AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 21, 1998.
REGISTRATION NOS. 33-9069
811-1442
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 16 [X]
AND/OR
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 28 [X]
(CHECK APPROPRIATE BOX OR BOXES)
------------
PHOENIX STRATEGIC ALLOCATION FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
------------
101 Munson Street, Greenfield, Massachusetts 01301
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
C/O PHOENIX EQUITY PLANNING CORPORATION
(800) 243-1574
(REGISTRANT'S TELEPHONE NUMBER)
------------
Thomas N. Steenburg
Vice President, Counsel and Secretary
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115
(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[x] on April 30, 1998 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
================================================================================
<PAGE>
PHOENIX STRATEGIC ALLOCATION FUND, INC.
CROSS REFERENCE SHEET REQUIRED BY RULE 495 UNDER THE SECURITIES ACT OF 1933
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................... Financial Highlights
4. General Description of Registrant................. Cover Page; Introduction; Investment
Objective and Policies; Additional Information
5. Management of the Fund............................ Management of the Fund; Distribution Plans; Additional
Information
5A. Management's Discussion of Fund
Performance....................................... Performance Information
6. Capital Stock and Other Securities................ Dividends, Distributions and Taxes;
Net Asset Value
7. Purchase of Securities Being Offered ............. Distribution Plans; How to Buy Shares; Investor
.................................................. Account Services; Net Asset Value; How to Redeem Shares
8. Redemption or Repurchase ......................... How to Redeem Shares
9. Legal Proceedings................................. 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 .................. The Fund
13. Investment Objective and Policies................. Investment Objective and Policies; Investment
Restrictions
14. Management of the Fund ........................... Directors and Officers
15. Control Persons and Principal Holders
of Securities .................................... Directors and Officers; Principal Shareholders
16. Investment Advisory and Other Services ........... Services of the Adviser; Plans of Distribution
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 Being Offered.......................... How to Buy Shares; Investor Account Services;
Net Asset Value; Redemption of Shares
20. Tax Status ....................................... Dividends, Distribution and Taxes
21. Underwriters...................................... Plans of Distribution
22. Calculations of Performance Data ................. Performance Information
23. Financial Statements.............................. Financial Statements
</TABLE>
PART C
The information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
PHOENIX
FUNDS
Prospectus May 1, 1998
[triangle] PHOENIX STRATEGIC
ALLOCATION FUND, INC.
[LOGO] PHOENIX
DUFF & PHELPS
<PAGE>
PHOENIX STRATEGIC ALLOCATION FUND, INC.
101 Munson Street
Greenfield, MA 01301
PROSPECTUS
May 1, 1998
PHOENIX STRATEGIC ALLOCATION FUND, INC. (the "Fund") is a diversified,
open-end management investment company with an investment objective to provide
the highest total return consistent with reasonable risk. The Fund invests
principally in stocks, bonds and money market instruments and may adjust the
proportion of its assets invested in the different types of securities whenever,
in the opinion of the Fund's investment adviser, the adjustment will contribute
to the attainment of the Fund's investment objective. In seeking to achieve its
investment objective, the Fund may, to the extent permitted by its fundamental
policies, write (sell) covered call options, purchase call and put options,
engage in transactions in financial futures contracts and related options,
invest in repurchase agreements, lend portfolio securities and engage in
portfolio trading. There can be no assurance that the Fund's objective will be
achieved.
This Prospectus sets forth concisely the information about the Fund 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 Fund, 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 Fund is contained in the Statement of Additional
Information, dated May 1, 1998, which has been filed with the Securities and
Exchange Commission (the "Commission") and is available at no charge by calling
1-800-243-4361 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.
The Commission maintains a Web site (http://www.sec.gov) that contains this
Prospectus, the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the Commission.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, CREDIT UNION, OR UNAFFILIATED ENTITY AND ARE NOT FEDERALLY
INSURED OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
(FDIC), THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY AND INVOLVE INVESTMENT
RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
CUSTOMER SERVICE: (800) 243-1574
MARKETING: (800) 243-4361
TELEPHONE ORDERS: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY): (800) 243-1926
<PAGE>
TABLE OF CONTENTS
Page
----
INTRODUCTION............................................................. 3
FUND EXPENSES............................................................ 4
FINANCIAL HIGHLIGHTS..................................................... 5
PERFORMANCE INFORMATION.................................................. 6
INVESTMENT OBJECTIVE AND POLICIES........................................ 6
INVESTMENT TECHNIQUES AND RELATED RISKS.................................. 9
INVESTMENT RESTRICTIONS.................................................. 10
PORTFOLIO TURNOVER....................................................... 11
MANAGEMENT OF THE FUND................................................... 11
DISTRIBUTION PLANS....................................................... 12
HOW TO BUY SHARES........................................................ 13
INVESTOR ACCOUNT SERVICES................................................ 18
NET ASSET VALUE.......................................................... 20
HOW TO REDEEM SHARES..................................................... 21
DIVIDENDS, DISTRIBUTIONS AND TAXES....................................... 22
ADDITIONAL INFORMATION .................................................. 23
2
<PAGE>
INTRODUCTION
This Prospectus describes the shares offered by and operation of Phoenix
Strategic Allocation Fund, Inc. (the "Fund"). The Fund is a diversified open-end
management investment company established as a corporation under the laws of the
Commonwealth of Massachusetts on November 22, 1966. The Fund's investment
objective is to provide the highest total return consistent with reasonable
risk.
THE INVESTMENT ADVISER
Phoenix Investment Counsel, Inc. ("PIC" or the "Adviser") is the investment
adviser of the Fund and its staff selects and supervises the investments in the
Fund's portfolio. The Adviser is a subsidiary of Phoenix Duff & Phelps
Corporation and an indirect subsidiary of Phoenix Home Life Mutual Insurance
Company. See "Management of the Fund" for a description of the Investment
Advisory Agreement and management fees.
DISTRIBUTOR AND DISTRIBUTION PLANS
Phoenix Equity Planning Corporation ("Equity Planning" or "Distributor"),
serves as national distributor of the Fund's shares. See "Distribution Plans"
and the Statement of Additional Information. Equity Planning also acts as
financial agent of the Fund and as such receives a fee. See "The Financial
Agent." Equity Planning also serves as the Fund's transfer agent. See "The
Custodian and Transfer Agent."
The Fund has adopted amended and restated distribution plans pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act").
Pursuant to the amended and restated distribution plans adopted for Class A and
Class B Shares, the Fund shall pay to Equity Planning an amount equal to 0.25%
annually of the average daily net assets of such class for furnishing
shareholder services (the "Service Fee"). Pursuant to the amended and restated
distribution plan adopted for Class B Shares, the Fund shall reimburse Equity
Planning up to a maximum annual rate of 0.75% of the Fund's average daily net
assets for Class B Shares for distribution expenses incurred in connection with
the sale and promotion of Class B Shares. See "Distribution Plans."
PURCHASE OF SHARES
The Fund offers two classes of shares of common stock which may be purchased
at a price equal to their net asset value per share plus sales charges which, at
the election of the purchaser, may be imposed (i) at the time of purchase (the
"Class A Shares"), or (ii) on a contingent deferred basis (the "Class B
Shares"). 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.
Class A 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 maximum sales charge of 4.75% of the offering price (4.99%
of the amount invested) on single purchases of less than $50,000. The sales
charge for Class A Shares is reduced on a graduated scale on single purchases of
$50,000 or more and subject to other conditions stated below. See "How to Buy
Shares," "How to Obtain Reduced Sales Charges on Class A Shares" and "Net Asset
Value."
Class B 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. See "How to Buy Shares" and "Deferred Sales Charge Alternative--Class
B Shares."
Shares of each class represent an identical interest in the investment
portfolio of the Fund and generally have the same rights except that Class B
Shares bear the cost of higher distribution plan fees which cause the Class B
Shares to have a higher expense ratio and to receive lower dividends than Class
A Shares. See "Fund Expenses."
MINIMUM INITIAL AND SUBSEQUENT INVESTMENTS
The minimum initial investment is $500 ($25 if using the bank draft investing
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 OF SHARES
Class A Shares 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 shareholders redeeming shares within five years 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 assurance that the Fund will achieve its investment
objective. In addition, special risks may be presented by the particular types
of securities in which the Fund may invest. For example, investments in below or
lower-rated debt securities may have speculative characteristics, including
overall greater risk of non-payment of interest and principal and potentially
greater sensitivity to general economic condition and changes in interest rates.
In addition, investors should consider risks inherent in foreign securities
which involve special risks not typically associated with investing in U.S.
companies. See "Investment Objective and Policies."
3
<PAGE>
FUND EXPENSES
The following table illustrates all expenses and fees that a shareholder of
the Fund will incur. The expenses and fees set forth in the table are for the
fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
-------------- --------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) 4.75% None
Maximum Sales Load Imposed on Reinvested Dividends None None
Deferred Sales Load (as a percentage of original purchase price or None 5% during the first
redemption proceeds, as applicable) year, decreasing 1%
annually to 2%
during the fourth
and fifth years;
dropping from 2%
to 0% after the fifth
year
Redemption Fee None None
Exchange Fee None None
ANNUAL FUND OPERATING EXPENSES
Management Fees 0.65% 0.65%
12b-1 Fees(a) 0.25% 1.00%
Other Operating Expenses 0.27% 0.27%
---- ----
TOTAL FUND OPERATING EXPENSES 1.17% 1.92%
==== ====
</TABLE>
(a) "12b-1 Fees" represent an asset-based sales charge that, for a long-term
shareholder, may be higher than the maximum front-end sales charge permitted by
the National Association of Securities Dealers, Inc. ("NASD"). Rule 12b-1 Fees
as stated include a Service Fee. See "Distribution Plans."
<TABLE>
<CAPTION>
CUMULATIVE EXPENSES
PAID FOR THE PERIOD
EXAMPLE* 1 YEAR 3 YEARS 5 YEARS 10 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 $ 59 $ 83 $109 $183
Class B Shares $ 59 $ 80 $104 $205
An investor would pay the following expenses on the same $1,000 investment
assuming no redemption at the end of each time period
Class A Shares $ 59 $ 83 $109 $183
Class B Shares $ 19 $ 60 $104 $205
</TABLE>
*THE PURPOSE OF THE ABOVE TABLE 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. CLASS B SHARES FIGURES
ASSUME CONVERSION TO CLASS A SHARES AFTER EIGHT YEARS. SEE "MANAGEMENT OF THE
FUND," "DISTRIBUTION PLANS" AND "HOW TO BUY SHARES."
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following table sets forth certain financial information for each class
of shares for the Fund. The financial information has been audited by Price
Waterhouse LLP, independent accountants. Their opinion and the Fund's Financial
Statements and notes thereto are incorporated by reference in the Statement of
Additional Information. The Statement of Additional Information and the Fund's
most recent Annual Report (containing the Report of Independent Accountants and
additional information relating to the Fund's performance) are available at no
charge upon request by calling (800) 243-4361.
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $15.52 $15.98 $14.82 $15.48 $14.89 $15.22 $13.43 $13.90 $12.55 $12.58
INCOME FROM INVESTMENT
OPERATIONS:(7)
Net investment Income.... 0.30 0.31 0.45 0.34 0.06(3) 0.24 0.36 0.60 0.94(2) 0.45(2)
Net realized and unrealized
gain (loss)............. 2.81 1.10 2.22 (0.69) 1.49 1.32 3.45 0.02 1.34 (0.03)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS......... 3.11 1.41 2.67 (0.35) 1.55 1.56 3.81 0.62 2.28 0.42
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income...... (0.30) (0.29) (0.52) (0.31) (0.11) (0.25) (0.37) (0.49) (0.55) (0.45)
Dividends from net
realized gains......... (2.90) (1.58) (0.99) (0.001) (0.85) (1.64) (1.65) (0.60) (0.38) (0.00)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS.. (3.20) (1.87) (1.51) (0.311) (0.96) (1.89) (2.02) (1.09) (0.93) (0.45)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
CHANGE IN NET ASSET VALUE.. (0.09) (0.46) 1.16 (0.66) 0.59 (0.33) 1.79 (0.47) 1.35 (0.03)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD.................... $15.43 $15.52 $15.98 $14.82 $15.48 $14.89 $15.22 $13.43 $13.90 $12.55
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return (1)........... 20.68% 8.78% 18.23% (2.26)% 10.49% 10.32% 28.62% 4.43% 18.41% 3.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands).............. $308,524 $309,678 $361,526 $335,177 $370,440 $58,006 $35,209 $28,413 $32,424 $34,926
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses....... 1.17% 1.21% 1.21% 1.24% 1.29% 1.36% 1.58% 1.58% 1.45% 1.52%
Net investment income.... 1.68% 1.78% 2.67% 2.18% 1.26% 2.06% 2.51% 4.23% 3.79% 3.72%
Portfolio turnover......... 355% 275% 184% 225% 246% 322% 249% 279% 315% 317%
Average commission rate
paid(6)................... $0.0547 $0.0529 N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>
(1) Maximum sales charges are not reflected in total return calculation.
(2) Includes reimbursement of operating expenses by investment adviser of
$0.016, $0.022 and $0.030, respectively.
(3) Computed using average shares outstanding.
(4) Annualized.
(5) Not annualized.
(6) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for securities trades on
which commissions are charged. This rate generally does not reflect
mark-ups, mark-downs, or spreads on shares traded on a principal basis.
(7) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
<TABLE>
<CAPTION>
CLASS B
-------------------------------------
YEAR FROM
ENDED INCEPTION
DECEMBER 31, 10/24/94 TO
1997 1996 1995 12/31/94
---- ---- ---- --------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $15.43 $15.89 $14.79 $14.98
INCOME FROM INVESTMENT
OPERATIONS:(7)
Net investment Income.... 0.18 0.19 0.30(3) 0.07
Net realized and unrealized
gain (loss)............. 2.77 1.09 2.22 (0.09)
------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS......... 2.95 1.28 2.52 (0.02)
------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income...... (0.18) (0.16) (0.43) (0.17)
Dividends from net
realized gains......... (2.90) (1.58) (0.99) --
------ ------ ------ ------
TOTAL DISTRIBUTIONS.. (3.08) (1.74) (1.42) (0.17)
------ ------ ------ ------
CHANGE IN NET ASSET VALUE.. (0.13) (0.46) 1.10 (0.19)
------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD.................... $15.30 $15.43 $15.89 $14.79
====== ====== ====== ======
Total return (1)........... 19.74% 7.95% 17.31% (0.12)%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands).............. $10,931 $9,594 $8,046 $1,328
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses....... 1.92% 1.96% 1.97% 2.26%(4)
Net investment income.... 0.92% 1.01% 1.88% 1.74%(4)
Portfolio turnover......... 355% 275% 184% 225%
Average commission rate
paid(6)................... $0.0547 $0.0529 N/A N/A
</TABLE>
(1) Maximum sales charges are not reflected in total return calculation.
(2) Includes reimbursement of operating expenses by investment adviser of
$0.016, $0.022 and $0.030, respectively.
(3) Computed using average shares outstanding.
(4) Annualized.
(5) Not annualized.
(6) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for securities trades on
which commissions are charged. This rate generally does not reflect
mark-ups, mark-downs, or spreads on shares traded on a principal basis.
(7) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
5
<PAGE>
PERFORMANCE INFORMATION
The Fund may, from time to time, include its yield and total return in
advertisements, sales literature, or reports to current and prospective
shareholders. Both yield and total return figures are computed separately for
Class A and Class B Shares in accordance with formulas specified by the
Securities and Exchange Commission. Yield and total return are based on
historical earnings and are not intended to indicate future performance.
The yield of the 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, for each class.
Standardized quotations of average annual total return for Class A and Class
B Shares will be expressed in terms of the average annual compounded rate of
return of a hypothetical investment in either Class A or Class B Shares over a
period of 1, 5, and 10 years (or up to the life of the class of shares 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 Shares and the maximum
contingent deferred sales charge applicable to a complete redemption of the
investment in the case of Class B Shares, and assume that all dividends and
distributions on Class A and Class B Shares are reinvested when paid. It is
expected that the performance of Class A Shares will be better than that of
Class B Shares as a result of lower distribution fees and certain incrementally
lower expenses paid by Class A Shares. The Fund also may 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,
the Fund may, from time to time, publish materials citing historical volatility
for shares of the Fund.
The 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, the Fund may compare its performance results to other investment
or savings vehicles (such as certificates of deposit) and may refer to results
published in various publications such as Changing Times, Forbes, Fortune,
Money, Barrons, Business Week and Investor's Daily, Stanger's Mutual Fund
Monitor, The Stanger Register, Stanger's Investment Adviser, The Wall Street
Journal, The New York Times, Consumer Reports, Registered Representative,
Financial Planning, Financial Services Weekly, Financial World, U.S. News and
World Report, Standard and Poor's The Outlook and Personal Investor. The Fund
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 Fund with
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 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 and traded over the NASDAQ National Market System.
Advertisements, sales literature and communications may contain information
about the Fund or the Adviser's current investment strategies and management
style. Current strategies and style may change to allow the Fund to respond to a
changing market and economic environment. From time to time, the Fund may
discuss specific portfolio holdings or industries in such communications. To
illustrate components of overall performance, the Fund may separate its
cumulative and average annual returns into income results and capital gains or
losses; or cite separately as a return figure the equity or bond portion of the
Fund's portfolio; or compare the Fund's equity or bond return figure to
well-known indices of market performance including, but not limited to: the S&P
500, Dow Jones Industrial Average, CS First Boston High Yield Index and Salomon
Brothers Corporate and Government Bond Indices.
Performance information for the Fund reflects only the performance of a
hypothetical investment in Class A or Class B Shares of the Fund during the
particular time period on which the calculations are based. Performance
information should be considered in light of the Fund's investment objectives
and policies, characteristics and qualities of the portfolio, and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future. For a description of the
methods used to determine total return for the Fund, see the Statement of
Additional Information.
The Fund's Annual Report, available upon request and without charge, contains
a discussion of the performance of the Fund and a comparison of that performance
to a securities market index.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide the highest total return
consistent with reasonable risk. Total return consists of the sum of dividends,
interest, premiums and net realized and unrealized appreciation in the value of
portfolio stocks, options, futures contracts, and other
6
<PAGE>
securities, less any expenses. Reasonable risk is risk which in the Adviser's
judgment would not present a greater than normal risk of loss in light of
current and reasonably anticipated future general market and economic
conditions, trends in yields and interest rates, and fiscal and monetary
policies. The investment objective is a fundamental policy and may not be
changed without the approval of a majority of the outstanding shares of the
Fund.
In seeking to achieve its investment objective, the Fund will invest
principally in stocks, bonds and other debt securities (i.e., those securities
or bonds evidencing the debt owed by a corporation, government or municipality
as discussed below), and money market instruments. The amount or proportion of
the Fund's assets which may be invested in each of the three types of securities
is not fixed and the Fund may adjust the mix of investments whenever, in the
opinion of its Adviser, such an adjustment will enable the Fund to capitalize on
perceived variations in return potential produced by the interaction of changing
financial market and economic conditions. There can be no assurance that the
Fund will achieve its investment objective.
The Fund will seek current income and capital appreciation over an extended
period of time by investing in stocks. The Fund may invest in common stocks and
other equity-type securities such as preferred stocks, securities convertible
into common stock and securities with warrants to purchase common stock
attached. Investments in stocks will consist largely of common stocks of
generally accepted investment quality. Such stocks will be selected by the
Adviser for current income considerations and/or for the promise they offer of
capital appreciation.
The Fund will seek current income and capital appreciation on an annual basis
by investing in bonds and other debt securities with maturities generally
exceeding one year. The Fund may invest in:
(a) publicly offered straight debt securities having a rating within the
four highest grades as determined by Moody's Investors Service, Inc.
("Moody's") (Aaa, Aa, A or Baa) or by Standard & Poor's Corporation
("Standard & Poor's") (AAA, AA, A or BBB) or, if unrated, those publicly
offered straight debt securities which are judged by the Fund to be of
equivalent quality to securities so rated;
(b) obligations issued, sponsored, assumed or guaranteed as to principal and
interest by the U.S. Government or its agencies or instrumentalities;
and
(c) publicly offered debt securities issued or guaranteed by a national or
state bank or bank holding company (as defined in the Federal Bank
Holding Company Act, as amended) having a rating within the three
highest grades as determined by Moody's (Aaa, Aa or A) or by Standard
& Poor's (AAA, AA, or A), and certificates of deposit of banks issuing
or guaranteeing securities having such ratings.
The Fund may take a modest position in lower or non-rated fixed income
securities, provided that the Fund will not invest more than 5% of its net
assets, determined at the time of investment, in high yield, high risk fixed
income securities (commonly referred to as "junk bonds").
Investment in fixed-income securities involves market and credit risks. The
price of fixed-income securities will generally move in inverse proportion to
interest rates. Securities rated Baa by Moody's and BBB by Standard & Poor's may
have some speculative characteristics and changes in economic conditions or
other circumstances may affect the ability of the issuer to make principal and
interest payments on these types of bonds. Additionally, with lower rated
securities, there is a greater possibility that an adverse change in the
financial condition of the issuer, particularly a highly leveraged issuer, may
affect the issuer's ability to make payments of income and principal and
increase the expenses of the Fund seeking recovery from the issuer. Investment
in lower rated and non-rated convertible fixed-income securities normally
involves a greater degree of market and credit risk than does investment in
securities having higher ratings. The price of these fixed-income securities
will generally move in inverse proportion to interest rates. In addition,
non-rated securities are often less marketable than rated securities. To the
extent that the Fund holds any lower rated or non-rated securities, it may be
negatively affected by adverse economic developments, increased volatility and
lack of liquidity. The Fund does not have a policy to dispose of a bond if its
rating drops below investment grade. The Statement of Additional Information
contains a description of Moody's and Standard & Poor's rating categories.
The Fund will seek current income by investing in money market instruments
(which generally mature in one year or less). Investments in money market
instruments may also be made for the purpose of preserving capital or for
liquidity purposes, in which event investment decisions may be based on
considerations other than the highest available yield. The Fund may invest in:
(a) obligations issued or guaranteed by the U.S. Government or its agencies,
authorities or instrumentalities;
(b) obligations issued by U.S. banks and savings and loan associations (such
as bankers' acceptances, certificates of deposit and time deposits,
including dollar denominated obligations of foreign branches of U.S.
banks and U.S. branches of foreign banks) and dollar denominated
obligations unconditionally guaranteed as to payment by U.S. banks or
savings and loan associations which at the date of the investment have
capital, surplus and undivided profits in excess of $100,000,000 as of
the date of
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their most recently published financial statements; and obligations
of other U.S. banks or savings and loan associations if such obligations
are insured by the Federal Deposit Insurance Corporation or the Federal
Savings and Loan Insurance Corporation;
(c) commercial paper which at the date of the investment is rated P-1 by
Moody's or A-1 by Standard & Poor's or, if not rated, is issued by a
company which at the date of the investment has an outstanding debt
issue rated Aa or higher by Moody's or AA or higher by Standard &
Poor's;
(d) other corporate obligations maturing in one year or less which at the
date of the investment are rated Aa or higher by Moody's or AA or higher
by Standard & Poor's; and
(e) repurchase agreements with respect to any of the foregoing obligations
with commercial banks, brokers and dealers considered by the Fund to be
creditworthy.
The Fund will not invest in time deposits if, as a result of such investment,
as much as 15% of the Fund's net assets would be invested in time deposits,
repurchase agreements which are not terminable within seven days and securities
subject to legal or contractual restrictions on resale or for which there is no
established market (so-called "illiquid" securities).
The Fund may invest up to 25% of its net assets in the securities of foreign
issuers. The Fund may invest in a broad range of foreign securities including
equity, debt and convertible securities and foreign government securities. In
connection with investments in foreign securities, the Fund may enter into
forward foreign currency exchange contracts for the purpose of protecting
against losses resulting from fluctuations in exchange rates between the U.S.
dollar and a particular foreign currency denominating a security which the Fund
holds or intends to acquire. The Fund will not speculate in forward foreign
currency exchange contracts.
Investing in the securities of foreign companies involves special risks and
considerations not typically associated with investing in U.S. companies. These
include less liquidity and more volatility in foreign markets, generally higher
commission rates on foreign portfolio transactions, the possibility of
confiscatory taxation, 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. Changes in foreign exchange rates
will affect the value of those securities which are denominated or quoted in
currencies other than the U.S. dollar. Many of the foreign securities held by
the Fund will not be registered with the Securities and Exchange Commission and
many of the issuers of foreign securities will not be subject to the
Commission's reporting requirements. Accordingly, there may be less publicly
available information about the securities and about the foreign company or
government issuing them than is available about a domestic company or government
entity. Moreover, individual foreign economies may compare favorably or
unfavorably with the United States economy with respect to such factors as rate
of growth, rate of inflation, capital reinvestment, resource self-sufficiency
and balance of payment positions.
The Fund may invest to a significant extent in securities of the U.S.
Government and its agencies and instrumentalities at a time when adverse market
conditions warrant the adoption of a temporary defensive position or at a time
when the yield differential between U.S. Government securities and other
investments is such that the U.S. Government securities will yield a higher
total return than other investments.
Securities issued or guaranteed as to principal and interest by the U.S.
Government include a variety of Treasury securities, which differ only in their
interest rates, maturities, and times of issuance. Treasury bills have a
maturity of one year or less. Treasury notes have maturities of one to seven
years, and Treasury bonds generally have maturity of greater than five years.
Agencies of the U.S. Government which issue or guarantee obligations include,
among others, Export-Import Banks of the United States, Farmers Home
Administration, Federal Housing Administration, Government National Mortgage
Association, Maritime Administration, Small Business Administration and The
Tennessee Valley Authority. Obligations of instrumentalities of the U.S.
Government include securities issued or guaranteed by, among others, the Federal
National Mortgage Association, Federal Home Loan Banks, Federal Home Loan
Mortgage Corporation, Federal Intermediate Credit Banks, Banks for Cooperatives,
and the U.S. Postal Service. Some of these securities are supported by the full
faith and credit of the U.S. Treasury, others are supported by the right of the
issuer to borrow from the Treasury, while still others are supported only by the
credit of the instrumentality.
Securities issued by Government National Mortgage Association ("GNMA") are,
and securities issued by Federal National Mortgage Association ("FNMA") include,
mortgage-backed securities representing part ownership of a pool of mortgage
loans. In the case of GNMA, the mortgages are insured by the Federal Housing
Administration or Farmers Home Administration or guaranteed by the Veterans
Administration. In the case of FNMA, the mortgages are not insured by an agency
of the U.S. Government.
The prices of mortgage-backed securities are inversely affected by changes in
interest rates and, therefore, are subject to the risk of market price
fluctuations. Mortgage-backed securities issued by GNMA and FNMA generally offer
yields which are higher than those available on other securities of the U.S.
Government and its agencies and instrumentalities, but may be less effective
than these other
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securities as a means of "locking in" attractive long-term interest rates.
This is a result of the need to reinvest prepayment of principal and the
possibility of significant unscheduled prepayments resulting from declines in
mortgage interest rates. As a result, these securities have less potential for
capital appreciation during periods of declining interest rates than other
investments of comparable risk of decline in value during periods of rising
rates.
INVESTMENT TECHNIQUES AND
RELATED RISKS
In addition to the investment policies described above, the Fund may utilize
the following investment practices or techniques.
WRITING (SELLING) CALL OPTIONS. A call option on a security gives the
purchaser of the option, in return for the premium paid to the writer (seller),
the right to buy the underlying security at the exercise price at any time
during the option period. Upon exercise by the purchaser, the writer of a call
option has the obligation to sell the underlying security at the exercise price.
A call option on a securities index is similar to a call option on an individual
security, except that the value of the option depends on the weighted value of
the group of securities comprising the index and all settlements are made in
cash. A call option may be terminated by the writer (seller) by entering into a
closing purchase transaction in which it purchases an option of the same series
as the option previously written.
The Fund may write exchange-traded call options with respect to 100% of its
portfolio. Call options may be written on portfolio securities and on securities
indices. Call options on portfolio securities will be covered since the Fund
will own the underlying securities at all times during the option period. Call
options on securities indices will be written only to hedge in an economically
appropriate way portfolio securities which are not otherwise hedged with options
or financial futures contracts and will be "covered" by identifying the specific
portfolio securities being hedged.
The Fund will write call options in order to obtain a return on its
investments from the premiums received and will retain the premiums whether or
not the options are exercised. Any decline in the market value of portfolio
securities will be offset to the extent of the premiums received (net of
transaction costs). If an option is exercised, the premium received on the
option will effectively increase the exercise price.
During the option period, the writer of a call option has given up the
opportunity for capital appreciation above the exercise price should the market
price of the underlying security increase, but has retained the risk of loss
should the price of the underlying security decline. Writing call options also
involves risks relating to the Fund's ability to close out options it has
written.
PURCHASING CALL AND PUT OPTIONS. A call option is described above. A put
option on a security gives the purchaser of the option, in return for the
premium paid to the writer (seller), the right to sell the underlying security
at the exercise price at any time during the option period. Upon exercise by the
purchaser, the writer of a put option has the obligation to purchase the
underlying security at the exercise price. A put option on a securities index is
similar to a put option on an individual security, except that the value of the
option depends on the weighted value of the group of securities comprising the
index and all settlements are made in cash.
The Fund may invest up to 5% of its total assets in exchange-traded call and
put options on securities and securities indices. The Fund will invest in call
and put options whenever, in the opinion of its Adviser, such investments will
contribute to the enhancement of total return to the Fund's shareholders. 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 would result in a net gain or loss
depending on whether the amount received on the sale is more or less than the
premium and other transaction costs paid on the call or put which is sold.
Purchasing a call or a put option involves the risk that the Fund may lose the
premium it paid plus transaction costs.
FINANCIAL FUTURES AND RELATED OPTIONS. Financial futures contracts consist of
interest rate 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 at a specified price. A stock
index assigns relative values to the common stocks included in the index, and
the index fluctuates with changes in the market values of the common stocks so
included. A stock 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 stock 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.
The Fund may purchase and sell financial futures contracts which are traded
on a recognized exchange or board of trade and may purchase exchange-traded put
and call options on financial futures contracts as a hedge against anticipated
changes in the market value of its portfolio securities or securities which it
intends to purchase. Hedging is the initiation of a position in the futures
market which is intended as a temporary substitute
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for the purchase or sale of the underlying securities in the cash market.
The Fund will engage in transactions in financial futures contracts and
related options only for hedging purposes and not for speculation. In addition,
the Fund will not purchase or sell any financial futures contract or related
option if, immediately thereafter, the sum of the assets committed with respect
to the Fund's existing futures and related options positions and the premiums
paid for related options would exceed 5% of the market value of the Fund's total
assets. At the time of purchase of a futures contract or a call option on a
futures contract, any asset, including equity securities and non-investment
grade debt (so long as the asset is liquid, unencumbered and marked to market
daily) equal to the market value of the futures contract minus the Fund's
initial margin deposit will be deposited in a pledged account with the Fund's
custodian bank to collateralize fully the position. The extent to which the 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.
Engaging in transactions in financial futures contracts involves certain
risks, such as the possibility of an imperfect correlation between futures
market prices and cash market prices and the possibility that the Adviser could
be incorrect in its expectations as to the direction or extent of various
interest rate movements. 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 that the Fund will lose
the premium it paid. Also, there may be circumstances when the purchase of an
option on a financial futures contract could result in a loss to the Fund while
the purchase or sale of the contract would not have resulted in a loss.
REPURCHASE AGREEMENTS. The Fund may invest up to 10% of its total assets in
repurchase agreements having maturities of no more than seven days, either for
temporary defensive purposes due to adverse market conditions or to generate
income from its excess cash balances. In addition, the Fund may invest up to 15%
of its net assets in illiquid securities including repurchase agreements having
maturities greater than seven days. A repurchase agreement is an agreement under
which the Fund acquires a money market instrument (generally a security issued
by the U.S. Government or an agency thereof, a bankers' acceptance or a
certificate of deposit) from a commercial bank, broker or dealer, 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. That instrument must have a total
value, including accrued interest, in excess of the value of the repurchase
agreement and will be held by the Fund's 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.
LENDING PORTFOLIO SECURITIES. In order to increase the return on its
investments, the Fund may lend its portfolio securities to broker-dealers and
other financial institutions in amounts up to 25% of the market or other fair
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 creditworthy. Lending portfolio securities involves risk of delay in the
recovery of the loaned securities and in some cases the loss of rights in the
collateral should the borrower fail financially.
TRADING OPERATIONS. The timing and amounts of purchases and sales of
individual securities and types of securities (stocks, bonds and money market
instruments) is of particular significance in the case of a fund seeking the
highest total return consistent with reasonable risk. Consequently, in seeking
to achieve its investment objective, the Fund intends to engage in portfolio
trading. The Fund will buy and sell portfolio securities in anticipation of, or
in response to, changing financial market and economic conditions and trends and
to take advantage of yield disparities. The Adviser will engage in trading
whenever it believes that the trade, net of transaction costs, will provide the
Fund with additional income or improve the capital appreciation potential of the
Fund's portfolio. Whether trading will enable the Fund to achieve its goals will
depend on the Adviser's ability to anticipate market developments, including
interest rate trends, obtain and properly evaluate relevant information, and
effect purchase and sale transactions on a favorable basis. Trading may result
in frequent changes in the Fund's portfolio and a high rate of portfolio
turnover.
INVESTMENT RESTRICTIONS
The investment restrictions to which the Fund is subject are fundamental
policies which may not be changed without shareholder approval. Among the more
significant restrictions, the Fund may not (i) concentrate its assets in the
securities of issuers which conduct their principal business activities in the
same industry; (ii) invest more than 5% of its total assets in securities issued
or guaranteed by any one issuer (except the U.S. Government) or purchase more
than 10% of the outstanding voting securities or more than 10% of the securities
of any class of any one issuer; (iii) invest in the aggregate more than 5% of
its total assets in the securities of any issuers which have (with predecessors)
a record of less than three years of continuous operations; (iv) invest in real
estate, real estate limited
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<PAGE>
partnerships, commodities or commodities contracts, except that the Fund may
(a) purchase or sell readily marketable securities which are secured by
interests in real estate or issued by companies which deal in real estate,
including real estate investment and mortgage investment trusts, and (b) engage
in financial futures contracts and related options transactions as described
above; (v) borrow in excess of 5% of the market or other fair value of its total
assets or pledge its assets to an extent greater than 5% of the market or other
fair value of its total assets (any borrowings to be from banks and undertaken
only as a temporary measure for extraordinary or emergency purposes); (vi) issue
senior securities (vii) purchase an illiquid security such as a restricted
security or a security for which market quotations are not readily available or
a repurchase agreement having a maturity longer than seven days if as a result
of such purchase more than 15% of the Fund's net assets would be invested in
such securities; and (viii) purchase securities of other investment companies,
except that the Fund may make such a purchase (a) in the open market involving
no commission or profit to a sponsor or dealer (other than the customary
broker's commission), provided that immediately thereafter (x) not more than 10%
of the Fund's total assets would be invested in such securities, (y) not more
than 5% of the Fund's total assets would be invested in the securities of any
one investment company and (z) not more than 3% of the voting stock of any one
investment company would be owned by the Fund, or (b) as part of a merger,
consolidation, or acquisition of assets.
A detailed description of the Fund's investment restrictions is contained in
the Statement of Additional Information.
PORTFOLIO TURNOVER
A change in securities held by the Fund is known as "portfolio turnover" and
may involve the payment by the Fund of dealer mark-up or underwriting
commissions and other transaction costs on the sale of securities, as well as on
the reinvestment of the proceeds in other securities. Portfolio turnover rate
for a fiscal year is the percentage determined by dividing the lesser of the
cost of purchases or proceeds from sales of portfolio securities by the average
of the value of portfolio securities during such year, all excluding securities
whose maturities at acquisition were one year or less. The Fund's portfolio
turnover rate will not be a limiting factor when the Adviser deems it desirable
to sell or purchase securities. The Fund's portfolio turnover rate may be higher
than some other investment companies having similar objectives if the Fund finds
it necessary to significantly change its portfolio to adopt a temporary
defensive position. A high turnover rate may involve greater expenses to the
Fund and could involve realization of capital gains that would be taxable to the
shareholders. Historical portfolio turnover rates for the Fund are listed under
"Financial Highlights."
MANAGEMENT OF THE FUND
The Fund is a mutual fund, known as an open-end diversified management
investment company. The Directors of the Fund ("Directors") are responsible for
the overall supervision of the Fund and perform the various duties imposed on
Directors by the 1940 Act and the Massachusetts General Corporation Law.
THE ADVISER
The Fund's investment adviser is Phoenix Investment Counsel, Inc. (the
"Adviser"), which is located at 56 Prospect Street, Hartford, Connecticut 06115.
The Adviser is a subsidiary of Phoenix Duff & Phelps Corporation and an indirect
subsidiary of Phoenix Home Life Mutual Insurance Company ("Phoenix") of
Hartford, Connecticut. Phoenix is a majority shareholder of Phoenix Duff &
Phelps Corporation. Phoenix 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 06102. 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. The Adviser also serves as investment adviser or
manager for Phoenix Series Fund, Phoenix Multi-Portfolio Fund (all portfolios
except Real Estate Securities Portfolio), The Phoenix Edge Series Fund (all
series except the Real Estate Securities Series and Aberdeen New Asia Series),
Phoenix Duff & Phelps Institutional Mutual Funds (except Real Estate Equity
Securities Portfolio, Core Equity Portfolio and Enhanced Reserves Portfolio),
Phoenix Growth and Income Fund of Phoenix Equity Series Fund, Phoenix Investment
Trust 97 and Phoenix Strategic Equity Series Fund (all funds except Phoenix
Equity Opportunities Fund), and as subadviser to the SunAmerica Series Trust,
and other investment advisory clients. The Adviser was originally organized in
1932 as John P. Chase, Inc. As of December 31, 1997, the Adviser had
approximately $20.5 billion in assets under management.
The Adviser continuously furnishes an investment program for the Fund and
manages the investment and reinvestment of the Fund's assets subject at all
times to the supervision of the Directors. The Adviser, at its expense,
furnishes to the Fund adequate office space and facilities and certain
administrative services, including the services of any member of its staff who
serves as an officer of the Fund.
As compensation for its services, the Adviser receives a fee, which is
accrued daily against the value of the Fund's net assets and payable monthly by
the Fund. The monthly fee is computed at an annual rate of 0.65% of the average
of the daily net asset values of the Fund up to $1 billion; 0.60% of such value
between $1 billion and $2 billion; and 0.55% of such value in excess of $2
billion. The ratio of
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management fees to average net assets for the fiscal year ended December 31,
1997 was 0.65%.
THE PORTFOLIO MANAGER
Ms. Mary E. Canning is the Portfolio Manager of the Fund and as such, is
primarily responsible for the day-to-day management of the Fund's portfolio. Ms.
Canning has served as Portfolio Manager of the Fund since August 1996 and as
Co-Manager since June 1996. She has been Managing Director and Investment
Strategist, Equities of Phoenix Investment Counsel, Inc. since 1996 and was a
Vice President from 1991 to 1996. Ms. Canning is also a Vice President of
Phoenix Series Fund (since 1987) and The Phoenix Edge Series Fund (since 1987).
From June 1991 to November 1995, Ms. Canning was Associate Portfolio Manager,
Common Stock, Phoenix Home Life Mutual Insurance Company and held various other
positions with Phoenix Home Life from 1982 to 1991.
THE FINANCIAL AGENT
Equity Planning acts as financial agent of the Fund and, as such, performs
administrative, bookkeeping and pricing functions for the Fund. 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 the Fund, at the following
incremental annual rates:
First $100 million .05%
$100 million to $300 million .04%
$300 million to $500 million .03%
Greater than $500 million .015%
(b) a minimum fee of $60,000; and (c) an annual fee of $12,000 together with an
additional $12,000 for any additional class of shares created in the future. For
its services during the fiscal year ended December 31, 1997, Equity Planning
received $149,370, or 0.05% of average net assets.
THE CUSTODIAN AND TRANSFER AGENT
The custodian of the assets of the Fund is State Street Bank and Trust
Company, P.O. Box 351, Boston, Massachusetts, 02101 (the "Custodian"). The Fund
has authorized the Custodian to appoint one or more subcustodians for the assets
of the Fund held outside the United States. Pursuant to a Transfer Agent and
Service Agreement with the Phoenix Funds, Equity Planning acts as Transfer Agent
for the Fund (the "Transfer Agent") for which it is paid $14.95 plus
out-of-pocket expenses for each designated shareholder account. The Transfer
Agent is authorized to engage subagents to perform certain shareholder servicing
functions from time to time for which such agents shall be 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 Fund.
DISTRIBUTION PLANS
The offices of Equity Planning, the national distributor of the Fund's
shares, are located at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200. Philip R. McLoughlin is a director and President of the
Fund and a director and officer of Equity Planning. Michael E. Haylon, an
officer of the Fund, is a director of Equity Planning. G. Jeffrey Bohne, Nancy
G. Curtiss, William E. Keen, III, William R. Moyer and Thomas N. Steenburg are
officers of the Fund and officers of Equity Planning.
Equity Planning and the Fund have entered into distribution agreements under
which Equity Planning has agreed to use its best efforts to find purchasers for
Fund shares and the Fund has granted to Equity Planning the exclusive right to
purchase from the Fund and resell, as principal, shares needed to fill
unconditional orders for Fund shares. Equity Planning may sell Fund shares
through its registered representatives or through securities dealers with whom
it has sales agreements. Equity Planning may also sell Fund shares pursuant to
sales agreements entered into with banks or bank affiliated securities brokers
who, acting as agent for their customers, place orders for Fund shares with
Equity Planning. Although the Glass-Steagall Act prohibits banks and bank
affiliates from engaging in the business of underwriting, distributing or
selling securities (including mutual fund shares), banking regulators have not
indicated that such institutions are prohibited from purchasing mutual fund
shares upon the order and for the account of their customers. If, because of
changes in law or regulations, or because of new interpretations of existing
law, it is determined that agency transactions of banks or bank affiliated
securities brokers are not permitted under the Glass-Steagall Act, the Directors
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 the Fund.
The sale of Fund shares through a securities broker affiliated with a
particular bank is not expected to preclude the Fund from borrowing from such
bank or from availing itself of custodial or transfer agency services offered by
such bank.
The Directors have adopted separate amended and restated distribution plans
for Class A and Class B shares (the "Class A Plan," the "Class B Plan" and
collectively the "Plans") pursuant to Rule 12b-1 under the Investment
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Company Act of 1940. The Plans authorize the Fund to reimburse Equity
Planning for expenses in connection with the sale and promotion of the Fund's
shares and to pay for the furnishing of shareholder services. Pursuant to the
amended and restated Class B Plan, the Fund is authorized to reimburse Equity
Planning monthly for actual expenses of Equity Planning up to 0.75% annually of
the average daily net assets of the Fund's Class B Shares. In addition, under
the Plans the Fund will pay Equity Planning 0.25% annually of the average daily
net assets of the Fund for providing services to shareholders, including
assistance in connection with inquiries related to shareholder accounts (the
"Service Fee").
Expenditures incurred under the Plans may consist of: (i) commissions to
sales personnel for selling 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 agreements with the Distributor for services rendered in
connection with the sale and distribution of shares of the Fund; (iv) payment of
expenses incurred in sales and promotional materials; (v) the costs of preparing
and distributing promotional material; (vi) the costs of printing the Fund's
Prospectus and Statement of Additional Information for distribution to potential
investors; and (vii) such other similar services that the Directors determine
are reasonably calculated to result in the sale of shares of the Fund. From the
Service Fee, Equity Planning expects to pay a quarterly fee to qualifying
broker-dealer firms, as compensation for providing personal services and/or the
maintenance of 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 Equity
Planning.
In order to receive payments under the Plans, participants must meet such
qualifications which are to be established in the sole discretion of the
Distributor, such as services to the Fund's shareholders; or services providing
the Fund 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 transmissions of such purchases or sales by computerized
tape or other electronic equipment; or other batch processing.
For the fiscal year ended December 31, 1997, the Fund paid $785,416 under the
Class A Plan and $103,992 under the Class B Plan. The fees were used to
compensate broker-dealers for servicing shareholders' accounts, including
$49,325 paid to W.S. Griffith & Co., Inc., an affiliate, compensating sales
personnel and reimbursing the Distributor for commission expenses and expenses
related to preparation of the marketing material. The Distributor's expenses
from selling and servicing Class B Shares may be more than the payments received
from contingent deferred sales charges collected on redeemed shares and from the
Fund under the Class B Plan. Those expenses may be carried over and paid in
future years. At December 31, 1997, the end of the last Plan year, the
Distributor had incurred unreimbursed expenses under the Class B Plan of
$372,747 (equal to 0.12% of the Fund's net assets) which have been carried over
into the present Class B Plan year.
On a quarterly basis, the Fund's Directors review a report on expenditures
under each Plan and the purposes for which expenditures were made. The Directors
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 Fund's Directors
and by a majority of the Directors who are not "interested persons" (as defined
in the 1940 Act) and who have no direct or indirect financial interest in the
operation of either Plan or any related agreements (the "Plan Directors"). Each
Plan provides that it may not be amended to materially increase the costs which
the Fund may bear without approval of the applicable class of shareholders of
the Fund and that other material amendments must be approved by a majority of
the Plan Directors 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 Directors who are not "interested
persons" shall be committed to the discretion of the Directors who are not
"interested persons." Each Plan may be terminated at any time by vote of a
majority of the Plan Directors or a majority of the applicable class of
outstanding shares of the Fund. If the Plans are terminated in accordance with
their terms, the obligations of the Fund to make payments to the Distributor
pursuant to the Plan, including payments for expenses carried over from previous
years, will cease.
The Directors have concluded that there is a reasonable likelihood that the
Plans will benefit the Fund and all classes of shareholders.
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 Directors to suspend distribution fees or amend either or both
Plans.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent investment
is $25. 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 Equity Planning, or pursuant to the Systematic Exchange
privilege (see the
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Statement of Additional Information). 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.
Each class of shares represents an interest in the same portfolio of
investments of the Fund, has the same rights, and is identical to the other in
all respects, except that Class B Shares bear the expenses of the deferred sales
arrangement and any expenses (including the higher distribution plan fees and
any incremental transfer agency costs) resulting from such sales arrangement.
Each class has exclusive voting rights with respect to provisions of the Rule
12b-1 distribution plan pursuant to which its distribution plan fees are paid,
and each class has different exchange privileges. Only the Class B Shares are
subject to a conversion feature. The net income attributable to Class B Shares
and the dividends payable on Class B Shares will be reduced by the amount of the
higher distribution plan fees and incremental expenses associated with such
distribution and service fees; likewise, the net asset value of the Class B
Shares will be reduced by such amount to the extent the Fund has undistributed
net income.
Subsequent investments for the purchase of full and fractional shares in
amounts of $25 or more may be made through an investment dealer or by sending a
check to Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8301. Shares will be maintained by the Transfer Agent in book
entry form; no share certificates are available. A fee may be incurred by the
shareholder for a lost or stolen share certificate previously issued. Sales
personnel of broker-dealers distributing the Fund's shares may receive differing
compensation for selling Class A or Class B Shares.
The Fund offers combination purchase privileges, letters of intent,
accumulation plans, withdrawal plans and reinvestment and exchange privileges.
Certain privileges may not be available in connection with Class B Shares or
other mutual funds advised, subadvised or distributed by the Adviser,
Distributor or any of their corporate affiliates (an "Affiliated Phoenix Fund").
See "Investor Account Services".
ALTERNATIVE SALES ARRANGEMENTS
The alternative purchase arrangement permits an investor to choose the method
of purchasing shares that is most 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 Fund, and other circumstances. Investors should consider whether, during
the anticipated life of their investment in the Fund, the accumulated continuing
distribution and service fees and contingent deferred sales charges on Class B
Shares prior to conversion would be less than the initial sales charge and
accumulated distribution and service fees on Class A Shares purchased at the
same time, and to what extent such differential would be offset by the higher
yield of Class A Shares. In this regard, Class A Shares will be more beneficial
to the investor who qualifies for certain reduced initial sales charges. For
this reason, the Distributor intends to limit sales of Class B Shares sold to
any shareholder to a maximum total value of $250,000. Class B Shares sold to
unallocated qualified employer sponsored plans may be limited to a total value
of $1,000,000.
Class B Shares sold to allocated qualified employer sponsored plans,
including 401(k) plans, will be limited to a maximum total value of $250,000 for
each participant. The Distributor reserves the right to decline the sale of
Class B Shares to allocated qualified employer sponsored plans not utilizing an
approved participant tracking system. In addition, 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, the plan, fund or foundation has assets of
$10,000,000 or more or at least 100 participant employees. Class B Shares will
also not be sold to investors who have reached the age of 85 because of such
persons' expected distribution requirements.
Class A Shares are subject to a lower distribution and service fees and,
accordingly, pay correspondingly higher dividends per share. However, because
initial sales charges are deducted at the time of purchase, such investors would
not have all their funds invested initially and, therefore, would initially own
fewer shares. Investors not qualifying for reduced initial sales charges who
expect to maintain their investment for an extended period of time might
consider purchasing Class A Shares because the accumulated continuing
distribution charges on Class B Shares may exceed the initial sales charge on
Class A Shares during the life of the investment. Again, however, such investors
must weigh this consideration against the fact that, because of such initial
sales charge, not all their funds will be invested initially. However, other
investors might determine that it would be more advantageous to purchase Class B
Shares to have all their funds invested initially, although remaining subject to
higher continuing distribution charges and, for a five-year period, being
subject to a contingent deferred sales charge.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
The public offering price of Class A Shares is the net asset value plus a
sales charge, as set forth below. Offering prices become effective at the close
of the general trading session of the New York Stock Exchange. Orders received
by dealers prior to such time are confirmed at the offering price effective at
that time, provided the order is received by State Street Bank prior to its
close of business.
The sales charge varies with the size of the purchase and reduced charges
apply to the aggregate of purchases of the Fund made at one time by "any
person," which term includes an individual, an individual and his/her spouse and
their children under the age of 21, or a trustee or other fiduciary purchasing
shares for a single trust, estate or
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<PAGE>
fiduciary account although more than one beneficiary is involved.
Class A Shares of the Fund are offered to the public at the net asset value
next computed after the purchase order is received by State Street Bank plus a
maximum sales charge of 4.75% of the offering price (4.99% of the amount
invested) on single purchases of less than $50,000. The sales charge is reduced
on a graduated scale on single purchases on $50,000 or more as shown below.
SALES CHARGE SALES CHARGE DEALER DISCOUNT
AMOUNT OF AS PERCENTAGE AS PERCENTAGE OR AGENCY FEE
TRANSACTION OF OFFERING OF AMOUNT AS PERCENTAGE OF
AT OFFERING PRICE PRICE INVESTED OFFERING PRICE*
- ----------------- ------------- ------------- ----------------
Less than $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**
---------------
*Equity Planning will sponsor sales contests, training and educational meetings
and provide to all qualifying dealers, from its own profits and resources,
additional compensation in the form of trips, merchandise or expense
reimbursement. Brokers or dealers other than Equity Planning may also make
customary additional charges for their services in effecting purchases, if they
notify the Fund of their intention to do so.
**In connection with Class A Share purchases (or subsequent purchases in any
amount) by an account held in the name of a qualified employee benefit plan with
at least 100 eligible employees. Equity Planning may pay broker-dealers, from
its own resources, an amount equal to 1% on the first $3 million of purchases,
0.50% on the next $3 million, plus 0.25% on the amount in excess of $6 million.
In connection with Class A Share purchases of $1,000,000 or more (or
subsequent purchases in any amount), excluding purchases by qualified employee
benefit plans as described above, Equity Planning may pay broker-dealers, from
its own profits and resources, a percentage of the net asset value of any shares
sold as set forth below:
PURCHASE AMOUNT PAYMENT TO BROKER-DEALER
--------------- ------------------------
$1,000,000 to $3,000,000 1%
$3,000,001 to $6,000,000 0.50 of 1%
$6,000,001 or more 0.25 of 1%
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 a pro rata
portion of any such amounts paid with respect to the investment.
Shares issued pursuant to the automatic reinvestment of income dividends or
capital gains distributions are not subject to any sales charges. The Fund
receives the entire net asset value of its Class A Shares sold to investors. The
Distributor's commission is the sales charge shown above less any applicable
discount or commission "reallowed" to selected dealers and agents. The
Distributor will reallow discounts to selected dealers and agents in the amounts
indicated in the table above. In this regard, the Distributor may elect to
reallow the entire sales charge to selected dealers and agents for all sales
with respect to which orders are placed with the Distributor. A selected dealer
who receives reallowance in excess of 90% of such a sales charge may be deemed
to be an "underwriter" under the Securities Act of 1933.
HOW TO OBTAIN REDUCED SALES CHARGES--CLASS A SHARES
Investors choosing the initial sales charge alternative under certain
circumstances may be entitled to pay reduced sales charges. The circumstances
under which such investors may pay reduced sales charges are described below.
