AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 28, 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. 2 [x]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. 2 [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
Information Required in Prospectus
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Item Number 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;
Distribution Plan; How to Redeem Shares
8. Redemption or Repurchase How to Buy Shares;
How to Redeem Shares
9. Pending Legal Proceedings Not Applicable
PART B
Information required in Statement of Additional Information
Item Number
- ------------
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 Management of the Trust;
Services 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 Determination of Net Asset Value; Purchase of
Securities Being Offered 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>
PROSPECTUS
PHOENIX DUFF & PHELPS
INSTITUTIONAL MUTUAL FUNDS
MARCH 1, 1996
Balanced Portfolio
Managed Bond Portfolio
Enhanced Reserves Portfolio
Growth Stock Portfolio
Money Market Portfolio
U.S. Government Securities Portfolio
Phoenix
[Phoenix Logo] Phoenix Duff & Phelps
<PAGE>
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.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. No dealer, salesperson 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.
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.
=============================================================================
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.
=============================================================================
<PAGE>
TABLE OF CONTENTS
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Page
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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 14
DISTRIBUTION PLAN 16
HOW TO BUY SHARES 16
NET ASSET VALUE 17
HOW TO REDEEM SHARES 18
DIVIDENDS, DISTRIBUTIONS AND TAXES 20
ADDITIONAL INFORMATION 21
APPENDIX 22
</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 "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 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 ("junk bonds"), 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.
<TABLE>
<CAPTION>
Class X Shares
-----------------------------------------------------------------------------------------
Managed Enhanced U.S. Gov't
Balanced Bond Reserves Growth Money Securities
Portfolio Portfolio Portfolio Portfolio Market Portfolio Portfolio
---------------------------------- ----------- ----------- ----------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price) None None None None None None
Maximum Sales Load Imposed on
Reinvested Dividends None None None None None None
Deferred Sales Load None None None None None None
Redemption Fees None None None None None None
Exchange Fee None None None None None None
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management Fees 0.55% 0.45% 0.24% 0.60% 0.25% 0.30%
12b-1 Fees None None None None None None
Other Operating Expenses
(After Reimbursement) (c) 0.10%(a) 0.10%(a) 0.10%(b) 0.10%(a) 0.10%(a) 0.10%(a)
Total Fund Operating Expenses 0.65% 0.55% 0.34% 0.70% 0.35% 0.40%
<FN>
(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: 0.65% 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; 0.70% of the average
annual net asset values of the Growth 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 and Other Operating Expenses for such Portfolios are
estimated to be 0.28%, 0.26%, 0.16%, 0.71%, and 0.72%, 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 and Other
Operating Expenses is estimated to be 0.29% absent such reimbursement or waiver.
(c) Based on estimated amounts for the current fiscal year.
</FN>
</TABLE>
4
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<TABLE>
<CAPTION>
Class Y Shares
-----------------------------------------------------------------------------------
Managed Enhanced Money U.S. Gov't.
Balanced Bond Reserves Growth Market Securities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
----------------------------------- ----------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction
Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage
of offering price) None None None None None None
Maximum Sales Load Imposed
on Reinvested Dividends None None None None None None
Deferred Sales Load None None None None None None
Redemption Fees None None None None None None
Exchange Fee None None None None None None
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management Fees 0.55% 0.45% 0.24% 0.60% 0.25% 0.30%
12b-1 Fees (c) 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Other Operating Expenses
(After Reimbursement) (d) 0.10%(a) 0.10%(a) 0.10%(b) 0.10%(a) 0.10%(a) 0.10%(a)
Total Fund Operating Expenses 0.90% 0.80% 0.59% 0.95% 0.60% 0.65%
<FN>
(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 Balanced Portfolio; 0.80% of the average annual net asset values of the Managed Bond Portfolio; 0.95% of the average
annual net asset values of the Growth 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 and Other Operating Expenses for such Portfolios are
estimated to be 0.28%, 0.26%, 0.16%, 0.71%, and 0.72%, 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 and Other
Operating Expenses is estimated to be 0.29% 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.
</FN>
</TABLE>
5
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<TABLE>
<CAPTION>
Cumulative
Expenses
Paid for the
Period
Example* 1 year 3 years
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<S> <C> <C>
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: 150%; 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 invest up to 10% of the
Portfolio's total net assets, determined at the time of investment, in high
yield, high risk (non-investment grade) securities ("junk bonds") or
non-rated securities of comparable quality. 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 invest up to 20% of the
Portfolio's total net assets, determined at the time of investment, in high
yield, high risk (non-investment grade) securities ("junk bonds") or
non-rated securities of comparable quality. 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 Institutional 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-grade, 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, convertible securities,
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 investment grade
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
quality 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. 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. See the Statement of Additional Information.
Illiquid Securities
Each Portfolio (other than the Money Market Portfolio) may invest up to 15%
of its net assets, taken at market values at the time of investment, in
"illiquid securities". The Money Market Portfolio may invest up to 10% of its
net assets, taken at market values at the time of investment, in "illiquid
securities". For this purpose, illiquid securities include any securities
subject to legal or contractual restrictions on resale, securities which must
be registered with the Securities and Exchange Commission before they can be
sold to the public, repurchase agreements maturing in more than seven days,
securities for which market quotations are not readily available, or other
securities which legally or in the Adviser's or Trustees' opinion may be
deemed illiquid. Among other risks unique to certain illiquid securities (as
described elsewhere in this Prospectus and Statement of Additional
Information), illiquid securities may be thinly or not actively traded, and
as a result, a Portfolio utilizing this investment technique may experience
difficulties in valuing or disposing of these securities.
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
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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' 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.
Financial losses relating to futures and options are potentially unlimited.
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
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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 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. See the Statement of Additional Information.
INVESTMENT RESTRICTIONS
Each Portfolio may not invest more than 25% of its assets in any one
industry, except the Money Market Portfolio may
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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 adviser. 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
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 Class Y
Shares 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
14
<PAGE>
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 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 1994. Mr. Flewellen was a
Second Vice President and portfolio manager with Northern Trust Bank from
1989 until 1994.
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 1995. Mr. Moore was a principal and a
portfolio manager with Harris Investment Management from 1984 until 1993 and
was a lead portfolio manager at Ford Motor Company from 1987 until 1989.
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. The Advisers may
also select affiliated broker-dealers to execute transactions for the Fund,
provided that the commissions, fees or other remuneration paid to such
affiliated brokers is reasonable and fair as compared to that paid to
non-affiliated brokers for comparable transactions.
15
<PAGE>
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 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.
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.
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) Plans and institutional investors
where the amounts invested represent the redemption proceeds from the
reorganization or merger of other investment companies.
No trail fees are payable to broker-dealers or others in connection with the
purchase, sale or retention of Class X
16
<PAGE>
Shares. Equity Planning may pay broker-dealers and financial institutions
exempt from registration pursuant to the Securities Exchange Act of 1934, as
amended, and related regulations ("exempt financial institutions"), 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 or exempt financial institution 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 agents, from its own
profits and resources, additional compensation in the form of trips,
merchandise or expense reimbursement. Broker-dealers or exempt financial
institutions 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 broker-dealers and 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 broker-dealers
and exempt financial institutions, 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.
Exchange Privileges
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.
Telephone Exchange Privileges
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 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
17
<PAGE>
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; 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 (if
issued) 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.
Telephone Redemption Privileges
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
18
<PAGE>
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 person or 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.
Systematic Withdrawal Program
The Systematic Withdrawal Program (the "Program") allows shareholders to
periodically redeem a portion of their shares on predetermined monthly,
quarterly, semi-annual or annual dates. In order to participate in the
Program, shareholders must provide written notice to the Transfer Agent
specifying (a) the frequency in which Program redemptions are to occur, (b)
the routing in which proceeds are to be directed into the shareholder's
account, and (c) the priority among Portfolios and classes of shares in which
redemptions are to occur.
Except as provided below, Program payments will be made on or about the
20th day of the month during the frequency period selected by the
shareholder. Program payments may also be processed through Automated
Clearing House (ACH) to the shareholder's account on or about the 10th, 15th
or 25th day of each month. Participants may not redeem sums in any period in
excess of the equivalent of 1% of aggregate Fund holdings (at the net asset
value on the date of redemption) during each month. Program redemptions will
only be effected after the Fund has assured itself that good payment has been
received for the purchase of shares which are to be redeemed.
Class X shareholders participating in the Program must at all times own
shares of the Fund worth $100,000 or more in the aggregate as determined by
the then current net asset value per share. Class Y shareholders
participating in the Program must at all times own shares of the Fund worth
$50,000 or more in the aggregate as determined by the then current net asset
value per share. A shareholder's participation in the Program will also
automatically terminate if redemptions are made outside the Program.
Checkwriting Privileges
Shareholders owning shares of the Enhanced Reserves, Money Market and/or U.S.
Government Securities Portfolios may elect to redeem shares through
checkwriting privileges offered by Equity Planning. In order to exercise this
privilege, qualified shareholders must (a) complete the appropriate
application, (b) submit the required signature card/ incumbency certificate
containing guaranteed signatures of all authorized check signatories, and (c)
designate the priority among Portfolios and classes of shares in which
redemptions are to occur in order to cover the amount of each check.
Applications are available by contacting Equity Planning at 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200 or by calling (800)
814-1897.
Checkwriting privileges are subject to rules and procedures adopted from
time to time by Equity Planning. Checkwriting privileges may be amended or
withdrawn upon ten days prior notice. Equity Planning reserves the right, in
its sole and absolute discretion, to refuse to honor checks and/or terminate
checkwriting privileges with respect to a shareholder in the event that (a)
amounts drawn in any check are less than $500; (b) the shareholder at any
time owns shares of the Fund worth $50,000 or less, as determined by the then
current net asset value(s) per share; (c) the shareholder owns shares of the
Fund worth less than the amount of any check, as determined on the date of
presentment of such check to the Transfer Agent; or (d) honoring a check
requires redemption of shares purchased with sums from the shareholder which
have not been actually and properly received by the Fund (which may take at
least fifteen days after receipt of the check). Presently, there is no charge
to the shareholder for this privilege. Equity Planning reserves the right,
however, to assess charges in connection with checks drawn against
non-sufficient funds or for research expenses.
