future changes in these guidelines.


PXP80B						10/98

THIRD AMENDMENT TO SCHEDULE A

ADMINISTRATION AGREEMENT

THIS AMENDMENT made effective as of the 1 ^st day of October, 2007 amends that certain administration agreement, dated as of July 1, 2006, as amended November 15, 2007 and whose Schedule A was amended on June 27, 2007 and September 24, 2007, between the trusts listed on Schedule A (each, a “Trust” and together the “Trusts”) including the funds listed under each Trust (each, a “Fund” and together the “Funds”) and Phoenix Equity Planning Corporation, a Connecticut Corporation (the “Administration Agreement”) as herein below provided.

W I T N E S S E T H :

WHEREAS, the Trusts and the Funds wish to amend Schedule A of the Administration Agreement.

NOW, THEREFORE, in consideration of the foregoing premise, the Trusts and the Funds hereby agree that the Administration Agreement is amended as follows:

1. Schedule A to the Administration Agreement is hereby replaced with Schedule A attached hereto and made a part hereof.

2. Except as herein provided, the Administration Agreement shall be and remain unmodified and in full force and effect.

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers.


PHOENIX ADVISER TRUST
PHOENIX ASSET TRUST
PHOENIX EQUITY SERIES FUND
PHOENIX EQUITY TRUST
PHOENIX INSIGHT FUNDS TRUST
PHOENIX INSTITUTIONAL MUTUAL FUNDS
PHOENIX INVESTMENT SERIES FUND
PHOENIX INVESTMENT TRUST 06
PHOENIX INVESTMENT TRUST 97
PHOENIX OPPORTUNITIES TRUST
PHOENIX SERIES FUND
PHOENIX STRATEGIC EQUITY SERIES FUND

By:		/s/ George R. Aylward
Name:		George R. Aylward
Title:		President

PHOENIX EQUITY PLANNING CORPORATION

By:		/s/ John H. Beers
Name:		John H. Beers
Title:		Vice President and Secretary

SCHEDULE A

(dated: October 1, 2007)