QUALIFIED PURCHASERS. No sales charge will be imposed on sales of shares to
(1) any trustee, director or officer of the Phoenix Funds, Phoenix-Engemann
Funds, Phoenix-Seneca Funds or any other Affiliated Phoenix Fund; (2) any
director or officer, or to any full-time employee or sales representative (who
has acted as such for at least 90 days) of the Adviser or of Equity Planning;
(3) registered representatives and employees of securities dealers with whom
Equity Planning 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 Equity Planning; (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,
Equity Planning and/or their corporate affiliates; (8) any employee or agent who
retires from the Adviser, Equity Planning and/or their corporate affiliate; (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 or any other Affiliated 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,
instrumentality, department, authority or agency prohibited by law from paying a
sales charge; (13) any fully matriculated student in a U.S. service academy;
(14) any unallocated accounts 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
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<PAGE>
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 or any other Affiliated Phoenix Fund if, in connection with the purchase
or redemption of the redeemed shares, the investor paid a 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 or any other
Affiliated 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.
In addition, Class A Shares purchased by the following investors are not
subject to any Class A sales charge: (1) investment advisers 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; (2)
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 those purchases; (3) clients of such
investment advisers or financial planners who buy shares for their own accounts
may also purchase shares without sales charge but only if their accounts are
linked to a master account of their investment adviser or 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 these investors may
be charged a fee by the broker, agent or financial intermediary for purchasing
shares).
COMBINATION PURCHASE PRIVILEGE. Purchases, either singly or in any
combination, of shares of the Fund or shares of any other Affiliated Phoenix
Fund, (including Class B Shares) if made at a single time by a single purchaser,
will be combined for the purpose of determining whether the total dollar amount
of such purchases entitles the purchaser to a reduced sales charge on any such
purchases of Class A Shares. Each purchase of Class A Shares will then be made
at the public offering price, as described in the then current Prospectus
relating to such shares, which at the time of such purchase is applicable to a
single transaction of the total dollar amount of all such purchases. The term
"single purchaser" includes an individual, or an individual, his spouse and
their children under the age of majority purchasing for his or their own account
(including an IRA account) including his or their own trust, commonly known as a
living trust; a trustee or other fiduciary purchasing for a single trust, estate
or single fiduciary account, although more than one beneficiary is involved;
multiple trusts or 403(b) plans for the same employer; multiple accounts (up to
200) under a qualified employee benefit plan or administered by a third party
administrator; or 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. Class A Shares or shares of any other Affiliated Phoenix
Fund (including Class B Shares and excluding Money Market Fund Series Class A
Shares) may be purchased by a "single purchaser" (as defined above) within a
period of thirteen months pursuant to a Letter of Intent, in the form provided
by Equity Planning, stating the investor's intention to invest in such shares
during such period an amount which, together with the value (at their maximum
offering prices on the date of the Letter) of the Class A Shares of the Fund or
Class A or Class B Shares of any other Affiliated Phoenix Fund then owned by
such investor, equals a specified dollar amount. Each purchase of shares made
pursuant to a Letter of Intent will be made at the public offering price, as
described in the then current Prospectus relating to such shares, which, at the
time of purchase, is applicable to a single transaction of the total dollar
amount specified in the Letter of Intent.
An investor's Letter of Intent is not a binding commitment of the investor to
purchase or a binding obligation of the Fund or Equity Planning to sell a
specified dollar amount of shares qualifying for a reduced sales charge.
Accordingly, out of his initial purchase (and subsequent purchases if
necessary), 5% of the dollar amount of purchases required to complete his
investment is held in escrow in the form of shares (valued at the purchase price
thereof) registered in the investor's name until he completes his investment, at
which time escrowed shares are deposited to his account. If the investor does
not complete his investment and does not within 20 days after written request by
Equity Planning or his dealer pay the difference between the sales charge on the
dollar amount specified in his Letter and the sales charge on the dollar amount
of actual purchases, the difference will be realized through the redemption of
an appropriate number of the escrowed shares and any remaining escrowed shares
will be deposited to his account.
RIGHT OF ACCUMULATION. "Single purchasers" (as defined above) may also
qualify for reduced sales charges based on the combined value of purchases of
either class of shares of the Fund, or any other Affiliated Phoenix Fund, made
over time. Reduced sales charges are offered to investors whose shares, in the
aggregate, are valued (i.e., the dollar amount of such purchases plus the then
current value (at the public offering price as described in the then current
prospectus relating to such shares) of shares of all
16
<PAGE>
Affiliated Phoenix Funds owned) in excess of the threshold amounts described
in the section entitled "Initial Sales Charge Alternative--Class A Shares." To
use this option, the investor must supply sufficient information as to account
registrations and account numbers to permit verification that one or more of his
purchases qualifies for a reduced sales charge.
ASSOCIATIONS. A group or association may be treated as a "single purchaser"
and qualify for reduced initial sales charges under the Combination Privilege
and Right of Accumulation if the group or association (1) has been in existence
for at least six months; (2) has a legitimate purpose other than to purchase
mutual fund shares at a reduced sales charge; (3) gives its endorsements or
authorization to the investment program to facilitate solicitation of the
membership by the investment dealer, thus effecting economies of sales effort;
and (4) is not a group whose sole organizational nexus is that the members are
credit card holders of a company, policyholders of an insurance company,
customers of a bank or a broker-dealer or clients of an investment adviser.
DEFERRED SALES CHARGE ALTERNATIVE--CLASS B SHARES
Investors choosing the deferred sales charge alternative purchase Class B
Shares at net asset value per share without the imposition of a sales charge at
the time of purchase. The Class B Shares are sold without an initial sales
charge but are subject to a sales charge if redeemed within five years of
purchase.
Proceeds from the contingent deferred sales charge are paid to the
Distributor and are used in whole or in part by the Distributor to defray its
expenses related to providing distribution-related services to the Fund in
connection with the sale of the Class B Shares, such as the payment of
compensation to selected dealers and agents. The combination of the contingent
deferred sales charge and the distribution fee facilitates the ability of the
Fund to sell the Class B Shares without a sales charge being deducted at the
time of purchase.
CONTINGENT DEFERRED SALES CHARGE. Class B Shares which are redeemed within
five years of purchase will be subject to a contingent deferred sales charge at
the rates set forth below charged as a percentage of the dollar amount subject
thereto. The charge will be assessed on an amount equal to the lesser of the
current market value or the cost of the shares being redeemed. Accordingly, no
sales charge will be imposed on increases in net asset value above the initial
purchase price. In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions.
The Distributor intends to pay investment dealers a sales commission of 4% of
the sale price of Class B Shares sold by such dealers, subject to future
amendment or termination. The Distributor will retain all or a portion of the
continuing distribution fee assessed to Class B shareholders and will receive
the entire amount of the contingent deferred sales charge paid by shareholders
on the redemption of shares to finance the 4% commission plus interest and
related marketing expenses.
The amount of the contingent deferred sales charge, if any, will vary
depending on the number of years from the time of payment for the purchase of
Class B Shares until the time of redemption of such shares. Solely for purposes
of determining the number of years from the time of any payment for the
purchases of shares, all payments during a month will be aggregated and deemed
to have been made on the last day of the previous month.
CONTINGENT DEFERRED
SALES CHARGE AS
A PERCENTAGE OF
DOLLAR AMOUNT
YEAR SINCE PURCHASE SUBJECT TO CHARGE
------------------- -------------------
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth 2%
Sixth 0%
In determining whether a contingent deferred sales charge is applicable to a
redemption, the calculation will be determined in the manner that minimizes the
rate being charged. Therefore, Class A Shares will be redeemed first, Class B
Shares held for over five years or acquired pursuant to reinvestment of
dividends or distributions are redeemed next and any Class B Shares held longest
during the five-year period, are redeemed next unless the shareholder directs
otherwise. The charge will not be applied to dollar amounts representing an
increase in the net asset value since the time of purchase.
To provide an example, assume in 1992, an investor purchased 100 Class B
Shares. In 1995, the investor purchased another 100 Class B Shares at $12 per
share. In 1995, the investor purchased 100 Class A Shares. Assume that in 1998,
the investor owns 225 Class B Shares (15 Class B Shares resulting from dividend
reinvestment and distributions upon the Class B Shares purchased in 1992 and 10
Class B Shares resulting from dividend reinvestment and distributions upon the
Class B Shares purchased in 1995) as well as 100 Class A Shares. If the investor
wished to then redeem 300 shares and had not specified a preference in redeeming
shares: first, 100 Class A Shares would be redeemed without charge. Second, 115
Class B Shares purchased in 1992 (including 15 shares issued as a result of
dividend reinvestment and distributions) would be redeemed next without charge.
Finally, 85 Class B Shares purchased in 1995 would be redeemed resulting in a
deferred sales charge of $27 [75 shares (85 shares minus 10 shares resulting
from dividend reinvestment) x $12 (original price of current NAV if less than
original) x 3% (applicable rate in the third year after purchase)].
The contingent deferred sales charge is waived on redemptions of shares (a)
if redemption is made within one
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<PAGE>
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) if redemption is
made within one year of disability, as defined in Section 72(m)(7) of the Code;
(c) in connection with mandatory distributions upon reaching age 70 1/2 under
any retirement plan qualified under Sections 401, 408 or 403(b) of the Code or
any redemption resulting from the tax-free return of an excess contribution to
an IRA; (d) in connection with redemptions 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) in connection
with the exercise of certain exchange privileges among Class B Shares of the
Fund and Class B Shares of other Affiliated Phoenix Funds; (f) in connection
with any direct rollover transfer of shares from an established Affiliated
Phoenix Fund qualified plan into a Phoenix Fund IRA by participants terminating
from the qualifying plan; and (g) in accordance with the terms specified under
the Systematic Withdrawal Program. If, upon the occurrence of a death as
outlined above, the account is transferred to an account registered in the name
of the deceased's estate, the contingent deferred sales charge will be waived on
any redemption from the estate account occurring within one year of the death.
If the Class B Shares are not redeemed within one year of the death, they will
remain Class B Shares and be subject to the applicable contingent deferred sales
charge when redeemed.
Class B Shares of the Fund will automatically convert to Class A Shares
without a sales charge at the relative net asset values of each class after
eight years from the acquisition of the Class B Shares, and as a result, will
thereafter be subject to the lower distribution fee under the Class A Plan. 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. The
purpose of the conversion feature is to relieve the holders of Class B Shares
that have been outstanding for a period of time sufficient for Equity Planning
to have been compensated for distribution-related expenses from most of any
continuing burden of such distribution-related expenses.
For purposes of conversion to Class A Shares, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares in
a shareholder's Fund account will be considered to be held in a separate
subaccount. Each time any Class B Shares in the shareholder's Fund account
(other than those in the subaccount) are converted to Class A Shares, an equal
pro rata portion of the Class B Shares in the subaccount will also be converted
to Class A Shares.
The conversion of Class B Shares to Class A Shares 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 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
occur, and shares might continue to be subject to the higher distribution fee
for an indefinite period. Even if the Fund were unable to obtain such
assurances, it might make additional distributions if doing so would assist in
complying with the Fund's general practice of distributing sufficient income to
reduce or eliminate Federal taxes otherwise payable by the Fund.
INVESTOR ACCOUNT SERVICES
The Fund mails periodic statements and reports to shareholders. In order to
reduce the volume of mail, 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. In most cases, changes to any
shareholder account may be accomplished by calling Shareholder Services at (800)
243-1574.
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.
You or your registered representative may, by telephone or written notice,
cancel or change the dollar amount being invested pursuant to the Investo-Matic
Plan unless you have notified the Fund or Transfer Agent that your registered
representative shall not have this authority.
DISTRIBUTION OPTION
The Fund currently declares 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 by the shareholder due to an invalid address,
then the dividend and/or distribution will be reinvested after the Transfer
Agent has been informed that the proceeds are undeliverable. Additional shares
will be purchased for your account at the then current net asset value.
Shareholders
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<PAGE>
who 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), may direct that any dividends and
distributions paid with respect to shares in that account be automatically
reinvested in a single account of any other Affiliated Phoenix Fund at net asset
value. You should obtain a current prospectus and consider the objectives and
policies 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. 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. A
distribution option may be changed at any time by notifying Shareholder Services
by telephone at (800) 243-1574 or by sending a letter signed by the registered
owner(s) of the account. 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. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.
SYSTEMATIC WITHDRAWAL PROGRAM
The Systematic Withdrawal Program allows you to periodically redeem a portion
of your account on a predetermined monthly or 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.
See "Redemption of Small Accounts."
Class A shareholders participating in the Systematic Withdrawal Program must
own shares of the Fund worth $5,000 or more, as determined by the then-current
net asset value per share, and elect to have all dividends reinvested in
additional Class A Shares of the Fund. The purchase of shares while
participating in the withdrawal program will ordinarily be disadvantageous to
the Class A Shares investor since a sales charge will be paid by the investor on
the purchase of Class A Shares at the same time as other shares are being
redeemed. For this reason, investors in Class A Shares may not participate in an
automatic investment program while participating in the Systematic Withdrawal
Program.
To participate in the Systematic Withdrawal Program, Class B shareholders
must initially own shares of the Fund worth $5,000 or more and elect to have all
dividends reinvested in additional Class B Shares of the Fund. 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 Fund are offered in connection with the following qualified
prototype retirement plans: IRA, Rollover IRA, SEP-IRA, SIMPLE IRA, Roth 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) 243-4361 for further
information about the plans.
EXCHANGE PRIVILEGES
You may exchange Class A or Class B Shares held in book entry form for shares
of the same class of other Affiliated Phoenix Funds provided that the following
conditions are met: (1) the shares that will be acquired in the exchange (the
"Acquired Shares") are available for sale in your state of residence; (2) the
Acquired Shares are of the same class as the shares to be surrendered (the
"Exchanged Shares"); (3) the Acquired Shares will be registered to the same
shareholder account as the Exchanged Shares; (4) the account value of the fund
whose shares are to be acquired must equal or exceed the minimum initial
investment amount required by that fund after the exchange is implemented; and
(5) if you have elected not to utilize the Telephone Exchange Privilege (see
below), a properly executed exchange request must be received by the Transfer
Agent.
Subject to the above requirements for an exchange, you or your registered
representative may, by telephone or written notice, elect to have Class A or
Class B shares of the Fund exchanged for the same class of shares of another
Affiliated Phoenix Fund automatically on a monthly,
19
<PAGE>
quarterly, semiannual, or annual basis or may cancel the privilege ("Systematic
Exchange").
Shareholders who maintain an account balance in the Fund 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), may direct that
shares of the Fund be automatically exchanged at predetermined intervals for
shares of the same class of another Affiliated Phoenix Fund. If you are
participating in the Self Security program offered by Phoenix Home Life, it is
not necessary to maintain the above account balances in order to use the
Systematic Exchange Privilege.
Such exchanges will be executed upon the close of business on the 10th of a
month and if the 10th falls on a holiday or weekend, then at the close of
business on the next succeeding business day. The minimum initial and subsequent
amount that may be exchanged under the Systematic Exchange is $25. Systematic
Exchange forms are available from Equity Planning.
Exchanges will be based upon each Fund's net asset value per share next
computed following receipt of a properly executed exchange request, without a
sales charge. On Class B Share exchanges, the contingent deferred sales charge
schedule of the original shares purchased continues to apply.
The exchange of shares from one Fund to another is treated as a sale of the
Exchanged Shares and a purchase of the Acquired Shares for Federal income tax
purposes. You may, therefore, realize a taxable gain or loss. See "Dividends,
Distributions and Taxes" for information concerning the Federal income tax
treatment of a disposition of shares.
Each Phoenix Fund has different investment objectives and policies.
Shareholders should, therefore, obtain and review the current prospectus of the
Fund into which the exchange is to be made before any exchange requests are
made.
MARKET TIMER RESTRICTIONS
Because excessive trading can hurt Fund performance and harm shareholders,
the Fund reserves the right to temporarily or permanently terminate exchange
privileges or reject any specific order 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 fund within any 30-day period. The Distributor
has entered into agreements with certain dealers and investment advisors
permitting them to exchange their clients' shares by telephone. These privileges
are limited under those agreements and the Distributor has the right to reject
or suspend those privileges.
TELEPHONE EXCHANGES
Telephone Exchange Privileges are only available in states where the shares
to be acquired may be legally sold. Unless you elect in writing not to
participate in the Telephone Exchange Privilege, shares for which certificates
have not been issued may be exchanged by calling (800) 243-1574 provided that
the exchange is made between accounts with identical registrations. Under the
Telephone Exchange Privilege, telephone exchange orders may also be entered on
behalf of the shareholder by his or her registered representative.
The Fund and the Transfer Agent will employ reasonable procedures to confirm
that telephone instructions are genuine. In addition to requiring identical
registrations on both accounts, the Transfer Agent will require address
verification and will record telephone instructions on tape. All exchanges will
be confirmed in writing to you. To the extent that procedures reasonably
designed to prevent unauthorized telephone exchanges are not followed, the Fund
and/or the Transfer Agent may be liable for following telephone instructions for
exchange transactions that prove to be fraudulent. Broker-dealers other than
Equity Planning have agreed to bear the risk of any loss resulting from any
unauthorized telephone exchange instruction from the firm or its registered
representatives. However, you would bear the risk of loss resulting from
instructions entered by an unauthorized third party that the Fund and/or the
Transfer Agent reasonably believe to be genuine. The Telephone Exchange
Privilege may be modified or terminated at any time on 60 days' notice to
shareholders. In addition, during times of drastic economic or market changes,
the Telephone Exchange Privilege may be difficult to exercise or may be
suspended temporarily. In such event an exchange may be effected by following
the procedure outlined for tendering shares represented by certificate(s).
If you elect not to use the Telephone Exchange Privilege or if the shares
being exchanged are represented by a certificate or certificates, you must
submit a written request to exchange such shares to Phoenix Funds, c/o State
Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301. If the
shares are being exchanged between accounts that are not registered identically,
the signature on such request must be guaranteed by an eligible guarantor
institution as defined by the Fund's 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. Any outstanding certificate or certificates for the tendered
shares must be duly endorsed and submitted.
NET ASSET VALUE
The net asset value per share of the Fund is determined as of the close of
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The net asset value per share of the Fund is
determined by adding the values of all securities and other assets, subtracting
liabilities, and dividing by the total
20
<PAGE>
number of outstanding shares. The total liability allocated to a class, plus
that class's distribution and service fees 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 Fund's investments are valued at market value or, where market quotations
are not available, at fair value as determined in good faith by the Directors 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 Directors 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 Directors 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 Fund buy back shares at the net asset value
next determined after receipt of a redemption request and any other required
documentation in proper form by State Street Bank (see "Net Asset Value"). In
the case of Class B Share redemptions, you will be subject to the applicable
deferred sales charge, if any, for such shares (see "Deferred Sales Charge
Alternative--Class B Shares"). To redeem, any outstanding share certificates in
proper form for transfer must be received by Phoenix Funds, c/o State Street
Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8801. To be in proper
form to redeem shares, your signature on the certificate or stock power must be
signed exactly as registered, including any fiduciary title, on a written
instruction letter, certificate, or accompanying stock power, such signature(s)
being guaranteed by an eligible guarantor institution as determined in
accordance with standards and procedures established by the Transfer Agent.
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 Fund
does 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 following table.
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 of shares, shareholders having questions about specific
requirements should contact the Fund at (800) 243-1574. Redemption requests will
not be honored until all required documents in proper form have been received.
HOW CAN I SELL MY SHARES?
[phone] By Phone o Sales up to $50,000
o Not available on most retirement accounts
(800) 243-1574 o Requests received after 4PM will be executed
on the following business day
[letter] In Writing o Letter of instruction from the registered
owner including the fund and account number
and the number of shares or dollar
amount you wish to sell
o 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
Shares previously issued in certificate form cannot be redeemed until the
certificated shares have been deposited to your account.
TELEPHONE REDEMPTIONS
The Fund and 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.
Equity Planning and the Fund will employ reasonable procedures to confirm that
telephone instructions are genuine. To the extent that procedures reasonably
designed to prevent unauthorized telephone redemptions are not followed, Equity
Planning and the Fund 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 Equity Planning and/or
the Fund reasonably believe to be genuine. The Telephone Redemption Privilege
may be modified or terminated at any time without prior notice to shareholders.
In addition, during times of drastic economic or market changes, the Telephone
Redemption Privilege may be difficult to exercise or may be suspended
temporarily. In
21
<PAGE>
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.
REDEMPTION IN KIND
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. However, the Fund has
elected to pay in cash all requests for redemption by any shareholder of record,
limited in respect to each shareholder during any 90 day period to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of such
period. This election has been made pursuant to Rule 18f-1 under the Investment
Company Act of 1940 Act and is irrevocable while the Rule is in effect unless
the Securities and Exchange Commission, by order, permits the withdrawal
thereof. In case of a redemption in kind, securities delivered in payment for
shares would be readily marketable and valued at the same value assigned to them
in computing the net asset value per share of the Fund. A shareholder receiving
such securities would incur brokerage costs when selling such securities.
REDEMPTION OF SMALL ACCOUNTS
Due to the relatively high cost of maintaining small accounts, the Fund
reserves 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
Fund redeems 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.
ACCOUNT REINSTATEMENT PRIVILEGE
You have a one time privilege of using redemption proceeds to purchase Class
A Shares of any Affiliated Phoenix Fund with no sales charge (at the 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 for reinvestment must be received by the Distributor 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 this reinvestment privilege.
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of the Fund to distribute substantially all of its net
investment income at least annually and to distribute net realized capital
gains, if any, annually. Both dividends and distributions will be payable in
shares of the Fund at net asset value or, at the option of the shareholder, in
cash.
It is also the policy of the Fund to qualify as a "regulated investment
company" by complying with provisions of the Internal Revenue Code of 1986, as
amended (the "Code") relieving investment companies which distribute
substantially all of their net income (both net investment income and net
realized capital gains) from federal income tax on the amounts distributed. The
Directors believe that the Fund so complied for its last taxable year.
Distributions of net investment income and net realized short-term capital gains
(whether received in shares or in cash) are treated by the shareholder as
ordinary income for federal income tax purposes. Distributions which are
designated by the Fund as long-term gains (whether received in shares or in
cash) are treated by the shareholder as long-term capital gains for federal
income tax purposes regardless of the length of time the shareholder may have
owned shares of the Fund. Shareholders who are not subject to tax on their
income will not be required to pay tax on amounts distributed to them. After the
close of the calendar year the Fund will advise shareholders what portion of any
payments received was ordinary income and what portion was long-term capital
gains.
The federal income tax laws impose a 4% nondeductible excise tax on each
regulated investment company with respect to the amount, if any, by which such
company does not meet distribution requirements specified in the federal income
tax laws. The Fund intends to comply with the distribution requirements and thus
does not expect to incur the 4% nondeductible excise tax.
IMPORTANT NOTICE REGARDING TAXPAYER IRS CERTIFICATION
Pursuant to IRS regulations, the Fund 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 Fund reserves the right to refuse to open an account for any person
failing to provide a taxpayer identification number along with the required
certifications.
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<PAGE>
The Fund sends to all 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 advisor regarding specific questions as to Federal, foreign,
state or local taxes.
ADDITIONAL INFORMATION
ORGANIZATION OF THE FUND
The Fund was originally organized on March 21, 1967 as a Massachusetts
corporation under the name of "Income and Capital Shares, Inc." The Directors
have designated the authorized capital stock of the Fund as 50,000,000 shares of
Class A Common Stock, $1 par value and 50,000,000 shares of Class B Common
Stock, $1 par value. Shareholders of the Fund are entitled to one full vote for
each full share owned and a fractional vote for any fractional share. Shares
will participate equally in dividends and distributions declared by the Fund and
in the Fund's net assets on liquidation, except as otherwise described in this
Prospectus. Shares are fully paid and non-assessable when issued and are
transferable and redeemable. Shares have no preemptive or conversion rights
(other than as described herein).
ADDITIONAL INQUIRIES
Inquiries and requests for the Statement of Additional Information, the
Annual Report to Shareholders and the Semiannual Report to Shareholders should
be directed to Equity Planning at (800) 243-4361 or 100 Bright Meadow Boulevard,
P.O. Box 2200, Enfield, Connecticut 06083-2200.
REGISTRATION STATEMENT
This Prospectus does not contain all the information included in the Fund's
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 Commission in Washington, D.C. upon payment
of the prescribed fee.
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.
o A corporation
o Financial institution
o Section 501(a) exempt organization (IRA, Corporate Retirement Plan,
403(b), Keogh)
o United States or any agency or instrumentality thereof
o A State, the District of Columbia, a possession of the United States,
or any subdivision or instrumentality thereof
o International organization or any agency or instrumentality thereof
o Registered dealer in securities or commodities registered in the
U.S. or a possession of the U.S.
o Real estate investment trust
o Common trust fund operated by a bank under section 584(a)
o An exempt charitable remainder trust, or a non-exempt trust
described in section 4947(a)(1)
o 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 Strategic
Allocation Fund, Inc. (the "Fund") which you should know before investing.
Please read it carefully and retain it for future reference.
The Fund has filed with the Securities and Exchange Commission a Statement
of Additional Information about the Fund, dated May 1, 1998. The Statement
contains more detailed information about the Fund and is incorporated into this
Prospectus by reference. You may obtain a free copy of the Statement by writing
the Fund at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut
06083-2200.
Financial information relating to the Fund is contained in the Annual Report
to Shareholders for the year ended December 31, 1997 and is incorporated into
the Statement of Additional Information by reference.
[recycle logo] PRINTED ON RECYCLED PAPER USING SOYBEAN INK
<PAGE>
PHOENIX STRATEGIC ALLOCATION FUND, INC. -------------------
PO Box 2200 BULK RATE MAIL
Enfield CT 06083-2200 U.S. POSTAGE
PAID
SPRINGFIELD, MA
PERMIT NO. 444
-------------------
[logo] PHOENIX
DUFF & PHELPS
PDP 453 (5/98)
<PAGE>
PHOENIX STRATEGIC ALLOCATION FUND, INC.
101 Munson Street
Greenfield, Massachusetts 01301
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1998
This Statement of Additional Information is not the prospectus, but expands
upon and supplements the information contained in the current Prospectus of
Phoenix Strategic Allocation Fund, Inc. (the "Fund"), dated May 1, 1998, and
should be read in conjunction with it. The Fund's 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, Connecticut 06083-2200.
--------------------
TABLE OF CONTENTS
Page
----
THE FUND.................................................................. 2
INVESTMENT OBJECTIVE AND POLICIES......................................... 2
INVESTMENT RESTRICTIONS................................................... 7
PERFORMANCE INFORMATION................................................... 8
PORTFOLIO TRANSACTIONS AND BROKERAGE...................................... 9
SERVICES OF THE ADVISER................................................... 10
NET ASSET VALUE........................................................... 11
PLANS OF DISTRIBUTION..................................................... 11
HOW TO BUY SHARES......................................................... 13
REDEMPTION OF SHARES...................................................... 14
DIVIDENDS, DISTRIBUTIONS AND TAXES........................................ 15
DIRECTORS AND OFFICERS.................................................... 16
ADDITIONAL INFORMATION.................................................... 22
APPENDIX.................................................................. 23
--------------------
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY): (800) 243-1926
- ---------------
PDP 458(5/98)
1
<PAGE>
THE FUND
Phoenix Strategic Allocation Fund, Inc. was organized as a corporation under
the laws of the Commonwealth of Massachusetts on November 22, 1966 as the Income
and Capital Shares, Inc. At a special meeting of the Fund's shareholders held on
June 24, 1994, the holders of the requisite percentages of outstanding shares
approved further amendment to the Fund's Restated Articles of Organization to
increase the number of authorized shares of the Fund's Common Stock, $1 par
value, from 15,000,000 to 50,000,000. On September 30, 1994, the holders of the
requisite percentages of outstanding shares approved further amendment to the
Fund's Restated Articles of Organization to (i) to redesignate the Common Stock
as Class A Common Stock, $1 par value; (ii) to authorize the Directors to
designate additional classes of Common Stock; and (iii) to authorize an
additional 50,000,000 shares of undesignated Common Stock, $1 par value.
At a special meeting of the Fund's shareholders held on November 8, 1996,
shareholders of the Fund approved a change in the name of the Fund to Phoenix
Strategic Allocation Fund, Inc. Prior to the effective date of the name change,
November 15, 1996, the Fund was known as the "Phoenix Total Return Fund, Inc."
INVESTMENT OBJECTIVE AND POLICIES
The Fund's Prospectus describes the investment objective of the Fund and
summarizes the investment policies and techniques the Fund will employ in
seeking to achieve its objective. The following discussion supplements the
description of the Fund's investment policies and techniques in the Prospectus.
WRITING AND PURCHASING OPTIONS
Call options written by the 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 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 Fund may write call options only if they are covered and 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.
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<PAGE>
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 an amount of
cash or liquid assets 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 to
collateralize fully the position and thereby ensure that it is not leveraged.
Any amount pledged may be applied to the Fund's obligation to segregate
additional amounts in the event that the market value of the qualified
securities falls below 100% of the current index value times the multiplier
times the number of contracts.
The Fund may invest up to 5% of its total assets in exchange-traded call and
put options. 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.
In connection with the Fund's 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 option is
unable to effect a closing purchase transaction, it cannot sell the underlying
security until the option expires or the option is exercised. Accordingly, a
covered call writer may not be able to sell the underlying security at a time
when it might otherwise be advantageous to do so.
Possible reasons for the absence of a liquid secondary market on an exchange
include the following: (i) insufficient trading interest in certain options;
(ii) restrictions on transactions imposed by an exchange; (iii) trading halts,
suspensions or other restrictions imposed with respect to particular classes or
series of options or underlying securities; (iv) inadequacy of the facilities of
an exchange or the clearing corporation to handle trading volume; and (v) a
decision by one or more exchanges to discontinue the trading of options or
impose restrictions on orders.
Each exchange has established limitations governing the maximum number of
call options, whether or not covered, which may be written by a single investor
acting alone or in concert with others (regardless of whether such options are
written on the same or different exchanges or are held or written on one or more
accounts or through one or more brokers). An exchange may order the liquidation
of positions found to be in violation of these limits and it may impose other
sanctions or restrictions. The Adviser believes that the position limits
established by the exchanges will not have any adverse impact upon the Fund.
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.
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<PAGE>
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 Fund's policy
to write or purchase options only on indices which include a sufficient number
of securities so that the likelihood of a trading halt in the index is
minimized.
Because the exercise of an index option is settled in cash, an index call
writer cannot determine the amount of its settlement obligation in advance and,
unlike call writing on portfolio securities, cannot provide in advance for its
potential settlement obligation by holding the underlying securities.
Consequently, 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, it may have to borrow from a bank (in an amount not
exceeding 5% of the Fund's total assets) 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
The Fund may use financial futures contracts and related options to hedge
against changes in the market value of its portfolio securities or securities
which it intends to purchase. Hedging is accomplished when an investor takes a
position in the futures market opposite to his cash market position. There are
two types of hedges--long (or buying) and short (or selling) hedges.
Historically, prices in the futures market have tended to move in concert with
cash market prices, and prices in the futures market have maintained a fairly
predictable relationship to prices in the cash market. Thus, a decline in the
market value of securities in the 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.
The 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 the 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
4
<PAGE>
bank an amount of cash or U.S. Treasury bills. 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 of cash or U.S.
Treasury bills, called variation margin, will be made to and from the account on
a daily basis as the price of the futures contract fluctuates. This process is
known as marking to market.
The writer of an option on a futures contract is required to deposit margin
pursuant to requirements similar to those applicable to futures contracts. Upon
exercise of an option on a futures contract, the delivery of the futures
position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's margin
account. This amount will be equal to the amount by which the market price of
the futures contract at the time of exercise exceeds, in the case of a call, or
is less than, in the case of a put, the exercise price of the option on the
futures contract.
Although financial futures contracts by their terms call for actual delivery
or acceptance of securities, in most cases the contracts are closed out before
the settlement date without the making or taking of delivery. Closing out is
accomplished by effecting an offsetting transaction. A futures contract sale is
closed out by effecting a futures contract purchase for the same aggregate
amount of securities and the same delivery date. If the sale price exceeds the
offsetting purchase price, the seller immediately would be paid the difference
and would realize a gain. If the offsetting purchase price exceeds the sale
price, the seller immediately would pay the difference and would realize a loss.
Similarly, a futures contract purchase is closed out by effecting a futures
contract sale for the same securities and the same delivery date. If the
offsetting sale price exceeds the purchase price, the purchaser would realize a
gain, whereas if the purchase price exceeds the offsetting sale price, the
purchaser would realize a loss.
The Fund will pay commissions on financial futures contract 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
The Fund may not engage in transactions in financial futures contracts or
related options for speculative purposes but only as a hedge against anticipated
changes in the market value of its portfolio securities or securities which it
intends to purchase. The Fund may not purchase or sell financial futures
contracts or related options if, immediately thereafter, the sum of the amount
of initial margin deposits on the Fund's existing futures and related options
positions and the premiums paid for related options would exceed 2% of the
market value of the Fund's total assets after taking into account unrealized
profits and losses on any such contracts. At the time of purchase of a futures
contract or a call option on a futures contract, any asset, including equity
securities and non-investment grade debt so long as the asset is liquid,
unencumbered and marked to market daily equal to the market value of the futures
contract minus the 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.
The extent to which the Fund may enter into financial futures contracts and
related options also may be limited by the requirements of the Internal Revenue
Code for qualification as a regulated investment company. See "Dividends,
Distributions and Taxes."
RISKS RELATING TO FUTURES CONTRACTS AND RELATED OPTIONS
Positions in futures contracts and related options may be closed out only on
an exchange which provides a secondary market for such contracts or options. The
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 the Fund would continue to be required to make daily margin
payments. In this situation, if the 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, the Fund 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 the Fund or
such prices move in a direction opposite to that anticipated, the Fund may
realize a loss on the hedging transaction which is not offset by an increase in
the value of its portfolio securities. As a result, the Fund's total
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<PAGE>
return for the period may be less than if it had not engaged in the hedging
transaction. The loss from investing in futures transactions is potentially
unlimited.
Utilization of futures contracts by the 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 elect to close out their contracts through offsetting
transactions rather than to meet margin deposit requirements. In such case,
distortions in the normal relationship between the cash and futures markets
could result. Price distortions could also result if investors in futures
contracts opt to make or take delivery of the underlying securities rather than
to engage in closing transactions due to the resultant reduction in the
liquidity of the futures market. In addition, due to the fact that, from the
point of view of speculators, the deposit requirements in the futures markets
are less onerous than margin requirements in the cash market, increased
participation by speculators in the futures market could cause temporary price
distortions. Due to the possibility of price distortions in the futures market
and because of the imperfect correlation between movements in the prices of
securities and movements in the prices of futures contracts, a correct forecast
of market trends may still not result in a successful hedging transaction.
Compared to the purchase or sale of futures contracts, the purchase of put or
call options on futures contracts involves less potential risk for the 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.
REPURCHASE AGREEMENTS
Repurchase agreements are described in the Fund's Prospectus. Repurchase
agreements will be entered into only with commercial banks, brokers and dealers
considered by the Fund to be creditworthy. The Directors of the Fund will
monitor the Fund's repurchase agreement transactions periodically and with the
Adviser will consider standards which the Adviser will use in reviewing the
creditworthiness of any party to a repurchase agreement with the Fund. No more
than an aggregate of 10% of the Fund's total assets, at the time of investment,
will be invested in repurchase agreements having maturities of no more than
seven days. In addition, the Fund may invest up to 15% of its net assets in
illiquid securities including repurchase agreements having maturities greater
than seven days and other investments subject to legal or contractual
restrictions on resale, or for which there are not readily available market
quotations.
The use of repurchase agreements involves certain risks. For example, if the
seller under a repurchase agreement defaults on its obligation to repurchase the
underlying instrument at a time when the value of the instrument has declined,
the Fund may incur a loss upon its disposition. If the seller becomes insolvent
and subject to liquidation or reorganization under bankruptcy or other laws, a
bankruptcy court may determine that the underlying instrument is collateral for
a loan by the Fund and therefore is subject to sale by the trustee in
bankruptcy. Finally, it is possible that the Fund may not be able to
substantiate its interest in the underlying instrument. While the Fund's
Directors acknowledge these risks, it is expected that they can be controlled
through careful monitoring procedures.
LENDING PORTFOLIO SECURITIES
The Fund may lend portfolio securities to broker-dealers and other financial
institutions in amounts up to 25% of the market or other fair value of its total
assets, provided that such loans are callable at any time by the Fund and are at
all times secured by collateral held by the Fund at least equal to the market
value, determined daily, of the loaned securities. The Fund will continue to
receive any income on the loaned securities, and at the same time will earn
interest on cash collateral (which will be invested in short-term debt
obligations) or a securities lending fee in the case of collateral in the form
of U.S. Government securities. A loan may be terminated at any time by either
the Fund or the borrower. Upon termination of a loan, the borrower will be
required to return the securities to the Fund, and any gain or loss in the
market price during the period of the loan would accrue to the Fund. If the
borrower fails to maintain the requisite amount of collateral, the loan will
automatically terminate, and the Fund may use the collateral to
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<PAGE>
replace the loaned securities while holding the borrower liable for any excess
of the replacement cost over the amount of the collateral.
When voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loan, in whole or in
part as may be appropriate, to permit the exercise of such rights if the matters
involved would have a material effect on the Fund's investment in the securities
which are the subject of the loan. The Fund may pay reasonable finders,
administrative and custodial fees in connection with loans of its portfolio
securities.
As with any extension of credit, there are risks of delay in recovery of the
loaned securities and in some cases loss of rights in the collateral should the
borrower of the securities fail financially. However, loans of portfolio
securities will only be made to firms considered by the Fund to be creditworthy
and when the consideration to be earned justifies the attendant risks.
FOREIGN SECURITIES
The 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 less than 25% of the Fund's net assets. Investments in foreign
securities, particularly those of non-governmental issuers, involve
considerations which are not ordinarily associated with investing in domestic
issues. These considerations include changes in currency rates, currency
exchange control regulations, the possibility of expropriation, the
unavailability of financial information, the difficulty of interpreting
financial information prepared under foreign securities markets, the impact of
political, social or diplomatic developments, difficulties in invoking legal
process abroad and the difficulty of assessing economic trends in foreign
countries.
The Fund may use a foreign custodian in connection with its purchases of
foreign securities and may maintain cash and cash equivalents in the care of a
foreign custodian. The amount of cash or cash equivalents maintained in the care
of eligible foreign custodians will be limited to an amount reasonably necessary
to effect the Fund's foreign securities transactions. The use of a foreign
custodian invokes considerations which are not ordinarily associated with
domestic custodians. These considerations include the possibility of
expropriations, restricted access to books and records of the foreign custodian,
inability to recover assets that are lost while under the control of the foreign
custodian, and the impact of political, social or diplomatic developments.
INVESTMENT RESTRICTIONS
The following information supplements the information included in the
Prospectus with respect to the investment restrictions to which the Fund is
subject. The investment restrictions described below are fundamental policies
and may not be changed without the approval of the lesser of (i) a majority of
the Fund's outstanding shares and (ii) 67% of the shares represented at a
meeting of Fund shareholders at which the holders of 50% or more of the Fund's
outstanding shares are represented. The Fund may not:
(1) Make short sales of securities, unless at the time of sale the Fund owns
an equal amount of such securities.
(2) Purchase securities on margin, except that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities. The deposit or payment by the Fund of initial or
maintenance margin in connection with financial futures contracts or
related options transactions is not considered the purchase of a security
on margin.
(3) Write, purchase or sell puts, calls or combinations thereof, except that
the Fund may (a) write exchange-traded covered call options on portfolio
securities and enter into closing purchase transactions with respect to
such options, (b) purchase exchange-traded call options and put options,
provided that the premiums on all outstanding call and put options would
not exceed 5% of its total assets, and enter into closing sale transactions
with respect to such options, and (c) engage in financial futures contracts
and related options transactions, provided that the sum of the initial
margin deposits on the Fund's existing futures and related options
positions and the premiums paid for related options would not exceed 5% of
its total assets.
(4) Borrow in excess of 5% of the market or other fair value of its total
assets, or pledge its assets to an extent greater than 5% of the market or
other fair value of its total assets. Any such borrowings shall be from
banks and shall be undertaken only as a temporary measure for extraordinary
or emergency purposes. Deposits in escrow in connection with the writing of
covered call options or in connection with the purchase or sale of
financial futures contracts and related options are not deemed to be a
pledge or other encumbrance.
(5) Underwrite the securities of other issuers, except to the extent that in
connection with the disposition of portfolio securities the Fund may be
deemed to be an underwriter.
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<PAGE>
(6) Concentrate its assets in the securities of issuers all of which conduct
their principal business activities in the same industry. This restriction
does not apply to obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities.
(7) Make any investment in real estate, real estate limited partnerships,
commodities or commodities contracts, except that the Fund may (a) purchase
or sell readily marketable securities which are secured by interests in
real estate, or issued by companies which deal in real estate including
real estate investment and mortgage investment trusts, and (b) engage in
financial futures contracts and related options transactions, provided that
the sum of the initial margin deposits on the Fund's futures and related
options positions and the premiums paid for related options would not
exceed 5% of the Fund's total assets.
(8) Make loans, except that the Fund may (a) invest up to 10% of its total
assets in repurchase agreements of a type regarded as "liquid" which are
fully collateralized as to principal and interest and which are entered
into only with commercial banks, brokers and dealers considered by the Fund
to be creditworthy and (b) loan its portfolio securities in amounts up to
one-third of the market or other fair value of its total assets.
(9) Purchase securities of other investment companies, except that the Fund may
make such a purchase (a) in the open market involving no commission or
profit to a sponsor or dealer (other than the customary broker's
commission), provided that immediately thereafter (i) not more than 10% of
the Fund's total assets would be invested in such securities and (ii) not
more than 3% of the voting stock of another investment company would be
owned by the Fund, or (b) as part of a merger, consolidation, or
acquisition of assets.
(10) Invest more than 5% of its total assets in the securities of any one issuer
(except the U.S. Government) or purchase more than 10% of the outstanding
voting securities or more than 10% of the securities of any class of any
one issuer.
(11) Invest in securities of any issuer if any officer or director of the Fund
or of the Fund's investment adviser owns more than 1/2 of 1% of the
outstanding securities of such issuer and such officers and directors own
in the aggregate more than 5% of the securities of such issuer.
(12) Invest in the aggregate more than 5% of its total assets in the securities
of any issuers which have (with predecessors) a record of less than three
years of continuous operations.
(13) Invest in warrants or rights except where acquired in units or attached to
other securities.
(14) Purchase an illiquid security such as a restricted security (including
repurchase agreements of a type regarded as "illiquid") or a security for
which market value quotations are not readily available if as a result of
such purchase more than 15% of the Fund's net assets would be invested in
such securities.
(15) Invest in interests in oil, gas, or other mineral exploration or
development programs.
(16) Issue senior 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 Fund's assets
will not be considered a violation of the restriction.
PERFORMANCE INFORMATION
Performance information for the Fund may appear in advertisements, sales
literature, or reports to shareholders or prospective shareholders. Performance
information in advertisements and sales literature may be expressed as "average
annual total return" and "total return."
The average annual total return for Class A and Class B Shares is computed in
accordance with a standardized method prescribed by rules of the Securities and
Exchange Commission (displayed below). The average annual total return for a
specific period is found by first taking a hypothetical $1,000 investment
("initial investment") in the Fund's shares on the first day of the period,
adjusting to deduct the maximum sales charge, and computing the "redeemable
value" of that investment at the end of the period. The redeemable value is then
divided by the initial investment, and this quotient is taken to the nth root (n
representing the number of years in the period) and 1 is subtracted from the
result, which is then expressed as a percentage. The calculation assumes that
all income and capital gains dividends paid by the Fund have been reinvested at
net asset value on the reinvestment dates during the period.
8
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P(1+T)(n) = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1, 5, 10 year periods at the
end of the 1, 5, 10 year periods (or fractional periods).
The manner in which total return will be calculated for public use is
described above. The following table summarizes the calculation of total return
for shares of the Fund, through December 31, 1997.
<TABLE>
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1997
<CAPTION>
From Inception
1 Year 5 Years 10 Years 10/24/94 to 12/31/97
------ ------- -------- --------------------
<S> <C> <C> <C> <C>
Class A 14.98% 9.82% 11.22% N/A
Class B 15.78% N/A N/A 13.43%
</TABLE>
Performance information reflects only the performance of a hypothetical
investment in the Class A or Class B shares of the Fund during the particular
time period on which the calculations are based. Performance information should
be considered in light of the investment objectives and policies,
characteristics and quality of the 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.
PORTFOLIO TRANSACTIONS AND BROKERAGE
In effecting portfolio transactions for the Fund, the Adviser adheres to the
Fund's policy of seeking best execution and price, determined as described
below, except to the extent it is permitted to pay higher brokerage commissions
for "brokerage and research services" as defined herein. The Adviser may cause
the Fund to pay a broker an amount of commission for effecting a securities
transaction in excess of the amount of commission which another broker or dealer
would have charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to the value
of the brokerage and research services provided by such broker. As provided in
Section 28(e) of the Securities Exchange Act of 1934, "brokerage and research
services" include advice as to the value of securities, the advisability of
investing in, purchasing or selling securities, the availability of securities
or purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement). Brokerage and research services provided by brokers to the Fund or
the Adviser are considered to be in addition to and not in lieu of services
required to be performed by the Adviser under its contract with the Fund and may
benefit both the Fund and other accounts of the Adviser. Conversely, brokerage
and research services provided by brokers to other accounts of the Adviser may
benefit the Fund. Where transactions are made in the over-the-counter market,
the Adviser will cause the Fund to deal with the primary market makers, unless
more favorable prices are otherwise obtainable.
The determination of what may constitute best execution and price in the
execution of a securities transaction by a broker involves a number of
considerations including, without limitation, the overall direct net economic
result to the Fund (involving both price paid or received and any commissions
and other costs paid), the efficiency with which the transaction is effected,
the ability to effect the transaction at all where a large block is involved,
availability of the broker to stand ready to execute possibly difficult
transactions in the future and the financial strength and stability of the
broker. Such considerations are judgmental and are weighed by the Adviser in
determining the overall reasonableness of brokerage commissions paid by the
Fund.
The policy of the Fund with respect to brokerage is and will be reviewed by
the Board of Directors of the Fund from time to time. Because of the possibility
of further regulatory developments affecting the securities exchanges and
brokerage practices generally, the foregoing practices may be changed, modified
or eliminated.
The Fund has adopted a policy and procedures governing the execution of
aggregated advisory client orders ("bunching procedures") in an attempt to lower
commission costs on a per-share and per-dollar basis. According to the bunching
procedures, the Adviser shall aggregate transactions unless it believes in its
sole discretion that such aggregation is inconsistent with its duty to seek
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best execution (which shall include the duty to seek best price) for the Fund.
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
Fund's participation in the transaction. If the aggregated order is filled in
its entirety, it shall be allocated among the Adviser's accounts in accordance
with the allocation order, and if the order is partially filled, it shall be
allocated pro rata based on the allocation order. Notwithstanding the foregoing,
the order may be allocated on a basis different from that specified in the
allocation order if all accounts of the Adviser whose orders are allocated
receive fair and equitable treatment and the reason for such different
allocation is explained in writing and is approved in writing by the Adviser's
compliance officer as soon as practicable after the opening of the markets on
the trading day following the day on which the order is executed. If an
aggregated order is partially filled and allocated on a basis different from
that specified in the allocation order, no account that is benefited by such
different allocation may intentionally and knowingly effect any purchase or sale
for a reasonable period following the execution of the aggregated order that
would result in it receiving or selling more shares than the amount of shares it
would have received or sold had the aggregated order been completely filled. The
Directors will annually review these procedures or as frequently as shall appear
appropriate.
For the fiscal years ended December 31, 1995, 1996, and 1997 brokerage
commissions paid by the Fund on portfolio transactions totaled $854,032,
$1,442,976 and $1,346,891, respectively. None of such commissions was paid to a
broker who was an affiliated person of the Fund or an affiliated person of such
a person or, to the knowledge of the Fund, to a broker an affiliated person of
which was an affiliated person of the Fund or the Adviser. Total brokerage
commissions paid during the fiscal year ended December 31, 1997 included
brokerage commissions of $1,058,039 on portfolio transactions aggregating
$1,080,516,016 executed by brokers who provided research and other statistical
and factual information.
SERVICES OF THE ADVISER
The offices of the Adviser, Phoenix Investment Counsel, Inc., are located at
56 Prospect Street, Hartford, Connecticut 06115-0480. The Adviser was organized
in 1932 as John P. Chase, Inc. and has been engaged in the management of the
Fund since 1967. In addition to the Fund, the Adviser also serves as investment
adviser to Phoenix Series Fund, The Phoenix Edge Series Fund (all series except
Real Estate Securities Series and Aberdeen New Asia Series), Phoenix Strategic
Equity Series Fund (all funds except Phoenix Equity Opportunities Fund), Phoenix
Duff & Phelps Institutional Mutual Funds (except Real Estate Equity Securities
Portfolio, Enhanced Reserves Portfolio and Core Equity Portfolio), Phoenix
Growth and Income Fund of Phoenix Equity Series Fund, Phoenix Investment Trust
97 and the Phoenix Multi-Portfolio Fund (all portfolios other than the Real
Estate Securities Portfolio), and as sub-adviser to the SunAmerica Series Trust,
among other investment adviser clients.
All of the outstanding stock of the Adviser is owned by Phoenix Equity
Planning Corporation ("Equity Planning"), a subsidiary of Phoenix Duff & Phelps
Corporation. The majority shareholder of Phoenix Duff & Phelps Corporation is
Phoenix Home Life Mutual Insurance Company ("Phoenix") of Hartford, Connecticut.
Phoenix, which was founded in 1851, is in the business of writing ordinary and
group life and health insurance and annuities. Equity Planning, a mutual fund
distributor, acts as the Distributor of the Fund's shares and as Financial Agent
for the Fund.
Philip R. McLoughlin, a director and officer of the Fund, is also a director
of the Adviser. Michael E. Haylon, an officer of the Fund, is also a director
and officer of the Adviser. G. Jeffrey Bohne, Mary E. Canning, William E. Keen,
III, William R. Moyer, William J. Newman and James D. Wehr, officers of the
Fund, are officers of the Adviser.
The contract between the Fund and the Adviser provides that the Adviser shall
furnish the Fund investment advice, certain administrative services, office
space and facilities, and shall pay the compensation of all officers and
employees of the Fund. All expenses (other than those specifically referred to
as being borne by the Adviser) incurred in the operation of the Fund, including,
among others, taxes, brokerage fees and commissions, fees of Directors who are
not full time employees of the Adviser or any of its affiliates, charges of
custodians, transfer and dividend disbursing agents and registrars, bookkeeping,
auditing and legal expenses, expenses of insurance premiums for fidelity and
other coverage and extraordinary expenses and expenses of a non-recurring nature
which may include, but not be limited to, the reasonable and proportionate cost
of any reorganization or acquisition of assets and the cost of legal proceedings
to which the Fund is a party, will be borne by the Fund.
The contract between the Fund and the Adviser provides that, as compensation
for its services to the Fund, the Adviser is entitled to a fee, payable within
five days after the end of each fiscal month, at the annual rate of 0.65% of the
average of the aggregate daily net asset values of the Fund up to $1 billion;
0.60% of such value between $1 billion and $2 billion; and 0.55% of such value
in excess of $2 billion. It also provides that the Fund will reimburse the
Adviser on a cost basis in the event the Adviser provides any services
(excluding printing) involved in maintaining registrations of the Fund and of
its shares with the Securities and Exchange Commission or involved in the
preparation of shareholder reports. The Adviser has agreed to reimburse the Fund
for the amount, if any, of the expenses of the Fund (including the Adviser's
compensation but excluding interest, brokerage cost, taxes and extraordinary
expenses) for any fiscal year which exceeds the level of expenses which the Fund
is permitted to bear under the most
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restrictive expense limitation imposed (and not waived) on the Fund by any state
in which shares of the Fund are then qualified for sale. Currently, the most
restrictive state expense limitation provisions limit such expenses of the Fund
to 2 1/2% of the first $30 million of average net assets, 2% of the next $70
million of such net assets and 1 1/2% of such net assets in excess of $100
million. In the event legislation were to be adopted in each state so as to
eliminate this restriction, the Fund would take such action necessary to
eliminate this expense limitation. For the fiscal years ended December 31, 1995,
1996 and 1997 the Adviser received fees totaling, $2,371,629, $2,241,038 and
$2,109,677, respectively, and it was not necessary that the Adviser reimburse
ordinary operating expenses of the Fund.
The contract between the Fund and the Adviser continues from year to year so
long as (1) such continuance is specifically approved at least annually by the
Board of Directors of the Fund or by a vote of a majority of the outstanding
shares of the Fund and (2) such continuance or any renewal and the terms of such
contract have been approved by the vote of a majority of Directors of the Fund
who are not interested persons, as that term is defined in the Investment
Company Act of 1940, of the Fund or the Adviser, cast in person at a meeting
called for the purpose of voting on such approval. It may be terminated without
penalty at any time on sixty days written notice, either by the Board of
Directors of the Fund, by a vote of a majority of the outstanding shares of the
Fund or by the Adviser, and automatically terminates upon its assignment (within
the meaning of said Investment Company Act).