When a check is presented to Equity Planning for payment, a sufficient
number of full and fractional shares owned by the shareholder and identified
as being available for such purposes will be redeemed to cover the amount of
the check. The number of shares to be redeemed will be determined on the date
the check is received by the Transfer Agent. Checks
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<PAGE>
will be processed on days in which the New York Stock Exchange is open. If
the net asset value(s) of the shares owned by the shareholder are
insufficient to cover the amount of a check presented, or if good and
sufficient funds required to purchase such shares have not been actually
received by the Fund, Equity Planning shall return such check marked "Non-
sufficient Funds" and no shares shall be redeemed. Canceled checks returned
to shareholders shall be deemed to constitute confirmation of redemptions.
Shareholders may not close an account by a withdrawal check.
Redemption-in-kind
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. 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 1940 Act 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 it 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 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 Enhanced 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
Organization of the Fund
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
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<PAGE>
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 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.
Additional Inquiries
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
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<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
23
<PAGE>
Phoenix Duff & Phelps Institutional Mutual Funds
P.O Box 2200
Enfield, CT 06083-2200
[Logo} Phoenix Duff & Phelps
Bulk Rate Mail
U.S. Postage
PAID
Springfield, MA
PDP 039 (3/96)
<PAGE>
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) 19
BROKERAGE ALLOCATION 20
DETERMINATION OF NET ASSET VALUE (18) 20
PURCHASE OF SHARES (17) 21
TAXES (19) 22
THE NATIONAL DISTRIBUTOR (15) 22
*Numbers in parenthesis are cross-references to
related pages of the Prospectus.
</TABLE>
<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.
1
<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,
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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 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.
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
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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
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.
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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.
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
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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
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
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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.
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
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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.
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.
8
<PAGE>
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, real estate limited partnerships 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 leases, 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 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.
14. 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.
15. 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.
16. 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.
17. Invest more than 5% of a Portfolio's net assets, valued at the lower
of cost or market, in warrants or rights. Included within that amount, but
not to exceed 2% of the value of a Portfolio's net assets, may be warrants
not listed on the New York or American Stock Exchange.
9
<PAGE>
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
For the 7 day period ended December 31, 1995, the effective yield for
Class X and Class Y shares of the Money Market Portfolio was 5.10% and 4.85%,
respectively.
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:
2[((a-b)) + 1)6 - 1]
YIELD = -------
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
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
10
<PAGE>
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
Since
1 Year 5 Years Inception
------ ------- --------------
<S> <C> <C> <C>
Balanced
Class X 23.32% N/A 13.09%(1)
Class Y 23.01 N/A 12.81(1)
Managed Bond
Class X 19.97 10.59 9.22
Class Y 19.67 10.32 8.95
Enhanced Rsvs.
Class X N/A N/A N/A
Class Y N/A N/A N/A
Growth
Class X 34.73 16.11 16.27
Class Y 34.39 15.82 15.98
U.S. Gov't
Sec.
Class X 12.29 N/A 6.95(2)
Class Y 12.01 N/A 6.68(2)
Money Market
Class X 5.68 4.42 6.03
Class Y 5.41 4.16 5.77
</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 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
11
<PAGE>
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.
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
- ------------------------------ ------------------ ---------------------------------------------------------
<S> <C> <C>
C. Duane Blinn (68) Trustee Partner in the law firm of Day, Berry & Howard.
Day, Berry & Howard Director/Trustee, Phoenix Funds (1980-present).
CityPlace Director/Trustee, the National Affiliated Investment
Hartford, CT 06103 Companies (until 1993).
Robert Chesek (61) Trustee Trustee/Director, Phoenix Funds (1981-present) and
49 Old Post Road Chairman (1989-1994). Director/Trustee, the National
Wethersfield, CT 06109 Affiliated Investment Companies (until 1993). Vice
President, Common Stock, Phoenix Home Life Mutual
Insurance Company (1980-1994).
</TABLE>
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 (67) Trustee Representative, Hilliard, Lyons, Inc. (broker-dealer)
3003 Gulf Shore Blvd. North (1993-present); President and Chief Operating Officer,
No. 901 Hilliard, Lyons, Inc. (1960-1993).
Naples, FL 33940
Harry Dalzell-Payne (66) Trustee Director/Trustee, Phoenix Funds (1983-present).
330 East 39th Street Director, Farragut Mortgage Co., Inc. (1991-1994).
Apartment 29G Director/Trustee, the National Affiliated Investment
New York, NY 10016 Companies (1983-1993). Formerly a Major General of the
British Army.
William N. Georgeson (67) Trustee Director, Duff & Phelps Utility and Corporate Bond Trust
575 Glenwood Road Inc. (1994-present); Director, Duff & Phelps Utilities
Lake Forest, IL 60045 Tax-Free Income Inc. (1993-present); Vice President,
Nuveen Advisory Corp. (1982-1990).
Francis E. Jeffries (65) Trustee Chairman of the Board, Phoenix Duff & Phelps
Phoenix Duff & Phelps Corporation. Trustee, Phoenix Duff & Phelps Mutual
Corporation Funds. Director, Duff & Phelps Utilities Income Fund,
55 East Monroe Street Duff & Phelps Utilities Tax-Free Income, Inc., Duff &
Suite 3600 Phelps Utility and Corporate Bond Trust, Inc. and The
Chicago, IL 60603 Empire District Electric Company. (Director 1989-1995),
Chief Executive Officer (1992-1995) and President
(1989-1993), Duff & Phelps Corporation.
Leroy Keith, Jr. 57 Trustee Chairman and Chief Executive Officer, Carson Products
Chairman and Chief Company (1995-present). Director/Trustee, Phoenix Funds
Executive Officer (1980-present). Director, Equifax Corp. (1991-present),
Carson Products Company and Keystone International Fund, Inc. (1989-present).
64 Ross Road Trustee, Keystone Liquid Trust, Keystone Tax Exempt
Savannah, GA 31405 Trust, Keystone Tax Free Fund, Master Reserves Tax Free
Trust, and Master Reserves Trust. Director/Trustee, the
National Affiliated Investment Companies (until 1993).
Director, Blue Cross/Blue Shield (1989-1993) and First
Union Bank of Georgia (1989-1993). President, Morehouse
College (1987-1994). Chairman and Chief Executive
Officer, Keith Ventures (1994-1995).
13
<PAGE>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
- ------------------------------ ------------------ ---------------------------------------------------------
*Philip R. McLoughlin (49) Trustee/ Vice Chairman and Chief Executive Officer, Phoenix Duff
President & 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 (1993- present);
164 Laird Road Director, Duff & Phelps Utility and Corporate Bond Trust
Colts Neck, NJ 07722 Inc. (1993-present); Director, Duff & Phelps Utilities
Tax-Free Income Inc. (1991- Present); Director, Senior
Executive Vice President and Chief Financial Officer,
Public Service Electric and Gas Company (1986-1992).
President and Chief Operating Officer, Enterprise
Diversified Holdings Incorporated (1993); Director,
First Fidelity Bank, N.A. (1984-1991).
James M. Oates (49) Trustee Managing Director, The Wydown Group (1994- present).
Managing Director Director, Phoenix Duff & Phelps Corporation
The Wydown Group (1995-present). Director/Trustee, Phoenix Funds
50 Congress Street (1987-present). Director, Govett Worldwide Opportunity
Suite 1000 Funds, Inc. (1991-present), Stifel Financial Corporation
Boston, MA 02109 (1986-present). Director, Investors Bank and Trust
Corporation and Investors Financial Services
Corporation. Director/Trustee, the National Affiliated
Investment Companies (until 1993). Director (1984-1994),
President (1984-1994) and Chief Executive Officer
(1986-1994), Neworld Bank. Savings Bank Life Insurance
Company (1988- 1994). Director, Blue Cross & Blue Shield
of New Hampshire.
Richard A. Pavia (65) Trustee Director, Speer Financial, Inc. (1981-present).
7145 North Ionia Director, Duff & Phelps Utility and Corporate Bond Trust
Chicago, IL 60646 Inc. (1992-present); Director, Duff & Phelps Utilities
Tax-Free Income Inc. (1991-present).
*Calvin J. Pedersen (54) Trustee President, Phoenix Duff & Phelps Corporation (1995-
55 East Monroe Street, Ste. present); President and Chief Operating Officer, Duff &
3800 Phelps Corporation (1993-1995); President & Chief
Chicago, IL 60603 Executive Officer, Duff & Phelps Utilities Income Inc.
(1995-present); Director and Executive Vice President,
Duff & Phelps Utilities Tax-Free Income Inc.
(1995-present); Director and Executive Vice President,
Duff & Phelps Utility and Corporate Bond Trust Inc.
(1995-present).
14
<PAGE>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
- ------------------------------ ------------------ ---------------------------------------------------------
Philip R. Reynolds (68) Trustee Director/Trustee, Phoenix Funds (1984-present).
43 Montclair Drive Director, Vestaur Securities, Inc. (1972-present).
West Hartford, CT 06107 Trustee, Treasurer, J. Walton Bissell Foundation and
Treasurer, J. Walton Bissell Foundation Inc. (1988-
present). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
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).
Richard E. Segerson (50) Trustee Director/Trustee, Phoenix Funds, (1993-present).
102 Valley Road Consultant, Tootal Group (1989-1991) and Texas Air
New Canaan, CT 06840 Corporation (1987-1989). Vice President and General
Manager, Coats & Clark, Inc. (previously Tootal
American, Inc.) (1991-1993). Director/Trustee, the
National Affiliated Investment Companies (1984- 1993).
Lowell P. Weicker, Jr. (64) Trustee Trustee/Director, the Phoenix Funds (1995-present).
Dresing Lierman Weicker Former Governor of the State of Connecticut (1991-
6931 Arlington Road 1995). Director, UST, Inc. (1995-present).
Suite 501
Bethesda, MD 20814
*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.
</TABLE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
- --------------------------- ----------------------- ---------------------------------------------------------
<S> <C> <C>
William J. Newman (56) Senior Vice President Executive Vice President, Phoenix Investment Counsel,
Inc. (1995-present). Senior Vice President, National
Securities & Research Corporation (1995- present).
Senior Vice President, Phoenix Equity Planning
Corporation (1995-present). Senior Vice President,
Phoenix Strategic Equity Series Fund (1995-present), The
Phoenix Edge Series Fund (1995-present), Phoenix
Multi-Portfolio Fund (1995- present), Phoenix Income and
Growth Fund (1996- present), Phoenix Series Fund
(1996-present), Phoenix Total Return Fund, Inc.
(1996-present), and Phoenix Worldwide Opportunities Fund
(1996- present). Vice President, Common Stock, and Chief
Investment Strategist, Phoenix Home Life Mutual
Insurance Company (April, 1995-November, 1995). Chief
Investment Strategist, Kidder, Peabody Co., Inc.
