As filed with the Securities and Exchange Commission on August 22, 1997
Registration No. 333-29043
File No. 811-8245
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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. 1 [X]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 1 [X]
(Check appropriate box or boxes)
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Phoenix Equity Series Fund
(Exact Name of Registrant as Specified in Charter)
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101 Munson Street, Greenfield, Massachusetts 01301
(Address of Principal Executive Offices) (Zip Code)
(800) 243-1574
(Registrant's Telephone Number, including Area Code)
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Thomas N. Steenburg
Vice President, Counsel and Secretary
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115-0479
(name and address of Agent for Service)
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Approximate Date of Proposed Public Offering: As soon as practicable after
Registration Statement becomes effective.
Registrant hereby amends this Registration Statement on such date(s) as may be
necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date that the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
Declaration Pursuant to Rule 24f-2: Registrant hereby registers an indefinite
number of shares of beneficial interest, $1 par value, under the Securities Act
of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940.
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<PAGE>
PHOENIX EQUITY SERIES FUND
Cross Reference Sheet Pursuant to Rule 495
Under the Securities Act of 1993
PART A
Information Required in Prospectus
<TABLE>
<CAPTION>
Item Number Prospectus Caption
- - ----------------------------------------------------- ------------------------------------------------------
<S> <C> <C>
1. Cover Page ................................. Cover Page
2. Synopsis ................................. Introduction; Fund Expenses
3. Condensed Financial Information ............ Not Applicable
4. General Description of Registrant ......... Cover Page; Introduction; Investment Objective
and Policies; Additional Information
5. Management of the Funds .................. Management of the Funds
6. Capital Stock and Other Securities ......... Dividends, Distributions and Taxes; Net Asset Value;
How to Buy Shares; Additional Information
7. Purchase of Securities Being Offered ...... How to Buy Shares; Distribution Plans; Net Asset
Value; Investor Account Services
8. Redemption or Repurchase .................. How to Redeem Shares
9. Pending Legal Proceeding .................. Not Applicable
</TABLE>
PART B
Information Required in Statement of Additional Information
<TABLE>
<CAPTION>
Item Number Statement of Additional Information Caption
- - -------------------------------------------------------------------- -------------------------------------------------------
<S> <C> <C>
10. Cover Page ................................................ Cover Page
11. Table of Contents ....................................... Table of Contents
12. General Information and History ........................... Cover Page; General Information
13. Investment Objectives and Policies ........................ Cover Page; Investment Objectives and
Policies; Investment Restrictions
14. Management of the Funds ................................. The Investment Advisers; Trustees and Officers; Other
Information
15. Control Persons and Principal Holders of Securities ...... Not Applicable
16. Investment Advisory and Other Services .................. The Investment Advisers
17. Brokerage Allocation .................................... Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities ........................ Net Asset Value; How to Buy Shares
19. Purchase, Redemption and Pricing of Securities How to Buy Shares; Investor Account Services;
Being Offered ............................................. Redemption of Shares; Net Asset Value
20. Tax Status ................................................ Dividends, Distributions and Taxes
21. Underwriter ............................................. The Distributor
22. Calculations of Performance Data ........................ Performance Information
23. Financial Statements .................................... Not Applicable
</TABLE>
<PAGE>
[COVER PAGE]
PHOENIX
FUNDS
PROSPECTUS
[AUGUST ,] 1997
Phoenix Equity Series Fund
o Core Equity Fund
o Growth and
Income Fund
[LOGO] PHOENIX
DUFF & PHELPS
<PAGE>
PHOENIX EQUITY SERIES FUND
101 Munson Street
Greenfield, MA 01301
PROSPECTUS
[August ], 1997
Phoenix Equity Series Fund (the "Trust") is an open-end management
investment company whose shares are offered in two series (each a "Fund" and
collectively the "Funds"). Each Fund represents an investment in a separate
diversified fund with its own investment objectives and policies designed to
meet its specific investment goals. There can be no assurance that any Fund
will achieve its objective.
Phoenix Core Equity Fund (the "Core Equity Fund" or "Fund") seeks
long-term capital appreciation by investing in common stocks.
Phoenix Growth and Income Fund (the "Growth and Income Fund" or "Fund")
seeks dividend growth, current income and capital appreciation by investing in
common stocks.
This Prospectus sets forth concisely the information about the Funds that
a prospective investor should know before investing. No dealer, salesperson or
any 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 information or representations must not be relied upon as having
been authorized by the Funds, Adviser or Distributor. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state in which, or to any person to whom, it
is unlawful to make such offer. Neither the delivery of this Prospectus nor any
sale hereunder shall, under any circumstances, create any implication that
information herein is correct at any time subsequent to its date. Investors
should read and retain this Prospectus for future reference. Additional
information about the Funds and the Trust is contained in the Statement of
Additional Information, dated [August ,] 1997, which has been filed with the
Securities and Exchange Commission (the "Commission") and is available upon
request at no charge by calling (800) 243-4361 or by writing to Phoenix Equity
Planning Corporation at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200. The Statement of Additional Information is incorporated
herein by reference.
Shares of the Trust are not deposits or obligations of, or guaranteed or
endorsed by, any bank, credit union, or affiliated entity, and are not
federally insured or otherwise protected by the Federal Deposit Insurance
Corporation (FDIC), the Federal Reserve Board, or any other agency, and involve
investment risk, including possible loss of principal.
- - --------------------------------------------------------------------------------
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.
- - --------------------------------------------------------------------------------
CUSTOMER SERVICE: (800) 243-1574
MARKETING: (800) 243-4361
TELEPHONE ORDERS: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY) (800) 243-1926
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
INTRODUCTION .......................................................... 3
FUND EXPENSES .......................................................... 4
PERFORMANCE INFORMATION .............................................. 6
INVESTMENT OBJECTIVES AND POLICIES ..................................... 6
INVESTMENT TECHNIQUES AND RELATED RISKS ............................... 7
INVESTMENT RESTRICTIONS .............................................. 12
PORTFOLIO TURNOVER .................................................... 12
MANAGEMENT OF THE FUNDS .............................................. 12
DISTRIBUTION PLANS .................................................... 14
HOW TO BUY SHARES .................................................... 15
INVESTOR ACCOUNT SERVICES .............................................. 19
NET ASSET VALUE ....................................................... 20
HOW TO REDEEM SHARES ................................................. 20
DIVIDENDS, DISTRIBUTIONS AND TAXES ..................................... 21
ADDITIONAL INFORMATION ................................................. 22
</TABLE>
2
<PAGE>
INTRODUCTION
This Prospectus describes certain of the shares offered by and the
operations of Phoenix Equity Series Fund (the "Trust"). The Trust is a
diversified, open-end management investment company established as a
Massachusetts business trust. Shares of the Trust are divided into two series,
each a "Fund" and collectively the "Funds." Each Fund has a different
investment objective, and is designed to meet different investment needs.
The Investment Advisers
Duff & Phelps Investment Management Co. ("DPIM" or the "Adviser") serves
as investment adviser to the Core Equity Fund and Phoenix Investment Counsel,
Inc. ("PIC" or the "Adviser") serves as investment adviser to the Growth and
Income Fund. DPIM and PIC are subsidiaries of Phoenix Duff & Phelps
Corporation. See "Management of the Fund" for a description of the Investment
Advisory Agreements and management fees.
Distributor and Distribution Plans
Phoenix Equity Planning Corporation ("Equity Planning" or "Distributor"),
serves as national distributor of the Funds' shares. See "Distribution Plans"
and the Statement of Additional Information. Equity Planning also acts as
financial agent of the Funds and as such receives a fee. See "The Financial
Agent." Equity Planning also serves as the Funds' transfer agent. See "The
Custodian and Transfer Agent."
The Funds have adopted distribution plans pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act") for all classes of
all Funds. Pursuant to the distribution plan adopted for Class A Shares, Class
B Shares, Class C Shares and Class M Shares, the Funds shall reimburse the
Distributor up to a maximum annual rate of 0.25%, 1.00%, 1.00% and 0.50%,
respectively, of the average daily net assets of each Fund for distribution
expenditures incurred in connection with the sale and promotion of each Class
of Shares of each Fund and for furnishing shareholder services. See
"Distribution Plans."
Purchase of Shares
Each Fund currently offers four classes of shares which may be purchased
at a price equal to their net asset value per share, plus a sales charge which,
at the election of the purchaser, may be imposed (i) at the time of the
purchase ("Class A Shares" and "Class M Shares") or (ii) on a contingent
deferred basis ("Class B Shares" and "Class C Shares").
Class A and M Shares are offered to the public at the next determined net
asset value after receipt of the order by State Street Bank and Trust Company
("State Street Bank") plus a sales charge. The maximum initial sales charge is
4.75% and 3.5%, respectively, of the offering price on single purchases of less
than $50,000. The sales charges are reduced on a graduated scale on single
purchases of $50,000 or more.
Class B and C Shares are offered to the public at the next determined net
asset value after receipt of an order by State Street Bank with no sales
charge. Class B Shares are subject to a sales charge if they are redeemed
within five years of purchase. Class C Shares redeemed within one year of
purchase are subject to a 1% sales charge.
Shares of each Class represent an identical interest in the investment
portfolio of a Fund and have the same rights. For more information on fees and
charges applicable for each Fund and Class, refer to "Fund Expenses" and
"Alternative Purchase Arrangements."
Completed applications for the purchase of shares should be mailed to the
Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301, Boston,
MA 02266-8301. See "How to Buy Shares."
Minimum Initial and Subsequent Investments
The minimum initial investment is $500 ($25 if using the bank draft
investment program designated "Investo-Matic") and the minimum subsequent
investment is $25. Exceptions to the minimum and subsequent investment amounts
are available under certain circumstances. See "How to Buy Shares."
Redemption Price
Class A and M Shares of a Fund may be redeemed at any time at the net
asset value per share next computed after receipt of a redemption request by
State Street Bank. Class B and C shareholders redeeming shares within certain
time periods of the date of purchase will normally be assessed a contingent
deferred sales charge. See "How to Redeem Shares."
Risk Factors
There can be no assurances that a Fund will achieve its investment
objectives. As a result of each Fund's substantial investment in the stock
market, the net asset value of a Fund's shares will fluctuate significantly in
response to changes in market and economic conditions, as well as the financial
condition and prospects of issuers in which each Fund invests.
See "Investment Objectives and Policies" and "Investment Techniques and
Related Risks" for more information on relevant risks.
3
<PAGE>
FUND EXPENSES
The following table illustrates all pro forma fees and expenses a
shareholder is expected to incur.
<TABLE>
<CAPTION>
Core Equity Fund
-------------------------------------------------------------------------------
Class A Class B Class C Class M
Shares Shares Shares Shares
(Pro-Forma)
<S> <C> <C> <C> <C>
Shareholder Transaction
Expenses
Maximum Sales Load Imposed
on Purchases (as a percentage
of offering price) 4.75% None None 3.50%
Maximum Sales Load Imposed
on Reinvested Dividends None None None None
Deferred Sales Load (as a None 5% during the first year, 1% during the None
percentage of original decreasing 1% annually to 2% first year
purchase price or during the fourth and fifth
redemption proceeds, years; decreasing to 0% after
as applicable) the fifth year
Redemption Fee None None None None
Exchange Fee None None None None
Annual Fund Operating
Expenses (a)
(as a percentage of average net
assets)
Management Fees 0.75% 0.75% 0.75% 0.75%
12b-1 Fees (b) 0.25% 1.00% 1.00% 0.50%
Other Expenses (After Expense
Reimbursement) (c) 0.25% 0.25% 0.25% 0.25%
------ ----- ----- ------
Total Fund Operating Expenses 1.25% 2.00% 2.00% 1.50%
====== ===== ===== ======
</TABLE>
<TABLE>
<CAPTION>
Growth and Income Fund
-------------------------------------------------------------------------------
Class A Class B Class C Class M
Shares Shares Shares Shares
(Pro-Forma)
<S> <C> <C> <C> <C>
Shareholder Transaction
Expenses
Maximum Sales Load Imposed
on Purchases (as a percentage
of offering price) 4.75% None None 3.50%
Maximum Sales Load Imposed
on Reinvested Dividends None None None None
Deferred Sales Load (as a None 5% during the first year, 1% during the None
percentage of original decreasing 1% annually to 2% first year
purchase price or during the fourth and fifth
redemption proceeds, years; decreasing to 0% after
as applicable) the fifth year
Redemption Fee None None None None
Exchange Fee None None None None
Annual Fund Operating
Expenses (a)
(as a percentage of average net
assets)
Management Fees 0.75% 0.75% 0.75% 0.75%
12b-1 Fees (b) 0.25% 1.00% 1.00% 0.50%
Other Expenses (After Expense
Reimbursement) (d) 0.25% 0.25% 0.25% 0.25%
------ ----- ------ -----
Total Fund Operating Expenses 1.25% 2.00% 2.00% 1.50%
====== ===== ====== =====
</TABLE>
- - -----------
(a) As of the date of this Prospectus, neither Fund had commenced
investment operations. The percentages indicated are estimates and actual
expenses may be more or less than the amounts shown.
(b) "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").
(c) The Adviser has agreed to reimburse the Core Equity Fund's operating
expenses other than Management Fees and Rule 12b-1 Fees for the amount by which
such operating expenses of Class A shares, Class B shares, Class C shares and
Class M shares exceed 1.25%, 2.00%, 2.00% and 1.50%, respectively, of the
average net assets through the fiscal year ended March 31, 1998. Total Fund
Operating Expenses for Class A, Class B, Class C and Class M shares are
estimated to be 3.02%, 3.77%, 3.77% and 3.27%, respectively, absent such waiver
or reimbursement for the fiscal year ended March 31, 1998.
(d) The Adviser has agreed to reimburse the Growth and Income Fund's
operating expenses other than Management Fees and Rule 12b-1 Fees for the
amount by which such operating expenses of Class A shares, Class B shares,
Class C shares and Class M shares exceed 1.25%, 2.00%, 2.00% and 1.50%,
respectively, of the average net assets through the fiscal year ended March 31,
1998. Total Fund Operating Expenses for Class A, Class B, Class C and Class M
shares are estimated to be 1.79%, 2.54%, 2.54% and 2.04%, respectively, absent
such waiver or reimbursement for the fiscal year ended March 31, 1998.
4
<PAGE>
<TABLE>
<CAPTION>
Cumulative Expenses
Paid for the Period
Core Equity Growth and Income
Fund Fund
------------------- -------------------
Example* 1 year 3 years 1 year 3 years
- - ----------------------------------------------------------------------- ------- --------- -------- --------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a hypothetical $1,000
investment assuming (1) a 5% annual return and (2) redemption at
the end of each time period.
Class A Shares $60 $85 $60 $85
Class B Shares $60 $83 $60 $83
Class C Shares $30 $63 $30 $63
Class M Shares $50 $81 $50 $81
An investor would pay the following expenses on the same $1,000
investment assuming no redemption at the end of each period:
Class A Shares $60 $85 $60 $85
Class B Shares $20 $63 $20 $63
Class C Shares $20 $63 $20 $63
Class M Shares $50 $81 $50 $81
</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. See "Management of the
Funds," "Distribution Plans" and "How to Buy Shares."
5
<PAGE>
PERFORMANCE INFORMATION
Each Fund may, from time to time, include its yield and total return in
advertisements or reports to shareholders or prospective investors. Both yield
and total return figures are computed separately for each Class of Shares of
each Fund in accordance with formulas specified by the Securities and Exchange
Commission and are based on historical earnings and are not intended to
indicate future performance.
The yield of each Fund will be computed by dividing the Fund'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 Fund's
yield.
Standardized quotations of average annual total return for each Class of
Shares of a Fund will be expressed in terms of the average annual compound rate
of return of a hypothetical investment in such Class of Shares over a period of
1, 5 and 10 years (or up to the life of the Fund). Standardized total return
quotations reflect the deduction of a proportional share of each class's
expenses (on an annual basis), deduction of the maximum initial sales load in
the case of Class A and M Shares and the maximum contingent deferred sales
charge applicable to a complete redemption of the investment in the case of
Class B and C Shares, and assume that all dividends and distributions are
reinvested when paid. Each 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. In addition, each Fund may
from time to time publish materials citing historical volatility for shares of
that Fund.
Historical performance data relating to investment returns realized by the
Adviser (for Core Equity Fund) and by the portfolio managers of Growth and
Income Fund have been included in this prospectus. This information appears
under "Management of the Funds" as an illustration of past performance in
managing substantially similar accounts as compared to the Standard & Poor's
500 Composite Stock Price Index (the "S&P 500"). (See "Prior Investment
Performance of DPIM" and "The Portfolio Managers: Growth and Income Fund.")
Investors should not consider this performance data as an indication of past or
future performance of the Core Equity Fund or the Growth and Income Fund.
Each Fund may from time to time include in advertisements containing total
return the ranking of those performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar, Inc.
Additionally, each Fund may compare that Fund's 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, Investor's Daily, Stanger's Mutual Fund
Monitor, The Stanger Register, Stanger's Investment Adviser, The Wall Street
Journal, The New York Times, Consumer Reports, Registered Representative,
Financial Planning, Financial Services Weekly, Financial World, U.S. News and
World Report, Standard & Poor's The Outlook, and Personal Investor. The Funds
may from time to time illustrate the benefits of tax deferral by comparing
taxable investments to investments made through tax-deferred retirement plans.
The total return may also be used to compare the performance of each Fund
against certain widely acknowledged outside standards or indices for stock and
bond market performance, such as the S&P 500, Dow Jones Industrial Average,
Europe Australia Far East Index (EAFE), 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 a Fund or Adviser's current investment strategies and
management style. Current strategies and style may change to allow a Fund to
respond quickly to changing market and economic conditions. From time to time,
a Fund may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, a Fund may
separate its cumulative and average annual returns into income and capital
gains components.
Performance information for a Fund reflects only the performance of a
hypothetical investment in Class A, Class B, Class C or Class M Shares of the
Fund during the particular time period in which the calculations are based.
Performance information should be considered in light of each Fund's investment
objectives and policies, characteristics and quality of its 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 for each Fund, see the Statement of
Additional Information.
The Trust's Annual Report, available upon request and without charge, will
contain a discussion of the performance of each Fund and a comparison of that
performance to a securities market index.
INVESTMENT OBJECTIVES
AND POLICIES
The investment objective of each Fund is a fundamental policy and may not
be changed without the approval of a majority of the outstanding shares of each
Fund. There can be no assurance that either Fund will achieve its investment
objective.
6
<PAGE>
Core Equity Fund
The Core Equity Fund's investment objective is to seek long-term capital
appreciation by investing in a diversified portfolio of common stocks. The Fund
seeks to achieve its objective by selecting securities primarily from equity
securities of the 1,000 largest companies traded in the United States, ranked
by market capitalization. Under normal circumstances, at least 65% of the
assets of the Core Equity Fund will be invested in equity securities; however,
it is the intention of the Adviser to be fully invested in equity securities.
Up to 10% of the total assets of the Core Equity Fund may be invested in
securities of foreign issuers.
The Adviser utilizes a quality driven strategy in pursuit of the Fund's
investment objective. The Fund selects large companies based on predictability
and consistency of future earnings and dividend growth at a price which is low
relative to the stock's historical valuation and the company's future growth
prospects. Portfolio risk is controlled through diversification among
industries, sectors, and the number of holdings. The Adviser's sell discipline
is based on a monitoring of holdings for fundamental change and overvaluation.
While the Adviser intends to be fully invested, in the event of adverse
market conditions the Fund may pursue a policy of retaining cash or investing
in high-quality money market instruments with maturities of one year or less,
and in repurchases agreements. See "Investment Techniques and Related Risks"
for more information on investment practices and risks.
The Fund commenced operations on [August ,] 1997 based on initial
capitalization of $5 million provided by Phoenix Home Life Mutual Insurance
Company. The experience of the Fund in raising additional capital for
investment purposes may directly affect the spectrum of portfolio holdings and
performance.
Growth and Income Fund
The Growth and Income Fund's investment objective is to seek dividend
growth, current income, and capital appreciation by investing in common stocks.
Under normal circumstances, the Fund is designed to seek a total return that
exceeds the total return of the S&P 500 and a dividend yield that exceeds the
S&P 500's dividend yield. Under normal circumstances, at least 65% of the
Fund's assets will be invested in common stock or other equity securities;
however, it is the intention of the Adviser to be fully invested in equity
securities.
The Adviser utilizes a quantitative value strategy in pursuit of the
Fund's investment objective. Quantitative value is an active management
strategy which involves selection of securities primarily from the equity
securities of the 1,500 largest companies traded in the United States, ranked
by market capitalization. The Adviser optimizes the portfolio to achieve a
desired balance of risk and return potential, including a targeted yield that
exceeds the yield of the S&P 500. This strategy seeks securities of companies
relatively undervalued and with improving fundamentals.
The Fund's management strategy may cause its portfolio to be more heavily
weighted in some industries than in others. However, the Fund will not invest
25% or more of its total assets in securities of companies whose principal
business activities are in the same industry.
The Fund commenced operations on [August ,] 1997 based on initial
capitalization of $5 million provided by Phoenix Home Life Mutual Insurance
Company. The experience of the Fund in raising additional capital for
investment purposes may directly affect the spectrum of portfolio holdings and
performance.
Additional discussion regarding risks involved in investing in the Funds
are described in the "Investment Techniques and Related Risks" section below.
INVESTMENT TECHNIQUES
AND RELATED RISKS
In addition to the investment policies described above, the Trust may
utilize the following investment practices.
Convertible Securities
The Growth and Income Fund may invest in convertible securities. A
convertible security is a bond, debenture, note, preferred stock or other
security that may be converted into or exchanged for a prescribed amount of
common stock of the same or a different issuer within a particular period of
time at a specified price or formula. A convertible security entitles the
holder to receive interest generally paid or accrued on debt or the dividend
paid on preferred stock until the convertible security matures or is redeemed,
converted or exchanged. Convertible securities have several unique investment
characteristics such as (1) higher yields than common stocks, but lower yields
than comparable nonconvertible securities, (2) a lesser degree of fluctuation
in value than the underlying stock since they have fixed income
characteristics, and (3) the potential for capital appreciation if the market
price of the underlying common stock increases. A convertible security might be
subject to redemption at the option of the issuer at a price established in the
convertible security's governing instrument. If a convertible security held by
the Fund is called for redemption, the Fund may be required to permit the
issuer to redeem the security, convert it into the underlying common stock or
sell it to a third party. The Fund will invest in convertible securities rated
in the four highest categories which are commonly called "investment grade"
securities. The Fund may, but is not required to, dispose of convertible
securities whose rating falls below investment grade. A detailed listing of
rating categories is in the Appendix to the Statement of Additional
Information.
Futures and Options Transactions
Financial Futures and Related Options. Each Fund may enter into financial
futures contracts and the Growth and Income Fund may also invest in related
options. These investments are intended as a hedge against anticipated changes
in the market value of the Fund's portfolio securities or securities which it
intends to purchase or in the exchange
7
<PAGE>
rate of foreign currencies. Hedging is the initiation of an offsetting position
in the futures market which is intended to minimize the risk associated with a
position's underlying securities in the cash market. Investment techniques
related to financial futures and options are summarized below and are described
more fully in the Statement of Additional Information.
Financial futures contracts consist of interest rate futures contracts,
foreign currency futures contracts and securities index futures contracts. An
interest rate futures contract obligates the seller of the contract to deliver,
and the purchaser to take delivery of, the interest rate securities called for
in the contract at a specified future time and a specified price. A foreign
currency futures contract obligates the seller of the contract to deliver, and
the purchaser to take delivery of, the foreign currency called for in the
contract at a specified future time and at a specified price. See "Foreign
Currency Transactions." A securities index assigns relative values to the
securities included in the index, and the index fluctuates with changes in the
market values of the securities so included. A securities index futures
contract is a bilateral agreement pursuant to which two parties agree to take
or make delivery of an amount of cash equal to a specified dollar amount times
the difference between the index value at the close of the last trading day of
the contract and the price at which the futures contract is originally struck.
An option on a financial futures contract gives the purchaser the right to
assume a position in the contract (a long position if the option is a call and
a short position if the option is a put) at a specified exercise price at any
time during the period of the option.
Each Fund 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 and may enter
into financial futures contracts on foreign currencies.
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 expectation as to the direction or extent of various
interest rate movements or foreign currency exchange rates, in which case the
return might have been greater had hedging not taken place. There is also the
risk that a liquid secondary market may not exist, and the loss from investing
in futures contracts is potentially unlimited because the Fund may be unable to
close its position. The risk in purchasing an option on a financial futures
contract is potentially unlimited. Also, there may be circumstances when the
purchase of an option on a financial futures contract could result in a loss
while the purchase or sale of the contract would not have resulted in a loss.
Writing Covered Options. The Growth and Income Fund may, from time to
time, write covered call option contracts as a means of increasing the yield on
the Fund's portfolio and also as a means of providing limited protection
against decreases in the market value of the Fund's portfolio. Options are
technically forms of "derivatives" in that their value is dependent upon
fluctuations in the value of other securities. Such contracts will be written
on securities in which the Fund has authority to invest and on securities
indices listed on an organized national securities exchange.
A call option on a security gives the purchaser of the option the right to
buy the underlying security from the writer at the exercise price at any time
prior to the expiration of the contract, regardless of the market price of the
security during the option period. A call option is "covered" if, throughout
the life of the option, (1) the Fund owns the optioned securities, (2) the Fund
maintains in a pledged account with its Custodian, any asset, including equity
securities and non-investment grade debt so long as the asset is liquid,
unencumbered and marked to market daily, with a value sufficient to meet its
obligations under the call, or (3) if the Fund owns an offsetting call option.
The premium paid to the writer is the consideration for undertaking the
obligations under the option contract. The writer forgoes the opportunity to
profit from any increase in the market price of the underlying security above
the exercise price except insofar as the premium represents such a profit. The
Fund will write only call option contracts when it is believed that the total
return to the Fund can be increased through such premiums consistent with the
Fund's investment objective.
The Fund may also write covered call options on securities indices.
Through the writing of call index options the Fund can achieve many of the same
objectives as through the use of call options on individual securities. Call
options on securities indices are similar to call options on a security except
that, rather than the right to take delivery of a security at a specified
price, a call option on a securities index gives the holder the right to
receive, upon exercise of the option, an amount of cash if the closing level of
the securities index upon which the call option is based is greater than the
exercise price of the option. The writing of option contracts is a highly
specialized activity which involves investment techniques and risks different
from those ordinarily associated with investment companies, and the
restrictions listed above would tend to reduce such risks.
The Fund may purchase options to close out a position (i.e., enter into a
"closing purchase transaction" (the purchase of a call option on the same
security with the same exercise price and expiration date as the call option
which it has previously written on any particular security)). When a security
is sold from the Fund's portfolio, the Fund will effect a closing purchase
transaction so as to close out any existing call option on that security,
realizing a profit or loss depending on whether the amount paid to purchase a
call option is less or more than the amount received from the sale thereof. In
addition, the Fund may wish to purchase a call option to hedge its portfolio
against an anticipated increase in the price of securities it intends to
purchase or to purchase a put option to hedge its portfolio against an
anticipated decline in securities prices.
Purchasing Call and Put Options, Warrants and Stock Rights. The Growth and
Income Fund may invest in exchange-traded or over-the-counter call and put
options on securities and securities indices and foreign currencies.
8
<PAGE>
Purchases of such options may be made for the purpose of hedging against
changes in the market value of the underlying securities or foreign currencies
or if in the opinion of the Adviser, a hedging transaction is consistent with
the Fund's investment objectives. The Fund may sell a call option or a put
option which it has previously purchased prior to the purchase (in the case of
a call) or the sale (in the case of a put) of the underlying security or
foreign currency. Any such sale would result in a net gain or loss depending on
whether the amount received on the sale is more or less than the premium and
other transaction costs paid on the call or put which is sold. Purchasing a
call or put option involves the risk that the Fund may lose the premium it paid
plus transaction costs.
Warrants and stock rights are almost identical to call options in their
nature, use and effect except that they are issued by the issuer of the
underlying security, rather than an option writer, and they generally have
longer expiration dates than call options.
Over-the-Counter ("OTC") Options. OTC options differ from exchange-traded
options in several respects. They are transacted directly with dealers and not
with a clearing corporation, and there is a risk of non-performance by the
dealer. However, the premium is paid in advance by the dealer. OTC options are
available for a greater variety of securities, and in a wider range of
expiration dates and exercise prices, than exchange-traded options. Since there
is no exchange, pricing is normally done by reference to information from a
market maker, which information is carefully monitored or caused to be
monitored by the Adviser and verified in appropriate cases.
A writer or purchaser of a put or call option can terminate it voluntarily
only by entering into a closing transaction. In the case of OTC options, there
can be no assurance that a continuous liquid secondary market will exist for
any particular option at any specific time. Consequently, the Fund may be able
to realize the value of an OTC option it has purchased only by exercising its
OTC option or entering into a closing sale transaction with the dealer that
issued it. Similarly, when the Fund writes an OTC option, it generally can
close out that option prior to its expiration only by entering into a closing
purchase transaction with the dealer to which the Fund originally wrote the
option. If a covered call option writer cannot effect a closing transaction, it
cannot sell the underlying security or foreign currency until the option
expires or the option is exercised. Therefore, the writer of a covered OTC call
option may not be able to sell an underlying security even though it might
otherwise be advantageous to do so. Likewise, the writer of a secured OTC put
option may be unable to sell the securities pledged to secure the put for other
investment purposes while it is obligated as a put writer. Similarly, a
purchaser of an OTC put or call option might also find it difficult to
terminate its position on a timely basis in the absence of a secondary market.
Restrictions on Use of Futures and Options. Each Fund may enter into
futures contracts and the Growth and Income Fund may also engage in options or
options on futures contracts, provided that such obligations represent no more
than 20% of such Fund's net assets. Under the Commodity Exchange Act, a Fund
may enter into futures and options transactions for hedging purposes without
regard to the percentage of assets committed to initial margin and option
premiums and for other than hedging purposes provided that assets committed to
initial margin and option premiums do not exceed 5% of the Fund's net assets.
To the extent required by law, each Fund will set aside cash and appropriate
liquid assets in a pledged account to cover its obligations related to futures
contracts and options. The extent to which a Fund may enter into financial
futures contracts and related options may also be limited by requirements of
the Internal Revenue Code for qualification as a regulated investment company.
Short-Term Instruments
For liquidity purposes, each Fund may invest in high-quality money market
instruments with remaining maturities of one year or less. Such instruments may
include U.S. Government Securities, Certificates of Deposit, Commercial Paper
and Bankers Acceptances. Each Fund may also invest in repurchase agreements
with maturities of seven days or less to generate income from its excess cash
balances. Each Fund may invest up to 5% of its net assets in repurchase
agreements having maturities of more than seven days (together with any other
illiquid securities held). Securities acquired through repurchase agreements
will be limited to U.S. Government securities and are subject to resale to the
seller at an agreed upon price and date (normally the next business day). The
resale price reflects an agreed upon interest rate effective for the period the
instrument is held by the Fund and is unrelated to the interest rate on the
underlying instrument. A repurchase agreement acquired by the Fund will always
be fully collateralized by the underlying instrument, which will be marked to
market every business day. The underlying instrument will be held for the
Fund's account by the Funds' custodian bank until repurchased.
The use of repurchase agreements involves certain risks such as default by
or the insolvency of the other party to the repurchase agreement. Repurchase
agreements will be entered into only with commercial banks, brokers and dealers
considered by the Adviser to be creditworthy.
Each Fund may also invest up to 10% of its total assets in a money market
fund managed by either Adviser. Such investments may be subject to duplicate
fees and expenses on that portion of their assets invested in the securities of
another investment company. Such investments will be for liquidity purposes.
Lending Portfolio Securities
In order to increase the return on its investment, each Fund may lend its
portfolio securities to broker-dealers and other financial institutions in
amounts up to one-third of the value of its total assets. Loans of portfolio
securities will always be fully collateralized and will be made only to
borrowers considered by the Adviser to be credit-worthy. Lending portfolio
securities involves risk of delay in the recovery of the
9
<PAGE>
loaned securities and in some cases the loss of rights in the collateral should
the borrower fail financially.
Leverage
Each Fund may borrow for temporary, extraordinary or emergency purposes.
Each Fund will borrow only from banks, and only if immediately after such
borrowing the value of the assets of the Fund (including the amount borrowed)
less its liabilities (not including any borrowings) is at least three times the
amount of funds borrowed. The effect of this provision is to permit the Fund to
borrow up to 331/3% of the total assets (not including any borrowings) of the
Fund. If, due to market fluctuations or other reasons, the value of the Fund's
assets computed as provided above becomes at any time less than three times the
amount of the borrowings, the Fund, within three business days, is required to
reduce bank debt to the extent necessary to meet the required 300% asset
coverage.
Interest on money borrowed will be an expense of the Fund with respect to
which the borrowing has been made. Because such expense would not otherwise be
incurred, the net investment income of the Fund is not expected to be as high
as it otherwise would be during periods when borrowings for investment purposes
are substantial. Bank borrowings must be obtained on an unsecured basis. Any
such borrowing must also be made subject to an agreement by the lender that any
recourse is limited to the assets of the Fund with respect to which the
borrowing has been made.
Foreign Securities
Each Fund may invest in the securities of foreign issuers. The Core Equity
Fund will limit its investments in foreign securities to 10% of its total
assets. The Growth and Income Fund may invest up to 20% of its total assets in
foreign securities; however, under normal circumstances no more than 10% of the
Fund's total assets will be invested in foreign securities.
Investing in the securities of foreign companies involves special risks
and considerations not typically associated with investing in U.S. companies.
These include differences in accounting, auditing and financial reporting
standards, generally higher commission rates on foreign portfolio transactions,
differences and inefficiencies in transaction settlement systems, the
possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations, political instability which could
affect U.S. investment or exchange control regulations, political instability
which could affect U.S. investments in foreign countries, and potential
restrictions on the flow of international capital. Additionally, dividends
payable on foreign securities may be subject to foreign taxes withheld prior to
distribution. Foreign securities often trade with less frequency and volume
than domestic securities and therefore may exhibit greater price volatility,
and changes in foreign exchange rates will affect the value of those securities
which are denominated or quoted in currencies other than the U.S. dollar.
Exchange rates are determined by forces of supply and demand in the foreign
exchange markets, and these forces are in turn affected by a range of economic,
political, financial, governmental and other factors. Exchange rate
fluctuations can affect the Fund's net asset value and dividends either
positively or negatively depending upon whether foreign currencies are
appreciating or depreciating in value relative to the U.S. dollar. Exchange
rates fluctuate over both the short and long term.
Foreign securities held by the Fund may not be registered with the
Securities and Exchange Commission ("SEC") and the issuers thereof will not be
subject to the SEC's reporting requirements. Accordingly, there may be less
publicly available information about the securities and about the foreign
company or government issuing them than is available about a domestic company
or government entity. Moreover, individual foreign economies may differ
favorably or unfavorably from the United States economy in such respects as
growth of Gross National Product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payment positions.
Although the Funds may buy securities of foreign issuers in foreign
markets, most of their foreign securities investments are made by purchasing
American Depositary Receipts (ADRs), "ordinary shares," or "New York Shares."
ADRs are dollar-denominated receipts representing interests in the securities
of a foreign issuer. They are issued by U.S. banks and traded on exchanges or
over the counter in the United States. Ordinary shares are shares of foreign
issuers that are traded abroad and on a U.S. exchange. New York shares are
shares that a foreign issuer has allocated for trading in the United States.
ADRs, ordinary shares, and New York shares all may be purchased with and sold
for U.S. dollars, which protects the Fund from the foreign settlement risks
described below.
