ThZeal - The Zeal

DEF 14A 1 kayne57381-def_14a.txt PROXY SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e) (2) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss.240.14a-12 PHOENIX-KAYNE FUNDS ------------------- (Name of Registrant as Specified in its Charter) Richard J. Wirth, Esq. c/o The Phoenix Companies, Inc. One American Row Hartford, Connecticut 06102-5056 (Name of Person(s) Filing Proxy Statement if other than the Registrant) Payment of Filing Fee (Check appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: 2) Aggregate number of securities to which transaction applies: 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): 4) Proposed maximum aggregate value of transaction: 5) Total fee paid: ___________ [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: 2) Form, Schedule or Registration No.: 3) Filing Party: 4) Date Filed: PHOENIX-KAYNE FUNDS 1800 AVENUE OF THE STARS, 2ND FLOOR LOS ANGELES, CALIFORNIA 90067 --------------------- NOTICE OF SPECIAL MEETING OF SHAREHOLDERS NOVEMBER 5, 2002 --------------------- To the Shareholders: A Special Meeting of Shareholders of Phoenix-Kayne Funds (the "Trust") will be held in the offices of Phoenix Investment Partners, Ltd., 56 Prospect Street, Hartford, Connecticut, on Tuesday, November 5, 2002 at 10:00 a.m. for the following purposes: (1) To reconstitute the Board of Trustees ("Board") so as to fix at five the number of trustees, and to elect five trustees to such Board to serve until the next meeting of shareholders at which trustees are elected; and (2) To consider and act upon such other matters as may properly come before the meeting or any adjournment thereof. The Board has fixed August 21, 2002 as the record date for the determination of shareholders entitled to notice of and to vote at the meeting. Whether or not you plan to attend the meeting in person, please vote your shares. As a convenience to our shareholders, you may now vote in any one of the following ways: o Through the Internet at www.proxycard.com/phoenix2002 and following the instructions; o By telephone, with a toll-free call to Georgeson Shareholder Communications, Inc., the Trust's proxy tabulator, at 1-800-594-3983; o By mail, with the enclosed proxy card and postage-paid envelope; or o In person at the meeting. We encourage you to vote via the Internet or by telephone, using the control number that appears on your enclosed proxy card. Use of Internet or telephone voting will reduce the time and costs associated with this proxy solicitation. If you elect to vote using one of these methods, do not return your proxy card unless you later elect to change your vote. Whichever method you choose, please read the enclosed proxy statement carefully before you vote. PLEASE RESPOND--WE ASK THAT YOU VOTE PROMPTLY IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION. YOUR VOTE IS IMPORTANT. By Order of the Board of Trustees, RICHARD J. WIRTH, Secretary Los Angeles, California September 20, 2002 PHOENIX-KAYNE FUNDS 1800 AVENUE OF THE STARS, 2ND FLOOR LOS ANGELES, CALIFORNIA 90067 --------------------- PROXY STATEMENT A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 5, 2002 --------------------- The enclosed proxy is solicited by the Board of Trustees of Phoenix-Kayne Funds (the "Trust") for use at the Special Meeting of Shareholders to be held on Tuesday, November 5, 2002, and at any adjournment thereof. Shareholders of record at the close of business on August 21, 2002 ("Shareholders") are entitled to notice of and to vote at the meeting or any adjourned session. On that date, there were issued and outstanding 28,082,877.90 shares, no par value per share, of the Trust (the "Shares"). Each Shareholder will be entitled to one vote for each dollar of net asset value of Shares held as of the Record Date and a proportional fractional vote for each fractional dollar value. All Shares will be voted in accordance with the specifications on duly executed proxies for such Shares. If a duly executed proxy does not specify a choice between approval or disapproval of, or abstention with respect to, any proposal, the Shares represented by the proxy will be voted in favor of the proposal. Any Shareholder executing a proxy has the power to revoke it at any time before it is exercised by executing and submitting to the Trust a later-dated proxy or written notice of revocation or by attending the meeting and voting in person. In addition to the solicitation of proxies by mail, officers and employees of Phoenix Investment Partners, Ltd. or its affiliates, may solicit proxies personally or by telephone or telegram. The Trust may also use a proxy solicitation firm to assist with the mailing and tabulation effort and any special, personal solicitation of proxies. Banks, brokers, fiduciaries and nominees will, upon request, be reimbursed by the Trust for their reasonable