NET ASSET VALUE
The net asset value per share of the Fund is determined as of the close of
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Since the Fund does not price securities on
weekends or United States national holidays, the net asset value of foreign
assets may be significantly affected on days when the investor has no access to
the Fund. The net asset value per share 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. 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 Directors 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 the Fund when investing in
foreign securities contemporaneously with the determination of the prices of the
majority of the portfolio securities of the 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 Directors or their delegates. If
at any time the 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 Directors although the actual calculations may be made by
persons acting pursuant to the direction of the Directors.
PLANS OF DISTRIBUTION
Equity Planning, a registered broker-dealer which is a subsidiary of Phoenix
Duff & Phelps Corporation, serves as national distributor of the Fund's shares.
The Fund and Equity Planning have entered into distribution agreements under
which Equity Planning has agreed to use its best efforts to find purchasers for
Fund shares and the Fund has granted to Equity Planning the exclusive right to
purchase from the Fund and resell, as principal, shares needed to fill
unconditional orders for Fund shares. Equity Planning may sell Fund shares
through its registered representatives or through securities dealers with whom
it has sales agreements. Equity Planning may also sell Fund shares pursuant to
sales agreements entered into with bank affiliated securities brokers who,
acting as agent for their customers, place orders for Fund shares with Equity
Planning. Although the Glass-Steagall Act prohibits banks and bank affiliates
from engaging in the business of underwriting, distributing or selling
securities (including mutual fund shares), banking regulators have not indicated
that such institutions are prohibited from purchasing mutual fund shares upon
the order and for the account of their customers. If, because of changes in law
or regulations, or because of new interpretations of existing law, it is
determined that agency transactions of banks or bank affiliated securities
brokers are not permitted under the Glass-Steagall Act, the Directors will
consider
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<PAGE>
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 the
Fund.
For its services under the amended and restated Class A and Class B Share
Distribution Plans, Equity Planning receives sales charges on transactions in
Fund shares (see "Purchase of Shares" in the Prospectus) and retains such
charges less the portion thereof allowed to its registered representatives and
to securities dealers and securities brokers with whom it has sales agreements.
In addition, Equity Planning may receive payments from the Fund pursuant to the
Distribution Plans described below. For the fiscal year ended December 31, 1995,
1996 and 1997, Equity Planning's gross commissions on sales of Fund shares
totaled $468,755, $289,171 and $186,575, respectively. Of those amounts, Equity
Planning retained net commissions of $59,491, $238,804 and $52,647,
respectively, for its services, the balance being paid to dealers with whom
Equity Planning had sales agreements.
Equity Planning also acts as Financial Agent of the Fund and as such performs
bookkeeping and pricing services and certain other administrative functions for
the Fund. As compensation for its services, Equity Planning is entitled to a
fee, payable monthly and based upon the average of the aggregate daily net asset
values of the Fund, at the following incremental annual rates:
First $100 million .05% plus a minimum fee
$100 million to $300 million .04%
$300 million to $500 million .03%
Greater than $500 million .015%
A minimum fee of $60,000 applies to the Fund. In addition, Equity Planning is
paid $12,000 for each class of shares beyond one. Until December 31, 1996,
Equity Planning's fee for these services was based on an annual rate of 0.03% of
the Fund's aggregate daily net asset value. For services to the Fund during the
fiscal years ended December 31, 1995, 1996 and 1997, the Financial Agent
received fees of $109,460, $103,432 and $149,370, respectively.
Philip R. McLoughlin, a director and officer of the Fund, is a director and
officer of Equity Planning. Michael E. Haylon, an officer of the Fund, is a
director of Equity Planning. G. Jeffrey Bohne, Nancy G. Curtiss, William E.
Keen, III, William R. Moyer, Leonard J. Saltiel and Thomas N. Steenburg are
officers of the Fund and officers of Equity Planning.
DISTRIBUTION PLANS
To permit the use of Fund assets to encourage activities primarily intended
to result in the sale of Fund shares, the Fund has adopted amended and restated
Distribution Plans (the "Plans") pursuant to Rule 12b-1 under the Investment
Company Act of 1940. The amended and restated Class A and Class B Plans have
been approved by the Board of Directors of the Fund, including a majority of the
Directors who are not interested persons of the Fund and who have no direct or
indirect financial interest in the Plan or any agreement related thereto (the
"Rule 12b-1 Directors").
The amended and restated Class B Plan authorizes the monthly payment by the
Fund to the Distributor for actual expenses of the Distributor up to 0.75% of
the Fund's Class B average daily net assets. Expenditures under the Plan may
consist of: (i) commissions to sales personnel for selling shares of the Funds
(including underwriting commissions and financing expenses incurred in
connection with 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
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 Fund; (iv) payment of expenses incurred in sales and promotional
activities, including advertising expenditures related to 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 Directors determine are reasonably calculated to result in the sale of
shares of the Fund. In addition, the Fund will pay 0.25% annually of the average
daily net assets of the Fund's shares for providing services to shareholders,
including assistance in connection with inquiries related to shareholder
accounts (the "Service Fee").
Each Plan requires that at least quarterly the Directors of the Fund review a
written report with respect to the amounts expended under the Plan and the
purposes for which such expenditures were made. While each Plan is in effect,
the Fund will be required to commit the selection and nomination of candidates
for Directors who are not interested persons of the Fund to the discretion of
other Directors who are not interested persons. Each Plan continues in effect
from year to year only provided such continuance is approved annually in advance
by votes of the majority of both (a) the Board of Directors of the Fund and (b)
the Rule 12b-1 Directors, cast in person at a meeting called for the purpose of
voting on the Plan and any agreements related to each Plan.
For the fiscal year ended December 31, 1997, the Fund paid Rule 12b-1 Fees in
the amount of $889,408 ($785,416 under the Class A Plan and $103,992 under the
Class B Plan) of which Equity Planning received $214,049, W.S. Griffith & Co.,
Inc., an affiliate, received $49,325 and unaffiliated broker-dealers received
$626,034. The 12b-1 payments were used for: (1) compensating
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dealers ($711,284); (2) compensating sales personnel ($156,588); (3) advertising
($87,824); (4) printing and mailing prospectuses to other than current
shareholders ($22,894); (5) service costs ($67,278) and (6) other ($33,400).
HOW TO BUY SHARES
The Prospectus includes information as to the offering price of Class A and
Class B Fund shares, the sales charge included in the offering price, and the
minimum initial and subsequent investments which may be made in Fund shares.
Sales of shares are made through registered representatives of the Distributor,
Equity Planning, or through securities brokers or dealers with whom Equity
Planning has sales agreements. Dealers purchase shares at a discount from the
applicable offering price. Dealers receiving such discounts may be deemed
"underwriters" within the meaning of that term under the Securities Act of 1933.
Sales of shares are also made to customers of banks or bank-affiliated
securities brokers with whom Equity Planning has sales agreements. Customers
purchase shares at the applicable offering price.
The Fund has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Fund's behalf.
The Fund will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Fund's net asset value next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
ALTERNATIVE PURCHASE ARRANGEMENTS
The Fund is authorized to offer two classes of shares. 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").
CLASS A SHARES
An investor who pays an initial sales charge or purchases at net asset value
acquires Class A shares. Class A shares are subject to ongoing distribution plan
fees at an annual rate of up to 0.25% of the Fund's aggregate average daily net
assets attributable to Class A shares. Certain purchases of Class A shares
qualify for reduced initial sales charges.
CLASS B SHARES
An investor who elects the deferred sales charge alternative acquires Class B
shares. Class B shares do not incur a sales charge when they are purchased, but
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.
Class B shares are subject to ongoing distribution and service fees at an
annual rate of up to 1.00% of the Fund's aggregate average daily net assets
attributable to Class B shares. Class B shares permit the investor's payment to
be invested in full from the time the investment is made. The higher ongoing
distribution plan fees paid by Class B shares will cause such shares to have a
higher expense ratio and to pay lower dividends 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 your order to purchase was
accepted. The purpose of the conversion feature is to eliminate the higher
distribution plan fees after the Distributor has been compensated for
distribution expenses related to the Class B shares. See "Conversion Feature"
below.
The alternative purchase arrangement permits you to choose the method of
purchasing shares that is more beneficial given such factors as the amount of
the purchase, the length of time you expect to hold the shares, and whether you
choose to receive distributions in cash or to reinvest them in additional
shares. You should consider whether, during the anticipated term of your
investment in the Fund, the accumulated continuing distribution and service fees
and contingent deferred sale charges on Class B shares prior to conversion would
be less than the initial sales charge and accumulated distribution and service
fees on Class A shares purchased at the same time, and the extent to which such
differential would be offset by the lower expenses attributable to Class A
shares.
Class A shares are subject to a lower distribution fee and, accordingly, pay
correspondingly higher dividends. However, because initial sales charges are
deducted at the time of purchase, Class A investors do not have all their funds
invested initially and initially own fewer shares. Investors not qualifying for
reduced initial sales charges who expect to maintain their investment for an
extended period of time should consider purchasing Class A shares because the
accumulated continuing distribution and service fees on Class B shares may
exceed the initial sales charge on Class A shares during the term of the
investment. However, such investors must weigh this consideration against the
fact that, because of the initial Class A sales charges, not all of their funds
will be invested initially.
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The distribution expenses incurred by the Distributor in connection with the
sale of the shares will be paid, in the case of Class A shares, from the
proceeds of the initial sales charge and the ongoing distribution plan fees and,
in the case of Class B shares, from the proceeds of the ongoing distribution and
service fees and the contingent deferred sales charge imposed upon redemptions
within five years of purchase. Sales personnel of broker-dealers distributing
shares may receive differing compensation for selling Class A or Class B shares.
The purpose and function of the contingent deferred sales charge and ongoing
distribution and service fees with respect to the Class B shares are the same as
those of the initial sale charge and ongoing distribution plan fees with respect
to the Class A shares.
Dividends paid with respect to Class A and Class B shares will be calculated
in the same manner, at the same time and on the same day, except that the higher
distribution plan fees and any incremental transfer agency costs relating to
Class B shares will be borne exclusively by that Class and will result in a
lower dividend.
The Directors of the Fund have determined that no conflict of interest will
exist between the Class A and Class B shares. The Directors shall, pursuant to
their fiduciary duties under the Investment Company Act of 1940 and state law,
monitor the question of Class A and Class B shares and seek to ensure that no
such conflict arises.
CONVERSION FEATURE
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 purchased. 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 plan fees. 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. The
purpose of the conversion feature is to eliminate the higher distribution fee
after the Distributor has been compensated for distribution expenses related to
the Class B shares.
For purposes of conversion to Class A, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B shares
will be considered to be held in a separate sub-account. Each time any Class B
shares in your account (other than those in the sub-account) convert to Class A,
an equal pro rata portion of the Class B shares in the sub-account will also
convert to Class A.
INVEST-BY-PHONE
This expedited investment service allows you to purchase shares for your
account by requesting a transfer of funds from the balance of your bank account.
Once a request is phoned in, Equity Planning will initiate the transaction by
wiring a request for monies to your commercial bank, savings bank or credit
union via Automated Clearing House (ACH). Your bank, which must be an ACH
member, will in turn forward the monies to State Street Bank and Trust Company
for credit to your Fund account. ACH is a computer based clearing and settlement
operation established for the exchange of electronic transactions among
participating depository institutions.
To establish this service, please complete an Invest-by-Phone Application and
attach a voided check, if applicable. Upon Equity Planning's acceptance of the
authorization form (usually two weeks) you may call toll free 800-367-5877 prior
to 3:00 p.m. (New York time) to place your purchase request. Instructions as to
the account number and amount to be invested must be communicated to Equity
Planning. Equity Planning will then contact your bank via ACH with appropriate
instructions. The purchase is normally credited to your Fund account the day
following receipt of the verbal instructions. The Fund may delay the mailing of
a check for redemption proceeds of Fund shares purchased with a check or via
Invest-by-Phone service until the Fund has assured itself that good payment has
been collected for the purchase of the shares, which may take up to 15 days.
The Fund and Equity Planning reserve the right to modify or terminate the
Invest-by-Phone service for any reason or to institute charges for maintaining
an Invest-by-Phone account.
EXCHANGE PRIVILEGE
Shares of the Fund may be exchanged for shares of the same class of shares of
any other Affiliated Phoenix Fund on the basis of the relative net asset values
per share at the time of the exchange. You may elect to have shares of the Fund
exchanged for shares of any other Affiliated Phoenix Fund automatically on a
monthly, quarterly, semiannual, or annual basis ("Systematic Exchange"). See the
Fund's prospectus for more information on the Exchange Privilege and other
services available to shareholders.
REDEMPTION OF SHARES
The redemption price is the net asset value next determined following the
receipt of a duly executed request for redemption of shares, together with any
outstanding certificate or certificates for such shares, duly endorsed, with
signatures guaranteed in the manner described below. Class B shares are subject
to a contingent deferred sales charge upon a redemption of shares within five
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<PAGE>
years of the date of purchase. Additional documentation may be required where
shares are held by a corporation, partnership, trustee or executor. Therefore,
it is suggested that shareholders holding shares registered in other than
individual names contact the Fund's Transfer Agent at (800) 243-1574 prior to
redemption to ensure that all necessary documents accompany the redemption
request.
The Fund has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Fund's behalf.
The Fund will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Fund's net asset value next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
BY MAIL. Non-certificated shares registered on the books of the Fund may be
redeemed by submitting a written request for redemption to Phoenix Funds, c/o
State Street Bank and Trust Company, PO Box 8301, Boston, MA 02266-8301. The
redemption request must contain the shareholder(s)' account name(s) and
number(s), the number of shares to be redeemed and the signature(s) of the
registered shareholder(s). If the shares are registered in the names of
individuals, singly, jointly or as custodian under the Uniform Gifts to Minors
Act or Uniform Transfers to Minors Act, and the proceeds of the redemption do
not exceed $50,000 and are to be paid to the registered owner(s) at the address
of record, the signature(s) on the redemption request need not be guaranteed.
Otherwise, the signature(s) must be guaranteed by an eligible guarantor
institution as defined by the Fund's 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. Shares represented by certificates in your possession may be
redeemed by submitting a written request for the redemption to Phoenix Funds,
c/o State Street Bank and Trust Company, PO Box 8301, Boston, MA 02266-8301,
together with the certificates, duly endorsed by all persons in whose names the
shares are registered, with signatures guaranteed, if required, in the manner
described above. Signatures must also be guaranteed on any change of address
request submitted in conjunction with a redemption request.
BY TELEPHONE. Unless you elect in writing not to participate in the Telephone
Redemption Privilege, shares for which certificates have not been issued may be
redeemed by calling (800) 243-1574 and telephone redemptions will also be
accepted on your behalf from your registered representative as described in the
Prospectus. 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. Equity Planning and the
Fund will employ reasonable procedures to confirm that telephone instructions
are genuine. To the extent that procedures reasonably designed to prevent
unauthorized telephone redemptions are not followed, Equity Planning and/or the
Fund 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 Equity Planning and/or
the Fund reasonably believe to be genuine.
Telephone redemption orders received and accepted by the Transfer Agent on
any day when the Transfer Agent is open for business will be entered at the next
determined net asset value. However, telephone redemption orders received and
accepted by the Transfer Agent after the close of trading hours on the Exchange
will be executed on the following business day. The proceeds of a telephone
redemption will normally be sent on the first business day following receipt of
the redemption request. However, with respect to the telephone redemption of
shares purchased by check, such requests will only be effected after the Fund
has assured itself that good payment has been collected for the purchase of
shares, which may take up to 15 days.
If the proceeds of the redemption are less than $500, the redemption will
normally be paid on the first business day following receipt of the request and
sent by mail to the address of record on your Fund account. If the proceeds of
the redemption are $500 or more, the redemption will be wired to the designated
U.S. commercial bank account. (The Telephone Redemption Privilege is not
available to HR-10, IRA or 403(b)(7) Plans.)
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of the Fund to comply with provisions of the Internal
Revenue Code relieving investment companies which distribute substantially all
of their net income (both net investment income and net realized capital gains)
from Federal income tax on the amounts distributed.
To qualify for treatment as a regulated investment company ("RIC") for tax
purposes, the Fund must: (a) derive in each taxable year at least 90% of its
gross income from dividends, interest, payments with respect to security loans
and gains from the sale or other disposition of stock or securities or foreign
currencies and other income (including but not limited to gains from options,
futures and forward contracts) derived with respect to its business of investing
in such stock, securities or currencies; and (b) meet certain diversification
requirements imposed under the Internal Revenue Code at the end of each quarter
of the taxable year. Under certain state tax laws, the Fund must also comply
with the "short-short" test to qualify for treatment as a RIC for state tax
purposes. Under
15
<PAGE>
the "short-short" test, the Fund must derive less than 30% of its gross income
in each taxable year from gains (without deduction for losses) from the sale or
other disposition of securities held for less than three months. If in any
taxable year the Fund does not qualify as a RIC, all of its taxable income will
be taxed at corporate rates. In addition, if in any tax year the Fund does not
qualify as a RIC for state tax purposes, a capital gain dividend may not retain
its character in the hands of the shareholder for state tax purposes.
Income dividends and short-term capital gain distributions, whether received
in shares or in cash, are treated by shareholders as ordinary income for Federal
income tax purposes.
Distributions which are designated by the Fund as long-term capital gains,
whether received in shares or in cash, are taxable to shareholders as long-term
capital gains (regardless of how long the distributee has been a shareholder).
Any loss from the sale of shares held for six months or less will be treated as
long-term capital loss to the extent of any capital gain distributions paid with
respect to such shares.
Any taxable distribution which is declared in December payable to
shareholders of record on any date in December and paid before the next February
l will be taxable to shareholders in the year declared.
The Fund is required to withhold, for income taxes, 31% of dividends,
distributions and redemption payments if any of the following circumstances
exist: (i) a shareholder fails to provide the Fund with a correct taxpayer
identification number ("TIN"); (ii) the Fund is notified by the Internal Revenue
Service that the shareholder furnished an incorrect TIN; or (iii) the Fund is
notified by the Internal Revenue Service that withholding is required because
the shareholder failed to report the receipt of dividends or interest from other
sources. Withholding may also be required with respect to accounts where the
shareholder fails to certify that (i) the TIN provided is correct and (ii) the
shareholder is not subject to such withholding. However, withholding will not be
required in the case of certain exempt entities nor in the case of those
shareholders who comply with the procedures as set forth by the Internal Revenue
Service. If incorrect information is provided by the shareholder and the
Internal Revenue Service consequently assesses the Fund a penalty, this penalty
will be passed on to the shareholder.
Dividends paid from net investment income and net realized short-term capital
gains to a shareholder who is a non-resident alien individual, a foreign trust
or estate, a foreign corporation or a foreign partnership (a "foreign
shareholder") will be subject to United States withholding tax at a rate of 30%
unless a reduced rate of withholding or a withholding exemption is provided
under applicable treaty law. Foreign shareholders are urged to consult their own
tax advisors concerning the applicability of the United States withholding tax
and any foreign taxes.
The information included in the Prospectus with respect to Dividends,
Distributions and Taxes, in conjunction with the foregoing, is a general and
abbreviated summary of applicable provisions of the Internal Revenue Code and
Treasury regulations now in effect as currently interpreted by the courts and
the Internal Revenue Service. The Code and these Regulations, as well as the
current interpretations thereof, may be changed at any time by legislative,
judicial, or administrative action.
Shareholders ordinarily will also be subject to state income taxes on the
dividends and distributions they receive from the Fund. Shareholders are urged
to consult counsel or other competent tax advisers regarding specific questions
as to Federal, state or local taxes.
DIRECTORS AND OFFICERS
The following table sets forth information concerning the directors and
executive officers of the Fund, including their principal occupations during the
past five years. Unless otherwise noted, the address of each director and
executive officer is 56 Prospect Street, Hartford, Connecticut 06115-0480. The
directors and executive officers are listed below.
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE FUND DURING THE PAST 5 YEARS
--------------------- ------------- -----------------------
<S> <C> <C>
Robert Chesek (63) Director Trustee/Director, (1981-present) and Chairman (1989-1994)
49 Old Post Road Phoenix Funds. Trustee, Phoenix Duff & Phelps Institutional
Wethersfield, CT 06109 Mutual Funds and Phoenix-Aberdeen Series Fund (1996-present).
Vice President, Common Stock, Phoenix Home Life Mutual Insurance
Company (1980-1994). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE FUND DURING THE PAST 5 YEARS
--------------------- ------------- -----------------------
<S> <C> <C>
E. Virgil Conway (68) Director Chairman, Metropolitan Transportation Authority (1992-present).
9 Rittenhouse Road Trustee/Director, Consolidated Edison Company of New York, Inc.
Bronxville, NY 10708 (1970-present), Pace University (1978-present), Atlantic Mutual
Insurance Company (1974-present), HRE Properties (1989-present),
Greater New York Councils, Boy Scouts of America (1985-present),
Union Pacific Corp. (1978-present), Blackrock Freddie Mac
Mortgage Securities Fund (Advisory Director) (1990-present),
Centennial Insurance Company (1974-present), Josiah Macy, Jr.,
Foundation (1985-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). Member, Audit
Committee of the City of New York (1981-1996). Advisory Director,
Blackrock Fannie Mae Mortgage Securities Fund (1989-1996). Member
(1990-1995), Chairman (1992-1995), Financial Accounting Standards
Advisory Council. Director/Trustee, the National Affiliated
Investment Companies (until 1993).
Harry Dalzell-Payne (68) Director Director/Trustee, Phoenix Funds (1983-present). Trustee, Phoenix-
330 East 39th Street Aberdeen Series Fund and Phoenix Duff & Phelps Institutional Mutual
Apartment 29G Funds (1996-present). Director, Duff & Phelps Utilities Tax-Free
New York, NY 10016 Income Inc. (1995-present) 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.
*Francis E. Jeffries (67) Director Director/Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-
6585 Nicholas Blvd. Aberdeen Series Fund and Phoenix Duff & Phelps Institutional Mutual
Apt. 1601 Funds (1996-present). Director, Duff & Phelps Utilities Income Inc.
Naples, FL 33963 (1987-present), Duff & Phelps Utilities Tax-Free Income Inc.
(1991-present), 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. (59) Director Chairman and Chief Executive Officer, Carson Products Company
Chairman and Chief (1995-present). Director/Trustee, Phoenix Funds (1980-present).
Executive Officer Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Carson Products Company Institutional Mutual Funds (1996-present). Director, Equifax Corp.
64 Ross Road (1991-present) and Evergreen International Fund, Inc. (1989-present).
Savannah, GA 30750 Trustee, Evergreen Liquid Trust, Evergreen Tax Exempt Trust,
Evergreen 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).
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE FUND DURING THE PAST 5 YEARS
--------------------- ------------- -----------------------
<S> <C> <C>
*Philip R. McLoughlin (51) Director and Chairman (1997-present, Director (1995-present), Vice Chairman
President (1995-1997) and Chief Executive Officer (1995-1997), 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
Reality 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).
**Everett L. Morris (69) Director Vice President, W.H. Reaves and Company (1993-present).
164 Laird Road Director/Trustee, Phoenix Funds (1995-present). Trustee, Duff &
Colts Neck, NJ 07722 Phelps Mutual Funds (1994-present). Trustee, Phoenix-Aberdeen
Series Fund and Phoenix Duff & Phelps Institutional Mutual
Funds (1996-present). Director, Duff & Phelps Utilities
Tax-Free Income Inc., (1991-present), Duff & Phelps Utility
and Corporate Bond Trust Inc. (1993-present). Director, Public
Service Enterprise Group, Inc. (1986-1993). President and
Chief Operating Officer, Enterprise Diversified Holdings, Inc.
(1989-1993).
*James M. Oates (51) Director Chairman, IBEX Capital Markets LLC (1997-present). Managing
Managing Director Director, Wydown Group (1994-present). Director, Phoenix Duff &
The Wydown Group Phelps Corporation (1995-present). Director/Trustee, Phoenix Funds
IBEX Capital Markets LLC (1987-present).Trustee, Phoenix-Aberdeen Series Fund and Phoenix
60 State Street Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Suite 950 AIB Govett Funds (1991-present), Blue Cross and Blue Shield of New
Boston, MA 02109 Hampshire (1994-present), Investors Financial Service
Corporation (1995-present), Investors Bank & Trust Corporation
(1995-present), Plymouth Rubber Co. (1995-present), Stifel
Financial (1996-present) and Command Systems, Inc.
(1998-present), Vice Chairman, Massachusetts Housing
Partnership (1992-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).
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE FUND DURING THE PAST 5 YEARS
--------------------- ------------- -----------------------
<S> <C> <C>
*Calvin J. Pedersen (56) Director Director (1986-present), President (1993-present) and Executive Vice
Phoenix Duff & Phelps President (1992-1993), Phoenix Duff & Phelps Corporation.
Corporation Director/Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-
55 East Monroe Street Aberdeen Series Fund and Phoenix Duff & Phelps Institutional
Suite 3600 Mutual Funds (1996-present). President and Chief Executive Officer,
Chicago, IL 60603 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).
**Herbert Roth, Jr. (69) Director Director/Trustee, Phoenix Funds (1980-present). Trustee, Phoenix-
134 Lake Street Aberdeen Series Fund and Phoenix Duff & Phelps Institutional Mutual
P.O. Box 909 Funds (1996-present). Director, Boston Edison Company (1978-
Sherborn, MA 01770 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).
Richard E. Segerson (52) Director Managing Director, Mullin Associates (1993-present). Director/Trustee,
102 Valley Road Phoenix Funds, (1993-present). Trustee, Phoenix-Aberdeen Series
New Canaan, CT 06840 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) Director Trustee/Director, Phoenix Funds (1995-present). Trustee, Phoenix-
731 Lake Avenue Aberdeen Series Fund and Phoenix Duff & Phelps Institutional Mutual
Greenwich, CT 06830 Funds (1996-present). Director, UST Inc. (1995-present), HPSC
Inc. (1995-present), Compuware (1996-present) and Burroughs
Wellcome Fund (1996-present). Visiting Professor, University
of Virginia (1997-present). Director, Duty Free International
(1997). Chairman, Dresing, Lierman, Weicker (1995-1996).
Governor of the State of Connecticut (1991-1995).
Michael E. Haylon (40) Executive Vice Director and Executive Vice President-Investments, Phoenix Duff &
President Phelps Corporation (1995-present). Senior Vice President,
Securities Investments, Phoenix Home Life Mutual Insurance
Company (1993-1995). Director (1994-present), President
(1996-present), and Executive Vice President (1994-1996),
National Securities & Research Corporation. Executive Vice
President, Phoenix Funds (1995-present) 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)
and Executive Vice President (1994-1995), Phoenix Investment
Counsel, Inc. Director (1994-present), President (1996-present)
and Executive Vice President (1994-1996), National Securities &
Research Corporation. Director, Phoenix Equity Planning
Corporation (1995-present). Various other positions with Phoenix
Home Life Mutual Insurance Company (1990-1993).
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE FUND DURING THE PAST 5 YEARS
--------------------- ------------- -----------------------
<S> <C> <C>
William J. Newman (58) Senior Vice Executive Vice President (1995-present) and Chief Investment
President Strategist (1996-present), Phoenix Investment Counsel, Inc.
Executive Vice President and Chief Investment Strategist
(1996-present), Senior Vice President (1995-1996), National
Securities & Research Corporation. Senior Vice President,
Phoenix Strategic Equity Series Fund (1996-present), The
Phoenix Edge Series Fund (1995-present), Phoenix
Multi-Portfolio Fund (1995-present), Phoenix Income and
Growth Fund (1996-present), Phoenix Series Fund (1995-present),
Phoenix Strategic Allocation Fund, Inc. (1996-present),
Phoenix Worldwide Opportunities Fund (1996-present),
Phoenix Duff & Phelps Institutional Funds (1996-present), and
Phoenix-Aberdeen Series Fund (1996-present). Senior
Vice President, Phoenix Equity Planning Corporation
(1995-1996). Vice President, Common Stock and Chief
Investment Strategist, Phoenix Home Life Insurance Company
(April, 1995-November, 1995). Chief Investment Strategist,
Kidder, Peabody Co., Inc. (1993-1994). Managing Director,
Equities, Bankers Trust Company (1991-1993).
James D. Wehr (40) Senior Vice Managing Director, Fixed Income (1996-present), Vice President
President (1991-1996), Phoenix Investment Counsel, Inc. Managing
Director, Fixed Income (1996-present), Vice President (1993-1996),
National Securities & Research Corporation. Senior Vice President
(1997-present), Vice President (1988-1997) Phoenix
Multi-Portfolio Fund; Senior Vice President (1997-present), Vice
President (1990-1997) Phoenix Series Fund; Senior Vice President
(1997-present), Vice President (1991-1997) The Phoenix Edge
Series Fund; Senior Vice President (1997-present), Vice
President (1993-1997) Phoenix California Tax Exempt Bonds, Inc.,
Senior Vice President (1997-present), Vice President (1996-1997)
Phoenix Duff & Phelps Institutional Mutual Funds. Senior Vice
President (1997-present) Phoenix Multi-Sector Fixed
Income Fund, Inc., Phoenix Multi-Sector Short Term Bond Fund,
Phoenix Income and Growth Fund and Phoenix Strategic
Allocation Fund, Inc. Senior Vice President and Chief Investment
Officer, Duff & Phelps Utilities Tax-Free Income Inc.
(1997-present). Managing Director, Public Fixed Income,
Phoenix Home Life Insurance Company (1991-1995). Various
positions with Phoenix Home Life Mutual Insurance Company
(1981-1991).
Mary C. Canning (41) Vice President Managing Director & Investment Strategist, Equities
(1996-present), Vice President (1991-1996), Phoenix Investment
Counsel, Inc. Managing Director and Investment Strategist,
National Securities & Research Corporation (1996-present).
Vice President, The Phoenix Edge Series Fund (1987-present)
and Phoenix Strategic Allocation Fund, Inc. (1996-present).
Associate Portfolio Manager, Common Stock, Phoenix Home Life
Mutual Insurance Company (1991-1995). Various other positions
with Phoenix Home Life Mutual Insurance Company (1982-1991).
William E. Keen, III (34) Vice Assistant Vice President (1996-present), Director of Mutual Fund
100 Bright Meadow Blvd. President Compliance (1995-1996), Phoenix Equity Planning Corporation.
P.O. Box 2200 Vice President, Phoenix Funds, Phoenix-Aberdeen Series
Enfield, CT 06083-2200 Fund, and Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present). Assistant Vice President, USAffinity Investments LP,
(1994-1995). Treasurer and Secretary, USAffinity Funds
(1994-1995). Manager, Fund Administration, SEI Corporation
(1991-1994).
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE FUND DURING THE PAST 5 YEARS
--------------------- ------------- -----------------------
<S> <C> <C>
William R. Moyer (53) Vice Senior Vice President and Chief Financial Officer, Phoenix Duff &
100 Bright Meadow Blvd. President Phelps Corporation (1995-present). Senior Vice President (1990-
P.O. Box 2200 present), Chief Financial Officer (1996-present), Finance (until 1996)
Enfield, CT 06083-2200 and Treasurer (1994-1996), Phoenix Equity Planning Corporation.
Senior Vice President (1990-present), Chief Financial Officer
(1996-present), Finance (until 1996) and Treasurer
(1994-present), Phoenix Investment Counsel, Inc. Senior Vice
President (1994-present), Chief Financial Officer
(1996-present), Finance (until 1996) and Treasurer
(1994-present), National Securities & Research Corporation. 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, Phoenix Duff & Phelps Investment Management
Co. (1996-present). Vice President, Investment Products Finance,
Phoenix Home Life Mutual Insurance Company (1990-1995). Senior
Vice President and Chief Financial Officer (1993-1995) and
Treasurer (1994-1995), W.S. Griffith & Co., Inc. and Townsend
Financial Advisors, Inc. Senior Vice President, Finance, Phoenix
Securities Group, Inc. (1993-1995). Vice President, the National
Affiliated Companies (until 1993).
Leonard J. Saltiel (44) Vice Managing Director, Operations and Service (1996-present), Senior
100 Bright Meadow Blvd. President Vice President, (1994-1996), Phoenix Equity Planning Corporation.
P.O. Box 2200 Vice President, Phoenix Funds, (1994-present), Phoenix Duff & Phelps
Enfield, CT 06083-2200 Institutional Mutual Funds and Phoenix-Aberdeen Series Fund
(1996-present), and National Securities & Research Corporation
(1994-1996). Vice President, Investment Operations, Phoenix
Home Life Mutual Insurance Company (1994-1995). Various
positions with Phoenix Home Life Insurance Company (1987-1994).
Nancy G. Curtiss (45) Treasurer Treasurer (1996-present), Vice President, Fund Accounting
(1994-1996), Phoenix Equity Planning Corporation. Treasurer,
Phoenix Funds (1994-present), Phoenix-Aberdeen Series Fund
(1996-present), and Phoenix Duff & Phelps Institutional Mutual
Funds (1996-present). Second Vice President and Treasurer,
Fund Accounting, Phoenix Home Life Mutual Insurance Company
(1994-1995). Various positions with Phoenix Home Life Mutual
Insurance Company (1987-1994).
G. Jeffrey Bohne (50) Secretary Vice President, Mutual Fund Customer Service (1996-present), Vice
101 Munson Street and Clerk President, Transfer Agent Operations (1993-1996), Phoenix Equity
Greenfield, MA 01301 Planning Corporation (1996-present). Secretary/Clerk, Phoenix
Funds (1993-present), Phoenix-Aberdeen Series Fund and Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present). Vice
President and General Manager, Phoenix Home Life Mutual
Insurance Company (1993-present). Assistant Vice President,
Phoenix Home Life Mutual Insurance Company (1992-1993). Vice
President, Home Life of New York Insurance Company (1984-1992).
</TABLE>
- ---------------
*Indicates that the Director is an "interested person" of the Fund within the
meaning of the definition set forth in Section 2(a) of the Investment Company
Act of 1940.
**Pursuant to the retirement policy of Phoenix Funds, Messrs. Morris and Roth
will retire form the Board of Directors effective January 1, 1999.
For services rendered to the Fund during the fiscal year ended December 31,
1997, the Directors received an aggregate of $20,663 from the Fund as Directors'
fees. For services on the Board of Directors/Trustees of the Phoenix Funds, each
Director 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 $2,500 per joint
meeting of the Boards. Each Director who serves on the Audit Committee receives
a retainer at the annual rate of $2,000 and a
21
<PAGE>
fee of $2,000 per joint Audit Committee meeting attended. Each Director who
serves on the Nominating Committee receives a retainer at the annual rate of
$1,000 and $1,000 per joint Nominating Committee meeting attended. Each Director
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 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 Directors. Director fee costs are allocated equally to each of the
Series and Funds within the Phoenix Funds complex. The foregoing fees do not
include 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 Fund's last fiscal year ending December 31, 1997, the Directors
received the following compensation:
<TABLE>
<CAPTION>
PENSION OR TOTAL
RETIREMENT ESTIMATED COMPENSATION
BENEFITS ANNUAL FROM FUND AND
AGGREGATE ACCRUED AS PART BENEFITS FUND COMPLEX
COMPENSATION OF FUND UPON (13 FUNDS) PAID TO
NAME FROM FUND EXPENSES RETIREMENT DIRECTORS
---- --------- ---------- -------- -----------
<S> <C> <C> <C> <C>
Robert Chesek $1,545 $56,500
E. Virgil Conway+ $2,010 $73,000
Harry Dalzell-Payne+ $1,755 $63,750
Francis E. Jeffries $1,500* $55,000
Leroy Keith, Jr $1,545 None None $56,500
Philip R. McLoughlin+ $ 0 for any for any $ 0
Everett L. Morris+ $1,710* Director Director $63,000
James M. Oates+ $1,710 $62,250
Calvin J. Pedersen $ 0 $ 0
Herbert Roth, Jr+ $2,085* $74,750
Richard E. Segerson $1,770 $64,750
Lowell P. Weicker, Jr $1,688 $61,250
</TABLE>
- ----------------
*This compensation (and the earnings thereon) was deferred pursuant to the
Directors Deferred Compensation Plan. At December 31, 1997, the total amount of
deferred compensation (including interest and other accumulation earned on the
original amounts deferred) accrued for Messrs. Jeffries, Morris and Roth was
$60,161, $126,891 and $137,672, 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.
On March 31, 1998, the Directors and officers of the Fund beneficially owned
less than 1% of the outstanding shares of the Fund.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of March 31, 1998 with respect
to each person who owns of record or is known by the Fund to own of record or
beneficially own 5% or more of any class of the Fund's equity securities.
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER CLASS NUMBER OF SHARES PERCENT OF CLASS
- ------------------- ----- ---------------- ----------------
<S> <C> <C> <C>
Merrill Lynch, Pierce, Fenner Class B 37,517.000 5.46%
& Smith, Inc.
ATTN: Fund Administration
4800 Deer Lake Dr. East
Jacksonville, Florida 32246
</TABLE>
ADDITIONAL INFORMATION
The Fund's Prospectus and this Statement of Additional Information omit
certain information contained in the registration statement filed with the
Securities and Exchange Commission which may be obtained from the Commission's
principal office at 450 Fifth Street, N.W., Washington, DC 20549, upon payment
of the fee prescribed by the Commission's rules and regulations.
22
<PAGE>
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company, P.O. Box 351, Boston, Massachusetts
02101, serves as the Fund's custodian. Phoenix Equity Planning Corporation, 100
Bright Meadow Boulevard, Enfield, Connecticut 06082, serves as Transfer Agent of
the Fund. As compensation, Equity Planning receives a fee equivalent to $14.95
for each designated shareholder account plus out-of-pocket expenses. Transfer
Agent fees are also utilized to offset costs and fees paid to subtransfer agents
employed by Equity Planning. State Street Bank and Trust Company serves as a
subtransfer agent pursuant to a Subtransfer Agency Agreement effective June 1,
1994.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110, has
been selected independent accountants for the Fund. Price Waterhouse LLP audits
the Fund's annual financial statements and expresses an opinion thereon.
FINANCIAL STATEMENTS
Financial information relating to the Fund is contained in the Annual Report
to Shareholders for the year ended December 31, 1997 and 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. The
Annual Report is incorporated into this Statement of Additional Information by
reference. A copy of the Annual Report must precede or accompany this Statement
of Additional Information.
APPENDIX
A-1 AND P-1 COMMERCIAL PAPER RATINGS
Commercial paper rated A-1 by Standard & Poor's Corporation ("S&P") has the
following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is rated "A" or better. The issuer has
access to at least two additional channels of borrowing. Basic earnings and cash
flow have an upward trend with allowance made for unusual circumstances.
Typically, the issuer's industry is well established and the issuer has a strong
position within the industry. The reliability and quality of management are
unquestioned.
The rating P-1 is the highest commercial paper rating assigned by Moody's
Investors Services, Inc. ("Moody's"). Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationship which exists with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.
MOODY'S INVESTORS SERVICE, INC. CORPORATE BOND RATINGS
AAA--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
AA--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa Group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment 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.
23
<PAGE>
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.
24
<PAGE>
Phoenix Strategic Allocation Fund, Inc.
- --------------------------------------------------------------------------------
INVESTMENTS AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------------------------- ----------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--3.1%
U.S. Treasury Notes--2.6%
U.S. Treasury Notes
6.625%, 5/15/07 ........... AAA $ 7,865 $ 8,327,069
-----------
Agency Mortgage-Backed Securities--0.5%
FNMA 6.85%, 5/17/20 ......... AAA 1,500 1,538,906
-----------
TOTAL U.S. GOVERNMENT AND
AGENCY SECURITIES
(Identified cost $9,313,833) ................................. 9,865,975
-----------
MUNICIPAL BONDS--4.1%
California--2.0%
California State Department
Water System Series S
5%, 12/1/29 ............... AA 325 315,988
Kern County Pension
Obligation Taxable
7.26%, 8/15/14 (f) ........ AAA 1,700 1,805,978
Long Beach Pension
Obligation Taxable
6.87%, 9/1/06 ............. AAA 950 988,351
Los Angeles County Public
Works 5.125%, 12/1/29 ..... AAA 495 486,328
San Bernardino County
Pension Obligation
Revenue Taxable 6.87%,
8/1/08 .................... AAA 455 472,913
San Bernardino County
Pension Obligation
Revenue Taxable 6.94%,
8/1/09 .................... AAA 1,240 1,297,164
Ventura County Pension
Obligation Taxable
6.54%, 11/1/05 ............ AAA 1,100 1,121,384
-----------
6,488,106
-----------
Florida--1.6%
Florida State Department of
Transportation Series A
5%, 7/1/27 ................ AA+ 400 389,260
Miami Beach Special
Obligation Taxable
8.60%, 9/1/21 ............. AAA 3,600 4,066,092
University of Miami
Exchangeable Revenue
Series A Taxable 7.65%,
4/1/20 .................... AAA 595 628,028
-----------
5,083,380
-----------
Massachusetts--0.1%
Massachusetts State Water
Authority 5%, 8/1/24 ...... AAA 400 388,592
-----------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------------------------- ----------------
<S> <C> <C> <C>
Texas--0.2%
Houston Water & Sewer
Refunding, Jr. Lien,
Series D 5%, 12/1/25 ...... AAA $ 495 $ 484,145
-----------
Washington--0.2%
Washington State Series E
Taxable 5%, 7/1/22 ........ AA+ 495 486,818
-----------
TOTAL MUNICIPAL BONDS
(Identified cost $12,507,289) ................................... 12,931,041
-----------
NON-CONVERTIBLE BONDS--5.5%
Asset-Backed Securities--1.8%
AESOP Funding II LLC
97-1, A2 144A 6.40%,
10/20/03 (d) .............. AAA 1,600 1,613,000
Capita Equipment
Receivables Trust 97-1,
B 6.45%, 8/15/02 .......... A+ 600 600,938
Chase Credit Card Master
Trust 97-2, A 6.30%,
4/15/03 ................... AAA 1,500 1,511,074
Fleetwood Credit Corp.
96-B, A 6.90%, 3/15/12 AAA 728 734,143
Green Tree Financial Corp.
96-2, M1 7.60%,
4/15/27 ................... AA- 1,150 1,199,594
-----------
5,658,749
-----------
Non-Agency Mortgage-Backed Securities--3.6%
CS First Boston Mortgage
Securities Corp. 95-AE,
B 7.182%, 11/25/27 ........ AA- 1,775 1,787,203
First Union Lehman Bros.
97-C1, B 7.43%,
4/18/29 ................... Aa(c) 600 628,312
G.E. Capital Mortgage
Services, Inc. 96-8, M
7.25%, 5/25/26 ............ AA 246 248,333
Lehman Large Loan
97-LL1, B 6.95%,
3/12/07 (f) ............... AA 725 742,559
Nationslink Funding Corp.
96-1, B 7.69%,
12/20/05 .................. AA 325 345,617
Residential Asset
Securitization Trust
96-A8, A1 8%, 12/25/26 .... AAA 660 669,558
Residential Funding
Mortgage Securities I
96-S1, A11 7.10%,
1/25/26 ................... AAA 1,500 1,518,281
</TABLE>
See Notes to Financial Statements
4
<PAGE>
Phoenix Strategic Allocation Fund, Inc.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
-------------------- -------------
<S> <C> <C> <C>
Non-Agency Mortgage-Backed Securities--continued
Residential Funding
Mortgage Securities I
96-S4, M1 7.25%,
2/25/26 ..................... AA $ 492 $ 497,622
Resolution Trust Corp.
93-C1, B 8.75%,
5/25/24 ..................... Aa(c) 805 804,985
Resolution Trust Corp.
95-2, M1 7.15%,
5/25/29 ..................... Aa(c) 1,310 1,332,677
Structured Asset Securities
Corp. 93-C1, B 6.60%,
10/25/24 (f) ................ A+ 1,275 1,249,603
Structured Asset Securities
Corp. 95-C4, B 7%,
6/25/26 (f) ................. AA 1,850 1,866,766
----------
11,691,516
----------
Paper & Forest Products--0.1%
Buckeye Cellulose Corp.
9.25%, 9/15/08 .............. BB- 350 370,125
----------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $17,485,676) ...................... 17,720,390
----------
FOREIGN GOVERNMENT SECURITIES--3.0%
Argentina--0.2%
Republic of Argentina
Bearer FRB 6.688%,
3/31/05 (e) ................. BB 797 712,140
----------
Brazil--0.3%
Republic of Brazil NMB-L
6.75%, 4/15/09 (e) .......... BB- 945 763,678
----------
Bulgaria--0.1%
Republic of Bulgaria
FLIRB Series A Bearer
Euro 2.25%, 7/28/12 (e) ..... B(c) 615 374,381
----------
Colombia--0.2%
Republic of Colombia
Yankee 7.25%, 2/23/04 ....... BBB- 750 707,813
----------
Croatia--0.1%
Croatia Series A 6.625%,
7/31/10 (e) ................. BBB- 420 369,600
----------
Ecuador--0.2%
Ecuador Bearer PDI Euro,
PIK interest
capitalization, 6.688%,
2/27/15 (e) ................. B(c) 930 617,200
----------
Mexico--0.4%
United Mexican States
Global Bond 11.50%,
5/15/26 ..................... BB 1,065 1,260,161
----------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------------------------- -------------
<S> <C> <C> <C>
Panama--0.2%
Republic of Panama
8.875%, 9/30/27 ............... BB+ $ 800 $ 752,800
----------
Peru--0.2%
Peru PDI 4%, 3/7/17 (e) ......... BB 1,005 660,787
----------
Poland--0.3%
Poland PDI Bearer 4%,
10/27/14 (e) .................. BBB- 1,125 974,531
----------
Russia--0.5%
Russia Interest Notes
Series US 144A 6.719%,
12/15/15 (d) (e) .............. NR 2,300 1,633,000
----------
Venezuela--0.3%
Republic of Venezuela
9.25%, 9/15/27 ................ B+ 845 755,747
----------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $9,247,230) ...................................... 9,581,838
----------
FOREIGN NON-CONVERTIBLE BONDS--0.2%
Chile--0.2%
Compania Sud Americana
de Vapores SA 7.375%,
12/8/03 ....................... BBB 200 198,750
Petropower I Funding Trust
144A 7.36%,
2/15/14 (d) ................... BBB 500 506,420
----------
705,170
----------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $696,097) ....................................... 705,170
----------
SHARES
-------
COMMON STOCKS--70.0%
Banks (Major Regional)--6.1%
AmSouth Bancorporation .................... 34,000 1,846,625
Banc One Corp. ............................ 62,200 3,378,238
BankBoston Corp. .......................... 41,800 3,926,587
Compass Bankshares, Inc. .................. 25,900 1,133,125
Mellon Bank Corp. ......................... 42,000 2,546,250
NationsBank Corp. ......................... 37,300 2,268,306
Southtrust Corp. .......................... 23,000 1,459,063
Washington Mutual, Inc. ................... 47,700 3,043,856
----------
19,602,050
----------
Banks (Money Center)--1.7%
BankAmerica Corp. ......................... 61,700 4,504,100
Citicorp .................................. 7,500 948,281
----------
5,452,381
----------
Biotechnology--0.2%
Centocor, Inc. (b) ........................ 18,200 605,150
----------
Broadcasting (Television, Radio, & Cable)--0.7%
Chancellor Media Corp. (b) ................ 31,600 2,358,150
----------
Chemicals (Specialty)--0.4%
Solutia, Inc. (b) ......................... 43,900 1,171,581
----------
</TABLE>
See Notes to Financial Statements
5
<PAGE>
Phoenix Strategic Allocation Fund, Inc.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
---------------------------------
<S> <C> <C>
Communications Equipment--2.8%
Ciena Corp. (b) ...... 77,400 $ 4,731,075
Lucent Technologies, Inc. 51,300 4,097,588
------------
8,828,663
------------
Computers (Hardware)--4.2%
International Business
Machines Corp. ... 128,600 13,446,738
------------
Computers (Networking)--0.9%
Cisco Systems, Inc. (b) 51,000 2,843,250
------------
Computers (Peripherals)--0.4%
EMC Corp. (b) ........ 46,400 1,273,100
------------
Computers (Software & Services)--4.7%
Adaptec, Inc. (b) ... 83,000 3,081,375
BMC Software, Inc. (b) 84,200 5,525,625
Compuware Corp. (b) .. 130,000 4,160,000
Edwards (J.D.) & Co. (b) 58,600 1,728,700
Yahoo!, Inc. (b) .... 7,200 498,600
------------
14,994,300
------------
Distributors (Food & Health)--0.8%
Cardinal Health, Inc. 34,400 2,584,300
------------
Electrical Equipment--2.1%
General Electric Co. 89,000 6,530,375
------------
Electronics (Instrumentation)--0.4%
Linear Technology Corp. 20,000 1,152,500
------------
Electronics (Semiconductors)--1.6%
National Semiconductor
Corp. (b) ........... 109,900 2,850,531
Texas Instruments, Inc. 52,800 2,376,000
------------
5,226,531
------------
Entertainment--1.1%
Tele-Comm Liberty Media
Group (b) ........... 97,700 3,541,625
------------
Financial (Diversified)--0.9%
American Express Co. 32,900 2,936,325
------------
Health Care (Diversified)--2.3%
Bristol-Myers Squibb Co. 32,300 3,056,387
Warner-Lambert Co. 35,700 4,426,800
------------
7,483,187
------------
Health Care (Drugs-Major Pharmaceuticals)--3.4%
Lilly (Eli) & Co. .... 30,300 2,109,637
Pfizer, Inc. ......... 103,800 7,739,588
Watson Pharmaceuticals,
Inc. (b) ............ 33,300 1,080,169
------------
10,929,394
------------
Health Care (Hospital Management)--1.3%
HBO & Co. ............ 85,800 4,118,400
------------
Health Care (Long Term Care)--0.6%
HEALTHSOUTH Corp. (b) 71,400 1,981,350
------------
Health Care (Medical Products & Supplies)--2.4%
Guidant Corp. ........ 66,600 4,145,850
Medtronic, Inc. ...... 69,400 3,630,488
------------
7,776,338
------------
Household Furn. & Appliances--0.9%
Sunbeam Corp., Inc. ... 64,500 2,717,062
------------
Household Products (Non-Durables)--0.8%
Colgate-Palmolive Co. 35,600 2,616,600
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------------------------------
<S> <C> <C>
Insurance (Life/Health)--0.6%
UNUM Corp. .......... 38,000 $ 2,066,250
------------
Insurance (Multi-Line)--1.4%
Reliastar Financial Corp. 8,100 333,619
Travelers Group, Inc. 77,100 4,153,762
------------
4,487,381
------------
Insurance (Property-Casualty)--1.0%
Allstate Corp. ....... 34,900 3,171,538
------------
Investment Banking/Brokerage--0.5%
Merrill Lynch & Co., Inc. 23,700 1,728,619
------------
Machinery (Diversified)--0.7%
Deere & Co. .......... 36,900 2,151,731
------------
Manufacturing (Diversified)--2.2%
Tyco International Ltd. 153,900 6,935,119
------------
Oil (Domestic Integrated)--1.4%
Tosco Corp. .......... 113,800 4,303,062
------------
Oil & Gas (Drilling & Equipment)--6.3%
BJ Services Co. (b) .. 33,400 2,402,712
Cooper Cameron Corp. (b) 17,100 1,043,100
Diamond Offshore
Drilling, Inc. ...... 48,600 2,338,875
Halliburton Co. ...... 84,600 4,393,913
Nabors Industries,
Inc. (b) ........... 16,200 509,287
Noble Drilling
Corp. (b) ........... 38,500 1,179,063
Rowan Companies,
Inc. (b) ........... 32,700 997,350
Schlumberger Ltd. .... 59,700 4,805,850
Transocean Offshore, Inc. 51,200 2,467,200
------------
20,137,350
------------
Oil & Gas (Refining & Marketing)--0.4%
Santa Fe International
Corp. ............... 31,700 1,289,794
------------
Personal Care--1.7%
Gillette Co. ......... 52,700 5,293,056
------------
Retail (Building Supplies)--1.3%
Home Depot, Inc. ..... 69,800 4,109,475
------------
Retail (Drug Stores)--2.8%
CVS Corp. ............ 70,900 4,542,031
Rite Aid Corp. ....... 76,600 4,495,463
------------
9,037,494
------------
Retail (Food Chains)--1.6%
Safeway, Inc. (b) .... 81,800 5,173,850
------------
Retail (General Merchandise)--1.2%
Borders Group, Inc. (b) 75,800 2,373,487
Staples, Inc. (b) .... 57,100 1,584,525
------------
3,958,012
------------
Telecommunications (Cellular/Wireless)--2.1%
AirTouch Communications,
Inc. (b) ........... 160,000 6,650,000
------------
Telecommunications (Long Distance)--1.6%
AT&T Corp. ........... 82,900 5,077,625
------------
Tobacco--2.5%
Philip Morris Companies,
Inc. ................ 175,900 7,970,469
------------
TOTAL COMMON STOCKS
(Identified cost $207,612,558) ........ 223,710,175
------------
</TABLE>
See Notes to Financial Statements
6
<PAGE>
Phoenix Strategic Allocation Fund, Inc.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------------------
<S> <C> <C>
FOREIGN COMMON STOCKS--4.4%
Computers (Software & Services)--0.2%
Baan Company NV (Netherlands) (b) ......... 17,900 $ 590,700
------------
Health Care (Drugs-Major Pharmaceuticals)--1.3%
SmithKline Beecham PLC Sponsored ADR
(United Kingdom) ....................... 81,800 4,207,588
------------
Health Care (Medical Products & Supplies)--0.4%
Elan PLC Sponsored ADR (Ireland) (b) ...... 25,300 1,295,044
------------
Household Furn. & Appliances--1.4%
Philips Electronics NV ADR NY
Registered Shares (Netherlands) ........ 74,500 4,507,250
------------
Oil (International Integrated)--1.1%
Elf Aquitane SA Sponsored ADR (France) ..... 57,300 3,359,213
------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $15,648,155) ...................... 13,959,795
------------
TOTAL LONG-TERM INVESTMENTS--90.3%
(Identified cost $272,510,838) ..................... 288,474,384
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
--------------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--7.6%
Commercial Paper--5.8%
Corporate Receivables
Corp. 5.90%, 1/6/98 ..... A-1 $2,000 1,998,361
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
--------------------------------------
<S> <C> <C> <C>
Commercial Paper--continued
Greenwich Funding Corp.