In investing in securities denominated in foreign currencies, the Fund
will be subject to the additional risk of currency fluctuations. An adverse
change in the value of a particular foreign currency as against the U.S.
dollar, to the extent that such change is not offset by a gain in other foreign
currencies, will result in a decrease in the Fund's assets. Any such change may
also have the effect of decreasing or limiting the income available for
distribution. Foreign currencies may be affected by revaluation, adverse
political and economic developments, and governmental restrictions. Although
the Fund will invest only in securities denominated in foreign currencies that
are fully convertible into U.S. dollars without legal restriction at the time
of investment, no assurance can be given that currency exchange controls will
not be imposed on any particular currency at a later date.
Securities of U.S. issuers denominated in foreign currencies may be less
liquid and their prices more volatile than securities issued by domestic
issuers and denominated in U.S. dollars. In addition, investing in securities
denominated in foreign currencies often entails costs not associated with
investment in U.S. dollar-denominated securities of U.S. issuers, such as the
cost of converting foreign currency to U.S. dollars, higher brokerage
commissions, custodial expenses and other fees. Non-
10
<PAGE>
U.S. dollar denominated securities may be subject to certain withholding and
other taxes of the relevant jurisdiction, which may reduce the yield on the
securities to the Fund and which may not be recoverable by the Fund or its
investors.
Each Fund will calculate its net asset value and complete orders to
purchase, exchange or redeem shares only on a Monday-Friday basis (excluding
holidays on which the New York Stock Exchange is closed). Foreign securities in
which a Fund may invest may be primarily listed on foreign stock exchanges
which may trade on other days (such as Saturdays). As a result, the net asset
value of the Fund's portfolio may be affected by such trading on days when a
shareholder has no access to the Fund.
Investment income received by the Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source. If a
Fund should have more than 50% of the value of its assets invested in
securities of foreign corporations at the close of its taxable year, the Fund
may elect to pass through to its shareholders their proportionate shares of
foreign income taxes paid. Investors are urged to consult their tax attorney
with respect to specific questions regarding foreign, federal, state or local
taxes.
Foreign Currency Transactions
The value of the assets of each Fund, as measured in United States
dollars, may be affected favorably or unfavorably by changes in foreign
currency exchange rates and exchange control regulations, and may incur costs
in connection with conversions between various currencies. Each Fund may
conduct foreign currency exchange transactions either on a spot (i.e., cash)
basis at the spot rate prevailing in the foreign currency exchange market, or
through forward contracts to purchase or sell foreign currencies. A forward
foreign currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of the contract. These contracts are traded directly between currency traders
(usually large commercial banks) and their customers. At the time of the
purchase of a forward foreign currency exchange 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
contract, minus the Fund's initial margin deposit with respect thereto, will be
deposited in a pledged account with the Fund's custodian bank to collateralize
fully the position and thereby ensure that it is not leveraged.
When a Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may want to establish the United States
dollar cost or proceeds, as the case may be. By entering into a forward
contract in United States dollars for the purchase or sale of the amount of
foreign currency involved in the underlying security transaction, it is able to
protect itself against a possible loss between trade and settlement dates
resulting from an adverse change in the relationship between the United States
dollar and such foreign currency. However, this tends to limit potential gains
which might result from a positive change in such currency relationships.
Utilizing this investment technique may also hedge the foreign currency
exchange rate risk by engaging in currency financial futures and options
transactions.
When the Adviser believes that the currency of a particular foreign
country may suffer a substantial decline against the United States dollar, it
may enter into a forward contract to sell an amount of foreign currency
approximating the value of some or all of a Fund's portfolio securities
denominated in such foreign currency. The forecasting of short-term currency
market movement is extremely difficult and whether such a short-term hedging
strategy will be successful is highly uncertain.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration of a contract. Accordingly, it may be necessary to
purchase additional currency on the spot market (and bear the expense of such
purchase) if the market value of the security is less than the amount of
foreign currency the Fund is obligated to deliver when a decision is made to
sell the security and make delivery of the foreign currency in settlement of a
forward contract. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security
if its market value exceeds the amount of foreign currency the Fund is
obligated to deliver.
If a Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between the Fund entering into a forward contract for the
sale of a foreign currency and the date it enters into an offsetting contract
for the purchase of the foreign currency, the Fund would realize gains to the
extent the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the Fund
would suffer a loss to the extent the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell. Although such
contracts tend to minimize the risk of loss due to a decline in the value of
the hedged currency, they also tend to limit any potential gain which might
result should the value of such currency increase. The Fund will have to
convert its holdings of foreign currencies into United States dollars from time
to time. Although foreign exchange dealers do not charge a fee for conversion,
they do realize a profit based on the difference (the "spread") between the
prices at which they are buying and selling various currencies.
Other Techniques
The Adviser may buy other types of securities or employ other portfolio
management techniques on behalf of each Fund. See the Statement of Additional
Information for more information on these investment techniques and their
related risks.
11
<PAGE>
INVESTMENT RESTRICTIONS
The investment restrictions to which each Fund is subject, together with
the investment objective of each Fund, are fundamental policies of the Funds
which may not be changed without the approval of such Fund's shareholders.
There is no assurance that any Fund will be able to meet its investment
objective. A detailed description of the investment restrictions for each Fund
is contained in the Statement of Additional Information.
PORTFOLIO TURNOVER
The Funds pay brokerage commissions for purchases and sales of portfolio
securities. A high rate of portfolio turnover involves a correspondingly
greater amount of brokerage commissions and other costs which must be borne
directly by a Fund and thus indirectly by its shareholders. It may also result
in the realization of larger amounts of short-term capital gains, which are
taxable to shareholders as ordinary income.
The rate of portfolio turnover is not a limiting factor when the Adviser
deems changes appropriate. Although the portfolio turnover rate of each Fund
cannot be accurately predicted, it is anticipated that the annual turnover rate
will likely not exceed 100%. Portfolio turnover rate 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 each Fund's securities (excluding
short-term securities). The turnover rate may vary greatly from year to year
and may be affected by cash requirements for redemptions of shares of each Fund
and by compliance with provisions of the Internal Revenue Code, relieving
investment companies which distribute substantially all of their net income
from federal income taxation on the amounts distributed. For more information
regarding the consequences relating to a high portfolio turnover rate, see
"Portfolio Transactions and Brokerage" and "Dividends, Distributions and Taxes"
in the Statement of Additional Information.
MANAGEMENT OF THE FUNDS
The Trust is an open-end management investment company known as a mutual
fund. The Trustees of the Trust are responsible for the overall supervision of
the Funds and perform the various duties imposed on Trustees by the 1940 Act
and Massachusetts business trust law.
The Advisers
Phoenix Investment Counsel, Inc. ("PIC") is the investment adviser for the
Growth and Income Fund. PIC is located at 56 Prospect Street, Hartford,
Connecticut 06115-0480. PIC was originally organized in 1932 as John P. Chase,
Inc. In addition to the Growth and Income Fund, PIC also serves as investment
adviser to other entities including Phoenix Duff & Phelps Institutional Mutual
Funds (except Enhanced Reserves Portfolio and Real Estate Equity Securities
Portfolio), Phoenix Series Fund, Phoenix Multi-Portfolio Fund (all portfolios
other than the Real Estate Securities Portfolio), Phoenix Strategic Allocation
Fund, Inc., Phoenix Strategic Equity Series Fund (all funds except Phoenix
Equity Opportunities Fund) and The Phoenix Edge Series Fund (all series other
than the Real Estate Securities Series and Aberdeen New Asia Series) and as
subadviser to the Chubb America Fund, Inc. and SunAmerica Series Trust, among
other investment advisory clients. As of December 31, 1996, PIC had
approximately $18.2 billion in assets under management.
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning"), a subsidiary of Phoenix Duff & Phelps
Corporation. Phoenix Home Life is a majority shareholder of Phoenix Duff &
Phelps Corporation. Phoenix Home Life is in the business of writing ordinary
and group life and health insurance and annuities. Its principal offices are
located at One American Row, Hartford, Connecticut 06115. Phoenix Duff & Phelps
Corporation is a New York Stock Exchange traded company that provides various
financial advisory services to institutional investors, corporations and
individuals through operating subsidiaries.
Duff & Phelps Investment Management Co. ("DPIM") serves as the investment
adviser to the Core Equity Fund. In addition to the Core Equity Fund, DPIM also
serves as investment adviser to the Enhanced Reserves Portfolio of Phoenix Duff
& Phelps Institutional Mutual Funds and three closed-end funds: Duff & Phelps
Utilities Income Inc., Duff & Phelps Utilities Tax-Free Income Inc. and Duff &
Phelps Utility and Corporate Bond Trust Inc. In addition, DPIM serves as
subadviser to the Real Estate Equity Securities Portfolio of Phoenix Duff &
Phelps Institutional Mutual Funds, the Real Estate Securities Portfolio of
Phoenix Multi-Portfolio Fund, the Real Estate Securities Series of The Phoenix
Edge Series Fund and, from July 1987 through October 1995, the AAL Funds. DPIM
is a subsidiary of Phoenix Duff & Phelps Corporation and is located at 55 East
Monroe Street, Suite 3600, Chicago, Illinois 60603. As of December 31, 1996,
DPIM had approximately $14 billion in assets under management on a
discretionary basis.
Prior Investment Performance of DPIM
The following table sets forth composite performance data relating to the
historical performance of substantially all of the institutional private
accounts managed by DPIM investment professionals that have substantially the
same investment objectives, policies, strategies and risks as the Core Equity
Fund. The data is provided to illustrate the past performance of the Adviser in
managing substantially similar accounts as compared to the S&P 500. Investors
should not consider this performance data as an indication of past or future
performance of the Core Equity Fund or of the Adviser.
The Adviser's composite performance data, during the period January 1,
1993 to present, was calculated in accordance with recommended standards of the
Association for Investment Management and Research ("AIMR"), first adopted in
1993. AIMR is a non-profit membership and education organization with more than
60,000 members worldwide that, among other things, has formulated a set of
performance presentation standards for investment advisers. These AIMR
performance presentation standards are intended
12
<PAGE>
to promote full and fair presentations by investment advisers of their
performance results and ensure uniformity in reporting so that performance
results of investment advisers are directly comparable.
All returns presented were calculated on a total return basis and include
all dividends, interest, accrued income and realized and unrealized gains and
losses. All returns reflect the deduction of the maximum advisory fee of 0.60%
of assets under management, brokerage commissions and execution costs paid by
the Adviser's institutional private accounts. Only those institutional private
accounts where the Adviser exercised full discretionary investment authority
have been included in the composite performance data. The institutional private
accounts included in the Adviser's composite performance data are not subject
to the same expenses and specific tax restrictions applicable to regulated
investment companies, such as the Core Equity Fund, under Subchapter M of the
Internal Revenue Code and are not subject to Investment Company Act of 1940
restrictions on investment limitations and diversification. Consequently, the
Adviser's investment results could have been adversely affected had these
regulations applied to the institutional private accounts.
The institutional private accounts whose composite return is shown were
managed by a team of DPIM professionals. The Core Equity Fund similarly will be
managed by a team headed by Diane Mustain.
The investment results covering the period from January 1, 1993 through
December 31, 1996 have been audited for AIMR compliance as of December 31,
1996. The investment results presented below could be calculated using
different methods thereby producing different results. The performance below
reflects past performance of the Adviser for periods ending June 30, 1997 for
similarly managed institutional private accounts and is not indicative of
future results for the Core Equity Fund.
<TABLE>
<CAPTION>
Period Adviser's Composite S&P 500
- - ------------- --------------------- --------
<S> <C> <C>
One Year 42.59% 34.75%
Three Years 28.96% 28.93%
Five Years 17.92% 19.80%
Ten Years 14.09% 14.61%
</TABLE>
Management Fees
The Advisers continuously furnish an investment program for each Fund and
manage the investment and reinvestment of the assets subject at all times to
the supervision of the Trustees. Under the terms of the Investment Advisory
Agreements for each Fund, the Advisers are entitled to a prescribed fee,
payable monthly, at the following annual rates based on the aggregate net asset
values of such Fund.
<TABLE>
<CAPTION>
1st Billion 1-2 Billion 2+ Billion
- - ------------- ------------- -----------
<S> <C> <C>
0.75% 0.70% 0.65%
</TABLE>
The Advisers have voluntarily agreed to assume Total Fund Operating
Expenses of each Fund excluding interest, taxes, brokerage fees, commissions
and extraordinary expenses, until March 31, 1998, to the extent that such
expenses exceed the following percentages of the average annual net asset
values for each Fund:
<TABLE>
<CAPTION>
Class A Class B Class C Class M
Shares Shares Shares Shares
- - ------------ --------- --------- --------
<S> <C> <C> <C>
1.25% 2.00% 2.00% 1.50%
</TABLE>
The Portfolio Managers
Core Equity Fund. Diane Mustain serves as lead Portfolio Manager and as
such is primarily responsible for the day-to-day operation of the Fund. As lead
Portfolio Manager she manages the team of investment professionals responsible
for the selection of portfolio securities. Ms. Mustain is an Executive Vice
President of DPIM and serves as Vice Chairman of its Equity Strategy Committee.
Previously, Ms. Mustain served as Group Vice President of Duff & Phelps
Investment Research Company where she was responsible for the selection of
consumer stocks for the equity research model portfolio and provided analytical
input to the Investment Management Committee. Ms. Mustain joined Phoenix Duff &
Phelps Corporation, then known as Duff & Phelps, in 1981.
Growth and Income Fund. Steven L. Colton serves as Portfolio Manager and
as such is primarily responsible for the day-to-day operation of the Fund. Mr.
Colton joined Phoenix Duff & Phelps Corporation in June 1997. Previously, Mr.
Colton was Portfolio Manager for the American Century Income & Growth Fund
("ACIGF") from its inception on December 17, 1990 through May 30, 1997. Dong
Zhang serves as a member of the team that manages Phoenix Growth and Income
Fund. Mr. Zhang also was a member of the portfolio management team for ACIGF
from June 1996 through June 4, 1997. The ACIGF has substantially similar
investment objectives, policies and strategies as the Growth and Income Fund.
The cumulative total return for the ACIGF from its inception through March 31,
1997 was 190.73%. At March 31, 1997 that fund had $887.1 million in net assets.
Average annual returns for the one-year, three-year and five-year periods ended
March 31, 1997 and for the period from inception through March 31, 1997,
compared with the performance of the Average Growth & Income Fund and S&P 500
were:
<TABLE>
<CAPTION>
Average Growth &
Period ACIGF Income Fund(a) S&P 500(b)
- - ------------------- -------- ----------------- -----------
<S> <C> <C> <C>
One Year 19.56% 15.52% 19.94%
Three Years 21.64% 17.84% 22.36%
Five Years 16.41% 14.15% 16.46%
Inception through
March 31, 1997 18.49% 15.75%(c) 17.54%
</TABLE>
(a) The Average Growth & Income Fund is a Lipper Category of funds that
combine a growth of earnings orientation and an income requirement for level
and/or rising dividends. Lipper Analytical Services, Inc. is an independent
mutual fund service that groups funds according to their investment objective.
(b) The S&P 500 is an unmanaged index of common stocks that is considered
to be generally representative of the United States stock market. The index has
been adjusted to reflect reinvestment of dividends.
13
<PAGE>
(c) For the period from 12/20/90 (the date nearest the fund's inception
for which data are available) to 3/31/97.
Historical performance is not indicative of future performance. The ACIGF
is a separate unrelated fund, and its historical performance is not indicative
of the potential performance of the Phoenix Growth and Income Fund. Share
prices and investment returns will fluctuate to reflect market conditions, as
well as changes in company-specific fundamentals of securities held in the
portfolio.
Mr. Colton is a graduate of the University of California, San Diego and
Stanford University. Mr. Colton was an investment professional with American
Century Companies from 1987 through May 30, 1997. Mr. Zhang received his Ph.D.
in Physics from Stanford University and joined American Century Companies in
1993. Mr. Zhang served as portfolio manager of the American Century Companies
prior to joining Phoenix Duff & Phelps Corporation in June 1997.
The Financial Agent
Equity Planning also acts as financial agent of the Funds and, as such,
performs administrative, bookkeeping and pricing functions for the Funds. As
compensation, Equity Planning is entitled to a fee, payable monthly and based
upon (a) the average of the aggregate daily net asset values of each 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>
(b) a minimum fee of $50,000 for each Fund; and (c) an annual fee of
$12,000 for each class of shares beyond one.
The Custodian and Transfer Agent
The custodian of the assets of the Funds is State Street Bank and Trust
Company, P.O. Box 351, Boston, Massachusetts 02101 (the "Custodian").
Pursuant to a Transfer Agent and Service Agreement with the Phoenix Funds,
Equity Planning acts as transfer agent for the Funds (the "Transfer Agent") for
which it is paid $14.95 plus certain out of pocket expenses for each designated
shareholder account. The Transfer Agent engages sub-agents to perform certain
shareholder servicing functions for which such agents are paid a fee by Equity
Planning.
Brokerage Commissions
Although the Conduct Rules of the National Association of Securities
Dealers, Inc. ("NASD") prohibit its members from seeking orders for the
execution of investment company portfolio transactions on the basis of their
sales of investment company shares, under such Rules, sales of investment
company shares may be considered in selecting brokers to effect portfolio
transactions. Accordingly, some portfolio transactions are, subject to such
Rules and to obtaining best prices and executions, effected through dealers
(excluding Equity Planning) who sell shares of the Funds.
DISTRIBUTION PLANS
The offices of Equity Planning, the national distributor of the Funds'
shares, 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
Funds and a director and officer of Equity Planning. David R. Pepin, a director
and officer of Equity Planning, is an officer of the Funds. Michael E. Haylon,
a director of Equity Planning, is an officer of the Funds. G. Jeffrey Bohne,
Nancy G. Curtiss, William E. Keen, III, William R. Moyer, Leonard J. Saltiel
and Thomas N. Steenburg are officers of the Funds and officers of Equity
Planning.
Equity Planning and the Funds have entered into distribution agreements
under which Equity Planning has agreed to use its best efforts to find
purchasers for Funds shares sold subject to an initial sales charge and those
sold subject to a contingent deferred sales charge. The Funds have granted
Equity Planning the exclusive right to purchase from the Funds and resell, as
principal, shares needed to fill unconditional orders for Funds shares. Equity
Planning may sell Funds shares through its registered representatives or
through securities dealers with whom it has sales agreements. Equity Planning
may also sell Funds shares pursuant to sales agreements entered into with banks
or bank-affiliated securities brokers who, acting as agent for their customers,
place orders for Funds 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 Fund.
The sale of Fund shares through a securities broker affiliated with a
particular bank is not expected to preclude the Funds from borrowing from such
bank or from availing itself of custodial or transfer agency services offered
by such bank.
The Trustees have adopted separate distribution plans under Rule 12b-1 of
the 1940 Act for each class of shares of each Fund of the Trust (the "Class A
Plan," the "Class B Plan," the "Class C Plan," the "Class M Plan," and
collectively the "Plans"). The Plans permit the Funds to reimburse the
Distributor for expenses incurred in connection with the sale and promotion of
Fund shares and the furnishing of shareholder services. A 12b-1 fee paid by one
series may be used to finance distribution of the shares of another series
based on the number of shareholder accounts within the Funds. Pursuant to the
Plans, the Funds may reimburse the Distributor for actual expenses of the
Distributor up to 0.25% annually for the average daily net assets of the Funds'
Class
14
<PAGE>
A Shares, up to 1.00% annually for the average daily net assets of the Funds'
Class B and C Shares, and up to 0.50% annually for the average daily net assets
of the Funds' Class M Shares.
Expenditures incurred under the Plans may consist of: (i) commissions to
sales personnel for selling shares of the Funds (including underwriting
commissions and finance charges related to the payment of commissions for sales
of Class B and C Shares); (ii) compensation, sales incentives and payments to
sales, marketing and service personnel; (iii) payments to broker-dealers and
other financial institutions which have entered into agreements with the
Distributor for services rendered in connection with the sale and distribution
of shares of the Funds and provision of shareholder services; (iv) payment of
expenses incurred in sales and promotional activities, including advertising
expenditures related to the Funds; (v) the costs of preparing and distributing
promotional materials; (vi) the cost of printing the Funds' Prospectus and
Statement of Additional Information for distribution to potential investors;
(vii) such other similar services that the Trustees determine are reasonably
calculated to result in the sale of shares of the Funds, provided, however that
a portion of such fee, which portion shall be equal to or less than 0.25%
annually of the average daily net assets of each Fund, may be paid for
reimbursing the costs of providing services to shareholders, including
assistance in connection with inquiries related to shareholder accounts (the
"Service Fee"). From the Service Fee, the Distributor expects to pay a
quarterly fee to qualifying broker/dealer firms, as compensation for providing
personal services to shareholders and/or maintaining shareholder accounts, with
respect to shares sold by such firms. This fee will not exceed on an annual
basis 0.25% of the average annual net asset value of such shares, and will be
in addition to sales charges on Fund shares which are reallowed to such firms.
To the extent that the entire amount of the Service Fee is not paid to such
firms, the balance will serve as compensation for personal and account
maintenance services furnished by the Distributor. The Distributor also pays to
dealers, as additional compensation with respect to sales of Class C and M
shares, 0.75% and 0.25% of the average annual net asset value of each class,
respectively.
In order to receive payments under the Plans, participants must meet such
qualifications as are to be established in the sole discretion of the
Distributor, such as services to the Funds' shareholders; or services providing
the Funds with more efficient methods of offering shares to groups of clients,
members or prospects of a participant; or services permitting bulking of
purchases or sales, or transmission of such purchases or sales by computerized
tape or other electronic equipment; or other batch processing.
On a quarterly basis, the Funds' Trustees review a report on expenditures
under each Plan and the purposes for which expenditures were made. The Trustees
conduct an additional, more extensive review annually in determining whether
each Plan will be continued. By its terms, continuation of each Plan from year
to year is contingent on annual approval by a majority of the Trustees and by a
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act) and who have no direct or indirect financial interest in the
operation of any Plan or any related agreements (the "Plan Trustees"). Each
Plan provides that it may not be amended to increase materially the costs which
the Funds may bear without approval of the applicable class of shareholders of
the affected Fund of the Trust and that other material amendments 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. Each 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 who are not "interested persons." Each Plan may be terminated at any
time by vote of a majority of the Plan Trustees or a majority of the applicable
class of outstanding shares of the each Fund.
The NASD regards certain distribution fees as asset-based sales charges
subject to NASD sales load limits. The NASD's maximum sales charge rule may
require the Trustees to suspend distribution fees or amend any or all of the
Plans.
HOW TO BUY SHARES
How do you invest?
You may open a fund account with an initial investment of $500. This
amount is reduced to $25 for investments made under the "Investo-Matic" plan
(see the Fund's Application), individual retirement accounts or under the
systematic exchange privilege described below. The initial investment
requirement is waived for investments made under pension, profit sharing or
employee benefit plans as well as in connection with reinvested dividends and
distributions.
You may make additional investments at any time with at least $25. The
subsequent investment minimum is waived for investments made under pension,
profit sharing or employee benefit plans as well as in connection with
reinvested dividends and distributions.
An application should be completed to open a new Phoenix Funds account. A
check for the amount you wish to invest, made payable to the "Phoenix Funds",
(along with the completed application if opening a new account), must be sent
to: Phoenix Funds, c/o State Street Bank and Trust Company ("State Street
Bank"), P.O. Box 8301, Boston, MA 02266-8301. See the Statement of Additional
Information for more information regarding the reduction or elimination of the
minimum initial or subsequent investments. You may also write to the
Distributor at 100 Bright Meadow Boulevard, Enfield, Connecticut 06083-2200 or
call (800) 243-1574.
Shares are sold at the public offering price based on the net asset value
for the class of shares bought next determined after State Street Bank receives
your order. In most cases, in order to receive that day's public offering
price, State Street Bank must receive your order before the close of regular
trading on the New York Stock Exchange. See "Net Asset Value."
What are the classes and how do they differ?
Each Fund presently offers investors four classes of shares which bear
sales and distribution charges in different amounts.
Class A Shares. If you buy Class A Shares, you will pay a sales charge at
the time of purchase equal to 4.75% of the
15
<PAGE>
offering price (4.99% of the amount invested). The sales charge may be reduced
or waived under certain conditions. Class A Shares are not subject to any
charges by the Fund when they are sold. Class A Shares have lower Rule 12b-1
fees and pay higher dividends than any other class.
Class B Shares. If you buy Class B Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class B Shares within the first 5
years after they are bought, you will pay a sales charge of up to 5% of your
shares' value. See "Deferred Sales Charge Alternative--Class B Shares." This
charge declines each year to zero and may be waived under certain conditions.
Class B shares have higher Rule 12b-1 fees and pay lower dividends than Class A
and M Shares. Class B Shares automatically convert to Class A Shares eight
years after purchase. The Distributor intends to limit investments in Class B
Shares to: (a) $250,000 for any person; (b) $1 million for any unallocated
employer sponsored plan; and (c) $250,000 for each participant in any allocated
qualified employer sponsored plan, including 401(k) plans, provided such plan
uses an approved participant tracking system. Class B Shares will not be sold
to any qualified employee benefit plan, endowment fund or foundation if, on the
date of the initial investment, such entity has assets of over $10 million or
more than 200 participant employees. Class B Shares will not be sold to anyone
who is over 85 years old.
Class C Shares. If you buy Class C Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class C Shares within the first year
after they are bought, you will pay a sales charge of 1% of your shares' value.
See "Deferred Sales Charge Alternative--Class C Shares." Class C Shares have
the same Rule 12b-1 fees and pay comparable dividends as Class B Shares. Class
C Shares do not convert to any other class of shares of the Fund. Class C
Shares are not currently offered for all Phoenix Funds.
Class M Shares. If you buy Class M Shares, you will pay a sales charge at
the time of purchase equal to 3.5% of the offering price (3.63% of the amount
invested). Class M Shares are not subject to any charges by the Fund when they
are sold. Class M Shares have lower Rule 12b-1 fees and pay higher dividends
than Class B and C Shares. Class M Shares do not convert to any other class of
shares of the Fund. Class M Shares are not currently offered for all Phoenix
Funds.
What arrangement is best for you?
The alternative purchase arrangement permits you to choose the method of
buying shares that is most beneficial to you given the amount of the purchase,
the length of time you expect to hold the shares, whether you wish to receive
distributions in cash or to reinvest them in additional shares, and other
circumstances. You should consider whether, during the anticipated term of your
investment, the accumulated continuing distribution and service fees and
contingent deferred sales charges of one class would be more than the initial
sales charge and accumulated distribution and service fees of another class of
shares bought at the same time. See "Distribution Plans" and "Fund Expenses."
Initial Sales Charge Alternative--Class A and M Shares
The public offering price of Class A and M Shares is the net asset value
plus a sales charge that varies depending on the size of any "person's" (see
"How To Obtain Reduced Initial Sales Charges--Class A and M Shares: Combination
Purchase Privilege") purchase. Shares issued based on the automatic
reinvestment of income dividends or capital gains distributions are not subject
to any sales charges. The sales charge is divided between your investment
dealer and the Distributor as shown on the following tables.
Class A Shares
<TABLE>
<CAPTION>
Sales Charge as
a percentage of
-----------------------
Amount of Net Dealer Discount
Transaction Offering Amount Percentage of
at Offering Price Price Invested Offering Price
- - -------------------- ---------- ---------- ----------------
<S> <C> <C> <C>
Under $50,000 4.75% 4.99% 4.25%
$50,000 but under
$100,000 4.50 4.71 4.00
$100,000 but under
$250,000 3.50 3.63 3.00
$250,000 but under
$500,000 3.00 3.09 2.75
$500,000 but under
$1,000,000 2.00 2.04 1.75
$1,000,000 or more None None None
</TABLE>
Class M Shares
<TABLE>
<CAPTION>
Sales Charge as
a percentage of
-----------------------
Amount of Net Dealer Discount
Transaction Offering Amount Percentage of
at Offering Price Price Invested Offering Price
- - -------------------- ---------- ---------- ----------------
<S> <C> <C> <C>
Under $50,000 3.50% 3.63% 3.00%
$50,000 but under
$100,000 2.50 2.56 2.00
$100,000 but under
$250,000 1.50 1.52 1.00
$250,000 but under
$500,000 1.00 1.01 1.00
$500,000 or more None None None
</TABLE>
Deferred Sales Charge Alternative--
Class B and C Shares
Class B and C Shares are purchased without an initial sales charge;
however, shares sold within a specified time period are subject to a declining
contingent deferred sales charge (the "CDSC") at the rates set forth below. The
charge will be multiplied by the then current market value or the initial cost
of the Shares being redeemed, whichever is less. No sales charge will be
imposed on increases in net asset value. In addition, shares issued based on
the automatic reinvestment of income dividends or capital gains distributions
are not subject to any sales charges. To minimize the CDSC, shares not subject
to any charge will be redeemed first, followed by shares held the longest time.
The Distributor will add up all shares bought in any month and use the last day
of the preceding month in calculating the amount of shares owned and time
period held for Class B Shares. The trade date will be used for purposes of
aging Class C Share investments.
16
<PAGE>
Deferred Sales charge you may pay to sell Class B Shares
Year 1 2 3 4 5 6+
- - ------ ---- ---- ---- ---- ---- ---
CDSC 5% 4% 3% 2% 2% 0%
Deferred Sales charge you may pay to sell Class C Shares
Year 1 2+
- - ------ ---- ----
CDSC 1% 0%
Dealer Concessions
In addition to the dealer discount on purchases of Class A and M Shares,
the Distributor intends to pay investment dealers a sales commission of 4% of
the sale price of Class B Shares and a sales commission of 1% of the sale price
of Class C Shares sold by such dealers. Your broker, dealer or investment
adviser may also charge you additional commissions or fees for their services
in selling shares to you provided they notify the Distributor of their
intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of
the Funds and/or for providing other shareholder services. Depending on the
nature of the services, these fees may be paid either from the Trust through
distribution fees, service fees or transfer agent fees or in some cases, the
Distributor may pay certain fees from its own profits and resources. From its
own profits and resources, the Distributor does intend to: (a) sponsor sales
contests, training and educational meetings and provide additional compensation
to qualifying dealers in the form of trips, merchandise or expense
reimbursements; (b) from time to time pay special incentive and retention fees
to qualified wholesalers, registered financial institutions and third party
marketers; (c) pay broker/dealers an amount equal to 1% of the first $3 million
of Class A Share purchases by an account held in the name of a qualified
employee benefit plan with at least 100 eligible employees, 0.50% on the next
$3 million, plus 0.25% on the amount in excess of $6 million; and (d) excluding
purchases as described in (c) above, pay broker/dealers an amount equal to 1%
of the amount of Class A Shares sold above $1 million but under $3 million,
0.50% on the next $3 million, plus 0.25% on the amount in excess of $6 million.
If part or all of such investment, including investments by qualified employee
benefit plans, is subsequently redeemed within one year of the investment date,
the broker-dealer will refund to the Distributor such amounts paid with respect
to the investment. In addition, the Distributor may pay the entire applicable
sales charge on purchases of Class A Shares to selected dealers and agents. Any
dealer who receives more than 90% of a sales charge may be deemed to be an
"underwriter" under the Securities Act of 1933.
How To Obtain Reduced Initial Sales Charges--Class A and M Shares
Investors choosing Class A or M Shares may be entitled to reduced sales
charges. The five ways in which sales charges may be avoided or reduced are
described below.
Qualified Purchasers. If you fall within any one of the following
categories, you will not have to pay a sales charge on your purchase of Class A
or M Shares: (1) any Phoenix Fund trustee, director or officer; (2) any
director or officer, or any full-time employee or sales representative (for at
least 90 days), of the Adviser or Distributor; (3) registered representatives
and employees of securities dealers with whom Distributor has sales agreements;
(4) any qualified retirement plan exclusively for persons described above; (5)
any officer, director or employee of a corporate affiliate of the Adviser or
Distributor; (6) any spouse, child, parent, grandparent, brother or sister of
any person named in (1), (2), (3) or (5) above; (7) employee benefit plans for
employees of the Adviser, Distributor and/or their corporate affiliates; (8)
any employee or agent who retires from Phoenix Home Life, Distributor and/ or
their corporate affiliates; (9) any account held in the name of a qualified
employee benefit plan, endowment fund or foundation if, on the date of the
initial investment, the plan, fund or foundation has assets of $10,000,000 or
more or at least 100 eligible employees; (10) any person with a direct rollover
transfer of shares from an established Phoenix Fund qualified plan; (11) any
Phoenix Home Life separate account which funds group annuity contracts offered
to qualified employee benefit plans; (12) any state, county, city, department,
authority or similar agency prohibited by law from paying a sales charge; (13)
any fully matriculated student in any U.S. service academy; (14) any
unallocated account held by a third party administrator, registered investment
adviser, trust company, or bank trust department which exercises discretionary
authority and holds the account in a fiduciary, agency, custodial or similar
capacity, if in the aggregate such accounts held by such entity equal or exceed
$1,000,000; (15) any person who is investing redemption proceeds from
investment companies other than the Phoenix Funds if, in connection with the
purchases or redemption of the redeemed shares, the investor paid a prior sales
charge provided such investor supplies verification that the redemption
occurred within 90 days of the Phoenix Fund purchase and that a sales charge
was paid; (16) any deferred compensation plan established for the benefit of
any Phoenix Fund trustee or director; provided that sales to persons listed in
(1) through (15) above are made upon the written assurance of the purchaser
that the purchase is made for investment purposes and that the shares so
acquired will not be resold except to the Fund; (17) purchasers of Class A or M
Shares bought through investment advisors and financial planners who charge an
advisory, consulting or other fee for their services and buy shares for their
own accounts or the accounts of their clients; (18) retirement plans and
deferred compensation plans and trusts used to fund those plans (including, for
example, plans qualified or created under sections 401(a), 403(b) or 457 of the
Internal Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker or agent or
other financial intermediary that has made special arrangements with the
Distributor for such purchases; or (19) clients of investment advisors or
financial planners who buy shares for their own accounts but only if their
accounts are linked to a master account of their investment advisor or
17
<PAGE>
financial planner on the books and records of the broker, agent or financial
intermediary with which the Distributor has made such special arrangements
(each of the investors described in (17) through (19) may be charged a fee by
the broker, agent or financial intermediary for purchasing shares).
Combination Purchase Privilege. Your purchase of any class of shares of
this or any other Phoenix Fund (other than Phoenix Money Market Fund Series
Class A Shares), if made at the same time by the same "person," will be added
together to determine whether the combined sum entitles you to an immediate
reduction in sales charges. A "person" is defined in this and the following
sections as (a) any individual, their spouse and minor children purchasing
shares for his or their own account (including an IRA account) including his or
their own trust; (b) a trustee or other fiduciary purchasing for a single
trust, estate or single fiduciary account (even though more than one
beneficiary may exist); (c) multiple employer trusts or Section 403(b) plans
for the same employer; (d) multiple accounts (up to 200) under a qualified
employee benefit plan or administered by a third party administrator; or (e)
trust companies, bank trust departments, registered investment advisers, and
similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority
and which are held in a fiduciary, agency, custodial or similar capacity,
provided all shares are held of record in the name, or nominee name, of the
entity placing the order.
Letter of Intent. If you sign a Letter of Intent, your purchase of any
class of shares of this or any other Phoenix Fund (other than Phoenix Money
Market Fund Series Class A Shares), if made by the same person within a
thirteen month period, will be added together to determine whether you are
entitled to an immediate reduction in sales charges. Sales charges are reduced
based on the overall amount you indicate that you will buy under the Letter of
Intent. The Letter of Intent is a mutually non-binding arrangement between you
and the Distributor. Since the Distributor doesn't know whether you will
ultimately fulfill the Letter of Intent, shares worth 5% of the amount of each
purchase will be set aside until you fulfill the Letter of Intent. When you buy
enough shares to fulfill the Letter of Intent, these shares will no longer be
restricted. If, on the other hand, you do not satisfy the Letter of Intent, or
otherwise wish to sell any restricted shares, you will be given the choice of
either buying enough shares to fulfill the Letter of Intent or paying the
difference between any sales charge you previously paid and the otherwise
applicable sales charge based on the intended aggregate purchases described in
the Letter of Intent. You will be given 20 days to make this decision. If you
do not exercise either election, the Distributor will automatically redeem the
number of your restricted shares needed to make up the deficiency in sales
charges received. The Distributor will redeem restricted Class A or M Shares
before Class C or B Shares, respectively. Oldest shares will be redeemed before
selling newer shares. Any remaining shares will then be deposited to your
account.
