As filed with the Securities and Exchange Commission on August 26, 1997
Registration Nos. 33-6930
811-4728
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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. 13 [X]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 14 [X]
(Check appropriate box or boxes)
-------------
Phoenix Income and Growth Fund
(Exact Name of Registrant as Specified in Declaration of Trust)
-------------
101 Munson Street, Greenfield, MA 01301
(Address of Principal Executive Offices) (Zip Code)
c/o Phoenix Equity Planning Corporation--Shareholder Services
(800) 243-1574
(Registrant's Telephone Number, including Area Code)
-------------
Thomas N. Steenburg
Vice President, Counsel and Secretary
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115-0479
(name and address of Agent for Service)
-------------
Approximate Date of Proposed Public Offering
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on August 28, 1997 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph(a)(i)
[ ] on pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on pursuant to paragraph (a)(ii) 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.
Registrant has registered an indefinite number of shares under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940. A
Rule 24f-2 Notice for the fiscal year ended on April 30, 1997 was filed by
Registrant with the Commission on June 27, 1997.
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<PAGE>
PHOENIX INCOME AND GROWTH FUND
Cross Reference Sheet Pursuant to Rule 495
PART A
<TABLE>
<CAPTION>
Part I of Form N-1A Prospectus Caption
- ---------------------------------------------------- -----------------------------------------------------
<S> <C> <C>
1. Cover Page ................................. Cover Page
2. Synopsis ................................. Introduction; Fund Expenses
3. Condensed Financial Information ............ Financial Highlights; Performance Information
4. General Description of Registrant ......... Introduction; Investment Objectives and Policies;
Investment Techniques and Related Risks; Additional
Information
5. Management of the Fund ..................... Introduction; Management of the Fund; Distribution
Plans
6. Capital Stock and Other Securities ......... Introduction; Investment Restrictions; Dividends,
Distributions and Taxes; Additional Information;
Investor Account Services
7. Purchase of Securities Being Offered ...... How to Buy Shares; Distribution Plans; Net Asset
Value; Investor Account Services
8. Redemption or Repurchase .................. How to Redeem Shares
9. Pending Legal Proceeding .................. Not Applicable
</TABLE>
PART B
<TABLE>
<CAPTION>
Part I of Form N-1A Statement of Additional Information
- ---------------------------------------------------------- -----------------------------------------------------
<S> <C> <C>
10. Cover Page ....................................... Cover Page
11. Table of Contents .............................. Table of Contents
12. General Information ........................... Cover Page; General Information
13. Investment Objectives and Policies ............ Cover Page; Investment Objectives and Policies;
Investment Restrictions; Investment Techniques
14. Management of the Fund ........................ Services of the Adviser; Trustees and Officers
15. Control Persons and Principal Holders of
Securities .................................... Not Applicable
16. Investment Advisory & Other Services ............ Trustees and Officers
17. Brokerage Allocation and Other Practices ...... Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities ............ Not Applicable
19. Purchase, Redemption and Pricing of Securities . How to Buy Shares; Alternative Purchase
Arrangements; Investor Account Services; Redemption
of Shares; Net Asset Value
20. Tax Status ....................................... Dividends, Distributions and Taxes
21. Underwriter .................................... The Distributor
22. Calculations of Performance Data ............... Performance Information
23. Financial Statements ........................... Financial Statements
</TABLE>
<PAGE>
[cover]
PHOENIX FUNDS
PROSPECTUS
AUGUST 28, 1997
Phoenix Income and Growth Fund
[logo] PHOENIX
DUFF & PHELPS
<PAGE>
PHOENIX INCOME AND GROWTH FUND
101 Munson Street
Greenfield, MA 01301
PROSPECTUS
August 28, 1997
Phoenix Income and Growth Fund (the "Fund") is a diversified, open-end
management investment company with a primary investment objective of investing
in a diversified group of securities that are selected for current yield
consistent with preservation of capital. The secondary objective of the Fund,
which is a non-fundamental policy, is to achieve capital appreciation when it
is consistent with the Fund's primary objective.
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 an 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 August 28, 1997, which has been filed with the Securities
and Exchange Commission (the "Commission") and is available upon request at no
charge by calling (800) 243-4361 or by writing to Phoenix Equity Planning
Corporation at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut
06083-2200. The Statement of Additional Information is incorporated herein by
reference.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, credit union, or affiliated entity, and are not
federally insured or otherwise protected by the Federal Deposit Insurance
Corporation (FDIC), the Federal Reserve Board, or any other agency and involve
investment risk, including possible loss of principal.
- --------------------------------------------------------------------------------
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
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 OBJECTIVES AND POLICIES ............ 6
INVESTMENT TECHNIQUES AND RELATED RISKS ...... 7
INVESTMENT RESTRICTIONS ..................... 10
MANAGEMENT OF THE FUND ........................ 10
DISTRIBUTION PLANS ........................... 11
HOW TO BUY SHARES ........................... 13
INVESTOR ACCOUNT SERVICES ..................... 17
NET ASSET VALUE .............................. 18
HOW TO REDEEM SHARES ........................ 19
DIVIDENDS, DISTRIBUTIONS AND TAXES ............ 20
ADDITIONAL INFORMATION ........................ 21
2
<PAGE>
INTRODUCTION
This Prospectus describes the shares offered by and the operations of
Phoenix Income and Growth Fund (the "Fund"). The Fund is a diversified,
open-end management investment company established as a Massachusetts business
trust. The Fund's primary investment objective is to invest in a diversified
group of securities that are selected for current yield consistent with
preservation of capital. The secondary objective of the Fund is to achieve
capital appreciation when it is consistent with the Fund's primary objective.
Investment Adviser
National Securities & Research Corporation (the "Adviser" or "National")
is the investment adviser of the Fund. 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 separate distribution plans pursuant to Rule 12b-1
under the Investment Company Act of 1940 as amended (the "1940 Act") for all
classes. Pursuant to the distribution plan adopted for Class A Shares, the Fund
shall reimburse the Distributor up to a maximum annual rate of 0.30% of the
Fund's average daily Class A Share net assets for distribution expenditures
incurred in connection with the sale and promotion of Class A Shares and for
furnishing of shareholder services. Although the Class A Shares Plan provides
for a 0.30% distribution fee, the Distributor has voluntarily agreed to limit
the 12b-1 fee charged to Class A Shares to 0.25% for the fiscal year 1998.
Pursuant to the distribution plan adopted for Class B Shares, the Fund shall
reimburse the Distributor up to a maximum annual rate of 1.00% of the Fund's
average daily Class B Share net assets for distribution expenditures incurred
in connection with the sale and promotion of Class B Shares and for furnishing
of shareholder services. See "Distribution Plans."
Purchase of Shares
The Fund offers two classes of shares which may be purchased at a price
equal to their net asset value per share, plus a sales charge which, at the
election of the purchaser, may be imposed (i) at the time of 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 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 and Trust Company, 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 have the same rights, except that Class B Shares bear
the cost of the higher distribution fees which cause the Class B Shares to have
a higher expense ratio and to pay lower dividends than Class A Shares. See "How
to Buy Shares."
Minimum Initial and Subsequent Investments
The minimum initial investment is $500 ($25 if using the bank draft
investment program designated "Investo-Matic") and the minimum subsequent
investment is $25. Exceptions to the minimum and subsequent investment amounts
are available under certain circumstances. See "How to Buy Shares."
Redemption 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 Equity Planning,
the Fund's transfer agent. 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
objectives. In addition, special risks may be presented by the particular types
of securities in which the Fund may invest. For example, investment in
lower-rated securities is speculative and involves risks not associated with
investment in higher rated securities, including overall greater risk of
non-payment of interest and principal and potentially greater sensitivity to
general economic conditions and changes in interest rates. See "Investment
Objectives and Policies."
3
<PAGE>
FUND EXPENSES
The following table illustrates all fees and expenses a shareholder will
incur. The fees and expenses set forth in the table are for the fiscal year
ended April 30, 1997.
<TABLE>
<CAPTION>
Class A Shares
----------------
<S> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) 4.75%
Maximum Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load (as a percentage of original purchase price or redemption proceeds, None
as applicable)
Redemption Fee None
Exchange Fee None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.70%
12b-1 Fees (a) 0.25%
Other Operating Expenses 0.23%
-----
Total Fund Operating Expenses 1.18%
=====
<CAPTION>
Class B Shares
-------------------------
<S> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load (as a percentage of original purchase price or redemption proceeds, 5% during the first
as applicable) year, decreasing 1%
annually to 2%
during the fourth
and fifth years;
decreasing to 0%
after the fifth year.
Redemption Fee None
Exchange Fee None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.70%
12b-1 Fees (a) 1.00%
Other Operating Expenses 0.23%
----
Total Fund Operating Expenses 1.93%
====
</TABLE>
- -----------
(a) "Rule 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").
While the Class A Share Distribution Plan continues to provide for a 0.30%
distribution fee, the Distributor has voluntarily agreed to limit the fee to
0.25% for the fiscal year 1998. Rule 12b-1 fees stated for Class B Shares
include a service fee.
<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 $1,000
investment, (1) a 5% annual return and (2) redemption at the
end of each time period:
Class A Shares $59 $83 $109 $184
Class B Shares $60 $81 $104 $206
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 $184
Class B Shares $20 $61 $104 $206
</TABLE>
*The purpose of the above table is to help the investor understand the various
costs and expenses 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 Share 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
respective fiscal years of 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 Fund performance) are
available at no charge upon request by calling (800) 243-4361.
(Selected data for a share outstanding throughout the indicated period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------
Year Ended April 30
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $10.08 $ 8.88 $9.33 $9.92 $9.13
Income from investment operations:
Net investment income 0.40 0.44 0.46 0.45 0.43(1)
Net realized and
unrealized gain (loss) 0.66 1.22 0.03 (0.08) 0.88
-------- -------- -------- -------- ---------
Total from
investment operations 1.06 1.66 0.49 0.37 1.31
-------- -------- -------- -------- ---------
Less distributions:
Dividends from net
investment income (0.40) (0.42) (0.45) (0.44) (0.44)
Dividends from net
realized gains (0.88) (0.04) (0.33) (0.52) (0.08)
In excess of
accumulated net
realized gains -- -- (0.16) -- --
-------- -------- -------- -------- ---------
Total distributions (1.28) (0.46) (0.94) (0.96) (0.52)
-------- -------- -------- -------- ---------
Change in net asset value (0.22) 1.20 (0.45) (0.59) 0.79
-------- -------- -------- -------- ---------
Net asset value, end of period $ 9.86 $10.08 $8.88 $9.33 $9.92
======== ======== ======== ======== =========
Total return(2) 10.93% 19.01% 5.95% 3.38% 14.78%
Ratios/supplemental data:
Net assets,
end of period (thousands) $451,439 $493,454 $490,225 $524,855 $514,803
Ratio to average net assets of:
Expenses 1.18% 1.18% 1.16% 1.23% 1.33%
Net investment income 3.82% 4.39% 5.07% 4.57% 4.60%
Portfolio turnover rate 111% 107% 90% 88% 44%
Average commission rate paid(5) $0.0515 N/A N/A N/A N/A
<CAPTION>
Class B
-----------------------------------
Year Ended April 30
1992 1991 1990 1989 1988 1997 1996 1995
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.48 $7.89 $8.31 $7.50 $8.21 $10.09 $ 8.88 $9.32
Income from investment operations:
Net investment income 0.45 0.45 0.50 0.50 0.49 0.31 0.36 0.39
Net realized and
unrealized gain (loss) 0.88 0.65 (0.08) 1.05 (0.38) 0.67 1.23 0.04
-------- -------- -------- -------- -------- -------- -------- --------
Total from
investment operations 1.33 1.10 0.42 1.55 0.11 0.98 1.59 0.43
-------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.44) (0.44) (0.50) (0.52) (0.44) (0.32) (0.34) (0.38)
Dividends from net
realized gains (0.24) (0.07) (0.34) (0.22) (0.38) (0.88) (0.04) (0.33)
In excess of
accumulated net
realized gains -- -- -- -- -- -- -- (0.16)
-------- -------- -------- -------- -------- -------- -------- --------
Total distributions (0.68) (0.51) (0.84) (0.74) (0.82) (1.20) (0.38) (0.87)
-------- -------- -------- -------- -------- -------- -------- --------
Change in net asset value 0.65 0.59 (0.42) 0.81 (0.71) (0.22) 1.21 (0.44)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $9.13 $8.48 $7.89 $8.31 $7.50 $9.87 $10.09 $8.88
======== ======== ======== ======== ======== ======== ======== ========
Total return(2) 16.28% 14.60% 4.58% 21.72% 1.63% 10.05% 18.14% 5.23%
Ratios/supplemental data:
Net assets,
end of period (thousands) $357,366 $254,013 $201,249 $158,190 $141,298 $370,929 $396,169 $386,515
Ratio to average net assets of:
Expenses 1.38% 1.43% 1.22% 0.95% 0.91% 1.93% 1.93% 1.91%
Net investment income 4.99% 5.52% 5.58% 6.37% 6.22% 3.06% 3.64% 4.32%
Portfolio turnover rate 32% 38% 19% 23% 33% 111% 107% 90%
Average commission rate paid(5) N/A N/A N/A N/A N/A $0.0515 N/A N/A
<CAPTION>
From
inception
1/3/92 to
1994 1993 4/30/92
-------- --------- ----------
<S> <C> <C> <C>
Net asset value,
beginning of period $9.92 $9.13 $8.98
Income from investment operations:
Net investment income 0.38 0.25(1) 0.08
Net realized and
unrealized gain (loss) (0.08) 1.00 0.15
-------- --------- ----------
Total from
investment operations 0.30 1.25 0.23
-------- --------- ----------
Less distributions:
Dividends from net
investment income (0.38) (0.38) (0.08)
Dividends from net
realized gains (0.52) (0.08) --
In excess of
accumulated net
realized gains -- -- --
-------- --------- ----------
Total distributions (0.90) (0.46) (0.08)
-------- --------- ----------
Change in net asset value (0.60) 0.79 0.15
-------- --------- ----------
Net asset value, end of period $9.32 $9.92 $9.13
======== ========= ==========
Total return(2) 2.62% 14.09% 2.69%(4)
Ratios/supplemental data:
Net assets,
end of period (thousands) $378,847 $217,432 $21,983
Ratio to average net assets of:
Expenses 1.91% 2.03% 2.08%(3)
Net investment income 3.98% 3.73% 4.07%(3)
Portfolio turnover rate 88% 44% 32%
Average commission rate paid(5) N/A N/A N/A
</TABLE>
(1)Computed using average shares outstanding.
(2)Maximum sales charge is not reflected in total return calculation.
(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.
5
<PAGE>
PERFORMANCE INFORMATION
The Fund may, from time to time, include its yield and total return in
advertisements, sales literature or reports to shareholders or prospective
investors. 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 and 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.
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).
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 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 & 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
against certain widely acknowledged outside standards or indices for stock and
bond market performance, such as the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500"), Dow Jones Industrial Average, Europe Australia Far
East Index (EAFE), Consumer Price Index, Lehman Brothers Corporate Index and
Lehman Brothers T-Bond Index. The S&P 500 is a commonly quoted measure of stock
market performance and represents common stocks of companies of varying sizes
segmented across 90 different industries which are listed on the New York Stock
Exchange, the American Stock Exchange or traded over the NASDAQ National Market
System.
Advertisements, sales literature and other communications may contain
information about the Fund or Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Fund to
respond quickly to changing market and economic conditions. From time to time
the Fund may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, the Fund may
separate its cumulative and average annual returns into income and capital
gains components; or cite separately as a return figure the equity or bond
portion of the Fund's portfolio; or compare the Fund's equity or bond return
figure to well-known indices of market performance including but not limited
to: the S&P 500, Dow Jones Industrial Average, CS First Boston High Yield Index
and Salomon Brothers Corporate Bond 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 objective
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 OBJECTIVES
AND POLICIES
The primary investment objective of the Fund is to provide an investment
in a diversified group of securities that are selected for current yield
consistent with preservation of capital. The primary investment objective of
the Fund is a fundamental policy which may not be changed without the approval
of the holders of a majority of the outstanding shares of the Fund. The
secondary investment objective of the Fund is to achieve capital appreciation
when that is consistent with the Fund's primary investment objective. The
secondary investment objective of the Fund is a non-fundamental policy
6
<PAGE>
that is changeable by a vote of the Trustees. At least 65% of the Fund's total
assets will be invested in securities that produce income and achieve capital
growth.
The Fund's portfolio will contain income producing securities, including
equity securities such as common stock, securities convertible to common stock,
debt securities, U.S. government securities and options on securities,
securities indexes and currencies. The proportion of holdings in each class of
securities will vary in accordance with the level of return that can be
obtained from these various types of securities. The Fund may invest up to 35%
of its total net assets in high risk fixed income securities (commonly referred
to as "junk" bonds.) The Fund may, but is not required to, dispose of debt
securities whose credit quality falls below investment grade. There is no
assurance that the Fund will meet its investment objectives.
Risk Considerations
Securities rated BBB/Baa by Standard & Poor's Corporation and Moody's
Investor's Services Inc., respectively, are medium grade investment obligations
that may have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to weakened capacity to make
principal and interest payments in the case of such obligations, than is the
case for higher grade securities. See the Appendix in the Statement of
Additional Information for a description of certain bond ratings.
While the Fund's management will seek to minimize risk through
diversification and continual evaluation of current developments in interest
rates and economic conditions, the market prices of lower rated securities
generally fluctuate in response to changes in interest rates and economic
conditions more than those of higher rated securities. Using credit ratings
helps to evaluate the safety of principal and interest payments but does not
assess market risk. Fluctuations in the market value of portfolio securities
subsequent to acquisition by the Fund will not normally affect cash income from
such securities but will be reflected in the Fund's net asset value.
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 its ability to make payments of income and
principal and increase the expenses of the Fund seeking recovery from the
issuer. Also, because the Fund intends to invest in securities in lower rating
categories, the achievement of its goals will be more dependent on the
Adviser's ability than would be the case if the Fund were investing in
securities in the higher rating categories. Lower-rated securities may be
thinly traded and less liquid than higher rated securities and therefore harder
to value and more susceptible to adverse publicity concerning the issuer.
Securities are selected for long-term investment and it is generally not
the policy of the Fund to purchase securities for trading purposes, although
there may be a limited number of short-term transactions. In general, the
assets of the Fund are kept fully invested in securities selected to meet the
investment objective of the Fund, but for temporary defensive purposes (as when
the Adviser believes that market conditions are adverse) any part of the assets
may be held, from time to time, in cash or money market instruments including
U.S. Government obligations maturing within one year from the date of purchase.
INVESTMENT TECHNIQUES
AND RELATED RISKS
Repurchase Agreements
The Fund may enter into repurchase agreements with respect to U.S.
Government Securities. Repurchase agreements may be entered into only with
registered broker/ dealers or Government Securities dealers ("dealers") and
depository institutions ("banks") believed by National to present minimum
credit risk in accordance with guidelines approved by the Fund's Trustees.
National will review and monitor the creditworthiness of such dealers and
banks. Under such agreements, the dealer or bank agrees, upon entering into the
contract, to repurchase a security it sells at a time and price mutually agreed
upon with the purchaser of the security, thereby determining the yield during
the term of the agreement. This results in a fixed rate of return insulated
from market fluctuations during such period. The seller under a repurchase
agreement will be required to maintain the value of the securities subject to
the agreement at not less than the repurchase price, and such value will be
determined on a daily basis by marking the underlying securities to their
market value. With respect to any repurchase agreements with a maturity of
greater than one day, such agreement shall be collateralized in an amount at
least equal to 102 percent of the repurchase price. The Fund does not bear the
risk of a decline in value of the underlying security unless the seller
defaults under its repurchase obligation. In the event of a bankruptcy or other
default of a seller of a repurchase agreement, the Fund could experience both
delays in liquidating the underlying securities and losses, including (a)
possible decline in the value of the underlying securities during the period
while the Fund seeks to enforce its rights thereto; (b) possible subnormal
levels of income and lack of access to income during this period; and (c)
expenses of enforcing rights. The Fund may invest up to 10% of its net assets
in repurchase agreements; however, during temporary defensive periods, up to
50% of the Fund's net assets may be so invested.
When-Issued Securities
The Fund may purchase securities on a when-issued or delayed delivery
basis. In such transactions, the price is fixed at the time the commitment to
purchase is made, but delivery and payment for the securities take place more
than seven days in the future or after a period longer than the customary
settlement period for the particular security. Customary settlement for
newly-issued mortgage-backed securities occurs only when the composition of the
underlying mortgage pool is set, typically once a month.
At the time the Fund makes the commitment to purchase a security on a
when-issued or delayed delivery basis, it will record the transaction and
reflect the value of the security and
7
<PAGE>
the liability to pay the purchase price in determining the Fund's net asset
value. The value of the security on the settlement date may be more or less
than the price paid as a result of, among other things, changes in the level of
interest rates or other market factors. Thus there is a risk of loss which is
in addition to the risk of decline in the value of the Fund's other assets. No
interest accrues on the security between the time the Fund enters into the
commitment and the time the security is delivered. The Fund will establish a
segregated account with the Custodian in which it will maintain cash and liquid
high grade debt securities equal in value to commitments for when-issued or
delayed delivery securities. Such segregated securities either will mature or,
if necessary, be sold on or before the settlement date. While when-issued or
delayed delivery securities may be sold prior to the settlement date, it is
intended that the Fund will purchase such securities with the purpose of
actually acquiring them unless a sale appears desirable for investment reasons,
in which case the Fund may sell its interest in the securities rather than take
delivery, and may reinvest the proceeds in similar or other securities. The
Fund may not invest more than 5% of its net assets at the time of investment in
securities purchased on a when-issued or delayed delivery basis.
Investing in Foreign Securities
The Fund may invest 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. While the Fund may
purchase the securities of issuers from various countries, it is anticipated
that its foreign investments will be primarily in securities of issuers from
the major industrialized nations such as the United Kingdom, France, Canada,
Germany and Japan. The Fund may also invest in domestic securities denominated
in foreign currencies.
Investing in the securities of foreign companies involves special risks
and considerations not typically associated with investing in U.S. companies.
These include differences in accounting, auditing and financial reporting
standards, generally higher commission rates on foreign portfolio transactions,
the possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations, political instability which could
affect U.S. investments in foreign countries, and potential restrictions on the
flow of international capital. Additionally, dividends payable on foreign
securities may be subject to foreign taxes withheld prior to distribution.
Foreign securities often trade with less frequency and volume than domestic
securities and therefore may exhibit greater price volatility, and changes in
foreign exchange rates will affect the value of those securities which are
denominated or quoted in currencies other than the U.S. dollar. Many of the
foreign securities held by the Fund will not be registered with, nor the
issuers thereof be subject to the reporting requirements of, the U.S.
Securities and Exchange Commission (the "SEC"). Accordingly, there may be less
publicly available information about the securities and about the foreign
company or government issuing them than is available about a domestic company
or government entity. Moreover, individual foreign economies may differ
favorably or unfavorably from the United States economy in such respects as
growth of Gross National Product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payment positions.
Certain foreign countries are less stable politically than the United
States. The possibility exists that certain foreign governments may adopt
policies providing for expropriation or nationalization of assets, confiscatory
taxation, currency blockage or limitations on the use or removal of monies or
other assets of an investment company. Finally, the Fund may encounter
difficulty in obtaining and enforcing judgments against issuers of foreign
securities. The economies of developing countries generally are heavily
dependent upon international trade and, accordingly, have been and may continue
to be adversely affected by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures
imposed or negotiated by the countries with which they trade. These economies
also have been and may continue to be adversely affected by economic conditions
in the countries with which they trade.
In investing in securities denominated in foreign currencies, the Fund
will be subject to the additional risk of currency fluctuations. An adverse
change in the value of a particular foreign currency as against the U.S.
dollar, to the extent that such change is not offset by a gain in other foreign
currencies, will result in a decrease in the Fund's assets. Any such change may
also have the effect of decreasing or limiting the income available for
distribution. Foreign currencies may be affected by revaluation, adverse
political and economic developments, and governmental restrictions. Although
the Fund will invest only in securities denominated in foreign currencies that
are fully convertible into U.S. dollars without legal restriction at the time
of investment, no assurance can be given that currency exchange controls will
not be imposed on any particular currency at a later date.
Securities of U.S. issuers denominated in foreign currencies may be less
liquid and their prices more volatile than securities issued by domestic
issuers and denominated in U.S. dollars. In addition, investing in securities
denominated in foreign currencies often entails costs not associated with
investment in U.S. dollar-denominated securities of U.S. issuers, such as the
cost of converting foreign currency to U.S. dollars, higher brokerage
commissions, custodial expenses and other fees. Non-U.S. dollar denominated
securities may be subject to certain withholding and other taxes of the
relevant jurisdiction, which may reduce the yield on the securities to the Fund
and which may not be recoverable by the Fund or its investors.
The Fund will calculate its net asset value and complete orders to
purchase, exchange or redeem shares only on a Monday-Friday basis (excluding
holidays on which the New York Stock Exchange is closed). Foreign securities in
which the Fund may invest may be primarily listed on foreign stock
8
<PAGE>
exchanges which may trade on other days (such as Saturdays). As a result, the
net asset value of the Fund's portfolio may be affected by such trading on days
when a shareholder has no access to the Fund.
Investment income received by the Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source.
Investors are urged to consult their tax attorney with respect to specific
questions regarding foreign, federal, state or local taxes.
Forward Foreign Currency Exchange Contracts
In order to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward foreign currency exchange contracts
("forward currency contracts") for the purchase or sale of a specified currency
at a specified future date. Such contracts may involve the purchase or sale of
a foreign currency against the U.S. dollar or may involve two foreign
currencies. The Fund may enter into forward currency contracts either with
respect to specific transactions or with respect to the Fund's portfolio
positions. For example, when the Fund anticipates making a purchase or sale of
a security, it may enter into a forward currency contract in order to set the
rate (either relative to the U.S. dollar or another currency) at which a
currency exchange transaction related to the purchase or sale will be made.
Further, when the Adviser believes that a particular currency may decline
compared to the U.S. dollar or another currency, the Fund may enter into a
forward contract to sell the currency that the Adviser expects to decline in an
amount approximating the value of some or all of the Fund's portfolio
securities denominated in that currency.
The Fund's use of forward currency contracts involves certain investment
risks and transaction costs to which it might not otherwise be subject. These
include: (1) the Adviser may not always be able to accurately predict movements
within currency markets, (2) the skills and techniques needed to use forward
currency contracts are different from those needed to select the securities in
which the Fund invests and (3) there is no assurance that a liquid secondary
market will exist that would enable the Adviser to "close out" existing
(current) contracts when doing so is desirable. The Fund's successful use of
forward currency contracts, options on foreign currencies, futures contracts on
foreign currencies and options on such contracts depends upon the Adviser's
ability to predict the direction of the market and political conditions, which
require different skills and techniques than predicting changes in the
securities markets generally. For instance, if the value of the securities
being hedged moves in a favorable direction, the advantage to the Fund would be
wholly or partially offset by a loss in the forward contracts or futures
contracts. Further, if the value of the securities being hedged does not
change, the Fund's net income would be less than if the Fund had not hedged
since there are transactional costs associated with the use of these investment
practices. These practices are subject to various additional risks. The
correlation between movements in the price of options and futures contracts and
the price of the currencies being hedged is imperfect. The use of these
instruments will hedge only the currency risks associated with investments in
foreign securities, not market risks. In addition, if the Fund purchases these
instruments to hedge against currency advances before it invests in securities
denominated in such currency and the currency market declines, the Fund might
incur a loss on the futures contract. The Fund's ability to establish and
maintain positions will depend on market liquidity. The ability of the Fund to
close out a futures position or an option depends upon a liquid secondary
market. There is no assurance that liquid secondary markets will exist for any
particular futures contract or option at any particular time. The loss from
investing in futures contracts is potentially unlimited.
U.S. Treasury and Corporate Zero Coupon Bonds
The Fund invests from time to time in U.S. Treasury and corporate zero
coupon bonds. Zero coupon bonds are issued and traded at a discount from their
face amount. The amount of the discount varies depending on such factors as the
time remaining until maturity of the bonds and prevailing interest rates. The
market price of U.S. Treasury zero coupon bonds are generally more volatile
than the U.S. Treasury securities that pay interest periodically and zero
coupon bonds are likely to respond to changes in interest rates to a greater
degree than do securities on which regular cash payments of interest are being
made that have similar maturities. In order to satisfy a requirement for
qualification as a "regulated investment company" under the Code, the Fund must
distribute its investment company taxable income, including the original issue
discount accrued on zero coupon bonds. Because the Fund will not receive on a
current basis cash payments in respect of accrued original issue discount on
zero coupon bonds during the period before maturity, the Fund will distribute
cash obtained from other sources in order to satisfy the distribution
requirement under the Code. See "Dividends, Distributions and Taxes."
Private Placements and Rule 144A Securities
The Fund may purchase securities which have been privately issued and are
subject to legal restrictions on resale or which are issued to qualified
institutional investors under special rules adopted by the SEC. Such securities
may offer higher yields than comparable publicly traded securities. Such
securities ordinarily can be sold by the Fund in secondary market transactions
to certain qualified investors pursuant to rules established by the SEC, in
privately negotiated transactions to a limited number of purchasers or in a
public offering made pursuant to an effective registration statement under the
Securities Act of 1933 (the "1933 Act"). Public sales of such securities by the
Fund may involve significant delays and expense. Private sales often require
negotiation with one or more purchasers and may produce less favorable prices
than the sale of similar unrestricted securities. Public sales generally
involve the time and expense of the preparation and processing of a
registration statement under the 1933 Act (and the possible decline in value of
the securities during such period) and may involve the payment of underwriting
commissions. In some instances, the Fund may have to bear certain costs of
registration in order to sell such shares
9
<PAGE>
publicly. Except in the case of securities sold to qualifying institutional
investors under special rules adopted by the SEC for which the Trustees of the
Fund determine the secondary market is liquid, Rule 144A securities will be
considered illiquid. Trustees of the Fund may determine the secondary market is
liquid based upon the following factors which will be reviewed periodically as
required pursuant to procedures adopted by the Fund: the number of dealers
willing to purchase or sell the security; the frequency of trades; dealer
undertakings to make a market in the security, and the nature of the security
and its market. Investing in Rule 144A Securities could have the effect of
increasing the level of the Fund's illiquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing these
securities. The Fund may invest up to 15% of its net assets in illiquid
securities.