expenses in sending proxy material to beneficial owners of Trust shares. Georgeson Shareholder Communications, Inc., a proxy solicitation firm, has been engaged by the Trust to act as solicitor and will receive fees estimated at $1,000, plus reimbursement of out-of-pocket expenses. The cost of solicitation of proxies will be borne by the Trust. In the event that sufficient votes in favor of any of the items set forth in the attached Notice of the meeting are not received by the time scheduled for the meeting, the meeting may be held for the purposes of voting on those proposals for which sufficient votes have been received and the persons named as proxies may propose one or more adjournments of the meeting for a period or periods of not more than 60 days in the aggregate to permit further solicitation of proxies with respect to any proposals for which sufficient votes have not been received. The meeting may be adjourned or postponed at the option of the Trust or the adviser, Kayne Anderson Rudnick Investment Management, LLC, for a period of not more than 60 days in the aggregate. Any such adjournment or postponement will require the affirmative vote of a majority of the votes cast on the question in person or by proxy at the session of the meeting to be adjourned. The persons named as proxies will vote in favor of such adjournment or postponement those proxies which they are entitled to vote in favor of such proposals. They will vote against such adjournment or postponement those proxies required to be voted against any such proposal. If a Shareholder abstains from voting as to any matter, then the Shares held by such Shareholder shall be deemed present at the meeting for purposes of determining a quorum, but shall not be included for purposes of calculating the vote with respect to such matter, and shall not be deemed to have been voted in favor of such matter. If a broker returns a "non-vote" proxy, indicating a lack of authority to vote on such matter, then the Shares covered by such non-vote proxy shall be deemed present at the meeting for all purposes except for the purpose of calculating the vote with respect to such matter. As used in this Proxy Statement, the term "interested person" has the meaning provided therefore in the Investment Company Act of 1940 (the "1940 Act"). The following table shows as of August 21, 2002 (the "Record Date") the number of whole shares of each Fund of the Trust outstanding, and the whole votes represented by such shares as of the Record Date: -------------------------------------------------------------------------------- SHARES VOTES FUND OUTSTANDING REPRESENTED -------------------------------------------------------------------------------- Kayne Anderson Rudnick Large Cap Fund 6,823,888 95,670,909 -------------------------------------------------------------------------------- Kayne Anderson Rudnick Small-Mid Cap Fund 7,483,503 117,341,327 -------------------------------------------------------------------------------- Kayne Anderson Rudnick International Fund 6,936,991 67,566,292 -------------------------------------------------------------------------------- Kayne Anderson Rudnick Intermediate Total Return Bond Fund 3,824,165 42,907,131 -------------------------------------------------------------------------------- Kayne Anderson Rudnick California Intermediate Tax-Free Bond Fund 3,014,328 33,067,178 -------------------------------------------------------------------------------- TOTAL: 28,082,875 356,552,837 -------------------------------------------------------------------------------- At August 31, 2002 the Trustees and officers as a group owned less than 1% of the then outstanding shares of the Funds. Appendix 1 shows the whole votes represented of each Fund owned by all persons known by the Trust to own more than 5% of a Fund, as of August 31, 2002. This Proxy Statement and the enclosed form of proxy are first being mailed to Shareholders on or about September 20, 2002. A copy of the Trust's most recent annual and semiannual reports will be furnished, without charge, to any shareholders upon request to Phoenix Equity Planning Corporation, 56 Prospect Street, P. O. Box 150480, Hartford, CT 06115-0480 or call, toll free, at (800) 243-4361. 