As filed with the Securities and Exchange Commission on February 1, 1996
Registration No. 811-9140
File No. 33-80057
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No. 1 [x]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. 1 [x]
(Check appropriate box or boxes.)
Phoenix Duff & Phelps Institutional Mutual Funds
(Exact Name of Registrant as Specified in Charter)
101 Munson Street, Greenfield, MA 01301
(Address of Principal Executive Offices) (Zip Code)
(800) 814-1897
(Registrant's Telephone Number, including Area Code)
Philip R. McLoughlin
Vice Chairman and Chief Executive Officer
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: It is proposed that this filing
will become effective on March 1, 1996.
Declaration Pursuant to Rule 24f-2: Registrant hereby registers an indefinite
number of shares of beneficial interest, $1 par value, under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940
for the fiscal year ended December 31, 1996.
The Registrant hereby amends this Registration Statement on such date(s) as
may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration Statement shall
become effective on such date that the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
Cross Reference Sheet Pursuant to Rule 495
Under the Securities Act of 1933
PART A
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Form N-1A Item No. Prospectus Caption
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1. Cover Page Cover Page
2. Synopsis Introduction; Fund Expenses
3. Condensed Financial Information Not Yet Applicable
4. General Description of Registrant Introduction;
Management of the Fund
5. Management of the Fund Management of the Fund;
Custodian and Transfer Agent
6. Capital Stock and Other Securities Management of the Fund; Description of Shares;
Dividends, Distributions and Taxes;
Additional Information
7. Purchase of Securities Being Offered How to Buy Shares; Net Asset Value;
National Distributor and Distribution Plan;
How to Redeem Shares
8. Redemption or Repurchase How to Buy Shares;
How to Redeem Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
PART B
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Form N-1A Item No.
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10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History The Fund
13. Investment Objectives and Policies Investment Policies;
Investment Restrictions;
Portfolio Turnover
14. Management of the Registrant Management of the Trust
15. Control Persons and Principal Holders of Securities Management of the Trust
16. Investment Advisory and Other Services Management of the Trust;
Investment Adviser; The National Distributor
and Distribution Plan
17. Brokerage Allocation Brokerage Allocation
18. Capital Stock and Other Securities Purchase of Shares; How to Redeem Shares
19. Purchase, Redemption and Pricing of Securities Determination of Net Asset Value;
Being Offered Purchase of Shares; How to Redeem Shares
20. Tax Status Taxes
21. Underwriter The National Distributor and
Distribution Plan
22. Calculation of Yield Quotations
of Money Market Fund Performance Information
23. Financial Statements Not Yet Applicable
</TABLE>
<PAGE>
PRELIMINARY PROSPECTUS--SUBJECT TO COMPLETION
DATE OF ISSUANCE: FEBRUARY 1, 1996
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
101 Munson Street
Greenfield, MA 01301
(800) 814-1897
PROSPECTUS
March 1, 1996
Phoenix Duff & Phelps Institutional Mutual Funds (the "Fund") is a
diversified, open-end management investment company whose shares are
presently offered in six separate portfolios. Each portfolio generally
operates as a separate fund with its own investment objectives and policies
designed to meet its specific investment goals.
Phoenix Duff & Phelps Institutional Balanced Portfolio ("Balanced
Portfolio") seeks as its investment objectives long-term capital growth,
reasonable income and conservation of capital. It is intended that this
Portfolio will invest in common stocks and fixed income securities, with
emphasis on income-producing securities which appear to the Adviser to have
potential for capital appreciation.
Phoenix Duff & Phelps Institutional Managed Bond Portfolio ("Managed Bond
Portfolio") seeks as its investment objective high current income and
appreciation of capital, consistent with prudent investment risk. It is
intended that this Portfolio will invest primarily in a diversified portfolio
of investment grade fixed income securities.
Phoenix Duff & Phelps Institutional Enhanced Reserves Portfolio ("Enhanced
Reserves Portfolio") seeks as its investment objective high current income
consistent with preservation of capital. It is intended that the Portfolio
will invest primarily in U.S. government securities and high grade corporate
debt obligations.
Phoenix Duff & Phelps Institutional Growth Stock Portfolio ("Growth
Portfolio") seeks as its investment objective long-term appreciation of
capital. Since income is not an objective, any income generated by the
investment of this Portfolio's assets will be incidental to its objective. It
is intended that this Portfolio will invest primarily in the common stocks
which have potential for capital appreciation.
Phoenix Duff & Phelps Institutional Money Market Portfolio ("Money Market
Portfolio") seeks as its investment objective as high a level of current
income as is consistent with the preservation of capital and the maintenance
of liquidity. It is intended that this Portfolio will invest solely in a
portfolio of high-quality money market instruments maturing in less than 397
days. An investment in the Portfolio is neither insured nor guaranteed by the
U.S. Government and there can be no assurance that the Fund will be able to
maintain a stable net asset value of $1.00 per share.
Phoenix Duff & Phelps Institutional U.S. Government Securities Portfolio
("U.S. Government Securities Portfolio") seeks as its investment objective a
high level of current income consistent with safety of principal. It is
intended that this Portfolio will invest primarily in a diversified portfolio
of securities having a weighted average duration generally not to exceed
approximately three years. The securities will be issued or guaranteed by the
U.S. Government or its agencies and backed by the full faith and credit of
the U.S. Government or supported by the ability to borrow from the U.S.
Treasury or by the credit of an agency or otherwise supported by the U.S.
Government.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, credit union, or affiliated entity and are not
federally insured or otherwise protected by the Federal Deposit Insurance
Corporation (FDIC), the Federal Reserve Board or any other agency and involve
investment risk, including possible loss of principal.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. No dealer, salesman or
other person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, and, if given
or made, such other information or representations must not be relied upon as
having been authorized by the Fund, Adviser, or Distributor. This Prospectus
does not constitute an offer to sell or solicitation of an offer to buy any
of the securities offered hereby in any state in which or to any person whom
it is unlawful to make such offer. Investors should read and retain this
Prospectus for future reference. Additional information about the Fund is
contained in the Statement of Additional Information dated March 1, 1996
which has been filed with the Securities and Exchange Commission and is
available at no charge by calling (800) 814-1897 or by writing to Phoenix
Equity Planning Corporation, at 100 Bright Meadow Boulevard, P.O. Box 2200,
Enfield, Connecticut 06083-2200. The Statement of Additional Information is
incorporated herein by reference.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[red herring on side of page]
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
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TABLE OF CONTENTS
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INTRODUCTION 3
FUND EXPENSES 4
PERFORMANCE INFORMATION 7
INVESTMENT OBJECTIVES AND POLICIES 7
PHOENIX DUFF & PHELPS INSTITUTIONAL BALANCED PORTFOLIO 8
PHOENIX DUFF & PHELPS INSTITUTIONAL MANAGED BOND PORTFOLIO 8
PHOENIX DUFF & PHELPS INSTITUTIONAL ENHANCED RESERVES PORTFOLIO 9
PHOENIX DUFF & PHELPS INSTITUTIONAL GROWTH STOCK PORTFOLIO 9
PHOENIX DUFF & PHELPS INSTITUTIONAL MONEY MARKET PORTFOLIO 9
PHOENIX DUFF & PHELPS INSTITUTIONAL U.S. GOVERNMENT SECURITIES PORTFOLIO 10
INVESTMENT TECHNIQUES AND RELATED RISKS 10
INVESTMENT RESTRICTIONS 13
MANAGEMENT OF THE FUND 13
NATIONAL DISTRIBUTOR AND DISTRIBUTION PLAN 15
DESCRIPTION OF SHARES 16
HOW TO BUY SHARES 17
NET ASSET VALUE 18
HOW TO REDEEM SHARES 18
DIVIDENDS, DISTRIBUTIONS AND TAXES 19
ADDITIONAL INFORMATION 20
APPENDIX 21
</TABLE>
2
<PAGE>
INTRODUCTION
This Prospectus describes the shares offered by and the operations of
Phoenix Duff & Phelps Institutional Mutual Funds (the "Fund"). The Fund is a
diversified, open-end management investment company established as a
Massachusetts business trust pursuant to an Agreement and Declaration of
Trust dated December 4, 1995, as amended from time to time. The Fund
presently consists of six separate portfolios (the "Portfolios"). Each
Portfolio has a different investment objective and invests primarily in
certain types of securities and is designed to meet different investment
needs.
The Investment Advisers
Phoenix Investment Counsel, Inc. ("PIC") serves as investment adviser to
the Balanced, Managed Bond, Growth, Money Market, and U.S. Government
Securities Portfolios. PIC is a subsidiary of Phoenix Duff & Phelps
Corporation and, prior to November 1, 1995, was an indirect subsidiary of
Phoenix Home Life Mutual Insurance Company. For managing, or directing the
investments of the following Portfolios, PIC is entitled a monthly fee at the
following annual rates based upon the average aggregate daily net asset
values of each such Portfolio up to $1 billion: (a) 0.60% of the average of
the aggregate daily net asset values of the Growth Portfolio; (b) 0.55% of
the average of the aggregate daily net asset values of the Balanced
Portfolio; (c) 0.45% of the average of the aggregate daily net asset values
of the Managed Bond Portfolio; (d) 0.25% of the average of the aggregate
daily net asset values of the Money Market Portfolio; and, (e) 0.30% of the
average of the aggregate daily net asset values of the U.S. Government
Securities Portfolio. Advisory fees for a Portfolio shall decrease by five
basis points at such time as the average aggregate daily net asset value of
such Portfolio exceeds $1 billion. See "Management of the Fund."
Duff & Phelps Investment Management Co. ("DPM") serves as investment
adviser to the Enhanced Reserves Portfolio. DPM is a subsidiary of Phoenix
Duff & Phelps Corporation. DPM is entitled to a monthly fee for managing, or
directing the investments of the Enhanced Reserves Portfolio, at the annual
rate of 0.24% of the average aggregate daily net asset values of such
Portfolio up to $1 billion. Advisory fees shall decrease by five basis points
at such time as the average aggregate daily net asset value of such Portfolio
exceeds $1 billion. PIC and DPM are sometimes collectively referred to as the
"Adviser."
The Distributor and Distribution Plan
Phoenix Equity Planning Corporation ("Equity Planning" or "Distributor"),
serves as National Distributor of the Fund's shares. See "National
Distributor and Distribution Plan" and the Statement of Additional
Information. Equity Planning also acts as financial agent and the Fund's
transfer agent (the "Transfer Agent").
The Fund has adopted a distribution plan for Class Y Shares pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"). The distribution plan adopted for Class Y Shares provides that the
Fund shall reimburse the National Distributor up to a maximum annual rate of
0.25% of the Fund's average daily Class Y Share net assets for distribution
expenses incurred in connection with the sale and promotion of Class Y Shares
for furnishing shareholder services. See "Distribution Plan."
Purchase of Shares
Each Portfolio is currently authorized to offer two classes of shares on a
continuous basis. Class X Shares are available to Plans (as hereafter
defined) and institutional investors which initially purchase Class X Shares
whose net asset value exceeds $5 million. Class Y Shares are offered to Plans
and institutional investors which initially purchase Class Y Shares whose net
asset value exceeds $1 million. The minimum subsequent investment for each
class is $100. "Plans" are defined as corporate, public, union and
governmental pension plans. Shares of each class represent an identical
interest in the investment portfolio of a Portfolio, and generally have the
same rights except that Class Y Shares bear the cost of higher distribution
fees which cause the Class Y Shares to have a higher expense ratio and to
receive lower dividends than Class X Shares. See "How To Buy Shares."
Redemption of Shares
Shares may be redeemed at any time at the net asset value per share next
computed after receipt of a redemption request by the Transfer Agent. See
"How to Redeem Shares."
Risk Factors
There can be no assurance that any Portfolio will achieve its respective
investment objectives. In addition, special risks may be presented by the
particular types of securities in which a Portfolio may invest. To the extent
that a Portfolio invests in lower rated securities, such an investment is
speculative and involves risks not associated with investment in higher-rated
securities, including overall greater risk of non-payment of interest and
principal and potentially greater sensitivity to general economic conditions
and changes in interest rates. As a result of a Portfolio's investment in the
stock market, net asset values of such Portfolio will fluctuate in response
to changes in the market and economic conditions, as well as the financial
condition and prospects of issuers in which such Portfolio invests. Certain
Portfolios may invest in options, foreign securities, and financial futures
and related options. The risk factors relevant to investment in each
Portfolio should be reviewed and are set forth in the "Investment Objectives
and Policies" and "Investment Techniques and Related Risks" sections of this
Prospectus and Statement of Additional Information.
3
<PAGE>
FUND EXPENSES
The following table illustrates all pro-forma expenses and fees that a
shareholder is expected to incur.
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Class X Shares
----------------------------------------
Managed Enhanced
Balanced Bond Reserves
Portfolio Portfolio Portfolio
---------------------------------- ----------- ----------- ------------
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Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price) None None None
Maximum Sales Load Imposed on
Reinvested Dividends None None None
Deferred Sales Load None None None
Redemption Fees None None None
Exchange Fee None None None
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management Fees 0.55% 0.45% 0.24%
12b-1 Fees None None None
Other Operating Expenses
(After Reimbursement) (c) 0.10%(a) 0.10%(a) 0.10%(b)
Total Fund Operating Expenses 0.65% 0.55% 0.34%
</TABLE>
<TABLE>
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Class X Shares
------------------------------------------------------
U.S. Gov't
Growth Money Securities
Portfolio Market Portfolio Portfolio
---------------------------------- ---------------- ---------------- -----------------
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Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price) None None None
Maximum Sales Load Imposed on
Reinvested Dividends None None None
Deferred Sales Load None None None
Redemption Fees None None None
Exchange Fee None None None
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management Fees 0.60% 0.25% 0.30%
12b-1 Fees None None None
Other Operating Expenses
(After Reimbursement) (c) 0.10%(a) 0.10%(a) 0.10%(a)
Total Fund Operating Expenses 0.70% 0.35% 0.40%
</TABLE>
(a) Phoenix Investment Counsel, Inc. has voluntarily agreed to reimburse
or waive Total Fund Operating Expenses of Class X Shares of each Portfolio
(other than the Enhanced Reserves Portfolio), excluding interest, taxes,
brokerage fees, commissions and extraordinary expenses, until December 31,
2001, to the extent that such expenses exceed: 0.70% of the average annual
net asset values of the Growth Portfolio; 0.65% of the average annual net
asset values of the Balanced Portfolio; 0.55% of the average annual net asset
values of the Managed Bond Portfolio; 0.35% of the average annual net asset
values of the Money Market Portfolio; and 0.40% of the average annual net
asset values of the U.S. Government Securities Portfolio. Total Fund
Operating Expenses are estimated to be 0.83%, 0.71%, 0.76%, 0.96% and 1.02%
for the Balanced, Managed Bond, Growth, Money Market and U.S. Government
Securities Portfolios, respectively, absent such reimbursement or waiver.
(b) Duff & Phelps Investment Management Co. has voluntarily agreed to
reimburse or waive Total Fund Operating Expenses of Class X Shares of the
Enhanced Reserves Portfolio, excluding interest, taxes, brokerage fees,
commissions and extraordinary expenses, until December 31, 1996, to the
extent that such expenses exceed: 0.34% of the average annual net asset
values. Total Fund Operating Expenses for the Enhanced Reserves Portfolio are
estimated to be 0.53% absent such reimbursement or waiver.
(c) Based on estimated amounts for the current fiscal year.
4
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Class Y Shares
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Managed Enhanced
Balanced Bond Reserves
Portfolio Portfolio Portfolio
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Shareholder Transaction
Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage
of offering price) None None None
Maximum Sales Load Imposed
on Reinvested Dividends None None None
Deferred Sales Load None None None
Redemption Fees None None None
Exchange Fee None None None
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management Fees 0.55% 0.45% 0.24%
12b-1 Fees (c) 0.25% 0.25% 0.25%
Other Operating Expenses
(After Reimbursement) (d) 0.10%(a) 0.10%(a) 0.10%(b)
Total Fund Operating Expenses 0.90% 0.80% 0.59%
</TABLE>
<TABLE>
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Class Y Shares
----------------------------------------
Money U.S. Gov't.
Growth Market Securities
Portfolio Portfolio Portfolio
----------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
Shareholder Transaction
Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage
of offering price) None None None
Maximum Sales Load Imposed
on Reinvested Dividends None None None
Deferred Sales Load None None None
Redemption Fees None None None
Exchange Fee None None None
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management Fees 0.60% 0.25% 0.30%
12b-1 Fees (c) 0.25% 0.25% 0.25%
Other Operating Expenses
(After Reimbursement) (d) 0.10%(a) 0.10%(a) 0.10%(a)
Total Fund Operating Expenses 0.95% 0.60% 0.65%
</TABLE>
(a) Phoenix Investment Counsel, Inc. has voluntarily agreed to reimburse
or waive Total Fund Operating Expenses of Class Y Shares of each Portfolio
(other than the Enhanced Reserves Portfolio), excluding interest, taxes,
brokerage fees, commissions and extraordinary expenses, until December 31,
2001, to the extent that such expenses exceed: 0.95% of the average annual
net asset values of the Growth Portfolio; 0.95% of the average annual net
asset values of the Balanced Portfolio; 0.80% of the average annual net asset
values of the Managed Bond Portfolio; 0.60% of the average annual net asset
values of the Money Market Portfolio; and 0.65% of the average annual net
asset values of the U.S. Government Securities Portfolio. Total Fund
Operating Expenses are estimated to be 1.08%, 0.96%, 1.01%, 1.21% and 1.27%
for the Balanced, Managed Bond, Growth, Money Market and U.S. Government
Securities Portfolios, respectively, absent such reimbursement or waiver.
(b) Duff & Phelps Investment Management Co. has voluntarily agreed to
reimburse or waive Total Fund Operating Expenses of Class Y Shares of the
Enhanced Reserves Portfolio, excluding interest, taxes, brokerage fees,
commissions and extraordinary expenses, until December 31, 1996, to the
extent that such expenses exceed: 0.59% of the average annual net asset
values. Total Fund Operating Expenses for the Enhanced Reserves Portfolio are
estimated to be 0.78% absent such reimbursement or waiver.
(c) Long-term shareholders may pay more in Rule 12b-1 fees than the
equivalent of the maximum front-end sales charges otherwise permitted by the
National Association of Securities Dealers, Inc.
(d) Based on estimated amounts for the current fiscal year.
5
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<TABLE>
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Cumulative Expenses
Paid for the Period
Example* 1 year 3 years
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An investor would pay the following expenses on
a $1,000 investment assuming
(1) 5% annual return and (2) redemption at
the end of each time period:
Balanced Portfolio
Class X Shares $ 7 $21
Class Y Shares 9 29
Managed Bond Portfolio
Class X Shares 6 18
Class Y Shares 8 26
Enhanced Reserves Portfolio
Class X Shares 3 11
Class Y Shares 6 19
Growth Portfolio
Class X Shares 7 22
Class Y Shares 10 30
Money Market Portfolio
Class X Shares 4 11
Class Y Shares 6 19
U.S. Government Securities
Portfolio
Class X Shares 4 13
Class Y Shares 7 21
</TABLE>
*The purpose of the table above is to help the investor understand the
various costs and expenses that the investor will bear directly or
indirectly. The example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.
For additional information regarding various costs and expenses, see
"Management of the Fund," and "How to Buy Shares."
6
<PAGE>
PERFORMANCE INFORMATION
The Fund may, from time to time, include the performance history of any or
all of the Portfolios (and each Class thereof) in advertisements, sales
literature or reports to current or prospective shareholders. Both yield and
total return figures are computed separately for Class X and Class Y Shares
of each Portfolio in accordance with formulas specified by the Securities and
Exchange Commission.
Performance data involving the Balanced, Managed Bond, Growth and U.S.
Government Portfolios is based on each such Portfolio's past performance as
separate investment accounts of Phoenix Home Life Mutual Insurance Company
prior to March 1, 1996. This performance data may be relevant as each such
separate account was managed, in all material respects, using substantially
the same investment objectives and policies as those used by such Portfolio.
Standardized average annual total return of each Class shall be calculated
for the preceding one, five and ten year periods (or since inception of the
applicable separate account if it has been in existence less than five or ten
years) by including the corresponding separate account's total return
calculated in accordance with formulas specified by the Securities and
Exchange Commission. The performance of the separate accounts has been
restated to reflect the deduction of the fees and expenses of the classes of
the corresponding Portfolio described in this Prospectus.
Except as above stated, standardized quotations of average annual total
return for each class of shares of each Portfolio will be expressed in terms
of the average annual compounded rate of return of a hypothetical investment
in either Class X or Class Y Shares of each Portfolio over a period of 1, 5,
and 10 years (or up to the life of the class of shares). Standardized total
return quotations reflect the deduction of a proportional share of each
Class's expenses of such Portfolio (on an annual basis), and assume that all
dividends and distributions are reinvested when paid. It is expected that the
performance of Class X Shares shall be better than that of Class Y Shares as
a result of lower distribution fees and certain incrementally lower expenses
paid by Class X Shares. The Fund may also quote supplementally a rate of
total return over different periods of time by means of aggregate, average,
and year-by-year or other types of total return figures.
Performance information may be expressed as yield, effective yield and
total return of either class of the Money Market Portfolio. Current yield for
the Money Market Portfolio will be based on the income earned by the
Portfolio (or Class) over a given 7-day period (less a hypothetical charge
reflecting deductions for expenses taken during the period) and then
annualized, i.e., the income earned in the period is assumed to be earned
every seven days over a 52-week period and is stated in terms of an annual
percentage return on the investment. Effective yield is calculated similarly
but reflects the compounding effect of earnings on reinvested dividends.
The yield of each Portfolio (other than the Money Market Portfolio) will
be computed by dividing the Portfolio's net investment income over a 30-day
period by an average value of invested assets (using the average number of
shares entitled to receive dividends and the maximum offering price per share
at the end of the period), all in accordance with applicable regulatory
requirements. Such amount will be compounded for six months and then
annualized for a twelve-month period to derive the Portfolio's yield for each
class.
Advertisements, sales literature and other communications may contain
information about the Fund or Adviser's current investment strategies and
management style. Current strategies and style may change to respond to a
changing market and economic conditions. From time to time, the Fund may
discuss specific portfolio holdings or industries in such communications. To
illustrate components of overall performance, the Fund may separate its
cumulative and average annual returns into income results and capital gains
or losses; or cite separately as a return figure the equity or bond portion
of a Portfolio's holdings; or compare a Portfolio's equity or bond return
figure to well-known indices of market performance including but not limited
to: the Standard &Poor's 500 Stock Index, Dow Jones Industrial Average, and
Salomon Brothers Corporate and Government Bond Indices.
Performance information for a Portfolio (and each Class thereof) reflects
only the performance of a hypothetical investment in a Class X Shares or
Class Y Shares of that Portfolio during the particular time period in which
the calculations are based. Performance information is not an indication of
future performance. Performance information should be considered in light of
a particular Portfolio's investment objectives and policies, characteristics
and qualities of the Portfolio, and the market conditions during the given
time period, and should not be considered as a representation of what may be
achieved in the future. Investment results will vary from those Portfolios
which previously existed as separate investment accounts particularly as such
separate investment accounts were not registered under the 1940 Act and
therefore were not subject to certain investment restrictions that are
imposed by the 1940 Act. For a description of the methods used to determine
total return, see the Statement of Additional Information.
The Fund's Annual Report, available upon request and without charge, shall
contain a discussion of the performance of each Portfolio and a comparison of
that performance to a securities market index.
INVESTMENT OBJECTIVES
AND POLICIES
Each Portfolio has a different investment objective and is designed to
meet different investment needs. The differences in objectives and policies
among the Portfolios can be expected to affect the investment return of each
Portfolio and the degree of market and financial risk to which each Portfolio
is subject. The investment objective of each Portfolio is a fundamental
policy which may not be changed without the approval of a vote of a majority
of the outstanding shares of that Portfolio. Risks are inherent in the
ownership of any security and there can be no assurance that any Portfolio
will achieve
7
<PAGE>
its investment objective. The investment policies of each Portfolio will also
affect the rate of portfolio turnover. A high rate of portfolio turnover
generally involves correspondingly greater brokerage commissions or
transaction costs, which are paid directly by the Fund. The rate for each
Portfolio, except the Money Market Portfolio (which does not normally pay
brokerage commissions), is estimated to be as follows: Balanced Portfolio:
250%; Managed Bond Portfolio: 200%; Enhanced Reserves Portfolio: %; Growth
Portfolio: 200%; and U.S. Government Securities Portfolio: 75%.
Phoenix Duff & Phelps Institutional Balanced Portfolio
The investment objective of the Balanced Portfolio is to seek long-term
capital growth, reasonable income and conservation of capital. The Portfolio
intends to invest based on combined considerations of risk, income, capital
enhancement and protection of capital value.
It is intended that the Portfolio may invest in any type or class of stock
believed by the Adviser to offer potential for capital appreciation over the
intermediate and long term. The Portfolio may also invest in securities
convertible into common stocks.
At least 25% of the value of this Portfolio's assets will be invested in
fixed income senior securities. The Portfolio intends to emphasize fixed
income senior securities which are rated within the four highest categories
by recognized rating agencies (i.e., AAA to BBB by Standard & Poor's
Corporation, Aaa to Baa by Moody's Investors Service, Inc., AAA to BBB- by
Duff & Phelps Credit Rating Co. ("D&P"), or AAA to BBB by Fitch Investor
Services Inc. D&P is not affiliated with the Portfolio or DPM. Fixed-income
securities which are rated in these categories are sometimes referred to as
"investment grade" securities.) or in unrated securities determined by the
Adviser to be comparable with such rating categories. If, in the Adviser's
opinion, market conditions warrant, the Portfolio may increase its position
in lower (non-investment grade) or non-rated securities from time to time. In
an effort to protect its assets against major market declines, or for other
temporary defensive purposes, this Portfolio may actively pursue a policy of
retaining cash or investing part or all of its assets in cash equivalents,
such as government securities and high grade commercial paper.
The price of fixed income securities will generally move in inverse
proportion to interest rates. Lower rated and non-rated fixed-income
securities are predominantly speculative with respect to the issuer's
capacity to repay principal and pay interest. Investment in lower rated and
non-rated convertible fixed-income securities normally involves a greater
degree of market and credit risk than does investment in securities having
higher ratings. In addition, non-rated securities are often less marketable
than rated securities. To the extent that the Portfolio holds any lower rated
or non-rated securities, it may be negatively affected by adverse economic
developments, increased volatility and lack of liquidity.
Phoenix Duff & Phelps Institutional Managed Bond Portfolio
The investment objective of the Managed Bond Portfolio is to generate a
high level of current income and appreciation of capital, consistent with
prudent investment risk, through investment in a diversified portfolio of
bonds.
The "bonds" which the Portfolio will purchase comprise corporate debt
securities which are issued by United States or Canadian corporations and
government securities, domestic and foreign. It is the Adviser's present
intent to purchase principally those government securities which are issued
or guaranteed by the United States government and its agencies or
instrumentalities and by the Government of Canada or any Canadian province,
municipality or governmental agency thereof. Canadian and other foreign
securities will be purchased only if principal and interest with respect to
such securities is payable in United States dollars.
Under normal circumstances, at least 80% of the value of the Portfolio's
total assets in bonds (other than commercial paper) will be represented by
debt securities which have, at the time of purchase, a rating within the four
highest grades as determined by Moody's Investors Service, Inc. (Aaa, Aa, A
or Baa) or Standard Poor's Corporation (AAA, AA, A or BBB) and debt
securities of banks and other issuers which, although not rated as a matter
of policy by either Moody's Investors Service, Inc. or Standard & Poor's
Corporation, are considered by the Adviser to have investment quality
comparable to investment grade securities. If, in the Adviser's opinion,
market conditions warrant, the Portfolio may increase its position in lower
(non-investment grade) or non-rated securities from time to time. The
Portfolio will seek to purchase debt securities which have protection against
immediate refunding. The Portfolio may include debt securities which sell at
substantial discounts from par. These securities are low coupon bonds which,
during periods of high interest rates because of their lower acquisition
cost, tend to sell at a yield basis that approaches current interest rates.
The Portfolio also intends to invest in short-term investments such as
U.S. Treasury notes and bills, obligations issued or guaranteed as to
principal or interest by the United States government or any agency or
authority thereof, obligations of U.S. banks and savings and loan
associations (including foreign branches of U.S. banks and U.S. branches of
foreign banks) such as certificates of deposit, time deposits and bankers
acceptances, commercial paper, repurchase agreements with respect to any of
the foregoing obligations. The Adviser intends to achieve appreciation of
capital through sector selection with emphasis on undervalued securities.
When in the opinion of the Adviser, current cash needs or market or economic
conditions warrant, the Portfolio may temporarily retain its assets in cash
or invest part or all of its assets in cash equivalents.
The price of fixed income securities will generally move in inverse
proportion to interest rates. Lower rated and non-rated
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fixed-income securities are predominantly speculative with respect to the
issuer's capacity to repay principal and pay interest. Investment in lower
rated and non-rated convertible fixed-income securities normally involves a
greater degree of market and credit risk than does investment in securities
having higher ratings. In addition, non-rated securities are often less
marketable than rated securities. To the extent that the Portfolio holds any
lower rated or non-rated securities, it may be negatively affected by adverse
economic developments, increased volatility and lack of liquidity.
Phoenix Duff & Phelps Enhanced Reserves Portfolio
The investment objective of the Enhanced Reserves Portfolio is to seek a
high level of current income consistent with preservation of capital. The
Portfolio seeks to achieve its objective primarily by investing in a
diversified portfolio of U.S. government securities and high grade corporate
debt obligations.
The Portfolio, which is not a money market fund, is designed for investors
who seek a higher yield than a money market fund and less fluctuation in net
asset value than an intermediate-term or long-term bond fund. Under normal
market conditions, the Portfolio intends to invest at least 65% of the total
value of its assets in U.S. government obligations including asset-backed
securities issued by the U.S. government or its agencies or instrumentalities
and high grade corporate debt obligations. Under normal market conditions,
the Enhanced Reserves Portfolio will invest in high grade securities
comprising debt obligations with maturities greater than one year rated at
the time of purchase AAA, AA, or A by Standard & Poor's Corporation or Aaa,
Aa, or A by Moody's Investors Service, Inc. or rated AAA, AA, or A by Duff &
Phelps Credit Rating Co. or similarly rated by any nationally recognized
statistical rating organization. Short-term debt obligations acquired by the
Portfolio will have equivalent ratings. The balance of the Portfolio's assets
may be invested in municipal obligations, mortgage-related securities of
private issuers, bank obligations, certain money market instruments,
repurchase agreements, and foreign securities.
The Portfolio may purchase portfolio securities with maturities of greater
than one year. In normal market conditions, however, the duration of the
Portfolio's aggregate portfolio will be approximately one year. The term
"maturity" refers to the time remaining until the final payment on such
security is due taking no account of the pattern of the securities' payments
prior to maturity. "Duration" refers to an alternate measurement of a
security's price sensitivity to changes in interest rates. Duration measures
the expected life of a security by assessing and weighting the present value
of the security's payment pattern. The value of the Portfolio's holdings can
be expected to fall when interest rates rise and vice-versa, according to
changes in prevailing interest rates.
At times the Adviser may judge that market conditions make pursuing the
Portfolio's basic investment strategy inconsistent with the best interests of
its shareholders. At such times, the Adviser may use alternative strategies
primarily designed to reduce fluctuations in the value of the Portfolio's
assets. In implementing these "temporary defensive" strategies, the Portfolio
may, without limitation, invest in high-quality, short-term securities.
Phoenix Duff & Phelps Institutional Growth Stock Portfolio
The investment objective of the Growth Stock Portfolio is to seek
long-term appreciation of capital. Since income is not an objective, any
income generated by the investment of the Portfolio's assets will be
incidental to its objective.
Under normal conditions, the Portfolio will invest at least 65% of its
total assets in any class or type of stock believed by the Adviser to offer
potential for capital appreciation over both the intermediate and long-term.
The Portfolio may also invest in preferred stocks, bonds, convertible
preferred stocks and convertible debentures if, in the Adviser's judgment,
such investment will further its investment objective.
When, for temporary defensive purposes (as when market conditions for
growth stocks are adverse), it is determined that other types of investments
appear advantageous on the basis of combined considerations of risk and the
protection of capital values, investments may be made in fixed income
securities with or without warrants or conversion features. In an effort to
protect its assets against major market declines, or for other temporary
defensive purposes, the Portfolio may actively pursue a policy whereby it
will retain cash or invest part or all of its assets in cash equivalents.
Investments in common stocks for capital appreciation are subject to the
risks of changing economic and market conditions which may affect the
profitability and financial conditions of the companies in whose securities
the Portfolio is invested and the Adviser's ability to anticipate those
changes. Since investments normally will consist primarily of securities
considered to have potential for appreciation, the assets of the Portfolio
may be considered to be subject to greater risks than would be involved if
the Portfolio invested in securities which do not have such potential.