(1993-1994). Managing Director, Equities, Bankers Trust
(1991-1993) and McKay Shields (1988-1990).
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
- --------------------------- ----------------------- ---------------------------------------------------------
<S> <C> <C>
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 (32) Vice President Senior Vice President and Fixed Income Portfolio
55 East Monroe Street Manager, Duff & Phelps Investment Management Co.
Ste. 3800 (1994-present). Second Vice President and Portfolio
Chicago, IL 60603 Manager, Northern Trust Bank (1985-1994).
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).
16
<PAGE>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
- ------------------------- ----------------------- ---------------------------------------------------------
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 (34) Vice President Executive Vice President, Duff & Phelps Investment
55 East Monroe Street Management Co. (1995-present). Principal and portfolio
Ste. 3800 manager, Harris Investment Management (1989-1993).
Chicago, IL 60603
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).
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).
17
<PAGE>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
- ------------------------- ----------------------- ---------------------------------------------------------
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 $3,000 and $500 per meeting.
Each Trustee who serves on a Committee receives a fee of $250 for each 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. 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:
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>
C. Duane Blinn $5,500 None None $61,500
Robert Chesek 5,500 None None 53,500
E. Virgil Conway 5,500 None None 87,500
William W. Crawford 5,500 None None 32,500
Harry Dalzell-Payne 5,500 None None 53,500
William N. Georgeson 5,500 None None 35,00
Francis E. Jeffries None None None None
Leroy Keith, Jr. 5,500 None None 53,500
Philip R. McLoughlin None None None None
Everett L. Morris 5,500 None None 86,000
James M. Oates 5,500 None None 61,500
Richard A. Pavia 5,500 None None 32,500
Calvin J. Pederson None None None None
Philip R. Reynolds 5,500 None None 53,500
Herbert Roth, Jr. 5,500 None None 65,500
Richard E. Segerson 5,500 None None 61,500
Lowell P. Weicker, Jr. 5,500 None None 61,500
</TABLE>
18
<PAGE>
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 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
19
<PAGE>
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.
The Trustees of the Fund, including a majority of disinterested Trustees,
have adopted procedures which allow the Advisers to allocate a portion of the
Fund's portfolio brokerage transactions to brokers affiliated with the Fund
or Advisers, including, without limitation, Duff & Phelps Securities Co. In
order for affiliated brokers to effect any portfolio transactions for the
Fund, the commissions, fees, or other remuneration received by such brokers
must be reasonable and fair compared to the commissions, fees or other
remuneration paid to other non-affiliated brokers in connection with
comparable transactions involving similar securities being purchased or sold
on a securities exchange during a comparable period of time.
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 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,
20
<PAGE>
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 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)
21
<PAGE>
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.
22
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 1, 1996--BEGINNING OF DAY
<TABLE>
<CAPTION>
U.S.
Managed Money Government
Balanced Bond Growth Market Securities
Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
Assets
Cash $100,000 100,000 100,000 100,000 100,000
Prepaid expenses 56,273 56,613 68,323 53,537 53,113
-------- -------- -------- -------- ------------
Total assets 156,273 156,613 168,323 153,537 153,113
Liabilities
Payable to distributor 56,273 56,613 68,323 53,537 53,113
-------- -------- -------- -------- ------------
Total liabilities 56,273 56,613 68,323 53,537 53,113
Net assets $100,000 100,000 100,000 100,000 100,000
======== ======== ======== ======== ============
Class Y
Shares of beneficial interest outstanding,
$1 par value unlimited authorization
Net assets $100,000 100,000 100,000 100,000 100,000
Net asset value and offering
price per share $
</TABLE>
The accompanying notes are an integral part of this financial statement.
23
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENT
1. ORGANIZATION
Phoenix Duff & Phelps Institutional Mutual Funds (the "Fund") is organized as
a Massachusetts business trust and is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end management investment
company whose shares are offered in six separate portfolios (the
"Portfolios"). The Fund is expected to commence operations on or about March
1, 1996 other than the Enhanced Reserves Portfolio (not covered in this
financial statement) which is expected to be available for sale on or about
May 1, 1996
Prior to March 1, 1996, the Portfolios, other than Enhanced Reserves
Portfolio, existed as separate accounts of Phoenix Home Life Mutual Insurance
Company ("PHL"). Upon commencement of operations, the net assets of each
separate account will be transferred into the corresponding Portfolio of the
Fund in exchange for shares of that Portfolio which will be credited to each
contractholder in accordance with the value of that contractholder's separate
account value as of the close of business on such date.
Each Portfolio has distinct investment objectives. The Balanced Portfolio
seeks to provide long-term capital growth, reasonable income and conservation
of capital. The Managed Bond Portfolio seeks to provide high current income
and appreciation of capital consistent with prudent investment risk. The
Growth Portfolio seeks as its investment objective long-term appreciation of
capital. The Money Market Portfolio seeks to provide as high a level of
current income as is consistent with the preservation of capital and the
maintenance of liquidity. The U.S. Government Securities Portfolio seeks as
its investment objective a high level of current income consistent with
safety of principal.
The Fund offers two classes of shares, Class X and Class Y. Class X shares
are available with no sales charges to institutional investors or plans whose
initial purchase of shares exceeds $5 million. Class Y shares are available
with an annual 0.25% distribution fee to institutional investors or plans
whose initial purchase of shares exceeds $1 million. Both classes of shares
have identical voting, dividend, liquidation and other rights (other than
conversion rights) and the same terms and conditions, except that Class Y
bears different distribution expenses and has exclusive voting rights with
respect to its distribution plan.
2. INVESTMENT ADVISER AND RELATED PARTY TRANSACTIONS
Phoenix Investment Counsel, Inc. ("PIC"), an indirect, majority-owned
subsidiary of PHL, serves as the investment adviser to the Portfolios other
than Enhanced Reserves Portfolio.
The Adviser is entitled to a fee, based upon the following annual rates as
a percentage of the average daily net assets of each Portfolio:
<TABLE>
<CAPTION>
1st $1 $1 billion
billion plus
<S> <C> <C>
Balanced 0.55% 0.50%
Managed Bond 0.45% 0.40%
Growth 0.60% 0.55%
Money Market 0.25% 0.20%
U.S Government
Securities 0.30% 0.25%
</TABLE>
Phoenix Equity Planning Corporation ("PEPCO"), an indirect, majority-owned
subsidiary of PHL, serves as the national distributor of the Fund's shares.
Each Portfolio's Class Y shares pays PEPCO a distribution fee at an annual
rate of 0.25% applied to the average daily net assets of that class.
As Financial Agent to the Fund, PEPCO receives a fee at an annual rate of
0.03% of the average daily net assets of each Portfolio for bookkeeping,
administrative and pricing services. PEPCO also serves as the Fund's Transfer
Agent.
As of the date of this financial statement, PHL holds all the outstanding
shares of each Portfolio of the Fund.
24
<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>
<CAPTION>
<S> <C>
(1)(a) Declaration of Trust of the Registrant, filed with Pre-Effective Amendment No. 1 on February 2,
1996 and incorporated herein by reference.
(1)(b) Amendment to Declaration of Trust changing names of Portfolios, filed herewith.
(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 with Pre-Effective Amendment No. 1 on February 2, 1996 and incorporated herein by
reference.
(b) Investment Advisory Agreement between Registrant and Phoenix Investment Counsel, Inc. ("PIC"),
filed with Pre-Effective Amendment No. 1 on February 2, 1996 and incorporated herein by
reference.
(6) Distribution Agreement between Registrant and Phoenix Equity Planning Corporation, filed with
Pre- Effective Amendment No. 1 on February 2, 1996 and incorporated herein by reference.
(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., filed herewith.
(9)(a) Financial Agent Agreement between Registrant and Phoenix Equity Planning Corporation, filed with
Pre-Effective Amendment No. 1 on February 2, 1996 and incorporated herein by reference.
(b) Transfer Agent Agreement between Registrant and Phoenix Equity Planning Corporation, filed
herewith.
(10) Opinion of Counsel, filed herewith.
*(11) Consent of Accountants.
(12) None
(13) Initial Capitalization Agreement, filed with Pre-Effective Amendment No. 1 on February 2, 1996
and incorporated herein by reference.
(14) None
(15) Rule 12b-1 Distribution Plan for Class Y Shares, filed herewith with Pre-Effective Amendment No. 1 on
February 2, 1996 and incorporated herein by reference.
(16) Schedule for Computation of Performance Quotations, filed herewith.
*(17) Financial Data Schedule as reflected on Edgar as Exhibit 27
(18) Rule 18f-3 Dual Distribution Plan, filed herewith.
(19) Powers of Attorney, 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>
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 Registrant has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Hartford, and State of Connecticut
on the 28th day of February, 1996.
PHOENIX DUFF & PHELPS
INSTITUTIONAL MUTUAL FUNDS
ATTEST: /s/ Thomas N. Steenburg
Thomas N. Steenburg
Assistant Secretary
By: /s/ Philip R. McLoughlin
Philip R. McLoughlin
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons
in the capacities indicated, on this 28th day of February, 1996.
Signature Title
- -------------------------- ----------------------
- -------------------------
C. Duane Blinn* Trustee
- -------------------------
Robert Chesek* Trustee
- -------------------------
E. Virgil Conway* Trustee
- -------------------------
William W. Crawford* Trustee
- -------------------------
Nancy G. Curtiss* Tresurer (principal
financial and
accounting officer)
- -------------------------
Harry Dalzell-Payne* Trustee
- -------------------------
William N. Georgeson* Trustee
- -------------------------
Francis E. Jeffries* Trustee
S-1
<PAGE>
- -------------------------
Leroy Keith, Jr.* Trustee
/s/ Philip R. McLoughlin Trustee and
- -------------------------
Philip R. McLoughlin President
- -------------------------
Everett L. Morris* Trustee
- -------------------------
James M. Oates* Trustee
- -------------------------
Richard A. Pavia* Trustee
- -------------------------
Calvin J. Pedersen* Trustee
- -------------------------
Philip R. Reynolds* Trustee
- -------------------------
Herbert Roth, Jr.* Trustee
- -------------------------
Richard E. Segerson* Trustee
- -------------------------
Lowell P. Weicker, Jr.* Trustee
By: /s/ Philip R. McLoughlin
- -------------------------
*Philip R. McLoughlin pursuant to powers of attorney filed herewith.
