SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.__)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Phoenix California Tax Exempt Bonds, Inc.
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(Name of Registrant as Specified In Its Charter)
Richard J. Wirth, Esq.
c/o Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid: __________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount Previously Paid:_________________________________
2) Form, Schedule or Registration No.:_____________________
3) Filing Party:___________________________________________
4) Date Filed:_____________________________________________
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PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
101 Munson Street
Greenfield, Massachusetts 01301
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Notice of Special Meeting in lieu of
the Annual Meeting of Shareholders
March 14, 1997
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To the Shareholders:
A Special Meeting in lieu of the Annual Meeting of Shareholders of Phoenix
California Tax Exempt Bonds, Inc. (the "Fund") will be held in the principal
executive offices of the Fund, 101 Munson Street, Greenfield, Massachusetts
01301, on Friday, March 14, 1997 at 10:00 a.m. for the following purposes:
(1) To fix at fourteen the number of Directors to serve until the next
Annual Meeting and until their successors are chosen and qualified,
and to elect the number of Directors so fixed;
(2) To ratify or reject the selection of Price Waterhouse LLP, independent
accountants, to audit financial statements of the Fund;
(3) To approve or not approve a new Investment Advisory Agreement;
(4) To approve or not approve a restatement of the Fund's fundamental
investment restrictions; and
(5) To consider and act upon such other matters as may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed December 18, 1996 as the record date for
the determination of shareholders entitled to notice of and to vote at the
meeting.
Whether or not you plan to attend the meeting in person, please vote your
shares by completing, dating and signing the enclosed proxy and returning it
promptly in the postage paid return envelope enclosed for your use. Prompt
return of proxies by shareholders will save the Fund and shareholders the
costs associated with further solicitation.
By Order of the Board of Directors,
G. Jeffrey Bohne, Secretary
Greenfield, Massachusetts
January 17, 1997
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PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
101 Munson Street
Greenfield, Massachusetts 01301
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PROXY STATEMENT
A Special Meeting in Lieu of The Annual Meeting of Shareholders
to be Held March 14, 1997
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The enclosed proxy is solicited by the Board of Directors of Phoenix
California Tax Exempt Bonds, Inc. (the "Fund") for use at the Special Meeting
in lieu of the Annual Meeting of Shareholders to be held on Friday, March 14,
1997, and at any adjournment thereof. Shareholders of record at the close of
business on December 18, 1996 ("Shareholders") are entitled to notice of and
to vote at the meeting or any adjourned session. On that date, there were
issued and outstanding 8,957,900.195 shares, par value $0.01 per share, of
the Fund (the "Shares"). Each Shareholder will be entitled to one vote for
each full Share (and a fractional vote corresponding to any fractional Share)
registered in his or her name on the Fund's books on the record date and not
thereafter repurchased or redeemed by the Fund.
All Shares will be voted in accordance with the specifications on duly
executed proxies for such Shares. If a duly executed proxy does not specify a
choice between approval or disapproval of, or abstention with respect to, any
proposal, the Shares represented by the proxy will be voted in favor of the
proposal. Any Shareholder executing a proxy has the power to revoke it at any
time before it is exercised by executing and submitting to the Fund a
later-dated proxy or written notice of revocation or by attending the meeting
and voting in person.
In addition to the solicitation of proxies by mail, officers and employees
of National Securities & Research Corporation, the Fund's investment adviser
(the "Adviser"), officers and employees of Phoenix Equity Planning
Corporation, the Fund's Distributor and Financial Agent, and persons retained
for the purpose may solicit proxies personally or by telephone or telegram.
Banks, brokers, fiduciaries and nominees will, upon request, be reimbursed by
the Fund for their reasonable expenses in sending proxy material to
beneficial owners of Fund shares. The cost of solicitation of proxies, which
is estimated to approximate $6,500 will be borne by the Fund.
As used in this Proxy Statement, the term "a majority of the outstanding
shares" means the lesser of (i) the vote of 67% of the Shares represented at
a meeting at which more than 50% of the outstanding Shares are represented or
(ii) more than 50% of the outstanding Shares. The terms "assignment" and
"interested person" as used in this Proxy Statement have the respective
meanings provided therefor in the Investment Company Act of 1940, as amended
(the "1940 Act").
In the event that insufficient votes in favor of any of the items set
forth in the attached Notice of the meeting are received by the time
scheduled for the meeting, the meeting may be held for the purposes of voting
on those proposals for which sufficient votes have been received and the
persons named as proxies may propose one or more adjournments of the meeting
for a period or periods of not more than thirty days in the aggregate to
permit further solicitation of proxies with respect to any proposals for
which sufficient votes have not been received. Any such adjournment will
require the affirmative vote of a majority of the votes cast on the question
in person or by proxy at the session of the meeting to be adjourned. The
persons named as proxies will vote in favor of such adjournment those proxies
which they are entitled to vote in favor of such proposals. They will vote
against such adjournment those proxies required to be voted against any such
proposal.
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If a Shareholder abstains from voting as to any matter, then the Shares
held by such Shareholder shall be deemed present at the meeting for purposes
of determining a quorum and for purposes of calculating the vote with respect
to such matter, but shall not be deemed to have been voted in favor of such
matter. If a broker returns a "non-vote" proxy, indicating a lack of
authority to vote on such matter, then the Shares covered by such non-vote
proxy shall be deemed present at the meeting for all purposes except for the
purposes of calculating the vote with respect to such matter.
This Proxy Statement and the enclosed form of proxy are first being mailed
to Shareholders on or about January 17, 1997. A copy of the Fund's most
recent annual report and the most recent semi-annual report succeeding the
annual report, if any, will be furnished, without charge, to any shareholders
upon request to Phoenix Equity Planning Corporation, 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, CT 06083-2200 or call, toll free, at (800)
243-4361.
ADDITIONAL INFORMATION
Security Ownership of Certain Beneficial Owners and Management
No person or group is known by the Fund to own beneficially more than 5% of
the Fund's outstanding shares.
On December 18, 1996, nominees for Director and officers of the Fund as a
group owned beneficially less than one percent of the Fund's outstanding
shares.
Information Concerning Investment Adviser
The Fund's investment adviser is National Securities & Research Corporation
(the "Adviser"), and is located at 56 Prospect Street, Hartford, Connecticut
06115-0480. All of the outstanding shares of the Adviser are owned by Phoenix
Duff & Phelps Corporation ("Phoenix Duff & Phelps"). Approximately 60% of the
outstanding common stock of Phoenix Duff & Phelps is owned by PM Holdings,
Inc. ("Holdings"), a wholly-owned subsidiary of Phoenix Home Life Mutual
Insurance Company ("Phoenix Home Life"). The principal offices of Holdings
and Phoenix Home Life are located at One American Row, Hartford, Connecticut
06102-5056. The principal office of Phoenix Duff & Phelps is located at 56
Prospect Street, Hartford, Connecticut 06115-0480.