Phoenix Adviser Trust

Phoenix Focused Value Fund

Phoenix Asset Trust

Phoenix Rising Dividends Fund

Phoenix Small-Mid Cap Fund

Phoenix Equity Series Fund

Phoenix Growth & Income Fund

Phoenix Equity Trust

Phoenix Mid-Cap Value Fund

Phoenix Value Opportunities Fund

Phoenix Insight Funds Trust

Phoenix Insight Balanced Fund

Phoenix Insight Bond Fund

Phoenix Insight Core Equity Fund

Phoenix Insight Emerging Markets Fund

Phoenix Insight Equity Fund

Phoenix Insight Government Money Market Fund

Phoenix Insight High Yield Bond Fund

Phoenix Insight Index Fund

Phoenix Insight Intermediate Government Bond Fund

Phoenix Insight Intermediate Tax-Exempt Bond Fund

Phoenix Insight Money Market Fund

Phoenix Insight Short/Intermediate Bond Fund

Phoenix Insight Small-Cap Growth Fund

Phoenix Insight Small-Cap Opportunity Fund

Phoenix Insight Small-Cap Value Fund

Phoenix Insight Tax-Exempt Bond Fund

Phoenix Insight Tax-Exempt Money Market Fund

Phoenix Institutional Mutual Funds

Phoenix Institutional Bond Fund

Phoenix Low-Duration Core Plus Bond Fund

Phoenix Investment Series Fund

Phoenix Income & Growth Fund

Phoenix Investment Trust 06

Phoenix All-Cap Growth Fund

Phoenix Small-Cap Growth Fund

Phoenix Investment Trust 97

Phoenix Quality Small-Cap Fund

Phoenix Small-Cap Sustainable Growth Fund

Phoenix Small-Cap Value Fund

Phoenix Opportunities Trust

Phoenix Bond Fund

Phoenix CA Tax-Exempt Bond Fund

Phoenix Core Bond Fund

Phoenix Diversifier PHOLIO

Phoenix Emerging Markets Bond Fund

Phoenix Foreign Opportunities Fund

Phoenix Global Utilities Fund

Phoenix Growth Opportunities Fund

Phoenix High Yield Fund

Phoenix International Real Estate Securities Fund

Phoenix International Strategies Fund

Phoenix Market Neutral Fund

Phoenix Money Market Fund

Phoenix Multi-Sector Fixed Income Fund

Phoenix Multi-Sector Short Term Bond Fund

Phoenix Real Estate Securities Fund

Phoenix Wealth Accumulator PHOLIO

Phoenix Wealth Builder PHOLIO

Phoenix Wealth Guardian PHOLIO

Phoenix Worldwide Strategies Fund

Phoenix Series Fund

Phoenix Balanced Fund

Phoenix Capital Growth Fund

Phoenix Mid-Cap Growth Fund

Phoenix Strategic Equity Series Fund

Phoenix Dynamic Growth Fund

Phoenix Strategic Growth Fund

FOURTH AMENDMENT TO SCHEDULE A

ADMINISTRATION AGREEMENT

THIS AMENDMENT made effective as of the 31 ^st day of January, 2008 amends that certain administration agreement, dated as of July 1, 2006, as amended November 15, 2007 and whose Schedule A was amended on June 27, 2007, September 24, 2007 and October 1, 2007, between the trusts listed on Schedule A (each, a “Trust” and together the “Trusts”) including the funds listed under each Trust (each, a “Fund” and together the “Funds”) and Phoenix Equity Planning Corporation, a Connecticut Corporation (the “Administration Agreement”) as herein below provided.

W I T N E S S E T H :

WHEREAS, the Trusts and the Funds wish to amend Schedule A of the Administration Agreement.

NOW, THEREFORE, in consideration of the foregoing premise, the Trusts and the Funds hereby agree that the Administration Agreement is amended as follows:

1. Schedule A to the Administration Agreement is hereby replaced with Schedule A attached hereto and made a part hereof.

2. Except as herein provided, the Administration Agreement shall be and remain unmodified and in full force and effect.

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers.


PHOENIX ADVISER TRUST
PHOENIX ASSET TRUST
PHOENIX EQUITY SERIES FUND
PHOENIX EQUITY TRUST
PHOENIX INSIGHT FUNDS TRUST
PHOENIX INSTITUTIONAL MUTUAL FUNDS
PHOENIX INVESTMENT SERIES FUND
PHOENIX INVESTMENT TRUST 06
PHOENIX INVESTMENT TRUST 97
PHOENIX OPPORTUNITIES TRUST
PHOENIX SERIES FUND
PHOENIX STRATEGIC EQUITY SERIES FUND

By:		/s/ George R. Aylward
Name:		George R. Aylward
Title:		President

PHOENIX EQUITY PLANNING CORPORATION

By:		/s/ John H. Beers
Name:		John H. Beers
Title:		Vice President and Secretary

SCHEDULE A

(dated: January 31, 2008)