2 PROPOSAL NO. 1 TO RECONSTITUTE THE BOARD OF TRUSTEES SO AS TO FIX AT FIVE THE NUMBER OF TRUSTEES AND TO ELECT FIVE TRUSTEES TO SUCH BOARD At the meeting of the Board of Trustees commencing on August 20, 2002, the independent Trustees, considered a proposal by management to consolidate the oversight of the Phoenix-Kayne Funds under a more seasoned Board of Trustees, consisting of members of the Executive Committee of the Phoenix Funds (the "Phoenix Partners Board"). In light of the acquisition earlier this year of a majority interest in Trust's adviser, Kayne Anderson Rudnick Investment Management, LLC ("Kayne") by Phoenix Investment Partners, Ltd. ("Phoenix"), management recommended the reconstitution of the Board of Trustees in furtherance of the integration of the Trust into the Phoenix distribution platform and fund structure. Consolidation under the Phoenix Partners Board could reduce expenses for Shareholders, decrease the administrative burdens placed on the advisory staff allowing them to devote more time to portfolio management, and provide Shareholders an experienced group of trustees to oversee their interests in a manner consistent with the Phoenix family of funds. The Trustees reviewed the credentials of the Phoenix Partners Board members and took note of their substantial experience in the mutual fund industry. An additional factor considered by the Trustees was the proposal by management that each current Trustee be elected to a newly established Advisory Board which would provide advice and counsel to the new trustees, with respect to the Phoenix-Kayne Funds, on a formal or informal basis by invitation. It is anticipated that this Advisory Board would be established by the Phoenix Partners Board at the first meeting following its election and would be commissioned for a period of at least two years following the election of the new board. Accordingly, the Trustees of the Phoenix-Kayne Funds determined that it would be beneficial for Shareholders if they were to resign in favor of the Phoenix Partners Board upon the election of the Phoenix Partners Board by Shareholders. The independent Trustees (trustees who are not interested persons of the Trust), acting as a nominating committee of the current Board of Trustees, have approved fixing the number of trustees at five and have proposed the five Phoenix Partners Board trustees as candidates to fill the trustees' positions on the new Board (the "Nominees"). The persons named in the enclosed proxy intend, unless authority is withheld, to vote for the election as trustees the nominees named below. The Trustees are recommending that the shareholders fix the number of Trustees at five and elect the persons whom they have nominated for election. Each of the Nominees has agreed to serve as a trustee if elected. If, at the time of the meeting, any Nominee should be unavailable for election (which is not presently anticipated), the persons named as proxies may vote for other persons in their discretion. Trustees will hold office until the earlier of their death, resignation, removal or retirement, or the next meeting of shareholders at which trustees are elected and the selection and qualification of their successors. Executive officers 3 were elected by the Board of Trustees at various meetings of the Trustees held on September 16, 1996, April 28, 1998, November 7, 2000 and August 20, 2002. All the current officers were confirmed by the Board of Trustees on August 20, 2002 and will hold office until the first meeting of the Board of Trustees following this special meeting of shareholders or until their successors are chosen and qualified. The following tables set forth the names, ages, principal occupations and other information relating to the Nominees. There is no stated term of office for trustees of the Trust. 4 INDEPENDENT NOMINEES

5 INDEPENDENT NOMINEES (CONTINUED)

6 INDEPENDENT NOMINEES

7 INTERESTED NOMINEE (CONTINUED)

* Mr. McLoughlin is an "interested person," as defined in the Investment Company Act of 1940, by reason of his current and former positions with Phoenix Investment Partners, Ltd., and its affiliates. 8 RELATIONSHIPS OF CERTAIN NOMINEES No Independent Nominee (or an immediate family member thereof) had any direct or indirect interest, the value of which exceeds $60,000, in Kayne, the principal underwriter of the Fund, or any entity controlling, controlled by or under common control with Kayne or the principal underwriter of the Fund. NOMINEE OWNERSHIP OF EQUITY SECURITIES Set forth below for each Nominee is a dollar range of equity securities of each Fund of the Trust, together with the aggregate dollar range of equity securities in all registered investment companies overseen by each Nominee that are in the same family of investment companies as the Funds, as of June 30, 2002: DOLLAR RANGE AGGREGATE DOLLAR RANGE OF NOMINEE OF EQUITY OWNERSHIP IN ALL FUNDS SECURITIES OF ANY OVERSEEN BY TRUSTEE IN FAMILY NAME OF NOMINEE FUND OF THE TRUST OF INVESTMENT COMPANIES --------------- ----------------- ----------------------- E. Virgil Conway None $1- $10,000 Harry Dalzell-Payne None None Philip R. McLoughlin None Over $100,000 Geraldine M. McNamara None None Everett L. Morris None Over $100,000 COMPENSATION OF CURRENT TRUSTEES During the Trust's fiscal year ended December 31, 2001, the Nominees received no compensation from the Trust; however, the current Trustees received the following compensation: PENSION OR TOTAL COMPENSATION RETIREMENT FROM TRUST AND FUND BENEFITS COMPLEX PAID AGGREGATE ACCRUED AS PART TO TRUSTEES COMPENSATION OF FUND (NO ADDITIONAL NAME FROM TRUST EXPENSES* TRUSTS) ---- ---------- --------- ------- Arnold B. Brustin $12,250 None $12,250 Carl D. Covitz $12,250 None $12,250 Gerald I. Isenberg $12,250 None $12,250 Allan M. Rudnick None None None William H. Waldorf $12,250 None $12,250 *The Trust does not maintain pension or retirement plans. 