Mortgage-Related Securities
The Fund may invest in mortgage-related securities which are securities
that directly or indirectly represent an ownership participation in, or are
secured by and payable from, mortgage loans on real property ("Mortgage-Related
Securities"). Such securities include pass-through securities representing
participation interests in pools of residential mortgage loans originated by
U.S. governmental or private lenders and guaranteed, to the extent provided in
such securities, by the U.S. government or one of its agencies or
instrumentalities. Mortgage pass-through securities, which are ownership
interests in the underlying mortgage loans, differ from conventional debt
securities, which provide for periodic payment of interest in fixed amounts
(usually semi-annually) and principal payments at maturity or on specified call
dates. Mortgage pass-through securities provide for monthly payments that are a
"pass-through" of the monthly interest and principal payments, including any
prepayments, made by the individual borrowers on the pooled mortgage loans, net
of any fees paid to the guarantor of such securities and the servicer of the
underlying mortgage loans. The underlying mortgages may be prepaid at any time
and such payments are passed through to the certificate holder as a prepayment
of principal. As a result, if the Fund purchases such a Mortgage-Related
Security at a premium, a prepayment rate that is faster than expected will
reduce the yield to maturity, while a prepayment rate that is slower than
expected will have the opposite effect of increasing the yield to maturity.
Conversely, if the Fund purchases a Mortgage-Related Security at a discount,
faster than expected prepayments will increase, while slower than expected
prepayment will reduce the yield to maturity.
Prepayments on a pool of mortgage loans are influenced by a variety of
economic, geographic, social and other factors, including changes in
mortgagors' housing needs, job transfers, unemployment, mortgagors' net equity
in the mortgaged properties and servicing decisions. Generally, however,
prepayments on fixed rate mortgage loans will increase during a period of
falling interest rates and decrease during a period of rising interest rates.
Mortgage-Related Securities may decrease in value as a result of increases in
interest rates and may benefit less than other fixed income securities from
declining interest rates because of the risk of prepayment. Accelerated
prepayments on Mortgage-Related Securities purchased by the Fund at a premium
also impose a risk of loss of principal because the premium may not have been
fully amortized at the time the principal is repaid in full.
Mortgage-Related Securities are also subject to maturity extension risk
which is the possibility that rising interest rates may cause prepayments to
occur at a slower than expected rate. This particular risk may effectively
change a security which was considered short or intermediate-term at the time
of purchase to a long-term security. Long-term securities generally fluctuate
more widely in response to changes in interest rates than short or
intermediate-term securities.
The Mortgage-Related Securities in which the Fund may invest include those
issued and guaranteed by the Government National Mortgage Association ("Ginnie
Mae"), the Federal National Mortgage Association ("Fannie Mae") and the Federal
Home Loan Mortgage Corporation ("Freddie Mac"). Ginnie Mae is a wholly-owned
corporate instrumentality of the United States and is authorized to borrow from
the U.S. Treasury without limitation to meet its payment obligations on the
mortgage-related securities which it issues and guarantees. Fannie Mae is a
federally chartered but privately owned corporation which guarantees the timely
payment of principal of and interest on the certificates it issues; the
guarantee is not backed by the U.S. government. Freddie Mac is a corporate
instrumentality of the United States which guarantees the timely payment of
interest on and the ultimate payment of principal of its certificates; the
guarantee is not backed by the U.S. government.
Other Investments
The Fund may also lend portfolio securities; invest up to 5% of its assets
in privately-issued asset backed securities, including collateralized mortgage
obligations ("CMO's"); and write options on securities (the Fund will limit
this technique to writing covered call option contracts on securities held by
the Fund). See the Fund's Statement of Additional Information for further
information.
INVESTMENT RESTRICTIONS
Not more than 25% of the total assets of the Fund will be concentrated in
the securities of any one industry. No security can be purchased by the Fund if
as a result (a) more than 5% of the value of the total assets of the Fund would
then be invested in the securities of a single issuer (other than U.S.
Government obligations) or (b) more than 10% of any class of securities, or
more than 10% of the outstanding voting securities of an issuer, would be held
by the Fund.
A detailed description of the Fund's investment restrictions is contained
in the Statement of Additional Information.
MANAGEMENT OF THE FUND
The Fund is a mutual fund, technically known as an open-end investment
management company. The Trustees of the Trust are responsible for the overall
supervision of the operations of the Fund and perform the various duties
imposed on Trustees by the 1940 Act and of Massachusetts business trust law.
10
<PAGE>
The Adviser
The investment adviser to the Fund is National, which is located at 56
Prospect Street, Hartford, CT 06115-0486. National is a direct subsidiary of
Phoenix Duff & Phelps Corporation. Phoenix Home Life Mutual Insurance Company
is a majority shareholder of Phoenix Duff & Phelps Corporation.
National also acts as the investment adviser or manager for Phoenix
Multi-Sector Short Term Bond Fund, Phoenix California Tax Exempt Bonds, Inc.,
Phoenix Equity Opportunity Fund Series of Phoenix Strategic Equity Series Fund,
Phoenix Multi-Sector Fixed Income Fund, Inc. and the Phoenix Worldwide
Opportunities Fund. The Adviser currently has approximately $1.6 billion in
assets under management.
As compensation for its services, National receives a fee, which is
accrued daily against the value of the Fund's net assets and is paid monthly by
the Fund. The fee is computed at an annual rate of .70% of the Fund's average
daily net assets of up to $1 billion, .65% of the Fund's average daily net
assets from $1 billion to $2 billion and .60% of the Fund's average daily net
assets in excess of $2 billion.
The ratio of the management fees to average net assets for the fiscal year
ended April 30, 1997 for Class A Shares and Class B Shares was .70%.
The Portfolio Manager
Mr. John Hamlin serves as Portfolio Manager of the Fund. As such, Mr.
Hamlin is primarily responsible for the day to day management of the Fund's
portfolio. Mr. Hamlin is also the Portfolio Manager of the Phoenix Convertible
Fund Series of the Phoenix Series Fund, advised by Phoenix Investment Counsel,
Inc., an affiliate of National. Mr. Hamlin has served as Portfolio Manager of
the Phoenix Convertible Fund since 1992. Mr. Hamlin is also Portfolio Manager,
Common Stock, Phoenix Home Life Mutual Insurance Company. From 1989 to 1992 Mr.
Hamlin was Associate Portfolio Manager for that Fund. Since May 14, 1993, he
has served as Investment Officer of National.
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:
<TABLE>
<S> <C>
First $100 million .05%
$100 million to $300 million .04%
$300 million through $500 million .03%
Greater than $500 million .015%
</TABLE>
(b) a minimum fee of $60,000; and (c) an annual fee of $12,000 for each
class of shares beyond one. For its services during the Fund's fiscal year
ended April 30, 1997, Equity Planning received $256,528 or .03% 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").
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 engages sub-agents 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. 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 Trustee and President of the
Fund and a director and officer of Equity Planning. David R. Pepin, a Director
and officer of Equity Planning, is an officer of the Fund. Michael E. Haylon, a
director of Equity Planning, is an officer of the Fund. G. Jeffrey Bohne, Nancy
G. Curtiss, William E. Keen, III, William R. Moyer, Leonard J. Saltiel and
Thomas N. Steenburg are officers of the Fund and officers of Equity Planning.
Equity Planning and the Fund have entered into distribution agreements
under which Equity Planning has agreed to use its best efforts to find
purchasers for Fund shares sold subject to an initial sales charge and those
sold subject to a contingent deferred sales charge. The Fund has granted Equity
Planning the exclusive right to purchase from the Fund and resell, as
principal, shares needed to fill unconditional orders for Fund shares. Equity
Planning may sell Fund shares through its registered representatives or through
securities dealers with whom it has sales agreements. Equity Planning may also
sell Fund shares pursuant to sales agreements entered into with banks or
bank-affiliated securities brokers who, acting as agent for their customers,
place orders for Fund shares with Equity Planning. Although the Glass-Steagall
Act prohibits banks and bank affiliates from engaging in the business of
underwriting, distributing or selling securities (including mutual fund
shares), banking regulators have not indicated that such institutions are
prohibited from purchasing mutual fund shares upon the order and for the
account of their customers. If, because of changes in law or regulations, or
because of new interpretations of existing law, it is determined that agency
transactions of banks or bank-affiliated securities
11
<PAGE>
brokers are not permitted under the Glass-Steagall Act, the Trustees will
consider what action, if any, is appropriate. It is not anticipated that
termination of sales agreements with banks or bank-affiliated securities
brokers would result in a loss to their customers or a change in the net asset
value per share of 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 Trustees have adopted separate distribution plans under Rule 12b-1 of
the 1940 Act for each class of shares of the Fund (the "Class A Plan," the
"Class B Plan," and collectively the "Plans"). The Plans permit the Fund to
reimburse the Distributor for expenses incurred in connection with the sale and
promotion of Fund shares and the furnishing of shareholder services. Pursuant
to the Class A Plan, the Fund may reimburse the Distributor for actual expenses
of the Distributor up to 0.30% annually for the average daily net assets of the
Fund's Class A Shares. However, the Distributor has voluntarily agreed to limit
the maximum amount of reimbursement under the Class A Plan for the current
fiscal year to 0.25% annually of the average daily net assets of the Fund's
Class A Shares. Under the Class B Plan, the Fund may reimburse the Distributor
monthly for actual expenses of the Distributor up to 1.00% annually of the
average daily net assets of the Fund's Class B Shares.
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 for sales
of Class B Shares); (ii) compensation, sales incentives and payments to sales,
marketing and service personnel; (iii) payments to broker-dealers and other
financial institutions which have entered into agreements with the Distributor
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 expenditures related to the Fund; (v) the costs of preparing and
distributing promotional materials; (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 Trustees of
the Fund determine are reasonably calculated to result in the sale of shares of
the Fund; provided, however, that a portion of such amount paid to the
Distributor, which portion shall be equal to or less than 0.25% annually of the
average daily net assets of the Fund shares, may be paid for reimbursing the
costs of providing services to shareholders, including assistance in connection
with inquiries related to shareholder accounts (the "Service Fee"). From the
Service Fee the Distributor expects to pay a quarterly fee to qualifying
broker/dealer firms, as compensation for providing personal services 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 the
Distributor.
In order to receive payments under the Plans, participants must meet such
qualifications to be established in the sole discretion of the Distributor,
such as services to the 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 transmission of such purchases or sales by computerized tape or other
electronic equipment; or other batch processing.
Under the Class A Plan, reimbursement or payment of expenses may not be
made unless such payment or reimbursement occurs prior to the earliest of (a)
the last day of the one-year period commencing on the last day of the calendar
quarter during which the specific service or activity was performed, or (b) the
last day of the one-year period commencing on the last day of the calendar
quarter during which payment for the service or activity was made by a third
party on behalf of the Fund. The Class B Plan, however, does not limit the
reimbursement of distribution related expenses to expenses incurred in
specified time periods.
For the fiscal year ended April 30, 1997, the Fund paid the Distributor
$1,178,775 under the Class A Plan and $3,831,208 under the Class B Plan. The
fees were used to compensate unaffiliated broker-dealers for servicing
shareholder's accounts, including $53,355 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. On a quarterly basis, the Fund's Trustees review a report on
expenditures under each Plan and the purposes for which expenditures were made.
The Trustees conduct an additional more extensive review annually in
determining whether each Plan will be continued. By its terms, continuation of
each Plan from year to year is contingent on annual approval by a majority of
the Fund's Trustees and by a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of either Plan or any related agreements
(the "Plan Trustees"). Each Plan provides that it may not be amended to
increase materially 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 Trustees by vote cast in person at a
meeting called for the purpose of considering such amendments. Each Plan
further provides that while it is in effect, the selection and nomination of
Trustees who are not "interested persons" shall be committed to the discretion
of the Trustees who are not "interested persons." Each Plan may be terminated
at any time by vote of a majority of the Plan Trustees or a majority of the
applicable class of outstanding shares of the Fund.
The Trustees have concluded that there is a reasonable likelihood that the
Plans will benefit the Fund and all classes of shareholders. The Class A Plan
and the Class B Plan were
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<PAGE>
approved by shareholders of the Fund at a special meeting of shareholders held
on April 30, 1993.
The National Association of Securities Dealers, Inc. ("NASD") regards
certain distribution fees as asset-based sales charges subject to NASD sales
load limits. The NASD's maximum sales charge rule may require the Trustees to
suspend distribution fees or amend either or both Plans.
HOW TO BUY SHARES
The minimum initial purchase 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 Statement of Additional Information). 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.
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 services
fee 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 services
fee is 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 paid on Class B Shares will be reduced by the
amount of the higher distribution services fee and incremental expenses
associated with such distribution services fee; 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 issued will be electronically recorded in book
entry form. A fee may be incurred by the shareholder for a previously issued
lost or stolen share certificate. 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.
Shares of the Fund or shares of any other Phoenix Fund may be exchanged for
shares of the same class on the basis of the relative net asset values per
share at the time of the exchange. Exchanges are subject to the minimum initial
investment requirement of the designated Phoenix Fund, except if made in
connection with the Systematic Exchange Privilege. Shareholders may exchange
shares held in book-entry form for an equivalent number (value) of the same
class of shares from any other Phoenix Fund. On Class B Share exchanges, the
contingent deferred sales charge schedule of the original shares purchased
continues to apply.
Alternative Sales Arrangements
The alternative purchase arrangements permit 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 fee and contingent deferred sales
charges on Class B Shares prior to conversion would be less than the initial
sales charge and accumulated distribution fee 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 will be limited
to a maximum 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 eligible 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 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
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.
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<PAGE>
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 and Trust
Company 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 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
and Trust Company, 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 of $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 and 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. Equity Planning shall also pay
service and retention fees, from its own profits and resources, to qualified
wholesalers in connection with the sale of shares of Phoenix Funds (exclusive
of Class A Shares of Phoenix Money Market Series) by registered financial
institutions and related third party marketers.
**In connection with Class A Share purchases (or subsequent purchases in any
amount) by accounts held in the name of qualified employee benefit plans 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 such amounts
paid with respect to the investment.
How to Obtain Reduced Sales Charges On 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 Phoenix Fund trustee, director or officer; (2) any director or
officer, or any full-time employee or sales representative (who has acted as
such for at least 90 days) of the Adviser or employee 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 a corporate affiliates; (9)
any account held in the name of a qualified employee benefit plan, endowment
fund or foundation if, on the date of initial investment, the plan, fund or
foundation has assets of $10,000,000 or more or at least 100 eligible
employees; (10) any person with a direct rollover transfer of shares from an
established Phoenix Fund qualified plan; (11) any Phoenix Home Life separate
account which funds group annuity contracts offered to qualified employee
benefit plans; (12) any state, county, city, 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 fiduciary, agency, custodial or similar capacity if
in the aggregate such accounts held by such entity equal or exceed $1,000,000;
(15) any person who is investing redemption proceeds from investment companies
other than the Phoenix Funds if, in connection with the purchases or redemption
of the redeemed shares, the investor paid a prior sales charge provided such
investor supplies verification that the redemption occurred within 90 days of
the Phoenix Fund purchase and that a sales charge was paid; or (16)
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<PAGE>
any account established by financial institutions, broker/dealers or registered
investment advisers for which an account management fee or transaction fee is
charged and, provided such entity has entered into an agreement with the
Distributor for this program; 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 advisors and financial
planners who charge an advisory, consulting or other fee for their services and
buy shares for their own accounts or the accounts of their clients, and (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 advisors 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 advisor 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).
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 "re-allowed" to selected dealers and agents.
The Distributor will re-allow discounts to selected dealers and agents in the
amounts indicated in the table above. In this regard, the Distributor may elect
to re-allow 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 re-allowance in excess of 90% of such a sales charge may be
deemed to be an "underwriter" under the Securities Act of 1933.
Combination Purchase Privilege. Purchases, either singly or in any
combination, of shares of the Fund or shares of any other Phoenix Fund
(including Class B Shares and excluding Money Market Series Class A 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 in record in the name, or nominee name, of the
entity placing the order.
Letter of Intent. Class A Shares or shares of any other Phoenix Fund
(including Class B shares and excluding Money Market 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 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 (valued at the purchase price thereof) is held in escrow in the form
of shares 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 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 current value
(at the public offering price as described in the then current prospectus
relating to such shares) of shares of the Phoenix Funds owned) in excess of the
threshold amount
15
<PAGE>
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 being 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 the
expenses of the Distributor 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 for selling Class B
shares. 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 charges, 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, it will be assumed that any Class A Shares are being redeemed
first. Class B Shares held for over 5 years and shares acquired pursuant to
reinvestment of dividends or distributions are redeemed next. 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 1990, an investor purchased 100 Class B
Shares. In 1993, the investor purchased another 100 Class B Shares at $12 per
share. In 1995, the investor purchased 100 Class A Shares. Assume that in 1996,
the investor owns 225 Class B Shares (15 Class B Shares resulting from dividend
reinvestment and distributions upon the Class B Shares purchased in 1990 and 10
Class B Shares resulting from dividend reinvestment and distributions upon the
Class B Shares purchased in 1993) 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 1990 (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 1993 would be redeemed
resulting in a deferred sales charge of $27 [75 shares (85 shares minus 10
shares resulting from dividend reinvestment) - $12 (original price) - 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 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 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
16
<PAGE>
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 Phoenix Funds; (f) in connection with any person with a
direct rollover transfer of shares from an established 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 of the classes
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 the
Distributor to have been compensated for distribution-related expenses from the
burden of such distribution-related expenses.
For purposes of conversion, Class B 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
sub-account. Each time any Class B Shares in the shareholder's Fund account
(other than those in the sub-account) are converted to Class A Shares, an equal
pro rata portion of the Class B Shares in the sub-account 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 from the Internal
Revenue Service ("IRS") to the effect that (i) the assessment of the higher
distribution fees and transfer agency costs with respect to Class B Shares does
not result in any dividends or distributions constituting "preferential
dividends" under the Code, and (ii) that the conversion of shares does not
constitute a taxable event under federal income tax law. The conversion of
Class B Shares to Class A Shares may be suspended if such an opinion or ruling
is no longer available. In that event, no further conversions of Class B Shares
would occur, and shares might continue to be subject to the higher distribution
fee for an indefinite period which may extend beyond the period ending eight
years after the end of the month in which affected Class B Shares were
purchased. 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 U.S.
federal taxes.
INVESTOR ACCOUNT SERVICES
The Fund mails periodic statements and reports to shareholders. In order
to reduce the volume and cost of mailings, to the extent possible, only one
copy of most Fund reports will be mailed to households for multiple accounts
with the same surname at the same household address. Please contact Equity
Planning to request additional copies of shareholder reports toll free at (800)
243-4361.
In most cases, changes to any shareholder account may be accomplished by
calling Shareholder Services at (800) 243-1574. More information relating to
the shareholder account services can be found in the Fund's Statement of
Additional Information ("SAI").
Bank Draft Investing Program (Investo-Matic Plan). By completing the
Investo-Matic Section of the New Account Application, you may authorize the
bank named in the form to draw $25 or more from your personal bank account to
be used to purchase additional shares for your account. The amount you
designate will be made available, in form payable to the order of the Transfer
Agent, by the bank on the date the bank draws on your account and will be used
to purchase shares at the applicable offering price.
Distribution Option. The 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 due
to an invalid address, then the dividend and/or distribution will be reinvested
after the Transfer Agent has been informed that the proceeds are undeliverable.
Additional shares will be purchased in your account at the then current net
asset value. Dividends and capital gain distributions received in shares are
taxable to you and credited to your account in full and fractional shares
computed at the closing net asset value on the next business day after the
record date. 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, 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
17
<PAGE>
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.
Class A and B 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. 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.
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, SIMPLE 401(k), Profit-Sharing and Money
Purchase Pension Plans which can be adopted by self-employed persons ("Keogh")
and by corporations and 403(b) Retirement Plans. Write or call Equity Planning
at (800) 243-4631 for further information about the plans.
Exchange Privileges
You may exchange shares of one Phoenix Fund for shares of another Phoenix
Fund without paying any fees or sales charges. On exchanges with share classes
that carry a contingent deferred sales charge, the CDSC schedule of the
original shares purchased continues to apply. Shares held in book-entry form
may be exchanged for shares of the same class of other Phoenix Funds, provided
the following conditions are met: (1) the shares that will be acquired in the
exchange (the "Acquired Shares") are available for sale; (2) the Acquired
Shares are the same class as the shares to be surrendered (the "Exchanged
Shares"); (3) the Acquired Shares will be registered to the same shareholder
account as the Exchanged Shares; (4) the account value of the Fund whose shares
are to be acquired must equal or exceed the minimum initial investment amount
required by that Phoenix Fund after the exchange is made; and (5) if you have
elected not to use the telephone exchange privilege (see below), a properly
executed exchange request must be received by the Distributor. Exchanges may be
made over the telephone or in writing and may be made at one time or
systematically over a period of time. Note, each Phoenix Fund has different
investment objectives and policies. You should read the prospectus of the
Phoenix Fund into which the exchange is to be made before making any exchanges.
This privilege may be modified or terminated at any time on 60 days' notice.
Market Timer Restrictions. Because excessive trading can hurt Fund
performance and harm shareholders, the Fund reserves the right to temporarily
or permanently terminate exchange privileges or reject any specific order from
anyone whose transactions seem to follow a timing pattern, including those who
request more than one exchange out of a fund within any 30 day period. The
Distributor has entered into agreements with certain market timer entities
permitting them to exchange their clients' shares by telephone. These
privileges are limited under those agreements. The Distributor has the right to
reject or suspend these privileges upon reasonable notice.
Telephone Exchanges. If permitted in your state and unless you waive this
privilege in writing, you or your broker may sell or exchange your shares over
the phone by calling the Distributor at (800) 243-1574. Reasonable procedures
will be used to confirm that telephone instructions are genuine. In addition to
requiring that the exchange is only made between accounts with identical
registrations, the Distributor may require address or other forms of
identification and will record telephone instructions. All exchanges will be
confirmed in writing to you. If procedures reasonably designed to prevent
unauthorized telephone exchanges are not followed, the Fund and/or Distributor
may be liable for following telephone instructions that prove to be fraudulent.
Broker/dealers other than the Distributor assume the risk of any loss resulting
from any unauthorized telephone exchange instructions from their firm or their
registered representatives. You assume the risk that the Distributor acts upon
unauthorized instructions it reasonably believes to be genuine. During times of
severe economic or market changes, this privilege may be difficult to exercise
or may be temporarily suspended. In such event, an exchange may be effected by
written request by following the procedure outlined for selling shares
represented by certificate(s).
NET ASSET VALUE
The net asset value per share of the Fund is determined as of the close of
regular trading of the New York Stock Exchange (the "Exchange") on days when
the Exchange is open for trading. The net asset value per share of the Fund is
determined by adding the values of all securities and other assets of the Fund,
subtracting liabilities, and dividing by the total number of outstanding shares
of the Fund. The total liability allocated to a class, plus that class's
distribution fee and any other expenses allocated solely to that class, are
deducted from the proportionate interest of such class in the assets of the
Fund, and the resulting amount of each is divided by the number of shares of
that class outstanding to produce the net asset value per share.
18
<PAGE>
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
Trustees or their delegates. Foreign and domestic debt securities (other than
short-term investments) are valued on the basis of broker quotations or
valuations provided by a pricing service approved by the Trustees when such
prices are believed to reflect the fair value of such securities. Foreign and
domestic equity securities are valued at the last sale price or, if there has
been no sale that day, at the last bid price, generally. Short term investments
having a remaining maturity of less than sixty-one days are valued at amortized
cost, which the Trustees have determined approximates market value. For further
information about security valuations, see the Statement of Additional
Information.
HOW TO REDEEM SHARES
You have the right to have the Fund buy back shares at the net asset value
next determined after receipt of a redemption order, and any other required
documentation in proper form, by Phoenix Funds c/o State Street Bank and Trust
Company, P.O. Box 8301, Boston, MA 02266-8301. In the case of a Class B Share
redemption, you will be subject to the applicable deferred sales charge, if
any, for such shares (see "Deferred Sales Charge Alternative--Class B Shares,"
above). Subject to certain restrictions, shares may be redeemed by telephone,
by check 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, however, that redemption
proceeds will not be disbursed until each check used for purchases of shares
has been cleared for payment by your bank, which may take up to 15 days after
receipt of the check.
The requirements to redeem shares are outlined in the table below.
Additional documentation may be required for redemptions by corporations,
partnerships or other organizations, executors, administrators, trustees,
custodians, guardians, or from IRA's or other retirement plans, or if
redemption is requested by anyone but the shareholder(s) of record. To avoid
delay in redemption or transfer, shareholders having questions about specific
requirements should contact the 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?
<TABLE>
<S> <C> <C>
[graphic of phone] By Phone [bullet] Sales up to $50,000
[bullet] Not available on most retirement accounts
(800) 243-1574 [bullet] Requests received after 4PM will be executed
on the following business day
[bullet] Letter of instruction from the registered owner
[graphic of envelope] In Writing including the fund and account number and
the number of shares or dollar amount you
wish to sell
[bullet] No signature guarantee is required if your
shares are registered individually, jointly, or
as custodian under the Uniform Gifts to
Minors Act or Uniform Transfers to Minors
Act, the proceeds of the redemption do not
exceed $50,000, and the proceeds are payable
to the registered owners(s) at the address of
record
</TABLE>
Shares previously issued in certificate form can not be redeemed until the
certificated shares have been deposited to your account.
Telephone Redemptions. The Fund and the Transfer Agent will employ
reasonable procedures to confirm that telephone instructions are genuine.
Address and bank account information will be verified, telephone redemption
instructions will be recorded on tape, and all redemptions will be confirmed in
writing to you. If there has been an address change within the past 60 days, a
telephone redemption will not be authorized. To the extent that procedures
reasonably designed to prevent unauthorized telephone redemptions are not
followed, the Fund and/or the Transfer Agent may be liable for following
telephone instructions for redemption transactions that prove to be fraudulent.
Broker/dealers other than Equity Planning have agreed to bear the risk of any
loss resulting from any unauthorized telephone redemption instruction from the
firm or its registered representatives. However, 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 Redemption Privilege may be modified or terminated at any time on 60
days' notice to shareholders. In addition, during times of drastic economic or
market changes, the Telephone Redemption Privilege may be difficult to exercise
or may be temporarily suspended. In such event, a redemption may be effected by
written request by following the procedure outlined above.
Written Redemptions. Ownership of shares is recorded electronically in
book entry form; no share certificates are available. If you elect not to use
the telephone redemption or telephone exchange privileges or if the shares
being exchanged are represented by a previously issued certificate(s), 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. Any outstanding
certificate or certificates for the tendered shares must be duly endorsed and
submitted. The Distributor reserves the right to charge you for lost or stolen
certificates.
Account Reinstatement Privilege. You have a one time privilege of using
redemption proceeds from Class A and B Shares to purchase Class A Shares of any
Phoenix Fund with
19
<PAGE>
no sales charge (at net asset value next determined after the request for
reinvestment is made). For Federal income tax purposes, a redemption and
reinvestment will be treated as a sale and purchase of shares. Special rules
may apply in computing the amount of gain or loss in these situations. (See
"Dividends, Distributions and Taxes" for information on the Federal income tax
treatment of a disposition of shares.) A written request to reinstate your
account must be received by the Transfer Agent within 180 days of the
redemption, accompanied by payment for the shares (not in excess of the
redemption value). Class B shareholders who have had the contingent deferred
sales charge waived through participation in the Systematic Withdrawal Program
are not eligible to use the Reinstatement Privilege.
Redemption of Small Accounts
Due to the relatively high cost of maintaining small accounts, the 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.
A shareholder should contact his/her broker/dealer if he/she wishes to
transfer shares from an existing broker/dealer street name account to a street
name account with another broker/ dealer. The Fund has no specific procedures
governing such account transfers.
DIVIDENDS, DISTRIBUTIONS
AND TAXES
The Fund intends to continue to qualify annually as a regulated investment
company under Subchapter M of the Code, and to distribute annually to
shareholders substantially all of its net investment income and net realized
capital gains, after utilization of any capital loss carryovers. If the Fund so
qualifies, it generally will not be subject to Federal income tax on the income
it distributes. The discussion below is based upon the assumption that the Fund
will continue to qualify as a regulated investment company.
The Fund intends to make distributions from net investment income
quarterly, and intends to distribute net realized capital gains, if any, at
least annually.
The Fund will be subject to a nondeductible 4% excise tax if it fails to
meet certain calendar year distribution requirements. In order to prevent
imposition of the excise tax, it may be necessary for the Fund to make
distributions more frequently than described in the previous paragraph.
Unless a shareholder elects to receive distributions in cash, dividends
and capital gain distributions will be paid in additional shares of the Fund
credited at the net asset value per share on the ex-date. Dividends and
distributions, whether received in cash or in additional shares of the Fund,
generally are subject to Federal income tax and may be subject to state, local,
and other taxes. Shareholders will be notified annually about the amount and
character of distributions made to them by the Fund.
Long-term capital gains, if any, distributed to shareholders and which are
designated by the Fund as capital gain distributions, are taxable to
shareholders as long-term capital gain distributions regardless of the length
of time shares of the Fund have been held by the shareholder. Distributions of
short-term capital gains and net investment income, if any, are taxable to
shareholders as ordinary income.
Dividends and distributions generally will be taxable to shareholders in
the taxable year of the shareholder in which they are received. However,
dividends and distributions declared by the Fund in October, November or
December of any calendar year, with a record date in such a month, and paid
during the following January, will be treated as if they were paid by the Fund
and received by shareholders on December 31 of the calendar year in which they
were declared.
A redemption or other disposition (including an exchange) of shares of the
Fund generally will result in the recognition of a taxable gain or loss, which
will be a long- or short-term capital gain or loss (assuming the shares were a
capital asset in the hands of the shareholder), depending upon a shareholder's
holding period for his or her shares. In addition, if shares of the Fund are
disposed of at a loss and are replaced (either through purchases or through
reinvestment of dividends) within a period commencing thirty days before and
ending thirty days after the disposition of such shares, the realized loss will
be disallowed and appropriate adjustments to the tax basis of the new shares
will be made. In addition, special rules may apply to determine the amount of
gain or loss realized on any exchange.
Legislation may be enacted in the future that could affect the tax
consequences described above. Foreign shareholders may be subject to U.S.
Federal income tax rules that differ from those described above. For more
information regarding distributions and taxes, see "Dividends, Distributions
and Taxes" in the Statement of Additional Information.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS regulations, the 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.
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.
20
<PAGE>
Investors are urged to consult their attorney or tax adviser regarding
specific questions as to Federal, foreign, state or local taxes.
ADDITIONAL INFORMATION
Organization of the Fund
The Fund was organized under Massachusetts law in 1986 as a business
trust. On August 29, 1986, the Fund purchased all of the assets and assumed all
of the liabilities of the Total Income Series of National Securities Funds.
National Securities Funds, as such, had been in existence since 1940. The Fund
is continuing the business of the Total Income Series. On December 15, 1989,
the Fund purchased all of the assets and assumed all of the liabilities of the
National Preferred Fund. On May 30, 1990, the Fund purchased all of the assets
and assumed all of the liabilities of the National Premium Income Fund. On June
30, 1993, the Trustees voted to change the name of the Fund to "Phoenix Income
and Growth Fund" to reflect the purchase of the Adviser by Phoenix Home Life
and the affiliation with the other Phoenix Funds.