Phoenix Duff & Phelps Institutional Money Market Portfolio
The principal investment objective for the Money Market Portfolio is to
achieve as high a level of current income as is consistent with safety of
principal and maintenance of liquidity. Investments shall be solely in high
grade short term securities such as commercial paper, notes payable upon
demand and having maturities varying from one day to 397 days, Treasury or
agency obligations or repurchase agreements, municipal notes, Banker's
Acceptances, Certificates of Deposit or any other form of short term
security. The dollar-weighted average maturity for any Portfolio investment
shall not exceed 90 days.
Commercial paper held by the Portfolio will be limited to securities rated
in the two highest "short term" rating categories by at least two nationally
recognized statistical
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rating organizations (one nationally recognized statistically rating
organization if that security only has one rating) or, if unrated, be issued
by companies with an outstanding debt issue currently rated AA by Standard &
Poor's Corporation or Aa by Moody's Investors Service, Inc. No more than 5%
of the Portfolio assets will be invested in securities not rated in the
highest short-term rating category, and, of those securities, no more than
the greater of 1% of the Portfolio's assets or $1 million can be held by any
one issuer. Certificates of Deposits must be issued by banks which have
capital, surplus and undivided profits of at least $100,000,000.
The Portfolio may not necessarily invest in money market instruments
paying the highest available yield at a particular time as a result of
considerations of liquidity and preservation of capital. Rather, consistent
with its investment objective, the Portfolio will attempt to maximize yields
by engaging in portfolio trading and buying and selling portfolio investments
in anticipation of, or in response to, changing economic and money market
conditions and trends. These policies, as well as the relatively short
maturities of obligations to be purchased by the Portfolio, may result in
frequent changes in its portfolio holdings.
The value of the securities in the Portfolio can be expected to vary
inversely to the changes in prevailing interest rates. Thus, if interest
rates increase after a security was purchased, that security, if sold, might
be sold at less than cost. Conversely, if interest rates decline after
purchase, the security, if sold, might be sold at a profit. In either
instance, if the security were held to maturity, no gain or loss would
normally be realized as a result of these fluctuations. Substantial
redemptions of Portfolio shares could require the sale of portfolio
investments at a time when a sale might not be desirable.
Phoenix Duff & Phelps Institutional
U.S. Government Securities Portfolio
The investment objective of the U.S. Government Securities Portfolio is to
seek a high level of current income consistent with safety of principal by
investing at least 80% of Portfolio assets in a diversified portfolio of
securities consisting of: (1) securities issued and guaranteed by the U.S.
Government, (2) securities issued by U.S. Government agencies and
instrumentalities and backed by the full faith and credit of the United
States, and (3) securities issued by U.S. Government agencies and
instrumentalities which are guaranteed by such agencies and instrumentalities
but are not otherwise backed by the full faith and credit of the United
States. The Portfolio is also authorized to invest up to 20% of its value in
short-term instruments.
U.S. Government Securities include (i) U.S. Treasury obligations which
differ only in their interest rates, maturities and times of issuance as
follows: U.S. Treasury Bills (maturity of one year or less), bonds (generally
maturities of greater than ten years), notes (maturity of one to ten years);
(ii) obligations issued or guaranteed by U.S. Government agencies and
instrumentalities that are backed by the full faith and credit of the United
States; such as securities issued by the Federal Housing Administration, the
Government National Mortgage Association ("GNMA"), the Department of Housing
and Urban Development, the Export-Import Bank, the General Services
Administration and the Maritime Administration and certain securities issued
by the Farmers Home Administration and the Small Business Administration;
(iii) obligations issued or guaranteed by U.S. Government agencies or
instrumentalities that are not backed by the full faith and credit of the
United States; such as securities issued by the Farm Credit Financial
Assistance Corporation, Financing Corporation, Federal Home Loan Bank,
Federal Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage
Association ("FNMA"), Farm Credit Banks, Resolution Funding Corporation and
Student Loan Marketing Association. The weighted average duration of of U.S.
Government Securities expected to be held by the Portfolio will generally not
exceed three years. See "Phoenix Duff & Phelps Institutional Enhanced
Reserves Portfolio" for a discussion of the terms "duration" and "maturity".
Although the payment of interest and principal on a portfolio security may
be guaranteed in certain instances by the U.S. Government or one of its
agencies or instrumentalities, the value of units of the Portfolio will
fluctuate in response to interest rate levels. In general, when interest
rates rise, prices of fixed income securities decline. When interest rates
decline, prices of fixed income securities rise.
INVESTMENT TECHNIQUES AND RELATED RISKS
In addition to the investment policies described above, each Portfolio,
unless otherwise described, may utilize the following investment practices or
techniques:
"When issued" and "delayed delivery" Securities
Each Portfolio may purchase and sell securities on a "when issued" and
"delayed delivery" basis. A Portfolio accrues no income on such securities
until the Portfolio actually takes delivery of such securities. These
transactions are subject to market fluctuation; the value of the securities
at delivery may be more or less than their purchase price. The yields
generally available on comparable securities when delivery occurs may be
higher than yields on the securities obtained pursuant to such transactions.
Because each Portfolio relies on the buyer or seller to consummate the
transaction, failure by the other party to complete the transaction may
result in a Portfolio missing the opportunity of obtaining a price or yield
considered to be advantageous. Each Portfolio will engage in "when issued"
and "delayed delivery" transactions for the purpose of acquiring securities
consistent with the Portfolio's investment objective and policies and not for
the purpose of investment leverage.
Securities Lending
Each Portfolio may lend its securities to brokers, dealers and financial
institutions provided that the market value of the securities subject to any
such loans does not exceed 25% of
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the value of the total assets (taken at market value) of such Portfolio; and
receive, as collateral, cash or cash equivalents which at all times while the
loan is outstanding, will be maintained in amounts equal to at least 102% of
the current market value of the loaned securities. Any cash collateral will
be invested in short-term securities. All fees or charges earned from
securities lending will inure to the benefit of the Portfolio. A Portfolio
will have the right to regain record ownership of loaned securities within
six business days and to exercise beneficial rights such as voting rights and
subscription rights. While a securities loan is outstanding, the Portfolio
will receive amounts equal to any interest or other distributions with
respect to the loaned securities. Any agreement to lend securities shall
provide that borrowers are obligated to return the identical securities or
their equivalent at termination of the loan and, that the Portfolio shall
have the right to retain any collateral or use the same to purchase
equivalent securities should the borrower fail to return securities as
required.
Short-Term Instruments
Each Portfolio (other than the Money Market Portfolio) may invest up to
20% of its assets in short term instruments other than instruments involving
U.S. Government Securities. Short term investments will be in high grade
short term securities such as commercial paper, drafts, notes payable upon
demand or having maturities varying from one day to 397 days, municipal
notes, Bankers' Acceptances, Certificates of Deposit or any other form of
short term security but may also include cash should such a holding appear to
be consistent with the goal of maximizing earnings. It is intended that
commercial paper held by these Portfolios will be rated A-1 by Standard &
Poor's Corporation or P-1 by Moody's Investors Service, Inc. or, if unrated,
be issued by companies with an outstanding debt issue currently rated at
least AA by Standard & Poor's Corporation or Aa by Moody's Investors Service,
Inc. Certificates of Deposits must be issued by banks which have capital,
surplus and undivided profits of at least $100,000,000.
Mortgage-Related Securities
Each Portfolio (other than the Growth and Money Market Portfolios) may
invest in securities that directly or indirectly represent a participation
in, or are secured by and payable from, mortgage loans secured by real
property ("Mortgage-Related Securities"). These instruments are referred to
as "derivatives" as their value is derived from the value of the underlying
security or securities. The Mortgage-Related Securities in which these
Portfolios may invest include those with fixed, floating and variable
interest rates and those with interest rates that change based on multiples
of changes in interest rates. Although certain Mortgage-Related Securities
are guaranteed by a third party or otherwise similarly secured, the market
value of the security, which may fluctuate, is not so secured. If these
Portfolios purchase a Mortgage-Related Security at a premium, all or part of
the premium may be lost if there is a decline in the market value of the
security, whether resulting from changes in interest rates or prepayments in
the underlying mortgage collateral. As with other interest-bearing
securities, the prices of certain Mortgage-Related Securities are inversely
affected by changes in interest rates, while other securities which these
Portfolios may purchase may be structured so that their interest rates will
fluctuate inversely (and thus their price will increase as interest rates
rise and decrease as interest rates fall) in response to changes in interest
rates. Though the value of a Mortgage-Related Security may decline when
interest rates rise, the converse is not necessarily true, since in periods
of declining interest rates the mortgages underlying the security are more
likely to prepay. For this and other reasons, a Mortgage-Related Security's
stated maturity may be shortened by unscheduled prepayments on the underlying
mortgages, and, therefore, it is not possible to predict accurately the
security's return. In addition, regular payments received in respect of
Mortgage-Related Securities include both interest and principal. If the
underlying mortgage securities experience greater than anticipated
prepayments of principal, these Portfolios may fail to fully recoup its
initial investment in these securities even if the securities are rated in
the highest rating category by a nationally recognized statistical rating
organization. No assurance can be given as to the return these Portfolios
will receive when these amounts are reinvested.
Each Portfolio (other than the Growth and Money Market Portfolios) may
also invest in securities issued by corporate and other special purpose
entities in which the source of income payments on the securities is a
dedicated pool of assets ("Asset-Backed Securities"). The securitization
techniques used for Asset-Backed Securities are similar to those used for
Mortgage-Related Securities. The collateral for these securities has included
home equity loans, automobile and credit card receivables, boat loans,
computer leases, airplane leases, mobile home loans, recreational vehicle
loans and hospital and other account receivables.
Financial Futures and Related Options
Each Portfolio (other than the Money Market Portfolios) may enter into
financial futures contracts and related options. These instruments are
referred to as "derivatives" as their value is derived from the value of the
underlying security or securities. These Portfolios may purchase and sell
financial futures contracts which are traded on a recognized exchange or
board of trade and may purchase exchange- or board-traded put and call
options on financial futures contracts as a hedge against anticipated changes
in the market value of its portfolio securities or securities which it
intends to purchase.
These Portfolios will engage in transactions in financial futures
contracts and related options only for hedging purposes and not for
speculation. In addition, these Portfolios will not purchase or sell any
financial futures contract or related option if, immediately thereafter, the
sum of the cash or U.S. Treasury bills initially committed with respect to
these Portfolios' existing futures and related options positions and the
premiums paid for related options would exceed 2% of the market value of each
Portfolio's total assets. At the time of purchase of a futures contract or a
call option on a futures contract, an amount of cash, U.S. Government
securities or other appropriate high-grade debt obligations equal to the
market value of the futures contract minus these Portfolios'
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initial margin deposit with respect thereto will be deposited in a segregated
account with these Portfolios to collateralize fully the position and thereby
ensure that it is not leveraged.
Engaging in transactions in financial futures contracts involves certain
risks, such as the possibility of an imperfect correlation between futures
market prices and cash market prices and the possibility that the Adviser
could be incorrect in its expectations as to the direction or extent of
various interest rate movements, in which case these Portfolios' return might
have been greater had hedging not taken place. There is also the risk that a
liquid secondary market may not exist. The risk in purchasing an option on a
financial futures contract is that these Portfolios will lose the premium it
paid. There may also be circumstances when the purchase of an option on a
financial future contract would result in a loss to these Portfolios while
the purchase or sale of the contract would not have resulted in a loss.
Futures and options may fail as hedging techniques in cases where the price
movements of the securities underlying the options and futures do not follow
the price movements of the portfolio securities subject to the hedge.
Foreign Securities
Each Portfolio (other than the Money Market and U.S. Government Securities
Portfolios) may purchase foreign securities, including those issued by
foreign branches of U.S. banks. Such investments in foreign securities will
be less than 15% of the total net asset value of these Portfolios at the time
of purchase. The Enhanced Reserves, Managed Bond and Balanced Portfolios may
invest in debt obligations issued by foreign corporations and by foreign
governments and their political subdivisions, which securities will be
denominated, and pay interest and principal, in U.S. dollars.
Investments in foreign securities, particularly those of non-governmental
issuers, involve considerations which are not ordinarily associated with
investing in domestic issues. These Portfolios may invest in a broad range of
foreign securities including equity, debt and convertible securities and
foreign government securities. In connection with investments in foreign
securities, the Portfolio may enter into forward foreign currency exchange
contracts for the purpose of protecting against losses resulting from
fluctuations in exchange rates between the U.S. dollar and a particular
foreign currency denominating a security which the Portfolio holds or intends
to acquire. These Portfolios will not speculate in forward foreign currency
exchange contracts.
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,
difficulty in invoking legal process abroad 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 these Portfolios will not be registered with the
Securities and Exchange Commission and many of the issuers of foreign
securities will not be subject to the Commission's reporting requirements.
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 compare favorably or unfavorably with the United States
economy with respect to such factors as rate of growth, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payment
positions, and economic trends in foreign countries may be difficult to
assess.
Particular risks are posed by investments in third world countries or
so-called "emerging markets." These securities may be especially volatile
based on relative economic, political and market conditions present in these
countries. These and other relevant conditions vary widely between emerging
market countries. For instance, certain emerging market countries are either
comparatively undeveloped 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 shares of many emerging
market issuers may also be held by a limited number of large investors
trading significant blocks of securities. While the Portfolios will strive to
be sensitive to publicized reversals of economic conditions, political unrest
and adverse changes in trading status, unanticipated political and social
developments may affect the values of these Portfolios' investments in such
countries and the availability of additional investments in such countries.
The Portfolio may use foreign custodians or sub-custodians in connection
with 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 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 expropriation, 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.
Repurchase Agreements
Each Portfolio (other than Money Market and Growth Portfolios) may agree
to purchase portfolio securities subject to the seller's agreement to
repurchase them at a mutually agreed upon date and price. These Portfolios
will enter into such repurchase agreements only with financial institutions
that are deemed to be creditworthy by the Adviser. During the term of any
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repurchase agreement, the Adviser will continue to monitor the
creditworthiness of the seller. Although the securities subject to repurchase
agreements may bear maturities exceeding thirteen months, these Portfolios do
not presently intend to enter into repurchase agreements with deemed
maturities in excess of seven days. If in the future a Portfolio were to
enter into repurchase agreements with deemed maturities in excess of seven
days, such Portfolio would do so only if such investment, together with other
illiquid securities, did not exceed 15% of the net value of that Portfolio's
total assets. Default or bankruptcy of the seller would, however, expose the
Portfolio to possible delay in connection with the disposition of the
underlying securities or loss to the extend that proceeds from a sale of the
underlying securities were less than the repurchase price under the
agreement.
Securities and Index Options
The Balanced, Enhanced Reserves and U.S. Government Securities Portfolios
may write covered call options and purchase call and put options. Call
options on securities indices will be written only to hedge in an
economically appropriate way portfolio securities which are not otherwise
hedged with options or financial futures contracts and will be "covered" by
identifying the specific portfolio securities being hedged.
These Portfolios will write call options in order to obtain a return on
its investments from the premiums received and will retain the premiums
whether or not the options are exercised. Any decline in the market value of
portfolio securities will be offset to the extent of the premiums received
(net of transaction costs). If an option is exercised, the premium received
on the option will effectively increase the exercise price.
During the option period the writer of a call option has 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. Writing call
options also involves risks relating to these Portfolios' ability to close
out options it has written.
These Portfolio may invest up to 2% of its total assets in exchange-traded
call and put options on securities and securities indices for the purpose of
hedging against changes in the market value of its portfolio securities.
These Portfolios will invest in call and put options whenever, in the opinion
of the Adviser, a hedging transaction is consistent with the investment
objectives of these Portfolios. These Portfolios 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 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 on the call or put which is sold. Purchasing a
call or a put option involves the risk that these Portfolio may lose the
premium it paid plus transaction costs.
"Zero-Coupon" and "Payment-in-Kind" Securities
The Balanced Portfolio may invest in so-called "zero-coupon" and
"payment-in-kind" securities. The Internal Revenue Code of 1986, as amended
(the "Code"), requires that regulated investment companies distribute at
least 90% of their net investment income each year, including tax-exempt and
non-cash income. Accordingly, although a Portfolio will receive no coupon
payments on zero coupon securities prior to their maturity and may receive
additional securities in lieu of cash payments on payment-in-kind securities,
a Portfolio is required, in order to maintain the desired tax treatment, to
include in its distributions to shareholders in each year any income
attributable to such securities that is in excess of 10% of a Portfolio's net
investment income in that year.
Municipal Obligations
When conditions warrant, the Bond, Balanced and Enhanced Reserves
Portfolios may invest in obligations issued by or on behalf of state and
local governmental issuers ("Municipal Obligations"), whether or not the
income thereon is exempt from the Federal income tax. The purchase of
Municipal Obligations may be advantageous when, as a result of prevailing
economic, regulatory or other circumstances, the yield of such securities, on
a pre-tax basis, is comparable to that of corporate or U.S. Government
obligations. Dividends paid by this Portfolio that are derived from interest
on Municipal Obligations would be taxable to the Portfolio's shareholders for
Federal income tax purposes.
INVESTMENT RESTRICTIONS
Each Portfolio may not invest more than 25% of its assets in any one
industry, except the Money Market Portfolio may invest more than 25% of its
assets in the domestic banking industry; and the U.S. Government Securities
Portfolio will invest at least 80% of its net assets in securities backed or
supported by the U.S. Government. In addition to the investment restrictions
described above, each Portfolio's investment program is subject to further
restrictions which are described in the Statement of Additional Information.
The restrictions for each Portfolio described above are fundamental and may
not be changed without shareholder approval.
MANAGEMENT OF THE FUND
The Fund is a mutual fund, technically known as an open-end, diversified
investment company. The Board of Trustees supervises the business affairs and
investments of the Fund, which is managed on a daily basis by each
Portfolio's investment advisers. The Fund was organized as a Massachusetts
business trust on December 4, 1995. The Fund commenced operations on March 1,
1996. The Fund is currently authorized to offer shares of beneficial interest
in series and is currently offering shares of six Portfolios. Two classes of
shares are currently offered by each Portfolio.
The Advisers
Phoenix Investment Counsel, Inc. ("PIC") is the investment adviser for
each Portfolio other than the Enhanced Reserves Portfolio. PIC is located at
56 Prospect Street, Hartford, Connecticut 06115-0480. PIC was originally
organized in 1932 as John P. Chase, Inc. In addition to these Portfolios, PIC
13
<PAGE>
also serves as investment adviser to other entities including Phoenix Series
Fund, Phoenix Multi-Portfolio Fund (all portfolios other than the Real Estate
Securities Portfolio), Phoenix Total Return Fund, Inc., and The Phoenix Edge
Series Fund (all Series other than the Real Estate Securities Series) and as
subadviser to the Chubb America Fund, Inc., SunAmerica Series Trust, JNL
Trust, and American Skandia Trust, among other investment advisory clients.
As of December 31, 1995, PIC had approximately $18.4 billion in assets under
management on a discretionary basis.
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning"), a subsidiary of Phoenix Duff & Phelps
Corporation of Chicago, Illinois. Prior to November 1, 1995, PIC and Equity
Planning were indirect, wholly-owned subsidiaries of Phoenix Home Life Mutual
Insurance Company ("Phoenix Home Life") of Hartford, Connecticut. Phoenix
Home Life is a majority shareholder of Phoenix Duff & Phelps Corporation.
Phoenix Home Life is in the business of writing ordinary and group life and
health insurance and annuities. Its principal offices are located at One
American Row, Hartford, Connecticut 06115. Phoenix Duff & Phelps Corporation
is a New York Stock Exchange traded company that provides various financial
advisory services to institutional investors, corporations and individuals
through operating subsidiaries.
Duff & Phelps Investment Management Co. ("DPM") serves as the investment
adviser to the Enhanced Reserves Portfolio. DPM is a subsidiary of Phoenix
Duff & Phelps Corporation. DPM is located at 55 East Monroe Street, Suite
3800, Chicago, Illinois 60603. As of December 31, 1995, DPM had approximately
$14.8 billion in assets under management on a discretionary basis. PIC and
DPM are sometimes collectively referred to as the "Advisers".
The Advisers continuously furnish an investment program for each
applicable Portfolio and manage the investment and reinvestment of the assets
subject at all times to the supervision of the Trustees. Under the terms of
the Investment Advisory Agreements, each Adviser is entitled to a prescribed
fee. For managing, or directing the investments of the following Portfolios,
PIC is entitled a monthly fee at the following annual rates based upon the
average aggregate daily net asset values of each such Portfolio up to $1
billion: (a) 0.60% of the average of the aggregate daily net asset values of
the Growth Portfolio; (b) 0.55% of the average of the aggregate daily net
asset values of the Balanced Portfolio; (c) 0.45% of the average of the
aggregate daily net asset values of the Managed Bond Portfolio; (d) 0.25% of
the average of the aggregate daily net asset values of the Money Market
Portfolio; and, (e) 0.30% of the average of the aggregate daily net asset
values of the U.S. Government Securities Portfolio. DPM is entitled to a
monthly fee for managing, or directing the investments of the Enhanced
Reserves Portfolio, at the annual rate of 0. 24% of the average aggregate
daily net asset values of such Portfolio up to $1 billion. Advisory fees
payable to PIC or DPM, as applicable, shall decrease by five basis points at
such time as the average aggregate daily net asset value of such Portfolio
exceeds $1 billion.
The Investment Advisory Agreements provide that each Adviser will
reimburse the Fund for the amount, if any, by which the total operating
expenses of any applicable Portfolio (including each investment adviser's
compensation, but excluding interest, taxes, brokerage fees and commissions
and extraordinary expenses) for any fiscal year exceed the level of expenses
which such Portfolio is permitted to bear under the most restrictive expense
limitation (which has not been waived) imposed on mutual funds by any State
in which shares of the Portfolio are then qualified for sale. In addition,
PIC has voluntarily agreed to assume Total Fund Operating Expenses of each
Portfolio (other than the Enhanced Reserves Portfolio), excluding interest,
taxes, brokerage fees, commissions and extraordinary expenses, until December
31, 2001, to the extent that such expenses exceed the following percentages
of average annual net asset values:
<TABLE>
<CAPTION>
Class X Shares Class Y Shares
---------------- -----------------
<S> <C> <C>
Balanced Portfolio 0.65% 0.90%
Managed Bond Portfolio 0.55% 0.80%
Growth Portfolio 0.70% 0.95%
Money Market Portfolio 0.35% 0.60%
U.S. Government
Securities Portfolio 0.40% 0.65%
</TABLE>
DPM has voluntarily agreed to reimburse or waive Total Fund Operating
Expenses of the Enhanced Reserves Portfolio, excluding interest, taxes,
brokerage fees, commissions and extraordinary expenses, until December 31,
1996, to the extent that such expenses exceed: 0.34% of the average annual
net asset values of Class X Shares of the Enhanced Reserves Portfolio and
.59% of the average annual net asset values of Class Y Shares of the Enhanced
Reserves Portfolio.
The Portfolio Managers
Balanced Portfolio
Mr. George I. Askew serves as portfolio manager of the Balanced Portfolio
and as such is responsible for the day-to-day management of the Portfolio's
holdings. Mr. Askew has served as a research analyst for Phoenix Home Life
Mutual Insurance Company since 1994, and an associate in the investment
banking division of Merrill Lynch & Co., from 1987 until 1992. Mr. Askew
attended the University of California at Los Angeles from 1992 until 1994,
where he obtained his Masters in Business Administration.
Managed Bond Portfolio
Mr. James D. Wehr serves as portfolio manager of the Managed Bond
Portfolio and as such is responsible for the day-to-day management of the
Portfolio's holdings. Mr. Wehr has served as portfolio manager of the Phoenix
Home Life Separate Account P since 1990, Phoenix Tax-Exempt Bond Portfolio of
the Phoenix Multi-Portfolio Fund; Phoenix California Tax Exempt Bond Fund
since 1993 and has been a Vice President of PIC since 1991.
Enhanced Reserves Portfolio
Mr. Marvin E. Flewellen serves as co-portfolio manager of the Enhanced
Reserves Portfolio and as such is responsible for
14
<PAGE>
the day-to-day management of the Portfolio's holdings. Mr. Flewellen has
served as a Vice President and a Fixed Income Portfolio Manager with DPM
since 19[]. Mr. Flewellen was a Second Vice President and portfolio manager
with Northern Trust Bank from 19[ ] until 19[ ].
Mr. Robert J. Moore also serves as co-portfolio manager of the Enhanced
Reserves Portfolio and as such is responsible for the day-to-day management
of the Portfolio's holdings. Mr. Moore has served as Executive Vice President
and head of Fixed Income with DPM since 19[ ]. Mr. Moore was a principal and
a portfolio manager with Harris Investment Management from 19[ ] until
19[ ] and was a lead portfolio manager at Ford Motor Company from 19[ ]
until 19[ ].
Growth Portfolio
Mr. Thomas Melvin serves as portfolio manager of the Growth Portfolio and
as such is responsible for the day-to-day management of the Portfolio's
holdings. Mr. Melvin has served as portfolio manager of Common Stock, Phoenix
Home Life Mutual Insurance Company from 1991 until 1995, and Portfolio
Manager, Constitution Capital Management from 1987 until 1991, and has been a
Vice President of PIC since 1992.
Money Market Portfolio
Ms. Dorothy J. Skaret serves as portfolio manager of the Money Market
Portfolio and as such is responsible for the day-to-day management of the
Portfolio's holdings. Ms. Skaret has served as the portfolio manager of
Phoenix Home Life Separate Account G from 1990 until 1995. Ms Skaret has also
served as the portfolio manager of the Money Market Fund of The Phoenix Edge
Series Fund from 1990 until the present, which also is advised by the
Adviser. Ms. Skaret is also a Vice President of National Securities &
Research Corporation since 1993.
U.S. Government Securities Portfolio
Mr. Christopher J. Kelleher serves as portfolio manager of the U.S.
Government Securities Portfolio and as such is responsible for the day-to-day
management of the Portfolio's holdings. Mr. Kelleher has served as the
portfolio manager of Phoenix Home Life Separate Account U since 1991. Mr.
Kelleher has been a Vice President of PIC since 1991 and is also a Vice
President of National Securities & Research Corporation (since 1993), and
Vice President of The Phoenix Edge Series Fund (since 1989).
The Financial Agent
Equity Planning serves as financial agent of the Fund and, as such,
performs administrative, bookkeeping and pricing services and certain other
administrative functions. As compensation, Equity Planning receives a
quarterly fee based on the average of the aggregate daily net asset values of
the Fund at an annual rate of $300 per $1 million which is expected to equal
approximately the cost to Equity Planning of providing such services.
The Custodians and Transfer Agent
The custodian of the assets of all Portfolios other than the Enhanced
Reserves Portfolio is The Chase Manhattan Bank, N.A., 1 Chase Manhattan
Plaza, Floor 3B, New York, New York 10081. The custodian for the assets of
the Enhanced Reserves Portfolio is State Street Bank and Trust Company, P.O.
Box 1713, Boston, Massachusetts 02101. The Fund has authorized the custodians
to appoint one or more subcustodians for the assets of the Fund held outside
the United States.
Equity Planning serves as transfer agent for the Fund (the "Transfer
Agent") for which it is paid $19.25 plus out-of-pocket expenses for each
designated shareholder account. The Transfer Agent is authorized to engage
sub-agents to perform certain shareholder servicing functions from time to
time for which such agents shall be paid a fee by the Transfer Agent.
Brokerage Commissions
Although the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. prohibit its members from seeking orders for the
execution of investment company portfolio transactions on the basis of their
sales of investment company shares, under such Rules, sales of investment
company shares may be considered in selecting brokers to effect portfolio
transactions. Accordingly, some portfolio transactions are, subject to such
Rules and to obtaining best prices and executions, effected through dealers
(excluding Equity Planning) who sell shares of the Fund.
NATIONAL DISTRIBUTOR AND DISTRIBUTION PLAN
Equity Planning serves as the national distributor of the Fund's shares.
Equity Planning is registered as a broker-dealer in fifty states. The
principal offices of Equity Planning are located at 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200. Philip R.
McLoughlin is a Trustee and President of the Fund and a director and officer
of Equity Planning. G. Jeffrey Bohne, James M. Dolan, William R. Moyer,
Leonard J. Saltiel, and Nancy G. Curtiss are officers of the Fund and
officers of Equity Planning.
Equity Planning and the Fund have entered into distribution agreements under
which Equity Planning has agreed to use its best efforts to find purchasers
for Fund shares. The Fund has granted Equity Planning the exclusive right to
purchase from the Fund and resell, as principal, shares needed to fill
unconditional orders for Fund shares. Equity Planning may sell Fund shares
through its registered representatives or through securities dealers with
whom it has sales agreements. Equity Planning may also sell Fund shares
pursuant to sales agreements entered into with banks or bank affiliated
securities brokers who, acting as agent for their customers, place orders for
Fund shares with Equity Planning. Although the Glass-Steagall Act prohibits
banks and bank affiliates from engaging in the business of underwriting,
distributing or selling securities (including mutual fund shares), banking
regulators have not indicated that such institutions are prohibited from
purchasing mutual fund shares upon the order and for the account of their
customers. If, because of changes in law or regulations, or because of new
interpretations of existing law, it is determined that agency transactions of
banks or bank affiliated securities brokers are not permitted under
15
<PAGE>
the Glass-Steagall Act, the Trustees will consider what action, if any, is
appropriate. It is not anticipated that termination of sales agreements with
banks or bank affiliated securities brokers would result in a loss to their
customers or a change in the net asset value per share of a Portfolio of the
Fund. The sale of Fund shares through a bank or a securities broker
affiliated with a bank is not expected to preclude the Fund from borrowing
from such bank or from availing itself of custodial or transfer agency
services offered by such bank.
Distribution Plan
The Trustees have adopted a distribution plan on behalf of the Class Y
Shares pursuant to Rule 12b-1 under the 1940 Act. The Class Y Share
distribution plan (the "Plan") has been approved by Phoenix Home Life as
initial, sole shareholder. The Plan authorizes the payment to Equity Planning
of amounts not exceeding 0.25% annually of the average of the daily net
assets of Class Y Shares of each respective Portfolio for each year elapsed
after the inception of the Plan. Although under no contractual obligation to
do so, the Fund intends to make such payments to Equity Planning as
commissions for Class Y Shares sold, to enable Equity Planning to (i) pay
maintenance or other fees with respect to Class Y Shares (the "Service Fee"),
and (ii) pay bank affiliated securities brokers maintenance or other fees
relating to Class Y Shares purchased by their customers and remaining on the
Fund's books during the period for which such fee is paid. The portion of the
above fees paid by the Fund to Equity Planning as "Service Fees" shall not
exceed 0.25% annually of Class Y Share average daily net assets. Payments,
less the portion thereof paid by Equity Planning to others, may be used by
Equity Planning for its expenses of distributing Class Y Shares. The Fund is
not required to reimburse Equity Planning if expenses of distributing Class Y
Shares exceed payments and any sales charges retained by Equity Planning.
Conversely, payments and sales charges retained by Equity Planning in excess
of expenses incurred in distributing Class Y Shares shall be retained by
Equity Planning as profit. The Plan requires that at least quarterly the
Trustees must review a written report with respect to the amounts expended
under the Plan and the purposes for which such expenditures were made. While
the Plan is in effect, the Fund will be required to commit the selection and
nomination of candidates for Trustees who are not "interested persons" (as
defined in the 1940 Act) to the discretion of other Trustees who are not
interested persons.
DESCRIPTION OF SHARES
The capitalization of the Fund consists solely of an unlimited number of
shares of beneficial interest. The Fund currently offers shares in six
different Portfolios, each offering two classes. Holders of shares of a
Portfolio have equal rights with regard to voting, redemptions, dividends,
distributions, and liquidations with respect to that Portfolio (provided that
Class Y Shares of a Portfolio bear higher distribution fees and pay
correspondingly lower dividends per share than Class X Shares of the same
Portfolio). Shareholders of all Portfolios vote on the election of Trustees.
On matters affecting an individual Portfolio (such as approval of an
investment advisory agreement or a change in fundamental investment
policies), a separate vote of that Portfolio is required. On matters
affecting an individual class (such as approval of matters relating to the
Class Y distribution plan), a separate vote of that class is required. Shares
of each Portfolio are fully paid, nonassessable, redeemable and fully
transferable when they are issued. Shares do not have cumulative voting
rights, conversion, preemptive rights or subscription rights.
The assets received by the Fund for the issue or sale of shares of each
Portfolio and all income, earnings, profits and proceeds thereof, are
allocated to such Portfolio (and class if applicable) subject only to the
rights of creditors, and constitute the underlying assets of such Portfolio
(and class if applicable). The underlying assets of each Portfolio are
required to be segregated on the books of account, and are to be charged with
the expenses in respect to such Portfolio and with a share of the general
expenses of the Fund. Any general expenses of the Fund not readily
identifiable as belonging to a particular Portfolio or class will be
allocated by or under the direction of the Trustees as they determine fair
and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a Massachusetts business trust such as the Fund may be
personally liable for debts or claims against the Fund. The Declaration of
Trust provides that shareholders shall not be subject to any personal
liability for the acts or obligations of the Fund and that every written
agreement, undertaking or obligation made or issued by the Fund shall contain
a provision to that effect. The 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 Fund. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability, which is considered remote, is limited to circumstances in which
the Fund itself would be unable to meet its obligations.
