As filed with the Securities and Exchange Commission on September 30, 1997
Registration No. 811-9140
File No. 33-80057
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 6 [X]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 8 [X]
(Check appropriate box or boxes.)
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Phoenix Duff & Phelps Institutional Mutual Funds
(Exact Name of Registrant as Specified in Charter)
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101 Munson Street, Greenfield, MA 01301
(Address of Principal Executive Offices) (Zip Code)
(800) 814-1897
(Registrant's Telephone Number, including Area Code)
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Thomas N. Steenburg
President, Counsel and Secretary
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115
(Name and Address of Agent for Service)
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It is proposed that this filing will become effective (check appropriate box)
[X] immediately upon filing pursuant to paragraph (b)
[ ] on pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously filed effective amendment.
Registrant has registered an indefinite number of shares under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940. A
Form 24f-2 for Registrant's fiscal year ended December 31, 1996 was filed on
February 27, 1997.
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<PAGE>
This Registration Statement contains two prospectuses and
two Statements of Additional Information.
These are identified as Version A and B of each.
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
(Version B)
Cross Reference Sheet Pursuant to Rule 495
Under the Securities Act of 1933
PART A
Information Required in Prospectus
<TABLE>
<CAPTION>
Item Number Caption
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<S> <C> <C>
1. Cover Page ................................. Cover Page
2. Synopsis ................................. Introduction; Fund Expenses
3. Condensed Financial Information ............ Financial Highlights
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
</TABLE>
PART B
Information required in Statement of Additional Information
<TABLE>
<CAPTION>
Item Number Caption
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<S> <C> <C>
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 Objectives and Policies; Investment
Restrictions; Portfolio Turnover
14. Management of the Registrant ............... Trustees and Officers
15. Control Persons and Principal Holders
of Securities .............................. Trustees and Officers
16. Investment Advisory and Other Services ...... Trustees and Officers; The Investment Advisers;
The Distributor; Distribution Plan
17. Brokerage Allocation ........................ Brokerage Allocation
18. Capital Stock and Other Securities ......... Purchase of Shares; How to Redeem Shares
19. Purchase, Redemption and Pricing of
Securities Being Offered ..................... Determination of Net Asset Value; Purchase of Shares;
How to Redeem Shares
20. Tax Status ................................. Dividends, Distributions and Taxes
21. Underwriter ................................. The Distributor; Distribution Plan
22. Calculation of Yield Quotations of Money
Market Fund ................................. Performance Information
23. Financial Statements ........................ Financial Statements
</TABLE>
<PAGE>
The following pages from Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A filed via EDGAR with the Securities and
Exchange Commission on April 28, 1997 are incorporated herein by reference
thereto:
Part A
Version A Cross Reference Sheet to items required by Rule 495(a)
Prospectus pages 1 through 26
Part B
Version A Statement of Additional Information pages 1 through 26
December 31, 1996 Annual Report
<PAGE>
[FRONT COVER]
P H O E N I X
F U N D S
PROSPECTUS
SEPTEMBER 30, 1997
Phoenix Duff & Phelps
Institutional Mutual Funds
[bullet] REAL ESTATE EQUITY SECURITIES PORTFOLIO
[LOGOTYPE] PHOENIX
DUFF & PHELPS
<PAGE>
PHOENIX REAL ESTATE EQUITY SECURITIES PORTFOLIO
101 Munson Street
Greenfield, MA 01301
(800) 814-1897
PROSPECTUS
September 30, 1997
The Phoenix Real Estate Equity Securities Portfolio (the "Real Estate
Portfolio") seeks as its investment objective capital appreciation and income
with approximately equal emphasis. It intends under normal circumstances to
invest primarily in marketable securities of publicly traded real estate
investment trusts (REITS) and companies that invest in, operate, develop,
and/or manage real estate located in the United States.
Phoenix Duff & Phelps Institutional Mutual Funds (the "Fund") is an
open-end management investment company whose shares are presently offered in
seven separate portfolios. Each portfolio generally operates as a separate fund
with its own investment objectives and policies designed to meet its specific
investment goals. This Prospectus offers only the shares of the Phoenix Real
Estate Equity Securities Portfolio.
This Prospectus sets forth concisely the information about the Real Estate
Portfolio 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 and the
Real Estate Portfolio is contained in the Statement of Additional Information
dated September 30, 1997 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, 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), he 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.
- --------------------------------------------------------------------------------
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
INTRODUCTION ................................. 3
FUND EXPENSES ................................. 4
FINANCIAL HIGHLIGHTS ........................ 5
PERFORMANCE INFORMATION ..................... 6
INVESTMENT OBJECTIVES AND POLICIES ............ 7
INVESTMENT TECHNIQUES AND RELATED RISKS ...... 8
INVESTMENT RESTRICTIONS ..................... 11
MANAGEMENT OF THE FUND ........................ 11
DISTRIBUTION PLAN ........................... 12
HOW TO BUY SHARES ........................... 12
NET ASSET VALUE .............................. 14
HOW TO REDEEM SHARES ........................ 14
DIVIDENDS, DISTRIBUTIONS AND TAXES ............ 15
ADDITIONAL INFORMATION ........................ 16
</TABLE>
2
<PAGE>
INTRODUCTION
This Prospectus describes certain of the shares offered by and the
operations of Phoenix Duff & Phelps Institutional Mutual Funds (the "Fund").
The Fund is an open-end management investment company established as a
Massachusetts business trust pursuant to an Agreement and Declaration of Trust
dated December 4, 1995. The Fund presently consists of seven separate
portfolios. Each portfolio has a different investment objective and invests
primarily in certain types of securities and is designed to meet different
investment needs. This Prospectus pertains only to the Phoenix Real Estate
Equity Securities Portfolio (the "Real Estate Portfolio" or "Portfolio").
The investment adviser for the Real Estate Portfolio is Phoenix Realty
Securities, Inc. (the "Adviser"). The Adviser is a wholly-owned indirect
subsidiary of Phoenix Home Life Mutual Insurance Company. For managing or
directing the investments of the Real Estate Portfolio, the Adviser is entitled
to a basic monthly fee equivalent to 0.50% of the aggregate daily net assets of
such Real Estate Portfolio. In addition, this fee is subject to a performance
adjustment to the extent that Portfolio annual performance differs from
prescribed benchmarks.
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 the
Fund's financial agent and transfer agent. See "The Financial Agent and
Administrator" and "The Custodian and 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 at an annual rate of 0.25% of the Fund's
average daily Class Y Share net assets for expenses incurred in
connection with furnishing shareholder services and maintaining shareholder
accounts. See "Distribution Plan."
Purchase of Shares
The Real Estate Portfolio is currently authorized to offer two classes of
shares on a continuous basis. Class X Shares and Class Y Shares are both
available to Plans (as hereafter defined) and institutional investors which
initially purchase shares whose net asset value equals or exceeds $250,000. 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 the Real Estate
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 the Real Estate Portfolio will achieve its
investment objective. Although the Real Estate Portfolio does not invest
directly in real property, it does invest primarily in securities concentrated
in and directly related to the real estate industry and may therefore be
subject to certain risks associated with the ownership of real estate and with
the real estate industry in general. The Real Estate Portfolio is
non-diversified, and therefore its value is potentially more susceptible to
adverse developments affecting the real estate industry. The risk factors
relevant to investment in the Real Estate 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 expenses and fees that a shareholder
is expected to incur. The expenses and fees set forth in the table were for the
period ended June 30, 1997 and have been pro-rated to reflect a full year of
operation.
<TABLE>
<CAPTION>
Real Estate Portfolio
----------------------------------
Class X Shares Class Y Shares
---------------- ---------------
<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) None None
Maximum Sales Load Imposed on Reinvested Dividends None None
Deferred Sales Load None None
Redemption Fees None None
Exchange Fee None None
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees 0.50% 0.50%
12b-1 Fees None 0.25%(a)
Other Operating Expenses (After Reimbursement)(b) 0.40% 0.40%
------ --------
Total Fund Operating Expenses 0.90% 1.15%
====== ========
</TABLE>
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(a) "12b-1 Fees" represent an asset based sales charge that, for a long
term shareholder, may be higher than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. ("NASD").
(b) Phoenix Realty Securities, Inc. has voluntarily agreed to reimburse or
waive Other Operating Expenses of Class X and Y Shares of the Real Estate
Portfolio, excluding interest, taxes, brokerage fees, commissions and
extraordinary expenses until December 31, 1997 to the extent that such expenses
exceed 0.40% of the average annual net asset values. Other Operating Expenses
for the Real Estate Portfolio are estimated to be 0.88% and 0.88%,
respectively, absent such reimbursement or waiver, and Total Operating Expenses
are estimated to be 1.38% and 1.63% for Class X and Y Shares, respectively,
absent such reimbursement or waiver.
<TABLE>
<CAPTION>
Cumulative Expenses
Paid for the Period
Example* 1 year 3 years
- ----------------------- -------- --------
<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:
Real Estate Portfolio
Class X Shares 9 29
Class Y Shares 12 37
</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."
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following table sets forth certain financial information of the Fund.
The Fund's unaudited Financial Statements and notes thereto are incorporated by
reference in the Statement of Additional Information.The Statement of
Additional Information and the Fund's most recent Semiannual Report (containing
additional information relating to the Portfolio's performance) are available
at no charge upon request by calling (800) 243-4361.
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
- --------------------------------------------------------------------------------
REAL ESTATE PORTFOLIO
<TABLE>
<CAPTION>
Class X Class Y
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From Inception From Inception
5/1/97 to 6/30/97 5/1/97 to 6/30/97
(Unaudited) (Unaudited)
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<S> <C> <C>
Net asset value, beginning of period ...... $ 10.00 $ 10.00
Income from investment operations
Net investment income ..................... 0.14 (1) 0.14 (1)
Net realized and unrealized gain ......... 0.50 0.50
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Total from investment operations ...... 0.64 0.64
----------- -----------
Less distributions
Dividends from net investment income ... -- --
Dividends from net realized gains ...... -- --
----------- -----------
Total distributions .................. -- --
----------- -----------
Change in net asset value .................. 0.64 0.64
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Net asset value, end of period ............ $ 10.64 $ 10.64
=========== ===========
Total return .............................. 6.40 (3) 6.40 (3)
Ratios/supplemental data:
Net assets, end of period (thousands) ...... $ 10,699 $ 107
Ratio to average net assets of:
Operating expenses ..................... 0.90%(2) 1.15%(2)
Net investment income .................. 8.73%(2) 8.26%(2)
Portfolio turnover ........................ 2%(3) 2%(3)
Average commission rate paid ............... $ 0.0500 (4) $ 0.0500 (4)
</TABLE>
- -----------
(1) Includes reimbursement of operating expenses by investment adviser of
$0.04 and $0.04, respectively, computed using average shares outstanding.
(2) Annualized.
(3) Not annualized.
(4) A fund is required to disclose its average commission rate per share for
securities trades on which commissions are charged. This rate generally
does not reflect mark-ups, mark-downs or spreads on shares traded on a
principal basis.
5
<PAGE>
PERFORMANCE INFORMATION
The Fund may, from time to time, include the performance history of the
Real Estate Portfolio (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 in
accordance with formulas specified by the Securities and Exchange Commission.
Standardized quotations of average annual total return for each class of
shares 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 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 (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.
Yield 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.
The Portfolio may from time to time include in advertisements information
containing total return and 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, the Portfolio or a
Class of the 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, REIT Watch, The New
York Times, Consumer Reports, Registered Representative, Financial Planning,
Financial Services Weekly, Financial World, U.S. News and World Report,
Standard and Poors The Outlook, and Personal Investor. The 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 Composite Stock
Price Index (the "S&P 500"), Consumer Price Index, Lehman Brothers Corporate
Index and Lehman Brothers T-Bond Index. The S&P 500 is a commonly quoted
measure of stock market performance and represents common stocks of companies
of varying sizes segmented across 90 different industries which are listed on
the New York Stock Exchange, the American Stock Exchange or traded over the
NASDAQ National Market System.
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 compare the
Portfolio's equity or bond return figure to well-known indices of market
performance including but not limited to the S&P 500, Dow Jones Industrial
Average, and Salomon Brothers Corporate and Government Bond Indices, Russell
2000, Lehman Brothers Bond Index, Wilshire Real Estate Securities Index, NAREIT
Equity Total Return Index, NAREIT Combined Index, and NCREIF Property Index.
The NCREIF Property Index is produced by the National Council of Real
Estate Investment Fiduciaries (NCREIF) and measures the historical performance
of income-producing properties owned by commingled funds on behalf of qualified
pension and profit-sharing trusts, or owned directly by these trusts and
managed on a separate account basis. Properties in the NCREIF Property Index
are unleveraged and the figures represent gross returns before advisory fees.
The NAREIT Combined Index and NAREIT Equity Total Return Index are published by
the National Association of Real Estate Investment Trusts (NAREIT). The NAREIT
Combined Index is comprised of all publicly-traded equity, mortgage or hybrid
REITs. The NAREIT Equity Total Return Index is comprised of all publicly-traded
Equity REITs. The Wilshire Securities Index measures the investment
characteristics of publicly traded real estate securities such as REITs, real
estate operating companies and partnerships.
Performance information for the Portfolio (and each Class thereof)
reflects only the performance of a hypothetical investment in a Class X Shares
or Class Y Shares of the 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
the 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. 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 the Portfolio and a comparison of
that performance to a securities market index.
6
<PAGE>
INVESTMENT OBJECTIVES
AND POLICIES
The Real Estate Portfolio seeks as its investment objective capital
appreciation and income with approximately equal emphasis. It intends under
normal circumstances to invest primarily in marketable securities of publicly
traded real estate investment trusts (REITs) and stocks of companies that are
principally engaged in the real estate industry. Under normal circumstances,
the Real Estate Portfolio intends to invest at least 75% of the value of its
assets in these securities. The Portfolio has adopted a policy to concentrate
its investments in the real estate industry.
The investment objective of the Real Estate Portfolio is a fundamental
policy which may not be changed without the approval of a vote of a majority of
the outstanding shares of the Real Estate Portfolio. Risks are inherent in the
ownership of any security and there can be no assurance that the Real Estate
Portfolio will achieve its investment objective. The investment policies of the
Real Estate 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
portfolio turnover rate for the Real Estate Portfolio is not anticipated to
exceed 75%.
Policies and limitations are considered at the time of purchase and the
sale of instruments is not required in the event of a change in circumstances.
REITs are pooled investment vehicles which invest primarily in income
producing real estate or real estate related loans or interests. Generally,
REITs can be classified as equity REITs, mortgage REITs or hybrid REITs. Equity
REITs invest the majority of their assets directly in real property and derive
income primarily from the collection of rents. Equity REITs can also realize
capital gains by selling properties that have appreciated in value. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
some income from the collection of interest payments. Hybrid REITs combine the
characteristics of both equity REITs and Mortgage REITs. The Real Estate
Portfolio intends to emphasize investment in equity REITs.
In determining whether an issuer is "principally engaged" in the real
estate industry, Adviser seeks companies which derive at least 50% of their
gross revenues or net profits from the ownership, development, construction,
financing, management or sale of commercial, industrial or residential real
estate. The equity securities of real estate companies considered for purchase
by the Real Estate Portfolio will consist of shares of beneficial interest,
marketable common stock, rights or warrants to purchase common stock, and
securities with common stock characteristics such as preferred stock and debt
securities convertible into common stock.
The Real Estate Portfolio may also invest up to 25% of its total assets in
(a) marketable debt securities of companies principally engaged in the real
estate industry, (b) mortgage-backed securities such as mortgage pass-through
certificates, real estate mortgage investment conduit ("REMIC") certificates
and collateralized mortgage obligations ("CMOs") (see "Investment Techniques
and Related Risks"); or (c) short-term investments.
The Real Estate Portfolio may invest in debt securities only if, at the
date of investment, they are rated within the four highest grades as determined
by Moody's Investors Services, Inc. (Aaa, Aa, A or Baa) or by Standard & Poor's
Corporation (AAA, AA, A or BBB) or, if not rated or rated under a different
system, are judged by Adviser to be of equivalent quality to debt securities so
rated. Securities rated Baa or BBB are medium grade investment obligations that
may have speculative characteristics. Changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments in the case of such obligations than is the case for
higher grade securities. The Real Estate Portfolio may, but is not obligated
to, dispose of debt securities whose credit quality falls below investment
grade. Unrated debt securities may be less liquid than comparable rated debt
securities and may involve somewhat greater risk than rated debt securities.
For temporary defensive purposes (as when market conditions in real estate
securities are extremely adverse such that Adviser believes there are
extraordinary risks associated with investment therein), the Real Estate
Portfolio may invest up to 100% of its total assets in short-term investments
such as money market instruments consisting of securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities; repurchase
agreements; certificates of deposit and bankers' acceptances issued by banks or
savings and loan associations having net assets of at least $500 million as of
the end of their most recent fiscal year; high-grade commercial paper rated, at
time of purchase, in the top two categories by a national rating agency or
determined to be of comparable quality by Adviser at the time of purchase.
Risk Considerations
The Real Estate Portfolio is non-diversified under the federal securities
laws. As a non-diversified portfolio, there is no restriction under the 1940
Act on the percentage of assets that may be invested at any time in the
securities of any one issuer. To the extent that the Real Estate Portfolio is
not fully diversified, it may be more susceptible to adverse economic,
political or regulatory developments affecting a single issuer than would be
the case if it were more broadly diversified. In addition, investments by the
Real Estate Portfolio in securities of companies providing mortgage servicing
will be subject to the risks associated with refinancings and their impact on
servicing rights.
Although the Real Estate Portfolio does not invest directly in real
estate, it does invest primarily in real estate securities and accordingly
concentrates its investment in the real estate industry. Accordingly, the value
of shares of the Real Estate Portfolio will fluctuate in response to changes in
economic conditions within the real estate industry. Risks associated with the
direct ownership of real estate and with the real estate
7
<PAGE>
industry in general include, among other things, possible declines in the value
of real estate; risks related to general and local economic conditions;
possible lack of availability of mortgage funds; over-building; extended
vacancies of properties; increases in competition, property taxes and operating
expenses; changes in zoning laws; costs resulting from the clean-up of, and
liability to third parties for damages resulting from, environmental problems;
casualty or condemnation losses; uninsured damages from flood, earthquakes or
other natural disasters; limitations on and variations in rents; dependency on
property management skill; the appeal of properties to tenants; and, changes in
interest rates. The Real Estate Portfolio may also invest in mortgage-backed
securities as described above. The risks associated with such securities are
described in the section "Mortgage-Related Securities."
Investing in REITs involves certain unique risks in addition to those
risks associated with investing in the real estate industry in general. Equity
REITs may be affected by changes in the value of the underlying property owned
by the REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, and
are subject to the risks of financing projects. As the Real Estate Portfolio
may invest in new or unseasoned REIT issuers, it may be difficult or impossible
for Adviser to necessarily ascertain the value of each of such REIT's
underlying assets, management capabilities and growth prospects. In addition,
REITs are subject to heavy cash flow dependency, default by borrowers,
self-liquidation, and the possibilities of failing to qualify for the exemption
from tax on distributed income under the Internal Revenue Code of 1986, as
amended (the "Code") and failing to maintain their exemptions from the 1940
Act. REITs whose underlying assets include long-term health care properties,
such as nursing, retirement and assisted living homes, may be impacted by
federal regulations concerning the health care industry. The Real Estate
Portfolio will indirectly bear its proportionate share of any expenses paid by
REITs in which it invests in addition to the expenses paid by the Real Estate
Portfolio itself.