Right of Accumulation. Your purchase of any class of shares of this or any
other Phoenix Fund, if made over time by the same person may be added together
to determine whether the combined sum entitles you to a prospective reduction
in sales charges. You must provide certain account information to the
Distributor to exercise this right.
Associations. Certain groups or associations may be treated as a "person"
and qualify for reduced Class A Share sales charges. The group or association
must: (1) have been in existence for at least six months; (2) have a legitimate
purpose other than to purchase mutual fund shares at a reduced sales charge;
(3) work through an investment dealer; or (4) not be a group whose sole reason
for existing is to consist of members who are credit card holders of a
particular company, policyholders of an insurance company, customers of a bank
or a broker-dealer or clients of an investment adviser.
How To Obtain Reduced Deferred Sales Charges--
Class B and C Shares
The CDSC is waived on the redemption (sale) of Class B and C Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to
Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section
72(m)(7); (c) as a mandatory distribution upon reaching age 701/2 under any
retirement plan qualified under Code Sections 401, 408 or 403(b) or resulting
from the tax-free return of an excess contribution to an IRA; (d) by 401(k)
plans using an approved participant tracking system for participant hardships,
death, disability or normal retirement, and loans which are subsequently
repaid; (e) based on the exercise of exchange privileges among Class B and C
Shares of this or any other Phoenix Fund; (f) based on any direct rollover
transfer of shares from an established Phoenix Fund qualified plan into a
Phoenix Fund IRA by participants terminating from the qualified plan; and (g)
based on the systematic withdrawal program (Class B Shares only). If, as
described in condition (a) above, an account is transferred to an account
registered in the name of a deceased's estate, the CDSC will be waived on any
redemption from the estate account occurring within one year of the death. If
the Class B or C Shares are not redeemed within one year of the death, they
will remain subject to the applicable CDSC.
Conversion Feature--Class B Shares
Class B Shares will automatically convert to Class A Shares of the same
Fund eight years after they are bought. Conversion will be on the basis of the
then prevailing net asset value of Class A and B Shares. There is no sales
load, fee or other charge for this feature. Class B Shares acquired through
dividend or distribution reinvestments will be converted into Class A Shares at
the same time that other Class B Shares are converted based on the proportion
that the reinvested shares bear to purchased Class B Shares. The conversion
feature is subject to the continuing availability of an opinion of counsel or a
ruling of the Internal Revenue Service that the assessment of the higher
distribution fees and associated costs with respect to Class B Shares does not
result in any dividends or distributions constituting "preferential dividends"
under the
18
<PAGE>
Code, and that the conversion of shares does not constitute a taxable event
under federal income tax law. If the conversion feature is suspended, Class B
Shares would continue to be subject to the higher distribution fee for an
indefinite period. Even if the Funds were unable to obtain such assurances, it
might continue to make distributions if doing so would assist in complying with
its general practice of distributing sufficient income to reduce or eliminate
federal taxes otherwise payable by the Funds.
INVESTOR ACCOUNT SERVICES
The Trust mails periodic statements and reports to shareholders. In order
to reduce the volume and cost of mailings, to the extent possible, only one
copy of most Fund reports will be mailed to households for multiple accounts
with the same surname at the same household address. Please contact Equity
Planning to request additional copies of shareholder reports toll free at (800)
243-4361.
In most cases, changes to any shareholder account may be accomplished by
calling Shareholder Services at (800) 243-1574. More information relating to
the shareholder account services can be found in the Fund's Statement of
Additional Information ("SAI").
Bank Draft Investing Program (Investo-Matic Plan). By completing the
Investo-Matic Section of the New Account Application, you may authorize the
bank named in the form to draw $25 or more from your personal checking or
savings account to be used to purchase additional shares for your account. The
amount you designate will be made available, in form payable to the order of
the Transfer Agent, by the bank on the date the bank draws on your account and
will be used to purchase shares at the applicable offering price.
Distribution Option. The Funds currently declare all income dividends and
all capital gain distributions, if any, payable in shares of the Fund at net
asset value or, at your option, in cash. By exercising the distribution option,
you may elect to: (1) receive both dividends and capital gain distributions in
additional shares or (2) receive dividends in cash and capital gain
distributions in additional shares or (3) receive both dividends and capital
gain distributions in cash. If you elect to receive dividends and/or
distributions in cash and the check cannot be delivered or remains uncashed 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 in your account at the then current net
asset value. Dividends and capital gain distributions received in shares are
taxable to you and credited to your account in full and fractional shares
computed at the closing net asset value on the next business day after the
record date.
Systematic Withdrawal Program. The Systematic Withdrawal Program allows
you to periodically redeem a portion of your account on a predetermined
monthly, quarterly, semiannual or annual basis. A sufficient number of full and
fractional shares will be redeemed so that the designated payment is made on or
about the 20th day of the month. Shares are tendered for redemption by the
Transfer Agent, as agent for the shareowner, on or about the 15th of the month
at the closing net asset value on the date of redemption. The Systematic
Withdrawal Program also provides for redemptions to be tendered on or about the
10th, 15th or 25th of the month with proceeds to be directed through Automated
Clearing House (ACH) to your bank account. In addition to the limitations
stated below, withdrawals may not be less than $25 and minimum account balance
requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of a Fund worth $5,000 or more, as determined by the then current net
asset value per share, and elect to have all dividends reinvested. Participants
in the Program redeeming Class C Shares will be subject to any applicable
contingent deferred sales charge. The purchase of shares while participating in
the withdrawal program will ordinarily be disadvantageous to the Class A or M
Shares investor since a sales charge will be paid by the investor on the
purchase of Class A or M Shares at the same time as other shares are being
redeemed. For this reason, investors in Class A or M Shares may not participate
in an automatic investment program while participating in the Systematic
Withdrawal Program.
Through the Program, Class B shareholders may withdraw up to 1% of their
aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B shareholders redeeming more shares than the
percentage permitted by the withdrawal program will be subject to any
applicable contingent deferred sales charge on all shares redeemed.
Accordingly, the purchase of Class B Shares will generally not be suitable for
an investor who anticipates withdrawing sums in excess of the above limits
shortly after purchase.
Tax Sheltered Retirement Plans. Shares of the Funds are offered in
connection with the following qualified prototype retirement plans: IRA,
Rollover IRA, SEP-IRA, SIMPLE IRA, SIMPLE 401(k), Profit-Sharing and Money
Purchase Pension Plans which can be adopted by self-employed persons ("Keogh")
and by corporations and 403(b) Retirement Plans. Write or call Equity Planning
at (800) 243-4631 for further information about the plans.
Exchange Privileges
You may exchange shares of one Phoenix Fund for shares of another Phoenix
Fund without paying any fees or sales charges. On exchanges with share classes
that carry a contingent deferred sales charge, the CDSC schedule of the
original shares purchased continues to apply. Shares held in book-entry form
may be exchanged for shares of the same class of other Phoenix Funds, provided
the following conditions are met: (1) the shares that will be acquired in the
exchange (the "Acquired Shares") are available for sale; (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
19
<PAGE>
Shares; (4) the account value of the Fund whose shares are to be acquired must
equal or exceed the minimum initial investment amount required by that Phoenix
Fund after the exchange is made; and (5) if you have elected not to use the
telephone exchange privilege (see below), a properly executed exchange request
must be received by the Distributor. Exchanges may be made over the telephone
or in writing and may be made at one time or systematically over a period of
time. Note, each Phoenix Fund has different investment objectives and policies.
You should read the prospectus of the Phoenix Fund into which the exchange is
to be made before making any exchanges. This privilege may be modified or
terminated at any time on 60 days' notice.
Market Timer Restrictions. Because excessive trading can hurt Fund
performance and harm shareholders, the Funds reserve 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 Exchanges. If permitted in your state and unless you waive this
privilege in writing, you or your broker may sell or exchange your shares over
the phone by calling the Distributor at (800) 243-1574. Reasonable procedures
will be used to confirm that telephone instructions are genuine. In addition to
requiring that the exchange is only made between accounts with identical
registrations, the Distributor may require address or other forms of
identification and will record telephone instructions. All exchanges will be
confirmed in writing to you. If procedures reasonably designed to prevent
unauthorized telephone exchanges are not followed, the Funds and/or Distributor
may be liable for following telephone instructions that prove to be fraudulent.
Broker/dealers other than the Distributor assume the risk of any loss resulting
from any unauthorized telephone exchange instructions from their firm or their
registered representatives. You assume the risk if the Distributor acts upon
unauthorized instructions it reasonably believes to be genuine. During times of
severe economic or market changes, this privilege may be difficult to exercise
or may be temporarily suspended. In such event, an exchange may be effected by
written request by the registered shareowner(s).
NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close
of regular trading of the New York Stock Exchange (the "Exchange") on days when
the Exchange is open for trading. The net asset value per share of a Fund is
determined by adding the values of all securities and other assets of the Fund,
subtracting liabilities, and dividing by the total number of outstanding shares
of the Fund. 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
Fund, and the resulting amount of each is divided by the number of shares of
that class outstanding to produce the net asset value per share.
The Funds' 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. 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
You have the right to have the Funds buy back shares at the net asset
value next determined after receipt of a redemption order, and any other
required documentation in proper form, by Phoenix Funds c/o State Street Bank
and Trust Company, P.O. Box 8301, Boston, MA 02266-8301. In the case of a Class
B or C Share redemption, you will be subject to the applicable deferred sales
charge, if any, for such shares (see "Deferred Sales Charge Alternative--Class
B and C Shares," above). Subject to certain restrictions, shares may be
redeemed by telephone or in writing. In addition, shares may be sold through
securities dealers, brokers or agents who may charge customary commissions or
fees for their services. The Funds do not charge any redemption fees. Payment
for shares redeemed is made within seven days, provided that redemption
proceeds will not be disbursed until each check used for purchases of shares
has been cleared for payment by your bank, which may take up to 15 days after
receipt of the check.
The requirements to redeem shares are outlined in the table below.
Additional documentation may be required for redemptions by corporations,
partnerships or other organizations, executors, administrators, trustees,
custodians, guardians, or from IRA's or other retirement plans, or if
redemption is requested by anyone but the shareholder(s) of record. To avoid
delay in redemption or transfer, shareholders having questions about specific
requirements should contact the Funds at (800) 243-1574. Redemption requests
will not be honored until all required documents in proper form have been
received.
20
<PAGE>
How can I sell my Shares?
By Phone [bullet] Sales up to $50,000
[phone symbol] [bullet] Not available on most retirement accounts
(800) 243-1574 [bullet] Requests received after 4PM will be executed
on the following business day
In Writing [bullet] Letter of instruction from the registered owner
[letter symbol] including the fund and account number and
the number of shares or dollar amount you
wish to sell
[bullet] No signature guarantee is required if your
shares are registered individually, jointly, or
as custodian under the Uniform Gifts to
Minors Act or Uniform Transfers to Minors
Act, the proceeds of the redemption do not
exceed $50,000, and the proceeds are payable
to the registered owner(s) at the address of
record
Telephone Redemptions
The Funds and the Transfer Agent will employ reasonable procedures to
confirm that telephone instructions are genuine. Address and bank account
information will be verified, telephone redemption instructions will be
recorded on tape, and all redemptions will be confirmed in writing to you. 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
Funds 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, you would bear the risk of
loss resulting from instructions entered by an unauthorized third party that
the Funds and/or the Transfer Agent reasonably believe to be genuine. The
Telephone Redemption 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 Redemption Privilege may be difficult to exercise
or may be temporarily suspended. In such event, a redemption may be effected by
written request by following the procedure outlined above.
Written Redemptions
If you elect not to use the telephone redemption or telephone exchange
privileges, you must submit your request in writing. If the shares are being
exchanged between accounts that are not identically registered, 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 unions, national securities exchanges, registered
securities associations, clearing agencies and savings associations.
Account Reinstatement Privilege
You have a one time privilege of using redemption proceeds from Class A,
B, C and M Shares to purchase Class A Shares of any Phoenix Fund with no sales
charge (at net asset value next determined after the request for reinvestment
is made). For Federal income tax purposes, a redemption and reinvestment will
be treated as a sale and purchase of shares. Special rules may apply in
computing the amount of gain or loss in these situations. (See "Dividends,
Distributions and Taxes" for information on the Federal income tax treatment of
a disposition of shares.) A written request to reinstate your account must be
received by the Transfer Agent within 180 days of the redemption, accompanied
by payment for the shares (not in excess of the redemption value). Class B
shareholders who have had the contingent deferred sales charge waived through
participation in the Systematic Withdrawal Program are not eligible to use the
Reinstatement Privilege.
Redemption of Small Accounts
Due to the relatively high cost of maintaining small accounts, the Funds
reserve the right to redeem, at net asset value, the shares of any shareholder
whose account has a value, due to redemptions, of less than $200. Before the
Funds redeem these shares, the shareholder will be given notice that the value
of the shares in the account is less than the minimum amount and will be
allowed 30 days to make an additional investment in an amount which will
increase the value of the account to at least $200.
DIVIDENDS, DISTRIBUTIONS
AND TAXES
Each Fund is treated as a separate entity for Federal income tax purposes.
Each Fund intends to elect to be treated as a regulated investment company
("RIC") and qualify annually as such under Subchapter M of the Internal Revenue
Code (the "Code"). In addition, each Fund intends to distribute annually to
shareholders all or substantially all of its net investment income and net
realized capital gains, after utilization of any capital loss carryover. As a
result, each Fund will not be subject to Federal income tax on the net
investment income and net capital gains that it distributes. The discussion
below is based upon the assumption that each Fund will qualify as a RIC.
Each Fund intends to make distributions from net investment income
semi-annually, and intends to distribute net realized capital gains, if any, on
an annual basis.
Each Fund will be subject to a nondeductible 4% excise tax if it fails to
meet certain calendar year distribution requirements. In order to prevent
imposition of the excise tax, it may be necessary for the Funds to make
distributions more frequently than described in the previous paragraph.
Unless a shareholder elects to receive distributions in cash, dividends
and capital gain distributions will be paid in additional shares of the Funds
credited at the net asset value per share on
21
<PAGE>
the ex-date. Dividends and distributions, whether received in cash or in
additional shares of the Funds, generally are subject to Federal income tax and
may be subject to state, local, and other taxes. Shareholders will be notified
annually about the amount and character of distributions made to them by the
Funds.
Long-term capital gains, if any, distributed to shareholders and which are
designated by the Funds as capital gain distributions, are taxable to
shareholders as long-term capital gain distributions regardless of the length
of time shares of the Funds have been held by the shareholder. Distributions of
short-term capital gains and net investment income, if any, are taxable to
shareholders as ordinary income.
Dividends and distributions generally will be taxable to shareholders in
the taxable year in which they are received. However, dividends and
distributions declared by the Funds in October, November or December of any
calendar year, with a record date in such a month, and paid during the
following January, will be treated as if they were paid by the Funds and
received by shareholders on December 31 of the calendar year in which they were
declared.
A redemption or other disposition (including an exchange) of shares of the
Funds generally will result in the recognition of a taxable gain or loss, which
will be a long- or short-term capital gain or loss (assuming the shares were a
capital asset in the hands of the shareholder), depending upon a shareholder's
holding period for his or her shares. In addition, if shares of a Fund are
disposed of at a loss and are replaced (either through purchases or through
reinvestment of dividends) within a period commencing thirty days before and
ending thirty days after the disposition of such shares, the realized loss will
be disallowed and appropriate adjustments to the tax basis of the new shares
will be made. In addition, special rules may apply to determine the amount of
gain or loss realized on any exchange.
The foregoing is only a summary of some of the important tax
considerations generally affecting a Fund and its shareholders. In addition to
the Federal income tax consequences described above, which are applicable to
any investment in a Fund, there may be state or local tax considerations, and
estate tax considerations, applicable to the circumstances of a particular
investor. Also, legislation may be enacted in the future that could affect the
tax consequences described above. Investors are urged to consult their
attorneys or tax advisers regarding specific questions as to Federal, foreign,
state or local taxes. Foreign shareholders may be subject to U.S. Federal
income tax rules that differ from those described above. For more information
regarding distributions and taxes, see "Dividends, Distributions and Taxes" in
the Statement of Additional Information.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS regulations, the Funds may be required to withhold 31% of
all reportable payments including any taxable dividends, capital gain
distributions or share redemption proceeds for any account which does not have
a taxpayer identification number or social security number and certain required
certifications.
The Funds reserve the right to refuse to open an account for any person
failing to provide a taxpayer identification number along with the required
certifications.
Each Fund will send to its shareholders, within 31 days after the end of
the calendar year, information which is required by the Internal Revenue
Service for preparing federal income tax returns. Investors are urged to
consult their attorney or tax adviser regarding specific questions as to
Federal, foreign, state or local taxes.
ADDITIONAL INFORMATION
Description of Shares
The Trust was established on May 30, 1997 as a Massachusetts business
trust. The capitalization of the Trust consists solely of an unlimited number
of shares of beneficial interest. The Trust currently offers shares in
different Funds and different classes of those Funds. Holders of shares of a
Fund have equal rights with regard to voting, redemptions, dividends,
distributions, and liquidations with respect to that Fund, except that Class B
and C Shares of any Fund, which bear higher distribution fees and certain
incrementally higher expenses associated with the deferred sales arrangement,
pay correspondingly lower dividends per share than Class A and M Shares of the
same Fund. Shareholders of all Funds vote on the election of Trustees. On
matters affecting an individual Fund (such as approval of an investment
advisory agreement or a change in fundamental investment policies) and on
matters affecting an individual class (such as approval of matters relating to
a Plan of Distribution for a particular class of shares), a separate vote of
that Fund or class is required. Trustees will call a meeting when at least 10%
of the outstanding shares so request in writing. If the Trustees fail to call a
meeting after being so notified, the Shareholders may call the meeting. The
Trustees will assist the Shareholders by identifying other shareholders or
mailing communications, as required under Section 16(c) of the Investment
Company Act of 1940.
Shares are fully paid, nonassessable, redeemable and fully transferable
when they are issued. Shares do not have cumulative voting rights, preemptive
rights or subscription rights. The assets received by the Funds for the issue
or sale of shares of each Fund, and any class thereof and all income, earnings,
profits and proceeds thereof, are allocated to such Fund, and class,
respectively, subject only to the rights of creditors, and constitute the
underlying assets of such Fund or class. The underlying assets of each Fund are
required to be segregated on the books of account, and are to be charged with
the expenses in respect to such Fund and with a share of the general expenses
of the Trust. Any general expenses of the Trust not readily identifiable as
belonging to a particular Fund 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 business trust such as the Trust may be personally liable for
debts or claims against the Trust. The Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts or
22
<PAGE>
obligations of the Trust and that every written agreement, undertaking or
obligation made or issued by the Trust 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 Trust. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability, which is considered remote,
is limited to circumstances in which the Trust itself would be unable to meet
its obligations.
Registration Statement
This Prospectus omits certain information included in the Statement of
Additional Information and Part C of the Registration Statement filed with the
Securities and Exchange Commission under the Securities Act of 1933 and the
1940 Act. A copy of the Registration Statement may be obtained from the
Securities and Exchange Commission in Washington, D.C.
23
<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:
<TABLE>
<S> <C>
Account Type Give Social Security Number or
Tax Identification Number of:
- - -----------------------------------------------------------------------------
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 Equity
Series Fund (the "Trust") which you should know before investing. Please read
it carefully and retain it for future reference.
Phoenix Equity Series Fund has filed with the Securities and Exchange
Commission a Statement of Additional Information about the Trust, dated [August
], 1997. The Statement contains more detailed information about the Trust and
is incorporated into this Prospectus by reference. You may obtain a free copy
of the Statement by writing the Trust c/o Phoenix Equity Planning Corporation,
100 Bright Meadow, P.O. Box 2200, Enfield, Connecticut 06083-2200 or by calling
(800) 243-4361.
[recycle symbol] Printed on recycled paper using soybean ink
<PAGE>
[BACK COVER]
----------------
Phoenix Equity Series Fund BULK RATE MAIL
PO Box 2200 U.S. POSTAGE
Enfield CT 06083-2200 PAID
SPRINGFIELD, MA
PERMIT NO. 444
----------------
[LOGO] PHOENIX
DUFF & PHELPS
PDP2005 (8/97)
<PAGE>
PHOENIX EQUITY SERIES FUND
101 Munson Street
Greenfield, MA 01301
Statement of Additional Information
[August ,] 1997
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current Prospectus of the
Phoenix Equity Series Fund (the "Trust"), dated [August ,] 1997 (the
"Prospectus"), and should be read in conjunction with it. Such Prospectus may
be obtained by calling Phoenix Equity Planning Corporation ("Equity Planning")
at (800) 243-4361 or by writing to Equity Planning at 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
THE TRUST (1) ................................. 1
INVESTMENT OBJECTIVES AND POLICIES (6) ...... 1
INVESTMENT RESTRICTIONS (12) .................. 1
PERFORMANCE INFORMATION (6) .................. 8
PORTFOLIO TRANSACTIONS AND BROKERAGE ......... 9
THE INVESTMENT ADVISERS (12) .................. 10
NET ASSET VALUE (20) ........................ 10
HOW TO BUY SHARES (15) ........................ 11
ALTERNATIVE PURCHASE ARRANGEMENTS (15) ......... 11
INVESTOR ACCOUNT SERVICES (19) ............... 12
REDEMPTION OF SHARES (20) ..................... 13
DIVIDENDS, DISTRIBUTIONS AND TAXES (21) ...... 13
TAX SHELTERED RETIREMENT PLANS (19) ......... 14
THE DISTRIBUTOR (14) ........................ 14
PLANS OF DISTRIBUTION (14) .................. 15
TRUSTEES AND OFFICERS ........................ 16
OTHER INFORMATION ........................... 22
APPENDIX .................................... 23
Numbers appearing in parentheses correspond to
related disclosures in the Trust's Prospectus.
</TABLE>
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
PDP 2005B (8/97)
<PAGE>
THE TRUST
Phoenix Equity Series Fund (the "Trust") is a diversified open-end
management investment company which was organized under Massachusetts law in
1997 as a business trust. The Trust presently comprises two series: the Phoenix
Core Equity Fund and Phoenix Growth and Income Fund each a "Fund" and
collectively the "Funds."
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Fund is deemed to be a fundamental policy
which may not be changed without the approval of the holders of a majority of
the outstanding shares of each Fund. Investment restrictions described in this
Statement of Additional Information are fundamental policies of each Fund and
may not be changed without the approval of each Fund's shareholders.
Notwithstanding the foregoing, certain investment restrictions affect more than
one series of the Trust and therefore modifications may require the consent of
other shareholders. There is no assurance that any Fund will meet its
investment objective.
INVESTMENT RESTRICTIONS
Fundamental Policies
The following investment restrictions constitute fundamental policies of
each Fund which may be changed only upon approval by the holders of a majority
of the outstanding shares of each Fund's shareholders. The Funds may not:
(1) With respect to 75% of their total assets, purchase the securities of any
issuer (other than securities issued or guaranteed by the U.S. government
or its agencies or instrumentalities) if, as a result, more than 5% of its
total assets would be invested in securities of that issuer.
(2) Purchase the securities of any one issuer if immediately after such
purchase a Fund would hold more than 10% of the outstanding voting
securities of that issuer.
(3) Borrow money except from a bank as a temporary measure to satisfy
redemption requests or for extraordinary or emergency purposes and then
only in an amount not exceeding 331/3% of the market value of a Fund's
total assets, so that immediately after any such borrowing asset coverage
of at least 300% for all such borrowings exists. To secure any such
borrowing, the Funds may not mortgage, pledge, or hypothecate in excess of
331/3% of the value of their total assets. The Funds will not purchase any
security while borrowings representing more than 5% of their total assets
are outstanding.
(4) Act as an underwriter of securities issued by others.
(5) Purchase real estate, real estate mortgage loans, interests in real estate
limited partnerships, or interests in oil, gas or mineral exploration or
development programs or leases, provided that this limitation shall not
prohibit (i) the purchase of U.S. Government securities and other debt
securities secured by real estate or interests therein; (ii) the purchase
of marketable securities issued by companies or investment trusts that
deal in real estate or interests therein; or (iii) purchase of marketable
securities issued by companies or other entities or investment vehicles
that engage in businesses relating to the development, exploration,
mining, processing or distributing of oil, gas, or minerals.
(6) Engage in any short-selling operations (except by selling futures
contracts).
(7) Make loans to others, except for the lending of portfolio securities
pursuant to guidelines established by the Board of Trustees or in
connection with purchase of debt securities in accordance with a Fund's
investment objective and policies.
(8) Purchase warrants, valued at the lower of cost or market, in excess of 5%
of the value of a Fund's net assets. Included within that amount, but not
to exceed 2% of the value of a Fund's net assets, may be warrants which
are not listed on the New York or American Stock Exchanges. Warrants
acquired by the Funds at any time in units or attached to securities are
not subject to this restriction.
(9) Purchase securities on margin, except for such short-term credits as may
be necessary for the clearance of transactions, provided that the Funds
may make initial and variation margin payments in connection with
purchases or sales of futures contracts or options on futures contracts.
(10) Issue or sell any class of senior security as defined in the Investment
Company Act of 1940 except for notes or other evidences of indebtedness
permitted under investment restriction (3) and except to the extent that
notes evidencing temporary borrowings or the purchase of securities on a
when-issued or delayed delivery basis might be deemed such.
(11) Except in connection with a merger, consolidation, acquisition, or
reorganization, invest in the securities of other investment companies,
including investment companies advised by the Adviser, or any affiliates,
if, immediately after such purchase or acquisition, more than 10% of the
value of a Fund's total assets would be invested in such securities in the
aggregate, or more than 5% in any one such security.
1
<PAGE>
(12) Purchase or retain securities of any issuer if, to the knowledge of the
Funds' management, those officers and Trustees of the Funds and of its
adviser, who each own beneficially more than 0.50% of the outstanding
securities of such issuer, together own beneficially more than 5% of such
securities.
(13) Invest in securities of an issuer which, together with any predecessor,
has been in operation for less than three years if, as a result, more than
5% of the total assets of a Fund would then be invested in such
securities.
(14) Invest in the securities of any one issuer if, immediately after such
purchase, 25% or more of a Fund's total assets would be invested in the
securities of issuers having their principal business activities in the
same industry.
(15) Invest in securities which are not readily marketable or the disposition
of which is restricted under federal securities laws (collectively
"illiquid securities") if, as a result, more than 5% of a Fund's net
assets would be invested in illiquid securities.
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 Funds' assets
will not be considered a violation of the restriction with the exception of the
Fund's borrowing policy as described in restriction (3), above.
Investment Techniques
The Funds may utilize the following practices or techniques in pursuing
its investment objectives.
U.S. Government Securities. For liquidity purposes, each Fund may invest
in U.S. government securities, including bills, notes and bonds issued by the
U.S. Treasury and securities issued or guaranteed by agencies or
instrumentalities of the U.S. government. Some U.S. government securities are
supported by the direct full faith and credit pledge of the U.S. government;
others are supported by the right of the issuer to borrow from the U.S.
Treasury; others such as securities issued by the Federal National Mortgage
Association, are supported by the discretionary authority of the U.S.
government to purchase the agencies' obligations; and others are supported only
by the credit of the issuing or guaranteeing instrumentality. There is no
assurance that the U.S. government will provide financial support to an
instrumentality it sponsors when it is not obligated by law to do so.
Repurchase Agreements. Repurchase Agreements are agreements by which a
Fund purchases a security and obtains a simultaneous commitment from the seller
(a member bank of the Federal Reserve System or, to the extent permitted by the
Investment Company Act of 1940, a recognized securities dealer) that the seller
will repurchase the security at an agreed upon price and date. The resale price
is in excess of the purchase price and reflects an agreed upon market rate
unrelated to the coupon rate on the purchased security.
A repurchase transaction is usually accomplished either by crediting the
amount of securities purchased to the account of the custodian of the Fund
maintained in a central depository of book-entry system or by physical delivery
of the securities to the Fund's custodian in return for delivery of the
purchase price to the seller. Repurchase transactions are intended to be
short-term transactions with the seller repurchasing the securities, usually
within seven days.
Even though repurchase transactions usually do not impose market risks on
the purchasing Fund, if the seller of the repurchase agreement defaults and
does not repurchase the underlying securities, the Fund might incur a loss if
the value of the underlying securities declines, and disposition costs may be
incurred in connection with liquidating the underlying securities. In addition,
if bankruptcy proceedings are commenced regarding the seller, realization upon
the underlying securities may be delayed or limited, and a loss may be incurred
if the underlying securities decline in value.
Securities and Index Options. The Growth and Income Fund may write covered
call options and purchase call and put options. Options and the related risks
are summarized below.
Writing and Purchasing Options. Call options written by the Growth and
Income Fund normally will have expiration dates between three and nine months
from the date written. During the option period the Fund may be assigned an
exercise notice by the broker-dealer through which the call option was sold,
requiring the Fund to deliver the underlying security (or cash in the case of
securities index calls) against payment of the exercise price. This obligation
is terminated upon the expiration of the option period or at such earlier time
as the Fund effects a closing purchase transaction. A closing purchase
transaction cannot be effected with respect to an option once the Fund has
received an exercise notice.
The exercise price of a call option written by the Fund may be below,
equal to or above the current market value of the underlying security or
securities index at the time the option is written.
A multiplier for an index option performs a function similar to the unit
of trading for an option on an individual security. It determines the total
dollar value per contract of each point between the exercise price of the
option and the current level of the underlying index. A multiplier of 100 means
that a one-point difference will yield $100. Options on different indices may
have different multipliers.
Securities indices for which options are currently traded include the
Standard & Poor's 100 and 500 Composite Stock Price Indices, Computer/Business
Equipment Index, Major Market Index, Amex Market Value Index, Computer
Technology Index, Oil
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and Gas Index, NYSE Options Index, Gaming/Hotel Index, Telephone Index,
Transportation Index, Technology Index, and Gold/ Silver Index. The Fund may
write call options and purchase call and put options on any other indices
traded on a recognized exchange.
Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option written by the Fund to prevent an
underlying security from being called, or to enable the Fund to write another
call option with either a different exercise price or expiration date or both.
The Fund may realize a net gain or loss from a closing purchase transaction
depending upon whether the amount of the premium received on the call option is
more or less than the cost of effecting the closing purchase transaction. If a
call option written by the Fund expires unexercised, the Fund will realize a
gain in the amount of the premium on the option less the commission paid.
The option activities of the Fund may increase its portfolio turnover rate
and the amount of brokerage commissions paid. The Fund will pay a commission
each time it purchases or sells a security in connection with the exercise of
an option. These commissions may be higher than those which would apply to
purchases and sales of securities directly.
Limitations on Options. The Growth and Income Fund may write call options
only if they are covered and if they remain covered so long as the Fund is
obligated as a writer. If the Fund writes a call option on an individual
security, the Fund will own the underlying security at all times during the
option period. The Fund will write call options on indices only to hedge in an
economically appropriate way portfolio securities which are not otherwise
hedged with options or financial futures contracts. Call options on securities
indices written by the Fund will be "covered" by identifying the specific
portfolio securities being hedged.
To secure the obligation to deliver the underlying security, the writer of
a covered call option on an individual security is required to deposit the
underlying security or other assets in escrow with the broker in accordance
with clearing corporation and exchange rules. In the case of an index call
option written by the Fund, the Fund will be required to deposit qualified
securities. A "qualified security" is a security against which the Fund has not
written a call option and which has not been hedged by the Fund by the sale of
a financial futures contract. If at the close of business on any day the market
value of the qualified securities falls below 100% of the current index value
times the multiplier times the number of contracts, the Fund will deposit any
asset, including equity securities and non-investment grade debt so long as the
asset is liquid, unencumbered and marked to market daily, equal in value to the
difference. In addition, when the Fund writes a call on an index which is
"in-the-money" at the time the call is written, the Fund will pledge with its
custodian bank any asset, including equity securities and non-investment grade
debt so long as the asset is liquid, unencumbered and marked to market daily,
equal in value to the amount by which the call is "in-the-money" times the
multiplier times the number of contracts. Any amount pledged may be applied to
the Fund's obligation to pledge additional amounts in the event that the market
value of the qualified securities falls below 100% of the current index value
times the multiplier times the number of contracts.
The Fund may sell a call option or a put option which it has previously
purchased prior to the purchase (in the case of a call) or the sale (in the
case of a put) of the underlying security. Any such sale of a call option or a
put option would result in a net gain or loss, depending on whether the amount
received on the sale is more or less than the premium and other transaction
costs paid.
The Growth and Income Fund will engage in options provided that such
obligations represent no more than 20% of the Fund's net assets. Under the
Commodity Exchange Act, a Fund may enter into futures and options transactions
for hedging purposes without regard to the percentage of assets committed to
initial margin and option premiums and for other than hedging purposes provided
that assets committed to initial margin and option premiums do not exceed 5% of
the Fund's net assets. To the extent required by law, the Fund will set aside
cash and appropriate liquid assets in a pledged account to cover its
obligations related to futures contracts and options. In connection with the
Fund qualifying as a regulated investment company under the Internal Revenue
Code, other restrictions on the Fund's ability to enter into option
transactions may apply from time to time. See "Dividends, Distributions and
Taxes."
Risks Relating to Options. During the option period, the writer of a call
option has, in return for the premium received on the option, given up the
opportunity for capital appreciation above the exercise price should the market
price of the underlying security increase, but has retained the risk of loss
should the price of the underlying security decline. The writer has no control
over the time when it may be required to fulfill its obligation as a writer of
the option.
The risk of purchasing a call option or a put option is that the Fund may
lose the premium it paid plus transaction costs. If the Fund does not exercise
the option and is unable to close out the position prior to expiration of the
option, it will lose its entire investment.
An option position may be closed out only on an exchange which provides a
secondary market for an option of the same series. Although the Fund will write
and purchase options only when the Adviser believes that a liquid secondary
market will exist for options of the same series, there can be no assurance
that a liquid secondary market will exist for a particular option at a
particular time and that the Fund, if it so desires, can close out its position
by effecting a closing transaction. If the writer of a covered call
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option is unable to effect a closing purchase transaction, it cannot sell the
underlying security until the option expires or the option is exercised.
Accordingly, a covered call writer may not be able to sell the underlying
security at a time when it might otherwise be advantageous to do so.
Possible reasons for the absence of a liquid secondary market on an
exchange include: (i) insufficient trading interest in certain options; (ii)
restrictions on transactions imposed by an exchange; (iii) trading halts,
suspensions or other restrictions imposed with respect to particular classes or
series of options or underlying securities; (iv) inadequacy of the facilities
of an exchange or the clearing corporation to handle trading volume; and (v) a
decision by one or more exchanges to discontinue the trading of options or
impose restrictions on orders.
Each exchange has established limitations governing the maximum number of
call options, whether or not covered, which may be written by a single investor
acting alone or in concert with others (regardless of whether such options are
written on the same or different exchanges or are held or written on one or
more accounts or through one or more brokers). An exchange may order the
liquidation of positions found to be in violation of these limits and it may
impose other sanctions or restrictions.
Risks of Options on Indices. Because the value of an index option depends
upon movements in the level of the index rather than movements in the price of
a particular security, whether the Fund will realize a gain or loss on the
purchase or sale of an option on an index depends upon movements in the level
of prices in the market generally or in an industry or market segment rather
than upon movements in the price of an individual security. Accordingly,
successful use by the Fund of options on indices will be subject to the
Adviser's ability to predict correctly movements in the direction of the market
generally or in the direction of a particular industry. This requires different
skills and techniques than predicting changes in the prices of individual
securities.