In addition to the Fund, the Adviser also serves as investment adviser to
Phoenix Income and Growth Fund, Phoenix Multi-Sector Fixed Income Fund, Inc.,
Phoenix Multi-Sector Short Term Bond Fund, Phoenix Strategic Equity Series
Fund: Phoenix Equity Opportunities Fund and Phoenix Worldwide Opportunities
Fund. As compensation for its services to Phoenix Income and Growth Fund and
Phoenix Strategic Equity Series Fund: Phoenix Equity Opportunities Fund, the
Adviser is entitled to a fee, based on an annual percentage rate of 0.70% of
the aggregate daily net asset values up to $1 billion; 0.65% of such values
between $1 billion and $2 billion; and 0.60% of such values in excess of $2
billion. As compensation for its services to Phoenix Multi-Sector Fixed
Income Fund, Inc. and Phoenix Multi-Sector Short Term Bond Fund, the Adviser
is entitled to a fee, based on an annual percentage rate of 0.55% of the
aggregate daily net asset values up to $1 billion; 0.50% of such values
between $1 billion and $2 billion; and 0.45% of such values in excess of $2
billion. As compensation for its services to Phoenix Worldwide Opportunities
Fund, the Adviser is entitled to a fee based on an annual percentage rate of
0.75% of the aggregate daily net asset values up to $1 billion; 0.70% of such
values between $1 billion and $2 billion; and 0.65% of such values in excess
of $2 billion. As of November 30, 1996, the Adviser had net assets under
management of approximately $1,717,665,000.
The directors of the Adviser are Michael E. Haylon, President, Philip R.
McLoughlin and David R. Pepin. The address of these Directors is 56 Prospect
Street, Hartford, Connecticut 06115-0480. The principal occupation of each
director is that of an executive officer of Phoenix Duff & Phelps
Corporation.
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Michael E. Haylon, an officer of the Fund, is President and a Director of
the Adviser. Philip R. McLoughlin, Trustee and President of the Fund, is a
Director and Chairman of the Adviser. David R. Pepin, an officer of the Fund,
is a Director of the Adviser. Timothy M. Heaney, William R. Moyer and James
D. Wehr, Vice Presidents of the Fund are also officers of the Adviser. Mr.
Heaney is a Director, Fixed Income Research, Mr. Moyer is a Senior Vice
President, Chief Financial Officer and Treasurer and Mr. Wehr is a Managing
Director, Fixed Income.
Michael E. Haylon, Philip R. McLoughlin and David R. Pepin are Directors
of Phoenix Equity Planning Corporation ("Equity Planning"), the Fund's
Distributor and Financial Agent. Leonard J. Saltiel is a Managing Director of
Operations and Service of Equity Planning. For services to the Fund during
the fiscal years ended April 30, 1994, 1995, and 1996 Equity Planning's gross
commissions on sales of Fund Shares totaled $246,087, $124,446, and $156,046,
respectively. Of these gross selling commissions Equity Planning received net
commissions of $35,802, $14,922, and $18,687, respectively, for its services,
the balance being paid to dealers. Equity Planning also acts as Financial
Agent for the Fund. For services in this capacity during the fiscal years
ended April 30, 1994, 1995 and 1996, Equity Planning received fees of
$42,889, $36,661, and $36,185, respectively.
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 or dealer 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 or dealer or that any offset of
direct expenses of the Fund yields the best net price. 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 clients of the
Adviser. Conversely, brokerage and research services provided by brokers to
other clients 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. Sales of investment company shares may be considered in selecting
brokers to effect portfolio transactions. Accordingly, some portfolio
transactions are, subject to the Conduct Rules of the National Association of
Securities Dealers, Inc. and to obtaining the best prices and executions,
effected through dealers (excluding Equity Planning) who sell shares of the
Fund. It is the present policy of the Fund not to effect any portfolio
transactions with Equity Planning.
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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.
None of the brokerage commissions received by Equity Planning were 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 April 30, 1996
included brokerage commissions of $0 on portfolio transactions aggregating
$47,941,193 executed by brokers who provided research and other statistical
and factual information.
Investment decisions for the Fund are made independently from those of the
other investment companies advised by the Adviser. Simultaneous transactions
are inevitable when several funds are managed by the same investment adviser,
particularly when the same security is suited for the investment objectives
of more than one fund. When two or more funds advised by the Adviser are
simultaneously engaged in the purchase or sale of the same security, the
transactions are allocated among the funds in a manner equitable to each
fund. It is recognized that in some cases this system could have a
detrimental effect on the price or volume of the security as far as the Fund
is concerned. In other cases, however, it is believed that the ability of the
Fund to participate in volume transactions will produce better executions for
the Fund. It is the opinion of the Board of Directors of the Fund that the
desirability of utilizing the Adviser as investment adviser to the Fund
outweighs the disadvantages that may be said to exist from simultaneous
transactions.
For the fiscal years ended April 30, 1994, 1995 and 1996, portfolio
turnover rates for the Fund were 25%, 51% and 20% respectively.
The Management Agreement
The Management Agreement (the "Management Agreement") between the Fund and
the Adviser was last approved by the shareholders on November 29, 1993. The
Management Agreement, dated May 14, 1993, as amended, 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 "interested persons" of the
Adviser or any of its affiliates, charges of custodians, transfer and
dividend disbursing agents and registrars, bookkeeping, auditing and legal
expenses will be borne by the Fund.
The Management Agreement provides that, as compensation for its services
to the Fund, the Adviser is entitled to a fee payable monthly at the annual
rate of 0.45% of the average of the aggregate daily net asset values of the
Fund up to $1 billion; 0.40% of such value between $1 billion and $2 billion;
and 0.35% of such value in excess of $2 billion. The Adviser also agreed to
reimburse the Fund with respect to Fund expenses, exclusive of taxes,
interest, brokerage fees, and extraordinary charges, such as litigation
costs, which exceed 1% of the average daily net assets of the Fund during any
fiscal year. For the fiscal years ended April 30, 1994, 1995 and 1996, it was
not necessary that the Adviser reimburse ordinary operating expenses of the
Fund and the Adviser's fees of $643,338, $549,917 and $542,769 respectively
were not reduced.
The Management Agreement provides that the Adviser shall not be liable to
the Fund or to any shareholder of the Fund for any act or omission in the
course of or in connection with the matters to which the Management Agreement
relates or for any losses that may be sustained in the purchase, holding or
sale of any security, except a loss resulting from willful misfeasance, bad
faith, gross negligence or reckless disregard on the part of the Adviser in
the performance of its duties thereunder.
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The Management Agreement continues in effect only so long as (1) such
continuance is specifically approved at least annually by the Board of
Directors of the Fund or by the 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 Adviser or of the Fund, cast in person
at a meeting called for the purpose of voting on such approval. The contract
automatically terminates upon its assignment (as that term is defined in the
Investment Company Act of 1940) and is terminable at any time, without
penalty, on 60 days' written notice, by the Board of Directors of the Fund,
by vote of a majority of the outstanding shares of the Fund or by the
Adviser.
PROPOSALS
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The By-Laws of the Fund provide that the Board of Directors shall consist
of not fewer than three Directors and that the number of Directors for each
year shall be fixed by vote at the meeting at which they are elected. The
persons named in the enclosed proxy intend, unless authority is withheld, to
vote for fixing the number of Directors at fourteen and for the election as
Directors of the nominees named below. All of the nominees have been
recommended by the Nominating Committee, which consists solely of Directors
who are not interested persons of the Fund. All of the nominees are presently
serving as Directors of the Fund. The Directors are recommending that the
shareholders fix the number of Directors at fourteen and elect the persons
whom they have nominated for election.