Prior to March 1, 1996, the Balanced, Managed Bond, Growth, Money Market and
U.S. Government Securities Portfolios existed as the Managed Bond Account
(Separate Account P), Balanced Account (Separate Account L), Growth Stock
Account (Separate Account S), Money Market Account (Separate Account G), and
U.S. Government Account (Separate Account U), respectively; separate
investment accounts of Phoenix Home Life, pursuant to the insurance laws of
the State of New York and the laws of other States. Each separate account was
maintained for the purpose of investing amounts allocated thereto by Phoenix
Home Life under certain group annuity contracts issued by Phoenix Home Life
in connection with pension or profit-sharing plans which meet the
requirements of Section 401(a) of the Internal Revenue Code of 1986, as
amended. The separate accounts were not investment companies, pursuant to the
1940 Act. Accordingly, a risk factor associated with an investment in the
Fund is that it has no operating history as a mutual fund prior to March 1,
1996.
On October 16, 1995, the Board of Directors of Phoenix Home Life approved
the conversion of each such separate
16
<PAGE>
account into a corresponding Portfolio of the Fund. As of March 1, 1996, the
net assets of each separate account were transferred into the corresponding
Portfolio of the Fund in exchange for shares of that Portfolio which were
credited to each contractholder in accordance with the value of that
contractholder's separate account units as of the close of business on such
date. Each separate account was then terminated.
HOW TO BUY SHARES
The Fund currently issues two classes of shares for each Portfolio. Class X
Shares are available to Plans (as hereafter defined) and institutional
investors which initially purchase Class X Shares of the Fund whose net asset
value exceeds $5 million. Class Y Shares are offered to Plans and
institutional investors which initially purchase Class Y Shares of the Fund
whose net asset value exceeds $1 million. "Plans" are defined as corporate,
public, union and governmental pension plans. Completed applications for the
purchase of shares should be mailed to State Street Bank and Trust Company,
P.O. Box 8301, Boston, MA 02266-8301.
The minimum subsequent investment for each class is $100. Shares are sold at
the net asset value per share (as described below) next computed after a
completed application or purchase order is received by State Street Bank and
Trust Company together with good and sufficient funds therefor (certified
checks, federal funds wires, and automated clearing house transactions
("ACH")). Completed orders received on a business day prior to 4:00 p.m.
E.S.T. will be processed based on that day's closing net asset value. Sales
of shares may be made through broker-dealers, pension consultants or other
qualified financial agents/institutions.
The minimum initial investment amounts for the purchase of either class of
Fund shares shall be waived with respect to purchases by: (i) Plans and
institutional investors who have been invested in those separate investment
accounts of Phoenix Home Life Mutual Insurance Company described above as of
March 1, 1996; (ii) trust companies, bank trust departments, financial
planners and investment advisers for funds over which such entity charges an
account management fee and which are held in a fiduciary, agency, advisory,
custodial or similar capacity; or (iii) shareholders where the amounts
invested represent the redemption proceeds from the reorganization or merger
of other investment companies.
No trail fees are payable to dealers in connection with the purchase, sale or
retention of Class X Shares. Equity Planning may pay broker-dealers, from its
own profits and resources, a percentage of the net asset value of any shares
sold as set forth below:
<TABLE>
<CAPTION>
Payment to
Purchase Amount Broker-Dealer
-------------------------- -----------------------
<S> <C>
$0 to $5,000,000 0.50%
$5,000,001 to $10,000,000 0.25%
$10,000,001 or more 0.10%
</TABLE>
If part of any investment is subsequently redeemed within one year of the
investment date, the broker/dealer will refund to Equity Planning any such
amounts paid with respect to the investment. Equity Planning will sponsor
sales contests, training and educational meetings and provide to all
qualifying financial agents, from its own profits and resources, additional
compensation in the form of trips, merchandise or expense reimbursement.
Brokers or dealers other than Equity Planning may also levy customary
additional charges to shareholders for their services in effecting
transactions, if they notify the Fund of their intention to do so.
Equity Planning intends to pay investment dealers and other exempt
financial institutions with whom it has a sales agreement a service fee of
0.25% of the average daily net asset value of Class Y Shares sold by such
dealers, subject to future amendment or termination. Equity Planning will
retain all or a portion of the continuing distribution fee assessed to Class
Y shareholders to finance commissions and related marketing expenses.
Shareholders may exchange Class X or Class Y Shares held in book-entry
form for shares of the same class of other Portfolios of the Fund provided
the following conditions are met: (1) the shares that will be acquired in the
exchange (the "Acquired Shares") are available for sale in the shareholder's
principal place of business; (2) the Acquired Shares are the same class as
the shares to be surrendered (the "Exchanged Shares"); (3) the Acquired
Shares will be registered to the same shareholder account as the Exchanged
Shares; (4) the account value of the shares to be acquired must equal or
exceed the minimum initial or subsequent investment amount, as applicable,
after the exchange is implemented; and (5) the shareholder is qualified to
acquire Fund shares in accordance with the limitations described in this
Prospectus. The Fund reserves the right to refuse exchange purchases by any
person or broker/dealer if, in the Fund's or Adviser's opinion, (a) the
exchange would adversely affect the Fund's ability to invest according to its
investment objectives and policies; (b) the Fund believes that a pattern of
exchanges coincides with a "market timing" strategy; or (c) otherwise
adversely affect the Fund and its shareholders. The Fund reserves the right
to terminate or modify its exchange privileges at any time upon giving
written notice to shareholders at least 60 days in advance. Shareholders are
urged to review their constituent documents and relevant requirements in
order to verify pertinent limitations imposed by retirement plan or group
annuity contract exchange limits as well as restrictions imposed by governing
law.
Unless a shareholder elects in writing not to participate in the Telephone
Exchange Privilege, shares for which certificates have not been issued may be
exchanged by calling 800-814-1897 provided that the exchange is made between
accounts with identical registrations. Under the Telephone Exchange
Privilege, telephone exchange orders may also be entered on behalf of the
shareholder by his or her registered representative.
The Fund and the Transfer Agent will employ reasonable procedures to
confirm that telephone instructions are genuine. In addition to requiring
identical registrations on both
17
<PAGE>
accounts, the Transfer Agent will require address verification and will
record telephone instructions on tape. All exchanges will be confirmed in
writing to the shareholder. To the extent that procedures reasonably designed
to prevent unauthorized telephone exchanges are not followed, the Fund and/or
the Transfer Agent may be liable for following telephone instructions for
exchange transactions that prove to be fraudulent. Broker/dealers other than
Equity Planning have agreed to bear the risk of any loss resulting from any
unauthorized telephone exchange instruction from the firm or its registered
representatives. However, the shareholder would bear the risk of loss
resulting from instructions entered by an unauthorized third party that the
Fund and/or the Transfer Agent reasonably believe to be genuine. The
Telephone Exchange Privilege may be modified or terminated at any time on 60
days' notice to shareholders. In addition, during times of drastic economic
or market changes, the Telephone Exchange Privilege may be difficult to
exercise or may be suspended temporarily. The Telephone Exchange Privilege is
available only in States where shares being acquired may be legally sold.
If a shareholder elects not to use the Telephone Exchange Privilege or if
the shares being exchanged are represented by a certificate or certificates,
in order to exchange shares the shareholder must submit a written request to
Equity Planning, 100 Bright Meadow Blvd., Enfield, CT 06083-2200, ATTN:
Phoenix Funds. If the shares are being exchanged between accounts that are
not registered identically, the signature on such request must be guaranteed
by an eligible guarantor institution as defined by the Transfer Agent in
accordance with its signature guarantee procedures. Currently, such
procedures generally permit guarantees by banks, broker dealers, credit
union, national securities exchanges, registered securities associations,
clearing agencies and savings associations. Any outstanding certificate or
certificates for the tendered shares must be duly endorsed and submitted.
NET ASSET VALUE
The net asset value of the shares of each Portfolio of the Fund is
determined once daily as of the close of trading of the New York Stock
Exchange (the "Exchange"), on days when the Exchange is open for trading. Net
asset value per share of a Portfolio is determined by adding the values of
all securities and other assets of the Portfolio, subtracting liabilities and
expenses, and dividing by the total number of outstanding shares of the
Portfolio. Assets and liabilities are determined in accordance with generally
accepted accounting principles and applicable rules and regulations of the
Securities and Exchange Commission. The total liability allocated to a class,
plus that class's distribution fee and any other expenses allocated solely to
that class, are deducted from the proportionate interest of such class in the
assets of the Portfolio, 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.
In determining the value of the assets of each Portfolio (other than the
Money Market Portfolio), the securities for which market quotations are
readily available are valued at market value. The assets of the Money Market
Portfolio are valued on an amortized cost basis absent extraordinary or
unusual market conditions. Debt securities (other than short-term
obligations) including those for which market quotations are not readily
available are normally valued on the basis of valuations provided by a
pricing service when such prices are believed to reflect the fair value of
such securities. Securities listed or traded on a national securities
exchange are valued at the last sale price or, if there has been no recent
sale, at the last bid price. Securities which are primarily traded on foreign
securities exchanges are generally valued at the preceding closing values of
such securities on their respective exchanges. A security that is listed or
traded on more than one exchange is valued at the quotation on the exchange
determined to be the primary market for such security by the Trustees or
their delegates. Securities traded in the over-the-counter market are valued
at the last bid price. Short-term obligations maturing in less than sixty
days are valued at amortized cost, which the Trustees have determined
approximates market. Equity options are valued at the last sale price unless
the bid or asked price is used. Exchange-traded fixed income options are
valued at the last sale price unless there is no sale price, in which event
current prices by market makers are used. Over-the-counter traded fixed
income options are valued based upon current prices provided by market
makers. Financial futures are valued at the settlement price established each
day by the board of trade or exchange on which they are traded. Illiquid
securities are valued at the price determined in good faith by the Trustees
or the Adviser acting at their direction, considering all relevant factors
including but not limited to, prices disseminated by pricing services (when
such prices are believed to reflect the fair value of such securities) and
the value of any comparable securities for which market quotations are
readily available. 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 a Portfolio has other investments, such
investments shall be valued at the fair value thereof as determined in good
faith by the Trustees, although the actual calculations may be made by
persons acting pursuant to the direction of the Trustees.
HOW TO REDEEM SHARES
Any holder of shares of any Portfolio may require the Fund to redeem its
shares at any time at the net asset value per share next computed after
receipt of a redemption request in proper written form by State Street Bank
and Trust Company, P.O. Box 8301, Boston, MA 02266-8301, ATTN: Phoenix Duff &
Phelps Institutional Mutual Funds. To be in proper form to redeem shares, (1)
the signature(s) of duly authorized representative(s) of the shareholder must
appear in the appropriate place upon the stock power; (2) the stock power or
any related instruction transmittal must specify the name and account number
of the shareholder exactly as registered; (3) the name of the Portfolio;
18
<PAGE>
and (4) and all such signatures must be guaranteed by an eligible guarantor
institution as determined in accordance with the standards and procedures
established by the Transfer Agent. Currently, such procedures generally
permit guarantees by banks, broker-dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations. Signature(s) must also be guaranteed on any change
of address request submitted in conjunction with any redemption request.
Additional documentation may be required for redemptions by corporations,
partnerships or other organizations, or if redemption is requested by anyone
other than the shareholder(s) of record. Redemption requests will not be
honored until all required documents in proper form have been received.
In addition, each Portfolio maintains a continuous offer to repurchase its
shares, and shareholders may normally sell their shares through securities
dealers, who may charge customary commissions for their services. The
redemption price in such case will be the price as of the close of the
general trading session of the New York Stock Exchange on that day, provided
the order is received by the dealer prior thereto, and is transmitted to the
Distributor prior to the close of its business. No charge is made by the Fund
on redemptions, but shares tendered through investment dealers may be subject
to service charge by such dealers. Payment for shares redeemed will be made
within three days after receipt of the duly endorsed share certificates or
written request; provided, however, that redemption proceeds will not be
disbursed until each check used for purchase of shares has been cleared for
payment by the investor's bank which may take up to 15 days after receipt of
the check.
Unless a shareholder elects in writing not to participate in the Telephone
Redemption Privilege, shareholders may redeem shares valued at up to $100,000
by calling (800) 814-1897. The Fund and the Transfer Agent will employ
reasonable procedures to confirm that telephone instructions are genuine.
Address and bank account information will be verified, telephone redemption
instructions will be recorded on tape, and all redemptions will be confirmed
in writing to the shareholder. If there has been an address change within the
past 60 days, a telephone redemption will not be authorized. To the extent
that procedures reasonably designed to prevent unauthorized telephone
redemptions are not followed, the Fund and/or the Transfer Agent may be
liable for following telephone instructions for redemption transactions that
prove to be fraudulent. Broker/dealers other than Equity Planning have agreed
to bear the risk of any loss resulting from any unauthorized telephone
redemption instruction from the firm or its registered representatives.
However, the shareholder would bear the risk of loss resulting from
instructions entered by an unauthorized third party that the Fund and/or the
Transfer Agent reasonably believe to be genuine. The Telephone Redemption
Privilege may be modified or terminated at any time without prior notice to
shareholders. In addition, during times of drastic economic or market
changes, the telephone redemption privilege may be difficult to exercise and
a shareholder should submit a written redemption request, as described above.
If the amount of the redemption is $500 or more, the proceeds will be
wired to the shareholder's designated U.S. commercial bank account. If the
amount of the redemption is less than $500, the proceeds will be sent by
check to the address of record on the shareholder's account.
Telephone redemption requests must be received by Equity Planning by the
close of trading on the New York Stock Exchange on any day when Equity
Planning is open for business. Requests made after that time or on a day when
Equity Planning is not open for business cannot be accepted by Equity
Planning. The proceeds of a telephone redemption will normally be sent on the
first business day following receipt of the redemption request. However, with
respect to the telephone redemption of shares purchased by check, such
requests will only be effected after the Fund has assured itself that good
payment has been collected for the purchase of shares, which may take up to
15 days.
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. The Fund has
elected to pay in cash all requests for redemption by any shareholder of
record, but may limit such cash in respect to each shareholder during any 90
day period to the lesser of $250,000 or 1% of the net asset value of the Fund
at the beginning of such period. This election has been made pursuant to Rule
18f-1 under the Investment Company Act of 1940 and is irrevocable while the
Rule is in effect unless the Securities and Exchange Commission, by order,
permits its withdrawal. In case of a redemption in kind, securities delivered
in payment for shares would be valued at the same value assigned to them in
computing the net asset value per share of the Fund. A shareholder receiving
such securities would incur brokerage costs when he sold the securities.
DIVIDENDS, DISTRIBUTIONS
AND TAXES
Each Portfolio will be treated as a separate mutual fund for federal
income tax purposes. Each Portfolio intends to elect to be taxed as a
regulated investment company ("RIC") and qualify as such annually under
Subchapter M of the Internal Revenue Code (the "Code"). As a RIC, each
Portfolio will not be subject to federal income tax on its ordinary income
and net realized gains distributed to its shareholders. Each Portfolio
intends to distribute sufficient ordinary income and net realized capital
gains, if any, annually to avoid the imposition of federal income tax or a
non-deductible 4% excise tax.
Many investors, including most tax qualified plan investors, may be
eligible for preferential federal income tax treatment on distributions
received from the Portfolio and dispositions of shares of the Portfolio. The
Fund has not sought opinions of counsel or applied for a ruling from the
Internal Revenue Service as to whether the assessment of higher distribution
fees
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<PAGE>
with respect to Class Y Shares may result in any dividends or distributions
constituting "preferential dividends" under the Code. Complete assurances
cannot be given when or whether the Fund will receive a favorable opinion or
ruling or, the potential consequences associated with an adverse
determination. This Prospectus does not attempt to describe in any respect
such preferential tax treatment. Any prospective investor that is a trust or
other entity eligible for special tax treatment under the Code that is
considering purchasing shares of the Fund should consult its tax advisor
about the federal, state or local tax consequences particular to it, as
should persons considering whether to have amounts held for their benefit in
such trusts or other entities which intend to invest in shares of the Fund.
Investors that do not receive preferential tax treatment are subject to
federal income tax on distributions received with respect to their shares of
the Fund. Distributions of the Fund's ordinary income and short-term capital
gains are taxable to shareholders as ordinary income whether received in cash
or shares of the Fund's. Designated long-term capital gains distributions are
taxable as long-term capital gains whether distribution in cash or additional
shares and regardless of how long the shareholder owned the shares of the
Fund; however, a loss recognized on the sale of the shares of a Portfolio
held for six months or less will be treated as a long-term capital loss to
the extent of long-term capital gains distributions received on those shares.
Certain designated dividends paid by the Fund may be eligible for the
dividends-received deduction for corporate shareholders. Shareholders should
consult with their tax advisor for additional information concerning the
federal, state, local and foreign tax consequences of purchasing shares of
the Portfolio.
Dividends from net investment income, if any, of the Money Market
Portfolio and Enhances Reserves Portfolio will be declared daily and paid
monthly. Dividends from net investment income for all other Portfolios will
be accrued and paid semi-annually. Dividends from net realized capital gains,
if any, will be declared and paid annually for all Portfolios. Dividends and
distributions with respect to the shares of any class of any Portfolio will
be payable in full and fractional shares of such class of Portfolio at the
net asset value on the first business day after the record date, or, at the
option of the shareholder, in cash. Any shareholder who purchases shares of a
Portfolio prior to the close of business on the record date for a dividend or
distribution will be entitled to receive such dividend or distribution.
The foregoing is only a summary of some of the important tax
considerations generally affecting the Portfolios and their shareholders.
Shareholders should consult competent tax advisers regarding specific tax
situations.
ADDITIONAL INFORMATION
Inquiries and requests for the Statement of Additional Information, the
Annual Report to Shareholders and the Semi-Annual Report to Shareholders
should be directed to Equity Planning at (800) 814-1897 or 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200.
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<PAGE>
APPENDIX
A-1 and P-1 Commercial Paper Ratings
The Money Market Portfolio will only invest in commercial paper which at
the date of investment is rated A-1 by Standard & Poor's Corporation or P-1
by Moody's Investors Service, Inc., or, if not rated, is issued or guaranteed
by companies which at the date of investment have an outstanding debt issue
rated AA by Standard & Poor's or Aa by Moody's.
Commercial paper rated A-1 by Standard & Poor's Corporation ("S&P") has
the following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is rated "A" or better. The issuer has
access to at least two additional channels of borrowing. Basic earnings and
cash flow have an upward trend with allowance made for unusual circumstances.
Typically, the issuer's industry is well established and the issuer has a
strong position within the industry. The reliability and quality of
management are unquestioned.
The rating P-1 is the highest commercial paper rating assigned by Moody's
Investors Service, Inc. ("Moody's"). Among the factors considered by Moody's
in assigning ratings are the following: (1) evaluation of the management of
the issuer; (2) economic evaluation of the issuer's industry or industries
and an appraisal of speculative-type risks which may be inherent in certain
areas; (3) evaluation of the issuer's products in relation to competition and
customer acceptance; (4) liquidity; (5) amount and quality of long-term debt;
(6) trend of earnings over a period of ten years; (7) financial strength of a
parent company and the relationship which exists with the issuer; and (8)
recognition by the management of obligations which may be present or may
arise as a result of public interest questions and preparations to meet such
obligations.
Moody's Investors Service, Inc., Corporate Bond Ratings
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they Comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
Ca--Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Standard and Poor's Corporation's Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this
category than for bonds in the A category.
BB-B-CCC-CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation.
BB indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some
21
<PAGE>
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
Fitch Investor Services, Inc.
AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA--Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA". Because bonds
rated in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated "F-1+."
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds with
higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited
margin of safety and the need for reasonable business and economic activity
throughout the life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, and D--Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be valued on the
basis of their ultimate recovery value in liquidation or reorganization of
the obligor. "DDD" represents the highest potential for recovery on these
bonds, and "D" represents the lowest potential for recovery.
Plus (+) Minus (-)--Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus
and minus signs however, are not used in the "DDD", "DD", or "D" categories.
Duff & Phelps Credit Rating Co. Rating Scale--Duff & Phelps (not
affiliated with the Fund or DPM) offers ratings for short-term and long-term
debt, preferred stock, structured financings, and insurer's claims paying
ability. D&P ratings are specific to credit quality, i.e., the likelihood of
timely payment for principal, interest, and in the case of a preferred stock
rating, preferred stock dividends. The insurance company claims paying
ability ratings reflect an insurer's ability to meet its claims obligations.
Long-Term Ratings
AAA Highest Quality
AA+, AA, AA- High Quality
A+, A, A- Good Quality
BBB+, BBB, BBB Satisfactory Quality (investment grade)
BB+, B, B- Non-Investment Grade
B+, B, B- Non-Investment Grade
CCC Speculative
22
<PAGE>
Statement of Additional Information-Subject to Completion
Date of Issuance: February 1, 1996
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
101 Munson Street, Greenfield, Massachusetts 01301
(800) 814-1897
Statement of Additional Information
March 1, 1996
This Statement of Additional Information is not a prospectus but is
incorporated by reference in the Prospectus. Much of the information
contained in this Statement of Additional Information expands upon subjects
discussed in the Prospectus. Accordingly, this Statement should be read in
conjunction with the Fund's current Prospectus, dated March 1, 1996, a copy
of which may be obtained by calling Phoenix Equity Planning Corporation
("Equity Planning") at (800) 814-1897, or by writing to Equity Planning at
100 Bright Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200.
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
PAGE
<S> <C>
THE FUND 1
INVESTMENT OBJECTIVES AND POLICIES (7) 1
INVESTMENT RESTRICTIONS (13) 8
PERFORMANCE INFORMATION (7) 10
PERFORMANCE COMPARISONS 12
PORTFOLIO TURNOVER 12
MANAGEMENT OF THE TRUST (13) 12
THE INVESTMENT ADVISERS (13) 17
BROKERAGE ALLOCATION 18
DETERMINATION OF NET ASSET VALUE (18) 18
PURCHASE OF SHARES (17) 19
TAXES (19) 19
THE NATIONAL DISTRIBUTOR (15) 20
</TABLE>
*Numbers in parenthesis are cross-references
to related pages of the Prospectus.
[red herring on side of page]
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
<PAGE>
THE FUND
Phoenix Duff & Phelps Institutional Mutual Funds (the "Fund") is an
open-end management investment company which was organized under
Massachusetts law on December 4, 1995 as a business trust. Prior to March 1,
1996, the Bond, Balanced, Growth, Money Market and U.S. Government Securities
Portfolios existed as the Managed Bond Account ("Separate Account P"),
Balanced Account ("Separate Account L"), Growth Stock Account ("Separate
Account S"), Money Market Account ("Separate Account G"), and U.S. Government
Account ("Separate Account U"), respectively; separate investment accounts of
Phoenix Home Life Mutual Insurance Company pursuant to the insurance laws of
the State of New York and the laws of other States.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of each Portfolio are described in the
"Investment Objectives and Policies" and "Investment Techniques" sections of
the Prospectus. The following discussion supplements the description of the
Portfolio's investment policies and investment techniques information
contained in the Prospectus.
The investment objective of each Portfolio is deemed to be a fundamental
policy and may not be changed without the approval of the shareholders of
that Portfolio. Investment restrictions described in this Statement of
Additional Information are fundamental policies of the Fund and may not be
changed as to any Portfolio without the approval of the Portfolio's
shareholders.
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.
Banker's 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. The U.S.
Government Securities Fund will invest primarily in securities which are
supported by the full faith and credit of the U.S. Government.
Repurchase Agreements. The repurchase price under the repurchase
agreements described in the Prospectus generally equals the price paid by the
Fund plus interest negotiated on the basis of current short-term rates (which
may be more or less than the rate on the securities underlying the repurchase
agreement). Securities subject to repurchase agreements are held by the
Fund's custodian (or sub-custodian) or in the Federal Reserve/Treasury
book-entry system. Repurchase agreements are considered to be loans under the
Investment Company Act of 1940 as amended (the "1940 Act").
Reverse Repurchase Agreements. At the time the Fund enters into a reverse
repurchase agreement (an agreement under which the Fund sells portfolio
securities and agrees to repurchase them at an agreed-upon date and price),
it will place in a segregated custodial account liquid assets such as U.S.
Government securities or other liquid high grade debt securities having a
value equal to or greater than the repurchase price (including accrued
interest) and will subsequently monitor the account to ensure that such value
is maintained. Reverse repurchase agreements involve the risk that the market
value of the securities sold by the Fund may decline below the price of the
securities it is obligated to repurchase. Reverse repurchase agreements are
considered to be borrowings under the 1940 Act.
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<PAGE>
Bank Obligations. For purposes of a Portfolio's investment policies with
respect to bank obligations, the assets of a bank or savings institution will
be deemed to include the assets of its domestic and foreign branches.
Municipal Obligations. Municipal Obligations include debt obligations
issued by or on behalf of states, territories and possessions of the United
States and the District of Columbia and their political subdivisions,
agencies and instrumentalities to obtain funds for various public purposes,
including the construction of a wide range of public facilities, the
refunding of outstanding obligations, the payment of general operating
expenses and the extension of loans to public institutions and facilities.
The two principal classifications of Municipal Obligations consist of
"general obligation" and "revenue" issues. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest, and, accordingly, the capacity of the
issuer of a general obligation bond as to the timely payment of interest and
the repayment of principal when due is affected by the issuer's maintenance
of its tax base. Revenue bonds are payable only from the revenues derived
from a particular facility or class of facilities or, in some cases, from the
proceeds of a special tax or other specific revenue source; accordingly, the
timely payment of interest and the repayment of principal in accordance with
the terms of such bonds is a function of the economic viability of such
facility or revenue source. The Bond, Balanced and Enhanced Reserves
Portfolios may include "moral obligation" issues, which are normally issued
by special purpose authorities. There are, of course, variations in the
quality of Municipal Obligations both within a particular classification and
between classifications, and the yields on Municipal Obligations depend upon
a variety of factors, including general money market conditions, the
financial condition of the issuer, general conditions of the municipal bond
market, the size of a particular offering, the maturity of the obligation and
the rating of the issue.
Certain types of Municipal Obligations (private activity bonds) are or
have been issued to obtain funds to provide privately operated housing
facilities, pollution control facilities, convention or trade show
facilities, mass transit, airport, port or parking facilities and certain
local facilities for water supply, gas, electricity or sewage or solid waste
disposal. Private activity bonds are also issued by privately held or
publicly owned corporations in the financing of commercial or industrial
facilities. State and local governments are authorized in most states to
issue private activity bonds for such purposes in order to encourage
corporations to locate within their communities. The principal and interest
on these obligations may be payable from the general revenues of the users of
such facilities.
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 Obligations. For example, under the Federal tax
legislation enacted in 1986, interest on certain private activity bonds must
be included in an investor's alternative minimum taxable income, and
corporate investors must treat all tax-exempt interest as an item of tax
preference. Dividends paid by the Portfolio that are derived from interest of
Municipal Obligations would be taxable to the Portfolio shareholders for
Federal income tax purposes.
Insured Municipal Obligations. Certain of the Municipal Obligations held
by a Portfolio may be insured as to the timely payment of principal and
interest. The insurance policies will usually be obtained by the issuer of
the Municipal Obligation at the time of its original issuance. In the event
that the issuer defaults on interest or principal payment, the insurer will
be notified and will be required to make payment to the bondholders. There
is, however, no guarantee that the insurer will meet its obligations. In
addition, such insurance will not protect against market fluctuations caused
by changes in interest rates and other factors.
Stand-By Commitments. Under a stand-by commitment, a dealer or bank agrees
to purchase from the Fund, at the Fund's option, specified Municipal
Obligations at their amortized cost value to the Fund plus accrued interest,
if any. Stand-by commitments may be sold, transferred or assigned by the Fund
only with the underlying Municipal Obligation. The Fund expects that stand-by
commitments will generally be available without the payment of any direct or
indirect consideration. However, if necessary or advisable, the Fund may pay
for a stand-by commitment either separately in cash or by paying a higher
price for portfolio securities which are acquired subject to the commitment
(thus reducing the yield to maturity otherwise available for the same
securities). Where the Fund paid any consideration directly or indirectly for
a stand-by commitment, its cost would be reflected as unrealized depreciation
for the period during which the commitment was held by the Fund.
The Fund intends to enter into stand-by commitments only with dealers,
banks and broker-dealers which, in the Adviser's opinion, present minimal
credit risks. The Fund's reliance upon the credit of these dealers, banks and
broker-dealers will be secured by the value of the underlying Municipal
Obligations that are subject to the commitment. In evaluating the
creditworthiness of the issuer of a stand-by commitment, the Adviser will
review periodically the issuer's assets, liabilities, contingent claims and
other relevant financial information. The Fund would acquire stand-by
commitments solely to facilitate portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes. Stand-by commitments
acquired by the Fund would be valued at zero in determining net asset value.
When-Issued and Delayed Delivery Transactions. When a Portfolio agrees to
purchase securities on a when-issued or delayed delivery basis, its custodian
will set aside cash, U.S. Government securities or other liquid high-grade
debt obligations equal to the amount of the purchase or the commitment in a
separate account. Normally, the custodian will set aside portfolio securities
to meet this requirement. The market value of the separate account will be
monitored and if such market value declines,
2
<PAGE>
the Portfolio will be required subsequently to place additional assets in the
separate account in order to ensure that the value of the account remains
equal to the amount of the Portfolio's commitments. Because a Portfolio will
set aside cash or liquid high-grade debt securities in the manner described,
the Portfolio's liquidity and ability to manage its portfolio might be
affected in the event its when-issued purchases or delayed delivery
commitments ever exceeded 25% of the value of its assets. In the case of a
delayed delivery of the sale of portfolio securities, the Portfolio's
custodian will hold the portfolio securities themselves in a segregated
account while the commitment is outstanding.
A Portfolio will make commitments to purchase securities on a when-issued
basis or delayed delivery 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, the Portfolio may
dispose of or renegotiate a commitment after it is entered into, and may sell
securities it has committed to purchase before those securities are delivered
to the Portfolio on the settlement date. In these cases the Portfolio may
realize a capital gain or loss. When a Portfolio engages in when-issued and
delayed delivery transactions, it relies on the other party to consummate the
trade. Failure of such party to do so may result in the Portfolio's incurring
a loss or missing an opportunity to obtain a price considered to be
advantageous.
The value of the securities underlying a when-issued purchase or a delayed
delivery to purchase securities, and any subsequent fluctuations in their
value, is taken into account when determining a Portfolio's net asset value
starting on the day a Portfolio agrees to purchase the securities. The
Portfolio does not earn interest on the securities it has committed to
purchase until they are paid for and delivered on the settlement date. When a
Portfolio makes a delayed delivery of the sale of securities it owns, the
proceeds to be received upon settlement are included in the Portfolio's
assets, and fluctuations in the value of the underlying securities are not
reflected in the Portfolio's net asset value as long as the commitment
remains in effect.
Securities Issued by Other Investment Companies. The Fund may invest in
securities issued by other investment companies within the limits prescribed
by the 1940 Act. The Fund currently intends to limit such investments so
that, as determined immediately after a purchase is made: (a) not more than
5% of the value of its total assets will be invested in the securities of any
one investment company; (b) not more than 10% of the value of its total
assets will be invested in the aggregate in securities of investment
companies as a group; (c) not more than 3% of the outstanding voting stock of
any one investment company will be owned by the Fund; and (d) not more than
10% of the outstanding voting stock of any one investment company will be
owned in the aggregate by the Fund and other investment companies advised by
the Investment Adviser. As a shareholder of another investment company, the
Fund would bear, along with other shareholders, its pro rata portion of the
expenses of such other investment company, including advisory fees. These
expenses would be in addition to the advisory and other expenses that the
Fund bears directly in connection with its own operations; and may represent
a duplication of fees to shareholders of the Fund.
Securities and Index Options. The Balanced, Enhanced Reserves and U.S.
Government Securities Portfolios may write covered call options and purchase
call and put options. Options and the related risks are summarized below.
Writing and Purchasing Options. Call options written by a Portfolio
normally will have expiration dates between three and nine months from the
date written. During the option period a Portfolio may be assigned an
exercise notice by the broker-dealer through which the call option was sold,
requiring the Portfolio to deliver the underlying security (or cash in the
case of securities index calls) against payment of the exercise price. This
obligation is terminated upon the expiration of the option period or at such
earlier time as the Portfolio effects a closing purchase transaction. A
closing purchase transaction cannot be effected with respect to an option
once the Portfolio has received an exercise notice.
The exercise price of a call option written by a Portfolio may be below,
equal to or above the current market value of the underlying security or
securities index at the time the option is written.
A multiplier for an index option performs a function similar to the unit
of trading for an option on an individual security. It determines the total
dollar value per contract of each point between the exercise price of the
option and the current level of the underlying index. A multiplier of 100
means that a one-point difference will yield $100. Options on different
indices may have different multipliers.
Securities indices for which options are currently traded include the
Standard & Poor's 100 and 500 Composite Stock Price Indices,
Computer/Business Equipment Index, Major Market Index, Amex Market Value
Index, Computer Technology Index, Oil and Gas Index, NYSE Options Index,
Gaming/Hotel Index, Telephone Index, Transportation Index, Technology Index,
and Gold/Silver Index. A Portfolio may write call options and purchase call
and put options on any other indices traded on a recognized exchange.
Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option written by a Portfolio, to prevent an
underlying security from being called, or to enable a Portfolio to write
another call option with either a different exercise price or expiration
date or both. A Portfolio may realize a net gain or loss from a closing
purchase transaction, depending upon whether the amount of the premium
received on the call option is more or less than the cost of effecting the
closing purchase transaction. If a call option written by a Portfolio
expires unexercised, a Portfolio will realize a gain in the amount of the
premium on the option less the commission paid.
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The option activities of a Portfolio may increase its portfolio turnover
rate and the amount of brokerage commissions paid. A Portfolio will pay a
commission each time it purchases or sells a security in connection with the
exercise of an option. These commissions may be higher than those which
would apply to purchases and sales of securities directly.
Limitations on Options. A Portfolio may write call options only if they
are covered and if they remain covered so long as a Portfolio is obligated
as a writer. If a Portfolio writes a call option on an individual security,
a Portfolio will own the underlying security at all times during the option
period. A Portfolio 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 Portfolio 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 escrow with the broker in
accordance with clearing corporation and exchange rules. In the case of an
index call option written by a Portfolio, a Portfolio will be required to
deposit qualified securities. A "qualified security" is a security against
which a Portfolio has not written a call option and which has not been
hedged by a Portfolio 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, a Portfolio will deposit an amount of cash or liquid
assets equal in value to the difference. In addition, when a Portfolio
writes a call on an index which is "in-the-money" at the time the call is
written, a Portfolio will segregate with its custodian bank cash or liquid
assets equal in value to the amount by which the call is "in-the-money"
times the multiplier times the number of contracts. Any amount segregated
may be applied to a Portfolio's obligation to segregate additional amounts
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 Portfolio may invest up to 2% of its total assets in exchange-traded
call and put options. A Portfolio 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. In connection with a
Portfolio qualifying as a regulated investment company under the Internal
Revenue Code, other restrictions on a Portfolio's ability to enter into
option transactions may apply from time to time. See "Taxes."
Risks Relating to Options. 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 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 a Portfolio
may lose the premium it paid plus transaction costs. If a Portfolio does not
exercise the option and is unable to close out the position prior to
expiration of the option, it will lose its entire investment.
An option position may be closed out only on an exchange which provides
a secondary market for an option of the same series. Although a Portfolio
will write and purchase options only when the 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 a Portfolio, 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 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 Adviser
believes that the position limits established by the exchanges will not have
any adverse impact upon a Portfolio or all of the Portfolios, in the
aggregate.
Risks of Options on 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 Portfolio 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 rather than upon movements in the price of an individual
security. Accordingly, successful use by a Portfolio of options
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on indices will be subject to the 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
Portfolio 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
a Portfolio. However, it is the Fund'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, a Portfolio will write call options on indices
only subject to the limitations described above.
Price movements in securities in a Portfolio's holdings will not
correlate perfectly with movements in the level of the index and, therefore,
a Portfolio bears the risk that the price of the securities held by the
Portfolio may not increase as much as the level of the index. In this event,
the Portfolio would bear a loss on the call which would not be completely
offset by movements in the prices of a Portfolio's portfolio securities. It
is also possible that the index may rise when the value of a Portfolio's
holdings securities does not. If this occurred, the Portfolio 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 portfolio securities.
Unless a Portfolio has other liquid assets which are sufficient to
satisfy the exercise of a call on an index, a Portfolio will be required to
liquidate portfolio securities in order to satisfy the exercise. Because an
exercise must be settled within hours after receiving the notice of
exercise, if a Portfolio fails to anticipate an exercise, it may have to
borrow from a bank (in an amount not exceeding 10% of a Portfolio's total
assets) pending settlement of the sale of securities in its portfolio and
pay interest on such borrowing.
When a Portfolio has written a call on an index, there is also a risk
that the market may decline between the time a Portfolio 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 a Portfolio is able to sell
securities in its portfolio. As with options on portfolio securities, a
Portfolio will not learn that a call has been exercised until the day
following the exercise date but, unlike a call on a portfolio security where
a Portfolio would be able to deliver the underlying security in settlement,
a Portfolio may have to sell part of its portfolio securities in order to
make settlement in cash, and the price of such securities might decline
before they could be sold.
If a Portfolio 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" a
Portfolio 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 a Portfolio 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.
Financial Futures and Related Options. Each Portfolio (other than the
Money Market Portfolio) may use financial futures contracts and related
options to hedge against changes in the market value of its portfolio
securities or securities which it intends to purchase. Hedging is
accomplished when an investor takes a position in the futures market opposite
to his cash market position. There are two types of hedges--long (or buying)
and short (or selling) hedges. Historically, prices in the futures market
have tended to move in concert with cash market prices, and prices in the
futures market have maintained a fairly predictable relationship to prices in
the cash market. Thus, a decline in the market value of securities in a
Portfolio's holdings may be protected against to a considerable extent by
gains realized on futures contracts sales. Similarly, it is possible to
protect against an increase in the market price of securities which a
Portfolio may wish to purchase in the future by purchasing futures contracts.
A Portfolio may purchase or sell any financial futures contracts which are
traded on a recognized exchange or board of trade. Financial futures
contracts consist of interest rate futures contracts and securities index
futures contracts. A public market presently exists in interest rate futures
contracts covering long-term U.S. Treasury bonds, U.S. Treasury notes,
three-month U.S. Treasury bills and GNMA certificates. Securities index
futures contracts are currently traded with respect to the Standard & Poor's
500 Composite Stock Price Index and such other broad-based stock market
indices as the New York Stock Exchange Composite Stock Index and the Value
Line Composite Stock Price Index. A clearing corporation associated with the
exchange or board of trade on which a financial futures contract trades
assumes responsibility for the completion of transactions and also guarantees
that open futures contracts will be performed.
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In contrast to the situation when a Portfolio purchases or sells a
security, no security is delivered or received by a Portfolio upon the
purchase or sale of a financial futures contract. Initially, a Portfolio will
be required to deposit in a segregated account with its custodian bank an
amount of cash, U.S. Treasury bills or liquid high grade debt obligations.
This amount is known as initial margin and is in the nature of a performance
bond or good faith deposit on the contract. The current initial margin
deposit required per contract is approximately 5% of the contract amount.
Brokers may establish deposit requirements higher than this minimum.
Subsequent payments, called variation margin, will be made to and from the
account on a daily basis as the price of the futures contract fluctuates.
This process is known as marking to market.
The writer of an option on a futures contract is required to deposit
margin pursuant to requirements similar to those applicable to futures
contracts. Upon exercise of an option on a futures contract, the delivery of
the futures position by the writer of the option to the holder of the option
will be accompanied by delivery of the accumulated balance in the writer's
margin account. This amount will be equal to the amount by which the market
price of the futures contract at the time of exercise exceeds, in the case of
a call, or is less than, in the case of a put, the exercise price of the
option on the futures contract.
Although financial futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery.
Closing out is accomplished by effecting an offsetting transaction. A futures
contract sale is closed out by effecting a futures contract purchase for the
same aggregate amount of securities and the same delivery date. If the sale
price exceeds the offsetting purchase price, the seller immediately would be
paid the difference and would realize a gain. If the offsetting purchase
price exceeds the sale price, the seller immediately would pay the difference
and would realize a loss. Similarly, a futures contract purchase is closed
out by effecting a futures contract sale for the same securities and the same
delivery date. If the offsetting sale price exceeds the purchase price, the
purchaser would realize a gain, whereas if the purchase price exceeds the
offsetting sale price, the purchaser would realize a loss. A Portfolio will
pay commissions on financial futures contracts and related options
transactions. These commissions may be higher than those which would apply to
purchases and sales of securities directly.
Limitations on Futures Contracts and Related Options. A Portfolio may not
engage in transactions in financial futures contracts or related options for
speculative purposes but only as a hedge against anticipated changes in the
market value of its portfolio securities or securities which it intends to
purchase. A Portfolio may not purchase or sell financial futures contracts or
related options if, immediately thereafter, the sum of the amount of initial
margin deposits on a Portfolio's existing futures and related options
positions and the premiums paid for related options would exceed 2% of the
market value of a Portfolio's total assets after taking into account
unrealized profits and losses on any such contracts. At the time of purchase
of a futures contract or a call option on a futures contract, an amount of
cash, U.S. Government securities or other appropriate high-grade debt
obligations equal to the market value of the futures contract minus a
Portfolio's initial margin deposit with respect thereto will be deposited in
a segregated account with a Portfolio's custodian bank to collateralize fully
the position and thereby ensure that it is not leveraged. The extent to which
a Portfolio may enter into financial futures contracts and related options
also may be limited by the requirements of the Internal Revenue Code for
qualification as a regulated investment company. See "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 Portfolio
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 Portfolio would continue to be required to make
daily margin payments. In this situation, if a Portfolio has insufficient
cash to meet daily margin requirements it may have to sell portfolio
securities at a time when it may be disadvantageous to do so. In addition, a
Portfolio 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 Portfolio'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 preclude a hedger's opportunity to
benefit from a favorable market movement. In addition, investing in futures
contracts and options on futures contracts will cause a Portfolio to incur
additional brokerage commissions and may cause an increase in a Portfolio's
portfolio turnover rate.
The successful use of futures contracts and related options also depends
on the ability of the Adviser to forecast correctly the direction and extent
of market movements within a given time frame. To the extent market prices
remain stable during the period a futures contract or option is held by a
Portfolio or such prices move in a direction opposite to that anticipated, a
Portfolio may realize a loss on the hedging transaction which is not offset
by an increase in the value of its portfolio securities. As a result, a
Portfolio's return for the period may be less than if it had not engaged in
the hedging transaction.
Utilization of futures contracts by a Portfolio 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 Portfolio 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 Portfolio has sold futures contracts to hedge its portfolio
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against decline in the market, the market may advance and the value of
securities held in a Portfolio's holdings may decline. If this occurred, a
Portfolio 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
Portfolio 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 Portfolio 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 Portfolio 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 due to the resultant reduction in the
liquidity of the futures market. In addition, due to the fact that, from the
point of view of speculators, 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
Portfolio 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
Portfolio 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.
Foreign Securities. Each Portfolio (other than the Money Market and U.S.
Government Securities Portfolios) may purchase foreign securities, including
those issued by foreign branches of U.S. banks. In any event, such
investments in foreign securities will be limited to 15% of the total net
asset value of each Portfolio. Investments in foreign securities,
particularly those of non-governmental issuers, involve considerations which
are not ordinarily associated with investing in domestic issues. These
considerations include changes in currency rates, currency exchange control
regulations, the possibility of expropriation, the unavailability of
financial information, the difficulty of interpreting financial information
prepared under foreign securities markets, the impact of political, social or
diplomatic developments, difficulties in invoking legal process abroad and
the difficulty of assessing economic trends in foreign countries.
The Fund may use a foreign custodian or sub-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 Fund'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.
Mortgage-Backed Securities. Each Portfolio (other than the Growth and
Money Market Portfolios) may invest in Mortgage-Related Securities (as
defined in the Prospectus), including those representing an undivided
ownership interest in a pool of mortgages, such as certificates of the
Government National Mortgage Association ("GNMA") and the Federal Home Loan
Mortgage Corporation ("FHLMC"). These certificates are in most cases
pass-through instruments, through which the holder receives a share of all
interest and principal payments from the mortgages underlying the
certificate, net of certain fees. The average life of a Mortgage-Related
Security varies with the underlying mortgage instruments, which have maximum
maturities of 40 years. The average life is likely to be substantially less
than the original maturity of the mortgage pools underlying the securities as
the result of prepayments, mortgage refinancings or foreclosure. Mortgage
prepayment rates are affected by various factors including the level of
interest rates, general economic conditions, the location and age of the
mortgage and other social and demographic conditions. Such prepayments are
passed through to the registered holder with the regular monthly payments of
principal and interest and have the effect of reducing future payments.
Government securities with nominal remaining maturities in excess of 3-1/2
years that have variable or floating interest rates or demand or put features
may nonetheless be deemed to have remaining maturities of 3-1/2 years or less
so as to be permissible investments for the Fund as follows: (a) a government
security with a variable or floating rate of interest will be deemed to have
a maturity equal to the period remaining until the next readjustment of the
interest rate; (b) a government security with a demand or put feature that
entitles the holder to receive the principal amount of the underlying
security at the time of or sometime after the holder gives notice of demand
or exercise of the put will be deemed to have a maturity equal to the period
remaining until the principal amount can be recovered through demand or
exercise of the put; and (c) a government security with both a variable or
floating rate of interest as described in clause (a) and a demand or put
feature as described in clause (b) will be deemed to have a maturity equal to
the shorter of the period remaining until the next readjustment of the
interest rate or the period remaining until the principal amount can be
recovered through demand or exercise of the put.
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Securities issued by Government National Mortgage Association ("GNMA")
are, and securities issued by Federal National Mortgage Association ("FNMA")
include, mortgage-backed securities representing part ownership of a pool of
mortgage loans. In the case of GNMA, the mortgages are insured by the Federal
Housing Administration or Farmers' Home Administration or guaranteed by the
Veteran's Administration. In the case of FNMA, the mortgages are not insured
by an agency of the U.S. Government.
The prices of mortgage-backed securities are inversely affected by changes
in interest rates and, therefore, are subject to the risk of market price
fluctuations. Mortgage-backed securities issued by GNMA and FNMA currently
offer yields which are higher than those available on other securities of the
U.S. Government and its agencies and instrumentalities, but may be less
effective than these other securities as a means of "locking in" attractive
long-term interest rates. This is a result of the need to reinvest prepayment
of principal and the possibility of significant unscheduled prepayments
resulting from declines in mortgage interest rates. As a result, these
securities have less potential for capital appreciation during periods of
declining interest rates than other investments of comparable risk of decline
in value during periods of rising rates.
Lending Portfolio Securities. In order to increase its return on
investments, each Portfolio may make loans of the portfolio securities as
long as the market value of the loaned securities does not exceed 25% of the
value of that Portfolio's total assets. Loans of portfolio securities will
always be fully collateralized at no less than 102% of the market value of
the loaned securities (as marked to market daily) and made only to borrowers
considered to be creditworthy. Lending portfolio securities involves a risk
of delay in the recovery of the loaned securities and possibly the loss of
the collateral if the borrower fails financially.
Lower Rated Fixed Income Securities. In the event that an issuer of
securities held by a Portfolio experiences difficulties in the timely payment
of principal or interest and such issuer seeks to restructure the terms of
its borrowings, the Portfolio may incur additional expenses and may determine
to invest additional assets with respect to such issuer or the project or
projects to which the Portfolio's portfolio securities relate. Further, the
Portfolio may incur additional expenses to the extent that it is required to
seek recovery upon a default in the payment of interest or the repayment of
principal on its portfolio holdings, and the Portfolio may be unable to
obtain full recovery thereof.
To the extent there is no established secondary market for some of the
medium and lower grade income securities in which the Portfolio may invest,
trading in such securities may be relatively inactive. During periods of
reduced market liquidity or in the absence of readily available market
quotations for medium and lower grade income securities held in the
Portfolio's holdings, the ability of the Investment Adviser to value the
Portfolio's securities becomes more difficult and the Investment Adviser's
use of judgment may play a greater role in the valuation of the Portfolio's
securities due to the reduced availability of reliable objective data.
Further, the Portfolio may have more difficulty selling such securities in a
timely manner and at their stated value than would be the case for securities
for which an established secondary market does exist.
Many medium and lower grade income securities are not listed for trading
on any national securities exchange, and many issuers of medium and lower
grade income securities choose not to have a rating assigned to their
obligations by any nationally recognized statistical rating organization. The
amount of information available about the financial condition of an issuer of
unrated or unlisted securities generally is not as extensive as that which is
available with respect to issuers of listed or rated securities. To the
extent that the Portfolio invests in unrated or unlisted medium and lower
grade income securities, the ability of the Adviser to evaluate the credit
risk of such securities may play a greater role in the ability of the
Portfolio to achieve its investment objective.
The Adviser seeks to minimize the risks involved in investing in medium
and lower grade income securities through portfolio diversification, careful
investment analysis, and attention to current developments and trends in the
economy and financial and credit markets. The Portfolio will rely on the
Adviser's judgment, analysis and experience in evaluating the
creditworthiness of an issue. In its analysis, the Adviser will take into
consideration, among other things, the issuer's financial resources, its
sensitivity to economic conditions and trends, its operating history, the
quality of the issuer's management and regulatory matters. Although the
Adviser's internal business and default risk analysis is independent of the
credit ratings of S&P, Moody's or D&P (or other nationally recognized
statistical rating organization), the Adviser may consider such ratings in
evaluating income securities. Achievement by the Portfolio of its investment
objective will be more dependent on the credit analysis of the Adviser than
is the case for investment companies with investment objectives similar to
the Portfolio's that are more reliant on such rating organizations in
selecting portfolio securities.
INVESTMENT RESTRICTIONS
The Fund's fundamental policies as they affect any Portfolio cannot be
changed without the approval vote of a majority of the outstanding shares of
such Portfolio, which is the lesser of (i) 67% or more of the voting
securities of such Portfolio present at a meeting if the holders of more than
50% of the outstanding voting securities of such Portfolio are present or
represented by proxy or (ii) more than 50% of the outstanding voting
securities of such Portfolio. A proposed change in fundamental policy or
investment objective will be deemed to have been effectively acted upon with
respect to any Portfolio if a majority of the outstanding voting securities
of that Portfolio votes for the approval of the proposal as provided above,
notwithstanding (1) that such matter has not been approved by a majority of
the outstanding securities of any other Portfolio affected by such matter and
(2) that such matter has not been approved by a majority of the outstanding
voting securities of the Fund.
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The following investment restrictions are fundamental policies of the Fund
with respect to all Portfolios and may not be changed except as described
above. Each Portfolio may not:
1. Purchase for such Portfolio securities of any issuer, other than
obligations issued or guaranteed as to principal and interest by the United
States Government or its agencies or instrumentalities, if immediately
thereafter (i) more than 5% of such Portfolio's total assets (taken at market
value) would be invested in the securities of such issuer or (ii) more than
10% of the outstanding securities of any class of such issuer would be held
by such Portfolio or by all Portfolios of the Fund in the aggregate.
2. Concentrate the portfolio investments of any Portfolio in any one
industry. To comply with this restriction, no security may be purchased for a
Portfolio if such purchase would cause the value of the aggregate investment
of such Portfolio in any one industry to exceed 25% of that Portfolio's total
assets (taken at market value). However, the Money Market Portfolio may
invest more than 25% of its assets in the domestic banking industry and the
Managed Bond Portfolio may invest up to 80% of that Portfolio's total assets
in corporate debt securities. Provided further, the foregoing restrictions
shall be inapplicable to investments in tax-exempt securities issued by
government or political subdivisions of governments.
3. Act as securities underwriter except as it technically may be deemed to
be an underwriter under the Securities Act of 1933, as amended, in selling a
portfolio security.
4. Purchase securities on margin, but it may obtain short-term credit as
may be necessary for the clearance of purchases and sales of securities.
5. Make short sales of securities or maintain a short position.
6. Make cash loans, except that the Fund may (i) purchase bonds, notes,
debentures or similar obligations which are customarily purchased by
institutional investors whether publicly distributed or not, and (ii) enter
into repurchase agreements, provided that no more than 15% of any Portfolio's
net assets (taken at market value) may be subject to repurchase agreements
maturing in more than seven days.
7. Make securities loans, except that the Portfolios may make loans of the
portfolio securities of any such Portfolio, provided that the market value of
the securities subject to any such loans does not exceed 25% of the value of
the total assets (taken at market value) of such Portfolio.
8. Make investments in real estate or commodities or commodity contracts,
although (i) the Fund may purchase securities of issuers which deal in real
estate or commodities and may purchase securities which are secured by
interests in real estate, specifically, securities issued by real estate
investment trusts and (ii) any Portfolio (excluding the Money Market and U.S.
Government Securities Portfolios) may engage in transactions in financial
futures contracts and related options, provided that the sum of the initial
margin deposits on such Portfolio's existing futures positions and the
premiums paid for related options would not exceed in the aggregate 2% of
such Portfolio's total assets.
9. Invest in oil, gas or other mineral exploration or development
programs, although the Fund may purchase securities of issuers which engage
in whole or in part in such activities.
10. Invest in puts, calls, straddles and any combination thereof, except
that the Balanced, Enhanced Reserves and U.S. Government Securities
Portfolios may (i) write (sell) exchange-traded covered call options on
portfolio securities and on securities indices and engage in related closing
purchase transactions and (ii) invest up to 2% of its total assets in
exchange-traded call and put options on securities and securities indices.
11. Purchase securities of companies for the purpose of exercising
management or control.
12. Participate in a joint or joint and several trading account in
securities.
13. Purchase securities of any other investment company except in the open
market at customary brokers' commission rates or as a part of a plan of
merger or consolidation.
14. Purchase or retain securities of any issuer if any officer or Trustee
of the Fund, or officer or director of its investment adviser, owns
beneficially more than 1/2 of 1% of the outstanding securities or shares, or
both, of such issuer and all such persons owning more than 1/2 of 1% of such
securities or shares together own beneficially more than 5% of such
securities or shares.
15. Borrow money, except that the Fund may (i) borrow money for any
Portfolio for temporary administrative purposes provided that any such
borrowing does not exceed 10% of the value of the total assets (taken at
market value) of such Portfolio and (ii) borrow money for any Portfolio for
investment purposes, provided that any such borrowing for investment purposes
with respect to any such Portfolio is (a) authorized by the Trustees prior to
any public distribution of the shares of such Portfolio or is authorized by
the shareholders of such Portfolio thereafter, (b) is limited to 33-1/3% of
the value of the total assets (taken at market value) of such Portfolio, and
(c) is subject to an agreement by the lender that any recourse is limited to
the assets of that Portfolio with respect to which the borrowing has been
made.
9
<PAGE>
16. Pledge, mortgage or hypothecate the assets of any Portfolio to an
extent greater than 10% of the total assets (taken at market value) of such
Portfolio to secure borrowing made pursuant to the provisions of item 15
above.
17. Issue senior securities except to the extent that it is permitted to
(a) borrow money from banks pursuant to the Fund's investment restrictions
regarding the borrowing of money, and (b) enter into transactions involving
forward foreign currency contracts, foreign currency futures contracts and
options thereon as described in the Fund's Prospectus and this Statement of
Additional Information.
The Fund may purchase illiquid securities, including repurchase agreements
providing for settlement more than seven days after notice and restricted
securities (securities that must be registered with the Securities and
Exchange Commission before they can be sold to the public) deemed to be
illiquid, but such securities will not constitute more than 15% of each
Portfolio's net assets (provided that not more than 10% of the Money Market
Portfolio's net assets may constitute illiquid securities). The Board of
Trustees, or the Adviser acting at its direction, values these securities,
taking into consideration quotations available from broker-dealers and
pricing services and other information deemed relevant.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage beyond the specified limit resulting
from a change in values of portfolio securities or amount of net assets shall
not be considered a violation of the restrictions.
PERFORMANCE INFORMATION
Performance information for each Portfolio may appear in advertisements,
sales literature, or reports to shareholders or prospective shareholders.
Performance information in advertisements and sales literature may be
expressed as yield and effective yield of the Money Market Portfolio, as
yield of the other Portfolios offered and as total return of any Portfolio.
Current yield for the Money Market Portfolio will be based on the change in
the value of a hypothetical investment (exclusive of capital changes) over a
particular 7-day period, less a hypothetical charge reflecting deductions for
expenses during the period (the stated as a percentage of the investment at
the start of the base period (the "base period return"). The base period
return is then annualized by multiplying by 365/7, with the resulting yield
figure carried to at least the nearest hundredth of one percent. "Effective
yield" for the Money Market Portfolio assumes that all dividends received
during an annual period have been reinvested. Calculation of "effective
yield" begins with the same "base period return" used in the calculation of
yield, which is then annualized to reflect weekly compounding pursuant to the
following formula:
Effective Yield = [(Base Period Return) + 1) 365/7] - 1
Quotations of yield for the Balanced, Managed Bond, Enhanced Reserves,
Growth, and U.S. Government Securities Portfolios will be based on all
investment income per share earned during a particular 30-day period
(including dividends and interest), less expenses (including pro rata Fund
expenses and expenses applicable to each particular Portfolio) accrued during
the period ("net investment income"), and are computed by dividing net
investment income by the value of a share of the Portfolio on the last day of
the period, according to the following formula:
YIELD = 2[((a-b)) + 1)6 - 1]
---------
cd
where,
a = dividends and interest earned during the period by the Portfolio
b = expenses accrued for the period (net of any reimbursements),
c = the average daily number of shares outstanding during the period that
were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the period.
As summarized in the Prospectus under the heading "Performance Information",
total return is a measure of the change in value of an investment in a
Portfolio over the period covered. The formula for total return used herein
includes four steps: (1) adding to the total number of shares purchased by a
hypothetical $1,000 investment in the Portfolio; (2) calculating the value of
the hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of shares of a Portfolio owned at the end of the
period by the net asset value on the last trading day of the period; (3)
assuming maximum sales charge deducted and reinvestment of all dividends at
net asset value and (4) dividing this account value for the hypothetical
investor by the initial $1,000 investment. Total return will be calculated
for one year, five years and ten years or the time period during which the
registration statement including the Portfolio was in effect if a Portfolio
has not been in existence for at least ten years.
Except as above stated, standardized quotations of average annual total
return for each class of shares of each Portfolio will be expressed in terms
of the average annual compounded rate of return of a hypothetical investment
in either Class X or Class Y Shares of each Portfolio over a period of 1, 5,
and 10 years (or up to the life of the class of shares). Standardized total
return quotations reflect the deduction of a proportional share of each
Class's expenses of such Portfolio (on an annual basis), and assume that all
10
<PAGE>
dividends and distributions are reinvested when paid. It is expected that the
performance of Class X Shares shall be better than that of Class Y Shares as
a result of lower distribution fees and certain incrementally lower expenses
paid by Class X Shares. The Fund may also quote supplementally a rate of
total return over different periods of time by means of aggregate, average,
and year-by-year or other types of total return figures.
Performance information for the Portfolio (and each Class thereof) reflects
only the performance of a hypothetical investment in a Class X or Class Y of
a Portfolio during the particular time period in which the calculations are
based. Performance information is not an indication of future performance.
Performance information should be considered in light of a particular
Portfolio's investment objectives and policies, characteristics and qualities
of the Portfolio, and the market conditions during the given time period, and
should not be considered as a representation of what may be achieved in the
future. Investment results will vary from time to time and are not identical
to the past portfolio investments of those Portfolios which previously
existed as separate accounts.
The manner in which total return will be calculated for public use is
described above. The following table summarizes the calculation of total
return involving the Balanced, Managed Bond, Growth and U.S. Government
Securities Portfolios based on each such Portfolio's past performance as a
separate investment account of Phoenix Home Life Mutual Insurance Company,
for periods before the Fund's registration statement became effective (March
1, 1996). This performance data may be relevant as each such separate account
was managed, in all material respects, using substantially the same
investment objectives, policies and restrictions as those used by such
Portfolio. These separate investment accounts were not registered under the
1940 Act and therefore were not subject to certain investment restrictions
that are imposed by the 1940 Act. If these separate investment accounts had
been registered under the 1940 Act, the separate investment accounts'
performance may have been adversely affected. Standardized average annual
total return of each Class shall be calculated for the preceding one, five
and ten year periods (or since inception of the applicable separate account
if it has been in existence less than five or ten years) by including the
corresponding separate account's total return calculated in accordance with
formulas specified by the Securities and Exchange Commission. The performance
of the separate accounts has been restated to reflect the deduction of the
fees and expenses of the classes of the corresponding Portfolio described in
the Prospectus.
Average Annual Total Return as of December 31, 1995
<TABLE>
<CAPTION>
Periods Ended
-----------------------------------------
10 Years or
1 Year 5 Years Since Inception
-------- --------- ------------------
<S> <C> <C> <C>
Balanced
Class X 23.3% N/A 13.0%(1)
Class Y N/A
Managed Bond
Class X 20.0 10.6 9.2
Class Y
Enhanced Rsvs.
Class X N/A N/A N/A
Class Y N/A N/A N/A
Growth
Class X 34.7 16.11 16.3
Class Y
U.S. Gov't Sec.
Class X 12.3 N/A 6.8(2)
Class Y N/A
</TABLE>
(1) Inception date 5/17/91
(2) Inception date 10/1/91
NOTE: Average annual total return assumes a hypothetical initial payment of
$1,000. At the end of each period, a total redemption is assumed. The ending
redeemable value is divided by the original investment to calculate total
return. Performance information for any Portfolio reflects only the
performance of a hypothetical investment in the Portfolio during the
particular time period on which the calculations are based. Performance
information should be considered in light of the investment objectives and
policies, characteristics and quality of the particular Portfolio, and the
market conditions during the given time period, and should not be considered
as a representation of what may be achieved in the future.
PERFORMANCE COMPARISONS
Each Portfolio 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
rating services such as
11
<PAGE>
Morningstar, Inc. Additionally, a Portfolio or Class of Portfolio 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,
Pensions & Investments, Institutional Investor, The New York Times, Consumer
Reports, Registered Representative, Financial Planning, Financial Services
Weekly, Financial World, U.S. News and World Report, Standard and Poors The
Outlook, and Personal Investor. A Portfolio 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 the Portfolio against certain
widely acknowledged outside standards or indices for stock and bond market
performance, such as the Standard & Poor's 500 Stock Index (the "S&P 500"),
Dow Jones Industrial Average, Europe Australia Far East Index (EAFE),
Consumer Price Index, Shearson Lehman Corporate Index and Shearson Lehman
T-Bond Index. The S&P 500 is a commonly quoted market value-weighted and
unmanaged index showing the changes in the aggregate market value of 500
stocks relative to the base period 1941-43. The S&P 500 is composed almost
entirely of common stocks of companies listed on the New York Stock Exchange,
although the common stocks of a few companies listed on the American Stock
Exchange or traded over-the-counter are included. The 500 companies
represented include 400 industrial, 60 transportation and 40 financial
services concerns. The S&P 500 represents about 80% of the market value of
all issues traded on the New York Stock Exchange.
Advertisements, sales literature, and other communications may contain
information about the Adviser's current investment strategies and management
style. Current strategies and style may change to allow the Fund to respond
quickly to changing market and economic conditions. From time to time the
Fund may include specific portfolio holdings or industries. To illustrate
components of overall performance, the Fund may separate its cumulative and
average annual returns into income and capital gains components; or cite
separately as a return figure the equity or bond portion of the Fund's
portfolio; or compare the Fund's equity or bond return figure to well-known
indices of market performance, including but not limited to: the S&P 500
Index, Dow Jones Industrial Average, First Boston High Yield Index and
Salomon Brothers Corporate Bond and Government Bond Indices.
PORTFOLIO TURNOVER
Each Portfolio has a different expected annual rate of portfolio turnover,
which 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 the
Portfolio'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
Portfolio. 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 each Portfolio's shares and by requirements which enable the
Fund to receive certain favorable tax treatment.
MANAGEMENT OF THE TRUST
The Trustees and executive officers of the Fund and their principal
occupations for at least the last five years are set forth below. Unless
otherwise noted, the address of each executive officer and Trustee is 56
Prospect Street, Hartford, Connecticut 06115.
12
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
----------------------------- ------------------- --------------------------------------------------------
<S> <C> <C>
E. Virgil Conway (66) Trustee Trustee/Director, Consolidated Edison Company of New
9 Rittenhouse Road York, Inc. (1970-present), Pace University
Bronxville, NY 10708 (1978-present), Atlantic Mutual Insurance Company
(1974-present), HRE Properties (1989-present), Greater
New York Councils, Boy Scouts of America (1985-present),
Union Pacific Corp. (1978-present), Atlantic Reinsurance
Company (1986-present), Blackstone Fund for Fannie Mae
Mortgage Securities (Advisory Director) (1989-present),
Centennial Insurance Company, Josiah Macy, Jr.,
Foundation, and The Harlem Youth Development Foundation.
Board Member, Metropolitan Transportation Authority
(1992-present). Chairman, Audit Committee of the City of
New York (1981-present). Director/Trustee, Phoenix Funds
(1993-present). Director, Realty Foundation of New York
(1972-present) and the New York Housing Partnership
Development Corp. (1981- present). Former Director, New
York Chamber of Commerce and Industry (1974-1990).
William W. Crawford (66) Trustee Representative, Hilliard, Lyons, Inc. (broker-dealer)
14155 Crayton Road #210 (1993-present); President and Chief Operating Officer,
Naples, FL 33940 Hilliard, Lyons, Inc. (19 -1993).
William N. Georgeson (67) Trustee Director, Duff & Phelps Utility and Corporate Bond Trust
575 Glenwood Road Inc. (19 -present); Director, Duff & Phelps Utilities
Lake Forest, IL 60045 Tax-Free Income Inc. (19 -present); Vice President,
Nuveen Advisory Corp. (19 -19 ).