REITs (especially mortgage REITs) are subject to interest rate risks. When
interest rates decline, the value of a REIT's investment in fixed rate
obligations usually rises. Conversely, when interest rates rise, the value of a
REIT's investment in fixed rate obligations can be expected to decline. In
contrast, as interest rates on adjustable rate mortgage loans are reset
periodically, yields on a REIT's investment in such loans will gradually align
themselves to reflect changes in market interest rates, causing the value of
such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
In addition, investing in REITs involves risks similar to those associated
with investing in small capitalization companies. REITs may have limited
financial resources, may trade less frequently and in a limited volume and may
be more subject to abrupt or erratic price movements than larger capitalization
stocks included in the S&P 500.
The Portfolio commenced operations on May 1, 1997 based upon an initial
capitalization of $5 million provided by Phoenix Home Life. The ability of the
Portfolio to raise additional capital for investment purposes may directly
affect the spectrum of portfolio holdings and performance.
INVESTMENT TECHNIQUES AND RELATED RISKS
In addition to the investment policies described above, the Real Estate
Portfolio may utilize the following investment practices or techniques:
"When issued" and "delayed delivery" Securities
The Real Estate Portfolio may purchase and sell securities on a "when
issued" and "delayed delivery" basis. The Real Estate Portfolio accrues no
income on such securities until the Real Estate 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 the Real Estate Portfolio relies on the
buyer or seller to consummate the transaction, failure by the other party to
complete the transaction may result in the Portfolio missing the opportunity of
obtaining a price or yield considered to be advantageous. The Real Estate
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
The Real Estate 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 33% of the value of the total assets (taken
at market value) of the 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 Real Estate Portfolio. The Real Estate 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 Real Estate 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 Real Estate 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.
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Illiquid Securities
The Real Estate Portfolio may invest up to 15% of its net assets, taken at
market values at the time of investment, in "illiquid securities." For this
purpose, illiquid securities include any securities for which market quotations
are not readily available, or other securities which are not deemed liquid
pursuant to procedures adopted by the Trustees. Such investments may include
repurchase agreements with deemed maturities in excess of seven days, certain
private placements and certain Rule 144A Securities (as discussed below). 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, the Real Estate
Portfolio may experience difficulties in valuing or disposing of these
securities. Pursuant to procedures adopted by the Trustees, restricted
securities, including Rule 144A Securities, can be presumptively deemed to be
liquid if the portfolio manager can regularly obtain two consistent broker
quotes for the security.
Short-Term Instruments
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 the Real
Estate Portfolio 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 $500 million.
Mortgage-Related Securities
The Real Estate Portfolio 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 the Real Estate Portfolio 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 the Real Estate Portfolio purchases 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 the Real Estate Portfolio 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, the Real Estate Portfolio 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 the Portfolio
will receive when these amounts are reinvested.
The Real Estate Portfolio may also invest up to 25% of its total assets in
mortgage-backed securities such as mortgage pass-through certificates, real
estate mortgage investment conduit ("REMIC") certificates and collateralized
mortgage obligations ("CMOs"). CMOs are derivative securities or "derivatives"
and are hybrid instruments with characteristics of both mortgage-backed and
mortgage pass-through securities. Similar to a bond, interest and pre-paid
principal on a CMO are paid, in most cases, semiannually. CMOs may be
collateralized by whole mortgage loans but are more typically collateralized by
portfolios of mortgage pass-through securities guaranteed by Government
National Mortgage Association (GNMA) or the Federal National Mortgage
Association. CMOs are structured into multiple classes, with each class bearing
a different stated maturity. Monthly payments of principal, including
prepayments, are first returned to investors holding the shortest maturity
class; investors holding the longer maturity classes receive principal only
after the first class has been retired. REMICs are similar to CMOs and are
fixed pools of mortgages with multiple classes of interests held by investors.
The Real Estate Portfolio may also invest in pass-through securities that
are derived from mortgages. A pass-through security is formed when mortgages
are pooled together and undivided interests in the pool or pools are sold. The
cash flow from the mortgages is passed through to the holders of the securities
in the form of periodic payments of interest, principal and prepayments (net of
a service fee).
The Real Estate Portfolio may purchase pass-through securities at a
premium or at a discount. The values of pass-through securities in which the
Real Estate Portfolio may invest will fluctuate with changes in interest rates.
The value of such securities varies inversely with interest rates, except that
when interest rates decline, the value of pass-through securities may not
increase as much as other debt securities because of the prepayment feature.
Changes in the value of such securities will
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not affect interest income from those obligations but will be reflected in the
Real Estate Portfolio's net asset value.
A particular risk associated with pass-through securities involves the
volatility of prices in response to changes in interest rates, or prepayment
risk. Prepayment rates are important because of their effect on the yield and
price of securities. Prepayments occur when the holder of an individual
mortgage prepays the remaining principal before the mortgage's scheduled
maturity date. As a result of the pass-through of prepayments of principal on
the underlying securities, mortgage-backed securities are often subject to more
rapid prepayment of principal than their stated maturity would indicate.
Although the pattern of prepayments is estimated and reflected in the price
paid for pass-through securities at the time of purchase, the actual prepayment
behavior of mortgages cannot be known at that time. Therefore, it is not
possible to predict accurately the realized yield or average life of a
particular issue of pass-through securities. Prepayments that occur faster than
estimated adversely affect yields for pass-throughs purchased at a premium
(that is, a price in excess of principal amount) and may cause a loss of
principal because the premium may not have been fully amortized at the time the
obligation is repaid. The opposite is true for pass-throughs purchased at a
discount. Furthermore, the proceeds from prepayments usually are reinvested at
current market rates, which may be higher than, but are usually lower than, the
rates earned on the original pass-through securities. Prepayments on a pool of
mortgage loans are influenced by a variety of economic, geographic, social and
other factors, including changes in mortgagors' housing needs, job transfers,
unemployment, mortgagors' net equity in the mortgaged properties and servicing
decisions. Generally, however, prepayments on fixed rate mortgage loans will
increase during a period of falling interest rates and decrease during a period
of rising interest rates. Mortgage-backed securities may decrease in value as a
result of increases in interest rates and may benefit less than other fixed
income securities or decline in value from declining interest rates because of
risk of prepayment.
The Real Estate Portfolio may also invest in securities issued by
corporate and other special purpose entities in which the source of income
payments on the securities is a dedicated pool of assets ("Asset-Backed
Securities"). The securitization techniques used for Asset-Backed Securities
are similar to those used for Mortgage-Related Securities. The collateral for
these securities has included home equity loans, automobile and credit card
receivables, boat loans, computer leases, airplane leases, mobile home loans,
recreational vehicle loans and hospital and other account receivables.
Financial Futures and Related Options
The Real Estate Portfolio 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. The
Real Estate Portfolio 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.
The Real Estate Portfolio will engage in transactions in financial futures
contracts and related options only for hedging purposes and not for
speculation. In addition, the Real Estate Portfolio will not purchase or sell
any financial futures contract or related option if, immediately thereafter,
the sum of the margin deposits initially committed with respect to the
Portfolio's existing futures and related options positions and the premiums
paid for related options would exceed 5% of the market value of the Portfolio's
total assets. At the time of purchase of a futures contract or a call option on
a futures contract, any asset, including equity securities and non-investment
grade debt so long as the asset is liquid, unencumbered and marked to market
daily equal to the market value of the futures contract minus the Real Estate
Portfolio's initial margin deposit with respect thereto will be deposited in a
pledged account with the Portfolio 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 the Real Estate Portfolio's 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 the Real Estate Portfolio will lose the
premium it paid. There may also be circumstances when the purchase of an option
on a financial futures contract would result in a loss to the Real Estate
Portfolio 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.
Repurchase Agreements
The Real Estate Portfolio may agree to purchase portfolio securities
subject to the seller's agreement to repurchase them at a mutually agreed upon
date and price. The Real Estate Portfolio 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,
the Real Estate Portfolio does not presently intend to enter into repurchase
agreements with deemed maturities in excess of seven days. If in the future the
Real Estate Portfolio were to enter into repurchase agreements with deemed
maturities in excess of seven days, the Portfolio would do so only if such
investment, together with other illiquid securities, did not exceed 15% of the
value of the Portfolio's net assets. Default or bankruptcy of the seller would,
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<PAGE>
however, expose the Real Estate 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.
Private Placements and Rule 144A Securities
The Real Estate Portfolio may purchase securities which have been
privately issued or are issued by newly established emerging entities and are
subject to legal restrictions on resale or which are issued to qualified
institutional investors under special rules adopted by the Securities and
Exchange Commission ("SEC"). Such securities may offer higher yields than
comparable publicly traded securities. Such securities ordinarily can be sold
by the Portfolio in secondary market transactions to certain qualified
investors pursuant to rules established by the SEC, in privately negotiated
transactions to a limited number of purchasers or in a public offering made
pursuant to an effective registration statement under the Securities Act of
1933 as amended (the "1933 Act"). Public sales of such securities by the
Portfolio may involve significant delays and expense. Private sales often
require negotiation with one or more purchasers and may produce less favorable
prices than the sale of similar unrestricted securities. Public sales generally
involve the time and expense of the preparation and processing of a
registration statement under the 1933 Act (and the possible decline in value of
the securities during such period) and may involve the payment of underwriting
commissions. In some instances, the Portfolio may have to bear certain costs of
registration in order to sell such shares publicly. Pursuant to procedures
adopted by the Trustees, restricted securities, including Rule 144A Securities,
can be presumptively deemed to be liquid if the portfolio manager can regularly
obtain two consistent broker quotes for the security.
INVESTMENT RESTRICTIONS
The Real Estate Portfolio has adopted fundamental policies, which may not
be changed without the requisite shareholder vote, with regard to the issuance
of senior securities, short sales, the borrowing of money, the underwriting of
securities of other issuers, concentration of investments in particular
industries (other than real estate), the purchase and sale of real estate,
commodities and futures contracts, and the making of loans. These restrictions
are more particularly described in the Statement of Additional Information.
MANAGEMENT OF THE FUND
The Fund is a mutual fund, known as an open-end, 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 seven portfolios. Two classes of shares are currently offered by each
portfolio.
The Adviser
The investment adviser to the Real Estate Portfolio is Phoenix Realty
Securities, Inc., which is located at 38 Prospect Street, Hartford, Connecticut
06115. The Adviser was formed in 1994 as an indirect wholly-owned subsidiary of
Phoenix Home Life Mutual Insurance Company ("Phoenix Home Life"). As of
December 31, 1996, the Adviser had approximately $1.4 billion in assets under
management. Phoenix Home Life is a mutual insurance company engaged in the
insurance and investment businesses. Phoenix Home Life's principal place of
business is located at One American Row, Hartford, Connecticut.
The Adviser continuously furnishes an investment program for the Real
Estate Portfolio and manages the investment and reinvestment of the assets
subject at all times to the supervision of the Trustees. The Adviser is
responsible for monitoring the services provided to the Portfolio. Under the
terms of the Investment Advisory Agreement, the Adviser is entitled to a
prescribed fee.
For managing, or directing the management, of the investments of the Real
Estate Portfolio, the Adviser is entitled to a basic monthly fee at the annual
rate of .50% of the average daily net asset value of the Portfolio. Such basic
monthly fee is subject to a performance adjustment based on the Portfolio's
annual performance as compared to certain prescribed benchmarks. The basic
monthly fee will therefore increase or decrease by .005% for every .10% after
the first .50% in which Portfolio performance on a rolling twelve month basis
is higher or lower than that of the NAREIT Equity Total Return Index. In no
event will the increase or decrease in any one 12-month period exceed .10%. The
adjustment shall be computed and paid monthly. The Adviser is not eligible for
the performance adjustment until the 13th month after inception of the
Portfolio.
The Portfolio Managers
Barbara Rubin and Michael Schatt are responsible for managing the assets
of the Real Estate Portfolio. Ms. Rubin, President of the Adviser, is also
Vice President and Co-Portfolio Manager for the Real Estate Securities Series
of The Phoenix Edge Series Fund and the Real Estate Securities Portfolio of
Phoenix Multi-Portfolio Fund. She has over 21 years real estate experience and
has been associated with Phoenix Home Life for the past 15 years. Michael
Schatt is employed as Managing Director of Phoenix Duff & Phelps Corporation,
an affiliate of the Adviser, and is a Senior Vice President of the Adviser and
Vice President of Duff & Phelps Investment Management Co., an affiliate of the
Adviser. His current responsibilities include managing the real estate
investment securities of Duff & Phelps Utilities Income Inc. Previously he
served as a Director of the Real Estate Advisory Practice for Coopers &
Lybrand, LLC and has over 16 years experience in the real estate industry.
The Financial Agent and Administrator
Equity Planning serves as financial agent of the Fund and, as such,
provides bookkeeping and pricing services and certain other ministerial
functions. As compensation, Equity
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Planning is entitled to a fee, payable monthly and based upon (a) the average
of the aggregate daily net asset values of the Portfolio, at the following
incremental annual rates:
<TABLE>
<S> <C>
First $100 million .05%
$100 million to $300 million .04%
$300 million through $500 million .03%
Greater than $500 million .015%
</TABLE>
(b) a minimum fee of $70,000; and (c) an annual fee of $12,000 for each
class of shares beyond one.
Duff & Phelps Investment Management Co. ("DPM") serves as administrator
for the Portfolio, and as such, facilitates and provides administrative
services for the Portfolio. DPM is a subsidiary of Phoenix Duff & Phelps
Corporation, which is an indirect less than wholly-owned subsidiary of Phoenix
Home Life. As compensation, under an Administration Agreement, DPM receives a
fee, computed daily and payable monthly, at the annual rate of 0.15% of the
average daily net assets of the Fund.
The Custodian and Transfer Agent
The custodian of the assets of the Real Estate Portfolio is State Street
Bank and Trust Company, P.O. Box 1713, Boston, Massachusetts 02101.
Equity Planning serves as transfer agent for the Fund (the "Transfer
Agent") for which it is paid $14.95 plus certain 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 Conduct Rules 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, past 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.
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. Michael E.
Haylon, a director of Equity Planning, is an officer of the Fund. G. Jeffrey
Bohne, Nancy G. Curtiss, William E. Keen, III, William R. Moyer, Leonard J.
Saltiel, and Thomas N. Steenburg 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 of a service fee to
Equity Planning in an amount equal to 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. 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 then in office who
are not interested persons.
HOW TO BUY SHARES
The Fund currently issues two classes of shares of the Real Estate
Portfolio. Both Class X Shares and Class Y Shares are each available to Plans
(as hereafter defined) and institutional investors which initially purchase
shares of the Fund whose net asset value equals or exceeds $250,000. "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.
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<PAGE>
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. Shares purchased
will be recorded in electronic book-entry form by the Transfer Agent. 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) trust companies,
bank trust departments, broker-dealers 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 (ii) 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 Shares.
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.
Market Timer Restrictions
Because excessive trading can hurt Fund performance and harm shareholders,
the Fund reserves the right to temporarily or permanently terminate exchange
privileges or reject any specific order from anyone whose transactions seem to
follow a timing pattern, including those who request more than one exchange out
of a fund within any 30 day period. The Distributor has entered into agreements
with certain market timer entities permitting them to exchange their clients'
shares by telephone. These privileges are limited under those agreements. The
Distributor has the right to reject or suspend these privileges upon reasonable
notice.
Telephone Exchange Privileges
Unless a shareholder elects in writing not to participate in the Telephone
Exchange Privilege, shares 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
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<PAGE>
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, in
order to exchange shares the shareholder must submit a written request to State
Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301, ATTN:
Phoenix Duff & Phelps Institutional Mutual 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.
NET ASSET VALUE
The net asset value per share of the Real Estate Portfolio is determined
as of the close of regular trading of the New York Stock Exchange (the
"Exchange") on days when the Exchange is open for trading. The net asset value
per share of the Real Estate Portfolio is determined by adding the values of
all securities and other assets of the Portfolio, subtracting liabilities, and
dividing by the total number of outstanding shares of the Portfolio. 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.
The Portfolio's investments are valued at market value or, where market
quotations are not available, at fair value as determined in good faith by the
Trustees or their delegates. Foreign and domestic debt securities (other than
short-term investments) are valued on the basis of broker quotations or
valuations provided by a pricing service approved by the Trustees when such
prices are believed to reflect the fair value of such securities. Foreign and
domestic equity securities are valued at the last sale price or, if there has
been no sale that day, at the last bid price, generally. Since the Trust does
not price securities on weekends or United States national holidays, the net
asset value of a Portfolio's foreign assets may be significantly affected on
days when the investor has no access to the Trust. Short-term investments
having a remaining maturity of less than sixty-one days are valued at amortized
cost, which the Trustees have determined approximates market value. For further
information about security valuations, see the Statement of Additional
Information.
HOW TO REDEEM SHARES
Any holder of shares of the Real Estate 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 request must
make reference to the name of the Real Estate 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, the Fund maintains a continuous offer to repurchase its
shares, and shareholders may normally sell their shares through securities
dealers, brokers or agents who may charge customary commissions or fees 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 written request in proper
form; 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 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,
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<PAGE>
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 or may
be suspended temporarily and a shareholder should submit a written redemption
request, as described above.
If the amount of the redemption is $500 or more, the proceeds may 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 orders
received and accepted by the Transfer Agent on any day when the Transfer Agent
is open for business will be entered at the next determined net asset value.
However telephone redemption orders received and accepted by the Transfer Agent
after the close of trading hours on the Exchange will be executed on the
following business day. 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 classes of shares of the Portfolio 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.
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
The Real Estate Portfolio will be treated as a separate mutual fund for
federal income tax purposes. The Real Estate Portfolio intends to elect to be
taxed as a regulated investment company ("RIC") and qualify as such annually
under Subchapter M of the Code. As a RIC, the Real Estate Portfolio will not be
subject to federal income tax on its ordinary income and net realized gains
distributed to its shareholders. The Real Estate 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 Real Estate Portfolio and dispositions of shares of the Real
Estate 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
15
<PAGE>
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 the Real Estate
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
Real Estate Portfolio.
Dividends from net investment income for the Real Estate Portfolio will be
accrued and paid quarterly. Dividends from net realized capital gains, if any,
will be declared and paid annually for the Real Estate Portfolio. Dividends and
distributions with respect to the shares of any class of the Real Estate
Portfolio will be payable in full and fractional shares of such class of the
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 the Real Estate 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 Real Estate Portfolio and its
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 seven
different portfolios, each offering two classes. Holders of shares of the Real
Estate Portfolio have equal rights with regard to voting, redemptions,
dividends, distributions, and liquidations with respect to the Real Estate
Portfolio (provided that Class Y Shares of the Real Estate Portfolio bear
higher distribution fees and pay correspondingly lower dividends per share than
Class X Shares). Shareholders of all portfolios vote on the election of
Trustees. On matters affecting the Real Estate Portfolio (such as approval of
an investment advisory agreement or a change in fundamental investment
policies), a separate vote of the Real Estate Portfolio is required. On matters
affecting an individual class (such as approval of matters relating to the
Class Y distribution plan), a separate vote of that class is required. Shares
of each portfolio are fully paid, nonassessable, redeemable and fully
transferable when they are issued. Shares do not have cumulative voting rights
conversion, preemptive rights or subscription rights.
The assets received by the Fund for the issue or sale of shares of each
portfolio and all income, earnings, profits and proceeds thereof, are allocated
to such portfolio (and class if applicable) subject only to the rights of
creditors, and constitute the underlying assets of such portfolio (and class if
applicable). The underlying assets of each portfolio are required to be
segregated on the books of account, and are to be charged with the expenses in
respect to such portfolio and with a share of the general expenses of the Fund.