S-2
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
First Amendment to Declaration of Trust
We, the undersigned, being all of the members of the Board of Trustees of
the Phoenix Duff & Phelps Institutional Mutual Funds, a Massachusetts business
trust organized under a Declaration of Trust dated December 4, 1995, and acting
pursuant to ARTICLE VI Section 6.3 of said Declaration of Trust, do hereby amend
said Declaration of Trust, by deleting the first sentence of the first paragraph
of Section 3.2 of ARTICLE III thereof and by inserting in lieu of such paragraph
the following paragraph:
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
Institutional Balanced Portfolio", "Phoenix Duff & Phelps
Institutional Managed Bond Portfolio", "Phoenix Duff & Phelps
Institutional Enhanced Reserves Portfolio", "Phoenix Duff & Phelps
Institutional Growth Stock Portfolio", "Phoenix Duff & Phelps
Institutional Money Market Portfolio", and "Phoenix Duff & Phelps
Institutional U.S. Government Securities Portfolio".
WITNESS our hands this 2nd day of February, 1996.
/s/ Thomas N. Steenburg /s/ Richard J. Wirth
- ------------------------------ ------------------------------
Thomas N. Steenburg, as Trustee and Richard J. Wirth, as Trustee and
not individually not individually
Ed-99.B8(b)
[CHASE LOGO]
GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective ___________________, 199_, and is between
THE CHASE MANHATTAN BANK, N.A. (the "Bank") and ______________________________
________________________________________________ (the "Customer").
1. Customer Accounts.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer ("Custody Account") for
any and all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money, bullion, coin and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same or evidencing or representing any other rights or
interests therein and other similar property whether certificated or
uncertificated as may be received by the Bank or its Subcustodian (as defined in
Section 3) for the account of the Customer ("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit Account") for
any and all cash in any currency received by the Bank or its Subcustodian for
the account of the Customer, which cash shall not be subject to withdrawal by
draft or check.
The Customer warrants its authority to: 1) deposit the cash and
Securities ("Assets") received in the Accounts and 2) give Instructions (as
defined in Section 11) concerning the Accounts. The Bank may deliver
securities of the same class in place of those deposited in the Custody
Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional Accounts
under the terms of this Agreement.
2. Maintenance of Securities and Cash at Bank and Subcustodian Locations.
Unless Instructions specifically require another location acceptable to
the Bank:
(a) Securities will be held in the country or other jurisdiction in which
the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and
(b) Cash will be credited to an account in a country or other jurisdiction
in which such cash may be legally deposited or is the legal currency for the
payment of public or private debts.
<PAGE>
Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent Instructions are issued and the Bank can comply with such
Instructions, the Bank is authorized to maintain cash balances on deposit for
the Customer with itself or one of its affiliates at such reasonable rates of
interest as may from time to time be paid on such accounts, or in non-interest
bearing accounts as the Customer may direct, if acceptable to the Bank.
If the Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians as defined in Section 3 (or
their securities depositories), such arrangement must be authorized by a written
agreement, signed by the Bank and the Customer.
3. Subcustodians and Securities Depositories.
The Bank may act under this Agreement through the subcustodians listed in
Schedule A of this Agreement with which the Bank has entered into subcustodial
agreements ("Subcustodians"). The Customer authorizes the Bank to hold Assets in
the Accounts in accounts which the Bank has established with one or more of its
branches or Subcustodians. The Bank and Subcustodians are authorized to hold any
of the Securities in their account with any securities depository in which they
participate.
The Bank reserves the right to add new, replace or remove Subcustodians.
The Customer will be given reasonable notice by the Bank of any amendment to
Schedule A. Upon request by the Customer, the Bank will identify the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other regulatory
authority that supervises or regulates such Subcustodian.
4. Use of Subcustodian.
(a) The Bank will identify the Assets on its books as belonging to
the Customer.
(b) A Subcustodian will hold such Assets together with assets belonging to
other customers of the Bank in accounts identified on such Subcustodian's books
as special custody accounts for the exclusive benefit of customers of the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject only
to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be subject only to
the instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding its
customer's assets shall provide that such assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, and that the beneficial
ownership of such assets will be freely transferable without the payment of
money or value other than for safe custody or administration. The foregoing
shall not apply to the extent of any special agreement or arrangement made by
the Customer with any particular Subcustodian.
5. Deposit Account Transactions.
(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required by
the Bank.
(b) In the event that any payment to be made under this Section 5 exceeds
the funds available in the Deposit Account, the Bank, in its discretion, may
advance the Customer such excess amount which shall be
2
<PAGE>
deemed a loan payable on demand, bearing interest at the rate customarily
charged by the Bank on similar loans.
(c) If the Bank credits the Deposit Account on a payable date, or at any
time prior to actual collection and reconciliation to the Deposit Account, with
interest, dividends, redemptions or any other amount due, the Customer will
promptly return any such amount upon oral or written notification: (i) that such
amount has not been received in the ordinary course of business or (ii) that
such amount was incorrectly credited. If the Customer does not promptly return
any amount upon such notification, the Bank shall be entitled, upon oral or
written notification to the Customer, to reverse such credit by debiting the
Deposit Account for the amount previously credited. The Bank or its Subcustodian
shall have no duty or obligation to institute legal proceedings, file a claim or
a proof of claim in any insolvency proceeding or take any other action with
respect to the collection of such amount, but may act for the Customer upon
Instructions after consultation with the Customer.
6. Custody Account Transactions.
(a) Securities will be transferred, exchanged or delivered by the Bank or
its Subcustodian upon receipt by the Bank of Instructions which include all
information required by the Bank. Settlement and payment for Securities received
for, and delivery of Securities out of, the Custody Account may be made in
accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of Securities to a
purchaser, dealer or their agents against a receipt with the expectation of
receiving later payment and free delivery. Delivery of Securities out of the
Custody Account may also be made in any manner specifically required by
Instructions acceptable to the Bank.
(b) The Bank, in its discretion, may credit or debit the Accounts on a
contractual settlement date with cash or Securities with respect to any sale,
exchange or purchase of Securities. Otherwise, such transactions will be
credited or debited to the Accounts on the date cash or Securities are actually
received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a reasonable
period, determined by the Bank in its discretion, after the contractual
settlement date for the related transaction.
(ii) If any Securities delivered pursuant to this Section 6 are returned
by the recipient thereof, the Bank may reverse the credits and debits of
the particular transaction at any time.
7. Actions of the Bank.
The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items which
call for payment upon presentation, to the extent that the Bank or Subcustodian
is actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
3
<PAGE>
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any transfers
of Assets to or from the Accounts. Such statements, advices or notifications
shall indicate the identity of the entity having custody of the Assets. Unless
the Customer sends the Bank a written exception or objection to any Bank
statement within sixty (60) days of receipt, the Customer shall be deemed to
have approved such statement. In such event, or where the Customer has otherwise
approved any such statement, the Bank shall, to the extent permitted by law, be
released, relieved and discharged with respect to all matters set forth in such
statement or reasonably implied therefrom as though it had been settled by the
decree of a court of competent jurisdiction in an action where the Customer and
all persons having or claiming an interest in the Customer or the Customer's
Accounts were parties.
All collections of funds or other property paid or distributed in respect
of Securities in the Custody Account shall be made at the risk of the Customer.
The Bank shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Bank or by its Subcustodians of any payment, redemption
or other transaction regarding Securities in the Custody Account in respect of
which the Bank has agreed to take any action under this Agreement.
8. Corporate Actions; Proxies; Tax Reclaims.
(a) Corporate Actions. Whenever the Bank receives information concerning
the Securities which requires discretionary action by the beneficial owner of
the Securities (other than a proxy), such as subscription rights, bonus issues,
stock repurchase plans and rights offerings, or legal notices or other material
intended to be transmitted to securities holders ("Corporate Actions"), the Bank
will give the Customer notice of such Corporate Actions to the extent that the
Bank's central corporate actions department has actual knowledge of a Corporate
Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a rights
issue, stock dividend, stock split or similar Corporate Action is received which
bears an expiration date, the Bank will endeavor to obtain Instructions from the
Customer or its Authorized Person, but if Instructions are not received in time
for the Bank to take timely action, or actual notice of such Corporate Action
was received too late to seek Instructions, the Bank is authorized to sell such
rights entitlement or fractional interest and to credit the Deposit Account with
the proceeds or take any other action it deems, in good faith, to be appropriate
in which case it shall be held harmless for any such action.
(b) Proxy Voting. The Bank will provide proxy voting services only
pursuant to a separate agreement. Proxy voting services may be provided by the
Bank or, in whole or in part, by one or more third parties appointed by the Bank
(which may be affiliates of the Bank).
(c) Tax Reclaims.
(i) Subject to the provisions hereof, the Bank will apply for a reduction
of withholding tax and any refund of any tax paid or tax credits which
apply in each applicable market in respect of income payments on
Securities for the benefit of the Customer which the Bank believes may be
available to such Customer.
4
<PAGE>
(ii) The provision of tax reclaim services by the Bank is conditional upon
the Bank receiving from the beneficial owner of Securities (A) a
declaration of its identity and place of residence and (B) certain other
documentation (pro forma copies of which are available from the Bank). The
Customer acknowledges that, if the Bank does not receive such
declarations, documentation and information, additional United Kingdom
taxation will be deducted from all income received in respect of
Securities issued outside the United Kingdom and that U.S. non-resident
alien tax or U.S. backup withholding tax will be deducted from U.S. source
income. The Customer shall provide to the Bank such documentation and
information as it may require in connection with taxation, and warrants
that, when given, this information shall be true and correct in every
respect, not misleading in any way, and contain all material information.
The Customer undertakes to notify the Bank immediately if any such
information requires updating or amendment.
(iii) The Bank shall not be liable to the Customer or any third party for
any tax, fines or penalties payable by the Bank or the Customer, and shall
be indemnified accordingly, whether these result from the inaccurate
completion of documents by the Customer or any third party, or as a result
of the provision to the Bank or any third party of inaccurate or
misleading information or the withholding of material information by the
Customer or any other third party, or as a result of any delay of any
revenue authority or any other matter beyond the control of the Bank.
(iv) The Customer confirms that the Bank is authorized to deduct from any
cash received or credited to the Cash Account any taxes or levies required
by any revenue or governmental authority for whatever reason in respect of
the Securities or Cash Accounts.
(v) The Bank shall perform tax reclaim services only with respect to
taxation levied by the revenue authorities of the countries notified to
the Customer from time to time and the Bank may, by notification in
writing, at its absolute discretion, supplement or amend the markets in
which the tax reclaim services are offered. Other than as expressly
provided in this sub-clause, the Bank shall have no responsibility with
regard to the Customer's tax position or status in any jurisdiction.