*Philip R. McLoughlin (49) Trustee/President Vice Chairman and Chief Executive Officer, Phoenix Duff
& Phelps Corporation (1995-present); Director
(1994-present) and Executive Vice President,
Investments, Phoenix Home Life Mutual Insurance Company
(1987-present). Director/Trustee and President, Phoenix
Funds (1989-present). Director, Phoenix Investment
Counsel, Inc. (1983-present). Director (1984-present)
and President (1990-present), Phoenix Equity Planning
Corporation. Director, World Trust Fund (1991-present).
Director, Chairman and Chief Executive Officer, National
Securities & Research Corporation (1993-present) and
Phoenix Securities Group, Inc. (1993-present).
Everett L. Morris (66) Trustee Vice President, W.H. Reaves and Company (19 -present);
164 Laird Road Director, Duff & Phelps Utility and Corporate Bond Trust
Colts Neck, NJ 07722 Inc. (19 -present); Director, Duff & Phelps Utilities
Tax-Free Income Inc. (19- Present); Director, Senior
Executive Vice President and Chief Financial Officer,
Public Service Enterprise Diversified Holdings
Incorporated (19 -1992); Director, First Fidelity Bank,
N.A. (19 -1991).
13
<PAGE>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
----------------------------- ------------------- --------------------------------------------------------
Richard A. Pavia (64) Trustee Director, Speer Financial, Inc. (19 -present).
7145 North Ionia Director, Duff & Phelps Utility and Corporate Bond Trust
Chicago, IL 60646 Inc. (19 -present); Director, Duff & Phelps Utilities
Tax-Free Income Inc. (19 -present).
*Calvin J. Pedersen (54) Trustee President, Phoenix Duff & Phelps Corporation (1995-
55 East Monroe Street, present); President and Chief Operating Officer, Duff &
Ste. 3800 Phelps Corporation (1993-1995); President & Chief
Chicago, IL 60603 Executive Officer, Duff & Phelps Utilities Income Inc.
(19 -present); Director and Executive Vice President,
Duff & Phelps Utilities Tax-Free Income Inc.
(19 -present); Director and Executive Vice President,
Duff & Phelps Utility and Corporate Bond Trust Inc.
(19 -present).
Herbert Roth, Jr. (67) Trustee Director/Trustee, Phoenix Funds (1980-present).
134 Lake Street Director, Boston Edison Company (1978-present), Phoenix
P.O. Box 909 Home Life Mutual Insurance Company (1972-present),
Sherborn, MA 01770 Landauer, Inc. (medical services) (1970-present), Tech
Ops./Sevcon, Inc. (electronic controllers)
(1987-present), Key Energy Group (oil rig service)
(1988-1993), and Mark IV Industries (diversified
manufacturer) (1985-present).
*Trustees identified with an asterisk are considered to be interested persons of the Fund (within the meaning
of the Investment Company Act of 1940, as amended) because of their affiliation with Phoenix Investment
Counsel, Inc., Duff & Phelps Investment Management Co., Inc. or Phoenix Equity Planning Corporation.
George I. Askew (33) Vice President Phoenix Investment Counsel, Inc. (1994-present). Merrill
Lynch & Co. (1987-1990) (Analyst, Investment Banking),
(1990-1992) (Associate, Investment Banking); University
of California at Los Angeles (MBA 1994).
James M. Dolan (46) Vice President Vice President and Compliance Officer (1994-present),
100 Bright Meadow Blvd. and Assistant Secretary (1981-present), Phoenix Equity
P.O. Box 2200 Planning Corporation. Vice President, Phoenix Funds
Enfield, CT 06083-2200 (1989-present). Vice President (1991- present),
Assistant Clerk and Assistant Secretary (1982-present),
Phoenix Investment Counsel, Inc. Vice President and
Compliance Officer, Assistant Secretary (1994-present),
Assistant Vice President (1993-1994), National
Securities & Research Corporation. Vice President and
Chief Compliance Officer, Phoenix Realty Advisors, Inc.
(1994-present). Chief Compliance Officer, Phoenix Realty
Securities, Inc. (1995-present). Vice President, the
National Affiliated Investment Companies (until 1993)
and various other positions with Phoenix Equity Planning
Corporation (1978-1994).
Marvin E. Flewellen ( ) Vice President Vice President and Fixed Income Portfolio Manager, Duff
55 East Monroe Street, & Phelps Investment Management Co. (19 -present).
Ste. 3800 Second Vice President and Portfolio Manager, Northern
Chicago, IL 60603 Trust Bank (19 -19 ).
14
<PAGE>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
------------------------------ ---------------- -------------------------------------------------------
Michael E. Haylon (38) Vice President Senior Vice President, Securities Investments, Phoenix
Home Life Mutual Insurance Company (1993-1995). Vice
President, Phoenix Multi-Sector Fixed Income Fund, Inc.
(1993-present), and The Phoenix Edge Series Fund
(1991-present). Director (1994-present) and Vice
President (1991-present), Phoenix Investment Counsel,
Inc. Managing Director, Aetna Bond Investors
(1989-1990). Director and Executive Vice President
(1994-present), Vice President (1993-1994) National
Securities & Research Corporation. Vice President,
Aetna Capital Management (1986-1990). Various other
positions with Phoenix Home Life Mutual Insurance
Company (1990-1993).
Christopher J. Kelleher (40) Vice President Vice President, National Securities & Research
Corporation (1993-present), The Phoenix Edge Series
Fund (1989-present) and Phoenix Investment Counsel,
Inc. (1991-present). Portfolio Manager, Public Bonds,
Phoenix Home Life Mutual Insurance Company (1991-1995).
Thomas S. Melvin, Jr. (52) Vice President Vice President, Phoenix Investment Counsel, Inc.
(1992-present). Vice President, National Securities &
Research Corporation (1993-present), Vice President,
Phoenix Multi-Portfolio Fund (1993-present), Portfolio
Manager, Common Stock, Phoenix Home Life Mutual
Insurance Company (1991-1995), and Portfolio Manager,
Constitution Capital Management (1987-1991).
Robert J. Moore ( ) Vice President Executive Vice President, Duff & Phelps Investment
55 East Monroe Street, Management Co. (19 -present). Principal and portfolio
Ste. 3800 manager, Harris Investment Management (19 -19 ), and
Chicago, IL 60603 Portfolio Manager, Ford Motor Company (19 -19 ).
William R. Moyer (51) Vice President Vice President, Investment Products Finance, Phoenix
100 Bright Meadow Blvd. Home Life Mutual Insurance Company (1990-1995). Senior
P.O. Box 2200 Vice President, Finance, and Treasurer, Phoenix Equity
Enfield, CT 06083-2200 Planning Corporation (1990-present), and Phoenix
Investment Counsel, Inc. (1990-present). Vice
President, Phoenix Funds (1990-present). Senior Vice
President, Finance, Phoenix Securities Group, Inc.
(1993-present). Senior Vice President, Finance
(1993-present), and Treasurer (1994-present), National
Securities & Research Corporation. Vice President, the
National Affiliated Investment Companies (until 1993).
Senior Vice President and Chief Financial Officer
(1993- 1995) and Treasurer (1994-1995) W.S. Griffith &
Co., Inc. and Townsend Financial Advisers, Inc. Senior
Manager, Price Waterhouse (1983-1990).
15
<PAGE>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
------------------------------ ---------------- -------------------------------------------------------
Leonard J. Saltiel (42) Vice President Vice President, Investment Operations, Phoenix Home
Life Mutual Insurance Company (1994-1995). Senior Vice
President, Phoenix Equity Planning Corporation
(1994-present). Vice President, Phoenix Funds
(1994-present). Vice President, National Securities &
Research Corporation (1994-present). Various positions
with Home Life Insurance Company and Phoenix Home Life
Mutual Insurance Company (1987-1994).
Dorothy J. Skaret (43) Vice President Vice President, National Securities & Research
Corporation (1993-present). The Phoenix Edge Series
Fund (1990-present) and Phoenix Investment Counsel,
Inc. (1990-present), Director, Public Fixed Income,
Phoenix Home Life Mutual Insurance Company (1990-1995),
and various other positions with Phoenix Home Life
Mutual Insurance Company (1986-1991).
James D. Wehr (38) Vice President Vice President, Phoenix Multi-Portfolio Fund (1988-
present), Managing Director, Public Fixed Income,
Phoenix Home Life Mutual Insurance Company,
(1991-1995). The Phoenix Edge Series Fund (1991-
present), Phoenix Investment Counsel, Inc. (1991-
present), Phoenix California Tax Exempt Bond Fund, Inc.
(1993-present), and National Securities & Research
Corporation (1993-present). Various positions with
Phoenix Home Life Mutual Insurance Company (1981-1991).
Nancy G. Curtiss (43) Treasurer Treasurer, Phoenix Funds (1994-present). Vice
President, Fund Accounting, Phoenix Equity Planning
Corporation (1994-present). Second Vice President and
Treasurer, Fund Accounting, Phoenix Home Life Mutual
Insurance Company (1994-1995). Various positions with
Phoenix Home Life Insurance Company (1987-1994).
G. Jeffrey Bohne (48) Secretary Vice President, Transfer Agent Operations, Phoenix
101 Munson St. Equity Planning Corporation (1993-present). Secretary,
Greenfield, MA 03101 the Phoenix Funds (1993-present). Vice President and
General Manager, Phoenix Home Life Mutual Insurance
Company (1993-1995). Vice President, Home Life
Insurance Company (1984-1992).
</TABLE>
For services rendered to the Fund during the period ended December 31,
1995, the Trustees received an aggregate of $0 from the Fund as Trustees'
fees. Each Trustee who is not a full-time employee of the Adviser or any of
its affiliates currently receives a retainer at the annual rate of $
and $ per meeting. Each Trustee who serves on the Audit Committee
receives a retainer at the annual rate of $2,000 and $2,000 per joint Audit
Committee meeting attended. Each Trustee who serves on the Nominating
Committee receives a retainer at the annual rate of $1,000 and $1,000 per
joint Nominating Committee meeting attended. Each Trustee who serves on the
Executive Committee and who is not an interested person of the Fund receives
a retainer at the annual rate of $1,000 and $1,000 per joint Executive
Committee meeting attended. Officers are compensated for their services by
the Adviser and receive no compensation from the Fund. Estimated payments for
the 1996 fiscal year are noted below:
16
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
Pension or
Retirement Total
Benefits Compensation
Aggregate Accrued Estimated From Fund and
Compensation as Part of Annual Benefits Fund Complex
Name From Fund Fund Expenses Upon Retirement Paid to Trustees
----------------------- ------------- --------------- ----------------- -------------------
<S> <C> <C> <C> <C>
E. Virgil Conway None None
William W. Crawford None None
William N. Georgeson None None
Philip R. McLoughlin None None None None
Everett L. Morris None None
Richard A. Pavia None None
Calvin J. Pederson None None None None
Herbert Roth, Jr. None None
</TABLE>
THE INVESTMENT ADVISERS
The offices of Phoenix Investment Counsel, Inc. ("PIC") are located at 56
Prospect Street, Hartford, Connecticut 06115. The offices of Duff & Phelps
Investment Management Co, Inc. ("DPM") are located at 55 East Monroe Street,
Suite 3800, Chicago, Illinois 60603.
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning"), a subsidiary of Phoenix Duff & Phelps
Corporation. DPM is also a subsidiary of Phoenix Duff & Phelps Corporation.
Phoenix Duff & Phelps Corporation is an indirect, less than wholly-owned
subsidiary of Phoenix Home Life Mutual Insurance Company ("Phoenix Home
Life") of Hartford, Connecticut. Phoenix Home Life is in the business of
writing ordinary and group life and health insurance and annuities. It was
founded in 1851 and at December 31, 1995, had total assets of approximately
$[ ] billion and insurance in force of approximately $[ ] billion. Equity
Planning, the National Distributor of the Fund's shares, also performs
bookkeeping, pricing, and administrative services for the Fund. It provides
bookkeeping and pricing services to two other investment companies advised by
the Advisers. (See "The National Distributor"). Equity Planning is registered
as a broker-dealer in fifty states. The principal office of Equity Planning
is located at 100 Bright Meadow Blvd., P.O. Box 2200, Enfield, Connecticut
06083-2200.
All costs and expenses (other than those specifically referred to as being
borne by the Advisers) incurred in the operation of the Fund are borne by the
Fund. Each Portfolio pays expenses incurred in its own operation and also
pays a portion of the Fund's general administration expenses allocated on the
basis of the asset size of the respective Portfolio, except where an
allocation using an alternative method can be more fairly made. Such expenses
include, but shall not be limited to, all expenses incurred in the operation
of the Fund and any public offering of its shares, including, among others,
interest, taxes, brokerage fees and commissions, fees of Trustees who are not
employees of the Adviser or any of its affiliates, expenses of Trustees' and
shareholders' meetings, including the cost of printing and mailing proxies,
expenses of insurance premiums for fidelity and other coverage, expenses of
repurchase and redemption of shares, expenses of issue and sale of shares (to
the extent not borne by Equity Planning under its agreement with the Fund),
expenses of printing and mailing stock certificates representing shares of
the Fund, association membership dues, charges of custodians, transfer
agents, dividend disbursing agents and financial agents, bookkeeping,
auditing, and legal expenses. The Fund will also pay the fees and bear the
expense of registering and maintaining the registration of the Fund and its
shares with the Securities and Exchange Commission and registering or
qualifying its shares under state or other securities laws and the expense of
preparing and mailing prospectuses and reports to shareholders.
The investment advisory agreements provide that the Advisers shall not be
liable to the Fund or to any shareholder of the Fund for any error of
judgment or mistake of law or for any loss suffered by the Fund or by any
shareholder of the Fund in connection with the matters to which the
investment advisory agreement relates, except a loss resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard on the part of
the Advisers in the performance of its duties thereunder.
As full compensation for the services and facilities furnished to the
Fund, the Advisers are entitled to a fee, payable monthly, as described on
page [15] in the Prospectus. There is no assurance that the Fund will reach
net asset levels high enough to realize reductions in the rates of the
advisory fees. Any reduction in the rate of the advisory fee on all
Portfolios will be prorated among the Portfolios in proportion to their
respective averages of the aggregate daily net asset values for the period
for which the fee had been paid.
The advisory agreements continue in force from year to year for all
Portfolios, provided that, with respect to each Portfolio, the agreement must
be approved at least annually by the Trustees or by vote of a majority of the
outstanding voting securities of the
17
<PAGE>
Portfolio. In addition, and in either event, the terms of the agreement and
any renewal thereof must be approved by the vote of a majority of the
Trustees who are not parties to the agreement or interested persons (as that
term is defined in the Investment Company Act of 1940) of any such party,
cast in person at a meeting called for the purpose of voting on such
approval. The agreements will terminate automatically if assigned and may be
terminated at any time, without payment of any penalty, either by the Fund or
by the Adviser, on sixty (60) days written notice.
BROKERAGE ALLOCATION
In effecting portfolio transactions for the Fund, the Advisers adhere to
the Fund's policy of seeking best execution and price, determined as
described below, except to the extent it is permitted to pay higher brokerage
commissions for "brokerage and research services" as defined herein. The
Advisers may cause the Fund to pay a broker an amount of commission for
effecting a securities transaction in excess of the amount of commission
which another broker or dealer would have charged for effecting the
transaction if the Advisers determine in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or that any offset of direct
expenses of a Portfolio yields the best net price. As provided in Section
28(e) of the Securities Exchange Act of 1934, "brokerage and research
services" include giving advice as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities; furnishing analyses and reports concerning
issuers, industries, economic factors and trends, portfolio strategy and the
performance of accounts; and effecting securities transactions and performing
functions incidental thereto (such as clearance and settlement). Brokerage
and research services provided by brokers to the Fund or to the Adviser are
considered to be in addition to and not in lieu of services required to be
performed by the Advisers under their contracts with the Fund and may benefit
both the Fund and other clients of the Advisers. Conversely, brokerage and
research services provided by brokers to other clients of the Advisers may
benefit the Fund.
If the securities in which a particular Portfolio of the Fund invests are
traded primarily in the over-the-counter market, where possible the Portfolio
will deal directly with the dealers who make a market in the securities
involved unless better prices and execution are available elsewhere. Such
dealers usually act as principals for their own account. On occasion,
securities may be purchased directly from the issuer. Bonds and money market
instruments are generally traded on a net basis and do not normally involve
either brokerage commission or transfer taxes.
The determination of what may constitute best execution and price in the
execution of a securities transaction by a broker involves a number of
considerations including, without limitation, the overall direct net economic
result to the Fund (involving both price paid or received and any net
commissions and other costs paid), the efficiency with which the transaction
is effected, the ability to effect the transaction at all where a large block
is involved, the availability of the broker to stand ready to execute
possibly difficult transactions in the future and the financial strength and
stability of the broker. Such considerations are judgmental and are weighed
by the Adviser in determining the overall reasonableness of brokerage
commissions paid by the Fund. Some portfolio transactions are, subject to the
Rules of Fair Practice of the National Association of Securities Dealers,
Inc. and subject to obtaining best prices and executions, effected through
dealers (excluding Equity Planning) who sell shares of the Fund.
DETERMINATION OF NET ASSET VALUE
The net asset value of shares of the Fund is determined once daily as of
the close of trading on the New York Stock Exchange on each day during which
the Exchange is open for trading. The New York Stock Exchange is scheduled to
be closed for trading on the following days: New Years Day, Washington's
Birthday, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The Board of Directors of the Exchange
reserves the right to change this schedule as conditions warrant.
Balanced, Managed Bond, Growth, Enhanced Reserves and U.S. Government
Securities Portfolios
In determining the value of the assets of each Portfolio other than the
Money Market Portfolio, the securities for which market quotations are
readily available are valued at market value, which is currently determined
using the last reported sale price, or, if no sales are reported--as is the
case with many securities traded over-the-counter--the last reported bid
price. Debt securities (other than short-term obligations, which are valued
on the basis of amortized cost as defined below) are normally valued on the
basis of valuations provided by a pricing service when such prices are
believed to reflect the fair value of such securities. Prices provided by the
pricing service may be determined without exclusive reliance on quoted prices
and take into account appropriate factors such as institution-size trading in
similar groups of securities, yield, quality of issue, trading
characteristics and other market data. All other securities and assets are
valued at their fair value as determined in good faith by the Trustees
although the actual calculations may be made by persons acting pursuant to
the direction of the Trustees.
Money Market Portfolio
The assets of the Money Market Portfolio are valued on the basis of
amortized cost absent extraordinary or unusual market conditions. Under the
amortized cost method of valuation, securities are valued at cost on the date
of purchase. Thereafter the value of a security is increased or decreased
incrementally each day so that at maturity any purchase discount or premium
is fully amortized and the value of the security is equal to its principal
amount. Due to fluctuations in interest rates, the amortized cost
18
<PAGE>
value of the Money Market Portfolio securities may at times be more or less
than their market value. By using amortized cost valuation, the Money Market
Portfolio seeks to maintain a constant net asset value of $1.00 per share
despite minor shifts in the market value of its portfolio securities.
The yield on a shareholder's investment may be more or less than that
which would be recognized if the Portfolio's net asset value per share was
not constant and was permitted to fluctuate with the market value of the
Portfolio's portfolio securities. However, as a result of the following
procedures, it is believed that any difference will normally be minimal. The
deviation is monitored periodically by comparing the Portfolio net asset
value per share as determined by using available market quotations with its
net asset value per share as determined through the use of the amortized cost
method of valuation. The Adviser will advise the Trustees promptly in the
event of any significant deviation. If the deviation exceeds 1/2 of 1%, the
Trustees will consider what action, if any, should be initiated to provide
fair valuation of the Portfolio's portfolio securities and prevent material
dilution or other unfair results to shareholders. Such action may include
redemption of shares in kind, selling portfolio securities prior to maturity,
withholding dividends or utilizing a net asset value per share as determined
by using available market quotations. Furthermore, the assets of the
Portfolio will not be invested in any security with a maturity of greater
than 397 days, and the average weighted maturity of its portfolio will not
exceed 90 days. Portfolio investments will be limited to U.S.
dollar-denominated securities which present minimal credit risks and are
rated within the two highest "short-term" rating categories as more
particularly described in the Prospectus.
PURCHASE OF SHARES
The Prospectus includes information as to the offering price of shares of
the Portfolio and the minimum initial and subsequent investments which may be
made in a Portfolio. Sales of shares are made through registered
representatives of Equity Planning, or through securities dealers with whom
Equity Planning has sales agreements. Sales of shares are also made to
customers of bank affiliated securities brokers with whom Equity Planning has
sales agreements. Customers purchase shares at the applicable offering price.
Each Portfolio currently declares all income dividends and all capital
gain distributions, if any, payable in shares of the Fund at net asset value
or, at the option of the shareholder, in cash. The Money Market Portfolio
will normally make no capital gain distributions, since its investments will
generally be made in securities which do not generate capital gains. Unless
otherwise specified in writing, shareholders shall automatically receive both
dividends and capital gain distributions in additional shares. If a
shareholder elects to receive dividends and/or distributions in cash and the
check cannot be delivered or remains uncashed by the shareholder due to an
invalid address, then the dividend and/or distribution will be reinvested
after the Transfer Agent has been informed that the proceeds are
undeliverable. Additional shares will be purchased for the shareholder's
account at the then current net asset value. Reinvestment direction forms and
prospectuses are available from Equity Planning. An alternate payee section
has been incorporated into the application allowing distributions to be
mailed to a second payee and/or address. Dividends and capital gain
distributions received in shares are taxable to the shareholder and credited
in full and fractional shares computed at the closing net asset value on the
next business day after the record date. 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 the
shareholder's account are repurchased or redeemed or transferred between the
record date and the payment date of a dividend or distribution, he will
receive cash for the dividend or distribution regardless of the distribution
option selected.
TAXES
As stated in the Prospectus, each Portfolio is treated as a separate
entity for federal income tax purposes. Each Portfolio intends to elect to be
treated as a regulated investment company ("RIC") and qualify as such under
Subchapter M of the Internal Revenue Code (the "Code").
The Code sets forth numerous criteria which must be satisfied in order for
each Portfolio to qualify as a RIC. Each Portfolio must, among other things,
meet the following tests for each taxable year: (1) at least 90% of the
Portfolio's gross income must be derived from a) dividends, b) interest, c)
payments with respect to securities loans, d) gains from the sale or other
disposition of stocks or securities or foreign currencies, or e) other income
(including but not limited to gains from options, futures, or forward
contracts) derived by the Portfolio with respect to its business of investing
in stocks, securities or currencies; (2) less than 30% of the Portfolio's
gross income must be derived from gains realized on the sale or other
disposition of: a) stocks or securities b) options, futures or forward
contracts (other than options, futures, or forward contracts on foreign
currencies) held less than three months; and c) foreign currencies (or
options, futures, or forward contracts) not directly related to the Portfolio
business of investing in stocks or securities; and (3) distribute annually at
least 90% of its investment company taxable income and net exempt-interest
income.
In addition to the gross income tests, to qualify as a RIC, each Portfolio
must also diversify its holdings so that, at the close of each quarter of its
taxable year, (1) 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 the Portfolio and not more than 10% of the outstanding voting
securities of such issuer, and (2) not more than 25% of the value of its
total
19
<PAGE>
assets is invested in the assets of any one issuer (other than U.S.
Government securities). If in any taxable year a Portfolio does not qualify
as a RIC, all of its net investment income and realized capital gains will be
taxed at corporate rates.
In each taxable year that a Portfolio 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. It is the policy of each
Portfolio to distribute all of its net investment income and net capital
gains to its shareholders in order to avoid any federal income tax liability.
In addition, each Portfolio intends to make timely distribution sufficient in
amount to avoid a non-deductible 4% excise tax. An excise tax will be imposed
on each Portfolio to the extent that it fails to distribute, with respect to
each calendar year, at least 98% of its net ordinary income for such calendar
year and 98% of its net capital gains as determined for the one year period
ending December 31 of such calendar year. In addition, an amount equal to the
undistributed net ordinary income and net capital gains from the previous
calendar year must also be distributed to avoid the excise tax.
The Fund is required to withhold for income taxes 31% of dividends,
distributions and redemption payments, if any of the following circumstances
exist: i) a shareholder fails to provide the Fund with a correct taxpayer
identification number (TIN); ii) the Portfolio is notified by the Internal
Revenue Service that the shareholder furnished an incorrect TIN; or iii) the
Fund is notified by the Internal Revenue Service that withholding is required
because the shareholder failed to report the receipt of dividends or interest
from other sources. Withholding may also be required for accounts with
respect to which a shareholder fails to certify that i) the TIN provided is
correct and ii) the shareholder is not subject to such withholding. However,
withholding will not be required from certain exempt entities nor those
shareholders complying with the procedures as set forth by the Internal
Revenue Service. A shareholder is required to provide the Fund with a correct
TIN. The Fund in turn is required to report correct taxpayer identification
numbers when filing all tax forms with the Internal Revenue Service. Should
the IRS levy a penalty on a Portfolio for reporting an incorrect TIN and that
TIN was provided by the shareholder, the Portfolio will pass the penalty onto
the shareholder.
Dividends paid by a Portfolio from net investment income and net realized
short-term capital gains to a shareholder who is a nonresident alien
individual, a foreign Fund 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.
The discussion of "Dividends, Distributions and Taxes" in the Prospectus,
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 Internal Revenue Service. The
Code and regulations, as well as the current interpretations thereof, may be
changed at any time by legislative, judicial, or administrative action.
Shareholders are urged to consult with their tax advisor regarding specific
questions as to federal, state, local or foreign taxes.
THE NATIONAL DISTRIBUTOR
Phoenix Equity Planning Corporation ("Equity Planning"), which has
undertaken to use its best efforts to find purchasers for shares of the Fund,
serves as the National Distributor of the Fund's shares. Shares of each
Portfolio are offered on a continuous basis. Pursuant to distribution
agreements for each class of shares or distribution method, the Distributor
will purchase shares of the Fund for resale to the public, either directly or
through securities dealers or agents, and is obligated to purchase only those
shares for which it has received purchase orders. Equity Planning may also
sell Fund shares pursuant to sales agreements entered into with
bank-affiliated securities brokers who, acting as agent for their customers,
place orders for Fund shares with Equity Planning. Although the
Glass-Steagall Act prohibits banks and bank affiliates from engaging in the
business of underwriting, distributing or selling securities (including
mutual fund shares), banking regulators have not indicated that such
institutions are prohibited from purchasing mutual fund shares upon the order
and for the account of their customers. In addition, state securities laws on
this issue may differ from the interpretations of federal law and banks and
financial institutions may be required to register as dealers pursuant to
state law. If, because of changes in law or regulations, or because of new
interpretations of existing law, it is determined that agency transactions of
bank-affiliated securities brokers are not permitted, the Trustees will
consider what action, if any, is appropriate. It is not anticipated that
termination of sales agreements with bank-affiliated securities brokers would
result in a loss to their customers or a change in the net asset value per
share of a Portfolio.
Philip R. McLoughlin is a Trustee and an officer of the Fund and a
director and officer of Equity Planning. G. Jeffrey Bohne, James M. Dolan,
William R. Moyer, Leonard J. Saltiel, and Nancy G. Curtiss are officers of
the Fund and officers of Equity Planning.
Pursuant to a Financial Agent Agreement, Equity Planning provides
bookkeeping and pricing services directly to the Fund. As compensation for
such services, Equity Planning receives a quarterly fee based on the average
of the aggregate daily net asset values of the Fund at an annual rate of $300
per million dollars. It is expected that the compensation to Equity Planning
will be approximately equal to the cost to Equity Planning of providing the
services provided for in the Financial Agent Agreement.
In addition, pursuant to an agreement between Equity Planning, the Fund's
Transfer Agent, and State Street Bank and Trust Company, State Street has
been appointed subagent to perform certain shareholder servicing functions
for the Fund. For performing such services State Street receives a monthly
fee from Equity Planning.
20
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements:
Included in Part A of the Registration Statement:
Financial Highlights [Not Yet Applicable]
Included in Part B of the Registration Statement:
Independent Auditors' Report [Not Yet Applicable]
Financial Statements [Not Yet Applicable]
Notes to Financial Statements [Not Yet Applicable]
Unaudited Balance Sheet
(b) Exhibits:
<TABLE>
<S> <C>
(1)(a) Declaration of Trust of the Registrant, filed herewith.
*(1)(b) Amendment to Declaration of Trust changing names of Portfolios.
(2) None
(3) None
(4) Reference is made to Article III, Section 3.4 of Registrant's Declaration of Trust
(5)(a) Investment Advisory Agreement between Registrant and Duff & Phelps Investment
Management Co. ("DPM"), filed herewith.
(b) Investment Advisory Agreement between Registrant and Phoenix Investment Counsel,
Inc. ("PIC"), filed herewith.
(6) Distribution Agreement between Registrant and Phoenix Equity Planning Corporation,
filed herewith.
(7) None
*(8)(a) Custodian Agreement between Registrant and State Street Bank and Trust Company
* (b) Custodian Agreement between Registrant and The Chase Manhattan Bank, N.A.
(9)(a) Financial Agent Agreement between Registrant and Phoenix Equity Planning
Corporation, filed herewith.
* (b) Transfer Agent Agreement between Registrant and Phoenix Equity Planning
Corporation.
* (c) Sub-Transfer Agent Agreement between Phoenix Equity Planning Corporation and State
Street Bank & Trust Company
*(10) Opinion of Counsel
*(11) Consent of Accountants
(12) None
(13) Initial Capitalization Agreement, filed herewith.
(14) None
(15) Rule 12b-1 Distribution Plan for Class Y Shares, filed herewith.
*(16) Schedule for Computation of Performance Quotations
*(17) Financial Data Schedule as reflected on Edgar as Exhibit 27
(18) Rule 18f-3 Dual Distribution Plan, filed herewith.
</TABLE>
*To Be Filed By Amendment
C-1
<PAGE>
Item 25. Persons Controlled by or under Common Control with Registrant.
As of the date hereof, to the best knowledge of the Registrant, no person
is directly or indirectly controlled by or under common control with the
Registrant.
Item 26. Number of Holders of Securities.
As of February 29, 1996:
<TABLE>
<CAPTION>
Class X Shares Class Y Shares
Number of Number of
Record Holders Record Holders
---------------- -----------------
<S> <C> <C>
0
Balanced Portfolio 0 0
Managed Bond Portfolio 0 0
Enhanced Reserves Portfolio 0 0
Growth Portfolio 0 0
Money Market Portfolio 0 0
U.S. Gov't Sec. Portfolio 0 0
</TABLE>
Item 27. Indemnification.
Please see Article of the Registrant's Declaration of Trust (incorporated
herein by reference). Registrant's trustees and officers are covered by an
Errors and Omissions Policy. Paragraph 10 of the Investment Advisory
Agreements between the Registrant and its Advisers provide in relevant part
that, in the absence of willful malfeasance, bad faith, gross negligence or
reckless disregard of the obligations or duties under the Investment Advisory
Agreements on the part of each the Adviser, the Advisers shall not be liable
to the Registrant or to any shareholder for any act or omission in the course
of or connected in any way with rendering services or for any losses that may
be sustained in the purchase, holding or sale of any security.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, directors, officers and controlling
persons of the Registrant and the investment advisers and distributor
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, director, officer, or controlling
person of the Registrant and the principal underwriter in connection with the
successful defense or any action, suit or proceeding) is asserted against the
Registrant by such trustee, director, officer or controlling person or the
Distributor in connection with the shares 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 28. Business and Other Connections of Investment Adviser.
See "Management of the Fund" in the Prospectus and "Management of the
Trust" in the Statement of Additional Information for information regarding
the business of the Advisers. For information as to the business, profession,
vocation or employment of a substantial nature of directors and officers of
the Advisers, reference is made to the Advisers' current Form ADV (SEC File
Nos. 801-5995 (PIC) & 14813 (DPM)) filed under the Investment Advisers Act of
1940, incorporated herein by reference.
Item 29. Principal Underwriter.
(a) The sole principal underwriter for the Registrant is Phoenix Equity
Planning Corporation.
(b) The directors and executive officers of Phoenix Equity Planning
Corporation, the distributor for Registrant, are as follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
-------------------------- ----------------------------- ------------------------
<S> <C> <C>
Martin J. Gavin Director and Vice President
56 Prospect Street Executive Vice President
P.O. Box 150480
Hartford, CT 06115-0480
Michael E. Haylon Director Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Trustee and President
One American Row
Hartford, CT 06115
C-2
<PAGE>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
-------------------------- ----------------------------- ------------------------
Leonard J. Saltiel Senior Vice President Vice President
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
William R. Moyer Senior Vice President, Vice President
100 Bright Meadow Blvd. Finance and Treasurer
P.O. Box 2200
Enfield, CT 06083-2200
William J. Newman Senior Vice President None
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President, Secretary
100 Bright Meadow Blvd. Transfer Agent Operations
P.O. Box 2200
Enfield, CT 06083-2200
Nancy G. Curtiss Vice President, Treasurer
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Maris Lambergs Vice President, None
100 Bright Meadow Blvd. National Sales Manager
P.O. Box 2200
Enfield, CT 06083-2200
James M. Dolan Vice President and Vice President
100 Bright Meadow Blvd. Compliance Officer;
P.O. Box 2200 Assistant Secretary
Enfield, CT 06083-2200
Elizabeth R. Sadowinski Vice President, None
100 Bright Meadow Blvd. Field and Investor Services
P.O. Box 2200
Enfield, CT 06083-2200
Eugene A. Charon Controller None
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
Thomas N. Steenburg Secretary None
One American Row
Hartford, CT 06115
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an
affiliated person of the Registrant or an affiliated person of such
affiliated person, directly or indirectly, from the Registrant during the
Registrant's last fiscal year.