5.91%, 1/9/98 .............. A-1+ $1,000 $ 998,687
Kimberly-Clark Corp.
6.15%, 1/9/98 .............. A-1+ 2,500 2,496,584
Minnesota Mining &
Manufacturing Co.
6.10%, 1/9/98 .............. A-1+ 2,410 2,406,733
Receivables Capital Corp.
6.15%, 1/23/98 ............. A-1+ 1,960 1,952,633
Procter & Gamble Co.
5.63%, 2/11/98 ............. A-1+ 3,000 2,980,764
Wisconsin Electric Power
Co. 5.75%, 2/13/98 ......... A-1+ 3,500 3,475,962
CXC, Inc. 5.75%, 3/23/98 ..... A-1+ 2,280 2,251,021
--------------
18,560,745
--------------
Federal Agency Securities--1.8%
Federal Home Loan Banks 5.75%,
1/2/98 ................................. 5,660 5,659,089
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $24,219,316)....................... 24,219,834
--------------
TOTAL INVESTMENTS--97.9%
(Identified cost $296,730,154)...................... 312,694,218(a)
Cash and receivables, less liabilities--2.1% 6,760,863
--------------
NET ASSETS--100.0% ................................... $ 319,455,081
==============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $24,595,104 and gross
depreciation of $8,946,917 for income tax purposes. At December 31, 1997,
the aggregate cost of securities for federal income tax purposes was
$297,046,031.
(b) Non-income producing.
(c) As rated by Moody's, Fitch, or Duff & Phelps.
(d) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1997, these securities amounted to a value of $3,752,420 or 1.2% of net
assets.
(e) Variable or step coupon security; interest rate shown reflects the rate
currently in effect.
(f) All or a portion segregated as collateral.
See Notes to Financial Statements
7
<PAGE>
Phoenix Strategic Allocation Fund, Inc.
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $296,730,154) $ 312,694,218
Short-term investments held as collateral
for loaned securities 5,520,892
Cash 1,520,024
Receivables
Investment securities sold 8,475,339
Fund shares sold 114,172
Interest and dividends 1,007,021
-------------
Total assets 329,331,666
-------------
Liabilities
Payables
Investment securities purchased 3,644,881
Collateral on securities loaned 5,520,892
Fund shares repurchased 265,385
Investment advisory fee 176,146
Distribution fee 74,607
Transfer agent fee 60,335
Financial agent fee 12,546
Directors' fee 2,256
Accrued expenses 119,537
-------------
Total liabilities 9,876,585
-------------
Net Assets $ 319,455,081
=============
Net Assets Consist of:
Capital paid in on shares of common stock $ 295,899,930
Undistributed net investment income 445,183
Accumulated net realized gain 7,145,904
Net unrealized appreciation 15,964,064
-------------
Net Assets $ 319,455,081
=============
Class A
Shares of common stock, $1 par value,
50,000,000 shares authorized
(Net Assets $308,523,643) 19,999,964
Net asset value per share $15.43
Offering price per share
$15.43/(1-4.75%) $16.20
Class B
Shares of common stock, $1 par value,
50,000,000 shares authorized
(Net Assets $10,931,438) 714,369
Net asset value and offering price per share $15.30
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
Investment Income
Interest $ 6,943,251
Dividends 2,248,442
Security lending 67,148
-----------
Total investment income 9,258,841
-----------
Expenses
Investment advisory fee 2,109,677
Distribution fee--Class A 785,416
Distribution fee--Class B 103,992
Financial agent fee 149,370
Transfer agent 490,092
Printing 92,432
Custodian 35,972
Professional 35,916
Registration 31,026
Directors 23,481
Miscellaneous 23,478
-----------
Total expenses 3,880,852
-----------
Net investment income 5,377,989
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 55,261,609
Net realized loss on written options (205,711)
Net realized gain on foreign currency transactions 195
Net change in unrealized appreciation (depreciation)
on investments 166,401
-----------
Net gain on investments 55,222,494
-----------
Net increase in net assets resulting from
operations $60,600,483
===========
</TABLE>
See Notes to Financial Statements
8
<PAGE>
Phoenix Strategic Allocation Fund, Inc.
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1997 December 31, 1996
------------------- ------------------
<S> <C> <C>
From Operations
Net investment income $ 5,377,989 $ 6,069,898
Net realized gain 55,056,093 32,225,004
Net change in unrealized appreciation (depreciation) 166,401 (9,313,255)
------------- -------------
Increase in net assets resulting from operations 60,600,483 28,981,647
------------- -------------
From Distributions to Shareholders
Net investment income--Class A (5,272,416) (5,622,283)
Net investment income--Class B (110,138) (90,090)
Net realized gains--Class A (50,054,070) (29,211,894)
Net realized gains--Class B (1,756,759) (899,061)
------------- -------------
Decrease in net assets from distributions to shareholders (57,193,383) (35,823,328)
------------- -------------
From Share Transactions
Class A
Proceeds from sales of shares (609,276 and 918,493 shares, respectively) 10,117,463 14,942,495
Net asset value of shares issued from reinvestment of distributions
(3,143,046 and 1,918,313 shares, respectively) 47,891,238 30,240,866
Cost of shares repurchased (3,705,438 and 5,512,257 shares, respectively) (62,577,057) (90,484,207)
------------- -------------
Total (4,568,356) (45,300,846)
------------- -------------
Class B
Proceeds from sales of shares (85,000 and 168,248 shares, respectively) 1,421,465 2,738,747
Net asset value of shares issued from reinvestment of distributions
(112,967 and 55,850 shares, respectively) 1,704,113 875,001
Cost of shares repurchased (105,293 and 108,645 shares, respectively) (1,781,004) (1,770,975)
------------- -------------
Total 1,344,574 1,842,773
------------- -------------
Decrease in net assets from share transactions (3,223,782) (43,458,073)
------------- -------------
Net increase (decrease) in net assets 183,318 (50,299,754)
Net Assets
Beginning of period 319,271,763 369,571,517
------------- -------------
End of period (including undistributed net investment income of $445,183 and
$448,303, respectively) $ 319,455,081 $ 319,271,763
============= =============
</TABLE>
See Notes to Financial Statements
9
<PAGE>
Phoenix Strategic Allocation Fund, Inc.
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------------------
Year Ended December 31,
1997 1996 1995 1994 1993
------------- ------------- --------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.52 $ 15.98 $ 14.82 $ 15.48 $ 14.89
Income from investment operations(6)
Net investment income 0.30 0.31 0.45 0.34 0.06(2)
Net realized and unrealized gain (loss) 2.81 1.10 2.22 (0.69) 1.49
--------- --------- -------- -------- -----------
Total from investment operations 3.11 1.41 2.67 (0.35) 1.55
--------- --------- -------- -------- -----------
Less distributions
Dividends from net investment income (0.30) (0.29) (0.52) (0.31) (0.11)
Dividends from net realized gains (2.90) (1.58) (0.99) (0.001) (0.85)
--------- --------- -------- -------- -----------
Total distributions (3.20) (1.87) (1.51) (0.311) (0.96)
--------- --------- -------- -------- -----------
Change in net asset value (0.09) (0.46) 1.16 (0.66) 0.59
--------- --------- -------- -------- -----------
Net asset value, end of period $ 15.43 $ 15.52 $ 15.98 $ 14.82 $ 15.48
========= ========= ======== ======== ===========
Total return(1) 20.68% 8.78% 18.23% (2.26)% 10.49%
Ratios/supplemental data:
Net assets, end of period (thousands) $308,524 $309,678 $361,526 $335,177 $370,440
Ratio to average net assets of:
Operating expenses 1.17% 1.21% 1.21% 1.24% 1.29%
Net investment income 1.68% 1.78% 2.67% 2.18% 1.26%
Portfolio turnover 355% 275% 184% 225% 246%
Average commission rate paid(5) $ 0.0547 $ 0.0529 N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
-------------------------------------------------------------------
From
Inception
Year Ended December 31, 10/24/94 to
1997 1996 1995 12/31/94
---------- --------- --------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.43 $ 15.89 $ 14.79 $ 14.98
Income from investment operations(6)
Net investment income 0.18 0.19 0.30 (2) 0.07
Net realized and unrealized gain (loss) 2.77 1.09 2.22 (0.09)
-------- --------- ----------- --------
Total from investment operations 2.95 1.28 2.52 (0.02)
-------- --------- ----------- --------
Less distributions
Dividends from net investment income (0.18) (0.16) (0.43) (0.17)
Dividends from net realized gains (2.90) (1.58) (0.99) --
-------- --------- ----------- --------
Total distributions (3.08) (1.74) (1.42) (0.17)
---------- -------- ----------- --------
Change in net asset value (0.13) (0.46) 1.10 (0.19)
-------- --------- ----------- --------
Net asset value, end of period $ 15.30 $ 15.43 $ 15.89 $ 14.79
======== ========= =========== ========
Total return(1) 19.74% 7.95% 17.31% (0.12)%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $10,931 $ 9,594 $ 8,046 $ 1,328
Ratio to average net assets of:
Operating expenses 1.92% 1.96% 1.97% 2.26%(3)
Net investment income 0.92% 1.01% 1.88% 1.74%(3)
Portfolio turnover 355% 275% 184% 225%
Average commission rate paid(5) $0.0547 $0.0529 N/A N/A
</TABLE>
(1) Maximum sales load is not reflected in total return calculation.
(2) Computed using average shares outstanding.
(3) Annualized
(4) Not annualized
(5) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
(6) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from
anticipated results depending on the timing of share purchases and
redemptions.
See Notes to Financial Statements
10
<PAGE>
PHOENIX STRATEGIC ALLOCATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Strategic Allocation Fund, Inc. ("the Fund") is registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment objective is to achieve
the highest total return consistent with reasonable risk by investing in
stocks, bonds and money market instruments. The Fund offers both Class A and
Class B shares. Class A shares are sold with a front-end sales charge of up to
4.75%. Class B shares are sold with a contingent deferred sales charge which
declines from 5% to zero depending on the period of time the shares are held.
Both classes of shares have identical voting, dividend, liquidation and other
rights and the same terms and conditions, except that each class bears
different distribution expenses and has exclusive voting rights with respect to
its distribution plan. Income and expenses of the Fund are borne pro rata by
the holders of both classes of shares, except that each class bears
distribution expenses unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
A. Security valuation:
Equity securities are valued at the last sale price, or if there had been
no sale that day, at the last bid price. Debt securities are valued on the
basis of broker quotations or valuations provided by a pricing service which
utilizes information with respect to recent sales, market transactions in
comparable securities, quotations from dealers, and various relationships
between securities in determining value. Short-term investments having a
remaining maturity of 60 days or less are valued at amortized cost which
approximates market. All other securities and assets are valued at fair value
as determined in good faith by or under the direction of the Directors.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign securities,
as soon as the Fund is notified. Interest income is recorded on the accrual
basis. The Fund does not amortize premiums but does amortize discounts using
the effective interest method. Realized gains or losses are determined on the
identified cost basis.
C. Income taxes:
It is the policy of the Fund to comply with the requirements of the
Internal Revenue Code (the Code), applicable to regulated investment companies,
and to distribute all of its taxable income to its shareholders. In addition,
the Fund intends to distribute an amount sufficient to avoid the imposition of
any excise tax under Section 4982 of the Code. Therefore, no provision for
federal income taxes or excise taxes has been made.
D. Distributions to shareholders:
Distributions to shareholders are recorded on the ex-dividend date. Income
and capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, expiring
capital loss carryforwards, foreign currency gain/loss, partnerships, and losses
deferred due to wash sales and excise tax regulations. Permanent book and tax
basis differences relating to shareholder distributions will result in
reclassifications to paid in capital.
E. Foreign currency translation:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at
the trade date. The gain or loss resulting from a change in currency exchange
rates between the trade and settlement dates of a portfolio transaction is
treated as a gain or loss on foreign currency. Likewise, the gain or loss
resulting from a change in currency exchange rates between the date income is
accrued and paid is treated as a gain or loss on foreign currency. The Fund
does not separate that portion of the results of operations arising from
changes in exchange rates and that portion arising from changes in the market
prices of securities.
F. Options:
The Fund may write covered options or purchase options contracts for the
purpose of hedging against changes in the market value of the underlying
securities or foreign currencies.
11
<PAGE>
PHOENIX STRATEGIC ALLOCATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 (Continued)
The Fund will realize a gain or loss upon the expiration or closing of the
option transaction. Gains and losses on written options are reported separately
in the Statement of Operations. When a written option is exercised, the
proceeds on sales or amounts paid are adjusted by the amount of premium
received. Options written are reported as a liability in the Statement of
Assets and Liabilities and subsequently marked-to-market to reflect the current
value of the option. The risk associated with written options is that the
change in value of options contracts may not correspond to the change in value
of the hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, or if a liquid secondary market does not
exist for the contracts.
The Fund may purchase options which are included in the Fund's Schedule of
Investments and subsequently marked-to-market to reflect the current value of
the option. When a purchased option is exercised, the cost of the security is
adjusted by the amount of premium paid. The risk associated with purchased
options is limited to the premium paid.
G. Security lending:
The Fund loans securities to qualified brokers through an agreement with
State Street Bank and Trust Company (State Street). Under the terms of the
agreement, the Fund receives collateral with a market value not less than 100%
of the market value of loaned securities. Collateral consists of cash,
securities issued or guaranteed by the U.S. Government or its agencies and the
sovereign debt of foreign countries. Interest earned on the collateral and
premiums paid by the borrower are recorded as income by the Fund net of fees
charged by State Street for its services in connection with this securities
lending program. Lending portfolio securities involves a risk of delay in the
recovery of the loaned securities or in the foreclosure on collateral. At
December 31, 1997, the Fund had loaned securities with a market value of
$5,376,860 and received collateral of $5,520,892.
NOTE 2. INVESTMENT ADVISORY FEES AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Fund, the Investment Adviser,
Phoenix Investment Counsel, Inc., an indirect majority-owned subsidiary of
Phoenix Home Life Mutual Insurance Company ("PHL"), is entitled to a fee at an
annual rate of 0.65% of the average daily net assets of the Fund for the first
$1 billion.
As Distributor of the Fund's shares, Phoenix Equity Planning Corp.
("PEPCO"), an indirect majority-owned subsidiary of PHL, has advised the Fund
that it retained net selling commissions of $16,801 for Class A shares and
deferred sales charges of $35,846 for Class B shares for the year ended
December 31, 1997. In addition, the Fund pays PEPCO a distribution fee at an
annual rate of 0.25% for Class A shares and 1.00% for Class B shares of the
average daily net assets of the Fund. The Distributor has advised the Fund that
of the total amount expensed for the year ended December 31, 1997, $214,049 was
retained by the Distributor, $626,034 was paid to unaffiliated participants and
$49,325 was paid to W.S. Griffith, an indirect subsidiary of PHL.
As Financial Agent of the Fund, PEPCO receives a fee for bookkeeping,
administration, and pricing services at an annual rate of 0.05% of average
daily net assets up to $100 million, 0.04% of average daily net assets of $100
million to $300 million, 0.03% of average daily net assets of $300 million
through $500 million, and 0.015% of average daily net assets greater than $500
million; a minimum fee may apply. PEPCO serves as the Fund's Transfer Agent
with State Street Bank and Trust Company as sub-transfer agent. For the year
ended December 31, 1997, transfer agent fees were $490,092 of which PEPCO
retained $195,024 which is net of the fees paid to State Street.
At December 31, 1997, PHL and affiliates held 60 Class A shares and 9,994
Class B shares of the Fund with a combined value of $153,828.
NOTE 3. PURCHASES AND SALES OF SECURITIES
During the year ended December 31, 1997, purchases and sales of
investments, excluding short-term securities and U.S. Government and agency
securities, amounted to $812,234,727 and $872,141,033, respectively. Purchases
and sales of long-term U.S. Government and agency securities amounted to
$154,459,567 and $155,029,546, respectively.
Written option activity for the year ended December 31, 1997, aggregated
the following:
<TABLE>
<CAPTION>
Call Options
-----------------------------
Number of Amount of
Options Premiums
----------- ---------------
<S> <C> <C>
Options outstanding at
December 31, 1996 -- $ --
Options written 4,595 1,357,023
Options canceled in closing
purchase transactions (4,445) (1,317,162)
Options expired -- --
Options exercised (150) (39,861)
------ ----------
Options outstanding at
December 31, 1997 -- $ --
====== ==========
</TABLE>
12
<PAGE>
PHOENIX STRATEGIC ALLOCATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 (Continued)
NOTE 4. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a fund's ability to
repatriate such amounts.
NOTE 5. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Fund has recorded
several reclassifications in the capital accounts. These reclassifications have
no impact on the net asset value of the Fund and are designed generally to
present undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder. During the year ended
December 31, 1997, the Fund increased undistributed net investment income by
$1,445 and decreased accumulated net realized gains by $1,445.
- ---------------------------------
TAX INFORMATION NOTICE (Unaudited)
Long-Term Capital Gains:
The Taxpayer Relief Act of 1997 included changes in the taxability of
long-term capital gains for individuals and certain other taxpayers. The
long-term capital gain distributions these shareholders receive from the Fund
are now taxed at either a 28% or 20% maximum rate, depending on how long an
asset was held and when it was sold. For the fiscal year ended December 31,
1997, the Fund distributed long-term capital gain dividends as follows:
28% rate gain distributions: $1,354,333
20% rate gain distributions: $631,201
Corporate Dividends Received Deduction:
For federal income tax purposes, 2.73% of the ordinary income dividends
paid by the Fund qualify for the dividends received deduction for corporate
shareholders.
This report is not authorized for distribution to prospective investors
in the Phoenix Strategic Allocation Fund, Inc. unless preceded or accompanied
by an effective prospectus which includes information concerning the sales
charge, the Fund's record and other pertinent information.
13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP [LOGO]
To the Board of Directors and Shareholders of
Phoenix Strategic Allocation Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments (except for bond ratings), and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Phoenix Strategic Allocation Fund, Inc. (the "Fund") at December 31, 1997, and
the results of its operations, the changes in its net assets and the financial
highlights for each of the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at December 31, 1997 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Boston, Massachusetts
February 18, 1998
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Condensed Financial Information is included in Part A of this registration
statement, Annual Report to Shareholders containing Financial Statements and
notes thereto and a Report of Independent Accountants for the year ended
December 31, 1997 are included in Part B of this registration statement and the
consent of Independent Accountants is included in Part C of this registration
statement.
(b) Exhibits:
1.1 Articles of Organization effective November 22, 1966
previously filed and filed via EDGAR with Post-Effective
Amendment No. 15 on April 24, 1997 and incorporated herein by
reference thereto.
1.2 Restated Articles of Organization effective March 21, 1967
previously filed and filed via EDGAR with Post-Effective
Amendment No. 15 on April 24, 1997 and incorporated herein by
reference thereto.
1.3 Amendment to Restated Articles of Organization effective March
31, 1982 previously filed and filed via EDGAR with
Post-Effective Amendment No. 15 on April 24, 1997 and
incorporated herein by reference thereto.
1.4 Amendment to Restated Articles of Organization effective July
9, 1986 filed with Amendment No. 10 and filed via EDGAR with
Post-Effective Amendment No. 15 on April 24, 1997 and
incorporated herein by reference thereto.
1.5 Amendment to Restated Articles of Organization effective July
22, 1986 and filed with Amendment No. 10 and filed via EDGAR
with Post-Effective Amendment No. 15 on April 24, 1997 and
incorporated herein by reference thereto.
1.6 Amendment to Restated Articles of Organization effective
September 15, 1987 and filed with Post-Effective Amendment No.
2 and filed via EDGAR with Post-Effective Amendment No. 15 on
April 24, 1997 and incorporated herein by reference thereto.
1.7 Amendment to Restated Articles of Organization effective July
5, 1994 and filed via EDGAR with Post-Effective Amendment No.
15 on April 24, 1997 and incorporated herein by reference
thereto.
1.8 Amendment to Restated Articles of Organization effective
October 12, 1994 and filed with Post-Effective Amendment No.
12 and filed via EDGAR with Post-Effective Amendment No. 15 on
April 24, 1997 and incorporated herein by reference thereto.
1.9 Amendment to Restated Articles of Organization effective
November 14, 1996 and filed via EDGAR with Post-Effective
Amendment No. 15 on April 24, 1997 and incorporated herein by
reference thereto.
2. By-Laws: Filed as Exhibit 2 to Amendment No. 10 (filed on Form
N-1A) to Registrant's Registration Statement on Form N-8B-1
(File No. 811-1442) and filed via EDGAR with Post-Effective
Amendment No. 15 on April 24, 1997 and incorporated herein by
reference thereto.
3. Not applicable.
C-1
<PAGE>
4. Reference is made to Article XXI of Registrant's By-Laws filed
with Amendment No. 10 and also Post-Effective Amendment Nos. 8
and 12 and filed via EDGAR with Post-Effective Amendment No.
15 on April 24, 1997 and incorporated herein by reference
thereto.
5.2 Management Agreement dated January 1, 1994 between Registrant
and Phoenix Investment Counsel, Inc. filed with Post-Effective
Amendment No. 12 on June 30, 1994 and filed via EDGAR with
Post-Effective Amendment No. 15 on April 24, 1997 and
incorporated herein by reference thereto.
6.1 Underwriting Agreement between Registrant and Phoenix Equity
Planning Corporation dated November 19, 1997 filed herewith
via EDGAR with Post-Effective Amendment No. 16 on April 21,
1998.
6.2 Form of Sales Agreement between Phoenix Equity Planning
Corporation and dealers filed herewith via EDGAR.
6.3 Form of Supplement to Phoenix Family of Funds Sales Agreement
filed via EDGAR herewith.
6.4 Form of Financial Institution Sales Contract for the Phoenix
Family of Funds filed via EDGAR herewith.
7. Not applicable.
8.1 Custodian Contract between Registrant and State Street Bank
and Trust Company dated May 1, 1997 filed herewith via EDGAR.
9.1 Amended and Restated Financial Agent Agreement between
Registrant and Phoenix Equity Planning Corporation dated
November 19, 1997 filed herewith via EDGAR.
9.2 Form of Transfer Agency and Service Agreement between
Registrant and Phoenix Equity Planning Corporation. Filed as
Exhibit 9.2b to Post-Effective Amendment No. 12 on June 30,
1994 and filed via EDGAR with Post-Effective Amendment No. 15
on April 24, 1997 and incorporated herein by reference
thereto.
9.3 Sub-Transfer Agency Agreement between Registrant and Phoenix
Equity Planning Corporation dated June 1, 1994. Filed via
EDGAR as Exhibit 9.2c to Post-Effective Amendment No. 15 on
April 24, 1997 and incorporated herein by reference thereto.
9.4 First Amendment to the Amended and Restated Financial Agent
Agreement between Registrant and Phoenix Equity Planning
Corporation effective as of February 27, 1998 filed herewith
via EDGAR.
10. Opinion and Consent of Counsel covering shares of the Fund
filed via EDGAR with Post-Effective Amendment No. 14 on May 1,
1996 and incorporated herein by reference.
11. Consent of Independent Accountants, filed herewith.
12. Not applicable.
13. Not applicable under rules relating to the filing of exhibits
in effect at date of original filing in 1966.
14.1 Custodial Agreement and supporting documentation and
information relating to Internal Revenue Code Section 403(b)
(7) tax sheltered accounts filed via EDGAR herewith.
C-2
<PAGE>
14.2 Custodial Agreement and supporting documentation and
information relating to Individual Retirement Accounts
("IRAs"), filed via EDGAR herewith.
15.1 Amended and Restated Distribution Plan for Class A shares
filed herewith via EDGAR.
15.2 Amended and Restated Distribution Plan for Class B shares
filed herewith via EDGAR.
16. Schedule for computation of performance information filed
herewith via EDGAR.
17. Financial Data Schedule filed herewith and reflected on EDGAR
as Exhibit 27.
18.1 Amended and Restated Rule 18f-3 Dual Distribution Plan
effective January 1, 1997 filed herewith via EDGAR with
Post-Effective Amendment No. 16 on April 21, 1998.
19. Powers of Attorney filed via EDGAR with Post-Effective
Amendment No. 14 on May 1, 1996 and incorporated herein by
reference.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
The following information is as of February 27, 1998.
NUMBER OF SHAREHOLDER
TITLE OF CLASS ACCOUNTS
-------------- ---------------------
Common Stock, $1 par value Class A Shares 19,112
Common Stock, $1 par value Class B Shares 873
ITEM 27. INDEMNIFICATION
Under the Registrant's By-Laws any present or former director or officer of
the Registrant is indemnified to the fullest extent permitted by law against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement, actually and reasonably incurred by him in connection with any
action, suit or proceeding to which he may be made a party by reason of being or
having been a director or officer of the Registrant, provided he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Registrant and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
By-Laws do not authorize indemnification of any director or officer who is
liable to the Registrant or its shareholders by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant 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 director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person, 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.
C-3
<PAGE>
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Management of the Fund" in the Prospectus and "Services of the Adviser" in
the Statement of Additional Information for information regarding the business
of the Adviser. 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 No. 801-5995
(PIC)) filed under the Investment Advisers Act of 1940, incorporated herein by
reference.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Equity Planning also serves as the principal underwriter for the following
other registrants:
Phoenix Multi-Sector Fixed Income Fund, Inc., Phoenix Series Fund, Phoenix
Multi-Sector Short Term Bond Fund, Phoenix Multi-Portfolio Fund, Phoenix
California Tax Exempt Bonds, Inc., Phoenix Income and Growth Fund, Phoenix
Worldwide Opportunities Fund, Phoenix Strategic Equity Series Fund, Phoenix
Equity Series Fund, Phoenix-Engemann Funds, Phoenix Investment Trust 97,
Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional Mutual Funds,
Phoenix Home Life Variable Universal Life Account, Phoenix Home Life Variable
Accumulation Account, PHL Variable Accumulation Account, Phoenix Life and
Annuity Variable Universal Life Account and PHL Variable Separate Account MVA1.
(b) Directors and executive officers of Phoenix Equity Planning Corporation
are as follows:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES WITH
BUSINESS ADDRESS WITH DISTRIBUTOR REGISTRANT
---------------- ------------------ --------------------------
<S> <C> <C>
Michael E. Haylon Director Executive
56 Prospect Street Vice President
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Director and
56 Prospect Street President
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Senior Vice Vice President
100 Bright Meadow Blvd. President and Chief
P.O. Box 2200 Financial Officer
Enfield, CT 06083-2200
John F. Sharry Executive Vice President, None
100 Bright Meadow Blvd. Retail Distribution
P.O. Box 1900
Enfield, CT 06083-2200
Paul A. Atkins Senior Vice President and None
56 Prospect St. Sales Manager
P.O. Box 150480
Hartford, CT 06115-0480
Leonard J. Saltiel Managing Director, Vice President
56 Prospect St. Operations and Service
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES WITH
BUSINESS ADDRESS WITH DISTRIBUTOR REGISTRANT
---------------- ------------------ --------------------------
<S> <C> <C>
G. Jeffrey Bohne Vice President, Mutual Fund Secretary and Clerk
101 Munson Street Customer Service
P.O. Box 810
Greenfield, MA 01302-0810
Eugene A. Charon Vice President and None
100 Bright Meadow Blvd. Corporate 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
William E. Keen, III Assistant Vice President, Vice President
100 Bright Meadow Blvd. Mutual Fund Regulation
P.O. Box 2200
Enfield, CT 06083-2200
Thomas N. Steenberg Vice President, Counsel Assistant Secretary
56 Prospect St. and Secretary
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an affiliated
person of the Registrant or an affiliated person of such affiliated person,
directly or indirectly, from the Registrant during the Registrant's last fiscal
year.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Persons maintaining physical possession of accounts, books and other
documents required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder include Registrant's Clerk;
Registrant's Secretary; Registrant's investment adviser, Phoenix Investment
Counsel, Inc.; Registrant's financial agent and principal underwriter, Phoenix
Equity Planning Corporation; Registrant's dividend disbursing agent, State
Street Bank and Trust Company; and Registrant's custodian, State Street Bank and
Trust Company. The address of the Secretary and Clerk is 101 Munson Street, P.O.
Box 810, Greenfield, MA 01302-0810; the address of the investment adviser is 56
Prospect Street, Hartford, Connecticut 06115-0480; the address of the transfer
agent and the financial agent is 100 Bright Meadow Boulevard, Enfield,
Connecticut 06083-2200; the address of the dividend disbursing agent is State
Street Bank and Trust Company, P.0. Box 8301, Boston, Massachusetts 02266-8301
Attention: Phoenix Funds; and the address of the custodian is State Street Bank
and Trust Company, P.0. Box 351, Boston, Massachusetts 02101.
ITEM 31. MANAGEMENT SERVICES
The information required by this Item is included in the Statement of
Additional Information.
ITEM 32. UNDERTAKINGS
The information called for by Item 5A of Form N-1A is contained in the
Fund's Annual Report to Shareholders; accordingly, the Fund hereby undertakes to
furnish each person to whom a prospectus is delivered with a copy of the Fund's
latest Annual Report, upon request and without charge.
C-5
<PAGE>
The Fund undertakes, if requested to do so by the holders of at least 10%
of the Fund's outstanding shares, to call a meeting of shareholders for the
purpose of voting upon the question of removal of a director or directors and to
assist with communications to other shareholders as required by Section 16(c) of
the Investment Company Act of 1940.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Amendment to the Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Hartford, and the State of
Connecticut on the 21st day of April, 1998.
PHOENIX STRATEGIC ALLOCATION FUND, INC.
ATTEST: /S/ THOMAS N. STEENBURG BY: /S/ PHILIP R. MCLOUGHLIN
---------------------- -----------------------
THOMAS N. STEENBURG PHILIP R. MCLOUGHLIN,
ASSISTANT SECRETARY PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities indicated, on this 21st day of April, 1998.
SIGNATURE TITLE
--------- -----
- -------------------------------------------------- Director
Robert Chesek*
- -------------------------------------------------- Director
E. Virgil Conway*
- -------------------------------------------------- Treasurer (principal
Nancy G. Curtiss* financial and
accounting officer)
- -------------------------------------------------- Director
Harry Dalzell-Payne*
- -------------------------------------------------- Director
Francis E. Jeffries*
- -------------------------------------------------- Director
Leroy Keith, Jr.*
/s/ Philip R. McLoughlin President and Director
- -------------------------------------------------- (principal executive
Philip R. McLoughlin officer)
- -------------------------------------------------- Director
Everett L. Morris*
- -------------------------------------------------- Director
James M. Oates*
- -------------------------------------------------- Director
Calvin J. Pedersen*
- -------------------------------------------------- Director
Herbert Roth, Jr.*
- -------------------------------------------------- Director
Richard E. Segerson*
- -------------------------------------------------- Director
Lowell P. Weicker, Jr.*
*By /s/ Philip R. McLoughlin
--------------------------------------------------
*Philip R. McLoughlin, Attorney-in-fact pursuant to powers of
attorney filed with Post-Effective Amendment No. 14
Exhibit 6.1
Underwriting Agreement
<PAGE>
UNDERWRITING AGREEMENT
THIS AGREEMENT made as of this 19th day of November, 1997, by and
between Phoenix Strategic Allocation Fund, Inc., a Massachusetts corporation
having a place of business located at 101 Munson Street, Greenfield,
Massachusetts (the "Fund") and Phoenix Equity Planning Corporation, a
Connecticut corporation having a place of business located at 100 Bright Meadow
Boulevard, Enfield, Connecticut (the "Underwriter").
WITNESSETH THAT:
1. The Fund hereby grants to the Underwriter the right to purchase shares
of beneficial interest of each class of each series of the Fund established and
designated as of the date hereof and of any additional series and classes
thereof which the Board of Directors or Board of Trustees, as applicable
("Trustees") may establish and designate during the term of this Agreement
(called the "Series" and "Classes", respectively) and to resell shares of
various Classes, as applicable, of each Series (collectively called the
"Shares") as principal and not as agent. The Underwriter accepts such
appointment and agrees to render the services described in this Agreement for
the compensation herein provided.
2. The Underwriter's right to purchase Shares shall be exclusive except
that the terms of this Agreement shall not apply to Shares issued or
transferred:
a) pursuant to an offer of exchange exempted under Section 22(d)
of the Investment Company Act of 1940, as amended (the "Act")
by reason of the fact that said offer is permitted by Section
11 of the Act, including any offer made pursuant to clause (1)
or (2) of Section 11(b);
b) upon the sale to a registered unit investment trust which is
the issuer of periodic payment plan certificates the net
proceeds of which are invested in redeemable securities;
c) pursuant to an offer made solely to all registered holders of
Shares, or all registered holders of Shares of any Series,
proportionate to their holdings or proportionate to any cash
distribution made to them by the Fund (subject to appropriate
qualifications designed solely to avoid issuance of fractional
securities);
d) in connection with any merger or consolidation of the Fund or
of any Series with any other investment company or the
acquisition by the Fund, by purchase or otherwise, of any
other investment company;
<PAGE>
e) pursuant to sales exempted from Section 22(d) of the Act, by
rule or regulation or order of the Securities and Exchange
Commission as provided in the then current registration
statement of the Fund; or
f) in connection with the reinvestment by Fund shareholders of
dividend and capital gains distributions.
3. The "Net Asset Value" and the "Public Offering Price" of the Shares as
referred to in this Agreement shall be computed in accordance with the
provisions of the then current registration statement of the Fund.
The Underwriter shall be notified promptly by the Fund of such computations.
4. The Underwriter has and shall enter into written sales agreements with
broker/dealers ("dealers") and with banks as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, as amended, (Exchange Act) that are not
required to register as a broker/dealer under the Exchange Act or the
regulations thereunder ("Banks"). Such sales agreements shall provide that
dealers or Banks shall use their best efforts to promote the sale of Shares.
Such sales agreements shall include such terms and conditions as Underwriter may
determine not inconsistent with this Agreement; provided, however, that such
sales agreements shall specify a) that the dealer is registered as a
broker/dealer under the Exchange Act and a member of the National Association of
Securities Dealers, Inc. or, in the alternative, that the Bank is exempt from
broker/dealer registration under the Exchange Act; and b) that such dealers and
Banks agree that they will comply with all applicable state, and federal laws
and the rules and regulations of applicable regulatory agencies.
5. Each day the Underwriter shall have the right to purchase from the
Fund, as principal, the amount of Shares needed to fill unconditional orders for
such Shares received by the Underwriter from dealers, Banks, or investors, but
no more than the Shares needed, at a price equal to the Net Asset Value of the
Shares. Any purchase of Shares by the Underwriter under this Agreement shall be
subject to reasonable adjustment for clerical errors, delays and errors of
transmission and cancellation of orders.
6. With respect to transactions other than with dealers or Banks, the
Underwriter will sell Shares only at the Public Offering Price then in effect,
except to the extent that sales at less than the Public Offering Price may be
allowed by the Act, any rule or regulation promulgated thereunder or by order of
the Securities and Exchange Commission, provided, however, that any such sales
at less than the Public Offering Price shall be consistent with the terms of the
then current registration statement of the Fund. The Underwriter will sell at
Net Asset Value Shares of any Classes which are offered by the then current
registration statement or prospectus of the Fund for sale at such Net Asset
Value or at Net Asset Value with a contingent deferred sales charge ("CDSC
Shares"). The Underwriter shall receive from the Fund all contingent deferred
sales charges applied on redemptions of CDSC Shares.
2
<PAGE>
7. Sales at a discount from the Public Offering Price shall be made in
accordance with the terms and conditions of the terms of the current
registration statement of the Fund allowing such discounts. Such discounts shall
not exceed the difference between the Net Asset Value and the Public Offering
Price; however, the Underwriter may offer compensation in excess of the
difference between the Net Asset Value and the Public Offering Price, at its
discretion and from its own profits and resources, and only as described in the
current registration statement of the Fund. With respect to sales of CDSC
Shares, the Underwriter, in accordance with the terms of the current
registration statement of the Fund, shall pay dealers a commission on such sales
from its own profits and resources.
8. As reimbursement for expenditures made in connection with providing
certain distribution-related services, the Underwriter may receive from the Fund
a distribution service fee under the terms and conditions set forth in the
Fund's distribution plan adopted under Rule 12b-1 under the Investment Company
Act of 1940, as amended, as the plan may be amended from time to time and
subject to any further limitations on such fees as the Trustees may impose. The
Underwriter may receive from the Fund a service fee to be retained by the
Underwriter as compensation for providing services to shareholders of the Fund
or to be paid to dealers and Banks for providing services to their clients who
are also shareholders of the Fund.
9. The Fund shall furnish the Underwriter with copies of its
organizational documents, as amended from time to time. The Fund shall also
furnish the Underwriter with any other documents of the Fund which will assist
the Underwriter in the performance of its duties hereunder.
10. The Underwriter agrees to use its best efforts (in states where it may
lawfully do so) to obtain from investors unconditional orders for Shares
authorized for issue by the Fund and registered under applicable Federal
securities laws, and, so long as it does so, nothing herein contained shall
prevent the Underwriter from entering into similar arrangements with other
registered investment companies. The Underwriter may, in the exercise of its
discretion, refuse to accept orders for Shares from any person.
11. Upon receipt by the Fund of a purchase order from the Underwriter,
accompanied by proper delivery instructions, the Fund shall, as promptly as
practicable thereafter, cause evidence of ownership of Shares to be delivered as
indicated in such purchase order. Payment for such Shares shall be made by the
Underwriter to the Fund in a manner acceptable to the Fund, provided that the
Underwriter shall pay for such Shares no later than the third business day after
the Underwriter shall have contracted to purchase such shares.
12. In connection with offering for sale and selling Shares, the Fund
authorizes the Underwriter to give only such information and to make only such
statements or representations as are contained in the then current registration
statement of the Fund. The Underwriter shall be responsible for the approval and
filing of sales material as required under SEC and NASD regulations.
3
<PAGE>
13. The Fund agrees to pay the following expenses:
a) the cost of mailing stock certificates representing Shares;
b) fees and expenses (including legal expenses) of registering
and maintaining registrations of the Fund and of each Series
and Class with the Securities and Exchange Commission
including the preparation and printing of registration
statements and prospectuses for filing with said Commission;
c) fees and expenses (including legal expenses) incurred in
registering and qualifying Shares for sale with any state
regulatory agency and fees and expenses of maintaining,
renewing, increasing or amending such registrations and
qualifications;
d) the expense of any issue or transfer taxes upon the sale of
Shares to the Underwriter by the Fund;
e) the cost of preparing and distributing reports and notices
to shareholders.; and
f) fees and expenses of the transfer agent, including the cost of
preparing and mailing notices to shareholders pertaining to
transactions with respect to such shareholders accounts.
14. The Underwriter agrees to pay the following expenses:
a) all expenses of printing prospectuses and statements of
additional information used in connection with the sale of
Shares and printing and preparing all other sales literature;
b) all fees and expenses in connection with the qualification of
the Underwriter as a dealer in the various states and
countries;
c) the expense of any stock transfer tax required in connection
with the sale of Shares by the Underwriter as principal to
dealers or to investors; and
d) all other expenses in connection with offering for sale and
the sale of Shares which have not been herein specifically
allocated to the Fund.
15. The Fund hereby appoints the Underwriter its agent to receive requests
to accept the Fund's offer to repurchase Shares upon such terms and conditions
as may be described in the Fund's then current registration statement. The
agency granted in this paragraph 15 is terminable at the discretion of the Fund.
As compensation for acting as such agent and as part of the
4
<PAGE>
consideration for acting as underwriter, Underwriter shall receive from the Fund
all contingent deferred sales charges imposed upon the redemption of Shares.
Whether and to what extent a contingent deferred sales charge will be imposed
shall be determined in accordance with, and in the manner set forth in, the
Fund's prospectus.
16. The Fund agrees to indemnify and hold harmless the Underwriter, its
officers and directors and each person, if any, who controls the Underwriter
within the meaning of section 15 of the Securities Act of 1933, as amended,
against any losses, claims, damages, liabilities and expenses (including the
cost of any legal fees incurred in connection therewith) which the Underwriter,
its officers, directors or any such controlling person may incur under said Act,
under any other statute, at common law or otherwise, arising out of or based
upon
a) any untrue statement or alleged untrue statement of a material
fact contained in the Fund's registration statement or
prospectus (including amendments and supplements thereto), or
b) any omission or alleged omission to state a material fact
required to be stated in the Fund's registration statement or
prospectus or necessary to make the statements in either not
misleading, provided, however, that insofar as losses, claims,
damages, liabilities or expenses arise out of or are based
upon any such untrue statement or omission or alleged untrue
statement or omission made in reliance and in conformity with
information furnished to the Fund by the Underwriter for use
in the Fund's registration statement or prospectus, such
indemnification is not applicable. In no case shall the Fund
indemnify the Underwriter or its controlling persons as to any
amounts incurred for any liability arising out of or based
upon any action for which the Underwriter, its officers and
directors or any controlling person would otherwise be subject
to liability by reason of willful misfeasance, bad faith, or
gross negligence in the performance of its duties or by reason
of the reckless disregard of its obligations and duties under
this Agreement.
17. The Underwriter agrees to indemnify and hold harmless the Fund, its
officers and trustees and each person, if any, who controls the Fund within the
meaning of Section 15 of the Securities Act of 1933, as amended, against any
losses, claims, damages, liabilities and expenses (including the cost of any
legal fees incurred in connection therewith) which the Fund, its officers,
trustees or any such controlling person may incur under said Act, under any
other statute, at common law or otherwise arising out of the acquisition of any
shares by any person which
a) may be based upon any wrongful act by the Underwriter or any
of its employees or representatives, or
b) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in the Fund's
registration statement, prospectus (including
5
<PAGE>
amendments and supplements thereto) or sales material, or any
omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made
in reliance upon information furnished or confirmed in writing
to the Fund by the Underwriter.
18. It is understood that:
a) trustees, officers, employees, agents and shareholders of the
Fund are or may be interested persons, as that term is defined
in the Act ("Interested Persons"), of the Underwriter as
directors, officers, stockholders or otherwise;
b) directors, officers, employees, agents and stockholders of the
Underwriter are or may be Interested Persons of the Fund as
trustees, officers, shareholders or otherwise;
c) the Underwriter may be an Interested Person of the Fund as
shareholder or otherwise; and
d) the existence of any such dual interest shall not offset the
validity hereof or of any transactions hereunder.
19. The Fund may terminate this Agreement by 60 days written notice to the
Underwriter at any time, without the payment of any penalty, by vote of the
Trustees or by a vote of a majority of the outstanding voting securities, as
that term is defined in the Act, of the Fund. The Underwriter may terminate this
Agreement by 60 days written notice to the Fund, without the payment of any
penalty. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in the Act.
20. Subject to prior termination as provided in paragraph 19, this
Agreement shall continue in force for one year from the date of execution and
from year to year thereafter so long as the continuance after such one year
period shall be specifically approved at least annually by vote of the Trustees,
or by a vote of a majority of the appropriate class of outstanding voting
securities, as that term is defined in the Act, of the Fund. Additionally, each
annual renewal of this Agreement must be approved by the vote of a majority of
the Trustees who are not parties to the Agreement or Interested Persons of any
such party, cast in person at a meeting of the Trustees called for the purpose
of voting on such approval.
6
<PAGE>
21. This Agreement shall become effective upon the date first set forth
above. This Agreement shall be governed by the laws of the State of Connecticut
and shall be binding on the successors and assigns of the parties to the extend
permitted by law.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
PHOENIX STRATEGIC
ALLOCATION FUND, INC.
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 6.2
Sales Agreement
<PAGE>
[logo]PHOENIX Phoenix Funds
DUFF&PHELPS Sales Agreement
- --------------------------------------------------------------------------------
PHOENIX EQUITY PLANNING CORPORATION
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, Connecticut 06083-2200
Dealer Name:
Address:
Phoenix Equity Planning Corporation ("PEPCO", "we", "us", or "our") invites you
to participate in the sale and distribution of shares of registered investment
companies (which shall collectively be referred to hereinafter as the "Funds")
for which we are national distributor or principal underwriter, and which may be
listed in Annex A hereto which such Annex may be amended by us from time to
time. Upon acceptance of this agreement by PEPCO, you may offer and sell shares
of each of the Funds (hereafter "Shares") subject, however, to the terms and
conditions hereof including our right to suspend or cease the sale of such
shares. For the purposes hereof, the above referenced dealer shall be referred
to as "you".
1. You understand and agree that in all sales of Shares to the public, you
shall act as dealer for your own account. All purchase orders and
applications are subject to acceptance or rejection by us in our sole
discretion and are effective only upon confirmation by us. Each purchase
will be deemed to have been consummated in our principal office subject to
our acceptance and effective only upon confirmation to you by us.
2. You agree that all purchases of Shares by you shall be made only for the
purpose of covering purchase orders already received from your customers
(who may be any person other than a securities dealer or broker) or for
your own bona-fide investment.
3. You shall offer and sell Shares pursuant to this agreement for the purpose
of covering purchase orders of your customers, to the extent applicable,
(a) at the current public offering price ("Offering Price") for Class A
Shares or (b) at the Net Asset Value for Class B shares as set forth in the
current prospectus of each of the funds. The offer and sale of Class B
Shares by you is subject to Annex B hereto, "Compliance Standards for the
Sale of the Phoenix Funds Under Their Alternative Purchase Arrangements".
4. You shall pay us for Shares purchased within three (3) business days of the
date of our confirmation to you of such purchase or within such time as
required by applicable rule or law. The purchase price shall be (a) the
Offering Price, less only the applicable dealer discount (Dealer Discount)
for Class A Shares, if applicable, or (b) the Net Asset Value, less only
the applicable sales commission (Sales Commission) for Class B Shares, if
applicable, as set forth in the current prospectus at the time the purchase
is received by us. We have the right, without notice, to cancel any order
for which payment of good and sufficient funds has not been received by us
as provided in this paragraph, in which case you may be held responsible
for any loss suffered resulting from your failure to make payment as
aforesaid.
5. You understand and agree that any Dealer Discount, Sales Commission or fee
is subject to change from time to time without prior notice. Any orders
placed after the effective date of any such change shall be subject to the
Dealer Discount or Sales Commission in effect at the time such order is
received by us.
6. You understand and agree that Shares purchased by you under this Agreement
will not be delivered until payment of good and sufficient funds has been
received by us. Delivery of Shares will be made by credit to a shareholder
open account unless delivery of certificates is specified in the purchase
order. In order to avoid unnecessary delay, it is understood that, at your
request, any Shares resold by you to one of your customers will be
delivered (whether by credit to a shareholder open account or by delivery
of certificates) in the name of your customer.
<PAGE>
7. You understand that on all purchases of Shares to which the terms of this
Agreement are applicable by a shareholder for whom you are dealer of
record, we will pay you an amount equal to the Dealer Discount, Sales
Commission or fees which would have been paid to you with respect to such
Shares if such Shares had been purchased through you. You understand and
agree that the dealer of record for this purpose shall be the dealer
through whom such shareholder most recently purchased Shares of such fund,
unless the shareholder or you have instructed us otherwise. You understand
that all amounts payable to you under this paragraph and currently payable
under this agreement will be paid as of the end of the month unless
specified otherwise for the total amount of Shares to which this paragraph
is applicable but may be paid more frequently as we may determine in our
discretion. Your request for Dealer Discount or Sales Commission reclaims
will be considered if adequate verification and documentation of the
purchase in question is supplied to us, and the reclaim is requested within
three years of such purchase.
8. We appoint the transfer agent (or identified sub-transfer agent) for each
of the Funds as our agent to execute the purchase transaction of Shares and
to confirm such purchases to your customers on your behalf, and you
guarantee the legal capacity of your customers so purchasing such Shares.
You further understand that if a customer's account is established without
the customer signing the application form, you hereby represent that the
instructions relating to the registration and shareholder options selected
(whether on the application form, in some other document or orally) are in
accordance with the customer's instructions and you agree to indemnify the
Funds, the transfer agent (or identified sub-transfer agent) and us for any
loss or liability resulting from acting upon such instructions.
9. Upon the purchase of Class A Shares pursuant to a Letter of Intent, you
will promptly return to us any excess of the Dealer Discount previously
allowed or paid to you over that allowable in respect to such larger
purchases.
10. Unless at the time of transmitting a purchase order you advise us to the
contrary, we may consider that the investor owns no other Shares and may
further assume that the investor is not entitled to any lower sales charge
than that accorded to a single transaction in the amount of the purchase
order, as set forth in the current prospectus.
11. You understand and agree that if any Shares purchased by you under the
terms of this Agreement are, within seven (7) business days after the date
of our confirmation to you of the original purchase order for such Shares,
repurchased by us as agent for such fund or are tendered to such fund for
redemption, you shall forfeit the right to, and shall promptly pay over to
us the amount of any Dealer Discount or Sales Commission allowed to you
with respect to such Shares. We will notify you of such repurchase or
redemption within ten (10) days of the date upon which certificates are
delivered to us or to such fund or the date upon which the holder of Shares
held in a shareholder open account places or causes to be placed with us or
with such fund an order to have such shares repurchased or redeemed.
12. You agree that, in the case of any repurchase of any Shares made more than
seven (7) business days after confirmation by us of any purchase of such
Shares, except in the case of Shares purchased from you by us for your own
bona fide investment, you will act only as agent for the holders of such
Shares and will place the orders for repurchase only with us. It is
understood that you may charge the holder of such Shares a fair commission
for handling the transaction.
13. Our obligations to you under this Agreement are subject to all the
provisions of the respective distribution agreements entered into between
us and each of the Funds. You understand and agree that in performing your
services under this agreement you are acting in the capacity of an
independent contractor, and we are in no way responsible for the manner of
your performance or for any of your acts or omissions in connection
therewith. Nothing in the Agreement shall be construed to constitute you or
any of your agents, employees, or representatives as our agent, partner or
employee, or the agent, partner of employee of any of the Funds.
In connection with the sale and distribution of shares of Phoenix Funds,
you agree to indemnify and hold us and our affiliates, employees, and/or
officers harmless from any damage or expense as a result of (a) the
negligence, misconduct or wrongful act by you or any employee,
representative, or agent of yours and/or (b) any actual or alleged
violation of any securities laws, regulations or orders. Any indebtedness
or obligation of yours to us whether arising hereunder or otherwise, and
any liabilities incurred or moneys paid by us to any person as a result of
any misrepresentation, wrongful or unauthorized act or omission, negligence
of, or failure of you or your employees, representatives or agents to
comply with the Sales Agreement, shall be set off against any compensation
payable under this agreement. Any differential between such expenses and
compensation payable hereunder shall be payable to us upon demand. The
terms of this provision shall not be impaired by the termination of this
agreement.
In connection with the sale and distribution of shares of Phoenix Funds, we
agree to indemnify and hold you, harmless from any damage or expense on
account of the gross and willful negligence, misconduct or wrongful act of
us or any employee, representative, or agent of ours which arises out of or
is based upon any untrue statement or alleged untrue statement of material
fact, or the omission or alleged omission of a material fact in: (i) any
registration statement, including any prospectus or any post-effective
amendment thereto; or (ii) any material prepared and/or supplied by us for
use in conjunction with the offer or sale of Phoenix Funds; or (iii) any
state registration or other document filed in any state or jurisdiction in
order to qualify any Fund under the securities laws of such state or
jurisdiction. The terms of this provision shall not be impaired by the
termination of this agreement.
<PAGE>
14. We will supply you with reasonable quantities of the current prospectus,
periodic reports to shareholders, and sales materials for each of the
Funds. You agree not to use any other advertising or sales material
relating to the sale of shares of any of the Funds unless such other
advertising or sales material is pre-approved in writing by us.
15. You agree to offer and sell Shares only in accordance with the terms and
conditions of the then current prospectus of each of the Funds and subject
to the provisions of this Agreement, and you will make no representations
not contained in any such prospectus or any authorized supplemental sales
material supplied by us. You agree to use your best efforts in the
development and promotion of sales of the Shares covered by this Agreement,
and agree to be responsible for the proper instruction, training and
supervision of all sales representatives employed by you in order that such
Shares will be offered in accordance with the terms and conditions of this
Agreement and all applicable laws, rules and regulations. All expenses
incurred by you in connection with your activities under this Agreement
shall be borne by you. In consideration for the extension of the right to
exercise telephone exchange and redemption privileges to you and your
registered representatives, you agree to bear the risk of any loss
resulting from any unauthorized telephone exchange or redemption
instructions from you or your registered representatives. In the event we
determine to refund any amounts paid by any investor by reason of such
violation on your part, you shall forfeit the right to, and pay over to us,
the amount of any Dealer Discount or Sales Commission allowed to you with
respect to the transaction for which the refund is made.