Each of the nominees has agreed to serve as a Director if elected. If, at
the time of the meeting, any nominee should be unavailable for election
(which is not presently anticipated), the persons named as proxies may vote
for other persons in their discretion. Directors will hold office until the
earlier of their retirement or the next annual meeting of shareholders and
the selection and qualification of their successors. Executive officers are
elected at the first meeting of the Board of Directors following the annual
meeting of shareholders and hold office until the first meeting of the Board
of Directors following the next annual meeting of shareholders and until
their successors are chosen and qualified.
The following table sets forth information as to the principal occupations
during the past five years of nominees for election as Directors and of the
Fund's executive officers and also sets forth information as to certain other
directorships held by nominees for election as Directors.
Nominees for Election as Directors
C. DUANE BLINN, 69, Director since 1993. Partner in the law firm of Day,
Berry & Howard; Trustee/Director, the Phoenix Funds; Trustee, Phoenix Duff &
Phelps Institutional Mutual Funds (since 1996); and Trustee, Phoenix-
Aberdeen Series Fund (since 1996). Trustee/Director, the National Affiliated
Investment Companies (May, 1993- December, 1993).
**ROBERT CHESEK, 62, Director since 1993 (Chairman from 1989 to 1994).
Vice President, Common Stock, Phoenix Home Life Mutual Insurance Company
(until 1993); Trustee/Director, the Phoenix Funds; Trustee, Phoenix Duff &
Phelps Institutional Mutual Funds (since 1996); and Trustee, Phoenix-Aberdeen
Series Fund (since 1996). Director and Chairman, Phoenix Investment Counsel,
Inc. (until 1994); Trustee/Director and Chairman, the National Affiliated
Investment Companies (May, 1993-December, 1993).
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E. VIRGIL CONWAY, 67, Director since 1993. Chairman, Metropolitan Transit
Authority (since 1992). Trustee/ Director, the Phoenix Funds; Trustee,
Phoenix Duff & Phelps Institutional Mutual Funds (since 1996); and Trustee,
Phoenix-Aberdeen Series Fund (since 1996). Duff & Phelps Utilities Tax-Free
Income Inc. (since 1995), Duff & Phelps Utility and Corporate Bond Trust,
Inc. (since 1995), Consolidated Edison Company of New York, Inc., Pace
University, Atlantic Mutual Insurance Company, HRE Properties, Greater New
York Councils, Boy Scouts of America, Union Pacific Corp., Centennial
Insurance Company, Josiah Macy, Jr. Foundation, and the Harlem Youth
Development Foundation; Director, Accuhealth, Trism, Inc., Realty Foundation
of New York, and Chairman, New York Housing Partnership Development Corp.;
and Chairman, Audit Committee of the City of New York. Advisory Director,
Fund Directions, Blackrock Mortgage Securities Fund and Blackrock Freddie Mac
Mortgage Securities Fund; Director/Trustee, the National Affiliated
Investment Companies (1987-1993); Director, New York Chamber of Commerce and
Industry (1979-1990). Chairman, Financial Accounting Standards Advisory
Council (1992-1995).
HARRY DALZELL-PAYNE, 67, Director since 1993. Trustee/Director, Phoenix
Duff & Phelps Institutional Mutual Funds (since 1996), Duff & Phelps
Utilities Tax-Free Income Inc. (since 1995), Duff & Phelps Utility and
Corporate Bond Trust, Inc. (since 1995), and the Phoenix Funds. Trustee,
Phoenix-Aberdeen Series Fund (since 1996). Director, Farragut Mortgage Co.,
Inc. (1991-1994). Director/Trustee, the National Affiliated Investment
Companies (1987-1993); formerly, a Major General of the British Army.
*FRANCIS E. JEFFRIES, 66, Director since 1995. Director, Phoenix Duff &
Phelps Corporation. Director/Trustee, Phoenix Funds (since 1995); Trustee,
Phoenix Duff & Phelps Institutional Mutual Funds (since 1996), Trustee,
Phoenix- Aberdeen Series Fund (since 1996). Duff & Phelps Mutual Funds, Duff
& Phelps Utilities Income Fund, Duff & Phelps Utilities Tax-Free Income Inc.,
and Duff & Phelps Utility and Corporate Bond Trust Inc. Director, The Empire
District Electric Company (1984-present). Director (1989-1995), Chief
Executive Officer (1989-1995) and President (1989- 1993), Duff & Phelps
Corporation. Chairman of the Board, Phoenix Duff & Phelps Corporation
(since 1995).
LEROY KEITH, JR., 57, Director since 1993. Trustee/Director, the Phoenix
Funds; Trustee, Keystone Liquid Trust, Keystone Tax Exempt Trust, Keystone
Tax Free Fund, Master Reserves Trust and Master Reserves Tax Free Trust;
Director, Keystone International Fund, Inc. Director, Equifax Corporation and
Phoenix Duff & Phelps Institutional Mutual Funds (since 1996). Trustee,
Phoenix-Aberdeen Series Fund (since 1996). President, Morehouse College
(1987-1994); Director/Trustee, the National Affiliated Investment Companies
(May, 1993-December, 1993); Director, First Union Bank of Georgia (1989-1993)
and Blue Cross/Blue Shield (1989-1993).
*PHILIP R. McLOUGHLIN, 50, Director and President since 1993. Executive Vice
President, Investments, Phoenix Home Life Mutual Insurance Company;
Director/Trustee and President, the Phoenix Funds; Phoenix Duff & Phelps
Institutional Mutual Funds and Phoenix-Aberdeen Series Fund (since 1996).
Director, Vice Chairman and Chief Executive Officer, Phoenix Duff & Phelps
Corporation (since 1995); Director and President, Phoenix Equity Planning
Corporation; Director, Phoenix Investment Counsel, Inc. and Phoenix Realty
Securities, Inc.; Director and Chairman, National Securities & Research
Corporation. Director, Duff & Phelps Utilities Tax-Free Income Inc. and Duff &
Phelps Utility and Corporate Bond Trust Inc.; Director/Trustee, the National
Affiliated Investment Companies (May, 1993-December, 1993).
EVERETT L. MORRIS, 68, Director since 1995. Vice President, W.H. Reaves
and Company (1993-present). Director/Trustee, Phoenix Funds (1995-present).
Trustee, Duff & Phelps Mutual Funds (since 1994), Phoenix Duff & Phelps
Institutional Mutual Funds (since 1996); Trustee, Phoenix-Aberdeen Series
Fund (since 1996). Director, Duff & Phelps Utilities Tax-Free Income Inc.
(since 1991) and Duff & Phelps Utility and Corporate Bond Trust, Inc. (since
1993); Director, Public Service Enterprise Group, Incorporated (1986-1993)
and President and Chief Operating Officer, Enter-
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prise Diversified Holdings, Incorporated (1989-1993). Senior Executive Vice
President and Chief Financial Officer, Public Service Electric and Gas
Company (1986-1992). Director, First Fidelity Bank, N.A., New Jersey (until
1991).