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by the
Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules thereunder will be maintained at the offices of the Registrant located
at 56 Prospect Street, Hartford, CT 06115, or its investment advisers, Duff &
Phelps Investment Management Co., 55 East Monroe Street, Suite 3800, Chicago,
Illinois 60610, Phoenix Investment Counsel, Inc., 56 Prospect Street,
Hartford, CT 06115, or the custodians, State Street Bank and Trust Company, 1
Heritage Drive, P2N, North Quincy, MA 02171 or The Chase Manhattan Bank,
N.A., 1 Chase Manhattan Plaza, Floor 3B, New York, NY 10081. All such
accounts, books and other documents required to be maintained by the
principal underwriter will be maintained at Phoenix Equity Planning
Corporation, 100 Bright Meadow Boulevard, Enfield, Connecticut 06083.
C-3
<PAGE>
Item 31. Management Services.
None.
Item 32. Undertakings.
(a) Not applicable.
(b) Registrant undertakes to file a post-effective amendment using financial
statements, which need not be certified, within four to six months from
the effective date of the Registrant's Registration Statement with
respect to the Fund.
(c) Registrant undertakes to furnish to each person to whom a prospectus is
delivered a copy of the Registrant's latest annual report to shareholders
upon request and without charge if the information called for by Item 5A
of Form N-1A is contained in such annual report.
(d) Registrant undertakes to provide the information specified pursuant to
Regulation S-K, Item 512 (Reg.S.S. 229.512), as applicable, the terms of
which are incorporated herein by reference.
(e) Registrant undertakes to call a special meeting of shareholders for the
purpose of voting upon the question of removal of a trustee or trustees
and to assist in communications with other shareholders, as required by
Section 16(c) of the 1940 Act, if requested to do so by holders of at
least 10% of a Portfolio's outstanding shares.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the undersigned Trustees of the Registrant
have duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereto duly authorized in the City of Hartford, and State
of Connecticut on the day of February, 1996.
PHOENIX DUFF & PHELPS
INSTITUTIONAL MUTUAL FUNDS
By: /s/ Thomas N. Steenburg
Name: Thomas N. Steenburg
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the day of February, 1996.
<TABLE>
<CAPTION>
Signature Title
------------------------- ---------------------------
<S> <C>
/s/ Richard J Wirth Trustee
Richard J. Wirth
/s/ Thomas N. Steenburg Trustee
Thomas N. Steenburg
/s/ Nancy G. Curtiss Treasurer
Nancy G. Curtiss (Principal Financial and
Accounting Officer)
</TABLE>
S-1
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
PROVISIONS
OF
DECLARATION OF TRUST
DECEMBER 4, 1995
<PAGE>
TABLE OF CONTENTS
ARTICLE I NAME, RESIDENT AGENT AND DEFINITIONS............................... 5
Section 1.1 Name............................................................. 5
Section 1.2 Resident Agent................................................... 5
Section 1.3 Definitions...................................................... 5
(a) "Trust"....................................................... 5
(b) "Trustees".................................................... 5
(c) "Shares"...................................................... 5
(d) "Series"...................................................... 5
(e) "Class"...................................................... 5
(f) "Shareholder"................................................ 5
(g) "Investment Company Act"...................................... 6
(h) "Commission".................................................. 6
(i) "Declaration of Trust"........................................ 6
(j) "Vote of a Majority of the Outstanding Voting Securities"..... 6
ARTICLE II THE TRUSTEES...................................................... 6
Section 2.1 Number, Designation, Election, Term, etc......................... 6
(a) Number and Election........................................... 6
(b) Term.......................................................... 6
(c) Resignation and Retirement.................................... 6
(d) Removal....................................................... 6
(e) Vacancies..................................................... 6
(f) Effect of Vacancy............................................. 7
(g) No Accounting................................................. 7
Section 2.2 Powers of Trustees............................................... 7
(a) Investments................................................... 8
(b) Disposition of Assets......................................... 8
(c) Ownership Powers.............................................. 8
(d) Subscription.................................................. 8
(e) Form of Holding............................................... 8
(f) Reorganization, etc........................................... 9
(g) Voting Trusts, etc............................................ 9
(h) Compromise.................................................... 9
(j) Borrowing and Security........................................ 9
(k) Insurance..................................................... 9
Section 2.3 Action by Trustees............................................... 9
Section 2.4 Certain Contract................................................. 9
(a) Advisory......................................................10
(b) Administration................................................10
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(c) Financial Agency...............................................10
(d) Distribution...................................................10
(e) Custodian......................................................10
(f) Transfer Agency................................................10
(g) Dividend Disbursing Agency.....................................11
(h) Shareholder Servicing..........................................11
Section 2.5 Certain Conflicts of Interest.....................................11
Section 2.6 Payment of Trust Expenses and Compensation of Trustees............11
Section 2.7 Ownership of Assets of the Trust..................................12
ARTICLE III SHARES............................................................12
Section 3.1 Description of Shares.............................................12
Section 3.2 Establishment and Designation of Series...........................13
(a) Assets Belonging to Series.....................................13
(b) Liabilities Belonging to Series................................14
(c) Dividends......................................................14
(d) Liquidation....................................................15
(e) Shareholder Voting.............................................15
(f) Redemption by Shareholder......................................15
(g) Repurchase.....................................................15
(h) Redemption by Trust............................................16
(i) Net Asset Value................................................16
(j) Transfer.......................................................16
(k) Equality.......................................................16
(l) Fractions......................................................16
(m) Exchange Privilege.............................................16
Section 3.3 Establishment and Designation of Classes..........................17
Section 3.4 Ownership of Shares...............................................18
Section 3.5 Investments in the Trust..........................................18
Section 3.6 No Preemptive or Appraisal Rights ................................18
Section 3.7 Status of Shares and Limitation of Personal Liability.............18
ARTICLE IV SHAREHOLDERS' VOTING POWERS AND MEETINGS..........................19
Section 4.1 Voting Powers.....................................................19
Section 4.2 Meetings..........................................................19
Section 4.3 Record Dates......................................................20
Section 4.4 Quorum and Required Vote..........................................20
Section 4.5 Action by Written Consent.........................................20
Section 4.6 Inspection of Records.............................................20
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ARTICLE V LIMITATION OF LIABILITY: INDEMNIFICATION............................20
Section 5.1 Trustees, Shareholders, etc. Not Personally Liable; Notice........20
Section 5.2 Trustee's Good Faith Action; Expert Advice; No Bond or Surety.....21
Section 5.3 Indemnification of Shareholders...................................21
Section 5.4 Indemnification of Trustees, Officers, etc........................21
Section 5.5 Compromise Payment................................................22
Section 5.6 Indemnification Not Exclusive, etc................................22
Section 5.7 Liability of Third Persons Dealing with Trustees..................23
ARTICLE VI MISCELLANEOUS......................................................23
Section 6.1 Duration and Termination of Trust.................................23
Section 6.2 Reorganization....................................................23
Section 6.3 Amendments........................................................23
Section 6.4 Filing of Copies; References; Headings............................24
Section 6.5 Applicable Law....................................................24
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AN AGREEMENT AND DECLARATION OF TRUST, herein called Declaration of
Trust, made at Greenfield, in The Commonwealth of Massachusetts on the fourth
day of December, 1995 by and between Thomas N. Steenburg and Richard J. Wirth,
whose addresses are 101 Munson Street, Greenfield, Massachusetts, (hereinafter
called the "Trustees"), and such persons as may from time to time become
Shareholders of this Trust by purchasing or otherwise acquiring shares of
beneficial interest issued hereunder, is hereby adopted to read in its entirety
as follows:
THE TRUSTEES hereby agree and declare that they will hold all cash,
securities, and other property which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the benefit of the holders from time to time
of shares of beneficial interest in the Trust.
ARTICLE I
NAME, RESIDENT AGENT AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as "Phoenix Duff & Phelps
Institutional Mutual Funds" and the Trustees shall conduct the business of the
Trust under that name or such other name as they may from time to time
determine.
Section 1.2 Resident Agent. To the extent required, the Trustees shall
have power to appoint a resident agent for the Trust in The Commonwealth of
Massachusetts, and from time to time to replace the resident agent so appointed.
Section 1.3 Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) "Trust" refers to the Massachusetts business trust established by
this Agreement and Declaration of Trust, as amended from time to
time;
(b) "Trustees" refers to the Trustees of the Trust named herein and
their duly elected successors;
(c) "Shares" refers to the transferable units of interest into which
beneficial interest in the Trust or any Series of the Trust (as
the context may require) shall be divided from time to time;
(d) "Series" refers to the Series of Shares established and
designated pursuant to the provisions of Article III;
(e) "Class" refers to the Class of a Series of Shares established
and designated pursuant to the provisions of Article III;
(f) "Shareholder" means a record owner of Shares;
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(g) The "Investment Company Act" refers to the Investment Company Act
of 1940 and the rules and regulations thereunder, all as amended
from time to time;
(h) The term "Commission" shall mean the Securities and Exchange
Commission;
(i) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust as amended or restated from time to time;
(j) "Vote of a Majority of the Outstanding Voting Securities" means
the lesser of (i) 67% of the shares represented at a meeting at
which more than 50% of the outstanding shares are represented or
(ii) more than 50% of the outstanding shares.
ARTICLE II
THE TRUSTEES
Section 2.1 Number, Designation, Election, Term, etc.
(a) Number and Election. At each meeting for the purpose, the
Shareholders shall fix the number of Trustees, to serve until
the election and qualification of their successors, and shall at
such meeting elect the number of Trustees so fixed. The Trustees
serving as such may increase or decrease the number of Trustees
to a number other than the number theretofore fixed. No decrease
in the number of Trustees shall have the effect of removing any
Trustee from office prior to the expiration of his term. However,
the number of Trustees may be decreased in conjunction with the
removal of a Trustee pursuant to subsection (d) of this Section
2.1.
(b) Term. Each Trustee shall serve as a Trustee until the election
and qualification of his successor, or until such Trustee sooner
dies, resigns, retires or is removed.
(c) Resignation and Retirement. Any Trustee may resign his trust or
retire as a Trustee, by written instrument signed by him and
delivered to the remaining Trustees or to any officer of the
Trust. Such resignation or retirement shall take effect upon such
delivery or upon such later date as is specified in such
instrument.
(d) Removal. Any Trustee may be removed with or without cause at any
time either by written instrument, signed by at least two-thirds
of the number of Trustees prior to such removal, specifying the
date upon which such removal shall become effective, or by the
Shareholders at any meeting called for the purpose.
(e) Vacancies. Any vacancy resulting from any reason, including
without limitation the death, resignation, retirement, removal or
incapacity of any of the Trustees, or resulting from an increase
in the number of Trustees by the Trustees, may be filled by
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a majority of the remaining Trustees through the appointment in
writing of a successor Trustee to hold office until the election
and qualification of his successor, provided that immediately
after filling any such vacancy at least two-thirds (2/3) of the
Trustees then holding office shall have been elected to such
office by the Shareholders at a meeting for the purpose. Such
appointment of a successor Trustee shall be effective upon the
written acceptance of the person named therein to serve as a
Trustee and written agreement by such person to be bound by the
provisions of this Declaration of Trust whereupon the Trust
estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance.
(f) Effect of Vacancy. The death, resignation, retirement, removal or
incapacity of the Trustees, or of any one of them, shall not
operate to annul or terminate the Trust or to revoke or terminate
any existing agency or contract created or entered into pursuant
to the terms of this Declaration of Trust. During any vacancy a
majority of the remaining Trustees may exercise any and all of
the powers of the Trustees hereunder. The determination of a
vacancy or vacancies in the number of Trustees by reason of
death, resignation or disability when made by the remaining
Trustees and set forth in any instrument filling such vacancy or
vacancies shall be final and conclusive for all purposes.
(g) No Accounting. Except to the extent required by the Investment
Company Act or under circumstances which would justify his
removal for cause, no person ceasing to be a Trustee as a result
of his death, resignation, retirement, removal or incapacity (nor
the estate of any such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such
cessation.
Section 2.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility. Without limiting the foregoing, the Trustees may adopt
By-Laws not inconsistent with this Declaration of Trust providing for the
conduct of the business and affairs of the Trust and may amend and repeal them
to the extent that such By-Laws do not reserve the right to the Shareholders;
they may, as they consider appropriate, elect and remove officers, appoint and
terminate agents and consultants, and hire and terminate employees, any one or
more of the foregoing of whom may be a Trustee, and may provide for the
compensation of all of the foregoing; they may appoint from their own number,
and terminate, any one or more committees consisting of two or more Trustees,
including without implied limitation an executive committee, which may, when the
Trustees are not in session and subject to the provisions of the Investment
Company Act, exercise some or all of the power and authority of the Trustees as
the Trustees may determine; in accordance with Section 2.4 they may retain one
or more advisers, administrators, financial agents and custodians and may
authorize any such custodian to employ sub-custodians or agents and to deposit
all or any part of the Trust's assets in a system or systems for the central
handling of securities and debt instruments, retain one or more transfer,
dividend, accounting or Shareholder servicing agents, provide for the
distribution of Shares by the Trust through one or more
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distributors, principal underwriters or otherwise, set record dates of times for
the determination of Shareholders or certain of them with respect to various
matters; they may compensate or provide for the compensation of the Trustees,
officers, advisers, administrators, financial agents, custodians, other agents,
consultants and employees of the Trust or the Trustees on such terms as they
deem appropriate; and in general they may delegate to any officer of the Trust,
to any committee of the Trustees and to any employee, adviser, administrator,
distributor, financial agent, custodian, transfer agent, dividend disbursing
agent, or any other agent or consultant of the Trust such authority, powers,
functions and duties as they consider desirable or appropriate for the conduct
of the business and affairs of the Trust, including without implied limitation
the power and authority to act in the name of the Trust and of the Trustees, to
sign documents and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing but subject to the fundamental investment
policies of the Trust and to the extent not inconsistent with the Investment
Company Act or other applicable law, the Trustees shall have the power and
authority:
(a) Investments. To invest and reinvest from time to time cash and
other assets of the Trust in any type or class of security or
debt instrument including Shares of Series established pursuant
to the terms of this Declaration of Trust; and to hold cash or
other assets of the Trust uninvested in whole or in part without
in any event being bound or limited by any present or future law,
rule of court or custom in regard to investments by trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets
of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any rights
of ownership, with respect to stock or other securities, debt
instruments or property ownership, and to execute and deliver
proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons
such power and discretion with respect to securities, debt
instruments or property as the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of
securities or debt instruments;
(e) Form of Holding. Subject to the provisions of Section 2.7, to
hold any security, debt instrument or property in a form not
indicating any trust, whether in bearer, unregistered or other
negotiable form, or in the name of the Trustees or of the Trust
or in the name of a custodian, sub-custodian or other depository
or a nominee or nominees or otherwise;
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(f) Reorganization, etc. To consent to or participate in any plan for
the reorganization, consolidation or merger of any corporation or
issuer, any security or debt instrument of which is or was held
in the Trust; to consent to any contract, lease, mortgage,
purchase or sale of property by such corporation or issuer, and
to pay calls or subscriptions with respect to any security or
debt instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any securities
or debt instruments in acting through a committee, depositary,
voting trustee or otherwise, and in that connection to deposit
any security or debt instrument with, or transfer any security or
debt instrument to, any such committee, depositary or trustee,
and to delegate to them such power and authority with relation to
any security or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to
pay, and to pay, such portion of the expenses and compensation of
such committee, depositary or trustee as the Trustees shall deem
proper.
(h) Compromise. To compromise, arbitrate or otherwise adjust claims
in favor of or against the Trust or any matter in controversy,
including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or
limited partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage and
pledge the assets of the Trust or any part thereof to secure
obligations arising in connection with such borrowing; and
(k) Insurance. To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for the
conduct of the business, including, without limitation, insurance
covering each officer and employee of the Trust against larceny
and embezzlement and insurance covering each Trustee with respect
to any errors or omissions which may be committed or omitted by
such Trustee.
Section 2.3 Action by Trustees. Except as otherwise provided by the
Investment Company Act or other applicable law or this Declaration of Trust, any
action taken by the Trustees may be taken by a majority of the Trustees present
at a meeting of Trustees (a quorum, consisting of at least a majority of the
Trustees then in office, being present), within or without Massachusetts,
including any meeting held by means of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting, or by written consents of a
majority of the Trustees then in office.
Section 2.4 Certain Contracts. Subject to compliance with the
provisions of the Investment Company Act, but notwithstanding any limitations
of present and future law or custom in regard to
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delegation of powers by trustees generally, the Trustees may, at any time and
from time to time and without limiting the generality of their powers and
authority otherwise set forth herein, enter into one or more contracts with any
one or more corporations, trusts, associations, partnerships, limited
partnerships, other types of organizations, or individuals ("Contracting Party")
to provide for the performance and assumption of some or all of the following
services, duties and responsibilities to, for or of the Trust and/or the
Trustees, and to provide for the performance and assumption of such other
services, duties and responsibilities in addition to those set forth below as
the Trustees may determine to be appropriate;
(a) Advisory. Subject to the general supervision of the Trustees and
in conformity with the stated policy of the Trustees with respect
to the investments of the Trust or of the assets belonging to any
Series, to manage such investments and assets, to make investment
decisions with respect thereto, and to place purchase and sale
orders for portfolio transactions relating to such investments
and assets;
(b) Administration. Subject to the general supervision of the
Trustees and in conformity with any policies of the Trustees with
respect to the operations of the Trust, to provide all or any
part of the administrative and clerical personnel, office space
and office equipment and services appropriate for the efficient
administration and operation of the Trust;
(c) Financial Agency. Subject to the general supervision of the
Trustees and in conformity with any policies of the Trustees with
respect to the operations of the Trust, to provide financial and
accounting services whether with respect to the Trust's assets,
or otherwise, including, but not limited to, the preparation and
supervision of the Trust's financial statements and reports,
bookkeeping services, pricing services, periodic reports to
Shareholders and others, supporting schedules in connection with
any audit of the Trust's business or operations, and registration
statements, prospectuses and other documents required to be filed
under all applicable Federal and state laws and to provide many
services involved in registering and maintaining the registration
of the Trust and of its Shares with the Commission and
registering or qualifying its Shares under state or other
securities laws or any services involved in preparing reports to
Shareholders;
(d) Distribution. To distribute the Shares of the Trust; to be
principal underwriter of such Shares or to act as agent of the
Trust in the sale of Shares and the acceptance or rejection of
orders for the purchase of Shares;
(e) Custodian. To maintain custody of the property of the Trust and
accounting records in connection therewith;
(f) Transfer Agency. To maintain records of the ownership of
outstanding Shares, the issuance and redemption and the transfer
thereof;
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(g) Dividend Disbursing Agency. To disburse any dividends and other
distributions declared by the Trustees and in accordance with the
policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends; and
(h) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with
respect to Shareholders and their Shares, and similar matters.
Section 2.5 Certain Conflicts of Interest. The same person may be the
Contracting Party for some or all of the services, duties and responsibilities
to, for and of the Trust and/or the Trustees, and the contracts with respect
thereto may contain such terms interpretive of or in addition to the delineation
of the services, duties and responsibilities provided for, including provisions
that are not inconsistent with the Investment Company Act relating to the
standard of duty of and the rights to indemnification of the Contracting Party
and others, as the Trustees may determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is
a shareholder, director, officer, partner, trustee, employee,
manager, adviser, principal underwriter, distributor or agent of
or for any Contracting Party, or of or for any parent or
affiliate of any Contracting Party, or that the Contracting Party
or any parent or affiliate thereof is a Shareholder or has an
interest in the Trust, or that
(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other
corporations, trusts, associations, partnerships, limited
partnerships or other organizations, or has other business or
interests
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust and/or the
Trustees or disqualify any Shareholder, Trustee or officer of the Trust from
voting upon or executing the same or create any liability or accountability to
the Trust or its Shareholders, provided that in the case of any relationship or
interest referred to in the preceding clause (i) on the part of any Trustee or
officer of the Trust either (x) the material facts as to such relationship or
interest have been disclosed to or are known by the Trustees not having any such
relationship or interest and the contract involved is approved in good faith by
a majority of such Trustees not having such relationship or interest (even
though such unrelated or disinterested Trustees are less than a quorum of all
the Trustees), or (y) the material facts as to such relationship or interest and
as to the contract have been disclosed to or are known by the Shareholders
entitled to vote thereon and the contract involved is specifically approved in
good faith by vote of the Shareholders, and (z) the specific contract involved
is fair to the Trust as of the time authorized, approved or ratified by the
Trustees or by the Shareholders.
Section 2.6 Payment of Trust Expenses and Compensation of Trustees.
The Trustees are authorized to pay or to cause to be paid out of the principal
or income of the Trust, or partly out of
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principal and partly out of income, and to charge or allocate the same to,
between or among such one or more of the Series that may be established and
designated pursuant to Article III, as the Trustees deem fair, any or all
expenses, fees, charges, taxes and liabilities incurred or arising in connection
with the Trust, or in connection with the management thereof, including, but not
limited to, the Trustees' compensation and such expenses and charges for the
services of the Trust's officers, employees, adviser, administrator, financial
agent, distributor, principal underwriter, auditor, counsel, custodian, transfer
agent, dividend disbursing agent, Shareholder servicing agent, and such other
agents, consultants, and independent contractors and such other expenses and
charges including non-recurring expenses and other expenses which may be deemed
extraordinary expenses under all applicable Federal or State law, as the
Trustees may deem necessary or proper to incur. The expenses, fees, charges,
taxes and liabilities incurred or arising in connection with the Trust may be
paid from sources other than the Trust assets. Without limiting the generality
of any other provision hereof, the Trustees shall be entitled to reasonable
compensation from the Trust or from other sources that may be available for
their services as Trustees.
Section 2.7 Ownership of Assets of the Trust. Notwithstanding the
provisions of subsection (e) of Section 2.2, title to all of the assets of the
Trust shall at all times be considered as vested in the Trustees as joint
tenants.
ARTICLE III
SHARES
Section 3.1 Description of Shares. The beneficial interest in the Trust
shall be divided into an unlimited number of Shares, with a par value of one
dollar each. The Trustees shall have the authority from time to time to
establish and designate one or more Series of Shares (including, without
limitation, those Series specifically established and designated in Section
3.2), and/or one or more Classes of Shares of a Series (including, without
limitation, those Classes of Shares specifically established and designated in
Section 3.3), as they deem necessary or desirable. The Trustees may issue Shares
of any Series (or Class thereof) for such consideration and on such terms as
they may determine (or for no consideration if pursuant to a Share dividend or
split), all without action or approval of the Shareholders. All Shares when so
issued on the terms determined by the Trustees shall be fully paid and
non-assessable. The Trustees may classify or reclassify any unissued Shares or
any Shares previously issued and reacquired of any Series into one or more
Series (or Class thereof) that may be established and designated from time to
time. The Trustees may hold as treasury Shares (of the same or some other Series
or Class), reissue for such consideration and on such terms as they may
determine, or cancel, at their discretion from time to time, any Shares of any
Series (or Class thereof) reacquired by the Trust.
The Trustee may from time to time close the transfer books or establish
record dates and times for the purposes of determining the holders of Shares
entitled to be treated as such, to the extent provided or referred in Section
3.4.
The establishment and designation of any Series of Shares (or Class
thereof) in addition to those established and designated in Sections 3.2 and 3.3
shall be effective upon the execution by a
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majority of the then Trustees of an instrument setting forth such establishment
and designation and the relative rights and preferences of such Series, or
Class, as the case may be, or as otherwise provided in such instrument. At any
time that there are no Shares outstanding, of any particular Series (or Class
thereof) previously established and designated the Trustees may by an instrument
executed by a majority of their number abolish that Series (or Class thereof)
and the establishment and designation thereof.
Any Trustee, officer or other agent of the Trust and any organization in
which any such person is interested may acquire, own, hold and dispose of Shares
of any Series of the Trust (or Class thereof) to the same extent as if such
person were not a Trustee, officer or other agent of the Trust or were not such
an organization; and the Trust may issue and sell or cause to be issued and sold
and may purchase Shares of any Series (or Class thereof) from any such person or
any such organization subject only to the general limitations, restrictions or
other provisions applicable to the sale or purchase of Shares of such Series
generally.
Section 3.2 Establishment and Designation of Series. Without limiting
the authority of the Trustees set forth in Section 3.1 to establish and
designate any further Series, the following six Series are hereby established
and designated: "Phoenix Duff & Phelps Balanced Fund," "Phoenix Duff & Phelps
Bond Fund," "Phoenix Duff & Phelps Enhanced Reserves Fund ," "Phoenix Duff &
Phelps Growth Stock Fund," "Phoenix Duff & Phelps Money Market Fund," and "
Phoenix Duff & Phelps U.S. Government Securities Fund." Shares of each Series
established and designated in this Section 3.2 and any Shares of any further
Series that may from time to time be established and designated by the Trustees
shall (unless the Trustees otherwise determine with respect to some further
Series at the time of establishing and designating the same) have the following
relative rights and preferences, subject to Article III, Section 3.3, below:
(a) Assets Belonging to Series. All consideration received by the
Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested
or reinvested, all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange
or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same
may be, shall irrevocably belong to that Series for all purposes,
subject only to the rights of creditors, and shall be so recorded
upon the books of account of the Trust. Such consideration,
assets, income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds, in whatever form the same
may be, together with any General Items, as defined herein,
allocated to that Series as provided herein, are herein referred
to as "assets belonging to" that Series. In the event that there
are any assets, income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as
belonging to any particular Series (collectively "General
Items"), the Trustees shall allocate such General Items to and
among any one or more of the Series established and designated
from time to time in such manner and on such basis
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as they, in their sole discretion, deem fair and equitable; and
any General Items so allocated to a particular Series shall
belong to that Series. Each such allocation by the Trustees shall
be conclusive and binding upon the Shareholders of all Series for
all purposes.
(b) Liabilities Belonging to Series. The assets belonging to each
particular Series shall be charged with the liabilities of the
Trust in respect to that Series and all expenses, costs, charges
and reserves attributable to that Series, and any general
liabilities, expenses, costs, charges or reserves of the Trust
which are not readily identifiable as belonging to any particular
Series shall be allocated and charged by the Trustees to and
among any one or more of the Series established and designated
from time to time in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable. The
liabilities, expenses, costs, charges and reserves allocated and
so charged to a Series are herein referred to as "liabilities
belonging to" that Series. Each allocation of liabilities,
expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the holders of all Series for all
purposes. The Trustees shall have full discretion, to the extent
not inconsistent with the Investment Company Act, to determine
which items shall be treated as income and which items as
capital; and each such determination and allocation shall be
conclusive and binding upon the Shareholders.
(c) Dividends. Dividends and distributions on Shares of a particular
Series may be paid with such frequency as the Trustees may
determine, which may be daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such
frequency as the Trustees may determine, to the holders of Shares
of that Series, from such of the income and capital gains,
accrued or realized, from the assets belonging to that Series as
the Trustees may determine, after providing for actual and
accrued liabilities belonging to that Series. All dividends and
distributions on Shares of a particular Series shall be
distributed pro rata to the holders of that Series in proportion
to the number of Shares of that Series held by such holders at
the date and time of record established for the payment of such
dividends or distributions, except that in connection with any
dividend or distribution program or procedure the Trustees may
determine that no dividend or distribution shall be payable on
Shares as to which the Shareholder's purchase order and/or
payment have not been received by the time or times established
by the Trustees under such program or procedure. Such dividends
and distributions may be made in cash or Shares or a combination
thereof as determined by the Trustees or pursuant to any program
that the Trustees may have in effect at the time for the election
by each Shareholder of the mode of the making of such dividend or
distribution to that Shareholder. Any such dividend or
distribution paid in Shares will be paid at the net asset value
thereof as determined in accordance with subsection (i) of this
Section 3.2.
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(d) Liquidation. In the event of the liquidation or dissolution of
the Trust or redemption of all of the Shares of any Series, the
Shareholders of each Series that has been established and
designated shall be entitled to receive, as a Series, when and as
declared by the Trustees, the excess of the assets belonging to
that Series over the liabilities belonging to that Series. The
assets so distributable to the Shareholders of any Series shall
be distributed among such Shareholders in proportion to the
number of shares of that Series held by them and recorded on the
books of the Trust. The redemption of all the Shares of any
particular Series may be authorized by a vote of a majority of
the Trustees then in office subject to the approval of a Vote of
a Majority of the Outstanding Voting Securities of that Series.
(e) Shareholder Voting. On each matter submitted to a vote of the
Shareholders, each holder of a Share shall be entitled to one
vote for each Share, and a proportionate vote for each fractional
Share, standing in his name on the books of the Trust
irrespective of the Series thereof and all Shares of all Series
shall vote as a single class ("Single Class Voting"); provided,
however, that (a) as to any matter with respect to which a
separate vote of any Series is required, such requirement as to a
separate vote by that Series shall apply in lieu of Single Class
Voting as described above; (b) in the event that the separate
vote requirement referred to in (a) above applies with respect to
one or more Series, then, subject to (c) below, the Shares of all
Series entitled to vote and to which the separate vote
requirement referred to in (a) above does not apply shall vote as
a single class; and (c) as to any matter which affects (within
the meaning of Rule 18f-2 under the Investment Company Act) the
interest of one or more but not all Series, only the holders of
Shares of the one or more affected Series shall be entitled to
vote.
(f) Redemption by Shareholder. Each holder of Shares of a particular
Series, upon request to the Trust and compliance with appropriate
transfer requirements, shall be entitled to require the Trust to
redeem all or any part of the shares of that Series standing in
the name of such holder on the books of Trust at a redemption
price equal to the net asset value per Share of that Series next
determined in accordance with subsection (i) of this Section 3.2
after the receipt in good order of the request for redemption.
Notwithstanding the foregoing, the Trust may postpone payment of
the redemption price and may suspend the right of the holders of
shares of any Series to require the Trust to redeem Shares of
that Series during any period or at any time when and to the
extent permissible under the Investment Company Act.
(g) Repurchase. The Trust may maintain, or authorize its agent to
maintain, an offer to repurchase its outstanding Shares. During
any period when such an offer is being maintained, each Share for
which a repurchase order is received shall be repurchased at a
price equal to the net asset value per Share next determined in
accordance with
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subsection (i) of this Section 3.2 after receipt of such
repurchase order less such amount not in excess of 1% of such net
asset value as the Trustees may determine.
(h) Redemption by Trust. Each Share of each Series that has been
established and designated is subject to redemption by the Trust
at the redemption price which would be applicable if such Share
was then being redeemed by the Shareholder pursuant to subsection
(f) of this Section 3.2 at any time if the Trustees determine in
their sole discretion that such redemption is in the best
interest of the holders of the Shares, or any Series thereof, of
the Trust, and upon such redemption the holders of the Shares so
redeemed shall have no further right with respect thereto other
than to receive payment of such redemption price.
(i) Net Asset Value. Except as otherwise provided herein, the net
asset value per Share of any Series shall be the quotient
obtained by dividing the value of the net assets of that Series
(being the value of the assets belonging to that Series less the
liabilities belonging to that Series) by the total number of
Shares of that Series outstanding, all determined in accordance
with the method and procedures established by the Trustees from
time to time.
(j) Transfer. All Shares of each particular Series shall be
transferable, but transfers of Shares of a particular Series will
be recorded on the Share transfer records of the Trust applicable
to that Series only at such times as may be permitted by the
Trustees.
(k) Equality. All Shares of each particular Series shall represent an
equal proportionate interest in the assets belonging to that
Series (subject to the liabilities belonging to that Series), and
each Share of any particular Series shall be equal to each other
Share of that Series; but the provisions of this sentence shall
not restrict any distinctions permissible under subsection (c) of
this Section 3.2 that may exist with respect to dividends and
distributions on Shares of the same Series. The Trustees may from
time to time divide or combine the Shares of any particular
Series into a greater or lesser number of Shares of that Series
without thereby changing the proportionate beneficial interest in
the assets belonging to that Series or in any way affecting the
rights of Shares of any other Series.
(l) Fractions. Any fractional Share of any Series, if any such
fractional Share is outstanding, shall carry proportionately all
the rights and obligations of a whole Share of that Series,
including rights with respect to voting, receipt of dividends and
distributions, redemption of Shares, and liquidation of the
Trust.
(m) Exchange Privilege. Subject to compliance with the requirements
of the Investment Company Act, the Trustees shall have the
authority to provide that holders of Shares of any Series shall
have the right to exchange said Shares for Shares of one or more
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other Series of Shares in accordance with such requirements and
procedures as may be established by the Trustees.