Any general expenses of the Fund not readily identifiable as belonging to a
particular portfolio or class will be allocated by or under the direction of
the Trustees as they determine fair and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a Massachusetts business trust such as the Fund may be
personally liable for debts or claims against the Fund. The Declaration of
Trust provides that shareholders shall not be subject to any personal liability
for the acts or obligations of the Fund and that every written agreement,
undertaking or obligation made or issued by the Fund shall contain a provision
to that effect. The Declaration of Trust provides for indemnification out of
the trust property for all losses and expenses of any shareholder held
personally liable for the obligations of the Fund. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability, which
is considered remote, is limited to circumstances in which the Fund itself
would be unable to meet its obligations.
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.
16
<PAGE>
BACKUP WITHHOLDING INFORMATION
Step 1. Please make sure that the social security number or taxpayer
identification number (TIN) which appears on the Application complies
with the following guidelines:
Account Type Give Social Security Number or Tax Identification Number
of:
<TABLE>
<S> <C>
Individual Individual
Joint (or Joint Tenant) Owner who will be paying tax
Uniform Gifts to Minors Minor
Legal Guardian Ward, Minor or Incompetent
Sole Proprietor Owner of Business (also provide owner's name)
Trust, Estate, Pension Plan Trust Trust, Estate, Pension Plan Trust (not personal TIN of fiduciary)
Corporation, Partnership,
Other Organization Corporation, Partnership, Other Organization
Broker/Nominee Broker/Nominee
</TABLE>
Step 2. If you do not have a TIN, you must obtain Form SS-5 (Application for
Social Security Number) or Form SS-4 (Application for Employer
Identification Number) from your local Social Security or IRS office and
apply for one. Write "Applied For" in the space on the application.
Step 3. If you are one of the entities listed below, you are exempt from backup
withholding.
[bullet] A corporation
[bullet] Financial institution
[bullet] Section 501(a) exempt organization (IRA, Corporate Retirement
Plan, 403(b), Keogh)
[bullet] United States or any agency or instrumentality thereof
[bullet] A State, the District of Columbia, a possession of the United
States, or any subdivision or instrumentality thereof
[bullet] International organization or any agency or instrumentality
thereof
[bullet] Registered dealer in securities or commodities registered in the
U.S. or a possession of the U.S.
[bullet] Real estate investment trust
[bullet] Common trust fund operated by a bank under section 584(a)
[bullet] An exempt charitable remainder trust, or a non-exempt trust
described in section 4947(a)(1)
[bullet] Regulated Investment Company
If you are in doubt as to whether you are exempt, please contact the Internal
Revenue Service.
Step 4. IRS Penalties--If you do not supply us with your TIN, you will be
subject to an IRS $50 penalty unless your failure is due to reasonable
cause and not willful neglect. If you fail to report interest, dividend
or patronage dividend income on your federal income tax return, you will
be treated as negligent and subject to an IRS 5% penalty tax on any
resulting underpayment of tax unless there is clear and convincing
evidence to the contrary. If you falsify information on this form or make
any other false statement resulting in no backup withholding on an
account which should be subject to a backup withholding, you may be
subject to an IRS $500 penalty and certain criminal penalties including
fines and imprisonment.
- -----------
This Prospectus sets forth concisely the information about the Phoenix Duff &
Phelps Institutional Mutual Funds (the "Fund") which you should know before
investing. Please read it carefully and retain it for future reference.
The Fund has filed with the Securities and Exchange Commission a Statement of
Additional Information, dated September 30, 1997. The Statement contains more
detailed information about the Fund and is incorporated into this Prospectus by
reference. You may obtain a free copy of the Statement by writing the Fund c/o
Phoenix Equity Planning Corporation, 100 Bright Meadow, P.O. Box 2200, Enfield,
Connecticut 06083-2200.
Financial Information relating to the Fund is contained in the Semiannual
Report to Shareholders for the period ended June 30, 1997 and is incorporated
into the Statement of Additional Information by reference.
[recycle symbol] Printed on recycled paper using soybean ink
<PAGE>
[back cover]
[logo]PHOENIX
REALTY
PDP 2003 (9/97)
<PAGE>
PHOENIX REAL ESTATE EQUITY SECURITIES PORTFOLIO
101 Munson Street, Greenfield, Massachusetts 01301
(800) 814-1897
Statement of Additional Information
September 30, 1997
This Statement of Additional Information is not a prospectus but expands
upon and supplements the information contained in the current prospectus of the
Real Estate Equity Securities Portfolio of the Phoenix Duff & Phelps
Institutional Mutual Funds (the "Fund"), dated September 30, 1997 and should be
read in conjunction with it. A copy 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 .................................... 2
INVESTMENT OBJECTIVES AND POLICIES (7) ...... 2
INVESTMENT RESTRICTIONS (11) .................. 5
PERFORMANCE INFORMATION (6) .................. 6
PORTFOLIO TURNOVER ........................... 7
SERVICES OF THE ADVISER (11) ............... 7
SERVICES OF THE ADMINISTRATOR ............... 8
BROKERAGE ALLOCATION ........................ 8
DETERMINATION OF NET ASSET VALUE (14) ......... 9
PURCHASE OF SHARES (12) ..................... 9
DIVIDENDS, DISTRIBUTIONS AND TAXES (15) ...... 10
THE DISTRIBUTOR (12) ........................ 10
DISTRIBUTION PLAN (12) ........................ 11
TRUSTEES AND OFFICERS ........................ 12
ADDITIONAL INFORMATION ..................... 19
*Numbers in parenthesis are
cross-references to related pages of the Prospectus.
</TABLE>
PDP 2003B (9/97) 1
<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.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of the Phoenix Real Estate Equity
Securities Portfolio (the "Real Estate Portfolio" or "Portfolio") are described
in the "Investment Objectives and Policies" and "Investment Techniques and
Related Risks" sections of the Prospectus.
The investment objective of the Real Estate Portfolio is deemed to be a
fundamental policy and may not be changed without the approval of the
shareholders of the Portfolio. Investment restrictions described in this
Statement of Additional Information are fundamental policies and may not be
changed without the approval of the Portfolio's shareholders.
The following discussion supplements the description of the Portfolio's
investment policies and investment techniques information contained in the
Prospectus.
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.
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").
Bank Obligations. For purposes of the 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.
When-Issued and Delayed Delivery Transactions. When the Portfolio agrees
to purchase securities on a when-issued or delayed delivery basis, its
custodian will set aside any asset, including equity securities and any
non-investment grade debt so long as the asset is liquid, unencumbered and
marked to market daily equal to the amount of the purchase or the commitment in
a pledged account. Normally, the custodian will set aside portfolio securities
to meet this requirement. The market value of the pledged account will be
monitored and if such market value declines, the Portfolio will be required
subsequently to place additional assets in the pledged account in order to
ensure that the value of the account remains equal to the amount of the
Portfolio's commitments. Because the Portfolio will set aside cash or other
liquid assets in the manner described, the Portfolio's liquidity
2
<PAGE>
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.
The 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 the 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 the Portfolio's net asset value
starting on the day the 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 the
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.
Financial Futures and Related Options. The 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 the
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 the Portfolio may
wish to purchase in the future by purchasing futures contracts.
The 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 the Portfolio purchases or sells a
security, no security is delivered or received by the Portfolio upon the
purchase or sale of a financial futures contract. Initially, the Portfolio will
be required to deposit in a segregated account with its custodian bank an
amount of cash, U.S. Treasury bills or liquid high grade debt obligations. This
amount is known as initial margin and is in the nature of a performance bond or
good faith deposit on the contract. The current initial margin deposit required
per contract is approximately 5% of the contract amount. Brokers may establish
deposit requirements higher than this minimum. Subsequent payments, called
variation margin, will be made to and from the account on a daily basis as the
price of the futures contract fluctuates. This process is known as marking to
market.
The writer of an option on a futures contract is required to deposit
margin pursuant to requirements similar to those applicable to futures
contracts. Upon exercise of an option on a futures contract, the delivery of
the futures position by the writer of the option to the holder of the option
will be accompanied by delivery of the accumulated balance in the writer's
margin account. This amount will be equal to the amount by which the market
price of the futures contract at the time of exercise exceeds, in the case of a
call, or is less than, in the case of a put, the exercise price of the option
on the futures contract.
Although financial futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery.
Closing out is accomplished by effecting an offsetting transaction. A futures
contract sale is closed out by effecting a futures contract purchase for the
same aggregate amount of securities and the same delivery date. If the sale
price exceeds the offsetting purchase price, the seller immediately would be
paid the difference and would realize a gain. If the offsetting purchase price
exceeds the sale price, the seller immediately would pay the difference and
would realize a loss. Similarly, a futures contract purchase is closed out by
effecting a futures contract sale for the same securities and the same delivery
date. If the offsetting sale price exceeds the purchase price, the purchaser
would realize a gain, whereas if the purchase price exceeds the offsetting sale
price, the purchaser would realize a loss. The 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.
3
<PAGE>
Limitations on Futures Contracts and Related Options. The 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. The 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 the Portfolio's existing futures and related options
positions and the premiums paid for related options would exceed 2% of the
market value of the 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, any asset, including
equity securities and non-investment grade debt so long as the asset is liquid,
unencumbered and marked to market daily equal to the market value of the
futures contract minus the Portfolio's initial margin deposit with respect
thereto will be deposited in a pledged account with the Portfolio's custodian
bank to collateralize fully the position and thereby ensure that it is not
leveraged. The extent to which the 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
"Dividends, Distributions and Taxes."
Risks Relating to Futures Contracts and Related Options. Positions in
futures contracts and related options may be closed out only on an exchange
which provides a secondary market for such contracts or options. The 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 the Portfolio would continue to be required to make
daily margin payments. In this situation, if the 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, the 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 the 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 the Portfolio to incur
additional brokerage commissions and may cause an increase in the 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 the Portfolio
or such prices move in a direction opposite to that anticipated, the 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, the Portfolio's
return for the period may be less than if it had not engaged in the hedging
transaction.
Utilization of futures contracts by the 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, the 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 the 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 the Portfolio's holdings may decline. If this occurred, the
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 the
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
the 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, the Portfolio will realize a loss on the futures that would not be
offset by a reduction in the price of the securities purchased.
The market prices of futures contracts may be affected if participants in
the futures market elect to close out their contracts through off-setting
transactions rather than to meet margin deposit requirements. In such case,
distortions in the normal relationship between the cash and futures markets
could result. Price distortions could also result if investors in futures
contracts opt to make or take delivery of the underlying securities rather than
to engage in closing transactions due to the resultant reduction in the
liquidity of the futures market. In addition, due to the fact that, from the
point of view of speculators, the deposit requirements in the futures markets
are less onerous than margin requirements in the cash market, increased
participation by speculators in the futures market could cause temporary price
distortions. Due to the possibility of price distortions in the futures market
and because of the imperfect correlation between movements in the prices of
securities and movements in the prices of futures contracts, a correct forecast
of market trends may still not result in a successful hedging transaction.
Compared to the purchase or sale of futures contracts, the purchase of put
or call options on futures contracts involves less potential risk for the
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 the
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.
4
<PAGE>
Mortgage-Related Securities. The Portfolio 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.
Securities issued by Government National Mortgage Association ("GNMA")
are, and securities issued by Federal National Mortgage Association ("FNMA")
include, mortgage-backed securities representing part ownership of a pool of
mortgage loans. In the case of GNMA, the mortgages are insured by the Federal
Housing Administration or Farmers' Home Administration or guaranteed by the
Veteran's Administration. In the case of FNMA, the mortgages are not insured by
an agency of the U.S. Government.
The prices of mortgage-backed securities are inversely affected by changes
in interest rates and, therefore, are subject to the risk of market price
fluctuations. Mortgage-backed securities issued by GNMA and FNMA currently
offer yields which are higher than those available on other securities of the
U.S. Government and its agencies and instrumentalities, but may be less
effective than these other securities as a means of "locking in" attractive
long-term interest rates. This is a result of the need to reinvest prepayment
of principal and the possibility of significant unscheduled prepayments
resulting from declines in mortgage interest rates. As a result, these
securities have less potential for capital appreciation during periods of
declining interest rates than other investments of comparable risk of decline
in value during periods of rising rates.
Lending Portfolio Securities. In order to increase its return on
investments, the Portfolio may make loans of the portfolio securities as long
as the market value of the loaned securities does not exceed 33% of the value
of the Portfolio's total assets. Loans of portfolio securities will always be
fully collateralized by cash or U.S. government securities 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.
Investment in Other Investment Companies. The Fund is authorized to invest
in the securities of other investment companies subject to the limitations
contained in the 1940 Act. In certain countries, investments by the Fund may
only be made through investments in other investment companies that, in turn,
are authorized to invest in the securities that are issued in such countries.
Investors should recognize that the Portfolio's purchase of the securities of
such other investment companies results in the layering of expenses such that
investors indirectly bear a proportionate part of the expenses for such
investment companies including operating costs, and investment advisory and
administrative fees.
INVESTMENT RESTRICTIONS
The Portfolio's fundamental policies cannot be changed without the
approval vote of a majority of the outstanding shares of the Portfolio, which
is the lesser of (i) 67% or more of the voting securities of the Portfolio
present at a meeting if the holders of more than 50% of the outstanding voting
securities of the Portfolio are present or represented by proxy or (ii) more
than 50% of the outstanding voting securities of the Portfolio. A proposed
change in fundamental policy or investment objective will be deemed to have
been effectively acted upon if a majority of the outstanding voting securities
of the 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
Portfolio and may not be changed except as described above. The Portfolio may
not:
(1) issue senior securities, as such term is defined in the Investment Company
Act of 1940, as amended, except as otherwise provided herein;
(2) make short sales of securities or purchase any securities on margin,
except for such short-term credits as are necessary for the clearance of
transactions; provided, however, the deposit or payment of an initial or
maintenance margin in connection with financial futures contracts or
related options transactions is not considered the purchase of a security
on margin;
(3) borrow money in excess of 25% of the value of its total assets, or pledge
its assets to an extent greater than 3% of the market or other fair value
of its total assets. Any such borrowings shall be from banks and shall be
undertaken only as a temporary measure or for extraordinary or emergency
purposes. Deposits in escrow in connection with the writing of covered
call options or in connection with the purchase or sale of financial
futures contracts and related options shall not be deemed to be a pledge
or other encumbrance;
5
<PAGE>
(4) engage in the business of underwriting the securities of others;
(5) concentrate its investments in the securities of issuers all of which
conduct their principal business activities in the same industry provided
that this restriction shall not apply to obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities or issuers
principally engaged in the real estate industry as defined by the Adviser
from time to time;
(6) make any direct investment in real estate, real estate mortgage loans
and/or commodities, except that the Fund may (a) purchase or sell readily
marketable securities which are secured by interests in real estate, or
issued by companies which deal in real estate including real estate
investment and mortgage investment trusts, and (b) engage in financial
futures contracts and related options transactions, provided that the sum
of the initial margin deposits on the Fund's futures and related options
positions and the premiums paid for related options do not exceed 5% of
the Fund's total assets; and
(7) make loans, except that the Fund may (a) invest up to 15% of its total
assets in repurchase agreements of a type regarded as "liquid" which are
fully collateralized as to principal and interest and which are entered
into only with commercial banks, brokers and dealers considered by the
Fund to be creditworthy and (b) loan its portfolio securities in amounts
up to one-third of the market or other fair value of its total assets.
If a percentage restriction on investment or utilization of assets as set
forth is adhered to at the time an investment is made, a later change in the
percentage resulting from a change in the values or costs of the Fund's assets
will not be considered violate of the restriction.
PERFORMANCE INFORMATION
Performance information for the 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 as total return.
Quotations of yield for the Portfolio will be based on all investment
income per share earned during a particular 30-day period (including dividends
and interest), less expenses (including pro rata Fund expenses and expenses
applicable to each particular Portfolio) accrued during the period ("net
investment income"), and are computed by dividing net investment income by the
value of a share of the Portfolio on the last day of the period, according to
the following formula:
YIELD = 2[((a-b)) + 1)(6) - 1]
-----
cd
where,
a = dividends and interest earned during the period by the Portfolio
b = expenses accrued for the period (net of any reimbursements),
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends, and
d = the maximum offering price per share on the last day of the period.
As summarized in the Prospectus under the heading "Performance Information,"
total return is a measure of the change in value of an investment in the
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 the 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 the 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 the 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 the 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 the 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
the 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 the 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.
6
<PAGE>
PORTFOLIO TURNOVER
Portfolio turnover is calculated by dividing the lesser of purchases or
sales of portfolio securities during the fiscal year by the monthly average of
the value of 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 the Portfolio's shares and by requirements which enable the
Fund to receive certain favorable tax treatment.
SERVICES OF THE ADVISER
The offices of Phoenix Realty Securities ("PRS") are located at 38
Prospect Street, Hartford, Connecticut 06115. PRS was formed in 1994 as an
indirect subsidiary of Phoenix Home Life Mutual Insurance Company ("Phoenix
Home Life") of Hartford, Connecticut. Phoenix Home Life is a mutual insurance
company engaged in the insurance and investment businesses. Phoenix Home Life's
principal place of business is located at One American Row, Hartford,
Connecticut.
The Adviser continuously furnishes an investment program for the Portfolio
and manages the investment and reinvestment of the assets of the Portfolio,
subject at all times to the supervision of the Trustees. The Adviser, at its
expense, furnishes certain other services, including the services of any member
of its staff who serves as an officer of the Fund.
The investment advisory agreement provides that all costs and expenses
(other than those specifically referred to as being borne by the Adviser)
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, a portion of the 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), 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 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 agreement provides that the Adviser 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 Adviser is entitled to a fee. The basic monthly advisory fee payable
to the Adviser is subject to a performance adjustment based upon the
Portfolio's annual performance as compared to certain prescribed benchmarks.
The basic monthly fee will therefore increase or decrease by .005% for every
.10% after the first .50% in which Portfolio performance (calculated at the
highest total return of the Portfolio based on the methods described in the
Prospectus and in this Statement of Additional Information) on a rolling twelve
month basis is higher or lower than that of the NAREIT Equity Total Return
Index. In no event will the increase or decrease in any one twelve month period
exceed .10%. There will be no performance adjustment in the first twelve months
following inception of the Portfolio. The following chart describes the total
fees which would be applicable:
<TABLE>
<CAPTION>
Performance
Rolling One Year Portfolio Return vs. NAREIT Index Base Fee Adjustment Total Fee
- -------------------------------------------------------------------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
(NAREIT Index -.50%) less than Portfolio Return less than (NAREIT Index +.50%) .50% none .50%
(NAREIT Index +.50%) less than Portfolio Return less than (NAREIT Index +.60%) .50% +0.005% .505%
or equal to
(NAREIT Index +.60%) less than Portfolio Return less than (NAREIT Index +.70%) .50% +0.01% .51%
or equal to
. . .
(NAREIT Index +2.40%)less than Portfolio Return .50% +0.1% .60%
or equal to
(NAREIT Index -.60%) less than Portfolio Return less than (NAREIT Index -.50%) .50% -0.005% .495%
or equal to
(NAREIT Index -.70%) less than Portfolio Return less than (NAREIT Index -.60%) .50% -0.01% .49%
or equal to
. . .
Portfolio Return less than (NAREIT Index -2.40%) .50% -0.10% .40%
or equal to
</TABLE>
7
<PAGE>
The advisory agreement will continue in force from year to year, provided
that 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 agreement 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.
SERVICES OF THE ADMINISTRATOR
Duff & Phelp Investment Management Co. (the "Administrator") serves as
administrator for the Real Estate Portfolio. Under the terms of the
Administration Agreement, the Administrator will assist in maintaining office
facilities, furnish clerical services, office supplies and stationery, provide
advice and assistance on the general operations of the Portfolio, monitor and
make recommendations concerning fidelity bond coverage, monitor compliance with
the policies and limitations of the Portfolio as set forth in the Fund's
governing documents, and prepare and/or coordinate all materials for the Board
of Trustees' meetings. As compensation, the Administrator receives a fee,
computed daily and payable monthly, at the annual rate of 0.15% of the average
daily net assets of the Portfolio.