*JAMES M. OATES, 50, Director since 1993. Managing Director, The Wydown
Group (since 1994) and Chairman, IBEX Capital Markets LLC (since 1997);
Trustee/Director, the Phoenix Funds; Trustee, Phoenix Duff & Phelps
Institutional Mutual Funds (since 1996); Director, Phoenix Duff & Phelps
Corporation (since 1995); and Trustee, Phoenix- Aberdeen Series Fund (since
1996). Director, Investors Bank & Trust Corporation (since 1995), Investors
Financial Services Corporation (since 1995), Blue Cross and Blue Shield of
New Hampshire (since 1994), Plymouth Rubber Co. (since 1995), and Govett
Worldwide Opportunity Funds Inc. (since 1991); President and Chief Executive
Officer, Neworld Bank (1984-1994); Director, Massachusetts Bankers
Association (1990-1993); Director/Trustee, the National Affiliated Investment
Companies (May, 1993-December, 1993); Director, Savings Bank Life Insurance
Company (1988-1994).
*CALVIN J. PEDERSEN, 54, Director since 1995. Director/Trustee, Phoenix
Funds (1995-present). Director, Phoenix Duff & Phelps Corporation (since
1986). President, Duff & Phelps Corporation (since July 1993). Executive Vice
President, Duff & Phelps Corporation (January 1992 to July 1993). President
and Chief Executive Officer, Duff & Phelps Utilities Tax-Free Income Inc. and
Duff & Phelps Utility and Corporate Bond Trust Inc. Trustee, Duff & Phelps
Mutual Funds, Phoenix Duff & Phelps Institutional Mutual Funds (since 1996),
and Trustee, Phoenix-Aberdeen Series Fund (since 1996).
PHILIP R. REYNOLDS, 69, Director since 1993. Director, Vestaur Securities,
Inc. (mutual fund) (since 1972); Trustee and Treasurer, J. Walton Bissell
Foundation, Inc. (since 1988); Trustee/Director, the Phoenix Funds. Trustee,
Phoenix Duff & Phelps Institutional Mutual Funds (since 1996) and Trustee,
Phoenix-Aberdeen Series Fund (since 1996). Director/Trustee, the National
Affiliated Investment Companies (May, 1993-December, 1993).
HERBERT ROTH, JR., 68, Director since 1993. Trustee/Director, the Phoenix
Funds; Director, Phoenix Home Life Mutual Insurance Company, Boston Edison
Company, Landauer, Inc. (medical services), Tech Ops./Sevcon Inc. (electronic
controllers), and Mark IV Industries (diversified manufacturer); Trustee,
Phoenix Duff & Phelps Institutional Mutual Funds (since 1996); Trustee,
Phoenix-Aberdeen Series Fund (since 1996); Director, Key Energy Group (oil
rig service) (1988-1994); Director/Trustee, the National Affiliated
Investment Companies (May, 1993-December, 1993).
RICHARD E. SEGERSON, 50, Director since 1993. Managing Director, Mullin
Associates (since 1993); Trustee/ Director, the Phoenix Funds; Trustee,
Phoenix Duff & Phelps Institutional Mutual Funds (since 1996); Trustee,
Phoenix- Aberdeen Series Fund (since 1996); Vice President and General
Manager, Coats & Clark, Inc. (previously Total American, Inc.) (1991-1993);
Director/Trustee, the National Affiliated Investment Companies (1984-1993);
Consultant, Total Group (1989-1991).
LOWELL P. WEICKER, JR., 65, Director since 1995. Chairman, Dresing,
Lierman, Weicker (since 1995); Trustee/Director, the Phoenix Funds; Trustee,
Phoenix Duff & Phelps Institutional Mutual Funds (since 1996); Trustee,
Phoenix-Aberdeen Series Fund (since 1996); Director, UST Inc. and HPSC, Inc.
(since 1995); Governor of the State of Connecticut (1991-1995).
*Indicates that the nominee is an "interested person" of the Fund, as that
term is defined in the Investment Company Act of 1940. Messrs. Jefferies,
McLoughlin, Oates, and Pedersen are directors and stockholders of Phoenix
Duff & Phelps Corporation and, therefore, are "interested persons" of the
Fund's Investment Adviser and "interested persons" of the Fund.
**Indicates that the nominee was an officer of the investment adviser
during the last five years. Until 1994, Mr. Chesek served as Chairman of the
Fund's Investment Adviser.
7
<PAGE>
Executive Officers
(Other than Philip R. McLoughlin, President, who is described above.)
MICHAEL E. HAYLON, 39, Executive Vice President since 1995. Executive Vice
President-Investments, Phoenix Duff & Phelps Corporation. Executive Vice
President, Phoenix Funds. Vice President, Phoenix Duff & Phelps Institutional
Mutual Funds. Director and President, Phoenix Investment Counsel, Inc. and
National Securities & Research Corporation. Senior Vice President, Securities
Investments, Phoenix Home Life Mutual Insurance Company (until 1995). Various
positions with Phoenix Home Life Mutual Insurance Company (1990-1993).
DAVID R. PEPIN, 53, Executive Vice President since July, 1996. Executive
Vice President, Phoenix Duff & Phelps Corporation (since 1996); Managing
Director, Phoenix-Aberdeen International Advisors, LLC; Director, Phoenix
Investment Counsel, Inc., and National Securities & Research Corporation.
Director and Executive Vice President, Mutual Fund Sales and Operations,
Phoenix Equity Planning Corporation. Various positions with Phoenix Home Life
Mutual Insurance Company (1994-1995). Vice President and General Manager,
Digital Equipment Corporation (1980-1994).
TIMOTHY M. HEANEY, 31, Vice President since 1996. Vice President and
Co-Manager (since 1996) of Phoenix Multi- Portfolio Fund Phoenix: Tax-Exempt
Bond Portfolio. Director, Fixed Income Research, Phoenix Investment Counsel,
Inc. and National Securities & Research Corporation (since 1996). Various
positions with Phoenix Home Life Mutual Insurance Company (1992-1995).
WILLIAM R. MOYER, 52, Vice President since 1993. Senior Vice President,
Finance, and Treasurer, Phoenix Equity Planning Corporation. Senior Vice
President, Finance, Chief Financial Officer and Treasurer, National
Securities & Research Corporation and Phoenix Investment Counsel, Inc. Vice
President, the Phoenix Funds. Senior Vice President and Chief Financial
Officer, Phoenix Duff & Phelps Corporation. Senior Vice President, Chief
Financial Officer and Treasurer, W.S. Griffith & Co., Inc. (until 1995). Vice
President, Investment Products Finance, Phoenix Home Life Mutual Insurance
Company; (until 1995).
LEONARD J. SALTIEL, 42, Vice President since 1994. Managing Director,
Operations and Service, Phoenix Equity Planning Corporation. Vice President,
Phoenix Duff & Phelps Institutional Mutual Funds and Phoenix-Aberdeen Series
Fund. Vice President, the Phoenix Funds (since 1994). Vice President,
Investment Operations, Phoenix Home Life Mutual Insurance Company (until
1995). Vice President, National Securities & Research Corporation (until
1996). Various positions with Phoenix Home Life Mutual Insurance Company
(1992-1994).