The Declaration of Trust provides that the Fund's Trustees are authorized
to create an unlimited number of series and, with respect to each series, to
issue an unlimited number of full and fractional shares of one or more classes
and to divide or combine the shares into a greater or lesser number of shares
without thereby changing the proportionate beneficial interests in the series.
All shares have equal voting rights, except that only shares of the respective
series or separate classes within a series are entitled to vote on matters
concerning only that series or class. At the date of this Prospectus, there is
only one existing series of the Fund, which has two classes of shares.
The shares of the Fund, when issued, will be fully paid and
non-assessable, have no preference, preemptive, or similar rights, and will be
freely transferable. There will normally be no meetings of shareholders for the
purpose of electing Trustees unless and until such time as less than a majority
of the Trustees holding office have been elected by shareholders, at which time
the Trustees then in office will call a shareholders' meeting for the election
of Trustees. Shareholders may, in accordance with the Declaration of Trust,
cause a meeting of shareholders to be held for the purpose of voting on the
removal of Trustees. Meetings of the shareholders will be called upon written
request of shareholders holding in the aggregate not less than 10% of the
outstanding shares having voting rights. Except as set forth above and subject
to the 1940 Act, the Trustees will continue to hold office and appoint
successor Trustees. Shares do not have cumulative voting rights and the holders
of more than 50% of the shares of the Fund voting for the election of Trustees
can elect all of the Trustees of the Fund if they choose to do so and in such
event the holders of the remaining shares would not be able to elect any
Trustees. Shareholders are entitled to redeem their shares as set forth under
"How to Redeem Shares."
The Declaration of Trust establishing the Fund, dated June 25, 1986 (a
copy of which, together with all amendments thereto, is on file in the office
of the Secretary of the Commonwealth of Massachusetts), provides that the
Fund's name refers to the Trustees under the Declaration of Trust collectively
as Trustees, but not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of the Fund shall be held to any personal liability,
nor shall report be had to their private property for the satisfaction of any
obligation or claim of said Fund but the "Trust Property" only shall be liable.
Registration Statement
This Prospectus omits certain information included in the Statement of
Additional Information and Part C of the Registration Statement filed with the
Securities and Exchange Commission under the Securities Act of 1933 and the
1940 Act. A copy of the Registration Statement may be obtained from the
Securities and Exchange Commission in Washington, D.C.
21
<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>
<CAPTION>
Account Type Give Social Security Number or Tax Identification Number of:
- -------------------------------------------------------------------------------------------------------
<S> <C>
Individual Individual
- -------------------------------------------------------------------------------------------------------
Joint (or Joint Tenant) Owner who will be paying tax
- -------------------------------------------------------------------------------------------------------
Uniform Gifts to Minors Minor
- -------------------------------------------------------------------------------------------------------
Legal Guardian Ward, Minor or Incompetent
- -------------------------------------------------------------------------------------------------------
Sole Proprietor Owner of Business (also provide owner's name)
- -------------------------------------------------------------------------------------------------------
Trust, Estate, Pension Plan Trust Trust, Estate, Pension Plan Trust (not personal TIN of fiduciary)
- -------------------------------------------------------------------------------------------------------
Corporation, Partnership,
Other Organization Corporation, Partnership, Other Organization
- -------------------------------------------------------------------------------------------------------
Broker/Nominee Broker/Nominee
- -------------------------------------------------------------------------------------------------------
</TABLE>
Step 2. If you do not have a TIN, you must obtain Form SS-5 (Application for
Social Security Number) or Form SS-4 (Application for Employer
Identification Number) from your local Social Security or IRS office and
apply for one. Write "Applied For" in the space on the application.
Step 3. If you are one of the entities listed below, you are exempt from backup
withholding.
[bullet] A corporation
[bullet] Financial institution
[bullet] Section 501(a) exempt organization (IRA, Corporate Retirement
Plan, 403(b), Keogh)
[bullet] United States or any agency or instrumentality thereof
[bullet] A State, the District of Columbia, a possession of the United
States, or any subdivision or instrumentality thereof
[bullet] International organization or any agency or instrumentality
thereof
[bullet] Registered dealer in securities or commodities registered in
the U.S. or a possession of the U.S.
[bullet] Real estate investment trust
[bullet] Common trust fund operated by a bank under section 584(a)
[bullet] An exempt charitable remainder trust, or a non-exempt trust
described in section 4947(a)(1)
[bullet] Regulated Investment Company
If you are in doubt as to whether you are exempt, please contact the Internal
Revenue Service.
Step 4. IRS Penalties--If you do not supply us with your TIN, you will be
subject to an IRS $50 penalty unless your failure is due to reasonable
cause and not willful neglect. If you fail to report interest, dividend
or patronage dividend income on your federal income tax return, you will
be treated as negligent and subject to an IRS 5% penalty tax on any
resulting underpayment of tax unless there is clear and convincing
evidence to the contrary. If you falsify information on this form or
make any other false statement resulting in no backup withholding on an
account which should be subject to a backup withholding, you may be
subject to an IRS $500 penalty and certain criminal penalties including
fines and imprisonment.
- -----------
This Prospectus sets forth concisely the information about the Phoenix Income
and Growth (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 August 28, 1997. The Statement
contains more detailed information about the Fund and is incorporated into this
Prospectus by reference. You may obtain a free copy of the Statement by writing
the Fund c/o Phoenix Equity Planning Corporation, 100 Bright Meadow, P.O. Box
2200, Enfield, Connecticut 06083-2200.
Financial information relating to the Fund is contained in the Annual Report to
Shareholders for the year ended April 30, 1997 and is incorporated into the
Statement of Additional Information by reference.
[recycle symbol] Printed on recycled paper using soybean ink
<PAGE>
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<PAGE>
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<PAGE>
[back cover]
[indicia]
Phoenix Income and Growth Fund BULK RATE MAIL
PO Box 2200 U.S. POSTAGE
Enfield CT 06083-2200 PAID
SPRINGFIELD, MA
PERMIT NO. 444
[logo] PHOENIX
DUFF & PHELPS
PDP 693 (8/97)
<PAGE>
PHOENIX INCOME AND GROWTH FUND
101 Munson Street
Greenfield, Massachusetts 01301
Statement of Additional Information
August 28, 1997
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current Prospectus of
Phoenix Income and Growth Fund (the "Fund"), dated August 28, 1997, 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, CT 06083-2200.
TABLE OF CONTENTS
PAGE
THE FUND .................................... 1
INVESTMENT OBJECTIVES AND POLICIES (6) ...... 1
INVESTMENT RESTRICTIONS (10) .................. 1
INVESTMENT TECHNIQUES (7) ..................... 2
PERFORMANCE INFORMATION (6) .................. 3
PORTFOLIO TURNOVER ........................... 5
PORTFOLIO TRANSACTIONS AND BROKERAGE ......... 5
SERVICES OF THE ADVISER (11) .................. 6
NET ASSET VALUE (18) ........................ 7
HOW TO BUY SHARES (13) ........................ 7
ALTERNATIVE PURCHASE ARRANGEMENTS (13) ...... 7
INVESTOR ACCOUNT SERVICES (17) ............... 9
REDEMPTION OF SHARES (19) ..................... 10
DIVIDENDS, DISTRIBUTIONS AND TAXES (20) ...... 10
TAX SHELTERED RETIREMENT PLANS (18) ......... 12
THE DISTRIBUTOR (11) ........................ 12
PLANS OF DISTRIBUTION (11) .................. 13
TRUSTEES AND OFFICERS ........................ 14
OTHER INFORMATION ........................... 22
APPENDIX .................................... 23
Numbers appearing in parentheses correspond to
related disclosures in the Fund's Prospectus.
Customer Service--(800) 243-1574
Marketing--(800) 243-4361
Telephone Orders--(800) 367-5877
Telecommunication Device (TTY)--(800) 243-1926
PDP 693B (8/97)
<PAGE>
THE FUND
Phoenix Income and Growth Fund is an open-end diversified management
investment company which was organized under Massachusetts law in 1986 as a
business trust. The Fund's Prospectus describes the investment objectives of
the Fund. The following discussion supplements the description of the Fund's
investment policies and investment techniques in the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The primary investment objective of the Fund is to provide an investment
in a diversified group of securities that are selected for current yield
consistent with preservation of capital. The investment objective of the Fund
is a fundamental policy which may not be changed without the approval of the
holders of a majority of the outstanding shares of the Fund. The secondary
objective of the Fund is to achieve capital appreciation when it is consistent
with the Fund's primary objective. The secondary objective is a non-fundamental
policy and may be changed by a vote of the Trustees without shareholder
approval. The Fund will contain income producing securities, including domestic
or foreign equity, debt, options, convertible securities and government
securities. The proportion of holdings in bonds, preferred stocks and equities
will vary with the level of return obtained from these various classes of
securities. Only securities producing income at the time of purchase will be
included in the portfolio. There is no assurance that the Fund will achieve its
investment objectives.
INVESTMENT RESTRICTIONS
Fundamental Policies
The following investment restrictions constitute fundamental policies of
the Fund which may be changed only upon approval by the holders of a majority
of the outstanding shares of the Fund. The Fund cannot:
1. Borrow money;
2. Underwrite the securities of others;
3. Deal in real estate except that it may purchase marketable securities of
companies that deal in real estate or interests therein including real
estate investment trusts but, excluding real estate limited partnerships;
4. Deal in commodities or commodities contracts;
5. Make loans to other persons except that it may lend portfolio securities
(up to 25% of net assets at the time the loan is made) to brokers or
dealers or other financial institutions not affiliated with the Fund or
the Adviser, subject to conditions established by the Adviser (See
"Lending of Securities") and enter into repurchase transactions (in
accordance with the Fund's current Prospectus);
6. Participate in any joint trading accounts;
7. Pledge, mortgage or hypothecate any securities or other property;
8. Purchase on margin;
9. Engage in short sales;
10. Issue senior securities;
11. Invest more than 25% of its assets in any one industry or group of
industries;
12. Purchase any securities (other than U.S. Government obligations) if, as a
result, more than 5% of the value of the total assets of the Fund would be
invested in securities of a single issuer;
13. Purchase any security if, as a result, more than 10% of any class of
securities or more than 10% of the outstanding voting securities of any
issuer would be held;
14. Purchase any security of an investment trust except for purchases in the
open market where no commission or profit to a sponsor or dealer results
from such purchases, other than a customary broker's commission; and
15. Make an investment for the purpose of exercising control or management.
Other Policies
The following investment restrictions do not constitute fundamental
policies and may be changed without shareholder approval. The Fund cannot:
1. Invest more than 15% of its net assets in illiquid securities, including
(a) securities with legal or contractual restrictions on resale (except in
the case of securities issued pursuant to Rule 144A sold to qualifying
institutional investors under special
1
<PAGE>
rules adopted by the Securities and Exchange Commission for which the
Trustees of the Fund determine the secondary market is liquid) (b)
repurchase agreements maturing in more than seven days and (c) securities
that are not readily marketable;
2. Purchase or retain any securities of any issuer if the officers, or
Trustees of the Fund, the Adviser who individually own beneficially more
than 1/2 of 1% of such issuer, together own beneficially more than 5% of
such issuer's securities;
3. Invest more than 5% of total net assets in securities of issuers
(including their predecessors) who have been in business for less than
three years; or
4. Invest in interests (including leases) in oil, gas or other mineral
exploration development programs.
INVESTMENT TECHNIQUES
The Fund may utilize the following practices or techniques in pursuing its
investment objectives.
Options
The Fund may, from time to time write covered call option contracts as a
means of increasing the total return of the Fund's portfolio and also as a
means of providing limited protection against increases in market value of the
Fund's portfolio. Such contracts will be written on securities in which the
Fund has authority to invest and on securities indices listed on an organized
national securities exchange. The aggregate value of the securities will be
limited to not more than 25% of the net assets of the Fund.
A call option on a security gives the purchaser of the option the right to
buy the underlying security from the writer at the exercise price at any time
prior to the expiration of the contract, regardless of the market price of the
security during the option period. A written call option is "covered" if,
throughout the life of the option (1) the Fund owns the optioned securities,
(2) the Fund maintains in a pledged account with its Custodian, any asset,
including equity securities, as long as the asset is liquid, unencumbered and
marked to market daily with a value sufficient to meet its obligations under
the call, or (3) if the Fund owns an offsetting call option. The premium paid
to the writer is the consideration for undertaking the obligations under the
option contract. The Fund will only write call option contracts when it is
believed that the total return to the Fund can be increased through such
premiums consistent with the Fund's investment objective.
The Fund may also write covered call options on securities indices.
Through the writing of call index options, the Fund can achieve many of the
same objectives as through the use of call options on individual securities.
Call options on securities indices are similar to call options on a security
except that, rather than the right to take delivery of a security at a
specified price, a call option on a securities index gives the holder the right
to receive, upon the exercise of the option, an amount of cash if the closing
level of the securities index upon which the call option is based is greater
than the exercise price of the option. The writing of such index call options
would be subject to the present limitation of covered call option writing of
not more than 25% of the net assets of the Fund. The writing of option
contracts is a highly specialized activity which involves investment techniques
and risks different from those ordinarily associated with investment companies,
and the restrictions listed above would tend to reduce such risks. The Fund has
not written call options in the last fiscal year and does not intend to do so
in the future with respect to more than 5% of the Fund's net assets.
The Fund may purchase options to close out a position, (i.e. a "closing
purchase transaction"--the purchase of a call option on the same security with
the same exercise price and expiration date as the call option which it has
previously written on any particular security). When a security is sold from
the Fund's portfolio, the Fund will first effect a closing purchase transaction
so as to close out any existing call option on that security, realizing a
profit or loss depending on whether the amount paid to purchase a call option
is less or more than the amount received from the sale thereof. In addition,
the Fund may wish to purchase a call option to hedge its portfolio against any
anticipated increase in the price of securities it intends to purchase or to
purchase a put option to hedge its portfolio against an anticipated decline in
securities prices. No more than 5% of the assets of the Fund may be invested in
the purchase of put and call options including index options.
The purchase and writing of options involves certain risks. During the
option period, the covered call writer has, in return for the premium on the
option, given up the opportunity to profit from a price increase in the
underlying securities above the exercise price, but, as long as its obligation
as a writer continues, has retained the risk of loss should the price of the
underlying security decline. The writer of an option has no control over the
time when it may be required to fulfill its obligation as a writer of the
option. Once an option writer has received an exercise notice, it cannot effect
a closing purchase transaction in order to terminate its obligation under the
option and must deliver the underlying securities at the exercise price. If a
call option purchased by the Fund is not sold when it has remaining value, and
if the market price of the underlying security remains less than or equal to
the exercise price, the Fund will lose its entire investment in the option.
Also, where an option on a particular security is purchased to hedge against
price movements in a related security, the price of the option may move more or
less than the price of the related security. There can be no assurance that a
liquid market will exist when the Fund seeks to close out an option position.
Furthermore, if trading restrictions or suspensions are imposed on the options
market, the Fund may be unable to close out an option position.
Lending of Securities
The Fund may lend portfolio securities to broker/dealers or other
institutional borrowers, but only when the borrower pledges cash collateral to
the Fund and agrees to maintain such so that it amounts at all times to at
least 100% of the value of the securities
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loaned. Furthermore, the Fund may terminate such loans at any time, and must
receive reasonable interest on the collateral as well as dividends, interest,
or other distributions paid on the security during the loan period. Upon
expiration of the loan, the borrower of the securities will be obligated to
return to the Fund the same number and kind of securities as those loaned
together with duly executed stock powers. The Fund must be permitted to vote
the proxies if a material event affecting the value of the security is to
occur. The Fund may pay reasonable fees in connection with the loan, including
reasonable fees to the Fund's Custodian for its services.
Privately Issued Asset-Backed Securities and Collateralized Mortgage-Backed
Obligations ("CMO")
The Fund may invest up to 5% of its assets in asset-backed securities,
which represent a participation in, or are secured by and payable from a stream
of payments generated by particular assets, most often a pool of assets similar
to one another, such as motor vehicle and credit card receivables.
Collateralized mortgage obligations or "CMO's" are debt obligations
collateralized by mortgage loans or mortgage pass-through securities.
Typically, privately issued CMO's are collateralized by Ginnie Mae, Fannie Mae
or Freddie Mac Certificates, but also may be collateralized by whole loans or
private pass-throughs (such collateral collectively hereinafter referred to as
"Mortgage Assets"). Multiclass pass-through securities are equity interests in
a trust composed of Mortgage Assets. Unless the context indicates otherwise,
all references herein to CMO's include multiclass pass-through securities.
Payments of principal of and interest on the Mortgage Assets, and any
reinvestment income thereon, are the sources of funds used to pay debt service
on the CMO's or make scheduled distributions on the multiclass pass-through
securities.
In a CMO, a series of bonds or certificates is issued in multiple classes.
Each class of CMO's, often referred to as a "tranche," is issued at a specific
fixed or floating coupon rate and has a stated maturity or final distribution
date. Principal prepayments on the Mortgage Assets may cause the CMO's to be
retired substantially earlier than their stated maturities or final
distribution dates. The principal of and interest on the Mortgage Assets may be
allocated among the several classes of a CMO in innumerable ways. The Fund may
also invest in, among others, parallel pay CMO's and Planned Amortization Class
CMO's ("PAC Bonds"). Parallel pay CMO's are structured to provide payments of
principal on each payment date to more than one class. These simultaneous
payments are taken into account in calculating the stated maturity date or
final distribution date of each class, which, as with other CMO structures,
must be retired earlier. PAC Bonds generally call for payments of a specified
amount of principal on each payment date.
Stripped mortgage-backed securities ("SMBS") are derivative multiclass
mortgage securities. SMBS may be issued by agencies or instrumentalities of the
U.S. Government, or by private originators of, or investors in, mortgage loans,
including savings and loan associations, mortgage banks, commercial banks,
investment banks and special purpose subsidiaries of the foregoing.
SMBS are structured with two or more classes of securities that receive
different proportions of the interest and principal distributions on a pool of
Mortgage Assets. A common type of SMBS will have at least one class receiving
only a small portion of the interest and a larger portion of the principal from
the Mortgage Assets, while the other classes will receive primarily interest
and only a small portion of the principal. In the most extreme case, one class
will receive all of the interest (the interest-only or "IO" class), while the
other class will receive all of the principal (the principal-only or "PO"
class). The yield to maturity on an IO class is extremely sensitive to the rate
of principal payments (including prepayments) on the related underlying
Mortgage Assets, and a rapid rate of principal payments may have a material
adverse effect on such security's yield to maturity. If the underlying Mortgage
Assets experience greater than anticipated prepayments of principal, the Fund
may fail to recoup fully its initial investment in these securities.
Forward Foreign Currency Exchange Contracts
In order to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward foreign currency exchange contracts
("forward currency contracts") for the purchase or sale of a specified currency
at a specified future date. Such contracts may involve the purchase or sale of
a foreign currency against the U.S. dollar or may involve two foreign
currencies. The Fund may enter into forward currency contracts either with
respect to specific transactions or with respect to the Fund's portfolio
positions.
PERFORMANCE INFORMATION
The Fund may, from time to time, include performance information in
advertisements, sales literature or reports to shareholders or prospective
investors. Performance information in advertisements and sales literature may
be expressed as a yield of a class and as a total return of any class of the
Fund.
Standardized quotations of average annual total return for Class A or
Class B shares will be expressed in terms of the average annual compounded rate
of return for a hypothetical investment in either Class A or Class B shares
over periods of 1, 5 and 10 years or up to the life of the class of shares),
calculated for each class separately pursuant to the following formula: P(1+T)n
= ERV (where P = a hypothetical initial payment of $1,000, T = the average
annual total return, n = the number of years, and ERV = the ending redeemable
value of a hypothetical $1,000 payment made at the beginning of the period).
All total return figures
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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 are on Class A and Class B shares
reinvested when paid.
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 & 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
against certain widely acknowledged outside standards or indices for stock and
bond market performance, such as the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500"), Dow Jones Industrial Average, Europe Australia Far
East Index (EAFE), Consumer Price Index, Lehman Brothers Corporate Index and
Lehman Brothers T-Bond Index.
Advertisements, sales literature and other communications may contain
information about the Fund and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Fund to
respond quickly to changing market and economic conditions. From time to time
the Fund may include specific portfolio holdings or industries, such as IBM or
health care, in such communications. To illustrate components of overall
performance, the Fund may separate is cumulative and average annual returns
into income and capital gains components; or cite separately as a return figure
the equity or bond portion of the Fund's portfolio; or compare the Fund's
equity or bond return future 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 Bond and
Government Bond Indices.
Quotations of yield for the Fund will be based on all investment income
per share earned during a particular 30-day period (including dividends and
interest), less expenses accrued during the period ("net investment income"),
and is computed by dividing net investment income by the value of a share on
the last day of the period according to the following formula:
Yield = 2[(a-b+1)(6)-1]
---
cxd
Where a = dividends and interest earned during the period by the Fund,
b = expenses accrued for the period (net of any reimbursements),
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the
period.
For the period ended April 30, 1997, the yield of the Class A Shares and
Class B Shares was 3.16% and 2.59%, respectively.
For the 1, 5 and 10 year periods ended April 30, 1997, the average annual
total return of the Class A Shares was 5.69%, 9.58% and 10.55%, respectively.
For the 1 and 5 year periods ended April 30, 1997, and since inception (January
3, 1992), for Class B Shares, the average annual total return was 6.14%, 9.88%
and 9.79%, respectively. Performance information reflects only the performance
of a hypothetical investment in each class during the particular time period on
which the calculations are based. Performance information should be considered
in light of the Fund's investment objectives and policies, characteristics and
quality of the portfolio, and the market condition during the given time
period, and should not be considered as a representation of what may be
achieved in the future.
The Fund may also compute aggregate total return for specified periods
based on a hypothetical Class A or Class B account with an assumed initial
investment of $10,000. The aggregate total return is determined by dividing the
net asset value of this account at the end of the specified period by the value
of the initial investment and is expressed as a percentage. Calculation of
aggregate total return reflects payment of the Class A shares's maximum sales
charge of 4.75% and assumes reinvestment of all income dividends and capital
gain distributions during the period. Based on the foregoing, the Class A
share's aggregate cumulative total return quotation for the period commencing
September 7, 1940 and ending April 30, 1997 was 27,178%. Class B aggregate
cumulative total return quotation for the period commencing with the offering
of the Class B Shares on January 3, 1992 and ending April 30, 1997 was 64%.
The Fund also may quote annual, average annual and annualized total return
and aggregate total return performance data, for both classes of shares of the
Fund, both as a percentage and as a dollar amount based on a hypothetical
$10,000 investment for various periods other than those noted below. Such data
will be computed as described above, except that (1) the rates of return
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
charge will not be included with respect to annual, annualized or aggregate
rate of return calculations.
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PORTFOLIO TURNOVER
Portfolio turnover is calculated by dividing the lesser of purchases or
sales of portfolio securities during the fiscal year by the monthly average of
the value of the Fund's securities (excluding from the computation all
securities, including options, with maturities at the time of acquisition of
one year or less). A high rate of portfolio turnover generally involves
correspondingly greater brokerage commission expenses, which must be borne
directly by the Fund. Turnover rates may vary greatly from year to year as well
as within a particular year and may also be affected by cash requirements for
redemptions of Fund shares and by requirements which enable the Fund to receive
certain favorable tax treatment (see "Dividends, Distributions and Taxes").
Historical annual rates of portfolio turnover for the Fund are set forth in the
prospectus, a copy of which must precede or accompany this Statement of
Additional Information.
For the fiscal years ended April 30, 1996 and April 30, 1997,
respectively, the turnover rates for the equity portion of the Fund were 104%
and 148%. The turnover rates for the fixed income securities were 112% and 42%
for the same periods.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser places orders for the purchase and sale of securities,
supervises their execution and negotiates brokerage commissions on behalf of
the Fund. It is the practice of the Adviser to seek the best prices and best
execution of orders and to negotiate brokerage commissions which in the
Adviser's opinion are reasonable in relation to the value of the brokerage
services provided by the executing broker. Brokers who have executed orders for
the Fund are asked to quote a fair commission for their services. If the
execution is satisfactory and if the requested rate approximates rates
currently being quoted by the other brokers selected by the Adviser, the rate
is deemed by the Adviser to be reasonable. Brokers may ask for higher rates of
commission if all or a portion of the securities involved in the transaction
are positioned by the broker, if the broker believes it has brought the Fund an
unusually favorable trading opportunity, or if the broker regards its research
services as being of exceptional value, and payment of such commissions is
authorized by the Adviser after the transaction has been consummated. If the
adviser more than occasionally differs with the broker's appraisal of
opportunity or value, the broker would not be selected to execute trades in the
future.
The Adviser believes that the Fund benefits with a securities industry
comprised of many and diverse firms and that the long-term interest of
shareholders of the Fund is best served by its brokerage policies which include
paying a fair commission rather than seeking to exploit its leverage to force
the lowest possible commission rate. The primary factors considered in
determining the firms to which brokerage orders are given are the Adviser's
appraisal of: the firm's ability to execute the order in the desired manner,
the value of research services provided by the firm, and the firm's attitude
toward and interest in mutual funds in general including the sale of mutual
funds managed and sponsored by the Adviser. The Adviser does not offer or
promise to any broker an amount or percentage of brokerage commissions as an
inducement or reward for the sale of shares of the Fund. Over-the-counter
purchases and sales are transacted directly with principal market-makers except
in those circumstances where in the opinion of the Adviser better prices and
execution are available elsewhere.
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 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 it
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 or the trading day following the day on which the order
is executed. If an aggregated order is partially filled and allocated on a
basis different from that specified in the allocation order, no account that is
benefited by such different allocation may intentionally and knowingly effect
any purchase or sale for a reasonable period following the execution of the
aggregated order that would result in it receiving or selling more shares than
the amount of shares it would have received or sold had the aggregated order
been completely filled. The Trustees will annually review these procedures or
as frequently as shall appear appropriate.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller firms
in general tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. In addition, several firms monitor
federal, state, local and foreign political
5
<PAGE>
developments; many of the brokers also provide access to outside consultants.
The outside research assistance is particularly useful to the Adviser's staff
since the brokers as a group tend to monitor a broader universe of securities
and other matters than the Adviser's staff can follow. In addition, it provides
the Adviser with a diverse perspective on financial markets. Research and
investment information is provided by these and other brokers at no cost to the
Adviser and is available for the benefit of other accounts advised by the
Adviser and its affiliates and not all of this information will be used in
connection with the Fund. While this information may be useful in varying
degrees and may tend to reduce the Adviser's expenses, it is not possible to
estimate its value and in the opinion of the Adviser it does not reduce the
Adviser's expenses in a determinable amount. The extent to which the Adviser
makes use of statistical, research and other services furnished by brokers is
considered by the Adviser in the allocation of brokerage business but there is
no formula by which such business is allocated. The Adviser does so in
accordance with its judgment of the best interest of the Funds and their
shareholders.
Purchases and sales of fixed-income securities will usually be principal
transactions. Such securities often will be purchased or sold from or to
dealers serving as market makers for the securities at a net price. The Fund
will also purchase such securities in underwritten offerings and will, on
occasion, purchase securities directly from the issuer. Generally, fixed-income
securities are traded on a net basis and do not involve brokerage commissions.
The cost of executing fixed-income securities transactions consists primarily
of dealer spreads and underwriting commissions.
In purchasing and selling fixed-income securities, it is the policy of the
Fund to obtain the best results taking into account the dealer's general
execution and operational facilities, the type of transaction involved and
other factors, such as the dealer's risk in positioning the securities
involved. While the Adviser generally seeks reasonably competitive spreads or
commissions, the Fund will not necessarily pay the lowest spread or commission
available.
The Fund may, in circumstances in which two or more dealers are in a
position to offer comparable results, give preference to a dealer which has
provided statistical or other research services to the Fund. By allocating
transactions in this manner, the Adviser is able to supplement its research and
analysis with the views and information of other securities firms.
During the fiscal years ended April 30, 1995, 1996 and 1997, brokerage
commissions paid by the Fund totaled $1,211,199, $1,189,884 and $1,778,732,
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 April 30, 1997 included brokerage commissions of
$1,119,918 on portfolio transactions aggregating $839,174,659 executed by
brokers who provided research and other statistical and factual information.
SERVICES OF THE ADVISER
The Adviser provides certain services and facilities required to carry on
the day-to-day operations of the Fund (for which it receives a management fee)
other than the costs of printing and mailing proxy materials, reports and
notices to shareholders; outside legal and auditing accounting services;
regulatory filing fees and expenses of printing the Fund's registration
statements (but the Distributor purchases such copies of the Fund's
prospectuses and reports and communications to shareholders as it may require
for sales purposes); insurance expense; association membership dues; brokerage
fees; and taxes.
As compensation for its services, the Adviser receives a fee, which is
accrued daily against the value of the Fund's net assets and is paid monthly by
the Fund. The fee is computed at an annual rate of 0.70% of the Fund's average
daily net assets up to $1 billion, 0.65% of the Fund's average daily net assets
from $1 billion to $2 billion and 0.60% of the Fund's average daily net assets
in excess of $2 billion. For the fiscal years 1995, 1996 and 1997, the net
management fees paid by the Fund to the Adviser were $6,338,744, $6,253,253 and
$5,982,415, respectively.
The Adviser has agreed that if, in any fiscal year, the aggregate expenses
of the Fund, exclusive of taxes, distribution fees, brokerage, interest and
(with the prior consent of any necessary state securities commissions)
extraordinary expenses, but including the management fee, exceed the most
restrictive expense limitations applicable to the Fund under state securities
laws or published regulations thereunder, the Adviser will refund to the Fund
the excess over such amount. Currently, the most restrictive of such
limitations would require the Adviser to reimburse the Fund to the extent that
in any fiscal year such aggregate expenses exceed 2.5% of the first $30,000,000
of the average net assets and 2.0% of the next $70,000,000, of the average net
assets and 1.5% of any amount of the average net assets in excess of
$100,000,000. 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.
The Adviser is a direct subsidiary of Phoenix Duff & Phelps Corporation.
Phoenix Home Life Mutual Insurance Company ("Phoenix Home Life") owns a
majority interest in Phoenix Duff & Phelps Corporation. Phoenix Home Life is a
mutual insurance company engaged in the insurance and investment businesses.
Phoenix Home Life's principal place of business is located at One American Row,
Hartford, Connecticut. The Adviser also acts as the investment adviser or
manager for Phoenix Multi-Sector Short Term Bond Fund, Phoenix California Tax
Exempt Bonds, Inc., Equity Opportunities Fund Series of Phoenix Strategic
Equity Series
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<PAGE>
Fund, Phoenix Multi-Sector Fixed Income Fund, Inc. and the Phoenix Worldwide
Opportunities Fund. The Adviser currently has approximately $1.6 billion in
assets under management. The Adviser has acted as an investment adviser for
over sixty years.