16. You represent that you are properly registered as a broker or dealer under
the Securities and Exchange Act of 1934 and are member of the National
Association of Securities Dealers, Inc. (NASD) and agree to maintain
membership in the NASD or in the alternative, that you are a foreign dealer
not eligible for membership in the NASD. You agree to notify us promptly of
any change, termination or suspension of the foregoing status. You agree to
abide by all the rules and regulations of the NASD including Section 26 of
Article III of the Rules of Fair Practice, which is incorporated herein by
reference as if set forth in full. You further agree to comply with all
applicable state and Federal laws and the rules and regulations of
applicable regulatory agencies. You further agree that you will not sell,
or offer for sale, Shares in any jurisdiction in which such Shares have not
been duly registered or qualified for sale. You agree to promptly notify us
with respect to (a) the initiation and disposition of any formal
disciplinary action by the NASD or any other agency or instrumentality
having jurisdiction with respect to the subject matter hereof against you
or any of your employees or agents; (b) the issuance of any form of
deficiency notice by the NASD or any such agency regarding your training,
supervision or sales practices; and (c) the effectuation of any consensual
order with respect thereto.
17. Either party may terminate this agreement for any reason by written or
electronic notice to the other party which termination shall become
effective fifteen (15) days after the date of mailing or electronically
transmitting such notice to the other party. We may also terminate this
agreement for cause or as a result of a violation by you, as determined by
us in our discretion, of any of the provisions of this Agreement, said
termination to be effective on the date of mailing written or transmitting
electronic notice to you of the same. Without limiting the generality of
the foregoing, your own expulsion from the NASD will automatically
terminate this Agreement without notice. Your suspension from the NASD or
violation of applicable state or Federal laws or rules and regulations of
applicable regulatory agencies will terminate this Agreement effective upon
the date of our mailing written notice or transmitting electronic notice to
you of such termination. Our failure to terminate this Agreement for any
cause shall not constitute a waiver of our right to so terminate at a later
date.
18. All communications and notices to you or us shall be sent to the addresses
set forth at the beginning of this Agreement or to such other address as
may be specified in writing from time to time.
19. This agreement shall become effective upon the date of its acceptance by us
as set forth herein. This agreement may be amended by PEPCO from time to
time. This Agreement and all rights and obligations of the parties
hereunder shall be governed by and construed under the laws of the State of
Connecticut. This agreement is not assignable or transferable, except that
we may assign or transfer this agreement to any successor distributor of
the Shares described herein.
ACCEPTED ON BEHALF OF ACCEPTED ON BEHALF OF
PHOENIX EQUITY PLANNING DEALER FIRM:
CORPORATION:
Date ______________________________ Date __________________________________
By /s/ John F. Sharry By
________________________________ ____________________________________
Print Name John F. Sharry Print Name
_________________________ ____________________________
Managing Director, Retail Sales
Print Title _______________________ Print Title ___________________________
NASD CRD Number _______________________
<PAGE>
[logo]PHOENIX Amended Annex A, Dealer Agreement with
DUFF&PHELPS Phoenix Equity Planning Corporation, February 27, 1998
================================================================================
I. PHOENIX FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PHOENIX SERIES FUND
Balanced Fund Series
Convertible Fund Series
Growth Fund Series
Aggressive Growth Fund Series
High Yield Fund Series
Money Market Fund Series
U.S. Government Securities Fund Series
PHOENIX-ABERDEEN SERIES FUND
Aberdeen New Asia Fund
Aberdeen Global Small Cap Fund
PHOENIX MULTI-PORTFOLIO FUND
Tax-Exempt Bond Portfolio
Mid Cap Portfolio
International Portfolio
Real Estate Securities Portfolio
Emerging Markets Bond Portfolio
Strategic Income Fund
PHOENIX STRATEGIC EQUITY SERIES FUND
Equity Opportunities Fund
Strategic Theme Fund
Small Cap Fund
PHOENIX EQUITY SERIES FUND
Core Equity Fund
Growth and Income Fund
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX VALUE EQUITY FUND
PHOENIX SMALL CAP VALUE FUND
PHOENIX-ENGEMANN FUNDS
Balanced Return Fund
Global Growth Fund
Growth Fund
Nifty Fifty Fund
Small & Mid-Cap Growth Fund
Value 25 Fund
- --------------------------------------------------------------------------------
Equity Planning may sponsor, to all qualifying dealers, on a non-discriminatory
basis, sales contests, training and educational meetings and provide to all
qualifying broker/dealers, from its own profits and resources, additional
compensation in the form of trips, merchandise or expense reimbursement. Brokers
or dealers other than Equity Planning may also make customary additional charges
for their services in effecting purchases, if they notify the Fund of their
intention to do so. Applicable waivers of Class A sales loads and Class B
contingent deferred sales charges are described in the prospectus.
================================================================================
CLASS A SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A SHARES (EXCEPT MULTI-SECTOR SHORT TERM MULTI-SECTOR SHORT TERM
BOND FUND & MONEY MARKET) BOND FUND CLASS A SHARES
DEALER DISCOUNT DEALER DISCOUNT
SALES CHARGE OR AGENCY FEE SALES CHARGE OR AGENCY FEE
AMOUNT OF AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
TRANSACTION OFFERING PRICE OFFERING PRICE OFFERING PRICE OFFERING PRICE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.25% 2.25% 2.00%
- -------------------------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 4.50 4.00 1.25 1.00
- -------------------------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 3.50 3.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 3.00 2.75 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 2.00 1.75 0.75 0.75
- -------------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more None None None None
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Shares of the Money Market Series are offered to the public at their constant
net asset value of $1.00 per share with no sales charge on Class A shares.
$1 MILLION NAV SALES FINDERS FEE: In connection with Class A Share purchases of
$1,000,000 or more (or subsequent purchases in any amount), Equity Planning may
pay broker/dealers, from its own profits and resources, a percentage of the net
asset value of shares sold (excluding Money Market shares) as set forth in the
table below. If part or all of such investment, is subsequently redeemed within
one year of the investment date, the broker/dealer will refund to Equity
Planning any such amounts paid with respect to the investment.
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PURCHASE AMOUNT $1,000,000 to $3,000,000 $3,000,001 to $6,000,000 $6,000,001 or more
- -------------------------------------------------------------------------------------------------------------------------------
PAYMENT TO BROKER/DEALERS 1% 0.50 of 1% 0.25 of 1%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
CLASS A SHARES
- --------------------------------------------------------------------------------
TRAIL: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.25% annually, based on the average
daily net asset value of Class A shares sold by such broker/dealers (except
Money Market Series) and remaining outstanding on the Funds' books during the
period in which the fee is calculated. Dealers must have an aggregate value of
$50,000 or more in one Fund to qualify for payment in that Fund.
<PAGE>
================================================================================
CLASS B SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B SHARES
(EXCEPT MULTI-SECTOR SHORT TERM BOND FUND) MULTI-SECTOR SHORT TERM BOND FUND CLASS B
<S> <C>
Sales Commission 4.00% Sales Commission 2.00%
</TABLE>
Broker/Dealer firms maintaining house/omnibus accounts, upon redemption of a
customer account within the time frames specified below, shall forward to Equity
Planning the indicated contingent deferred sales charge.
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE CONTINGENT DEFERRED CONTINGENT DEFERRED
SALES CHARGES SALES CHARGES
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
First 5.00% 2.00%
- ---------------------------------------------------------------------------------------------------------------------------
Second 4.00 1.50
- ---------------------------------------------------------------------------------------------------------------------------
Third 3.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------
Fourth and Fifth 2.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------
Sixth 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
TRAIL: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.25% annually, based on the average
daily net asset value of shares sold by such broker/dealers (except Money Market
Series) and remaining outstanding on the Funds' books during the period in which
the fee is calculated, commencing one year after the investment date. Dealers
must have an aggregate value of $50,000 or more in one Fund to qualify for
payment in that Fund.
================================================================================
CLASS C SHARES - MULTI-SECTOR SHORT TERM BOND FUND ONLY
- --------------------------------------------------------------------------------
TRAIL: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.50% annually, based on the average
daily net asset value of shares sold by such broker/dealers and remaining
outstanding on the Funds' books during the period in which the fee is
calculated. Dealers must have an aggregate value of $50,000 or more in the Fund
to qualify for payment.
FINDERS FEE:
In connection with Class C Share purchases of $250,000 or more (or subsequent
purchases in any amount), Equity Planning may pay broker-dealers,
from its own resources, on amount equal to 0.50% of purchases above $250,000
but under $3 million plus 0.25% on purchases in excess of $3 million.
If all or part of the investment is subsequently redeemed, except for exchanges
or purchases of other Phoenix funds, within one year of the investment date, the
broker-dealer will refund to the Distributor such amount paid with respect to
the investment.
================================================================================
CLASS C SHARES - AVAILABLE ONLY FOR THE FUNDS LISTED BELOW:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CORE EQUITY FUND PHOENIX-ENGEMANN GLOBAL GROWTH FUND PHOENIX-ENGEMANN SMALL & MID-CAP
EMERGING MARKETS BOND PORTFOLIO MULTI-SECTOR FIXED INCOME FUND GROWTH FUND
(EFFECTIVE 3-27-98) STRATEGIC INCOME FUND VALUE EQUITY FUND
GROWTH AND INCOME FUND (EFFECTIVE 3-27-98) SMALL CAP VALUE FUND
HIGH YIELD FUND SERIES STRATEGIC THEME FUND PHOENIX-ENGEMANN BALANCED RETURN FUND
(EFFECTIVE 2-27-98) PHOENIX-ENGEMANN NIFTY FIFTY FUND PHOENIX-ENGEMANN VALUE 25 FUND
PHOENIX-ENGEMANN GROWTH FUND
</TABLE>
Sales Commission: 1%. Contingent deferred sales charge: 1% for one year from the
date of each purchase. Broker/Dealer firms maintaining house/omnibus accounts,
upon redemption of a customer account within one year of purchase date, shall
forward to Equity Planning the indicated contingent deferred sales charge.
TRAIL AND SERVICE FEE: Equity Planning intends to pay a fee after the first year
to qualifying broker/dealer firms at the equivalent of 0.75% annually, and a
Service Fee at the equivalent of 0.25% annually, based on the average daily net
asset value of shares sold by such broker/dealers and remaining outstanding on
the Funds' books during the period in which the fee is calculated. Dealers must
have an aggregate value of $50,000 or more in the Fund to qualify for payment.
<PAGE>
================================================================================
CLASS M SHARES - AVAILABLE ONLY FOR THE FUNDS LISTED BELOW:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CORE EQUITY FUND MULTI-SECTOR FIXED INCOME FUND VALUE EQUITY FUND
GROWTH AND INCOME FUND STRATEGIC THEME FUND SMALL CAP VALUE FUND
PHOENIX-ENGEMANN GROWTH FUND PHOENIX-ENGEMANN NIFTY FIFTY FUND PHOENIX-ENGEMANN BALANCED RETURN FUND
PHOENIX-ENGEMANN GLOBAL GROWTH FUND PHOENIX-ENGEMANN SMALL & MID-CAP PHOENIX-ENGEMANN VALUE 25 FUND
GROWTH FUND
</TABLE>
<TABLE>
<CAPTION>
DEALER DISCOUNT
SALES CHARGE OR AGENCY FEE
AMOUNT OF AS PERCENTAGE OF AS PERCENTAGE OF
OFFERING PRICE OFFERING PRICE OFFERING PRICE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 3.50% 3.00%
- ----------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 2.50 2.00
- ----------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 1.50 1.00
- ----------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 1.00 1.00
- ----------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 None None
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
TRAIL: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.50% annually, based on the average
daily net asset value of shares sold by such broker/dealers and remaining
outstanding on the Funds' books during the period in which the fee is
calculated. Dealers must have an aggregate value of $50,000 or more in the Fund
to qualify for payment.
================================================================================
II. A. PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
- --------------------------------------------------------------------------------
Balanced Portfolio Growth Stock Portfolio
Enhanced Reserves Portfolio Money Market Portfolio
Managed Bond Portfolio U.S. Government Securities Portfolio
FINDER'S FEE: Equity Planning may pay broker/dealers, from its own profits and
resources, a percentage of the net asset value of Class X and Class Y shares
sold as set forth in the table below. If part of any investment is subsequently
redeemed within one year of the investment date, the broker/dealer will refund
to Equity Planning any such amounts paid with respect to the investment.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PURCHASE AMOUNT 0 to $5,000,000 $5,000,001 to $10,000,000 $10,000,001 or more
- -----------------------------------------------------------------------------------------------------------------------------------
PAYMENT TO BROKER/DEALERS 0.50% 0.25% 0.10%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TRAIL: (Class Y shares only): Equity Planning intends to pay broker/dealers a
quarterly service fee at the equivalent of 0.25% annually, based on the average
daily net asset value of Class Y shares sold by such broker/dealers and
remaining outstanding on the Funds' books during the period in which the fee is
calculated, subject to future amendment or termination.
================================================================================
II. B. PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
- --------------------------------------------------------------------------------
Phoenix Real Estate Equity Securities Portfolio
TRAIL: (Class Y shares only): Equity Planning intends to pay broker/dealers a
quarterly service fee at the equivalent of 0.25% annually, based on the average
daily net asset value of Class Y shares sold by such broker/dealers and
remaining outstanding on the Funds' books during the period in which the fee is
calculated, subject to future amendment or termination.
<PAGE>
PDP80A (2-98) Distributed by Phoenix Equity Planning Corporation,
Enfield, CT, 06083
<PAGE>
[logo]PHOENIX Annex B To Dealer Agreement With
DUFF&PHELPS Phoenix Equity Planning Corporation
- --------------------------------------------------------------------------------
Compliance Standards for
the Sale of the Phoenix Funds
Under Their Alternative Purchase Arrangements
As national distributor or principal underwriter of the Phoenix Funds, which
offer their shares on both a front-end and deferred sales charge basis, Phoenix
Equity Planning Corporation ("PEPCO") has established the following compliance
standards which set forth the basis upon which shares of the Phoenix Funds may
be sold. These standards are designed for those broker/dealers ("dealers") that
distribute shares of the Phoenix Funds and for each dealer's financial
advisors/registered representatives.
As shares of the Phoenix Funds are offered with two different sales arrangements
for sales and distribution fees, it is important for an investor not only to
choose a mutual fund that best suits his investment objectives, but also to
choose the sales financing method which best suits his particular situation. To
assist investors in these decisions and to ensure proper supervision of mutual
fund purchase recommendations, we are instituting the following compliance
standards to which dealers must adhere when selling shares of the Phoenix Funds:
1. Any purchase of a Phoenix Fund for less than $250,000 may be either of
shares subject to a front-end load (Class A shares) or subject to deferred
sales charge (Class B shares).
2. Any purchase of a Phoenix Fund by an unallocated qualified employer
sponsored plan for less than $1,000,000 may be either of shares subject to
a front-end load (Class A shares) or subject to deferred sales charge
(Class B shares). Class B shares sold to allocated qualified employer
sponsored plans will be limited to a maximum total value of $250,000 per
participant.
3. Any purchase of a Phoenix Fund for $250,000 or more (except as noted above)
or which qualifies under the terms of the prospectus for net asset value
purchase of Class A shares should be for Class A shares.
General Guidelines
These are instances where one financing method may be more advantageous to an
investor than the other. Class A shares are subject to a lower distribution fee
and, accordingly, pay correspondingly higher dividends per share. However,
because initial sales charges are deducted at the time of purchase, such
investors would not have all of their funds invested initially and, therefore,
would initially own fewer shares. Investors not qualifying for reduced initial
sales charges who expect to maintain their investment for an extended period of
time might consider purchasing Class A Shares because the accumulated continuing
distribution charges on Class B Shares may exceed the initial sales charge on
Class A Shares during the life of the investment.
Again, however, such investors must weigh this consideration against the fact
that, because of such initial sales charge, not all of their funds will be
invested initially. However, other investors might determine that it would be
more advantageous to purchase Class B Shares to have all of their funds invested
initially, although remaining subject to higher continuing distribution charges
and, for a five-year period, being subject to a contingent deferred sales charge
(three years for Asset Reserve).
A National Association of Securities Dealers rule specifically prohibits
"breakpoint sales" of front-end load shares. A "breakpoint sale" is a sale to
the client of an amount of front-end load (Class A) shares just below the amount
which would be subject to the next breakpoint on the fund's sales charge
schedule. Because the deferred sales charge on Class B shares is reduced by 1%
for each year the shares are held, a redemption of Class B shares just before an
"anniversary date" is in some ways analogous to a breakpoint sale. A client
might wish to redeem just before an anniversary date for tax or other reasons,
and a client who chose to wait would continue to be at market risk.
Nevertheless, investment executives should inform clients intending to redeem
Class B shares near an anniversary date that, if the redemption were delayed,
the deferred sales charge would be reduced.
Responsibilities of Branch Office Manager (or other appropriate reviewing
officer).
A dealer's branch manger or other appropriate reviewing officer ("the Reviewing
Officer") must ensure that the financial advisor/registered representative has
advised the client of the available financing methods offered by the Phoenix
Funds, and the impact of choosing one method over another. In certain instances,
it may be appropriate for the Reviewing Officer to discuss the purchase directly
with the client. The reviewing officer should review purchases for Class A or
Class B shares given the relevant facts and circumstances, including but not
limited to: (a) the specific purchase order dollar amount; (b) the length of
time the investor expects to hold his shares; and (c) any other relevant
circumstances, such as the availability of purchases under letters of intent or
pursuant to rights of accumulation and distribution requirements. The foregoing
guidelines, as well as the examples cited above, should assist the Reviewing
Officer in reviewing and supervising purchase recommendations and orders.
Effectiveness
These compliance guidelines are effective immediately with respect to any order
for shares of those Phoenix Funds which offer their shares pursuant to the
alternative purchase arrangement.
Questions relating to these compliance guidelines should be directed by the
dealer to its national mutual fund sales and market group or its legal
department or compliance director. PEPCO will advise dealers in writing of any
future changes in these guidelines.
PEP80B 11/95
Exhibit 6.3
Supplement to Sales Agreement
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
SUPPLEMENT TO PHOENIX FAMILY OF FUNDS
SALES AGREEMENT
It is hereby agreed that this AGREEMENT, dated this __________ day
of __________, 19__, between ________________________________________ ("Dealer")
and Phoenix Equity Planning Corporation ("Distributor"), supplements and amends
the Sales Agreement between Dealer and Distributor dated by Distributor
_______________________ 19__ ("Sales Agreement').
WHEREAS, Dealer wishes to use shares of the Funds in a fee-based
program made available by Dealer to clients of Dealer (the "Fee-Based Program");
WHEREAS, Dealer wishes to afford its fee-based clients the
opportunity to qualify for the ability to purchase shares of the Funds at net
asset value; and
WHEREAS, Distributor is willing to allow Dealer to purchase shares
of the Funds for clients in the Fee-Based Program subject to the provisions of
this agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by both parties, Dealer
and Distributor hereby agree as follows:
1. Dealer may sell shares of any Funds made available by
Distributor, from time to time, at net asset value to bona fide clients of
Dealer for use solely in their Fee-Based Program. Dealer will earn no concession
or commission on any such sale.
2. Distributor, after consulting Dealer, will determine, from time
to time, which Funds it will make available to Dealer for use in the Fee-Based
Program. Dealer will comply with all provisions of the Prospectus and Statement
of Additional Information of each Fund.
1
<PAGE>
3. All shares made available to Dealer under the Fee-Based Program
must be purchased by Dealer for the benefit of Dealer's clients participating in
its Fee-Based Program under which Dealer provides portfolio management and other
services to such clients for a fee. Such fee to be paid in connection with
investment in the Funds shall at all times be at a level acceptable to
Distributor. Dealer acknowledges that it has sent the Distributor the current
fee schedule for the Fee-Based Program and Dealer agrees to notify Distributor
at least thirty (30) days in advance in writing of any amendment to such fee
schedule. The current fee schedule is attached. Dealer shall not prepare, use or
distribute brochures, written materials or advertising in any form that refers
to sales of the Funds as no-load or at net asset value except, in the case of
brochures, it may refer to the Funds as available at net asset value under the
Fee-Based Program if the fees and expenses of the Fee-Based Program are given at
least equal prominence. Notwithstanding the foregoing, in connection with
explaining the fees and expenses of the Fee-Based Program, representatives of
Dealer may describe to customers the option of purchasing Fund shares through
the Fee-Based Program at net asset value.
4. Distributor warrants that all necessary disclosures regarding
the sale of shares at net asset value will be set forth in the Prospectus and
Statement of Additional Information of the Funds available under this Agreement.
5. Dealer may maintain either an omnibus account(s) solely for the
clients of its Fee-Based program or may maintain separate accounts for each
client of its Fee-Based Program with the Fund's transfer agent. If an omnibus
account(s) is maintained, Dealer shall be solely responsible for meeting all
legal obligations with respect to each beneficial owner including, but not
limited to, the delivery of proxies, annual and semi-annual reports and other
materials.
6. This Agreement shall be governed and interpreted in accordance
with the laws of the State of Connecticut. This Agreement shall not relieve
Dealer or Distributor from any obligations either may have under any other
agreements between them (except with respect to the payment of service fees),
including but not limited to the Sales Agreement, which is incorporated by
reference herein and shall control in case of any conflict with this Agreement.
7. Distributor is not endorsing, recommending or otherwise involved
in providing any investment product or advisory service of Dealer (including but
not limited to the Fee-Based Program). Distributor is merely affording Dealer
the opportunity to use shares of the Funds distributed by Distributor as an
investment medium for the Fee-Based Program.
8. This Agreement is not exclusive and may be terminated by either
party upon sixty (60) days prior written notice to the other party. It shall
terminate automatically upon termination of the Sales Agreement between the
parties. This Agreement may be amended only by a written instrument, signed by
both parties.
IN WITNESS WHEREOF, this Agreement has been executed as of the date set
forth above by a duly authorized officer of each party.
2
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
By: _______________________________________
John F. Sharry
Managing Director, Retail Sales
Dealer: _____________________________
By: _________________________________
Name: _______________________________
Title: ______________________________
Address: ____________________________
____________________________
____________________________
Phone: ______________________________
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P O Box 2200
Enfield, CT 06083-2200
(230) 253-1000
3
Exhibit 6.4
Sales Contract
<PAGE>
FINANCIAL INSTITUTION SALES CONTRACT
FOR THE PHOENIX FAMILY OF FUNDS
Between: and
PHOENIX EQUITY PLANNING CORPORATION
Distributor of: The Phoenix Family of Funds
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
As distributor of The Phoenix Family of Funds (the "Funds"), we agree that you
may make available to your customers, under an agency relationship with your
customers, shares of beneficial interest issued by the Funds (the "Shares"),
subject to any limitation imposed by the Funds and to confirmation by us of each
transaction. By your acceptance hereof, you agree to all of the following terms
and conditions:
I. Offering Prices and Fees
The public offering price at which you may make Shares available to your
customers is the net asset value thereof, as computed from time to time, plus
any applicable sales charge described in the then current prospectus of the
applicable Fund. In the case of purchases by you, as agent for your customers,
of shares sold with a sales charge, you will receive an agency fee consisting of
a portion of the public offering price, determined on the same basis as the
"dealer discount" described in the then current Prospectus of the Funds, and
such other compensation to dealers as may be described therein, which shall be
payable to you at the same time and on the same basis as the same is paid to
such dealers, consistent with applicable law, rules and regulations. In
determining the amount of any agency fee payable to you hereunder, we reserve
the right to revise the agency fee referred to herein upon written notice to
you. We will furnish you upon request with the public offering prices for the
Shares and you agree to quote such prices in connection with any Shares made
available by you as agent for your customers. Each purchase of Shares by your
customers is made subject to confirmation by us at the public offering price
next computed after receipt of the order. There is no sales charge or agency fee
to you on the reinvestment of dividends and distributions.
II. Manner of Making Shares Available for Purchase
We will, upon request, deliver to you a copy of each Fund's then current
Prospectus and will provide you with such number of copies of each Fund's
current Prospectus, Statement of Additional Information and shareholder reports
and of supplementary sales materials prepared by us, as you may reasonably
request. It shall be your obligation to ensure that all such information and
materials are distributed to your customers who own Shares in accordance with
securities and/or banking law and regulations and any other applicable
regulations. Neither you nor any other person is authorized to give any
information or make any representations other than those contained in such
prospectuses, Statements of Additional Information and shareholder reports or in
such supplemental sales materials. You shall not furnish or cause to be
furnished to any person, display or publish any information or materials
relating to any Fund (including, without limitation, promotional materials and
sales literature, advertisements, press releases, announcements, statements,
posters, signs or similar material), except such information and materials as
may be furnished to you by us or the Fund, and such other information and
materials as may be approved in writing by us. We reserve the right to reject
any purchases for any accounts which we reasonably determine are not made in
accordance with the terms of the applicable Fund Prospectus and the provisions
of this Agreement.
You hereby agree:
(i) to not purchase any Shares as agent for any customer, unless you
deliver or cause to be delivered to such customer, at or prior to the
time of such purchase, a copy of the then-current Prospectus of the
applicable Fund unless such customer has acknowledged receipt of the
Prospectus of such Fund. You hereby represent that you understand your
obligation to deliver a prospectus to customers who purchase Shares
pursuant to federal securities laws and you have taken all necessary
steps to comply with such prospectus delivery requirements;
PEP 613 12-92
<PAGE>
(ii) to transmit to us promptly upon receipt any and all orders received by
you, it being understood that no conditional orders will be accepted;
(iii) to obtain from each customer for whom you act as agent for the
purchase of Shares any taxpayer identification number certification
and backup withholding information required under the Internal Revenue
Code, as amended from time to time (the "Code"), and the regulations
set forth thereunder, or other sections of the Code which may become
applicable and to provide us or our designee with timely written
notice of any failure to obtain such taxpayer identification number
certification or information in order to enable the implementation of
any required backup withholding in accordance with the Code and the
regulations thereunder;
(iv) to pay to us the offering price, less any agency fee to which you are
entitled, within five (5) business days of our confirmation of your
customer's order, or such shorter time as may be required by law. You
may, subject to our approval, remit the total public offering price to
us, and we will return to you your agency fee. If such payment is not
received within said time period, we reserve the right, without prior
notice, to cancel the sale, or at our option to return the Shares to
the issuer for redemption or repurchase. In the latter case, we shall
have the right to hold you responsible for any loss resulting to us.
Should payment be made by local bank check, liquidation of Shares may
be delayed pending clearance of your check; and
(v) to offer and sell Shares, and execute telephone transactions only in
accordance with the terms and conditions of the then current
prospectuses of the relevant Funds and to make no representations not
contained in any such prospectus or in any authorized supplemental
material supplied to you. In addition, in consideration for the
extension of the right to exercise telephone transaction privileges,
you acknowledge that neither the Funds nor the Transfer Agent nor
Equity Planning will be liable for any loss, injury or damage incurred
as a result of acting upon, nor will they be responsible for the
authenticity of, any telephone instructions, and you agree to
indemnify and hold harmless the Funds, Equity Planning and the
Transfer Agent against any loss, injury or damage resulting from any
unauthorized telephone transaction instruction from you or your
representatives. (Telephone instructions will be recorded on tape).
Unless otherwise mutually agreed in writing or except as provided below, each
transaction placed by you shall be promptly confirmed by us in writing to you,
and shall be confirmed to the customer promptly upon receipt by us of
instructions from you as to such customer. In the case of a purchase order by
customer's application, each transaction shall be promptly confirmed in writing
directly to the customer and a copy of each confirmation shall be sent
simultaneously to you. You understand that in the case of an Omnibus Account we
shall send a confirmation to you as the shareholder of record only. We reserve
the right, at our discretion and without notice, to suspend the sale of Shares
or withdraw entirely the sale of Shares of any or all of the Funds. All orders
are subject to acceptance or rejection by us in our sole discretion, and by the
Funds in their sole discretion. The procedure stated herein relating to the
pricing and handling of orders shall be subject to instructions which we may
forward to you from time to time.
III. Compliance With Law
You hereby represent that you are either (1) a "bank" as defined in Section
3(a)(6) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and at the time of each transaction in shares of the Funds, are not required to
register as a broker-dealer under the Exchange Act or regulations thereunder; or
(2) registered as a broker-dealer under the Exchange Act, a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD") and
affiliated with a bank.
(i) If you are a bank, not required to register as a broker-dealer under
the Exchange Act, you further represent and warrant to us that with
respect to any sales in the United States, you will use your best
efforts to ensure that any purchase of Shares by your customers
constitutes a suitable investment for such customers. You shall not
effect any transaction in, or induce any purchase or sale of, any
Shares by means of any manipulative deceptive or other fraudulent
device or contrivance and shall otherwise deal equitable and fairly
with your customers with respect to transactions in Shares of a Fund.
-2-
<PAGE>
(ii) If you are a NASD member broker-dealer affiliated with a bank and
registered under the Exchange Act, you further represent and warrant
to us that with respect to any sales in the United States, you agree
to abide by all of the applicable laws, rules and regulations
including applicable provisions of the Securities Act of 1933 as
amended, and the applicable rules and regulations of the NASD,
including, without limitation, its Rules of Fair Practice, and the
applicable rules and regulations of any jurisdiction in which you make
Shares available for sale to your customers. You agree not to make
available for sale to your customers the Shares in any jurisdiction in
which the Shares are not qualified for sale or in which you are not
qualified as a broker-dealer. We shall have no obligation or
responsibility as to your right to make Shares of any Fund available
to your customers in any jurisdiction. You agree to notify us
immediately in the event of (a) your expulsion or suspension from the
NASD or your becoming subject to any enforcement action by the
Securities and Exchange Commission, NASD, or any other self-regulatory
organization, or (b) your violation of any applicable federal or state
law, rule or regulation including, but not limited to, those of the
SEC, NASD, or other self-regulatory organization, arising out of or in
connection with this Agreement, or which may otherwise affect in any
material way your ability to act in accordance with the terms of this
Agreement.
You shall not make Shares of any Fund available to your customers, including
your fiduciary customers, except in compliance with all federal and state laws
and rules and regulations of regulatory agencies or authorities applicable to
you, or any of your affiliates engaging in such activity, which may affect your
business practices. You confirm that you are not in violation of any banking law
or regulations to which you are subject. You agree to hold us and the Funds
harmless and indemnify us in the event that you or any of your representatives
should violate any law, rule or regulation or any provisions of this Agreement.
In the event that we determine to refund any amounts paid by a customer in
connection with any such violation on your part, you shall forfeit the right to
the amount of any agency fee allowed by us with respect to the transaction for
which the refund is made. All expenses which you incur in connection with your
activities under this Agreement shall be borne by you.
IV. Relationship With Customer
With respect to any and all transactions in the Shares of any Fund pursuant to
this Agreement, it is understood and agreed in each case that: (i) you shall be
acting solely as agent for the account of your customer; (ii) each transaction
shall be initiated solely upon the order of your customer; (iii) we shall
execute transactions only upon receiving instructions from you acting as agent
for your customer or upon receiving instructions directly from your customer;
(iv) as between you and your customer, your customer will have full beneficial
ownership of all Shares; and (v) each transaction shall be for the account of
your customer and not for your account.
Subject to the foregoing, however, you may maintain record ownership of such
customers' Shares in an "Omnibus Account" or an account registered in your name
or the name of your nominee, for the benefit of such customers. You understand
that such Shares must be held in a separate account for each shareholder of such
Funds. You represent and warrant to us that you will have full right, power and
authority to effect transactions (including, without limitation, any purchases
and redemptions) in Shares on behalf of all customer accounts provided by you.
V. Relationship With Financial Institutions
Your obligations to us under this Agreement are subject to all the provisions of
the respective distribution agreements entered into between us and each of the
Funds. You understand and agree that in performing your services under this
Agreement you are acting in the capacity of an independent contractor, and we
are in no way responsible for the manner of your performance or for any of your
acts or omissions in connection therewith. It is further understood that neither
this Agreement nor the performance of the services of the respective parties
hereunder shall be considered to constitute an exclusive arrangement, or to
create a partnership, association or joint venture between you and us. In making
available Shares of the Funds under this Agreement, nothing herein shall be
construed to constitute you or any of your agents, employees or representatives
as our agent or employee, or as an agent or employee of the Funds, and you shall
not make any representations to the contrary. As distributor of the Funds, we
shall have full authority to take such action as we may deem advisable in
respect of all matters pertaining to the distribution of the Shares. We shall
not be under any obligation to you, except for obligations expressly assumed by
us in this Agreement.
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<PAGE>
VI. Termination
Either party hereto may terminate this Agreement, without cause, upon ten days'
written notice to the other party. We may terminate this Agreement for cause
upon the violation by you of any of the provisions hereof, such termination to
become effective on the date such notice of termination is mailed to you. If you
are registered as a broker-dealer and affiliated with a bank, this Agreement
shall terminate automatically if either Party ceases to be a member of the NASD.
VII. Assignability
This Agreement is not assignable or transferable, except that we may assign or
transfer this Agreement to any successor distributor of the Funds.
VIII. Miscellaneous
(i) All communications mailed to us should be sent to the above address.
Any notice to you shall be duly given if mailed or delivered to you at
the address specified by you below.
(ii) This Agreement constitutes the entire agreement and understanding
between the parties and supersedes any and all prior agreements
between the parties.
(iii) This Agreement and the rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of
Connecticut.
Very truly yours,
PHOENIX EQUITY PLANNING CORPORATION
By _________________________________________
Authorized Signature
____________________________________________
Name and Title
We accept and agree to the foregoing Agreement as of the date set forth below
Financial Institution: __________________________________
By _________________________________________
Authorized Signature, Title
____________________________________________
____________________________________________
Address
(NASD CRD # if applicable _________________ )
Date: ______________________________________
Please return the signed copy of this Sales Contract to Phoenix Equity Planning
Corporation at the above address.
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
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<S> <C> <C>
1. Employment of Custodian and Property to be Held By It....................................................1
2. Duties of the Custodian with Respect to Property
of each Fund Held by the Custodian in the United States..................................................2
2.1 Holding Securities..............................................................................2
2.2 Delivery of Securities..........................................................................2
2.3 Registration of Securities......................................................................4
2.4 Bank Accounts...................................................................................4
2.5 Availability of Federal Funds...................................................................5
2.6 Collection of Income............................................................................5
2.7 Payment of Fund Moneys..........................................................................5
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.............................6
2.9 Appointment of Agents...........................................................................7
2.10 Deposit of Fund Assets in U.S. Securities System................................................7
2.11 Fund Assets Held in the Custodian's Direct Paper System.........................................8
2.12 Segregated Account..............................................................................9
2.13 Ownership Certificates for Tax Purposes.........................................................9
2.14 Proxies.........................................................................................9
2.15 Communications Relating to Fund Securities.....................................................10
3. Duties of the Custodian with Respect to Property of
each Fund Held Outside of the United States.............................................................10
3.1 Appointment of Foreign Sub-Custodians..........................................................10
3.2 Assets to be Held..............................................................................10
3.3 Foreign Securities Systems.....................................................................10
3.4 Holding Securities.............................................................................11
3.5 Agreements with Foreign Banking Institutions...................................................11
3.6 Access of Independent Accountants of each Fund.................................................11
3.7 Reports by Custodian...........................................................................11
3.8 Transactions in Foreign Custody Account........................................................12
3.9 Liability of Foreign Sub-Custodians............................................................12
3.10 Liability of Custodian.........................................................................12
3.11 Reimbursement for Advances.....................................................................13
3.12 Monitoring Responsibilities....................................................................13
3.13 Branches of U.S. Banks.........................................................................13
3.14 Tax Law........................................................................................13
4. Payments for Sales or Repurchase or Redemptions
of Shares of each Fund..................................................................................14
5. Proper Instructions.....................................................................................14
6. Actions Permitted Without Express Authority.............................................................15
7. Evidence of Authority...................................................................................15
8. Duties of Custodian With Respect to the Books of Account and Calculation of Net Asset Value
and Net Income..........................................................................................15
9. Records ................................................................................................16
10. Opinion of Fund's Independent Accountants...............................................................16
11. Reports to Fund by Independent Public Accountants.......................................................16
12. Compensation of Custodian...............................................................................16
13. Responsibility of Custodian.............................................................................16
14. Effective Period, Termination and Amendment.............................................................18
15. Successor Custodian.....................................................................................18
16. Interpretive and Additional Provisions..................................................................19
17. Additional Funds........................................................................................19
18. Massachusetts Law to Apply..............................................................................20
19. Prior Contracts.........................................................................................20
20. Shareholder Communications..............................................................................20
21. Limitation of Liability................................................................................21
</TABLE>
<PAGE>
MASTER CUSTODIAN CONTRACT
This Contract between each fund or series of a fund listed on Appendix 1
which evidences its agreement to be bound hereby by executing a copy of this
Contract (each such fund, any and all separate series or portfolios thereof and
any additional portfolios or separate series thereof which become subject to
this Contract pursuant to Section 17 hereof, are individually hereafter referred
to as a "Fund"), and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, each of the Funds has previously entered into a Custodian Contract
with the Custodian;
WHEREAS, the Custodian and each of the Funds desire to replace such
existing Custodian Contracts with this Master Custodian Contract between the
Custodian and all of the Funds;
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
-----------------------------------------------------
Each Fund hereby employs the Custodian as the custodian of the assets of
such Fund, including securities which such Fund desires to be held in places
within the United States ("domestic securities") and securities it desires to be
held outside the United States ("foreign securities") pursuant to the provisions
of such Fund's governing documents (domestic securities and foreign securities
are sometimes collectively referred to herein as "Securities"). Each Fund agrees
to deliver to the Custodian all securities and cash of such Fund, and all
payments of income, payments of principal or capital distributions received by
it with respect to all securities owned by such Fund from time to time, and the
cash consideration received by it for such new or treasury shares each class of
capital stock or beneficial interest, as applicable, of such Fund, ("Shares") as
may be issued or sold from time to time. The Custodian shall not be responsible
for any property of a Fund held or received by such Fund and not delivered to
the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Fund from time to time employ
one or more sub-custodians, located in the United States but only in accordance
with an applicable vote by the Board of the Fund, and provided that the
Custodian shall have no more or less responsibility or liability to the Fund on
account of any actions or omissions of any sub-custodian so employed than any
such sub-custodian has to the Custodian. The Fund shall approve in writing the
terms of any subcustodian agreement with a United States subcustodian. The
Custodian may employ as sub-custodian for each Fund's foreign securities the
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.
<PAGE>
2. Duties of the Custodian with Respect to Property of each Fund Held By the
Custodian in the United States
--------------------------------------------------------------------------
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Fund all non-cash property, to be held by it in the
United States including all domestic securities owned by such Fund, other
than (a) securities which are maintained pursuant to Section 2.10 in a
clearing agency which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury (each, a "U.S.
Securities System") and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the Direct Paper System of
the Custodian (the "Direct Paper System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by a Fund held by the Custodian or in a U.S. Securities
System account of the Custodian or in the Custodian's Direct Paper book
entry system account ("Direct Paper System Account") only upon receipt of
Proper Instructions from such Fund, which may be continuing instructions
when deemed appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of such Fund and receipt
of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by such Fund;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of such Fund;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of
such Fund or into the name of any nominee or nominees of the Custodian
or into the name or nominee name of any agent appointed pursuant to
Section 2.9 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same
2
<PAGE>
aggregate face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of such Fund, to the
broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by such
Fund, but only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and such Fund, which may be in the
form of cash or obligations issued by the United States government,
its agencies or instrumentalities, except that in connection with any
loans for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S. Department of
the Treasury, the Custodian will not be held liable or responsible for
the delivery of securities owned by such Fund prior to the receipt of
such collateral;
11) For delivery as security in connection with any borrowings by such
Fund requiring a pledge of assets by such Fund, but only against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among
such Fund, the Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of
The National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by such Fund ;
3
<PAGE>
13) For delivery in accordance with the provisions of any agreement among
such Fund, the Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations, regarding
account deposits in connection with transactions by such Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for such Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may be
described from time to time in the currently effective prospectus and
statement of additional information of such Fund ("Prospectus"), in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions from such Fund, a certified copy of a
resolution of the Board or of the Executive Committee of such Fund
signed by an officer of such Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of such Fund to be
delivered, setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of such securities shall
be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of each Fund
or in the name of any nominee of each Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to each Fund, unless
a Fund has authorized in writing the appointment of a nominee to be used in
common with other registered investment companies having the same
investment adviser as such Fund, or in the name or nominee name of any
agent appointed pursuant to Section 2.9 or in the name or nominee name of
any sub-custodian appointed pursuant to Article 1. All securities accepted
by the Custodian under the terms of this Contract shall be in "street name"
or other good delivery form. If, however, a Fund directs the Custodian to
maintain securities in "street name", the Custodian shall utilize
commercially reasonable means to timely collect income due such Fund on
such securities and to timely notify each Fund of relevant corporate
actions including, without limitation, pendency of calls, maturities,
tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Fund , subject
only to draft or order by the Custodian acting pursuant to the terms of
this Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of such
Fund, other than cash maintained by such Fund in a bank account established
and used
4
<PAGE>
in accordance with Rule 17f-3 under the Investment Company Act of 1940.
Funds held by the Custodian for each Fund may be deposited by it to its
credit as Custodian in the Banking Department of the Custodian or in such
other banks or trust companies as it may in its discretion deem necessary
or desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment Company Act
of 1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of each
applicable Fund be approved by vote of a majority of the Board of such
Fund. Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between a Fund and the
Custodian, the Custodian shall, upon the receipt of Proper Instructions
from such Fund, make federal funds available to such Fund as of specified
times agreed upon from time to time by such Fund and the Custodian in the
amount of checks received in payment for Shares of such Fund which are
deposited into such Fund's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to Securities held hereunder to which each Fund shall be
entitled either by law or pursuant to custom in the securities business,
and shall collect on a timely basis all income and other payments with
respect to bearer securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent thereof and shall credit
such income, as collected, to such Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach and
present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when
due on securities held hereunder. Unless otherwise agreed to by the
parties, income due each Fund on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of the Fund. The
Custodian will have no duty or responsibility in connection therewith,
other than to provide each Fund with such information or data as may be
necessary to assist each Fund in arranging for the timely delivery to the
Custodian of the income to which each Fund is properly entitled.
2.7 Payment of Fund Moneys. Upon receipt of Proper Instructions from a Fund,
which may be continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out moneys of each Fund in the following
cases only:
1) Upon the purchase of Securities, options, futures contracts or options
on futures contracts for the account of such Fund but only (a) against
the delivery of such securities or evidence of title to such options,
futures contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the United
States or abroad which is qualified under the Investment
5
<PAGE>
Company Act of 1940, as amended, to act as a custodian and has been
designated by the Custodian as its agent for this purpose) registered
in the name of such Fund or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for transfer; (b)
in the case of a purchase effected through a U.S. Securities System,
in accordance with the conditions set forth in Section 2.10 hereof;
(c) in the case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section 2.11; (d) in the
case of repurchase agreements entered into between such Fund and the
Custodian, or another bank, or a broker-dealer which is a member of
NASD, (i) against delivery of the securities either in certificate
form or through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against delivery of
the receipt evidencing purchase by such Fund of securities owned by
the Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from such Fund or (e) for
transfer to a time deposit account of such Fund in any bank, whether
domestic or foreign; such transfer may be effected prior to receipt of
a confirmation from a broker and/or the applicable bank pursuant to
Proper Instructions from such Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of Securities
owned by such Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by such Fund as set
forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by such Fund,
including but not limited to the following payments for the account of
such Fund: interest, taxes, management, accounting, transfer agent and
legal fees, and operating expenses of such Fund whether or not such
expenses are to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends on Shares of such Fund declared
pursuant to the governing documents of such Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in addition to
Proper Instructions from such Fund, a certified copy of a resolution
of the Board or of the Executive Committee of such Fund signed by an
officer of such Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
6
<PAGE>
purpose to be a proper purpose, and naming the person or persons to
whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except
as specifically stated otherwise in this Contract, in any and every case
where payment for purchase of Securities for the account of such Fund is
made by the Custodian in advance of receipt of the securities purchased in
the absence of specific Proper Instructions from such Fund to so pay in
advance, the Custodian shall be absolutely liable to such Fund for such
securities to the same extent as if the securities had been received by the
Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times, subject to
the applicable Fund's prior approval, in its discretion appoint (and may at
any time remove) any other bank or trust company which is itself qualified
under the Investment Company Act of 1940, as amended, to act as a
custodian, as its agent to carry out such of the provisions of this Article
2 as the Custodian may from time to time direct; provided, however, that
the appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of
the Exchange Act, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein as "U.S.
Securities System" in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
1) The Custodian may keep securities of each Fund in a U.S. Securities
System provided that such securities are represented in an account
("Account") of the Custodian in the U.S. Securities System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of each Fund
which are maintained in a U.S. Securities System shall identify by
book-entry those securities belonging to each Fund;
3) The Custodian shall pay for securities purchased for the account of
each Fund upon (i) receipt of advice from the U.S. Securities System
that such securities have been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of each Fund. The Custodian shall
transfer securities sold for the account of each Fund upon (i) receipt
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<PAGE>
of advice from the U.S. Securities System that payment for such
securities has been transferred to the Account, and (ii) the making of
an entry on the records of the Custodian to reflect such transfer and
payment for the account of each Fund. Copies of all advices from the
U.S. Securities System of transfers of securities for the account of
each Fund shall identify each Fund, be maintained for each Fund by the
Custodian and be provided to each Fund at its request. Upon request,
the Custodian shall furnish each Fund confirmation of each transfer to
or from the account of each Fund in the form of a written advice or
notice and shall furnish to each Fund copies of daily transaction
sheets reflecting each day's transactions in the U.S. Securities
System for the account of each Fund.
4) The Custodian shall provide each Fund with any report obtained by the
Custodian on the U.S. Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the U.S. Securities System;
5) The Custodian shall have received from each Fund the initial
certificate required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to each Fund for the benefit of such Fund
for any loss or damage to such Fund resulting from use of the U.S.
Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or any such agent to
enforce effectively such rights as it may have against the U.S.
Securities System; at the election of the affected Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect
to any claim against the U.S. Securities System or any other person
which the Custodian may have as a consequence of any such loss or
damage if and to the extent that such Fund has not been made whole for
any such loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
deposit and/or maintain securities owned by each Fund in the Direct Paper
System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions from each Fund ;
2) The Custodian may keep securities of each Fund in the Direct Paper
System only if such securities are represented in an account of the
Custodian in the Direct Paper System which shall not include any
assets of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
8
<PAGE>
3) The records of the Custodian with respect to securities of each Fund
which are maintained in the Direct Paper System shall identify by
book-entry those securities belonging to each Fund;
4) The Custodian shall pay for securities purchased for the account of
each Fund upon the making of an entry on the records of the Custodian
to reflect such payment and transfer of securities to the account of
each Fund. The Custodian shall transfer securities sold for the
account of each Fund upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for the
account of each Fund;
5) The Custodian shall furnish each Fund confirmation of each transfer to
or from the account of each Fund, in the form of a written advice or
notice, of Direct Paper on the next business day following such
transfer and shall furnish to each Fund copies of daily transaction
sheets reflecting each day's transactions in the Direct Paper System
for the account of each Fund;
6) The Custodian shall provide each Fund with any report on its system of
internal accounting control as each Fund may reasonably request from
time to time.
2.12 Pledged Account. The Custodian shall upon receipt of Proper
Instructions from a Fund establish and maintain a pledged account or
accounts for and on behalf of such Fund, into which account or accounts
may be transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to Section 2.10
hereof, (i) in accordance with the provisions of any agreement among
such Fund , the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by such Fund, (ii) for
purposes of segregating cash or government securities in connection
with options purchased, sold or written by such Fund or commodity
futures contracts or options thereon purchased or sold by such Fund,
(iii) for the purposes of compliance by such Fund with the procedures
required by Investment Company Act Release No. 10666, and subsequent
release or releases of the Securities and Exchange Commission relating
to the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in
the case of clause (iv), upon receipt of, in addition to Proper
Instructions from such Fund , a certified copy of a resolution of the
Board or of the Executive Committee of such Fund signed by an
9
<PAGE>
officer of such Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated
account.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to securities of each Fund held by it and in connection with
transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
such Fund or a nominee of such Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to
the applicable Fund such proxies, all proxy soliciting materials and all
notices relating to such securities.
2.15 Communications Relating to Fund Securities. Subject to the provisions of
Section 2.3, the Custodian shall transmit promptly to each Fund all written
information (including, without limitation, pendency of calls and
maturities of domestic securities and expirations of rights in connection
therewith and notices of exercise of call and put options written by such
Fund and the maturity of futures contracts purchased or sold by such Fund)
received by the Custodian from issuers of the securities being held for
such Fund. With respect to tender or exchange offers, the Custodian shall
transmit promptly to each Fund all written information received by the
Custodian from issuers of the securities whose tender or exchange is sought
and from the party (or his agents) making the tender or exchange offer. If
a Fund desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, such Fund shall notify the
Custodian at least three business days prior to the date on which the
Custodian is to take such action.
3. Duties of the Custodian with Respect to Property of each Fund Held Outside
of the United States
--------------------------------------------------------------------------
3.1 Appointment of Foreign Sub-Custodians. Each Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for such Fund's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated
on Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper
Instructions", as defined in Section 5 of this Contract, together with a
certified resolution of such Fund's Board, the Custodian and such Fund may
agree to amend Schedule A hereto from time to time to designate additional
foreign banking institutions and foreign securities depositories to act as
sub-custodian. Upon receipt of Proper Instructions, a Fund may instruct the
Custodian to cease the employment of any one or more such sub-custodians
for maintaining custody of such Fund's assets.
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<PAGE>
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or each Fund may determine to be reasonably
necessary to effect such Fund's foreign securities transactions. The
Custodian shall identify on its books as belonging to each Fund, the
foreign securities of each Fund held by each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and each Fund, assets of each Fund shall be
maintained in a clearing agency which acts as a securities depository or in
a book-entry system for the central handling of securities located outside
of the United States (each a "Foreign Securities System") only through
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof (Foreign Securities Systems and
U.S. Securities Systems are collectively referred to herein as the
"Securities Systems"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.6
hereof.
3.4 Holding Securities. The Custodian may hold securities and other non-cash
property for all of its customers, including each Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash
property of each Fund which are maintained in such account shall identify
by book-entry those securities and other non-cash property belonging to
each Fund and (ii) the Custodian shall require that securities and other
non-cash property so held by the foreign sub-custodian be held separately
from any assets of the foreign sub-custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a foreign
banking institution shall provide that: (a) the assets of each Fund will
not be subject to any right, charge, security interest, lien or claim of
any kind in favor of the foreign banking institution or its creditors or
agents, except a claim of payment for their safe custody or administration;
(b) beneficial ownership for the assets of each Fund will be freely
transferable without the payment of money or value other than for custody
or administration; (c) adequate records will be maintained identifying the
assets as belonging to each Fund; (d) officers of or auditors employed by,
or other representatives of the Custodian, including to the extent
permitted under applicable law the independent public accountants for each
Fund, will be given access to the books and records of the foreign banking
institution relating to its actions under its agreement with the Custodian;
and (e) assets of each Fund held by the foreign sub-custodian will be
subject only to the instructions of the Custodian or its agents. Agreements
with
11
<PAGE>
foreign banking institutions shall contain those provisions required by
subparagraph (c) of Section 17f-5 under the Investment Company Act of 1940.
3.6 Access of Independent Accountants of each Fund. Upon request of each Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of each Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to each Fund from time to
time, as mutually agreed upon, statements in respect of the securities and
other assets of each Fund held by foreign sub-custodians, including but not
limited to an identification of entities having possession of such Fund's
securities and other assets and advices or notifications of any transfers
of securities to or from each custodial account maintained by a foreign
banking institution for the Custodian on behalf of such Fund indicating, as
to securities acquired for such Fund, the identity of the entity having
physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, the provisions of Sections 2.2 and
2.7 of this Contract shall apply, mutatis mutandis to the foreign
securities of each Fund held outside the United States by foreign
sub-custodians. (b) Notwithstanding any provision of this Contract to the
contrary, settlement and payment for securities received for the account of
each Fund and delivery of securities maintained for the account of each
Fund may be effected in accordance with the customary established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with
the expectation of receiving later payment for such securities from such
purchaser or dealer. (c) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's nominee to the
same extent as set forth in Section 2.3 of this Contract, and each Fund
agrees to hold any such nominee harmless from any liability as a holder of
record of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and each Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of a Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent
that such Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
12
<PAGE>
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians generally in this Contract and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by Section 3.13 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has otherwise exercised
reasonable care. Notwithstanding the foregoing provisions of this Section
3.10, in delegating custody duties to State Street London Ltd., the
Custodian shall not be relieved of any responsibility to each Fund for any
loss due to such delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization, insurrection,
civil strife or armed hostilities) or (b) other losses (excluding a
bankruptcy or insolvency of State Street London Ltd. not caused by
political risk) due to Acts of God, nuclear incident or other losses under
circumstances where the Custodian and State Street London Ltd. have
exercised reasonable care.