The Agreement continues in effect from year to year provided such
continuance is specifically approved at least annually by the Fund's Board of
Trustees including a majority of the trustees who are not interested persons or
by a vote of a majority of the outstanding voting securities of the Portfolio.
The Agreement automatically terminates upon its assignment and may be
terminated by either party at any time upon not less than 60 days' written
notice.
BROKERAGE ALLOCATION
In effecting portfolio transactions for the Fund, the Adviser adheres 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 Adviser 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 Adviser
determines 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 the 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 Adviser under its contract with the Fund and may benefit both
the Fund and other clients of the Adviser. Conversely, brokerage and research
services provided by brokers to other clients of the Adviser may benefit the
Fund.
If the securities in which the Portfolio 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 Conduct Rules 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. Past sales of Fund shares may be
considered when selecting dealers to effect portfolio transactions.
The Fund has adopted a policy and procedures governing the execution of
aggregated advisory client orders ("bunching procedures") in an attempt to
lower commission costs on a per-share and per-dollar basis. According to the
bunching procedures, the Advisor shall aggregate transactions unless it
believes in its sole discretion that such aggregation is inconsistent with its
duty to seek best execution (which shall includes the duty to seek best price)
for the Fund. No advisory account of the Advisor is to
8
<PAGE>
be favored over any other account and each account that participates in an
aggregated order is expected to participate at the average share price for all
transactions of the Advisor in that security on a given business day, with all
transaction costs shared pro rata based on the Fund's participation in the
transaction. If the aggregated order is filled in its entirety, it shall be
allocated among the Adviser's accounts in accordance with the allocation order,
and if the order is partially filled, it shall be allocated pro rata based on
the allocation order. Notwithstanding the foregoing, the order may be allocated
on a basis different from that specified in the allocation order if all
accounts of the Adviser whose orders are allocated receive fair and equitable
treatment and the reason for such different allocation is explained in writing
and is approved in writing by the Adviser's compliance officer as soon as
practicable after the opening of the markets on the trading day following the
day on which the order is executed. If an aggregated order is partially filled
and allocated on a basis different from that specified in the allocation order,
no account that is benefited by such different allocation may intentionally and
knowingly effect any purchase or sale for a reasonable period following the
execution of the aggregated order that would result in it receiving or selling
more shares than the amount of shares it would have received or sold had the
aggregated order been completely filled. The Trustees will annually review
these procedures or as frequently as shall appear appropriate.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each Portfolio is determined as of the
close of regular trading of the New York Stock Exchange (the "Exchange") on
days when the Exchange is open for trading. The Exchange will be closed on the
following observed national holidays: New Year's Day, Martin Luther King Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Since the Fund does not price securities on
weekends or United States national holidays, the net asset value of a
Portfolio's foreign assets may be significantly affected on days when the
investor has no access to the Fund. The 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 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.
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 exchange for such
security by the Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world,
the calculation of net asset value may not take place for any Portfolio which
invests in foreign securities contemporaneously with the determination of the
prices of the majority of the portfolio securities of such Portfolio. All
assets and liabilities initially expressed in foreign currency values will be
converted into United States dollar values at the mean between the bid and ask
quotations of such currencies against United States dollars as last quoted by
any recognized dealer. If an event were to occur after the value of an
investment was so established but before the net asset value per share was
determined, which was likely to materially change the net asset value, then the
instrument would be valued using fair value considerations by the Trustees or
their delegates. If at any time a Portfolio has investments where market
quotations are not readily available, such investments are valued at the fair
value thereof as determined in good faith by the Trustees although the actual
calculations may be made by persons acting pursuant to the direction of the
Trustees.
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 the 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 net asset value.
The 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. 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.
9
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
As stated in the Prospectus, the Portfolio is treated as a separate entity
for federal income tax purposes. The 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
the Portfolio to qualify as a RIC. The 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; and (2) 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, the 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 the 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 the 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,
the Portfolio intends to make timely distribution sufficient in amount to avoid
a non-deductible 4% excise tax. An excise tax will be imposed on the 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 October 31 of
such calendar year. In addition, an amount equal to the undistributed net
ordinary income and net capital gains from the previous calendar year must also
be distributed to avoid the excise tax.
The Fund is required to withhold for income taxes 31% of dividends,
distributions and redemption payments, if any of the following circumstances
exist: i) a shareholder fails to provide the Fund with a correct taxpayer
identification number (TIN); ii) the Fund 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 the Fund for reporting an incorrect TIN and that TIN was provided by the
shareholder, the Fund will pass the penalty onto the shareholder.
Dividends paid by the 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 DISTRIBUTOR
Phoenix Equity Planning Corporation ("Equity Planning" or "Distributor"),
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
the 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
10
<PAGE>
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 the Portfolio.
Pursuant to a Financial Agent Agreement, Equity Planning provides
bookkeeping and pricing services and certain other ministerial functions
directly to the Fund. As compensation for such services, Equity Planning is
entitled to a fee, payable monthly and based upon the average of the aggregate
daily net asset values of the fund, at the following incremental annual rates:
<TABLE>
<S> <C>
First $100 million .05%
$100 million to $300 million .04%
$300 million through $500 million .03%
Greater than $500 million .015%
</TABLE>
A minimum fee of $70,000 is applicable. In addition, Equity Planning is
paid $12,000 for each class of shares beyond one.
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.
DISTRIBUTION PLAN
The Fund has adopted a distribution plan on behalf of its Class Y Shares
pursuant to Rule 12b-1 of the 1940 Act (the "Plan"). The Plan permits the Fund
to reimburse the Distributor for expenses incurred in connection with
activities intended to promote the sale of shares of Class Y Shares of the
Fund.
Pursuant to the Plan, the Fund may compensate the Distributor in an amount
equal to 0.25% of the average daily net assets of the Class Y Shares (the
"Service Fee"). The Service Fee is paid to the Distributor to reimburse the
costs of providing services to Class Y shareholders, including assistance in
connection with inquiries related to shareholder accounts.
On a quarterly basis, the Trustees of the Fund review a report on
expenditures under the Plan and the purposes for which expenditures were made.
The Trustees conduct an additional, more extensive review annually in
determining whether the Plan will be continued. By its terms, continuation of
the Plan from year to year is contingent on annual approval by a majority of
the Trustees of the Fund and by a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of the Plans or any related
agreements (the "Plan Trustees"). The Plan provides that it may not be amended
to increase materially the costs which the Fund may bear pursuant to the Plan
without approval of the Class Y shareholders of the Fund and that other
material amendments to the Plan must be approved by a majority of the Plan
Trustees by vote cast in person at a meeting called for the purpose of
considering such amendments. The Plan further provides that while it is in
effect, the selection and nomination of Trustees who are not "interested
persons" shall be committed to the discretion of the Trustees then in office
who are not "interested persons." The Plan may be terminated at any time by
vote of a majority of the Plan Trustees or a majority of the outstanding Class
Y Shares of the Fund.
No interested persons of the Fund and no Trustee who is not an interested
person of the Fund, as that term is defined in the Investment Company Act of
1940, had any direct or indirect financial interest in the operation of the
Plan.
11
<PAGE>
TRUSTEES AND OFFICERS
The Trustees and Officers of the Fund and their business affiliations for
the past five years are set forth below and, unless otherwise noted, the
address of each executive officer and Trustee is 56 Prospect Street, Hartford,
Connecticut, 06115-0480.
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------------- ---------------- ---------------------------------------------------------------------
<S> <C> <C>
C. Duane Blinn (69)** Trustee Partner in the law firm of Day, Berry & Howard. Director/Trustee,
Day, Berry & Howard Phoenix Funds (1980-present). Trustee, Phoenix-Aberdeen Series
CityPlace Fund and Phoenix Duff & Phelps Institutional Mutual Funds (1996-
Hartford, CT 06103 present). Director/Trustee, the National Affiliated Investment
Companies (until 1993).
Robert Chesek (63) Trustee Trustee/Director (1981-present) and Chairman (1989-1994), Phoenix
49 Old Post Road Funds. Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff &
Wethersfield, CT 06109 Phelps Institutional Mutual Funds (1996-present). Vice President,
Common Stock, Phoenix Home Life Mutual Insurance Company
(1980-1994). Director/Trustee, the National Affiliated Investment
Companies (until 1993).
E. Virgil Conway (68) Trustee Chairman, Metropolitan Transportation Authority (1992-present).
9 Rittenhouse Road Trustee/Director, Consolidated Edison Company of New York, Inc.
Bronxville, NY 10708 (1970-present), Pace University (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), Blackrock Freddie Mac Mortgage
Securities Fund (Advisory Director) (1990-present), Centennial
Insurance Company (1974-present), Josiah Macy, Jr., Foundation
(1975-present), The Harlem Youth Development Foundation (1987-
present), Accuhealth (1994-present), Trism, Inc. (1994-present),
Realty Foundation of New York (1972-present), New York Housing
Partnership Development Corp. (Chairman) (1981-present) and Fund
Directions (Advisory Director) (1993-present). Director/Trustee,
Phoenix Funds (1993-present). Trustee, Phoenix-Aberdeen Series
Fund and Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present). Director, Duff & Phelps Utilities Tax-Free Income Inc. and
Duff & Phelps Utility and Corporate Bond Trust Inc. (1995-present).
Chairman, Audit Committee of the City of New York (1981-1996).
Advisory Director, Blackrock Fannie Mae Mortgage Securities Fund
(1989-1996). Chairman, Financial Accounting Standards Advisory
Council (1992-1995). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
William W. Crawford (69) Trustee Representative (1994-1995), Senior Executive (1994-1995), President
3029 Wynfield Mews Lane and Chief Operating Officer (1988-1993), Hilliard, Lyons, Inc.
Louisville, KY 40206 (broker/dealer). Director, Duff & Phelps Utilities Tax-Free Income
Inc. (1995-present), Duff & Phelps Utility and Corporate Bond Trust
Inc. (1995-present).
Harry Dalzell-Payne (68) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee, Phoenix-
330 East 39th Street Aberdeen Series Fund and Phoenix Duff & Phelps Institutional
Apartment 29G Mutual Funds (1996-present). Director, Duff & Phelps Utilities
New York, NY 10016 Tax-Free Income Inc. and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1995-present). Director, Farragut Mortgage Co., Inc.
(1991-1994). Director/Trustee, the National Affiliated Investment
Companies (1983-1993). Formerly a Major General of the British
Army.
William N. Georgeson (70) Trustee Director, Duff & Phelps Utility and Corporate Bond Trust Inc.
575 Glenwood Road (1994-present) and Duff & Phelps Utilities Tax-Free Income Inc.
Lake Forest, IL 60045 (1993-present).
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ---------------------------- --------------- -------------------------------------------------------------------------
<S> <C> <C>
*Francis E. Jeffries (67) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-
6585 Nicholas Blvd. Aberdeen Series Inc. and Phoenix Duff & Phelps Institutional Mutual
Apt. 1601 Funds (1996-present). Director, Duff & Phelps Utilities Income Inc.
Naples, FL 33963 (1987-present), Duff & Phelps Utilities Tax-Free Income Inc. (1991-
present) and Duff & Phelps Utility and Corporate Bond Trust Inc.
(1993-present). Director, The Empire District Electric Company
(1984-present). Director (1989-1997), Chairman of the Board
(1993-1997), President (1989-1993), and Chief Executive Officer
(1989-1995), Phoenix Duff & Phelps Corporation.
Leroy Keith, Jr. (58) Trustee Chairman and Chief Executive Officer, Carson Products Company
Chairman and Chief (1995-present). Director/Trustee, Phoenix Funds (1980-present).
Executive Officer Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Carson Product Company Institutional Mutual Funds (1996-present). Director, Equifax Corp.
64 Ross Road (1991-present) and Keystone International Fund, Inc. (1989-present).
Savannah, GA 30750 Trustee, Keystone Liquid Trust, Keystone Tax Exempt Trust, Keystone
Tax Free Fund, Master Reserves Tax Free Trust, and Master Reserves
Trust. President, Morehouse College (1987-1994). Chairman and
Chief Executive Officer, Keith Ventures (1992-1994). Director/
Trustee, the National Affiliated Investment Companies (until 1993).
Director, Blue Cross/Blue Shield (1989-1993) and First Union Bank
of Georgia (1989-1993).
*Philip R. McLoughlin (50) Trustee and Chairman (1997-present), Vice Chairman (1995-1997) and
President Chief Executive Officer (1995-present), Phoenix Duff & Phelps
Corporation. Director (1994-present) and Executive Vice President,
Investments (1988-present), Phoenix Home Life Mutual Insurance
Company. Director/Trustee and President, Phoenix Funds (1989-present).
Trustee and President, Phoenix-Aberdeen Series Fund and Phoenix Duff
& Phelps Institutional Mutual Funds (1996-present). Director, Duff &
Phelps Utilities Tax-Free Income Inc. (1995-present) and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present). Director (1983-
present) and Chairman (1995-present), Phoenix Investment Counsel, Inc.
Director (1984-present) and President (1990-present), Phoenix Equity
Planning Corporation. Director (1993-present), Chairman (1993-present)
and Chief Executive Officer (1993-1995), National Securities &
Research Corporation. Director, Phoenix Realty Group, Inc. (1994-
present), Phoenix Realty Advisors, Inc. (1987-present), Phoenix Realty
Investors, Inc. (1994-present), Phoenix Realty Securities, Inc. (1994-
present), PXRE Corporation (Delaware) (1985-present), and World Trust
Fund (1991-present). Director and Executive Vice President, Phoenix
Life and Annuity Company (1996-present). Director and Executive Vice
President, PHL Variable Insurance Company (1995-present). Director,
Phoenix Charter Oak Trust Company (1996-present). Director and Vice
President, PM Holdings, Inc. (1985-present). Director and President,
Phoenix Securities Group, Inc. (1993-1995). Director (1992-present) and
President (1992-1994), W.S. Griffith & Co., Inc. Director (1992-present)
and President (1992-1994), Townsend Financial Advisers, Inc. Director/
Trustee, the National Affiliated Investment Companies (until 1993).
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------------- --------------- -----------------------------------------------------------------------
<S> <C> <C>
Eileen A. Moran (42) Trustee President and Chief Executive Officer, Public Service Resources
Corporation (1990-present).
Everett L. Morris (69) Trustee Vice President, W.H. Reaves and Company (1993-present). Director/
164 Laird Road Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
Colts Neck, NJ 07722 Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Duff & Phelps Utilities Tax-Free Income
Inc. (1991-present) and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1993-present). Director, Public Service Enterprise Group,
Incorporated (1986-1993). President and Chief Operating Officer,
Enterprise Diversified Holdings, Incorporated (1989-1993).
*James M. Oates (51) Trustee Chairman, IBEX Capital Markets LLC (1997-present). Managing
Managing Director Director, Wydown Group (1994-present). Director, Phoenix Duff &
The Wydown Group Phelps Corporation (1995-present). Director/Trustee, Phoenix Funds
IBEX Capital Markets LLC (1987-present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
60 State Street Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Suite 950 Govett Worldwide Opportunity Funds, Inc. (1991-present), Blue Cross
Boston, MA 02109 and Blue Shield of New Hampshire (1994-present), Investors
Financial Service Corporation (1995-present), Investors Bank & Trust
Corporation (1995-present), Plymouth Rubber Co. (1995-present) and
Stifel Financial (1996-present). Member, Chief Executives
Organization (1996-present). Director (1984-1994), President (1984-
1994) and Chief Executive Officer (1986-1994), Neworld Bank.
Director/Trustee, the National Affiliated Investment Companies (until
1993).
Richard A. Pavia (67) Trustee Director (1981-present), Chairman and Chief Executive Officer (1989-
7145 North Ionia 1994), Speer Financial, Inc. Director, Duff & Phelps Utilities Tax-
Chicago, IL 60646 Free Income Inc. (1991-present), Duff & Phelps Utility and Corporate
Bond Trust Inc. (1992-present).
*Calvin J. Pedersen (55) Trustee Director (1986-present), President (1993-present) and Executive Vice
Phoenix Duff & Phelps President (1992-1993), Phoenix Duff & Phelps Corporation. Director/
Corporation Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
55 East Monroe Street Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
Suite 3600 (1996-present). President and Chief Executive Officer, Duff & Phelps
Chicago, IL 60603 Utilities Tax-Free Income Inc. (1995-present), Duff & Phelps Utilities
Income Inc. (1994-present) and Duff & Phelps Utility and Corporate
Bond Trust Inc. (1995-present).
Philip R. Reynolds (70)** Trustee Director/Trustee, Phoenix Funds (1984-present). Trustee, Phoenix-
43 Montclair Drive Aberdeen Series Fund and Phoenix Duff & Phelps Institutional
West Hartford, CT 06107 Mutual Funds (1996-present). Director, Vestaur Securities, Inc.
(1972-present). Trustee and Treasurer, J. Walton Bissell Foundation,
Inc. (1988-present). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
Herbert Roth, Jr. (68) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee, Phoenix-
134 Lake Street Aberdeen Series Fund and Phoenix Duff & Phelps Institutional
P.O. Box 909 Mutual Funds (1996-present). Director, Boston Edison Company
Sherborn, MA 01770 (1978-present), Phoenix Home Life Mutual Insurance Company
(1972-present), Landauer, Inc. (medical services) (1970-present), Tech
Ops./Sevcon, Inc. (electronic controllers) (1987-present), and Mark IV
Industries (diversified manufacturer) (1985-present). Director, Key
Energy Group (oil rig service) (1988-1994). Director/Trustee, the
National Affiliated Investment Companies (until 1993).
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------- --------------- -----------------------------------------------------------------------
<S> <C> <C>
Richard E. Segerson (51) Managing Director, Mullin Associates (1993-present). Director/
102 Valley Road Trustee, Phoenix Funds (1993-present). Trustee, Phoenix-Aberdeen
New Canaan, CT 07840 Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). 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. (66) Trustee/Director, Phoenix Funds (1995-present). Trustee, Phoenix-
731 Lake Avenue Aberdeen Series Fund and Phoenix Duff & Phelps Institutional
Greenwich, CT 06830 Mutual Funds (1996-present). Director, UST Inc. (1995-present),
HPSC Inc. (1995-present), Duty Free International, Inc. (1997-
present) and Compuware (1996-present). Visiting Professor, University
of Virginia (1997-present). Chairman, Dresing, Lierman, Weicker
(1995-1996). Governor of the State of Connecticut (1991-1995).
Michael E. Haylon (39) Executive Director and Executive Vice President--Investments, Phoenix Duff &
Vice Phelps Corporation (1995-present). Executive Vice President, Phoenix
President Funds (1993-present) and Phoenix-Aberdeen Series Fund (1996-
present). Executive Vice President (1997-present), Vice President
(1996-1997), Phoenix Duff & Phelps Institutional Mutual Funds.
Director (1994-present), President (1995-present), Executive Vice
President (1994-1995), Vice President (1991-1994), Phoenix
Investment Counsel, Inc. Director (1994-present), President (1996-
present), Executive Vice President (1994-1996), Vice President
(1993-1994), National Securities & Research Corporation. Director,
Phoenix Equity Planning Corporation (1995-present). Senior Vice
President, Securities Investments, Phoenix Home Life Mutual
Insurance Company (1993-1995). Various other positions with
Phoenix Home Life Mutual Insurance Company (1990-1993).