The Management Agreement was approved by the Trustees of the Fund on March
16, 1993, and by the shareholders of the Fund on May 13, 1993. The Management
Agreement will continue in effect from year to year if specifically approved
annually (a) by the Trustees of the Fund, including a majority of the
disinterested Trustees, or by (b) a majority of the outstanding voting
securities of the Fund as defined in the 1940 Act. Shareholders were asked to
approve the Management Agreement at a Special Meeting of Shareholders held on
May 7, 1993 due to a change in control of National which resulted in the
termination of the Management Agreement which was previously in effect. The
Management Agreement may be terminated without penalty at any time by a similar
vote upon 60 days' notice or by the adviser upon 60 days' written notice and
will automatically terminate in the event of its assignment as defined in
Section 2(a)(4) of the 1940 Act.
NET ASSET VALUE
The net asset value per share of the Fund is determined as of the close of
regular trading of the New York Stock Exchange (the "Exchange") on days when
the Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. Since the Fund does not price securities on weekends or
United States national holidays, the net asset value of the Fund's foreign
assets may be significantly affected on days when the investor has no access to
the Fund. The net asset value per share of the Fund is determined by adding the
values of all securities and other assets of the Fund, subtracting liabilities,
and dividing by the total number of outstanding shares of the Fund. Assets and
liabilities are determined in accordance with generally accepted accounting
principles and applicable rules and regulations of the Securities and Exchange
Commission. The total liability allocated to a class, plus that class's
distribution fee and any other expenses allocated solely to that class, are
deducted from the proportionate interest of such class in the assets of the
Fund, and the resulting amount of each is divided by the number of shares of
that class outstanding to produce the net asset value per share.
A security that is listed or traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary exchange for such
security by the Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world,
the calculation of net asset value may not take place for the Fund if it
invests 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 Trustees 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 Trustees although the actual calculations may
be made by persons acting pursuant to the direction of the Trustees.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent
investment is $25. However, both the minimum initial and subsequent investment
amounts are $25 for investments pursuant to the "Investo-Matic" plan, a bank
draft investing program administered by Distributor, or pursuant to the
Systematic Exchange privilege or for an individual retirement account (IRA). In
addition, there are no subsequent investment minimum amounts in connection with
the reinvestment of dividend or capital gain distributions. Completed
applications for the purchase of shares should be mailed to: Phoenix Funds, c/o
State Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares of the Fund 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").
The alternative purchase arrangement permits an investor to choose the
method of purchasing shares that is more beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Fund, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the Fund,
the accumulated continuing distribution services fee and contingent deferred
sales charges on Class B shares prior to conversion would be less than the
initial sales charge and accumulated distribution services fee on Class A
shares purchased at the same time, and to what extent such differential would
be offset by the lower expenses attributable to Class A shares.
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<PAGE>
Class A shares are subject to a lower distribution services fee and,
accordingly, pay correspondingly higher dividends, to the extent any dividends
are paid, 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 charges, 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.
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 services fee
and, in the case of Class B shares, from the proceeds of the ongoing
distribution services fee and the contingent deferred sales charge incurred
upon redemption within five years of purchase. Sales personnel of
broker-dealers distributing the Fund's shares may receive differing
compensation for selling Class A or Class B shares. Investors should understand
that the purpose and function of the contingent deferred sales charge and
ongoing distribution services fee with respect to the Class B shares are the
same as those of the initial sales charge and ongoing distribution services
fees with respect to the Class A shares.
Dividends paid by the Fund, if any, with respect to Class A and Class B
shares will be calculated in the same manner at the same time on the same day,
except that the higher distribution services fee and any incremental transfer
agency costs relating to Class B shares will be borne exclusively by that
class. See "Dividends, Distributions and Taxes."
The Trustees of the Fund have determined that currently no conflict of
interest exists between the Class A and Class B shares. On an ongoing basis,
the Trustees of the Fund, pursuant to their fiduciary duties under the 1940 Act
and state laws, will seek to ensure that no such conflict arises.
Class A Shares
An investor who elects the initial sales charge alternative acquires Class
A shares. Class A shares incur a sales charge when they are purchased and enjoy
the benefit of not being subject to any sales charge when they are redeemed.
Class A shares are subject to an ongoing distribution services fee at an annual
rate of up to 0.30% of the Fund's aggregate average daily net assets
attributable to the Class A shares. However, for the current fiscal year, the
Distributor has voluntarily agreed to limit the distribution services fee for
Class A Shares to 0.25%. In addition, certain purchases of Class A shares
qualify for reduced initial sales charges. See the Fund's current Prospectus.
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 they are subject to a sales charge if they are redeemed within
five years of purchase. The deferred sales charge may be waived in connection
with certain qualifying redemptions. See the Fund's current Prospectus.
Class B shares are subject to an ongoing distribution services fee at an
annual rate of up to 1.00% of the Fund's aggregate average daily net assets
attributable to the Class B shares. Class B shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment
is made. The higher ongoing distribution services fee paid by Class B shares
will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than those related to Class A
shares. Class B shares will automatically convert to Class A shares eight years
after the end of the calendar month in which the shareholder's order to
purchase was accepted, in the circumstances and subject to the qualifications
described in the Fund's Prospectus.
Class B shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were issued. At the
end of this period, Class B shares will automatically convert to Class A shares
and will no longer be subject to the higher distribution services fee. Such
conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge. 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 the Distributor
to have been compensated for distribution expenses related to the Class B
shares from most of the burden of such distribution-related expenses.
For purposes of conversion to Class A, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B shares
in a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class B shares in the shareholder's Fund 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.
8
<PAGE>
INVESTOR ACCOUNT SERVICES
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 all classes. In most
cases, changes to account services may be accomplished over the phone.
Inquiries regarding policies and procedures relating to shareholder account
services should be directed to Shareholder Services at (800) 243-1574.
Exchanges. Class A Shares of the Fund held under six months are not
eligible for the exchange privilege. Under certain circumstances, shares of any
Phoenix Fund may be exchanged for shares of the same Class on the basis of the
relative net asset values per share at the time of the exchange. Exchanges are
subject to the minimum initial investment requirement of the designated Series,
Fund, or Portfolio, except if made in connection with the Systematic Exchange
privilege. Shareholders may exchange shares held in book-entry form for an
equivalent number (value) of the same class of shares of any other Phoenix
Fund, if currently offered. On exchanges with share classes that carry a
contingent deferred sales charge, the CDSC schedule of original shares
purchased continues to apply.The exchange of shares is treated as a sale and
purchase for federal income tax purposes (see also "Dividends, Distributions
and Taxes").
Systematic Exchanges. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Phoenix Fund automatically on a monthly,
quarterly, semi-annual or annual basis or may cancel this privilege at any
time. If you maintain an account balance of at least $5,000, or $2,000 for tax
qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that shares be
automatically exchanged at predetermined intervals for shares of the same class
of another Phoenix Fund. This requirement does not apply to Phoenix "Self
Security" program participants. Systematic exchanges will be executed upon the
close of business on the 10th day of each month or the next succeeding business
day. Systematic exchange forms are available from the Distributor. Exchanges
will be based upon each Fund's net asset value per share next computed after
the close of business on the 10th day of each month (or succeeding business
day), without sales charge. On Class B Share exchanges, the CDSC schedule of
the original shares purchased continues to apply.
Dividend Reinvestment Across Accounts. If you maintain an account balance
of at least $5,000, or $2,000 for tax qualified retirement benefit plans
(calculated on the basis of the net asset value of the shares held in a single
account), you may direct that any dividends and distributions paid with respect
to shares in that account be automatically reinvested in a single account of
one of the other Phoenix Funds 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. 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.
Invest-By-Phone. This expedited investment service allows you to make an
investment in an account by requesting a transfer of funds from the balance of
your bank account. Once a request is phoned in, the Transfer Agent 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 the
Transfer Agent for credit to your account. ACH is a computer based clearing and
settlement operation established for the exchange of electronic transactions
among participating depository institutions. This service may also be used to
sell shares of the Fund and direct proceeds of sale through ACH to your bank
account.
To establish this service, please complete the Invest-by-Phone Application
and attach a voided check. Upon the Transfer Agent's acceptance of the
authorization form (usually within two weeks) you may call toll free (800)
367-5877 prior to 3:00 p.m. (Eastern Time) to place your purchase request.
Instructions as to the account number and amount to be invested must be
communicated to the Transfer Agent. The Transfer Agent will then contact your
bank via ACH with appropriate instructions. The purchase is normally credited
to your 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 after receipt of the check.
The Fund and the Transfer Agent 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.
9
<PAGE>
REDEMPTION OF SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefor postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for the Fund to dispose of its securities or to determine fairly the value of
its net assets or during any other period permitted by order of the Securities
and Exchange Commission for the protection of investors. Furthermore, the
Transfer Agent will not mail redemption proceeds until checks received for
shares purchased have cleared, which may take up to 15 days after receipt of
the check. Redemptions by Class B shareholders will be subject to the
applicable deferred sales charge, if any. See the Fund's current Prospectus for
further information.
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.
A shareholder should contact his/her broker/dealer if he/she wishes to
transfer shares from an existing broker/dealer street name account to a street
name account with another broker/dealer. The Fund has no specific procedures
governing such account transfers.
By Mail
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the possession of the shareholder, they must be mailed or
presented, duly endorsed in the full name of the account, with a written
request to Equity Planning that the Fund redeem the shares. See the Fund's
current Prospectus for more information.
Telephone Redemption
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Fund's current Prospectus for
additional information.
Reinvestment Privilege
Shareholders who may have overlooked features of their investment at the
time they redeemed have a privilege of reinstatement of their investment at net
asset value. See the Fund's current Prospectus for more information and
conditions attached to the privilege.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to remain qualified as a regulated investment company
under certain provisions of the Code. Under such provisions, the Fund will not
be subject to Federal income tax on such part of its ordinary income and net
realized capital gains which it distributes to shareholders provided it meets
certain distribution requirements. To qualify for treatment as a regulated
investment company, the Fund generally must, among other things, (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 disposition
of stock or securities and certain other items and (b) diversify its holdings
so that, at the end of each quarter of the taxable year (i) at least 50% of the
market value of the Fund's assets are represented by cash, U.S. Government
securities, securities of other regulated investment companies and other
securities, with such other securities of any one issuer limited for purposes
of this calculation to an amount not greater than 5% of the Fund's total assets
and 10% of the outstanding voting securities of any one issuer and (ii) not
more than 25% of the value of its total assets is invested in the securities of
any one issuer (other than U.S. Government securities or the securities of
other regulated investment companies). If, in any taxable year, the Fund does
not qualify as a regulated investment company all of its taxable income will be
taxed to the Fund at corporate rates.
It is the Fund's intention to distribute to its shareholders at least 98%
of net investment taxable income due to the Code imposing a 4% nondeductible
excise tax on a regulated investment company, such as the Fund, if it does not
distribute to its shareholders during the calendar year an amount equal to 98%
of its net ordinary income, with certain adjustments, plus 98% of the Fund's
net capital gains for the 12-month period ending on October 31 of such calendar
year. In addition, an amount equal to any undistributed investment company
taxable income or capital gain net income from the previous reporting year must
also be distributed to avoid the excise tax. The excise tax is imposed on the
amount by which the regulated investment company does not meet the foregoing
distribution requirements. If the Fund has taxable income that would be subject
to the excise tax, the Fund intends to distribute such income so as to avoid
payment of the excise tax.
Under another provision of the Code, any dividend declared by the Fund to
shareholders of record in October, November or December of any year will be
deemed to have been received by, and will be taxable to shareholders as of
December 31, provided that the dividend is actually paid by the Fund in January
of the following year.
10
<PAGE>
Under certain circumstances, the sales charge incurred in acquiring shares
of the Fund may not be taken into account in determining the gain or loss on
the disposition of those shares. This rule applies where shares of the Fund are
disposed of within 90 days after the date on which they were acquired and new
shares of a regulated investment company are acquired without a sales charge or
at a reduced sales charge. In that case, the gain or loss realized on the
disposition will be determined by excluding from the charge incurred in
acquiring those shares. This exclusion applies to the extent that the otherwise
applicable sales charge with respect to the newly acquired shares is reduced as
a result of the shareholder having incurred a sales charge initially. The
portion of the sales charge affected by this rule will be treated as a sales
charge paid for the new shares.
Distributions by the Fund reduce the net asset value of the Fund's shares.
Should a distribution reduce the net asset value of a share below a
shareholder's cost for the share, such a distribution nevertheless generally
would be taxable to the shareholder as ordinary income or long-term capital
gain, even though, from an investment standpoint, it may constitute a partial
return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution by the Fund. The
price of shares purchased at that time may include the amount of the
forthcoming distribution, but the distribution generally would be taxable to
them.
Some shareholders may be subject to withholding of Federal income tax on
dividends and redemption payments from the Fund backup withholding at the rate
of 31%. Corporate shareholders and certain other shareholders specified in the
Code generally are exempt from such backup withholding. Generally, shareholders
subject to backup withholding will be (i) those for whom a certified taxpayer
identification number is not on file with the Fund, (ii) those about whom
notification has been received (either by the shareholder or the Fund) from the
Internal Revenue Service that they are subject to backup withholding or (iii)
those who, to the Fund's knowledge, have furnished an incorrect taxpayer
identification number. Generally, to avoid backup withholding, an investor
must, at the time an account is opened, certify under penalties of perjury that
the taxpayer identification number furnished is correct and that he or she is
not subject to backup withholding.
The Fund may invest in certain debt securities that are originally issued
or acquired at a discount. Special rules apply under the Code to the
recognition of income with respect to such debt securities. Under the special
rules, the Fund may recognize income for tax purposes without a corresponding
current receipt of cash. In addition, gain on a disposition of a debt security
subject to the special rules may be treated wholly or partially as ordinary
income, not capital gain.
The Fund intends to accrue dividend income for Federal income tax purposes
in accordance with the rules applicable to regulated investment companies. In
some cases, these rules may have the effect of accelerating (in comparison to
other recipients of the dividend) the time at which the dividend is taken into
account by the Fund as taxable income.
Transactions in options on stock indexes are subject to the Code rules of
section 1256. Pursuant to these rules, such options, whether sold by the Fund
during a taxable year or held by the Fund at the close of its taxable year,
will be treated as if sold for their market value. Generally, 60% of any net
gain or loss recognized on the deemed sale, as well as 60% of the gain or loss
with respect to any actual termination (including expiration), will be treated
as long-term capital gain or loss and the remaining 40% will be treated as
short-term capital gain or loss.
The Fund may be subject to tax on dividend or interest income received
from securities of non-U.S issuers withheld by a foreign country at the source.
The United States has entered into tax treaties with many foreign countries
which entitle the Fund to a reduced rate of tax or exemption from tax on
income. It is impossible to determine the effective rate of foreign tax in
advance since the amount of the Fund's assets to be invested within various
countries is not known. The Fund intends to operate so as to qualify for treaty
tax benefits where applicable. To the extent that the Fund is liable for
foreign income taxes withheld at the source, the Fund may operate so as to meet
the requirements of the Code to "pass through" to the Fund's shareholders tax
benefits attributable to foreign income taxes paid by the Fund. If more than
50% of the value of the Fund's total assets at the close of its taxable year is
comprised of securities issued by foreign corporations, the Fund may elect with
the Internal Revenue Service to "pass through" to the Fund's shareholders the
amount of foreign income taxes paid by the Fund. Pursuant to this election,
shareholders will be required to (i) include in gross income, even though no
actually received, their respective pro rata share of foreign taxes paid by the
Fund; (ii) treat their pro rata share of foreign taxes as paid by them; (iii)
either deduct their pro rata share of foreign taxes in computing their taxable
income, or use such share as foreign tax credit against U.S. income tax (but
not both). No deduction for foreign taxes may be claimed by a non-corporate
shareholder who does not itemize deductions. The Fund may meet the requirements
to "pass through" to its shareholders foreign income taxes paid, but there can
be no assurance that the Fund will be able to do so. Each shareholder will be
notified within 60 days after the close of each taxable year of the Fund if the
foreign taxes paid by the Fund will "pass through" for that year, and, if so,
the amount of each shareholder's pro rata share (by country) or (i) the foreign
taxes paid and (ii) the Fund's gross income from foreign sources. Shareholders
who are not liable for federal income taxes will not be affected by such "pass
through" of foreign tax credits.
The foregoing is a general summary of the applicable provisions of the
Code and Treasury Regulations presently in effect. For the complete provisions,
reference should be made to the pertinent Code sections and the Treasury
Regulations promulgated thereunder. The Code and these Treasury Regulations are
subject to change by legislative or administrative action either
11
<PAGE>
prospectively or retroactively. Distributions and the transactions referred to
above may be subject to state and local income tax, and the treatment thereof
may differ from the federal treatment discussed herein.
Shareholders are advised to consult with their tax advisor or attorney
regarding specific questions as to Federal, foreign, state or local taxes.
TAX SHELTERED RETIREMENT PLANS
Shares of the Fund and other Phoenix Funds may be offered in connection
with employer-sponsored 401(k) plans. National and its affiliates may provide
administrative services to these plans and to their participants, in addition
to the services that National and its affiliates provide to the Phoenix Funds,
and receive compensation therefor. For information on the terms and conditions
applicable to employee participation in such plans, including information on
applicable plan administrative charges and expenses, prospective investors
should consult the plan documentation and employee enrollment information which
is available from participating employers.
THE DISTRIBUTOR
Pursuant to a Distribution Agreement with the Fund, Phoenix Equity
Planning Corporation (the "Distributor"), an indirect less than wholly-owned
subsidiary of Phoenix Home Life and an affiliate of National, serves as
distributor for the Fund. The address of the Distributor is P.O. Box 2200, 100
Bright Meadow Blvd., Enfield, Connecticut 06083-2200. As such, the Distributor
conducts a continuous offering pursuant to a "best efforts" arrangement
requiring the Distributor to take and pay for only such securities as may be
sold to the public. During the fiscal years 1995, 1996 and 1997, purchasers of
the Fund shares paid aggregate sales charges of $3,664,991, $2,500,197 and
$1,478,251, respectively, of which the principal Distributor of the Fund
received net commissions of $2,230,339, $1,910,302 and $1,028,526,
respectively, for its services, the balance being paid to dealers. The fees
were used to compensate sales and services persons for selling shares of the
Fund and for providing services to shareholders. In addition, the fees were
used to compensate the Distributor for sales and promotional activities.
The Distribution Agreement may be terminated at any time on not more than
60 days written notice, without payment of a penalty, by the Distributor, by
vote of a majority of the outstanding voting securities of the Fund, or by vote
of a majority of the Fund's Trustees who are not "interested persons" of the
Fund and who have no direct or indirect financial interest in the operation of
the Distribution Plan or in any related agreements. The Distribution Agreement
will terminate automatically in the event of its assignment.
Dealers with whom the Distributor has entered into sales agreements
receive sales charges in accordance with the commission table set forth in the
Prospectus. The Distributor may from time to time pay, from its own resources
or pursuant to the Plan of Distribution described below, a bonus or other
incentive to dealers (other than the Distributor) which employ a registered
representative who sells a minimum dollar amount of the shares of the Fund
during a specific period of time. Such bonus or other incentive may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and members of their
families to places within or without the United States or other bonuses such as
gift certificates or the cash equivalent of such bonuses. The Distributor may,
from time to time, reallow the entire portion of the sales charge which it
normally retains to individual selling dealers. However, such additional
reallowance generally will be made only when the selling dealer commits to
substantial marketing support such as internal wholesaling through dedicated
personnel, internal communications and mass mailings.
Equity Planning also acts as administrative agent of the Fund and as such
performs administrative, bookkeeping and pricing functions for the Fund. As
compensation for such services, effective as of January 1, 1997, 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% subject to a minimum fee
$100 million to $300 million .04%
$300 million through $500 million .03%
Greater than $500 million .015%
A minimum charge of $60,000 is applicable. 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 its services during the
Fund's fiscal year ended April 30, 1997, Equity Planning received $256,528.
12
<PAGE>
PLANS OF DISTRIBUTION
The Fund has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for each class of shares of the Fund (the "Class A Plan," the "Class B
Plan," and collectively the "Plans"). The Plans permit the Fund to reimburse
the Distributor for expenses incurred in connection with activities intended to
promote the sale of shares of each class of shares of the Fund. Pursuant to the
Class A Plan, the Fund may reimburse the Distributor for actual expenses of the
Distributor up to 0.30% of the average daily net assets of the Fund's Class A
shares. For fiscal year 1998, the Distributor has voluntarily agreed to limit
the Rule 12b-1 fee for Class A Shares to 0.25%. Under the Class B Plan, the
Fund may reimburse the Distributor monthly for actual expense of the
Distributor up to 1.00% of the average daily net assets of the Fund's Class B
shares.
Expenditures under the Plans shall consist of: (i) commissions to sales
personnel for selling shares of the Fund (including distribution fees and
financing expenses incurred in connection with the sale of Class B shares);
(ii) compensation, sales incentives and payments to sales, marketing and
service personnel; (iii) payments to broker-dealers and other financial
institutions which have entered into agreements with the Distributor in the
form of the Dealer Agreement for Phoenix Funds for services rendered in
connection with the sale and distribution of shares of the 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 Trustees of the Fund determines
are reasonably calculated to result in the sale of shares of the Fund; provided
however, a portion of such amount paid to the Distributor, which portion shall
be equal to or less than 0.25% annually of the average daily net assets of the
Fund shares may be paid for reimbursing the costs of providing services to the
shareholders, including assistance in connection with inquiries related to
shareholder accounts (the "Service Fee").
In order to receive payments under the Plans, participants must meet such
qualifications to be established in the sole discretion of the Distributor,
such as services to the Fund's shareholders; or services providing the Fund
with more efficient methods of offering shares to coherent groups of clients,
members or prospects of a participant; or services permitting bulking of
purchases or sales, or transmission of such purchases or sales by computerized
tape or other electronic equipment; or other processing.
The fee received by the Distributor under the early years of the Plans is
not likely to reimburse the Distributor for the total distribution expenses it
will actually incur as a result of the Fund having fewer assets and the
Distributor incurring greater promotional expenses during the start-up phase.
No amounts paid or payable by the Fund under the Plan for Class A shares may be
used to pay for, or reimburse payment for, sales or promotional services or
activities unless such payment or reimbursement takes place prior to the
earliest of (a) the last day of the one year period commencing on the last day
of the calendar quarter during which the specific service or activity was
performed, or (b) the last day of the one year period commencing on the last
day of the calendar quarter during which payment for the services or activity
was made by a third party on behalf of the Fund. The Class B Plan, however,
does not limit the reimbursement of distribution related expenses to expenses
incurred in specific time periods. If the Plans are terminated in accordance
with their terms, the obligations of the Fund to make payments to the
Distributor pursuant to the Plans will cease and the Fund will not be required
to make any payments past the date on which each Plan terminates.
For the fiscal year ended April 30, 1997, the Fund paid Rule 12b-1 Fees in
the amount of $5,009,983 of which the principal Distributor received $3,126,095,
unaffiliated broker-dealers received $1,830,533 and W.S. Griffith & Co., Inc.,
an affiliate, received $53,355. The Rule 12b-1 payments for the fiscal year
ended April 30, 1997 were used for (1) compensation of dealers ($4,276,346),
(2) compensation to sales personnel ($303,938), (3) advertising ($163,935),
(4) printing and mailing prospectuses to other than current shareholders
($22,304), (5) service costs ($130,789) and (6) other costs ($112,671).
On a quarterly basis, the Fund's Trustees review a report on expenditures
under the Plans and the purposes for which expenditures were made. The Trustees
conduct an additional, more extensive review annually in determining whether
the Plans will be continued. By its terms, continuation of the Plans from year
to year is contingent on annual approval by a majority of the Fund's Trustees
and by a majority of the Trustees who are not "interested persons" (as defined
in the 1940 Act) and who have no direct or indirect financial interest in the
operation of the Plans or any related agreements (the "Plan Trustees"). The
Plans provide that they may not be amended to increase materially the costs
which the Fund may bear pursuant to the Plans without approval of the
shareholders of the Fund and that other material amendments to the Plans must
be approved by a majority of the Plan Trustees by vote cast in person at a
meeting called for the purpose of considering such amendments. The Plans
further provides that while it is in effect, the selection and nomination of
Trustees who are not "interested persons" shall be committed to the discretion
of the Trustees who are not "interested persons." The Plans may be terminated
at any time by vote of a majority of the Plan Trustees or a majority of the
outstanding shares of the relevant class of the Fund.
The National Association of Securities Dealers, Inc. (the "NASD") regards
certain distribution fees as asset-based sales charges subject to NASD sales
load limits. The NASD's maximum sales charge rule may require the Trustees to
suspend distribution fees or amend the Plans.
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<PAGE>
TRUSTEES AND OFFICERS
The following table sets forth information concerning the Trustees and
executive officers of the Fund, including their principal occupations during
the past five years. Unless otherwise noted, the address of each executive
officer and Trustee is 56 Prospect Street, Hartford, Connecticut, 06115.
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ------------------------ ---------------- ------------------------------------------------------
<S> <C> <C>
C. Duane Blinn (69)** Trustee Partner in the law firm of Day, Berry & Howard.
Day, Berry & Howard Director/Trustee, Phoenix Funds (1980-present).
CityPlace Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Hartford, CT 06103 Duff & Phelps Institutional Mutual Funds (1996-
present). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
Robert Chesek (63) Trustee Trustee/Director (1981-present) and Chairman (1989-
49 Old Post Road 1994), Phoenix Funds. Trustee, Phoenix-Aberdeen
Wethersfield, CT 06109 Series Fund and Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present). Vice President,
Common Stock, Phoenix Home Life Mutual Insurance
Company (1980-1994). Director/Trustee, the National
Affiliated Investment Companies (until 1993).
E. Virgil Conway (68) Trustee Chairman, Metropolitan Transportation Authority
9 Rittenhouse Road (1992-present). Trustee/Director, Consolidated Edison
Bronxville, NY 10708 Company of New York, Inc. (1970-present), Pace
University (1978-present), Atlantic Mutual Insurance
Company (1974-present), HRE Properties (1989-
present), Greater New York Councils, Boy Scouts of
America (1985-present), Union Pacific Corp. (1978-
present), Blackrock Freddie Mac Mortgage Securities
Fund (Advisory Director) (1990-present), Centennial
Insurance Company (1974-present), Josiah Macy, Jr.,
Foundation (1975-present), The Harlem Youth
Development Foundation (1987-present), Accuhealth
(1994-present), Trism, Inc. (1994-present), Realty
Foundation of New York (1972-present), New York
Housing Partnership Development Corp. (Chairman)
(1981-present) and Fund Directions (Advisory
Director) (1993-present). Director/Trustee, Phoenix
Funds (1993-present). Trustee, Phoenix-Aberdeen
Series Fund and Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present). Director, Duff &
Phelps Utilities Tax-Free Income Inc. and Duff &
Phelps Utility and Corporate Bond Trust Inc. (1995-
present). Chairman, Audit Committee of the City of
New York (1981-1996). Advisory Director, Blackrock
Fannie Mae Mortgage Securities Fund (1989-1996).
Chairman, Financial Accounting Standards Advisory
Council (1992-1995). Director/Trustee, the National
Affiliated Investment Companies (until 1993).
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ---------------------------- --------------- -------------------------------------------------------
<S> <C> <C>
Harry Dalzell-Payne (68) Trustee Director/Trustee, Phoenix Funds (1983-present).
330 East 39th Street Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Apartment 29G Duff & Phelps Institutional Mutual Funds (1996-
New York, NY 10022 present). Director, Duff & Phelps Utilities Tax-Free
Income Inc. and Duff & Phelps Utility and Corporate
Bond Trust Inc. (1995-present). Director, Farragut
Mortgage Co., Inc. (1991-1994). Director/Trustee, the
National Affiliated Investment Companies (1983-
1993). Formerly a Major General of the British Army.
*Francis E. Jeffries (66) Trustee Director/Trustee, Phoenix Funds (1995-present).
6585 Nicholas Blvd. Trustee, Phoenix-Aberdeen Series Inc. and Phoenix
Apt. 1601 Duff & Phelps Institutional Mutual Funds (1996-
Naples, FL 33963 present). Director, Duff & Phelps Utilities Income
Fund (1987-present), Duff & Phelps Utilities Tax-
Free Income Inc. (1991-present) and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1993-present).
Director, The Empire District Electric Company
(1984-present). Director (1989-1997), Chairman of
the Board (1993-1997), President (1989-1993), and
Chief Executive Officer (1989-1995), Phoenix Duff &
Phelps Corporation.
Leroy Keith, Jr. (58) Trustee Chairman and Chief Executive Officer, Carson
Chairman and Chief Products Company (1995-present). Director/Trustee,
Executive Officer Phoenix Funds (1980-present). Trustee, Phoenix-
Carson Products Company Aberdeen Series Fund and Phoenix Duff & Phelps
64 Ross Road Institutional Mutual Funds (1996-present). Director,
Savannah, GA 30750 Equifax Corp. (1991-present) and Keystone
International Fund, Inc. (1989-present). Trustee,
Keystone Liquid Trust, Keystone Tax Exempt Trust,
Keystone Tax Free Fund, Master Reserves Tax Free
Trust, and Master Reserves Trust. President,
Morehouse College (1987-1994). Chairman and Chief
Executive Officer, Keith Ventures (1992-1994).
Director/Trustee, the National Affiliated Investment
Companies (until 1993). Director, Blue Cross/Blue
Shield (1989-1993) and First Union Bank of Georgia
(1989-1993).
</TABLE>
15
<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 (50) Trustee and Chairman (1997-present), Vice Chairman (1995-1997)
President and Chief Executive Officer (1995-present), Phoenix
Duff & Phelps Corporation. Director (1994-present) and
Executive Vice President, Investments (1988-present),
Phoenix Home Life Mutual Insurance Company.
Director/Trustee and President, Phoenix Funds (1989-
present). Trustee and President, Phoenix-Aberdeen
Series Fund and Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present). Director, Duff & Phelps
Utilities Tax-Free Income Inc. (1995-present) and Duff
& Phelps Utility and Corporate Bond Trust Inc. (1995-
present). Director (1983-present) and Chairman (1995-
present), Phoenix Investment Counsel, Inc. Director
(1984-present) and President (1990-present), Phoenix
Equity Planning Corporation. Director (1993-present),
Chairman (1993-present) and Chief Executive Officer
(1993-1995), National Securities & Research
Corporation. Director, Phoenix Realty Group, Inc.