3.11 Reimbursement for Advances. If, pursuant to Proper Instructions, a Fund
requires the Custodian to advance cash or securities for any purpose for
the benefit of a Fund including the purchase or sale of foreign exchange or
of contracts for foreign exchange, or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of
this Contract, except such as may arise from events or circumstances for
which the Custodian or a sub-custodian are liable pursuant to Sections 3.9
and 3.10 above, or from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Fund shall be security therefor and
should such Fund fail to repay the Custodian promptly, the Custodian shall
upon prior written notice be entitled to utilize available cash and to
dispose of such Fund's assets to the extent necessary to obtain
reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to each
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian and such other information needed
to permit the Fund to comply with Section 17f-5 under the 1940 Act. Such
information shall be similar in kind and scope to that furnished to each
Fund in connection with the initial approval of this Contract. In addition,
the Custodian will promptly inform each Fund in the event that the
Custodian learns of a material adverse change in the financial condition of
a foreign sub-custodian or any material loss of the assets of each Fund or
in the case of any foreign sub-custodian not the subject of an exemptive
order from the Securities and Exchange Commission is notified by such
foreign sub-custodian that there appears to be a substantial likelihood
that its shareholders' equity
13
<PAGE>
will decline below $200 million (U.S. dollars or the equivalent thereof) or
that its shareholders' equity has declined below $200 million (in each case
computed in accordance with generally accepted U.S. accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this Contract,
the provisions hereof shall not apply where the custody of a Fund's assets
are maintained in a foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the Investment Company Act of 1940
meeting the qualification set forth in Section 26(a) of said Act. The
appointment of any such branch as a sub-custodian shall be governed by
Article 1 of this Contract. (b) Cash held for each Fund in the United
Kingdom shall be maintained in an interest bearing account established for
each Fund with the Custodian's London branch, which account shall be
subject to the direction of the Custodian, State Street London Ltd. or
both.
3.14 Tax Law. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on any Fund or the Custodian as
custodian of such Fund by the tax law of the United States of America or
any state or political subdivision thereof. It shall be the responsibility
of each Fund to notify the Custodian of the obligations imposed on each
Fund or the Custodian as custodian of each Fund by the tax law of
jurisdictions other than those mentioned in the above sentence, including
responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist each Fund with respect to any claim for
exemption or refund under the tax law of jurisdictions for which each Fund
has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Shares of each Fund
-----------------------------------------------------------------------
The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent of each Fund and deposit into the account of each Fund such
payments as are received for Shares of each Fund issued or sold from time to
time by each Fund. The Custodian will provide timely notification to each Fund
and the Transfer Agent of any receipt by it of payments for Shares of such Fund.
From such funds as may be available for the purpose but subject to the
limitations of each Fund's governing documents and any applicable votes of the
Board of each Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of each Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of each Fund, the Custodian shall honor checks drawn on
the
14
<PAGE>
Custodian by a holder of Shares, which checks have been furnished by such
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between each Fund and the Custodian.
5. Proper Instructions
-------------------
Proper Instructions as used throughout this Contract means a writing signed
or initialed by one or more person or persons as the Board of each Fund shall
have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. Each Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of each Fund
accompanied by a detailed description of procedures approved by the Board,
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board and the
Custodian are satisfied that such procedures afford adequate safeguards for such
Fund's assets. For purposes of this Section, Proper Instructions shall include
instructions received by the Custodian pursuant to any three-party agreement
which requires a segregated asset account in accordance with Section 2.12.
6. Actions Permitted without Express Authority
-------------------------------------------
The Custodian may in its discretion, without express authority from each
Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the applicable Fund;
1) surrender securities in temporary form for securities in definitive
form;
2) endorse for collection, in the name of each Fund, checks, drafts and
other negotiable instruments; and
3) in general, attend to all ministerial details in connection with the
sale, exchange, substitution, purchase, transfer and other dealings
with the securities and property of each Fund except as otherwise
directed by the Board of each Fund.
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<PAGE>
7. Evidence of Authority
---------------------
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed by or on behalf
of each Fund. The Custodian may receive and accept a certified copy of a vote of
the Board of each Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board pursuant to the governing documents of each Fund as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and Calculation of
Net Asset Value and Net Income
---------------------------------------------------------------------------
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of each Fund to keep the books of
account of each Fund and/or compute the net asset value per share of the
outstanding shares of each Fund or, if directed in writing to do so by each Fund
, shall itself keep such books of account and/or compute such net asset value
per share. If so directed, the Custodian shall also calculate daily the net
income of each Fund as described in each Fund's currently effective Prospectus
and shall advise each Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of each Fund to do
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value per
share and the daily income of each Fund shall be made at the time or times
described from time to time in each Fund's currently effective Prospectus.
9. Records
-------
The Custodian shall with respect to each Fund create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of each Fund under the Investment Company
Act of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of each Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the applicable
Fund and employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the request of any Fund, supply such Fund with a tabulation
of securities owned by such Fund and held by the Custodian and shall, when
requested to do so by a Fund and for such compensation as shall be agreed upon
between such Fund and the Custodian, include certificate numbers in such
tabulations.
10. Opinion of Fund's Independent Accountant
----------------------------------------
The Custodian shall take all reasonable action, as each Fund may from time
to time request, to obtain from year to year favorable opinions from each Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of each Fund's Form N-1A,
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<PAGE>
and Form N-SAR or other annual reports to the Securities and Exchange Commission
and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
--------------------------------------------------
The Custodian shall provide each Fund, at such times as each Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports, shall be
of sufficient scope and in sufficient detail, as may reasonably be required by
each Fund to provide reasonable assurance that any material inadequacies would
be disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
12. Compensation of Custodian
-------------------------
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, determine in accordance with the fee
schedule attached hereto as Schedule B, as amended from time to time as agreed
by each Fund and the Custodian.
13. Responsibility of Custodian
---------------------------
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to any Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for a Fund) on
all matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to any Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
17
<PAGE>
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts provided Custodian has maintained an adequate
disaster recovery plan; (ii) errors by a Fund or its investment advisor in their
instructions to the Custodian provided such instructions have been in accordance
with this Contract; (iii) the insolvency of or acts or omissions by a Securities
System; (iv) any delay or failure of any broker, agent or intermediary, central
bank or other commercially prevalent payment or clearing system to deliver to
the Custodian's sub-custodian or agent securities purchased or in the remittance
or payment made in connection with securities sold; (v) any delay or failure of
any company, corporation, or other body in charge or registering or transferring
securities in the name of the Custodian, a Fund, the Custodian's sub-custodians,
nominees or agents or any consequential losses arising out of such delay or
failure to transfer such securities including non-receipt of bonus, dividends
and rights and other accretions or benefits; (vi) delays or inability to perform
its duties due to any disorder in market infrastructure with respect to any
particular security or Securities System; and (vii) any provision of any present
or future law or regulation or order of the United States of America, or any
state thereof, or any other country, or political subdivision thereof or of any
court of competent jurisdiction.
Except as expressly provided in Section 3.9, the Custodian shall be liable
for the acts or omissions of a foreign banking institution appointed pursuant to
the provisions of Article 3 to the same extent as set forth in Article 1 hereof
with respect to sub-custodians located in the United States.
If a Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the reasonable opinion of the Custodian, result in the Custodian or its nominee
assigned to a Fund being liable for the payment of money or incurring liability
of some other form, such Fund, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If a Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlements)
or in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of such Fund shall be security
therefor and should such Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of such
Fund's assets to the extent necessary to obtain reimbursement.
18
<PAGE>
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. Effective Period, Termination and Amendment
-------------------------------------------
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not with respect to each Fund act under Section 2.10 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of each Fund has approved the initial use of
a particular Securities System by each Fund, as required by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian shall not with
respect to a Fund act under Section 2.11 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant Secretary that the Board
has approved the initial use of the Direct Paper System by each Fund; provided
further, however, that a Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of its governing documents, and further provided, that a Fund may at any time by
action of its Board (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, each Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination as provided
herein.
15. Successor Custodian
-------------------
If a successor custodian for a Fund shall be appointed by the Board of such
Fund, the Custodian shall, upon termination, and upon receipt of a certified
copy of such vote, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of such
Fund then held by it hereunder and shall transfer to an account of the successor
custodian all of the securities of such Fund held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of the
applicable Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board shall have been delivered to the Custodian
on or before the date when such
19
<PAGE>
termination shall become effective, then the Custodian shall have the right to
deliver to a bank or trust company, which is a "bank" as defined in the
Investment Company Act of 1940, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published report,
of not less than $25,000,000, all securities, funds and other properties held by
the Custodian on behalf of such Fund and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract on behalf
of such Fund and to transfer to an account of such successor custodian all of
the securities of such Fund held in any Securities System. Thereafter, such bank
or trust company shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of a Fund to procure the certified copy of the vote referred to above or
of the Board to appoint a successor custodian, the Custodian shall be entitled
to fair compensation for its services during such period as the Custodian
retains possession of such securities, funds and other properties and the
provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Contract, the Custodian and each
Fund, may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the governing documents of any Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
17. Additional Funds
----------------
In the event that any mutual funds in addition to the Funds are hereafter
established which desire to have the Custodian render services as custodian
under the terms hereof, it shall so notify the Custodian in writing, and if the
Custodian agrees in writing to provide such services, such fund shall become a
Fund hereunder, subject to the delivery by the new Fund of resolutions
authorizing the appointment of the Custodian and such other supporting or
related documentation as the Custodian may request. All references to the "Fund"
are to each of the Funds listed on Appendix 1 individually, as if this Contract
were between each such individual Fund and the Custodian.
18. Massachusetts Law to Apply
--------------------------
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
20
<PAGE>
19. Prior Contracts
---------------
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between each of the Funds and the Custodian relating to the custody of
such Fund's assets.
20. Shareholder Communications
--------------------------
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs each Fund to indicate whether such Fund authorizes
the Custodian to provide such Fund's name, address, and share position to
requesting companies whose stock each Fund owns. If a Fund tells the Custodian
"no", the Custodian will not provide this information to requesting companies.
If a Fund tells the Custodian "yes" or do not check either "yes" or "no" below,
the Custodian is required by the rule to treat such Fund as consenting to
disclosure of this information for all securities owned by such Fund or any
funds or accounts established by each Fund. For each Fund's protection, the Rule
prohibits the requesting company from using such Fund's name and address for any
purpose other than corporate communications. Please indicate below whether each
Fund consents or objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the name,
address, and share positions of each Fund listed on
Appendix 1.
NO [X] The Custodian is not authorized to release the
name, address, and share positions of each Fund listed
on Appendix 1.
21. Limitation of Liability.
------------------------
The execution of this Contract has been authorized by each Fund's Board.
This Contract is executed on behalf of each Fund or, in the case of a Fund
organized as a business trust, the trustees of such Fund as trustees and not
individually and the obligations of each Fund under this Contract are not
binding upon any of such Fund's trustees, officers or shareholders individually
but are binding only upon the assets and property of such Fund. A Certificate of
Trust in respect of each Fund organized as a business trust is on file with the
Secretary of the Commonwealth of Massachusetts.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 1st day of May, 1997.
EACH OF THE FUNDS LISTED ON APPENDIX 1
By: /s/ Michael E. Haylon
--------------------------
Michael E. Haylon
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
--------------------------
Executive Vice President
Ronald E. Logue
<PAGE>
APPENDIX 1
Fund Names
(as of May 1, 1997)
Phoenix California Tax Exempt Bonds, Inc.
The Phoenix Edge Series Fund
Real Estate Securities Series
Phoenix Income and Growth Fund
Phoenix Multi-Portfolio Fund
Phoenix Diversified Income Portfolio
Phoenix Emerging Markets Bond Portfolio
Phoenix Endowment Equity Portfolio
Phoenix Real Estate Securities Portfolio
Phoenix Mid Cap Portfolio
Phoenix Tax-Exempt Bond Portfolio
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Series Fund
Phoenix Aggressive Growth Fund Series
Phoenix Balanced Fund Series
Phoenix Convertible Fund Series
Phoenix Growth Fund Series
Phoenix High Yield Fund Series
Phoenix Money Market Series
Phoenix U.S. Government Securities Fund Series
Phoenix Strategic Allocation Fund, Inc.
Phoenix Strategic Equity Series Fund
Phoenix Equity Opportunities Fund
Phoenix Micro Cap Fund
Phoenix Small Cap Fund
Phoenix Strategic Theme Fund
Phoenix Duff & Phelps Institutional Mutual Funds
Enhanced Reserves Portfolio
Real Estate Equity Securities Portfolio
<PAGE>
Schedule A
----------
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of each Fund for use as
sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
- ----------------------------
Fund's Authorized Officer
Date:
-------------------------
<PAGE>
[LOGO]State Street
SCHEDULE B
STATE STREET BANK AND TRUST COMPANY
Custodian Fee Schedule
Effective June 1, 1996
Phoenix Duff and Phelps Funds
- --------------------------------------------------------------------------------
I. Administration
Domestic Custody - Maintain custody of fund assets. Settle portfolio
purchases and sales. Report buy and sell fails. Determine and collect
portfolio income. Make cash disbursements and report cash transactions.
Monitor corporate actions. Report portfolio positions. The custody fee
shown below is an annual charge, billed and payable monthly, based on
average monthly net assets.
Average Monthly Net Assets Annual Fees in Basis Points
-------------------------- ---------------------------
First $3 Billion .5
Next $2 Billion .375
Thereafter .25
II. Domestic Portfolio Trades - For each line item processed
State Street Bank Repos $ 7.00
DTC or Fed Book Entry $ 6.00
New York Physical Settlements $25.00
Physical Maturities-delivery and collection fee $33.00
All other trades $16.00
III. International Custody - Maintain custody of funds assets. Settle portfolio
purchases and sales. Report buy and sell fails. Determine and collect
portfolio income. Make cash disbursements and report cash transactions in
local and base currency. Report foreign taxes. File foreign tax reclaims.
Monitor corporate actions. Report portfolio positions.
<PAGE>
[LOGO]State Street
A. Country Grouping
- ---------------------
Group A Group B Group C Group D Group E
- ------- ------- ------- ------- -------
Austria Australia Denmark Indonesia Argentina
Canada Belgium Finland Malaysia Bangladesh
Euroclear Hong Kong France Mexico Brazil
Germany Netherlands Ireland Portugal Chile
Japan New Zealand Italy South Korea China
Singapore Luxembourg Spain Columbia
Switzerland Norway Sri Lanka Cyprus
Philippines Sweden Greece
Thailand Taiwan Hungary
United Kingdom India
Israel
Pakistan
Peru
Turkey
Uruguay
Venezuela
B. Transaction Charges
- ------------------------
Group A Group B Group C Group D Group E
- ------- ------- ------- ------- -------
$26 $30 $45 $60 $75
C. Holding Charges in Basis Points (Annual Fee)
- -------------------------------------------------
Assets Group A Group B Group C Group D Group E
- ------ ------- ------- ------- ------- -------
First $100 MM 5.0 8.0 13.0 15.0 25.0
Next $100 MM 4.0 6.0 10.0 13.0 25.0
Excess 3.0 5.0 8.0 13.0 25.0
IV. Options
Option charge for each option written or
closing contract, per issue, per broker $25.00
Option expiration charge, per issue, per broker $15.00
Option exercised charge, per issue, per broker $15.00
<PAGE>
[LOGO]State Street
V. Lending of Securities
Deliver loaned securities versus cash collateral $20.00
Deliver loaned securities versus securities collateral $30.00
Receive/deliver additional cash collateral $ 6.00
Substitutions of securities collateral $30.00
Deliver cash collateral versus receipt of loaned securities $15.00
Deliver securities collateral versus receipt of
loaned securities $25.00
Loan administration -- mark-to-market per day, per loan $ 3.00
VI. Interest Rate Futures
Transactions -- no security movement $ 8.00
VII. Coupon Bonds
Monitoring for calls and processing coupons --
for each coupon issue held -- monthly charge $ 5.00
VIII. Holdings Charge
For each issue maintained -- monthly charge $ 5.00
IX. Principal Reduction Payments Per Paydown $10.00
<PAGE>
[LOGO]State Street
X. Special Services
Fees for activities of a non-recurring nature such as fund
consolidations or reorganizations, extraordinary security shipments
and the preparation of special reports will be subject to negotiation.
Fees for tax accounting/recordkeeping for options, financial futures,
and other special items will be negotiated separately.
Account Position Appraisal
--------------------------
Special appraisal by industry classification:
Monthly fee - per portfolio $50.00
XI. Out-of-Pocket Expenses
----------------------
A billing for the recovery of applicable out-of-pocket expenses will
be made as of the end of each month. Out-of-pocket expenses include,
but are not limited to the following:
Telephone
Wire Charges ($4.70 per wire in and $4.55 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer -- $8.00 Each
Transfer Fees
Sub-custodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over $2,500 - $4.25
GNMA Transfer - $15 each
PTC Deposit/Withdrawal for same day turnarounds - $50.00
XII. Payment
The above fees will be charged against the fund's custodian checking
account five (5) days after the invoice is mailed to the fund's
offices.
<PAGE>
[LOGO]State Street
PHOENIX DUFF AND PHELPS FUNDS STATE STREET BANK & TRUST CO.
By /s/ Nancy G. Curtiss By /s/ Charles R. Whittemore, Jr.
------------------------------ ------------------------------
Title Treasurer Title Vice President
------------------------------ ------------------------------
Date June 13, 1997 Date June 11, 1996
------------------------------ ------------------------------
Exhibit 9.1
Amended and Restated Financial Agent Agreement
<PAGE>
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
THIS AGREEMENT made and concluded as of this 19th day of November, 1997
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
<PAGE>
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 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. 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).
<PAGE>
9. This Agreement shall be construed and the rights and obligations of
the parties hereunder enforced in accordance with the laws of the Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
PHOENIX CALIFORNIA TAX EXEMPT
BONDS, INC.
PHOENIX EQUITY SERIES FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX INVESTMENT TRUST 97
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 OPPOR-
TUNITIES FUND
By:/s/ Michael E. Haylon
--------------------------------------
Michael E. Haylon
Executive Vice President
PHOENIX EQUITY PLANNING
CORPORATION
By:/s/ Philip R. McLoughlin
--------------------------------------
Philip R. McLoughlin
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:
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 through $500 3 basis points on average daily net assets
million:
Greater than $500 million: 1.5 basis points on average daily net assets
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 Core Equity Fund
Phoenix Equity Opportunities Fund
Phoenix Growth and Income Fund
Phoenix Growth Fund Series
Phoenix Micro Cap Fund
Phoenix Mid Cap Portfolio
Phoenix Small Cap Fund
Phoenix Small Cap Value Fund
Phoenix Strategic Theme Fund
Phoenix Value Equity 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 Strategic Income Fund
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
First Amendment To
Amended And Restated Financial Agent Agreement
<PAGE>
FIRST AMENDMENT TO
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
THIS AMENDMENT made effective as of the 27th day of February, 1998 amends that
certain Amended and Restated Financial Agent Agreement dated November 19, 1997
by and among the following parties (the "Agreement") as hereinbelow provided.
W I T N E S S E T H :
WHEREAS, the parties hereto wish to amend the Agreement to eliminate
the provision that states that Financial Agent is not responsible for the acts
or omissions of any agent appointed by it:
NOW, THEREFORE, in consideration of the foregoing premise, the first
sentence of Paragraph 4 of the Agreement is amended to read as follows:
"Financial Agent shall not be liable for anything done or omitted to be
done by it in the exercise of due care in discharging its duties
specifically described hereunder."
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their duly authorized officers on this 23rd day of March, 1998.
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX EQUITY SERIES FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX INVESTMENT TRUST 97
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/ Michael E. Haylon
Michael E. Haylon
Executive Vice President
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Philip R. McLoughlin
Philip R. McLoughlin
President
Exhibit 11
Consent of Independent Accountants
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 16 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated February 18, 1998, relating to the financial
statements and financial highlights appearing in the December 31, 1997 Annual
Report to Shareholders of the Phoenix Strategic Allocation Fund, Inc., which are
also incorporated by reference into the Registration Statement. We also consent
to the reference to us under the heading "Financial Highlights" in the
Prospectus and under the heading "Additional Information - Independent
Accountants" in the Statement of Additional Information.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
April 21, 1998
Exhibit 14.1
Internal Revenue Code Section 403(b)(7)
Custodial Agreement
<PAGE>
ANSWERS TO YOUR
QUESTIONS REGARDING
403(b)
<PAGE>
What is a 403(b) plan?
403(b) is a section of the Internal Revenue Code which permits a tax-sheltered
retirement program for employees of non-profit organizations defined in section
501(c)(3) and 170(b)(i)(A)(ii) of the Internal Revenue Code. A non-profit
organization is defined as a corporation, fund, or foundation organized and
operated exclusively for religious, charitable, scientific, testing for public
safety, or educational purposes. Some examples are hospitals, public school
systems and humane associations.
Who is eligible to participate in a 403(b) plan?
Employees of the non-profit organizations described above are eligible to
participate in a 403(b) plan. Under a 403(b) plan, contributions made on behalf
of an individual must be invested in a mutual fund or an annuity.
What are the advantages of investing in a 403(b) plan?
*The employee has a tax-favored means for setting aside retirement savings out
of current income. Contributions and earnings compound tax deferred until they
are withdrawn, usually when the individual is in a lower tax bracket.
*Your principal investment as well as any earnings are vested
immediately.
*Benefits are usually distributed at retirement when you are in a lower tax
bracket and standard deductions are increased.
How do I contribute to a 403(b) plan?
You instruct your employer to make the contributions from future income to a
403(b) plan on your behalf. Contributions may be deducted from your salary or
they may be derived by foregoing an increase in pay. The salary reduction may be
expressed as a specific number of dollars per year or per pay period, or it may
be expressed as a percentage of pay.
<PAGE>
How do I establish a 403(b) plan?
Your employer must complete the Employer Adoption Agreement. You must sign a
Salary Reduction Agreement which describes the amount of compensation to be
contributed to your 403(b) plan. Remember, 403(b) contributions pertain to
compensation for the taxable year after the Salary Reduction Agreement is
signed. Contributions cannot be derived from funds previously received by the
employee (i.e., past earnings, savings).
How are my contributions invested?
Contributions are directed to the Phoenix Funds by your employer. We will invest
the funds as you direct on your Employee Adoption Agreement form.
How much can I contribute to a 403(b) plan?
Contributions cannot exceed a specified limit known as the exclusion allowance.
The employee's exclusion allowance for a taxable year is the lesser of $9,500 or
20 percent of includable compensation for that year, multiplied by the number of
years of service, and reduced by the total contributions paid in prior taxable
years to other retirement plans. We have included a Salary Reduction Worksheet
in this booklet in order to help you calculate your contribution amount.
May I increase/decrease my contributions at any time?
An employee is permitted only one agreement in any given taxable calendar year.
The contributions may be increased/decreased on, or after, the first day of the
next taxable year. The Salary Reduction Agreement may be terminated at any time
with respect to unearned compensation.
When can I begin taking distributions from my plan?
Distribution of your 403(b) funds can be taken without penalty for any of the
following reasons:
A. Attaining age 59-1/2.
B. Terminating employment with your current organization and taking periodic
payments over your lifetime or life expectancy, or over joint lives or life
expectancy of you and your designated beneficiary.
C. Death.
D. Becoming disabled.
E. Experiencing financial hardship. (limited to amounts that do not
exceed medical expense deduction)*
F. Having attained age 55, separating from service, and having met 403(b)
early retirement requirement guidelines.
G. Rollover of distributions within 60 days of receipt to an IRA or another
403(b)(7).
H. Pursuant to "qualified domestic relations order" (divorce proceedings).
*Any funds withdrawn for other types of financial hardship will be subject to a
10% penalty income tax.
You must begin taking distributions from your plan when you reach age 70-1/2.
<PAGE>
How are distributions made?
You direct how your distributions are to be made. Distributions can be made in a
lump sum payment, spread over your life expectancy or spread over the combined
life expectancy of you and your beneficiary(ies).
How would my distributions be taxed?
All distributions are taxed as ordinary income. State income tax laws may
differ. You should contact your state concerning taxation of your 403(b)
distributions.
What if I change employers; can I continue to contribute?
Yes, but only if your new employer opens a 403(b) plan for you.
As another alternative, proceeds may be transferred to an IRA account, or you
may set up a tax-deferred IRA rollover account.
You may not make contributions to a 403(b) account on your own.
What investment funds are available to me under the 403(b) plan?
The following Phoenix Funds are available to meet your 403(b) investment needs:
A. High Yield Fund* - Seeks high current income; capital growth is a secondary
objective. This Series invests primarily in a diversified portfolio of high
yield fixed income securities.
B. High Quality Bond Fund* - Seeks income and appreciation of capital. This
Series invests primarily in publicly-traded investment quality debt
securities.
C. U.S. Government Securities Fund* - Seeks a high level of current income
consistent with safety of principal. This Series invests solely in
securities which are issued or guaranteed by the U.S. Government or its
agencies and instrumentalities and backed by the full faith and credit of
the United States (U.S. Government Securities).
D. Balanced Fund* - Seeks reasonable income, long-term capital growth and
conservation of capital. This Series invests primarily in common stocks and
fixed income securities, with emphasis on income-producing securities which
appear to have a potential for capital enhancement.
E. Convertible Fund* - Seeks income and the potential for capital
appreciation, objectives which are considered as relatively equal. This
Series invests at least 65 percent of its total assets (exclusive of cash
and government securities) in debt securities and preferred stocks
which are convertible into, or carry the right to purchase, common
stock or other equity securities. This Series may employ leveraging
techniques by borrowing money and using such funds to increase its
investments in securities above the amounts otherwise possible.
<PAGE>
F. Growth Fund* - Seeks long-term appreciation of capital. Since income is not
an objective, any income generated by the investment of this Series' assets
will be incidental to its objective. This Series invests primarily in the
common stocks of companies believed by the advisor to have appreciation
potential.
G. Stock Fund* - Seeks appreciation of capital through the use of aggressive
investment techniques. This Series invests primarily in common stocks
believed by management to have a substantial potential for capital growth
without being subject to unreasonable risks.
H. Total Return Fund** - Seeks the highest total return consistent with
reasonable risk. The Fund invests primarily in stocks, bonds and money
market instruments and may adjust the proportion of assets invested in the
different types of securities whenever, in the opinion of the advisor, the
adjustment will contribute to attaining the investment objective.
I. Phoenix Money Market Fund - Seeks as high a level of current income as is
consistent with the preservation of capital and the maintenance of
liquidity. It is intended that this Series will invest primarily in a
portfolio of high-grade money market instruments generally maturing in less
than one year.
What if my investment objectives change?
The Phoenix 403(b)(7) Tax-Sheltered Account allows you to transfer your
investment within the Phoenix Family of Funds free of charge. Transfers may be
subject to certain limitations contained in the Phoenix Funds Prospectuses.
*A Series of the Phoenix Series Fund
**Phoenix Total Return Fund, Inc.
<PAGE>
PHOENIX
TAX-SHELTERED ACCOUNT
SALARY REDUCTION
ANNUAL CONTRIBUTION WORKSHEET
<PAGE>
SALARY REDUCTION WORKSHEETS
The following 403(b) Salary Reduction Worksheets were designed to assist you in
calculating your maximum annual employee salary reduction contribution. The
worksheet helps you determine the amount to be contributed for one year only. It
is important for you to review this information with your tax advisor to be
certain that your contributions will not exceed allowable limitations. Legal or
tax advice is not provided by the custodian, the sponsor of the Phoenix
Tax-Sheltered Account 403(b)(7), or their agents.
These worksheets will not apply to you if your present employer contributes to a
403(b) account on your behalf, other than by salary reduction. In addition,
these worksheets may not be appropriate if:
A. You are a church employee.
B. You will make salary reduction contributions to other retirement plans
(another 403(b), 401(k), SEP-IRA, 457 Deferred Compensation Plan) in this
calendar year.
C. You are a part-time employee.
1. $__________ = Annual compensation this calendar year with current employer
(before salary reduction).
2. __________ = Years of service with current employer (full and fractional
years from date hired to end of current calendar year.)
If less than one year, use one year.
3. $__________ = Total of all past contributions made to any nontaxable
retirement plan by you and your present employer during the above years of
service. This includes you and your employer's past contributions to any
retirement plan including this and other 403(b) plans, State Retirement
Plans, 401(k), or SEP-IRA.*
4. $__________ = __________ multiplied by __________.
(amount on line 1) (number on line 2)
5. $__________ = __________ multiplied by 5.
(amount on line 3)
6. $__________ = __________ minus __________.
(amount on line 4) (amount on line 5)
7. __________ = __________ plus 5.
(number on line 2)
8. $__________ = __________ divided by __________ = Basic Exclusion
(amount on line 6) (amount on line 7) Allowance
9. $__________ = __________ multiplied by 20% = Maximum Annual
(amount on line 1) Addition
Note: If the number on line 2 is less than 15, skip lines 10-13 and enter $9,500
on line 14.
*If you have contributed to a 457 Deferred Compensation plan in the past, be
sure to consult with your tax advisor as your years of service may need to be
adjusted.
<PAGE>
10. $__________ = __________ multiplied by $5,000
(number on line 2)
11. $__________ = Total of all salary reduction contributions made to any
403(b) plans by your present employer (but not including present year
contributions).
12. $__________ = __________ minus __________.
(number on line 10) (number on line 11)
(If less than zero, use zero.)
13. $__________ = The lesser of $3,000 or the amount on line 12 = Special
catch-up salary reduction amount. This is subject to a lifetime limitation
of $15,000.
14. $__________ = __________ plus $9,500 = Dollar Limitation
(amount on line 13)
15. $__________ = The lesser of lines 8, 9 or 14 = Maximum Allowable
Contribution.
An employee of an educational institution, home health service and certain
church organizations who wants to contribute more than the exclusion allowance
calculated on the previous page can use one of three special options. The option
selected is irrevocable; no other option may be selected in any other year.
However, an individual may elect to use the amount on line 15 instead of the
selected alternative option in any given tax year. Please refer to calculations
completed on the previous page in order to complete the following information.
Option A - Year of Separation from Service Limitation
May be elected only in the year in which the employee separates from service.
1. $__________ = Amount on line 8 recalculated using only the last 10 years of
service (Basic Exclusion Allowance).
2. $__________ = Amount on line 14 (Dollar Limitation).
The Maximum Allowance Contribution is the lesser of 1 or 2.
Option B - Any Year Limitation
May be elected during any year.
1. $__________ = Amount on line 8 (Basic Exclusion Allowance).
2. $__________ = Amount on line 14 (Dollar Limitation).
3. $__________ = Amount on line 9 plus $3,200.
Option C - Overall Limitation
May be elected in any year of service.
1. $__________ = Amount on line 14 (Dollar Limitation).
2. $__________ = Amount on line 9 (Maximum Annual Addition).
The Maximum Allowable Contribution is the lesser of 1 or 2.
<PAGE>
A GREAT
TAX-SHELTERED PLAN
IS ONLY 5 STEPS AWAY!
A Tax-Sheltered Account 403(b)(7) is a great way to reduce tax burdens while
investing in your future. To get started, just:
1. Complete the Employee Adoption Agreement.
2. Have your employer complete the Employer Adoption Agreement.
3. Complete the Salary Reduction form and keep it on file with your employer.
(Note: Your company/organization may have its own Salary Reduction Form.)
4. Have your employer prepare one check for your TSA investment and
establishment fee payable to the Phoenix Fund you have selected for
investment. The establishment fee of $10.00 will be deducted from your
initial contribution.
5. Mail the Employee Adoption Agreement, Employer Adoption Agreement, and
check to:
Phoenix Equity Planning Corporation
Attn: TSA Department
100 Bright Meadow Boulevard
Enfield, CT 06082-1989
<PAGE>
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard, Enfield, CT 06082-1989
{LOGO} Phoenix Tax-Sheltered Mutual Fund Account
The PHOENIX(R) EMPLOYEE ADOPTION AGREEMENT
- --------------------------------------------------------------------------------
The Participant named below, by execution and acknowledgement of this Adoption
Agreement, hereby applies for a Custodial Account pursuant to Section 403(b) (7)
of the Internal Revenue Code and the Employer Adoption Agreement and agrees to
the terms of the Phoenix Equity Planning Corporation Tax-Sheltered Mutual
Fund Plan.
================================================================================
1. PARTICIPANT INFORMATION
================================================================================
NAME OF PARTICIPANT BIRTHDATE
- --------------------------------------------------------------------------------
ADDRESS
- --------------------------------------------------------------------------------
CITY STATE ZIP CODE SOCIAL SECURITY NUMBER
- --------------------------------------------------------------------------------
PARTICIPANT AND/OR HIS/HER SPOUSE IS AFFILIATED IN ANY WAY WITH A FIRM ENGAGED
IN THE SECURITIES INDUSTRY* *IF YES, PROVIDE NAME OF SECURITY FIRM
[ ] NO [ ] YES
================================================================================
2. EMPLOYER INFORMATION
================================================================================
NAME
- --------------------------------------------------------------------------------
ADDRESS CITY STATE ZIP CODE
- --------------------------------------------------------------------------------
Does employer have other active participants in this 403(b) plan? [ ] YES [ ] NO
================================================================================
3. CUSTODIAN INFORMATION
================================================================================
NAME
State Street Bank and Trust Company
- --------------------------------------------------------------------------------
ADDRESS
Custody and Shareholders Services Division, P.O. Box 1912, Boston, MA 02105
- --------------------------------------------------------------------------------
The Participant accepts the Plan as a Custodial Account treated as an annuity
contract under Section 403(b) of the Code. The Participant (a) designates the
following fund(s) as the investments to be purchased with contributions by the
Employer under the Plan on behalf of the Participant, and (b) acknowledges
receipt of the current prospectus(es) of the designated fund(s). (Elect one or
more)
- --------------------------------------------------------------------------------
FUND INVESTMENT OBJECTIVES INITIAL SUBSEQUENT
CONTRIBUTION CONTRIBUTION
----------------------------------
WHOLE PERCENTAGES ONLY
================================================================================
Phoenix Series Fund
================================================================================
[ ] Balanced REASONABLE INCOME,
LONG-TERM CAPITAL GROWTH $ %
- --------------------------------------------------------------------------------
[ ] Convertible INCOME WITH POTENTIAL FOR
CAPITAL APPRECIATION $ %
- --------------------------------------------------------------------------------
[ ] Growth LONG-TERM APPRECIATION
OF CAPITAL $ %
- --------------------------------------------------------------------------------
[ ] High Quality INCOME AND THE APPRECIATION
Bond OF CAPITAL $ %
- --------------------------------------------------------------------------------
[ ] High Yield HIGH CURRENT INCOME $ %
- --------------------------------------------------------------------------------
[ ] Money Market HIGH CURRENT INCOME
CONSISTENT WITH THE
PRESERVATION OF CAPITAL
AND THE MAINTENANCE
OF LIQUIDITY $ %
- --------------------------------------------------------------------------------
[ ] Stock APPRECIATION OF CAPITAL
THROUGH THE USE OF
AGGRESSIVE INVESTMENT
TECHNIQUES $ %
- --------------------------------------------------------------------------------
[ ] U.S. Government HIGH LEVEL OF CURRENT INCOME
Securities Fund CONSISTENT WITH SAFETY OF
PRINCIPAL $ %
================================================================================
Phoenix Total HIGHEST TOTAL RETURN
Return Fund, Inc. CONSISTENT WITH REASONABLE
RISK $ %
================================================================================
The Participant agrees to pay the following fees to the Custodian: (a) New
Account fee: $10 (b) Annual Maintenance fee (per fund selected above): $15 (c)
Distributions from the plan: Termination or Transfer out of the Phoenix Equity
Planning Corp. TSA Agreement: $25. The new account fee will be deducted from the
initial contribution. Custodian will collect Annual Maintenance fee during the
first quarter of the year by: (a) liquidating sufficient shares from each
Phoenix Fund Account, or, (b) billing you at your mailing address.
================================================================================
4. GENERAL PROVISIONS
================================================================================
The Participant agrees that the duties imposed by the PLAN or law on either the
Custodian or PEPCO may be performed in full reliance upon the instructions and
directions of the Participant to PEPCO and of PEPCO to the Custodian as provided
in the Plan. The Custodian agrees to establish and maintain the Custodial
Account for the benefit of the Participant in accordance with the provisions of
the Plan and to accept contributions of cash thereto from the Employer.
The Participant represents that the Participant's participation in the Plan is
completely voluntary and that the sole involvement of the Employer in the Plan
is, without endorsement of the Plan, to permit registered representatives of
securities dealers to publicize the Plan to the Participant and to perform its
obligations under the Salary Reduction Agreement.
The Participant acknowledges that he or she has received and read a current
prospectus relating to the Investment Company Shares in which he or she has
directed investments. The Participant acknowledges that he or she has received
and read a copy of the Phoenix Custodial Agreement. The Participant designates
the Beneficiaries and elects the method of distribution.
(Continued on Reverse Side)
PEP 429 C 6-89
<PAGE>
The Participant understands that he or she is responsible for computing the
annual maximum salary reduction amounts on his or her behalf and agrees to
indemnify PEPCO and State Street Bank and Trust Company, Custodian, for any act
done or omitted to be done in good faith reliance on information provided by or
at the direction of the Participant, the Participant's Beneficiary(ies), or the
legal representative of the Participant or Participant's Beneficiary(ies). The
Participant also certifies, under penalty of perjury, that the Taxpayer
Identification Number is true, correct, and complete.
The Participant is responsible for determining the tax effect of the Salary
Reduction Agreement, including determining that the salary reduction does not
exceed the amount to be contributed in that year in accordance with the
provisions of Section 415 or the "exclusion allowance" as determined in
accordance with the provisions of Code Section 403(b)(2) (as modified by Code
Sections 415(a)(2) and 457(c)(2)) and the limit on excess deferrals in Code
Section 402(g).
================================================================================
5. TELEPHONE EXCHANGE [ ] Yes [ ] No
================================================================================
Telephone exchanges are subject to the terms of the Prospectus. If the
shareholder checks the "yes" box, telephone exchange orders will be accepted
from the shareholder and may be accepted from PEPCO and from the shareholder's
broker/dealer. By signing this New Account Application, the shareholder agrees
that the Phoenix Series Fund, Phoenix Total Return Fund, Inc., the Transfer
Agent, and PEPCO will not be liable for any loss, injury or damage incurred as a
result of acting upon, and neither will they be responsible for the authenticity
of any telephone instructions, other than those instructions delivered by PEPCO.
If the shareholder checks the "no" box, only the shareholder may authorize an
exchange, by writing to State Street Bank and Trust Company according to the
terms of the Prospectus. If the shareholder does not check either the "yes" or
"no" box, it will be assumed that the shareholder is NOT electing the Telephone
Exchange Privilege.
================================================================================
6. DESIGNATION OF BENEFICIARY
================================================================================
PRIMARY BENEFICIARY: The Participant hereby designates the following named
individual(s) as Primary Beneficiary(ies) to receive all amounts payable from
his or her Custodial Account by reason of his or her death and hereby revokes
any and all prior beneficiary designations heretofore made and filed with the
Custodian.
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. FULL LEGAL NAME (Last, first, middle) SOCIAL SECURITY NUMBER DATE OF BIRTH RELATIONSHIP TO PARTICIPANT
- ----------------------------------------------------------------------------------------------------------------------
COMPLETE ADDRESS (Number, street, city, state & zip code)
- ----------------------------------------------------------------------------------------------------------------------
2. FULL LEGAL NAME (Last, first, middle) SOCIAL SECURITY NUMBER DATE OF BIRTH RELATIONSHIP TO PARTICIPANT
- ----------------------------------------------------------------------------------------------------------------------
COMPLETE ADDRESS (Number, street, city, state & zip code)
======================================================================================================================
CONTINGENT BENEFICIARY
In the event the Primary Beneficiary(ies) does/do not survive the Participant, the Participant hereby designates the
following as Contingent Beneficiary(ies) of all such amounts:
- ----------------------------------------------------------------------------------------------------------------------
1. FULL LEGAL NAME (Last, first, middle) SOCIAL SECURITY NUMBER DATE OF BIRTH RELATIONSHIP
- ----------------------------------------------------------------------------------------------------------------------
COMPLETE ADDRESS (Number, street, city, state & zip code)
- ---------------------------------------------------------------------------------------------------------------------
2. FULL LEGAL NAME (Last, first, middle) SOCIAL SECURITY NUMBER DATE OF BIRTH RELATIONSHIP
- ----------------------------------------------------------------------------------------------------------------------
COMPLETE ADDRESS (Number, street, city, state & zip code)
======================================================================================================================
7. SIGNATURES
======================================================================================================================
PARTICIPANT'S SIGNATURE DATE
</TABLE>
================================================================================
8. FOR DEALER USE ONLY
================================================================================
REPRESENTATIVE CODE NUMBER AND NAME (Please print) REPRESENTATIVE SIGNATURE
X
- --------------------------------------------------------------------------------
DEALER NAME IN FULL (Please print) BRANCH MANAGER'S SIGNATURE
X
- --------------------------------------------------------------------------------
BRANCH CODE AND BRANCH ADDRESS AUTHORIZED DEALER SIGNATURE
X
- --------------------------------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER PHOENIX EQUITY PLANNING
CORPORATION
( ) - X
- --------------------------------------------------------------------------------
State Street Bank and Trust Company shall become a party hereto upon mailing to
the Participant a document acknowledging its receipt of the Agreement and
confirming its acceptance thereof.
<PAGE>
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard, Enfield, CT 06082-1989
The Phoenix
[LOGO] Tax-Sheltered Mutual Fund Account
The PHOENIX(R) EMPLOYER ADOPTION AGREEMENT
The Employer hereby adopts the Phoenix Equity Planning Corporation Tax-Sheltered
Mutual Fund Plan (the "Plan"), appoints State Street Bank and Trust Company to
act as Custodian under the Plan, delegates certain duties under the Plan to
Phoenix Equity Planning Corporation and agrees to abide by the provisions of the
plan. The employer represents that it is an organization described in Section
403(b)(1)(a) of the Code and that its only responsibilities with respect to this
plan are to make salary reductions in accordance with agreements with the
Participants and to transfer such salary reduction contributions to the
Custodian.
The Employer agrees to make all contributions in accordance with the terms of an
executed Salary Reduction Agreement between Employer and each Participant.
The Employer represents that the Participant's participation in the Plan is
completely voluntary.
Employer hereby represents and warrants that its Tax Shelter Account plans under
403(b) of the Code are and will be administered in conformity with a reasonable
and good faith interpretation of the non-discrimination rules under Section
403(b)(12) of the Code.
<TABLE>
<S> <C>
Name of Employer: Accepted by State Street
Bank and Trust Company
____________________________________________ By:_________________________________________
By:_________________________________________ Title:______________________________________
Title:______________________________________ Date:_______________________________________
Date:_______________________________________ Accepted by Phoenix Equity
Planning Corporation
Address:
Street______________________________________ By:_________________________________________
City________________________________________ Title:______________________________________
State ___________________ Zip _____________ Date:_______________________________________
Telephone: ( )
_________________________________
</TABLE>
*The Employer is required to sign this Agreement only if the Employer does not
already have a signed 403(b) Agreement with Phoenix.
PEP 429 D (6-89)
<PAGE>
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard, Enfield, CT 06082-1989
The Phoenix
[LOGO] Tax-Sheltered Mutual Fund Account
The PHOENIX(R) SALARY REDUCTION AGREEMENT
This Salary Reduction Agreement is entered into by the Employer and the
Participant to provide the source for contributions made on behalf of the
Participant under the Phoenix Equity Planning Corporation Tax-Sheltered Mutual
Fund Plan, which is incorporated herein by reference.
1. The Employer and the Participant hereby agree that, with respect to
services to be rendered hereafter by the Participant, the Participant's
salary for such services shall be reduced by the
amount of _________% or $_________ per year commencing with the pay due on
_______________, 19 _____. The Employer agrees to forward the amount of
such reduction in compensation of the Custodian for investment in the
Participant's Account.
2. The rights of the Participant in the Account under the Plan shall be
nonforfeitable at all times.
3. This Salary Reduction Agreement shall continue indefinitely until amended
or terminated, provided that no more than one such agreement may be made in
any taxable year of the Employee. The Employer and the Participant may
amend or terminate this agreement by thirty (30) days written notice. This
agreement will automatically terminate upon the termination of the Plan or
the termination of the Participant's employment by the Employer.
4. The Participant is responsible for determining the tax effect of this
Salary Reduction Agreement, including determining that the salary reduction
in Paragraph 1 does not exceed the amount permitted to be contributed in
that year in accordance with the provisions of Section 415 or the
"exclusion allowance" as determined in accordance with the provisions of
Code Section 403(b)(2) (as modified by Code Sections 415(a)(2) and
457(c)(2)) and the limit on excess deferrals in Code Section 402(g). The
Employer will provide to the Participant, upon request, any available
information from the Employer's records which is necessary to enable the
Participant to make these tax determinations.
The parties have signed this Salary Reduction Agreement this ___________ day of
____________________, 19 _____.
Employer:__________________________ Participant:_________________________
By:________________________________
Title:_____________________________
PEP 429 A (6-89)
<PAGE>
INSTRUCTIONS FOR TSA TRANSFERS
Complete the following forms and submit them to:
Phoenix Equity Planning Corporation, 100 Bright Meadow Boulevard,
Enfield, CT 06082-1989:
1) Tax-Sheltered Mutual Fund Account Employee Adoption Agreement
2) Tax-Sheltered Mutual Fund Account Transfer Agreement
Upon our receipt of the appropriate paperwork, an account will be established.
The Transfer Agreement Form will be sent to the existing issuer or custodian
(Transferor Company) after obtaining State Street Bank and Trust Company's
acceptance.
The Transferor Company should then mail the proceeds from your existing TSA
account/annuity to Phoenix Equity Planning Corporation for investment in your
Tax-Sheltered Mutual Fund Account.
Please direct any questions to our Shareholder Service Department by calling
toll-free 1-800-243-1574.
<PAGE>
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard, Enfield, CT 06082-1989
The Phoenix
[LOGO] Tax-Sheltered Mutual Fund Account
The PHOENIX(R) TRANSFER AGREEMENT
TRANSFEROR COMPANY (existing issuer or custodian)
- ----------------------------------------------
NAME
- -----------------------------------------------
STREET
( )
- ----------------------------------------------- ----------------------------
CITY STATE ZIP PHONE NUMBER OF EXISTING
CUSTODIAN/ISSUER
The Parties hereto do hereby agree as follows:
Said annuity/account is more specifically described as follows:
Policy/Account/Contract/Certificate Number:
#_______________________________________________________________________________
The Employee hereby requests that all or $__________ from the proceeds of the
above-described annuity/account be transferred from the Transferor Company to
State Bank and Trust Company for investment in an individual custodial account
pursuant to Section 403(b)(7) of the Code and intends such transfer to be a
non-taxable transfer.
The Employee does hereby surrender the above-described to the Transferor Company
and directs that such Transferor Company forward the proceeds therefrom to State
Street Bank and Trust Company for Employee's benefit as hereinafter provided.
Upon execution of this Agreement by the Employee and the State Street Bank and
Trust Company, this Agreement shall become binding and irrevocable. No
distribution shall be made until after the execution of this Agreement by the
Employee.
Any amounts may be payable directly from the Transferor Company to the order of
Phoenix Equity Planning Corporation in accordance with the instructions below.
Employee Signature:__________________________________
Employee Name:_______________________________________
PLEASE PRINT
Employee Address:____________________________________
____________________________________
NOTE: Your existing custodian may require a signature guarantee. Please check
with them for requirements.
- --------------------------------------------------------------------------------
SIGNATURE GUARANTEE BY: NAME OF BANK OR FIRM
-------------------------------------
SIGNATURE OF OFFICER & TITLE
================================================================================
FOR CUSTODIAN USE ONLY
================================================================================
ACCEPTANCE BY NEW CUSTODIAN (to be completed by State Street Bank and Trust
Company) We agree to accept custodianship and the transfer described above for
the Distributors 403(b) Plan established on behalf of the above named
individual. State Street Bank and Trust Company accepts its appointment as
successor custodian of the above 403(b) account and requests the liquidation and
transfer of assets indicated above. FORMER CUSTODIAN: Please mail the proceeds
made payable to PHOENIX SERIES FUND, and/or PHOENIX TOTAL RETURN FUND, INC. to:
PHOENIX EQUITY PLANNING CORPORATION
Attn: Transfer of Assets
Acct. No: __________________________________
100 Bright Meadow Boulevard
Enfield, CT 06082-1989
- --------------------------------------------------------------------------------
BY: (CUSTODIAN) DATE
STATE STREET BANK AND TRUST COMPANY
- --------------------------------------------------------------------------------
PEP 429 B (6-89)
<PAGE>
PHOENIX
TAX-SHELTERED
ACCOUNT
403 (b)(7)
TERMS AND
CONDITIONS
<PAGE>
The Phoenix Equity Planning Corporation's Tax-Sheltered Mutual Fund Plan will be
established for the exclusive benefit of the Participant and his or her
Beneficiaries upon the execution of the Employee Adoption Agreement and the
Salary Reduction Agreement. The Plan is intended to satisfy the requirements of
Code Sections 403(b)(7) and 401(f)(2). The parties to the Plan are PEPCO, the
Participant, the Employer and the Custodian.
The Custodian will accept contributions made by the Employer on behalf of the
Participant for investment in the funds elected in the Employee Adoption
Agreement to provide retirement benefits for the Participant. The Custodial
Account shall be subject to the terms and conditions of the Plan. The State
Street Bank and Trust Company shall serve as the Plan's Custodian.
Article I--Definitions
As used in the Plan, the following terms shall have the following meaning unless
a different meaning is clearly required by the context:
1.01 Account or "Custodial Account" means the separate investment account
established for the Participant in accordance with Section 2.01 of this
Plan.
1.02 Agreement or "Custodial Agreement" means the Plan, including the Employer
Adoption Agreement, the Employee Adoption Agreement and the Salary
Reduction Agreement, as may be amended from time to time.
1.03 Beneficiary means a person designated in writing by a Participant to
receive any benefit then vested under the Plan in the event of such
Participant's death.
1.04 PEPCO means Phoenix Equity Planning Corporation, a Connecticut
corporation, a wholly owned subsidiary of Phoenix Mutual Life Insurance
Company.
1.05 Code means the Internal Revenue Code of 1986, as amended.
1.06 Custodian means the State Street Bank and Trust Company and any successor
thereto under Section 6.05 hereof.
1.07 Disability means the inability of a Participant to engage in any
substantial gainful activity by reason of physical or mental impairment
which can be expected to result in death or to be of long continued and
indefinite duration as determined independently by a duly licensed
physician; or such other definition as defined in Section 72(m) of the
Code, should such Section be amended in the future.
1.08 Employer means the signatory corporation or organization, as the case may
be, which is either (a) an educational institution or system described in
Section 170(b)(1)(A)(ii) of the Code, or (b) a tax-exempt organization
described in Section 501(c)(3) of the Code which is exempt from tax under
Section 501(a) thereof, and any like successor to either which in writing
elects with the written acceptance of the Custodian to continue the Plan.
1.09 Financial Hardship means a financial need of the Participant resulting
from (i) purchase of principal residence; (ii) threat of eviction from a
foreclosure on a principal residence; (iii) tuition for higher education
for participant or dependent; and (iv) substantial uninsured medical
expenses for participant or dependent.
1.10 Investment Company Shares means the shares of the Phoenix Funds,
open-ended, regulated investment companies within the meaning of Section
851(a) of the Code, whose shares may be purchased through PEPCO.
<PAGE>
1.11 Participant means any employee of the Employer who executes the Agreement
and who executes a Salary Reduction Agreement with the Employer which
directs the Employer to contribute a specified contribution of salary to
the Plan.
1.12 Plan means the Phoenix Equity Planning Corporation Tax-Sheltered Mutual
Fund Plan, as amended from time to time.
1.13 Salary Reduction Agreement means a written agreement between the Employer
and the Employee whereby the Employee irrevocably agrees to reduce salary
(or to forego an increase in salary) with respect to amounts earned after
the effective date of the Agreement, and whereby the Employer agrees to
contribute the amount of salary reduced or foregone by the Employee to the
Custodial Account. The Salary Reduction Agreement may be terminated at any
time either by the Employer or Employee with respect to amounts not yet
earned by the Employee; provided that no more than one Agreement for
salary reduction may be made within any taxable calendar year of the
Employee.
Article II--Contributions
2.01 Custodial Account: The Custodian shall establish a Custodial Account which
satisfies the requirements of Code 401(f)(2), and which shall receive all
contributions made by the Employer on behalf of the Participant.