(vi) The Customer confirms that the Bank is authorised to disclose any
information requested by any revenue authority or any governmental body in
relation to the Customer or the Securities and/or Cash held for the
Customer.
(vii) Tax reclaim services may be provided by the Bank or, in whole or in
part, by one or more third parties appointed by the Bank (which may be
affiliates of the Bank); provided that the Bank shall be liable for the
performance of any such third party to the same extent as the Bank would
have been if it performed such services itself.
9. Nominees.
Securities which are ordinarily held in registered form may be registered
in a nominee name of the Bank, Subcustodian or securities depository, as the
case may be. The Bank may without notice to the Customer cause any such
Securities to cease to be registered in the name of any such nominee and to be
registered in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by the issuer,
the Bank may allot the called portion to the respective beneficial holders of
such class of security in any manner the Bank deems to be fair and equitable.
The Customer agrees
5
<PAGE>
to hold the Bank, Subcustodians, and their respective nominees harmless from
any liability arising directly or indirectly from their status as a mere record
holder of Securities in the Custody Account.
10. Authorized Persons.
As used in this Agreement, the term "Authorized Person" means employees or
agents including investment managers as have been designated by written notice
from the Customer or its designated agent to act on behalf of the Customer under
this Agreement. Such persons shall continue to be Authorized Persons until such
time as the Bank receives Instructions from the Customer or its designated agent
that any such employee or agent is no longer an Authorized Person.
11. Instructions.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Customer will hold the
Bank harmless for the failure of an Authorized Person to send such confirmation
in writing, the failure of such confirmation to conform to the telephone
instructions received or the Bank's failure to produce such confirmation at any
subsequent time. The Bank may electronically record any Instructions given by
telephone, and any other telephone discussions with respect to the Custody
Account. The Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which the Bank shall make
available to the Customer or its Authorized Persons.
12. Standard of Care; Liabilities.
(a) The Bank shall be responsible for the performance of only such duties
as are set forth in this Agreement or expressly contained in Instructions which
are consistent with the provisions of this Agreement as follows:
(i) The Bank will use reasonable care with respect to its obligations
under this Agreement and the safekeeping of Assets. The Bank shall be
liable to the Customer for any loss which shall occur as the result of the
failure of a Subcustodian to exercise reasonable care with respect to the
safekeeping of such Assets to the same extent that the Bank would be
liable to the Customer if the Bank were holding such Assets in New York.
In the event of any loss to the Customer by reason of the failure of the
Bank or its Subcustodian to utilize reasonable care, the Bank shall be
liable to the Customer only to the extent of the Customer's direct
damages, to be determined based on the market value of the property which
is the subject of the loss at the date of discovery of such loss and
without reference to any special conditions or circumstances. In no event
shall Bank be liable for special, indirect or consequential loss or damage
of any kind whatsoever (including but not limited to lost profits), even
if Bank has been advised of the likelihood of such loss or damage and
regardless of the form of action.
6
<PAGE>
(ii) The Bank will not be responsible for any act, omission, default or
the solvency of any broker or agent which it or a Subcustodian appoints
unless such appointment was made negligently or in bad faith.
(iii) The Bank shall be indemnified by, and without liability to the
Customer for any action taken or omitted by the Bank whether pursuant to
Instructions or otherwise within the scope of this Agreement if such act
or omission was in good faith, without negligence. In performing its
obligations under this Agreement, the Bank may rely on the genuineness of
any document which it believes in good faith to have been validly
executed.
(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any taxes
or other governmental charges, and any related expenses with respect to
income from or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the advice of
counsel (who may be counsel for the Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to
such advice.
(vi) The Bank need not maintain any insurance for the benefit of
the Customer.
(vii) Without limiting the foregoing, the Bank shall not be liable for any
loss which results from: 1) the general risk of investing, or 2) investing
or holding Assets in a particular country including, but not limited to,
losses resulting from nationalization, expropriation or other governmental
actions; regulation of the banking or securities industry; currency
restrictions, devaluations or fluctuations; and market conditions which
prevent the orderly execution of securities transactions or affect the
value of Assets.
(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear
fusion, fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty or
responsibility to:
(i) question Instructions or make any suggestions to the
Customer or an Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to
investments or the retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any default in
the payment of principal or income of any security other than as provided
in Section 5(c) of this Agreement;
(iv) evaluate or report to the Customer or an Authorized Person regarding
the financial condition of any broker, agent or other party to which
Securities are delivered or payments are made pursuant to this Agreement;
or
(v) review or reconcile trade confirmations received from brokers. The
Customer or its Authorized Persons (as defined in Section 10) issuing
Instructions shall bear any responsibility to review such confirmations
against Instructions issued to and statements issued by the Bank.
7
<PAGE>
(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have a
material interest in a transaction, or circumstances are such that the Bank may
have a potential conflict of duty or interest including the fact that the Bank
or any of its affiliates may provide brokerage services to other customers, act
as financial advisor to the issuer of Securities, act as a lender to the issuer
of Securities, act in the same transaction as agent for more than one customer,
have a material interest in the issue of Securities, or earn profits from any of
the activities listed herein.
13. Fees and Expenses.
The Customer agrees to pay the Bank for its services under this Agreement
such amount as may be agreed upon in writing, together with the Bank's
reasonable out-of-pocket or incidental expenses, including, but not limited to,
legal fees. The Bank shall have a lien on and is authorized to charge any
Accounts of the Customer for any amount owing to the Bank under any provision of
this Agreement.
14. Miscellaneous.
(a) Foreign Exchange Transactions. To facilitate the administration of the
Customer's trading and investment activity, the Bank is authorized to enter into
spot or forward foreign exchange contracts with the Customer or an Authorized
Person for the Customer and may also provide foreign exchange through its
subsidiaries, affiliates or Subcustodians. Instructions, including standing
instructions, may be issued with respect to such contracts but the Bank may
establish rules or limitations concerning any foreign exchange facility made
available. In all cases where the Bank, its subsidiaries, affiliates or
Subcustodians enter into a foreign exchange contract related to Accounts, the
terms and conditions of the then current foreign exchange contract of the Bank,
its subsidiary, affiliate or Subcustodian and, to the extent not inconsistent,
this Agreement shall apply to such transaction.
(b) Certification of Residency, etc. The Customer certifies that it is a
resident of the United States and agrees to notify the Bank of any changes in
residency. The Bank may rely upon this certification or the certification of
such other facts as may be required to administer the Bank's obligations under
this Agreement. The Customer will indemnify the Bank against all losses,
liability, claims or demands arising directly or indirectly from any such
certifications.
(c) Access to Records. The Bank shall allow the Customer's independent
public accountant reasonable access to the records of the Bank relating to the
Assets as is required in connection with their examination of books and records
pertaining to the Customer's affairs. Subject to restrictions under applicable
law, the Bank shall also obtain an undertaking to permit the Customer's
independent public accountants reasonable access to the records of any
Subcustodian which has physical possession of any Assets as may be required in
connection with the examination of the Customer's books and records.
(d) Governing Law; Successors and Assigns. This Agreement shall be
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Bank.
(e) Entire Agreement; Applicable Riders. Customer represents that
the Assets deposited in the Accounts are (Check one):
_______ Employee Benefit Plan or other assets subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA");
8
<PAGE>
_______ Mutual Fund assets subject to certain Securities and Exchange
Commission ("SEC") rules and regulations;
_______ Neither of the above.
This Agreement consists exclusively of this document together with
Schedule A, Exhibits I - _______ and the following Rider(s) [Check
applicable rider(s)]:
_______ ERISA
_______ MUTUAL FUND
_______ SPECIAL TERMS AND CONDITIONS
There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.
(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or unenforceable in any respect on the basis
of any particular circumstances or in any jurisdiction, the validity, legality
and enforceability of such provision or provisions under other circumstances or
in other jurisdictions and of the remaining provisions will not in any way be
affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no failure or
delay on the part of either party in exercising any power or right under this
Agreement operates as a waiver, nor does any single or partial exercise of any
power or right preclude any other or further exercise, or the exercise of any
other power or right. No waiver by a party of any provision of this Agreement,
or waiver of any breach or default, is effective unless in writing and signed by
the party against whom the waiver is to be enforced.
(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses or
such other addresses as may subsequently be given to the other party in writing:
Bank: The Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or telex: __________________________
Customer: ____________________________________
____________________________________
____________________________________
or telex: __________________________
(i) Termination. This Agreement may be terminated by the Customer or the
Bank by giving sixty (60) days written notice to the other, provided that such
notice to the Bank shall specify the names of the persons to whom the Bank shall
deliver the Assets in the Accounts. If notice of termination is given by the
Bank, the Customer shall, within sixty (60) days following receipt of the
notice, deliver to the Bank Instructions specifying the names of the persons to
whom the Bank shall deliver the Assets. In either case the Bank will deliver the
Assets to the persons so specified, after deducting any amounts which the Bank
determines in good faith to be owed to it under Section 13. If within sixty (60)
days following receipt of a notice of termination by the Bank, the Bank does not
receive Instructions from the Customer specifying the names of the persons to
whom the Bank shall deliver the Assets, the Bank, at its election, may deliver
the Assets to a bank or trust company doing business in the State of New York to
be held and disposed of pursuant to the provisions of this Agreement, or to
Authorized Persons, or may continue to hold the Assets until Instructions are
provided to the Bank.
CUSTOMER
By:____________________________________________
Title:
Date:
THE CHASE MANHATTAN BANK, N.A.
By:____________________________________________
Title:
Date:
54480
<PAGE>
STATE OF )
: ss.
COUNTY OF )
On this day of , 19 , before me
personally came , to me known, who being by me
duly sworn, did depose and say that he/she resides in
at , that he/she is of,
the entity described in and which executed the foregoing instrument; that
he/she knows the seal of said entity, that the seal affixed to said instrument
is such seal, that it was so affixed by order of said entity, and that he/she
signed his/her name thereto by like order.
___________________________________
Sworn to before me this _____
day of ________________, 19 .
_____________________________
Notary
<PAGE>
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this day of , 19 , before me
personally came , to me known, who being by me
duly sworn, did depose and say that he/she resides in
at ; that he/she is a Vice President of THE CHASE
MANHATTAN BANK, (National Association), the corporation described in and which
executed the foregoing instrument; that he/she knows the seal of said
corporation, that the seal affixed to said instrument is such corporate seal,
that it was so affixed by order of the Board of Directors of said corporation,
and that he/she signed his/her name thereto by like order.