Index prices may be distorted if trading of certain securities included in
the index is interrupted. Trading in index options also may be interrupted in
certain circumstances, such as if trading were halted in a substantial number
of securities included in the index. If this occurred, the Fund would not be
able to close out options which it had written or purchased and, if
restrictions on exercise were imposed, might be unable to exercise an option it
purchased, which would result in substantial losses to the Fund. However, it is
the Trust's policy to write or purchase options only on indices which include a
sufficient number of securities so that the likelihood of a trading halt in the
index is minimized.
Because the exercise of an index option is settled in cash, an index call
writer cannot determine the amount of its settlement obligation in advance and,
unlike call writing on portfolio securities, cannot provide in advance for its
potential settlement obligation by holding the underlying securities.
Consequently, the Fund will write call options on indices only subject to the
limitations described above.
Price movements in securities in the Fund's portfolio will not correlate
perfectly with movements in the level of the index and, therefore, the Fund
bears the risk that the price of the securities held by the Fund may not
increase as much as the level of the index. In this event, the Fund would bear
a loss on the call which would not be completely offset by movements in the
prices of the Fund's portfolio securities. It is also possible that the index
may rise when the value of the Fund's portfolio securities does not. If this
occurred, the Fund would experience a loss on the call which would not be
offset by an increase in the value of its portfolio and might also experience a
loss in the market value of portfolio securities.
Unless the Fund has other liquid assets which are sufficient to satisfy
the exercise of a call on an index, the Fund will be required to liquidate
portfolio securities in order to satisfy the exercise. Because an exercise must
be settled within hours after receiving the notice of exercise, if the Fund
fails to anticipate an exercise, to the extent permissible, it may have to
borrow from a bank pending settlement of the sale of securities in its
portfolio and pay interest on such borrowing.
When the Fund has written a call on an index, there is also a risk that
the market may decline between the time the Fund has the call exercised against
it, at a price which is fixed as of the closing level of the index on the date
of exercise, and the time the Fund is able to sell securities in its portfolio.
As with options on portfolio securities, the Fund will not learn that a call
has been exercised until the day following the exercise date but, unlike a call
on a portfolio security where the Fund would be able to deliver the underlying
security in settlement, the Fund may have to sell part of its portfolio
securities in order to make settlement in cash, and the price of such
securities might decline before they could be sold.
If the Fund exercises a put option on an index which it has purchased
before final determination of the closing index value for that day, it runs the
risk that the level of the underlying index may change before closing. If this
change causes the exercised option to fall "out-of-the-money" the Fund will be
required to pay the difference between the closing index value and the exercise
price of the option (multiplied by the applicable multiplier) to the assigned
writer. Although the Fund may be able to minimize this risk by withholding
exercise instructions until just before the daily cutoff time or by selling
rather than exercising an option when the index level is close to the exercise
price, it may not be possible to eliminate this risk entirely because the
cutoff times for index options may be earlier than those fixed for other types
of options and may occur before definitive closing index values are announced.
Financial Futures Contracts and Related Options. Each Fund may enter into
financial futures contracts and the Growth and Income Fund may also invest in
related options. Financial Futures and related options may be used to hedge
against changes
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in the market value of a Fund's portfolio securities or securities which a Fund
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 Fund's portfolio 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 Fund may wish to purchase in the future by purchasing futures
contracts.
Each Fund may purchase or sell any financial futures contracts which are
traded on a recognized exchange or board of trade. Financial futures contracts
consist of interest rate futures contracts and securities index futures
contracts. A public market presently exists in interest rate futures contracts
covering long-term U.S. Treasury bonds, U.S. Treasury notes, three-month U.S.
Treasury bills and GNMA certificates. Securities index futures contracts are
currently traded with respect to the Standard & Poor's 500 Composite Stock
Price Index and such other broad-based stock market indices as the New York
Stock Exchange Composite Stock Index and the Value Line Composite Stock Price
Index. A clearing corporation associated with the exchange or board of trade on
which a financial futures contract trades assumes responsibility for the
completion of transactions and also guarantees that open futures contracts will
be performed.
In contrast to the situation when a Fund purchases or sells a security, no
security is delivered or received by the Fund upon the purchase or sale of a
financial futures contract. Initially, the Fund will be required to deposit in
a pledged account with its custodian bank any asset, including equity
securities and non-investment grade debt so long as the asset is liquid,
unencumbered and marked to market daily. 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.
Each Fund will pay commissions on financial futures contracts and related
options transactions. These commissions may be higher than those which would
apply to purchases and sales of securities directly.
Limitations on Futures Contracts and Related Options. Each Fund may enter
into futures contracts and the Growth and Income Fund may also enter into
options on futures contracts, provided that such obligations represent no more
than 20% of the Fund's net assets. Under the Commodity Exchange Act, a Fund may
enter into futures and options transactions for hedging purposes without regard
to the percentage of assets committed to initial margin and option premiums and
for other than hedging purposes provided that assets committed to initial
margin and option premiums do not exceed 5% of the Fund's net assets. To the
extent required by law, each Fund will set aside cash and appropriate liquid
assets in a pledged account to cover its obligations related to futures
contracts and options.
The extent to which the Funds may enter into financial futures contracts
and related options also may be limited by the requirements of the Internal
Revenue Code for qualifications 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. Each Fund will
enter into an option or futures position only if there appears to be a liquid
secondary market. However, there can be no assurance that a liquid secondary
market will exist for any particular option or futures contract at any specific
time. Thus, it may not be possible to close out a futures or related option
position. In the case of a futures position, in the event of adverse price
movements each Fund would continue to be required to make daily margin
payments. In this situation, if each Fund 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, each Fund
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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 Fund's ability to hedge its portfolio
effectively.
There are several risks in connection with the use of futures contracts as
a hedging device. While hedging can provide protection against an adverse
movement in market prices, it can also 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 Fund to incur
additional brokerage commissions and may cause an increase in the Fund's
portfolio turnover rate.
The successful use of futures contracts and related options also depends
on the ability of the Adviser to forecast correctly the direction and extent of
market movements within a given time frame. To the extent market prices remain
stable during the period a futures contract or option is held by a Fund or such
prices move in a direction opposite to that anticipated, the Fund may realize a
potential unlimited loss on the hedging transaction which is not offset by an
increase in the value of its portfolio securities. As a result, a Fund's return
for the period may be less than if it had not engaged in the hedging
transaction.
Utilization of futures contracts by a Fund involves the risk of imperfect
correlation in movements in the price of futures contracts and movements in the
price of the securities which are being hedged. If the price of the futures
contract moves more or less than the price of the securities being hedged, the
Fund will experience a gain or loss which will not be completely offset by
movements in the price of the securities. It is possible that, where the Fund
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 Fund's
portfolio may decline. If this occurred, the Fund would lose money on the
futures contract and would also experience a decline in value in its portfolio
securities. Where futures are purchased to hedge against a possible increase in
the prices of securities before the Fund is able to invest its cash (or cash
equivalents) in securities (or options) in an orderly fashion, it is possible
that the market may decline; if the Fund then determines not to invest in
securities (or options) at that time because of concern as to possible further
market decline or for other reasons, the Fund will realize a loss on the
futures that would not be offset by a reduction in the price of the securities
purchased.
The market prices of futures contracts may be affected if participants in
the futures market also elect to close out their contracts through off-setting
transactions rather than to meet margin deposit requirements. In such cases,
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 Fund
because the maximum amount at risk is the premium paid for the options plus
transaction costs. However, there may be circumstances when the purchase of an
option on a futures contract would result in a loss to the Fund while the
purchase or sale of the futures contract would not have resulted in a loss,
such as when there is no movement in the price of the underlying securities.
Leverage. Each Fund may borrow for temporary, extraordinary or emergency
purposes. Each Fund will borrow only from banks, and only if immediately after
such borrowing the value of the assets of the Fund (including the amount
borrowed) less its liabilities (not including any borrowings) is at least three
times the amount of funds borrowed. The effect of this provision is to permit
the Fund to borrow up to 331/3% of the total assets (not including any
borrowings) of the Fund. If, due to market fluctuations or other reasons, the
value of the Fund's assets computed as provided above becomes at any time less
than three times the amount of the borrowings, the Fund, within three business
days, is required to reduce bank debt to the extent necessary to meet the
required 300% asset coverage.
Interest on money borrowed will be an expense of the Fund with respect to
which the borrowing has been made. Because such expense would not otherwise be
incurred, the net investment income of the Fund is not expected to be as high
as it otherwise would be during periods when borrowings for investment purposes
are substantial. Bank borrowings must be obtained on an unsecured basis. Any
such borrowing must also be made subject to an agreement by the lender that any
recourse is limited to the assets of the Fund with respect to which the
borrowing has been made.
Foreign Securities. Each Fund may purchase foreign securities, including
those issued by foreign branches of U.S. banks. In any event, such investments
in foreign securities will be limited to 10% of the total assets of the Core
Equity Fund. The Growth and Income Fund will not invest more than 20% of its
total assets in foreign securities; however, under normal circumstances, no
more than 10% of its total assets will be invested in foreign securities.
Investments in foreign securities, particularly those of non-governmental
issuers, involve considerations which are not ordinarily associated with
investing in domestic issues. These considerations include changes in currency
rates, currency exchange control regulations, the possibility of expropriation,
the unavailability of financial information, the difficulty of interpreting
financial information prepared under foreign securities markets, the impact of
political, social or diplomatic developments, difficulties in invoking legal
process abroad and the difficulty of assessing economic trends in foreign
countries.
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The Funds may use a foreign custodian in connection with its purchases of
foreign securities and may maintain cash and cash equivalents in the care of a
foreign custodian. The amount of cash or cash equivalents maintained in the
care of eligible foreign custodians will be limited to an amount reasonably
necessary to effect the Funds' foreign securities transactions. The use of a
foreign custodian invokes considerations which are not ordinarily associated
with domestic custodians. These considerations include the possibility of
expropriations, restricted access to books and records of the foreign
custodian, inability to recover assets that are lost while under the control of
the foreign custodian, and the impact of political, social or diplomatic
developments.
Although the Funds may buy securities of foreign issuers in foreign
markets, most of their foreign securities investments are made by purchasing
American Depositary Receipts (ADRs), "ordinary shares," or "New York Shares."
The Funds may invest in foreign-currency-denominated securities that trade in
foreign markets if the Adviser believes that such investments will be
advantageous to the Funds.
ADRs are dollar-denominated receipts representing interests in the
securities of a foreign issuer. They are issued by U.S. banks and traded on
exchanges or over the counter in the United States. Ordinary shares are shares
of foreign issuers that are traded abroad and on a U.S. exchange. New York
shares are shares that a foreign issuer has allocated for trading in the United
States. ADRs, ordinary shares, and New York shares all may be purchased with
and sold for U.S. dollars, which protects the Fund from the foreign settlement
risks described below.
Lending Portfolio Securities. In order to increase its return on
investments, each Fund may make loans of its portfolio securities, as long as
the market value of the loaned securities does not exceed one-third of the
value of the Fund's total assets. Loans of portfolio securities will always be
fully collateralized by cash or securities issued or guaranteed by the U.S.
Government and marked to market daily, at no less than 100% of the market value
of the loaned securities (as marked to market daily) and made only to borrowers
considered by the Adviser 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.
Forward Foreign Currency Exchange Contracts. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days ("Term") from
the date of the contract agreed upon by the parties, at a price set at the time
of the contract. These contracts are traded directly between currency traders
(usually large commercial banks) and their customers.
Each Fund does not intend to enter into such forward contracts if it would
have more than 5% of the value of its net assets committed to the initial
margin and option premiums on such contracts on a regular or continuous basis.
A Fund will not enter into such forward contracts or maintain a net exposure in
such contracts where it would be obligated to deliver an amount of foreign
currency in excess of the value of its portfolio securities and other assets
denominated in that currency. The Adviser believes that it is important to have
the flexibility to enter into such forward contracts when it determines that to
do so is in the best interests of the Fund. The Funds' custodian bank will
pledge any asset, including equity securities and non-investment grade debt so
long as the asset is liquid, unencumbered and marked to market daily, in an
amount not less than the value of the Fund's total assets committed to forward
foreign currency exchange contracts entered into for the purchase of a foreign
currency. If the value of the securities pledged declines, additional cash or
securities will be added so that the pledged amount is not less than the amount
of the Fund's commitments with respect to such contracts. Generally, the Fund
does not enter into forward contracts with a term longer than one year.
Foreign Currency Options. A foreign currency option provides the option
buyer with the right to buy or sell a stated amount of foreign currency at the
exercise price at a specified date or during the option period. A call option
gives its owner the right, but not the obligation, to buy the currency, while a
put option gives its owner the right, but not the obligation, to sell the
currency. The option seller (writer) is obligated to fulfill the terms of the
option sold if it is exercised. However, either seller or buyer may close its
position during the option period for such options any time prior to
expiration.
A call rises in value if the underlying currency appreciates. Conversely,
a put rises in value if the underlying currency depreciates. While purchasing a
foreign currency option can protect the Fund against an adverse movement in the
value of a foreign currency, it does not limit the gain which might result from
a favorable movement in the value of such currency. For example, if the Fund
were holding securities denominated in an appreciating foreign currency and had
purchased a foreign currency put to hedge against a decline in the value of the
currency, it would not have to exercise its put. Similarly, if the Fund had
entered into a contract to purchase a security denominated in a foreign
currency and had purchased a foreign currency call to hedge against a rise in
the value of the currency but instead the currency had depreciated in value
between the date of purchase and the settlement date, the Fund would not have
to exercise its call but could acquire in the spot market the amount of foreign
currency needed for settlement.
Foreign Currency Futures Transactions. Each Fund may use foreign currency
futures contracts and options on such futures contracts. Through the purchase
or sale of such contracts, a Fund may be able to achieve many of the same
objectives attainable through the use of foreign currency forward contracts,
but more effectively and possibly at a lower cost.
Unlike forward foreign currency exchange contracts, foreign currency
futures contracts and options on foreign currency futures contracts are
standardized as to amount and delivery period and are traded on boards of trade
and commodities exchanges. It is anticipated that such contracts may provide
greater liquidity and lower cost than forward foreign currency exchange
contracts.
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Regulatory Restrictions. To the extent required to comply with Securities
and Exchange Commission Release No. IC-10666, when purchasing a futures
contract or writing a put option, each Fund will maintain in a pledged account
any asset, including equity securities and non-investment grade debt so long as
the asset is liquid, unencumbered and marked to market daily, equal to the
value of such contracts.
Each Fund may enter into futures contracts and the Growth and Income Fund
may also engage in options or options on futures contracts, provided that such
obligations represent no more than 20% of a Fund's net assets. Under the
Commodity Exchange Act, a Fund may enter into futures and options transactions
for hedging purposes without regard to the percentage of assets committed to
initial margin and option premiums and for other than hedging purposes provided
that assets committed to initial margin and option premiums do not exceed 5% of
a Fund's net assets. To the extent required by law, the Funds will set aside
cash and appropriate liquid assets in a pledged account to cover its
obligations related to futures contracts and options.
Derivative Investments. In order to hedge various portfolio positions,
including to hedge against price movements in markets in which the Funds
anticipate increasing their exposure, the Funds may invest in certain
instruments which may be characterized as derivative investments. These
investments include various types of interest rate transactions, options and
futures. Such investments also may consist of indexed securities. Other of such
investments have no express quantitative limitations, although they may be made
solely for hedging purposes, not for speculation, and may in some cases be
limited as to the type of counter-party permitted. Interest rate transactions
involve the risk of an imperfect correlation between the index used in the
hedging transactions and that pertaining to the securities which are the
subject of such transactions. Similarly, utilization of options and futures
transactions involves the risk of imperfect correlation in movements in the
price of options and futures and movements in the price of the securities or
interest rates which are the subject of the hedge. Investments in indexed
securities, including inverse securities, subject the Funds to the risks
associated with changes in the particular indices, which may include reduced or
eliminated interest payments and losses of invested principal.
PERFORMANCE INFORMATION
The Funds may, from time to time, include total return in advertisements
or reports to shareholders or prospective investors. Performance information in
advertisements and sales literature may be expressed as yield of a class or
Fund and as total return of any Class or Fund.
Standardized quotations of average annual total return for each Class of
Shares of a Fund will be expressed in terms of the average annual compounded
rate of return for a hypothetical investment in either Class A, Class B, Class
C or Class M Shares of a Fund over periods of 1, 5 and 10 years or up to the
life of the class of shares of a Fund, calculated for each class separately
pursuant to the following formula: P(1 + T)n = ERV (where P = a hypothetical
initial payment of $1,000, T = the average annual total return, n = the number
of years, and ERV = the ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period). All total return figures reflect
the deduction of a proportional share of each class's expenses (on an annual
basis), deduction of the maximum initial sales load in the case of Class A and
M Shares and the maximum contingent deferred sales charge applicable to a
complete redemption of the investment in the case of Class B and C Shares, and
assume that all dividends and distributions are reinvested when paid.
The Funds may from time to time include in advertisements containing total
return the ranking of those performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar, Inc.
Additionally, the Funds may compare 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, Investor's Daily, Stanger's Mutual Fund Monitor,
The Stanger Register, Stanger's Investment Adviser, The Wall Street Journal,
The New York Times, Consumer Reports, Registered Representative, Financial
Planning, Financial Services Weekly, Financial World, U.S. News and World
Report, Standard & Poor's The Outlook, and Personal Investor. The Funds may
from time to time illustrate the benefits of tax deferral by comparing taxable
investments to investments made through tax-deferred retirement plans. The
total return may also be used to compare the performance of the Funds 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"), Dow Jones Industrial Average, Europe Australia Far East
Index (EAFE), Consumer's Price Index, Lehman Brothers Corporate Index and
Lehman Brothers T-Bond Index.
Advertisements, sales literature and other communications may contain
information about the Funds and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Funds to
respond quickly to changing market and economic conditions. From time to time
the Funds may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, the Funds may
separate its cumulative and average annual returns into income and capital
gains components.
Performance information reflects only the performance of a hypothetical
investment in each class during the particular time period on which the
calculations are based. Performance information should be considered in light
of each Fund's investment objectives and policies, characteristics and quality
of the portfolio, and the market condition during the given time period, and
should not be considered as a representation of what may be achieved in the
future.
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The Funds may also compute aggregate cumulative total return for specified
periods based on a hypothetical Class A, Class B, Class C or Class M account
with an assumed initial investment of $10,000. The aggregate total return is
determined by dividing the net asset value of this account at the end of the
specified period by the value of the initial investment and is expressed as a
percentage. Calculation of aggregate total return reflects payment of the Class
A and M Shares' maximum sales charge of 4.75% and 3.5%, respectively, and
assumes reinvestment of all income dividends and capital gain distributions
during the period.
The Funds also may quote annual, average annual and annualized total
return and aggregate total return performance data, for each class of shares of
the Funds, both as a percentage and as a dollar amount based on a hypothetical
$10,000 investment for various periods other than those noted below. Such data
will be computed as described above, except that (1) the rates of return
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
charge will not be included with respect to annual, annualized or aggregate
rate of return calculations.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser places orders for the purchase and sale of securities,
supervises their execution and negotiates brokerage commissions on behalf of
the Funds. It is the practice of the Adviser to seek the best prices and
execution of orders and to negotiate brokerage commissions which in the
Adviser's opinion are reasonable in relation to the value of the brokerage
services provided by the executing broker. Brokers who have executed orders for
the Funds are asked to quote a fair commission for their services. If the
execution is satisfactory and if the requested rate approximates rates
currently being quoted by the other brokers selected by the Adviser, the rate
is deemed by the Adviser to be reasonable. Brokers may ask for higher rates of
commission if all or a portion of the securities involved in the transaction
are positioned by the broker, if the broker believes it has brought the Funds
an unusually favorable trading opportunity, or if the broker regards its
research services as being of exceptional value, and payment of such
commissions is authorized by the Adviser after the transaction has been
consummated. If the Adviser more than occasionally differs with the broker's
appraisal of opportunity or value, the broker would not be selected to execute
trades in the future. The Adviser believes that the Funds benefit with a
securities industry comprised of many and diverse firms and that the long-term
interest of shareholders of the Funds is best served by brokerage policies
which include paying a fair commission rather than seeking to exploit its
leverage to force the lowest possible commission rate. The primary factors
considered in determining the firms to which brokerage orders are given are the
Adviser's appraisal of: the firm's ability to execute the order in the desired
manner; the value of research services provided by the firm; and the firm's
attitude toward and interest in mutual funds in general including the sale of
mutual funds managed and sponsored by the Adviser. The Adviser does not offer
or promise to any broker an amount or percentage of brokerage commissions as an
inducement or reward for the sale of shares of the Funds. Over-the-counter
purchases and sales are transacted directly with principal market-makers except
in those circumstances where in the opinion of the Adviser better prices and
execution are available elsewhere.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller firms
in general tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. In addition, several firms monitor
federal, state, local and foreign political developments; many of the brokers
also provide access to outside consultants. The outside research assistance is
particularly useful to the Adviser's staff since the brokers as a group tend to
monitor a broader universe of securities and other matters than the Adviser's
staff can follow. In addition, it provides the Adviser with a diverse
perspective on financial markets. Research and investment information is
provided by these and other brokers at no cost to the Adviser and is available
for the benefit of other accounts advised by the Adviser and its affiliates and
not all of this information will be used in connection with the Funds. While
this information may be useful in varying degrees and may tend to reduce the
Adviser's expenses, it is not possible to estimate its value and in the opinion
of the Adviser it does not reduce the Adviser's expenses in a determinable
amount. The extent to which the Adviser makes use of statistical, research and
other services furnished by brokers is considered by the Adviser in the
allocation of brokerage business but there is no formula by which such business
is allocated. The Adviser does so in accordance with its judgment of the best
interest of the Funds and shareholders.
A high rate of portfolio turnover involves a correspondingly higher amount
of brokerage commissions and other costs which must be borne directly by the
Funds and indirectly by shareholders.
The Funds have adopted a policy and procedures governing the execution of
aggregated advisory client orders ("bunching procedures") in an attempt to
lower commission costs on a per-share and per-dollar basis. According to the
bunching procedures, the Adviser shall aggregate transactions unless it
believes in its sole discretion that such aggregation is inconsistent with its
duty to seek best execution (which shall include the duty to seek best price)
for the Funds. No advisory account of the Adviser is to be favored over any
other account and each account that participates in an aggregated order is
expected to participate at the average share price for all transactions of the
Adviser in that security on a given business day, with all transaction costs
shared pro rata based on the Funds' participation in the transaction. If the
aggregated order is filled in its entirety, it shall be allocated among the
Adviser's accounts in accordance with the allocation order, and if the order is
partially filled, it shall be allocated pro rata
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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.
THE INVESTMENT ADVISERS
The offices of Duff & Phelps Investment Management Co., Inc. ("DPIM") are
located at 55 East Monroe Street, Suite 3600, Chicago, Illinois 60603. The
offices of Phoenix Investment Counsel, Inc. ("PIC") are located at 56 Prospect
Street, Hartford, Connecticut 06115. DPIM serves as investment adviser to the
Core Equity Fund and PIC is the investment adviser to the Growth and Income
Fund.
DPIM and PIC are subsidiaries of Phoenix Duff & Phelps Corporation.
Phoenix Duff & Phelps Corporation is an indirect, less than wholly-owned
subsidiary of Phoenix Home Life Mutual Insurance Company ("Phoenix Home Life")
of Hartford, Connecticut. Phoenix Home Life is 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 Advisers provide certain services and facilities required to carry on
the day-to-day operations of the Funds (for which each receives management
fees) other than the costs of printing and mailing proxy materials, reports and
notices to shareholders; legal, auditing and accounting services; regulatory
filing fees and expenses of printing the Funds' registration statement (but the
Distributor purchases such copies of the Funds' prospectuses and reports and
communications to shareholders as it may require for sales purposes); insurance
expense; association membership dues; brokerage fees; and taxes.
All costs and expenses (other than those specifically referred to as being
borne by the Advisers) incurred in the operation of the Funds are borne by the
Funds. Each Fund pays expenses incurred in its own operation and also pays a
portion of the Trust's general administration expenses allocated on the basis
of the asset size of the respective Fund, 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 Funds 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
Advisers or any of their affiliates, expenses of Trustees' and shareholders'
meetings, including the cost of printing and mailing proxies, expenses of
insurance premiums for fidelity and other coverage, expenses of repurchase and
redemption of shares, expenses of issue and sale of shares (to the extent not
borne by Equity Planning under its agreement with the Funds), association
membership dues, charges of custodians, transfer agents, dividend disbursing
agents and financial agents, bookkeeping, auditing, and legal expenses. The
Funds will also pay the fees and bear the expense of registering and
maintaining the registration of the Trust and its shares with the Securities
and Exchange Commission and registering or qualifying its shares under state or
other securities laws and the expense of preparing and mailing prospectuses and
reports to shareholders.
The investment advisory agreements provide that the Advisers shall not be
liable to the Funds or to any shareholder of the Funds for any error of
judgment or mistake of law or for any loss suffered by the Funds or by any
shareholder of the Funds in connection with the matters to which the investment
advisory agreements relate, except a loss resulting from willful misfeasance,
bad faith, gross negligence or reckless disregard on the part of the Advisers
in the performance of their duties thereunder.
As full compensation for the services and facilities furnished to the
Funds, the Advisers are entitled to a fee, payable monthly, as described in the
Prospectus. There is no assurance that the Funds will reach net asset levels
high enough to realize reductions in the rates of the advisory fees.
The advisory agreements continue in force from year to year for each Fund,
provided that, with respect to each Fund, the agreement must be approved at
least annually by the Trustees or by vote of a majority of the outstanding
voting securities of each Fund. In addition, and in either event, the terms of
the agreement and any renewal thereof must be approved by the vote of a
majority of the Trustees who are not parties to the agreement or interested
persons (as that term is defined in the Investment Company Act of 1940) of any
such party, cast in person at a meeting called for the purpose of voting on
such approval. The agreements will terminate automatically if assigned and may
be terminated at any time, without payment of any penalty, either by the Trust
or by the Adviser, on sixty (60) days written notice.
NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close
of regular trading of the New York Stock Exchange (the "Exchange") on days when
the Exchange is open for trading. The Exchange will be closed on the following
observed national
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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 Funds do not price securities on weekends or United States national
holidays, the net asset value of a Fund's foreign assets may be significantly
affected on days when the investor has no access to the Funds. The net asset
value per share of a Fund is determined by adding the values of all securities
and other assets of the Fund, subtracting liabilities, and dividing by the
total number of outstanding shares of the Fund. Assets and liabilities are
determined in accordance with generally accepted accounting principles and
applicable rules and regulations of the 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 Fund, and the
resulting amount of each is divided by the number of shares of that class
outstanding to produce the net asset value per share.
A security that is listed or traded on more than one exchange is valued at
the 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 Fund which
invests in foreign securities contemporaneously with the determination of the
prices of the majority of the portfolio securities of such Fund. 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 Fund 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.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent
investment is $25. However, both the minimum initial and subsequent investment
amounts are $25 for investments pursuant to the "Investo-Matic" plan, a bank
draft investing program administered by Distributor, or pursuant to the
Systematic Exchange privilege or for an individual retirement account (IRA). In
addition, there are no subsequent investment minimum amounts in connection with
the reinvestment of dividend or capital gain distributions. Completed
applications for the purchase of shares should be mailed to: Phoenix Funds, c/o
State Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased from investment dealers at a price equal to their
net asset value per share, plus a sales charge which, at the election of the
purchaser, may be imposed either (i) at the time of the purchase (the "initial
sales charge alternative") or (ii) on a contingent deferred basis (the
"deferred sales charge alternative"). Orders received by dealers prior to the
close of trading on the New York Stock Exchange are confirmed at the offering
price effective at that time, provided the order is received by the Distributor
prior to its close of business.
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is more beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Funds, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the Trust,
the accumulated continuing distribution services fee and contingent deferred
sales charges on Class B or C Shares would be less than the initial sales
charge and accumulated distribution services fee on Class A or M Shares
purchased at the same time.
Dividends paid by the Funds, if any, with respect to each Class of Shares
will be calculated in the same manner at the same time on the same day, except
that fees such as higher distribution services fee and any incremental transfer
agency costs relating to each Class of Shares will be borne exclusively by that
class. See "Dividends, Distributions and Taxes."
Class A Shares
Class A Shares incur a sales charge when they are purchased and enjoy the
benefit of not being subject to any sales charge when they are redeemed. Class
A Shares are subject to an ongoing distribution services fee at an annual rate
of up to 0.25% of the Trust's aggregate average daily net assets attributable
to the Class A Shares. In addition, certain purchases of Class A Shares qualify
for reduced initial sales charges. See the Funds' current Prospectus for
additional information.
Class B Shares
Class B Shares do not incur a sales charge when they are purchased, but
they are subject to a sales charge if they are redeemed within five years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions. See the Funds' current Prospectus for additional
information.
Class B Shares are subject to an ongoing distribution services fee at an
annual rate of up to 1.00% of the Fund's aggregate average daily net assets
attributable to the Class B Shares. Class B Shares enjoy the benefit of
permitting all of the investor's dollars
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to work from the time the investment is made. The higher ongoing distribution
services fee paid by Class B Shares will cause such shares to have a higher
expense ratio and to pay lower dividends, to the extent any dividends are paid,
than those related to Class A Shares. Class B Shares will automatically convert
to Class A Shares eight years after the end of the calendar month in which the
shareholder's order to purchase was accepted, in the circumstances and subject
to the qualifications described in the Funds' Prospectus. The purpose of the
conversion feature is to relieve the holders of the Class B Shares that have
been outstanding for a period of time sufficient for the adviser and the
Distributor to have been compensated for distribution expenses related to the
Class B Shares from most of the burden of such distribution related expenses.
Class B Shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were issued. At the
end of this period, Class B Shares will automatically convert to Class A Shares
and will no longer be subject to the higher distribution services fee. Such
conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge.
For purposes of conversion to Class A Shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares
in a shareholder's Trust account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Trust account
(other than those in the sub-account) convert to Class A, an equal pro rata
portion of the Class B Share dividends in the sub-account will also convert to
Class A Shares.
Class C Shares
Class C Shares are purchased without an initial sales charge but are
subject to a deferred sales charge if redeemed within one year of purchase. The
deferred sales charge may be waived in connection with certain qualifying
redemptions. Shares issued in conjunction with the automatic reinvestment of
income distributions and capital gain distributions are not subject to any
sales charges. Class C Shares are subject to an ongoing distribution services
fee of up to 1.00% of the Funds' aggregate average daily net assets
attributable to Class C Shares. See the Funds' current Prospectus for more
information.
Class M Shares
Class M Shares incur a sales charge at the time of purchase but are not
subject to any sales charge when redeemed. Certain purchases of Class M Shares
may qualify for reduced initial sales charges as described in the Funds'
Prospectus. Class M Shares are subject to an ongoing distribution services fee
of up to 0.50% of the Funds' aggregate average daily net assets attributable to
Class M Shares.
INVESTOR ACCOUNT SERVICES
The Funds offer combination purchase privileges, letters of intent,
accumulation plans, withdrawal plans and reinvestment and exchange privileges
as described in the Funds' current Prospectus. Certain privileges may not be
available in connection with all classes. In most cases, changes to account
services may be accomplished over the phone. Inquiries regarding policies and
procedures relating to shareholder account services should be directed to
Shareholder Services at (800) 243-1574.
Exchanges. Under certain circumstances, shares of any Phoenix Fund may be
exchanged for shares of the same Class of another Phoenix Fund on the basis of
the relative net asset values per share at the time of the exchange. Exchanges
are subject to the minimum initial investment requirement of the designated
Fund, Series, or Portfolio, except if made in connection with the Systematic
Exchange privilege. Shareholders may exchange shares held in book-entry form
for an equivalent number (value) of the same class of shares of any other
Phoenix Fund, if currently offered. On exchanges with share classes that carry
a contingent deferred sales charge, the CDSC schedule of the original shares
purchased continues to apply. The exchange of shares is treated as a sale and
purchase for federal income tax purposes (see also "Dividends, Distributions
and Taxes").
Systematic Exchanges. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Phoenix Fund automatically on a monthly,
quarterly, semi-annual or annual basis or may cancel this privilege at any
time. If you maintain an account balance of at least $5,000, or $2,000 for tax
qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that shares be
automatically exchanged at predetermined intervals for shares of the same class
of another Phoenix Fund. This requirement does not apply to Phoenix "Self
Security" program participants. Systematic exchanges will be executed upon the
close of business on the 10th day of each month or the next succeeding business
day. Systematic exchange forms are available from the Distributor. Exchanges
will be based upon each Fund's net asset value per share next computed after
the close of business on the 10th day of each month (or next succeeding
business day), without sales charge. On Class B and C Share exchanges, the CDSC
schedule of the original shares purchased continues to apply.
Dividend Reinvestment Across Accounts. If you maintain an account balance
of at least $5,000, or $2,000 for tax qualified retirement benefit plans
(calculated on the basis of the net asset value of the shares held in a single
account), you may direct that any dividends and distributions paid with respect
to shares in that account be automatically reinvested in a single account of
one of the other Phoenix Fund at net asset value. You should obtain a current
prospectus and consider the objectives and policies
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of each Fund carefully before directing dividends and distributions to another
Fund. Reinvestment election forms and prospectuses are available from Equity
Planning. Distributions may also be mailed to a second payee and/or address.
Requests for directing distributions to an alternate payee must be made in
writing with a signature guarantee of the registered owner(s). To be effective
with respect to a particular dividend or distribution, notification of the new
distribution option must be received by the Transfer Agent at least three days
prior to the record date of such dividend or distribution. If all shares in
your account are repurchased or redeemed or transferred between the record date
and the payment date of a dividend or distribution, you will receive cash for
the dividend or distribution regardless of the distribution option selected.
REDEMPTION OF SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefor postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for the Fund to dispose of its securities or to determine fairly the value of
its net assets or during any other period permitted by order of the Securities
and Exchange Commission for the protection of investors. Furthermore, the
Transfer Agent will not mail redemption proceeds until checks received for
shares purchased have cleared, which may take up to 15 days or more. See the
Funds' current Prospectus for further information.
Redemptions by Class B and C shareholders will be subject to the
applicable deferred sales charge, if any.
Each shareholder account in the Funds which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the
giving of not less than 30 days written notice to the shareholder mailed to the
address of record. During the 30 day period the shareholder has the right to
add to the account to bring its value to $200 or more. See the Funds' current
Prospectus for more information.
Telephone Redemptions
Shareholders may redeem up to $50,000 worth of their shares by telephone.
See the Funds' current Prospectus for additional information.
Reinvestment Privilege
Shareholders who may have overlooked features of their investment at the
time they redeemed have a privilege of reinvestment of their investment at net
asset value. See the Funds' current Prospectus for more information and
conditions attached to this privilege.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund is treated as a separate entity for federal income tax purposes.
Each Fund intends to elect to be treated as a regulated investment company
("RIC") and qualify annually as such under certain provisions of the Internal
Revenue Code (the "Code"). Under such provisions, each Fund will not be subject
to federal income tax on such part of its ordinary income and net realized
capital gains which it distributes to shareholders provided it meets certain
distribution requirements. To qualify for treatment as a regulated investment
company, each Fund must, among other things, derive in each taxable year at
least 90% of its gross income from dividends, interest and gains from the sale
or other disposition of securities. If in any taxable year each Fund does not
qualify as a regulated investment company, all of its taxable income will be
taxed at corporate rates.
The Code imposes a 4% nondeductible excise tax on a regulated investment
company if it does not distribute to its shareholders during the calendar year
an amount equal to 98% of the Fund's net ordinary income, with certain
adjustments, for such calendar year, plus 98% of each Fund' net capital gains
for the 12-month period ending on October 31 of such calendar year. In
addition, an amount equal to any undistributed investment company taxable
income or capital gain net income from the previous calendar year must also be
distributed to avoid the excise tax. The excise tax is imposed on the amount by
which the regulated investment company does not meet the foregoing distribution
requirements. If each Fund has taxable income that would be subject to the
excise tax, each Fund intends to distribute such income so as to avoid payment
of the excise tax.