Section 3.3 Designation and Establishment of Classes. The Trustees, in
their discretion, may authorize the division of the Shares of any Series into
two or more Classes, and the different Classes shall be established and
designated, the variations in the relative rights and preferences as between the
different Classes shall be fixed and determined, by the Trustees; provided, that
all Shares of any Series shall be identical to all other Shares of the same
Series, except, subject to the provisions of this Section 3.3, that there may be
variations between different classes as to allocation of expenses, rights of
redemption, special and relative rights as to dividends and on liquidation,
conversion rights, and conditions under which the several Classes shall have
separate voting rights. All references to Shares in this Declaration shall be
deemed to refer to Shares of any or all Classes as the context may require.
(a) Without in any manner limiting the rights of the Trustees set
forth in the immediately preceding paragraph, the Trustees hereby
divide the Shares of each of the Series described in Section 3.2,
above, into two Classes. The Classes of each such respective
Series, so established, shall be designated as "Class X Shares"
and "Class Y Shares". The following preferences, conversion and
other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption
shall pertain to all Shares in each of the foregoing Classes:
(1) The assets belonging to each Class shall be invested in the
same investment portfolio as the applicable Series.
(2) The dividends and distributions of investment income and
capital gains with respect to each Class shall be in such amounts
as may be declared from time to time by the Trustees, and the
dividends and distributions of each Class of a Series may vary
from dividends and distributions of investment income and capital
gains with respect to the other Class of that Series to reflect
differing allocations of the expenses of the Trust between the
holders of the two classes of such Series and any resultant
differences between the net asset value per share of the two
classes of such Series, to such extent and for such purposes as
the Trustees may deem appropriate. The allocation of investment
income or capital gains and expenses and liabilities of each
Series between the Class X Shares and the Class Y Shares shall be
determined by the Trustees in a manner that is consistent with
Rule 18f-3 under the Investment Company Act, as the same may be
amended from time to time.
(3) The holders of Class X Shares and Class Y Shares shall have
(i) exclusive voting rights with respect to provisions of any
distribution plan adopted by the Trust pursuant to Rule 12b-1
under the Investment Company Act (a "Plan") applicable to each
respective Class of a particular Series, and (ii) no voting
rights with respect to provisions of any Plan applicable to the
other Class of that Series, any other Series, or with regard to
any other matter submitted to a vote of shareholders of the Trust
which does not affect holders of that respective Class of such
Series.
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(4) There shall be no rights of conversion between Classes.
(5) The net asset value of a Share shall reflect all
indebtedness, expenses and liabilities attributable to each
applicable Class within each respective Series. The net asset
value of a Share shall be determined by dividing the net asset
value of each applicable Class of a particular Series by the
number of Shares of that Class outstanding within that Series.
Notwithstanding the foregoing, Shares of each Class shall
represent an equal proportionate interest in the assets belonging
to the applicable Class within that Series, subject to the
liabilities of that particular Class. Shares of each Class shall
also represent an interest in the assets belonging to such Series
which shall be proportionate to the relative aggregate net asset
value of such Class relative to the aggregate net asset value of
the other Class within said Series, subject to the liabilities of
that particular Series.
Section 3.4 Ownership of Shares The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Series
(and Class thereof) that has been established and designated. No certificates
certifying the ownership of Shares need be issued except as the Trustees may
otherwise determine from time to time. The Trustees may make such rules as they
consider appropriate for the issuance of Share certificates, the use of
facsimile signatures, the transfer of Shares, and similar matters. The record
books of the Trust as kept by the Trust or any transfer or similar agent, as the
case may be, shall be conclusive as to who are the Shareholders and as to the
number of Shares of each Series (and Class thereof) held from time to time by
each such Shareholder.
Section 3.5 Investments in the Trust. The Trustees may accept
investments in the Trust from such persons and on such terms and for such
consideration, not inconsistent with the provisions of the Investment Company
Act, as they from time to time authorize. The Trustees may authorize any
distributor, principal underwriter, transfer agent or other person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares whether or not conforming to such
authorized terms.
Section 3.6 No Preemptive or Appraisal Rights. Shareholders shall have
no preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust. Shareholders shall have no appraisal rights
other than as may from time to time be provided by applicable law.
Section 3.7 Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. Ownership of Shares shall not entitle the
Shareholder to any title in or to the whole or any part of the Trust property or
right to call for a partition or division of the same or for an accounting. The
Trust shall not be deemed or otherwise construed to be a partnership nor shall
the ownership of Shares constitute the Shareholders partners. Neither the Trust
nor the Trustees nor any officer, employee or agent of the Trust shall have any
power to bind personally any Shareholder nor, except as specifically provided
herein, to call upon any Shareholder
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<PAGE>
for the payment of any sum of money or assessment whatsoever other than such as
the Shareholder may at any time agree to pay.
ARTICLE IV
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 4.1 Voting Powers. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section 2.1,
(ii) with respect to any contract with a Contracting Party as provided in
Section 2.4 as to which Shareholder approval is required by the Investment
Company Act, (iii) with respect to any termination or reorganization of the
Trust or any Series to the extent and as provided in Sections 6.1 and 6.2, (iv)
with respect to any amendment of this Declaration of Trust to the extent and as
provided in Section 6.3, (v) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders, and (vi) with
respect to such additional matters relating to the Trust as may be required by
the Investment Company Act, this Declaration of Trust or any registration of the
Trust with the Commission or state regulatory agency, or as the Trustees may
consider necessary or desirable. There shall be no cumulative voting in the
election of Trustees. Shares may be voted by proxy. A proxy purporting to be
executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. At any time when no Shares of a Series are
outstanding, the Trustees may with respect to that Series exercise all rights of
Shareholders and may take any action required by law or this Declaration of
Trust to be taken by Shareholders with respect to that Series.
Section 4.2 Meetings. There shall be such meetings of Shareholders of
the Trust as may be required by the Investment Company Act or as may be called
by the Trustees, at the office of the Trust or at such other place as may be
designated in the call thereof, which call shall made by the Trustees. In the
event that any such meeting is not held on the date fixed in the notice thereof,
whether the omission be by oversight or otherwise, a subsequent meeting may be
called by the Trustees and held in lieu of the original meeting, with the same
effect as though held on such date. Meetings may also be called by the Trustees
from time to time for the purpose of taking action upon any matter requiring the
vote or authority of the Shareholders as herein provided or upon any other
matter deemed by the Trustees to be necessary or desirable. Written notice of
any meeting of Shareholders shall be given or caused to be given by the Trustees
by mailing such notice at least seven days before such meeting, postage prepaid,
stating the time, place and purpose of the meeting, to each Shareholder at the
Shareholder's address as it appears on the records of the Trust. If the Trustees
shall fail to call or give notice of any meeting of Shareholders for a period of
60 days after written application by Shareholders holding at least 10% of the
Shares then outstanding requesting a meeting be called for a purpose requiring
action by the Shareholders as provided herein, then Shareholders holding at
least 10% of the Shares then outstanding may call and give notice of such
meeting, and thereupon the meeting shall be held in the manner provided for
herein in case of call thereof by the Trustees.
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<PAGE>
Section 4.3 Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than 60 days prior to the date of any meeting of Shareholders or other action as
the date and time of record for the determination of Shareholders entitled to
vote at such meeting or any adjournment thereof or to be treated as Shareholders
of record for purposes of such action and no Shareholder becoming such after
that date and time shall be so entitled to vote at such meeting or any
adjournment thereof or to be treated as a Shareholder of record for purposes of
such other action.
Section 4.4 Quorum and Required Vote. A majority of the Shares entitled
to vote shall be a quorum for the transaction of business at a Shareholders'
meeting, but any lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held, within a reasonable time after the
date set for the original meeting, without the necessity of further notice. A
majority of the Shares voted, at a meeting at which a quorum is present, shall
decide any questions and a plurality shall elect a Trustee, except when a
different vote is provided for by any provision of the Investment Company Act or
other applicable law or by this Declaration of Trust.
Section 4.5 Action by Written Consent. Subject to the provisions of the
Investment Company Act and other applicable law, any action taken by
Shareholders of the Trust or of any Series may be taken without a meeting if a
majority of Shareholders entitled to vote on the matter ( or such larger
proportion thereof as shall be required by the Investment Company Act or by any
express provision of this Declaration of Trust) consent to the action in writing
and such written consents are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as a vote taken at
a meeting of Shareholders.
Section 4.6 Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the extent permitted by the Trustees.
ARTICLE V
LIMITATION OF LIABILITY: INDEMNIFICATION
Section 5.1 Trustees, Shareholders, etc. Not Personally Liable; Notice.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Trust for payment under such
credit, contract or claim; and neither the Shareholders nor the Trustees, nor
any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefore. Every note, bond, contract,
instrument, certificate or undertaking and every other act or thing whatsoever
executed or done by or on behalf of the Trust or the Trustees or any of them in
connection with the Trust shall be conclusively deemed to have been executed or
done only by or for the Trust or the Trustees and not personally. Nothing in
this Declaration of Trust shall protect any Trustee or officer against any
liability to the Trust or the Shareholders to which such
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Trustee or officer would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee or of such officer.
Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officers or officer shall give notice that
this Declaration of Trust is on file with the Secretary of The Commonwealth of
Massachusetts and shall recite to the effect that the same was executed or made
by or on behalf of the Trust or by them as Trustees or Trustee or as officers or
officer and not individually and that the obligations of such instrument are not
binding upon any of them or the Shareholders individually but are binding only
upon the assets and property of the Trust, but the omission thereof shall not
operate to bind any Trustees or Trustee or officers or officer or Shareholders
or Shareholder individually.
Section 5.2 Trustee's Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretion hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his own
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of the Trustee, and for nothing
else, and shall not be liable for errors of judgement or mistakes of fact or
law. Subject to the foregoing, ( a) the Trustees shall not be responsible or
liable in any event for any neglect or wrongdoing of any officer, agent,
employee, consultant, adviser, administrator, distributor or principal
underwriter, financial agent, custodian or transfer, dividend disbursing,
Shareholder servicing or other agent of the Trust, nor shall any Trustee be
responsible for the act or omission of any other Trustee; (b) the Trustees may
take advice of counsel or other experts with respect to the meaning and
operation of this Declaration of Trust and their duties as Trustees and shall be
under no liability for any act or omission in accordance with such advice or for
failing to follow such advice; and (c) in discharging their duties, the
Trustees, when acting in good faith, shall be entitled to rely upon the books of
account of the Trust and upon written reports made to the Trustees by any
officer appointed by them, any independent public accountant, and (with respect
to the subject matter of the contract involved) any officer, partner or
responsible employee of a Contracting Party appointed by the Trustees pursuant
to Section 2.4. The Trustees as such shall not be required to give any bond or
surety or any other security for the performance of their duties.
Section 5.3 Indemnification of Shareholders. In case any Shareholder or
former Shareholder shall be charged or held to be personally liable for any
obligation or liability of the Trust solely by reason of being or having been a
Shareholder and not because of such Shareholder's acts or omissions or for some
other reason, the Trust (upon proper and timely request by the Shareholder)
shall assume the defense against such charge and satisfy any judgement thereon,
and the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or, in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled out
of the assets of the Trust estate to be held harmless from and indemnified
against all loss and expense arising from such charge or liability.
Section 5.4 Indemnification of Trustees, Officers, etc. The Trust shall
indemnify each of its Trustees and officers (hereinafter referred to as a
"Covered Person") against all liabilities, including
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but not limited to amounts paid in satisfaction of judgements, in compromise or
as fines and penalties, and expenses, including reasonable accountants' and
counsel fees, incurred by any Covered Person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body, in which such Covered
Person may be or may have been involved as a party or otherwise or with which
such person may be or may have been threatened, while in office or thereafter,
by reason of being or having been such a Trustee or officer, except with respect
to any matter as to which such Covered Person shall have been finally
adjudicated in any such action, suit or other proceeding not to have acted in
good faith in the reasonable belief that such Covered Person's action was in or
not opposed to the best interests of the Trust and except that no Covered Person
shall be indemnified against any liability to the Trust or its Shareholders to
which such Covered Person would otherwise be subject by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of such Covered Person's office. Expenses, including
accountants' and counsel fees so incurred by any such Covered Person (but
excluding amounts paid in satisfaction of judgements, in compromise or as fines
or penalties), may be paid from time to time by the Trust in advance of the
final disposition of any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Covered Person to repay amounts so paid to
the Trust if it is ultimately determined that indemnification of such expenses
is not authorized under this Article V.
Section 5.5 Compromise Payment. As to any matter disposed of by a
compromise payment of any such Covered Person referred to in Section 5.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless there has been
obtained an opinion in writing of independent legal counsel to the effect that
such Covered Person does not appear not to have acted in good faith in the
reasonable belief that his action was in or not opposed to the best interests of
the Trust and that such indemnification would not protect such person against
any liability to the Trust to which such person would otherwise be subject by
reason of wilful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of office. Any payment made to any covered
Person hereunder shall not prevent the recovery from any Covered Person of any
amount paid to such Covered Person in accordance with any of such clauses as
indemnification if such Covered Person is subsequently adjudicated by a court of
competent jurisdiction not to have acted in good faith in the reasonable belief
that such Covered Person's action was in or not opposed to the best interests of
the Trust or to have been liable to the Trust or its Shareholders by reason of
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office.
Section 5.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article V shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article V, "Covered Person" shall include such person's heirs, executors
and administrators. Nothing contained in this article shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain liability insurance on
behalf of any such person.
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<PAGE>
Section 5.7 Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by a majority of the Trustees then in office
subject to the approval by a Vote of a Majority of Outstanding Voting Securities
of each Series voting separately by Series.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated, as may
be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of subsection (d) of Section 3.2.
Section 6.2 Reorganization. The Trustees may sell, convey and transfer
the assets of the Trust, or the assets belonging to any one or more Series, to
another Trust, partnership, association or corporation organized under the laws
of any state of the United States, or to the Trust, to be held as assets
belonging to another Series of the Trust, in exchange for cash, shares or other
securities (including, in the case of a transfer to another Series of the Trust,
Shares of such other Series) with such transfer being made subject to, or with
the assumption by the transferee of, the liabilities belonging to each Series
the assets of which are so transferred; provided, however, that no assets
belonging to any particular Series shall be so transferred unless the terms of
such transfer shall have first been approved at a meeting called for the purpose
by a Vote of a Majority of the Outstanding Voting Securities of that Series.
Following such transfer, the Trustees shall distribute such cash, shares or
other securities (giving due effect to the assets and liabilities belonging to
and any other differences among the various Series the assets belonging to which
have so been transferred) among the Shareholders of the Series the assets
belonging to which have been so transferred; and if all of the assets of the
Trust have been so transferred, the Trust shall be terminated.
Section 6.3 Amendments. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment except as herein provided upon the
Shareholders without the express consent of each Shareholder or Trustee
involved. Subject to the foregoing, the provisions of this Declaration of Trust
(whether or not related to the rights of Shareholders) may be amended at any
time by an instrument in writing signed by a majority of the then Trustees (or
by a Trustee or officer of the Trust pursuant to the vote of a majority of such
Trustees), when authorized to do so by the vote in accordance with subsection
(e) of Section 3.2 by
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Shareholders holding a majority of the Shares entitled to vote, except that
amendments (a) establishing and designating any further Series or Shares, as
provided in Section 3.1, or (b) abolishing any Series of Shares (or Class
thereof) of which there are no Shares outstanding, or (c) adopting, altering, or
amending investment restrictions with respect to the Trust or any Series of the
Trust which are not fundamental investment policies of the Trust or of any
Series, or (d) having the purpose of changing the name of the Trust or the name
of the Series or Class established and designated, or of supplying any omission,
curing any ambiguity or curing, correcting or supplementing any provision hereof
which is internally inconsistent with any other provision hereof or which is
defective or inconsistent with the Investment Company Act or with the
requirements of the Internal Revenue Code and applicable regulations for the
Trust's obtaining the most favorable treatment thereunder available to regulated
investment companies, shall not require authorization by Shareholder vote.
Subject to the foregoing, any such amendment shall be effective as provided in
the instrument containing the terms of such amendment or, if there is no
provision therein with respect to effectiveness, upon the execution of such
instrument and of a certificate (which may be a part of such instrument)
executed by a Trustee or officer of the Trust to the effect that such amendment
has been duly adopted.
Section 6.4 Filing of Copies; References; Headings. The original or a
conformed copy of this Declaration of Trust and of each amendment thereto shall
be kept at the office of the Trust where it may be inspected by any Shareholder.
A copy of this Declaration of Trust and of each amendment thereto shall be filed
by the Trust with the Secretary of The Commonwealth of Massachusetts, as well as
with any other governmental office where such filing may be required, but the
failure to make any such filing shall not impair the effectiveness of this
Declaration of Trust or any such subsequent amendment. Anyone dealing with the
Trust may rely on a certificate by a Trustee or officer of the Trust as to
whether or not any such amendments have been made, as to the identities of the
Trustees and officers, and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this Declaration of
Trust or of any such subsequent amendment. In this instrument and in any such
amendment, references to this instrument, and all expressions like "herein",
"hereof" and "hereunder" shall be deemed to refer to this instrument as a whole
as the same may be amended or affected by any such amendments. The masculine
gender shall include the feminine and neuter genders. Headings are placed herein
for convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this instrument. This
instrument or any amendment thereto may be executed in any number of
counterparts each of which shall be deemed an original.
Section 6.5 Applicable Law. This Declaration of Trust, made in the
Commonwealth of Massachusetts, and the Trust created hereunder, is governed by
the laws of said Commonwealth and is construed and administered according to
said laws. The Trust is of the type referred to in Section 1 of chapter 182 of
the Massachusetts General Laws and of the type commonly called a Massachusetts
business trust, and, without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust.
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IN WITNESS WHEREOF, the undersigned have executed this instrument this 4th day
of December, 1995.
[signature]
- ---------------------------
Thomas N. Steenburg
[signature]
- -----------------------------
Richard J. Wirth
funds\1935
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Exhibit 5(a)
Investment Advisory Agreement
-1-
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made by and between Phoenix Duff & Phelps Institutional
Mutual Funds, a Massachusetts business trust having a place of business located
at 101 Munson Street, Greenfield, Massachusetts (the "Trust") and Duff & Phelps
Investment Management Company, Inc., an Illinois corporation having a place of
business located at 55 East Monroe Street, Chicago, Illinois (the "Adviser").
WITNESSETH THAT:
1. The Trust hereby appoints the Adviser to act as investment adviser to
the Trust on behalf of the Phoenix Duff & Phelps Institutional Enhanced Reserves
Portfolio established and designated by the Trustees on or before the date
hereof (the "Existing Series"), for the period and on the terms set forth
herein. The Adviser accepts such appointment and agrees to render the services
described in this Agreement for the compensation herein provided.
2. In the event that the Trustees desire to retain the Adviser to render
investment advisory services hereunder with respect to one or more additional
series ("Additional Series"), the Trust shall notify the Adviser in writing. If
the Adviser is willing to render such services, it shall notify the Trust in
writing, whereupon such Additional Series shall become subject to the terms and
conditions of this Agreement.
3. The Adviser shall furnish continuously an investment program for the
Existing Series and any Additional Series which may become subject to the terms
and conditions set forth herein (sometimes collectively referred to as the
"Series") and shall manage the investment and reinvestment of the assets of each
Series, subject at all times to the supervision of the Trustees.
4. With respect to managing the investment and reinvestment of the
Series' assets, the Adviser shall provide, at its own expense:
(a) Investment research, advice and supervision;
(b) An investment program for each Series consistent with its
investment objectives;
(c) Implementation of the investment program for each Series
including the purchase and sale of securities;
(d) Advice and assistance on the general operations of the Trust;
(e) Regular reports to the Trustees on the implementation of each
Series' investment program; and
<PAGE>
-2-
5. The Adviser shall, for all purposes herein, be deemed to be an
independent contractor.
6. The Adviser shall furnish at its own expense, or pay the expenses
of the Trust, for the following:
(a) Office facilities, including office space, furniture and
equipment;
(b) Personnel necessary to perform the functions required to
manage the investment and reinvestment of each Series' assets
(including those required for research, statistical and
investment work);
(c) Personnel to serve without salaries from the Trust as
officers or agents of the Trust. The Adviser need not provide
personnel to perform, or pay the expenses of the Trust for,
services customarily performed for an open-end management
investment company by its national distributor, custodian,
financial agent, transfer agent, auditors and legal counsel;
(d) Compensation and expenses, if any, of the Trustees who are
also full-time employees of the Adviser or any of its
affiliates; and
7. All costs and expenses not specifically enumerated herein as payable
by the Adviser shall be paid by the Trust. Such expenses shall include, but
shall not be limited to, all expenses (other than those specifically referred to
as being borne by the Adviser) incurred in the operation of the Trust and any
public offering of its shares, including, among others, interest, taxes,
brokerage fees and commissions, fees of Trustees who are not full-time employees
of the Adviser or any of its affiliates, expenses of Trustees' and shareholders'
meetings including the cost of printing and mailing proxies, expenses of
insurance premiums for fidelity and other coverage, expenses of repurchase and
redemption of shares, expenses of issue and sale of shares (to the extent not
borne by its national distributor under its agreement with the Trust), expenses
of printing and mailing stock certificates representing shares of the Trust,
association membership dues, charges of custodians, transfer agents, dividend
disbursing agents and financial agents, bookkeeping, auditing and legal
expenses. The Trust will also pay the fees and bear the expense of registering
and maintaining the registration of the Trust and its shares with the Securities
and Exchange Commission and registering or qualifying its shares under state or
other securities laws and the expense of preparing and mailing prospectuses and
reports to shareholders. Additionally, if authorized by the Trustees, the Trust
shall pay for extraordinary expenses and expenses of a non-recurring nature
which may include, but not be limited to the reasonable and proportionate cost
of any reorganization or acquisition of assets and the cost of legal proceedings
to which the Trust is a party.
<PAGE>
-3-
8. For providing the services and assuming the expenses outlined herein,
the Trust agrees that the Adviser shall be compensated as follows:
(a) The Trust shall pay the Adviser a monthly fee with respect to
each Series based on the following annual rates as a
percentage of the average aggregate daily net asset values of
the Series:
Portfolio First $1 Excess Over $1
billion Billion
Enhanced Reserves 0.24% 0.19%
The amounts payable to the Adviser with respect to each Series shall be based
upon the average of the values of the net assets of such Series as of the close
of business each day, computed in accordance with the Declaration of Trust.
(b) Compensation shall accrue immediately upon the effective date
of this Agreement.
(c) If there is termination of this Agreement during a month,
each Series' fee for that month shall be proportionately
computed upon the average of the daily net asset values of
such Series for such partial period in such month.
(d) The Adviser agrees to reimburse the Trust for the amount, if
any, by which the total operating and management expenses for
any Series (including the Adviser's compensation, pursuant to
this paragraph, but excluding taxes, interest, costs of
portfolio acquisitions and dispositions and extraordinary
expenses), for any "fiscal year" exceed the level of expenses
which such Series is permitted to bear under the most
restrictive expense limitation (which is not waived by the
State) imposed on open-end investment companies by any state
in which shares of such Series are then qualified. Such
reimbursement, if any, will be made by the Adviser to the
Trust within five days after the end of each month. For the
purpose of this subparagraph (d), the term "fiscal year"
shall include the portion of the then current fiscal year
which shall have elapsed at the date of termination of this
Agreement.
9. The services of the Adviser to the Trust are not to be deemed
exclusive, the Adviser being free to render services to others and to engage in
other activities. Without relieving the Adviser of its duties hereunder and
subject to the prior approval of the Trustees and subject further to compliance
with applicable provisions of the Investment Company Act of 1940, as amended,
the Adviser may appoint one or more agents to perform any of the functions and
services which
<PAGE>
-4-
are to be provided under the terms of this Agreement upon such terms and
conditions as may be mutually agreed upon among the Trust, the Adviser and any
such agent.
10. The Adviser shall not be liable to the Trust or to any shareholder of
the Trust for any error of judgment or mistake of law or for any loss suffered
by the Trust or by any shareholder of the Trust in connection with the matters
to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard on the part of
the Adviser in the performance of its duties hereunder.
11. It is understood that:
(a) Trustees, officers, employees, agents and shareholders of the
Trust are or may be "interested persons" of the Adviser as
directors, officers, stockholders or otherwise;
(b) Directors, officers, employees, agents and stockholders of
the Adviser are or may be "interested persons" of the Trust
as Trustees, officers, shareholders or otherwise; and
(c) The existence of any such dual interest shall not affect the
validity hereof or of any transactions hereunder.
12. This Agreement shall become effective with respect to the Existing
Series as of the date stated below (the "Contract Date") and with respect to any
Additional Series, on the date specified in the notice to the Trust from the
Adviser in accordance with paragraph 2 hereof that the Adviser is willing to
serve as Adviser with respect to such Additional Series. Unless terminated as
herein provided, this Agreement shall remain in full force and effect for a
period of two years following the Contract Date, and, with respect to each
Additional Series, until the next anniversary of the Contract Date following the
date on which such Additional Series became subject to the terms and conditions
of this Agreement and shall continue in full force and effect for periods of one
year thereafter with respect to each Series so long as (a) such continuance with
respect to any such Series is approved at least annually by either the Trustees
or by a "vote of the majority of the outstanding voting securities" of such
Series and (b) the terms and any renewal of this Agreement with respect to any
such Series have been approved by a vote of a majority of the Trustees who are
not parties to this Agreement or "interested persons" of any such party cast in
person at a meeting called for the purpose of voting on such approval; provided,
however, that the continuance of this Agreement with respect to each Additional
Series is subject to its approval by a "vote of a majority of the outstanding
voting securities" of any such Additional Series on or before the next
anniversary of the Contract Date following the date on which such Additional
Series became a Series hereunder.
<PAGE>
-5-
Any approval of this Agreement by a vote of the holders of a "majority of
the outstanding voting securities"' of any Series shall be effective to continue
this Agreement with respect to such Series notwithstanding (a) that this
Agreement has not been approved by a "vote of a majority of the outstanding
voting securities" of any other Series of the Trust affected thereby and (b)
that this Agreement has not been approved by the holders of a "vote of a
majority of the outstanding voting securities" of the Trust, unless either such
additional approval shall be required by any other applicable law or otherwise.
13. The Trust may terminate this Agreement with respect to the Trust or
to any Series upon 60 days' written notice to the Adviser at any time, without
the payment of any penalty, by vote of the Trustees or, as to each Series, by a
"vote of the majority of the outstanding voting securities" of such Series. The
Adviser may terminate this Agreement upon 60 days' written notice to the Trust,
without the payment of any penalty. This Agreement shall immediately terminate
in the event of its "assignment".
14. The terms "majority of the outstanding voting securities",
"interested persons" and "assignment", when used herein, shall have the
respective meanings in the Investment Company Act of 1940, as amended.
15. In the event of termination of this Agreement, or at the request of
the Adviser, the Trust will eliminate all reference to "Phoenix" and/or "Phoenix
Duff & Phelps" from its name, and will not thereafter transact business in a
name using the word "Phoenix" and/or "Phoenix Duff & Phelps" in any form or
combination whatsoever, or otherwise use the word "Phoenix" and/or "Phoenix Duff
& Phelps" as part of its name. The Trust will thereafter in all prospectuses,
advertising materials, letterheads, and other material designed to be read by
investors and prospective investors delete from its name the word "Phoenix"
and/or "Phoenix Duff & Phelps" or any approximation thereof. If the Adviser
chooses to withdraw the Trust's right to use the word "Phoenix" and/or "Phoenix
Duff & Phelps", it agrees to submit the question of continuing this Agreement to
a vote of the Trust's shareholders at the time of such withdrawal.
16. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but bind only the trust property of
the Trust, as provided in the Declaration of Trust. The execution and delivery
of this Agreement have been authorized by the Trustees and shareholders of the
Trust and signed by the President of the Trust, acting as such, and neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
be binding upon or impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. The Declaration of Trust, as amended, is or shall be on file with the
Secretary of The Commonwealth of Massachusetts.
<PAGE>
-6-
17. This Agreement shall be construed and the rights and obligations of
the parties hereunder enforced in accordance with the laws of The Commonwealth
of Massachusetts.
<PAGE>
-7-
18. The effective date of this Agreement shall be deemed to be
contemporaneous with the initial public offering of shares of the Existing
Series.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
PHOENIX DUFF & PHELPS
INSTITUTIONAL MUTUAL FUNDS
By:_________________________
Philip R. McLoughlin, President
DUFF & PHELPS INVESTMENT
MANAGEMENT COMPANY, INC.
By:_________________________
pdp020
<PAGE>
Exhibit 5(b)
Investment Advisory Agreement
-1-
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made effective as of the 1st day of March, 1996 by and
between Phoenix Duff & Phelps Institutional Mutual Funds, a Massachusetts
business trust having a place of business located at 101 Munson Street,
Greenfield, Massachusetts (the "Trust") and Phoenix Investment Counsel, Inc., a
Massachusetts corporation having a place of business located at 56 Prospect
Street, Hartford, Connecticut (the "Adviser").
WITNESSETH THAT:
1. The Trust hereby appoints the Adviser to act as investment adviser to
the Trust on behalf of the following five series of the Trust established and
designated by the Trustees on or before the date hereof, namely (i) Phoenix Duff
& Phelps Institutional Balanced Portfolio; (ii) Phoenix Duff & Phelps
Institutional Managed Bond Portfolio; (iii) Phoenix Duff & Phelps Institutional
Growth Stock Portfolio; (iv) Phoenix Duff & Phelps Institutional Money Market
Portfolio, and (v) Phoenix Duff & Phelps Institutional U.S. Government
Securities Portfolio (collectively, the "Existing Series"), for the period and
on the terms set forth herein. The Adviser accepts such appointment and agrees
to render the services described in this Agreement for the compensation herein
provided.
2. In the event that the Trustees desire to retain the Adviser to render
investment advisory services hereunder with respect to one or more additional
series ("Additional Series"), the Trust shall notify the Adviser in writing. If
the Adviser is willing to render such services, it shall notify the Trust in
writing, whereupon such Additional Series shall become subject to the terms and
conditions of this Agreement.
3. The Adviser shall furnish continuously an investment program for the
Existing Series and any Additional Series which may become subject to the terms
and conditions set forth herein (sometimes collectively referred to as the
"Series") and shall manage the investment and reinvestment of the assets of each
Series, subject at all times to the supervision of the Trustees.
4. With respect to managing the investment and reinvestment of the
Series' assets, the Adviser shall provide, at its own expense:
(a) Investment research, advice and supervision;
(b) An investment program for each Series consistent with its
investment objectives;
(c) Implementation of the investment program for each Series
including the purchase and sale of securities;
(d) Advice and assistance on the general operations of the Trust;
<PAGE>
-2-
(e) Regular reports to the Trustees on the implementation of each
Series' investment program; and
<PAGE>
-3-
5. The Adviser shall, for all purposes herein, be deemed to be an
independent contractor.
6. The Adviser shall furnish at its own expense, or pay the expenses
of the Trust, for the following:
(a) Office facilities, including office space, furniture and
equipment;
(b) Personnel necessary to perform the functions required to
manage the investment and reinvestment of each Series' assets
(including those required for research, statistical and
investment work);
(c) Personnel to serve without salaries from the Trust as
officers or agents of the Trust. The Adviser need not provide
personnel to perform, or pay the expenses of the Trust for,
services customarily performed for an open-end management
investment company by its national distributor, custodian,
financial agent, transfer agent, auditors and legal counsel;
(d) Compensation and expenses, if any, of the Trustees who are
also full-time employees of the Adviser or any of its
affiliates; and
7. All costs and expenses not specifically enumerated herein as payable
by the Adviser shall be paid by the Trust. Such expenses shall include, but
shall not be limited to, all expenses (other than those specifically referred to
as being borne by the Adviser) incurred in the operation of the Trust and any
public offering of its shares, including, among others, interest, taxes,
brokerage fees and commissions, fees of Trustees who are not full-time employees
of the Adviser or any of its affiliates, expenses of Trustees' and shareholders'
meetings including the cost of printing and mailing proxies, expenses of
insurance premiums for fidelity and other coverage, expenses of repurchase and
redemption of shares, expenses of issue and sale of shares (to the extent not
borne by its national distributor under its agreement with the Trust), expenses
of printing and mailing stock certificates representing shares of the Trust,
association membership dues, charges of custodians, transfer agents, dividend
disbursing agents and financial agents, bookkeeping, auditing and legal
expenses. The Trust will also pay the fees and bear the expense of registering
and maintaining the registration of the Trust and its shares with the Securities
and Exchange Commission and registering or qualifying its shares under state or
other securities laws and the expense of preparing and mailing prospectuses and
reports to shareholders. Additionally, if authorized by the Trustees, the Trust
shall pay for extraordinary expenses and expenses of a non-recurring nature
which may include, but not be limited to the reasonable and proportionate cost
of any reorganization or acquisition of assets and the cost of legal proceedings
to which the Trust is a party.
<PAGE>
-4-
8. For providing the services and assuming the expenses outlined herein,
the Trust agrees that the Adviser shall be compensated as follows:
(a) The Trust shall pay the Adviser a monthly fee with respect to
each Series based on the following annual rates as a
percentage of the average aggregate daily net asset values of
the Series:
Portfolio First $1 billion Excess over $1 Billion
Balanced 0.55% 0.50%
Managed Bond 0.45% 0.40%
Growth 0.60% 0.55%
Money Market 0.25% 0.20%
U.S. Gov't Sec. 0.30% 0.25%
The amounts payable to the Adviser with respect to each Series shall be based
upon the average of the values of the net assets of such Series as of the close
of business each day, computed in accordance with the Declaration of Trust.