JAMES D. WEHR, 39, Vice President since 1993. Vice President, Phoenix
Multi-Portfolio Fund, Phoenix Series Fund, The Phoenix Edge Series Fund, and
Phoenix Duff & Phelps Institutional Mutual Funds. Managing Director, Fixed
Income, Phoenix Investment Counsel, Inc. and National Securities & Research
Corporation (1996-Present). Vice President, Phoenix Investment Counsel, Inc.
(1991-1996) and National Securities & Research Corporation (1993-1996).
NANCY G. CURTISS, 43, Treasurer since 1994. Treasurer, Phoenix Equity
Planning Corporation (1996-Present). Treasurer, the Phoenix Funds; Treasurer,
Phoenix Duff & Phelps Institutional Mutual Funds and Phoenix-Aberdeen Series
Fund (since 1996). Second Vice President and Treasurer, Fund Accounting,
Phoenix Home Life Mutual Insurance Company (until 1995); Vice President, Fund
Accounting, Phoenix Equity Planning Corporation (until 1996). Various
positions with Phoenix Home Life Mutual Insurance Company (1978-1984).
Audit, Nominating and Executive Committees
The Board of Directors has an Audit Committee, a Nominating Committee and an
Executive Committee. The members are appointed at the first meeting of the
Board following a meeting of the shareholders at which Directors are elected.
8
<PAGE>
The members of the Audit Committee of the Fund include only Directors who
are not interested persons of the Fund. The Audit Committee meets with the
Fund's auditors to review the scope of auditing procedures, the adequacy of
internal controls, compliance by the Fund with the accounting, recordkeeping
and financial reporting requirements of the Investment Company Act of 1940,
and the possible effect on Fund operations of any new or proposed tax or
other regulations applicable to investment companies. The Committee reviews
services provided to the Fund pursuant to the Management Agreement and other
service agreements to determine if the Fund is receiving satisfactory
services at reasonable prices; makes an annual recommendation concerning the
appointment of auditors; and reviews and recommends policies and practices
relating to principles to be followed in the conduct of Fund operations. The
Audit Committee reports the results of its inquiries to the Board of
Directors. The Audit Committee currently consists of Messrs. C. Duane Blinn,
E. Virgil Conway, Herbert Roth, Jr., Richard E. Segerson and Lowell P.
Weicker, Jr. The Audit Committee held four meetings during the fiscal year
ended April 30, 1996.
The Nominating Committee consists only of Directors who are not interested
persons of the Fund. It recommends to the Board of Directors persons to be
elected as Directors. The Nominating Committee held two meeting(s) during the
fiscal year ended December 31, 1996. The Nominating Committee currently
consists of Messrs. Robert Chesek, Harry Dalzell-Payne, Leroy Keith, Jr.,
Philip R. Reynolds and Herbert Roth, Jr. It will consider individuals
proposed by a shareholder for election as a Director. Shareholders who wish
to submit the name of any individual must submit in writing a brief
description of the proposed nominee's business experience and other
information relevant to the qualifications of the individual to serve as a
Director of the Fund.
The Executive Committee consists of three Directors, two of whom are not
interested persons of the Fund. The Executive Committee is empowered under
Article V of the Fund's By-Laws to act for the Board on matters that can be
delegated to a committee. The Executive Committee meets on an as-needed basis
as appropriate between Board meetings. Currently, the Executive Committee
consists of Messrs. E. Virgil Conway, Philip R. McLoughlin and Herbert Roth,
Jr.
Four meetings of the Board of Directors were held during the fiscal year
ended April 30, 1996. During this term in office, the Directors attended 100%
of the total number of meetings of the Board. None of the Directors attended
fewer than 75% of the meetings of the Board and Committees of the Board.
For services rendered to the Fund during the fiscal year ended April 30,
1996, persons serving as Directors during that period received an aggregate
of $17,625 from the Fund as Directors' fees.
Each Director who is not an "interested person" of the Adviser or any of its
affiliates currently is entitled to 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 $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 joint
Executive Committee meeting attended. The foregoing fees do not include the
reimbursement of expenses incurred in connection with meeting attendance.
Officers are compensated for their services by the Adviser and receive no
compensation from the Fund.
9
<PAGE>
For the Fund's last fiscal year, the Directors received the following
compensation:
COMPENSATION TABLE
<TABLE>
<CAPTION>
Total
Compensation
Pension or From Fund
Retirement Estimated and Fund
Aggregate Benefits Accrued Annual Complex
Compensation As Part of Fund Benefits Upon Paid to
Name From Fund Expenses Retirement Directors
- ---- ------------ ---------------- ------------- ------------
<S> <C> <C> <C> <C>
C. Duane Blinn $ 1,730* $50,250
Robert Chesek $ 1,545 $45,750
E. Virgil Conway $ 1,915 $67,750
Harry Dalzell-Payne $ 1,605 $47,250
Francis E. Jeffries $ 0 $ 0
Leroy Keith, Jr. $ 1,525 None for any Director None for any Director $45,250
Philip R. McLoughlin $ 0 $ 0
Everett L. Morris $ 330* $40,750
James M. Oates $ 1,850 $54,250
Calvin J. Pedersen $ 0 $ 0
Philip R. Reynolds $ 1,605 $47,250
Herbert Roth, Jr. $ 2,020* $59,250
Richard E. Segerson $ 1,850 $54,250
Lowell P. Weicker, Jr. $ 1,650 $49,250
</TABLE>
*This compensation (and the earnings thereon) was deferred pursuant to the
Directors' Deferred Compensation Plan.
THE DIRECTORS RECOMMEND A VOTE "FOR" THE ELECTION
OF THE NOMINEES FOR DIRECTORS
PROPOSAL NO. 2
RATIFICATION OR REJECTION OF SELECTION OF AUDITORS
On the recommendation of the Audit Committee, the Directors (including all
of the Directors who are not interested persons of the Fund) have selected
Price Waterhouse LLP, independent accountants, to audit financial statements
of the Fund filed with the Securities and Exchange Commission and other
regulatory authorities. The Fund has been advised that neither such firm nor
any of its partners has any financial interest in the Fund. The selection of
auditors is subject to ratification or rejection by the shareholders at the
meeting.
10
<PAGE>
A representative of Price Waterhouse LLP, auditors for the Fund for the
fiscal year ended April 30, 1996, is not expected to be present at the
meeting. A representative of Price Waterhouse LLP will have the opportunity
to make a statement if they desire to do so and is expected to be available
to respond to appropriate questions.
The Fund's auditors examine the financial statements of the Fund annually,
issue a report on internal controls and procedures for inclusion in
Securities and Exchange Commission filings for the year, review the Fund's
semi-annual financial statements and prepare or review the Fund's income tax
returns.