_________________________________
Sworn to before me this _________
day of ___________, 19____.
_____________________________
Notary
<PAGE>
Mutual Fund Rider to Global Custody Agreement
Between The Chase Manhattan Bank, N.A. and
-----------------------------------------
effective __________________
Customer represents that the Assets being placed in the Bank's custody are
subject to the Investment Company Act of 1940 (the Act), as the same may be
amended from time to time.
Except to the extent that the Bank has specifically agreed to comply with
a condition of a rule, regulation, interpretation promulgated by or under the
authority of the SEC or the Exemptive Order applicable to accounts of this
nature issued to the Bank (Investment Company Act of 1940, Release No. 12053,
November 20, 1981), as amended, or unless the Bank has otherwise specifically
agreed, the Customer shall be solely responsible to assure that the maintenance
of Assets under this Agreement complies with such rules, regulations,
interpretations or exemptive order promulgated by or under the authority of the
Securities Exchange Commission.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible
foreign custodian or an eligible foreign securities depository, which are
further defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined
in Rule 17f-5 under the Investment Company Act of 1940;
(b) "eligible foreign custodian" shall mean (i) a banking institution or
trust company incorporated or organized under the laws of a country other
than the United States that is regulated as such by that country's
government or an agency thereof and that has shareholders' equity in
excess of $200 million in U.S. currency (or a foreign currency equivalent
thereof), (ii) a majority owned direct or indirect subsidiary of a
qualified U.S. bank or bank holding company that is incorporated or
organized under the laws of a country other than the United States and
that has shareholders' equity in excess of $100 million in U.S. currency
(or a foreign currency equivalent thereof) (iii) a banking institution or
trust company incorporated or organized under the laws of a country other
than the United States or a majority owned direct or indirect subsidiary
of a qualified U.S. bank or bank holding company that is incorporated or
organized under the laws of a country other than the United States which
has such other qualifications as shall be specified in Instructions and
approved by the Bank; or (iv) any other entity that shall have been so
qualified by exemptive order, rule or other appropriate action of the SEC;
and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws of
a country other than the United States, which operates (i) the central
system for handling securities or equivalent book-entries in that country,
or (ii) a transnational system for the central handling of securities or
equivalent book-entries.
The Customer represents that its Board of Directors has approved each of
the Subcustodians listed in Schedule A to this Agreement and the terms of the
subcustody agreements between the Bank and each Subcustodian, which are attached
as Exhibits I through of Schedule A, and further represents that its Board has
determined that the use of each Subcustodian and the terms of each subcustody
agreement are consistent with the best interests of the Fund(s) and its (their)
shareholders. The Bank will supply the Customer with any amendment to Schedule A
for approval. The Customer has supplied or will supply the Bank with certified
copies of its Board of Directors resolution(s) with respect to the foregoing
prior to placing Assets with any Subcustodian so approved.
Section 11. Instructions.
Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions made pursuant to
Section 5 and 6 of this Agreement may be made only for the purposes listed
below. Instructions must specify the purpose for which any transaction is
to be made and Customer shall be solely responsible to assure that
Instructions are in accord with any limitations or restrictions applicable
to the Customer by law or as may be set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise
become payable;
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any
restrictions applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of, the
Bank, its Subcustodian or the Customer's transfer agent, such shares to be
purchased or redeemed;
(j) For the purpose of redeeming in kind shares of the Customer against
delivery to the Bank, its Subcustodian or the Customer's transfer agent of
such shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement among
the Customer, the Bank and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The National
Association of Securities Dealers, Inc. ("NASD"), relating to compliance
with the rules of The Options Clearing Corporation and of any registered
national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Customer;
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only
upon payment to the Bank of monies for the premium due and a receipt for
the Securities which are to be held in escrow. Upon exercise of the
option, or at expiration, the Bank will receive from brokers the
Securities previously deposited. The Bank will act strictly in accordance
with Instructions in the delivery of Securities to be held in escrow and
will have no responsibility or liability for any such Securities which are
not returned promptly when due other than to make proper request for such
return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related
transactions;
(n) For other proper purposes as may be specified in Instructions issued
by an officer of the Customer which shall include a statement of the
purpose for which the delivery or payment is to be made, the amount of the
payment or specific Securities to be delivered, the name of the person or
persons to whom delivery or payment is to be made, and a certification
that the purpose is a proper purpose under the instruments governing the
Customer; and
(o) Upon the termination of this Agreement as set forth in Section
14(i).
Section 12. Standard of Care; Liabilities.
Add the following subsection (d) to Section 12:
(d) The Bank hereby warrants to the Customer that in its opinion, after
due inquiry, the established procedures to be followed by each of its
branches, each branch of a qualified U.S. bank, each eligible foreign
custodian and each eligible foreign securities depository holding the
Customer's Securities pursuant to this Agreement afford protection for
such Securities at least equal to that afforded by the Bank's established
procedures with respect to similar securities held by the Bank and its
securities depositories in New York.
Section 14. Access to Records.
Add the following language to the end of Section 14(c):
Upon reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of
internal accounting controls applicable to the Bank's duties under this
Agreement. The Bank shall endeavor to obtain and furnish the Customer with
such similar reports as it may reasonably request with respect to each
Subcustodian and securities depository holding the Customer's assets.
<PAGE>
DOMESTIC AND GLOBAL
SPECIAL TERMS AND CONDITIONS RIDER
Domestic Corporate Actions and Proxies
With respect to domestic U.S. and Canadian Securities (the latter if held in
DTC), the following provisions will apply rather than the provisions of Section
8 of the Agreement:
The Bank will send to the Customer or the Authorized Person for a Custody
Account, such proxies (signed in blank, if issued in the name of the
Bank's nominee or the nominee of a central depository) and communications
with respect to Securities in the Custody Account as call for voting or
relate to legal proceedings within a reasonable time after sufficient
copies are received by the Bank for forwarding to its customers. In
addition, the Bank will follow coupon payments, redemptions, exchanges or
similar matters with respect to Securities in the Custody Account and
advise the Customer or the Authorized Person for such Account of rights
issued, tender offers or any other discretionary rights with respect to
such Securities, in each case, of which the Bank has received notice from
the issuer of the Securities, or as to which notice is published in
publications routinely utilized by the Bank for this purpose.
<PAGE>
GLOBAL INVESTOR SERVICES
----------------
Fee Schedule
between
Phoenix Duff & Phelps Institutional Funds
and
The Chase Manhattan Bank, N.A.
February 22, 1996
I. US Custody Fees
Basis Points Transactions
------------ ------------
Safekeeping 1.5
DTC Eligible $ 6.50
Fed Book Entry $ 4.00
PTC Eligible $ 7.00
Physical $17.00
II. Global Custody Fees
Bands Basis Points Transactions
- ----- ------------ ------------
Cedel 3.0 $25
Band A 4.0 $35
Band B 6.0 $35
Band C 8.0 $50
Band D 10.0 $60
III. Other Transactions
Switch - Physical $17.00
Switch - Book see transaction charges above
Wires $8.00
IV. Out of Pocket Expenses
Including script fees, legal fees, etc, as incurred.
V. Transition to Successor Custodian
Existing fee schedule
[CHASE LOGO]
<PAGE>
GLOBAL INVESTOR SERVICES
----------------
Band A Band B
- ------ ------
Canada Germany
Japan France
United Kingdom Netherlands
Switzerland
Band C Band D
- ------ ------
Austria Mexico
Belgium South Korea
Denmark Thailand
Finland
Hong Kong
Ireland
Italy
Malaysia
New Zealand
Norway Singapore
Sweden
Phoenix Investments
By: ____________________________________ ___________________
Signature Date
____________________________________
Print Name and Title
The Chase Manhattan Bank, N.A.
By: ____________________________________ ___________________
Signature Date
____________________________________
Print Name and Title
[CHASE LOGO]
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 1st day of March, 1996, by and between the
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS (hereinafter referred to as the
"Fund"), and PHOENIX EQUITY PLANNING CORPORATION (hereinafter referred to as the
"Transfer Agent").
W I T N E S S E T H:
WHEREAS, the Fund desires to appoint Transfer Agent as their transfer
agent, dividend disbursing agent and agent in connection with certain other
activities, and Transfer Agent desires to accept such appointment; and
WHEREAS, the parties wish to set forth herein their mutual understandings
and agreements.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and other good and valuable consideration, the receipt and sufficiency whereof
being hereby acknowledged and affirmed, the parties hereto agree as follows:
Article 1 Terms of Appointment; Duties of Transfer Agent
1.01 Subject to the terms and conditions set forth in this Agreement, the
Fund hereby employs and appoints Transfer Agent to act as, and Transfer Agent
agrees to act as, transfer agent for the authorized and issued shares of
beneficial interest of the Fund (hereinafter collectively and singularly
referred to as "Shares"), dividend disbursing agent and agent in connection with
any accumulation, open-account or similar plans provided to the shareholders of
the Fund ("Shareholders") and as set out in the currently effective registration
statement of the Fund (the prospectus and statement of additional information
portions of such registration statement being referred to as the "Prospectus"),
including, without limitation, any periodic investment plan or periodic
withdrawal program.
1.02 Transfer Agent agrees that it will perform the following services
pursuant to this Agreement:
(a) In accordance with procedures established from time to time by
agreement between the Fund and Transfer Agent, Transfer Agent shall:
i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation
therefor to the Custodian appointed from time to time by the
Trustees of the Fund (which entity or entities, as the case
may be, shall be referred to as the "Custodian");
ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the each appropriate
Shareholder account;
iii) Receive for acceptance, redemption requests and redemption
directions and deliver the
appropriate documentation therefor to the Custodian;
iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Transfer Agent shall execute transactions directly
with broker-dealers authorized by the Fund who shall thereby
be deemed to be acting on behalf of the Fund;
v) At the appropriate time as and when it receives monies paid to
it by any Custodian with respect to any redemption, pay over
or cause to be paid over in the appropriate manner such monies
as instructed by the redeeming Shareholders;
vi) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
<PAGE>
vii) Prepare and transmit payments for dividends and distributions
declared by the Fund, if any;
viii) Issue replacement certificates for those certificates alleged
to have been lost, stolen or destroyed upon receipt by the
Transfer Agent of indemnification satisfactory to the Transfer
Agent and the Fund, and the Transfer Agent at its option, may
issue replacement certificates in place of mutilated stock
certificates upon presentation thereof and without such
indemnity;
ix) Maintain records of account for and advise the Fund and its
respective Shareholders as to the
foregoing; and
x) Record the issuance of Shares and maintain pursuant to Rule
17Ad-10(e) under the Exchange Act of 1934, a record of the
total number of Shares which are authorized, issued and
outstanding based upon data provided to it by the Fund. The
Transfer Agent shall also provide on a regular basis to the
Fund the total number of Shares which are authorized, issued
and outstanding shall have no obligation, when recording the
issuance of Shares, to monitor the issuance of such Shares or
to take cognizance of any laws relating to the issue or sale
of such Shares, which functions shall be the sole
responsibility of the Fund.