Phoenix Adviser Trust

Phoenix Focused Value Fund

Phoenix Asset Trust

Phoenix Small-Mid Cap Fund

Phoenix Equity Series Fund

Phoenix Growth & Income Fund

Phoenix Equity Trust

Phoenix Mid-Cap Value Fund

Phoenix Value Opportunities Fund

Phoenix Insight Funds Trust

Phoenix Insight Balanced Fund

Phoenix Insight Bond Fund

Phoenix Insight Core Equity Fund

Phoenix Insight Emerging Markets Fund

Phoenix Insight Government Money Market Fund

Phoenix Insight High Yield Bond Fund

Phoenix Insight Index Fund

Phoenix Insight Intermediate Government Bond Fund

Phoenix Insight Intermediate Tax-Exempt Bond Fund

Phoenix Insight Money Market Fund

Phoenix Insight Short/Intermediate Bond Fund

Phoenix Insight Small-Cap Growth Fund

Phoenix Insight Small-Cap Opportunity Fund

Phoenix Insight Small-Cap Value Fund

Phoenix Insight Tax-Exempt Bond Fund

Phoenix Insight Tax-Exempt Money Market Fund

Phoenix Insight Value Equity Fund

Phoenix Institutional Mutual Funds

Phoenix Institutional Bond Fund

Phoenix Low-Duration Core Plus Bond Fund

Phoenix Investment Series Fund

Phoenix Income & Growth Fund

Phoenix Investment Trust 06

Phoenix All-Cap Growth Fund

Phoenix Small-Cap Growth Fund

Phoenix Investment Trust 97

Phoenix Quality Small-Cap Fund

Phoenix Small-Cap Sustainable Growth Fund

Phoenix Small-Cap Value Fund

Phoenix Opportunities Trust

Phoenix Bond Fund

Phoenix CA Tax-Exempt Bond Fund

Phoenix Core Bond Fund

Phoenix Diversifier PHOLIO

Phoenix Foreign Opportunities Fund

Phoenix Global Utilities Fund

Phoenix Growth Opportunities Fund

Phoenix High Yield Fund

Phoenix International Real Estate Securities Fund

Phoenix International Strategies Fund

Phoenix Market Neutral Fund

Phoenix Money Market Fund

Phoenix Multi-Sector Fixed Income Fund

Phoenix Multi-Sector Short Term Bond Fund

Phoenix Real Estate Securities Fund

Phoenix Senior Floating Rate Fund

Phoenix Wealth Accumulator PHOLIO

Phoenix Wealth Builder PHOLIO

Phoenix Wealth Guardian PHOLIO

Phoenix Worldwide Strategies Fund

Phoenix Series Fund

Phoenix Balanced Fund

Phoenix Capital Growth Fund

Phoenix Mid-Cap Growth Fund

Phoenix Strategic Equity Series Fund

Phoenix Strategic Growth Fund

FIRST AMENDMENT

ADMINISTRATION AGREEMENT

THIS AMENDMENT made effective as of the 15 ^th day of November, 2007 amends that certain administration agreement, dated as of July 1, 2006 between the trusts listed on Schedule A (each, a “Trust” and together the “Trusts”) including the funds listed under each Trust (each, a “Fund” and together the “Funds”) and Phoenix Equity Planning Corporation, a Connecticut Corporation (the “Administration Agreement”) as herein below provided.

W I T N E S S E T H :

WHEREAS, the Trusts and the Funds hereby amend paragraph 2. of the Administration Agreement.

NOW, THEREFORE, in consideration of the foregoing premise, paragraph 2. to the Administration Agreement is hereby replaced with paragraph 2. set forth below and made a part hereof. Except as herein provided, the Administration Agreement shall be and remain unmodified and in full force and effect.

2. Duties of the Administrator.

(a) The Administrator shall perform or arrange for the performance of the following administrative and clerical services: (i) maintain and preserve the books and records, including financial and corporate records, of each Trust as required by law or otherwise for the proper operation of each Trust; (ii) prepare and, subject to approval by each Trust, file registration statements, notices, reports, tax returns and other documents required by U.S. Federal, state and other applicable laws and regulations (other than state “blue sky” laws), including proxy materials and periodic reports to Fund shareholders, oversee the preparation and filing of registration statements, notices, reports and other documents required by state “blue sky” laws, and oversee the monitoring of sales of shares of the Funds for compliance with state securities laws; (iii) calculate and publish the net asset value of each Fund’s shares; (iv) calculate dividends and distributions and performance data, and prepare other financial information regarding each Trust; (v) oversee and assist in the coordination of, and, as the Board may reasonably request or deem appropriate, make reports and recommendations to the Board on, the performance of administrative and professional services rendered to the Funds by others including, but not limited to, the custodian, registrar, transfer agent and dividend disbursing agent, shareholder servicing agents, accountants, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable; (vi) furnish corporate secretarial services to each Trust, including, without limitation, preparation of materials necessary in connection with meetings of each Trust’s Board of Trustees, including minutes, notices of meetings, agendas and other Board materials; (vii) provide each Trust with the services of an adequate number of persons competent to perform the administrative and clerical functions described herein; (viii) provide each Trust with administrative office and data

processing facilities; (ix) arrange for payment of each Fund’s expenses; (x) provide routine accounting services to the Funds, and consult with each Trust’s officers, independent accountants, legal counsel, custodian, accounting agent and transfer and dividend disbursing agent in establishing the accounting policies of each Trust; (xi) prepare such financial information and reports as may be required by any banks from which each Trust borrows funds; (xii) develop and implement procedures to monitor each Fund’s compliance with legal and regulatory requirements and with each Fund’s investment policies and restrictions as set forth in each Fund’s currently effective Prospectus and Statement of Additional Information filed under the Securities Act of 1933, as amended; (xiii) arrange for the services of persons who may be appointed as officers of each Trust, including the President, Vice Presidents, Treasurer, Secretary and one or more assistant officers; (xiv) prepare and file appropriate class action securities litigation claims on behalf of the Funds; and (xv) provide such assistance to the investment adviser, the custodian, other Trust service providers and the Fund counsel and auditors as generally may be required to carry on properly the business and operations of each Trust. Each Trust agrees to cause the portfolio management agent to deliver to the Administrator, on a timely basis, such information as may be necessary or appropriate for the Administrator’s performance of its duties and responsibilities hereunder, including but not limited to, shareholder reports, records of transactions, valuations of investments (which may be based on information provided by a pricing service) and records of expenses borne by each Fund, and the Administrator shall be entitled to rely on the accuracy and completeness of such information in performing its duties hereunder. Notwithstanding anything to the contrary herein contained, each Trust, and not the Administrator, shall be responsible for and bear the costs of other service providers such as the custodian, transfer agent, dividend disbursing agent, shareholder servicing agents, legal counsel, independent auditors, underwriters, brokers and dealers, corporate fiduciaries, insurers, printers, banks and such other persons as may be necessary for the proper operation of the Funds.