(b) Compensation shall accrue immediately upon the effective date
of this Agreement.
(c) If there is termination of this Agreement during a month,
each Series' fee for that month shall be proportionately
computed upon the average of the daily net asset values of
such Series for such partial period in such month.
(d) The Adviser agrees to reimburse the Trust for the amount, if
any, by which the total operating and management expenses for
any Series (including the Adviser's compensation, pursuant to
this paragraph, but excluding taxes, interest, costs of
portfolio acquisitions and dispositions and extraordinary
expenses), for any "fiscal year" exceed the level of expenses
which such Series is permitted to bear under the most
restrictive expense limitation (which is not waived by the
State) imposed on open-end investment companies by any state
in which shares of such Series are then qualified. Such
reimbursement, if any, will be made by the Adviser to the
Trust within five days after the end of each month. For the
purpose of this subparagraph (d), the term "fiscal year"
shall include the portion of the then current fiscal year
which shall have elapsed at the date of termination of this
Agreement.
<PAGE>
-5-
9. The services of the Adviser to the Trust are not to be deemed
exclusive, the Adviser being free to render services to others and to engage in
other activities. Without relieving the Adviser of its duties hereunder and
subject to the prior approval of the Trustees and subject further to compliance
with applicable provisions of the Investment Company Act of 1940, as amended,
the Adviser may appoint one or more agents to perform any of the functions and
services which are to be provided under the terms of this Agreement upon such
terms and conditions as may be mutually agreed upon among the Trust, the Adviser
and any such agent.
10. The Adviser shall not be liable to the Trust or to any shareholder of
the Trust for any error of judgment or mistake of law or for any loss suffered
by the Trust or by any shareholder of the Trust in connection with the matters
to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard on the part of
the Adviser in the performance of its duties hereunder.
11. It is understood that:
(a) Trustees, officers, employees, agents and shareholders of the
Trust are or may be "interested persons" of the Adviser as
directors, officers, stockholders or otherwise;
(b) Directors, officers, employees, agents and stockholders of
the Adviser are or may be "interested persons" of the Trust
as Trustees, officers, shareholders or otherwise; and
(c) The existence of any such dual interest shall not affect the
validity hereof or of any transactions hereunder.
12. This Agreement shall become effective with respect to the Existing
Series as of the date stated above (the "Contract Date") and with respect to any
Additional Series, on the date specified in the notice to the Trust from the
Adviser in accordance with paragraph 2 hereof that the Adviser is willing to
serve as Adviser with respect to such Additional Series. Unless terminated as
herein provided, this Agreement shall remain in full force and effect for a
period of two years following the Contract Date, and, with respect to each
Additional Series, until the next anniversary of the Contract Date following the
date on which such Additional Series became subject to the terms and conditions
of this Agreement and shall continue in full force and effect for periods of one
year thereafter with respect to each Series so long as (a) such continuance with
respect to any such Series is approved at least annually by either the Trustees
or by a "vote of the majority of the outstanding voting securities" of such
Series and (b) the terms and any renewal of this Agreement with respect to any
such Series have been approved by a vote of a majority of the Trustees who are
not parties to this Agreement or "interested persons" of any such party cast in
person at a meeting called for the purpose of voting on such approval; provided,
however, that the continuance of this Agreement with respect to each
<PAGE>
-6-
Additional Series is subject to its approval by a "vote of a majority of the
outstanding voting securities" of any such Additional Series on or before the
next anniversary of the Contract Date following the date on which such
Additional Series became a Series hereunder.
Any approval of this Agreement by a vote of the holders of a "majority of
the outstanding voting securities"' of any Series shall be effective to continue
this Agreement with respect to such Series notwithstanding (a) that this
Agreement has not been approved by a "vote of a majority of the outstanding
voting securities" of any other Series of the Trust affected thereby and (b)
that this Agreement has not been approved by the holders of a "vote of a
majority of the outstanding voting securities" of the Trust, unless either such
additional approval shall be required by any other applicable law or otherwise.
13. The Trust may terminate this Agreement with respect to the Trust or
to any Series upon 60 days' written notice to the Adviser at any time, without
the payment of any penalty, by vote of the Trustees or, as to each Series, by a
"vote of the majority of the outstanding voting securities" of such Series. The
Adviser may terminate this Agreement upon 60 days' written notice to the Trust,
without the payment of any penalty. This Agreement shall immediately terminate
in the event of its "assignment".
14. The terms "majority of the outstanding voting securities",
"interested persons" and "assignment", when used herein, shall have the
respective meanings in the Investment Company Act of 1940, as amended.
15. In the event of termination of this Agreement, or at the request of
the Adviser, the Trust will eliminate all reference to "Phoenix" and/or "Phoenix
Duff & Phelps" from its name, and will not thereafter transact business in a
name using the word "Phoenix" and/or "Phoenix Duff & Phelps" in any form or
combination whatsoever, or otherwise use the word "Phoenix" and/or "Phoenix Duff
& Phelps" as part of its name. The Trust will thereafter in all prospectuses,
advertising materials, letterheads, and other material designed to be read by
investors and prospective investors delete from its name the word "Phoenix"
and/or "Phoenix Duff & Phelps" or any approximation thereof. If the Adviser
chooses to withdraw the Trust's right to use the word "Phoenix" and/or "Phoenix
Duff & Phelps", it agrees to submit the question of continuing this Agreement to
a vote of the Trust's shareholders at the time of such withdrawal.
16. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but bind only the trust property of
the Trust, as provided in the Declaration of Trust. The execution and delivery
of this Agreement have been authorized by the Trustees and shareholders of the
Trust and signed by the President of the Trust, acting as such, and neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
be binding upon or impose any liability on any of them
<PAGE>
-7-
personally, but shall bind only the trust property of the Trust as provided in
its Declaration of Trust. The Declaration of Trust, as amended, is or shall be
on file with the Secretary of The Commonwealth of Massachusetts.
17. This Agreement shall be construed and the rights and obligations of
the parties hereunder enforced in accordance with the laws of The Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
PHOENIX DUFF & PHELPS
INSTITUTIONAL MUTUAL FUNDS
By:________________________________
Philip R. McLoughlin, President
PHOENIX INVESTMENT COUNSEL,
INC.
By:________________________________
Michael E. Haylon, President
funds\1856
Exhibit 6
Distribution Agreement
<PAGE>
DISTRIBUTION AGREEMENT
THIS AGREEMENT made as of this 1st day of March, 1996, by and between
Phoenix Duff & Phelps Institutional Mutual Funds, a Massachusetts business trust
having a place of business located at 101 Munson Street, Greenfield,
Massachusetts 01301 (the "Trust") and Phoenix Equity Planning Corporation, a
Connecticut corporation having a place of business locateD at 100 Bright Meadow
Boulevard, Enfield, Connecticut (the "Distributor").
WITNESSETH THAT:
1. The Trust hereby grants to the Distributor the right to purchase shares of
beneficial interest of each series of the Trust established and designated as of
the date hereof and of any additional series which the Trustees may establish
and designate during the term of this Agreement (collectively called the
"Series") and to resell shares of each Series (collectively called the "Shares")
as principal and not as agent. The Distributor accepts such appointment and
agrees to render the services described in this Agreement for the compensation
herein provided.
2. The Distributor's right to purchase Shares shall be exclusive except that the
terms of this Agreement shall not apply to Shares issued or transferred:
a) pursuant to an offer of exchange exempted under Section 22(d) of
the Investment Company Act of 1940, as amended (the "Act") by
reason of the fact that said offer is permitted by Section 11 of
the Act, including any offer made pursuant to clause (1) or (2)
of Section 11(b);
b) upon the sale to a registered unit investment trust which is the
issuer of periodic payment plan certificates the net proceeds of
which are invested in redeemable securities;
c) pursuant to an offer made solely to all registered holders of
Shares, or all registered holders of Shares of any Series,
proportionate to their holdings or proportionate to any cash
distribution made to them by the Trust (subject to appropriate
qualifications designed solely to avoid issuance of fractional
securities);
d) in connection with any merger or consolidation of the Trust or of
any Series with any other investment company or the acquisition
by the Trust, by purchase or otherwise, of any other investment
company;
e) pursuant to sales exempted from Section 22(d) of the Act, by rule
or regulation or order of the Securities and Exchange Commission
as provided in the then current registration statement of the
Trust; or
1
<PAGE>
f) in connection with the reinvestment by Trust shareholders of
dividend and capital gains distributions.
3. The "Net Asset Value" and the "Public Offering Price" of the Shares of each
Series as referred to in this Agreement shall be computed in accordance with the
provisions of the then current registration statement of the Trust. The
Distributor shall be notified promptly by the Trust of such computations.
4. Each day the Distributor shall have the right to purchase from the Trust, as
principal, the amount of Shares of each Series needed to fill unconditional
orders for Shares of such Series received by the Distributor from dealers or
investors, but no more than the Shares needed, at a price equal to the Net Asset
Value of the Shares of such Series. Any purchase of Shares by the Distributor
under this Agreement shall be subject to reasonable adjustment for clerical
errors, delays and errors of transmission and cancellation of orders.
5. With respect to transactions other than with dealers, the Distributor will
sell Shares of each Series only at the Public Offering Price then in effect,
except to the extent that sales at less than the Public Offering Price may be
allowed by the Act, any rule or regulation promulgated thereunder or by order of
the Securities and Exchange Commission, provided, however, that any such sales
at less than the Public Offering Price shall be consistent with the terms of the
then current registration statement of the Trust. Any sale of Shares of each
Series to or through a person other than a dealer will be at the Public Offering
Price; however, the Distributor may pay a commission to such person equal to no
more than the difference between the Public Offering Price and the Net Asset
Value of those Shares. The Distributor will sell at Net Asset Value Shares of
any Series which are offered by the then current registration statement or
prospectus of the Trust of sale at such Net Asset Value.
6. Sales at a discount from the Public Offering Price shall be made in
accordance with the terms and conditions of uniform selling agreements allowing
such discounts. Such discounts shall not exceed the difference between the Net
Asset Value and the Public Offering Price.
7. The Trust shall furnish the Distributor with copies of its Declaration of
Trust, as amended from time to time. The Trust shall also furnish the
Distributor with any other documents of the Trust which will assist the
Distributor in the performance of its duties hereunder.
8. The Distributor agrees to use its best efforts (in states where it may
lawfully do so) to obtain from investors unconditional orders for Shares
authorized for issue by the Trust and registered under applicable Federal
securities laws, and, so long as it does so, nothing herein contained shall
prevent the Distributor from entering into similar arrangements with other
registered investment companies. The Distributor may, in the exercise of its
discretion, refuse to accept orders for Shares from any person.
2
<PAGE>
9. Upon receipt by the Trust of a purchase order from the Distributor,
accompanied by proper applications for the purchase of Shares and delivery
instructions, the Trust shall, as promptly as practicable thereafter, cause
evidence of ownership of such Shares to be delivered as indicated in such
purchase order. Payment for such Shares shall be made by the Distributor to the
Trust in a manner acceptable to the Trust, provided that the Distributor shall
pay for such Shares no later than the tenth business day after the Distributor
shall have contracted to purchase such shares.
10. In connection with offering for sale and selling Shares, the Trust
authorizes the Distributor to give only such information and to make only such
statements or representations as are contained in the then current registration
statement of the Trust or in then current sales literature or advertisements.
11. The Trust agrees to pay the following expenses:
a) the cost of mailing stock certificates representing Shares;
b) fees and expenses (including legal expenses) of registering and
maintaining registrations of the Trust and of each Series with
the Securities and Exchange Commission including the preparation
and printing of registration statements and prospectuses for
filing with said Commission;
c) fees and expenses (including legal expenses) incurred in
registering and qualifying Shares for sale with any state
regulatory agency and fees and expenses of maintaining, renewing,
increasing or amending such registrations and qualifications;
d) the expense of any issue or transfer taxes upon the sale of
Shares to the Distributor by the Trust; and
e) the cost of preparing and distributing reports and notices to
shareholders.
12. The Distributor agrees to pay the following expenses:
a) all expenses of printing prospectuses and statements of
additional information sued in connection with the sale of Shares
and printing and preparing all other sales literature;
b) all fees and expenses in connection with the qualification of the
Distributor as a dealer in the various states and countries;
c) the expense of any stock transfer tax required in connection with
the sale of Shares by the Distributor as principal to dealers or
to investors; and
3
<PAGE>
d) all other expenses in connection with offering for sale and the
sale of Shares which have not been herein specifically allocated
to the Trust.
13. The Trust hereby appoints the Distributor its agent to receive requests to
accept the Trust's offer to repurchase Shares upon such terms and conditions as
may be described in the Trust's then current registration statement. The agency
granted in this paragraph 13 is terminable at the discretion of the Trust.
14. The Trust agrees to indemnify and hold harmless the Distributor, its
officers and directors and each person, if any, who controls the Distributor
within the meaning of section 15 of the Securities Act of 1933, as amended,
against any losses, claims, damages, liabilities and expenses (including the
cost of any legal fees incurred in connection therewith) which the Distributor,
its officers, directors or any such controlling person may incur under said Act,
under any other statute, at common law or otherwise, arising out of or based
upon
a) any untrue statement or alleged untrue statement of a material
fact contained in the Trust's registration statement or
prospectus (including amendments and supplements thereto), or
b) any omission or alleged omission to state a material fact
required to be stated in the Trust's registration statement or
prospectus or necessary to make the statements in either not
misleading, provided, however, that insofar as losses, claims,
damages, liabilities or expenses arise out of or are based upon
any such untrue statement or omission or alleged untrue statement
or omission made in reliance and in conformity with information
furnished to the Trust by the Distributor for use in the Trust's
registration statement or prospectus, such indemnification is not
applicable. In no case shall the Trust indemnify the Distributor
or its controlling persons as to any amounts incurred for any
liability arising out of or based upon any action for which the
Distributor, its officers and directors or any controlling person
would otherwise be subject to liability by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
its duties or by reason of the reckless disregard of its
obligations and duties under this Agreement.
15. The Distributor agrees to indemnify and hold harmless the Trust, its
officers and trustees and each person, if any, who controls the Trust within the
meaning of Section 15 of the Securities Act of 1933, as amended, against any
losses, claims, damages, liabilities and expenses (including the cost of any
legal fees incurred in connection therewith) which the Trust, its officers,
trustees or any such controlling person any incur under said Act, under any
other statute, at common law or otherwise arising out of the acquisition of any
shares by any person which
a) may be based upon any wrongful act by the Distributor or any of
its employees or representatives, or
4
<PAGE>
b) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in the Trust's
registration statement or prospectus (including amendments and
supplements thereto), or any omission or alleged omission to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading if such statement
or omission was made in reliance upon information furnished or
confirmed in writing to the Trust by the Distributor.
16. It is understood that;
a) trustees, officers, employees, agents and shareholders of the
Trust are or may be interested persons, as that term is defined
in the Act ("Interested Persons"), of the Distributor as
directors, officers, stockholders or otherwise;
b) directors, officers, employees, agents and stockholders of the
Distributor are or may be Interested Persons of the Trust as
trustees, officers, shareholders or otherwise;
c) the Distributor may be an Interested Person of the Trust as
shareholder or otherwise; and
d) the existence of any such dual interest shall not offset the
validity hereof or of any transactions hereunder.
17. The Trust may terminate this Agreement by 60 days written notice to the
Distributor at any time, without the payment of any penalty, by vote of the
Trustees or by a vote of a majority of the outstanding voting securities, as
that term is defined in the Act, of the Trust. The Distributor may terminate
this Agreement by 60 days written notice to the Trust, without the payment of
any penalty. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in the Act.
18. Subject to prior termination as provided in paragraph 17, this Agreement
shall continue in force for one year from the date of execution and from year to
year thereafter so long as the continuance after such one year period shall be
specifically approved at least annually by vote of the Trustees, or by a vote of
a majority of the Class A outstanding voting securities, as that term is defined
in the Act, of the Trust. Additionally, each annual renewal of this Agreement
must be approved by the vote of a majority of the Trustees who are not parties
to the Agreement or Interested Persons of any such party, cast in person at a
meeting of the Trustees called for the purpose of voting on such approval.
19. It is expressly agreed that the obligations of the Trust hereunder shall not
be binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust. The execution and delivery of
this Agreement by the President of the Trust has been authorized by the
5
<PAGE>
Trustees acting as such, and neither such execution and delivery by such officer
nor such authorization by such Trustees shall be deemed to have been made by any
of them individually or be binding upon or impose any liability on any of them
personally, but shall bind only the trust property of the Trust as provided in
the Declaration of Trust. The Declaration of Trust is on file with the Secretary
of The Commonwealth of Massachusetts.
20. This Agreement shall become effective upon the date first set forth above.
This Agreement shall be governed by the laws of The Commonwealth of
Massachusetts and shall be binding on the successors and assigns of the parties
to the extend permitted by law.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
PHOENIX DUFF & PHELPS INSTITUTIONAL
MUTUAL FUNDS
By:________________________________
PHOENIX EQUITY PLANNING CORPORATION
By:________________________________
pdp018
6
Exhibit 9(a)
Financial Agent Agreement
<PAGE>
FINANCIAL AGENT AGREEMENT
THIS AGREEMENT made and concluded as of this 1st day of March, 1996 by
and between Phoenix Equity Planning Corporation, a Connecticut corporation
having a place of business located at 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Financial Agent") and Phoenix Duff & Phelps Institutional
Mutual Funds, a Massachusetts business trust having a place of business located
at 101 Munson Street, Greenfield, Massachusetts 01301 (the "Trust").
WITNESSETH THAT:
1. Financial Agent shall keep the books of the Trust and compute the
daily net asset value of shares of the Trust in accordance with instructions
received from time to time from the Board of Trustees of the Trust; which
instructions shall be certified to Financial Agent by the Trust's Secretary.
Financial Agent shall report such net asset value so determined to the Trust and
shall perform such other services as may be requested from time to time by the
Trust as are reasonably incidental to Financial Agent's duties hereunder.
2. Financial Agent shall be obligated to maintain, for the periods and
in the places required by Rule 31a-2 under the Investment Company Act of 1940,
as amended, those books and records maintained by Financial Agent. Such books
and records are the property of the Trust and shall be surrendered promptly to
the Trust upon its request. Furthermore, such books and records shall be open to
inspection and audit at reasonable times by officers and auditors of the Trust.
3. As compensation for its services hereunder during any fiscal year of
the Trust, Financial Agent shall receive, within five days after the end of each
fiscal quarter, a fee equivalent to 0.03% of the average aggregate daily net
asset values of the Trust.
4. Financial Agent shall not be liable for anything done or omitted by
it in the exercise of due care in discharging its duties specifically described
hereunder and shall be answerable and accountable only for its own acts and
omissions and not for those of any agent employed by it nor for those of any
bank, trust company, broker, depository, correspondent or other person.
Financial Agent shall be protected in acting upon any instruction, notice,
request, consent, certificate, resolution, or other instrument or paper believed
by Financial Agent to be genuine, and to have been properly executed, and shall,
unless otherwise specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be ascertained by Financial
Agent hereunder a certificate signed by the Secretary of the Trust. Financial
Agent shall be entitled, with respect to questions of law relating to its duties
hereunder, to advice of counsel (which may be counsel for the Trust) and, with
respect to anything done or omitted by it in good faith hereunder in conformity
with the advice of or based upon an opinion of counsel, to be held harmless by
the Trust from all claims of loss or damage. Nothing herein shall protect
Financial Agent against any liability to the Trust or to its respective
shareholders to which Financial Agent would otherwise be subject by reason of
its wilful misfeasance, bad faith, gross negligence or
<PAGE>
reckless disregard of its duties hereunder. Except as provided in this Paragraph
4, Financial Agent shall not be entitled to any indemnification by the Trust.
5. Subject to prior approval of the Board of Trustees of the Trust,
Financial Agent may appoint one or more sub-financial agents to perform any of
the functions and services which are to be provided under the terms of this
Agreement upon such terms and conditions as may be mutually agreed upon by the
Trust, Financial Agent and such sub-financial agent.
6. This Agreement shall continue in effect only so long as (a) such
continuance is specifically approved at least annually by the Board of Trustees
of the Trust or by a vote of a majority of the outstanding voting securities of
the Trust, and (b) the terms and any renewal of such Agreement have been
approved by the vote of a majority of the trustees of the Trust who are not
parties to this Agreement or interested persons, as that term is defined in the
Investment Company Act of 1940, as amended, of any such party, cast in person at
a meeting called for the purpose of voting on such approval. A "majority of the
outstanding voting securities of the Trust" shall have, for all purposes of this
Agreement, the meaning provided therefor in said Investment Company Act.
7. Either party may terminate the within Agreement by tendering written
notice to the other, whereupon Financial Agent will be relieved of the duties
described herein. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in said Investment Company Act.
8. This Agreement shall be construed and the rights and obligations
of the parties hereunder enforced in accordance with the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
PHOENIX DUFF & PHELPS INSTITUTIONAL
MUTUAL FUNDS
By:________________________________
PHOENIX EQUITY PLANNING CORPORATION
By:________________________________
pdp017
Exhibit 13
Initial Capitalization Agreement
<PAGE>
INITIAL CAPITAL AGREEMENT
February 29, 1996
Phoenix Duff & Phelps Institutional Mutual Funds
101 Munson Street
Greenfield, Massachusetts 01301
Dear Sirs:
Phoenix Duff & Phelps Institutional Mutual Funds (the "Trust") proposes
to issue and sell shares of beneficial interest of its Portfolios (the "Shares")
pursuant to a registration statement on Form N-1A (the "Registration Statement")
filed with the Securities and Exchange Commission. The undersigned hereby offers
to purchase such number of Shares contemporaneous with the effective date of the
Registration Statement (or such earlier date as may be agreed upon) required in
order to provide the Trust with a net worth of at least $100,000 as required by
Section 14 of the Investment Company Act of 1940, as amended.
The undersigned represents and warrants to the Trust that the Shares are
being acquired by us for investment and not with a view to the resale or further
distribution thereof and that we have no present intention to redeem the Shares.
Please confirm that the foregoing correctly sets forth our agreement
with the Trust.
Very truly yours,
Phoenix Investment Counsel, Inc.
By: _______________________________
Michael E. Haylon, President
Confirmed, as of the date
first above mentioned.
Phoenix Duff & Phelps Institutional Mutual Fund
By:____________________________
pdp021
Exhibit 15
Distribution Plan
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
(the "Fund")
DISTRIBUTION PLAN PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have entered
into a Distribution Agreement pursuant to which the Distributor will act as
principal underwriter of shares of the Fund for sale to the permissible
purchasers. The Trustees of the Fund have determined to adopt this Distribution
Plan (the "Plan"), in accordance with the requirements of Section 12b-1 of the
Investment Company Act of 1940, as amended (the "Act") with respect to Class Y
shares of the Fund and have determined that there is a reasonable likelihood
that the Plan will benefit the Fund and its Class Y shareholders.
2. Rule 12b-1 Fees
The Fund shall reimburse the Distributor, at the end of each month, up
to a maximum on an annual basis of 0.25% of the average daily value of the net
assets of the Fund's Class Y shares, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc., for
distribution expenditures incurred by Distributor subsequent to the
effectiveness of this Plan, in connection with the sale and promotion of the
Class Y shares of the Fund and the furnishing of services to Class Y
shareholders of the Fund. Such expenditures shall consist of: (i) commissions to
sales personnel for selling Class Y shares of the Fund (including underwriting
commissions and finance charges related to the payment of commissions); (ii)
compensation, sales incentives and payments to sales, marketing and service
personnel; (iii) payments to broker-dealers and other financial institutions
which have entered into selling agreements with the Distributor for services
rendered in connection with the sale and distribution of Class Y shares of the
Fund; (iv) payment of expenses incurred in sales and promotional activities,
including advertising expenditures related to the Class Y shares of the Fund;
(v) the costs of preparing and distributing promotional materials; (vi) the cost
of printing the Fund's Prospectus and Statement of Additional Information for
distribution to potential investors; and (vii) such other similar services that
the Trustees of the Fund determine are reasonably calculated to result in the
sale of Class Y shares of the Fund; provided however, that all or a portion of
such amount paid to the Distributor, which sum shall be equal to or less than
0.25% annually of the average daily net assets of the Fund's Class Y shares, may
be paid for reimbursing the costs of providing services to Class Y shareholders
including assistance in connection with inquiries related to shareholder
accounts (the "Service Fee").
Amounts paid or payable by the Fund under this Plan or any agreement
with any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to
<PAGE>
pay for, or reimburse payment for, the distribution expenditures described in
the preceding paragraph and shall, given all surrounding circumstances,
represent charges within the range of what would have been negotiated at arm's
length as payment for the specific sales or promotional services and activities
to be financed hereunder and any related agreement, as determined by the
Trustees of the Fund, in the exercise of reasonable business judgment, in light
of fiduciary duties under state law and Sections 36(a) and (b) of the Act and
based upon appropriate business estimates and projections.
3. Reports
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare and
furnish to the Trustees of the Fund for their review, and the Trustees shall
review, a written report complying with the requirements of Rule 12b-l under the
Act regarding the amounts expended under this Plan and the purposes for which
such expenditures were made.
4. Required Approval
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of this Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or any related agreement and this
Plan shall not take effect with respect to the Fund until it has been approved
by a vote of at least a majority of the outstanding voting Class Y shares (as
such phrase is defined in the Act).
5. Term
This Plan shall remain in effect for one year from the date of its
adoption and may be continued thereafter if specifically approved at least
annually by a vote of at least a majority of the Trustees of the Fund as well as
a majority of the Disinterested Trustees. This Plan may be amended at any time,
provided that (a) the Plan may not be amended to increase materially the amount
of the distribution expenses provided in Paragraph 2 hereof (including the
Service Fee) without the approval of at least a majority of the outstanding
voting securities (as defined in the Act) of the Class Y 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.
6. Selection of Disinterested Trustees
While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
<PAGE>
7. Related Agreements
Any related agreement shall be in writing and shall provide that (a)
such agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class Y shares of the Fund on not more than 60 days' written notice to the other
party to the agreement and (b) such agreement shall terminate automatically in
the event of its assignment.
8. Termination
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class Y shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
9. Records
The Fund shall preserve copies of this Plan and any related agreements
and all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
10. Non-Recourse
The Fund's Declaration of Trust dated December 4, 1995, a copy of which,
together with the amendments thereto ("Declaration"), is on file in the office
of the Secretary of the Commonwealth of Massachusetts, refers to the Trustees
under the Declaration of Trust collectively as Trustees, but not as individuals
or personally, and no Trustee, shareholder, officer, employee or agent of the
Fund may be held to any personal liability, nor may any resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Fund but the Fund property only shall be
liable.
pdp016
Exhibit 18
Dual Distribution Plan
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
(the "Fund")
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended ("1940 Act"), this Plan describes the multi-class system for the Fund,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the effective date of this Plan, the Fund shall offer multiple
classes of shares, as described herein, pursuant to Rule 18f-3 and this Plan.
2. The Multi-Class Structure
The portfolios of the Fund listed on Schedule A hereto shall offer two
classes of shares, Class X and Class Y ("Multi-Class Portfolios"). Shares of the
Multi-Class Portfolios shall represent an equal pro rata interest in the
respective Portfolio and, generally, shall have identical voting, dividend,
liquidation, and other rights, preferences, powers, restrictions, limitations,
qualifications and terms and conditions, except that: (a) each class shall have
a different designation; (b) each class shall bear any Class Expenses, as
defined by Section B, below; (c) each class shall have exclusive voting rights
on any matter submitted to shareholders that relates solely to its distribution
arrangement; and (d) each class shall have separate voting rights on any matter
submitted to shareholders in which the interests of one class differ from the
interests of any other class. In addition, Class X and Class Y shares shall have
the features described in Sections a, b, c and d, below.
a. Distribution Plan
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 with
respect to Class Y shares for each Multi-Class Portfolio, containing
substantially the following terms:
Class Y shares of each Portfolio shall reimburse Phoenix Equity Planning
Corporation (the "Distributor") for costs and expenses incurred in connection
with distribution and marketing of shares of the Fund, as provided in the
Distribution Plan and any supplements thereto, subject to an annual limit of
0.25% of the average daily net assets of a Portfolio's Class Y shares.
<PAGE>
- 2 -
b. Allocation of Income and Expenses
i. General.
The gross income, realized and unrealized capital gains and
losses and expenses (other than Class Expenses, as defined below) of each
Portfolio shall be allocated to each class on the basis of its net asset value
relative to the net asset value of the Portfolio. Expenses to be so allocated
include expenses of the Fund that are not attributable to a particular Portfolio
or class of a Portfolio but are allocated to a Portfolio ("Fund Expenses") and
expenses of a particular Portfolio that are not attributable to a particular
class of that Portfolio ("Portfolio Expenses"). Fund Expenses include, but are
not limited to, Trustees' fees, insurance costs and certain legal fees.
Portfolio Expenses include, but are not limited to, certain state registration
fees, custodial fees, advisory fees and other expenses relating to the
management of the Portfolio's assets.
ii. Class Expenses.
Expenses attributable to a particular class ("Class Expenses")
shall be limited to: (a) payments pursuant to the Distribution Plan for that
class; (b) transfer agent fees attributable to a specific class, (c) printing
and postage expenses related to preparing and distributing material such as
shareholder reports, prospectuses and proxy materials to current shareholders of
the class; (d) registration fees for shares of the class (other than those set
forth in Section b.i. above); (e) the expense of administrative personnel and
services as required to support the shareholders of a specific class; (f)
litigation or other legal expenses relating solely to one class of shares; and
(g) Trustees' fees incurred as a result of issues relating to a class of shares.
Expenses described in (a) of this paragraph must be allocated to the class for
which they are incurred. All other expenses described in this paragraph may be
allocated as Class Expenses, if the Fund's President and Treasurer have
determined, subject to Board approval or ratification, which of such categories
of expenses will be treated as Class Expenses, consistent with applicable legal
principles under the 1940 Act and the Internal Revenue Code of 1986, as amended
("Code").
In the event that a particular expense is no longer reasonably
allocable by class or to a particular class, it shall be treated as a Fund
Expense or Portfolio Expense as applicable, and in the event a Fund Expense or
Portfolio Expense becomes allocable as a Class Expense, it shall be so
allocated, subject to compliance with Rule 18f-3 and Board approval or
ratification.
The initial determination of expenses that will be allocated as
Class Expenses and any subsequent changes thereto as set forth in this Plan
shall be reviewed by the Board of Trustees and approved by such Board and by a
majority of the Trustees who are not "interested persons" of the Fund, as
defined in the 1940 Act ("Independent Trustees")
<PAGE>
- 3 -
iii. Waivers or Reimbursements of Expenses
Expenses may be waived or reimbursed by the Fund's investment
adviser(s), its principal underwriters, or any other provider of services to a
Portfolio or Fund without the prior approval of the Board of Trustees.
c. Exchange Privileges
Shareholders of a Multi-Class Portfolio may exchange shares of a
particular class for shares of the same class in another Multi-Class Portfolio,
at the relative net asset values of the respective shares to be exchanged and
with no sales charge, provided the shares to be acquired in the exchange are, as
may be necessary, qualified for sale in the shareholder's state of residence and
subject to the applicable requirements, if any, as to minimum amount.
d. Conversion Feature
There shall be no conversion rights between classes of shares of a
Multi-Class Portfolio.
3. Board Review
a. Initial Approval
The Board of Trustees, including the Independent Trustees,
through a Consent in lieu of Meeting dated February , 1996, initially approved
the Plan based on a determination that the Plan, including the expense
allocation, is in the best interests of each class and Portfolio individually
and of the Fund.
b. Approval of Amendments
The Plan may not be amended materially unless the Board of
Trustees, the Independent Trustees, have found that the proposed amendment,
including any proposed related expense allocation, is in the best interests of
each class and Portfolio individually and of the Fund.
<PAGE>
- 4 -
c. Periodic Review
The Board shall review reports of expense allocations and such
other information as they request at such times, or pursuant to such schedule,
as they may determine consistent with applicable legal requirements.
4. Contracts
Any agreement related to the Multi-Class System shall require the
parties thereto to furnish to the Board of Trustees, upon their request, such
information as is reasonably necessary to permit the Trustees to evaluate the
Plan or any proposed amendment.
5. Effective Date
The Plan, having been reviewed and approved by the Board of Trustees and
the Independent Trustees, shall take effect as of March 1, 1996.
6. Amendments
The Plan may not be amended to modify materially its terms unless such
amendment has been approved in the manner specified in Section 3.b. of this
Plan.
pdp022
<PAGE>
SCHEDULE A
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
INSTITUTIONAL BALANCED PORTFOLIO
INSTITUTIONAL MANAGED BOND PORTFOLIO
INSTITUTIONAL ENHANCED RESERVES PORTFOLIO
INSTITUTIONAL GROWTH STOCK PORTFOLIO
INSTITUTIONAL MONEY MARKET PORTFOLIO
INSTITUTIONAL U.S. GOVERNMENT SECURITIES PORTFOLIO