THE DIRECTORS RECOMMEND A VOTE "FOR" RATIFICATION
OF THE SELECTION OF AUDITORS
PROPOSAL NO. 3
TO APPROVE OR NOT APPROVE A NEW INVESTMENT ADVISORY AGREEMENT
At a meeting of the Board of Directors on November 20, 1996, at which
there was present and voting in person a majority of the Directors who are
not parties to the Advisory Agreement or interested persons of any such
party, the Directors unanimously approved the proposed Investment Advisory
Agreement attached as Exhibit A (the "Proposed Agreement"). The Proposed
Agreement is in the form used by the majority of mutual funds in the Phoenix
Funds. The Adviser anticipates that standardization of the form of investment
advisory agreement will provide for more efficient administration of the
Fund. This agreement is substantially the same as the existing agreement
except in three areas.
First, the Proposed Agreement provides that the Fund pay the fees of all
Directors who are not full-time employees of the Adviser or any of its
affiliates. The existing agreement provides that the Fund pay the fees of all
Directors who are not "interested persons" of the Adviser. Two of the Fund's
fourteen Directors are full-time employees of an affiliate of the Adviser.
Four of the Fund's Directors are interested persons of the Adviser. The
change in agreements would mean that the Fund would bear the cost of the fees
and expenses of two additional Directors. However, the pro forma additional
Fund expense would be under $3500, or less than 0.01% of the value of the
Fund's net assets as at April 30, 1996.
Second, the Proposed Agreement explicitly authorizes the Adviser to
utilize bunching procedures approved by the Directors during their meeting on
November 20, 1996. These procedures are intended to produce greater
efficiencies and cost savings by allowing trade orders to be combined when
appropriate.
Third, under the Proposed Agreement, the expense cap would be eliminated.
The voluntary expense cap addressed various state law expense limitations and
additional expense limitations agreed to by the Investment Adviser upon
creation of the Fund. Based upon the passage of the National Securities
Markets Improvements Act of 1996, such limitations are no longer effective.
Furthermore, the additional limitations agreed to by the Adviser were
intended as a short-term device to protect shareholders from excessive
expenses during the start-up phase of the Fund. Elimination of these
limitations is intended to conform to the expenses charged to similar, mature
funds by the Investment Adviser or its affiliates and to be consistent with
prevailing expenses fees for similar funds in the mutual fund industry. This
action would not, directly or indirectly, establish a new fee or expense or
presently increase any existing fee or expense to be paid by the Fund and its
shareholders.
RECOMMENDATION
The Directors recommend that the shareholders approve the Proposed
Agreement. Approval of the Agreement is to be determined by the vote of a
majority of the outstanding shares. If the Agreement is not approved by the
shareholders,
11
<PAGE>
the Investment Adviser will continue to serve as investment adviser to such
Fund under the terms of the current Advisory Agreement for a period of time
pending approval of the Proposed Agreement (not to exceed one hundred and
twenty days) unless a different investment advisory agreement is entered into
with another investment adviser.
THE DIRECTORS RECOMMEND A VOTE "FOR" APPROVAL OF THE
NEW INVESTMENT ADVISORY AGREEMENT
PROPOSAL NO. 4
TO APPROVE OR NOT TO APPROVE
REVISIONS TO THE FUND'S FUNDAMENTAL INVESTMENT POLICIES
The Fund's fundamental investment policies, as set forth as "Investment
Restrictions" in the Statement of Additional Information, currently contain
numerous restrictions against making certain types of investments based upon
prohibitions found in the Investment Company Act of 1940, as amended (the "1940
Act") as well as various state blue sky laws. On October 11, 1996, President
Clinton signed the National Securities Markets Improvement Act of 1996. This new
legislation created a national system of regulating mutual funds by pre-empting
state blue sky laws. As mutual funds need not comply with state blue sky laws
involving investment restrictions, the Fund desires to eliminate all
restrictions other than those mandated by the 1940 Act. Accordingly,
restrictions have been eliminated pertaining to redundant constraints as to
permissible Fund investments and investing in the securities of any one issuer.
And an inapplicable prohibition involving investments in commodities and mineral
exploration programs has also been deleted as well as a restriction pertaining
to trading account participations. None of the restrictions deleted are expected
to have any impact upon continued Fund operations. The Fund's investment
restrictions would therefore be restated as follows:
"The Fund may not:
(1) issue senior securities, as such term is defined in the Investment
Company Act of 1940, as amended, except as otherwise permitted under
these fundamental investment restrictions;
(2) make short sales of securities or purchase any securities on margin,
except for such short-term credits as are necessary for the clearance
of transactions; provided, however, the deposit or payment of an
initial or maintenance margin in connection with financial futures
contracts or related options transactions is not considered the
purchase of a security on margin;
(3) borrow money in excess of 5% of the value of its total assets, or
pledge its assets to an extent greater than 5% of the value of its
total assets. Any such borrowings shall be from banks and shall be
undertaken only as a temporary measure or for extraordinary or
emergency purposes. Deposits in escrow in connection with the writing
of covered call options or in connection with the purchase or sale of
financial futures contracts and related options shall not be deemed to
be a pledge or other encumbrance;
(4) engage in the business of underwriting the securities of others except
in connection with the purchase of securities for its portfolio of
municipal bonds;
(5) concentrate its investments in the securities of issuers all of which
conduct their principal business activities in the same industry
provided that this restriction shall not apply to obligations issued
or guaranteed by the U.S. Government, its agencies or
instrumentalities;
(6) make any investment in real estate, real estate mortgage loans and/or
commodities, except that the Fund may (a) purchase or sell readily
marketable securities which are secured by interests in real estate,
or issued by companies which deal in real estate including real estate
investment and mortgage investment trusts, and (b) engage
12
<PAGE>
in financial futures contracts and related options transactions,
provided that the sum of the initial margin deposits on the Fund's
futures and related options positions and the premiums paid for
related options do not exceed 5% of the value of the Fund's total
assets; and
(7) make loans, except that the Fund may (a) invest up to 15% of its total
assets in repurchase agreements of a type regarded as "liquid" which
are fully collateralized as to principal and interest and which are
entered into only with commercial banks, brokers and dealers
considered by the Fund to be creditworthy and (b) loan its portfolio
securities in amounts up to one-third of the value of its total assets.
If a percentage restriction on investment or utilization of assets as set
forth is adhered to at the time an investment is made, a later change in the
percentage resulting from a change in the values or costs of the Fund's
assets will not be considered violate of the restriction."
RECOMMENDATION
The Directors recommend that the shareholders approve the proposed
restated fundamental restrictions. Approval of the restated restrictions is
to be determined by the vote of a majority of the outstanding shares. The
restated restrictions shall become operative concurrently with the
effectiveness of a registration statement describing the same.
THE DIRECTORS RECOMMEND A VOTE "FOR" THE FUND'S
RESTATED FUNDAMENTAL INVESTMENT RESTRICTIONS
As of the date of this Proxy Statement, Fund management knows of no other
matters to be brought before this meeting. However, if other matters properly
come before this meeting, the persons named in the enclosed proxy will vote
in accordance with the best interests of the Fund and its shareholders on
such matters.
SHAREHOLDER PROPOSALS Any proposal by a shareholder of the Fund intended
to be presented at the next Meeting of Shareholders of the Fund must be
received by the Fund at 101 Munson Street, Greenfield, Massachusetts 01301 no
later than September 22, 1997.