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), Transfer Agent shall: (i) perform all of the customary services
of a transfer agent, dividend disbursing agent and, as relevant, agent in
connection with accumulation, open-account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal program),
including, but not limited to, maintaining all Shareholder accounts, preparing
Shareholder meeting lists, mailing proxies, receiving and tabulating proxies,
mailing Shareholder reports and Prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts, preparing
and filing U.S. Treasury Department Forms 1099 and other appropriate forms
required with respect to dividends and distributions by federal authorities for
all Shareholders, preparing and mailing confirmation forms and statements of
account to Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts, preparing and mailing activity
statements for Shareholders, and providing Shareholder account information; and
(ii) provide a system which will enable the Fund to monitor the total number of
Shares sold in each State.
(c) In addition, the Fund shall (i) identify to Transfer Agent in writing
those transactions and assets to be treated as exempt from blue sky reporting
for each State, and (ii) verify the establishment of transactions for each State
on the system prior to activation and thereafter monitor the daily activity for
each State. The responsibility of Transfer Agent for the Fund's blue sky State
registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the reporting of
such transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of the services in Article
1 may be established from time to time by agreement between the Fund and
Transfer Agent per the attached service responsibility schedule, if any. The
Transfer Agent may at times perform only a portion of these services and the
Fund or its agent may perform these services on behalf of the Fund.
(e) The Transfer Agent shall provide additional services on behalf of the
Fund (i.e., escheatment services) which may be agreed upon in writing between
the Fund and the Transfer Agent.
Article 2 Fees and Expenses
2.01 In consideration of the services provided by the Transfer Agent
pursuant to this Agreement, the Fund agrees to pay Transfer Agent an annual
maintenance fee for each Shareholder account as set forth in Schedule A attached
hereto and made a part hereof. Annual Maintenance Fees and out-of-pocket
expenses and advances identified under Section 2.02 below may be changed from
time to time subject to mutual written agreement between the Fund and Transfer
Agent. Nothing herein shall preclude the assignment of all or any portion of the
foregoing fees and expense reimbursements to any sub-agent contracted by
Transfer Agent.
-2-
<PAGE>
2.02 In addition to the fee paid under Section 2.01 above, the Fund agree
to reimburse Transfer Agent for out-of-pocket expenses or advances incurred by
Transfer Agent for the items set out in Schedule A attached hereto. In addition,
any other expenses incurred by Transfer Agent at the request or with the consent
of the Fund, will be reimbursed by the Fund requesting the same.
2.03 The Fund agree to pay all fees and reimbursable expenses within five
days following the mailing of the respective billing notice. The above fees will
be charged against the Fund's custodian checking account five (5) days after the
invoice is transmitted to the Fund. Postage for mailing of dividends, proxies,
Fund reports and other mailings to all Shareholder accounts shall be advanced to
Transfer Agent at least seven (7) days prior to the mailing date of such
materials.
Article 3 Representations and Warranties of Transfer Agent
The Transfer Agent represents and warrants to the Fund that:
3.01 It is a corporation organized and existing and in good standing
under the laws of the State of Connecticut.
3.02 It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.03 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
3.04 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement.
3.05 It is and shall continue to be a duly registered transfer agent
pursuant to Section 17A(c)(2) of the Securities Exchange Act of
1934.
Article 4 Representations and Warranties of Fund
The Fund represents and warrants to Transfer Agent that:
4.01 All trust proceedings, as the case may be, required to enter into
and perform this Agreement have been undertaken and are in full
force and effect.
4.02 The Fund is an open-end, diversified management investment companies
registered under the Investment Company Act of 1940.
4.03 A registration statement under the Securities Act of 1933 is
currently effective for the Fund and such registration statement
will remain effective, and appropriate state securities law filings
have been made and will continue to be made, with respect to all
Shares being offered for sale.
Article 5 Data Access and Proprietary Information
5.01 The Fund acknowledge that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Transfer Agent as part of the Fund's
ability to access certain Fund-related data ("Customer Data") maintained by the
Transfer Agent on data bases under the control and ownership of the Transfer
Agent or other third party ("Data Access Services") constitute copyrighted,
trade secret, or other proprietary information (collectively, "Proprietary
Information") of substantial value to the Transfer Agent or other third party.
In no event shall Proprietary Information be deemed Customer Data. The Fund
agrees to treat all Proprietary Information as proprietary to the Transfer Agent
and further agrees that it shall not divulge any Proprietary Information to any
person or organization except as may be provided hereunder. Without limiting the
foregoing, the Fund agrees for itself and its employees and agents:
-3-
<PAGE>
(a) to access Customer Data solely from location as may be designated in
writing by the Transfer Agent and solely in accordance with the Transfer
Agent's applicable user documentation;
(b) to refrain from copying or duplicating in any way the
Proprietary Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently
obtained, to inform in a timely manner of such fact and dispose of
such information in accordance with the Transfer Agent's
instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer facility or
other location, except with the prior written consent of the
Transfer Agent;
(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties; and
(f) to honor all reasonable written requests made by the Transfer Agent
to protect at the Transfer Agent's expense the rights of the
Transfer Agent in Proprietary Information at common law, under
federal copyright law and under other federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Article 5. The obligations of this Article shall
survive any earlier termination of this Agreement.
5.02 If the Fund notifies the Transfer Agent that any of the Data Access
Services do not operate in material compliance with the most recently issued
user documentation for such services, the Transfer Agent shall endeavor in a
timely manner to correct such failure. Organizations from which the Transfer
Agent may obtain certain data included in the Data Access Services are solely
responsible for the contents of such data and the Fund agrees to make no claim
against the Transfer Agent arising out of the contents of such third-party data,
including, but not limited to, the accuracy thereof. DATA ACCESS SERVICES AND
ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH
ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE TRANSFER AGENT EXPRESSLY
DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
5.03 If the transactions available to the Fund include the ability to
originate electronic instructions to the Transfer Agent in order to (i) effect
the transfer or movement of cash or Shares or (ii) transmit Shareholder
information or other information (such transactions constituting a "COEFI"),
then in such event the Transfer Agent shall be entitled to rely on the validity
and authenticity of such instruction without undertaking any further inquiry as
long as such instruction is undertaken in conformity with security procedures
established by the Transfer Agent from time to time.
Article 6 Indemnification
6.01 The Transfer Agent shall not be responsible for, and the Fund shall
indemnify and hold Transfer Agent harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liability arising
out of or attributable to:
(a) All actions of Transfer Agent or its agent or subcontractors required
to be taken pursuant to this Agreement, provided that such actions are taken in
good faith and without negligence or willful misconduct.
(b) The lack of good faith, negligence or willful misconduct by the Fund
which arise out of the breach of any representation or warranty of the Fund
hereunder.
(c) The reliance on or use by the Transfer Agent or its agents or
subcontractors of information, records and documents which (i) are received by
Transfer Agent or its agents or subcontractors, and (ii) have been prepared,
maintained
-4-
<PAGE>
or performed by the Fund or any other person or firm on behalf of the Fund
including but not limited to any previous transfer agent or registrar.
(d) The reliance on, or the carrying out by Transfer Agent or its agents
or subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or regulations of
any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
6.02 Transfer Agent shall indemnify and hold each of the Fund harmless
from and against any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liability arising out of or attributable to any action or
failure or omission to act by Transfer Agent, or any sub-agent, as a result of
Transfer Agent's, or such sub-agent's, lack of good faith, negligence or willful
misconduct.
6.03 At any time the Transfer Agent may apply to any officer of the Fund
for instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by Transfer Agent under
this Agreement, and Transfer Agent and its agents or subcontractors shall not be
liable and shall be indemnified by the Fund for any action taken or omitted by
it in reliance upon such instructions or upon the opinion of such counsel. The
Transfer Agent, its agents and subcontractors shall be protected and indemnified
in acting upon any paper or document furnished by or on behalf of the Fund,
reasonably believed to be genuine and to have been signed by the proper person
or persons, or upon any instruction, information, data, records or documents
provided Transfer Agent or its agents or subcontractors by machine readable
input, telex, CRT data entry or other similar means authorized by the Fund, and
shall not be held to have notice of any change of authority of any person, until
receipt of written notice thereof from the Fund. Transfer Agent, its agents and
subcontractors shall also be protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the proper manual or
facsimile signatures of the officers of any Fund, and the proper
countersignature of any former transfer agent or registrar, or of a co-transfer
agent or co-registrar.
6.04 In order that the indemnification provisions contained in this
Article 6 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
6.05 Transfer Agent hereby expressly acknowledges that recourse against
the Fund, if any, shall be subject to those limitations provided by governing
law and the Declaration of Trust of the Fund, as applicable, and agrees that
obligations assumed by the Fund hereunder shall be limited in all cases to the
Fund and its assets. Transfer Agent shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Fund, nor shall the
Transfer Agent seek satisfaction of any obligations from the Trustees or any
individual Trustee of the Fund.
Article 7 Standard of Care
7.01 The Transfer Agent shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy of all
services performed under this Agreement, but assumes no responsibility and shall
not be liable for loss or damage due to errors unless said errors are caused by
its negligence, bad faith, or willful misconduct of that of its employees.
-5-
<PAGE>
Article 8 Covenants
8.01 The Fund shall promptly furnish to Transfer Agent the following:
(a) A certified copy of the resolution of its Trustees authorizing the
appointment of Transfer Agent and the execution and delivery of this Agreement.
(b) A copy of the Declaration of Trust and all amendments thereto.
8.02 The Transfer Agent hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
8.03 The Transfer Agent shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, Transfer Agent agrees that all such records prepared
or maintained by Transfer Agent relating to the services to be performed by
Transfer Agent hereunder are the property of the Fund and will be preserved,
maintained and made available in accordance with such Section and Rules, and
will be surrendered promptly to the Fund on and in accordance with its request.
8.04 The parties agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other person, except
as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records, Transfer Agent will endeavor to notify theFund and to
secure instructions from an authorized officer of the Fund as to such
inspection. Transfer Agent reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that it
may be held liable for the failure to exhibit the Shareholder records to such
person.