Under another provision of the Code, any dividend declared by each Fund to
shareholders of record in October, November and December of any year will be
deemed to have been received by, and will be taxable to shareholders as of
December 31 of such year, provided that the dividend is actually paid by each
Fund before February 1, of the following year.
The Funds' policy is to distribute to its shareholders substantially all
investment company taxable income as defined in the Code and any net realized
capital gains for each year and consistent therewith to meet the distribution
requirements of Part I of subchapter M of the Code. The Funds intend to meet
the other requirements of Part I of subchapter M, including the requirements
with respect to diversification of assets and sources of income, so that the
Funds will pay no taxes on net investment income and net realized capital gains
distributed to shareholders.
13
<PAGE>
Under certain circumstances, the sales charge incurred in acquiring shares
of the Funds may not be taken into account in determining the gain or loss on
the disposition of those shares. This rule applies where shares of the Funds
are disposed of within 90 days after the date on which they were acquired and
new shares of a regulated investment company are acquired without a sales
charge or at a reduced sales charge. In that case, the gain or loss realized on
the disposition will be determined by excluding from the tax basis of the
shares disposed of all or a portion of the sales charge incurred in acquiring
those shares. This exclusion applies to the extent that the otherwise
applicable sales charge with respect to the newly acquired shares is reduced as
a result of the shareholder having incurred a sales charge initially. The
portion of the sales charge affected by this rule will be treated as a sales
charge paid for the new shares.
Distributions by the Funds reduce the net asset value of the Funds'
shares. Should a distribution reduce the net asset value of a share below a
shareholder's cost for the shares, such a distribution nevertheless generally
would be taxable to the shareholder as ordinary income or long-term capital
gain, even though, from an investment standpoint, it may constitute a partial
return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution by a Fund. The
price of shares purchased at that time may include the amount of the
forthcoming distribution, but the distribution generally would be taxable to
them.
Transactions in options on stock indices are subject to the Code rules of
section 1256. Pursuant to these rules, such options, whether sold by the Funds
during a taxable year or held by the Funds at the close of its taxable year,
will be treated as if sold for their market value, with 40% of any resulting
gain or loss treated as short-term and 60% long-term.
A high portfolio turnover rate may result in the realization of larger
amounts of short-term gains, which are taxable to shareholders as ordinary
income.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS Regulations, the Funds may be required to withhold 31% of
all reportable payments including any taxable dividends, capital gains
distributions or share redemption proceeds, for an account which does not have
a taxpayer identification number or social security number and certain required
certifications. The Funds reserve the right to refuse to open an account for
any person failing to provide a taxpayer identification number along with the
required certifications.
The Funds will furnish shareholders, within 31 days after the end of the
calendar year, with information which is required by the Internal Revenue
Service for preparing income tax returns. Investors are urged to consult their
attorney or tax adviser regarding specific questions as to Federal, foreign,
state or local taxes.
TAX SHELTERED RETIREMENT PLANS
Shares of the Funds and other Phoenix Funds may be offered in connection
with employer-sponsored 401(k) plans. PIC and its affiliates may provide
administrative services to these plans and to their participants, in addition
to the services that PIC and its affiliates provide to the Phoenix Funds, and
may receive compensation therefor. For information on the terms and conditions
applicable to employee participation in such plans, including information on
applicable plan administrative charges and expenses, prospective investors
should consult the plan documentation and employee enrollment information which
is available from participating employers.
THE DISTRIBUTOR
Pursuant to a Distribution Agreement with the Funds, Phoenix Equity
Planning Corporation (the "Distributor"), an indirect wholly-owned subsidiary
of Phoenix Duff & Phelps Corporation and an affiliate of DPIM, serves as
distributor for the Funds. As such, the Distributor conducts a continuous
offering pursuant to a "best efforts" arrangement requiring the Distributor to
take and pay for only such securities as may be sold to the public. The address
of the Distributor is 100 Bright Meadow Blvd., P.O. Box 2200, Enfield,
Connecticut 06083-2200.
The Distribution Agreement may be terminated at any time on not more than
60 days written notice, without payment of a penalty, by the Distributor, by
vote of a majority of the outstanding voting securities of the Funds, or by
vote of a majority of the Funds' Trustees who are not "interested persons" of
the Funds and who have no direct or indirect financial interest in the
operation of the Distribution Plan or in any related agreements. The
Distribution Agreement will terminate automatically in the event of its
assignment.
Dealers with whom the Distributor has entered into sales agreements
receive sales charges in accordance with the commission table set forth in the
Prospectus. The Distributor may from time to time pay, from its own resources
or pursuant to the Plan of Distribution described below, a bonus or other
incentive to dealers (other than the Distributor) which employ a registered
representative who sells a minimum dollar amount of the shares of the Funds
during a specific period of time. Such bonus or other incentive may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and members of their
families to places within or without the United States or other bonuses such as
gift certificates or the cash equivalent of such bonuses. The Distributor may,
from time to time, reallow the entire portion of the
14
<PAGE>
sales charge which it normally retains to individual selling dealers. However,
such additional reallowance generally will be made only when the selling dealer
commits to substantial marketing support such as internal wholesaling through
dedicated personnel, internal communications and mass mailings.
Equity Planning also acts as administrative agent of the Trust and as such
performs administrative, bookkeeping and pricing functions for the Funds. 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
each Fund, at the following incremental annual rates:
<TABLE>
<S> <C>
First $100 million .05% subject to a minimum fee
$100 million to $300 million .04%
$300 million through $500 million .03%
Greater than $500 million .015%
</TABLE>
A minimum charge of $50,000 is applicable for each Fund. In addition,
Equity Planning is paid $12,000 for each class of shares beyond one.
PLANS OF DISTRIBUTION
The Trust has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for each class of shares of each series of the Trust (the "Class A
Plan," the "Class B Plan," the "Class C Plan," the "Class M Plan," and
collectively the "Plans"). The Plans permit the Funds to reimburse the
Distributor for expenses incurred in connection with activities intended to
promote the sale of shares of each class of shares of the Funds.
Pursuant to the Plans, the Funds may reimburse the Distributor for actual
expenses of the Distributor up to 0.25% of the average daily net assets of the
Funds' Class A Shares, up to 1.00% of the average daily net assets of the
Funds' Class B and of Class C Shares, and up to 0.50% of the average daily net
assets of the Funds' Class M Shares. Expenditures under the Plans shall consist
of: (i) commissions to sales personnel for selling shares of the Funds
(including underwriting fees and financing expenses incurred in connection with
the sale of Class B Shares); (ii) compensation, sales incentives and payments
to sales, marketing and service personnel; (iii) payments to broker-dealers and
other financial institutions which have entered into agreements with the
Distributor in the form of the Dealer Agreement for Phoenix Funds for services
rendered in connection with the sale and distribution of shares of the Funds;
(iv) payment of expenses incurred in sales and promotional activities,
including advertising expenditures related to the Funds; (v) the costs of
preparing and distributing promotional materials; (vi) the cost of printing the
Funds' Prospectuses and Statements of Additional Information for distribution
to potential investors; and (vii) such other similar services that the Trustees
of the Funds determine are reasonably calculated to result in the sale of
shares of the Funds; provided however, a portion of such amount paid to the
Distributor, which portion shall be equal to or less than 0.25% annually of the
average daily net assets of the Funds' shares may be paid for reimbursing the
costs of providing services to the shareholders, including assistance in
connection with inquiries related to shareholder accounts (the "Service Fee").
In order to receive payments under the Plans, participants must meet such
qualifications to be established in the sole discretion of the Distributor,
such as services to the Funds' shareholders; or services providing the Funds
with more efficient methods of offering shares to coherent groups of clients,
members or prospects of a participant; or services permitting bulking of
purchases or sales, or transmission of such purchases or sales by computerized
tape or other electronic equipment; or other processing.
The fee received by the Distributor under the early years of the Plans is
not likely to reimburse the Distributor for the total distribution expenses it
will actually incur as a result of the Funds having fewer assets and the
Distributor incurring greater promotional expenses during the start-up phase.
If the Plans are terminated in accordance with their terms, the obligations of
the Funds to make payments to the Distributor pursuant to the Plans will cease
and the Funds will not be required to make any payments past the date on which
each Plan terminates.
On a quarterly basis, the Funds' Trustees review a report on expenditures
under the Plans and the purposes for which expenditures were made. The Trustees
conduct an additional, more extensive review annually in determining whether
the Plans will be continued. By its terms, continuation of the Plans from year
to year is contingent on annual approval by a majority of the Funds' Trustees
and by a majority of the Trustees who are not "interested persons" (as defined
in the 1940 Act) and who have no direct or indirect financial interest in the
operation of the Plans or any related agreements (the "Plan Trustees"). The
Plans provide that they may not be amended to increase materially the costs
which the Funds may bear pursuant to the Plans without approval of the
shareholders of the Funds and that other material amendments to the Plans must
be approved by a majority of the Plan Trustees by vote cast in person at a
meeting called for the purpose of considering such amendments. The Plans
further 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 who are not "interested persons." The Plans may be terminated
at any time by vote of a majority of the Plan Trustees or a majority of the
outstanding shares of the Funds.
The National Association of Securities Dealers (the "NASD"), recently
approved certain amendments to the NASD's mutual fund maximum sales charge
rule. The amendments would, under certain circumstances, regard distribution
fees to be asset-based sales charges subject to NASD sales load limits. An
amendment to the NASD's maximum sales charge rule may require the Trustees to
amend the Plan.
15
<PAGE>
TRUSTEES AND OFFICERS
The Trustees and Officers of the Trust 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 Trust During the Past 5 Years
- - -------------------------- ---------------- -----------------------------------------------------------------
<S> <C> <C>
C. Duane Blinn (69)** Trustee Partner in the law firm of Day, Berry & Howard. Director/
Day, Berry & Howard Trustee, Phoenix Funds (1980-present). Trustee, Phoenix-
CityPlace Aberdeen Series Fund and Phoenix Duff & Phelps
Hartford, CT 06103 Institutional Mutual Funds (1996-present). Director/Trustee,
the National Affiliated Investment Companies (until 1993).
Robert Chesek (63) Trustee Trustee/Director (1981-present) and Chairman (1989-1994),
49 Old Post Road Phoenix Funds. Trustee, Phoenix-Aberdeen Series Fund and
Wethersfield, CT 06109 Phoenix Duff & 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-
9 Rittenhouse Road present). Trustee/Director, Consolidated Edison Company of
Bronxville, NY 10708 New York, Inc. (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).
Harry Dalzell-Payne (68) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
330 East 39th Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Apartment 29G Institutional Mutual Funds (1996-present). Director, Duff &
New York, NY 10016 Phelps Utilities 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.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- - ----------------------------- ---------------- ------------------------------------------------------------------
<S> <C> <C>
*Francis E. Jeffries (66) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
6585 Nicholas Blvd. Phoenix-Aberdeen Series Inc. and Phoenix Duff & Phelps
Apt. 1601 Institutional Mutual Funds (1996-present). Director, Duff &
Naples, FL 33963 Phelps Utilities Income Fund (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
Chairman and Chief Company (1995-present). Director/Trustee, Phoenix Funds
Executive Officer (1980-present). Trustee, Phoenix-Aberdeen Series Fund and
Carson Product Company Phoenix Duff & Phelps Institutional Mutual Funds (1996-
64 Ross Road present). Director, Equifax Corp. (1991-present) and Keystone
Savannah, GA 30750 International Fund, Inc. (1989-present). 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 Chief
President 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>
17
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- - --------------------------- ---------------- ---------------------------------------------------------------
<S> <C> <C>
Everett L. Morris (69) Trustee Vice President, W.H. Reaves and Company (1993-present).
164 Laird Road Director/Trustee, Phoenix Funds (1995-present). Trustee,
Colts Neck, NJ 07722 Phoenix-Aberdeen 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 Director Managing Director, Wydown Group (1994-present). Director,
The Wydown Group Phoenix Duff & Phelps Corporation (1995-present). Director/
IBEX Capital Markets LLC Trustee, Phoenix Funds (1987-present). Trustee, Phoenix-
60 State Street Aberdeen Series Fund and Phoenix Duff & Phelps
Suite 950 Institutional Mutual Funds (1996-present). Director, Govett
Boston, MA 02109 Worldwide Opportunity Funds, Inc. (1991-present), Blue Cross
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).
*Calvin J. Pedersen (55) Trustee Director (1986-present), President (1993-present) and
Phoenix Duff & Phelps Executive Vice President (1992-1993), Phoenix Duff & Phelps
Corporation Corporation. Director/Trustee, Phoenix Funds (1995-present).
55 East Monroe Street Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff &
Suite 3600 Phelps Institutional Mutual Funds (1996-present). President
Chicago, IL 60603 and Chief Executive Officer, Duff & Phelps 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,
43 Montclair Drive Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
West Hartford, CT 06107 Institutional 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,
134 Lake Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
P.O. Box 909 Institutional Mutual Funds (1996-present). Director, Boston
Sherborn, MA 01770 Edison Company (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>
18
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- - ----------------------------- ---------------- ----------------------------------------------------------------
<S> <C> <C>
Richard E. Segerson (51) Managing Director, Mullin Associates (1993-present).
102 Valley Road Director/Trustee, Phoenix Funds (1993-present). Trustee,
New Canaan, CT 07840 Phoenix-Aberdeen 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,
731 Lake Avenue Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Greenwich, CT 06830 Institutional 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
Vice Duff & Phelps Corporation (1995-present). Executive Vice
President President, Phoenix 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-
Vice Aberdeen Series Fund (1996-present). Director (1997-present)
President and Executive 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).
Steven L. Colton (38) Vice Managing Director/Senior Portfolio Manager, Phoenix
President Investment Counsel, Inc. (1997-present). Vice President/
Senior Portfolio Manager, American Century Investment
Management (1987-1997). Portfolio Manager, American
Century Target Maturity Trust (1987-1990), American Century
Gold Equities Index Fund (1989-1991), American Century
Income and Growth Fund (1990-1997), American Century
Equity Growth Fund (1991-1996) and American Century
Utilities Income Fund (1993-1997).
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- - --------------------------- ---------------- -----------------------------------------------------------------
<S> <C> <C>
William E. Keen, III (34) Vice Assistant Vice President, Phoenix Equity Planning
100 Bright Meadow Blvd. President Corporation (1996-present). Vice President, Phoenix Funds,
P.O. Box 2200 Phoenix Duff & Phelps Institutional Mutual Funds and
Enfield, CT 06083-2200 Phoenix-Aberdeen Series 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).
William R. Moyer (53) Vice Senior Vice President and Chief Financial Officer, Phoenix
100 Bright Meadow Blvd. President Duff & Phelps Corporation (1995-present). Senior Vice
P.O. Box 2200 President, Finance (1990-present), Chief Financial Officer
Enfield, CT 06083-2200 (1996-present), and Treasurer (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).
Diane L. Mustain (37) Vice Executive Vice President (1996-present), Senior Vice
President President (1995-1996), Vice President (1993-1995), Duff &
Phelps Investment Management Co. Group Vice President,
Duff & Phelps Investment Research Company (1992-1993).
Leonard J. Saltiel (43) Vice Managing Director (1996-present), Senior Vice President
President (1994-1996), 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).
Dong Zhang (31) Vice Portfolio Manager, Phoenix Investment Counsel, Inc. (1997-
President present). Portfolio Manager (1996-1997), Associate Portfolio
Manager (1995-1996), Senior Research Analyst (1993-1995),
American Century Investment Management.
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).
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- - ----------------------- ---------------- ----------------------------------------------------------------
<S> <C> <C>
G. Jeffrey Bohne (49) Secretary Vice President and General Manager, Phoenix Home Life
101 Munson Street Mutual Insurance Co. (1993-present). Vice President, Mutual
Greenfield, MA 01301 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.
For services on the Boards of Directors/Trustees of the Phoenix Funds,
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 $40,000 and a
fee of $2,500 per joint meeting of the Boards. Each Trustee who serves on the
Audit Committee receives a retainer at the annual rate of $2,000 and a fee of
$2,000 per joint Audit Committee meeting attended. Each Trustee who serves on
the Nominating Committee receives a retainer at the annual rate of $1,000 and a
fee of $1,000 per joint Nominating Committee meeting attended. Each Trustee who
serves on the Executive Committee and who is not an interested person of the
Fund receives a retainer at the annual rate of $1,000 and $1,000 per joint
Executive Committee meeting attended. 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. Costs are allocated equally to each of
the Series and Funds within the Fund complex. The foregoing fees do not include
the reimbursement of expenses incurred in connection with meeting attendance.
Officers and employees of the Adviser who are interested persons are
compensated by the Adviser and receive no compensation from the Fund.
For the Funds' upcoming fiscal year, the Trustees will receive
approximately the following compensation:
<TABLE>
<CAPTION>
Total
Compensation
Pension or From Fund and
Aggregate Retirement Benefits Estimated Fund Complex
Compensation Accrued as Part Annual Benefits (12 Funds)
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
- - ------------------------ -------------- --------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
C. Duane Blinn $ 1,800* None None $30,250
Robert Chesek $ 1,568 for any for any $26,750
E. Virgil Conway+ $ 1,833 Trustee Trustee $30,875
Harry Dalzell-Payne+ $ 1,568 $26,875
Francis E. Jeffries $ 1,475* $ 0
Leroy Keith, Jr. $ 1,568 $26,750
Philip R. McLoughlin+ $ 0 $ 0
Everett L. Morris+ $ 1,475* $25,375
James M. Oates+ $ 1,725 $29,000
Calvin Pedersen $ 0 $ 0
Philip R. Reynolds $ 1,568 $26,750
Herbert Roth, Jr.+ $ 1,925* $32,375
Richard E. Segerson $ 1,785 $30,125
Lowell P. Weicker, Jr. $ 1,800 $30,125
</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, Jeffries, Morris and Roth
was $349,026.91, $28,561.41, $85,849.73 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.
21
<PAGE>
OTHER INFORMATION
Independent Accountants
Price Waterhouse LLP has been selected as the independent accountants for
the Funds. Price Waterhouse LLP audits the Funds' annual financial statements
and expresses an opinion thereon.
Custodian and Transfer Agent
State Street Bank and Trust Company ("State Street"), serves as custodian
of the Funds' assets (the "Custodian"). Equity Planning acts as Transfer Agent
for the Funds (the "Transfer Agent").
Report to Shareholders
The fiscal year of the Funds ends on March 31. The Funds will send
financial statements to shareholders at least semi-annually. An annual report,
containing financial statements, audited by independent accountants, will be
sent to shareholders each year, and is available without charge upon request.
Financial Statements
The Financial Statements for the Funds as of [ ] are incorporated herein
by reference. The financial information relating to the Funds is available by
calling Equity Planning at (800) 243-4361, or by writing to Equity Planning at
100 Bright Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200. A
copy of the Annual Report must precede or accompany this Statement of
Additional Information.
22
<PAGE>
APPENDIX
Moody's Investors Service, Inc. Corporate Bond Ratings
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa Group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Standard & Poor's Corporation's Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
BB-B-CCC-CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
23
<PAGE>
PHOENIX EQUITY SERIES FUND
PART C--OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
No financial statements have been included for the Trust.
(b) Exhibits:
<TABLE>
<S> <C>
1.1* Declaration of Trust of the Registrant filed via EDGAR herewith.
2. None.
3. None.
4.1 Reference is hereby made to Article IV of Registrant's Declaration of Trust.
5.1* Investment Advisory Agreement between Registrant and Duff & Phelps Investment Management Co., Inc.
filed via EDGAR herewith.
5.2* Investment Advisory Agreement between Registrant and Phoenix Investment Counsel, Inc. filed via
EDGAR herewith.
6.1 Distribution Agreement between Registrant and Phoenix Equity Planning Corporation ("Equity Planning").
7. None.
8.1* Master Custodian Contract between Registrant and State Street Bank and Trust Company filed via EDGAR
herewith.
9.1* Transfer Agency and Service Agreement between Registrant and Equity Planning Corporation filed via
EDGAR herewith.
9.2* Financial Agent Agreement between Registrant and Equity Planning.
9.3* First Amendment to Financial Agent Agreement between Registrant and Phoenix Equity Planning
Corporation filed via EDGAR herewith.
9.4* Second Amendment to Financial Agent Agreement between Registrant and Phoenix Equity Planning
Corporation filed via EDGAR herewith.
10. Opinion of Counsel as to legality of the shares.
11. Consent of Independent Accountant.
12. Not applicable.
13.* Initial Capital Agreement.
14. None.
15.1* Form of Distribution Plan filed via EDGAR herewith.
16. Schedule for computation of performance information.
17. Not yet applicable.
18.1* Amended and Restated Plan pursuant to Rule 18f-3 filed via EDGAR
herewith.
18.2* First Amendment to the Amended and Restated Plan pursuant to Rule
18f-3 filed via EDGAR herewith.
19.* Powers of Attorney filed via EDGAR herewith.
</TABLE>
- - -----------
*Filed Herewith.
Item 25. Persons Controlled by or Under Common Control With Registrant
No person is controlled by, or under common control, with the Registrant.
C-1
<PAGE>
Item 26. Number of Holders of Securities
As of May 30, 1997, the number of record holders of each class of
securities of the Registrant was as follows:
<TABLE>
<CAPTION>
Number of Number of Number of Number of
Class A Class B Class C Class M
Title of Fund Record-holders Record-holders Record-holders Record-holders
- - ----------------------------- ---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Phoenix Core Equity Fund 0 0 0 0
Phoenix Growth and Income
Fund 0 0 0 0
</TABLE>
Item 27. Indemnification
Please see Article V of the Registrant's Declaration of Trust
(incorporated herein by reference). Registrant's trustees and officers are
covered by an Errors and Omissions Policy. 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 the Adviser, the Adviser 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 Funds" in the Prospectus and "The Investment
Advisers" in the Statement of Additional Information which is included in this
Registration Statement. For information as to the business, profession,
vocation or employment of a substantial nature of directors and officers of the
Adviser, reference is made to the Adviser's current Form ADV (SEC File Nos.
801-14813 (DPIM) and 801-5995 (PIC)) filed under the Investment Advisers Act of
1940, incorporated herein by reference.
Item 29. Principal Distributor
(a) See "Distribution Plans" and "How to Buy Shares" in the Prospectus and
"The Distributor" and "Plans of Distribution" in the Statement of
Additional Information, both of which are included in this Registration
Statement.
(b) Directors and executive officers of Phoenix Equity Planning Corporation
are as follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions 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
Hartford, CT 06115-0480 and Operations
Leonard J. Saltiel Managing Director, Vice President
100 Bright Meadow Blvd. Operations and Service
P.O. Box 2200
Enfield, CT 06083-2200
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Distributor with Registrant
- - ------------------------- ------------------------------- -----------------------
<S> <C> <C>
Paul A. 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
P.O. Box 2200 Independent Division
Enfield, CT 06083-2200
William R. Moyer Senior Vice President, Vice President
100 Bright Meadow Blvd. and Chief Financial Officer
P.O. Box 2200
Enfield, CT 06083-2200
John F. Sharry Managing Director, None
100 Bright Meadow Blvd. Mutual Fund Distribution
P.O. Box 1900
Enfield, CT 06083-1900
G. Jeffrey Bohne Vice President, Secretary
100 Bright Meadow Blvd. Mutual Fund
P.O. Box 2200 Customer Service
Enfield, CT 06083-2200
Eugene A. Charon Vice President and None
100 Bright Meadow Blvd. Controller
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
100 Bright Meadow Blvd. Administration
P.O. Box 2200
Enfield, CT 06083-2200
Thomas N. Steenburg Vice President, Assistant Secretary
56 Prospect Street Counsel and Secretary
P.O. Box 150480
Hartford, CT 06115-0480
William E. Keen, III Assistant Vice President, Vice President
100 Bright Meadow Blvd. Mutual Fund Regulation
P.O. Box 1900
Enfield, CT 06083-1900
</TABLE>
(c) Not applicable.
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., Inc., 55 East Monroe Street, Suite 3600, Chicago,
Illinois 60603 and Phoenix Investment Counsel, Inc., 56 Prospect Street,
Hartford, Connecticut 06115, or the custodian, State Street Bank and Trust
Company, 1 Heritage Drive, P2N, North Quincy, MA 02171. 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
Not applicable.
C-3
<PAGE>
Item 32. Undertakings
(a) Not applicable.
(b) Registrant hereby undertakes to file a post-effective amendment using
financial statements, which need to be certified, within four to
six-months after the effective date of this post-effective amendment to
the Registration Statement.
(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to shareholders
upon request and without charge.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Hartford, and State of Connecticut on
the 22nd day of August, 1997.
PHOENIX EQUITY SERIES FUND
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 person in
the capacity indicated, on this 22nd day of August, 1997.
<TABLE>
<CAPTION>
Signature Title
- - ------------------------------------------- -------------------------------
<S> <C>
Trustee
- - ----------------------------
E. Virgil Conway*
Treasurer (Principal Financial
- - ---------------------------- and Accounting Officer)
Nancy G. Curtiss*
Trustee
- - ----------------------------
Harry Dalzell-Payne*
/s/ Philip R. McLoughlin President and Trustee
- - ---------------------------- (Principal Executive Officer)
Philip R. McLoughlin
Trustee
- - ----------------------------
Everett L. Morris*
Trustee
- - ----------------------------
James M. Oates*
Trustee
- - ----------------------------
Herbert Roth, Jr.*
By /s/ Philip R. McLoughlin
----------------------------
*Philip R. McLoughlin pursuant to powers
of attorney filed herewith.
</TABLE>
S-1
Exhibit 1.1
Declaration of Trust
<PAGE>
PHOENIX EQUITY SERIES FUND
PROVISIONS
OF
DECLARATION OF TRUST
MAY 30, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE I NAME, RESIDENT AGENT AND DEFINITIONS.............................. 5
Section 1.1 Name............................................................ 5
Section 1.2 Resident Agent.................................................. 5
Section 1.3 Definitions..................................................... 5
(a) "Trust"................................................... 5
(b) "Trustees"................................................ 5
(c) "Shares".................................................. 5
(d) "Series".................................................. 5
(e) "Class"................................................... 5
(f) "Shareholder"............................................. 5
(g) "Investment Company Act".................................. 6
(h) "Commission".............................................. 6
(i) "Declaration of Trust".................................... 6
(j) "Vote of a Majority of the Outstanding Voting Securities". 6
ARTICLE II THE TRUSTEES..................................................... 6
Section 2.1 Number, Designation, Election, Term, etc........................ 6
(a) Number and Election....................................... 6
(b) Term...................................................... 6
(c) Resignation and Retirement................................ 6
(d) Removal................................................... 6
(e) Vacancies................................................. 6
(f) Effect of Vacancy......................................... 7
(g) No Accounting............................................. 7
Section 2.2 Powers of Trustees.............................................. 7
(a) Investments............................................... 8
(b) Disposition of Assets..................................... 8
(c) Ownership Powers.......................................... 8
(d) Subscription.............................................. 8
(e) Form of Holding........................................... 8
(f) Reorganization, etc....................................... 9
(g) Voting Trusts, etc........................................ 9
(h) Compromise................................................ 9
(j) Borrowing and Security.................................... 9
(k) Insurance................................................. 9
Section 2.3 Action by Trustees.............................................. 9
Section 2.4 Certain Contract................................................ 9
i
<PAGE>
(a) Advisory..................................................10
(b) Administration............................................10
(c) Financial Agency..........................................10
(d) Distribution..............................................10
(e) Custodian.................................................10
(f) Transfer Agency...........................................10
(g) Dividend Disbursing Agency................................11
(h) Shareholder Servicing.....................................11
Section 2.5 Certain Conflicts of Interest...................................11
Section 2.6 Payment of Trust Expenses and Compensation of Trustees..........11
Section 2.7 Ownership of Assets of the Trust................................12
ARTICLE III SHARES..........................................................12
Section 3.1 Description of Shares...........................................12
Section 3.2 Establishment and Designation of Series.........................13
(a) Assets Belonging to Series................................13
(b) Liabilities Belonging to Series...........................14
(c) Dividends.................................................14
(d) Liquidation...............................................15
(e) Shareholder Voting........................................15
(f) Redemption by Shareholder.................................15
(g) Repurchase................................................15
(h) Redemption by Trust.......................................16
(i) Net Asset Value...........................................16
(j) Transfer..................................................16
(k) Equality..................................................16
(l) Fractions.................................................16
(m) Exchange Privilege........................................16
Section 3.3 Establishment and Designation of Classes........................17
Section 3.4 Ownership of Shares.............................................18
Section 3.5 Investments in the Trust........................................18
Section 3.6 No Preemptive or Appraisal Rights ..............................18
Section 3.7 Status of Shares and Limitation of Personal Liability...........18
ARTICLE IV SHAREHOLDERS' VOTING POWERS AND MEETINGS........................19
Section 4.1 Voting Powers...................................................19
Section 4.2 Meetings........................................................19
Section 4.3 Record Dates....................................................20
Section 4.4 Quorum and Required Vote........................................20
ii
<PAGE>
Section 4.5 Action by Written Consent.......................................20
Section 4.6 Inspection of Records...........................................20
ARTICLE V LIMITATION OF LIABILITY: INDEMNIFICATION..........................20
Section 5.1 Trustees, Shareholders, etc. Not Personally Liable; Notice......20
Section 5.2 Trustee's Good Faith Action; Expert Advice; No Bond or Surety...21
Section 5.3 Indemnification of Shareholders.................................21
Section 5.4 Indemnification of Trustees, Officers, etc......................21
Section 5.5 Compromise Payment..............................................22
Section 5.6 Indemnification Not Exclusive, etc..............................22
Section 5.7 Liability of Third Persons Dealing with Trustees................23
ARTICLE VI MISCELLANEOUS....................................................23
Section 6.1 Duration and Termination of Trust...............................23
Section 6.2 Reorganization..................................................23
Section 6.3 Amendments......................................................23
Section 6.4 Filing of Copies; References; Headings..........................24
Section 6.5 Applicable Law..................................................24
iii
<PAGE>
THIS AGREEMENT AND DECLARATION OF TRUST (herein called "Declaration of
Trust") made at Greenfield, in the Commonwealth of Massachusetts on the 30th day
of May, 1997 by and between Thomas N. Steenburg, whose address is 101 Munson
Street, Greenfield, Massachusetts, (hereinafter called the "Trustees"), and such
persons as may from time to time become Shareholders of this Trust by purchasing
or otherwise acquiring shares of beneficial interest issued hereunder, is hereby
adopted to read in its entirety as follows:
THE TRUSTEES hereby agree and declare that they will hold all cash,
securities, and other property which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the benefit of the holders from time to time
of shares of beneficial interest in the Trust.
ARTICLE I
NAME, RESIDENT AGENT AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as "Phoenix Equity Series
Fund" and the Trustees shall conduct the business of the Trust under that name
or such other name as they may from time to time determine.
Section 1.2 Resident Agent. To the extent required, the Trustees shall
have power to appoint a resident agent for the Trust in The Commonwealth of
Massachusetts, and from time to time to replace the resident agent so appointed.
Section 1.3 Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) "Trust" refers to the Massachusetts business trust established
by this Agreement and Declaration of Trust, as amended from
time to time;
(b) "Trustees" refers to the Trustees of the Trust named herein
and their duly elected successors;
(c) "Shares" refers to the transferable units of interest into
which beneficial interest in the Trust or any Series of the
Trust (as the context may require) shall be divided from time
to time;
(d) "Series" refers to the Series of Shares established and
designated pursuant to the provisions of Article III;
(e) "Class" refers to the Class of a Series of Shares established
and designated pursuant to the provisions of Article III;
(f) "Shareholder" means a record owner of Shares;
<PAGE>
(g) The "Investment Company Act" refers to the Investment Company
Act of 1940 and the rules and regulations thereunder, all as
amended from time to time;
(h) The term "Commission" shall mean the Securities and Exchange
Commission;
(i) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust as amended or restated from time to time;
(j) "Vote of a Majority of the Outstanding Voting Securities"
means the lesser of (i) 67% of the shares represented at a
meeting at which more than 50% of the outstanding shares are
represented or (ii) more than 50% of the outstanding shares.
ARTICLE II
THE TRUSTEES
Section 2.1 Number, Designation, Election, Term, etc.
(a) Number and Election. At each meeting for the purpose, the
Shareholders shall fix the number of Trustees, to serve until
the election and qualification of their successors, and shall
at such meeting elect the number of Trustees so fixed. The
Trustees serving as such may increase or decrease the number
of Trustees to a number other than the number theretofore
fixed. No decrease in the number of Trustees shall have the
effect of removing any Trustee from office prior to the
expiration of his term. However, the number of Trustees may be
decreased in conjunction with the removal of a Trustee
pursuant to subsection (d) of this Section 2.1.
(b) Term. Each Trustee shall serve as a Trustee until the election
and qualification of his successor, or until such Trustee
sooner dies, resigns, retires or is removed.
(c) Resignation and Retirement. Any Trustee may resign his trust
or retire as a Trustee, by written instrument signed by him
and delivered to the remaining Trustees or to any officer of
the Trust. Such resignation or retirement shall take effect
upon such delivery or upon such later date as is specified in
such instrument.
(d) Removal. Any Trustee may be removed with or without cause at
any time either by written instrument, signed by at least
two-thirds of the number of Trustees
2
<PAGE>
prior to such removal, specifying the date upon which such
removal shall become effective, or by the Shareholders at any
meeting called for the purpose.
(e) Vacancies. Any vacancy resulting from any reason, including
without limitation the death, resignation, retirement, removal
or incapacity of any of the Trustees, or resulting from an
increase in the number of Trustees by the Trustees, may be
filled by a majority of the remaining Trustees through the
appointment in writing of a successor Trustee to hold office
until the election and qualification of his successor,
provided that immediately after filling any such vacancy at
least two-thirds (2/3) of the Trustees then holding office
shall have been elected to such office by the Shareholders at
a meeting for the purpose. Such appointment of a successor
Trustee shall be effective upon the written acceptance of the
person named therein to serve as a Trustee and written
agreement by such person to be bound by the provisions of this
Declaration of Trust whereupon the Trust estate shall vest in
the new Trustee, together with the continuing Trustees,
without any further act or conveyance.
(f) Effect of Vacancy. The death, resignation, retirement, removal
or incapacity of the Trustees, or of any one of them, shall
not operate to annul or terminate the Trust or to revoke or
terminate any existing agency or contract created or entered
into pursuant to the terms of this Declaration of Trust.
During any vacancy a majority of the remaining Trustees may
exercise any and all of the powers of the Trustees hereunder.
The determination of a vacancy or vacancies in the number of
Trustees by reason of death, resignation or disability when
made by the remaining Trustees and set forth in any instrument
filling such vacancy or vacancies shall be final and
conclusive for all purposes.
(g) No Accounting. Except to the extent required by the Investment
Company Act or under circumstances which would justify his
removal for cause, no person ceasing to be a Trustee as a
result of his death, resignation, retirement, removal or
incapacity (nor the estate of any such person) shall be
required to make an accounting to the Shareholders or
remaining Trustees upon such cessation.