2.02 Employer Contributions: The Employer shall make contributions under the
Plan on behalf of the Participant in accordance with the Salary Reduction
Agreement that has been entered into with the Participant. However,
contributions made during a Participant's taxable year by the Employer,
as computed by the Employer or the Participant, shall not exceed an amount
equal to the lesser of the amount permitted to be contributed in that year
in accordance with the provisions of Section 415 of the Code or the
Participant's exclusion allowance as determined for that year in
accordance with the provisions of Section 403(b)(2) of the Code, as
modified by Section 414(a)(2) and 457(c)(2). If an excess contribution
exists with respect to a Participant's Account for any taxable year within
the meaning of Code Section 4973 (c), the Participant may notify the
Custodian through PEPCO in writing of the amount of such excess and
request a refund of such amount. Upon receiving such written notification,
the Custodian shall redeem sufficient Investment Company Shares to refund
the amount of such excess contribution to the Participant, plus the net
income to the Account on such excess contribution. Neither the Custodian,
PEPCO, nor any agent thereof shall have any duty to determine whether an
excess contribution has been made on behalf of a Participant to the Plan.
2.03 Transfer to the Custodial Account: At the written direction of the
Participant through PEPCO, the Custodian shall accept as a contribution on
behalf of the Participant:
(a) The amount of the Participant's interest in any other custodial
account maintained for the benefit of the Participant in accordance
with the provisions of Section 403(b)(7) of the Code which is
transferred directly to it in cash by the Custodian of the custodial
account;
(b) the amount, or portion thereof, of the Participant's interest in any
other custodial account maintained for the benefit of the
Participant or of the proceeds from an annuity contract for the
benefit of the Participant in accordance with the provisions of
Section 403(b) of the Code which is transferred to it in cash by or
on behalf of the Participant if the Custodian and PEPCO receive
adequate assurance that such transfer either constitutes a tax-free
transfer or a rollover contribution as described in Section
403(b)(8) or 408(d)(3) of the Code.
<PAGE>
2.04 Transfers from the Custodial Account: At the written direction of the
Participant through PEPCO, the Custodian shall transfer, in cash, the
balance in the Participant's Custodial Account less the amount of any
taxes, charges or other expenses then chargeable thereto to:
(a) the Custodian of any other Custodial Account maintained for the
benefit of the Participant in accordance with the provisions of
Sections 403(b)(7) of the Code; or
(b) the insurance company designated by the Participant for the
purchase, for the benefit of the Participant, of an annuity contract
described in Section 403(b) of the Code, if the transfer meets the
requirements for a tax-free transfer. Any determination as to
whether the transfer is a tax-free transfer shall be made by the
Participant upon the advice of his or her tax counsel.
Article III--Investment of Contributions
3.01 Contributions: All contributions under the Plan shall be credited to the
Participant's Account and shall be used to purchase full and fractional
Investment Company Shares specified by the Participant in the Employee
Adoption Agreement. The execution of the Employee Adoption Agreement shall
be deemed the Participant's acknowledgement of receipt of the current
prospectus relating to the Investment Company Shares in which he or she
has directed investment. With each contribution, the Employer shall notify
the Custodian of the name of each Participant on whose behalf a
contribution is made and the amount to be credited to each Participant's
Account. The usual sales and service charges described in the prospectus
concerning the acquisition and accumulation of such shares shall be
charged to the Participant's Account.
3.02 Reinvestment: All dividends and capital gain distributions received on
particular Investment Company Shares held in a Participant's Account shall
be reinvested in full and fractional shares of the same investment company
and shall be credited to that Participant's Account. If such dividends
or distributions may be received in additional shares or in cash or other
property, the Custodian shall elect to receive the same in additional
shares.
3.03 Vesting: Each Participant's interest in the Account attributable to
contributions on his or her behalf, together with earnings credited
thereto shall be at all times fully vested and nonforfeitable.
3.04 Investment Direction: The investment instructions specified in the
Employee Adoption Agreement shall be followed by the Custodian until such
instructions are modified by the Participant in writing, or in such other
form approved by the Custodian. If either PEPCO or the Custodian finds any
investment instructions of the Participant to be incomplete, conflicting
or otherwise unacceptable, it may return the same to the Participant for
clarification, and until clarification or further instructions acceptable
to PEPCO and the Custodian are received, any Employer contribution which
was uninvested due to such unacceptable instructions may be invested in
accordance with the Participant's last previous written instructions with
respect to investment of contributions.
3.05 Exchanges: The Participant, by a suitable writing or such other method
approved by the Custodian, may at any time direct the Custodian to
exchange all or any portion of the Investment Company Shares held in the
Participant's Custodial Account for other Investment Company Shares if
such exchange is permitted by the current prospectus relating to the
Investment Company Shares involved in the transaction, and such direction
shall be deemed the Participant's acknowledgement of receipt of the
current prospectus relating to the Investment Company Shares in which he
or she has directed investment.
<PAGE>
3.06 Ownership of Investment Company Shares: Title in all Investment Company
Shares purchased under the Plan shall be registered in the name of the
Custodian (or its nominee) as custodian for the account of the
Participant. The Custodian shall cause PEPCO to forward all proxy and
other materials that relate to the Investment Company Shares held in the
Custodial Account to the Participant and shall follow the Participant's
written instructions with respect to voting shares. If instructions of the
Participant are not received, the shares shall not be voted.
Article IV- Payment of Benefits
4.01 General:
(a) Subject to the restrictions on distributions from ORP Accounts
described in Section 4.11, distribution of the assets in an Account
may be made to the Participant on account of one of the following:
1. the Participant has attained age 59-1/2 as described in
Section 4.02 below;
2. the Participant retires early as described in Section 4.03
below;
3. the Participant has separated from service with the Employer
as described in Section 4.04 below;
4. the Participant has become disabled as described in Section
4.05 below; or
5. the Participant encounters financial hardship as described in
Section 4.06 below.
(b) The Participant may elect a form of distribution from among the
following alternatives:
i. a single sum, in cash or kind.
ii. equal or substantially equal monthly, quarterly or annual
installments over the life of the Participant or over the
lives of the Participant and designated Beneficiary, or a
period certain not to exceed the life expectancy of such
participant or the joint and last survivor life expectancy of
such Participant and Beneficiary.
iii. an immediate or deferred annuity contract purchased by the
Custodian, which provides for payments over the life of the
Participant or, if Participant so elects, for payments over
the lives of the Participant and the Participant's
Beneficiary.
4.02 Age 59-1/2: Distribution shall be made on the Participant's written
application at anytime after a Participant has attained the age of 59-1/2
years.
4.03 Early Retirement: Distribution shall be made on the Participant's written
application if the Participant retires (with separation from service with
the Employer) under either the early or normal retirement provisions,
under any other retirement plan maintained by the Employer, and the
Participant has attained the age of 55 years at the time of such early or
normal retirement.
4.04 Separation from Service: Distribution shall be made on the Participant's
written application at any time after a Participant has separated from
service with the Employer provided, however, any such distribution shall
be made only under paragraph 4.01(b) ii above.
<PAGE>
4.05 Disability: Distribution on account of disability shall be made on the
Participant's written application for such distribution accompanied by a
physician's statement certifying that the Participant is unable to engage
in any substantial gainful activity by reason of any medically determined
physical or mental impairment which can be expected to result in death or
to be of long-continued and indefinite duration.
4.06 Financial Hardship: Before the Custodian may make a Distribution for a
Financial Hardship, the Custodian must receive a written certification
from an independent person (or persons) certifying the existence of, and
the amount necessary to satisfy the Financial Hardship. The Custodian
may not distribute more than an amount required to meet the immediate
financial need created by the Financial Hardship and not reasonably
available from other resources of the participant. The independent person
must determine the existence of the Financial Hardship in accordance
with uniform and nondiscriminatory standards, and such independent
person must not be the Participant, the Custodian, an employee or director
of a regulated investment company, or any person who would be a
disqualified person under Code Section 4975 if the Custodian Account was a
qualified plan under Code Section 401(a). Distributions on account of
Financial Hardship after December 31, 1988 shall only be made from
contributions made, and not from earnings thereon, pursuant to a Salary
Reduction Agreement. Contributions on behalf of a Participant shall be
suspended for the twelve month period following the Distribution for
Financial Hardship. Any contributions after the suspension shall be
limited during the subsequent twelve month period to the amount of
contributions made during the taxable year in which the Distribution was
made.
4.07 Minimum Required Distributions:
(a) A Participant's entire remaining interest in the Account will be
distributed to the Participant no later than the required
beginning date or, if elected by Participant in a written
application, will be distributed beginning not later than such date
in substantially equal monthly, quarterly, or annual installments
over a period certain not extending beyond the life expectancy of
such Participant and a designated Beneficiary. If such designated
Beneficiary is anyone other than the spouse of the Participant, then
the amount of any such periodic distribution will be in a sufficient
amount so that the Participant will be actuarially expected to
receive more than one-half of the payments in his lifetime.
(b) The phrase "required beginning date" as used herein shall mean the
April 1 following the calendar year in which the Participant attains
age 70-1/2 years.
4.08 Death:
(a) In the event of the Participant's death, distribution of assets in
the Participant's Account shall be made to his designated
Beneficiary or Beneficiaries. If there is no valid beneficiary
designation in effect at the time of the Participant's death, such
distribution shall be made to his spouse, if living, otherwise to
his estate. Any such distribution shall only be made on the written
application of the party entitled thereto and submission of evidence
satisfactory to the Custodian of the Participant's death.
(b) If distribution of the Participant's Account(s) has begun in
accordance with Section 4.07 above and the Participant dies before
his entire interest has been distributed to him, the remaining
portion of such interest shall be distributed at least as rapidly as
under the method of distribution being used under Section 4.07 as of
the date of his death.
<PAGE>
(c) If a Participant dies before the distribution of his Account has
begun in accordance with Section 4.07, then the distribution of the
Participant's Account shall be made to his Beneficiary within (5)
years of his death, except if:
(1) the distribution is to be made to a designated Beneficiary and
such benefit is to be paid over a period not extending beyond
the life expectancy of such Beneficiary and such distribution
begins not later than 1 year after the date of the Partici-
pant's death (or such later date as regulations may permit);
or
(2) the designated Beneficiary is the surviving spouse of the
Participant and distribution is to be made over a period not
extending beyond the life expectancy of such spouse and such
distribution commences no later than that date on which the
Participant would have attained age 70-1/2; then distribution
may be made in accordance with paragraph (1) or (2) above,
whichever is applicable.
(d) The Participant may designate and change his Beneficiary or
Beneficiaries under this Agreement on a form provided by the
Custodian or otherwise acceptable to the Custodian for such purpose.
All elections with respect to the mode of distribution of the
Custodial Account on the death of the Participant may be made by the
Participant, or, in the absence of an irrevocable election by the
Participant, by his Beneficiary. The designation of beneficiary form
shall not become effective until it is filed with the Custodian. The
last designation filed with the Custodian shall be controlling, and
whether or not it fully disposes the Custodial Account, shall revoke
all such other designation previously filed by the Participant. Each
such executed designation is specifically incorporated herein by
reference and shall be construed, enforced, and administered
according to the laws of the Commonwealth of Massachusetts.
4.09 Methods of Payment: Payments may be made in cash or shares or a
combination thereof as may be directed by the Participant, provided,
however, that any payments made on account of financial hardship shall be
in cash, and any periodic payments to be made by the Custodian shall be in
cash unless the Custodian otherwise agrees to make such periodic payments
in shares.
4.10 Written Application: The Custodian shall not have any responsibility to
make distributions other than upon the Participant's written application
for such benefits and providing such information as the Custodian may
require. Any written application shall be on a form provided by the
Custodian or in such other manner as may be acceptable to the Custodian.
The Custodian shall not, however, be responsible for complying with a
written document which does not appear on its face to be genuine, and
assumes no duty of further inquiry.
4.11 Reductions on Distributions from ORP Accounts: Notwithstanding anything
herein to the contrary, except as may be required under Section 4.12 in
accordance with the requirements of the Code Sections 403(b)(10) and
401(a)(9), distributions are to be made from ORP Accounts only if the
Participant terminated participation in the Optional Retirement Program as
provided in Section 36, 105, Title 110B, Vernon's Texas Civil Statutes, by
reason of his death, retirement or termination of employment and such dis-
tributions from the ORP Accounts shall only be made upon the written
authorization of the Employer.
4.12 Assignment of Benefits: The Custodial Account and/or the benefits payable
to the Participant, a spouse or a Beneficiary are not subject to the
claims of their creditors and may not be voluntarily or involuntarily
assigned or alienated or encumbered.
<PAGE>
Article V--Amendment and Termination
5.01 Plan Termination: The Plan may be terminated at any time by a written
notice to the Custodian and PEPCO, signed by the Participant and the
Employer, and specifying the date of the Plan's termination. However, the
Plan may be continued by a successor Employer described in Section 1.08 of
the Plan that executes an Adoption Agreement to the Plan, together with
the Participant and PEPCO. Upon termination of the Plan, the Participant's
Account shall be distributed in accordance with the Provisions of Article
IV hereof.
5.02 Plan Amendment: The Plan may be amended at any time by delivering to the
Custodian and PEPCO a written copy of such modification or amendment,
signed by the Employer, provided, however, that:
(a) No modification or amendment shall cause or permit any part of the
assets in the Participant's Account to be diverted to purposes other
than for the exclusive benefit of the Participant or his or her
Beneficiary or as would cause or permit any portion of such assets
to revert to, or become the property of, the Employer; and
(b) No retroactive modification or amendment shall deprive the
Participant or his or her Beneficiary of any benefit to which the
Participant was entitled under the Plan by reason of contributions
made prior to the effective date of modification or amendment,
unless such modification or amendment is necessary to conform the
Plan to, or satisfy the conditions of, any law, governmental
regulation or filing, and to permit the Plan to meet the
requirements of Section 403(b)(7) of the Internal Revenue Code or
any similar statute enacted in lieu thereof.
(c) No modification or amendment shall take effect without the prior
written approval of PEPCO and the Custodian (but such consent shall
not be construed as approval of the sufficiency of any such
modification or amendment).
5.03 Amendment Delegation: The Employer hereby delegates to PEPCO the power to
amend the Plan in any respect at any time (including retroactive
amendment) by submitting a copy of the amendment to the Employer in order
to meet the requirements of Section 403(b)(7) of the Code or obtain a
ruling or determination from the Internal Revenue Service that the Plan,
as so amended, meets said requirements. Employer shall be deemed to have
consented to any such amendment. However, no such amendment shall deprive
any Participant or his or her Beneficiary of any benefit to which the same
was entitled by reason of contributions made prior thereto or permit Plan
assets to be diverted to purposes other than for the exclusive benefit of
Participants or their Beneficiaries or to revert to or become the property
of the Employer.
<PAGE>
Article VI--Custodian
6.01 Powers of Custodian: The Custodian shall have all powers necessary for the
performance of its duties, including the ability to delegate the
performance of any of its administrative duties. The Custodian shall hold
the contributions received by it subject to the terms of the Plan and the
purposes herein set forth and the Custodian shall be responsible only for
such assets as shall actually be received by it hereunder. The Custodian
is by the terms of the Plan subject to directions of the Participant, in
writing or in such other form approved by the Custodian, in the
investment, distribution, transfer and exchange of assets held in custody
in the name of Custodian on behalf of the Participant and his or her
Beneficiaries. The Custodian shall not be liable for following such
instructions, nor shall the Custodian be liable for its actions or failure
to act due to the absence of such instructions. Furthermore, the Custodian
may conclusively rely upon and shall be protected in acting upon any
written from the Employer, the Participant or their legal representatives
or any other notice, request, consent certificate or other instrument or
paper believed by it to be genuine and to have been properly executed,
and, so long as it acts in good faith, in taking or omitting to take any
other action in reliance thereon.
6.02 Maintenance of Records: The Custodian shall maintain such records with
respect to the Participant as may be necessary for the proper
administration of the Custodial Account. The Custodian shall file annually
an accounting with the Participant after the close of each calendar year
and shall file such information as shall be required of it by the
Secretary of the Treasury. Upon the expiration of sixty (60) days after
such a report is rendered, the Custodian and PEPCO shall be forever
released and discharged from all liability and accountability to anyone
with respect to transactions shown in or reflected by such report except
with respect as to any such acts or transactions as to which the
Participant shall have filed written objections with the Custodian or
PEPCO within such sixty-day period.
6.03 Fees, Taxes, and Expenses: Each Participant shall pay the Custodian fees
in accordance with the fee schedule set forth in the Employee Adoption
Agreement with respect to the Participant's Account. Upon thirty (30) days
prior written notice, the Custodian may substitute a fee schedule
differing from the schedule in said Adoption Agreement. Except as
otherwise agreed, the Custodian shall not make any charge in addition to
its agreed fees for services rendered by any of its officers or employees
in the performance of its duties hereunder. The Custodian's fees, any
income, gift, estate and inheritance taxes and other taxes of any kind
whatsoever, including transfer taxes incurred in connection with the
investment or reinvestment of the assets of the Custodial Account, that
may be levied or assessed in respect to such assets, and all other
administrative expenses incurred by the Custodian in the performance of
its duties including fees for legal services rendered to the Custodian,
may be charged to the Participant's Account, with the right to liquidate
Investment Company Shares for this purpose, or (at the Custodian's option)
charged to the Participant.
<PAGE>
6.04 Resignation or Removal of Custodian: The Custodian may resign at any time
upon sixty (60) days notice in writing to PEPCO, the Employer and the
Participant and may be removed by PEPCO at any time upon sixty (60) days
notice in writing to the Custodian. Upon such resignation or removal,
PEPCO shall appoint a Successor Custodian to serve under the Plan. Upon
receipt by the Custodian of written acceptance of such appointment by the
Successor Custodian, the Custodian shall transfer to such Successor the
assets of the Participant's Accounts and all necessary records (or copies
thereof) pertaining thereto, provided that (at the Custodian's request)
any Successor Custodian shall agree not to dispose of any records without
the Custodian's consent. The Custodian is authorized, however, to reserve
such a portion of such assets as it may deem advisable for payment of all
its fees, compensation, costs and expenses or for the payment of any other
liabilities constituting a charge on or against the Custodian with any
balance of such reserve remaining after the payment of all such items to
be paid over to the Successor Custodian. If within one hundred twenty
(120) days after the Custodian's resignation or removal, PEPCO has not
appointed a Successor Custodian who has accepted such appointment, this
Plan shall terminate and all assets in the Participant's Accounts shall be
distributed in accordance with the provisions of Article IV hereof.
6.05 Successor Custodian: A Successor Custodian appointed to serve under this
Plan must be a bank as defined in Code Section 401(d)(1) or such other
person who qualifies under Section 401(f)(2) of the Code and satisfies the
Custodian, upon request, as to such qualification. After the Custodian has
transferred the assets of the Participant's Accounts (including any
reserve balance as contemplated above) to the Successor Custodian, the
Custodian shall be relieved of all further responsibility with respect to
the Plan, the Custodial Account, and the assets thereof, and the Custodian
shall not be liable for the acts or omissions of such successor.
Article VII-Miscellaneous
7.01 Action by Parties to Plan: The Parties to the Plan and all persons
claiming any interest whatsoever hereunder agree to perform any and all
acts and to execute any and all documents and papers which may be
necessary or desirable for the carrying out of the Plan or any of its
provisions. The Plan shall be binding upon the heirs, executors,
administrators, successors and assignees of any and all parties hereto and
Participants hereunder whether present or future.
7.02 Rights Reserved by Employer: The Plan shall not be construed as creating
and modifying any contract of employment between the Employer and the
Participant.
7.03 Limitation of Liability: An investment company whose shares are issued in
connection with the Plan shall not be considered to be a party to the Plan
and shall be fully protected in presuming that the Custodian is as shown
on the latest notification received at its principal office, and shall be
protected in acting in accordance with any written direction of the
Custodian and shall have no duty to see to the application of funds paid
by it to the Custodian. Neither such investment company nor PEPCO shall be
responsible for the propriety of contributions or distributions made under
the Plan.
7.04 Failure to Qualify Plan: The Plan is established and created with the
intent that it shall meet the terms of Section 403(b)(7) of the Code;
however, if it is determined by the Internal Revenue Service that the Plan
does not initially and cannot be amended retroactively to qualify under
Section 403(b)(7) of the Code, all assets acquired with contributions
hereunder together with income earned thereon (less reasonable expenses
and agreed Custodian fees) shall be distributed to the Participant and the
Plan shall be considered to be rescinded and of no force and effect. If
the Plan, after initially meeting such terms shall fail to do so, the Plan
shall be terminated and the assets held hereunder shall be disposed of in
accordance with the Section 5.01 hereof within thirty (30) days following
the Custodian's receipt of notice of such failure from the Employer or the
Participant.
<PAGE>
7.05 This Agreement is an amendment to, and restatement of, any prior agreement
entitled Phoenix Equity Planning Corporation Tax-Sheltered Mutual Fund
Plan as existing on January 1, 1987 under which State Street Bank and
Trust Company served as Custodian for contributions contributed by the
Employer to a Custodial Account established for the benefit of the
Participant under Code Section 403(b)(7) for investment in the Phoenix
Funds. Said Amendment and restatement is effective retroactive to January
1, 1987.
7.06 Governing Law: The Plan shall be construed and administered in accordance
with the laws of the Commonwealth of Massachusetts, provided no provision
shall be construed to conflict with any provision of Federal law.
Article VIII--Administration
8.01 Instructions: All instructions, notices, forms and remittances received by
PEPCO from the Participant shall be forwarded to the Custodian.
8.02 Performance: Custodian and PEPCO shall be agents for the Participant to
perform the duties conferred on each of them, respectively, hereunder as
directed by Participant. The parties do not intend to confer any fiduciary
duties on the Custodian or PEPCO, and none shall be implied. Neither shall
be liable (or assumes any responsibility) for the collection of
contributions, the deductibility of any contribution or the propriety of
any contributions under this Agreement, or the purpose or propriety of any
distribution ordered in accordance with Article IV, which matters are the
responsibility of Participant and Participant's Beneficiary.
8.03 Indemnification: Participant shall always fully indemnify PEPCO and
Custodian and save PEPCO and Custodian harmless from any and all liability
whatsoever which may arise either in connection with this Agreement and
matters which it contemplates, except that which arises due to PEPCO's or
Custodian's negligence or willful misconduct, or with respect to making or
failing to make any distribution, other than for failure to make
distribution in accordance with an order therefore which is in full
compliance with Article IV. Neither PEPCO nor Custodian shall be obligated
or expected to commence or defend any legal action or proceeding in
connection with this Agreement or such matters as may arise therefrom
unless agreed upon by that party and Participant, and unless fully
indemnified for so doing to that party's satisfaction.
8.04 Duties: The Custodian and PEPCO shall each be responsible solely for
performance of those duties expressly assigned to it in this Agreement;
neither assumes any responsibility as to duties assigned to anyone else
hereunder or by operation of law.
Exhibit 14.2
Custodial Agreement Relating to Individual Retirement
Accounts
<PAGE>
----------------------------
PULL
--------------------
[graphic--swash]
--------------
- ----------------------------------------
- ----------------------------------------
FOUR EASY
- ----------------------------------------
STEPS TO
- ----------------------------------------
AN IRA
- ----------------------------------------
It's so easy to get the investment flexibility the Phoenix IRA offers. A
variety of portfolios, each with a different investment objective, allows
you to choose the right one for your Individual Retirement Account. Get
the Phoenix IRA advantage in 4 easy steps.
1 Complete the Easy IRA Application (and Transfer Form if you are
transferring your assets from an existing IRA),
2 Make one personal check payable to the Phoenix Fund you choose for your
investment and a separate check to State Street Bank & Trust for the
establishment fee (see fee card for details),
3 Mail the application, transfer form (if required) and both checks to
Phoenix Equity Planning Corp., One American Row, Hartford, Connecticut
06115,
4 Read carefully and keep the IRA Agreement and Fee Schedule in your files
for future reference.
What could be easier!
<PAGE>
CUSTODIAN FEE SCHEDULE FOR
INDIVIDUAL RETIREMENT ACCOUNTS
(Payable to the Custodian)
Fees payable to the Custodian, State Street Bank and Trust Company, are outlined
below and vary according to the investment products held in your IRA Account.
Plan Establishment Fee is payable upon the opening of your account and
maintenance fees are payable annually thereafter.
<TABLE>
<S> <C>
Plan Establishment Fee
If the investment is in one or more of the Phoenix Funds (per shareholder)....................$10.00
Annual Maintenance Fee
Phoenix Funds (per fund account)..............................................................$15.00
Distributions From The Plan
Termination or Transfer out of the Phoenix Equity Planning Corp. IRA Agreement................$25.00
Tax Withholding (only if applicable)
Each distribution requiring tax withholding...................................................$10.00
</TABLE>
(over)
- -------------------------------------------------------------------------------
FOR REGISTERED REPS. OF PHOENIX EQUITY PLANNING CORP. ONLY
----------------------------------------------------------
Limited Partnership and Outside Fund Charges
<TABLE>
<S> <C>
Plan Establishment Fee
1. If the investment is in a Limited Partnership..............................................$10.00
2. Investment in both (Limited Partnership and Mutual Fund)...................................$10.00
Annual Maintenance Fee
1. Limited Partnership and/or outside Mutual Fund (per limited partnership or mutual fund or
series thereof)...........................................................................$20.00
Distributions From The Plan
Termination or Transfer out of the Phoenix Equity Planning Corp. IRA Agreement................$25.00
Transaction Fee
1. Purchase, Sale or Reregistration of a Limited Partnership..................................$15.00
2. Purchase, Sale or Reregistration of an outside Mutual Fund.................................$10.00
</TABLE>
The Custodian will collect the annual maintenance fee during the first quarter
of each year by: a) liquidating sufficient shares from each Phoenix Fund
account, or, b) billing you at your mailing address.
<PAGE>
The PHOENIX Transfer Of Assets*
Phoenix Equity Planning Corp.
Hartford, CT 06115
PRINT & PRESS HARD; YOU ARE MAKING 4 COPIES
================================================================================
INSTRUCTIONS FOR COMPLETION (by client)
================================================================================
1. Complete sections 1. through 4.
2. Mail all 4 copies of this form with any additional documents, if necessary
(policies, certificates, set-up fee, application) to:
PHOENIX EQUITY PLANNING CORPORATION, Attn: PEPCO Transfer of Assets,
One American Row, Hartford, CT 06115
*(FOR TRANSFERS IN KIND PLEASE CONTACT US AT (800) 243-1574, CONN. RESIDENTS
CALL COLLECT 275-5901)
================================================================================
1. EXISTING IRA INFORMATION
================================================================================
NAME OF EXISTING CUSTODIAN/ISSUER
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
STREET ADDRESS OF EXISTING CUSTODIAN/ISSUER --(P.O. BOX UNACCEPTABLE) CITY STATE ZIP CODE
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT VEHICLE MATURITY DATE ACCOUNT NO. PHONE NO. OF EXISTING CUSTODIAN/ISSUER
(CD, Mutual Fund, etc.) (if applicable) (with existing custodian)
</TABLE>
================================================================================
2. FOR ALL TRANSFERS (Please check one)
================================================================================
[ ] Please deposit proceeds in my existing Phoenix IRA:_________________________
FUND NAME ACCOUNT NUMBER
[ ] Establish an IRA account in my name (Please enclose a Phoenix IRA
application and a check for the set-up fee made payable to State Street Bank
& Trust Company)
- --------------------------------------------------------------------------------
FUND USE ONLY: New account number:
================================================================================
3. NAME & ADDRESS OF DEPOSITOR
================================================================================
State Street Bank & Trust Company, Custodian for the IRA of:
- --------------------------------------------------------------------------------
NAME SOCIAL SECURITY NUMBER DAYTIME PHONE NUMBER
- --------------------------------------------------------------------------------
ADDRESS CITY STATE ZIP CODE
================================================================================
4. AUTHORIZATION TO TRANSFER FUNDS
================================================================================
TO EXISTING CUSTODIAN:
This will serve as authorization to liquidate and transfer
[ ] ALL or [ ] PART $____________
DOLLAR AMOUNT
of my account as listed in Section I above to transfer the assets to an IRA
I have established through Phoenix Equity Planning Corporation.
- --------------------------------------------------------------------------------
NOTE: Depositor's signature is required for DEPOSITOR'S SIGNATURE DATE
ALL TRANSFERS (triangle)
- --------------------------------------------------------------------------------
NOTE: Your existing custodian may require signature guarantee. Please check with
them for requirements.
- --------------------------------------------------------------------------------
SIGNATURE GUARANTEE BY: NAME OF BANK OR FIRM
- --------------------------------------------------------------------------------
SIGNATURE OF OFFICER & TITLE
================================================================================
FOR INTERNAL USE ONLY
================================================================================
ACCEPTANCE BY NEW CUSTODIAN (to be completed by State Street Bank & Trust
Company) We agree to accept custodianship and the transfer described above for
the Distributors' IRA Plan established on behalf of the above named individual.
State Street Bank & Trust Company accepts its appointment as successor custodian
of the above IRA account and requests the liquidation and transfer of assets
indicated above. Custodian: Please mail the proceeds made payable to PHOENIX
SERIES FUND, and/or PHOENIX TOTAL RETURN FUND, INC. along with the 2nd (canary)
copy of this form to:
PHOENIX EQUITY PLANNING CORPORATION
Attn: Transfer of Assets
Acct. No.: _________________________
1 American Row
Hartford, CT 06115
- --------------------------------------------------------------------------------
BY: (CUSTODIAN) DATE
STATE STREET BANK & TRUST COMPANY /s/ GL Reeves
- --------------------------------------------------------------------------------
PEP 340 2-88
<PAGE>
[logo]
The PHOENIX PHOENIX EASY IRA APPLICATION
(One application per investor please.)
================================================================================
<TABLE>
<S> <C>
Complete all information and mail to: If you have any questions, call us toll free on 1-800-243-1574
Phoenix Equity Planning Corporation -----------------------------------------------------------------
Attention: PEPCO IRA Department For Internal Use Only
One American Row -----------------------------------------------------------------
Hartford, CT 06115 [ ] Establishment Fee Paid
</TABLE>
- --------------------------------------------------------------------------------
SECTION I - Individual Retirement Account
- --------------------------------------------------------------------------------
[ ] Individual Mutual Fund (one account, $2,000 maximum contribution)
[ ] Spousal IRA (Individual & non-working spouse, two separate accounts,
$2,250 maximum combined contributions)
[ ] SEP IRA
[ ] Individual Limited Partnership IRA - Phoenix Agent use only
[ ] Transfer of Assets from Custodian to Custodian (Please also
complete a Transfer of Assets Form)
[ ] IRA Rollover
Source of Contribution
[ ] Rollover IRA
[ ] Qualified Plan
[ ] Combination IRA (IRA Rollover and a contributory IRA)
================================================================================
SECTION II - Account Registration
- --------------------------------------------------------------------------------
IRA Registration
- --------------------------------------------------------------------------------
NAME
- --------------------------------------------------------------------------------
STREET
- --------------------------------------------------------------------------------
CITY STATE ZIP CODE
- --------------------------------------------------------------------------------
SOCIAL SECURITY NUMBER BIRTHDATE
- --------------------------------------------------------------------------------
Are you/your spouse a current Phoenix Fund Client?
[ ] No [ ] Yes
Are you/your spouse affiliated in any way with a firm engaged
in the securities industry? [ ] No [ ] Yes
If yes, indicate name of firm __________________________________________________
- --------------------------------------------------------------------------------
SECTION III - Investment Selection
- --------------------------------------------------------------------------------
IRA Investment Selection
- --------------------------------------------------------------------------------
Year in which deduction will be taken. 19__ 19__ Rollover
- --------------------------------------------------------------------------------
[ ] Stock $ $ $
- --------------------------------------------------------------------------------
[ ] Growth $ $ $
- --------------------------------------------------------------------------------
[ ] Convertible $ $ $
- --------------------------------------------------------------------------------
[ ] Balanced $ $ $
- --------------------------------------------------------------------------------
[ ] High Yield $ $ $
- --------------------------------------------------------------------------------
[ ] High Quality Bond $ $ $
- --------------------------------------------------------------------------------
[ ] Money Market $ $ $
- --------------------------------------------------------------------------------
[ ] U.S. Government $ $ $
- --------------------------------------------------------------------------------
[ ] Total Return $ $ $
- --------------------------------------------------------------------------------
[ ] _____________________ $ $ $
OTHER
- --------------------------------------------------------------------------------
[ ] ___________________________ $ $ $
NAME OF LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
Make your check for your IRA contribution payable to the Phoenix Fund of your
choice. Plus make another check for the applicable establishment fee payable to
STATE STREET BANK AND TRUST COMPANY.
================================================================================
SECTION IV
- --------------------------------------------------------------------------------
COMBINED PURCHASE DISCOUNT/RIGHTS OF ACCUMULATION - If this account
qualifies for a Reduced Sales Charge under the terms of the
REDUCED Prospectus, please give the following information:
SALES ----------------------------------------------------------------------
CHARGE FUND NAME ACCOUNT NUMBER ACCOUNT REGISTRATION RELATIONSHIP TO INVESTOR
-----------------------------------------------------------------------
[ ] YES
-----------------------------------------------------------------------
[ ] NO
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
LETTER OF INTENT - Intended Investment of $10,000 or more.
(Check appropriate box below.)
[ ] Yes [ ] No This is a new Letter of Intent. Date ______________.
I have completed and attached a Letter of Intent
form with this application. (Letter of Intent form
found within Prospectus.)
[ ] Yes [ ] No This is an existing Letter of Intent. The Letter of
Intent form was signed on _______________ $ ________
DATE AMOUNT
By: ________________________________________________
================================================================================
SECTION V - For dealer use only.
- --------------------------------------------------------------------------------
REPRESENTATIVE CODE NUMBER AND NAME (Please print) REPRESENTATIVE'S SIGNATURE
X
- --------------------------------------------------------------------------------
DEALER NAME IN FULL BRANCH MANAGER'S SIGNATURE
X
- --------------------------------------------------------------------------------
BRANCH CODE AND BRANCH ADDRESS AUTHORIZED DEALER SIGNATURE
X
- --------------------------------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER
(---) --- - ----
- --------------------------------------------------------------------------------
This is a [ ] Mail Order [ ] Wire Order
- --------------------------------------------------------------------------------
PEP 339 1-89
<PAGE>
================================================================================
SECTION VI - Beneficiary Designation
- --------------------------------------------------------------------------------
GENERAL PROVISIONS
Except as otherwise provided in this Designation of Beneficiary, all amounts
payable from a Participant's Custodial Account by reason of his or her death:
1) Shall be paid in equal shares to the named Primary Beneficiaries who survive
the participant.
2) If no Primary Beneficiary survives the participant, such amount shall be paid
in equal shares to the Contingent Beneficiaries who survive the participant.
3) If the Participant does not designate a beneficiary or if no designated
Beneficiary survives the Participant, such amounts shall be paid to the
Participant's surviving spouse, or if the Participant does not have a
surviving spouse to the Participant's issue by right of representation, or if
the Participant does not leave a surviving spouse or surviving issue, to the
Participant's estate.
NOTE: If you have more than one Primary or Contingent Beneficiary, please
provide a signed and dated attachment indicating their names, addresses, social
security numbers and your relationships.
- --------------------------------------------------------------------------------
INDIVIDUAL BENEFICIARY DESIGNATION
PRIMARY BENEFICIARY CONTINGENT BENEFICIARY
- --------------------------------------------------------------------------------
NAME BIRTH DATE NAME BIRTHDATE
- --------------------------------------------------------------------------------
STREET STREET
- --------------------------------------------------------------------------------
CITY STATE ZIP CITY STATE ZIP
- --------------------------------------------------------------------------------
RELATIONSHIP SOCIAL SECURITY NUMBER RELATIONSHIP SOCIAL SECURITY NUMBER
- --------------------------------------------------------------------------------
A statement will be sent to your firm confirming the above transaction and will
serve as notification of State Street Bank's acceptance.
- --------------------------------------------------------------------------------
TELEPHONE
EXCHANGE
[ ] Yes [ ] No
Telephone exchanges are subject to the terms of the Prospectus. If the
shareholder checks the "yes" box, telephone exchange orders will be accepted
from the shareholder, and may be accepted from Equity Planning and from the
shareholders' broker/dealer. By signing this New Account Application, the
shareholder agrees that the Fund, the Transfer Agent, and Equity Planning will
not be liable for any loss, injury or damage incurred as a result of acting
upon, and neither will they be responsible for the authenticity of, any
telephone instructions, other than those instructions delivered by Equity
Planning. If the shareholder for the authenticity of, any telephone
instructions, other than those instructions delivered by Equity Planning. If the
shareholder checks the "no" box, only the shareholder may authorize an exchange,
by writing to State Street Bank & Trust Company according to the terms of the
Prospectus. If the shareholder does not check either the "yes" or "no" box, it
will be assumed that the shareholder is NOT electing the Telephone Exchange
Privilege.
================================================================================
SECTION VII - Signatures
- --------------------------------------------------------------------------------
PLEASE READ AND SIGN
I hereby establish a Phoenix Individual Retirement Account Plan. I have
received and read a current prospectus, and appoint State Street Bank & Trust
Company of Boston, Massachusetts as custodian of the separate plan. I have
received and read the IRA Custodial Agreement and Disclosure Statement
enclosed. The applicable account establishment fee (for a Mutual Fund),
(Limited Partnership), or (both a Limited Partnership and Mutual Fund
Distribution Account) is enclosed in the form of a check made payable to
State Street Bank & Trust Company. See enclosed Fee Schedule for amount(s).
If an IRA is being established for your spouse, please note that separate
establishment fees apply. I understand that if I make any contributions to
the funds rolled over from a qualified plan, or otherwise commingle rollover
amounts with accumulation amounts, I will have relinquished the right to
ultimately roll over the funds distributed to me to another qualified plan.
If I do establish a combination IRA and make future contributions to this
account, I hereby release and hold harmless State Street Bank and Trust
Company from any liability for any loss, damage, or injury which I may
sustain as a result of my election not to establish two separate Individual
Retirement Custodial Accounts. Furthermore, if I am making a rollover
contribution from a qualified plan, I understand that such a rollover is
irrevocable.
X ____________________________________________ Date ___________________________
INDIVIDUAL'S SIGNATURE
================================================================================
SECTION VIII - Limited Partnership IRA Distribution Account
- --------------------------------------------------------------------------------
All distributions from the above named limited partnership IRA should be
invested as follows:
[ ] Please establish a separate Mutual Fund IRA in the Phoenix ________________
Fund. FUND NAME
_____________________________
ACCOUNT NUMBER
[ ] Please deposit distributions to my existing ______________________ Fund
IRA Account Number ____________________________________.
================================================================================
SECTION IX - For Internal Use Only
- --------------------------------------------------------------------------------
x _____________________________________________________
ACCEPTED BY STATE STREET BANK AND TRUST COMPANY
/s/ W. F. Sheridan
Assistant Vice President
<PAGE>
INTERNAL REVENUE SERVICE'S ANNOUNCEMENT 86-121,
ON 1986 TAX REFORM ACT'S EFFECTS ON INDIVIDUAL RETIREMENT ACCOUNTS
The Tax Reform Act of 1986 (which we will call the Act) makes a number of
major changes to the law governing the deductibility of contributions to
Individual Retirement Arrangements (IRAs).
The changes made by the Act are generally not effective until January 1,
1987. This means that contributions made for 1987 are subject to the Act's new
rules; however, you can still make a contribution for 1986 as late as April 15,
1987, under the old rules.
ELIGIBILITY
Under the new law, if neither you, nor your spouse, is an active participant
(see A. below) you may make a contribution of up to the lesser of $2,000 (or
$2,250 in the case of Spousal IRA) or 100% of compensation and take a deduction
for the entire amount contributed. If you are an active participant but have an
adjusted gross income (AGI) below a certain level (see B. below), you may make a
deductible contribution as under current law. If, however, you or your spouse is
an active participant and your combined AGI is above the specified level, the
amount of the deductible contribution you may make to an IRA is phased down and
eventually eliminated.
A. Active Participant
You are an "active participant" for a year if you are covered by a retirement
plan. You are covered by a "retirement plan" for a year if your employer or
union has a retirement plan under which money is added to your account or you
are eligible to earn retirement credits. For example, if you are covered under a
profit-sharing plan, certain government plans, a salary reduction arrangement
(such as a tax sheltered annuity arrangement or a 401(k) plan), a simplified
employee pension plan (SEP) or a plan which promises you a retirement benefit
which is based upon the number of years of service you have with the employer,
you are likely to be an active participant. Your Form W-2 for the year,
starting with the 1987 tax year, should indicate your participation status.
You are an active participant for a year even if you are not yet vested in
your retirement benefit. Also, if you make required contributions or voluntary
employee contributions to a retirement plan, you are an active participant. In
certain plans you may be an active participant even if you were only with the
employer for part of the year.
You are not considered an active participant if you are covered in a plan
only because of your service as (1) an Armed Forces Reservist, for less than 90
days of active service, or (2) a volunteer firefighter covered for firefighting
service by a government plan. Of course, if you are covered in any other plan,
these exceptions do not apply.
If you are married but file a separate tax return, your spouse's active
participation does not affect your ability to make deductible contributions.
<PAGE>
B. Adjusted Gross Income (AGI)
If you are an active participant, you must look at your Adjusted Gross Income
for the year (if you and your spouse file a joint tax return you use your
combined AGI) to determine whether you can make a deductible IRA contribution.
Your tax return will show you how to calculate your AGI for this purpose. If you
are at or below a certain AGI level, called the Threshold Level, you are treated
as if you were not an active participant and can make a deductible contribution
under the same rules as a person who is not an active participant.
If you are single, your threshold AGI level is $25,000. The threshold level
if you are married and file a joint tax return is $40,000, and if you are
married but file a separate tax return, the threshold level is $0.
If your AGI is less than $10,000 above your threshold level, you will still
be able to make a deductible contribution but it will be limited in amount. The
amount by which your AGI exceeds your Threshold Level (AGI - Threshold Level) is
called your Excess AGI. The Maximum Allowable Deduction is $2,000 (or $2,250 for
a Spousal IRA). You can estimate your Deduction Limit using Table 1 or calculate
it as follows:
(Your Deduction Limit may be slightly higher if you use this formula rather
than the Table.)
$10,000 - Excess AGI x Maximum Allowable Deduction = Deduction Limit
- --------------------
$10,000
You must round up the result to the next highest $10 level (the next highest
number which ends in zero). For example, if the result is $1,525, you must round
it up to $1,530. If the final result is below $200 but above zero, your
Deduction Limit is $200. Your Deduction Limit cannot, in any event, exceed 100%
of your compensation.
Example 1: Ms. Smith, a single person, is an active participant and has an
AGI of $31,619. She calculates her deductible IRA contribution as follows:
Her AGI is $31,619
Her Threshold Level is $25,000
Her Excess AGI is (AGI - Threshold Level) or
($31,619 - $25,000) = $6,619
Her Maximum Available Deduction is $2,000
<PAGE>
So, her IRA deduction limit is:
$10,000 - $6,619 x $2,000 = $676 (rounded to $680).
----------------
$10,000
Example 2: Mr. and Mrs. Young file a joint tax return. Each spouse earns more
than $2,000 and one is an active participant. They have combined AGI of
$44,255. They may each contribute to an IRA and calculate their deductible
contributions to each IRA as follows:
Their AGI is $44,255
Their Threshold Level is $40,000
Their Excess AGI is (AGI - Threshold Level) or
($44,255 - $40,000) = $4,255
The Maximum Allowable Deduction for each spouse is
$2,000
So, each spouse may compute his or her IRA deduction
limit as follows:
$10,000 - $4,255 x $2,000 = $1,149 (rounded to $1,150).
----------------
$10,000
Example 3: If, in example 2, Mr. Young did not earn any compensation, or
elected to be treated as earning no compensation, Mrs. Young could establish a
Spousal IRA (consisting of an account for herself and one for her husband).
The amount of deductible contributions which could be made to the two IRAs is
calculated using a Maximum Allowable Deduction of $2,250 rather than $2,000.
$10,000 - $4,255 x $2,250 = $1,293 (rounded to $1,300).
----------------
$10,000
The $1,300 can be divided between the two accounts, but neither IRA may receive
a deductible contribution of more than $1,150.
Example 4: Mr. Jones, a married person, files a separate tax return and is an
active participant. He has $1,500 of compensation and wishes to make a
deductible contribution to an IRA.
His AGI is $1,500
His Threshold Level is $0
His Excess AGI is (AGI - Threshold Level) or
($1,500 - $0) = $1,500
His Maximum Allowable Deduction is $2,000
So, his IRA deduction limit is:
$10,000 - $1,500 x $2,000 = $1,700
----------------
$10,000
Even though his IRA deduction limit under the formula is $1,700, Mr. Jones may
not deduct an amount in excess of his compensation, so, his actual deduction is
limited to $1,500.
SPOUSAL IRAs
As noted in Example 3 above, under the Act you may contribute to a Spousal
IRA even if your spouse has earned some compensation during the year. Provided
your spouse does not make a contribution to an IRA, you may set up a Spousal IRA
consisting of an account for your spouse as well as an account for yourself. The
maximum deductible amount for the Spousal IRA is the lesser of $2,250 or 100% of
compensation. This rule applies for 1986 Spousal IRAs as well as 1987 Spousal
IRAs.
NONDEDUCTIBLE CONTRIBUTIONS TO IRAs
Even if you are above your threshold level and thus may not make a deductible
contribution of $2,000 ($2,250 for a Spousal IRA), you may still contribute up
to the lesser of 100% of compensation or $2,000 to an IRA ($2,250 for a Spousal
IRA). The amount of your contribution which is not deductible will be a
nondeductible contribution to the IRA. You may also choose to make a
contribution nondeductible even if you could have deducted part or all of the
contribution. Interest or other earnings on your IRA contribution, whether from
deductible or nondeductible contributions, will not be taxed until taken out of
your IRA and distributed to you.
If you make a nondeductible contribution to an IRA you must report the amount
of the nondeductible contribution to the IRS as a part of your tax return for
the year.
You may make a $2,000 contribution at any time during the year, if your
compensation for the year will be at least $2,000, without having to know how
much will be deductible. When you fill out your tax return you may then figure
out how much is deductible.
You may withdraw an IRA contribution made for a year any time before April 15
of the following year. If you do so, you must also withdraw the earnings
attributable to that portion and report the earnings as income for the year
for which the contribution was made. If some portion of your contribution is
not deductible, you may decide either to withdraw the nondeductible amount, or
to leave it in the IRA and designate that portion as a nondeductible
contribution on your tax return.
<PAGE>
Phoenix
Equity Planning
Corporation
IRA Agreement
Sponsored by
Phoenix Mutual
Life Insurance
Company
Here are the terms and conditions that apply to your IRA as amended and
restated, effective January 1, 1985
<PAGE>
Phoenix Equity Planning Corporation
Individual Retirement Account
(IRA)
Sponsored by Phoenix Mutual Life
Insurance Company
As amended and restated effective
January 1, 1985
The use of this material is authorized only when preceded or accompanied by a
current prospectus disclosing any applicable sales charges.
The Phoenix Equity Planning Corporation (PEPCO), Prototype Individual
Retirement Account Plan has been filed for approval with the Internal Revenue
Service.
Execution of the Account Application by the Depositor and acceptance by
the Custodian (no later than the time prescribed by law for filing the Federal
Income Tax return for the Depositor's tax year) will establish an individual
retirement account (IRA) for Depositor which meets the requirements of IRS Code
Section 408(a).
The Depositor desires to provide for his/her retirement and for the
support of his/her beneficiaries upon his/her death.
To accomplish this purpose, the Depositor establishes an Individual
Retirement Account as described in Section 408(a) of the Internal Revenue Code
of 1954, as amended, or any successor statute (hereinafter referred to as the
"Code") under the terms of the agreement set forth herein (the "Agreement").
The sponsor has furnished the Depositor with a disclosure statement as
required under the Income Tax Regulations under Code Section 408(i).
The Depositor has deposited with the Custodian the amount indicated on the
Application; and the Depositor and Custodian agree as follows:
Phoenix Equity Planning Corporation
Prototype Individual Retirement Account
Custodial Agreement
Article I--Contributions
- -------------------------------------
1.1 The Custodian may accept additional contributions in cash from the
Depositor
1
<PAGE>
during a taxable year of the Depositor except as limited by Sections 1.2,
1.6 and 1.7.
1.2 Limitations. Except in the case of a rollover contribution as that term
is described in Section 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8),
405(d)(3), 408(d)(3) or 409(b)(3)(C) of the Code, or in the case of a
transfer of assets directly from the trustee or custodian of an Indi-
vidual Retirement Account (as described in Section 408 of the Code) of the
Depositor, the Custodian will only accept cash and will not accept
contributions on behalf of the Depositor in excess of: for the taxable
year of the Depositor, the lesser of $2,000 or 100% of includible
compensation, less, if any, the amount of any qualified voluntary
employee contributions, as described in Section 219(e) of the Code, that
the Depositor has made, for the taxable year, as an employee under a
qualified employer plan or governmental plan, as described in Sections
219(e)(3) and (4) of the Code, respectively.
(a) Compensation means wages, salaries, professional fees, or other
amounts derived from or received for personal service actually
rendered (including, but not limited to commissions paid
salesmen, compensation for services on the basis of a percentage
of profits, commissions on insurance premiums, tips and
bonuses) and includes earned income, as defined in Code Section
401(c)(2) reduced by the deduction the self-employed individual
takes for contributions made to a retirement plan qualified under
Code Section 401 by an employer for an owner-employee.
Compensation for tax years beginning after 1984 includes any
amount includible in gross income under Code Section 71 with re-
spect to a divorce or separation instrument described in
Section 71(b)(2)(A). Compensation does not include amounts
derived from or received as earnings or profits
2
<PAGE>
from property (including, but not limited to, interest and
dividends) or amounts not includible in gross income.
Compensation also does not include any amount received as a
pension or annuity or as deferred compensation.
1.3 Initial Periodic Contribution. Initial contributions, which Depositor
intends to be tax-deductible, shall be in cash and are to be invested
under this Agreement. Depositor contemplates future periodic contributions
within the limits allowed by law. Depositor assumes full and sole re-
sponsibility for determining that the sum of periodic contributions during
a single taxable year of Depositor does not exceed those limits. Depositor
shall not contribute after the custodial account ceases to be exempt by
reason of either Section 408(e) or 415(g) of the Internal Revenue Code.
All future contributions shall be in cash and shall be sent to Custodian
by Depositor directly and not through an intermediary employer.
1.4 Rollover Contribution. If the Depositor indicates on the Application that
the contribution is a rollover contribution, the Depositor warrants that:
(a) such amount was received by Depositor as--
(i) a "qualifying rollover distribution" or a "partial
distribution" from an employees' trust;
(ii) a distribution from another individual retirement account
or annuity, a qualified bond purchase plan or a U.S.
retirement bond; all as described in Code Section
402(a)(5) (including subparagraph D describing partial
distributions), 402(a)(7), 403(a)(4), 403(b)(8),
405(d)(3), 408(d)(3), or 409(b)(3)(C), as the case may be;
and is contributed within sixty (60) days of its receipt by Depositor;
(b) in the case of a contribution of a
3
<PAGE>
qualifying rollover distribution from an employees' trust or
employee annuity, the amount of such rollover contribution is an
amount equal to or less than the excess of the total distribution
from such trust or plan over amounts considered to be contributed
by Depositor pursuant to Section 72 of the Code and, such
rollover shall in any event be cash unless otherwise agreed by
the Custodian;
(c) in the case of a rollover contribution from another individual
retirement account or individual retirement annuity, such other
account or annuity was not itself funded by a rollover
contribution from any other source within one (1) year of the
date of the contribution hereto;
(d) if the Depositor makes any further contribution to the custodial
account after making the rollover contribution, Depositor
warrants that:
(i) either such contribution constitutes part of the original
account after making the rollover contribution hereto and
is made within the limitations of this Subsection; or
(ii) such contribution is an Annual Contribution which Depositor
agrees may be made ONLY if the initial rollover
contribution was from another individual retirement account
or annuity and none of the assets thereof were attributable
to a rollover from an employee trust as described in
Subsection 1.4(b) above;
(e) in the case of a rollover contribution comprised of a
distribution from another individual retirement account or
individual retirement annuity by reason of the death
4
<PAGE>
of an individual other than the Depositor in a tax year beginning
after 1983, that Depositor is the surviving spouse of the
decedent.
1.5 Transfer Contributions. A transfer contribution shall be a deposit in cash
or any other property to be invested under this Agreement if the funds in
another Individual Retirement Account of the Depositor are transferred
directly from the Trustee/Custodian of the Account directly to the
Custodian. A transfer contribution shall not be considered a Rollover
Contribution under Section 1.4 above.
1.6 Spousal IRA.
(a) A Depositor who has established an IRA for the benefit of a non-
working spouse may make contributions to his/her own IRA and to
the IRA established for the benefit of the non-working spouse
during any taxable year of the Depositor for which the Depositor
and the non-working spouse remain eligible. The Custodian will
accept contributions up to the lesser of 100% of includible com-
pensation or, $2,250, for a taxable year of a Depositor who has
also established an IRA for the benefit of a non-working spouse,
provided, however, that a maximum contribution of only $2,000
may be made to any one such IRA.