(1994-present), Phoenix Realty Advisors, Inc. (1987-
present), Phoenix Realty Investors, Inc. (1994-present),
Phoenix Realty Securities, Inc. (1994-present), PXRE
Corporation (Delaware) (1985-present), and World Trust
Fund (1991-present). Director and Executive Vice
President, Phoenix Life and Annuity Company (1996-
present). Director and Executive Vice President, PHL
Variable Insurance Company (1995-present). Director,
Phoenix Charter Oak Trust Company (1996-present).
Director and Vice President, PM Holdings, Inc. (1985-
present). Director and President, Phoenix Securities
Group, Inc. (1993-1995). Director (1992-present) and
President (1992-1994), W.S. Griffith & Co., Inc.
Director (1992-present) and President (1992-1994),
Townsend Financial Advisers, Inc. Director/Trustee, the
National Affiliated Investment Companies (until 1993).
Everett L. Morris (69) Trustee Vice President, W.H. Reaves and Company (1993-
164 Laird Road present). Director/Trustee, Phoenix Funds (1995-
Colts Neck, NJ 07722 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) and Duff &
Phelps Utility and Corporate Bond Trust Inc. (1993-
present). Director, Public Service Enterprise Group,
Incorporated (1986-1993). President and Chief
Operating Officer, Enterprise Diversified Holdings,
Incorporated (1989-1993).
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------------- --------------- --------------------------------------------------------
<S> <C> <C>
*James M. Oates (51) Trustee Chairman, IBEX Capital Markets LLC (1997-
Managing Director present). Managing Director, Wydown Group (1994-
The Wydown Group present). Director, Phoenix Duff & Phelps
IBEX Capital Markets LLC Corporation (1995-present). Director/Trustee, Phoenix
60 State Street Fund (1987-present). Trustee, Phoenix-Aberdeen
Suite 950 Series Fund and Phoenix Duff & Phelps Institutional
Boston, MA 02109 Mutual Funds (1996-present). Director, Govett
Worldwide Opportunity Funds, Inc. (1991-present),
Blue Cross and Blue Shield of New Hampshire
(1994-present), Investors Financial Service
Corporation (1995-present), Investors Bank & Trust
Corporation (1995-present), Plymouth Rubber Co.
(1995-present) and Stifel Financial (1996-present).
Member, Chief Executives Organization (1996-
present). Director (1984-1994), President (1984-
1994) and Chief Executive Officer (1986-1994),
Neworld Bank. Director/Trustee, the National
Affiliated Investment Companies (until 1993).
*Calvin J. Pedersen (55) Trustee Director (1986-present), President (1993-present) and
Phoenix Duff & Phelps Executive Vice President (1992-1993), Phoenix Duff
Corporation & Phelps Corporation. Director/Trustee, Phoenix
55 East Monroe Street Funds (1995-present). Trustee, Phoenix-Aberdeen
Suite 3600 Series Fund and Phoenix Duff & Phelps Institutional
Chicago, IL 60603 Mutual Funds (1996-present). President and Chief
Executive Officer, Duff & Phelps Utilities Tax-Free
Income Inc. (1995-present), Duff & Phelps Utilities
Income Inc. (1994-present) and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present).
Philip R. Reynolds (70)** Trustee Director/Trustee, Phoenix Funds (1984-present).
43 Montclair Drive Trustee, Phoenix-Aberdeen Series Fund and Phoenix
West Hartford, CT 06107 Duff & Phelps Institutional Mutual Funds (1996-
present). Director, Vestaur Securities, Inc. (1972-
present). Trustee and Treasurer, J. Walton Bissell
Foundation, Inc. (1988-present). Director/Trustee, the
National Affiliated Investment Companies (until
1993).
Herbert Roth, Jr. (68) Trustee Director/Trustee, Phoenix Funds (1980-present).
134 Lake Street Trustee, Phoenix-Aberdeen Series Fund and Phoenix
P.O. Box 909 Duff & Phelps Institutional Mutual Funds (1996-
Sherborn, MA 01770 present). Director, Boston Edison Company (1978-
present), Phoenix Home Life Mutual Insurance
Company (1972-present), Landauer, Inc. (medical
services) (1970-present),Tech Ops./Sevcon, Inc.
(electronic controllers) (1987-present), and Mark IV
Industries (diversified manufacturer) (1985-present).
Director, Key Energy Group (oil rig service) (1988-
1994). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------- --------------- --------------------------------------------------------
<S> <C> <C>
Richard E. Segerson (51) Trustee Managing Director, Mullin Associates (1993-present).
102 Valley Road Director/Trustee, Phoenix Funds (1993-present).
New Canaan, CT 06840 Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Duff & Phelps Institutional Mutual Funds (1996-
present). Vice President and General Manager, Coats
& Clark, Inc. (previously Tootal American, Inc.)
(1991-1993). Director/Trustee, the National Affiliated
Investment Companies (1984-1993).
Lowell P. Weicker, Jr. (66) Trustee Trustee/Director, Phoenix Funds (1995-present).
731 Lake Avenue Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Greenwich, CT 06830 Duff & Phelps Institutional Mutual Funds (1996-
present). Director, UST Inc. (1995-present), HPSC
Inc. (1995-present), Duty Free International, Inc.
(1997-present) and Compuware (1996-present).
Visiting Professor, University of Virginia (1997-
present). Chairman, Dresing, Lierman, Weicker
(1995-1996). Governor of the State of Connecticut
(1991-1995).
Michael E. Haylon (39) Executive Director and Executive Vice President--Investments,
Vice Phoenix Duff & Phelps Corporation (1995-present).
President Executive Vice President, Phoenix Funds (1993-
present) and Phoenix-Aberdeen Series Fund (1996-
present). Executive Vice President (1997-present),
Vice President (1996-1997), Phoenix Duff & Phelps
Institutional Mutual Funds. Director (1994-present),
President (1995-present), Executive Vice President
(1994-1995), Vice President (1991-1994), Phoenix
Investment Counsel, Inc. Director (1994-present),
President (1996-present), Executive Vice President
(1994-1996), Vice President (1993-1994), National
Securities & Research Corporation. Director, Phoenix
Equity Planning Corporation (1995-present). Senior
Vice President, Securities Investments, Phoenix
Home Life Mutual Insurance Company (1993-1995).
Various other positions with Phoenix Home Life
Mutual Insurance Company (1990-1993).
David R. Pepin (54) Executive Executive Vice President, Phoenix Funds and
Vice Phoenix-Aberdeen Series Fund (1996-present).
President Director (1997-present) and Executive Vice President
(1996-present), Phoenix Duff & Phelps Corporation.
Managing Director, Phoenix-Aberdeen International
Advisers, LLC (1996-present). Director and
Executive Vice President, Phoenix Equity Planning
Corp. (1996-present). Director, Phoenix Investment
Counsel, Inc. and National Securities & Research
Corporation (1996-present). Various positions with
Phoenix Home Life Mutual Insurance Company
(1994-1995). Vice President and General Manager,
Finance and Health, Digital Equipment Corporation
(1980-1994).
</TABLE>
18
<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
President Investment Strategist (1996-present), Phoenix
Investment Counsel, Inc. Executive Vice President
and Chief Investment Strategist (1996-present),
Senior Vice President (1995-present), National
Securities & Research Corporation, Senior Vice
President, Phoenix Equity Planning Corporation
(1995-1996), Phoenix Strategic Equity Series Fund
(1996-present), The Phoenix Edge Series Fund
(1995-present), Phoenix Multi-Portfolio Fund (1995-
present), Phoenix Income and Growth Fund (1996-
present), Phoenix Series Fund (1996-present),
Phoenix Strategic Allocation Fund, Inc. (1996-
present), Phoenix Worldwide Opportunities Fund
(1996-present), Phoenix-Aberdeen Series Fund
(1996-present) and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Vice
President, Common Stock and Chief Investment
Strategist, Phoenix Home Life Mutual Insurance
Company (April, 1995-November, 1995). Chief
Investment Strategist, Kidder, Peabody Co., Inc.
(1993-1994). Managing Director, Equities, Bankers
Trust Company (1991-1993).
John M. Hamlin (38) Vice Portfolio Manager, Equities (1996-present), Vice
President President (1995-1996), Phoenix Investment Counsel,
Inc. Portfolio Manager, Equities (1996-present),
Investment Officer (1993-1996), National Securities
& Research Corporation. Vice President, Phoenix
Income and Growth Fund (1993-present) and
Phoenix Series Fund (1994-present). Portfolio
Manager, Common Stock, Phoenix Home Life Mutual
Insurance Company (1989-1995).
William E. Keen, III (34) Vice Assistant Vice President, Phoenix Equity Planning
100 Bright Meadow Blvd. President Corporation (1996-present). Vice President, Phoenix
P. O. Box 2200 Funds, Phoenix Duff & Phelps Institutional Mutual
Enfield, CT 06083-2200 Funds and Phoenix-Aberdeen Series Fund (1996-
present). Assistant Vice President, USAffinity
Investments LP (1994-1995). Treasurer and
Secretary, USAffinity Funds (1994-1995). Manager,
Fund Administration, SEI Corporation (1991-1994).
</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 R. Moyer (53) Vice Senior Vice President and Chief Financial Officer,
100 Bright Meadow Blvd. President Phoenix Duff & Phelps Corporation (1995-present).
P. O. Box 2200 Senior Vice President, Finance (1990-present), Chief
Enfield, CT 06083-2200 Financial Officer (1996-present), and Treasurer
(1994-1996), Phoenix Equity Planning Corporation.
Senior Vice President (1990-present), Chief Financial
Officer (1996-present) and Treasurer (1994-present),
Phoenix Investment Counsel, Inc. Senior Vice
President, Finance (1993-present), Chief Financial
Officer (1996-present), and Treasurer (1994-present),
National Securities & Research Corporation. Senior
Vice President and Chief Operating Officer, Duff &
Phelps Investment Management Co. (1996-present).
Vice President, Phoenix Funds (1990-present),
Phoenix-Duff & Phelps Institutional Mutual Funds
(1996-present) and Phoenix-Aberdeen Series Fund
(1996-present). Senior Vice President and Chief
Financial Officer, W. S. Griffith & Co., Inc. (1992-
1995) and Townsend Financial Advisers, Inc. (1993-
1995). Vice President, the National Affiliated
Investment Companies (until 1993). Vice President,
Investment Products Finance, Phoenix Home Life
Mutual Insurance Company (1990-1995).
Leonard J. Saltiel (43) Vice Managing Director (1996-present), Senior Vice
President President (1994-1996), Phoenix Equity Planning
Corporation. Vice President, Phoenix Funds (1994-
present), Phoenix Duff & Phelps Institutional Mutual
Funds (1996-present) and Phoenix-Aberdeen Series
Fund (1996-present). Vice President, Investment
Operations, Phoenix Home Life Mutual Insurance
Company (1994-1995). Various positions with Home
Life Insurance Company and Phoenix Home Life
Mutual Insurance Company (1987-1994).
G. Jeffrey Bohne (49) Secretary Vice President and General Manager, Phoenix Home
101 Munson St. Life Mutual Insurance Co. (1993-present). Vice
Greenfield, MA 03101 President, Mutual Fund Customer Service, Phoenix
Equity Planning Corporation (1993-present).
Secretary, Phoenix Funds (1993-present). Clerk,
Phoenix Strategic Allocation Fund, Inc. (1994-
present). Secretary, Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present) and
Phoenix-Aberdeen Series Fund (1996-present).
Vice President, Home Life of New York Insurance
Company (1984-1992).
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------- --------------- -------------------------------------------------------
<S> <C> <C>
Nancy G. Curtiss (44) Treasurer Vice President, Fund Accounting (1994-present) and
Treasurer (1996-present), Phoenix Equity Planning
Corporation. Treasurer, Phoenix Funds (1994-present),
Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present) and Phoenix-Aberdeen Series Fund
(1996-present). Second Vice President and Treasurer,
Fund Accounting, Phoenix Home Life Mutual
Insurance Company (1994-1995). Various positions
with Phoenix Home Life Mutual Insurance Company
(1987-1994).
</TABLE>
- -----------
*Indicates that the Trustee is an "interested person" of the Trust within the
meaning of the definition set forth in Section 2(a)(19) of the Investment
Company Act of 1940.
**Pursuant to the retirement policy of the Phoenix Funds, Messrs. Blinn and
Reynolds will retire from the Board of Trustees effective January 1, 1998.
For services rendered to the Fund for the fiscal year ended April 30,
1997, the Trustees received aggregate remuneration of $19,505. For services on
the Boards of Directors/Trustees of the Phoenix Funds, each Trustee who is not
a full-time employee of the Adviser or any of its affiliates currently receives
a retainer at the annual rate of $40,000 and a fee of $2,500 per joint meeting
of the Boards. Each Trustee who serves on the Audit Committee receives a
retainer at the annual rate of $2,000 and a fee of $2,000 per joint Audit
Committee meeting attended. Each Trustee who serves on the Nominating Committee
receives a retainer at the annual rate of $1,000 and a fee of $1,000 per joint
Nominating Committee meeting attended. Each Trustee who serves on the Executive
Committee and who is not an interested person of the Fund receives a retainer
at the annual rate of $1,000 and $1,000 per joint Executive Committee meeting
attended. The function of the Executive Committee is to serve as a contract
review, compliance review and performance review delegate of the full Board of
Trustees. Costs are allocated equally to each of the Series and Funds within
the Fund Complex. The foregoing fees do not include the reimbursement of
expenses incurred in connection with meeting attendance. Officers and employees
of the Adviser who are interested persons are compensated for their services by
the Adviser and receive no compensation from the Fund.
21
<PAGE>
For the Fund's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
Total
Compensation
Pension or From Fund and
Aggregate Retirement Benefits Estimated Fund Complex
Compensation Accrued as Part Annual Benefits (12 Funds)
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
- ------------------------ -------------- --------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
C. Duane Blinn $ 1,845* $63,250
Robert Chesek $ 1,623 $56,250
E. Virgil Conway+ $ 1,908 $66,000
Harry Dalzell-Payne+ $ 1,623 None None $56,750
Francis E. Jeffries $ 375* for any for any $15,000
Leroy Keith, Jr. $ 1,623 Trustee Trustee $56,250
Philip R. McLoughlin+ $ 0 $ 0
Everett L. Morris+ $ 1,520* $54,000
James M. Oates+ $ 1,695 $58,500
Calvin J. Pedersen $ 0 $ 0
Philip R. Reynolds $ 1,623 $56,250
Herbert Roth, Jr.+ $ 2,010 $68,750
Richard E. Segerson $ 1,815 $62,750
Lowell P. Weicker, Jr. $ 1,845 $63,250
</TABLE>
- -----------
*This compensation (and the earnings thereon) will be deferred pursuant to the
Directors' Deferred Compensation Plan. At June 30, 1997, the total amount of
deferred compensation (including interest and other accumulation earned on the
original amounts deferred) accrued for Messrs. Blinn, Jeffries, Morris and Roth
was $349,026.91, $28,561.41, $85,849.73 and $132,587.69, respectively. At
present, by agreement among the Fund, the Distributor and the electing
director, director fees that are deferred are paid by the Fund to the
Distributor. The liability for the deferred compensation obligation appears
only as a liability of the Distributor.
+Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are members
of the Executive Committee.
On April 30, 1997, the Trustees and officers of the Fund beneficially
owned less than 1% of the outstanding shares of the Fund.
OTHER INFORMATION
Independent Accountants
Price Waterhouse LLP has been selected as the independent accountants for
the Fund. Price Waterhouse LLP audits the Fund's annual financial statements
and expresses an opinion thereon.
Custodian and Transfer Agent
State Street Bank and Trust Company, serves as custodian of the Fund's
assets (the "Custodian") and, Equity Planning acts as Transfer Agent for the
Fund (the "Transfer Agent").
Reports to Shareholders
The fiscal year of the Fund ends on April 30th. The Fund will send
financial statements to its shareholders at least semi-annually. An annual
report containing financial statements audited by the Fund's independent
accountants, will be sent to shareholders each year.
Financial Statements
The Financial Statements for the fiscal year ended April 30, 1997
appearing in the Fund's 1997 Annual Report to Shareholders, are incorporated
herein by reference.
22
<PAGE>
APPENDIX
Standard and Poor's Corporation's Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
BB-B-CCC-CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some 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.
Moody's Investors Service, Inc.
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 an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations;
i.e., they are neither highly protective 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.
Note: Those bonds in the Aa, A and Baa groups which Moody's believes
possess the strongest investment attributes are designated by the symbols Aa1,
A1 and Baa1.
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 safe
guarded during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of a 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
and interest.
23
<PAGE>
Phoenix Income and Growth Fund
INVESTMENTS AT APRIL 30, 1997
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- ---------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--7.3%
U.S. Treasury Notes--3.9%
U.S. Treasury Notes 7.375%, '97 AAA $ 5,000 $ 5,040,200
U.S. Treasury Notes 5.25%, '98 AAA 2,250 2,229,210
U.S. Treasury Notes 5%, '99 .. AAA 15,700 15,371,273
U.S. Treasury Notes 6%, '99 .. AAA 2,000 1,984,374
U.S. Treasury Notes 6.375%, '01 AAA 5,000 4,973,200
U.S. Treasury Strip, P.O., 0%, '17 AAA 10,000 2,428,000
---------------
32,026,257
---------------
Agency Mortgage-Backed Securities--3.4%
GNMA 6.50%, '23-'24 .......... AAA 30,034 28,382,781
---------------
TOTAL U.S. GOVERNMENT AND
AGENCY SECURITIES
(Identified cost $61,120,080) ............................... 60,409,038
---------------
NON-CONVERTIBLE BONDS--14.2%
Asset-Backed Securities--1.3%
Airplanes Pass Through Trust
1D 10.875%, '19 ............. BB 1,400 1,547,784
Fleetwood Credit Corp. 96-B,
Class A 6.90%, '12 .......... AAA 2,419 2,421,288
Green Tree Financial Corp.
96-4, A6 7.40%, '27 ......... AAA 1,500 1,489,687
Green Tree Financial Corp.
96-2, M1 7.60%, '27 ......... AA- 3,325 3,306,297
Green Tree Financial Corp.
96-4, M1 7.75%, '27 ......... AA- 1,500 1,527,188
---------------
10,292,244
---------------
Entertainment, Leisure & Gaming--1.5%
Turner Broadcasting 8.375%,
'13 ......................... BB+ 3,000 3,008,670
Viacom International Sub.
Debenture 8%, '06 ........... BB- 10,000 9,300,000
---------------
12,308,670
---------------
Hospital Management & Services--0.6%
Tenet Healthcare Corp. Sr.
Note 9.625%, '02 ........... BB 5,000 5,312,500
---------------
Lodging & Restaurants--0.6%
Host Marriott Travel Plaza,
Inc. 9.50%, '05 ............. BB- 5,000 5,112,500
---------------
Non-Agency Mortgage-Backed Securities--7.1%
DLJ Mortgage Acceptance
Corp. 96-CF1, A1B 144A
7.58%, '28 (b) .............. AAA 1,400 1,426,688
G.E. Capital Mortgage Service
94-9, M 6.50%, '24 .......... AA 11,576 10,530,635
G.E. Capital Mortgage Service
96-8, M 7.25%, '26 .......... AA 496 479,258
Non-Agency Mortgage-Backed Securities--continued
Lehman Structured Securities
Corp. 96-1, E-1 7.995%, '26. NR $ 2,987 $ 3,022,139
Nationslink Funding Corp.
96-1, B 7.69%, '05 .......... AA 1,500 1,523,438
Prudential Home Mortgage
Securities 94-15, M 6.80%,
'24 ......................... Aa(d) 8,466 7,841,758
Residential Asset
Securitization Trust 96-A8,
A1 8%, '26 .................. AAA 3,535 3,564,838
Residential Funding Mortgage
96-S1, A11 7.10%, '26 ....... AAA 2,800 2,691,063
Residential Funding Mortgage
96-S4, M1 7.25%, '26 ........ AA 2,970 2,862,194
Resolution Trust Corp. 92-C8,
D 8.835%, '23 ............... BBB- 7,206 7,388,547
Resolution Trust Corp. 95-C2,
B 6.80%, '27 ................ Aa(d) 5,866 5,649,551
Securitized Asset Sales 93-J,
2B 6.808%, '23 .............. A(d) 4,447 4,128,880
Structured Asset Securities
Corp. 95-C1, C 7.375%, '24 .. A 2,500 2,491,406
Structured Asset Securities
Corp. 95-C4, B 7%, '26 ...... AA 5,198 5,134,359
---------------
58,734,754
---------------
Paper & Forest Products--0.6%
Buckeye Cellulose Corp.
8.50%, '05 ................. BB- 5,000 4,900,000
---------------
Publishing, Broadcasting, Printing & Cable--0.3%
Cablevision Systems Corp.
9.875%, '06 ................ B 2,500 2,500,000
---------------
REITS--0.4%
Meditrust Corp. 7.375%, '00 .. BBB- 3,000 3,003,300
---------------
Telecommunications Equipment--1.0%
Rogers Cablesystems Ltd.
9.625%, '02 ................ BB+ 8,000 8,230,000
---------------
Textile & Apparel--0.6%
Westpoint Stevens 8.75%, '01 BB- 5,000 5,087,500
---------------
Truckers & Marine--0.2%
Teekay Shipping Corp.
8.32%, '08 .................. BB 1,645 1,612,100
---------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $117,588,629) .............................. 117,093,568
---------------
FOREIGN GOVERNMENT SECURITIES--4.6%
Argentina--1.1%
Republic of Argentina Bearer
FRB 6.75%, '05 (e) ......... BB- 728 668,391
</TABLE>
See Notes to Financial Statements
3
<PAGE>
Phoenix Income and Growth Fund
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- ---------------
<S> <C> <C> <C>
Argentina--continued
Republic of Argentina
Discount L-GL Euro
6.375%, '23 (e) ............. BB- $ 5,850 $ 4,840,875
Republic of Argentina Global
Bond 11.375%, '17 ........... BB 1,000 1,062,250
Republic of Argentina Par
L-GP 5.25%, '23 (e) ......... BB- 4,000 2,610,000
---------------
9,181,516
---------------
Brazil--0.6%
Republic of Brazil DCB-L
Euro 6.938%, '12 (e) ........ B+ 3,100 2,472,250
Republic of Brazil Discount
Z-L Euro 6.875%, '24 (e) .... B+ 3,125 2,517,578
---------------
4,989,828
---------------
Colombia--0.2%
Republic of Colombia Euro
9%, '97 ..................... BBB- 1,500 1,500,315
---------------
Mexico--0.8%
United Mexican States 144A
7.625%,'01 (b) (e) .......... Baa(d) 1,600 1,620,800
United Mexican States
Discount A 6.867%,
'19 (e) (f) ................. BB 500 443,125
United Mexican States Euro D
6.352%,'19 (e) (f) .......... BB 1,500 1,329,375
United Mexican States Series
B Euro 6.25%, '19 (f) ....... BB 4,250 3,089,218
---------------
6,482,518
---------------
Morocco--0.4%
Morocco R&C Agreement
Series A 6.375%, '09 (e) .... NR 3,800 3,344,000
---------------
Panama--0.3%
Panama IRB Series 18 Yr.
3.50%, '14 (e) .............. BB+ 1,700 1,261,187
Panama PDI 6.563%, '16 (e) ... BB+ 1,521 1,299,267
---------------
2,560,454
---------------
Poland--0.4%
Poland Discount Euro 6.938%,
'24 (e) .................... BBB- 1,250 1,215,625
Poland PDI B 4%, '14 (e) ..... BBB- 3,000 2,445,000
---------------
3,660,625
---------------
Venezuela--0.8%
Republic of Venezuela
Discount 6.813%, '20 (e) (f) Ba 5,100 4,197,938
Republic of Venezuela Par
6.75%, '20 (f) .............. Ba 2,150 1,560,093
---------------
5,758,031
---------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $35,434,582) ............................... 37,477,287
---------------
FOREIGN NON-CONVERTIBLE BONDS--1.0%
Chile--0.4%
CSAV 7.3751%, '03
(Industrial) ................ BBB $ 580 $ 561,150
Petropower I Funding 144A
7.36%, '14 (Utility-Gas) (b) BBB 2,400 2,254,440
---------------
2,815,590
---------------
Indonesia--0.3%
Asia Pulp & Paper Co. Yankee
11.75%, '05 (Paper &
Forest Products) ............ BB 2,500 2,640,625
---------------
Netherlands--0.3%
Astra Overseas Financial
144A 8.75%, '03
(Diversified Financial
Services) (b) ............... NR 2,500 2,525,000
---------------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $7,928,265) ................................ 7,981,215
---------------
MUNICIPAL BONDS--2.7%
California--2.7%
Kern County Pension Oblig.
Taxable 7.26%, '14 .......... AAA 4,350 4,181,263
Long Beach Pension Oblig.
Taxable 6.87%, '06 .......... AAA 3,000 2,941,620
Orange County Pension Series
A Taxable 7.60%, '08 ........ AAA 4,520 4,583,325
Sacramento County 95-A
Taxable 6.625%, '06 ......... AAA 3,400 3,275,900
San Bernardino County Oblig.
Revenue Taxable 6.87%, '08 .. AAA 1,335 1,291,906
San Bernardino County Oblig.
Revenue Taxable 6.94%, '09 .. AAA 3,625 3,516,613
Ventura County Pension
Taxable 6.54%, '05 .......... AAA 2,200 2,127,774
---------------
21,918,401
---------------
TOTAL MUNICIPAL BONDS
(Identified cost $22,405,166) ............................... 21,918,401
---------------
CONVERTIBLE BONDS--9.0%
Autos & Trucks--0.1%
Volkswagen Cv. 144A 3%,
'02 (Germany) (b) ........... NR 1,000 1,240,000
---------------
Computer Software & Services--0.3%
Macronix International Co. Cv.
1%, '07 ..................... NR 2,000 2,150,000
---------------
Electrical Equipment--0.1%
Itron, Inc. Cv. 144A 6.75%,
'04 (b) ..................... NR 1,000 1,075,000
---------------
Entertainment, Leisure & Gaming--0.8%
Comcast Corp. Cv. (SIRENS)
3.375%, '05 (e) ............. BB- 7,500 6,825,000
</TABLE>
See Notes to Financial Statements
4
<PAGE>
Phoenix Income and Growth Fund
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- ---------------
<S> <C> <C> <C>
Food--1.6%
Grand Metropolitan PLC Cv.
144A 6.50%, '00 (United
Kingdom) (b) ................ A+ $10,750 $13,222,500
---------------
Healthcare--Diversified--0.8%
Roche Holdings, Inc. Cv. 144A
0%, '12 (Switzerland) (b) ... NR 5,500 2,145,000
Sandoz Capital BVI Ltd. Cv. 144A
2%, '02 (Switzerland) (b) ... NR 3,500 4,383,750
---------------
6,528,750
---------------
Hospital Management & Services--0.7%
Tenet Healthcare Cv. 6%, '05 . B+ 5,000 6,075,000
---------------
Insurance--0.1%
Chubb Corp. Cv. 6%, '98 ...... AA 1,000 1,285,000
---------------
Medical Products & Supplies--0.2%
Heartport, Inc. Cv. 144A
7.25%, '04 (b) .............. NR 1,250 1,312,500
---------------
Metals & Mining--0.2%
Still Water Mining Cv. 7%, '03 NR 1,500 1,522,500
---------------
Natural Gas--1.5%
Apache Corp. Cv. 144A 6%,
'02 (b) ...................... BBB- 6,000 7,192,500
Consolidated Natural Gas Co.
Cv. 7.25%, '15 .............. A+ 5,300 5,604,750
---------------
12,797,250
---------------
Office & Business Equipment--0.2%
Comverse Technology Cv.
144A 5.75%, '06 (b) ......... NR 1,250 1,343,750
---------------
Oil Service & Equipment--0.3%
Nabors Industries, Inc. Cv.
5%, '06 ..................... BBB- 2,000 2,450,000
---------------
Pollution Control--0.5%
WMX Technologies, Inc. Sub.
Notes Cv. 2%, '05 ........... A 4,350 3,762,750
---------------
Publishing, Broadcasting, Printing & Cable--0.4%
Times Mirror Co. Cv. 144A
0%, '17 (b) ................. NR 7,500 2,971,875
---------------
REITS--2.0%
Health Care Property, Inc. Cv.
144A 6%, '00 (b) ............ BBB 1,500 1,477,500
---------------
Retail--0.2%
Home Depot, Inc. Cv. 3.25%,
'01 .......................... A+ 2,000 2,047,500
---------------
Retail--Drug--0.6%
Rite Aid Corp. Cv. 0%, '06 ... BBB 7,000 5,171,250
---------------
Telecommunications Equipment--0.2%
BBN Corp. Cv. 6%, '12 ........ B(d) 1,650 1,608,750
---------------
TOTAL CONVERTIBLE BONDS
(Identified cost $69,484,223) ............................... 74,866,875
---------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------- ---------------
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS--12.1%
Banks--0.6%
H. F. Ahmanson & Co. Series D Cv.
Pfd. 6% ................................ 60,000 $ 4,740,000
--------------
Chemical--0.2%
Merrill Lynch, IGL (STRYPES) 6.25% 35,000 1,356,250
--------------
Computer Software & Services--0.5%
Microsoft Corp. Series A Cv. Pfd.
$2.196 ................................. 50,500 4,324,063
--------------
Conglomerates--0.4%
Rouse Co. Series B Cv. Pfd. $3.00 39,000 1,769,625
USX Corp. Cv. Pfd. 6.75% ................ 75,000 1,556,250
--------------
3,325,875
--------------
Diversified Financial Services--0.3%
Morgan Stanley Group, TBR (PERQS)
6% ..................................... 40,000 2,830,000
--------------
Electronics--0.3%
Morgan Stanley Group, AMD (PERQS)
10% .................................... 51,800 2,078,475
--------------
Entertainment, Leisure & Gaming--0.5%
Mattel, Inc. Series C Cv. Pfd. $0.4125 320,000 3,680,000
--------------
Lodging & Restaurants--0.6%
Felcor Suite Hotels, Inc. Series A Cv.
Pfd. $1.95 ............................. 51,000 1,453,500
Host Marriott Financial Trust Cv. Pfd.
144A 6.75% (b) ......................... 60,000 3,345,000
--------------
4,798,500
--------------
Machinery--0.7%
Cooper Industries, Wyman notes (DECS)
6% ..................................... 325,000 6,134,375
--------------
Metals & Mining--1.4%
Coeur d'Alene Cv. Pfd. 7% ............... 210,000 3,386,250
Freeport-McMoRan Copper Cv. Pfd.
7% ..................................... 150,000 4,050,000
Inco Limited Cv. Pfd. Series E 5.50%
(Canada) ............................... 46,700 2,352,513
Titanium Metals Cv. Pfd. 144A
6.625% (b) ............................. 30,000 1,380,000
--------------
11,168,763
--------------
Oil--3.0%
Occidental Petroleum Corp. Cv. Pfd.