David R. Pepin (54) Executive Executive Vice President, Phoenix Funds and Phoenix-Aberdeen
Vice Series Fund (1996-present). Director (1997-present) and Executive
President Vice President (1996-present), Phoenix Duff & Phelps Corporation.
Managing Director, Phoenix-Aberdeen International Advisers, LLC
(1996-present). Director and Executive Vice President, Phoenix
Equity Planning Corp. (1996-present). Director, Phoenix Investment
Counsel, Inc. and National Securities & Research Corporation (1996-
present). Various positions with Phoenix Home Life Mutual Insurance
Company (1994-1995). Vice President and General Manager, Finance
and Health, Digital Equipment Corporation (1980-1994).
William J. Newman (58) Senior Vice Executive Vice President (1995-present), Chief Investment Strategist
President (1996-present), Phoenix Investment Counsel, Inc. Executive Vice
President and Chief Investment Strategist (1996-present), Senior Vice
President (1995-1996), National Securities & Research Corporation.
Senior Vice President, Phoenix Strategic Equity Series Fund (1996-
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
Strategic Allocation Fund, Inc. (1996-present), Phoenix Worldwide
Opportunities Fund (1996-present), Phoenix-Aberdeen Series Fund
(1996-present) and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Senior Vice President, Phoenix Equity Planning
Corporation (1995- 1996), 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 Company (1991-1993).
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ------------------------------ --------------- --------------------------------------------------------------------
<S> <C> <C>
James D. Wehr (40) Senior Vice Managing Director, Fixed Income, (1996-present), Vice President
President (1991-1996), Phoenix Investment Counsel, Inc. Managing Director,
Fixed Income, (1996-present), Vice President (1993-1996), National
Securities & Research Corporation. Senior Vice President (1997-
present), Vice President (1988-1997), Phoenix Multi-Portfolio Fund;
Senior Vice President (1997-present), Vice President (1990-1997),
Phoenix Series Fund; Senior Vice President (1997-present), Vice
President (1991-1997), The Phoenix Edge Series Fund; Senior Vice
President (1997-present), Vice President (1993-1997), Phoenix
California Tax Exempt Bonds, Inc.; Senior Vice President (1997-
present), Vice President (1996-1997), Phoenix Duff & Phelps
Institutional Mutual Funds; and Senior Vice President, Phoenix
Multi-Sector Short Term Bond Fund and Phoenix Multi-Sector Fixed
Income Fund (1997-present). Managing Director, Public Fixed
Income, Phoenix Home Life Insurance Company (1991-1995). Various
positions with Phoenix Home Life Insurance Company (1981-1991).
Marvin E. Flewellen (33) Vice Senior Vice President and Fixed Income Portfolio Manager, Duff &
55 East Monroe Street President Phelps Investment Management Co. (1994-present). Vice President,
Suite 3800 Phoenix Duff & Phelps Institutional Mutual Funds (1996-present).
Chicago, IL 60603 Second Vice President and Portfolio Manager, Northern Trust Bank
(1985-1994).
William E. Keen, III (34) Vice Assistant Vice President, Phoenix Equity Planning Corporation
100 Bright Meadow Blvd. President (1996-present). Vice President, Phoenix Funds, Phoenix Duff &
P.O. Box 2200 Phelps Institutional Mutual Funds and Phoenix-Aberdeen Series
Enfield, CT 06083-2200 Fund (1996-present). Assistant Vice President, USAffinity
Investments LP (1994-1995). Treasurer and Secretary, USAffinity
Funds (1994-1995). Manager, Fund Administration, SEI Corporation
(1991-1994).
Christopher J. Kelleher (42) Vice Managing Director, Fixed Income (1996-present), Vice President
President (1991-1996), Phoenix Investment Counsel, Inc. and National
Securities & Research Corporation. Vice President, The Phoenix
Edge Series Fund (1989-present), Phoenix Series Fund (1989-present)
and Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present). Portfolio Manager, Public Bonds, Phoenix Home Life Mutual
Insurance Company (1991-1995).
Thomas S. Melvin, Jr. (54) Vice Managing Director, Equities (1996-present), Vice President (1994-
President 1996), Executive Vice President (1992-1994), Phoenix Investment
Counsel, Inc. Managing Director, Equities (1996-present), Vice
President (1994-1996), Executive Vice President (1993-1994),
National Securities & Research Corporation. Vice President, Phoenix
Multi-Portfolio Fund (1993-present) and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Portfolio Manager,
Common Stock, Phoenix Home Life Mutual Insurance Company
(1991-1995).
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- -------------------------- --------------- -----------------------------------------------------------------------
<S> <C> <C>
William R. Moyer (53) Vice Senior Vice President and Chief Financial Officer, Phoenix Duff &
100 Bright Meadow Blvd. President Phelps Corporation (1995-present). Senior Vice President, Finance
P.O. Box 2200 (1990-present), Chief Financial Officer (1996-present), and Treasurer
Enfield, CT 06083-2200 (1994-1996), Phoenix Equity Planning Corporation. Senior Vice
President (1990-present), Chief Financial Officer (1996-present) and
Treasurer (1994-present), Phoenix Investment Counsel, Inc. Senior
Vice President, Finance (1993-present), Chief Financial Officer
(1996-present), and Treasurer (1994-present), National Securities &
Research Corporation. Senior Vice President and Chief Financial
Officer, Duff & Phelps Investment Management Co. (1996-present).
Vice President, Phoenix Funds (1990-present), Phoenix-Duff &
Phelps Institutional Mutual Funds (1996-present) and Phoenix-
Aberdeen Series Fund (1996-present). Senior Vice President and
Chief Financial Officer, W. S. Griffith & Co., Inc. (1992-1995) and
Townsend Financial Advisers, Inc. (1993-1995). Vice President,
the National Affiliated Investment Companies (until 1993). Vice
President, Investment Products Finance, Phoenix Home Life Mutual
Insurance Company (1990-1995).
Scott C. Noble (51) Vice Director (1994-present) and Chief Executive Officer (1995-present),
President Phoenix Realty Securities, Inc. Chief Executive Officer (1995-
present), Director and President (1994-present), Phoenix Realty
Group, Inc. Senior Vice President, Real Estate, Phoneix Home Life
Mutual Insurance Company (1991-present). Director and Executive
Vice President, Phoenix Real Estate Securities, Inc. (1993-present).
Vice President, Phoenix Multi-Portfolio Fund (1994-present), The
Phoenix Edge Series Fund (1995-present) and Phoenix Duff & Phelps
Institutional Mutual Funds (1997-present). Director (1991-present)
and President (1993-present), Phoenix Founders, Inc. Director and
Chief Executive Officer, Phoenix Realty Advisors, Inc. (1991-present).
Director, President and Chief Executive Officer (1994-present),
Phoenix Realty Investors, Inc. Various other positions with Phoenix
Home Life Mutual Insurance Company (1991-1993).
C. Edwin Riley, Jr. (43) Vice Managing Director, Equities (1996-present), Vice President (1995-
President 1996), Phoenix Investment Counsel, Inc. Managing Director, Equities,
National Securities & Research Corporation (1996-present). Vice
President, The Phoenix Edge Series Fund (1995-present), Phoenix
Strategic Allocation Fund, Inc. (1995-1996), Phoenix Series
Fund (1996-present) and Phoenix Duff & Phelps Institutional Mutual
Funds (1996-present). Director of Equity Management, NationsBanc
Investment Management (1981-1995).
Barbara Rubin (42) Vice Vice President (1992-present), Second Vice President (1986-1992),
President Real Estate, Phoenix Home Life Mutual Insurance Company. Vice
President, Phoenix Multi-Portfolio Fund (1994-present), The Phoenix
Edge Series Fund (1995-present) and Phoenix Duff & Phelps
Institutional Mutual Funds (1997-present). Vice President (1991-
present), 238 Columbus Blvd., Inc. Director (1998-present) and Vice
President (1993-present), Phoenix Founders, Inc. Vice President
Phoenix Real Estate Securities, Inc. (1993-present). Director and
President, Phoenix Realty Advisors, Inc. (1987-present). President
(1995-present), Executive Vice President (1994-present), Phoenix
Realty Securities, Inc.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ------------------------- --------------- ------------------------------------------------------------------------
<S> <C> <C>
Leonard J. Saltiel (43) Vice Managing Director (1996-present), Senior Vice President (1994-
President 1996), Phoenix Equity Planning Corporation. Vice President, Phoenix
Funds (1994-present), Phoenix Duff & Phelps Institutional Mutual
Funds (1996-present) and Phoenix-Aberdeen Series Fund (1996-
present). Vice President, Investment Operations, Phoenix Home Life
Mutual Insurance Company (1994-1995). Various positions with
Home Life Insurance Company and Phoenix Home Life Mutual
Insurance Company (1987-1994).
Julie L. Sapia (40) Vice Head Money Market Trader (1997-present), Phoenix Investment
President Counsel, Inc. Vice President (1997-present), The Phoenix Edge Series
Fund, Phoenix Series Fund, Phoenix Duff & Phelps Institutional
Mutual Funds and Phoenix-Aberdeen Series Fund. Money Market
Trader (1995-1997), Phoenix Investment Counsel, Inc. Money Market
Trader (1991-1995), Phoenix Home Life Mutual Insurance Company.
Michael Schatt (50) Vice Vice President, Phoenix Realty Securities, Inc. (1997-present). Vice
President President (1997-present), Phoenix Duff & Phelps Institutional Mutual
Funds, Phoenix Multi-Portfolio Fund and The Phoenix Edge Series
Fund. Vice President, Duff & Phelps Investment Management Co.
(1997-present). Vice President, Duff & Phelps Utilities Income Inc.
(1997-present). Managing Director, Phoenix Duff & Phelps
Corporation (1994-present). Director, Real Estate Advisory Practice,
Coopers & Lybrand, LLC (1990-1994).
Dorothy J. Skaret (45) Vice Director, Money Market Trading (1996-present), Vice President
President (1991-1996), Phoenix Investment Counsel, Inc. Director, Money
Market Trading (1996-present), Vice President (1993-1996), National
Securities & Research Corporation. Vice President, The Phoenix
Edge Series Fund (1991-present), Phoenix Series Fund (1990-
present), Phoenix-Aberdeen Series Fund (1996-present), Phoenix Duff
& Phelps Institutional Mutual Funds (1996-present) and Phoenix
Realty Securities, Inc. (1995-present). Director, Public Fixed Income,
Phoenix Home Life Mutual Insurance Company (1991-1995).
Nancy G. Curtiss (44) Treasurer Vice President, Fund Accounting (1994-present) and Treasurer (1996-
present), Phoenix Equity Planning Corporation. Treasurer, Phoenix Funds
(1994-present), Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present) and Phoenix-Aberdeen Series Fund (1996-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 (49) Secretary Vice President and General Manager (1993-present), Assistant Vice
101 Munson Street President (1992-1993) Phoenix Home Life Mutual Insurance Co. Vice
Greenfield, MA 01301 President, Mutual Fund Customer Service, Phoenix Equity Planning
Corporation (1993-present). Secretary, Phoenix Funds (1993-present).
Clerk, Phoenix Strategic Allocation Fund, Inc. (1994-present).
Secretary, Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present) and Phoenix-Aberdeen Series Fund (1996-present). Vice
President, Home Life of New York Insurance Company (1984-1992).
</TABLE>
- -----------
*Indicates that the Trustee is an "interested person" of the Trust within the
meaning of the definition set forth in Section 2(a)(19) of the Investment
Company Act of 1940.
**Pursuant to the retirement policy of the Phoenix Funds, Messrs. Blinn and
Reynolds will retire from the Board of Trustees effective January 1, 1998.
18
<PAGE>
For services rendered to the Fund during the period ended December 31, 1996,
the Trustees received an aggregate of $77,238 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. The function of the Executive Committee is to serve as a
contract review, compliance review and performance review delegate of the full
Board of Trustees. Officers and employees of the Adviser who are interested
persons are compensated for their services by the Adviser and receive no
compensation from the Fund.
For the Fund's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Benefits From Fund and
Aggregate Accrued Estimated Fund Complex
Compensation as Part of Annual Benefits (12 Funds)
Name From Fund Fund Expenses Upon Retirement Paid to Trustees
- ------------------------ ----------------- --------------- ----------------- -----------------
<S> <C> <C> <C> <C>
C. Duane Blinn $ 5,000* None None $60,500
Robert Chesek 5,000 None None 53,500
E. Virgil Conway+ 5,250 None None 94,110
William W. Crawford 5,250* None None 43,150
Harry Dalzell-Payne+ 5,250 None None 68,630
William N. Georgeson 5,250 None None 41,990
Francis E. Jeffries None None None None
Leroy Keith, Jr. 5,000 None None 53,500
Philip R. McLoughlin+ None None None None
Eileen A. Moran 1,250 None None 7,130
Everett L. Morris+ 5,250* None None 92,490
James M. Oates+ 5,000 None None 58,000
Richard A. Pavia 5,250* None None 39,490
Calvin J. Pedersen None None None None
Philip R. Reynolds 5,000 None None 53,500
Herbert Roth, Jr.+ 5,250 None None 64,750
Richard E. Segerson 5,250 None None 60,250
Lowell P. Weicker, Jr. 5,000 None None 60,500
</TABLE>
* This compensation (and the earnings thereon) will be deferred pursuant to the
Directors' Deferred Compensation Plan. At June 30, 1997, the total amount of
deferred compensation (including interest and other accumulation earned on
the original amounts deferred) accrued for Messrs. Blinn, Crawford,
Jeffries, Morris, Pavia and Roth was $349,026.91, $2,599.34, $28,561.41,
$85,849.73, $2,142.32 and $132,587.69, respectively. At present, by
agreement among the Fund, the Distributor and the electing director,
director fees that are deferred are paid by the Fund to the Distributor. The
liability for the deferred compensation obligation appears only as a
liability of the Distributor.
+ Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are members
of the Executive Committee.
ADDITIONAL INFORMATION
Custodian and Transfer Agent
State Street Bank and Trust Company ("State Street"), serves as custodian
of the Fund's assets (the "Custodian") and is located at 1 Heritage Drive, P2N,
North Quincy, MA 02171. Equity Planning acts as Transfer Agent for the Fund
(the "Transfer Agent").
Reports to Shareholders
The fiscal year of the Fund ends on December 31. The Fund will send to its
shareholders, at least semi-annually, reports showing the securities of the
Fund's portfolio and other information.
Financial Statements
The Financial Statements for the period ended June 30, 1997 appearing in
the Fund's 1997 Semiannual Report to Shareholders, are incorporated herein by
reference.
19
<PAGE>
Real Estate Equity Securities Portfolio
- --------------------------------------------------------------------------------
INVESTMENTS AT JUNE 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
---------- ----------
<S> <C> <C> <C>
COMMON STOCKS 98.8%
REAL ESTATE INVESTMENT TRUSTS 98.5%
COMMERCIAL 42.7%
Office/Industrial 42.7%
Arden Realty Group, Inc. 15,500 $ 403,000
Boston Properties, Inc. 1,000 27,500
CenterPoint Properties Corp. 13,400 425,450
Crescent Real Estate Equities Co. 25,000 793,750
First Industrial Realty Trust, Inc. 18,500 541,125
Great Lakes REIT, Inc. 20,000 328,750
Highwoods Properties, Inc. 18,900 604,800
Reckson Associates Realty Corp. 21,000 483,000
TriNet Corporate Realty Trust, Inc. 15,100 499,244
Weeks Corp. 16,300 509,375
------------
4,615,994
------------
DIVERSIFIED 0.9%
Colonial Properties Trust 3,300 96,938
------------
HEALTH CARE 4.5%
Nationwide Health Properties, Inc. 22,200 488,400
------------
HOTELS 17.3%
Patriot American Hospitality, Inc. 29,300 747,150
Starwood Lodging Trust 18,500 789,719
Sunstone Hotel Investors, Inc. 22,600 327,700
------------
1,864,569
------------
RESIDENTIAL 15.3%
Apartments 15.3%
Bay Apartment Communities, Inc. 12,700 469,900
Equity Residential Properties Trust 13,700 650,750
Essex Property Trust, Inc. 16,500 530,062
------------
1,650,712
------------
RETAIL 17.8%
Community/Neighborhood 8.1%
Developers Diversified Realty Corp. 12,000 480,000
Vornado Realty Trust 5,500 396,688
------------
876,688
------------
Factory Outlet 2.0%
Chelsea G.C.A. Realty, Inc. 5,700 216,600
------------
Regional Malls 7.7%
The Macerich Company 14,800 410,700
Urban Shopping Centers, Inc. 13,300 423,937
------------
834,637
------------
TOTAL RETAIL 1,927,925
------------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Identified cost $10,130,723) 10,644,538
------------
</TABLE>
See Notes to Financial Statements
2
<PAGE>
Real Estate Equity Securities Portfolio
- --------------------------------------------------------------------------------
INVESTMENTS AT JUNE 30, 1997 (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C> <C>
REAL ESTATE OPERATING COMPANIES 0.3%
Office/Industrial 0.3%
Crescent Operating, Inc. (b) 2,500 $ 30,000
------------
TOTAL REAL ESTATE OPERATING COMPANIES
(Identified cost $43,125)
30,000
------------
TOTAL COMMON STOCKS
(Identified cost $10,173,848)
10,674,538
------------
TOTAL INVESTMENTS 98.8%
(Identified cost $10,173,848)
10,674,538 (a)
Cash and receivables, less liabilities 1.2%
131,133
------------
NET ASSETS 100.0% $10,805,671
============
</TABLE>
(a) Federal income tax information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $558,279 and gross
depreciation of $57,589 for federal income tax purposes. At June 30, 1997,
the aggregate cost of securities for federal income tax purposes was
$10,173,848.