9 For services rendered to the Trust during the fiscal year ended December 31, 2001, persons serving as Trustees during that period received an aggregate of $49,000 from the Trust as Trustees' fees. Each Trustee who is not currently an "interested person" of the Adviser, or of any of its affiliates, is entitled to a fee of $2,000 for each regular Board attended and $250 for each committee meeting attended. The foregoing fees do not include the reimbursement of expenses incurred in connection with meeting attendance. Officers and employees of the adviser who are interested persons are compensated by the Adviser and receive no compensation from the Trust. CURRENT BOARD COMMITTEES AND MEETINGS The Board of Trustees has established an Audit Committee. The Committee reviews the Trust's financial reporting procedures, its system of internal control and the independent audit process. The Committee also reviews the Trust's procedures for monitoring compliance with investment restrictions, applicable laws and regulations and the Code of Ethics. The members of the Audit Committee of the Trust include all the Trustees who are not interested persons of the Trust (i.e., the "independent Trustees"). The Audit Committee currently consists of Arnold B. Brustin, Carl D. Covitz, Gerald I. Isenberg and William H. Waldorf. The Board of Trustees held four meetings and the Audit Committee held one meeting during the fiscal year ended December 31, 2001. Each Trustee was present for at least 75% of the total number of meetings of the Board, or of the Board and Audit Committee, if applicable. EXECUTIVE OFFICERS The following table sets forth certain information about the Executive Officers of the Trust. The address of each individual, unless otherwise noted, is 56 Prospect Street, Hartford, CT 06115-0480. 10 EXECUTIVE OFFICERS

11 EXECUTIVE OFFICERS (CONTINUED)

12 VOTING REQUIREMENTS The five nominees receiving the highest number of votes will be elected, provided that at least 33-1/3% of the Trust's outstanding voting securities are present at the meeting, in person or by proxy. THE TRUSTEES RECOMMEND A VOTE "FOR" THE ELECTION OF THE NOMINEES FOR TRUSTEES INVESTMENT ADVISER, UNDERWRITER AND ADMINISTRATOR Kayne Anderson Rudnick Investment Management, LLC, 1800 Avenue of the Stars, Los Angeles, California 90067 is the Trust's investment adviser. Phoenix Equity Planning Corporation, 56 Prospect Street, P.O. Box 150480, Hartford, Connecticut 06115-0480, serves as the Trust's underwriter. U.S. Bancorp Fund Services, LLC, 2020 East Financial Way, Suite 100, Glendora, California 91741 serves as the Trust's administrator. ADDITIONAL INFORMATION OTHER MATTERS As of the date of this Proxy Statement, the Trust's management knows of no other matters to be brought before the meeting. However, if any other matters properly come before the meeting, the persons named in the enclosed proxy will vote in accordance with their judgment on such matters. SHAREHOLDER PROPOSALS The Trust is not required and does not intend to hold annual meetings of shareholders. The next meeting of shareholders will be held at such time as may be determined by the Trustees or legally required. Any shareholder desiring to present a proposal for consideration at the next meeting of shareholders must submit the proposal in writing so that it is received by the Trust within a reasonable time before the solicitation for such meeting is made and must satisfy all other legal requirements. All shareholders are urged to vote. The enclosed proxy is revocable and will not affect your right to vote in person if you attend the meeting. By Order of the Board of Trustees, RICHARD J. WIRTH, Secretary Los Angeles, California September 20, 2002 13 Appendix 1 List of Persons Owning of Record or Beneficially More Than 5% of the Outstanding Shares* of Each Fund VOTES PERCENT OF NAME OF SHAREHOLDER FUND REPRESENTED CLASS X* ------------------- ---- ----------- -------- BNY Clearing Services, LLC Large Cap Fund 10,086,860 10.64% A/C 6556-5202 Small-Mid Cap Fund 6,106,168 5.21% Post & Co. 725000 International Fund 7,605,425 11.42% 111 East Kilbourn Avenue Total Return Bond Fund 10,847,511 25.87% Milwaukee, WI 53202 Bear Stearns Securities Corp. Large Cap Fund 6,331,744 6.68% FBO 402-90559-12 California Bond Fund 11,412,748 34.56% 1 Metrotech Center North Brooklyn, NY 11201-3859 Bear Stearns Securities Corp. California Bond Fund 