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers.


PHOENIX ADVISER TRUST
PHOENIX ASSET TRUST
PHOENIX EQUITY SERIES FUND
PHOENIX EQUITY TRUST
PHOENIX INSIGHT FUNDS TRUST
PHOENIX INSTITUTIONAL MUTUAL FUNDS
PHOENIX INVESTMENT SERIES FUND
PHOENIX INVESTMENT TRUST 06
PHOENIX INVESTMENT TRUST 97
PHOENIX OPPORTUNITIES TRUST
PHOENIX SERIES FUND
PHOENIX STRATEGIC EQUITY SERIES FUND

By:		/s/ George R. Aylward
Name:		George R. Aylward
Title:		President

PHOENIX EQUITY PLANNING CORPORATION

By:		/s/ John H. Beers
Name:		John H. Beers
Title:		Vice President and Secretary

March 4, 2008

U. S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

RE:	Phoenix Equity Trust (the “Trust”)

Post Effective Amendment No. 88

to Registration Statement No. 002-16590

Ladies and Gentlemen:

This opinion is furnished in connection with the registration under the Securities Act of 1933, as amended, of shares (the “Shares”) of the above-referenced Trust. In rendering this opinion, I have examined such documents, records and matters of law as deemed necessary for purposes of this opinion. I have assumed the genuineness of all signatures of all parties, the authenticity of all documents submitted as originals, the correctness of all copies and the correctness of all written or oral statements made to me.

Based upon and subject to the foregoing, it is my opinion that the Shares that will be issued by the Trust when sold will be legally issued, fully paid and non-assessable.

My opinion is rendered solely in connection with the Registration Statement on Form N-1A under which the Shares will be registered and may not be relied upon for any other purpose without my written consent. I hereby consent to the use of this opinion as an exhibit to such Registration Statement.

Very truly yours,

/s/ Kevin J. Carr

Kevin J. Carr

Vice President and Counsel,

The Phoenix Companies, Inc.

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in this Registration Statement on Form N-1A of our reports dated: June 22, 2007, relating to the financial statements and financial highlights which appear in the April 30, 2007 Annual Report to Shareholders of Phoenix Income & Growth Fund and Phoenix Strategic Growth Fund; August 21, 2007, relating to the financial statements and financial highlights which appear in the June 30, 2007 Annual Report to Shareholders of Phoenix Mid-Cap Value Fund and Phoenix Value Opportunities Fund; October 16, 2007, relating to the financial statements and financial highlights which appear in the August 31, 2007 Annual Report to Shareholders of Phoenix Growth & Income Fund, Phoenix Quality Small-Cap Fund, Phoenix Small-Cap Sustainable Growth Fund and Phoenix Small-Cap Value Fund; November 20, 2007, relating to the financial statements and financial highlights which appear in the September 30, 2007 Annual Report to Shareholders of Phoenix Growth Opportunities Fund; December 20, 2007, relating to the financial statements and financial highlights which appear in the October 31, 2007 Annual Reports to Shareholders of Phoenix Balanced Fund, Phoenix Capital Growth and Phoenix Mid-Cap Growth Fund; and February 21, 2008, relating to the financial statements and financial highlights which appear in the December 31, 2007 Annual Reports to Shareholders of Phoenix All-Cap Growth Fund, Phoenix Small-Cap Growth Fund and Phoenix Small-Mid Cap Fund (all constituting, in part, the Phoenix Equity Trust), which are also incorporated by reference into the Registration Statement. We also consent to the references to us under the headings “Financial Highlights”, “Non-Public Holdings Information”, “Independent Registered Public Accounting Firm” and “Reports to Shareholders” in such Registration Statement.