(b) Non-income producing
See Notes to Financial Statements
3
<PAGE>
Real Estate Equity Securities Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Assets
Investment securities at value (Identified cost $10,173,848) $10,674,538
Cash 72,761
Receivables
Investment securities sold 98,297
Dividends 86,083
Receivable from adviser 17,417
Prepaid expenses 53,475
------------
Total assets 11,002,571
------------
Liabilities
Payables
Investment securities purchased 171,128
Financial agent fee 6,740
Transfer agent fee 3,393
Administration fee 2,415
Trustees' fee 1,296
Distribution fee 21
Accrued expenses 11,907
------------
Total liabilities 196,900
------------
Net Assets $10,805,671
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $10,155,743
Undistributed net investment income 141,231
Accumulated net realized gain 8,007
Net unrealized appreciation 500,690
------------
Net Assets $10,805,671
============
Class X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $10,699,142) 1,005,559
Net asset value and offering price per share $10.64
Class Y
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $106,529) 10,015
Net asset value and offering price per share $10.64
</TABLE>
See Notes to Financial Statements
4
<PAGE>
Real Estate Equity Securities Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FROM INCEPTION MAY 1, 1997
TO JUNE 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Investment Income
Dividends $146,882
Interest 8,952
------------
Total investment income 155,834
------------
Expenses
Investment advisory fee 8,090
Distribution fee - Class Y 41
Financial agent fee 13,704
Administration fee 2,415
Registration 10,660
Transfer agent 7,417
Professional 4,592
Printing 4,106
Custodian 1,989
Trustees 1,296
Miscellaneous 819
------------
Total expenses 55,129
Less expenses borne by investment adviser (40,526)
------------
Net expenses 14,603
------------
Net investment income 141,231
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 8,007
Net change in unrealized appreciation (depreciation) on
investments 500,690
------------
Net gain on investments 508,697
------------
Net increase in net assets resulting from operations $649,928
============
</TABLE>
See Notes to Financial Statements
5
<PAGE>
Real Estate Equity Securities Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
May 1, 1997 to
June 30, 1997
(Unaudited)
----------------
<S> <C>
From Operations
Net investment income $ 141,231
Net realized gain 8,007
Net change in unrealized appreciation (depreciation) 500,690
------------
Increase in net assets resulting from operations 649,928
------------
From Distributions to Shareholders
Net investment income - Class X -
Net investment income - Class Y -
------------
Decrease in net assets from distributions
to shareholders -
------------
From Share Transactions
Class X
Proceeds from sales of shares (1,005,559 shares) 10,055,594
Net asset value of shares issued from reinvestment of
distributions (0 shares) -
Cost of shares repurchased (0 shares) -
------------
Total 10,055,594
------------
Class Y
Proceeds from sales of shares (10,015 shares) 100,149
Net asset value of shares issued from reinvestment of
distributions (0 shares) -
Cost of shares repurchased (0 shares) -
------------
Total 100,149
------------
Increase in net assets from share transactions 10,155,743
------------
Net increase in net assets 10,805,671
Net Assets
Beginning of period 0
------------
End of period (including undistributed net investment
income of $141,231) $10,805,671
============
</TABLE>
See Notes to Financial Statements
6
<PAGE>
Real Estate Equity Securities Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class X Class Y
-------------- --------------
From Inception From Inception
5/1/97 to 5/1/97 to
6/30/97 6/30/97
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Net asset value, beginning of period $10.00 $10.00
Income from investment operations
Net investment income 0.14 (1) 0.14 (1)
Net realized and unrealized gain 0.50 0.50
------------ ------------
Total from investment operations 0.64 0.64
------------ ------------
Less distributions
Dividends from net investment income - -
Dividends from net realized gains - -
------------ ------------
Total distributions - -
------------ ------------
Change in net asset value 0.64 0.64
------------ ------------
Net asset value, end of period $10.64 $10.64
============ ============
Total return 6.40% (3) 6.40% (3)
Ratios/supplemental data:
Net assets, end of period (thousands) $10,699 $107
Ratio to average net assets of:
Operating expenses 0.90% (2) 1.15% (2)
Net investment income 8.73% (2) 8.26% (2)
Portfolio turnover 2% (3) 2% (3)
Average commission rate paid $0.0500 (4) $0.0500 (4)
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of $0.04
and $0.04, respectively, computed using average shares outstanding.
(2) Annualized
(3) Not annualized
(4) A fund is required to disclose its average commission rate per share for
securities trades on which commissions are charged. This rate generally
does not reflect mark-ups, mark-downs or spreads on shares traded on a
principal basis.
See Notes to Financial Statements
7
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
REAL ESTATE EQUITY SECURITIES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
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 an open-end management investment
company. Seven Portfolios are presently offered for sale: Balanced Portfolio,
Managed Bond Portfolio, Growth Stock Portfolio, Money Market Portfolio, U.S.
Government Securities Portfolio, Enhanced Reserves Portfolio and Real Estate
Equity Securities Portfolio. This report only covers the Real Estate Equity
Securities Portfolio (the "Portfolio"). The Portfolio's investment objective is
capital appreciation and income with approximately equal emphasis through
investing, under normal circumstances, primarily in marketable securities of
publicly-traded real estate investment trusts (REITS) and companies that invest
in, operate, develop and/or manage real estate located in the United States.
The Portfolio offers both Class X and Class Y shares. Both classes of
shares have identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class Y bears distribution expenses and
has exclusive voting rights with respect to its distribution plan. Income and
expenses of the Portfolio are borne pro rata by the holders of both classes of
shares, except that Class X bears no distribution expenses.
The following is a summary of significant accounting policies
consistently followed by the Portfolio in the preparation of its financial
statements. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets, liabilities, revenues and
expenses. Actual results could differ from those estimates.
A. Security valuation:
Equity securities are valued at the last sale price, or if there has
been no sale that day, at the last bid price. Short-term investments having a
remaining maturity of 60 days or less are valued at amortized cost which
approximates market.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Dividend income
is recorded on the ex-dividend date. Interest income is recorded on the accrual
basis. The Portfolio does not amortize premiums but does amortize discounts
using the effective interest method. Realized gains or losses are determined on
the identified cost basis.
C. Income taxes:
The Portfolio is treated as a separate taxable entity. It is the policy
of the Portfolio to comply with the requirements of the Internal Revenue Code
(the "Code"), applicable to regulated investment companies, and to distribute
substantially all of its taxable income to its shareholders. In addition, the
Portfolio intends to distribute an amount sufficient to avoid imposition of any
excise tax under Section 4982 of the Code. Therefore, no provision for federal
income taxes or excise taxes has been made.
D. Distributions to shareholders:
Distributions are recorded by the Portfolio on the ex-dividend date.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, non-deductible
expenses, foreign currency gain/loss, partnerships and losses deferred due to
wash sales and excise tax regulations. Permanent book and tax basis differences
relating to shareholder distributions will result in reclassifications to paid
in capital.
8
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
REAL ESTATE EQUITY SECURITIES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 (Unaudited) (Continued)
E. Expenses:
Expenses incurred by the Fund with respect to any two or more
Portfolios are allocated in proportion to the net assets of each Portfolio,
except where allocation of direct expense to each Portfolio or an alternative
allocation method can be more fairly made.
F. Repurchase agreements:
A repurchase agreement is a transaction where a Portfolio acquires a
security for cash and obtains a simultaneous commitment from the seller to
repurchase the security at an agreed upon price and date. The Portfolio, through
its custodian, takes possession of securities collateralizing the repurchase
agreement. The collateral is marked to market daily to ensure that the market
value of the underlying assets remains sufficient to protect the Portfolio in
the event of default by the seller. If the seller defaults and the value of the
collateral declines or, if the seller enters insolvency proceedings, realization
of collateral may be delayed or limited.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Portfolio, the Adviser, Phoenix
Realty Securities, Inc., an indirect wholly-owned subsidiary of Phoenix Home
Life Mutual Insurance Company ("PHL"), is entitled to a fee based on an annual
rate of 0.50% of the average daily net assets of the Portfolio. The Adviser has
agreed to reimburse the Portfolio to the extent that total expenses exceed 0.90%
and 1.15% of the average daily net assets of Class A and Class B, respectively.
Phoenix Equity Planning Corporation ("PEPCO"), an indirect
majority-owned subsidiary of PHL, serves as the national distributor of the
Fund's shares. The Portfolio pays PEPCO a distribution fee of an annual rate of
0.25% for Class Y shares applied to the average daily net assets of that class.
As Financial Agent to the Portfolio, PEPCO receives a fee for
bookkeeping and pricing services at an annual rate of 0.05% of average daily net
assets up to $100 million, 0.04% of average daily net assets from $100 million
through $300 million, 0.03% of average daily net assets from $300 million
through $500 million and 0.015% of average daily net assets greater than $500
million; a minimum fee may apply.
Duff & Phelps Investment Management Co. ("DPM") serves as administrator
for the Portfolio, and as such, facilitates and provides administrative
services. DPM is a subsidiary of Phoenix Duff & Phelps Corporation, which is an
indirect less than wholly-owned subsidiary of PHL. As compensation, under an
Administration Agreement, DPM receives a fee at the annual rate of 0.15% of the
average daily net assets of the Portfolio.
PEPCO serves as the Portfolio's Transfer Agent with State Street Bank
and Trust Company as sub-transfer agent. For the period ended June 30, 1997,
transfer agent fees were $7,417 which were all paid to State Street.
As of June 30, 1997, PHL owned 490,000 Class X shares with a value of
$5,213,600 and 10,000 Class Y shares with a value of $106,400. The PHL Employee
Defined Benefit Pension Plan owned 515,545 Class X shares with a value of
$5,485,394.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the period ended June 30,
1997, were $10,353,760 and $187,919, respectively. There were no purchases or
sales of U.S. Government and agency securities.
9
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
PART C--OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A of the Registration Statement: Financial Highlights
Included in Part B of the Registration Statement: Financial Statements and
Notes thereto included in the Semiannual Report to Shareholders dated June
30, 1997, incorporated by reference.
(b) Exhibits:
<TABLE>
<S> <C>
(1)(a) Declaration of Trust of the Registrant, filed via Edgar 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 via Edgar with Pre-Effective
Amendment No. 2 on February 28, 1996 and incorporated herein by reference.
(1)(c) Amendment to Declaration of Trust adding Real Estate Equity Securities Portfolio filed via Edgar with
Post-Effective Amendment No. 4 on February 11, 1997.
(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 via Edgar 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
via Edgar with Pre-Effective Amendment No. 1 on February 2, 1996 and incorporated herein by
reference.
(c) Form of Investment Advisory Agreement between Registrant and Phoenix Realty Securities, Inc.
("PRS"), filed via Edgar with Post-Effective Amendment No. 5 on April 28, 1997 and incorporated
herein by reference.
(6)(a) Distribution Agreement between Registrant and Phoenix Equity Planning Corporation, filed via Edgar
with Pre-Effective Amendment No. 1 on February 2, 1996 and incorporated herein by reference.
(b) Form of Sales Agreement between Phoenix Equity Planning Corporation and dealers, filed via Edgar
with Post-Effective Amendment No. 1 on March 1, 1996 and incorporated herein by reference.
(7) None
(8)(a) Custodian Agreement between Registrant and State Street Bank and Trust Company, filed via Edgar
with Post-Effective Amendment No. 6 on September 30, 1997.
(b) Custodian Agreement between Registrant and The Chase Manhattan Bank, N.A., filed via Edgar with
Pre-Effective Amendment No. 2 on February 28, 1996 and incorporated herein by reference.
(9)(a) Financial Agent Agreement between Registrant and Phoenix Equity Planning Corporation dated
December 11, 1996, filed via Edgar with Post-Effective Amendment No. 5 on April 28, 1997.
(b) Transfer Agent Agreement between Registrant and Phoenix Equity Planning Corporation, filed via Edgar
with Pre-Effective Amendment No. 2 on February 28, 1996 and incorporated herein by reference.
(c) Form of Administration Agreement between Registrant (on behalf of Real Estate Equity Securities
Portfolio) and Phoenix Duff & Phelps Corporation, filed via Edgar with Post-Effective Amendment No. 4
on February 11, 1997.
(10)(a) Opinion of Counsel, filed via Edgar with Pre-Effective Amendment No. 2 on February 28, 1996 and
incorporated herein by reference.
(b) Opinion of Counsel (as to the Real Estate Equity Securities Portfolio) filed via Edgar with Post-Effective
Amendment No. 5 on April 28, 1997 and incorporated herein by reference.
(11) Consent of Accountants filed herewith.
(12) None
(13) Initial Capitalization Agreement, filed via Edgar with Pre-Effective Amendment No. 1 on February 2,
1996 and incorporated herein by reference.
(14) None
(15) Amended and Restated Rule 12b-1 Distribution Plan for Class Y Shares, filed via Edgar with Post-
Effective Amendment No. 6 on September 30, 1997.
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
(16) Schedule for Computation of Performance Quotations, filed via Edgar with Pre-Effective Amendment No.
2 on February 28, 1996 and incorporated herein by reference.
(17) Financial Data Schedule as reflected on Edgar as Exhibit 27 filed herewith.
(18) Amended and Restated Rule 18f-3 Dual Distribution Plan filed via Edgar with Post-Effective
Amendment No. 5 on April 28, 1997.
(19)(a) Powers of Attorney, filed via Edgar with Pre-Effective Amendment No. 2 on February 28, 1996 and
incorporated herein by reference.
(b) Power of Attorney for Ms. Moran, filed via Edgar with Post-Effective Amendment No. 4 on February 11, 1997.
</TABLE>
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 August 29, 1997:
<TABLE>
<CAPTION>
Class X Shares Class Y Shares
Number of Number of
Record Holders Record Holders
---------------- ---------------
<S> <C> <C>
Balanced Portfolio ............... 55 31
Managed Bond Portfolio ............ 75 23
Enhanced Reserves Portfolio ...... 37 5
Growth Portfolio .................. 62 38
Money Market Portfolio ............ 39 25
U.S. Gov't Sec. Portfolio ......... 20 14
Real Estate Portfolio ............ 5 4
</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 "Trustees and Officers"
and "Services of the Adviser" 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), 801-48190 (PRS) and 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.
C-2
<PAGE>
(b) The directors and executive officers of Phoenix Equity Planning
Corporation, the distributor for Registrant, are as follows:
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address with Distributor with Registrant
- -------------------------- ------------------------------- -------------------------
<S> <C> <C>
Michael E. Haylon Director Executive Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Trustee and President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
David R. Pepin Director and None
56 Prospect Street Executive Vice President,
P.O. Box 150480 Mutual Fund Sales and
Hartford, CT 06115-0480 Operations
Leonard J. Saltiel Managing Director, Vice President
100 Bright Meadow Blvd. Operations and Service
P.O. Box 2200
Enfield, CT 06083-2200
Paul Atkins Senior Vice President and None
56 Prospect Street Sales Manager
P.O. Box 150480
Hartford, CT 06115-0480
Maris Lambergs Senior Vice President, None
100 Bright Meadow Blvd. Insurance and Independent
P.O. Box 2200 Division
Enfield, CT 06083-2200
William R. Moyer Senior Vice President and Vice President
100 Bright Meadow Blvd. Chief Financial Officer
P.O. Box 2200
Enfield, CT 06083-2200
John F. Sharry Managing Director, Mutual None
100 Bright Meadow Blvd. Fund Distribution
P.O. Box 2200
Enfield, CT 06083-2200
G. Jeffrey Bohne Vice President, Mutual Fund Secretary
101 Munson Street Customer Service
P.O. Box 810
Greenfield, MA 01302-0810
Eugene A. Charon Vice President and Controller None
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
Nancy G. Curtiss Vice President and Treasurer, Treasurer
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Elizabeth R. Sadowinski Vice President, None
56 Prospect Street Administration
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address with Distributor with Registrant
- ------------------------- --------------------------- ----------------------
<S> <C> <C>
Thomas N. Steenburg Vice President, Counsel Assistant Secretary
56 Prospect Street and Secretary
P.O. Box 150480
Hartford, CT 06115
William E. Keen, III Assistant Vice President, Vice President
100 Bright Meadow Blvd. Mutual Fund Regulation
P.O. Box 2200
Enfield, CT 06083-2200
</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.
Item 31. Management Services.
None.
Item 32. Undertakings.
(a) Not applicable.
(b) Filed herewith.
(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 certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Hartford, and State of Connecticut on
the 30th day of September, 1997.
PHOENIX DUFF & PHELPS
INSTITUTIONAL MUTUAL FUNDS
ATTEST: /s/ Thomas N. Steenburg By: /s/ Philip R. McLoughlin
----------------------- ----------------------------------
Thomas N. Steenburg Philip R. McLoughlin
Assistant Secretary 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 30th day of September, 1997.
<TABLE>
<CAPTION>
Signature Title
- ------------------------------- -------------------------------
<S> <C>
- ---------------------------- Trustee
C. Duane Blinn*
- ---------------------------- Trustee
Robert Chesek*
- ---------------------------- Trustee
E. Virgil Conway*
- ---------------------------- Trustee
William W. Crawford*
- ---------------------------- Treasurer (principal financial
Nancy G. Curtiss* and accounting officer)
- ---------------------------- Trustee
Harry Dalzell-Payne*
- ---------------------------- Trustee
William N. Georgeson*
- ---------------------------- Trustee
Francis E. Jeffries*
- ---------------------------- Trustee
Leroy Keith, Jr.*
/s/ Philip R. McLoughlin
- ---------------------------- Trustee and President
Philip R. McLoughlin
- ---------------------------- Trustee
Eileen A. Moran**
- ---------------------------- Trustee
Everett L. Morris*
- ---------------------------- Trustee
James M. Oates*
</TABLE>
S-1(c)
<PAGE>
<TABLE>
<CAPTION>
Signature Title
- ------------------------------- --------
<S> <C>
- ---------------------------- 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.*
</TABLE>
*By: /s/ Philip R. McLoughlin
-------------------------
* Philip R. McLoughlin pursuant to powers of attorney filed with
Pre-Effective Amendment No. 2 on February 28, 1996 and incorporated
herein by reference.
** Philip R. McLoughlin pursuant to powers of attorney filed with
Post-Effective Amendment No. 4 on February 11, 1997 and incorporated
herein by reference.
S-2(c)
Exhibit 8(a)
Custodian Contract
<PAGE>
CUSTODIAN CONTRACT
Between
EACH OF THE PARTIES LISTED ON APPENDIX 1
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Employment of Custodian and Property to be Held By It....................................................1
2. Duties of the Custodian with Respect to Property
of each Fund Held by the Custodian in the United States..................................................2
2.1 Holding Securities..............................................................................2
2.2 Delivery of Securities..........................................................................2
2.3 Registration of Securities......................................................................4
2.4 Bank Accounts...................................................................................4
2.5 Availability of Federal Funds...................................................................5
2.6 Collection of Income............................................................................5
2.7 Payment of Fund Moneys..........................................................................5
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.............................6
2.9 Appointment of Agents...........................................................................7
2.10 Deposit of Fund Assets in U.S. Securities System................................................7
2.11 Fund Assets Held in the Custodian's Direct Paper System.........................................8
2.12 Segregated Account..............................................................................9
2.13 Ownership Certificates for Tax Purposes.........................................................9
2.14 Proxies.........................................................................................9
2.15 Communications Relating to Fund Securities.....................................................10
3. Duties of the Custodian with Respect to Property of
each Fund Held Outside of the United States.............................................................10
3.1 Appointment of Foreign Sub-Custodians..........................................................10
3.2 Assets to be Held..............................................................................10
3.3 Foreign Securities Systems.....................................................................10
3.4 Holding Securities.............................................................................11
3.5 Agreements with Foreign Banking Institutions...................................................11
3.6 Access of Independent Accountants of each Fund.................................................11
3.7 Reports by Custodian...........................................................................11
3.8 Transactions in Foreign Custody Account........................................................12
3.9 Liability of Foreign Sub-Custodians............................................................12
3.10 Liability of Custodian.........................................................................12
3.11 Reimbursement for Advances.....................................................................13
3.12 Monitoring Responsibilities....................................................................13
3.13 Branches of U.S. Banks.........................................................................13
3.14 Tax Law........................................................................................13
4. Payments for Sales or Repurchase or Redemptions
of Shares of each Fund..................................................................................14
5. Proper Instructions.....................................................................................14
6. Actions Permitted Without Express Authority.............................................................15
7. Evidence of Authority...................................................................................15
8. Duties of Custodian With Respect to the Books of Account and Calculation of Net Asset Value
and Net Income..........................................................................................15
9. Records 16
10. Opinion of Fund's Independent Accountants...............................................................16
11. Reports to Fund by Independent Public Accountants.......................................................16
12. Compensation of Custodian...............................................................................16
13. Responsibility of Custodian.............................................................................16
14. Effective Period, Termination and Amendment.............................................................18
15. Successor Custodian.....................................................................................18
16. Interpretive and Additional Provisions..................................................................19
17. Additional Funds........................................................................................19
18. Massachusetts Law to Apply..............................................................................20
19. Prior Contracts.........................................................................................20
20. Shareholder Communications..............................................................................20
21. Limitation of Liability................................................................................21
</TABLE>
<PAGE>
MASTER CUSTODIAN CONTRACT
This Contract between each fund or series of a fund listed on Appendix 1
which evidences its agreement to be bound hereby by executing a copy of this
Contract (each such fund, any and all separate series or portfolios thereof and
any additional portfolios or separate series thereof which become subject to
this Contract pursuant to Section 17 hereof, are individually hereafter referred
to as a "Fund"), and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, each of the Funds has previously entered into a Custodian Contract
with the Custodian;
WHEREAS, the Custodian and each of the Funds desire to replace such
existing Custodian Contracts with this Master Custodian Contract between the
Custodian and all of the Funds;
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
-----------------------------------------------------
Each Fund hereby employs the Custodian as the custodian of the assets of
such Fund, including securities which such Fund desires to be held in places
within the United States ("domestic securities") and securities it desires to be
held outside the United States ("foreign securities") pursuant to the provisions
of such Fund's governing documents (domestic securities and foreign securities
are sometimes collectively referred to herein as "Securities"). Each Fund agrees
to deliver to the Custodian all securities and cash of such Fund, and all
payments of income, payments of principal or capital distributions received by
it with respect to all securities owned by such Fund from time to time, and the
cash consideration received by it for such new or treasury shares each class of
capital stock or beneficial interest, as applicable, of such Fund, ("Shares") as
may be issued or sold from time to time. The Custodian shall not be responsible
for any property of a Fund held or received by such Fund and not delivered to
the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Fund from time to time employ
one or more sub-custodians, located in the United States but only in accordance
with an applicable vote by the Board of the Fund, and provided that the
Custodian shall have no more or less responsibility or liability to the Fund on
account of any actions or omissions of any sub-custodian so employed than any
such sub-custodian has to the Custodian. The Fund shall approve in writing the
terms of any subcustodian agreement with a United States subcustodian. The
Custodian may employ as sub-custodian for each Fund's foreign securities the
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.