144A $3.875 (b)............. 220,000 12,045,000
Tosco Financing Trust Cv. Pfd. 144A
5.75% (b) .............................. 16,000 876,000
Unocal Corp. Cv. Pfd. 6.25% .. 176,100 9,597,450
Valero Energy Corp. Cv. Pfd. $3.125 ..... 30,500 1,982,500
--------------
24,500,950
--------------
Oil Service & Equipment--0.5%
Mesa, Inc. Series A PIK 8%... 688,500 4,389,187
--------------
</TABLE>
See Notes to Financial Statements
5
<PAGE>
Phoenix Income and Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
--------- ---------------
<S> <C> <C>
Publishing, Broadcasting, Printing & Cable--0.9%
Cablevision Systems Corp. Series I Cv.
Pfd. 8.50% .............................. 165,000 $ 3,650,625
Merrill Lynch, Cox (STRYPES) 6% .......... 215,000 4,246,250
--------------
7,896,875
--------------
Telecommunications Equipment--0.7%
Qualcomm, Inc. 144A Cv. Pfd.
5.75% (b) ............................... 77,000 3,426,500
TCI Pacific Communications Pfd. 5% ....... 25,000 2,356,250
--------------
5,782,750
--------------
Utility--Electric--0.5%
AES Trust I Series A Cv. Pfd. 5.375% ..... 30,000 1,638,750
California Energy Capital Trust Cv. Pfd.
6.25% ................................... 35,000 2,476,250
--------------
4,115,000
--------------
Utility--Gas--0.5%
MCN Energy Group, Inc. Cv. Pfd.
8.75% ................................... 148,100 3,943,163
--------------
Utility--Telephone--0.5%
US West, Inc. Series D Cv. Pfd. 4.50% .... 90,000 4,016,250
--------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified cost $95,703,645) ...................... 99,080,476
--------------
PREFERRED STOCKS--4.9%
Banks--0.5%
Fleet Financial Group, Inc. Pfd. 9.30% ... 150,000 3,862,500
--------------
Insurance--0.5%
Aon Corp. 8% Pfd. ........................ 166,500 4,224,937
--------------
Natural Gas--0.7%
Enron Capital $2.00 Pfd. Series C ........ 225,000 5,596,875
--------------
Publishing, Broadcasting, Printing & Cable--1.2%
News Corp. Overseas Ltd. Series A
8.625% Pfd. ............................. 400,000 10,050,000
--------------
REITS--2.0%
Home Ownership Funding 2 Step-down
Pfd. 144A 13.338% (b) ................... 5,000 4,899,880
Marquette Real Estate Fund Step-down Pfd.
144A 13.701% (b) ........................ 12,000 11,805,120
--------------
16,705,000
--------------
TOTAL PREFERRED STOCKS
(Identified cost $41,035,550) ...................... 40,439,312
--------------
COMMON STOCKS--34.3%
Advertising--1.0%
Interpublic Group Companies, Inc. ........ 75,200 4,258,200
Omnicom Group, Inc. ...................... 81,600 4,324,800
--------------
8,583,000
--------------
Banks--1.6%
BankAmerica Corp. ........................ 14,700 1,718,062
Barnett Banks, Inc. ...................... 124,790 6,099,111
Banks--continued
Chase Manhattan Corp. .................... 17,000 $ 1,574,625
Citicorp ................................. 17,900 2,015,988
Mellon Bank Corp. ........................ 25,600 2,128,000
--------------
13,535,786
--------------
Beverages--0.5%
PepsiCo, Inc. ............................ 121,600 4,240,800
--------------
Chemical--Specialty--0.7%
Praxair, Inc. ............................ 114,100 5,890,412
--------------
Computer Software & Services--0.3%
Computer Associates International, Inc. .. 42,200 2,194,400
--------------
Conglomerates--0.4%
Thermo Electron Corp. (c) ................ 94,100 3,246,450
--------------
Cosmetics & Soaps--0.6%
Colgate Palmolive Co. .................... 46,900 5,205,900
--------------
Diversified Miscellaneous--0.9%
Hillenbrand Industries, Inc. ............. 113,400 4,876,200
Jostens, Inc. ............................ 98,000 2,339,750
--------------
7,215,950
--------------
Electronics--5.2%
Intel Corp. .............................. 22,400 3,430,000
LSI Logic Corp. (c) ...................... 112,100 4,287,825
Perkin Elmer Corp. ....................... 431,400 31,330,425
Tektronix, Inc. .......................... 61,300 3,317,863
--------------
42,366,113
--------------
Healthcare--Diversified--0.7%
Warner-Lambert Co. ....................... 61,100 5,987,800
--------------
Healthcare--Drugs--1.7%
Amgen, Inc. (c) .......................... 86,900 5,116,238
Genzyme Corp. (c) ........................ 180,200 4,167,125
Merck & Co., Inc. ........................ 50,000 4,525,000
--------------
13,808,363
--------------
Hospital Management & Services--1.0%
Oxford Health Plans (c) .................. 51,800 3,412,325
Pacificare Health Systems, Inc.
Class B (c) ............................. 24,500 1,966,125
United Healthcare Corp. .................. 54,400 2,645,200
--------------
8,023,650
--------------
Insurance--3.0%
Aetna, Inc. .............................. 44,200 4,027,725
Allstate Corp. ........................... 39,200 2,567,600
Chubb Corp. .............................. 137,300 7,929,075
ITT Hartford Group, Inc. ................. 55,300 4,119,850
Western National Corp. ................... 206,000 5,304,500
--------------
23,948,750
--------------
Medical Products & Supplies--2.1%
Baxter International, Inc. ............... 182,600 8,741,975
Johnson & Johnson ........................ 60,000 3,675,000
U.S. Surgical Corp. ...................... 119,125 4,080,031
--------------
16,497,006
--------------
</TABLE>
See Notes to Financial Statements
6
<PAGE>
Phoenix Income and Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
--------- ----------
<S> <C> <C>
Metals & Mining--2.6%
Alumax, Inc. (c) ............................ 45,500 $ 1,660,750
Aluminum Company of America ................. 121,200 8,468,850
Century Aluminum Co. ........................ 152,100 2,509,650
Kaiser Aluminum Corp. (c) ................... 148,200 1,593,150
Reynolds Metals Co. ......................... 29,800 2,022,675
Stillwater Mining Co. (c) ................... 274,300 5,520,288
-----------
21,775,363
-----------
Natural Gas--3.8%
Burlington Resources, Inc. .................. 57,400 2,432,325
Columbia Gas System, Inc. ................... 40,000 2,475,000
Consolidated Natural Gas Co. ................ 46,400 2,337,400
Enron Corp. ................................. 105,600 3,973,200
Equitable Resources, Inc. ................... 85,600 2,535,900
KN Energy, Inc. ............................. 51,800 1,929,550
New Jersey Resources Corp. .................. 58,300 1,683,412
Questar Corp. ............................... 51,800 1,968,400
Tejas Gas Corp. (c) ......................... 51,800 2,149,700
Washington Gas Light Co. .................... 79,700 1,833,100
Williams Companies, Inc. .................... 173,650 7,618,894
-----------
30,936,881
-----------
Office & Business Equipment--0.5%
Seagate Technology, Inc. (c) ................ 94,930 4,354,898
-----------
Oil--1.9%
Barrett Resources Corp. (c) ................. 128,500 4,208,375
NGC Corp. ................................... 170,800 3,010,350
Noble Affiliates, Inc. ...................... 114,000 4,075,500
USX-Marathon Group .......................... 102,900 2,842,612
Valero Energy Corp. ......................... 43,100 1,513,888
-----------
15,650,725
-----------
Oil Service & Equipment--2.3%
Baker Hughes, Inc. .......................... 132,600 4,574,700
Diamond Offshore Drilling, Inc. (c) ......... 15,000 965,625
ENSCO International, Inc. (c) ............... 87,600 4,161,000
Noble Drilling Corp. (c) .................... 193,123 3,355,512
Parker Drilling Co. (c) ..................... 131,200 1,016,800
Precision Drilling Corp. (c) ................ 20,300 705,425
Reading & Bates Corp. (c) ................... 106,200 2,376,225
Tidewater, Inc. ............................. 50,400 2,022,300
-----------
19,177,587
-----------
Pollution Control--0.8%
Republic Industries, Inc. (c) ............... 187,600 4,654,825
WMX Technologies, Inc. ...................... 67,700 1,988,688
-----------
6,643,513
-----------
Professional Services--0.0%
CellNet Data Systems (c) ...................... 24,000 180,000
-----------
REITS--0.9%
IRT Property Co. .............................. 150,000 1,706,250
Meditrust Corp. ............................... 96,296 3,514,804
Patriot American Hospitality .................. 110,000 2,365,000
-----------
7,586,054
-----------
Telecommunications Equipment--0.8%
Cisco Systems, Inc. (c) ....................... 39,500 $ 2,044,125
Motorola, Inc. ................................ 72,600 4,156,350
-----------
6,200,475
-----------
Truckers & Marine--0.1%
Hvide Marine, Inc. Class A (c) ................ 51,000 879,750
-----------
Utility--Electric--0.6%
CMS Energy Corp. .............................. 150,000 4,762,500
-----------
Utility--Gas--0.3%
Eastern Enterprises ........................... 50,000 1,693,750
MCN Energy Group, Inc. ........................ 35,900 1,027,637
-----------
2,721,387
-----------
TOTAL COMMON STOCKS
(Identified cost $234,305,839) ................................ 281,613,513
-----------
FOREIGN COMMON STOCKS--4.2%
Banks--0.5%
Credit Communial Holding/Dexia 144A
(Belgium) (b) (c) ............................ 38,000 3,801,140
-----------
Beverages--0.5%
PanAmerican Beverages, Inc. Class A
(Mexico) ..................................... 155,800 4,518,200
-----------
Engineering & Construction--0.2%
Chicago Bridge & Iron Co. NV
(Netherlands)(c) .............................. 75,000 1,275,000
-----------
Insurance--0.6%
GCR Holdings Ltd. (Bermuda) ................... 40,000 865,000
LaSalle Re Holdings Ltd. (Bermuda) ............ 40,000 1,110,000
Mid Ocean Ltd. (Bermuda) ...................... 20,000 917,500
Partner Re Ltd. (Bermuda) ..................... 35,000 1,176,875
Renaissancere Holdings Ltd. (Bermuda) ......... 30,000 1,110,000
-----------
5,179,375
-----------
Oil--0.4%
Ensign Resource Service Group, Inc.
(Canada) (c) ................................. 45,000 788,796
Shell Transport & Trading Co. ADR
(United Kingdom) ............................. 23,000 2,446,625
-----------
3,235,421
-----------
Rails--0.6%
Canadian Pacific Ltd. (Canada) ................ 195,500 4,765,313
-----------
Truckers & Marine--0.4%
Knightsbridge Tankers Ltd. (Bermuda) .......... 150,000 3,412,500
-----------
Utility--Telephone--1.0%
BCE, Inc. (Canada) ............................ 175,000 8,159,375
-----------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $29,891,217) ................................. 34,346,324
-----------
TOTAL LONG-TERM INVESTMENTS--94.3%
(Identified cost $714,897,196) ................................ 775,226,009
-----------
</TABLE>
See Notes to Financial Statements
7
<PAGE>
Phoenix Income and Growth Fund
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- ---------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--1.0%
Commercial Paper--1.0%
Vermont American Corp.
5.52%, 5-1-97 .................. A-1+ $ 3,985 $ 3,985,000
Du Pont (E.I) De Nemours &
Co. 5.28%, 5-5-97 .............. A-1+ 85 84,950
Preferred Receivables Funding
Corp. 5.50%, 5-7-97 ............ A-1 2,795 2,792,438
Campbell Soup Co. 5.50%,
5-8-97 ......................... A-1+ 1,510 1,508,385
--------------
8,370,773
--------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
---------------
<S> <C>
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $8,370,773) ................. $ 8,370,773
--------------
TOTAL INVESTMENTS--95.3%
(Identified cost $723,267,969) ............... 783,596,782(a)
Cash and receivables, less liabilities--4.7% . 38,770,707
--------------
NET ASSETS--100.0% ............................ $822,367,489
==============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $75,942,538 and gross
depreciation of $16,167,455 for income tax purposes. At April 30, 1997,
the aggregate cost of securities for federal income tax purposes was
$723,821,699.
(b) 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 April 30,
1997, these securities amount to a value of $85,769,943 or 10.4% of net
assets.
(c) Non-income producing.
(d) As rated by Moody's, Fitch or Duff & Phelps.
(e) Variable or step coupon security; interest rate shown reflects the rate
currently in effect.
(f) Rights incorporated as a unit.
See Notes to Financial Statements
8
<PAGE>
Phoenix Income and Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $723,267,969) $783,596,782
Cash 137,964
Receivables
Investment securities sold 38,042,993
Fund shares sold 159,269
Dividends and interest 5,112,934
---------------
Total assets 827,049,942
---------------
Liabilities
Payables
Investment securities purchased 2,145,605
Fund shares repurchased 1,294,641
Investment advisory fee 466,606
Distribution fee 392,443
Transfer agent fee 183,927
Financial agent fee 20,438
Trustees' fee 4,516
Accrued expenses 174,277
---------------
Total liabilities 4,682,453
---------------
Net Assets $822,367,489
===============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $732,477,810
Undistributed net investment income 2,320,683
Accumulated net realized gain 27,240,183
Net unrealized appreciation 60,328,813
---------------
Net Assets $822,367,489
===============
Class A
Shares of beneficial interest outstanding, $0.0001 par
value, unlimited authorization
(Net Assets $451,438,500) 45,801,216
Net asset value per share $9.86
Offering price per share
$9.86/(1-4.75%) $10.35
Class B
Shares of beneficial interest outstanding, $0.0001 par
value, unlimited authorization
(Net Assets $370,928,989) 37,580,543
Net asset value and offering price per share $9.87
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997
<TABLE>
<S> <C>
Investment Income
Interest $28,309,597
Dividends 14,393,420
--------------
Total investment income 42,703,017
--------------
Expenses
Investment advisory fee 5,982,415
Distribution fee--Class A 1,178,775
Distribution fee--Class B 3,831,208
Financial agent 256,528
Transfer agent 1,333,163
Printing 135,492
Custodian 88,002
Registration 54,150
Professional 52,219
Trustees 22,674
Miscellaneous 32,923
--------------
Total expenses 12,967,549
--------------
Net investment income 29,735,468
--------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 58,030,503
Net realized loss on foreign currency transactions (63,547)
Net change in unrealized appreciation (depreciation)
on investments (2,222,870)
--------------
Net gain on investments 55,744,086
--------------
Net increase in net assets resulting from operations $85,479,554
==============
</TABLE>
See Notes to Financial Statements
9
<PAGE>
Phoenix Income and Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
April 30, 1997 April 30, 1996
--------------- ---------------
<S> <C> <C>
From Operations
Net investment income $ 29,735,468 $ 36,235,156
Net realized gain 57,966,956 74,561,424
Net change in unrealized appreciation (depreciation) (2,222,870) 41,747,703
--------------- ---------------
Increase in net assets resulting from operations 85,479,554 152,544,283
--------------- ---------------
From Distributions to Shareholders
Net investment income--Class A (18,481,864) (21,775,957)
Net investment income--Class B (12,058,093) (13,920,528)
Net realized gains--Class A (39,142,002) (1,790,547)
Net realized gains--Class B (31,924,691) (1,413,822)
--------------- ---------------
Decrease in net assets from distributions to shareholders (101,606,650) (38,900,854)
--------------- ---------------
From Share Transactions
Class A
Proceeds from sales of shares (3,227,767 and 4,186,098 shares, respectively) 32,305,915 40,001,714
Net asset value of shares issued from reinvestment of distributions
(4,817,814 and 1,892,290 shares, respectively) 47,024,383 18,094,132
Cost of shares repurchased (11,192,137 and 12,338,773 shares, respectively) (112,400,718) (118,161,444)
--------------- ---------------
Total (33,070,420) (60,065,598)
--------------- ---------------
Class B
Proceeds from sales of shares (2,616,679 and 3,371,066 shares, respectively) 26,139,385 32,278,099
Net asset value of shares issued from reinvestment of distributions
(3,430,811 and 1,165,398 shares, respectively) 33,531,068 11,169,191
Cost of shares repurchased (7,729,516 and 8,800,122 shares, respectively) (77,728,213) (84,143,012)
--------------- ---------------
Total (18,057,760) (40,695,722)
--------------- ---------------
Decrease in net assets from share transactions (51,128,180) (100,761,320)
--------------- ---------------
Net increase (decrease) in net assets (67,255,276) 12,882,109
Net Assets
Beginning of period 889,622,765 876,740,656
--------------- ---------------
End of period (including undistributed net investment income of $2,320,683 and
$2,996,598, respectively) $ 822,367,489 $ 889,622,765
=============== ===============
</TABLE>
See Notes to Financial Statements
10
<PAGE>
Phoenix Income and Growth Fund
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------
Year Ended April 30,
1997 1996 1995 1994 1993
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.08 $8.88 $9.33 $9.92 $9.13
Income from investment operations:
Net investment income 0.40 0.44 0.46 0.45 0.43
Net realized and unrealized gain (loss) 0.66 1.22 0.03 (0.08) 0.88
-------- -------- -------- --------- --------
Total from investment operations 1.06 1.66 0.49 0.37 1.31
-------- -------- -------- --------- --------
Less distributions:
Dividends from net investment income (0.40) (0.42) (0.45) (0.44) (0.44)
Dividends from net realized gains (0.88) (0.04) (0.33) (0.52) (0.08)
In excess of accumulated net realized gains -- -- (0.16) -- --
-------- -------- -------- --------- --------
Total distributions (1.28) (0.46) (0.94) (0.96) (0.52)
-------- -------- -------- --------- --------
Change in net asset value (0.22) 1.20 (0.45) (0.59) 0.79
-------- -------- -------- --------- --------
Net asset value, end of period $9.86 $10.08 $8.88 $9.33 $9.92
======== ======== ======== ========= ========
Total return(2) 10.93% 19.01% 5.95% 3.38% 14.78%
Ratios/supplemental data:
Net assets, end of period (thousands $451,439 $493,454 $490,225 $524,855 $514,803
Ratio to average net assets of:
Expenses 1.18% 1.18% 1.16% 1.23% 1.33%
Net investment income 3.82% 4.39% 5.07% 4.57% 4.60%
Portfolio turnover 111% 107% 90% 88% 44%
Average commission rate paid(3) $0.0515 N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
------------------------------------------------------------------
Year Ended April 30,
1997 1996 1995 1994 1993
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.09 $8.88 $9.32 $9.92 $9.13
Income from investment operations:
Net investment income 0.31 0.36 0.39 0.38 0.25
Net realized and unrealized gain (loss) 0.67 1.23 0.04 (0.08) 1.00
-------- -------- -------- --------- --------
Total from investment operations 0.98 1.59 0.43 0.30 1.25
-------- -------- -------- --------- --------
Less distributions:
Dividends from net investment income (0.32) (0.34) (0.38) (0.38) (0.38)
Dividends from net realized gains (0.88) (0.04) (0.33) (0.52) (0.08)
In excess of accumulated net realized gains -- -- (0.16) -- --
-------- -------- -------- --------- --------
Total distributions (1.20) (0.38) (0.87) (0.90) (0.46)
-------- -------- -------- --------- --------
Change in net asset value (0.22) 1.21 (0.44) (0.60) 0.79
-------- -------- -------- --------- --------
Net asset value, end of period $9.87 $10.09 $8.88 $9.32 $9.92
======== ======== ======== ========= =========
Total return(2) 10.05% 18.14% 5.23% 2.62% 14.09%
Ratios/supplemental data:
Net assets, end of period (thousands) $370,929 $396,169 $386,515 $378,847 $217,432
Ratio to average net assets of:
Expenses 1.93% 1.93% 1.91% 1.91% 2.03%
Net investment income 3.06% 3.64% 4.32% 3.98% 3.73%
Portfolio turnover 111% 107% 90% 88% 44%
Average commission rate paid(3) $0.0515 N/A N/A N/A N/A
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charge is not reflected in total return calculation.
(3) 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.
See Notes to Financial Statements
11
<PAGE>
PHOENIX INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Income and Growth Fund (the "Fund") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified open-end management investment company. The Fund's
primary investment objective is to invest in a diversified group of
securities that are selected for current yield consistent with preservation
of capital. 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 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 their fair value as
determined in good faith by or under the direction of the Trustees.
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. Discounts are amortized to income using the effective
interest method. Realized gains and 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 substantially all of its taxable income to its shareholders. In
addition, the Fund intends to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Code. Therefore, no
provision for federal income taxes or excise taxes has been made.
D. Distributions to shareholders:
Distributions 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, 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.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Fund, the Investment Adviser,
National Securities and Research Corporation, an indirect majority-owned
subsidiary of Phoenix Home Life Mutual Insurance Company ("PHL"), is entitled
to a fee at an annual rate of 0.70% of the average daily net assets of the
Fund for the first $1.0 billion and 0.65% for the second $1.0 billion.
12
<PAGE>
PHOENIX INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1997 (Continued)
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 $56,591 for Class A shares and
deferred sales charges of $971,935 for Class B shares for the year ended
April 30, 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 Distribution Plan for Class A
shares provides for fees to be paid up to a maximum on an annual basis of
0.30%; the Distributor has voluntarily agreed to limit the fee to 0.25%. The
Distributor has advised the Fund that of the total amount expensed for the
year ended April 30, 1997, $3,126,095 was earned by the Distributor and
$1,883,888 was earned by unaffiliated participants.
As Financial Agent of the Fund, PEPCO received a fee for bookkeeping,
administration, and pricing services at an annual rate of 0.03% of the
average daily net assets of the Fund through December 31, 1996, and starting
on January 1, 1997, 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 April
30, 1997, transfer agent fees were $1,333,163 of which PEPCO retained
$496,785 which is net of fees paid to State Street.
At April 30, 1997, PHL and affiliates held 120 Class A shares and 17 Class B
shares of the Fund with a combined value of $1,348.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities, excluding short-term securities and
options, for the year ended April 30, 1997 aggregated $883,564,825 and
$1,039,092,454, including $24,846,276 and $40,519,832 of U.S. Government and
Agency securities, respectively.
4. CAPITAL LOSS CARRYOVERS
Under current tax law, capital losses realized after October 31, 1996 may be
deferred and treated as occurring on the first day of the following fiscal
year. For the year ended April 30, 1997, the Fund deferred foreign currency
losses of $38,947.
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. As of April 30, 1997,
the Fund decreased capital paid in on shares of beneficial interest by
$99,138, increased undistributed net investment income by $128,574 and
decreased accumulated net realized gains by $29,436.
TAX INFORMATION NOTICE (Unaudited)
For federal income tax purposes, 21.6% of the ordinary income dividends paid
by the Fund qualify for the dividends received deduction of corporate
shareholders.
For the fiscal year ended April 30, 1997, the Fund distributed $43,970,488
of long-term capital gain dividends.
This report is not authorized for distribution to prospective investors in
the Phoenix Income & Growth Fund 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 (Price Waterhouse logo)
To the Trustees and Shareholders of
Phoenix Income and Growth Fund
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 Income and Growth Fund (the "Fund") at April 30, 1997,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended 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 April 30, 1997 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ Price Waterhouse LLP
Boston, Massachusetts
June 10, 1997
14
<PAGE>
PHOENIX INCOME AND GROWTH FUND
PART C--OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A: Financial Highlights
Included in Part B: Financial Statements and Notes thereto, and Report
of Independent Accountants are included in the
Annual Report to Shareholders for the year ended
April 30, 1997, incorporated by reference.
(b) Exhibits:
<TABLE>
<S> <C>
1.1 Declaration of Trust of the Registrant, as amended, previously filed, and herein incorporated by reference.
1.2 Amendment to Declaration of Trust of the Registrant, filed with Post-Effective Amendment No. 10 on
August 25, 1994 and herein incorporated by reference.
2. By-laws of the Registrant, previously filed, and herein incorporated by reference.
3. Not Applicable.
4. Reference is made to Article VI of Registrant's Declaration of Trust, as amended, and filed with the
Registration Statement referred to in Exhibit 1.1.
5.1 Management Agreement between Registrant and National Securities & Research Corporation, dated May
14, 1993, previously filed, and herein incorporated by reference.
5.2 Amendment to Management Agreement between Registrant and National Securities & Research
Corporation, dated January 1, 1994, filed with Post-Effective Amendment No. 10 on August 25, 1994 and
herein incorporated by reference.
6.1 Underwriting Agreement for Class A Shares between Registrant and Phoenix Equity Planning Corporation
("Equity Planning") dated May 14, 1993, previously filed, and herein incorporated by reference.
6.2 Underwriting Agreement for Class B Shares between Registrant and Equity Planning, dated May 14, 1993,
previously filed, and incorporated herein by reference.
7. None.
8.* Custodian Contract between Registrant and State Street Bank and Trust Company dated May 1, 1997,
filed with Post-Effective Amendment No. 13 on August 26, 1997.
9.1* Transfer Agency and Service Agreement between Registrant and Equity Planning dated June 1, 1994, filed
with Post-Effective Amendment No. 10 on August 25, 1994, filed via EDGAR with Post-Effective
Amendment No. 13 on August 26, 1997 and herein incorporated by reference.
9.2* Form of Sales Agreement, filed with Post-Effective Amendment No. 10 on August 25, 1994, filed via
EDGAR with Post-Effective Amendment No. 13 on August 26, 1997 and herein incorporated by reference.
9.3* Financial Agent Agreement between Registrant and Phoenix Equity Planning Corporation dated December
11, 1996, filed via EDGAR herewith.
9.4* First Amendment to Financial Agent Agreement between Registrant and Phoenix Equity Planning
Corporation dated January 1, 1997 filed via EDGAR herewith.
9.5* Second Amendment to Financial Agent Agreement between Registrant and Phoenix Equity Planning
Corporation filed via EDGAR herewith and incorporated by reference.
10. Opinion as to legality of the shares previously filed, and herein incorporated by reference.
11.* Consent of Independent Accountant.
12. Not Applicable.
13. None.
14. None.
15.1 Distribution Plan for Class A Shares, dated May 14, 1993, previously filed, and herein incorporated by
reference.
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
15.2 Distribution Plan for Class B Shares, dated May 14, 1993, previously filed, and herein incorporated
by reference.
16. Schedule for computation of yield and effective yield quotations, filed with Post-Effective Amendment
No. 10 on August 25, 1994 and herein incorporated by reference.
17.* Financial Data Schedule filed herewith and reflected on EDGAR as Exhibit 27.
18. Powers of attorney, filed via Edgar with Post-Effective Amendment No. 12 on August 27, 1996 and
incorporated by reference.
19.1 Plan Pursuant to Rule 18f-3, effective November 15, 1995, filed via Edgar with Post-Effective
Amendment No. 12 on August 27, 1996 and incorporated by reference.
19.2 Amended and Restated Plan Pursuant to Rule 18f-3, effective May 1, 1996, filed via Edgar with
Post-Effective Amendment No. 12 on August 27, 1996 and incorporated by reference.
19.3* Amended and Restated Plan Pursuant to Rule 18f-3, effective May 1, 1996 filed via EDGAR with
Post-Effective Amendment No. 13 on August 26, 1997.
19.4* First Amendment to Amended and Restated Plan Pursuant to Rule 18f-3 dated May 28, 1997 filed
via EDGAR with Post-Effective Amendment No. 13 on August 26, 1997.
</TABLE>
- -----------
*Filed herewith.
Item 25. Persons Controlled by or Under Common Control With Registrant
No person is controlled by, or under common control, with the Registrant.
Item 26. Number of Holders of Securities
As of May 30, 1997, the number of record holders of each class of
securities of the Registrant was as follows:
Number of
Title of Class Record-holders
- ---------------------------------------------- ---------------
Shares of Beneficial Interest--Class A 26,226
Shares of Beneficial Interest--Class B 20,634
Item 27. Indemnification
Registrant's indemnification provision is set forth in Post-Effective
Amendment No. 9 filed with the Securities and Exchange Commission on June 30,
1993, and is incorporated herein by reference.
Item 28. Business and Other Connections of Investment Adviser
See "Management of the Fund" in the Prospectus and "Services of the
Adviser" and "Trustees and Officers" of the Statement of Additional Information
in which is included in this Post-Effective Amendment.
For information as to the business, profession, vocation or employment of
a substantial nature of directors and officers of National Securities &
Research Corporation, the Adviser, reference is made to the Adviser's current
Form ADV (SEC File No. 801-8177) filed under the Investment Advisers Act of
1940 and incorporated herein by reference.
Item 29. Principal Underwriter
(a) See "Distribution Plans" and "How to Buy Shares" in the Prospectus and
"The Distributor" and "Plans of Distribution" in the Statement of
Additional Information, both of which are included in this Post-Effective
Amendment to the Registration Statement.
(b) Directors and executive officers of Phoenix Equity Planning Corporation
are as follows:
<TABLE>
<CAPTION>
Name and Position and Offices Position and Offices
Principal Address with Distributor with Registrant
- ------------------------- ------------------------ -------------------------
<S> <C> <C>
Michael E. Haylon Director Executive Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Trustee and President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
Name and Position and Offices Position and Offices
Principal Address with Distributor with Registrant
- ------------------------- ------------------------------- -------------------------
<S> <C> <C>
David R. Pepin Director and Executive Executive Vice President
56 Prospect Street Vice President, Mutual Fund
P.O. Box 150480 Sales and Operations
Hartford, CT 06115-0480
Leonard J. Saltiel Managing Director, Vice President
100 Bright Meadow Blvd. Operations and Service
P.O. Box 2200
Enfield, CT 06083-2200
Paul A. Atkins Senior Vice President and None
56 Prospect Street Sales Manager
P.O. Box 150480
Hartford, CT 06115-0480
Maris Lambergs Senior Vice President, None
100 Bright Meadow Blvd. Insurance and Independent
P.O. Box 2200 Division
Enfield, CT 06083-2200
William R. Moyer Senior Vice President Vice President
100 Bright Meadow Blvd. and Chief Financial Officer
P.O. Box 2200
Enfield, CT 06083-2200
John F. Sharry Managing Director, None
100 Bright Meadow Blvd. Mutual Fund Distribution
P.O. Box 2200
Enfield, CT 06083-2200
G. Jeffrey Bohne Vice President Secretary
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
Eugene A. Charon Vice President and Controller None
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
Nancy G. Curtiss Vice President and Treasurer, Treasurer
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Elizabeth R. Sadowinski Vice President, None
56 Prospect Street Administration
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Counsel Assistant Secretary
56 Prospect Street and Secretary
P.O. Box 150480
Hartford, CT 06115-0480
William E. Keen, III Assistant Vice President, Vice President
100 Bright Meadow Blvd. Mutual Fund Regulation
P.O. Box 2200
Enfield, CT 06083-2200
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an affiliated
person of the Registrant or an affiliated person of such affiliated person,
directly or indirectly, from the Registrant during the Registrant's last fiscal
year.