6,237,256 18.89% FBO 402-90559-15 1 Metrotech Center North Brooklyn, NY 11201-3859 Bear Stearns Securities Corp. Total Return Bond Fund 2,118,096 5.05% FBO 402-90544-10 1 Metrotech Center North Brooklyn, NY 11201-3859 Charles Schwab & Co., Inc. Large Cap Fund 7,716,578 8.14% Special Custody Account for Small-Mid Cap Fund 18,935,922 16.15% Benefit of Customers International Fund 16,245,348 24.39% Attn: Mutual Funds Total Return Bond Fund 4,795,001 11.44% 101 Montgomery Street California Bond Fund 4,454,809 13.49% San Francisco, CA 94104 Fidelity Investments Large Cap Fund 4,757,289 5.02% Institutional Operations Total Return Bond Fund 3,987,398 9.51% Co., Inc., FIIOC as Agent for Certain Qualified Employee Benefit Plans Attn: IC Funds 100 Magellan Way KWIC Covington, KY 41015 NFSC FEBO #479-574864 International Fund 4,126,191 6.20% Public Broadcasting Service Long Term 1320 Braddock Pl. Alexandria, VA 22314-1649 14 VOTES PERCENT OF NAME OF SHAREHOLDER FUND REPRESENTED CLASS X* ------------------- ---- ----------- -------- NFSC FEBO #U19-000019 Total Return Bond Fund 2,281,385 5.33% Firstar Operations - Reinvest P.O. Box 1787 Attn: Mutual Funds Milwaukee, WI 53201 NFSC FEBO #579-464821 California Bond Fund 3,393,564 10.28% Richard Shapiro - Large Cap 10360 Strathmore Drive Los Angeles, CA 90024-2550 Prudential Securities, Inc. Small-Mid Cap Fund 13,508,939 11.52% Cust. FBO Clients PC Attn: Mutual Funds 1 New York Plaza New York, NY 10292 *As of August 31, 2002, only Class X Shares were issued and outstanding. 15 PHOENIX-KAYNE FUNDS 1800 AVENUE OF THE STARS LOS ANGELES, CALIFORNIA 90067 PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS NOVEMBER 5, 2002 PROXY The undersigned shareholder of Phoenix-Kayne Funds (the "Trust"), revoking any and all previous proxies heretofore given for shares of the Trust held by the undersigned, hereby constitutes and appoints Philip R. McLoughlin and Richard J. Wirth, and each of them, proxies and attorneys of the undersigned, with power of substitution to each, for and in the name of the undersigned to vote and act upon all matters (unless and except as expressly limited below) at the Special Meeting of Shareholders of the Trust to be held on November 5, 2002 at the offices of the Phoenix Investment Partners, Ltd., 56 Prospect Street, Hartford, Connecticut, and at any and all adjournments thereof, with respect to all shares of the Trust for which the undersigned is entitled to provide instructions or with respect to which the undersigned would be entitled to provide instructions or act with all the powers the undersigned would possess if personally present and to vote with respect to specific matters as set forth below. Any proxies heretofore given by the undersigned with respect to said meeting are hereby revised. To avoid the expense of adjourning the Meeting to a subsequent date, please return this proxy in the enclosed self-addressed, postage-paid envelope. In the alternative, you may vote by telephone by calling toll-free 1-800-594-3983 to speak with a live representative or via the Internet at www.proxycard.com/phoenix2002. Prompt voting by shareholders will avoid the costs associated with further solicitation. This proxy, if properly executed, will be voted in the manner as directed herein by the undersigned shareholder. Unless otherwise specified in the squares provided, the undersigned's vote will be cast "FOR" the Proposal. If no direction is made for the Proposal, this proxy will be voted "FOR" such Proposal. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST WHICH RECOMMENDS A VOTE "FOR" THE PROPOSAL ACCOUNT NUMBER: SHARES: CONTROL NO.: TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |X| KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. VOTE ON PROPOSAL 1. ELECTION OF TRUSTEES To fix the number of Trustees at five and Withhold For All elect Trustees (except as marked to the For Authority Except contrary below) [ ] [ ] [ ] E. Virgil Conway, Harry Dalzell-Payne, Philip R. McLoughlin, Geraldine M. McNamara and Everett L. Morris (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME.) 2. TO TRANSACT SUCH OTHER BUSINESS AS PROPERLY MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF. NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. IF SHARES ARE REGISTERED IN MORE THAN ONE NAME, ALL REGISTERED SHAREHOLDERS SHOULD SIGN THIS PROXY; BUT IF ONE SHAREHOLDER SIGNS, THIS SIGNATURE BINDS THE OTHER SHAREHOLDER(S). WHEN SIGNING AS AN ATTORNEY, EXECUTOR, ADMINISTRATOR, AGENT, TRUSTEE, GUARDIAN, OR CUSTODIAN FOR A MINOR, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY AN AUTHORIZED PERSON. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AN AUTHORIZED PERSON. THIS PROXY MAY BE REVOKED BY THE SHAREHOLDER(S) AT ANY TIME PRIOR TO THE SPECIAL MEETING OF THE SHAREHOLDERS. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date