<PAGE>
2. Duties of the Custodian with Respect to Property of each Fund Held By the
Custodian in the United States
--------------------------------------------------------------------------
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Fund all non-cash property, to be held by it in the
United States including all domestic securities owned by such Fund, other
than (a) securities which are maintained pursuant to Section 2.10 in a
clearing agency which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury (each, a "U.S.
Securities System") and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the Direct Paper System of
the Custodian (the "Direct Paper System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by a Fund held by the Custodian or in a U.S. Securities
System account of the Custodian or in the Custodian's Direct Paper book
entry system account ("Direct Paper System Account") only upon receipt of
Proper Instructions from such Fund, which may be continuing instructions
when deemed appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of such Fund and receipt
of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by such Fund;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of such Fund;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of
such Fund or into the name of any nominee or nominees of the Custodian
or into the name or nominee name of any agent appointed pursuant to
Section 2.9 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same
2
<PAGE>
aggregate face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of such Fund, to the
broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by such
Fund, but only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and such Fund, which may be in the
form of cash or obligations issued by the United States government,
its agencies or instrumentalities, except that in connection with any
loans for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S. Department of
the Treasury, the Custodian will not be held liable or responsible for
the delivery of securities owned by such Fund prior to the receipt of
such collateral;
11) For delivery as security in connection with any borrowings by such
Fund requiring a pledge of assets by such Fund, but only against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among
such Fund, the Custodian 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 such Fund ;
3
<PAGE>
13) For delivery in accordance with the provisions of any agreement among
such Fund, the Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations, regarding
account deposits in connection with transactions by such Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for such Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may be
described from time to time in the currently effective prospectus and
statement of additional information of such Fund ("Prospectus"), in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions from such Fund, a certified copy of a
resolution of the Board or of the Executive Committee of such Fund
signed by an officer of such Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of such Fund to be
delivered, setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of such securities shall
be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of each Fund
or in the name of any nominee of each Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to each Fund, unless
a Fund has authorized in writing the appointment of a nominee to be used in
common with other registered investment companies having the same
investment adviser as such Fund, or in the name or nominee name of any
agent appointed pursuant to Section 2.9 or in the name or nominee name of
any sub-custodian appointed pursuant to Article 1. All securities accepted
by the Custodian under the terms of this Contract shall be in "street name"
or other good delivery form. If, however, a Fund directs the Custodian to
maintain securities in "street name", the Custodian shall utilize
commercially reasonable means to timely collect income due such Fund on
such securities and to timely notify each Fund of relevant corporate
actions including, without limitation, pendency of calls, maturities,
tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Fund , subject
only to draft or order by the Custodian acting pursuant to the terms of
this Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of such
Fund, other than cash maintained by such Fund in a bank account established
and used
4
<PAGE>
in accordance with Rule 17f-3 under the Investment Company Act of 1940.
Funds held by the Custodian for each Fund may be deposited by it to its
credit as Custodian in the Banking Department of the Custodian or in such
other banks or trust companies as it may in its discretion deem necessary
or desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment Company Act
of 1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of each
applicable Fund be approved by vote of a majority of the Board of such
Fund. Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between a Fund and the
Custodian, the Custodian shall, upon the receipt of Proper Instructions
from such Fund, make federal funds available to such Fund as of specified
times agreed upon from time to time by such Fund and the Custodian in the
amount of checks received in payment for Shares of such Fund which are
deposited into such Fund's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to Securities held hereunder to which each Fund shall be
entitled either by law or pursuant to custom in the securities business,
and shall collect on a timely basis all income and other payments with
respect to bearer securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent thereof and shall credit
such income, as collected, to such Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach and
present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when
due on securities held hereunder. Unless otherwise agreed to by the
parties, income due each Fund on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of the Fund. The
Custodian will have no duty or responsibility in connection therewith,
other than to provide each Fund with such information or data as may be
necessary to assist each Fund in arranging for the timely delivery to the
Custodian of the income to which each Fund is properly entitled.
2.7 Payment of Fund Moneys. Upon receipt of Proper Instructions from a Fund,
which may be continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out moneys of each Fund in the following
cases only:
1) Upon the purchase of Securities, options, futures contracts or options
on futures contracts for the account of such Fund but only (a) against
the delivery of such securities or evidence of title to such options,
futures contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the United
States or abroad which is qualified under the Investment
5
<PAGE>
Company Act of 1940, as amended, to act as a custodian and has been
designated by the Custodian as its agent for this purpose) registered
in the name of such Fund or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for transfer; (b)
in the case of a purchase effected through a U.S. Securities System,
in accordance with the conditions set forth in Section 2.10 hereof;
(c) in the case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section 2.11; (d) in the
case of repurchase agreements entered into between such Fund and the
Custodian, or another bank, or a broker-dealer which is a member of
NASD, (i) against delivery of the securities either in certificate
form or through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against delivery of
the receipt evidencing purchase by such Fund of securities owned by
the Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from such Fund or (e) for
transfer to a time deposit account of such Fund in any bank, whether
domestic or foreign; such transfer may be effected prior to receipt of
a confirmation from a broker and/or the applicable bank pursuant to
Proper Instructions from such Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of Securities
owned by such Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by such Fund as set
forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by such Fund,
including but not limited to the following payments for the account of
such Fund: interest, taxes, management, accounting, transfer agent and
legal fees, and operating expenses of such Fund whether or not such
expenses are to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends on Shares of such Fund declared
pursuant to the governing documents of such Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in addition to
Proper Instructions from such Fund, a certified copy of a resolution
of the Board or of the Executive Committee of such Fund signed by an
officer of such Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
6
<PAGE>
purpose to be a proper purpose, and naming the person or persons to
whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except
as specifically stated otherwise in this Contract, in any and every case
where payment for purchase of Securities for the account of such Fund is
made by the Custodian in advance of receipt of the securities purchased in
the absence of specific Proper Instructions from such Fund to so pay in
advance, the Custodian shall be absolutely liable to such Fund for such
securities to the same extent as if the securities had been received by the
Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times, subject to
the applicable Fund's prior approval, in its discretion appoint (and may at
any time remove) any other bank or trust company which is itself qualified
under the Investment Company Act of 1940, as amended, to act as a
custodian, as its agent to carry out such of the provisions of this Article
2 as the Custodian may from time to time direct; provided, however, that
the appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of
the Exchange Act, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein as "U.S.
Securities System" in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
1) The Custodian may keep securities of each Fund in a U.S. Securities
System provided that such securities are represented in an account
("Account") of the Custodian in the U.S. Securities System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of each Fund
which are maintained in a U.S. Securities System shall identify by
book-entry those securities belonging to each Fund;
3) The Custodian shall pay for securities purchased for the account of
each Fund upon (i) receipt of advice from the U.S. Securities System
that such securities have been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of each Fund. The Custodian shall
transfer securities sold for the account of each Fund upon (i) receipt
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<PAGE>
of advice from the U.S. Securities System that payment for such
securities has been transferred to the Account, and (ii) the making of
an entry on the records of the Custodian to reflect such transfer and
payment for the account of each Fund. Copies of all advices from the
U.S. Securities System of transfers of securities for the account of
each Fund shall identify each Fund, be maintained for each Fund by the
Custodian and be provided to each Fund at its request. Upon request,
the Custodian shall furnish each Fund confirmation of each transfer to
or from the account of each Fund in the form of a written advice or
notice and shall furnish to each Fund copies of daily transaction
sheets reflecting each day's transactions in the U.S. Securities
System for the account of each Fund.
4) The Custodian shall provide each Fund with any report obtained by the
Custodian on the U.S. Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the U.S. Securities System;
5) The Custodian shall have received from each Fund the initial
certificate required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to each Fund for the benefit of such Fund
for any loss or damage to such Fund resulting from use of the U.S.
Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or any such agent to
enforce effectively such rights as it may have against the U.S.
Securities System; at the election of the affected Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect
to any claim against the U.S. Securities System or any other person
which the Custodian may have as a consequence of any such loss or
damage if and to the extent that such Fund has not been made whole for
any such loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
deposit and/or maintain securities owned by each Fund in the Direct Paper
System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions from each Fund ;
2) The Custodian may keep securities of each Fund in the Direct Paper
System only if such securities are represented in an account of the
Custodian in the Direct Paper System which shall not include any
assets of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
8
<PAGE>
3) The records of the Custodian with respect to securities of each Fund
which are maintained in the Direct Paper System shall identify by
book-entry those securities belonging to each Fund;
4) The Custodian shall pay for securities purchased for the account of
each Fund upon the making of an entry on the records of the Custodian
to reflect such payment and transfer of securities to the account of
each Fund. The Custodian shall transfer securities sold for the
account of each Fund upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for the
account of each Fund;
5) The Custodian shall furnish each Fund confirmation of each transfer to
or from the account of each Fund, in the form of a written advice or
notice, of Direct Paper on the next business day following such
transfer and shall furnish to each Fund copies of daily transaction
sheets reflecting each day's transactions in the Direct Paper System
for the account of each Fund;
6) The Custodian shall provide each Fund with any report on its system of
internal accounting control as each Fund may reasonably request from
time to time.
2.12 Pledged Account. The Custodian shall upon receipt of Proper
Instructions from a Fund establish and maintain a pledged account or
accounts for and on behalf of such Fund, into which account or accounts
may be transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to Section 2.10
hereof, (i) in accordance with the provisions of any agreement among
such Fund , the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by such Fund, (ii) for
purposes of segregating cash or government securities in connection
with options purchased, sold or written by such Fund or commodity
futures contracts or options thereon purchased or sold by such Fund,
(iii) for the purposes of compliance by such Fund with the procedures
required by Investment Company Act Release No. 10666, and subsequent
release or releases of the Securities and Exchange Commission relating
to the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in
the case of clause (iv), upon receipt of, in addition to Proper
Instructions from such Fund , a certified copy of a resolution of the
Board or of the Executive Committee of such Fund signed by an
9
<PAGE>
officer of such Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated
account.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to securities of each Fund held by it and in connection with
transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
such Fund or a nominee of such Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to
the applicable Fund such proxies, all proxy soliciting materials and all
notices relating to such securities.
2.15 Communications Relating to Fund Securities. Subject to the provisions of
Section 2.3, the Custodian shall transmit promptly to each Fund all written
information (including, without limitation, pendency of calls and
maturities of domestic securities and expirations of rights in connection
therewith and notices of exercise of call and put options written by such
Fund and the maturity of futures contracts purchased or sold by such Fund)
received by the Custodian from issuers of the securities being held for
such Fund. With respect to tender or exchange offers, the Custodian shall
transmit promptly to each Fund all written information received by the
Custodian from issuers of the securities whose tender or exchange is sought
and from the party (or his agents) making the tender or exchange offer. If
a Fund desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, such Fund shall notify the
Custodian at least three business days prior to the date on which the
Custodian is to take such action.
3. Duties of the Custodian with Respect to Property of each Fund Held Outside
of the United States
--------------------------------------------------------------------------
3.1 Appointment of Foreign Sub-Custodians. Each Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for such Fund's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated
on Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper
Instructions", as defined in Section 5 of this Contract, together with a
certified resolution of such Fund's Board, the Custodian and such Fund may
agree to amend Schedule A hereto from time to time to designate additional
foreign banking institutions and foreign securities depositories to act as
sub-custodian. Upon receipt of Proper Instructions, a Fund may instruct the
Custodian to cease the employment of any one or more such sub-custodians
for maintaining custody of such Fund's assets.
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<PAGE>
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or each Fund may determine to be reasonably
necessary to effect such Fund's foreign securities transactions. The
Custodian shall identify on its books as belonging to each Fund, the
foreign securities of each Fund held by each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and each Fund, assets of each Fund shall be
maintained in a clearing agency which acts as a securities depository or in
a book-entry system for the central handling of securities located outside
of the United States (each a "Foreign Securities System") only through
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof (Foreign Securities Systems and
U.S. Securities Systems are collectively referred to herein as the
"Securities Systems"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.6
hereof.
3.4 Holding Securities. The Custodian may hold securities and other non-cash
property for all of its customers, including each Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash
property of each Fund which are maintained in such account shall identify
by book-entry those securities and other non-cash property belonging to
each Fund and (ii) the Custodian shall require that securities and other
non-cash property so held by the foreign sub-custodian be held separately
from any assets of the foreign sub-custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a foreign
banking institution shall provide that: (a) the assets of each Fund will
not be subject to any right, charge, security interest, lien or claim of
any kind in favor of the foreign banking institution or its creditors or
agents, except a claim of payment for their safe custody or administration;
(b) beneficial ownership for the assets of each Fund will be freely
transferable without the payment of money or value other than for custody
or administration; (c) adequate records will be maintained identifying the
assets as belonging to each Fund; (d) officers of or auditors employed by,
or other representatives of the Custodian, including to the extent
permitted under applicable law the independent public accountants for each
Fund, will be given access to the books and records of the foreign banking
institution relating to its actions under its agreement with the Custodian;
and (e) assets of each Fund held by the foreign sub-custodian will be
subject only to the instructions of the Custodian or its agents. Agreements
with
11
<PAGE>
foreign banking institutions shall contain those provisions required by
subparagraph (c) of Section 17f-5 under the Investment Company Act of 1940.
3.6 Access of Independent Accountants of each Fund. Upon request of each Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of each Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to each Fund from time to
time, as mutually agreed upon, statements in respect of the securities and
other assets of each Fund held by foreign sub-custodians, including but not
limited to an identification of entities having possession of such Fund's
securities and other assets and advices or notifications of any transfers
of securities to or from each custodial account maintained by a foreign
banking institution for the Custodian on behalf of such Fund indicating, as
to securities acquired for such Fund, the identity of the entity having
physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, the provisions of Sections 2.2 and
2.7 of this Contract shall apply, mutatis mutandis to the foreign
securities of each Fund held outside the United States by foreign
sub-custodians. (b) Notwithstanding any provision of this Contract to the
contrary, settlement and payment for securities received for the account of
each Fund and delivery of securities maintained for the account of each
Fund may be effected in accordance with the customary established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with
the expectation of receiving later payment for such securities from such
purchaser or dealer. (c) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's nominee to the
same extent as set forth in Section 2.3 of this Contract, and each Fund
agrees to hold any such nominee harmless from any liability as a holder of
record of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and each Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of a Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent
that such Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
12
<PAGE>
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians generally in this Contract and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by Section 3.13 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has otherwise exercised
reasonable care. Notwithstanding the foregoing provisions of this Section
3.10, in delegating custody duties to State Street London Ltd., the
Custodian shall not be relieved of any responsibility to each Fund for any
loss due to such delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization, insurrection,
civil strife or armed hostilities) or (b) other losses (excluding a
bankruptcy or insolvency of State Street London Ltd. not caused by
political risk) due to Acts of God, nuclear incident or other losses under
circumstances where the Custodian and State Street London Ltd. have
exercised reasonable care.
3.11 Reimbursement for Advances. If, pursuant to Proper Instructions, a Fund
requires the Custodian to advance cash or securities for any purpose for
the benefit of a Fund including the purchase or sale of foreign exchange or
of contracts for foreign exchange, or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of
this Contract, except such as may arise from events or circumstances for
which the Custodian or a sub-custodian are liable pursuant to Sections 3.9
and 3.10 above, or from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Fund shall be security therefor and
should such Fund fail to repay the Custodian promptly, the Custodian shall
upon prior written notice be entitled to utilize available cash and to
dispose of such Fund's assets to the extent necessary to obtain
reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to each
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian and such other information needed
to permit the Fund to comply with Section 17f-5 under the 1940 Act. Such
information shall be similar in kind and scope to that furnished to each
Fund in connection with the initial approval of this Contract. In addition,
the Custodian will promptly inform each Fund in the event that the
Custodian learns of a material adverse change in the financial condition of
a foreign sub-custodian or any material loss of the assets of each Fund or
in the case of any foreign sub-custodian not the subject of an exemptive
order from the Securities and Exchange Commission is notified by such
foreign sub-custodian that there appears to be a substantial likelihood
that its shareholders' equity
13
<PAGE>
will decline below $200 million (U.S. dollars or the equivalent thereof) or
that its shareholders' equity has declined below $200 million (in each case
computed in accordance with generally accepted U.S. accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this Contract,
the provisions hereof shall not apply where the custody of a Fund's assets
are maintained in a foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the Investment Company Act of 1940
meeting the qualification set forth in Section 26(a) of said Act. The
appointment of any such branch as a sub-custodian shall be governed by
Article 1 of this Contract. (b) Cash held for each Fund in the United
Kingdom shall be maintained in an interest bearing account established for
each Fund with the Custodian's London branch, which account shall be
subject to the direction of the Custodian, State Street London Ltd. or
both.
3.14 Tax Law. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on any Fund or the Custodian as
custodian of such Fund by the tax law of the United States of America or
any state or political subdivision thereof. It shall be the responsibility
of each Fund to notify the Custodian of the obligations imposed on each
Fund or the Custodian as custodian of each Fund by the tax law of
jurisdictions other than those mentioned in the above sentence, including
responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist each Fund with respect to any claim for
exemption or refund under the tax law of jurisdictions for which each Fund
has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Shares of each Fund
-----------------------------------------------------------------------
The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent of each Fund and deposit into the account of each Fund such
payments as are received for Shares of each Fund issued or sold from time to
time by each Fund. The Custodian will provide timely notification to each Fund
and the Transfer Agent of any receipt by it of payments for Shares of such Fund.
From such funds as may be available for the purpose but subject to the
limitations of each Fund's governing documents and any applicable votes of the
Board of each Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of each Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of each Fund, the Custodian shall honor checks drawn on
the
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<PAGE>
Custodian by a holder of Shares, which checks have been furnished by such
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between each Fund and the Custodian.
5. Proper Instructions
-------------------
Proper Instructions as used throughout this Contract means a writing signed
or initialed by one or more person or persons as the Board of each Fund shall
have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. Each Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of each Fund
accompanied by a detailed description of procedures approved by the Board,
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board and the
Custodian are satisfied that such procedures afford adequate safeguards for such
Fund's assets. For purposes of this Section, Proper Instructions shall include
instructions received by the Custodian pursuant to any three-party agreement
which requires a segregated asset account in accordance with Section 2.12.