C-3
<PAGE>
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
investment adviser, National Securities & Research Corporation; Registrant's
financial agent, transfer agent and principal underwriter, Phoenix Equity
Planning Corporation; Registrant's dividend disbursing agent and custodian,
State Street Bank and Trust Company. The address of the Secretary of the Trust
is 101 Munson Street, Greenfield, Massachusetts 01301; the address of National
Securities & Research Corporation is One American Row, Hartford, Connecticut
06115-2520; the address of Phoenix Equity Planning Corporation is 100 Bright
Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200; the address
of the dividend disbursing agent is P.O. Box 8301, Boston, Massachusetts
02266-8301, Attention: Phoenix Funds, and the address of the custodian is P.O.
Box 351, Boston, Massachusetts 02101.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to
shareholders upon request and without charge.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
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 State
of Connecticut on the 26th day of August, 1997.
PHOENIX INCOME AND GROWTH FUND
ATTEST: /s/ Thomas N. Steenburg By: /s/ Philip R. McLoughlin
------------------------------- -----------------------------------
Thomas N. Steenburg Philip R. McLoughlin, President
Assistant Secretary
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 26th day of August, 1997:
Signature Title
--------- -----
Trustee
- ----------------------------
C. Duane Blinn*
Trustee
- ----------------------------
Robert Chesek*
Trustee
- ----------------------------
E. Virgil Conway*
Treasurer (principal
- ---------------------------- financial and
Nancy G. Curtiss* accounting officer)
Trustee
- ----------------------------
Harry Dalzell-Payne*
Trustee
- ----------------------------
Francis E. Jeffries*
Trustee
- ----------------------------
Leroy Keith, Jr.*
/s/ Philip R. McLoughlin Trustee and President
- ---------------------------- (principal executive
Philip R. McLoughlin officer)
Trustee
- ----------------------------
Everett L. Morris*
Trustee
- ----------------------------
James M. Oates*
Trustee
- ----------------------------
Calvin J. Pedersen*
Trustee
- ----------------------------
Philip R. Reynolds*
Trustee
- ----------------------------
Herbert Roth, Jr.*
S-1(c)
<PAGE>
Signature Title
--------- -----
Trustee
- ----------------------------
Richard E. Segerson*
Trustee
- ----------------------------
Lowell P. Weicker, Jr.*
By /s/ Philip R. McLoughlin
--------------------------
*Philip R. McLoughlin pursuant to powers of attorney previously filed.
S-2(c)
Exhibit 8.
Custodian Contract
<PAGE>
CUSTODIAN CONTRACT
Between
EACH OF THE PARTIES LISTED ON APPENDIX 1
and
STATE STREET BANK AND TRUST COMPANY
Phoenix2.cus
GlobalSeriesCorp
21N
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
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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
<PAGE>
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
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<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 aggregate face amount or
number of units; provided that, in any such case, the new
securities are to be delivered to the Custodian;
<PAGE>
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;
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;
<PAGE>
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 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.
<PAGE>
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 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
<PAGE>
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
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
<PAGE>
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 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;
<PAGE>
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;
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.
<PAGE>
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 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
<PAGE>
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.
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.
<PAGE>
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 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
<PAGE>
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.
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.
<PAGE>
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 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.
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
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, 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
<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.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. Effective Period, Termination and Amendment
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs each Fund to indicate whether such Fund authorizes
the Custodian to provide such Fund's name, address, and share position to
requesting companies whose stock each Fund owns. If a Fund tells the Custodian
"no", the Custodian will not provide this information to requesting companies.
If a Fund tells the Custodian "yes" or do not check either "yes" or "no" below,
the Custodian is required by the rule to treat such Fund as consenting to
disclosure of this information for all securities owned by such Fund or any
funds or accounts established by each Fund. For each Fund's protection, the Rule
prohibits the requesting company from using such Fund's name and address for any
purpose other than corporate communications. Please indicate below whether each
Fund consents or objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the name, address,
and share positions of each Fund listed on Appendix 1.
NO [X] The Custodian is not authorized to release the name, address,
and share positions of each Fund listed on Appendix 1.
21. Limitation of Liability.
The execution of this Contract has been authorized by each Fund's
Board. This Contract is executed on behalf of each Fund or, in the case of a
Fund organized as a business trust, the trustees of such Fund as trustees and
not individually and the obligations of each Fund under this Contract are not
binding upon any of such Fund's trustees, officers or shareholders individually
but are binding only upon the assets and property of such Fund. A Certificate of
Trust in respect of each Fund organized as a business trust is on file with the
Secretary of the Commonwealth of Massachusetts.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 1st day of May, 1997.
EACH OF THE FUNDS LISTED ON APPENDIX 1
By: /s/ Michael E. Haylon
----------------------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
---------------------------------
Executive Vice President
<PAGE>
APPENDIX 1
Fund Names
(as of May 1, 1997)
Phoenix California Tax Exempt Bonds, Inc.
The Phoenix Edge Series Fund
Real Estate Securities Series
Phoenix Income and Growth Fund
Phoenix Multi-Portfolio Fund
Phoenix Diversified Income Portfolio
Phoenix Emerging Markets Bond Portfolio
Phoenix Endowment Equity Portfolio
Phoenix Real Estate Securities Portfolio
Phoenix Mid Cap Portfolio
Phoenix Tax-Exempt Bond Portfolio
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Series Fund
Phoenix Aggressive Growth Fund Series
Phoenix Balanced Fund Series
Phoenix Convertible Fund Series
Phoenix Growth Fund Series
Phoenix High Yield Fund Series
Phoenix Money Market Series
Phoenix U.S. Government Securities Fund Series
Phoenix Strategic Allocation Fund, Inc.
Phoenix Strategic Equity Series Fund
Phoenix Equity Opportunities Fund
Phoenix Micro Cap Fund
Phoenix Small Cap Fund
Phoenix Strategic Theme Fund
Phoenix Duff & Phelps Institutional Mutual Funds
Enhanced Reserves Portfolio
Real Estate Equity Securities Portfolio
<PAGE>
Schedule A
----------
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of each Fund for use as
sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
- ----------------------------
Fund's Authorized Officer
Date: ______________________
Exhibit 9.1
Transfer Agency and Service Agreement
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
between
PHOENIX FUNDS
and
PHOENIX EQUITY PLANNING CORPORATION
<PAGE>
Table of Contents
-----------------
Page
----
Article 1 - Terms of Appointment; Duties of Transfer Agent.................1
Article 2 - Fees and Expenses..............................................3
Article 3 - Representations and Warranties of Transfer Agent...............3
Article 4 - Representations and Warranties of the Phoenix Funds............3
Article 5 - Data Access and Proprietary Information........................4
Article 6 - Indemnification................................................5
Article 7 - Standard of Care...............................................6
Article 8 - Covenants......................................................6
Article 9 - Termination....................................................7
Article 10 - Assignment.....................................................7
Article 11 - Amendment......................................................7
Article 12 - Connecticut Law to Apply.......................................7
Article 13 - Force Majeure..................................................7
Article 14 - Consequential Damages..........................................8
Article 15 - Merger of Agreement............................................8
Article 16 - Limitations of Liability of the Trustees
and Shareholders...............................................8
Article 17 - Counterparts...................................................8
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the 1st day of June, 1994, by and between the
undersigned entities (hereinafter singularly referred to as a "Fund" and
collectively referred to as the "Phoenix Funds"), and PHOENIX EQUITY PLANNING
CORPORATION (hereinafter referred to as the "Transfer Agent").
WITNESSETH:
WHEREAS, the Phoenix Funds desire to appoint Transfer Agent as their
transfer agent, dividend disbursing agent and agent in connection with certain
other activities, and Transfer Agent desires to accept such appointment; and
WHEREAS, the parties wish to set forth herein their mutual understandings
and agreements.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and other good and valuable consideration, the receipt and sufficiency whereof
being hereby acknowledged and affirmed, the parties hereto agree as follows:
Article 1 Terms of Appointment; Duties of Transfer Agent
----------------------------------------------
1.01 Subject to the terms and conditions set forth in this Agreement, the
Phoenix Funds hereby employ and appoint Transfer Agent to act as, and Transfer
Agent agrees to act as, transfer agent for the authorized and issued shares of
beneficial interest or common stock, as the case may be, of each of the Phoenix
Funds (hereinafter collectively and singularly referred to as "Shares"),
dividend disbursing agent and agent in connection with any accumulation,
open-account or similar plans provided to the shareholders of the Phoenix Funds
("Shareholders") and as set out in the currently effective registration
statement of each Fund (the prospectus and statement of additional information
portions of such registration statement being referred to as the "Prospectus"),
including, without limitation, any periodic investment plan or periodic
withdrawal program.
1.02 Transfer Agent agrees that it will perform the following services
pursuant to this Agreement:
(a) In accordance with procedures established from time to time by
agreement between the Phoenix Funds and Transfer Agent, Transfer Agent shall:
i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation therefor
to the Custodian appointed from time to time by the
Trustees/Directors of each Fund (which entity or entities, as the
case may be, shall be referred to as the "Custodian");
ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the each appropriate Shareholder
account;
iii) Receive for acceptance, redemption requests and redemption
directions and deliver the appropriate documentation therefor to
the Custodian;
iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Transfer Agent shall execute transactions directly
with broker-dealers authorized by the Phoenix Funds who shall
thereby be deemed to be acting on behalf of the Phoenix Funds;
<PAGE>
v) At the appropriate time as and when it receives monies paid to it
by any Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
vi) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
vii) Prepare and transmit payments for dividends and distributions
declared by each Fund, if any;
viii) Issue replacement certificates for those certificates alleged to
have been lost, stolen or destroyed upon receipt by the Transfer
Agent of indemnification satisfactory to the Transfer Agent and
the Phoenix Funds, and the Transfer Agent at its option, may
issue replacement certificates in place of mutilated stock
certificates upon presentation thereof and without such
indemnity;
ix) Maintain records of account for and advise each Fund and its
respective Shareholders as to the foregoing; and
x) Record the issuance of Shares and maintain pursuant to Rule
17Ad-10(e) under the Exchange Act of 1934, a record of the total
number of Shares which are authorized, issued and outstanding
based upon data provided to it by each Fund. The Transfer Agent
shall also provide on a regular basis to each Fund the total
number of Shares which are authorized, issued and outstanding
shall have no obligation, when recording the issuance of Shares,
to monitor the issuance of such Shares or to take cognizance of
any laws relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of each respective
Fund.
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), Transfer Agent shall: (i) perform all of the customary services
of a transfer agent, dividend disbursing agent and, as relevant, agent in
connection with accumulation, open-account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal program),
including, but not limited to, maintaining all Shareholder accounts, preparing
Shareholder meeting lists, mailing proxies, receiving and tabulating proxies,
mailing Shareholder reports and Prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts, preparing
and filing U.S. Treasury Department Forms 1099 and other appropriate forms
required with respect to dividends and distributions by federal authorities for
all Shareholders, preparing and mailing confirmation forms and statements of
account to Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts, preparing and mailing activity
statements for Shareholders, and providing Shareholder account information; and
(ii) provide a system which will enable each Fund to monitor the total number of
Shares sold in each State.
(c) In addition, the Phoenix Funds shall (i) identify to Transfer Agent in
writing those transactions and assets to be treated as exempt from blue sky
reporting for each State, and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of Transfer Agent for a Fund's blue
sky State registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Phoenix Funds and the
reporting of such transactions to each Fund as provided above.
(d) Procedures as to who shall provide certain of the services in Article 1
may be established from time to time by agreement between the Phoenix Funds and
Transfer Agent per the attached service responsibility schedule, if any. The
Transfer Agent may at times perform only a portion of these services and the
Phoenix Funds or its agent may perform these services on behalf of any Fund.
- 2 -
<PAGE>
(e) The Transfer Agent shall provide additional services on behalf of the
Phoenix Funds (i.e., escheatment services) which may be agreed upon in writing
between the Phoenix Funds and the Transfer Agent.
Article 2 Fees and Expenses
-----------------
2.01 In consideration of the services provided by the Transfer Agent
pursuant to this Agreement, each Fund agrees to pay Transfer Agent an annual
maintenance fee for each Shareholder account as set forth in Schedule A attached
hereto and made a part hereof. Annual Maintenance Fees and out-of-pocket
expenses and advances identified under Section 2.02 below may be changed from
time to time subject to mutual written agreement between each Fund and Transfer
Agent. Nothing herein shall preclude the assignment of all or any portion of the
foregoing fees and expense reimbursements to any sub-agent contracted by
Transfer Agent.
2.02 In addition to the fee paid under Section 2.01 above, the Phoenix
Funds agree to reimburse Transfer Agent for out-of-pocket expenses or advances
incurred by Transfer Agent for the items set out in Schedule A attached hereto.
In addition, any other expenses incurred by Transfer Agent at the request or
with the consent of any Fund, will be reimbursed by the Fund requesting the
same.
2.03 The Phoenix Funds agree to pay all fees and reimbursable expenses
within five days following the mailing of the respective billing notice. The
above fees will be charged against each Fund's custodian checking account five
(5) days after the invoice is transmitted to the Phoenix Funds. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
Shareholder accounts shall be advanced to Transfer Agent at least seven (7) days
prior to the mailing date of such materials.
Article 3 Representations and Warranties of Transfer Agent
------------------------------------------------
The Transfer Agent represents and warrants to the Phoenix Funds that:
3.01 It is a corporation organized and existing and in good standing under
the laws of the State of Connecticut.
3.02 It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.03 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.04 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3.05 It is and shall continue to be a duly registered transfer agent
pursuant to Section 17A(c)(2) of the Securities Exchange Act of 1934.
Article 4 Representations and Warranties of Phoenix Funds
-----------------------------------------------
The Phoenix Funds represent and warrant to Transfer Agent that:
4.01 All corporate or trust proceedings, as the case may be, required to
enter into and perform this Agreement have been undertaken and are in full force
and effect.
4.02 Each Fund is an open-end, diversified management investment companies
registered under the Investment Company Act of 1940.
- 3 -
<PAGE>
4.03 A registration statement under the Securities Act of 1933 is currently
effective for each Fund that is offering its securities for sale and such
registration statement will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with respect to all
Shares being offered for sale.
Article 5 Data Access and Proprietary Information
---------------------------------------
5.02 The Phoenix Funds acknowledge that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and documentation
manuals furnished to the Phoenix Funds by the Transfer Agent as part of each
Fund's ability to access certain Fund-related data ("Customer Data") maintained
by the Transfer Agent on data bases under the control and ownership of the
Transfer Agent or other third party ("Data Access Services") constitute
copyrighted, trade secret, or other proprietary information (collectively,
"Proprietary Information") of substantial value to the Transfer Agent or other
third party. In no event shall Proprietary Information be deemed Customer Data.
The Phoenix Funds agree to treat all Proprietary Information as proprietary to
the Transfer Agent and further agree that it shall not divulge any Proprietary
Information to any person or organization except as may be provided hereunder.
Without limiting the foregoing, the Phoenix Funds agree for itself and its
employees and agents:
(a) to access Customer Data solely from location as may be designated in
writing by the Transfer Agent and solely in accordance with the
Transfer Agent's applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to inform in a timely manner of such fact and dispose of such
information in accordance with the Transfer Agent's instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer facility or
other location, except with the prior written consent of the Transfer
Agent;
(e) that the Phoenix Funds shall have access only to those authorized
transactions agreed upon by the parties; and
(f) to honor all reasonable written requests made by the Transfer Agent to
protect at the Transfer Agent's expense the rights of the Transfer
Agent in Propriety Information at common law, under federal copyright
law and under other federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Article 5. The obligations of this Article shall
survive any earlier termination of this Agreement.
5.02 If the Phoenix Funds notified the Transfer Agent that any of the Data
Access Services do not operate in material compliance with the most recently
issued user documentation for such services, the Transfer Agent shall endeavor
in a timely manner to correct such failure. Organizations from which the
Transfer Agent may obtain certain data included in the Data Access Services are
solely responsible for the contents of such data and the Phoenix Funds agree to
make no claim against the Transfer Agent arising out of the contents of such
third-party data, including, but not limited to, the accuracy thereof. DATA
ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN
CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE TRANSFER
AGENT EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
- 4 -
<PAGE>
5.03 If the transactions available to the Phoenix Funds include the ability
to originate electronic instructions to the Transfer Agent in order to (i)
effect the transfer or movement of cash or Shares or (ii) transmit Shareholder
information or other information (such transactions constituting a "COEFI"),
then in such event the Transfer Agent shall be entitled to rely on the validity
and authenticity of such instruction without undertaking any further inquiry as
long as such instruction is undertaken in conformity with security procedures
established by the Transfer Agent from time to time.
Article 6 Indemnification
---------------
6.01 The Transfer Agent shall not be responsible for, and the Phoenix Funds
shall indemnify and hold Transfer Agent harmless from and against, any and all
losses, damages, costs, charges, counsel fees, payments, expenses and liability
arising out of or attributable to:
(a) All actions of Transfer Agent or its agent or subcontractors required
to be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct.
(b) The lack of good faith, negligence or willful misconduct by the
Phoenix Funds which arise out of the breach of any representation or
warranty of the Phoenix Funds hereunder.
(c) The reliance on or use by the Transfer Agent or its agents or
subcontractors of information, records and documents which (i) are
received by Transfer Agent or its agents or subcontractors, and (ii)
have been prepared, maintained or performed by the Phoenix Funds or
any other person or firm on behalf of the Phoenix Funds including but
not limited to any previous transfer agent or registrar.
(d) The reliance on, or the carrying out by Transfer Agent or its agents
or subcontractors of any instructions or requests of the Phoenix
Funds.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state
or in violation of any stop order or other determination or ruling by
any federal agency or any state with respect to the offer or sale of
such Shares in such state.
6.02 Transfer Agent shall indemnify and hold each of the Phoenix Funds
harmless from and against any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liability arising out of or attributable to any
action or failure or omission to act by Transfer Agent, or any sub-agent, as a
result of Transfer Agent's, or such sub-agent's, lack of good faith, negligence
or willful misconduct.
6 .03 At any time the Transfer Agent may apply to any officer of the
Phoenix Funds for instructions, and may consult with legal counsel with respect
to any matter arising in connection with the services to be performed by
Transfer Agent under this Agreement, and Transfer Agent and its agents or
subcontractors shall not be liable and shall be indemnified by the Phoenix Funds
for any action taken or omitted by it in reliance upon such instructions or upon
the opinion of such counsel. The Transfer Agent, its agents and subcontractors
shall be protected and indemnified in acting upon any paper or document
furnished by or on behalf of the Phoenix Funds, reasonably believed to be
genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided Transfer Agent or
its agents or subcontrators by machine readable input, telex, CRT data entry or
other similar means authorized by the Phoenix Funds, and shall not be held to
have notice of any change of authority of any person, until receipt of written
notice thereof from the Phoenix Funds. Transfer Agent, its agents and
subcontractors shall also be protected and indemnified in recognizing stock
certificates which are reasonably
- 5 -
<PAGE>
believed to bear the proper manual or facsimile signatures of the officers of
any Fund, and the proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
6.04 In order that the indemnification provisions contained in this Article
6 shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
6.05 Transfer Agent hereby expressly acknowledges that recourse against any
of the Phoenix Funds, if any, shall be subject to those limitations provided by
governing law and the Declaration of Trust of the Phoenix Funds, as applicable,
and agrees that obligations assumed by the Phoenix Funds hereunder shall be
limited in all cases to the Phoenix Funds and their respective assets. Transfer
Agent shall not seek satisfaction of any such obligation from the shareholders
or any shareholder of the Phoenix Funds, nor shall the Transfer Agent seek
satisfaction of any obligations from the Trustees/Directors or any individual
Trustee/Director of the Phoenix Funds.
Article 7 Standard of Care
----------------
7 .01 The Transfer Agent shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy of all
services performed under this Agreement, but assumes no responsibility and shall
not be liable for loss or damage due to errors unless said errors are caused by
its negligence, bad faith, or willful misconduct of that of its employees.
Article 8 Covenants
---------
8.01 The Phoenix Funds shall promptly furnish to Transfer Agent the
following:
(a) A certified copy of the resolution of its Trustees/Directors
authorizing the appointment of Transfer Agent and the execution and
delivery of this Agreement.
(b) A copy of the Declaration of Trust or Articles of Incorporation, as
the case may be, and ByLaws, if any, and all amendments thereto of
each Fund.
8.02 The Transfer Agent hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Phoenix Funds for safekeeping of
stock certificates, check forms and facsimile signature imprinting devices, if
any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices.
8.03 The Transfer Agent shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, Transfer Agent agrees that all such records prepared
or maintained by Transfer Agent relating to the services to be performed by
Transfer Agent hereunder are the property of each respective Fund and will be
preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to each respective Fund on and in
accordance with its request.
8.04 The parties agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this
- 6 -
<PAGE>
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records, Transfer Agent will endeavor to notify the affected Fund
and to secure instructions from an authorized officer of such Fund as to such
inspection. Transfer Agent reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that it
may be held liable for the failure to exhibit the Shareholder records to such
person.
Article 9 Termination
-----------
9.01 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other. The parties mutually acknowledge
that the termination of this Agreement by one, but not each Fund shall not
effect a termination of this Agreement as to any and all other Phoenix Fund(s)
which have not terminated the Agreement.
9.02 Should any Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the terminating Fund. Additionally, Transfer Agent reserves the right to charge
any other reasonable expenses associated with such termination and/or a charge
equivalent to the average of three (3) months' fees to the terminating Fund.
Article 10 Assignment
----------
10.01 Except as provided in Section 10.03 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
10.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
10.03 The Transfer Agent may, without further consent on the part of any of
the Phoenix Funds, subcontract for the performance hereof with one or more
sub-agents; provided, however, that Transfer Agent shall be as fully responsible
to each Fund for the acts and omissions of any subcontractor as it is for its
own acts and omissions.
Article 11 Amendment
---------
11.01 This Agreement may be amended or modified by a written agreement
executed by the parties and authorized or approved by a resolution of the
Trustees/Directors of each respective Fund.
Article 12 Connecticut Law to Apply
------------------------
12.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Connecticut.
Article 13 Force Majeure
-------------
13.01 In the event either party is unable to perform its obligations under
the terms of this Agreement because of the acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
- 7 -
<PAGE>
Article 14 Consequential Damages
---------------------
14.01 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
Article 15 Merger of Agreement
-------------------
15.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
15.02 This Agreement shall not be merged with or construed in conjunction
with any other current or future agreement between the Phoenix Funds (including
any Fund) and Phoenix Equity Planning Corporation, each and all of which
agreements shall at all times remain separate and distinct.
Article 16 Limitations of Liability of the Trustees and Shareholders
---------------------------------------------------------
16.01 For the Funds which that are formed as Massachusetts business trusts,
notice is hereby given that the Agreement and Declaration of such Trusts are on
file with the Secretary of the Commonwealth of Massachusetts and was executed on
behalf of the Trustees of such Trusts as Trustees and not individually and that
the obligations of this instrument are not binding upon any of the Trustees or
Shareholders individually but are binding only upon the assets and property of
each Fund.
Article 17 Counterparts
------------
17.01 This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
- 8 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
Phoenix Asset Reserve
Phoenix California Tax Exempt Bonds, Inc.
Phoenix Equity Opportunities Fund
Phoenix Income and Growth Fund
Phoenix Multi-Portfolio Fund
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Series Fund
Phoenix Total Return Fund, Inc.
Phoenix Worldwide Opportunities Fund
By: /s/ Philip R. McLoughlin
---------------------------------
Name: Philip R. McLoughlin
Title: President
ATTEST:
By: /s/ Richard Wirth
--------------------------
Name: Richard Wirth
Title: Assistant Secretary
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Martin J. Gavin
---------------------------------
Executive Vice President
ATTEST:
By: /s/ Patricia O. McLaughlin
--------------------------
Name: Patricia O. McLaughlin
Title: Assistant Secretary
- 9 -
<PAGE>
Schedule A
----------
Fee Schedule
Annual Maintenance Fees shall be based on the following formula:
AMF(Fund) = BAMF x SA
where, AMFFund refers to the aggregate Annual Maintenance Fee levied
against each respective Fund,
BAMF refers to the Base Annual Maintenance Fee levied against each
respective Fund for each shareholder account, as more particularly
described below, at the basic annual per account rate of $19.25 for
daily dividend accounts and $14.95 for non-daily dividend accounts,
and
SA refers to the number of Shareholder Accounts subject to the terms
of this Agreement and any and all sub-transfer agent agreements which
presently or hereafter may be entered into by the Transfer Agent. For
the purpose of computing the foregoing, the Transfer Agent will
ascertain the number of Shareholders of each Fund regardless of
whether any such Shares are held in accordance with any pooled or
omnibus accounts or arrangement managed or controlled by any entity,
broker/dealer or sub-transfer agent.
Other Fees
- ----------
o Omnibus Accounts, Per Transaction $2.50
o Closed Accounts, per Account, per month $0.20
o Check writing Fees:
Privilege set-up $5.00
Per Cleared Check $1.00
Out-of-Pocket Expenses
- ----------------------
Out-of-pocket expenses include, but are not limited to: confirmation production,
postage, forms, telephone, microfilm, microfiche, stationary and supplies billed
as .1122% of postage costs and expenses incurred at the specific direction of
any Fund. Postage for mass mailings is due seven days in advance of the mailing
date.
Exhibit 9.2
Form of Sales Agreement
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
100 Bright Meadow Boulevard
Enfield, Connecticut 06082-1989
800-243-4361
(203) 253-1000
PHOENIX FAMILY OF FUNDS
SALES AGREEMENT
To: Phoenix Equity Planning Corporation From:
100 Bright Meadow Boulevard
Enfield, Connecticut 06082
Sir/Madam:
We desire to enter into an Agreement with you for the sale and distribution of
shares of registered investment companies (which shall collectively be referred
to hereafter as the "Funds") for which you are national distributor or principal
underwriter and which may be listed in the Annex A hereto which such Annex may
be amended by you from time to time. Upon acceptance of this Agreement by you,
we understand that we may offer and sell shares of each of the Funds (hereafter
"Shares") subject, however, to all of the terms and conditions hereof including
your right to suspend or cease the sale of such shares.
1. We understand and agree that in all sales of Shares to the public we shall
be acting as dealer for our own account: that all purchase orders and
applications submitted to you by us are subject to acceptance or rejection
by you in your sole discretion: and that each purchase will be deemed to
have been consummated in your principal office subject to your acceptance
and effective only upon confirmation in us by you.
2. We agree that all purchases of Shares by us shall be made only for the
purpose of covering purchase orders already received from our customers
(who may be any person other than a securities dealer or broker) or for our
own bona fide investment.
3. We shall offer and sell shares purchased pursuant to this Agreement for the
purpose of covering purchase orders of our customers at the current public
offering price for such Shares ("Offering Price") as set forth in the
current prospectus of each of the funds.
4. We shall pay you for Shares purchased by us within five (5) business days
of the date of your confirmation to us of such purchase. The purchase price
shall be the Offering Price, less only the applicable dealer discount
("Dealer Discount"), if any, as set forth in Annex A hereto. We agree that
you have the right, without notice, to cancel any order for which payment
has not been received by you as provided in this paragraph, in which case
you may hold us responsible for any loss suffered by you resulting from our
failure to make payment as aforesaid.
5. We understand and agree that any Dealer Discount or fee is subject to
change from time to time. Any orders placed after the effective date of any
such Dealer Discount change shall be subject to the Dealer Discounts in
effect at the time such order is received by you.
6. We understand and agree that Shares purchased by us under this Agreement
will not be delivered until payment has been received by you. 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 our request, any Shares resold
by us to one of our customers will be delivered (whether by credit to a
shareholder open account or by delivery of certificates) in the name of our
customer.
<PAGE>
7. We understand that on all purchases of Shares to which the terms of this
Agreement are applicable by a person for whom we are dealer of record, you
will pay us an amount equal to the Dealer Discount or fees which would have
been paid to us with respect to such Shares if such Shares had been
purchased through us. We understand and agree that the dealer of record for
this purpose shall be the dealer through whom such person most recently
purchased Shares of such fund. We understand that all amounts payable to us
under this paragraph and currently payable under this agreement will be
paid as of the end of each month unless specified otherwise for the total
amount of Shares to which this paragraph is applicable but may be paid more
frequently as you may determine in your discretion.
8. You appoint the transfer agent for each of the Funds as your agent to
execute the purchase transaction of Shares and to confirm such purchases to
our customers on our behalf, and we guarantee the legal capacity of our
customers so purchasing such shares. We further understand if a customer's
account is established without the customer signing the application form,
we 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 we agree to indemnify the Funds, the transfer agent and
you for any loss or liability resulting from acting upon such instructions.
9. Upon the purchase of Shares pursuant to a Letter of Intent, we will
promptly return to you any excess of the Dealer Discount previously allowed
or paid to us over that allowable in respect to such larger purchase.
10. Unless at the time of transmitting a purchase order we advise you to the
contrary, you 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 Annex A hereto.
11. We understand and agree that if any Shares purchased by us under the terms
of this Agreement are, within seven (7) business days after the date of
your confirmation to us of the original purchase order for such shares,
repurchased by you as agent for such fund or are tendered to such fund for
redemption, we shall forfeit the right to, and shall pay over to you the
amount of, any Dealer Discount allowed to us with respect to such Shares.
It is understood that you will forthwith pay over such amount to such fund
and also shall pay over to such fund your share of the Sales Charge, if
any, on the original transaction. We understand that you will notify us of
such repurchase or redemption within ten (10) days of the date upon which
certificates are delivered to you 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 to you or with such fund an order to have such Shares repurchased
or redeemed.
12. We agree that, in the case of any repurchase of any Shares made more than
seven (7) business days after confirmation by you of any purchase of such
Shares, except in the case of Shares purchased by us from you for our own
bona fide investment, we will act only as agent for the holders of such
Shares and will place the orders for repurchase only with you. It is
understood that we may charge the holder of such Shares a fair commission
for handling the transaction.
13. Your obligations to us under this Agreement are subject to all the
provisions of the respective distribution agreements entered into between
you and each of the Funds. We understand and agree that in performing our
services under this agreement we are acting in the capacity of an
independent contractor, and you are in no way responsible for the manner of
our performance or for any of our acts or omissions in connection
therewith. Nothing in the Agreement shall be construed to constitute us or
any of our agents, employees or representatives as your agent, partner or
employee or the agent, partner or employee of any of the Funds.