Article 9 Termination
9.01 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
9.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, Transfer Agent reserves the right to charge any other
reasonable expenses associated with such termination and/or a charge equivalent
to the average of three (3) months' fees to the terminating Fund.
Article 10 Assignment
10.01 Except as provided in Section 10.03 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
10.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
10.03 The Transfer Agent may, without further consent on the part of any
of the Fund, subcontract for the performance hereof with one or more sub-agents;
provided, however, that Transfer Agent shall be as fully responsible to the Fund
for the acts and omissions of any subcontractor as it is for its own acts and
omissions.
-6-
<PAGE>
Article 11 Amendment
11.01 This Agreement may be amended or modified by a written agreement
executed by the parties and authorized or approved by a resolution of the
Trustees of theFund.
Article 12 Connecticut Law to Apply
12.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Connecticut.
Article 13 Force Majeure
13.01 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
Article 14 Consequential Damages
14.01 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
Article 15 Merger of Agreement
15.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
15.02 This Agreement shall not be merged with or construed in conjunction
with any other current or future agreement between the Fund and Phoenix Equity
Planning Corporation, each and all of which agreements shall at all times remain
separate and distinct.
Article 16 Limitations of Liability of the Trustees and Shareholders
16.01 Notice is hereby given that the Agreement and Declaration of Trust
on file with the Secretary of the Commonwealth of Massachusetts was executed on
behalf of the Trustees as trustees and not individually and that the obligations
of this instrument are not binding upon any of the Trustees or Shareholders
individually but are binding only upon the assets and property of the Fund.
Article 17 Counterparts
17.01 This Agreement may be executed by the parties hereto on any number
of counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
Phoenix Duff & Phelps Institutional Mutual Funds
By:______________________________
Name: Philip R. McLoughlin
Title: President
ATTEST:
By:_____________________________
Name:
Title:
PHOENIX EQUITY PLANNING CORPORATION
By:________________________________
Executive Vice President
ATTEST:
By:_____________________________
Name:
Title:
-8-
<PAGE>
Schedule A
Fee Schedule
Annual Maintenance Fees shall be based on the following formula:
AMFFund = BAMF x SA
where, AMFFund refers to the aggregate Annual Maintenance Fee levied
against the Fund,
BAMF refers to the Base Annual Maintenance Fee levied against the
Fund for each shareholder account, as more particularly described
below, at the basic annual per account rate of $19.25, and
SA refers to the number of Shareholder Accounts subject to the terms
of this Agreement and any and all sub-transfer agent agreements
which presently or hereafter may be entered into by the Transfer
Agent. For the purpose of computing the foregoing, the Transfer
Agent will ascertain the number of Shareholders of each Fund
regardless of whether any such Shares are held in accordance with
any pooled or omnibus accounts or arrangement managed or controlled
by any entity, broker/dealer or sub-transfer agent.
Other Fees
o Omnibus Accounts, Per Transaction $2.50
o Closed Accounts, per Account, per month $0.20
o Check writing Fees:
o Privilege set-up $5.00
o Per Cleared Check $1.00
Out-of-Pocket Expenses
Out-of-pocket expenses include, but are not limited to: confirmation production,
postage, forms, telephone, microfilm, microfiche, stationary and supplies billed
as .1122% of postage costs and expenses incurred at the specific direction of
any Fund. Postage for mass mailings is due seven days in advance of the mailing
date.
February 21, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Ladies and Gentlemen:
I am Vice President and Counsel of Phoenix Duff & Phelps Corporation,
parent company to the advisers and distributor of Phoenix Duff & Phelps
Institutional Mutual Funds (the "Phoenix Fund"), a Massachusetts business trust,
and have represented these entities in connection with the formation of the
Phoenix Fund and the preparation and filing of the Registration Statement or
Form N-1A under which shares of the Phoenix Fund have been registered (the
"Registration Statement"). I am admitted to practice law in the State of
Connecticut and am familiar with Massachusetts law applicable to this entity.
This opinion is furnished in connection with the registration under the
Securities Act of 1933, as amended, of Class X and Class Y shares ("Shares") of
the Phoenix Fund, two classes that will be offered and sold by the Phoenix Fund.
In rendering my opinion, I have examined such documents, records, and
matters of law as I deemed necessary for purposes of this opinion. I have
assumed the genuineness of all signatures of all parties, the authenticity of
all documents submitted as originals, the correctness of all copies, and the
correctness of all facts set forth in the certificates delivered to me and the
correctness of all written or oral statements made to me.
Based upon and subject to the foregoing, it is my opinion that the Shares
that will be issued by the Phoenix Fund, when sold consistent with the terms of
purchase set forth in the Registration Statement, will be legally issued, fully
paid, and nonassessable.
<PAGE>
Securities and Exchange Commission
February 21, 1996
Page 2
My opinion is rendered solely in connection with the Registration
Statement and may not be relied upon for any other purposes without my written
consent. I hereby consent to the use of this opinion as an exhibit to such
Registration Statement.
Yours truly,
/s/ Thomas N. Steenburg
Thomas N. Steenburg
fund\1023
SCHEDULE FOR COMPUTATION OF
PERFORMANCE QUOTATION
Phoenix Duff & Phelps
Institutional Mutual Fund
Growth Stock Account
<TABLE>
<CAPTION>
Beginning Initial Offering Shares Income Shares Dec. 31 95
Date Investment Price Purchased Distribution Reinvested Total Shares
<S> <C> <C> <C> <C> <C> <C> <C>
Dec. 31 85 10 yrs 1,000 10.57128 94.596 0 0 94.596
Dec. 31 90 5 yrs 1,000 22.618942 44.211 0 0 44.211
Dec. 31 94 1 yr 1,000 35.43576 28.22 0 0 28.22
<CAPTION>
Dec. 31 95 Average
Total ending CUM Annual
Beginning Dec. 31 95 redeemable Return Return
Date NAV Value ($) (%) (%)
<S> <C> <C> <C> <C>
Dec. 31 85 47.740831 4,516.09 351.61 16.27
Dec. 31 90 47.740831 2,110.66 111.07 16.11
Dec. 31 94 47.740831 1,347.25 34.73 34.73
</TABLE>
Computation of Average annual return:
R = ((ERV/II)^ (1/n))-1) where,
R = average annual total return
ERV = ending redeemable value
II = initial investment
N = number of years
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
pdp023
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds, hereby
constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940
relating to Phoenix Duff & Phelps Institutional Mutual Funds, and
hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
Feb. 21 /s/ C. Duane Blinn
___________________, 1996 ___________________________________, Trustee
pdp036
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds, hereby
constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940
relating to Phoenix Duff & Phelps Institutional Mutual Funds, and
hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
Feb. 24 /s/ Robert Chesek
___________________, 1996 ___________________________________, Trustee
pdp036
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds, hereby
constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940
relating to Phoenix Duff & Phelps Institutional Mutual Funds, and
hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
Feb. 16 /s/ E. Virgil Conway
___________________, 1996 ___________________________________, Trustee
pdp036
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds, hereby
constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940
relating to Phoenix Duff & Phelps Institutional Mutual Funds, and
hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
Feb. 16 /s/ William W. Crawford
___________________, 1996 ___________________________________, Trustee
pdp036
<PAGE>
POWER OF ATTORNEY
I, the undersigned Treasurer and Principal Financial and
Accounting Officer of Phoenix Duff & Phelps Institutional Mutual
Funds, hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg, or either of them as my true and lawful
attorneys and agents with full power to sign for me in the
capacity indicated below, any or all Registration Statements or
amendments thereto filed with the Securities and Exchange
Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Duff & Phelps
Institutional Mutual Funds, and hereby ratify and confirm my
signature as it may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/ Nancy G. Curtiss
Nancy G. Curtiss
Treasurer
Principal Financial and
Accounting Officer
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<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds, hereby
constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940
relating to Phoenix Duff & Phelps Institutional Mutual Funds, and
hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
Feb. 21 /s/ Harry Dalzell-Payne
___________________, 1996 ___________________________________, Trustee
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<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds, hereby
constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940
relating to Phoenix Duff & Phelps Institutional Mutual Funds, and
hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
Feb. 16 /s/ William N. Georgeson
___________________, 1996 ___________________________________, Trustee
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<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds, hereby
constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940
relating to Phoenix Duff & Phelps Institutional Mutual Funds, and
hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
Feb. 21 /s/ Francis E. Jeffries
___________________, 1996 ___________________________________, Trustee
pdp036
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds, hereby
constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940
relating to Phoenix Duff & Phelps Institutional Mutual Funds, and
hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
Feb. 21 /s/ Leroy Keith, Jr.
___________________, 1996 ___________________________________, Trustee
pdp036
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds, hereby
constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940
relating to Phoenix Duff & Phelps Institutional Mutual Funds, and
hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
Feb. 16 /s/ Everett L. Morris
___________________, 1996 ___________________________________, Trustee
pdp036
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds, hereby
constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940
relating to Phoenix Duff & Phelps Institutional Mutual Funds, and
hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
Feb. 21 /s/ James M. Oates
___________________, 1996 ___________________________________, Trustee
pdp036
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds, hereby
constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940
relating to Phoenix Duff & Phelps Institutional Mutual Funds, and
hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
Feb. 16 /s/ Richard A. Pavia
___________________, 1996 ___________________________________, Trustee
pdp036
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds, hereby
constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940
relating to Phoenix Duff & Phelps Institutional Mutual Funds, and
hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
Feb. 16 /s/ Calvin J. Pedersen
___________________, 1996 ___________________________________, Trustee
pdp036
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds, hereby
constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940
relating to Phoenix Duff & Phelps Institutional Mutual Funds, and
hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
Feb. 21 /s/ P.R. Reynolds
___________________, 1996 ___________________________________, Trustee
pdp036
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds, hereby
constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940
relating to Phoenix Duff & Phelps Institutional Mutual Funds, and
hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
Feb. 21 /s/ Herbert Roth Jr.
___________________, 1996 ___________________________________, Trustee
pdp036
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds, hereby
constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940
relating to Phoenix Duff & Phelps Institutional Mutual Funds, and
hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
Feb. 21 /s/ Richard E. Segerson
___________________, 1996 ___________________________________, Trustee
pdp036
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds, hereby
constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940
relating to Phoenix Duff & Phelps Institutional Mutual Funds, and
hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
Feb. 21 /s/ Lowell P. Weicker, Jr.
___________________, 1996 ___________________________________, Trustee
pdp036