6. Actions Permitted without Express Authority
-------------------------------------------
The Custodian may in its discretion, without express authority from each
Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the applicable Fund;
1) surrender securities in temporary form for securities in definitive
form;
2) endorse for collection, in the name of each Fund, checks, drafts and
other negotiable instruments; and
3) in general, attend to all ministerial details in connection with the
sale, exchange, substitution, purchase, transfer and other dealings
with the securities and property of each Fund except as otherwise
directed by the Board of each Fund.
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<PAGE>
7. Evidence of Authority
---------------------
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed by or on behalf
of each Fund. The Custodian may receive and accept a certified copy of a vote of
the Board of each Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board pursuant to the governing documents of each Fund as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and Calculation of
Net Asset Value and Net Income
---------------------------------------------------------------------------
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of each Fund to keep the books of
account of each Fund and/or compute the net asset value per share of the
outstanding shares of each Fund or, if directed in writing to do so by each Fund
, shall itself keep such books of account and/or compute such net asset value
per share. If so directed, the Custodian shall also calculate daily the net
income of each Fund as described in each Fund's currently effective Prospectus
and shall advise each Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of each Fund to do
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value per
share and the daily income of each Fund shall be made at the time or times
described from time to time in each Fund's currently effective Prospectus.
9. Records
-------
The Custodian shall with respect to each Fund create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of each Fund under the Investment Company
Act of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of each Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the applicable
Fund and employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the request of any Fund, supply such Fund with a tabulation
of securities owned by such Fund and held by the Custodian and shall, when
requested to do so by a Fund and for such compensation as shall be agreed upon
between such Fund and the Custodian, include certificate numbers in such
tabulations.
10. Opinion of Fund's Independent Accountant
----------------------------------------
The Custodian shall take all reasonable action, as each Fund may from time
to time request, to obtain from year to year favorable opinions from each Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of each Fund's Form N-1A,
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<PAGE>
and Form N-SAR or other annual reports to the Securities and Exchange Commission
and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
--------------------------------------------------
The Custodian shall provide each Fund, at such times as each Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports, shall be
of sufficient scope and in sufficient detail, as may reasonably be required by
each Fund to provide reasonable assurance that any material inadequacies would
be disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
12. Compensation of Custodian
-------------------------
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, determine in accordance with the fee
schedule attached hereto as Schedule B, as amended from time to time as agreed
by each Fund and the Custodian.
13. Responsibility of Custodian
---------------------------
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to any Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for a Fund) on
all matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to any Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
17
<PAGE>
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts provided Custodian has maintained an adequate
disaster recovery plan; (ii) errors by a Fund or its investment advisor in their
instructions to the Custodian provided such instructions have been in accordance
with this Contract; (iii) the insolvency of or acts or omissions by a Securities
System; (iv) any delay or failure of any broker, agent or intermediary, central
bank or other commercially prevalent payment or clearing system to deliver to
the Custodian's sub-custodian or agent securities purchased or in the remittance
or payment made in connection with securities sold; (v) any delay or failure of
any company, corporation, or other body in charge or registering or transferring
securities in the name of the Custodian, a Fund, the Custodian's sub-custodians,
nominees or agents or any consequential losses arising out of such delay or
failure to transfer such securities including non-receipt of bonus, dividends
and rights and other accretions or benefits; (vi) delays or inability to perform
its duties due to any disorder in market infrastructure with respect to any
particular security or Securities System; and (vii) any provision of any present
or future law or regulation or order of the United States of America, or any
state thereof, or any other country, or political subdivision thereof or of any
court of competent jurisdiction.
Except as expressly provided in Section 3.9, the Custodian shall be liable
for the acts or omissions of a foreign banking institution appointed pursuant to
the provisions of Article 3 to the same extent as set forth in Article 1 hereof
with respect to sub-custodians located in the United States.
If a Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the reasonable opinion of the Custodian, result in the Custodian or its nominee
assigned to a Fund being liable for the payment of money or incurring liability
of some other form, such Fund, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If a Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlements)
or in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of such Fund shall be security
therefor and should such Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of such
Fund's assets to the extent necessary to obtain reimbursement.
18
<PAGE>
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. Effective Period, Termination and Amendment
-------------------------------------------
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not with respect to each Fund act under Section 2.10 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of each Fund has approved the initial use of
a particular Securities System by each Fund, as required by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian shall not with
respect to a Fund act under Section 2.11 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant Secretary that the Board
has approved the initial use of the Direct Paper System by each Fund; provided
further, however, that a Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of its governing documents, and further provided, that a Fund may at any time by
action of its Board (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, each Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination as provided
herein.
15. Successor Custodian
-------------------
If a successor custodian for a Fund shall be appointed by the Board of such
Fund, the Custodian shall, upon termination, and upon receipt of a certified
copy of such vote, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of such
Fund then held by it hereunder and shall transfer to an account of the successor
custodian all of the securities of such Fund held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of the
applicable Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board shall have been delivered to the Custodian
on or before the date when such
19
<PAGE>
termination shall become effective, then the Custodian shall have the right to
deliver to a bank or trust company, which is a "bank" as defined in the
Investment Company Act of 1940, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published report,
of not less than $25,000,000, all securities, funds and other properties held by
the Custodian on behalf of such Fund and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract on behalf
of such Fund and to transfer to an account of such successor custodian all of
the securities of such Fund held in any Securities System. Thereafter, such bank
or trust company shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of a Fund to procure the certified copy of the vote referred to above or
of the Board to appoint a successor custodian, the Custodian shall be entitled
to fair compensation for its services during such period as the Custodian
retains possession of such securities, funds and other properties and the
provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Contract, the Custodian and each
Fund, may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the governing documents of any Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
17. Additional Funds
----------------
In the event that any mutual funds in addition to the Funds are hereafter
established which desire to have the Custodian render services as custodian
under the terms hereof, it shall so notify the Custodian in writing, and if the
Custodian agrees in writing to provide such services, such fund shall become a
Fund hereunder, subject to the delivery by the new Fund of resolutions
authorizing the appointment of the Custodian and such other supporting or
related documentation as the Custodian may request. All references to the "Fund"
are to each of the Funds listed on Appendix 1 individually, as if this Contract
were between each such individual Fund and the Custodian.
18. Massachusetts Law to Apply
--------------------------
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
20
<PAGE>
19. Prior Contracts
---------------
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between each of the Funds and the Custodian relating to the custody of
such Fund's assets.
20. Shareholder Communications
--------------------------
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs each Fund to indicate whether such Fund authorizes
the Custodian to provide such Fund's name, address, and share position to
requesting companies whose stock each Fund owns. If a Fund tells the Custodian
"no", the Custodian will not provide this information to requesting companies.
If a Fund tells the Custodian "yes" or do not check either "yes" or "no" below,
the Custodian is required by the rule to treat such Fund as consenting to
disclosure of this information for all securities owned by such Fund or any
funds or accounts established by each Fund. For each Fund's protection, the Rule
prohibits the requesting company from using such Fund's name and address for any
purpose other than corporate communications. Please indicate below whether each
Fund consents or objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the name,
address, and share positions of each Fund listed on
Appendix 1.
NO [X] The Custodian is not authorized to release the
name, address, and share positions of each Fund listed
on Appendix 1.
21. Limitation of Liability.
------------------------
The execution of this Contract has been authorized by each Fund's Board.
This Contract is executed on behalf of each Fund or, in the case of a Fund
organized as a business trust, the trustees of such Fund as trustees and not
individually and the obligations of each Fund under this Contract are not
binding upon any of such Fund's trustees, officers or shareholders individually
but are binding only upon the assets and property of such Fund. A Certificate of
Trust in respect of each Fund organized as a business trust is on file with the
Secretary of the Commonwealth of Massachusetts.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 1st day of May, 1997.
EACH OF THE FUNDS LISTED ON APPENDIX 1
By: /s/ Michael E. Haylon
--------------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
--------------------------
Executive Vice President
<PAGE>
APPENDIX 1
Fund Names
(as of May 1, 1997)
Phoenix California Tax Exempt Bonds, Inc.
The Phoenix Edge Series Fund
Real Estate Securities Series
Phoenix Income and Growth Fund
Phoenix Multi-Portfolio Fund
Phoenix Diversified Income Portfolio
Phoenix Emerging Markets Bond Portfolio
Phoenix Endowment Equity Portfolio
Phoenix Real Estate Securities Portfolio
Phoenix Mid Cap Portfolio
Phoenix Tax-Exempt Bond Portfolio
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Series Fund
Phoenix Aggressive Growth Fund Series
Phoenix Balanced Fund Series
Phoenix Convertible Fund Series
Phoenix Growth Fund Series
Phoenix High Yield Fund Series
Phoenix Money Market Series
Phoenix U.S. Government Securities Fund Series
Phoenix Strategic Allocation Fund, Inc.
Phoenix Strategic Equity Series Fund
Phoenix Equity Opportunities Fund
Phoenix Micro Cap Fund
Phoenix Small Cap Fund
Phoenix Strategic Theme Fund
Phoenix Duff & Phelps Institutional Mutual Funds
Enhanced Reserves Portfolio
Real Estate Equity Securities Portfolio
<PAGE>
Schedule A
----------
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of each Fund for use as
sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
- ----------------------------
Fund's Authorized Officer
Date:
-------------------------
<PAGE>
[LOGO]State Street
SCHEDULE B
STATE STREET BANK AND TRUST COMPANY
Custodian Fee Schedule
Effective June 1, 1996
Phoenix Duff and Phelps Funds
- --------------------------------------------------------------------------------
I. Administration
Domestic Custody - Maintain custody of fund assets. Settle portfolio
purchases and sales. Report buy and sell fails. Determine and collect
portfolio income. Make cash disbursements and report cash transactions.
Monitor corporate actions. Report portfolio positions. The custody fee
shown below is an annual charge, billed and payable monthly, based on
average monthly net assets.
Average Monthly Net Assets Annual Fees in Basis Points
-------------------------- ---------------------------
First $3 Billion .5
Next $2 Billion .375
Thereafter .25
II. Domestic Portfolio Trades - For each line item processed
State Street Bank Repos $ 7.00
DTC or Fed Book Entry $ 6.00
New York Physical Settlements $25.00
Physical Maturities-delivery and collection fee $33.00
All other trades $16.00
III. International Custody - Maintain custody of funds assets. Settle portfolio
purchases and sales. Report buy and sell fails. Determine and collect
portfolio income. Make cash disbursements and report cash transactions in
local and base currency. Report foreign taxes. File foreign tax reclaims.
Monitor corporate actions. Report portfolio positions.
<PAGE>
[LOGO]State Street
A. Country Grouping
- ---------------------
Group A Group B Group C Group D Group E
- ------- ------- ------- ------- -------
Austria Australia Denmark Indonesia Argentina
Canada Belgium Finland Malaysia Bangladesh
Euroclear Hong Kong France Mexico Brazil
Germany Netherlands Ireland Portugal Chile
Japan New Zealand Italy South Korea China
Singapore Luxembourg Spain Columbia
Switzerland Norway Sri Lanka Cypress
Philippines Sweden Greece
Thailand Taiwan Hungary
United Kingdom India
Israel
Pakistan
Peru
Turkey
Uruguay
Venezuela
B. Transaction Charges
- ------------------------
Group A Group B Group C Group D Group E
- ------- ------- ------- ------- -------
$26 $30 $45 $60 $75
C. Holding Charges in Basis Points (Annual Fee)
- -------------------------------------------------
Assets Group A Group B Group C Group D Group E
- ------ ------- ------- ------- ------- -------
First $100 MM 5.0 8.0 13.0 15.0 25.0
Next $100 MM 4.0 6.0 10.0 13.0 25.0
Excess 3.0 5.0 8.0 13.0 25.0
IV. Options
Option charge for each option written or
closing contract, per issue, per broker $25.00
Option expiration charge, per issue, per broker $15.00
Option exercised charge, per issue, per broker $15.00
<PAGE>
[LOGO]State Street
V. Lending of Securities
Deliver loaned securities versus cash collateral $20.00
Deliver loaned securities versus securities collateral $30.00
Receive/deliver additional cash collateral $ 6.00
Substitutions of securities collateral $30.00
Deliver cash collateral versus receipt of loaned securities $15.00
Deliver securities collateral versus receipt of
loaned securities $25.00
Loan administration -- mark-to-market per day, per loan $ 3.00
VI. Interest Rate Futures
Transactions -- no security movement $ 8.00
VII. Coupon Bonds
Monitoring for calls and processing coupons --
for each coupon issue held -- monthly charge $ 5.00
VIII. Holdings Charge
For each issue maintained -- monthly charge $ 5.00
IX. Principal Reduction Payments Per Paydown $10.00
<PAGE>
[LOGO]State Street
X. Special Services
Fees for activities of a non-recurring nature such as fund
consolidations or reorganizations, extraordinary security shipments
and the preparation of special reports will be subject to negotiation.
Fees for tax accounting/recordkeeping for options, financial futures,
and other special items will be negotiated separately.
Account Position Appraisal
--------------------------
Special appraisal by industry classification:
Monthly fee - per portfolio $50.00
XI. Out-of-Pocket Expenses
----------------------
A billing for the recovery of applicable out-of-pocket expenses will
be made as of the end of each month. Out-of-pocket expenses include,
but are not limited to the following:
Telephone
Wire Charges ($4.70 per wire in and $4.55 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer -- $8.00 Each
Transfer Fees
Sub-custodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over $2,500 - $4.25
GNMA Transfer - $15 each
PTC Deposit/Withdrawal for same day turnarounds - $50.00
XII. Payment
The above fees will be charged against the fund's custodian checking
account five (5) days after the invoice is mailed to the fund's
offices.
<PAGE>
[LOGO]State Street
PHOENIX DUFF AND PHELPS FUNDS STATE STREET BANK & TRUST CO.
By /s/ Nancy G. Curtiss By /s/ Charles R. Whittemore, Jr.
------------------------------ ------------------------------
Title Treasurer Title Vice President
------------------------------ ------------------------------
Date June 13, 1997 Date June 11, 1996
------------------------------ ------------------------------
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendement No. 6 to the registration statement on Form N-1A of Phoenix Duff &
Phelps Institutional Mutual Funds (the "Registration Statement") of our report
dated February 14, 1997, relating to the financial statements and financial
highlights appearing in the December 31, 1996 Annual Report to Shareholders of
the Balanced Portfolio, Managed Bond Portfolio, Growth Stock Portfolio, Money
Market Portfolio, U.S. Government Securities Portfolio and Enhanced Reserves
Portfolio (portfolios of the Phoenix Duff & Phelps Institutional Mutual Funds),
which is incorporated by reference in the Registration Statement.
We also consent to the reference to us under the heading "Financial Highlights"
in the Prospectus and under the heading "Independent Accountants" in the
Statement of Additional Information included in Post-Effective Amendment No. 5
which is incorporated by reference in the Registration Statement.
/s/ PRICE WATERHOUSE LLP
Boston, Massachusetts
September 29, 1997
Exhibit 15
Distribution Plan
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
(the "Fund")
CLASS Y SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have entered
into a Distribution Agreement pursuant to which the Distributor will act as
principal underwriter of each class of shares of the Fund for sale to the
permissible purchasers. The Trustees of the Fund have determined to adopt this
Distribution Plan (the "Plan"), in accordance with the requirements of Section
12b-1 of the Investment Company Act of 1940, as amended (the "Act") with respect
to Class Y shares of the Fund and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its Class Y shareholders.
2. Rule 12b-1 Fees
The Fund shall pay the Distributor, at the end of each month, an amount
on an annual basis equal to 0.25% of the average daily value of the net assets
of the Fund's Class Y shares, as compensation for providing personal service to
shareholders, including assistance in connection with inquiries relating to
shareholder accounts, and for maintaining shareholder accounts (the "Service
Fee").
Amounts paid or payable by the Fund under this Plan or any agreement
with any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
3. Reports
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare and
furnish to the Trustees of the Fund for their review, and the Trustees shall
review, a written report complying with the requirements of Rule 12b-l under the
Act regarding the amounts expended under this Plan and the purposes for which
such expenditures were made.
<PAGE>
4. Required Approval
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of this Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or any related agreement and this
Plan shall not take effect with respect to the Fund until it has been approved
by a vote of at least a majority of the outstanding voting Class Y shares (as
such phrase is defined in the Act).
5. Term
This Plan shall remain in effect for one year from the date of its
adoption and may be continued thereafter if specifically approved at least
annually by a vote of at least a majority of the Trustees of the Fund as well as
a majority of the Disinterested Trustees. This Plan may be amended at any time,
provided that (a) the Plan may not be amended to increase materially the amount
of the distribution expenses provided in Paragraph 2 hereof (including the
Service Fee) without the approval of at least a majority of the outstanding
voting securities (as defined in the Act) of the Class Y shares of the Fund and
(b) all material amendments to this Plan must be approved by a majority vote of
the Trustees of the Fund and of the Disinterested Trustees cast in person at a
meeting called for the purpose of such vote.
6. Selection of Disinterested Trustees
While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
Any related agreement shall be in writing and shall provide that (a)
such agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class Y shares of the Fund on not more than 60 days' written notice to the other
party to the agreement and (b) such agreement shall terminate automatically in
the event of its assignment.
8. Termination
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class Y shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
<PAGE>
9. Records
The Fund shall preserve copies of this Plan and any related agreements
and all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
10. Non-Recourse
The Fund's Declaration of Trust dated December 4, 1995, a copy of
which, together with the amendments thereto ("Declaration"), is on file in the
office of the Secretary of the Commonwealth of Massachusetts, refers to the
Trustees under the Declaration of Trust collectively as Trustees, but not as
individuals or personally, and no Trustee, shareholder, officer, employee or
agent of the Fund may be held to any personal liability, nor may any resort be
had to their private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of the Fund but the Fund property only
shall be liable.
[Adopted at a duly held meeting of the Board of Trustees on August 27, 1997.]
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 077
<NAME> PDP INSTITUTIONAL REAL ESTATE EQUITY SEC. PORTFOLIO CL X
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> MAY-01-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 10174
<INVESTMENTS-AT-VALUE> 10675
<RECEIVABLES> 202
<ASSETS-OTHER> 126
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11003
<PAYABLE-FOR-SECURITIES> 171
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<TOTAL-LIABILITIES> 197
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10156
<SHARES-COMMON-STOCK> 1006
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 141
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 501
<NET-ASSETS> 10806
<DIVIDEND-INCOME> 147
<INTEREST-INCOME> 9
<OTHER-INCOME> 0
<EXPENSES-NET> (15)
<NET-INVESTMENT-INCOME> 141
<REALIZED-GAINS-CURRENT> 8
<APPREC-INCREASE-CURRENT> 501
<NET-CHANGE-FROM-OPS> 650
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1006
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 10699
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 55
<AVERAGE-NET-ASSETS> 9681
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.14
<PER-SHARE-GAIN-APPREC> 0.50
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.64
<EXPENSE-RATIO> 0.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 078
<NAME> PDP INSTITUTIONAL REAL ESTATE EQUITY SEC. PORTFOLIO CL Y
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> MAY-01-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 10174
<INVESTMENTS-AT-VALUE> 10675
<RECEIVABLES> 202
<ASSETS-OTHER> 126
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11003
<PAYABLE-FOR-SECURITIES> 171
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26
<TOTAL-LIABILITIES> 197
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10156
<SHARES-COMMON-STOCK> 10
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 141
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 501
<NET-ASSETS> 10806
<DIVIDEND-INCOME> 147
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<EXPENSES-NET> (15)
<NET-INVESTMENT-INCOME> 141
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<APPREC-INCREASE-CURRENT> 501
<NET-CHANGE-FROM-OPS> 650
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 107
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 55
<AVERAGE-NET-ASSETS> 9681
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.14
<PER-SHARE-GAIN-APPREC> 0.50
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.64
<EXPENSE-RATIO> 1.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