LOGO

Boston, Massachusetts

March 10, 2008

PHOENIX EQUITY TRUST

(the “Fund”)

CLASS B SHARES

AMENDED AND RESTATED DISTRIBUTION PLAN PURSUANT TO RULE 12b-1

under the

INVESTMENT COMPANY ACT OF 1940

1.	Introduction

The Fund, on behalf of its series listed in Appendix A, as may be amended from time to time, and Phoenix Equity Planning Corporation (the “Distributor”), a broker-dealer registered under the Securities Exchange Act of 1934, have entered into a Distribution Agreement pursuant to which the Distributor acts as principal underwriter of each series and class of shares of the Fund for sale to the permissible purchasers. The Trustees of the Fund have determined to adopt this amended and restated Distribution Plan (the “Plan”), in accordance with the requirements of Rule 12b-1 of the Investment Company Act of 1940, as amended (the “Act”) with respect to Class B shares of the Fund and have determined that there is a reasonable likelihood that the Plan will benefit the Fund and its Class B shareholders.

2.	Rule 12b-1 Fees

The Fund shall pay to the Distributor its “Allocable Portion”, as hereinafter defined, at the end of each month, the distribution and service fee allowable under the Rules of Conduct of NASD Regulation, Inc. (the “Rules of Conduct”) an amount on an annual basis equal to 0.75% of the average daily value of the net assets of any series of the Fund’s Class B shares, as compensation for distribution services and a fee of 0.25% of the average daily value of the net assets of any series of the Fund’s Class B shares for shareholder services. Distribution services include, but are not limited to, payment of compensation, including incentive compensation to securities dealers and financial institutions and organizations; payment of compensation to and expenses of personnel of the Distributor who support the distribution of the Class B shares; expenses related to the cost of financing or providing such financing from the Distributor’s or an affiliate’s resources in connection with the Distributor’s payment of such distribution expenses and the payment of other direct distribution costs such as the cost of sales literature, advertising and prospectuses. Shareholder services include, but are not limited to, transmitting prospectuses, statements of additional information, shareholder reports, proxy statements and other materials to shareholders; providing educational materials; providing facilities to answer questions about the Funds; receiving and answering correspondence; assisting shareholders in completing application forms and selecting dividend and other account options and providing such other information and services as the Distributor or Fund may reasonable request.

For purposes of applying the limitation set forth in the Rules of Conduct on the maximum amount of the distribution fee payable in respect of the Class B Shares of any series, the Fund elects to add to the six and one quarter percent (6.25%) of the issue price of the Class B Shares, or such other percentage as may be proscribed in such Rules of Conduct, interest thereon at the rate of prime plus one percent per annum. A contingent deferred sales charge (“CDSC”) also shall be payable by the holders of Class B Shares in the case of early redemptions of such Class B Shares.

3.	Allocable Portion

Any Distribution Agreement in respect of Class B Shares of any series may provide that: (I) the Principal Distributor in respect of such Distribution Agreement will be deemed to have fully earned its Allocable Portion of the Distribution Fee payable in respect of Class B Shares of such series upon the sale of each “Initial Issue Commission Share” (as hereinafter defined) of such series taken into account in determining such Principal Distributor’s Allocable Portion of such Distribution Fee; (II) except as provided in (III) below, the Fund’s obligation to pay such Principal Distributor its Allocable Portion of the Distribution Fee payable in respect of the Class B Shares of such series shall be absolute and unconditional and shall not be subject to dispute, offset, counterclaim or any defense whatsoever (it being understood that such provision is not a waiver of the Fund’s right to pursue such Principal Distributor and enforce such claims against the assets of such Principal Distributor other than its right to the Distribution Fees and CDSCs in respect of the Class B Shares of such series); (III) the Fund’s obligation to pay such Principal Distributor its Allocable Portion of the Distribution Fee payable in respect of the Class B Shares of such series shall not be terminated or modified except to the extent required by a change in the Act or the Rules of Conduct enacted or promulgated after June 1, 2000 (a “Change-in-Applicable-Law”), or in connection with a “Complete Termination” (as hereinafter defined) of this Plan in respect of the Class B Shares of such series; (IV) the Fund will not waive or change any CDSC in respect of the Class B Shares of such series, except as provided in the Fund’s Prospectus or statement of additional information without the consent of the Principal Distributor (or its assigns); (V) except to the extent required by a Change-in-Applicable-Law, neither the termination of such Principal Distributor’s role as principal distributor of the Class B Shares of such series, nor the termination of such Distribution Agreement nor the termination of this Plan will terminate such Principal Distributor’s right to its Allocable Portion of the CDSCs in respect of Class B Shares of such series sold prior to such termination; (VI) except as provided in the Fund’s Prospectus and statement of additional information, until such Principal Distributor has been paid its Allocable Portion of the Distribution Fees in respect of the Class B Shares of such series, the Fund will not adopt a plan of liquidation in respect of such series without the consent of such Principal Distributor (or its assigns); and (VII) such Principal Distributor may sell and assign its rights to its Allocable Portion of the Distribution Fees and CDSCs (but not such Principal Distributor’s obligations to the Fund under the Distribution Agreement) to raise Funds to make the expenditures related to the distribution of Class B Shares of such series and in connection therewith, upon receipt of notice of such sale and assignment, the Fund shall pay to the purchaser or assignee such portion of the Principal Distributor’s Allocable Portion of the Distribution Fees in respect of the Class B Shares of such series so sold or assigned. For purposes of this Plan, the term “Allocable Portion” means, in respect of Distribution Fees payable in respect of the Class B Shares of any series as applied to any Principal Distributor, the portion of such Distribution Fees and CDSCs allocated to such Principal Distributor in accordance with the Allocation Schedule (as hereinafter defined). For purposes of this Plan, the term “Complete Termination” of this Plan means, in respect of any series, a termination of