Section 2.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility. Without limiting the foregoing, the Trustees may adopt
By-Laws not inconsistent with this Declaration of Trust providing for the
conduct of the business and affairs of the Trust and may amend and repeal them
to the extent that such By-Laws do not reserve the right to the Shareholders;
they may, as they consider appropriate, elect and remove officers, appoint and
terminate agents and consultants, and hire and terminate employees, any one or
more of the foregoing of whom may be a Trustee, and may provide for the
3
<PAGE>
compensation of all of the foregoing; they may appoint from their own number,
and terminate, any one or more committees consisting of two or more Trustees,
including without implied limitation an executive committee, which may, when the
Trustees are not in session and subject to the provisions of the Investment
Company Act, exercise some or all of the power and authority of the Trustees as
the Trustees may determine; in accordance with Section 2.4 they may retain one
or more advisers, administrators, financial agents and custodians and may
authorize any such custodian to employ sub-custodians or agents and to deposit
all or any part of the Trust's assets in a system or systems for the central
handling of securities and debt instruments, retain one or more transfer,
dividend, accounting or Shareholder servicing agents, provide for the
distribution of Shares by the Trust through one or more distributors, principal
underwriters or otherwise, set record dates of times for the determination of
Shareholders or certain of them with respect to various matters; they may
compensate or provide for the compensation of the Trustees, officers, advisers,
administrators, financial agents, custodians, other agents, consultants and
employees of the Trust or the Trustees on such terms as they deem appropriate;
and in general they may delegate to any officer of the Trust, to any committee
of the Trustees and to any employee, adviser, administrator, distributor,
financial agent, custodian, transfer agent, dividend disbursing agent, or any
other agent or consultant of the Trust such authority, powers, functions and
duties as they consider desirable or appropriate for the conduct of the business
and affairs of the Trust, including without implied limitation the power and
authority to act in the name of the Trust and of the Trustees, to sign documents
and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing but subject to the fundamental
investment policies of the Trust and to the extent not inconsistent with the
Investment Company Act or other applicable law, the Trustees shall have the
power and authority:
(a) Investments. To invest and reinvest from time to time cash and
other assets of the Trust in any type or class of security or
debt instrument including Shares of Series established
pursuant to the terms of this Declaration of Trust; and to
hold cash or other assets of the Trust uninvested in whole or
in part without in any event being bound or limited by any
present or future law, rule of court or custom in regard to
investments by trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or all
of the assets of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any
rights of ownership, with respect to stock or other
securities, debt instruments or property ownership, and to
execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting
to such person or persons
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such power and discretion with respect to securities, debt
instruments or property as the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of
securities or debt instruments;
(e) Form of Holding. Subject to the provisions of Section 2.7, to
hold any security, debt instrument or property in a form not
indicating any trust, whether in bearer, unregistered or other
negotiable form, or in the name of the Trustees or of the
Trust or in the name of a custodian, sub-custodian or other
depository or a nominee or nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any plan
for the reorganization, consolidation or merger of any
corporation or issuer, any security or debt instrument of
which is or was held in the Trust; to consent to any contract,
lease, mortgage, purchase or sale of property by such
corporation or issuer, and to pay calls or subscriptions with
respect to any security or debt instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any
securities or debt instruments in acting through a committee,
depositary, voting trustee or otherwise, and in that
connection to deposit any security or debt instrument with, or
transfer any security or debt instrument to, any such
committee, depositary or trustee, and to delegate to them such
power and authority with relation to any security or debt
instrument (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such
committee, depositary or trustee as the Trustees shall deem
proper.
(h) Compromise. To compromise, arbitrate or otherwise adjust
claims in favor of or against the Trust or any matter in
controversy, including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or
limited partnerships and any other combinations or
associations;
(j) Borrowing and Security. To borrow funds and to mortgage and
pledge the assets of the Trust or any part thereof to secure
obligations arising in connection with such borrowing; and
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(k) Insurance. To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or
appropriate for the conduct of the business, including,
without limitation, insurance covering each officer and
employee of the Trust against larceny and embezzlement and
insurance covering each Trustee with respect to any errors or
omissions which may be committed or omitted by such Trustee.
Section 2.3 Action by Trustees. Except as otherwise provided by the
Investment Company Act or other applicable law or this Declaration of Trust, any
action taken by the Trustees may be taken by a majority of the Trustees present
at a meeting of Trustees (a quorum, consisting of at least a majority of the
Trustees then in office, being present), within or without Massachusetts,
including any meeting held by means of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting, or by written consents of a
majority of the Trustees then in office.
Section 2.4 Certain Contracts. Subject to compliance with the
provisions of the Investment Company Act, but notwithstanding any limitations of
present and future law or custom in regard to delegation of powers by trustees
generally, the Trustees may, at any time and from time to time and without
limiting the generality of their powers and authority otherwise set forth
herein, enter into one or more contracts with any one or more corporations,
trusts, associations, partnerships, limited partnerships, other types of
organizations, or individuals ("Contracting Party") to provide for the
performance and assumption of some or all of the following services, duties and
responsibilities to, for or of the Trust and/or the Trustees, and to provide for
the performance and assumption of such other services, duties and
responsibilities in addition to those set forth below as the Trustees may
determine to be appropriate;
(a) Advisory. Subject to the general supervision of the Trustees
and in conformity with the stated policy of the Trustees with
respect to the investments of the Trust or of the assets
belonging to any Series, to manage such investments and
assets, to make investment decisions with respect thereto, and
to place purchase and sale orders for portfolio transactions
relating to such investments and assets;
(b) Administration. Subject to the general supervision of the
Trustees and in conformity with any policies of the Trustees
with respect to the operations of the Trust, to provide all or
any part of the administrative and clerical personnel, office
space and office equipment and services appropriate for the
efficient administration and operation of the Trust;
(c) Financial Agency. Subject to the general supervision of the
Trustees and in conformity with any policies of the Trustees
with respect to the operations of the
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Trust, to provide financial and accounting services whether
with respect to the Trust's assets, or otherwise, including,
but not limited to, the preparation and supervision of the
Trust's financial statements and reports, bookkeeping
services, pricing services, periodic reports to Shareholders
and others, supporting schedules in connection with any audit
of the Trust's business or operations, and registration
statements, prospectuses and other documents required to be
filed under all applicable Federal and state laws and to
provide many services involved in registering and maintaining
the registration of the Trust and of its Shares with the
Commission and registering or qualifying its Shares under
state or other securities laws or any services involved in
preparing reports to Shareholders;
(d) Distribution. To distribute the Shares of the Trust; to be
principal underwriter of such Shares or to act as agent of the
Trust in the sale of Shares and the acceptance or rejection of
orders for the purchase of Shares;
(e) Custodian. To maintain custody of the property of the Trust
and accounting records in connection therewith;
(f) Transfer Agency. To maintain records of the ownership of
outstanding Shares, the issuance and redemption and the
transfer thereof;
(g) Dividend Disbursing Agency. To disburse any dividends and
other distributions declared by the Trustees and in accordance
with the policies of the Trustees and/or the instructions of
any particular Shareholder to reinvest any such dividends; and
(h) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with
respect to Shareholders and their Shares, and similar matters.
Section 2.5 Certain Conflicts of Interest. The same person may be the
Contracting Party for some or all of the services, duties and responsibilities
to, for and of the Trust and/or the Trustees, and the contracts with respect
thereto may contain such terms interpretive of or in addition to the delineation
of the services, duties and responsibilities provided for, including provisions
that are not inconsistent with the Investment Company Act relating to the
standard of duty of and the rights to indemnification of the Contracting Party
and others, as the Trustees may determine.
The fact that:
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(i) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee,
employee, manager, adviser, principal underwriter, distributor
or agent of or for any Contracting Party, or of or for any
parent or affiliate of any Contracting Party, or that the
Contracting Party or any parent or affiliate thereof is a
Shareholder or has an interest in the Trust, or that
(ii) any Contracting Party may have a contract providing for
the rendering of any similar services to one or more other
corporations, trusts, associations, partnerships, limited
partnerships or other organizations, or has other business or
interests
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust and/or the
Trustees or disqualify any Shareholder, Trustee or officer of the Trust from
voting upon or executing the same or create any liability or accountability to
the Trust or its Shareholders, provided that in the case of any relationship or
interest referred to in the preceding clause (i) on the part of any Trustee or
officer of the Trust either (x) the material facts as to such relationship or
interest have been disclosed to or are known by the Trustees not having any such
relationship or interest and the contract involved is approved in good faith by
a majority of such Trustees not having such relationship or interest (even
though such unrelated or disinterested Trustees are less than a quorum of all
the Trustees), or (y) the material facts as to such relationship or interest and
as to the contract have been disclosed to or are known by the Shareholders
entitled to vote thereon and the contract involved is specifically approved in
good faith by vote of the Shareholders, and (z) the specific contract involved
is fair to the Trust as of the time authorized, approved or ratified by the
Trustees or by the Shareholders.
Section 2.6 Payment of Trust Expenses and Compensation of Trustees .
The Trustees are authorized to pay or to cause to be paid out of the principal
or income of the Trust, or partly out of principal and partly out of income, and
to charge or allocate the same to, between or among such one or more of the
Series that may be established and designated pursuant to Article III, as the
Trustees deem fair, any or all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust, or in connection with the
management thereof, including, but not limited to, the Trustees' compensation
and such expenses and charges for the services of the Trust's officers,
employees, adviser, administrator, financial agent, distributor, principal
underwriter, auditor, counsel, custodian, transfer agent, dividend disbursing
agent, Shareholder servicing agent, and such other agents, consultants, and
independent contractors and such other expenses and charges including
non-recurring expenses and other expenses which may be deemed extraordinary
expenses under all applicable Federal or State law, as the Trustees may deem
necessary or proper to incur. The expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust may be paid from sources other
than the Trust assets. Without limiting the generality of any other provision
hereof, the Trustees shall be entitled to reasonable
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compensation from the Trust or from other sources that may be available for
their services as Trustees.
Section 2.7 Ownership of Assets of the Trust. Notwithstanding the
provisions of subsection (e) of Section 2.2, title to all of the assets of the
Trust shall at all times be considered as vested in the Trustees as joint
tenants.
ARTICLE III
SHARES
Section 3.1 Description of Shares. The beneficial interest in the Trust
shall be divided into an unlimited number of Shares, with a par value of one
dollar each. The Trustees shall have the authority from time to time to
establish and designate one or more Series of Shares (including, without
limitation, those Series specifically established and designated in Section
3.2), and/or one or more Classes of Shares of a Series (including, without
limitation, those Classes of Shares specifically established and designated in
Section 3.3), as they deem necessary or desirable. The Trustees may issue Shares
of any Series (or Class thereof) for such consideration and on such terms as
they may determine (or for no consideration if pursuant to a Share dividend or
split), all without action or approval of the Shareholders. All Shares when so
issued on the terms determined by the Trustees shall be fully paid and
non-assessable. The Trustees may classify or reclassify any unissued Shares or
any Shares previously issued and reacquired of any Series into one or more
Series (or Class thereof) that may be established and designated from time to
time. The Trustees may hold as treasury Shares (of the same or some other Series
or Class), reissue for such consideration and on such terms as they may
determine, or cancel, at their discretion from time to time, any Shares of any
Series (or Class thereof) reacquired by the Trust.
The Trustee may from time to time close the transfer books or establish
record dates and times for the purposes of determining the holders of Shares
entitled to be treated as such, to the extent provided or referred in Section
3.4.
The establishment and designation of any Series of Shares (or Class
thereof) in addition to those established and designated in Sections 3.2 and 3.3
shall be effective upon the execution by a majority of the then Trustees of an
instrument setting forth such establishment and designation and the relative
rights and preferences of such Series, or Class, as the case may be, or as
otherwise provided in such instrument. At any time that there are no Shares
outstanding, of any particular Series (or Class thereof) previously established
and designated the Trustees may by an instrument executed by a majority of their
number abolish that Series (or Class thereof) and the establishment and
designation thereof.
Any Trustee, officer or other agent of the Trust and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares of any Series of the Trust (or
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Class thereof) to the same extent as if such person were not a Trustee, officer
or other agent of the Trust or were not such an organization; and the Trust may
issue and sell or cause to be issued and sold and may purchase Shares of any
Series (or Class thereof) from any such person or any such organization subject
only to the general limitations, restrictions or other provisions applicable to
the sale or purchase of Shares of such Series generally.
Section 3.2 Establishment and Designation of Series. Without limiting
the authority of the Trustees set forth in Section 3.1 to establish and
designate any further Series, the following two Series are hereby established
and designated: "Phoenix Core Equity Fund," and "Phoenix Growth and Income
Fund." Shares of each Series established and designated in this Section 3.2 and
any Shares of any further Series that may from time to time be established and
designated by the Trustees shall (unless the Trustees otherwise determine with
respect to some further Series at the time of establishing and designating the
same) have the following relative rights and preferences, subject to Article
III, Section 3.3, below:
(a) Assets Belonging to Series. All consideration received by the
Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to
that Series for all purposes, subject only to the rights of
creditors, and shall be so recorded upon the books of account
of the Trust. Such consideration, assets, income, earnings,
profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, together with any
General Items, as defined herein, allocated to that Series as
provided herein, are herein referred to as "assets belonging
to" that Series. In the event that there are any assets,
income, earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as belonging to
any particular Series (collectively "General Items"), the
Trustees shall allocate such General Items to and among any
one or more of the Series established and designated from time
to time in such manner and on such basis as they, in their
sole discretion, deem fair and equitable; and any General
Items so allocated to a particular Series shall belong to that
Series. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series for
all purposes.
(b) Liabilities Belonging to Series. The assets belonging to each
particular Series shall be charged with the liabilities of the
Trust in respect to that Series and all expenses, costs,
charges and reserves attributable to that Series, and any
general
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liabilities, expenses, costs, charges or reserves of the Trust
which are not readily identifiable as belonging to any
particular Series shall be allocated and charged by the
Trustees to and among any one or more of the Series
established and designated from time to time in such manner
and on such basis as the Trustees in their sole discretion
deem fair and equitable. The liabilities, expenses, costs,
charges and reserves allocated and so charged to a Series are
herein referred to as "liabilities belonging to" that Series.
Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon
the holders of all Series for all purposes. The Trustees shall
have full discretion, to the extent not inconsistent with the
Investment Company Act, to determine which items shall be
treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding
upon the Shareholders.
(c) Dividends. Dividends and distributions on Shares of a
particular Series may be paid with such frequency as the
Trustees may determine, which may be daily or otherwise
pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine, to
the holders of Shares of that Series, from such of the income
and capital gains, accrued or realized, from the assets
belonging to that Series as the Trustees may determine, after
providing for actual and accrued liabilities belonging to that
Series. All dividends and distributions on Shares of a
particular Series shall be distributed pro rata to the holders
of that Series in proportion to the number of Shares of that
Series held by such holders at the date and time of record
established for the payment of such dividends or
distributions, except that in connection with any dividend or
distribution program or procedure the Trustees may determine
that no dividend or distribution shall be payable on Shares as
to which the Shareholder's purchase order and/or payment have
not been received by the time or times established by the
Trustees under such program or procedure. Such dividends and
distributions may be made in cash or Shares or a combination
thereof as determined by the Trustees or pursuant to any
program that the Trustees may have in effect at the time for
the election by each Shareholder of the mode of the making of
such dividend or distribution to that Shareholder. Any such
dividend or distribution paid in Shares will be paid at the
net asset value thereof as determined in accordance with
subsection (i) of this Section 3.2.
(d) Liquidation. In the event of the liquidation or dissolution of
the Trust or redemption of all of the Shares of any Series,
the Shareholders of each Series that has been established and
designated shall be entitled to receive, as a Series, when and
as declared by the Trustees, the excess of the assets
belonging to that Series over the liabilities belonging to
that Series. The assets so distributable to the
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Shareholders of any Series shall be distributed among such
Shareholders in proportion to the number of shares of that
Series held by them and recorded on the books of the Trust.
The redemption of all the Shares of any particular Series may
be authorized by a vote of a majority of the Trustees then in
office subject to the approval of a Vote of a Majority of the
Outstanding Voting Securities of that Series.
(e) Shareholder Voting. On each matter submitted to a vote of the
Shareholders, each holder of a Share shall be entitled to one
vote for each Share, and a proportionate vote for each
fractional Share, standing in his name on the books of the
Trust irrespective of the Series thereof and all Shares of all
Series shall vote as a single class ("Single Class Voting");
provided, however, that (a) as to any matter with respect to
which a separate vote of any Series is required, such
requirement as to a separate vote by that Series shall apply
in lieu of Single Class Voting as described above; (b) in the
event that the separate vote requirement referred to in (a)
above applies with respect to one or more Series, then,
subject to (c) below, the Shares of all Series entitled to
vote and to which the separate vote requirement referred to in
(a) above does not apply shall vote as a single class; and (c)
as to any matter which affects (within the meaning of Rule
18f-2 under the Investment Company Act) the interest of one or
more but not all Series, only the holders of Shares of the one
or more affected Series shall be entitled to vote.
(f) Redemption by Shareholder. Each holder of Shares of a
particular Series, upon request to the Trust and compliance
with appropriate transfer requirements, shall be entitled to
require the Trust to redeem all or any part of the shares of
that Series standing in the name of such holder on the books
of Trust at a redemption price equal to the net asset value
per Share of that Series next determined in accordance with
subsection (i) of this Section 3.2 after the receipt in good
order of the request for redemption.
Notwithstanding the foregoing, the Trust may postpone payment
of the redemption price and may suspend the right of the
holders of shares of any Series to require the Trust to redeem
Shares of that Series during any period or at any time when
and to the extent permissible under the Investment Company
Act.
(g) Repurchase. The Trust may maintain, or authorize its agent to
maintain, an offer to repurchase its outstanding Shares.
During any period when such an offer is being maintained, each
Share for which a repurchase order is received shall be
repurchased at a price equal to the net asset value per Share
next determined in accordance with subsection (i) of this
Section 3.2 after receipt of such repurchase
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order less such amount not in excess of 1% of such net asset
value as the Trustees may determine.
(h) Redemption by Trust. Each Share of each Series that has been
established and designated is subject to redemption by the
Trust at the redemption price which would be applicable if
such Share was then being redeemed by the Shareholder pursuant
to subsection (f) of this Section 3.2 at any time if the
Trustees determine in their sole discretion that such
redemption is in the best interest of the holders of the
Shares, or any Series thereof, of the Trust, and upon such
redemption the holders of the Shares so redeemed shall have no
further right with respect thereto other than to receive
payment of such redemption price.
(i) Net Asset Value. Except as otherwise provided herein, the net
asset value per Share of any Series shall be the quotient
obtained by dividing the value of the net assets of that
Series (being the value of the assets belonging to that Series
less the liabilities belonging to that Series) by the total
number of Shares of that Series outstanding, all determined in
accordance with the method and procedures established by the
Trustees from time to time.
(j) Transfer. All Shares of each particular Series shall be
transferable, but transfers of Shares of a particular Series
will be recorded on the Share transfer records of the Trust
applicable to that Series only at such times as may be
permitted by the Trustees.
(k) Equality. All Shares of each particular Series shall represent
an equal proportionate interest in the assets belonging to
that Series (subject to the liabilities belonging to that
Series), and each Share of any particular Series shall be
equal to each other Share of that Series; but the provisions
of this sentence shall not restrict any distinctions
permissible under subsection (c) of this Section 3.2 that may
exist with respect to dividends and distributions on Shares of
the same Series. The Trustees may from time to time divide or
combine the Shares of any particular Series into a greater or
lesser number of Shares of that Series without thereby
changing the proportionate beneficial interest in the assets
belonging to that Series or in any way affecting the rights of
Shares of any other Series.
(l) Fractions. Any fractional Share of any Series, if any such
fractional Share is outstanding, shall carry proportionately
all the rights and obligations of a whole Share of that
Series, including rights with respect to voting, receipt of
dividends and distributions, redemption of Shares, and
liquidation of the Trust.
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(m) Exchange Privilege. Subject to compliance with the
requirements of the Investment Company Act, the Trustees shall
have the authority to provide that holders of Shares of any
Series shall have the right to exchange said Shares for Shares
of one or more other Series of Shares in accordance with such
requirements and procedures as may be established by the
Trustees.
Section 3.3 Designation and Establishment of Classes. The Trustees, in
their discretion, may authorize the division of the Shares of any Series into
two or more Classes, and the different Classes shall be established and
designated, the variations in the relative rights and preferences as between the
different Classes shall be fixed and determined, by the Trustees; provided, that
all Shares of any Series shall be identical to all other Shares of the same
Series, except, subject to the provisions of this Section 3.3, that there may be
variations between different classes as to allocation of expenses, rights of
redemption, special and relative rights as to dividends and on liquidation,
conversion rights, and conditions under which the several Classes shall have
separate voting rights. All references to Shares in this Declaration shall be
deemed to refer to Shares of any or all Classes as the context may require.
(a) Without in any manner limiting the rights of the Trustees set
forth in the immediately preceding paragraph, the Trustees
hereby divide the Shares of each of the Series described in
Section 3.2, above, into four Classes. The Classes of each
such respective Series, so established, shall be designated as
"Class A Shares", "Class B Shares", "Class C Shares" and
"Class M Shares". The following preferences, conversion and
other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of
redemption shall pertain to all Shares in each of the
foregoing Classes:
(1) The assets belonging to each Class shall be invested in
the same investment portfolio as the applicable Series.
(2) The dividends and distributions of investment income and
capital gains with respect to each Class shall be in such
amounts as may be declared from time to time by the Trustees,
and the dividends and distributions of each Class of a Series
may vary from dividends and distributions of investment income
and capital gains with respect to the other Class of that
Series to reflect differing allocations of the expenses of the
Trust between the holders of each Class of such Series and any
resultant differences between the net asset value per share of
each Class of such Series, to such extent and for such
purposes as the Trustees may deem appropriate. The allocation
of investment income or capital gains and expenses and
liabilities of each Series between shares of each Class of
such Series shall be determined by the Trustees in a manner
that is consistent with Rule 18f-3 under the Investment
Company Act.
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(3) The holders of shares of each Class of a Series shall have
(i) exclusive voting rights with respect to provisions of any
distribution plan adopted by the Trust pursuant to Rule 12b-1
under the Investment Company Act (a "Plan") applicable to each
respective Class of a particular Series, and (ii) no voting
rights with respect to provisions of any Plan applicable to
another Class of that Series, any other Series, or with regard
to any other matter submitted to a vote of shareholders of the
Trust which does not affect holders of that respective Class
of such Series.
(4)(i) Each Class B Share, other than a share purchased
through the automatic reinvestment of a dividend or a
distribution with respect to Class B Shares, shall be
converted automatically, and without any action or choice on
the part of the holder thereof, into Class A Shares on the
date that is the first business day following the month in
which the eighth anniversary date of the date of issuance of
the Class B Share falls (the "Conversion Date"). With respect
to Class B Shares issued in an exchange or series of exchanges
for shares of shares of beneficial interest or common stock,
as the case may be, of another investment company or class or
series thereof registered under the Investment Company Act
pursuant to an exchange privilege granted by the Trust, the
date of issuance of the Class B Shares for the purposes of the
immediately preceding sentence shall be the date of issuance
of the original shares of beneficial interest or common stock,
as the case may be.
(ii) Each Class B Share acquired through the automatic
reinvestment of a dividend or a distribution with respect to
Class B Shares shall be segregated in a separate sub-account.
Each time any Class B Shares in a shareholder's Fund account
(other than those in the aforedescribed applicable
sub-account) convert to Class A Shares, an equal pro rata
portion of the Class B Shares then in the sub-account will
also convert to Class A Shares without any action or choice on
the part of the holder thereof. The portion will be determined
by the ratio that the shareholder's Class B Shares converting
to Class A Shares bears to the shareholder's total Class B
Shares not acquired through dividends and distributions.
(iii) The conversion of Class B Shares to Class A Shares is
subject to the continuing availability of an opinion of
counsel or a ruling from the Internal Revenue Service that
payment of different dividends on Class A Shares and Class B
Shares does not result in the Trust's dividends or
distributions constituting "preferential dividends" under the
Internal Revenue Code of 1986, as amended,
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and that the conversion of shares does not constitute a
taxable event under federal income tax law.
(iv) The number of shares of Class A Shares into which a share
of Class B Shares is converted pursuant to paragraphs
(a)(4)(i) and (a)(4)(ii) hereof shall equal the number
(including for this purpose fractions of a Share) obtained by
dividing the net asset value per share of the Class B Shares
(for the purposes of sales and redemptions thereof on the
Conversion Date) by the net asset value per share of the Class
A Shares (for the purposes of sales and redemptions thereof on
the Conversion Date).
(v) On the Conversion Date, the Class B Shares converted into
shares of Class A Shares will cease to accrue dividends and
will no longer be deemed outstanding and the rights of the
holders thereof (except the right to receive (i) the number of
shares of Class A Shares which have been converted and (ii)
declared but unpaid dividends as of the Conversion Date) will
cease. To the extent that Share certificates are issued,
certificates representing Class A Shares resulting from the
conversion need not be issued until certificates representing
Class B Shares converted, if issued, have been received by the
Trust or its agent duly endorsed for transfer.
(5) The net asset value of a Share shall reflect all
indebtedness, expenses and liabilities attributable to each
applicable Class within each respective Series. The net asset
value of a Share shall be determined by dividing the net asset
value of each applicable Class of a particular Series by the
number of Shares of that Class outstanding within that Series.
Notwithstanding the foregoing, Shares of each Class shall
represent an equal proportionate interest in the assets
belonging to the applicable Class within that Series, subject
to the liabilities of that particular Class. Shares of each
Class shall also represent an interest in the assets belonging
to such Series which shall be proportionate to the relative
aggregate net asset value of such Class relative to the
aggregate net asset value of the other Class within said
Series, subject to the liabilities of that particular Series.
Section 3.4 Ownership of Shares The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Series
(and Class thereof) that has been established and designated. No certificates
certifying the ownership of Shares need be issued except as the Trustees may
otherwise determine from time to time. The Trustees may make such rules as they
consider appropriate for the issuance of Share certificates, the use of
facsimile signatures, the transfer of Shares, and similar matters. The record
books of the Trust as kept by the Trust or any transfer or similar agent, as the
case may be, shall be conclusive as to who are the Shareholders
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and as to the number of Shares of each Series (and Class thereof) held from time
to time by each such Shareholder.
Section 3.5 Investments in the Trust. The Trustees may accept
investments in the Trust from such persons and on such terms and for such
consideration, not inconsistent with the provisions of the Investment Company
Act, as they from time to time authorize. The Trustees may authorize any
distributor, principal underwriter, transfer agent or other person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares whether or not conforming to such
authorized terms.
Section 3.6 No Preemptive or Appraisal Rights. Shareholders shall have
no preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust. Shareholders shall have no appraisal rights
other than as may from time to time be provided by applicable law.
Section 3.7 Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. Ownership of Shares shall not entitle the
Shareholder to any title in or to the whole or any part of the Trust property or
right to call for a partition or division of the same or for an accounting. The
Trust shall not be deemed or otherwise construed to be a partnership nor shall
the ownership of Shares constitute the Shareholders partners. Neither the Trust
nor the Trustees nor any officer, employee or agent of the Trust shall have any
power to bind personally any Shareholder nor, except as specifically provided
herein, to call upon any Shareholder for the payment of any sum of money or
assessment whatsoever other than such as the Shareholder may at any time agree
to pay.
ARTICLE IV
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 4.1 Voting Powers. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section 2.1,
(ii) with respect to any contract with a Contracting Party as provided in
Section 2.4 as to which Shareholder approval is required by the Investment
Company Act, (iii) with respect to any termination or reorganization of the
Trust or any Series to the extent and as provided in Sections 6.1 and 6.2, (iv)
with respect to any amendment of this Declaration of Trust to the extent and as
provided in Section 6.3, (v) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders, and (vi) with
respect to such additional matters relating to the Trust as may be required by
the Investment Company Act, this Declaration of Trust or any registration of the
Trust with the Commission or state regulatory
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agency, or as the Trustees may consider necessary or desirable. There shall be
no cumulative voting in the election of Trustees. Shares may be voted by proxy.
A proxy purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger. At any time when no Shares of a
Series are outstanding, the Trustees may with respect to that Series exercise
all rights of Shareholders and may take any action required by law or this
Declaration of Trust to be taken by Shareholders with respect to that Series.
Section 4.2 Meetings. There shall be such meetings of Shareholders of
the Trust as may be required by the Investment Company Act or as may be called
by the Trustees, at the office of the Trust or at such other place as may be
designated in the call thereof, which call shall be made by the Trustees. In the
event that any such meeting is not held on the date fixed in the notice thereof,
whether the omission be by oversight or otherwise, a subsequent meeting may be
called by the Trustees and held in lieu of the original meeting, with the same
effect as though held on such date. Meetings may also be called by the Trustees
from time to time for the purpose of taking action upon any matter requiring the
vote or authority of the Shareholders as herein provided or upon any other
matter deemed by the Trustees to be necessary or desirable. Written notice of
any meeting of Shareholders shall be given or caused to be given by the Trustees
by mailing such notice at least seven days before such meeting, postage prepaid,
stating the time, place and purpose of the meeting, to each Shareholder at the
Shareholder's address as it appears on the records of the Trust. If the Trustees
shall fail to call or give notice of any meeting of Shareholders for a period of
60 days after written application by Shareholders holding at least 10% of the
Shares then outstanding requesting a meeting be called for a purpose requiring
action by the Shareholders as provided herein, then Shareholders holding at
least 10% of the Shares then outstanding may call and give notice of such
meeting, and thereupon the meeting shall be held in the manner provided for
herein in case of call thereof by the Trustees.
Section 4.3 Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than 60 days prior to the date of any meeting of Shareholders or other action as
the date and time of record for the determination of Shareholders entitled to
vote at such meeting or any adjournment thereof or to be treated as Shareholders
of record for purposes of such action and no Shareholder becoming such after
that date and time shall be so entitled to vote at such meeting or any
adjournment thereof or to be treated as a Shareholder of record for purposes of
such other action.
Section 4.4 Quorum and Required Vote. A majority of the Shares entitled
to vote shall be a quorum for the transaction of business at a Shareholders'
meeting, but any lesser number shall
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be sufficient for adjournments. Any adjourned session or sessions may be held,
within a reasonable time after the date set for the original meeting, without
the necessity of further notice. A majority of the Shares voted, at a meeting at
which a quorum is present, shall decide any questions and a plurality shall
elect a Trustee, except when a different vote is provided for by any provision
of the Investment Company Act or other applicable law or by this Declaration of
Trust.
Section 4.5 Action by Written Consent. Subject to the provisions of the
Investment Company Act and other applicable law, any action taken by
Shareholders of the Trust or of any Series may be taken without a meeting if a
majority of Shareholders entitled to vote on the matter ( or such larger
proportion thereof as shall be required by the Investment Company Act or by any
express provision of this Declaration of Trust) consent to the action in writing
and such written consents are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as a vote taken at
a meeting of Shareholders.
Section 4.6 Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the extent permitted by the Trustees.
ARTICLE V
LIMITATION OF LIABILITY: INDEMNIFICATION
Section 5.1 Trustees, Shareholders, etc. Not Personally Liable; Notice.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Trust for payment under such
credit, contract or claim; and neither the Shareholders nor the Trustees, nor
any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefore. Every note, bond, contract,
instrument, certificate or undertaking and every other act or thing whatsoever
executed or done by or on behalf of the Trust or the Trustees or any of them in
connection with the Trust shall be conclusively deemed to have been executed or
done only by or for the Trust or the Trustees and not personally. Nothing in
this Declaration of Trust shall protect any Trustee or officer against any
liability to the Trust or the Shareholders to which such Trustee or officer
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee or of such officer.
Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officers or officer shall give notice that
this Declaration of Trust is on file with the Secretary of The Commonwealth of
Massachusetts and shall recite to the effect that the same was executed or made
by or on behalf of the Trust or by them as Trustees or Trustee or as officers or
officer and not individually and that the obligations of such instrument are not
binding upon any of them or the Shareholders individually but are binding only
upon the assets and
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property of the Trust, but the omission thereof shall not operate to bind any
Trustees or Trustee or officers or officer or Shareholders or Shareholder
individually.
Section 5.2 Trustee's Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretion hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of the Trustee, and for nothing
else, and shall not be liable for errors of judgment or mistakes of fact or law.
Subject to the foregoing, ( a) the Trustees shall not be responsible or liable
in any event for any neglect or wrongdoing of any officer, agent, employee,
consultant, adviser, administrator, distributor or principal underwriter,
financial agent, custodian or transfer, dividend disbursing, Shareholder
servicing or other agent of the Trust, nor shall any Trustee be responsible for
the act or omission of any other Trustee; (b) the Trustees may take advice of
counsel or other experts with respect to the meaning and operation of this
Declaration of Trust and their duties as Trustees and shall be under no
liability for any act or omission in accordance with such advice or for failing
to follow such advice; and (c) in discharging their duties, the Trustees, when
acting in good faith, shall be entitled to rely upon the books of account of the
Trust and upon written reports made to the Trustees by any officer appointed by
them, any independent public accountant, and (with respect to the subject matter
of the contract involved) any officer, partner or responsible employee of a
Contracting Party appointed by the Trustees pursuant to Section 2.4. The
Trustees as such shall not be required to give any bond or surety or any other
security for the performance of their duties.
Section 5.3 Indemnification of Shareholders. In case any Shareholder or
former Shareholder shall be charged or held to be personally liable for any
obligation or liability of the Trust solely by reason of being or having been a
Shareholder and not because of such Shareholder's acts or omissions or for some
other reason, the Trust (upon proper and timely request by the Shareholder)
shall assume the defense against such charge and satisfy any judgment thereon,
and the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or, in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled out
of the assets of the Trust estate to be held harmless from and indemnified
against all loss and expense arising from such charge or liability.
Section 5.4 Indemnification of Trustees, Officers, etc. The Trust shall
indemnify each of its Trustees and officers (hereinafter referred to as a
"Covered Person") against all liabilities, including but not limited to amounts
paid in satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any action, suit
or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with
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which such person may be or may have been threatened, while in office or
thereafter, by reason of being or having been such a Trustee or officer, except
with respect to any matter as to which such Covered Person shall have been
finally adjudicated in any such action, suit or other proceeding not to have
acted in good faith in the reasonable belief that such Covered Person's action
was in or not opposed to the best interests of the Trust and except that no
Covered Person shall be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office. Expenses,
including accountants' and counsel fees so incurred by any such Covered Person
(but excluding amounts paid in satisfaction of judgments, in compromise or as
fines or penalties), may be paid from time to time by the Trust in advance of
the final disposition of any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Covered Person to repay amounts so paid to
the Trust if it is ultimately determined that indemnification of such expenses
is not authorized under this Article V.
Section 5.5 Compromise Payment. As to any matter disposed of by a
compromise payment of any such Covered Person referred to in Section 5.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless there has been
obtained an opinion in writing of independent legal counsel to the effect that
such Covered Person does not appear not to have acted in good faith in the
reasonable belief that his action was in or not opposed to the best interests of
the Trust and that such indemnification would not protect such person against
any liability to the Trust to which such person would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of office. Any payment made to any covered
Person hereunder shall not prevent the recovery from any Covered Person of any
amount paid to such Covered Person in accordance with any of such clauses as
indemnification if such Covered Person is subsequently adjudicated by a court of
competent jurisdiction not to have acted in good faith in the reasonable belief
that such Covered Person's action was in or not opposed to the best interests of
the Trust or to have been liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office.
Section 5.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article V shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article V, "Covered Person" shall include such person's heirs, executors
and administrators. Nothing contained in this article shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain liability insurance on
behalf of any such person.
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Section 5.7 Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by a majority of the Trustees then in office
subject to the approval by a Vote of a Majority of Outstanding Voting Securities
of each Series voting separately by Series.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated, as may
be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of subsection (d) of Section 3.2.
Section 6.2 Reorganization. The Trustees may sell, convey and transfer
the assets of the Trust, or the assets belonging to any one or more Series, to
another Trust, partnership, association or corporation organized under the laws
of any state of the United States, or to the Trust, to be held as assets
belonging to another Series of the Trust, in exchange for cash, shares or other
securities (including, in the case of a transfer to another Series of the Trust,
Shares of such other Series) with such transfer being made subject to, or with
the assumption by the transferee of, the liabilities belonging to each Series
the assets of which are so transferred; provided, however, that no assets
belonging to any particular Series shall be so transferred unless the terms of
such transfer shall have first been approved at a meeting called for the purpose
by a Vote of a Majority of the Outstanding Voting Securities of that Series.
Following such transfer, the Trustees shall distribute such cash, shares or
other securities (giving due effect to the assets and liabilities belonging to
and any other differences among the various Series the assets belonging to which
have so been transferred) among the Shareholders of the Series the assets
belonging to which have been so transferred; and if all of the assets of the
Trust have been so transferred, the Trust shall be terminated.