14. We understand that you will supply us with reasonable quantities of the
current prospectus and periodic reports to shareholders for each of the
Funds. We agree not to use any other advertising or sales material relating
to the sale of shares of any of the Funds unless other advertising or sales
material is approved in writing by you.
<PAGE>
15. We shall offer and sell Shares, and execute telephone exchanges, 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 we
will make no representations not contained in any such prospectus or in any
authorized supplemental material supplied by you. We will use our 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 and
training of all sales representatives employed by us in order that such
Shares will be offered in accordance with terms and conditions of this
Agreement and all applicable laws, rules and regulations. We agree to hold
you harmless and indemnify you in the event that we or any of our sales
representatives should violate any law, rule or regulation or any
provisions of this Agreement which may result in possible liability to you.
In addition, in consideration for the extension of the right to exercise
the telephone exchange privilege to us and our registered representatives,
we 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 agree that we will indemnify and hold harmless
the Funds, Equity Planning and the Transfer Agent against any loss, injury
or damage resulting from any telephone exchange instruction from us or our
registered representatives. (Telephone instructions will be recorded on
tape.) In the event you determine to refund any amounts paid by any
investor by reason of any such violation on our part, we shall forfeit the
right to, and pay over to you, the amount of any dealer discount allowed to
us with respect to the transaction for which the refund is made. All
expenses which we incur in connection with our activities under this
Agreement shall be borne by us.
16. We represent that we are properly registered as a broker or dealer under
the Securities Exchange Act of 1934 and are members of the National
Assocation of Securities Dealers, Inc. ("NASD") and agree to maintain
membership in the NASD or, in the alternative, that we are foreign dealers
not eligible for membership in the NASD. We agree to notify you promptly of
any change, termination, or suspension of the foregoing status. We 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. We further agree to comply with all
applicable state and Federal laws and the rules and regulations of
applicable regulatory agencies. We further agree that we will not sell, or
offer for sale, Shares in any state or jurisdiction in which such Shares
have not been duly registered or qualified for sale.
17. Either party may terminate this Agreement for any reason by written or
telegraphic notice to the other party which termination shall become
effective fifteen (15) days after the date of mailing or telegraphing such
notice to the other party. You may also terminate this Agreement for cause
or as a result of a violation by us, as determined by you in your
discretion, of any of the provisions of this Agreement, said termination to
be effective on the date of mailing written or telegraphing notice to us of
the same. Without limiting the generality of the foregoing, our own
expulsion from the NASD will automatically terminate this Agreement without
notice. Our suspension from the NASD of violation or applicable state or
Federal laws or rules and regulations of applicable regulatory agencies
will terminate this Agreement effective upon the date of your mailing
written notice or telegraphing notice to us of such termination. Your
failure to terminate this Agreement for any cause shall not constitute a
waiver of your right to so terminate at a later date for such cause.
18. We understand and agree that all communications and notices to you or to us
shall be sent to the addresses set forth at the beginning of this Agreement
or to such other addresses as either party may specify in writing from time
to time.
19. This Agreement shall become effective upon the date of its acceptance by
you as set forth herein. 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 you may assign or transfer this Agreement to any successor
distributor of the Shares described herein.
ACCEPTED ON BEHALF OF
PHOENIX EQUITY PLANNING CORPORATION
<TABLE>
<S> <C>
DEALER FIRM
Date_________________________________________________ ____________________________________________________
NAME OF DEALER
By John W. Filoon, Jr., Snr. Vice Pres., Sales & Mktg. Date
-------------------------------------------------- -------------------------------------------------
NAME AND TITLE
By _________________________________________________
NAME AND TITLE
/s/ John W. Filoon, Jr.
- ------------------------------------------------------ -----------------------------------------------------
AUTHORIZED SIGNATURE AUTHORIZED SIGNATURE
NASD - CRD -NUMBER _________________________________
</TABLE>
<PAGE>
ANNEX A
DEALER'S AGREEMENT WITH
PHOENIX EQUITY PLANNING CORPORATION
The public offering price of Class A Shares of all Series of the Phoenix Series
Fund (except the Money Market Fund Series) all Portfolios of the Phoenix
Multi-Portfolio Fund and the Phoenix Total Return Fund Inc., is the net asset
value plus a sales charge. The offering price so determined becomes effective
after the purchase order is received by Equity Planning or the Trust's agent,
State Street Bank and Trust Company. The sales charge is reduced on a graduated
scale on single purchases of $50,000 or more as shown below:
Class A Shares
- --------------
<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Discount or Agency
Amount of Transaction as percentage as percentage fee as percentage
at offering price of offering price of amount invested of offering price*
- ----------------- ----------------- ------------------ --------------------------
<S> <C> <C> <C>
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 (see below*)
</TABLE>
*In connection with purchase of Class A shares of $1,000,000 or more (and
subsequent purchases in any amount) including purchases of shares of the Phoenix
Money Market Fund Series, Equity Planning may pay broker-dealers from its own
profits and resources, a percentage of the net asset value of any shares sold
(excluding Phoenix Money Market Fund Series) as set forth below:
Purchase Amount Payment to Broker/Dealers
- --------------- -------------------------
$1,000,000 - $2,000,000 .75 of 1%
$2,000,000 - $4,000,000 .50 of 1%
$4,000,000 or more .25 of 1%
Effective January 1, 1994: Class B shares will be offered on sales of shares of
the Phoenix High Yield Fund Series and Phoenix U.S. Government Fund Series both
of which are Series of the Phoenix Series Fund, on sales of Shares of the
Phoenix Tax Exempt Bond Portfolio which is a Portfolio of the Phoenix
Multi-Portfolio Fund and on shares of the Phoenix Total Return Fund Inc. Class B
shares are sold at net asset value per share without the imposition of a sales
charge at the time of purchase. Shares which are redeemed within six years of
purchase will be subject to a contingent deferred sales charge, as described in
the Fund's current prospectus, at the rates set forth below:
Class B Shares:
- ---------------
Contingent Deferred Sales Charge
as a percentage of dollar amount
Years Since Purchase subject to charge
- -------------------- --------------------------------
First 4%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh 0
PHOENIX FUNDS DISTRIBUTION PLAN
- -------------------------------
Under their respective Distribution Plans, each of the Phoenix Funds may pay
Equity Planning an amount annually not to exceed a certain percentage of the
average daily net assets of the Fund, as shown below. Equity Planning may pay to
qualifying dealers an amount up to this percentage of the average daily net
assets in qualifying shares sold by such dealers as described in the Fund's
prospectus.
<PAGE>
FUND NAME DISTRIBUTION PLAN
- --------- -----------------
Phoenix Series Fund Class A .25% Class B .75%
Phoenix Multi-Portfolio Fund .25% .75%
Phoenix Total Return Fund .25% .75%
*Equity Planning may sponsor sales contests and provide to all qualifying
dealers from its own profits and resources, additional compensation in the form
of trips and merchandise. Brokers or dealers other than Equity Planning may also
make customary additional charges for their Services in effecting purchases, if
they notify the Trust of their intention to do so.
FINANCIAL AGENT AGREEMENT
THIS AGREEMENT made and concluded as of this 11th day of December, 1996
by and between Phoenix Equity Planning Corporation, a Connecticut corporation
having a place of business located at 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Financial Agent") and each of the undersigned mutual funds
(hereinafter collectively and singularly referred to as the "Trust").
WITNESSETH THAT:
1. Financial Agent shall keep the books of the Trust and compute the
daily net asset value of shares of the Trust in accordance with instructions
received from time to time from the Board of Trustees of the Trust; which
instructions shall be certified to Financial Agent by the Trust's Secretary.
Financial Agent shall report such net asset value so determined to the Trust and
shall perform such other services as may be requested from time to time by the
Trust as are reasonably incidental to Financial Agent's duties hereunder.
2. Financial Agent shall be obligated to maintain, for the periods and
in the places required by Rule 31a-2 under the Investment Company Act of 1940,
as amended, those books and records maintained by Financial Agent. Such books
and records are the property of the Trust and shall be surrendered promptly to
the Trust upon its request. Furthermore, such books and records shall be open to
inspection and audit at reasonable times by officers and auditors of the Trust.
3. As compensation for its services hereunder during any fiscal year of
the Trust, Financial Agent shall receive, within eight days after the end of
each month, a fee as specified in Schedule A.
4. Financial Agent shall not be liable for anything done or omitted by
it in the exercise of due care in discharging its duties specifically described
hereunder and shall be answerable and accountable only for its own acts and
omissions and not for those of any agent employed by it nor for those of any
bank, trust company, broker, depository, correspondent or other person.
Financial Agent shall be protected in acting upon any instruction, notice,
request, consent, certificate, resolution, or other instrument or paper believed
by Financial Agent to be genuine, and to have been properly executed, and shall,
unless otherwise specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be ascertained by Financial
Agent hereunder a certificate signed by the Secretary of the Trust. Financial
Agent shall be entitled, with respect to questions of law relating to its duties
hereunder, to advice of counsel (which may be counsel for the Trust) and, with
respect to anything done or omitted by it in good faith hereunder in conformity
with the advice of or based upon an opinion of counsel, to be held harmless by
the Trust from all claims of loss or damage. Nothing herein shall protect
Financial Agent against any liability to the Trust or to its respective
shareholders to which Financial Agent would otherwise be subject by reason of
its willful misfeasance, bad faith, gross 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.
<PAGE>
5. Subject to prior approval of the Board of Trustees of the Trust,
Financial Agent may appoint one or more sub-financial agents to perform any of
the functions and services which are to be provided under the terms of this
Agreement upon such terms and conditions as may be mutually agreed upon by the
Trust, Financial Agent and such sub-financial agent.
6. This Agreement shall continue in effect only so long as (a) such
continuance is specifically approved at least annually by the Board of Trustees
of the Trust or by a vote of a majority of the outstanding voting securities of
the Trust, and (b) the terms and any renewal of such Agreement have been
approved by the vote of a majority of the trustees of the Trust who are not
parties to this Agreement or interested persons, as that term is defined in the
Investment Company Act of 1940, as amended, of any such party, cast in person at
a meeting called for the purpose of voting on such approval. A "majority of the
outstanding voting securities of the Trust" shall have, for all purposes of this
Agreement, the meaning provided therefor in said Investment Company Act.
7. Either party may terminate the within Agreement by tendering written
notice to the other, whereupon Financial Agent will be relieved of the duties
described herein. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in said Investment Company Act.
8. This Agreement shall be construed and the rights and obligations of
the parties hereunder enforced in accordance with the laws of the Commonwealth
of Massachusetts.
<PAGE>
9. This Agreement shall become effective on January 1, 1997.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
PHOENIX CALIFORNIA TAX EXEMPT
BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED INCOME
FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM
BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
By: /s/ Philip R. McLoughlin
------------------------
Philip R. McLoughlin
President
PHOENIX EQUITY PLANNING
CORPORATION
By: /s/ David R. Pepin
------------------------
David R. Pepin
Executive Vice President
<PAGE>
SCHEDULE A
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS FINANCIAL AGENT
Annual Financial Agent Fees shall be based on the following formula:
(1) An incremental schedule applies as follows:
Up to $100 million: 5 basis points on average daily net assets
$100 million to $300 million: 4 basis points on average daily net assets
$300 million thru $500 million: 3 basis points on average daily net assets
Greater than $500 million: 1.5 basis points on average daily net assets
A minimum fee will apply as follows:
Money Market $35,000
Equity $50,000
Balanced $60,000
Fixed Income $70,000
International $70,000
REIT $70,000
(2) An additional charge of $12,000 applies for each additional class
of shares above one, over and above the minimum asset-based fee previously
noted.
The following tables indicates the classification and effective date
for each of the applicable fund/series/portfolio:
Classification Series Name
Money Market Phoenix Money Market Fund Series
Equity Phoenix Aggressive Growth Fund Series
Phoenix Convertible Fund Series
Phoenix Endowment Equity Portfolio
Phoenix Equity Opportunities Fund
Phoenix Growth Fund Series
Phoenix Micro Cap Fund
Phoenix Mid Cap Portfolio
Phoenix Small Cap Fund
Phoenix Strategic Theme Fund
<PAGE>
Classification Series Name
Balanced Phoenix Balanced Fund Series
Phoenix Income and Growth Fund
Phoenix Strategic Allocation Fund, Inc.
Fixed Income Phoenix California Tax Exempt Bonds, Inc.
Phoenix Diversified Income Portfolio
Phoenix Emerging Markets Bond Portfolio
Phoenix High Yield Fund Series
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Tax-Exempt Bond Portfolio
Phoenix U.S. Government Securities Fund Series
International Phoenix International Portfolio
Phoenix Worldwide Opportunities Fund
REIT Phoenix Real Estate Securities Portfolio
FIRST AMENDMENT TO FINANCIAL AGENT AGREEMENT
THIS AMENDMENT made effective as of the 1st day of January, 1997 amends that
certain Financial Agent Agreement dated December 11, 1996 by and among the
following parties (the "Agreement") as hereinbelow provided.
W I T N E S S E T H :
WHEREAS, due to a scrivener's error, the Phoenix Convertible Fund
Series was incorrectly classified as an "Equity" series rather than a "Balanced"
series for purposes of applying the minimum fee; and
WHEREAS, the parties wish to correct this error and correctly classify
the Phoenix Convertible Fund Series as a "Balanced" series:
NOW, THEREFORE, in consideration of the foregoing premises, Schedule A
to the Agreement is hereby replaced with "Revised Schedule A" attached hereto
and made a part hereof. Except as hereinabove provided, the Agreement shall be
and remain unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their duly authorized officers on this 25th day of February, 1997.
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
By: /s/ Philip R. McLoughlin
-------------------------
Philip R. McLoughlin
President (as to all)
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ David R. Pepin
-------------------------
David R. Pepin
Executive Vice President
<PAGE>
REVISED SCHEDULE A
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS FINANCIAL AGENT
Annual Financial Agent Fees shall be based on the following formula:
(1) An incremental schedule applies as follows:
Up to $100 million: 5 basis points on average daily net assets
$100 million to $300 million: 4 basis points on average daily net assets
$300 million thru $500 million: 3 basis points on average daily net assets
Greater than $500 million: 1.5 basis points on average daily net assets
A minimum fee will apply as follows:
Money Market $35,000
Equity $50,000
Balanced $60,000
Fixed Income $70,000
International $70,000
REIT $70,000
(2) An additional charge of $12,000 applies for each additional class
of shares above one, over and above the minimum asset-based fee previously
noted.
The following tables indicates the classification and effective date
for each of the applicable fund/series/portfolio:
Classification Series Name
Money Market Phoenix Money Market Fund Series
Equity Phoenix Aggressive Growth Fund Series
Phoenix Endowment Equity Portfolio
Phoenix Equity Opportunities Fund
Phoenix Growth Fund Series
Phoenix Micro Cap Fund
Phoenix Mid Cap Portfolio
Phoenix Small Cap Fund
Phoenix Strategic Theme Fund
<PAGE>
Classification Series Name
Balanced Phoenix Balanced Fund Series
Phoenix Convertible Fund Series
Phoenix Income and Growth Fund
Phoenix Strategic Allocation Fund, Inc.
Fixed Income Phoenix California Tax Exempt Bonds, Inc.
Phoenix Diversified Income Portfolio
Phoenix Emerging Markets Bond Portfolio
Phoenix High Yield Fund Series
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Tax-Exempt Bond Portfolio
Phoenix U.S. Government Securities Fund Series
International Phoenix International Portfolio
Phoenix Worldwide Opportunities Fund
REIT Phoenix Real Estate Securities Portfolio
SECOND AMENDMENT TO FINANCIAL AGENT AGREEMENT
THIS AMENDMENT made effective as of the 1st day of July, 1997 amends that
certain Financial Agent Agreement dated December 11, 1997 and amended January 1,
1997 by and among the following parties (the "Agreement") as hereinbelow
provided.
W I T N E S S E T H :
WHEREAS, the parties hereto wish to amend the Agreement to include an
express provision to allow the addition of funds without necessitating a formal
amendment to said Agreement:
NOW, THEREFORE, in consideration of the foregoing premise, Paragraph 8
of the Agreement is renumbered to Paragraph 9 and the following language
inserted as the new Paragraph 8:
8. Additional Funds
Additional funds may become party to this Agreement by
notifying the Financial Agent in writing, and if the Financial Agent
agrees in writing to provide its services, such fund shall become a
Trust subject to the terms of the Agreement. Such notification shall
include a revised Schedule A reflecting the new fund(s) as added to the
appropriate fund classification(s).
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their duly authorized officers on this 22nd day of July, 1997.
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
By: /s/ Philip R. McLoughlin
---------------------------------
Philip R. McLoughlin
President
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ David R. Pepin
-----------------------------------
David R. Pepin
Executive Vice President
Exhibit 11
Consent of Independent Accountant
<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. 13 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated June 10, 1997, relating to the financial
statements and financial highlights appearing in the April 30, 1997 Annual
Report to Shareholders of the Phoenix Income and Growth Fund, 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 "Other Information--Independent Accountants" in the
Statement of Additional Information.
/s/ PRICE WATERHOUSE LLP
Boston, Massachusetts
August 25, 1997
PHOENIX FUNDS
(the "Funds")
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended
("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the original effective date of this Plan, the Funds shall offer
multiple classes of shares, as described herein, pursuant to Rule 18f-3 and this
Plan.
2. The Multi-Class Structure
-------------------------
The portfolios of the Funds listed on Schedule A hereto shall offer two
classes of shares, Class A and Class B ("Multi-Class Portfolios"). Shares of the
Multi-Class Portfolios shall represent an equal pro rata interest in the
respective Multi-Class Portfolio and, generally, shall have identical voting,
dividend, liquidation, and other rights, preferences, powers, restrictions,
limitations, qualifications and terms and conditions, except that: (a) each
class shall have a different designation; (b) each class shall bear any Class
Expenses, as defined by Section 2(b), below; (c) each class shall have exclusive
voting rights on any matter submitted to shareholders that relates solely to its
distribution arrangement; and (d) each class shall have separate voting rights
on any matter submitted to shareholders in which the interests of one class
differ from the interests of any other class. In addition, Class A and Class B
shares shall have the features described in Sections a, b, c and d, below.
a. Distribution Plans
------------------
The Funds have adopted Distribution Plans pursuant to Rule 12b-1 with
respect to each Multi-Class Portfolio, containing substantially the following
terms:
i. Class A shares of each Multi-Class Portfolio shall reimburse
Phoenix Equity Planning Corporation (the "Distributor") for costs and expenses
incurred in connection with distribution and marketing of shares thereof, as
provided in the Class A Distribution Plan and any supplements thereto, subject
to an annual limit of 0.25%, or in some cases 0.30%, of the average daily net
assets of a Multi-Class Portfolio's Class A shares.
<PAGE>
-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.
b. Allocation of Income and Expenses
---------------------------------
i. General.
The gross income, realized and unrealized capital gains and losses and
expenses (other than Class Expenses, as defined below) of each Multi-Class
Portfolio shall be allocated to each class on the basis of its net asset value
relative to the net asset value of the Multi-Class Portfolio. Expenses to be so
allocated include expenses of the Funds that are not attributable to a
particular Multi-Class Portfolio or class of a Multi-Class Portfolio but are
allocated to a Multi-Class Portfolio ("Fund Expenses") and expenses of a
particular Multi-Class Portfolio that are not attributable to a particular class
of that Multi-Class Portfolio ("Portfolio Expenses"). Fund Expenses include, but
are not limited to, trustees' fees, insurance costs and certain legal fees.
Portfolio Expenses include, but are not limited to, certain state registration
fees, custodial fees, advisory fees and other expenses relating to the
management of the Multi-Class Portfolio's assets.
ii. Class Expenses.
Expenses attributable to a particular class ("Class Expenses") shall
be limited to: (1) transfer agency fees; (2) stationery, printing, postage, and
delivery expenses relating to preparing and distributing shareholder reports,
prospectuses, and proxy statements; (3) state Blue Sky registration fees; (4)
SEC registration fees; (5) expenses of administrative personnel and services to
the extent related to another category of class-specific expenses; (6) trustees'
fees and expenses; (7) accounting expenses, auditors' fees, litigation expenses,
and legal fees and expenses; and (8) expenses incurred in connection with
shareholder meetings. Expenses described in subsection (a) (i) and (ii) above of
this paragraph must be allocated to the class for which they are incurred. All
other expenses described in this paragraph will be allocated as Class Expenses,
if a Fund's President and Treasurer have determined, subject to Board approval
or ratification, which of such categories of expenses will be treated as Class
Expenses, consistent with applicable legal principles under the 1940 Act and the
Internal Revenue Code of 1986, as amended ("Code"). The difference between the
Class Expenses allocated to each share of a class during a year and the Class
Expenses allocated to each share of any other class during such year shall at
all times be less than .50% of the average daily net asset value of the class of
shares with the smallest average net asset value. The afore-described
description of Class Expenses and any amendment thereto
<PAGE>
-3-
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 18f-3 and Board approval or
ratification.
The initial determination of expenses that will be allocated as Class
Expenses and any subsequent changes thereto as set forth in this Plan shall be
reviewed by the Board of Trustees and approved by such Board and by a majority
of the Trustees who are not "interested persons" of the Fund, as defined in the
1940 Act ("Independent Trustees").
iii. Waivers or Reimbursements of Expenses
Investment Advisor may waive or reimburse its management fee in whole
or in part provided that the fee is waived or reimbursed to all shares of the
Fund in proportion to the relative average daily net asset values.
Investment Advisor or a related entity who charges a fee for a Class
Expense may waive or reimburse that fee in whole or in part only if the revised
fee more accurately reflects the relative cost of providing to each Multi-Class
Portfolio the service for which the Class Expense is charged.
Distributor may waive or reimburse a Rule 12b-1 Plan fee payment in
whole or in part.
c. Exchange Privileges
-------------------
Shareholders of a Multi-Class Portfolio may exchange shares of a particular
class for shares of the same class in another Multi-Class Portfolio, at the
relative net asset values of the respective shares to be exchanged and with no
sales charge, provided the shares to be acquired in the exchange are, as may be
necessary, qualified for sale in the shareholder's state of residence and
subject to the applicable requirements, if any, as to minimum amount. Each
Multi-Class Portfolio reserves the right to temporarily or permanently terminate
exchange privileges, impose conditions upon the exercision of exchange
privileges, or reject any specific order for any dealer, shareholder or person
whose transactions seem to follow a timing pattern, including those who request
more than one exchange out of a Multi-Class Portfolio within any thirty (30) day
period. Each Multi-Class Portfolio reserves the right to terminate or modify
these exchange privileges at any time upon giving prominent notice to
shareholders at least 60 days in advance.
<PAGE>
-4-
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 20, 1996, approved the Amended and Restated Plan
based on a determination that the Plan, including the expense allocation, is in
the best interests of each class and Multi-Class Portfolio individually and of
the Funds. Their determination was based on their review of information
furnished to them which they deemed reasonably necessary and sufficient to
evaluate the Plan.
b. Approval of Amendments
----------------------
The Plan may not be amended materially unless the Board of Trustees,
including a majority of the Independent Trustees, have found that the proposed
amendment, including any proposed related expense allocation, is in the best
interests of each class and Multi-Class Portfolio individually and of the Funds.
Such funding shall be based on information required by the Board and furnished
to them that the Board deems reasonably necessary to evaluate the proposed
amendment.
c. Periodic Review
---------------
The Board shall review reports of expense allocations and such other
information as they request at such times, or pursuant to such schedule, as they
may determine consistent with applicable legal requirements.
<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>
SCHEDULE A
----------
PHOENIX CALIFORNIA TAX -EXEMPT BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND:
DIVERSIFIED INCOME PORTFOLIO
EMERGING MARKETS BOND PORTFOLIO
INTERNATIONAL PORTFOLIO
MID CAP PORTFOLIO
REAL ESTATE SECURITIES PORTFOLIO
TAX-EXEMPT BOND PORTFOLIO
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND:
AGGRESSIVE GROWTH FUND SERIES
BALANCED FUND SERIES
CONVERTIBLE FUND SERIES
GROWTH FUND SERIES
HIGH YIELD FUND SERIES
MONEY MARKET FUND SERIES
U.S. GOVERNMENT SECURITIES FUND SERIES
PHOENIX STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND
MICRO CAP FUND
SMALL CAP FUND
STRATEGIC THEME FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX WORLDWIDE OPPORTUNITIES FUND
PHOENIX FUNDS
(the "Funds")
FIRST AMENDMENT TO THE
AMENDED AND RESTATED PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
That certain Amended and Restated Plan Pursuant to Rule 18f-3 under the
Investment Company Act of 1940 duly adopted by the Board of Directors/Trustees
of the Funds on November 20, 1996, is hereby amended as follows:
1. The first and last sentences of Section 2. The Multi-Class
Structure are deleted and the following two sentences substituted therefor:
The portfolios of the Funds listed on Schedule A hereto shall offer up
to four classes of shares as indicated on Schedule A: Class A, Class B,
Class C and Class M. ( . . . ) In addition, Class A, Class B, Class C and
Class M shares shall have the features described in Sections a, b, c and d,
below.
2. The following two subparagraphs are added to Section 2a.
Distribution Plans immediately following subparagraph 2a(ii):
iii. Class C shares of each Multi-Class Portfolio shall reimburse the
Distributor for costs and expenses incurred in connection with distribution
and marketing of shares thereof, as provided in the Class C Distribution
Plan and any supplements thereto, subject to an annual limit of 1.00%, or
in some cases 0.50%, of the average daily net assets of a Multi-Class
Portfolio's Class C shares.
iv. Class M shares of each Multi-Class Portfolio shall reimburse the
Distributor for costs and expenses incurred in connection with distribution
and marketing of shares thereof, as provided in the Class M Distribution
Plan and any supplements thereto, subject to an annual limit of 0.50% of
the average daily net assets of a Multi-Class Portfolio's Class M shares.
3. Schedule A is amended as attached hereto.
This Amendment was approved by the Board of Directors/Trustees at a meeting
held on May 28, 1997.
/s/ Thomas N. Steenburg
----------------------------
Assistant Secretary
<PAGE>
SCHEDULE A
----------
<TABLE>
<CAPTION>
Class A Class B Class C Class M
------- ------- ------- -------
<S> <C> <C> <C> <C>
PHOENIX CALIFORNIA TAX -EXEMPT BONDS, INC. X X -- --
PHOENIX INCOME AND GROWTH FUND X X -- --
PHOENIX MULTI-PORTFOLIO FUND:
EMERGING MARKETS BOND PORTFOLIO X X X X
INTERNATIONAL PORTFOLIO X X -- --
MID CAP PORTFOLIO X X -- --
REAL ESTATE SECURITIES PORTFOLIO X X -- --
STRATEGIC INCOME PORTFOLIO X X X X
TAX-EXEMPT BOND PORTFOLIO X X -- --
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC. X X X X
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND X X X --
PHOENIX SERIES FUND:
AGGRESSIVE GROWTH FUND SERIES X X -- --
BALANCED FUND SERIES X X -- --
CONVERTIBLE FUND SERIES X X -- --
GROWTH FUND SERIES X X -- --
HIGH YIELD FUND SERIES X X X X
MONEY MARKET FUND SERIES X X X X
U.S. GOVERNMENT SECURITIES FUND X X -- --
SERIES
PHOENIX STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND X X -- --
MICRO CAP FUND X X -- --
SMALL CAP FUND X X -- --
STRATEGIC THEME FUND X X X X
PHOENIX STRATEGIC ALLOCATION FUND, INC. X X -- --
PHOENIX WORLDWIDE OPPORTUNITIES FUND X X -- --
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> PHOENIX INCOME & GROWTH FUND CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 723268
<INVESTMENTS-AT-VALUE> 783597
<RECEIVABLES> 43315
<ASSETS-OTHER> 138
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 827050
<PAYABLE-FOR-SECURITIES> 2146
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2536
<TOTAL-LIABILITIES> 4682
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 732478
<SHARES-COMMON-STOCK> 45801
<SHARES-COMMON-PRIOR> 48948
<ACCUMULATED-NII-CURRENT> 2320
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 27240
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 60329
<NET-ASSETS> 822367
<DIVIDEND-INCOME> 14393
<INTEREST-INCOME> 28310
<OTHER-INCOME> 0
<EXPENSES-NET> (12968)
<NET-INVESTMENT-INCOME> 29735
<REALIZED-GAINS-CURRENT> 57967
<APPREC-INCREASE-CURRENT> (2223)
<NET-CHANGE-FROM-OPS> 85479
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (18482)
<DISTRIBUTIONS-OF-GAINS> (39142)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3228
<NUMBER-OF-SHARES-REDEEMED> (11192)
<SHARES-REINVESTED> 4818
<NET-CHANGE-IN-ASSETS> (42016)
<ACCUMULATED-NII-PRIOR> 2997
<ACCUMULATED-GAINS-PRIOR> 40369
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5982
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12968
<AVERAGE-NET-ASSETS> 854631
<PER-SHARE-NAV-BEGIN> 10.08
<PER-SHARE-NII> 0.40
<PER-SHARE-GAIN-APPREC> 0.66
<PER-SHARE-DIVIDEND> (0.40)
<PER-SHARE-DISTRIBUTIONS> (0.88)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.86
<EXPENSE-RATIO> 1.18
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> PHOENIX INCOME & GROWTH FUND CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 723268
<INVESTMENTS-AT-VALUE> 783597
<RECEIVABLES> 43315
<ASSETS-OTHER> 138
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 827050
<PAYABLE-FOR-SECURITIES> 2146
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2536
<TOTAL-LIABILITIES> 4682
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 732478
<SHARES-COMMON-STOCK> 37581
<SHARES-COMMON-PRIOR> 39263
<ACCUMULATED-NII-CURRENT> 2320
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 27240
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 60329
<NET-ASSETS> 822367
<DIVIDEND-INCOME> 14393
<INTEREST-INCOME> 28310
<OTHER-INCOME> 0
<EXPENSES-NET> (12968)
<NET-INVESTMENT-INCOME> 29735
<REALIZED-GAINS-CURRENT> 57967
<APPREC-INCREASE-CURRENT> (2223)
<NET-CHANGE-FROM-OPS> 85479
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (12058)
<DISTRIBUTIONS-OF-GAINS> (31925)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2617
<NUMBER-OF-SHARES-REDEEMED> (7730)
<SHARES-REINVESTED> 3431
<NET-CHANGE-IN-ASSETS> (25240)
<ACCUMULATED-NII-PRIOR> 2997
<ACCUMULATED-GAINS-PRIOR> 40369
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5982
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12968
<AVERAGE-NET-ASSETS> 854631
<PER-SHARE-NAV-BEGIN> 10.09
<PER-SHARE-NII> 0.31
<PER-SHARE-GAIN-APPREC> 0.67
<PER-SHARE-DIVIDEND> (0.32)
<PER-SHARE-DISTRIBUTIONS> (0.88)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.87
<EXPENSE-RATIO> 1.93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