this Plan involving the cessation of payments of Distribution Fees hereunder in respect of Class B Shares of such series and the cessation of payments of distribution fees pursuant to every other rule 12b-1 plan of the Fund in respect of such series for every future class of shares which, in the good faith determination of the Board of Trustees of the Fund, has substantially similar economic characteristics to the Class B Shares taking into account the total sales charge, contingent deferred sales charge and other similar charges, it being understood that the existing Class A Shares and the existing Class C Shares do not have substantially similar economic characteristics to the Class B Shares. For purposes of this Plan, the term “Allocation Schedule” means, in respect of the Class B Shares of any series, a schedule which shall be approved in the same manner as this Plan as contemplated by Section 3 hereof for assigning to each Principal Distributor of Class B Shares of such series the portion of the total Distribution Fees payable by the Fund in respect of the Class B Shares of such series which has been earned by such Principal Distributor, which shall be attached to and become a part of any Distribution Agreement in respect of Class B Shares. For purposes of clause (I) of the first sentence of this Section 3, the term “Initial Issue Commission Share” shall mean, in respect of any series, a Class B Share which is a Commission Share issued by such series under circumstances other than in connection with a permitted free exchange with another Fund. For purposes of the foregoing definition a “Commission Share” shall mean, in respect of any series, each Class B Share of such series which is issued under circumstances which would normally give rise to an obligation of the holder of such Class B Share to pay a CDSC upon redemption of such Share, including, without limitation, any Class B Share of such Fund issued in connection with a permitted free exchange, and any such Class B Share shall not cease to be a Commission Share prior to the redemption (including a redemption in connection with a permitted free exchange) or conversion even though the obligation to pay the CDSC shall have expired or conditions for thereof still exist.

Reports

At least quarterly in each year this Plan remains in effect, the Fund’s Principal Accounting Officer or Treasurer, or such other person authorized to direct the disposition of monies paid or payable by the Fund, shall prepare and furnish to the Trustees of the Fund for their review, and the Trustees shall review, a written report complying with the requirements of Rule 12b-1 under the Act regarding the amounts expended under this Plan and the purposes for which such expenditures were made.

5.	Required Approval

This plan shall not take effect until it, together with any related agreement, has been approved by a vote of at least a majority of the Fund’s Trustees as well as a vote of at least a majority of the Trustees of the Fund who are not interested persons (as defined in the Act) of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any related agreement (the “Disinterested Trustees”), cast in person at a meeting called for the purpose of voting on this Plan or any related agreement.

Term

This Plan shall remain in effect for one year from the date of its adoption and may be continued thereafter if specifically approved at least annually by a vote of at least a majority of the Trustees of the Fund as well as a majority of the Disinterested Trustees. This Plan may be amended at any time, provided that (a) the Plan may not be amended to increase materially the amount of the distribution and service expenses without the approval of at least a majority of the outstanding voting securities (as defined in the Act) of the Class B shares of the Fund and (b) all material amendments to this Plan must be approved by a majority vote of the Trustees of the Fund and of the Disinterested Trustees cast in person at a meeting called for the purpose of such vote.

7.	Selection of Disinterested Trustees

While this Plan is in effect, the selection and nomination of Trustees who are not interested persons (as defined in the Act) of the Fund shall be committed to the discretion of the Disinterested Trustees then in office.