Section 6.3 Amendments. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment except as herein provided upon the
Shareholders without the express consent of each Shareholder or Trustee
involved.
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Subject to the foregoing, the provisions of this Declaration of Trust (whether
or not related to the rights of Shareholders) may be amended at any time by an
instrument in writing signed by a majority of the then Trustees (or by a Trustee
or officer of the Trust pursuant to the vote of a majority of such Trustees),
when authorized to do so by the vote in accordance with subsection (e) of
Section 3.2 by Shareholders holding a majority of the Shares entitled to vote,
except that amendments (a) establishing and designating any further Series or
Shares, as provided in Section 3.1, or (b) abolishing any Series of Shares (or
Class thereof) of which there are no Shares outstanding, or (c) adopting,
altering, or amending investment restrictions with respect to the Trust or any
Series of the Trust which are not fundamental investment policies of the Trust
or of any Series, or (d) having the purpose of changing the name of the Trust or
the name of the Series or Class established and designated, or of supplying any
omission, curing any ambiguity or curing, correcting or supplementing any
provision hereof which is internally inconsistent with any other provision
hereof or which is defective or inconsistent with the Investment Company Act or
with the requirements of the Internal Revenue Code and applicable regulations
for the Trust's obtaining the most favorable treatment thereunder available to
regulated investment companies, shall not require authorization by Shareholder
vote. Subject to the foregoing, any such amendment shall be effective as
provided in the instrument containing the terms of such amendment or, if there
is no provision therein with respect to effectiveness, upon the execution of
such instrument and of a certificate (which may be a part of such instrument)
executed by a Trustee or officer of the Trust to the effect that such amendment
has been duly adopted.
Section 6.4 Filing of Copies; References; Headings. The original or a
conformed copy of this Declaration of Trust and of each amendment thereto shall
be kept at the office of the Trust where it may be inspected by any Shareholder.
A copy of this Declaration of Trust and of each amendment thereto shall be filed
by the Trust with the Secretary of The Commonwealth of Massachusetts, as well as
with any other governmental office where such filing may be required, but the
failure to make any such filing shall not impair the effectiveness of this
Declaration of Trust or any such subsequent amendment. Anyone dealing with the
Trust may rely on a certificate by a Trustee or officer of the Trust as to
whether or not any such amendments have been made, as to the identities of the
Trustees and officers, and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this Declaration of
Trust or of any such subsequent amendment. In this instrument and in any such
amendment, references to this instrument, and all expressions like "herein",
"hereof" and "hereunder" shall be deemed to refer to this instrument as a whole
as the same may be amended or affected by any such amendments. The masculine
gender shall include the feminine and neuter genders. Headings are placed herein
for convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this instrument. This
instrument or any amendment thereto may be executed in any number of
counterparts each of which shall be deemed an original.
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Section 6.5 Applicable Law. This Declaration of Trust, made in the
Commonwealth of Massachusetts, and the Trust created hereunder, is governed by
the laws of said Commonwealth and is construed and administered according to
said laws. The Trust is of the type referred to in Section 1 of chapter 182 of
the Massachusetts General Laws and of the type commonly called a Massachusetts
business trust, and, without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust.
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IN WITNESS WHEREOF, the undersigned has executed this instrument this 30th day
of May, 1997.
- - -----------------------------
Thomas N. Steenburg
25
Exhibit 5.1
Investment Advisory Agreement
<PAGE>
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made effective as of the __ day of _________, 1997 by and
between Phoenix Equity Series Fund, a Massachusetts business trust having a
place of business located at 101 Munson Street, Greenfield, Massachusetts (the
"Trust") and Duff & Phelps Management Co., an Illinois corporation having a
place of business located at 55 East Monroe Street, Chicago, Illinois (the
"Adviser").
WITNESSETH THAT:
1. The Trust hereby appoints the Adviser to act as investment adviser to
the Trust on behalf of the following series of the Trust established and
designated by the Trustees on or before the date hereof, namely Phoenix Core
Equity Fund (the "Existing Series"), for the period and on the terms set forth
herein. The Adviser accepts such appointment and agrees to render the services
described in this Agreement for the compensation herein provided.
2. In the event that the Trustees desire to retain the Adviser to render
investment advisory services hereunder with respect to one or more additional
series ("Additional Series"), the Trust shall notify the Adviser in writing. If
the Adviser is willing to render such services, it shall notify the Trust in
writing, whereupon such Additional Series shall become subject to the terms and
conditions of this Agreement.
3. The Adviser shall furnish continuously an investment program for the
Existing Series and any Additional Series which may become subject to the terms
and conditions set forth herein (sometimes collectively referred to as the
"Series") and shall manage the investment and reinvestment of the assets of each
Series, subject at all times to the supervision of the Trustees.
4. With respect to managing the investment and reinvestment of the
Series' assets, the Adviser shall provide, at its own expense:
(a) Investment research, advice and supervision;
(b) An investment program for each Series consistent with
its investment objectives;
(c) Implementation of the investment program for each Series
including the purchase and sale of securities;
(d) Advice and assistance on the general operations of the
Trust; and
<PAGE>
(e) Regular reports to the Trustees on the implementation of
each Series' investment program.
5. The Adviser shall, for all purposes herein, be deemed to be an
independent contractor.
6. The Adviser shall furnish at its own expense, or pay the expenses of
the Trust, for the following:
(a) Office facilities, including office space, furniture and
equipment;
(b) Personnel necessary to perform the functions required to
manage the investment and reinvestment of each Series'
assets (including those required for research,
statistical and investment work);
(c) Personnel to serve without salaries from the Trust as
officers or agents of the Trust. The Adviser need not
provide personnel to perform, or pay the expenses of the
Trust for, services customarily performed for an
open-end management investment company by its national
distributor, custodian, financial agent, transfer agent,
auditors and legal counsel; and
(d) Compensation and expenses, if any, of the Trustees who
are also full-time employees of the Adviser or any of
its affiliates; and
(e) Any subadviser recommended by the Adviser and appointed
to act on behalf of the Trust.
7. All costs and expenses not specifically enumerated herein as payable
by the Adviser shall be paid by the Trust. Such expenses shall include, but
shall not be limited to, all expenses (other than those specifically referred to
as being borne by the Adviser) incurred in the operation of the Trust and any
public offering of its shares, including, among others, interest, taxes,
brokerage fees and commissions, fees of Trustees who are not full-time employees
of the Adviser or any of its affiliates, expenses of Trustees' and shareholders'
meetings including the cost of printing and mailing proxies, expenses of
insurance premiums for fidelity and other coverage, expenses of repurchase and
redemption of shares, expenses of issue and sale of shares (to the extent not
borne by its national distributor under its agreement with the Trust), expenses
of printing and mailing stock certificates representing shares of the Trust,
association membership dues, charges of custodians, transfer agents, dividend
disbursing agents and financial agents, bookkeeping, auditing and legal
expenses. The Trust will also pay the fees and bear the expense of registering
and maintaining the registration of the Trust and its shares with the Securities
and Exchange Commission and registering or qualifying its shares under state or
other securities laws and the expense of preparing and mailing prospectuses and
reports to shareholders. Additionally, if authorized by the Trustees, the Trust
shall pay for extraordinary expenses and
<PAGE>
-4-
expenses of a non-recurring nature which may include, but not be limited to the
reasonable and proportionate cost of any reorganization or acquisition of assets
and the cost of legal proceedings to which the Trust is a party.
8. For providing the services and assuming the expenses outlined herein,
the Trust agrees that the Adviser shall be compensated as follows:
(a) Within eight days after the end of each month, the Trust
shall pay the Adviser a monthly fee with respect to each
Series at the annual rate of .75% of the average
aggregate daily net asset values of each Series up to $1
billion, .70% of the average aggregate daily net asset
value of each Series from $1 billion to $2 billion, and
.65% of the average aggregate daily net asset values in
excess of $2 billion. The amounts payable to the Adviser
with respect to each Series shall be based upon the
average of the values of the net assets of such Series
as of the close of business each day, computed in
accordance with the Trust's Declaration of Trust.
(b) Compensation shall accrue immediately upon the effective
date of this Agreement.
(c) If there is termination of this Agreement during a
month, each Series' fee for that month shall be
proportionately computed upon the average of the daily
net asset values of such Series for such partial period
in such month.
(d) The Adviser agrees to reimburse the Trust for the
amount, if any, by which the total operating and
management expenses for any Series (including the
Adviser's compensation, pursuant to this paragraph, but
excluding taxes, interest, costs of portfolio
acquisitions and dispositions and extraordinary
expenses), for any "fiscal year" exceed the level of
expenses which such Series is permitted to bear under
the most restrictive expense limitation (which is not
waived by the State) imposed on open-end investment
companies by any state in which shares of such Series
are then qualified. Such reimbursement, if any, will be
made by the Adviser to the Trust within five days after
the end of each month. For the purpose of this
subparagraph (d), the term "fiscal year" shall include
the portion of the then current fiscal year which shall
have elapsed at the date of termination of this
Agreement.
9. The services of the Adviser to the Trust are not to be deemed
exclusive, the Adviser being free to render services to others and to engage in
other activities. Without relieving the
<PAGE>
-5-
Adviser of its duties hereunder and subject to the prior approval of the
Trustees and subject further to compliance with applicable provisions of the
Investment Company Act of 1940, as amended, the Adviser may appoint one or more
agents to perform any of the functions and services which are to be provided
under the terms of this Agreement upon such terms and conditions as may be
mutually agreed upon among the Trust, the Adviser and any such agent.
10. The Adviser shall not be liable to the Trust or to any shareholder
of the Trust for any error of judgment or mistake of law or for any loss
suffered by the Trust or by any shareholder of the Trust in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard on the part of
the Adviser in the performance of its duties hereunder.
11. It is understood that:
(a) Trustees, officers, employees, agents and shareholders
of the Trust are or may be "interested persons" of the
Adviser as directors, officers, stockholders or
otherwise;
(b) Directors, officers, employees, agents and stockholders
of the Adviser are or may be "interested persons" of the
Trust as Trustees, officers, shareholders or otherwise;
and
(c) The existence of any such dual interest shall not affect
the validity hereof or of any transactions hereunder.
12. This Agreement shall become effective with respect to the Existing
Series as of the date stated above (the "Contract Date") and with respect to any
Additional Series, on the date specified in the notice to the Trust from the
Adviser in accordance with paragraph 2 hereof that the Adviser is willing to
serve as Adviser with respect to such Additional Series. Unless terminated as
herein provided, this Agreement shall remain in full force and effect for a
period of two years following the Contract Date, and, with respect to each
Additional Series, until the next anniversary of the Contract Date following the
date on which such Additional Series became subject to the terms and conditions
of this Agreement and shall continue in full force and effect for periods of one
year thereafter with respect to each Series so long as (a) such continuance with
respect to any such Series is approved at least annually by either the Trustees
or by a "vote of the majority of the outstanding voting securities" of such
Series and (b) the terms and any renewal of this Agreement with respect to any
such Series have been approved by a vote of a majority of the Trustees who are
not parties to this Agreement or "interested persons" of any such party cast in
person at a meeting called for the purpose of voting on such approval;
<PAGE>
-6-
provided, however, that the continuance of this Agreement with respect to each
Additional Series is subject to its approval by a "vote of a majority of the
outstanding voting securities" of any such Additional Series on or before the
next anniversary of the Contract Date following the date on which such
Additional Series became a Series hereunder.
Any approval of this Agreement by a vote of the holders of a "majority
of the outstanding voting securities" of any Series shall be effective to
continue this Agreement with respect to such Series notwithstanding (a) that
this Agreement has not been approved by a "vote of a majority of the outstanding
voting securities" of any other Series of the Trust affected thereby and (b)
that this Agreement has not been approved by the holders of a "vote of a
majority of the outstanding voting securities" of the Trust, unless either such
additional approval shall be required by any other applicable law or otherwise.
13. The Trust may terminate this Agreement with respect to the Trust or
to any Series upon 60 days' written notice to the Adviser at any time, without
the payment of any penalty, by vote of the Trustees or, as to each Series, by a
"vote of the majority of the outstanding voting securities" of such Series. The
Adviser may terminate this Agreement upon 60 days' written notice to the Trust,
without the payment of any penalty. This Agreement shall immediately terminate
in the event of its "assignment".
14. The terms "majority of the outstanding voting securities",
"interested persons" and "assignment", when used herein, shall have the
respective meanings in the Investment Company Act of 1940, as amended.
15. In the event of termination of this Agreement, or at the request of
the Adviser, the Trust will eliminate all reference to "Phoenix" from its name,
and will not thereafter transact business in a name using the word "Phoenix" in
any form or combination whatsoever, or otherwise use the word "Phoenix" as part
of its name. The Trust will thereafter in all prospectuses, advertising
materials, letterheads, and other material designed to be read by investors and
prospective investors delete from its name the word "Phoenix" or any
approximation thereof. If the Adviser chooses to withdraw the Trust's right to
use the word "Phoenix", it agrees to submit the question of continuing this
Agreement to a vote of the Trust's shareholders at the time of such withdrawal.
16. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but bind only the trust property of
the Trust, as provided in the Declaration of Trust. The execution and delivery
of this Agreement have been authorized by the Trustees and shareholders of the
Trust and signed by the President of the Trust, acting as such, and neither
<PAGE>
-7-
such authorization by such Trustees and shareholders nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or be binding upon or impose any liability on any of them
personally, but shall bind only the trust property of the Trust as provided in
its Declaration of Trust. The Declaration of Trust, as amended, is or shall be
on file with the Secretary of The Commonwealth of Massachusetts.
17. This Agreement shall be construed and the rights and obligations of
the parties hereunder enforced in accordance with the laws of the State of
Connecticut.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
PHOENIX EQUITY SERIES FUND
By: _____________________________________
Philip R. McLoughlin
President
DUFF & PHELPS INVESTMENT MANAGEMENT CO.
By: _____________________________________
William R. Moyer
Vice President
Exhibit 5.2
Investment Advisory Agreement
<PAGE>
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made effective as of the __ day of _________, 1997 by and
between Phoenix Equity Series Fund, a Massachusetts business trust having a
place of business located at 101 Munson Street, Greenfield, Massachusetts (the
"Trust") and Phoenix Investment Counsel, Inc., a Massachusetts corporation
having a place of business located at 56 Prospect Street, Hartford, Connecticut
(the "Adviser").
WITNESSETH THAT:
1. The Trust hereby appoints the Adviser to act as investment adviser to
the Trust on behalf of the following series of the Trust established and
designated by the Trustees on or before the date hereof, namely Phoenix Income
and Growth Fund (the "Existing Series"), for the period and on the terms set
forth herein. The Adviser accepts such appointment and agrees to render the
services described in this Agreement for the compensation herein provided.
2. In the event that the Trustees desire to retain the Adviser to render
investment advisory services hereunder with respect to one or more additional
series ("Additional Series"), the Trust shall notify the Adviser in writing. If
the Adviser is willing to render such services, it shall notify the Trust in
writing, whereupon such Additional Series shall become subject to the terms and
conditions of this Agreement.
3. The Adviser shall furnish continuously an investment program for the
Existing Series and any Additional Series which may become subject to the terms
and conditions set forth herein (sometimes collectively referred to as the
"Series") and shall manage the investment and reinvestment of the assets of each
Series, subject at all times to the supervision of the Trustees.
4. With respect to managing the investment and reinvestment of the
Series' assets, the Adviser shall provide, at its own expense:
(a) Investment research, advice and supervision;
(b) An investment program for each Series consistent with
its investment objectives;
(c) Implementation of the investment program for each Series
including the purchase and sale of securities;
(d) Advice and assistance on the general operations of the
Trust; and
<PAGE>
(e) Regular reports to the Trustees on the implementation of
each Series' investment program.
5. The Adviser shall, for all purposes herein, be deemed to be an
independent contractor.
6. The Adviser shall furnish at its own expense, or pay the expenses of
the Trust, for the following:
(a) Office facilities, including office space, furniture and
equipment;
(b) Personnel necessary to perform the functions required to
manage the investment and reinvestment of each Series'
assets (including those required for research,
statistical and investment work);
(c) Personnel to serve without salaries from the Trust as
officers or agents of the Trust. The Adviser need not
provide personnel to perform, or pay the expenses of the
Trust for, services customarily performed for an
open-end management investment company by its national
distributor, custodian, financial agent, transfer agent,
auditors and legal counsel; and
(d) Compensation and expenses, if any, of the Trustees who
are also full-time employees of the Adviser or any of
its affiliates; and
(e) Any subadviser recommended by the Adviser and appointed
to act on behalf of the Trust.
7. All costs and expenses not specifically enumerated herein as payable
by the Adviser shall be paid by the Trust. Such expenses shall include, but
shall not be limited to, all expenses (other than those specifically referred to
as being borne by the Adviser) incurred in the operation of the Trust and any
public offering of its shares, including, among others, interest, taxes,
brokerage fees and commissions, fees of Trustees who are not full-time employees
of the Adviser or any of its affiliates, expenses of Trustees' and shareholders'
meetings including the cost of printing and mailing proxies, expenses of
insurance premiums for fidelity and other coverage, expenses of repurchase and
redemption of shares, expenses of issue and sale of shares (to the extent not
borne by its national distributor under its agreement with the Trust), expenses
of printing and mailing stock certificates representing shares of the Trust,
association membership dues, charges of custodians, transfer agents, dividend
disbursing agents and financial agents, bookkeeping, auditing and legal
expenses. The Trust will also pay the fees and bear the expense of registering
and maintaining the registration of the Trust and its shares with the Securities
and Exchange Commission and registering or qualifying its shares under state or
other securities laws and the expense of preparing and mailing prospectuses and
reports to shareholders. Additionally, if authorized by the Trustees, the Trust
shall pay for extraordinary expenses and
<PAGE>
-4-
expenses of a non-recurring nature which may include, but not be limited to the
reasonable and proportionate cost of any reorganization or acquisition of assets
and the cost of legal proceedings to which the Trust is a party.
8. For providing the services and assuming the expenses outlined herein,
the Trust agrees that the Adviser shall be compensated as follows:
(a) Within eight days after the end of each month, the Trust
shall pay the Adviser a monthly fee with respect to each
Series at the annual rate of .75% of the average
aggregate daily net asset values of each Series up to $1
billion, .70% of the average aggregate daily net asset
value of each Series from $1 billion to $2 billion, and
.65% of the average aggregate daily net asset values in
excess of $2 billion. The amounts payable to the Adviser
with respect to each Series shall be based upon the
average of the values of the net assets of such Series
as of the close of business each day, computed in
accordance with the Trust's Declaration of Trust.
(b) Compensation shall accrue immediately upon the effective
date of this Agreement.
(c) If there is termination of this Agreement during a
month, each Series' fee for that month shall be
proportionately computed upon the average of the daily
net asset values of such Series for such partial period
in such month.
(d) The Adviser agrees to reimburse the Trust for the
amount, if any, by which the total operating and
management expenses for any Series (including the
Adviser's compensation, pursuant to this paragraph, but
excluding taxes, interest, costs of portfolio
acquisitions and dispositions and extraordinary
expenses), for any "fiscal year" exceed the level of
expenses which such Series is permitted to bear under
the most restrictive expense limitation (which is not
waived by the State) imposed on open-end investment
companies by any state in which shares of such Series
are then qualified. Such reimbursement, if any, will be
made by the Adviser to the Trust within five days after
the end of each month. For the purpose of this
subparagraph (d), the term "fiscal year" shall include
the portion of the then current fiscal year which shall
have elapsed at the date of termination of this
Agreement.
9. The services of the Adviser to the Trust are not to be deemed
exclusive, the Adviser being free to render services to others and to engage in
other activities. Without relieving the
<PAGE>
-5-
Adviser of its duties hereunder and subject to the prior approval of the
Trustees and subject further to compliance with applicable provisions of the
Investment Company Act of 1940, as amended, the Adviser may appoint one or more
agents to perform any of the functions and services which are to be provided
under the terms of this Agreement upon such terms and conditions as may be
mutually agreed upon among the Trust, the Adviser and any such agent.
10. The Adviser shall not be liable to the Trust or to any shareholder
of the Trust for any error of judgment or mistake of law or for any loss
suffered by the Trust or by any shareholder of the Trust in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard on the part of
the Adviser in the performance of its duties hereunder.
11. It is understood that:
(a) Trustees, officers, employees, agents and shareholders
of the Trust are or may be "interested persons" of the
Adviser as directors, officers, stockholders or
otherwise;
(b) Directors, officers, employees, agents and stockholders
of the Adviser are or may be "interested persons" of the
Trust as Trustees, officers, shareholders or otherwise;
and
(c) The existence of any such dual interest shall not affect
the validity hereof or of any transactions hereunder.
12. This Agreement shall become effective with respect to the Existing
Series as of the date stated above (the "Contract Date") and with respect to any
Additional Series, on the date specified in the notice to the Trust from the
Adviser in accordance with paragraph 2 hereof that the Adviser is willing to
serve as Adviser with respect to such Additional Series. Unless terminated as
herein provided, this Agreement shall remain in full force and effect for a
period of two years following the Contract Date, and, with respect to each
Additional Series, until the next anniversary of the Contract Date following the
date on which such Additional Series became subject to the terms and conditions
of this Agreement and shall continue in full force and effect for periods of one
year thereafter with respect to each Series so long as (a) such continuance with
respect to any such Series is approved at least annually by either the Trustees
or by a "vote of the majority of the outstanding voting securities" of such
Series and (b) the terms and any renewal of this Agreement with respect to any
such Series have been approved by a vote of a majority of the Trustees who are
not parties to this Agreement or "interested persons" of any such party cast in
person at a meeting called for the purpose of voting on such approval;
<PAGE>
-6-
provided, however, that the continuance of this Agreement with respect to each
Additional Series is subject to its approval by a "vote of a majority of the
outstanding voting securities" of any such Additional Series on or before the
next anniversary of the Contract Date following the date on which such
Additional Series became a Series hereunder.
Any approval of this Agreement by a vote of the holders of a "majority
of the outstanding voting securities" of any Series shall be effective to
continue this Agreement with respect to such Series notwithstanding (a) that
this Agreement has not been approved by a "vote of a majority of the outstanding
voting securities" of any other Series of the Trust affected thereby and (b)
that this Agreement has not been approved by the holders of a "vote of a
majority of the outstanding voting securities" of the Trust, unless either such
additional approval shall be required by any other applicable law or otherwise.
13. The Trust may terminate this Agreement with respect to the Trust or
to any Series upon 60 days' written notice to the Adviser at any time, without
the payment of any penalty, by vote of the Trustees or, as to each Series, by a
"vote of the majority of the outstanding voting securities" of such Series. The
Adviser may terminate this Agreement upon 60 days' written notice to the Trust,
without the payment of any penalty. This Agreement shall immediately terminate
in the event of its "assignment".
14. The terms "majority of the outstanding voting securities",
"interested persons" and "assignment", when used herein, shall have the
respective meanings in the Investment Company Act of 1940, as amended.
15. In the event of termination of this Agreement, or at the request of
the Adviser, the Trust will eliminate all reference to "Phoenix" from its name,
and will not thereafter transact business in a name using the word "Phoenix" in
any form or combination whatsoever, or otherwise use the word "Phoenix" as part
of its name. The Trust will thereafter in all prospectuses, advertising
materials, letterheads, and other material designed to be read by investors and
prospective investors delete from its name the word "Phoenix" or any
approximation thereof. If the Adviser chooses to withdraw the Trust's right to
use the word "Phoenix", it agrees to submit the question of continuing this
Agreement to a vote of the Trust's shareholders at the time of such withdrawal.
16. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but bind only the trust property of
the Trust, as provided in the Declaration of Trust. The execution and delivery
of this Agreement have been authorized by the Trustees and shareholders of the
Trust and signed by the President of the Trust, acting as such, and neither
<PAGE>
-7-
such authorization by such Trustees and shareholders nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or be binding upon or impose any liability on any of them
personally, but shall bind only the trust property of the Trust as provided in
its Declaration of Trust. The Declaration of Trust, as amended, is or shall be
on file with the Secretary of The Commonwealth of Massachusetts.
17. This Agreement shall be construed and the rights and obligations of
the parties hereunder enforced in accordance with the laws of the State of
Connecticut.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
PHOENIX EQUITY SERIES FUND
By: __________________________
Philip R. McLoughlin
President
PHOENIX INVESTMENT COUNSEL, INC.
By: __________________________
Michael E. Haylon
President
Exhibit 8.1
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
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<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;
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<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
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<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
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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
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<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.
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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
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<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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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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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,
16
<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:
-------------------------
Exhibit 9.1
Transfer Agency and Service Agreement
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
between
PHOENIX FUNDS
and
PHOENIX EQUITY PLANNING CORPORATION
<PAGE>
Table of Contents
Page
Article 1 - Terms of Appointment; Duties of Transfer Agent....................1
Article 2 - Fees and Expenses.................................................3
Article 3 - Representations and Warranties of Transfer Agent..................3
Article 4 - Representations and Warranties of the Phoenix Funds...............3
Article 5 - Data Access and Proprietary Information...........................4
Article 6 - Indemnification...................................................5
Article 7 - Standard of Care..................................................6
Article 8 - Covenants.........................................................6
Article 9 - Termination.......................................................7
Article 10 - Assignment........................................................7
Article 11 - Amendment.........................................................7
Article 12 - Connecticut Law to Apply..........................................7
Article 13 - Force Majeure.....................................................7
Article 14 - Consequential Damages.............................................8
Article 15 - Merger of Agreement...............................................8
Article 16 - Limitations of Liability of the Trustees
and Shareholders..................................................8
Article 17 - Counterparts......................................................8
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 1st day of June, 1994, by and between the
undersigned entities (hereinafter singularly referred to as a "Fund" and
collectively referred to as the "Phoenix Funds"), and PHOENIX EQUITY PLANNING
CORPORATION (hereinafter referred to as the "Transfer Agent").
WITNESSETH:
WHEREAS, the Phoenix Funds desire to appoint Transfer Agent as their
transfer agent, dividend disbursing agent and agent in connection with certain
other activities, and Transfer Agent desires to accept such appointment; and
WHEREAS, the parties wish to set forth herein their mutual
understandings and agreements.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency whereof being hereby acknowledged and affirmed, the parties hereto
agree as follows:
Article 1 Terms of Appointment; Duties of Transfer Agent
1.01 Subject to the terms and conditions set forth in this Agreement,
the Phoenix Funds hereby employ and appoint Transfer Agent to act as, and
Transfer Agent agrees to act as, transfer agent for the authorized and issued
shares of beneficial interest or common stock, as the case may be, of each of
the Phoenix Funds (hereinafter collectively and singularly referred to as
"Shares"), dividend disbursing agent and agent in connection with any
accumulation, open-account or similar plans provided to the shareholders of the
Phoenix Funds ("Shareholders") and as set out in the currently effective
registration statement of each Fund (the prospectus and statement of additional
information portions of such registration statement being referred to as the
"Prospectus"), including, without limitation, any periodic investment plan or
periodic withdrawal program.
1.02 Transfer Agent agrees that it will perform the following services
pursuant to this Agreement:
(a) In accordance with procedures established from time to time by
agreement between the Phoenix Funds and Transfer Agent, Transfer Agent shall:
i) Receive for acceptance, orders for the purchase of
Shares, and promptly deliver payment and appropriate
documentation therefor to the Custodian appointed
from time to time by the Trustees/Directors of each
Fund (which entity or entities, as the case may be,
shall be referred to as the "Custodian");
ii) Pursuant to purchase orders, issue the appropriate
number of Shares and hold such Shares in the each
appropriate Shareholder account;
iii) Receive for acceptance, redemption requests and
redemption directions and deliver the appropriate
documentation therefor to the Custodian;
iv) In respect to the transactions in items (i), (ii) and
(iii) above, the Transfer Agent shall execute
transactions directly with broker-dealers authorized
by the Phoenix Funds who shall thereby be deemed to
be acting on behalf of the Phoenix Funds;
<PAGE>
v) At the appropriate time as and when it receives
monies paid to it by any Custodian with respect to
any redemption, pay over or cause to be paid over in
the appropriate manner such monies as instructed by
the redeeming Shareholders;
vi) Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
vii) Prepare and transmit payments for dividends and
distributions declared by each Fund, if any;
viii) Issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon
receipt by the Transfer Agent of indemnification
satisfactory to the Transfer Agent and the Phoenix
Funds, and the Transfer Agent at its option, may
issue replacement certificates in place of mutilated
stock certificates upon presentation thereof and
without such indemnity;
ix) Maintain records of account for and advise each Fund
and its respective Shareholders as to the foregoing;
and
x) Record the issuance of Shares and maintain pursuant
to Rule 17Ad-10(e) under the Exchange Act of 1934, a
record of the total number of Shares which are
authorized, issued and outstanding based upon data
provided to it by each Fund. The Transfer Agent shall
also provide on a regular basis to each Fund the
total number of Shares which are authorized, issued
and outstanding shall have no obligation, when
recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any
laws relating to the issue or sale of such Shares,
which functions shall be the sole responsibility of
each respective Fund.
(b) In addition to and not in lieu of the services set forth in the
above paragraph (a), Transfer Agent shall: (i) perform all of the customary
services of a transfer agent, dividend disbursing agent and, as relevant, agent
in connection with accumulation, open-account or similar plans (including
without limitation any periodic investment plan or periodic withdrawal program),
including, but not limited to, maintaining all Shareholder accounts, preparing
Shareholder meeting lists, mailing proxies, receiving and tabulating proxies,
mailing Shareholder reports and Prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts, preparing
and filing U.S. Treasury Department Forms 1099 and other appropriate forms
required with respect to dividends and distributions by federal authorities for
all Shareholders, preparing and mailing confirmation forms and statements of
account to Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts, preparing and mailing activity
statements for Shareholders, and providing Shareholder account information; and
(ii) provide a system which will enable each Fund to monitor the total number of
Shares sold in each State.
(c) In addition, the Phoenix Funds shall (i) identify to Transfer Agent
in writing those transactions and assets to be treated as exempt from blue sky
reporting for each State, and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of Transfer Agent for a Fund's blue
sky State registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Phoenix Funds and the
reporting of such transactions to each Fund as provided above.
(d) Procedures as to who shall provide certain of the services in
Article 1 may be established from time to time by agreement between the Phoenix
Funds and Transfer Agent per the attached service responsibility schedule, if
any. The Transfer Agent may at times perform only a portion of these services
and the Phoenix Funds or its agent may perform these services on behalf of any
Fund.
- 2 -
<PAGE>
(e) The Transfer Agent shall provide additional services on behalf of
the Phoenix Funds (i.e., escheatment services) which may be agreed upon in
writing between the Phoenix Funds and the Transfer Agent.
Article 2 Fees and Expenses
2.01 In consideration of the services provided by the Transfer Agent
pursuant to this Agreement, each Fund agrees to pay Transfer Agent an annual
maintenance fee for each Shareholder account as set forth in Schedule A attached
hereto and made a part hereof. Annual Maintenance Fees and out-of-pocket
expenses and advances identified under Section 2.02 below may be changed from
time to time subject to mutual written agreement between each Fund and Transfer
Agent. Nothing herein shall preclude the assignment of all or any portion of the
foregoing fees and expense reimbursements to any sub-agent contracted by
Transfer Agent.
2.02 In addition to the fee paid under Section 2.01 above, the Phoenix
Funds agree to reimburse Transfer Agent for out-of-pocket expenses or advances
incurred by Transfer Agent for the items set out in Schedule A attached hereto.
In addition, any other expenses incurred by Transfer Agent at the request or
with the consent of any Fund, will be reimbursed by the Fund requesting the
same.
2.03 The Phoenix Funds agree to pay all fees and reimbursable expenses
within five days following the mailing of the respective billing notice. The
above fees will be charged against each Fund's custodian checking account five
(5) days after the invoice is transmitted to the Phoenix Funds. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
Shareholder accounts shall be advanced to Transfer Agent at least seven (7) days
prior to the mailing date of such materials.
Article 3 Representations and Warranties of Transfer Agent
The Transfer Agent represents and warrants to the Phoenix Funds that:
3.01 It is a corporation organized and existing and in good standing
under the laws of the State of Connecticut.
3.02 It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
3.03 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.04 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
3.05 It is and shall continue to be a duly registered transfer agent
pursuant to Section 17A(c)(2) of the Securities Exchange Act of 1934.
Article 4 Representations and Warranties of Phoenix Funds
The Phoenix Funds represent and warrant to Transfer Agent that:
4.01 All corporate or trust proceedings, as the case may be, required
to enter into and perform this Agreement have been undertaken and are in full
force and effect.
4.02 Each Fund is an open-end, diversified management investment
companies registered under the Investment Company Act of 1940.
- 3 -
<PAGE>
4.03 A registration statement under the Securities Act of 1933 is
currently effective for each Fund that is offering its securities for sale and
such registration statement will remain effective, and appropriate state
securities law filings have been made and will continue to be made, with respect
to all Shares being offered for sale.
Article 5 Data Access and Proprietary Information
5.02 The Phoenix Funds acknowledge that the data bases, computer
programs, screen formats, report formats, interactive design techniques, and
documentation manuals furnished to the Phoenix Funds by the Transfer Agent as
part of each Fund's ability to access certain Fund-related data ("Customer
Data") maintained by the Transfer Agent on data bases under the control and
ownership of the Transfer Agent or other third party ("Data Access Services")
constitute copyrighted, trade secret, or other proprietary information
(collectively, "Proprietary Information") of substantial value to the Transfer
Agent or other third party. In no event shall Proprietary Information be deemed
Customer Data. The Phoenix Funds agree to treat all Proprietary Information as
proprietary to the Transfer Agent and further agree that it shall not divulge
any Proprietary Information to any person or organization except as may be
provided hereunder. Without limiting the foregoing, the Phoenix Funds agree for
itself and its employees and agents:
(a) to access Customer Data solely from location as may be designated
in writing by the Transfer Agent and solely in accordance with
the Transfer Agent's applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of
the Proprietary Information, and if such access is inadvertently
obtained, to inform in a timely manner of such fact and dispose
of such information in accordance with the Transfer Agent's
instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer facility
or other location, except with the prior written consent of the
Transfer Agent;
(e) that the Phoenix Funds shall have access only to those authorized
transactions agreed upon by the parties; and
(f) to honor all reasonable written requests made by the Transfer
Agent to protect at the Transfer Agent's expense the rights of
the Transfer Agent in Propriety Information at common law, under
federal copyright law and under other federal or state law.
Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Article 5. The obligations of this Article
shall survive any earlier termination of this Agreement.
5.02 If the Phoenix Funds notified the Transfer Agent that any of the
Data Access Services do not operate in material compliance with the most
recently issued user documentation for such services, the Transfer Agent shall
endeavor in a timely manner to correct such failure. Organizations from which
the Transfer Agent may obtain certain data included in the Data Access Services
are solely responsible for the contents of such data and the Phoenix Funds agree
to make no claim against the Transfer Agent arising out of the contents of such
third-party data, including, but not limited to, the accuracy thereof. DATA
ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN
CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE TRANSFER
AGENT EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
- 4 -
<PAGE>
5.03 If the transactions available to the Phoenix Funds include the
ability to originate electronic instructions to the Transfer Agent in order to
(i) effect the transfer or movement of cash or Shares or (ii) transmit
Shareholder information or other information (such transactions constituting a
"COEFI"), then in such event the Transfer Agent shall be entitled to rely on the
validity and authenticity of such instruction without undertaking any further
inquiry as long as such instruction is undertaken in conformity with security
procedures established by the Transfer Agent from time to time.
Article 6 Indemnification
6.01 The Transfer Agent shall not be responsible for, and the Phoenix
Funds shall indemnify and hold Transfer Agent harmless from and against, any and
all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to:
(a) All actions of Transfer Agent or its agent or subcontractors
required to be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct.
(b) The lack of good faith, negligence or willful misconduct by the
Phoenix Funds which arise out of the breach of any representation or warranty of
the Phoenix Funds hereunder.