MISCELLANEOUS As of the date of this Proxy Statement, Fund's management
knows of no other matters to be brought before the meeting. However, if any
other matters properly come before the meeting, the persons named in the
enclosed proxy will vote in accordance with their judgment on such matters.
All shareholders are urged to complete, sign, and return their proxies.
The enclosed proxy is revocable and will not affect your right to vote in
person if you attend the meeting.
By Order of the Board of Directors,
G. Jeffrey Bohne, Secretary
Greenfield, Massachusetts
January 17, 1997
13
<PAGE>
EXHIBIT A
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
FORM OF INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made effective as of the day of March, 1997 by and between
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC., a Maryland corporation having a
place of business located at 101 Munson Street, Greenfield, Massachusetts
(the "Fund") and NATIONAL SECURITIES & RESEARCH CORPORATION, a New York
corporation having a place of business located at 56 Prospect Street,
Hartford, Connecticut (the "Adviser").
WITNESSETH THAT:
1. The Fund hereby appoints the Adviser to act as investment adviser to
the Fund for the period and on the terms set forth herein. The Adviser
accepts such appointment and agrees to render the services described in this
Agreement for the compensation herein provided.
2. In the event that the Directors desire to retain the Adviser to render
investment advisory services hereunder with respect to one or more series
("Additional Series"), the Fund shall notify the Adviser in writing. If the
Adviser is willing to render such services, it shall notify the Fund in
writing, whereupon such Additional Series shall become subject to the terms
and conditions of this Agreement.
3. The Adviser shall furnish continuously an investment program for the
Fund and any Additional Series which may become subject to the terms and
conditions set forth herein (sometimes collectively referred to as the
"Series") and shall manage the investment and reinvestment of the assets of
each Series, subject at all times to the supervision of the Directors. In
effectuating the investment program for the Fund, the Adviser shall aggregate
a transaction in accordance with the Statement of Policy with respect to
Aggregation of Orders as most recently adopted by the Fund.
4. With respect to managing the investment and reinvestment of the Series'
assets, the Adviser shall provide, at its own expense:
(a) Investment research, advice and supervision;
(b) An investment program for each Series consistent with its investment
objectives;
(c) Implementation of the investment program for each Series including
the purchase and sale of securities;
(d) Advice and assistance on the general operations of the Fund; and
(e) Regular reports to the Directors on the implementation of each
Series' investment program.
5. The Adviser shall, for all purposes herein, be deemed to be an
independent contractor.
6. The Adviser shall furnish at its own expense, or pay the expenses of the
Fund, for the following:
(a) Personnel necessary to perform the functions required to manage the
investment and reinvestment of each Series' assets (including those
required for research, statistical and investment work);
(b) Any Subadviser recommended by the Adviser and appointed to act on
behalf of the Fund.
A-1
<PAGE>
7. All costs and expenses not specifically enumerated herein as payable by
the Adviser shall be paid by the Fund. Such expenses shall include, but shall
not be limited to, all expenses (other than those specifically referred to as
being borne by the Adviser) incurred in the operation of the Fund and any public
offering of its shares, including, among others, interest, taxes, brokerage fees
and commissions, fees of Directors who are not full-time employees of the
Adviser or any of its affiliates, expenses of Directors' and shareholders'
meetings including the cost of printing and mailing proxies, expenses of
insurance premiums for fidelity and other coverage, expenses of repurchase and
redemption of shares, expenses of issue and sale of shares (to the extent not
borne by its national distributor under its agreement with the Fund), expenses
of printing and mailing stock certificates representing shares of the Fund,
association membership dues, charges of custodians, transfer agents, dividend
disbursing agents and financial agents, bookkeeping, auditing and legal
expenses. The Fund will also pay the fees and bear the expense of registering
and maintaining the registration of the Fund and its shares with the Securities
and Exchange Commission and registering or qualifying its shares under state or
other securities laws and the expense of preparing and mailing prospectuses and
reports to shareholders. Additionally, if authorized by the Directors, the Fund
shall pay for extraordinary expenses and expenses of a non-recurring nature
which may include, but not be limited to the reasonable and proportionate cost
of any reorganization or acquisition of assets and the cost of legal proceedings
to which the Fund is a party.
8. For providing the services and assuming the expenses outlined herein,
the Fund agrees that the Adviser shall be compensated as follows:
(a) The Fund shall pay the Adviser a monthly fee with respect to each
Series at the annual rate of 0.45% of the Fund's average aggregate
daily net assets up to $1 billion, 0.40% of the Fund's average
aggregate daily net assets from $1 to $2 billion, and 0.35% of the
Fund's average aggregate daily net assets in excess of $2 billion.
The amounts payable to the Adviser with respect to the Fund shall be
payable on the last day of each month.
(b) Compensation shall accrue immediately upon the effective date of
this Agreement.
(c) If there is termination of this Agreement during a month, each
Series' fee for that month shall be proportionately computed upon
the average of the daily net asset values of such Series for such
partial period in such month.
9. The services of the Adviser to the Fund are not to be deemed exclusive,
the Adviser being free to render services to others and to engage in other
activities. Without relieving the Adviser of its duties hereunder and subject
to the prior approval of the Directors and subject further to compliance with
applicable provisions of the Investment Company Act of 1940, as amended, the
Adviser may appoint one or more agents to perform any of the functions and
services which are to be provided under the terms of this Agreement upon such
terms and conditions as may be mutually agreed upon among the Fund, the
Adviser and any such agent.
10. The Adviser shall not be liable to the Fund or to any shareholder of
the Fund for any error of judgment or mistake of law or for any loss suffered
by the Fund or by any shareholder of the Fund in connection with the matters
to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard on the part of
the Adviser in the performance of its duties hereunder.
11. It is understood that:
(a) Directors, officers, employees, agents and shareholders of the Fund
are or may be "interested persons" of the Adviser as directors,
officers, stockholders or otherwise;
A-2
<PAGE>
(b) Directors, officers, employees, agents and stockholders of the
Adviser are or may be "interested persons" of the Fund as Directors,
officers, shareholders or otherwise; and
(c) The existence of any such dual interest shall not affect the
validity hereof or of any transactions hereunder.
12. This Agreement shall become effective with respect to the Fund as of
the date stated above (the "Contract Date") and with respect to any
Additional Series, on the date specified in the notice to the Fund from the
Adviser in accordance with paragraph 2 hereof that the Adviser is willing to
serve as Adviser with respect to such Additional Series. Unless terminated as
herein provided, this Agreement shall remain in full force and effect for a
period of two years following the Contract Date, and, with respect to each
Additional Series, until the next anniversary of the Contract Date following
the date on which such Additional Series became subject to the terms and
conditions of this Agreement and shall continue in full force and effect for
periods of one year thereafter with respect to each Series so long as (a)
such continuance with respect to any such Series is approved at least
annually by either the Directors or by a "vote of the majority of the
outstanding voting securities" of such Series and (b) the terms and any
renewal of this Agreement with respect to any such Series have been approved
by a vote of a majority of the Directors who are not parties to this
Agreement or "interested persons" of any such party cast in person at a
meeting called for the purpose of voting on such approval; provided, however,
that the continuance of this Agreement with respect to each Additional Series
is subject to its approval by a "vote of a majority of the outstanding voting
securities" of any such Additional Series on or before the next anniversary
of the Contract Date following the date on which such Additional Series
became a Series hereunder.