8.	Related Agreements

Any related agreement shall be in writing and shall provide that (a) such agreement shall be subject to termination, without penalty, by vote of a majority of the outstanding voting securities (as defined in the Act) of the Class B shares of the Fund on not more than 60 days’ written notice to the other party to the agreement and (b) such agreement shall terminate automatically in the event of its assignment.

9.	Termination

This Plan may be terminated at any time by a vote of a majority of the Disinterested Trustees or by a vote of a majority of the outstanding voting securities (as defined in the Act) of the Class B shares of the Fund. In the event this Plan is terminated or otherwise discontinued, no further payments hereunder will be made hereunder.

10.

Records

The Fund shall preserve copies of this Plan and any related agreements and all reports made pursuant to Paragraph 3 hereof, and any other information, estimates, projections and other materials that serve as a basis therefor, considered by the Trustees of the Fund, for a period of not less than six years from the date of this Plan, the agreement or report, as the case may be, the first two years in an easily accessible place.

11.	Non-Recourse

A copy of the Fund’s Declaration of Trust (the “Declaration of Trust”) is on file in the office of the Secretary of the State of Delaware. The Declaration of Trust refers to the Trustees collectively as Trustees, but not as individuals or personally, and no Trustee, shareholder, officer,

employee or agent of the Fund may be held to any personal liability, nor may any resort be had to their private property for the satisfaction of any obligation or claim or otherwise in connection with the affairs of the Fund but the Fund property only shall be liable.

Amended and Restated March 1, 2007

APPENDIX A

Phoenix Worldwide Strategies Fund

PHOENIX EQUITY TRUST

(the “Fund”)

AMENDMENT NO. 1 TO

CLASS A SHARES

AMENDED AND RESTATED DISTRIBUTION PLAN PURSUANT TO RULE 12b-1

under the

INVESTMENT COMPANY ACT OF 1940

THIS AMENDMENT made effective as of the 10 ^th day of March, 2008 amends that certain Class A Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the Investment Company Act of 1940, dated March 1, 2007 by and for the Fund (the “Plan”) as herein below provided.

W I T N E S S E T H :

WHEREAS, the Fund wishes to amend Appendix A of the Plan to reflect the addition of new series of the Fund which have been approved as parties to the Plan.

NOW, THEREFORE, in consideration of the foregoing premises, the Fund hereby agrees that the Plan is amended as follows:

1. Appendix A to the Plan is hereby replaced with Appendix A attached hereto and made a part hereof.

2. Except as herein provided, the Plan shall be and remain unmodified and in full force and effect.

APPENDIX A

Phoenix All-Cap Growth Fund

Phoenix Balanced Fund

Phoenix Capital Growth Fund

Phoenix Growth & Income Fund

Phoenix Growth Opportunities Fund

Phoenix Income & Growth Fund

Phoenix Mid-Cap Growth Fund

Phoenix Mid-Cap Value Fund

Phoenix Quality Small-Cap Fund

Phoenix Small-Cap Growth Fund

Phoenix Small-Cap Sustainable Growth Fund

Phoenix Small-Cap Value Fund

Phoenix Small-Mid Cap Fund

Phoenix Strategic Growth Fund

Phoenix Value Opportunities Fund

PHOENIX EQUITY TRUST

(the “Fund”)

AMENDMENT NO. 1 TO

CLASS B SHARES

AMENDED AND RESTATED DISTRIBUTION PLAN PURSUANT TO RULE 12b-1

under the

INVESTMENT COMPANY ACT OF 1940

THIS AMENDMENT made effective as of the 10 ^th day of March, 2008 amends that certain Class B Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the Investment Company Act of 1940, dated March 1, 2007 by and for the Fund (the “Plan”) as herein below provided.

W I T N E S S E T H :

WHEREAS, the Fund wishes to amend Appendix A of the Plan to reflect the addition of new series of the Fund which have been approved as parties to the Plan.

NOW, THEREFORE, in consideration of the foregoing premises, the Fund hereby agrees that the Plan is amended as follows:

1. Appendix A to the Plan is hereby replaced with Appendix A attached hereto and made a part hereof.

2. Except as herein provided, the Plan shall be and remain unmodified and in full force and effect.

APPENDIX A

Phoenix All-Cap Growth Fund

Phoenix Balanced Fund

Phoenix Capital Growth Fund

Phoenix Growth & Income Fund

Phoenix Income & Growth Fund

Phoenix Mid-Cap Growth Fund

Phoenix Small-Cap Growth Fund

Phoenix Small-Cap Value Fund

Phoenix Small-Mid Cap Fund

Phoenix Strategic Growth Fund

PHOENIX EQUITY TRUST

(the “Fund”)

AMENDMENT NO. 1 TO

CLASS C SHARES

AMENDED AND RESTATED DISTRIBUTION PLAN PURSUANT TO RULE 12b-1

under the

INVESTMENT COMPANY ACT OF 1940

THIS AMENDMENT made effective as of the 10 ^th day of March, 2008 amends that certain Class C Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the Investment Company Act of 1940, dated March 1, 2007 by and for the Fund (the “Plan”) as herein below provided.

W I T N E S S E T H :

WHEREAS, the Fund wishes to amend Appendix A of the Plan to reflect the addition of new series of the Fund which have been approved as parties to the Plan.

NOW, THEREFORE, in consideration of the foregoing premises, the Fund hereby agrees that the Plan is amended as follows:

1. Appendix A to the Plan is hereby replaced with Appendix A attached hereto and made a part hereof.

2. Except as herein provided, the Plan shall be and remain unmodified and in full force and effect.

APPENDIX A

Phoenix All-Cap Growth Fund

Phoenix Balanced Fund

Phoenix Capital Growth Fund

Phoenix Growth & Income Fund

Phoenix Growth Opportunities Fund

Phoenix Income & Growth Fund

Phoenix Mid-Cap Growth Fund

Phoenix Mid-Cap Value Fund

Phoenix Quality Small-Cap Fund

Phoenix Small-Cap Growth Fund

Phoenix Small-Cap Sustainable Growth Fund

Phoenix Small-Cap Value Fund

Phoenix Small-Mid Cap Fund

Phoenix Strategic Growth Fund

Phoenix Value Opportunities Fund

POWER OF ATTORNEY

I, the undersigned member of the Board of Trustees of the below-named trusts, with their respective file numbers under the Securities Act of 1933 noted, hereby constitute and appoint George R. Aylward, Tracy L. Rich and Kevin J. Carr, or any of them as my true and lawful attorneys and agents with full power to sign for me in the capacity indicated below, any or all registration statements on Form N-1A, amendments thereto, and such other filings as may be appropriate, with the Securities and Exchange Commission under the Securities Act of 1933 and/or the Investment Company Act of 1940 relating to each of said mutual funds, and hereby ratify and confirm my signature as it may be signed by said attorneys and agents.


Phoenix Adviser Trust		(333-106142)
Phoenix Asset Trust		(333-08045)
Phoenix CA Tax-Exempt Bond Fund		(002-83024)
Phoenix Equity Series Fund		(333-29043)
Phoenix Equity Trust		(002-16590)
Phoenix Insight Funds Trust		(033-64915)
Phoenix Institutional Mutual Funds		(033-80057)
Phoenix Investment Series Fund		(033-06930)
Phoenix Investment Trust 06		(033-01922)
Phoenix Investment Trust 97		(333-34537)
Phoenix Multi-Portfolio Fund		(033-19423)
Phoenix Multi-Series Trust		(033-45758)
Phoenix PHOLIOs ^(sm)		(333-05039)
Phoenix Portfolios		(333-45675)
Phoenix Opportunities Trust		(033-65137)
Phoenix Series Fund		(002-14069)
Phoenix Strategic Equity Series Fund		(033-06931)

I hereby declare that a photostatic, xerographic or other similar copy of this original instrument shall be as effective as the original.

IN WITNESS WHEREOF, this 28 ^th day of February, 2008.


/s/ E. Virgil Conway		/s/ Harry Dalzell-Payne
E. Virgil Conway, Trustee		Harry Dalzell-Payne, Trustee

/s/ Francis E. Jeffries		/s/ Dr. Leroy Keith, Jr.
Francis E. Jeffries, Trustee		Dr. Leroy Keith, Jr., Trustee

/s/ Geraldine M. McNamara		/s/ Philip R. McLoughlin
Geraldine M. McNamara, Trustee		Philip R. McLoughlin, Trustee

/s/ Richard E. Segerson		/s/ James M. Oates
Richard E. Segerson, Trustee		James M. Oates, Trustee

/s/ Ferdinand L.J. Verdonck		/s/ George R. Aylward
Ferdinand L. J. Verdonck, Trustee		George R. Aylward, Trustee

All signatures need not appear on the same copy of this Power of Attorney.