(c) The reliance on or use by the Transfer Agent or its agents or
subcontractors of information, records and documents which (i) are received by
Transfer Agent or its agents or subcontractors, and (ii) have been prepared,
maintained or performed by the Phoenix Funds or any other person or firm on
behalf of the Phoenix Funds including but not limited to any previous transfer
agent or registrar.
(d) The reliance on, or the carrying out by Transfer Agent or its
agents or subcontractors of any instructions or requests of the Phoenix Funds.
(e) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws or regulations
of any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
6.02 Transfer Agent shall indemnify and hold each of the Phoenix Funds
harmless from and against any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liability arising out of or attributable to any
action or failure or omission to act by Transfer Agent, or any sub-agent, as a
result of Transfer Agent's, or such sub-agent's, lack of good faith, negligence
or willful misconduct.
6 .03 At any time the Transfer Agent may apply to any officer of the
Phoenix Funds for instructions, and may consult with legal counsel with respect
to any matter arising in connection with the services to be performed by
Transfer Agent under this Agreement, and Transfer Agent and its agents or
subcontractors shall not be liable and shall be indemnified by the Phoenix Funds
for any action taken or omitted by it in reliance upon such instructions or upon
the opinion of such counsel. The Transfer Agent, its agents and subcontractors
shall be protected and indemnified in acting upon any paper or document
furnished by or on behalf of the Phoenix Funds, reasonably believed to be
genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided Transfer Agent or
its agents or subcontrators by machine readable input, telex, CRT data entry or
other similar means authorized by the Phoenix Funds, and shall not be held to
have notice of any change of authority of any person, until receipt of written
notice thereof from the Phoenix Funds. Transfer Agent, its agents and
subcontractors shall also be protected and indemnified in recognizing stock
certificates which are reasonably
- 5 -
<PAGE>
believed to bear the proper manual or facsimile signatures of the officers of
any Fund, and the proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
6.04 In order that the indemnification provisions contained in this
Article 6 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
6.05 Transfer Agent hereby expressly acknowledges that recourse against
any of the Phoenix Funds, if any, shall be subject to those limitations provided
by governing law and the Declaration of Trust of the Phoenix Funds, as
applicable, and agrees that obligations assumed by the Phoenix Funds hereunder
shall be limited in all cases to the Phoenix Funds and their respective assets.
Transfer Agent shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Phoenix Funds, nor shall the Transfer
Agent seek satisfaction of any obligations from the Trustees/Directors or any
individual Trustee/Director of the Phoenix Funds.
Article 7 Standard of Care
7 .01 The Transfer Agent shall at all times act in good faith and
agrees to use its best efforts within reasonable limits to insure the accuracy
of all services performed under this Agreement, but assumes no responsibility
and shall not be liable for loss or damage due to errors unless said errors are
caused by its negligence, bad faith, or willful misconduct of that of its
employees.
Article 8 Covenants
8.01 The Phoenix Funds shall promptly furnish to Transfer Agent the
following:
(a) A certified copy of the resolution of its Trustees/Directors
authorizing the appointment of Transfer Agent and the execution and delivery of
this Agreement.
(b) A copy of the Declaration of Trust or Articles of Incorporation, as
the case may be, and By-Laws, if any, and all amendments thereto of each Fund.
8.02 The Transfer Agent hereby agrees to establish and maintain
facilities and procedures reasonably acceptable to the Phoenix Funds for
safekeeping of stock certificates, check forms and facsimile signature
imprinting devices, if any; and for the preparation or use, and for keeping
account of, such certificates, forms and devices.
8.03 The Transfer Agent shall keep records relating to the services to
be performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, Transfer Agent agrees that all such records prepared
or maintained by Transfer Agent relating to the services to be performed by
Transfer Agent hereunder are the property of each respective Fund and will be
preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to each respective Fund on and in
accordance with its request.
8.04 The parties agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this
- 6 -
<PAGE>
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records, Transfer Agent will endeavor to notify the affected Fund
and to secure instructions from an authorized officer of such Fund as to such
inspection. Transfer Agent reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that it
may be held liable for the failure to exhibit the Shareholder records to such
person.
Article 9 Termination
9.01 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other. The parties mutually acknowledge
that the termination of this Agreement by one, but not each Fund shall not
effect a termination of this Agreement as to any and all other Phoenix Fund(s)
which have not terminated the Agreement.
9.02 Should any Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the terminating Fund. Additionally, Transfer Agent reserves the right to charge
any other reasonable expenses associated with such termination and/or a charge
equivalent to the average of three (3) months' fees to the terminating Fund.
Article 10 Assignment
10.01 Except as provided in Section 10.03 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
10.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
10.03 The Transfer Agent may, without further consent on the part of
any of the Phoenix Funds, subcontract for the performance hereof with one or
more sub-agents; provided, however, that Transfer Agent shall be as fully
responsible to each Fund for the acts and omissions of any subcontractor as it
is for its own acts and omissions.
Article 11 Amendment
11.01 This Agreement may be amended or modified by a written agreement
executed by the parties and authorized or approved by a resolution of the
Trustees/Directors of each respective Fund.
Article 12 Connecticut Law to Apply
12.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Connecticut.
Article 13 Force Majeure
13.01 In the event either party is unable to perform its obligations
under the terms of this Agreement because of the acts of God, strikes, equipment
or transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
- 7 -
<PAGE>
Article 14 Consequential Damages
14.01 Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement or for any
act or failure to act hereunder.
Article 15 Merger of Agreement
15.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
15.02 This Agreement shall not be merged with or construed in
conjunction with any other current or future agreement between the Phoenix Funds
(including any Fund) and Phoenix Equity Planning Corporation, each and all of
which agreements shall at all times remain separate and distinct.
Article 16 Limitations of Liability of the Trustees and Shareholders
16.01 For the Funds which that are formed as Massachusetts business
trusts, notice is hereby given that the Agreement and Declaration of such Trusts
are on file with the Secretary of the Commonwealth of Massachusetts and was
executed on behalf of the Trustees of such Trusts as Trustees and not
individually and that the obligations of this instrument are not binding upon
any of the Trustees or Shareholders individually but are binding only upon the
assets and property of each Fund.
Article 17 Counterparts
17.01 This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
- 8 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
Phoenix Asset Reserve
Phoenix California Tax Exempt Bonds, Inc.
Phoenix Equity Opportunities Fund
Phoenix Income and Growth Fund
Phoenix Multi-Portfolio Fund
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Series Fund
Phoenix Total Return Fund, Inc.
Phoenix Worldwide Opportunities Fund
By: /s/ Philip R. McLoughlin
------------------------
Name: Philip R. McLoughlin
Title: President
ATTEST:
By: /s/ Richard Wirth
-----------------
Name: Richard Wirth
Title: Assistant Secretary
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Martin J. Gavin
-------------------
Executive Vice President
ATTEST:
By: /s/ Patricia O. McLaughlin
--------------------------
Name: Patricia O. McLaughlin
Title: Assistant Secretary
- 9 -
<PAGE>
Schedule A
Fee Schedule
Annual Maintenance Fees shall be based on the following formula:
AMF[inferior subscript]Fund = BAMF x SA
where, AMF[inferior subscript]Fund refers to the aggregate Annual
Maintenance Fee levied against each respective Fund,
BAMF refers to the Base Annual Maintenance Fee levied against
each respective Fund for each shareholder account, as more
particularly described below, at the basic annual per account
rate of $19.25 for daily dividend accounts and $14.95 for
non-daily dividend accounts, and
SA refers to the number of Shareholder Accounts subject to the
terms of this Agreement and any and all sub-transfer agent
agreements which presently or hereafter may be entered into by
the Transfer Agent. For the purpose of computing the foregoing,
the Transfer Agent will ascertain the number of Shareholders of
each Fund regardless of whether any such Shares are held in
accordance with any pooled or omnibus accounts or arrangement
managed or controlled by any entity, broker/dealer or
sub-transfer agent.
Other Fees
o Omnibus Accounts, Per Transaction $2.50
o Closed Accounts, per Account, per month $0.20
o Check writing Fees:
Privilege set-up $5.00
Per Cleared Check $1.00
Out-of-Pocket Expenses
Out-of-pocket expenses include, but are not limited to: confirmation production,
postage, forms, telephone, microfilm, microfiche, stationary and supplies billed
as .1122% of postage costs and expenses incurred at the specific direction of
any Fund. Postage for mass mailings is due seven days in advance of the mailing
date.
Exhibit 9.2
FINANCIAL AGENT AGREEMENT
THIS AGREEMENT made and concluded as of this 11th day of December, 1996
by and between Phoenix Equity Planning Corporation, a Connecticut corporation
having a place of business located at 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Financial Agent") and each of the undersigned mutual funds
(hereinafter collectively and singularly referred to as the "Trust").
WITNESSETH THAT:
1. Financial Agent shall keep the books of the Trust and compute the
daily net asset value of shares of the Trust in accordance with instructions
received from time to time from the Board of Trustees of the Trust; which
instructions shall be certified to Financial Agent by the Trust's Secretary.
Financial Agent shall report such net asset value so determined to the Trust and
shall perform such other services as may be requested from time to time by the
Trust as are reasonably incidental to Financial Agent's duties hereunder.
2. Financial Agent shall be obligated to maintain, for the periods and
in the places required by Rule 31a-2 under the Investment Company Act of 1940,
as amended, those books and records maintained by Financial Agent. Such books
and records are the property of the Trust and shall be surrendered promptly to
the Trust upon its request. Furthermore, such books and records shall be open to
inspection and audit at reasonable times by officers and auditors of the Trust.
3. As compensation for its services hereunder during any fiscal year of
the Trust, Financial Agent shall receive, within eight days after the end of
each month, a fee as specified in Schedule A.
4. Financial Agent shall not be liable for anything done or omitted by
it in the exercise of due care in discharging its duties specifically described
hereunder and shall be answerable and accountable only for its own acts and
omissions and not for those of any agent employed by it nor for those of any
bank, trust company, broker, depository, correspondent or other person.
Financial Agent shall be protected in acting upon any instruction, notice,
request, consent, certificate, resolution, or other instrument or paper believed
by Financial Agent to be genuine, and to have been properly executed, and shall,
unless otherwise specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be ascertained by Financial
Agent hereunder a certificate signed by the Secretary of the Trust. Financial
Agent shall be entitled, with respect to questions of law relating to its duties
hereunder, to advice of counsel (which may be counsel for the Trust) and, with
respect to anything done or omitted by it in good faith hereunder in conformity
with the advice of or based upon an opinion of counsel, to be held harmless by
the Trust from all claims of loss or damage. Nothing herein shall protect
Financial Agent against any liability to the Trust or to its respective
shareholders to which Financial Agent would otherwise be subject by reason of
its willful misfeasance, bad faith, gross
<PAGE>
negligence or reckless disregard of its duties hereunder. Except as provided in
this paragraph, Financial Agent shall not be entitled to any indemnification
by the Trust.
5. Subject to prior approval of the Board of Trustees of the Trust,
Financial Agent may appoint one or more sub-financial agents to perform any of
the functions and services which are to be provided under the terms of this
Agreement upon such terms and conditions as may be mutually agreed upon by the
Trust, Financial Agent and such sub-financial agent.
6. This Agreement shall continue in effect only so long as (a) such
continuance is specifically approved at least annually by the Board of Trustees
of the Trust or by a vote of a majority of the outstanding voting securities of
the Trust, and (b) the terms and any renewal of such Agreement have been
approved by the vote of a majority of the trustees of the Trust who are not
parties to this Agreement or interested persons, as that term is defined in the
Investment Company Act of 1940, as amended, of any such party, cast in person at
a meeting called for the purpose of voting on such approval. A "majority of the
outstanding voting securities of the Trust" shall have, for all purposes of this
Agreement, the meaning provided therefor in said Investment Company Act.
7. Either party may terminate the within Agreement by tendering written
notice to the other, whereupon Financial Agent will be relieved of the duties
described herein. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in said Investment Company Act.
8. This Agreement shall be construed and the rights and obligations of
the parties hereunder enforced in accordance with the laws of the Commonwealth
of Massachusetts.
<PAGE>
9. This Agreement shall become effective on January 1, 1997.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
PHOENIX CALIFORNIA TAX EXEMPT
BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED INCOME
FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM
BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION FUND,
INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES
FUND
By: /s/ Philip R. McLoughlin
--------------------------------
Philip R. McLoughlin
President
PHOENIX EQUITY PLANNING
CORPORATION
By: /s/ David R. Pepin
--------------------------------
David R. Pepin
Executive Vice President
<PAGE>
SCHEDULE A
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS FINANCIAL AGENT
Annual Financial Agent Fees shall be based on the following formula:
(1) An incremental schedule applies as follows:
<TABLE>
<CAPTION>
<S> <C>
Up to $100 million: 5 basis points on average daily net assets
$100 million to $300 million: 4 basis points on average daily net assets
$300 million thru $500 million: 3 basis points on average daily net assets
Greater than $500 million: 1.5 basis points on average daily net assets
</TABLE>
A minimum fee will apply as follows:
Money Market $35,000
Equity $50,000
Balanced $60,000
Fixed Income $70,000
International $70,000
REIT $70,000
(2) An additional charge of $12,000 applies for each additional class
of shares above one, over and above the minimum asset-based fee previously
noted.
The following tables indicates the classification and effective date
for each of the applicable fund/series/portfolio:
Classification Series Name
Money Market Phoenix Money Market Fund Series
Equity Phoenix Aggressive Growth Fund Series
Phoenix Convertible Fund Series
Phoenix Endowment Equity Portfolio
Phoenix Equity Opportunities Fund
Phoenix Growth Fund Series
Phoenix Micro Cap Fund
Phoenix Mid Cap Portfolio
Phoenix Small Cap Fund
Phoenix Strategic Theme Fund
<PAGE>
Classification Series Name
Balanced Phoenix Balanced Fund Series
Phoenix Income and Growth Fund
Phoenix Strategic Allocation Fund, Inc.
Fixed Income Phoenix California Tax Exempt Bonds, Inc.
Phoenix Diversified Income Portfolio
Phoenix Emerging Markets Bond Portfolio
Phoenix High Yield Fund Series
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Tax-Exempt Bond Portfolio
Phoenix U.S. Government Securities Fund Series
International Phoenix International Portfolio
Phoenix Worldwide Opportunities Fund
REIT Phoenix Real Estate Securities Portfolio
Exhibit 9.3
FIRST AMENDMENT TO FINANCIAL AGENT AGREEMENT
THIS AMENDMENT made effective as of the 1st day of January, 1997 amends that
certain Financial Agent Agreement dated December 11, 1996 by and among the
following parties (the "Agreement") as hereinbelow provided.
W I T N E S S E T H :
WHEREAS, due to a scrivener's error, the Phoenix Convertible Fund
Series was incorrectly classified as an "Equity" series rather than a "Balanced"
series for purposes of applying the minimum fee; and
WHEREAS, the parties wish to correct this error and correctly classify
the Phoenix Convertible Fund Series as a "Balanced" series:
NOW, THEREFORE, in consideration of the foregoing premises, Schedule A
to the Agreement is hereby replaced with "Revised Schedule A" attached hereto
and made a part hereof. Except as hereinabove provided, the Agreement shall be
and remain unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their duly authorized officers on this 25th day of February, 1997.
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
By: /s/ Philip R. McLoughlin
--------------------------------------
Philip R. McLoughlin
President (as to all)
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ David R. Pepin
--------------------------------------
David R. Pepin
Executive Vice President
<PAGE>
REVISED SCHEDULE A
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS FINANCIAL AGENT
Annual Financial Agent Fees shall be based on the following formula:
(1) An incremental schedule applies as follows:
<TABLE>
<CAPTION>
<S> <C>
Up to $100 million: 5 basis points on average daily net assets
$100 million to $300 million: 4 basis points on average daily net assets
$300 million thru $500 million: 3 basis points on average daily net assets
Greater than $500 million: 1.5 basis points on average daily net assets
</TABLE>
A minimum fee will apply as follows:
Money Market $35,000
Equity $50,000
Balanced $60,000
Fixed Income $70,000
International $70,000
REIT $70,000
(2) An additional charge of $12,000 applies for each additional class
of shares above one, over and above the minimum asset-based fee previously
noted.
The following tables indicates the classification and effective date
for each of the applicable fund/series/portfolio:
Classification Series Name
Money Market Phoenix Money Market Fund Series
Equity Phoenix Aggressive Growth Fund Series
Phoenix Endowment Equity Portfolio
Phoenix Equity Opportunities Fund
Phoenix Growth Fund Series
Phoenix Micro Cap Fund
Phoenix Mid Cap Portfolio
Phoenix Small Cap Fund
Phoenix Strategic Theme Fund
<PAGE>
Classification Series Name
Balanced Phoenix Balanced Fund Series
Phoenix Convertible Fund Series
Phoenix Income and Growth Fund
Phoenix Strategic Allocation Fund, Inc.
Fixed Income Phoenix California Tax Exempt Bonds, Inc.
Phoenix Diversified Income Portfolio
Phoenix Emerging Markets Bond Portfolio
Phoenix High Yield Fund Series
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Tax-Exempt Bond Portfolio
Phoenix U.S. Government Securities Fund Series
International Phoenix International Portfolio
Phoenix Worldwide Opportunities Fund
REIT Phoenix Real Estate Securities Portfolio
Exhibit 9.4
SECOND AMENDMENT TO FINANCIAL AGENT AGREEMENT
THIS AMENDMENT made effective as of the 1st day of July, 1997 amends that
certain Financial Agent Agreement dated December 11, 1997 and amended January 1,
1997 by and among the following parties (the "Agreement") as herein below
provided.
W I T N E S S E T H :
WHEREAS, the parties hereto wish to amend the Agreement to include an
express provision to allow the addition of funds without necessitating a formal
amendment to said Agreement:
NOW, THEREFORE, in consideration of the foregoing premise, Paragraph 8
of the Agreement is renumbered to Paragraph 9 and the following language
inserted as the new Paragraph 8:
8. Additional Funds
Additional funds may become party to this Agreement by
notifying the Financial Agent in writing, and if the Financial Agent
agrees in writing to provide its services, such fund shall become a
Trust subject to the terms of the Agreement. Such notification shall
include a revised Schedule A reflecting the new fund(s) as added to the
appropriate fund classification(s).
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their duly authorized officers on this 22nd day of July, 1997.
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
By: /s/ Philip R. McLoughlin
--------------------------------------
Philip R. McLoughlin
President
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ David R. Pepin
--------------------------------------
David R. Pepin
Executive Vice President
Exhibit 13
Initial Capital Agreement
<PAGE>
INITIAL CAPITAL AGREEMENT
_____________, 1997
Phoenix Equity Series Fund
101 Munson Street
Greenfield, Massachusetts 01301
Dear Sirs:
Phoenix Equity Series Fund (the "Trust") proposes to issue and sell
shares of beneficial interest of its Series (the "Shares") pursuant to a
registration statement on Form N-1A (the "Registration Statement") filed with
the Securities and Exchange Commission. The undersigned hereby offers to
purchase such number of Shares contemporaneous with the effective date of the
Registration Statement (or such earlier date as may be agreed upon) required in
order to provide the Trust with a net worth of at least $100,000 as required by
Section 14 of the Investment Company Act of 1940, as amended.
The undersigned represents and warrants to the Trust that the Shares
are being acquired by us for investment and not with a view to the resale or
further distribution thereof and that we have no present intention to redeem the
Shares.
Please confirm that the foregoing correctly sets forth our agreement
with the Trust.
Very truly yours,
Phoenix Home Life Mutual Insurance Company
By: _________________________________
Confirmed, as of the date first above mentioned.
Phoenix Equity Series Fund
By: ____________________________
Philip R. McLoughlin
President
Exhibit 15.1
Form of Distribution Plan
<PAGE>
[NAME OF FUND]
(the "Fund")
CLASS ___ 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 ___ shares of the Fund and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its Class ___ shareholders.
2. Rule 12b-1 Fees
---------------
[The Fund shall reimburse the Distributor, at the end of each month, up
to a maximum on an annual basis of ____% the average daily value of the net
assets of the Fund's Class ___ shares, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc., for
distribution expenditures incurred by Distributor subsequent to the
effectiveness of this Plan, in connection with the sale and promotion of the
Class ___ shares of the Fund and the furnishing of services to Class ___
shareholders of the Fund. Such expenditures shall consist of: (i) commissions to
sales personnel for selling Class ___ shares of the Fund (including underwriting
commissions and finance charges related to the payment of commissions); (ii)
compensation, sales incentives and payments to sales, marketing and service
personnel; (iii) payments to broker-dealers and other financial institutions
which have entered into selling agreements with the Distributor for services
rendered in connection with the sale and distribution of Class ___ shares of the
Fund; (iv) payment of expenses incurred in sales and promotional activities,
including advertising expenditures related to the Class ___ shares of the Fund;
(v) the costs of preparing and distributing promotional materials; (vi) the cost
of printing the Fund's Prospectus and Statement of Additional Information for
distribution to potential investors; and (vii) such other similar services that
the Trustees of the Fund determine are reasonably calculated to result in the
sale of Class ___ shares of the Fund.] The Fund shall [also] 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 ___
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").
<PAGE>
[Any reduction to amounts payable under this Plan shall first be to the
extent of the Service Fee, and then from the balance of the 12b-1 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.
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 ___ 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 ___ 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.
<PAGE>
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 ___ 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 ___ shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
9. Records
-------
The Fund shall preserve copies of this Plan and any related agreements
and all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
[10. Non-Recourse
------------
The Fund's Declaration of Trust dated ____________, 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.]
Exhibit 18.1
Amended and Restated Plan
pursuant to Rule 18f-3
<PAGE>
PHOENIX FUNDS
(the "Funds")
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended ("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the original effective date of this Plan, the Funds shall offer
multiple classes of shares, as described herein, pursuant to Rule 18f-3 and this
Plan.
2. The Multi-Class Structure
-------------------------
The portfolios of the Funds listed on Schedule A hereto shall offer two
classes of shares, Class A and Class B ("Multi-Class Portfolios"). Shares of the
Multi-Class Portfolios shall represent an equal pro rata interest in the
respective Multi-Class Portfolio and, generally, shall have identical voting,
dividend, liquidation, and other rights, preferences, powers, restrictions,
limitations, qualifications and terms and conditions, except that: (a) each
class shall have a different designation; (b) each class shall bear any Class
Expenses, as defined by Section 2(b), below; (c) each class shall have exclusive
voting rights on any matter submitted to shareholders that relates solely to its
distribution arrangement; and (d) each class shall have separate voting rights
on any matter submitted to shareholders in which the interests of one class
differ from the interests of any other class. In addition, Class A and Class B
shares shall have the features described in Sections a, b, c and d, below.
a. Distribution Plans
------------------
The Funds have adopted Distribution Plans pursuant to Rule 12b-1 with
respect to each Multi-Class Portfolio, containing substantially the following
terms:
i. Class A shares of each Multi-Class Portfolio shall
reimburse Phoenix Equity Planning Corporation (the "Distributor") for costs and
expenses incurred in connection with distribution and marketing of shares
thereof, as provided in the Class A Distribution Plan and any supplements
thereto, subject to an annual limit of 0.25%, or in some cases 0.30%, of the
average daily net assets of a Multi-Class Portfolio's Class A shares.
<PAGE>
ii. Class B shares of each Multi-Class Portfolio shall
reimburse the Distributor for costs and expenses incurred in connection with
distribution and marketing of shares thereof, as provided in the Class B
Distribution Plan and any supplements thereto, subject to an annual limit of
1.00% of the average daily net assets of a Multi-Class Portfolio's Class B
shares.
b. Allocation of Income and Expenses
---------------------------------
i. General.
--------
The gross income, realized and unrealized capital gains and
losses and expenses (other than Class Expenses, as defined below) of each
Multi-Class Portfolio shall be allocated to each class on the basis of its net
asset value relative to the net asset value of the Multi-Class Portfolio.
Expenses to be so allocated include expenses of the Funds that are not
attributable to a particular Multi-Class Portfolio or class of a Multi-Class
Portfolio but are allocated to a Multi-Class Portfolio ("Fund Expenses") and
expenses of a particular Multi-Class Portfolio that are not attributable to a
particular class of that Multi-Class Portfolio ("Portfolio Expenses"). Fund
Expenses include, but are not limited to, trustees' fees, insurance costs and
certain legal fees. Portfolio Expenses include, but are not limited to, certain
state registration fees, custodial fees, advisory fees and other expenses
relating to the management of the Multi-Class Portfolio's assets.
ii. Class Expenses.
---------------
Expenses attributable to a particular class ("Class Expenses")
shall be limited to: (1) transfer agency fees; (2) stationery, printing,
postage, and delivery expenses relating to preparing and distributing
shareholder reports, prospectuses, and proxy statements; (3) state Blue Sky
registration fees; (4) SEC registration fees; (5) expenses of administrative
personnel and services to the extent related to another category of
class-specific expenses; (6) trustees' fees and expenses; (7) accounting
expenses, auditors' fees, litigation expenses, and legal fees and expenses; and
(8) expenses incurred in connection with shareholder meetings. Expenses
described in subsection (a) (i) and (ii) above of this paragraph must be
allocated to the class for which they are incurred. All other expenses described
in this paragraph will be allocated as Class Expenses, if a Fund's President and
Treasurer have determined, subject to Board approval or ratification, which of
such categories of expenses will be treated as Class Expenses, consistent with
applicable legal principles under the 1940 Act and the Internal Revenue Code of
1986, as amended ("Code"). The difference between the Class Expenses allocated
to each share of a class during a year and the Class Expenses allocated to each
share of any other class during such year shall at all times be less than .50%
of the average daily net asset value of the class of shares with the smallest
average net asset value. The afore-described description of Class Expenses and
any amendment thereto shall be subject to the continuing availability of an
opinion of counsel or a ruling from the Internal Revenue Service to the effect
that any such allocation of expenses or the assessment of higher distribution
fees and transfer agency costs on any class of shares does not result in any
dividends or distributions constituting "preferential dividends" under the Code.
<PAGE>
-4-
In the event that a particular expense is no longer reasonably
allocable by class or to a particular class, it shall be treated as a Fund
Expense or Portfolio Expense as applicable, and in the event a Fund Expense or
Portfolio Expense becomes allocable as a Class Expense, it shall be so
allocated, subject to compliance with Rule 18f-3 and Board approval or
ratification.
The initial determination of expenses that will be allocated
as Class Expenses and any subsequent changes thereto as set forth in this Plan
shall be reviewed by the Board of Trustees and approved by such Board and by a
majority of the Trustees who are not "interested persons" of the Fund, as
defined in the 1940 Act ("Independent Trustees").
iii. Waivers or Reimbursements of Expenses
-------------------------------------
Investment Advisor may waive or reimburse its management fee in whole
or in part provided that the fee is waived or reimbursed to all shares of the
Fund in proportion to the relative average daily net asset values.
Investment Advisor or a related entity who charges a fee for a Class
Expense may waive or reimburse that fee in whole or in part only if the revised
fee more accurately reflects the relative cost of providing to each Multi-Class
Portfolio the service for which the Class Expense is charged.
Distributor may waive or reimburse a Rule 12b-1 Plan fee payment in
whole or in part.
c. Exchange Privileges
-------------------
Shareholders of a Multi-Class Portfolio may exchange shares of a
particular class for shares of the same class in another Multi-Class Portfolio,
at the relative net asset values of the respective shares to be exchanged and
with no sales charge, provided the shares to be acquired in the exchange are, as
may be necessary, qualified for sale in the shareholder's state of residence and
subject to the applicable requirements, if any, as to minimum amount. Each
Multi-Class Portfolio reserves the right to temporarily or permanently terminate
exchange privileges, impose conditions upon the exercision of exchange
privileges, or reject any specific order for any dealer, shareholder or person
whose transactions seem to follow a timing pattern, including those who request
more than one exchange out of a Multi-Class Portfolio within any thirty (30) day
period. Each Multi-Class Portfolio reserves the right to terminate or modify
these exchange privileges at any time upon giving prominent notice to
shareholders at least 60 days in advance.
d. Conversion Feature
------------------
Class B Shares of a Multi-Class Portfolio will automatically convert to
Class A Shares of that portfolio, without sales charge, at the relative net
asset values of each such classes, not later than eight years from the
acquisition of the Class B Shares. The conversion of Class B Shares to
<PAGE>
-5-
Class A Shares is subject to the continuing availability of an opinion of
counsel or a ruling from the Internal Revenue Service to the effect that the
conversion of shares does not constitute a taxable event under federal income
tax law.
3. Board Review
------------
a. Approval of Amended and Restated Plan
-------------------------------------
The Board of Trustees, including a majority of the Independent
Trustees, at a meeting held on November 20, 1996, approved the Amended and
Restated Plan based on a determination that the Plan, including the expense
allocation, is in the best interests of each class and Multi-Class Portfolio
individually and of the Funds. Their determination was based on their review of
information furnished to them which they deemed reasonably necessary and
sufficient to evaluate the Plan.
b. Approval of Amendments
----------------------
The Plan may not be amended materially unless the Board of
Trustees, including a majority of the Independent Trustees, have found that the
proposed amendment, including any proposed related expense allocation, is in the
best interests of each class and Multi-Class Portfolio individually and of the
Funds. Such funding shall be based on information required by the Board and
furnished to them that the Board deems reasonably necessary to evaluate the
proposed amendment.
c. Periodic Review
---------------
The Board shall review reports of expense allocations and such
other information as they request at such times, or pursuant to such schedule,
as they may determine consistent with applicable legal requirements.
4. Contracts
---------
Any agreement related to the Multi-Class System shall require the
parties thereto to furnish to the Board of Trustees, upon their request, such
information as is reasonably necessary to permit the Trustees to evaluate the
Plan or any proposed amendment.
5. Effective Date
--------------
The Amended and Restated Plan, having been reviewed and approved by the
Board of Trustees and the Independent Trustees, shall take effect as of the
first day of each Fund's current fiscal year.
<PAGE>
-6-
6. Amendments
----------
The Plan may not be amended to modify materially its terms unless such
amendment has been approved in the manner specified in Section 3(b) of this
Plan.
<PAGE>
SCHEDULE A
----------
PHOENIX CALIFORNIA TAX-EXEMPT BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND:
DIVERSIFIED INCOME PORTFOLIO
EMERGING MARKETS BOND PORTFOLIO
INTERNATIONAL PORTFOLIO
MID CAP PORTFOLIO
REAL ESTATE SECURITIES PORTFOLIO
TAX-EXEMPT BOND PORTFOLIO
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND:
AGGRESSIVE GROWTH FUND SERIES
BALANCED FUND SERIES
CONVERTIBLE FUND SERIES
GROWTH FUND SERIES
HIGH YIELD FUND SERIES
MONEY MARKET FUND SERIES
U.S. GOVERNMENT SECURITIES FUND SERIES
PHOENIX STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND
MICRO CAP FUND
SMALL CAP FUND
STRATEGIC THEME FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX WORLDWIDE OPPORTUNITIES FUND
Exhibit 18.2
First Amendment to Amended and Restated Plan
pursuant to Rule 18f-3
<PAGE>
PHOENIX FUNDS
(the "Funds")
FIRST AMENDMENT TO THE
AMENDED AND RESTATED PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
That certain Amended and Restated Plan Pursuant to Rule 18f-3 under the
Investment Company Act of 1940 duly adopted by the Board of Directors/Trustees
of the Funds on November 20, 1996, is hereby amended as follows:
1. The first and last sentences of Section 2. The Multi-Class
Structure are deleted and the following two sentences substituted
therefor:
The portfolios of the Funds listed on Schedule A hereto shall offer up
to four classes of shares as indicated on Schedule A: Class A, Class
B, Class C and Class M. ( . . . ) In addition, Class A, Class B, Class
C and Class M shares shall have the features described in Sections a,
b, c and d, below.
2. The following two subparagraphs are added to Section 2a.
Distribution Plans immediately following subparagraph 2a(ii):
iii. Class C shares of each Multi-Class Portfolio shall
reimburse the Distributor for costs and expenses incurred in connection
with distribution and marketing of shares thereof, as provided in the
Class C Distribution Plan and any supplements thereto, subject to an
annual limit of 1.00%, or in some cases 0.50%, of the average daily net
assets of a Multi-Class Portfolio's Class C shares.
iv. Class M shares of each Multi-Class Portfolio shall
reimburse the Distributor for costs and expenses incurred in connection
with distribution and marketing of shares thereof, as provided in the
Class M Distribution Plan and any supplements thereto, subject to an
annual limit of 0.50% of the average daily net assets of a Multi-Class
Portfolio's Class M shares.
3. Schedule A is amended as attached hereto.
This Amendment was approved by the Board of Directors/Trustees at a
meeting held on May 28, 1997.
/s/ Thomas N. Steenburg
----------------------------------
Assistant Secretary
<PAGE>
SCHEDULE A
----------
<TABLE>
<CAPTION>
Class A Class B Class C Class M
------- ------- ------- -------
<S> <C> <C> <C> <C>
PHOENIX CALIFORNIA TAX-EXEMPT BONDS, INC. X X __ __
PHOENIX INCOME AND GROWTH FUND X X __ __
PHOENIX MULTI-PORTFOLIO FUND:
EMERGING MARKETS BOND PORTFOLIO X X X X
INTERNATIONAL PORTFOLIO X X __ __
MID CAP PORTFOLIO X X __ __
REAL ESTATE SECURITIES PORTFOLIO X X __ __
STRATEGIC INCOME PORTFOLIO X X X X
TAX-EXEMPT BOND PORTFOLIO X X __ __
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC. X X X X
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND X X X __
PHOENIX SERIES FUND:
AGGRESSIVE GROWTH FUND SERIES X X __ __
BALANCED FUND SERIES X X __ __
CONVERTIBLE FUND SERIES X X __ __
GROWTH FUND SERIES X X __ __
HIGH YIELD FUND SERIES X X X X
MONEY MARKET FUND SERIES X X X X
U.S. GOVERNMENT SECURITIES FUND X X __ __
SERIES
PHOENIX STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND X X __ __
MICRO CAP FUND X X __ __
SMALL CAP FUND X X __ __
STRATEGIC THEME FUND X X X X
PHOENIX STRATEGIC ALLOCATION FUND, INC. X X __ __
PHOENIX WORLDWIDE OPPORTUNITIES FUND X X __ __
</TABLE>
Exhibit 19
Powers of Attorney
<PAGE>
POWER OF ATTORNEY
I, the undersigned officer of Phoenix Equity Series Fund, hereby
constitute and appoint Philip R. McLoughlin and Thomas N. Steenburg, or either
of them as my true and lawful attorneys and agents with full power to sign for
me in the capacity indicated below, any or all Registration Statements or
amendments thereto filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940 relating to
Phoenix Equity Series Fund, and hereby ratify and confirm my signature as it may
be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
July 24, 1997 /s/ Nancy G. Curtiss
--------------------
Nancy G. Curtiss, Treasurer
Principal Financial and Accounting Officer
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Equity
Series Fund, hereby constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Equity Series Fund, and hereby ratify
and confirm my signature as it may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
July 24, 1997 /s/ E. Virgil Conway
--------------------
E. Virgil Conway, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Equity
Series Fund, hereby constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Equity Series Fund, and hereby ratify
and confirm my signature as it may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
July 24, 1997 /s/ Harry Dalzell-Payne
-----------------------------
Harry Dalzell-Payne, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Equity
Series Fund, hereby constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Equity Series Fund, and hereby ratify
and confirm my signature as it may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
July 24, 1997 /s/ James M. Oates
------------------
James M. Oates, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Equity
Series Fund, hereby constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Equity Series Fund, and hereby ratify
and confirm my signature as it may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
July 24, 1997 /s/ Everett L. Morris
---------------------
Everett L. Morris, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Equity
Series Fund, hereby constitute and appoint Philip R. McLoughlin and Thomas N.
Steenburg, or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Equity Series Fund, and hereby ratify
and confirm my signature as it may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
July 24, 1997 /s/ Herbert Roth, Jr.
---------------------
Herbert Roth, Jr., Trustee