(b) Contributions by Divorced or Separated Spouses. For contribu-
tions relating to 1984 tax years (and earlier) the following
rules apply. If a divorced or separated spouse (a) maintained a
spousal IRA for at least five years preceding the divorce, and
(b) if the ex-spouse has contributed to the spousal IRA for at
least three of the preceding five years, then the contribution to
such IRA shall not exceed the lesser of $1,125 or the sum of
Compensation and taxable alimony. For taxable years
5
<PAGE>
beginning after 1984 these rules are repealed and the
Compensation for IRA Contribution purposes of a divorced spouse
shall be any amount includible in gross income under Code Section
71 with respect to a divorce or separation instrument described
in Section 71(b)(2)(A).
1.7 SEP. In addition to any contributions made by the Depositor under Section
1.2, the Custodian may accept Employer contributions made on behalf of the
Depositor for the taxable year of the Depositor who is an eligible
employee under a Simplified Employee Pension-Individual Retirement
Account Contribution Agreement (under Section 408(k) of the Code). The
maximum amount allowable under this paragraph is the lesser of $30,000
(or, if applicable, the amount specified in Section 415(c)(1)(A), as ad-
justed in accordance with Code Section 415(d)), or 15% of compensation.
Article II--Nonforfeitability The interest of the Depositor in the balance in
the custodial account shall at all times be nonforfeitable. This account is
created for the exclusive benefit of Depositor and Depositor's beneficiaries.
Article III--Investment of
Contributions
3.1 As used herein the term "Broker" means Phoenix Equity Planning Corporation
(PEPCO), a securities broker-dealer registered under the Securities
Exchange Act of 1934.
3.2 "Investment Company Shares" shall mean any open ended investment company
shares marketed by PEPCO and for which the Custodian has agreed to act as
Custodian.
3.3 "Securities" shall mean one or more units or shares of a security (other
than Investment Company Shares) marketed by PEPCO and permitted by
applicable laws
6
<PAGE>
and regulations as investments of Individ- ual Retirement Accounts and for
which the Custodian has agreed to act as Custodian.
(a) Securities shall include but not be limited to limited
partnership interests traded by or obtainable through PEPCO which
are acceptable to the Custodian - such acceptance or
non-acceptance not to be construed as a judgment concerning the
prudence or advisability of such an investment.
3.4 "Savings Instrument" shall mean an interest bearing deposit in the
Custodian's banking department of a type made available by the Custodian
from time to time for investment hereunder.
3.5 Custodian is to invest and reinvest all custodial funds in Investment
Company Shares, Securities, and Savings Instruments as Depositor directs
from time to time. The Depositor's investment selection shall remain in
effect until Depositor gives the Custodian contrary instructions pursuant
to this Article III or Article VII, which governs investment of the cus-
todial account.
3.6 Investment Prohibitions. No part of the custodial funds shall be invested
in life insurance contracts, nor may the assets of the custodial account
be commingled with other property except in a common trust bond or common
investment fund (within the meaning of Code Section 408(a)(5)). No
investment of custodial funds shall be made in a work of art, rug,
antique, metal, gem, stamp, coin, alcoholic beverage, or any other
tangible property which is designated as a collectible by the Internal
Revenue Service pursuant to Code Section 408(m). Any such investment is
treated as a distribution.
Article IV--Distributions
- ------------------------------------
4.1 Except in the case of the Depositor's death or disability (as defined in
Section 72(m) of the Code) or attainment of age 59-1/2, before
distributing an amount from the account, the Custodian shall
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<PAGE>
receive from the Depositor a declaration of the Depositor's intention as
to the disposition of the amount distributed.
4.2 The entire interest of the Depositor in the custodial account must be, or
commence to be, distributed as of the required beginning date, which is
April 1 of the calendar year following the calendar year in which the
Depositor attains age 70-1/2.
4.3 Distribution of the assets of the custodial account shall be made in a
manner set forth in Section 4.5 or 4.6, whichever applies, and at such
time as Depositor (or Depositor's Beneficiary if Depositor is deceased)
shall elect by written order to Custodian, provided, that distribution
(except for distribution on account of Depositor's disability or death,
return of an "excess contribution" referred to in Section 4.8, or a
"rollover" from this account) made earlier than age 59-1/2 may subject
Depositor to an "early distribution penalty tax" described under Section
408(f) of the Code. For that purpose, Depositor will be considered
disabled if Depositor can prove, as provided in Section 72(m)(7) of the
Code, that Depositor is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or be of
long-continued and indefinite duration. Depositor (or Depositor's
Beneficiary if Depositor is decreased) shall order distribution in the
manner and at the time permitted or required by this Section 4.3.
Neither Custodian nor any other party providing services to the
custodial account assumes any responsibility for the tax treatment of any
distribution from the custodial account; such responsibility rests solely
with the person ordering the distribution.
4.4 Custodian assumes (and shall have) no responsibility to make any
distribution on order of Depositor (or Depositor's Beneficiary if
Depositor is deceased) unless and until such order specifies the occasion
for such distribution, the elected manner
8
<PAGE>
of distribution, and any declaration required by Section 4.1. Also, before
making any such distribution or before honoring any assignment of the
custodial account, Custodian shall be furnished with any and all
applications, certificates, tax waivers, signature guarantees and other
documents (including proof of any legal representative's authority) deemed
necessary or advisable by Custodian, but Custodian shall not be
responsible for complying with an order which appears on its face to be
genuine, or for refusing to comply if not satisfied it is genuine, and
Custodian assumes no duty of further inquiry.
4.5 Upon receipt of a proper written order as required above, Custodian shall
cause the assets of the custodial account to be distributed in cash or in
kind, as the Custodian shall determine, as follows:
(a) If the distribution order calls for the custodial account to be
paid to Depositor under Section 4.3, then distribution shall be
made in one or more of the following ways as specified in the
order:
(1) In a lump sum.
(2) In installments ratably over a period which may either be
(i) not longer than the life expectancy of Depositor or
(ii) not longer than the joint and survivor life
expectancies of Depositor and Depositor's beneficiary. The
life expectancy and joint and last survivor expectancy
referred to in this Agreement will be computed by the use
of the return multiples, contained in Section 1.72-9 of the
Income Tax Regulations; first when installment payments
commence, and thereafter at least as of the time Depositor
attains age 70-1/2. The entire interest of the Depositor
for whose benefit the custodial account is maintained, will
be distributed or commence to be distributed, no later than
the
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<PAGE>
first day of April following the calendar year in which the
Depositor attains age 70-1/2 (required beginning date), in
equal or substantially equal amounts. If the period is
measured by one or more such expectancies, then beginning
with the year Depositor attains age 70-1/2, the amount
distributed each year shall be at least equal to the
quotient obtained by dividing the entire custodial account
remaining at the beginning of that year by the life
expectancy of Depositor, or the joint life and last
survivor expectancy of Depositor and Depositor's
beneficiary (whichever is applicable), determined as of the
time Depositor attains age 70, reduced by the number of
whole years elapsed since Depositor attained 70-1/2;
provided, however, that no distribution need be made in any
year, or a lesser amount may be distributed during such
year, if the aggregate amounts distributed through the end
of such year are at least equal to the aggregate of the
minimum amounts required by this Subsection 4.5(a)(2) to
have been so distributed. For purposes of this computation,
a Depositor's life expectancy may be recalculated no more
frequently than annually, however, the life expectancy of a
nonspouse beneficiary may not be recalculated. During
Depositor's lifetime the entire custodial account remaining
for distribution at any time under this Subsection
4.5(a)(2) may, pursuant to a proper supplementary written
order as specified above, be distributed to Depositor.
(3) By the purchase and distribution of a single-premium
contract meeting the
10
<PAGE>
requirements of Sections 408(b)(1), (3), (4) and (5) of the
Code applicable to an "individual retirement annuity."
If the Depositor fails to elect any of the methods of distribution
described above on or before the required beginning date, the Custodian shall
have no liability to the Depositor for any tax penalty or other damages
resulting from any inadvertent failure by the Custodian to make such
distribution.
4.6 (a) Where distributions have commenced to the Depositor and the
Depositor dies before the entire interest in the custodial
account has been distributed, Custodian, upon notification, shall
distribute the then remaining custodial account to the
Depositor's designated beneficiary in accordance with the
original election made by the Depositor, or in any other mode of
distribution which will result in distribution of the entire
account balance at least as rapidly as the Depositor's original
election.
(b) Where distributions have not commenced to the Depositor as of
the time of the Depositor's death and a beneficiary other than a
spouse is designated, the entire remaining interest in the
custodial account shall be distributed within five years
following the death of Depositor unless:
(i) any portion of Depositor's interest in the custodial
account is payable to, or for the benefit of, a desig-
nated beneficiary,
(ii) the portion of the Depositor's entire interest to which
the designated beneficiary is entitled will be
distributed in substantially equal installments over the
life of the beneficiary or over a period certain not
11
<PAGE>
extending beyond the life expectancy of the beneficiary,
and
(iii) the distributions to the designated beneficiary commence no
later than one year after date of Depositor's death, or
such later date as may be prescribed by the Secretary of
the Treasury. The designated beneficiary may elect at any
time to receive greater payments.
(c) Where distributions have not commenced to depositor as of the
time of the Depositor's death and the spouse is the designated
beneficiary, the entire remaining interest in the custodial
account shall be distributed within five years following the date
of the Depositor's death unless the spouse elects within the five
year period commencing with Depositor's death to receive
benefits as outlined below:
(i) the portion of Depositor's interest to which the surviving
spouse is entitled will be distributed in equal or
substantially equal payments over the life of the spouse or
over a period certain not extending beyond the life
expectancy of the spouse, and
(ii) the distributions to the spouse commence at any date prior
to but no later than the date on which the Depositor would
have attained age 70-1/2. The surviving spouse may
accelerate these payments at any time, i.e., increase the
frequency or amount of such payments.
(d) If a surviving spouse beneficiary dies before distributions to
such spouse begin, 4.6(b) and (c) shall be applied as if the
spouse beneficiary were the Depositor.
12
<PAGE>
(e) If the Depositor dies before the entire interest has been
distributed and the beneficiary of the IRA is other than the
surviving spouse, no additional cash or rollover contribution may
be accepted by the IRA.
(f) If the Depositor dies before the entire interest has been
distributed and the designated beneficiary is the Depositor's
surviving spouse, the spouse may treat the account as his or her
own individual retirement arrangement. This election will be
deemed to have been made if such surviving spouse makes a regular
IRA contribution to the account, makes a rollover to or from such
account, or fails to elect a distribution in conjunction with
paragraph (c) of this Section 4.6.
(g) For purposes of distributions from this Article, payments will be
calculated by use of the return multiples specified in
Section 1.72-9 of the regulations. Life expectancy of a surviving
spouse may be recalculated annually. In the case of any other
designated beneficiary, life expectancy will be calculated at
the time payment first commences and payments for any
12-consecutive month period will be based on such life expectancy
minus the number of whole years passed since distribution first
commenced.
(h) Amounts paid to a child of the Depositor will be treated as if
paid to the surviving spouse if the remainder of the interest
becomes payable to the surviving spouse when the child reaches
the age of majority.
4.7 (a) The term "Depositor's Beneficiary" means the person or
persons designated as such by the "designating person" (as
defined below) on a form acceptable to Custodian for use in
connection with this Agreement, signed by the designating
person, and filed with the Custo-
13
<PAGE>
dian. The form may name individuals to take upon the contingency
of survival; it may also order that payments to Depositor's
Beneficiary be made ratably over a period not to exceed five
years or, if the Beneficiary is the Depositor's spouse, over a
period not exceeding that permitted under Section 4.5(a)(2), and
such order shall be binding on the Beneficiary.
(b) The term "designating person" means Depositor; after Deposi-
tor's death, it also means the person or persons (other than
Depositor's estate) who begin to receive a portion of the
custodial account pursuant to such a designation by Depositor,
and designations by such a person shall relate solely to the
balance of that portion remaining in the custodial account as
of when distribution pursuant to a designation by that person is
to commence. The Custodian shall accept all such forms only in
the Commonwealth of Massachusetts, and they shall be considered
part of this Agreement for purposes of Section 8.5. However, if
no such designation on such a form effectively disposes of the
custodial account as of the time such distribution is to com-
mence, the term Depositor's Beneficiary shall then mean the
Designating Person's estate.
(c) When and after distributions of the custodial account to Deposi-
tor's Beneficiary commence, all rights and obligations assigned
to Depositor by provisions of this Agreement shall inure to, and
be enjoyed and exercised by, Depositor's Beneficiary instead of
Depositor.
4.8 If during a taxable year Depositor contributed under Article I total
amounts which exceed the amount deductible by Depositor for that year; or
because Depositor attained age 70-1/2 in that year except in the case of
employer contribu-
14
<PAGE>
tions to a SEP, then upon receiving written notice specifying the year in
question, the amount of the excess, the reason it is an excess, and the
amount of net income in the custodial account attributable to such excess
Custodian shall distribute cash to Depositor in an amount equal to the sum
of such excess and earnings. If the excess contribution did not arise
because Distributor attained age 70-1/2, then (in Custodian's discretion
unless otherwise instructed by Depositor) in lieu of being distributed,
said sum shall be treated by Depositor as a contribution in the then
current or a succeeding taxable year.
4.9 The terms of such annuity provided as a form of distribution under this
agreement shall provide for payments over the life of the Beneficiary or
for a term certain not exceeding the life expectancy of such Beneficiary.
Any annuity contract so purchased shall be immediately distributed to
such Beneficiary. However, no such annuity contract shall be required to
be purchased if distributions over a term certain is for a period
extending beyond the life expectancy of the Depositor, or the joint and
survivor life expectancies of the Depositor and his/her Beneficiary.
Any annuity which Custodian is to purchase and distribute under this
Agreement may be fixed or variable, but Custodian shall not be required to
distribute in the form of an annuity unless the annuity premium is at
least $1,000.
Article V--Reports
- --------------------------------
5.1 The Depositor agrees to provide information to the Custodian at such time
and in such manner as may be necessary for the Custodian to prepare any
reports required pursuant to Section 408(i) of the Code and the
regulations thereunder.
5.2 The Custodian agrees to submit reports to the Internal Revenue Service and
the Depositor at such time and in such manner and containing such
information as is prescribed by the Internal Revenue Service; provided,
however, that Deposi-
15
<PAGE>
tor shall prepare any return or report required as a result of
(1) the generation by assets of the custodial account of unrelated
business taxable income or unrelated debt financed income as
defined in the Code or
(2) the incurrence of a windfall profits tax, or any return or report
necessary to preserve the availability of any credit or deduction
with respect thereto.
Depositor shall sign such return as preparer, and forward it to the
Custodian at least 10 days prior to the due date thereof.
5.3 The Depositor, Custodian, Broker and, if applicable, the general partner
of any partnership interests which are held by the Custodian hereunder
shall furnish to each other such information relevant to the custodial
account as may be required under the Code and any regulations issued
or forms adopted by the Treasury Department thereunder.
Article VI--Amendment and
Termination
- ---------------------------------
6.1 (a) Depositor retains the right to amend this Agreement in any
respect at any time, effective on a stated date which shall be
at least sixty (60) days after giving written notice of the
amendment (including its exact terms) to Custodian by
registered or certified mail, unless Custodian waives notice as
to such amendment. If the Custodian does not wish to continue
serving in its respective capacity under this Agreement as so
amended, it may resign in accordance with Article VII.
(b) Depositor also delegates to the Sponsor, the Depositor's right so
to amend, including retroactively, as necessary or appropriate in
the opinion of counsel satisfactory to the Sponsor, in order to
conform this custodial account to pertinent provisions of the
Code
16
<PAGE>
and other laws or successor provisions of law, or to obtain a
governmental ruling that such requirements are met, to adopt a
prototype or master form of agreement in substitution for this
Agreement, or as otherwise may be advisable in the opinion of
such counsel. Any amendment by the Sponsor shall be communicated
in writing to Depositor and Custodian, and Depositor shall be
deemed to have consented thereto unless, within thirty (30) days
after such communication to Depositor is mailed, Depositor either
(i) gives Custodian a written order for a lump-sum distribution
of the custodial account, or (ii) removes the Custodian and
appoints a successor under Article VII.
(c) Notwithstanding the provisions of Subsections 6.1(a) and (b), no
amendment shall increase the responsibilities or duties of
Custodian without its prior written consent.
(d) This Section 6.1 shall not be construed to restrict the
Custodian's right to substitute fee schedules in the manner
provided by Article VII, and no such substitution shall be deemed
to be an amendment of this Agreement.
(e) This Section 6.1 shall not be construed to restrict Custodian's
freedom to agree with PEPCO upon the terms by which additional
Investment Company Shares or Securities may be made available for
investment.
6.2 (a) Custodian shall terminate the custodial account if this
Agreement is terminated, or, if within thirty (30) days (or such
longer time as Custodian may agree) after resignation or
removal of Custodian pursuant to Article VII, Depositor has not
appointed a successor which has accepted such appoint-
17
<PAGE>
ment. Termination of the custodial account shall be affected by
distributing all assets thereof in a lump sum in cash or in kind
to Depositor, subject to Custodian's right to reserve funds as
provided in Article VII.
(b) Upon termination of the custodial account, this Agreement shall
terminate and have no further force and effect, and Custodian
shall be relieved from all further liability with respect to
this Agreement, the custodial account, and all assets thereof
so distributed.
Article VII--Custodial Account
- ----------------------------------------
7.1 This Agreement shall take effect only when accepted by the Custodian. As
directed, Custodian shall then open and maintain a separate custodial
account for Depositor and invest the initial contribution as directed by
Depositor in accordance with Article III.
7.2 (a) Every subsequent contribution shall be accompanied by written
instructions from Depositor stating Depositor's choice of in-
vestment. Depositor shall state Depositor's choice of one or more
of the Investment Company Shares available from PEPCO and/ or one
or more of the Securities available from PEPCO. Depositor agrees
that the availability of an investment shall not be construed as
an endorsement by the Custodian of the Investment Company
Shares or Securities in which contributions may be invested, fi-
nal choice of which is at the sole discretion of Depositor. The
Custodian does not undertake to render any investment advice
whatsoever to Depositor; its sole duties are those prescribed in
Section 7.5.
(b) The Custodian shall invest subsequent contributions as
directed. However, if any such written
18
<PAGE>
instructions are not received as required, or if received, are in
the opinion of Custodian unclear, or if the accompanying
contribution exceeds the maximum amounts as described in Article
I, Custodian may hold or return, within a reasonable time, all or
a portion of the contribution uninvested without liability for
loss of income or appreciation, and without liability for
interest, pending receipt of written instructions or
clarification.
(c) All dividends and capital gain distributions received on
account of Investment Company Shares held in the custodial
account shall (unless received in additional such shares) be
reinvested in full and fractional shares, if available, which
shall be credited to the account. If any distribution on such
shares may be received at the election of the shareholder in
additional such shares or in cash or other property, Custodian
shall elect to receive it in additional such shares.
Any dividends and capital gains or other distributions
received on account of Securities held in the custodial account
shall be reinvested in accordance with written instructions by
the Depositor, in one or more of the following: (i) full and
fractional Investment Company Shares, (ii) Securities, or (iii)
Savings Instruments.
All interest earned on Savings Instruments shall be credited
as a deposit thereto.
7.3 All Investment Company Shares or Securities, whether in shares or
otherwise, acquired by Custodian hereunder shall be registered in the name
of the Custodian (with or without identifying Depositor) or of its
nominee. Custodian shall deliver, or cause to be executed and delivered,
to Depositor all notices, prospectuses, financial statements, proxies
and proxy soliciting materials relating to such investment held in the
(custodial) account.
19
<PAGE>
Custodian shall not vote any Investment Company Share or any shares or
units of any security except in accordance with written instructions
received from Depositor.
7.4 Custodian shall keep adequate records of transactions it is required to
perform hereunder. Not later than sixty (60) days after the close of each
calendar year or after the Custodian's resignation or removal, Custodian
shall render to Depositor a written report or reports reflecting the
transactions affected by it during such period and the assets of the
custodial account at the close of the period. Sixty (60) days after
rendering such report(s), Custodian shall be forever released and
discharged from all liability and accountability to anyone with respect
to its acts and transactions shown in or reflected by such report(s),
except where, within the sixty day period, written objections have been
filed with the Custodian by the recipient of such reports.
7.5 Custodian shall be an agent for Depositor to receive and invest
contributions as directed by Depositor, hold and distribute such
investments, and keep adequate records and report thereon, all in accor-
dance with this Agreement. The parties do not intend to confer any
fiduciary duties on Custodian, and none shall be implied. Custodian may
perform any of its administrative duties through other persons designated
by Custodian from time to time, except that all Investment Company Shares
and Securities must be registered as stated in Section 7.3 of this
Article; and Custodian intends initially to delegate all such duties to
Boston Financial Data Services, Inc., which is partially owned by the
Custodian's parent company; but no such delegation or future change
therein shall be considered as an amendment to this Agreement. Custodian
shall not be liable (and assumes no responsibility) for the collection of
contributions, the deductibility of any contributions or their
propriety under the Agreement, or the purpose or propriety of any
distribution ordered in accordance
20
<PAGE>
with Article IV, whose matters are the responsibility of Depositor and
Depositor's Beneficiary.
7.6 Depositor shall always fully indemnify Custodian and save it harmless from
any and all liability whatsoever which may arise either (1) in connection
with this Agreement and matters which it contemplates except that which
arises due to Custodian's negligence or willful misconduct, or (2) with
respect to making or failing to make any distribution therefor which is in
full compliance with Article IV. Custodian shall not be obligated or
expected to commence or defend any legal action or proceeding in
connection with this Agreement or such matters unless agreed upon by
Custodian and Depositor, and unless fully indemnified for so doing to
Custodian's satisfaction.
7.7 Custodian may conclusively rely upon and shall be protected in acting upon
any written order from Depositor or Depositor's Beneficiary or any other
notice, request, consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly executed, and so
long as it acts in good faith, in taking or omitting to take any other
action in reliance thereon.
7.8 (a) The Custodian may charge the Depositor reasonable fees,
including an annual maintenance fee, for services hereunder
according to standard schedules of rates which may be in effect
from time to time. Initially, the fees payable to the Custodian
shall be in amounts as specified in the fee schedule provided
with this Agreement. Upon thirty (30) days prior written
notice, Custodian may substitute a fee schedule differing from
that schedule initially provided.
(b) Any income, gift, estate and inheritance taxes and other taxes of
any kind whatsoever, including transfer taxes incurred in
connection with the investment or reinvestment of the assets of
the custodial account, that may be
21
<PAGE>
levied or assessed in respect to such assets, and all other
administrative expenses incurred by the Custodian in the
performance of its duties, including fees for legal services
rendered to it shall be charged to the custodial account.
(c) All such fees and taxes and other administrative expenses charged
to the custodial account shall be collected either from the
amount of any contribution or distribution to be credited to such
account, or (at the option of the person entitled to collect
such amounts) to the extent possible under the circumstances by
the conversion into cash of sufficient assets of the account.
Notwithstanding the foregoing, the Custodian may make demand upon
the Depositor for payment of the amount of such fees, taxes and
other administrative expenses if, in the discretion of the
Custodian, conversion of sufficient assets of the custodial ac-
count is not feasible under the circumstances.
7.9 Resignation or Removal of Custodian.
(a) Upon thirty (30) days' prior written notice to the Custodian,
Depositor may remove it from its office hereunder. Such notice,
to be effective, shall designate a successor Custodian and shall
be accompanied by the successor's written acceptance. The
Custodian also may at any time resign unilaterally upon thirty
(30) days' prior written notice to Depositor, whereupon the
Depositor shall appoint a successor to the Custodian.
(b) The successor Custodian shall be a bank, insured credit union, or
other person satisfactory to the Secretary of the Treasury
pursuant to Section 408(a)(2) of the Code. Upon receipt by
Custodian of written acceptance by its successor
22
<PAGE>
of such successor's appointment, Custodian shall transfer and pay
over to such successor the assets of the custodial account and
all records (or copies thereof) of Custodian pertaining thereto,
provided that the successor Custodian agrees not to dispose of
any such records without the Custodian's consent. Custodian is
authorized, however, to reserve such sum of money or property as
it may deem advisable for payment of all its fees, compensation,
costs, and expenses, or for payment of any other liabilities
constituting a charge on or against the assets of the custodial
account or on or against the Custodian, with any balance of such
reserve remaining after the payment of all such items to be paid
over to the successor Custodian.
(c) If within thirty (30) days after Custodian's resignation or
removal or such longer time as Custodian may agree to, Depositor
has not appointed a Successor Custodian which has accepted such
appointment, Custodian shall terminate the custodial account
pursuant to paragraph (d) unless within that time the Sponsor
appoints such successor and gives written notice thereof to
Depositor and Custodian.
(d) Custodian shall terminate the Custodial Account, if, within the
time referred to in paragraph (c) neither Depositor nor the
Sponsor has appointed a Successor Custodian which has accepted
such appointment. Termination of the Custodial Account shall be
affected by distributing all assets thereof in a lump sum in
cash or in kind to Depositor, subject to Custodian's right to
reserve funds as provided in this Article VII.
(e) Upon termination of the Custodial Account, this Agreement shall
terminate and have no further force and effect, and Custodian
23
<PAGE>
shall be relieved from all further liability with respect to this
Agreement, the Custodial Account, and all assets so distributed.
Article VIII--Miscellaneous
- -------------------------------------------------
8.1 References herein to the "Internal Revenue Code" or "Code" and Sections
thereof shall mean the same as amended from time to time, including
successors to such Sections.
8.2 "Sponsor" shall mean Phoenix Mutual Life Insurance Company.
8.3 Except where otherwise specifically required in this Agreement, any
notice from Custodian to any person provided for in this Agreement shall
be effective if sent by first-class mail to such person at that person's
last address on Custodian's records.
8.4 Depositor's Beneficiary shall not have the right or power to anticipate
any part of the custodial account or to sell, assign, transfer, pledge or
hypothecate any part thereof. The custodial account shall not be liable
for the debts of Depositor's Beneficiary or subject to any seizure,
attachment, execution or other legal process in respect thereof. At no
time shall it be possible for any part of the assets of the custodial
account to be used for or diverted to purposes other than for the
exclusive benefit of the Depositor or his/ her Beneficiary.
8.5 This Agreement is accepted by Custodian in, and shall be construed and
administered in accordance with the law of, the Commonwealth of
Massachusetts. This Agreement is intended to qualify under Section 408(a)
of the Code as an individual retirement account and to entitle Depositor
to the retirement savings deduction under Section 219 of the Code, and if
any provision hereof is subject to more than one interpretation or any
term used herein is subject to more than one construction, such ambiguity
shall be resolved in favor of that interpretation or construction which
is consistent with that intent. However, neither Custodian nor the Sponsor
shall be re-
24
<PAGE>
sponsible for whether or not such intentions are achieved through use of
this Agreement, and Depositor is referred to Depositor's attorney for any
such assurances.
8.6 Depositor should seek advice from Depositor's attorney regarding the
legal consequences (including but not limited to federal and state tax
matters) of entering into this Agreement, contributing to the custodial
account, and ordering Custodian to make distributions from the account.
Depositor should understand that Custodian, Sponsor, and Broker (and any
company associated therewith) are prohibited by law from rendering such
advice.
Article IX--Controlling Article
- ---------------------------------------
Notwithstanding any other articles which may be added or incorporated, the
provisions of Section 1.1, Article II and Section 3.6 and this sentence shall be
controlling. Furthermore, any other Article or Section shall be wholly- invalid,
if it is inconsistent in whole or in part, with Section 408(a) of the Code and
the regulations thereunder.
This admendment and restatement is effective as of January 1, 1985. Dated at
Hartford, Connecticut this 25th day of November, 1985.
/s/ Richard C. Shaw
-------------------------------------------
Richard C. Shaw
Vice President, Phoenix Mutual
Life Insurance Company.
Disclosure Statement
This Disclosure Statement is being provided to assist you in understanding your
individual retirement account and is a general review of portions of the federal
income tax law applicable to it. IRA's are intended to benefit individuals in
preparation for their retirement. Therefore, they may not be used like an
ordinary savings account and are subject to many restrictions imposed by the
Internal Revenue Code. Consequently, please read the following information in
addition to the Custodial Agreement carefully. THE PROVISIONS OF THE CUSTODIAL
AGREEMENT WILL PREVAIL WHERE THE DISCLOSURE
25
<PAGE>
STATEMENT IS INCOMPLETE OR
APPEARS TO BE IN CONFLICT.
Revocation
You may cancel your IRA custodial agreement and your IRA application for any
reason within seven days of the date you signed the IRA Account application. To
cancel within this seven-day period, write a note or a letter which contains
your name and address in it and which says that your IRA custodial agreement is
canceled. Mail or deliver your note or letter to:
Phoenix Equity Planning
Corporation (PEPCO)
One American Row
Hartford, Connecticut 06115
If you mail the note or letter, it is considered received on the date of the
postmark (or the date of registration or certification if sent by registered or
certified mail).
If you do cancel your IRA within the seven-day period after you signed the PEPCO
IRA Account application, your initial contribution will be refunded to you
without cost, charge or decrease of any kind.
Contributions
Annual Contributions
Your contributions, not including rollover contributions or IRA to IRA
transfers, must be in cash or a cash equivalent (such as a check). Except for
rollovers or IRA to IRA transfers, the maximum amount that you may contribute to
an IRA for your taxable year is $2,000, but you can contribute less if you
choose. However, if the compensation included in your gross income for a taxable
year is less than $2,000, your contribution is limited to the total amount of
that compensation.
Spousal IRA
In addition to establishing your own IRA, you may also establish an IRA for your
spouse, provided the following requirements are met: (a) you and your spouse are
married at the end of the taxable year; (b) you must be eligible to contribute
to your own IRA; (c) you and your spouse file a joint income tax return for the
taxable year; (d) your spouse has received no compensation for personal services
or earned income from self-employment.
26
<PAGE>
IRAs for Divorced Spouses
A divorced spouse is allowed a deduction for contributions to a spousal IRA
established by the individual's former spouse if:
(a) the spousal IRA was established at least 5 years before the beginning of
the taxable year in which the decree of divorce or separate maintenance
decree was issued; and
(b) the former spouse made deductible contributions to the IRA for at least
3 of the five years preceding the year in which the decree was issued.
If the above conditions are met, then the divorced spouse may contribute the
lesser of (a) the sum of the divorced spouse's compensation and alimony
includible in gross income or (b) $1,125 to the IRA. These rules are only
applicable for contributions that relate to taxable years prior to 1985. For
1985 tax years or later, all taxable alimony received by a divorced spouse under
a decree of divorce or separate maintenance is treated as compensation for the
purposes of the IRA deduction limit and the rules.
If you have established an IRA for yourself and for your spouse, the maximum
deductible contributions you may make may not exceed the lesser of (a) 100% of
your compensation for the taxable year, or (b) $2,250; provided, however, that a
maximum contribution of $2,000 may be made to either IRA. Separate IRA's must be
established for yourself and your spouse.
Other Contribution Limitations
If you make deductible voluntary employee contributions to a qualified employer
plan for any taxable year, the above maximum contribution must be reduced by the
amount of deductible contribution to the qualified employer plan. For instance,
if your gross income for a taxable year is $2,000 or greater, and you make a
$500 deductible voluntary employee contribution to a qualified employer plan,
you may only contribute $1,500 to your IRA custodial account for that taxable
year. Amounts contributed to a 401(k) plan on your behalf by an employer which
reduce your income do not count against this $2,000 limit.
If you are an eligible employee under a Simplified Employer Pension
Individual Re-
27
<PAGE>
tirement Account, your employer may contribute up to the lesser of 25% of your
calendar year compensation or $30,000 on your behalf. Any such employer
contributions may be made in addition to any contributions you may make to your
individual IRA.
Because the IRS does not allow deductions for any contributions made for the
taxable year in which you reach age 70-1/2, the IRA custodial agreement provides
that no cash contributions may be made to your account for that or any following
taxable year. However, deductible employer contributions may be made to your SEP
for you even though you have attained age 70-1/2. Rollover contributions and IRA
to IRA transfers, however, can be made at any time.
Tax Advantages of an IRA
Allowable contributions made to your IRA are fully-deductible from gross income
for federal income tax purposes. This is true whether or not you itemize
deductions. The maximum amount deductible from an annual contribution is the
lesser of $2,000 or 100% of your compensation. The dollar limit is $2,250 if
contributions are made for a nonworking spouse.
Unlike an ordinary savings account, the earnings on your IRA custodial
account are not taxable in the year they are earned. Your contributions and the
earnings on them will be taxed only in the taxable year you withdraw them. If
you withdraw only a part of your contributions and earnings in a taxable year,
only the part withdrawn will be taxable for that year.
Time for Making Contributions
Except for rollover contributions or IRA to IRA transfers, contributions to your
IRA for a taxable year may be made up through the due date, without extensions,
for that year's federal income tax return. Because of this time flexibility, you
must advise us of the taxable year to which each of your contributions apply.
Tax Penalties for Excess Contributions
Except for a rollover contribution or IRA to IRA transfers, any contribution in
excess of the limits specified in the section entitled Contributions, will not
be deductible and will
28
<PAGE>
also be subject to an annual 6% excise tax. This excise tax is not deductible.
You can avoid the excise tax by withdrawing the excess and any earnings on it
before the due date (including extensions) for filing your federal tax return
for that taxable year. The withdrawn earnings, if any, must be included in
income for the tax year in which the excess contribution was made. Also, the
earnings portion of the withdrawn excess contribution may be subject to a 10%
premature withdrawal penalty. The 6% excise tax will be payable for future years
if you do not withdraw the excess or if you do not eliminate the excess by
making reduced contributions for future years.
Rollover To and From Your
Custodial Account
Certain distributions from qualified plans, annuity plans, Keogh plans, bond
purchase plans and other arrangements may be contributed to your IRA custodial
account. These distributions are often referred to as "lump-sum distributions."
Certain partial distributions are also eligible to be contributed to your IRA.
This is called a rollover contribution. The rollover contribution must be made
within 60 days after your receipt of the funds or property in order to be
contributed to your IRA custodial account. If the rollover is made within that
60 day period, you will not be taxed on the amount of the rollover for that
taxable year. Taxation of the rollover occurs only when it is withdrawn from
your IRA custodial account.
Because only one rollover from a particular IRA to any other IRA may be made
in any twelve-month period and because in certain situations it may not be to
your tax advantage to make a rollover contribution to a particular IRA or other
allowable arrangement, you should consult with your tax advisor before making
any type of rollover contribution to or from your IRA custodial account.
You may also have the Custodian transfer funds or property from your IRA
custodial account into another IRA and certain types of plans and annuities. The
twelve-month rollover restriction does not apply to IRA to IRA transfers.
A transfer of any portion of your interest in your IRA to your former spouse
under a divorce decree is not considered a distribution
29
<PAGE>
taxable to you. The amount transferred is considered an IRA for your former
spouse.
Tax Penalties for Early Withdrawal
Because IRAs are intended to be used for income during retirement years, early
withdrawal of money from your IRA account is subject to a federal penalty tax.
The tax is 10% of the amount withdrawn. The amount withdrawn will also be
included in your income for the tax year in which it is withdrawn. This tax
penalty may also apply if an individual borrows from their account or uses the
value of the account as security or collateral for a loan. There is no penalty
tax if a withdrawal is made:
* after reaching age 59-1/2
* because of death or disability at any age
* because of a rollover from the IRA
* to correct an excess contribution before the due date of your tax return
* to correct an excess rollover contribution which was caused by erroneous
tax information supplied by your employer on which you reasonably relied.
Under the IRA custodial agreement, you must advise us of your intended use of
a withdrawal if the withdrawal is made prior to death, disability or age 59-1/2.
Also under the IRA custodial agreement, you may not borrow funds from your IRA
or use IRA funds as collateral for a loan. Such a use is viewed as a withdrawal
under the Internal Revenue Code.
Withdrawals from your IRA will be taxed at ordinary income tax rates and, if
eligible, you may use the 5-year income averaging method if that will help
reduce your taxes in the year of a withdrawal. The favorable income tax
treatment for certain lump-sum distributions which are granted by Section 402 of
the Internal Revenue Code (i.e., ten-year forward averaging) do not apply to
distributions from your IRA custodial account. This is true regardless of the
type of distribution you receive from your IRA and regardless of the source of
your contribution to the IRA.
State Income, inheritance or other taxes may apply to IRA distributions. You
should ask your tax advisor for information.
30
<PAGE>
Distributions from Your IRA
Custodial Account
You must begin to receive distributions from your IRA custodial account no
later than April 1 of the calendar year following the year in which you reach
age 70-1/2.
You may choose to have your IRA custodial account distributed to you in a
lump sum or in a series of monthly, quarterly or annual payments over a period
of years not exceeding your life expectancy (as determined by IRS tables). After
age 70-1/2, the period can be no longer than your lifetime, the lifetime of you
and your beneficiary, or any period of years which does not exceed the life
expectancy of you and your beneficiary.
If you die after distributions to you from your IRA have started and if you
chose a method of payment which provides for continued payments to your spouse
when you die, then your spouse, if living at your death, will receive those
payments until he or she dies, unless the surviving spouse requests a more rapid
distribution.
If you die before distribution from your IRA custodial account has started
and you have designated a beneficiary other than your spouse, your IRA account
must be distributed within five years of the date of your death unless:
(a) a beneficiary has been designated by you,
(b) distribution to the designated beneficiary will be made over the life of
that beneficiary or over a period certain not extending beyond the life
expectancy of the beneficiary, and
(c) distributions will commence no later than one year after the date of
your death.
If you die before distribution from your IRA custodial account has started
and you have designated your spouse as beneficiary, distributions to your spouse
must begin no later than the date you would have reached age 70-1/2 and be
distributed over a period not extending beyond the life expectancy of your
spouse, or the entire interest to which your spouse is entitled must be
distributed within five years of the date of your death.
If you die before your entire interest has been distributed from your IRA and
your ben-
31
<PAGE>
eficiary is not your surviving spouse, no additional cash or rollover
contributions may be accepted in the account. If your beneficiary is your
spouse, he or she may treat the IRA as his or her own. Additional contributions
may be made to the IRA, provided compensation and age requirements are met, and
no distribution would be required until the year in which the surviving spouse
reached 70-1/2.
The methods of distributions which are available under your IRA custodial
account are designed so that you will be withdrawing the required amount of
money when the required time comes. However, if for any reason you or your
beneficiary do not withdraw the amount required by law, you or your beneficiary
must pay a tax equal to 50% of the required amount not withdrawn.
Beneficiaries
The IRA custodial account application includes a section where you may choose
your beneficiary or beneficiaries and choose the type of distribution your
beneficiaries will receive if you die. If you want to change that designation,
you may do so at any time on a form we will provide. Any change in beneficiary
will cancel all your prior designations of beneficiary.
The last designation of beneficiary which is filed with us during your
lifetime will be the controlling designation at death.
Prohibited Transactions
If you engage in certain transactions with the money in your IRA custodial
account, your IRA will lose its tax exemption. You would then have to include
the entire value of your IRA account in your gross income for federal tax
purposes for that year. These transactions which are prohibited (such as
borrowing money from the account) are listed in Section 4975 of the Internal
Revenue Code.
Tax Filing Requirements
Allowable deductions for your IRA contributions are reported on your regular
Form 1040 tax return every year. However, if you owe penalty taxes for excess
contributions, early withdrawal or for "under distributions", you must also file
Form 5329.
For more information about tax filing requirements or general information
about IRAs, contact any IRS district office and/or
32
<PAGE>
your tax advisor. Note that Publications 590, available from the IRS, explains
much of the information in this Disclosure Statement, and provides additional
information about IRAs.
IRS Approval
The Plan has been filed for approval by the Internal Revenue Service as to form
for use in establishing IRAs. Such approval when received will not, however,
represent determination of the deductibility of any particular contribution made
by you or merits of your particular IRA.
Miscellaneous Information
Your interest in your IRA custodial account is non-forfeitable at all times. No
part of your IRA account will be invested in life insurance contracts. No part
of your IRA account will be mixed with other property except it may be invested
with a common trust fund or a common investment fund.
Financial Disclosure/Fees/
Commissions on Products
Your contributions to this IRA will be subject to custodial fees which have been
furnished to you in a separate schedule.
If the investment(s) you choose to fund this IRA is (are) sold by prospectus,
consult the applicable prospectus(es) you have been furnished for information
concerning (i) the types and amounts of charges which are made against your
contributions, (ii) the method for computing and allocating annual earnings, and
(iii) the types of other charges which may be applied to your interest in the
investment(s) in determining the net amount of money available to you and the
method of computing each such charge. Growth in value of this IRA is neither
guaranteed nor projected. The prospectus also outlines the investment objectives
of the Fund or Limited Partnership, or other security. You should consider those
objectives carefully to determine if they are consistent with your own planning
for retirement.
33
<PAGE>
Limited Partnership Interests
Investments in this IRA are directed by you. The permitted range of investments
includes only limited partnership interests and mutual funds made available by
the Broker and accepted by the Custodian. Any decision by you to direct your
investment into partnership interests should only be made after consideration of
the following general facts regarding such interests. These general statements
regarding possible tax and other implications of such an investment in no way
override or supplement any applicable prospectus and are intended only to
acquaint you with possible issues arising out of such an investment. The
prospectus should always be referred to in making any investment decision.
- -- While usually all income received from investments in an IRA are tax
free to the account, there are tax rules which state, in effect, that
certain income from the active conduct of a trade or business of a
partnership or debt financed income generate unrelated business taxable
income (UBTI) which may be taxable to the Custodial Account if it exceeds
$1,000 on an annual basis.
- -- These taxes, if any, are an expense of the Account and should be paid
by the Account. The Custodian may, in its sole discretion, liquidate any
assets in the Account to satisfy such taxes.
- -- Funds may be sent to the Custodian to pay these taxes in order to avoid
liquidation of an asset. Attention should be given to the possibility of
an excess contribution from this procedure.
- -- Liquidity. There may be no ready market to sell an interest after it
has been purchased. (Refer to the prospectus for a complete description of
the liquidity of the units.) This may cause the Custodian an unavoidable
delay in effecting your investment directions or in arranging for
distributions to you or your beneficiary.
34
<PAGE>
Internal Revenue Service Department of the Treasury
Plan Name: IRA 006 Washington, DC 20224
FF#: 50147410000-006 Person to Contact: Mrs. Fleming
Case #: 8570677 Telephone Number: (202) 566-6421
Letter Serial #: B110013a Refer Reply to: OP:E:EP:RQ:1:1
Phoenix Mutual Life Insurance Date: 03/27/86
One American Row E.I.N.: 06-0493340
Hartford, CT 06115
Dear Applicant:
In our opinion, the form of the prototype trust, custodial account or annuity
contract identified above is acceptable under section 408 of the Internal
Revenue Code.
Each individual who adopts this approved plan will be considered to have a
retirement savings program that satisfies the requirements of Code section 408,
provided they follow the terms of the program and do not engage in certain
transactions specified in Code section 408(e). Please provide a copy of this
letter to each person affected.
The Internal Revenue Service has not evaluated the merits of this savings
program and does not guarantee contributions or investments made under the
savings program. Furthermore, this letter does not express any opinion as to the
applicability of Code section 4975, regarding prohibited transactions.
Code section 408(i) and related regulations require that the trustee, custodian
or issuer of a contract provide a disclosure statement to each participant in
this program as specified in the regulations. Publication 590, Tax Information
on Individual Retirement Arrangements, gives information about the items to be
disclosed.
The trustee, custodian or issuer of a contract is also required to provide each
adopting individual with annual reports of savings program transactions.
Your program may have to be amended to include or revise provisions in order to
comply with future changes in the law or regulations.
35
<PAGE>
If you have any questions concerning IRS processing of this case, call us at the
above telephone number. Please refer to the Letter Serial Number and File Folder
Number shown in the heading of this letter. Please provide those adopting this
plan with your phone number, and advise them to contact your office if they have
any questions about the operation of this plan.
You should keep this letter as a permanent record. Please notify us if you
terminate the form of this plan.
Sincerely yours,
/s/ John Swieca
John Swieca
Chief, Employee Plans
Rulings & Qualifications Branch
36
<PAGE>
PHOENIX EQUITY
Planning Corporation
a Phoenix Mutual company
For assistance call 800-243-1574
(Connecticut residents call collect)
278-8050
Exhibit 15.1
Class A Shares
Amended And Restated Distribution Plan
<PAGE>
PHOENIX STRATEGIC ALLOCATION FUND, INC.
(the "Fund")
CLASS A 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 A shares of the Fund and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its Class A shareholders.
2. Rule 12b-1 Fees
---------------
The Fund shall pay the Distributor, at the end of each month, an amount
on an annual basis equal to 0.25% of the average daily value of the net assets
of the Fund's Class A shares, as compensation for providing personal service to
shareholders, including assistance in connection with inquiries relating to
shareholder accounts, and for maintaining shareholder accounts (the "Service
Fee").
Amounts paid or payable by the Fund under this Plan or any agreement
with any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
3. Reports
-------
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare and
furnish to the Trustees of the Fund for their review, and the Trustees shall
review, a written report complying with the requirements of Rule 12b-l under the
Act regarding the amounts expended under this Plan and the purposes for which
such expenditures were made.
<PAGE>
4. Required Approval
-----------------
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of this Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or any related agreement and this
Plan shall not take effect with respect to the Fund until it has been approved
by a vote of at least a majority of the outstanding voting Class A 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 A shares of the Fund and
(b) all material amendments to this Plan must be approved by a majority vote of
the Trustees of the Fund and of the Disinterested Trustees cast in person at a
meeting called for the purpose of such vote.
6. Selection of Disinterested Trustees
------------------------------------
While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
------------------
Any related agreement shall be in writing and shall provide that (a)
such agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class A 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 A shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
<PAGE>
9. Records
-------
The Fund shall preserve copies of this Plan and any related agreements
and all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
[Adopted at a duly held meeting of the Board of Directors on August 27, 1997.]
Exhibit 15.2
Class B Shares
Amended And Restated Distribution Plan
<PAGE>
PHOENIX STRATEGIC ALLOCATION FUND, INC.
(the "Fund")
CLASS B 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 B shares of the Fund and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its Class B 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 .75% of the average daily value of the net
assets of the Fund's Class B 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 B shares of the Fund and the furnishing of services to Class B
shareholders of the Fund. Such expenditures shall consist of: (i) commissions to
sales personnel for selling Class B 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 B shares of the
Fund; (iv) payment of expenses incurred in sales and promotional activities,
including advertising expenditures related to the Class B 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 B 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 B 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 B 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 B 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 B 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 B 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.
[Adopted at a duly held meeting of the Board of Directors on August 27, 1997.]
Exhibit 16
EXPLANATION OF TOTAL RETURN CALCULATION
<PAGE>
<TABLE>
EXPLANATION OF TOTAL RETURN CALCULATION EXHIBIT 16
PHOENIX STRATEGIC ALLOCATION FUND
- ---------------------------------
TOTAL RETURN FORMULA:
P( 1 + T )(n) = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value
<CAPTION>
(a) (b) (c)=a-b (d) (e) (f) (g) (h)=f-g (i)=(h-a)/a
Front end Initial Net Number of Dividend Share Backend Ending Cumulative Average
Initial Sales Asset shares per Reinvest Value end Sales Redeemable Total Annual
Payment Charge Value Initial Payment Shares of Period Charge Value Return Return
------- ------ ----- --------------- ------ --------- ------ ----- ------ ------
($) ($) ($) ($) ($) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SINCE INCEPTION JANUARY 29, 1982 TO DECEMBER 31, 1997
Strategic Allocation CLASS A
1,000.00 47.50 952.50 88.36 338.6 6,587.93 0 6,587.93 558.79% 12.91%
SINCE INCEPTION OCTOBER 24, 1994 TO DECEMBER 31, 1997
Strategic Allocation CLASS B
1,000.00 - 1,000.00 66.76 32.24 1,514.56 20.00 1,494.56 49.46% 13.43%
10 YEARS ENDING DECEMBER 31,1997
Strategic Allocation CLASS A
1,000.00 47.50 952.50 75.72 111.9813 2,896.16 0 2,896.16 189.62% 11.22%
5 YEARS ENDING DECEMBER 31,1997
Strategic Allocation CLASS A
1,000.00 47.50 952.50 63.98 39.52 1,597.04 0 1,597.04 59.70% 9.82%
3 YEARS ENDING DECEMBER 31,1997
Strategic Allocation CLASS A
1,000.00 47.50 952.50 64.27 31.55 1,478.48 0 1,478.48 47.85% 13.92%
Strategic Allocation CLASS B
1,000.00 - 1,000.00 67.61 31.49 1,516.34 20.00 1,496.34 49.63% 14.38%
1 YEAR ENDING DECEMBER 31,1997
Strategic Allocation CLASS A
1,000.00 47.50 952.50 61.38 13.12 1,149.77 0 1,149.77 14.98% 14.98%
Strategic Allocation CLASS B
1,000.00 - 1,000.00 64.81 13.45 1,197.43 40.00 1,157.43 15.74% 15.74%
</TABLE>
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 up
to four classes of shares as indicated on Schedule A: Class A, Class B, Class C
and Class M ("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, Class B, Class C and Class M 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>
-2-
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.
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.
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
<PAGE>
-3-
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.
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 1 8f-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
<PAGE>
-4-
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 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 19, l997, 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.
<PAGE>
-5-
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.
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>
<TABLE>
SCHEDULE A
----------
<CAPTION>
Class A Class B Class C Class M
------- ------- ------- -------
<S> <C> <C> <C> <C>
PHOENIX CALIFORNIA TAX -EXEMPT BONDS, INC. X X __ __
PHOENIX EQUITY SERIES FUND:
PHOENIX CORE EQUITY FUND X X X X
PHOENIX GROWTH AND INCOME FUND X X X X
PHOENIX INCOME AND GROWTH FUND X X __ __
PHOENIX INVESTMENT TRUST 97:
PHOENIX SMALL CAP VALUE FUND X X X X
PHOENIX VALUE EQUITY FUND X X 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
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
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>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> PHOENIX STRATEGIC ALLOCATION FUND, INC. CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 296730
<INVESTMENTS-AT-VALUE> 312694
<RECEIVABLES> 9597
<ASSETS-OTHER> 7041
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 329332
<PAYABLE-FOR-SECURITIES> 3645
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6232
<TOTAL-LIABILITIES> 9877
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 295900
<SHARES-COMMON-STOCK> 20000
<SHARES-COMMON-PRIOR> 19953
<ACCUMULATED-NII-CURRENT> 445
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7146
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15964
<NET-ASSETS> 319455
<DIVIDEND-INCOME> 2249
<INTEREST-INCOME> 6943
<OTHER-INCOME> 67
<EXPENSES-NET> (3881)
<NET-INVESTMENT-INCOME> 5378
<REALIZED-GAINS-CURRENT> 55056
<APPREC-INCREASE-CURRENT> 166
<NET-CHANGE-FROM-OPS> 60600
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5272)
<DISTRIBUTIONS-OF-GAINS> (50054)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 609
<NUMBER-OF-SHARES-REDEEMED> (3705)
<SHARES-REINVESTED> 3143
<NET-CHANGE-IN-ASSETS> (1154)
<ACCUMULATED-NII-PRIOR> 448
<ACCUMULATED-GAINS-PRIOR> 3902
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2110
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3881
<AVERAGE-NET-ASSETS> 324566
<PER-SHARE-NAV-BEGIN> 15.52
<PER-SHARE-NII> 0.30
<PER-SHARE-GAIN-APPREC> 2.81
<PER-SHARE-DIVIDEND> (0.30)
<PER-SHARE-DISTRIBUTIONS> (2.90)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.43
<EXPENSE-RATIO> 1.17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> PHOENIX STRATEGIC ALLOCATION FUND, INC. CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 296730
<INVESTMENTS-AT-VALUE> 312694
<RECEIVABLES> 9597
<ASSETS-OTHER> 7041
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 329332
<PAYABLE-FOR-SECURITIES> 3645
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6232
<TOTAL-LIABILITIES> 9877
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 295900
<SHARES-COMMON-STOCK> 714
<SHARES-COMMON-PRIOR> 622
<ACCUMULATED-NII-CURRENT> 445
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7146
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15964
<NET-ASSETS> 319455
<DIVIDEND-INCOME> 2249
<INTEREST-INCOME> 6943
<OTHER-INCOME> 67
<EXPENSES-NET> (3881)
<NET-INVESTMENT-INCOME> 5378
<REALIZED-GAINS-CURRENT> 55056
<APPREC-INCREASE-CURRENT> 166
<NET-CHANGE-FROM-OPS> 60600
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (110)
<DISTRIBUTIONS-OF-GAINS> (1757)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 85
<NUMBER-OF-SHARES-REDEEMED> (105)
<SHARES-REINVESTED> 113
<NET-CHANGE-IN-ASSETS> 1337
<ACCUMULATED-NII-PRIOR> 448
<ACCUMULATED-GAINS-PRIOR> 3902
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2110
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3881
<AVERAGE-NET-ASSETS> 324566
<PER-SHARE-NAV-BEGIN> 15.43
<PER-SHARE-NII> 0.18
<PER-SHARE-GAIN-APPREC> 2.77
<PER-SHARE-DIVIDEND> (0.18)
<PER-SHARE-DISTRIBUTIONS> (2.90)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.30
<EXPENSE-RATIO> 1.92
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