Any approval of this Agreement by a vote of the holders of a "majority of
the outstanding voting securities" of any Series shall be effective to
continue this Agreement with respect to such Series notwithstanding (a) that
this Agreement has not been approved by a "vote of a majority of the
outstanding voting securities" of any other Series of the Fund affected
thereby and (b) that this Agreement has not been approved by the holders of a
"vote of a majority of the outstanding voting securities" of the Fund, unless
either such additional approval shall be required by any other applicable law
or otherwise.
13. The Fund may terminate this Agreement with respect to the Fund or to
any Series upon 60 days' written notice to the Adviser at any time, without
the payment of any penalty, by vote of the Directors or, as to each Series,
by a "vote of the majority of the outstanding voting securities" of such
Series. The Adviser may terminate this Agreement upon 60 days' written notice
to the Fund, without the payment of any penalty. This Agreement shall
immediately terminate in the event of its "assignment".
14. The terms "majority of the outstanding voting securities", "interested
persons" and "assignment", when used herein, shall have the respective
meanings in the Investment Company Act of 1940, as amended.
15. In the event of termination of this Agreement, or at the request of
the Adviser, the Fund will eliminate all reference to "Phoenix" and/or
"Phoenix Duff & Phelps" from its name, and will not thereafter transact
business in a name using the word "Phoenix" and/or "Phoenix Duff & Phelps" in
any form or combination whatsoever, or otherwise use the word "Phoenix"
and/or "Phoenix Duff & Phelps" as part of its name. The Fund will thereafter
in all prospectuses, advertising materials, letterheads, and other material
designed to be read by investors and prospective investors delete from its
name the word "Phoenix" and/or "Phoenix Duff & Phelps" or any approximation
thereof. If the Adviser chooses to withdraw the Fund's right to use the word
"Phoenix" and/or "Phoenix Duff & Phelps", it agrees to submit the question of
continuing this Agreement to a vote of the Fund's shareholders at the time of
such withdrawal.
A-3
<PAGE>
16. It is expressly agreed that the obligations of the Fund hereunder
shall not be binding upon any of the Directors, shareholders, nominees,
officers, agents or employees of the Fund personally, but bind only the
property of the Fund. The execution and delivery of this Agreement have been
authorized by the Directors and shareholders of the Fund and signed by the
President of the Fund, acting as such, and neither such authorization by such
Directors and shareholders nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or be binding
upon or impose any liability on any of them personally, but shall bind only
the property of the Fund.
17. This Agreement shall be construed and the rights and obligations of
the parties hereunder enforced in accordance with the laws of Maryland.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first
written above.
PHOENIX CALIFORNIA TAX EXEMPT
BONDS, INC.
By: ------------------------------------
Name:
Title:
NATIONAL SECURITIES & RESEARCH
CORPORATION
By: ------------------------------------
Name:
Title:
A-4
<PAGE>
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
101 Munson Street
Greenfield, Massachusetts 01301
Proxy for a Special Meeting in lieu of the Annual Meeting of Shareholders
March 14, 1997
PROXY
The undersigned shareholder of Phoenix California Tax Exempt Bonds, Inc. (the
"Fund"), revoking any and all previous proxies heretofore given for shares of
the Fund held by the undersigned, hereby constitutes and appoints Philip R.
McLoughlin, Thomas N. Steenburg and Richard J. Wirth, and any and each of them,
proxies and attorneys of the undersigned, with power of substitution to each,
for and in the name of the undersigned to vote and act upon all matters (unless
and except as expressly limited below) at the Special Meeting in lieu of the
Annual Meeting of Shareholders of the Fund to be held on March 14, 1997 at the
offices of the Fund, 101 Munson Street, Greenfield, Massachusetts, and at any
and all adjournments thereof, with respect to all shares of the Fund for which
the undersigned is entitled to provide instructions or with respect to which the
undersigned would be entitled to provide instructions or act with all the powers
the undersigned would possess if personally present and to vote with respect to
specific matters as set forth on the reverse. Any proxies heretofore given by
the undersigned with respect to said meeting are hereby revoked.
To avoid the expense of adjourning the Meeting to a subsequent date, please
return this proxy in the enclosed self-addressed, postage-paid envelope.
This proxy, if properly executed, will be voted in the manner as directed herein
by the undersigned shareholder. Unless otherwise specified in the squares
provided, the undersigned's vote will be cast "FOR" each Proposal. If no
direction is made for any Proposals, this proxy will be voted "FOR" any and all
such Proposals.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE FUND WHICH
RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS.
<PAGE>
<TABLE>
<S> <C> <C> <C>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
Withhold For All
PROPOSAL NO. 1. For Authority Except*
ELECTION OF DIRECTORS [ ] [ ] [ ]
To fix the number of Directors at fourteen
and elect Directors (except as marked to the
contrary below)
D. Blinn, R. Chesek, V. Conway, H. Dalzell-Payne, F. Jeffries,
L. Keith, P. McLoughlin, E. Morris, J. Oates, C. Pedersen, P. Reynolds,
H. Roth, R. Segerson and L. Weicker
* (INSTRUCTIONS: To withhold authority to vote for any individual
nominee, mark the "FOR ALL EXCEPT" box and strike a line through the
nominee's name. Unless authority is withheld to vote for all nominees,
the persons named as proxies shall vote to fix the number of Directors
at fourteen.)
-----------------------------------------------------
Date
Please be sure to sign and date this Proxy.
- ------------------------------------------------------------------------------------------------------------
Shareholder sign here Co-owner sign here
- ------------------------------------------------------------------------------------------------------------
PROPOSAL NO. 2. For Against Abstain
RATIFICATION OF SELECTION OF PRICE
WATERHOUSE LLP AS AUDITORS. [ ] [ ] [ ]
PROPOSAL NO. 3. For Against Abstain
TO APPROVE OR NOT APPROVE A NEW
INVESTMENT ADVISORY AGREEMENT. [ ] [ ] [ ]
PROPOSAL NO. 4. For Against Abstain
TO APPROVE OR NOT APPROVE THE
FUND'S RESTATED FUNDAMENTAL
INVESTMENT RESTRICTIONS. [ ] [ ] [ ]
PROPOSAL NO. 5.
TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
</TABLE>
NOTE: Please sign exactly as your name appears hereon. If shares are registered
in more than one name, all registered shareholders should sign this proxy; but
if one shareholder signs, this signature binds the other shareholder. When
signing as an attorney, executor, administrator, agent, trustee, or guardian, or
custodian for a minor, please give full title as such. If a corporation, please
sign in full corporate name by an authorized person. If a partnership, please
sign in partnership name by an authorized person.
This Proxy may be revoked by the shareholder(s) at any time prior to the Special
Meeting in lieu of the Annual Meeting.
RECORD DATE SHARES:
