As filed with the Securities and Exchange Commission on August 21, 1998
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. 14 [X]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 15 [X]
(Check appropriate box or boxes)
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Phoenix Income and Growth Fund
(Exact Name of Registrant as Specified in Declaration of Trust)
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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 Investment Partners, Ltd.
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)
[X] immediately upon filing pursuant to paragraph (b)
[ ] on 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.
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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
4. General Description of Registrant ................ Introduction; Investment Objectives and Policies;
Additional Information
5. Management of the Fund ........................... Introduction; Management of the Fund;
Distribution Plans
5A. Management's Discussion of Fund Performance ...... Performance Information
6. Capital Stock and Other Securities ............... Introduction; Investment Restrictions; Net Asset Value;
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; The Fund; Other Information
13. Investment Objectives and Policies ............ Cover Page; Investment Objectives and Policies;
Investment Restrictions; Investment Techniques
14. Management of the Fund ........................ Trustees and Officers
15. Control Persons and Principal Holders of
Securities .................................... Trustees and Officers
16. Investment Advisory & Other Services .......... Services of the Adviser; The Distributor;
Distribution Plans
17. Brokerage Allocation .......................... Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities ............ The Fund
19. Purchase, Redemption and Pricing of Securities How to Buy Shares; Alternative Purchase
Being Offered ................................. Arrangements; Investor Account Services; Redemption
of Shares; Net Asset Value
20. Tax Status .................................... Dividends, Distributions and Taxes
21. Underwriter ................................... The Distributor; Distribution Plans
22. Calculations of Performance Data .............. Performance Information
23. Financial Statements .......................... Financial Statements
</TABLE>
<PAGE>
P H O E N I X
F U N D S
Prospectus August 28, 1998
[triangle] PHOENIX INCOME AND
GROWTH FUND
[PHOENIX LOGO] PHOENIX
INVESTMENT PARTNERS
<PAGE>
PHOENIX INCOME AND GROWTH FUND
101 Munson Street
Greenfield, MA 01301
PROSPECTUS
August 28, 1998
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, 1998, 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.
The Commission maintains a Web site (http://www.sec.gov) that contains
this Prospectus, the Statement of Additional Information, material incorporated
by reference, and other information regarding registrants that file
electronically with the Commission.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, credit union, or 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
<TABLE>
<CAPTION>
Page
-----
<S> <C>
INTRODUCTION ..................................... 3
FUND EXPENSES .................................... 4
FINANCIAL HIGHLIGHTS ............................. 5
PERFORMANCE INFORMATION .......................... 6
INVESTMENT OBJECTIVES AND POLICIES ............... 6
INVESTMENT TECHNIQUES AND RELATED RISKS .......... 7
INVESTMENT RESTRICTIONS .......................... 11
MANAGEMENT OF THE FUND ........................... 11
DISTRIBUTION PLANS ............................... 12
HOW TO BUY SHARES ................................ 13
INVESTOR ACCOUNT SERVICES ........................ 18
NET ASSET VALUE .................................. 19
HOW TO REDEEM SHARES ............................. 19
DIVIDENDS, DISTRIBUTIONS AND TAXES ............... 20
ADDITIONAL INFORMATION ........................... 21
</TABLE>
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
Phoenix Investment Counsel, Inc. (the "Adviser" or "PIC") is the
investment adviser of the Fund. The Adviser is a subsidiary of Phoenix
Investment Partners, Ltd. (formerly 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 Management Agreement and
management fees.
Distributor and Distribution Plans
Phoenix Equity Planning Corporation ("Equity Planning" or the
"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 amended and restated 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 amended and restated
distribution plans, the Fund will pay the Distributor 0.25% of the Fund's
average daily net assets of each Class for furnishing of shareholder services
(the "Service Fee"). Pursuant to the distribution plans adopted for Class A and
Class B Shares, the Fund shall reimburse the Distributor up to a maximum annual
rate of 0.05% of the Fund's average daily Class A Share net assets and 0.75% of
the Fund's average daily Class B Share net assets for distribution expenditures
incurred in connection with the sale and promotion of such Shares. Although the
Class A Shares Plan provides for a 0.05% distribution fee, the Distributor has
voluntarily agreed to waive the 12b-1 distribution fee charged to Class A
Shares to for the fiscal year 1999. 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 ("State
Street Bank"), or an authorized agent, 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, or an authorized agent,
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 State Street Bank
or an authorized 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."
Pending Transaction
Subject to the approval of shareholders of the Phoenix Convertible Fund
Series (a series of Phoenix Series Fund), shares of the Fund will be issued to
those shareholders of the Phoenix Convertible Fund Series in exchange for the
assets and liabilities of that fund. If approved, it is anticipated that the
merger of Phoenix Convertible Fund will be completed in October 1998.
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, 1998.
<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 0.18%
------
Total Fund Operating Expenses 1.13%
======
<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 0.18%
----
Total Fund Operating Expenses 1.88%
====
</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 1999. Rule 12b-1 fees as stated include a service
fee. The portion of the Class B Shares 12b-1 Fees that are not service fees
reimburse the Distributor for certain qualifying distribution expenses. Based
on current levels of reimbursable expenses the Distributor expects that the
actual 12b-1 Fees paid with respect to Class B Shares may be less than 1.00%
for the fiscal year 1999. See "Distribution Plans."
<TABLE>
<CAPTION>
Cumulative Expenses
Paid for the Period
Example* 1 year 3 years 5 years 10 years
- -------- ------ -------- -------- --------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, (1) a 5% annual return and (2) redemption at the
end of each time period:
Class A Shares $58 $82 $107 $178
Class B Shares $59 $79 $102 $201
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 $58 $82 $107 $178
Class B Shares $19 $59 $102 $201
</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 PricewaterhouseCoopers 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,
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.86 $10.08 $8.88 $9.33 $9.92
Income from investment operations:
Net investment income 0.38 0.40 0.44 0.46 0.45
Net realized and
unrealized gain (loss) 1.63 0.66 1.22 0.03 (0.08)
-------- -------- -------- -------- --------
Total from
investment operations 2.01 1.06 1.66 0.49 0.37
-------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.39) (0.40) (0.42) (0.45) (0.44)
Dividends from net
realized gains (1.28) (0.88) (0.04) (0.33) (0.52)
In excess of
accumulated net
realized gains -- -- -- (0.16) --
--------- -------- -------- -------- --------
Total distributions (1.67) (1.28) (0.46) (0.94) (0.96)
--------- -------- -------- -------- --------
Change in net asset value 0.34 (0.22) 1.20 (0.45) (0.59)
--------- -------- -------- -------- --------
Net asset value, end of period $10.20 $ 9.86 $10.08 $ 8.88 $ 9.33
========= ======== ======== ======== ========
Total return(2) 21.87% 10.93% 19.01% 5.95% 3.38%
Ratios/supplemental data:
Net assets,
end of period (thousands) $459,992 $ 451,439 $493,454 $490,225 $524,855
Ratio to average net assets of:
Expenses 1.13% 1.18% 1.18% 1.16% 1.23%
Net investment income 3.61% 3.82% 4.39% 5.07% 4.57%
Portfolio turnover rate 155% 111% 107% 90% 88%
Average commission rate paid(5) $ 0.0556 $ 0.0515 N/A N/A N/A
<CAPTION>
Class A Class B
----------------------------------------------------------- -----------------------
Year Ended April 30,
1993 1992 1991 1990 1989 1998 1997
-------- --------- -------- --------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.13 $8.48 $7.89 $8.31 $7.50 $9.87 $10.09
Income from investment
operations:
Net investment income 0.43(1) 0.45 0.45 0.50 0.50 0.30 0.31
Net realized and
unrealized gain (loss) 0.88 0.88 0.65 (0.08) 1.05 1.64 0.67
-------- -------- -------- -------- -------- -------- --------
Total from
investment operations 1.31 1.33 1.10 0.42 1.55 1.94 0.98
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.44) (0.44) (0.44) (0.50) (0.52) (0.31) (0.32)
Dividends from net
realized gains (0.08) (0.24) (0.07) (0.34) (0.22) (1.28) (0.88)
In excess of
accumulated net
realized gains -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total distributions (0.52) (0.68) (0.51) (0.84) (0.74) (1.59) (1.20)
-------- -------- -------- -------- -------- -------- --------
Change in net asset value 0.79 0.65 0.59 (0.42) 0.81 0.35 (0.22)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 9.92 $ 9.13 $8.48 $ 7.89 $8.31 $10.22 $9.87
======== ======== ======== ======== ======== ======== ========
Total return(2) 14.78% 16.28% 14.60% 4.58% 21.72% 21.03% 10.05%
Ratios/supplemental data:
Net assets,
end of period (thousands) $514,803 $357,366 $254,013 $201,249 $158,190 $361,876 $370,929
Ratio to average net assets of:
Expenses 1.33% 1.38% 1.43% 1.22% 0.95% 1.88% 1.93%
Net investment income 4.60% 4.99% 5.52% 5.58% 6.37% 2.86% 3.06%
Portfolio turnover rate 44% 32% 38% 19% 23% 155% 111%
Average commission rate paid(5) N/A N/A N/A N/A N/A $0.0556 $0.0515
<CAPTION>
Class B
-----------------------------------------------------------------------
From
inception
Year Ended April 30, 1/3/92 to
1996 1995 1994 1993 4/30/92
------------ ------------ ------------ --------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.88 $9.32 $ 9.92 $ 9.13 $ 8.98
Income from investment
operations:
Net investment income 0.36 0.39 0.38 0.25(1) 0.08
Net realized and
unrealized gain (loss) 1.23 0.04 (0.08) 1.00 0.15
-------- -------- -------- -------- -------
Total from
investment operations 1.59 0.43 0.30 1.25 0.23
-------- -------- -------- -------- -------
Less distributions:
Dividends from net
investment income (0.34) (0.38) (0.38) (0.38) (0.08)
Dividends from net
realized gains (0.04) (0.33) (0.52) (0.08) --
In excess of
accumulated net
realized gains -- (0.16) -- -- --
-------- -------- -------- -------- -------
Total distributions (0.38) (0.87) (0.90) (0.46) (0.08)
-------- -------- -------- -------- -------
Change in net asset value 1.21 (0.44) (0.60) 0.79 0.15
-------- -------- -------- -------- -------
Net asset value, end of period $10.09 $ 8.88 $ 9.32 $ 9.92 $9.13
======== ======== ======== ======== =======
Total return(2) 18.14% 5.23% 2.62% 14.09% 2.69%(4)
Ratios/supplemental data:
Net assets,
end of period (thousands) $396,169 $386,515 $378,847 $217,432 $21,983
Ratio to average net assets of:
Expenses 1.93% 1.91% 1.91% 2.03% 2.08%(3)
Net investment income 3.64% 4.32% 3.98% 3.73% 4.07%(3)
Portfolio turnover rate 107% 90% 88% 44% 32%
Average commission rate paid(5) N/A 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)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.
The table below shows the dollar weighted average of total investments, as
of April 30, 1998, listed by Standard & Poor's ("S&P") rating categories, or
comparable rating by another nationally recognized statistical rating
organization ("NRSRO"). The column titled "Not Rated" reflects the percentage
of portfolio holdings which were not rated by any NRSRO but which the Adviser
has judged to be comparable in quality to the corresponding rating categories.
<TABLE>
<CAPTION>
S&P Rating Rated Not Rated
- ------------ ---------- ----------
<S> <C> <C>
AAA 18.7% 0.7%
AA 6.4 0.0
A 3.2 0.1
BBB 5.9 0.7
BB 7.1 0.4
B 2.0 1.1
CCC 0.0 0.2
CC 0.0 0.0
C 0.0 0.0
D 0.0 0.0
---- ---
43.3 3.2
</TABLE>
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 Adviser 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 the Adviser to present minimum
credit risk in accordance with guidelines approved by the Fund's Trustees. The
Adviser 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
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<PAGE>
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 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. The Fund may purchase
the securities of issuers from various countries, including countries commonly
referred to as "emerging markets." 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. 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. 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.
Certain emerging market countries are either comparatively undeveloped or
are in the process of becoming developed and may consequently be economically
based on a relatively few or closely interdependent industries. A high
proportion of the securities of many emerging market issuers may also be held
by a limited number of large investors trading significant blocks of
securities. While the Adviser will strive to be sensitive to publicized
reversals of economic conditions, political unrest and adverse changes in
trading status, unanticipated political and social developments may affect the
values of the Fund's investments in such countries and the availability of
additional investments in such countries.
When 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
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<PAGE>
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 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.
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
9
<PAGE>
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 Commission. 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 Commission, 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 publicly. Except in the case
of securities sold to qualifying institutional investors under special rules
adopted by the Commission 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-Backed and Asset-Backed Securities
The Fund may invest in mortgage-backed and other asset-backed securities.
Mortgage-backed securities represent direct or indirect participations in, or
are secured by and payable from, mortgage loans secured by real property. They
include pass-through instruments, representing an undivided interest in a pool
of mortgages, in which the holder receives a share of all interest and
principal payments from the mortgages in the pool. For many of these
securities, the U.S. Government, the issuing agency, or a private entity
guarantees payment of interest and principal or provides other forms of credit
enhancement. Some mortgage pass-through securities entitle the holders to all
or a substantial portion of the interest payments on a pool of mortgage assets
("Interest Only" securities, or "IOs") while others entitle the holders to all
or a substantial portion of the principal payments ("Principal Only" securities
or "POs"). Mortgage-backed securities also include collateralized mortgage
obligations ("CMOs"), a term that generally includes debt instruments
collateralized by mortgage loans or mortgage pass-through securities and multi-
class pass-through securities. CMO's are generally issued in classes, each
representing an obligation with a stated maturity or final distribution date
and a specific fixed or floating coupon rate. Payments of principal and
interest on the underlying mortgage assets may be allocated among the classes
in various ways, resulting in differing predictability of cash flows among the
classes. Other asset-backed securities apply techniques similar to those used
in mortgage-backed securities to base obligations on financial assets other
than mortgages, including automobile receivables, credit card receivables,
loans to finance boats, recreational vehicles, and mobile homes, computer,
copier, railcar, and medical equipment leases, and trade, healthcare, and
franchise receivables.
Part of the cash flow of mortgage-backed or other asset-backed securities may
be from the early payoff of some of the underlying loans. The specific amount
and timing of such prepayments are difficult to predict, creating "prepayment
risk." For mortgage-related securities, prepayments are likely to increase
during periods of declining long-term interest rates because borrowers tend to
refinance when interest rates drop. In the event of very high prepayments, the
Fund may be required to invest these proceeds at a lower interest rate, causing
the Fund to earn less than if the prepayments had not occurred. Prepayments are
likely to decrease during periods of rising interest rates, causing the
expected average life of mortgage-related securities to become longer. This
variability of prepayments will tend to limit price gains when interest rates
drop and to exaggerate price declines when interest rates rise. In general, the
obligations supporting other asset-backed securities are of shorter maturities
than mortgage loans and are less likely to experience substantial prepayments.
However, the risks relating to default may be greater.
The Adviser expects additional assets will be "securitized" in the future.
The Fund may invest in any such instruments or variations on them to the extent
consistent with the Fund's investment objectives and policies.
Other Investments
The Fund may also lend portfolio securities 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.
Impact of the Year 2000 Issue
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. There is the
possibility that some or all of a company's computer programs that have
date-sensitive software may recognize a date using "00" as the year 1900
10
<PAGE>
rather than the year 2000. The cost of modifying computer programs to become
Year 2000 compliant may impact the financial performance and market price of
companies whose securities are held by the Fund.
The Trustees have directed management to ensure that the systems used by
service providers (including Phoenix Investment Partners, Ltd. ("PXP") and its
subsidiaries) in support of the Fund's operations be assessed and brought into
Year 2000 compliance. Based upon preliminary assessments, PXP has determined
that it will be required to modify or replace portions of its software so that
its computer systems will properly utilize dates beyond December 31, 1999.
Since many of the core systems of PXP companies are investment related, PXP
management believes that the majority of these systems are already Year 2000
compliant. PXP believes that with modifications to existing software and
conversions to new software, the Year 2000 issue will be mitigated. It is
anticipated that such modifications and conversions will be completed on a
timely basis. It is not known at this time if there could be a material impact
on the operations of PXP companies or the Fund if such modifications and
conversions are not completed timely.
PXP will utilize both internal and external resources to reprogram, or
replace, and test the software for Year 2000 modifications. Certain systems are
already in the process of being converted due to previous initiatives and it is
expected that all core systems will be remediated by December 31, 1998 and
tested by June 1999. The total cost to become Year 2000 compliant is not an
expense of the Fund and is not expected to have a material impact on the
operating results of PXP.
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 Fund 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 Massachusetts business trust law.
The Adviser
The investment adviser to the Fund is PIC, which is located at 56 Prospect
Street, Hartford, CT 06115-0486. PIC is a direct subsidiary of PXP. Phoenix
Home Life Mutual Insurance Company is a majority shareholder of PXP.
PIC presently also acts as the investment adviser to the Phoenix
California Tax Exempt Bonds, Inc., Phoenix-Seneca Funds, Phoenix Multi-Sector
Fixed Income Fund, Inc., Phoenix Multi-Sector Short Term Bond Fund, Phoenix
Strategic Equity Series Fund, Phoenix Series Fund, Phoenix Duff & Phelps
Institutional Mutual Funds (except Real Estate Equity Securities Portfolio,
Enhanced Reserves Portfolio and Core Equity Portfolio), Phoenix Multi-Portfolio
Fund (except Real Estate Securities Portfolio), Phoenix Growth and Income Fund
of Phoenix Equity Series Fund, Phoenix Investment Trust 97, Phoenix Strategic
Allocation Fund, Inc., The Phoenix Edge Series Fund (except Aberdeen New Asia
Series and Real Estate Securities Series) and Phoenix Worldwide Opportunities
Fund. As of May 31, 1998, the Adviser had approximately $21.6 billion in assets
under management. The Adviser has acted as an investment adviser for over 60
years.
As compensation for its services, PIC 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 of 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. The ratio of the management fees to average net
assets for the fiscal year ended April 30, 1998 for Class A Shares and Class B
Shares was 0.70%.
The Portfolio Manager
Investment and trading decisions for the Fund are made by a team of equity
investment professionals and a team of fixed income investment professionals.
Steven L. Colton is the leader of the equity team and as such is primarily
responsible for the day-to-day decisions related to the equity holdings in the
Fund's portfolio. Mr. Colton is also Vice President and Portfolio Manager of
the Phoenix Growth and Income Fund of Phoenix Equity Series Fund. Mr. Colton
joined PIC in June, 1997. Previously, Mr. Colton was Portfolio Manager for the
American Century Income & Growth Fund from its inception in 1990 through May
30, 1997.
The Financial Agent
Equity Planning acts as financial agent of the Fund and, as such, performs
administrative, bookkeeping and pricing functions for the Fund. For its
services as financial agent, Equity Planning will be paid a fee equal to the
sum of (1) the documented cost of fund accounting and related services provided
by PFPC, Inc., as subagent, to the financial agent, plus (2) the documented
cost to the financial agent to provide financial reporting and tax services and
oversight of the subagent's performance. The current fee schedule of PFPC, Inc.
ranges from 0.085% to 0.0125% of the aggregate daily net asset values of the
Fund. Certain minimum fees and fee waivers may apply. For its services during
the Fund's fiscal year ended April 30, 1998, Equity Planning received $252,949
or .03% of average net assets.
11
<PAGE>
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 subagents to perform certain
shareholder servicing functions from time to time for which such agents shall
be paid a fee by Equity Planning.
Brokerage Commissions
Although the Conduct Rules of the National Association of Securities
Dealers, Inc. ("NASD") prohibit its members from seeking orders for the
execution of investment company portfolio transactions on the basis of their
sales of investment company shares, under such Rules, sales of investment
company shares may be considered in selecting brokers to effect portfolio
transactions. Accordingly, some portfolio transactions are, subject to such
Rules and to obtaining best prices and executions, effected through dealers
(excluding Equity Planning) who sell shares of the Fund.
DISTRIBUTION PLANS
The offices of Equity Planning, the national distributor of the Fund's
shares, are located at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200. Philip R. McLoughlin is a Trustee and President of the
Fund and a director and officer of Equity Planning. Michael E. Haylon and
William R. Moyer, directors of Equity Planning, are officers of the Fund and
Mr. Moyer is also an officer of Equity Planning. G. Jeffrey Bohne, Nancy G.
Curtiss, William E. Keen, III, Leonard J. Saltiel, John F. Sharry and Thomas N.
Steenburg are officers of the Fund and officers of Equity Planning.
Equity Planning and the Fund have entered into an Underwriting Agreement
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 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 amended and restated 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 to pay for 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 0.05%
annually for the average daily net assets of the Fund's Class A Shares.
However, the Distributor has voluntarily agreed to waive reimbursement under
the Class A Plan for the current fiscal year. Under the Class B Plan, the Fund
may reimburse the Distributor monthly for actual expenses of the Distributor up
to 0.75% annually of the average daily net assets of the Fund's Class B Shares.
In addition, the Fund will pay the Distributor 0.25% annually of the average
daily net assets of the Fund for providing services to shareholders, including
assistance in connection with inquiries related to shareholder accounts (the
"Service Fee").
Expenditures incurred under the Plans may consist of: (i) commissions to
sales personnel for selling shares of the Fund (including underwriting
commissions and finance charges related to the payment of commissions); (ii)
compensation, sales incentives and payments to sales, marketing and service
personnel; (iii) payments to broker-dealers and other financial institutions
which have entered into agreements with the Distributor for services rendered
in connection with the sale and distribution of shares of the Fund; (iv)
payment of expenses incurred in sales and promotional 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. 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.
12
<PAGE>
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, 1998, the Fund paid the Distributor
$1,161,545 under the Class A Plan and $3,750,399 under the Class B Plan. The
fees were used to compensate unaffiliated broker-dealers for servicing
shareholder's accounts, including $68,005 paid to W.S. Griffith & Co., Inc., an
affiliate, compensating sales personnel and reimbursing the Distributor for
commission expenses and expenses related to preparation of the marketing
material. The Distributor's expenses from selling and servicing Class B Shares
may be more than the payments received from contingent deferred sales charges
collected on redeemed shares and from the Fund under the Class B Plan. Those
expenses may be carried over and paid in future years. At April 30, 1998, the
end of the last Plan year, the Distributor has incurred unreimbursed expenses
under the Class B Plan of $684,387 (equal to 0.08% of the Fund's net assets)
which have been carried over into the present Class B Plan year. As of the date
of this Prospectus the expenses carried over from the prior year have been
fully reimbursed. The only qualifying expenses currently are those expenses
that are incurred currently. The Distributor anticipates that current expense
levels will not result in the maximum reimbursement under the Class B Plan for
the remainder of the current fiscal year.
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 materially increase the costs which
the Fund may bear without approval of the applicable class of shareholders of
the Fund and that other material amendments must be approved by a majority of
the Plan 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 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 the 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
13
<PAGE>
in connection with Class B Shares or other mutual funds advised, subadvised or
distributed by the Adviser, Distributor or any of their corporate affiliates
(an "Affiliated Phoenix Fund"). See "Investor Account Services."
Shares of the Fund or shares of any other Affiliated 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 Affiliated 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 Affiliated 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 plan fees on Class A Shares purchased
at the same time, and to what extent such differential would be offset by the
higher yield of Class A Shares. In this regard, Class A Shares will be more
beneficial to the investor who qualifies for certain reduced initial sales
charges. For this reason, the Distributor intends to limit sales of Class B
Shares sold to any shareholder to a maximum total value of $250,000. Class B
Shares sold to unallocated qualified employer sponsored plans 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 lower distribution plan fees and,
accordingly, pay correspondingly higher dividends per share. However, because
initial sales charges are deducted at the time of purchase, such investors
would not have all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced initial sales
charges who expect to maintain their investment for an extended period of time
might consider purchasing Class A shares because the accumulated continuing
distribution charges on Class B Shares may exceed the initial sales charge on
Class A Shares during the life of the investment. Again, however, such
investors must weigh this consideration against the fact that, because of such
initial sales charge, not all their funds will be invested initially. However,
other investors might determine that it would be more advantageous to purchase
Class B Shares to have all their funds invested initially, although remaining
subject to higher continuing distribution charges and, for a five-year period,
being subject to a contingent deferred sales charge.
Initial Sales Charge Alternative--Class A Shares
The public offering price of Class A Shares is the net asset value plus a
sales charge, as set forth below. Offering prices become effective at the close
of trading of the New York Stock Exchange (normally 4:00 PM eastern time).
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 or an authorized agent 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
or an authorized agent, 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.
<TABLE>
<CAPTION>
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*
- --------------------- --------------- --------------- -----------------
<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 None**
</TABLE>
- --------------------
*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
14
<PAGE>
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:
<TABLE>
<CAPTION>
Purchase Amount Payment to Broker-Dealer
- -------------------------- -------------------------
<S> <C>
$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%
</TABLE>
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.
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.
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 trustee, director or officer of the Phoenix Funds, Phoenix-Engemann
Funds, Phoenix-Seneca Funds or any other Affiliated Phoenix Fund; (2) any
director or officer, or 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 Affiliated Phoenix Fund qualified plan; (11) any Phoenix
Home Life separate account which funds group annuity contracts offered to
qualified employee benefit plans; (12) any state, county, city,
instrumentality, department, authority or agency prohibited by law from paying
a sales charge; (13) any fully matriculated student in a U.S. service academy;
(14) any unallocated accounts held by a third party administrator, registered
investment adviser, trust company, or bank trust department which exercises
discretionary authority and holds the account in a fiduciary, agency, custodial
or similar capacity if in the aggregate such accounts held by such entity equal
or exceed $1,000,000; (15) any person who is investing redemption proceeds from
investment companies other than the Phoenix Funds or any other Affiliated
Phoenix Fund if, in connection with the 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) any deferred compensation
plan established for the benefit of any Affiliated Phoenix Fund trustee or
director; provided that sales to persons listed in (1) through (16) 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).
Combination Purchase Privilege. Purchases, either singly or in any
combination, of shares of the Fund or shares of any other Affiliated Phoenix
Fund (including Class B Shares
15
<PAGE>
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 Affiliated 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 Affiliated Phoenix Fund then owned by such
investor, equals a specified dollar amount. Each purchase of shares made
pursuant to a Letter of Intent will be made at the public offering price, as
described in the then current Prospectus relating to such shares, which at the
time of purchase is applicable to a single transaction of the total dollar
amount specified in the Letter of Intent.
An investor's Letter of Intent is not a binding commitment of the investor
to purchase or a binding obligation of the Fund or Equity Planning to sell a
specified dollar amount of shares qualifying for a reduced sales charge.
Accordingly, out of the initial purchase (and subsequent purchases if
necessary), 5% of the dollar amount of purchases required to complete the
investment (valued at the purchase price thereof) is held in escrow in the form
of shares registered in the investor's name until the investment is completed,
at which time escrowed shares are deposited to the investor's account. If the
investor does not complete the investment and does not within 20 days after
written request by Equity Planning or the investor's dealer pay the difference
between the sales charge on the dollar amount specified in the Letter of Intent
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 the
investor's account.
Right of Accumulation. "Single purchasers" (as defined above) may also
qualify for reduced sales charges based on the combined value of purchases of
either class of shares of the Fund, or any other Affiliated Phoenix Fund, made
over time. Reduced sales charges are offered to investors whose shares, in the
aggregate, are valued (i.e., the dollar amount of such purchases plus the
current value (at the public offering price as described in the then current
prospectus relating to such shares) of shares of the Affiliated Phoenix Funds
owned) in excess of the threshold amount 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 plan fees 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
16
<PAGE>
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.
<TABLE>
<CAPTION>
Contingent Deferred
Sales Charge as
a Percentage of
Dollar Amount
Year Since Purchase Subject to Charge
- --------------------- --------------------
<S> <C>
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth 2%
Sixth 0%
</TABLE>
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 five 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.
For example, assume an investor purchased 100 Class B Shares at $10 per
share (at a cost of $1,000) and in the second year after purchase, the net
asset value per share has increased to $12 and, during such time, the investor
has acquired 10 additional Class B Shares through dividend reinvestment. If, at
such time the investor makes his first redemption of 50 Class B Shares
(proceeds of $600), 10 shares will not be subject to charge because they were
acquired through dividend reinvestment. With respect to the remaining 40
shares, the charge is applied only to the original cost of $10 per share and
not to the increase in net asset value of $2 per share. Therefore, $400 of the
$600 redemption proceeds will be charged at a rate of 4% (the applicable rate
in the second year after purchase) or $16.00.
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 resulting from the tax-free
return of an excess contribution to an IRA; (d) in connection with redemptions
by 401(k) plans using an approved participant tracking system for participant
hardships, death, disability or normal retirement, and loans which are
subsequently repaid; (e) in connection with the exercise of certain exchange
privileges among Class B Shares of the Fund and Class B Shares of other
Affiliated Phoenix Funds; (f) in connection with any person with a direct
rollover transfer of shares from an established Affiliated Phoenix Fund
qualified plan into an Affiliated 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 plan fees 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
17
<PAGE>
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 Program also provides for redemptions to be tendered on or about the
10th, 15th or 25th of the month with proceeds to be directed through Automated
Clearing House (ACH) to your bank account. In addition to the limitations
stated below, withdrawals may not be less than $25 and minimum account balance
requirements shall continue to apply. See "Redemption of Small Accounts."
Class A 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 retirement plans: IRA, Rollover IRA,
SEP-IRA, SIMPLE IRA, Roth IRA, SIMPLE 401(k), Profit-Sharing and Money Purchase
Pension Plans which can be adopted by self-employed persons ("Keogh") and by
corporations and 403(b) Retirement Plans. Write or call Equity Planning at
(800) 243-4631 for further information about the plans.
Exchange Privileges
You may exchange shares of one Phoenix Fund for shares of another
Affiliated 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
Affiliated 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
18
<PAGE>
shareholder account as the Exchanged Shares; (4) the account value of the fund
whose shares are to be acquired must equal or exceed the minimum initial
investment amount required by that fund after the exchange is 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 Transfer Agent.
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 Affiliated Phoenix
Fund has different investment objectives and policies. You should read the
prospectus of the Affiliated 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 Transfer Agent 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 Transfer
Agent 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 Transfer
Agent 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.
NET ASSET VALUE
The net asset value per share of the Fund is determined as of the close of
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The net asset value per share of the Fund is
determined by adding the values of all securities and other assets 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 plan fees and any other expenses allocated solely to that class,
are deducted from the proportionate interest of such class in the assets of the
Fund, and the resulting amount of each is divided by the number of shares of
that class outstanding to produce the net asset value per share.
The Fund's investments are valued at market value or, where market
quotations are not available, at fair value as determined in good faith by the
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, or an authorized agent. 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>
[Phone Symbol] 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
</TABLE>
19
<PAGE>
<TABLE>
<S> <C> <C>
[Envelope Symbol] In Writing [bullet] Letter of instruction from the registered owner
including the fund and account number and
the number of shares or dollar amount you
wish to sell
[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 cannot 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 Affiliated Phoenix Fund with no
sales charge (at net asset value next determined after the request for
reinvestment is made). For Federal income tax purposes, a redemption and
reinvestment will be treated as a sale and purchase of shares. Special rules
may apply in computing the amount of gain or loss in these situations. (See
"Dividends, Distributions and Taxes" for information on the Federal income tax
treatment of a disposition of shares.) A written request to reinstate your
account must be received by the Transfer Agent within 180 days of the
redemption, accompanied by payment for the shares (not in excess of the
redemption value). Class B shareholders who have had the contingent deferred
sales charge waived through participation in the Systematic Withdrawal Program
are not eligible to use the Reinstatement Privilege.
Redemption of Small Accounts
Due to the relatively high cost of maintaining small accounts, the 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.
Redemption in Kind
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. However, the Fund
has elected to pay in cash all requests for redemption by any shareholder of
record, limited in respect to each shareholder during any 90-day period to the
lesser of $250,000 or 1% of the net asset value of the Fund at the beginning of
such period. This election has been made pursuant to Rule 18f-1 under the
Investment Company Act of 1940 and is irrevocable while the Rule is in effect
unless the Securities and Exchange Commission, by order, permits the withdrawal
thereof. In case of a redemption in kind, securities delivered in payment for
shares would be readily marketable and valued at the same value assigned to
them in computing the net asset value per share of the Fund. A shareholder
receiving such securities would incur brokerage costs when selling the
securities.
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
20
<PAGE>
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.
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 former 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
21
<PAGE>
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 resort 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.
Additional Inquiries
Inquiries and requests for the Statement of Additional Information, the
Annual Report to Shareholders and the Semiannual Report to Shareholders should
be directed to Equity Planning at (800) 243-4361 or 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200.
Registration Statement
This Prospectus omits certain information included in the Statement of
Additional Information and Part C of the Registration Statement filed with the
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. upon payment of the prescribed fee.
22
<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 Fund (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, 1998. The Statement
contains more detailed information about the Fund and is incorporated into this
Prospectus by reference. You may obtain a free copy of the Statement by writing
the Fund c/o Phoenix Equity Planning Corporation, 100 Bright Meadow Boulevard,
P.O. Box 2200, Enfield, Connecticut 06083-2200.
Financial information relating to the Fund is contained in the Annual Report to
Shareholders for the year ended April 30, 1998 and is incorporated into the
Statement of Additional Information by reference.
[Recycle Logo] Printed on recycled paper using soybean ink
<PAGE>
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<PAGE>
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<PAGE>
Phoenix Funds BULK RATE MAIL
PO Box 2200 U.S. POSTAGE
Enfield CT 06083-2200 PAID
SPRINGFIELD, MA
PERMIT NO. 444
[PHOENIX LOGO] PHOENIX
INVESTMENT PARTNERS
PXP 693 (8/98)
<PAGE>
PHOENIX INCOME AND GROWTH FUND
101 Munson Street
Greenfield, Massachusetts 01301
Statement of Additional Information
August 28, 1998
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, 1998, and should
be read in conjunction with it. The Fund's Prospectus may be obtained by
calling Phoenix Equity Planning Corporation ("Equity Planning") at (800)
243-4361 or by writing to Equity Planning at 100 Bright Meadow Boulevard, P.O.
Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
THE FUND ...................................... 1
INVESTMENT OBJECTIVES AND POLICIES ............ 1
INVESTMENT RESTRICTIONS ....................... 1
INVESTMENT TECHNIQUES ......................... 2
PERFORMANCE INFORMATION ....................... 5
PORTFOLIO TURNOVER ............................ 6
PORTFOLIO TRANSACTIONS AND BROKERAGE .......... 6
SERVICES OF THE ADVISER ....................... 8
NET ASSET VALUE ............................... 8
HOW TO BUY SHARES ............................. 9
ALTERNATIVE PURCHASE ARRANGEMENTS ............. 9
INVESTOR ACCOUNT SERVICES ..................... 10
REDEMPTION OF SHARES .......................... 11
DIVIDENDS, DISTRIBUTIONS AND TAXES ............ 12
TAX SHELTERED RETIREMENT PLANS ................ 13
THE DISTRIBUTOR ............................... 13
DISTRIBUTION PLANS ............................ 14
TRUSTEES AND OFFICERS ......................... 15
OTHER INFORMATION ............................. 23
APPENDIX ...................................... 24
</TABLE>
Customer Service--(800) 243-1574
Marketing--(800) 243-4361
Telephone Orders--(800) 367-5877
Telecommunication Device (TTY)--(800) 243-1926
PXP 693B (8/98)
<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 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 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 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
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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.
Mortgage-Related and Other Asset-Backed Securities
Mortgage Pass-Through Securities. These are interests in pools of mortgage
loans, assembled and issued by various governmental, government-related, and
private organizations. Unlike other forms of debt securities, which normally
provide for periodic payment of interest in fixed amounts with principal
payments at maturity or specified call dates, these securities provide a
monthly payment consisting of both interest and principal payments. In effect,
these payments are a "pass-through" of the monthly payments made by the
borrowers on their residential or commercial mortgage loans, net of any fees
paid to the issuer or guarantor of such securities. Additional payments are
caused by repayments of principal resulting from the sale of the underlying
property, refinancing or foreclosure, net of fees or costs. "Modified
pass-through" securities (such as securities issued by the Government National
Mortgage Association ("GNMA")) entitle the holder to receive all interest and
principal payments owed on the mortgage pool, net of certain fees, at the
scheduled payment dates regardless of whether or not the mortgagor actually
makes the payment.
The principal governmental guarantor of mortgage-related securities is
GNMA. GNMA is a wholly owned United States Government corporation within the
Department of Housing and Urban Development. GNMA is authorized to guarantee,
with the full faith and credit of the United States Government, the timely
payment of principal and interest on securities issued by institutions approved
by GNMA (such as savings and loan institutions, commercial banks and mortgage
bankers) and backed by pools of Federal Housing Administration insured or
Veterans Administration guaranteed mortgages.
Government-related guarantors whose obligations are not backed by the full
faith and credit of the United States Government include the Federal National
Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation
("FHLMC"). FNMA is a government-sponsored corporation owned entirely by private
stockholders. It is subject to general regulation by the Secretary of Housing
and Urban Development. FNMA purchases conventional (i.e., not insured or
guaranteed by any government agency) residential mortgages from a list of
approved seller/servicers which include state and federally chartered savings
and loan associations, mutual savings banks, commercial banks and credit unions
and mortgage bankers. FHLMC is a government-sponsored corporation formerly
owned by the twelve Federal Home Loan Banks and now owned entirely by private
stockholders. FHLMC issues Participation Certificates ("Pcs") that represent
interests in conventional mortgages from FHLMC's national portfolio. FNMA and
FHLMC guarantee the timely payment of interest and ultimate collection of
principal on securities they issue, but their guarantees are not backed by the
full faith and credit of the United States Government.
Commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers also
create pass-through pools of conventional residential mortgage loans. Such
issuers may, in addition, be the originators and/or servicers of the underlying
mortgage loans as well as the guarantors of the mortgage-related securities.
Pools created by such non-governmental issuers generally offer a higher rate of
interest than government and government-related pools because there are no
direct or indirect government or agency guarantees of payments for such
securities. However, timely payment of interest and principal of these pools
may be supported by various forms of insurance or guarantees, including
individual loan, title, pool and hazard insurance and letters of credit. The
insurance and guarantees are issued by governmental entities, private insurers
and the mortgage poolers. Such insurance and guarantees and the
creditworthiness of the issuers thereof will be considered in determining
whether a mortgage-related security meets the Fund's investment quality
standards. There can be no assurance that the private insurers or guarantors
can meet their obligations under the insurance policies or guarantee
arrangements. The Fund may buy mortgage-related securities without insurance or
guarantees if, through an examination of the loan experience and practices of
the originator/servicers and poolers, the Adviser determines that the
securities meet the Fund's quality standards. Securities issued by certain
private organizations may not be readily marketable.
Mortgage-backed securities that are issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, are not subject to the Fund's
industry concentration restrictions, set forth above under "Investment
Restrictions," by virtue of the exclusion from the test available to all U.S.
Government securities. The Fund will take the position that privately-issued
mortgage-related securities do not represent interests in any particular
"industry" or group of industries. The assets underlying such securities may be
represented by a portfolio of residential or commercial mortgages (including
both whole mortgage loans and mortgage participation interests) or portfolios
of mortgage pass-through securities issued or guaranteed by GNMA, FNMA or
FHLMC. Mortgage loans underlying a mortgage-related security may in turn be
insured or guaranteed by the Federal Housing Administration or the Department
of Veterans Affairs. In the case of private issue mortgage-related securities
whose underlying assets are neither U.S. Government securities nor U.S.
Government-insured mortgages, to the extent that real properties securing such
assets may be located in the same geographical region, the security may be
subject to a greater risk of default than other comparable securities in the
event of adverse economic, political or business developments that may affect
such region and, ultimately, the ability of residential homeowners to make
payments of principal and interest on the underlying mortgages.
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Collateralized Mortgage Obligations (CMOs). A CMO is similar to a bond in
that interest and prepaid principal is paid, in most cases, semiannually. CMOs
may be collateralized by whole mortgage loans or by portfolios of mortgage
pass-through securities guaranteed by entities such as GNMA, FHLMC, or FNMA,
and their income streams.
CMOs are typically structured in multiple classes, each bearing a
different stated maturity. Actual maturity and average life will depend upon
the prepayment experience of the collateral. CMOs provide for a modified form
of call protection through a de facto breakdown of the underlying pool of
mortgages according to how quickly the loans are repaid. Monthly payment of
principal received from the pool of underlying mortgages, including
prepayments, is first returned to investors holding the shortest maturity
class. Investors holding the longer maturity classes typically receive
principal only after the first class has been retired. An investor may be
partially guarded against a sooner than desired return of principal because of
the sequential payments.
FHLMC CMOs are debt obligations of FHLMC issued in multiple classes having
different maturity dates and are secured by the pledge of a pool of
conventional mortgage loans purchased by FHLMC. Unlike FHLMC Pcs, payments of
principal and interest on the CMOs are made semiannually rather than monthly.
The amount of principal payable on each semiannual payment date is determined
in accordance with FHLMC's mandatory sinking fund schedule. Sinking fund
payments in the CMOs are allocated to the retirement of the individual classes
of bonds in the order of their stated maturities. Payments of principal on the
mortgage loans in the collateral pool in excess of the amount of FHLMC's
minimum sinking fund obligation for any payment date are paid to the holders of
the CMOs as additional sinking-fund payments. Because of the "pass-through"
nature of all principal payments received on the collateral pool in excess of
FHLMC's minimum sinking fund requirement, the rate at which principal of the
CMOs is actually repaid is likely to be such that each class of bonds will be
retired in advance of its scheduled maturity date. If collection of principal
(including prepayments) on the mortgage loans during any semiannual payment
period is not sufficient to meet FHLMC's minimum sinking fund obligation on the
next sinking fund payment date, FHLMC agrees to make up the deficiency from its
general funds.
CMO Residuals. CMO residuals are derivative mortgage securities issued by
agencies or instrumentalities of the U.S. Government or by private originators
of, or investors in, mortgage loans. As described above, the cash flow
generated by the mortgage assets underlying a series of CMOs is applied first
to make required payments of principal and interest on the CMOs and second to
pay the related administrative expenses of the issuer. The "residual" in a CMO
structure generally represents the interest in any excess cash flow remaining
after making the foregoing payments. Each payment of such excess cash flow to a
holder of the related CMO residual represents income and/or a return of
capital. The amount of residual cash flow resulting from a CMO will depend on,
among other things, the characteristics of the mortgage assets, the coupon rate
of each class of CMO, prevailing interest rates, the amount of administrative
expenses and, in particular, the prepayment experience on the mortgage assets.
In addition, if a series of a CMO includes a class that bears interest at an
adjustable rate, the yield to maturity on the related CMO residual will also be
extremely sensitive to changes in the level of the index upon which interest
rate adjustments are based. As described below with respect to stripped
mortgage-backed securities, in certain circumstances the Fund may fail to
recoup fully its initial investment in a CMO residual.
CMO residuals are generally purchased and sold by institutional investors
through several investment banking firms acting as brokers or dealers. The CMO
residual market has only very recently developed and CMO residuals currently
may not have the liquidity of other more established securities trading in
other markets. CMO residuals may be subject to certain restrictions on
transferability, may be deemed "illiquid," and may be subject to the Fund's
limitations on investment in illiquid securities.
Stripped Mortgage-Backed Securities. Stripped mortgage-backed securities
("SMBS") are derivative multi-class mortgage securities. They may be issued by
agencies or instrumentalities of the U.S. Government, or by private originators
of, or investors in, mortgage loans. SMBS are usually structured with two
classes that receive different proportions of the interest and principal
distributions on a pool of mortgage assets. A common type of SMBS will have one
class receiving some of the interest and most of the principal from the
mortgage assets, while the other class will receive most of the interest and
the remainder 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 security 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 the Fund's yield to maturity from these securities. 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
even if the security is in one of the highest rating categories.
Although SMBS are purchased and sold by institutional investors through
several investment banking firms acting as brokers or dealers, these securities
were only recently developed. As a result, established trading markets have not
yet developed and, accordingly, these securities may be deemed "illiquid" and
subject to the Fund's limitations on investment in illiquid securities.
The Fund may invest in other mortgage-related securities with features
similar to those described above, to the extent consistent with the Fund's
investment objectives and policies.
Other Asset-Backed Securities. Through trusts and other special purpose
entities, various types of securities based on financial assets other than
mortgage loans are increasingly available, in both pass-through structures
similar to mortgage pass-through
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securities described above and in other structures more like CMOs. As with
mortgage-related securities, these asset-backed securities are often backed by
a pool of financial assets representing the obligations of a number of
different parties. They often include credit-enhancement features similar to
mortgage-related securities.
Financial assets on which these securities are based include automobile
receivables; credit card receivables; loans to finance boats, recreational
vehicles, and mobile homes; computer, copier, railcar, and medical equipment
leases; and trade, healthcare, and franchise receivables. In general, the
obligations supporting these asset-backed securities are of shorter maturities
than mortgage loans and are less likely to experience substantial prepayments.
However, obligations such as credit card receivables are generally unsecured
and the obligors are often entitled to protection under a number of state and
federal consumer credit laws granting, among other things, rights to set off
certain amounts owed on the credit cards, thus reducing the balance due. Other
obligations that are secured, such as automobile receivables, may present
issuers with difficulties in perfecting and executing on the security
interests, particularly where the issuer allows the servicers of the
receivables to retain possession of the underlying obligations, thus increasing
the risk that recoveries on defaulted obligations may not be adequate to
support payments on the securities.
The Adviser expects additional assets will be "securitized" in the future.
The Fund may invest in any such instruments or variations on them to the extent
consistent with the Fund's investment objectives and policies.
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 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
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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)/(cxd) + 1)(6) - 1]
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, 1998, the yield of the Class A Shares and
Class B Shares was 3.57% and 3.00%, respectively.
For the 1, 5 and 10 year periods ended April 30, 1998, the average annual
total return of the Class A Shares was 16.10%, 10.93% and 12.58%, respectively.
For the 1 and 5 year periods ended April 30, 1998, and since inception (January
3, 1992), for Class B Shares, the average annual total return was 17.03%,
11.19% and 11.49%, 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, 1998 was 33,143%. 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, 1998 was 99.06%.
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.
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, 1997 and 1998, respectively,
the turnover rates for the equity portion of the Fund were 104%, 148% and 139%.
The turnover rates for the fixed income securities were 112%, 42% and 126% 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
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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 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.
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During the fiscal years ended April 30, 1996, 1997 and 1998, brokerage
commissions paid by the Fund totaled $1,189,884, $1,778,732 and $1,276,897,
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, 1998 included brokerage commissions of
$877,676 on portfolio transactions aggregating $741,999,534 executed by brokers
who provided research and other statistical and factual information.
SERVICES OF THE ADVISER
Effective June 1, 1998, National Securities & Research Corporation
("National") assigned its investment advisory agreement to Phoenix Investment
Counsel, Inc. ("PIC"). PIC now serves as the Adviser for the Fund. National and
PIC are both subsidiaries of Phoenix Investment Partners, Ltd. Phoenix Home
Life Mutual Insurance Company ("Phoenix Home Life") owns a majority interest in
Phoenix Investment Partners, Ltd. 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 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 1996, 1997 and 1998, the net
management fees paid by the Fund to the Adviser were $6,253,253, $5,982,415 and
$5,877,607, respectively.
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. 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.
Philip R. McLoughlin, a Trustee and officer of the Fund, is also a
director of the Adviser. Michael E. Haylon and William R. Moyer, officers of
the Fund, are also directors and officers of the Adviser. G. Jeffrey Bohne,
Steven L. Colton, Nancy G. Curtiss, William E. Keen, III, Christopher J.
Kelleher, Leonard J. Saltiel, Thomas N. Steenburg and James D. Wehr, officers
of the Fund, are also officers of the Adviser.
NET ASSET VALUE
The net asset value per share of the Fund is determined as of the close of
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Since the Fund does not price securities on
weekends or United States national holidays, the net asset value of 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 plan fees and any other expenses allocated
solely to that class, are deducted from the proportionate interest of such
class in the assets of the Fund, and the resulting amount of each is divided by
the number of shares of that class outstanding to produce the net asset value
per share.
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
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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.
The Fund has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Fund's behalf.
The Fund will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts
the order. Customer orders will be priced at the Fund's net asset value next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
ALTERNATIVE PURCHASE ARRANGEMENTS
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 plan fees and contingent deferred sales
charges on Class B shares prior to conversion would be less than the initial
sales charge and accumulated distribution plan fees 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.
Class A shares are subject to lower distribution plan fees 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 plan fees
and, in the case of Class B shares, from the proceeds of the ongoing
distribution plan fees 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 plan
fees with respect to the Class B shares are the same as those of the initial
sales charge and ongoing distribution plan 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 plan fees 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
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subject to ongoing distribution plan fees 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 plan fees 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 ongoing distribution plan fees 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 plan fees 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 plan fees. Such
conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge. The
purpose of the conversion feature is to 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.
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
Under certain circumstances, shares of any Affiliated 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 Affiliated 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 Affiliated 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 Affiliated 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.
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 Affiliated
Phoenix Funds at net asset value. You should obtain a current prospectus and
consider the objectives and policies of each fund carefully before
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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 PM (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.
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.
The Fund has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Fund's behalf.
The Fund will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts
the order. Customer orders will be priced at the Fund's net asset value next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
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.
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.
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.
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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.
The Code imposes 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 and payable
to shareholders of record on a specified date in such a month 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.
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.
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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 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 Affiliated Phoenix Funds may be offered in
connection with employer-sponsored 401(k) plans. PIC and its affiliates may
provide administrative services to these plans and to their participants, in
addition to the services that PIC and its affiliates provide to the Phoenix
Funds, and 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 an Underwriting 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 PIC, 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 1996, 1997 and 1998, purchasers of
the Fund shares paid aggregate sales charges of $2,500,197, $1,478,251 and
$1,204,486, respectively, of which the principal Distributor of the Fund
received net commissions of $1,910,302, $1,028,526 and $859,920, 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 Underwriting 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
13
<PAGE>
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
Plans or in any related agreements. The Underwriting 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 Distribution Plans 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 financial agent of the Fund and as such
performs administrative, bookkeeping and pricing functions for the Fund. For
its services as financial agent, Equity Planning will be paid a fee equal to
the sum of (1) the documented cost of fund accounting and related services
provided by PFPC, Inc., as subagent, to the financial agent, plus (2) the
documented cost to the financial agent to provide financial reporting and tax
services and oversight of the subagent's performance. The current fee schedule
of PFPC, Inc. is based upon the average of the aggregate daily net asset values
of the Fund, at the following incremental annual rates.
<TABLE>
<S> <C>
First $200 million .085%
$200 million to $400 million .05%
$400 million to $600 million .03%
$600 million to $800 million .02%
$800 million to $1 billion .015%
Greater than $1 billion .0125%
</TABLE>
Percentage rates are applied to the aggregate daily net asset values of
the Fund. PFPC, Inc. also charges minimum fees and additional fees for each
additional class of fund shares. Equity Planning retains PFPC, Inc. as subagent
for each of the funds for which Equity Planning serves as financial agent.
PFPC, Inc. agreed to a modified fee structure and waived certain charges.
Because PFPC, Inc.'s arrangement would have favored smaller funds over larger
funds, Equity Planning reallocates PFPC, Inc.'s overall asset-based charges
among all funds for which it serves as financial agent on the basis of the
relative net assets of each fund. As a result, the PFPC, Inc. charges to the
Fund are expected to be slightly less than the amount that would be found
through direct application of the table illustrated above. For its services
during the Fund's fiscal year ended April 30, 1998, Equity Planning received
$252,949.
DISTRIBUTION PLANS
The Fund has adopted separate amended and restated 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 Fund shares and to
pay for 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 0.05% of the average daily net assets of the Fund's Class A shares. For
fiscal year 1998, the Distributor has voluntarily agreed to waive the fee for
Class A Shares. Under the Class B Plan, the Fund may reimburse the Distributor
monthly for actual expense of the Distributor up to 0.75% of the average daily
net assets of the Fund's Class B shares. In addition, the Fund will pay the
Distributor 0.25% annually of the average daily net assets of the Fund for
providing services to the shareholders, including assistance in connection with
inquiries related to shareholder accounts (the "Service Fee").
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 payment of commissions);
(ii) compensation, sales incentives and payments to sales, marketing and
service personnel; (iii) payments to broker-dealers and other financial
institutions which have entered into agreements with the Distributor in the
form of the Dealer Agreement for Phoenix Funds for services rendered in
connection with the sale and distribution of shares of the Fund; (iv) payment
of expenses incurred in sales and promotional activities, including advertising
expenditures related to the Fund; (v) the costs of preparing and distributing
promotional materials; (vi) the cost of printing the Fund's Prospectus and
Statement of Additional Information for distribution to potential investors;
and (vii) such other similar services that the Trustees of the Fund determines
are reasonably calculated to result in the sale of shares of the Fund.
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
14
<PAGE>
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.
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, 1998, the Fund paid Rule 12b-1 Fees in
the amount of $4,911,944 of which the Distributor received $3,121,953,
unaffiliated broker-dealers received $1,721,986 and W.S. Griffith & Co., Inc.,
an affiliate, received $68,005. The Rule 12b-1 payments for the fiscal year
ended April 30, 1998 were used for (1) compensation of dealers ($4,275,744),
(2) compensation to sales personnel ($285,270), (3) advertising ($155,368), (4)
printing and mailing prospectuses to other than current shareholders ($18,201),
(5) service costs ($119,666) and (6) other costs ($57,695).
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
Trustees have concluded that there is a reasonable likelihood that each Plan
will benefit the Fund and each affected Class of shareholders.
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 provide that while 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 plan fees or amend the Plans.
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>
Robert Chesek (64) 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).
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- -------------- -----------------------
<S> <C> <C>
E. Virgil Conway (69) 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). Member, Audit Committee of the City of
New York (1981-1996). Advisory Director, Blackrock
Fannie Mae Mortgage Securities Fund (1989-1996).
Member (1990-1995), Chairman (1992-1995),
Financial Accounting Standards Advisory Council.
Director/Trustee, the National Affiliated Investment
Companies (until 1993).
Harry Dalzell-Payne (69) 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 (67) 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
Inc. (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
Investment Partners, Ltd.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- -------------- -----------------------
<S> <C> <C>
Leroy Keith, Jr. (59) 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 Evergreen
International Fund, Inc. (1989-present). Trustee,
Evergreen Liquid Trust, Evergreen Tax Exempt Trust,
Evergreen Tax Free Fund, Master Reserves Tax Free
Trust, and Master Reserves Trust. President,
Morehouse College (1987-1994). Chairman and Chief
Executive Officer, Keith Ventures (1992-1994).
Director/Trustee, the National Affiliated Investment
Companies (until 1993). Director, Blue Cross/Blue
Shield (1989-1993) and First Union Bank of Georgia
( 1989-1993).
*Philip R. McLoughlin (51) Trustee and Chairman, (1997-present), Director, (1995-present),
President Vice Chairman (1995-1997) and Chief Executive
Officer, (1995-present) Phoenix Investment Partners,
Ltd. 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, PHL Associates, Inc. (1995-present).
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>
**Everett L. Morris (70) 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).
*James M. Oates (52) Trustee Chairman, IBEX Capital Markets LLC (1997-
Managing Director present). Managing Director, Wydown Group (1994-
The Wydown Group present). Director, Phoenix Investment Partners, Ltd.
IBEX Capital Markets LLC (1995-present). Director/Trustee, Phoenix Funds
60 State Street (1987-present). Trustee, Phoenix-Aberdeen Series
Suite 950 Fund and Phoenix Duff & Phelps Institutional
Boston, MA 02109 Mutual Funds (1996-present). Director, AIB Govett
Funds (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), Stifel Financial (1996-present)
and Command Systems, Inc. (1998-present). Vice
Chairman Massachusetts Housing Partnership (1992-
present). Member, Chief Executives Organization
(1996-present). Director (1984-1994), President
(1984-1994) and Chief Executive Officer (1986-
1994), Neworld Bank. Director/Trustee, the National
Affiliated Investment Companies (until 1993).
*Calvin J. Pedersen (56) Trustee Director (1986-present), President (1993-present) and
Phoenix Investment Executive Vice President (1992-1993), Phoenix
Partners, Ltd. Investment Partners, Ltd. 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).
**Herbert Roth, Jr. (69) 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), Landauer, Inc. (medical services) (1970-
present), Tech Ops./Sevcon, Inc. (electronic
controllers) (1987-present), and Mark IV Industries
(diversified manufacturer) (1985-present). Member,
Directors Advisory Council, Phoenix Home Life
Mutual Insurance Company (1998-present). Director,
Key Energy Group (oil rig service) (1988-1994) and
Phoenix Home Life Mutual Insurance Company
(1972-1998). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- -------------- -----------------------
<S> <C> <C>
Richard E. Segerson (52) 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. (67) 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),
Burroughs Wellcome Fund (1996-present), HPSC Inc.
(1995-present) and Compuware (1996-present).
Visiting Professor, University of Virginia (1997-
present). Director, Duty Free International (1997).
Chairman, Dresing, Lierman, Weicker (1995-1996).
Governor of the State of Connecticut (1991-1995).
Michael E. Haylon (40) Executive Director and Executive Vice President--Investments,
Vice Phoenix Investment Partners, Ltd. (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).
John F. Sharry (46) Executive Managing Director, Retail, Phoenix Equity Planning
Vice Corporation (1995-present). Executive Vice
President President, Phoenix Funds and Phoenix-Aberdeen
Series Fund (1998-present). Managing Director,
Director and National Sales Manager (December
1993-November 1995), Senior Vice President,
Director and National Sales Manager (December
1992-December 1993), Putnam Funds.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- -------------- -----------------------
<S> <C> <C>
James D. Wehr (41) Senior Vice Managing Director, Fixed Income, (1996-present),
President Vice President (1991-1996), Phoenix Investment
Counsel, Inc. Managing Director, Fixed Income,
(1996-present), Vice President (1993-1996), National
Securities & Research Corporation. Senior Vice
President (1997-present), Vice President (1988-
1997), Phoenix Multi-Portfolio Fund; Senior Vice
President (1997-present), Vice President (1990-
1997), Phoenix Series Fund; Senior Vice President
(1997-present), Vice President (1991-1997), The
Phoenix Edge Series Fund; Senior Vice President
(1997-present), Vice President (1993-1997), Phoenix
California Tax Exempt Bonds, Inc.; Senior Vice
President (1997-present), Vice President (1996-
1997), Phoenix Duff & Phelps Institutional Mutual
Funds; and Senior Vice President, Phoenix Multi-
Sector Short Term Bond Fund, Phoenix Multi-Sector
Fixed Income Fund, Phoenix Income and Growth
Fund and Phoenix Strategic Allocation Fund, Inc.
(1997-present). Senior Vice President and Chief
Investment Officer, Duff & Phelps Utilities Tax Free
Income Inc. (1997-present). Managing Director,
Public Fixed Income, Phoenix Home Life Insurance
Company (1991-1995). Various positions with
Phoenix Home Life Insurance Company (1981-1991).
Steven L. Colton (39) Vice Managing Director, Value Equities, Phoenix
President Investment Counsel, Inc. (1997-present) and
Managing Director, Value Equities, National
Securities & Research Corporation (1998-present).
Vice President, The Phoenix Edge Series Fund and
Phoenix Series Fund (1997-present). Vice President/
Senior Portfolio Manager, American Century
Investment Management (1987-1997). Portfolio
Manager, American Century/Benham Income &
Growth Fund (1990-1997). Portfolio Manager,
American Century/Benham Equity Growth Fund
(1991-1996). Portfolio Manager, American Century/
Benham Utilities Income Fund (1993-1997).
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>
20
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- -------------- -----------------------
<S> <C> <C>
William R. Moyer (54) Vice Senior Vice President and Chief Financial Officer,
100 Bright Meadow Blvd. President Phoenix Investment Partners, Ltd. (1995-present).
P. O. Box 2200 Director (1998-present), Senior Vice President, Finance
Enfield, CT 06083-2200 (1990-present), Chief Financial Officer (1996-present),
and Treasurer (1994-1996 and 1998-present), Phoenix
Equity Planning Corporation. Director (1998-present),
Senior Vice President (1990-present), Chief Financial
Officer (1996-present) and Treasurer (1994-present),
Phoenix Investment Counsel, Inc. Director (1998-
present), Senior Vice President, Finance (1993-present),
Chief Financial Officer (1996-present), and Treasurer
(1994-present), National Securities & Research Corpo-
ration. Senior Vice President and Chief Financial
Officer, Duff & Phelps Investment Management Co.
(1996-present). Vice President, Phoenix Funds (1990-
present), Phoenix Duff & Phelps Institutional Mutual
Funds (1996-present) and Phoenix-Aberdeen Series
Fund (1996-present). Vice President, Investment Prod-
ucts Finance, Phoenix Home Life Mutual Insurance
Company (1990-1995). 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).
Leonard J. Saltiel (44) Vice Managing Director, Operations and Service (1996-
President present), Senior Vice President (1994-1996), Phoenix
Equity Planning Corporation. Vice President, Phoenix
Funds (1994-present), Phoenix Duff & Phelps Institu-
tional 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 Phoenix Home Life Mutual Insurance Company
( 1987-1994).
G. Jeffrey Bohne (50) 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 (1996-
present), Vice President, Transfer Agent Operations
(1993-1996), Phoenix Equity Planning Corporation.
Secretary/Clerk, Phoenix Funds (1993-present),
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).
Nancy G. Curtiss (45) 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>
21
<PAGE>
- -----------
*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. Morris and
Roth will retire from the Board of Trustees effective January 1, 1999.
For services rendered to the Fund for the fiscal year ended April 30,
1998, the Trustees received aggregate remuneration of $20,078. 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 $2,000 and $2,000 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.
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 (14 Funds)
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
---- ------------ ------------------- --------------- ----------------
<S> <C> <C> <C> <C>
Robert Chesek $1,538 $55,750
E. Virgil Conway+ $2,040 $74,500
Harry Dalzell-Payne+ $1,815 None None $67,250
for any for any
Francis E. Jeffries $1,500* $53,750
Trustee Trustee
Leroy Keith, Jr. $1,538 $55,750
Philip R. McLoughlin+ $ 0 $ 0
Everett L. Morris+ $1,778* $65,750
James M. Oates+ $1,778 $65,250
Calvin J. Pedersen $ 0 $ 0
Herbert Roth, Jr.+ $2,108* $77,000
Richard E. Segerson $1,785 $63,750
Lowell P. Weicker, Jr. $1,688 $60,000
</TABLE>
- -----------
*This compensation (and the earnings thereon) will be deferred pursuant to the
Directors' Deferred Compensation Plan. At April 30, 1998, the total amount of
deferred compensation (including interest and other accumulation earned on the
original amounts deferred) accrued for Messrs. Jeffries, Morris and Roth was
$82,041, $137,256 and $140,068, 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 July 29, 1998, the Trustees and officers of the Fund beneficially owned
less than 1% of the outstanding shares of the Fund.
22
<PAGE>
Principal Shareholders
The following table sets forth information as of July 29, 1998 with
respect to each person who owns of record or is known by the Registrant to own
of record or beneficially own 5% or more of any Class of the Registrant's
equity securities.
<TABLE>
<CAPTION>
Name of Shareholder Class Number of Shares Percent of Class
- ----------------------- --------- ------------------ -----------------
<S> <C> <C> <C>
Merrill Lynch Pierce Class B 3,972,928.559 11.77%
Fenner & Smith
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
</TABLE>
OTHER INFORMATION
Independent Accountants
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110, has been
selected as the independent accountants for the Fund. PricewaterhouseCoopers
LLP audits the Fund's annual financial statements and expresses an opinion
thereon.
Custodian and Transfer Agent
State Street Bank and Trust Company ("State Street"), P.O. Box 351,
Boston, MA 02101, serves as custodian of the Fund's assets. Equity Planning,
100 Bright Meadow Boulevard, P.O. Box 2200, Enfield, CT 06083-2200, acts as
Transfer Agent for the Fund (the "Transfer Agent"). As compensation, Equity
Planning receives a fee equivalent to $14.95 for each designated shareholder
account plus out-of-pocket expenses. Transfer Agent fees are also utilized to
offset costs and fees paid to subtransfer agents employed by Equity Planning.
State Street Bank and Trust Company serves as a subtransfer agent pursuant to a
Subtransfer Agency Agreement.
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, and is available without
charge upon request.
Financial Statements
The Financial Statements for the fiscal year ended April 30, 1998
appearing in the Fund's 1998 Annual Report to Shareholders, are incorporated
herein by reference.
23
<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.
24
<PAGE>
Phoenix Income and Growth Fund
- ------------------------------------------------------
INVESTMENTS AT APRIL 30, 1998
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(UNAUDITED) (000) VALUE
----------- -------- ------------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES--9.7%
U.S. TREASURY NOTES--9.7%
U.S. Treasury Notes 5.375%, 1/31/00....................... AAA $51,250 $ 51,080,357
U.S. Treasury Notes 5.50%, 3/31/00........................ AAA 17,000 16,977,728
U.S. Treasury Notes 5.50%, 1/31/03........................ AAA 5,680 5,642,682
U.S. Treasury Notes 6.125%, 8/15/07....................... AAA 5,850 6,005,552
------------
TOTAL U.S. GOVERNMENT
(Identified cost $80,014,366).................................................... 79,706,319
------------
AGENCY MORTGAGE-BACKED SECURITIES--3.8%
GNMA 6.50%, '23-'24....................................... AAA 27,135 27,041,574
FNMA 98-M4, C 6.527%, 5/25/30............................. AAA 4,000 4,028,750
------------
TOTAL AGENCY MORTGAGE-BACKED SECURITIES
(Identified cost $30,335,138).................................................... 31,070,324
------------
MUNICIPAL BONDS--8.4%
CALIFORNIA--4.3%
California State Department Water System Series S 5%,
12/1/29................................................. AA 1,700 1,612,875
Fresno County Pension Obligation Taxable 6.21%, 8/15/06... AAA 5,600 5,551,000
Kern County Pension Obligation Taxable 7.26%, 8/15/14..... AAA 4,500 4,770,000
Long Beach Pension Obligation Taxable 6.87%, 9/1/06....... AAA 3,000 3,116,250
Los Angles County Public Works 5.125%, 12/1/29............ AAA 2,560 2,464,000
Orange County Pension Obligation Series A Taxable 7.62%,
9/1/08.................................................. AAA 4,520 4,926,800
Sacramento County 95-A Pension Taxable 6.625%, 8/15/06.... AAA 3,400 3,489,250
San Bernardino County Pension Obligation Revenue Taxable
6.87%, 8/1/08........................................... AAA 1,335 1,378,388
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(UNAUDITED) (000) VALUE
----------- -------- ------------
<S> <C> <C> <C>
CALIFORNIA--CONTINUED
San Bernardino County Pension Obligation Revenue Taxable
6.94%, 8/1/09........................................... AAA $3,625 $ 3,760,937
Sonoma County Pension Obligation 6.625%, 6/1/13........... AAA 1,700 1,706,375
Ventura County Pension Obligation Taxable 6.54%,
11/1/05................................................. AAA 2,200 2,241,250
------------
35,017,125
------------
FLORIDA--0.2%
Florida Department of Transportation 5%, 7/1/27........... AA+ 2,050 1,957,750
------------
ILLINOIS--0.5%
Illinois Educational Facilities Authority Revenue--Loyola
University Series A Taxable 7.84%, 7/1/24............... AAA 3,410 3,661,487
------------
MASSACHUSETTS--0.4%
Massachusetts State Port Authority Revenue 6.05%,
7/1/02.................................................. AA- 1,575 1,567,125
Massachusetts State Water Authority 5%, 8/1/24............ AAA 2,050 1,947,500
------------
3,514,625
------------
NEW YORK--0.9%
New York State Taxable 6.40%, 3/1/08...................... AAA 7,460 7,460,000
------------
PENNSYLVANIA--0.5%
Pittsburgh Pension Taxable 6.5%, 3/1/17................... AAA 4,250 4,127,813
------------
TEXAS--1.3%
Dallas-Fort Worth Airport 6.40%, 11/1/06.................. AAA 4,415 4,426,038
Dallas-Fort Worth Taxable 6.40%, 11/1/07.................. AAA 1,200 1,200,000
Houston Water & Sewer Ref-Jr Series D 5%, 12/1/25......... AAA 2,560 2,435,200
Texas Taxable Veterans Series B 6.05%, 12/1/02............ AA 3,000 2,973,750
------------
11,034,988
------------
WASHINGTON--0.3%
Washington State Series E Taxable 5%, 7/1/22.............. AA+ 2,560 2,416,000
------------
TOTAL MUNICIPAL BONDS
(Identified cost $68,283,968).................................................... 69,189,788
------------
</TABLE>
4 See Notes to Financial Statements
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- ------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(UNAUDITED) (000) VALUE
----------- -------- ------------
ASSET-BACKED SECURITIES--4.4%
<S> <C> <C> <C>
AESOP Funding II LLC 97-1, A2 144A 6.40%, 10/20/03 (b).... AAA $5,000 $ 5,060,938
Associates Manufactured Housing Pass Through 97-2 A6
7.075%, 3/15/28......................................... AAA 1,500 1,521,562
Capita Equipment Receivables Trust 97-1B, 6.45%,
8/15/02................................................. A+ 3,500 3,541,562
Chase Credit Card Master Trust 1997-2A 6.30%, 4/15/03..... AAA 5,000 5,028,320
Discover Card Master Trust I 98-4, A 5.75%, 10/16/03...... AAA 2,000 1,987,578
Fleetwood Credit Corp. 96-B, A 6.90%, 3/15/12............. AAA 1,822 1,839,303
Green Tree Financial Corp. 96-2, M1 7.60%, 4/15/27........ AA- 3,325 3,456,961
Green Tree Financial Corp. 96-4, A6 7.40%, 6/15/27........ AAA 1,515 1,573,470
Newcourt Receivables Asset Trust 1997-1 A3 6.11%,
5/21/01................................................. AAA 4,600 4,610,063
Premier Auto Trust 98-1, A-4 5.70%, 10/6/02............... AAA 2,500 2,485,156
Wings Commercial Loan Master Trust I 98-A2 144A 5.918%,
3/20/08 (b)(e).......................................... AAA 5,000 5,004,688
------------
TOTAL ASSET-BACKED SECURITIES
(Identified cost $30,797,464).................................................... 36,109,601
------------
CORPORATE BONDS--8.2%
BROADCASTING (TELEVISION RADIO CABLE)--0.4%
Turner Broadcasting 8.375%, 7/1/13........................ BBB- 3,000 3,382,500
------------
COMMUNICATIONS EQUIPMENT--0.6%
Panamsat Corp. 144A 6.125%, 1/15/05 (b)................... A- 5,000 4,881,250
------------
CONSUMER FINANCE--0.6%
Ford Motor Credit 6%, 1/14/03............................. A 5,000 4,962,500
------------
DIVERSIFIED MISCELLANEOUS--1.2%
IBJ Preferred Capital Co. LLC 144A 8.79%,
12/29/49 (b)(e)......................................... BBB- 4,880 4,626,103
SB Treasury Co. 144A 9.125%, 12/29/49 (b)(e).............. BBB- 4,880 5,032,500
------------
9,658,603
------------
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(UNAUDITED) (000) VALUE
----------- -------- ------------
<S> <C> <C> <C>
HEALTH CARE--DIVERSIFIED--0.6%
McKesson Corp. 144A 6.40%, 3/1/08 (b)..................... A- $ 5,100 $ 5,023,500
------------
HOSPITAL MANAGEMENT--0.7%
Tenet Healthcare Corp. Sr. Note 9.625%, 9/1/02............ Ba(d) 5,000 5,631,250
------------
INVESTMENT BANKING/BROKERAGE--0.6%
Merrill Lynch & Co. 6%, 2/12/03........................... AA- 5,000 4,962,500
------------
MEDICAL PRODUCTS & SUPPLIES--0.6%
Boston Scientific 6.625% 3/15/05.......................... A- 4,925 4,937,313
------------
PAPER & FOREST PRODUCTS--0.6%
Buckeye Cellulose Corp. 8.5%, 12/15/05.................... BB- 5,000 5,112,500
------------
REITS--0.4%
Meditrust Corp. Notes 7.375%, 7/15/00..................... BBB- 3,000 3,052,500
------------
RETAIL (FOOD CHAINS)--0.5%
Fred Meyer 7.45%, 3/1/08.................................. BB+ 4,000 4,000,000
------------
TELEPHONE--0.6%
Century Telephone Enterprises 6.30%, 1/15/08.............. BBB+ 5,000 4,925,000
------------
TEXTILES (APPAREL)--0.6%
Westpoint Stevens 8.75%, 12/15/01......................... BB 5,000 5,418,750
------------
TRUCKS & PARTS--0.2%
Cummins Engine 6.45%, 3/1/05.............................. BBB+ 1,650 1,637,625
------------
TOTAL CORPORATE BONDS
(Identified cost $66,889,861).................................................... 67,585,791
------------
NON-AGENCY MORTGAGE BACKED SECURITIES--13.0%
CS First Boston Corp. 97-SPCE, D 144A 7.332%, 4/20/08
(b)..................................................... BBB(d) 4,039 4,066,768
CS First Boston Mortgage Securities Corp. 97-C2, B 6.72%,
11/17/07................................................ Aa(d) 11,000 11,144,375
DLJ Mortgage Acceptance Corp. 96-CF1, A1B 144A 7.58%,
2/12/06 (b)............................................. AAA 4,400 4,677,750
DLJ Mortgage Acceptance Corp. 97-CF2, B2 144A 7.14%,
11/15/08 (b)............................................ BBB- 5,000 5,010,938
First Union Lehman Brothers 97-C1, B 7.43%, 4/18/07....... Aa(d) 2,500 2,625,781
</TABLE>
See Notes to Financial Statements 5
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- ------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(UNAUDITED) (000) VALUE
----------- -------- ------------
NON-AGENCY MORTGAGE BACKED SECURITIES--CONTINUED
<S> <C> <C> <C>
G.E. Capital Mortgage Services, Inc. 94-9, M 6.50%,
2/25/24................................................. AA $11,415 $ 11,182,838
G.E Capital Mortgage Services, Inc. 1996-4 A5 7%,
3/25/26................................................. AAA 8,820 8,837,446
G.E. Capital Mortgage Services, Inc. 96-8, M 7.25%,
5/25/26................................................. AA 490 500,736
G.E. Capital Mortgage Services, Inc. 97-1, A14 7.50%,
3/25/27................................................. AAA 5,000 5,062,500
GMAC Commercial Mortgage Securities, Inc. 97-B, C-2
6.703%, 12/15/07........................................ Aa(d) 7,000 7,063,437
Lehman Large Loan 97-L11, B 6.95%, 3/12/07................ AA 4,340 4,462,062
Nationslink Funding Corp. 96-1, B 7.69%, 12/20/05......... AA 1,500 1,586,250
New Century Home Equity Loan Trust 6.78%, 8/25/25......... AAA 5,750 5,764,375
Prudential Home Mortgage Securities 94-15, M 6.80%,
5/25/24................................................. Aa(d) 8,350 8,300,802
Prudential Home Mortgage Securities 144A 96-A B1 7.9584%,
5/28/26 (b)............................................. NR 2,525 2,365,609
Residential Asset Securitization Trust 96-A8, A1 8%,
12/25/26................................................ AAA 1,925 1,937,064
Residential Funding Mortgage Securities I 96-S1, A11
7.10%, 1/25/26.......................................... AAA 2,800 2,821,000
Residential Funding Mortgage Securities I 96-S4, M1 7.25%,
2/25/26................................................. AA 3,915 3,948,387
Securitized Asset Sales 93-J 2B 6.807%, 11/28/23.......... A(d) 4,420 4,429,569
Structured Asset Securities Corp. 95-C4, B 7%, 6/25/26.... AA 5,198 5,239,937
Triangle Funding Ltd. 97-3A, 1B 144A 5.846%, 10/15/05
(b)(e).................................................. AA 5,650 5,639,406
------------
TOTAL NON-AGENCY MORTGAGE BACKED SECURITIES
(Identified cost $109,915,438)................................................... 106,667,030
------------
FOREIGN GOVERNMENT SECURITIES--10.6%
ARGENTINA--1.3%
Republic of Argentina 9.75%, 9/19/27...................... BB 3,750 3,620,625
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(UNAUDITED) (000) VALUE
----------- -------- ------------
<S> <C> <C> <C>
ARGENTINA--CONTINUED
Republic of Argentina Bearer FRB 6.625%, 3/31/05 (e)...... BB $ 8,156 $ 7,493,095
------------
11,113,720
------------
BRAZIL--0.9%
Republic of Brazil NMB-L 6.688%, 4/15/09 (e).............. BB- 9,075 7,651,359
------------
BULGARIA--0.5%
Bulgaria FLIRB-A Bearer Euro 2.25%, 7/28/12 (e)........... B(d) 6,105 4,105,612
------------
COLOMBIA--0.9%
Republic of Colombia 7.625%, 2/15/07...................... BBB- 8,000 7,495,520
------------
CROATIA--0.9%
Croatia Series B 6.50%, 7/31/06 (e)....................... BBB- 3,698 3,395,035
Croatia Series A 6.50%, 7/31/10 (e)....................... BBB- 4,300 3,818,937
------------
7,213,972
------------
ECUADOR--0.5%
Ecuador Bearer PDI Euro, PIK interest capitalization
6.625%, 2/27/15 (e)..................................... BB 2,114 1,352,346
Ecuador Registered PDI Euro, PIK interest capitalization,
6.625%, 2/27/15 (e)..................................... BB 3,811 2,437,782
------------
3,790,128
------------
KOREA--0.3%
Republic of Korea 8.875%, 4/15/08......................... BB+ 2,300 2,267,800
------------
MEXICO--1.3%
United Mexican States Global Bond 11.50%, 5/15/26......... BB 9,160 11,049,250
------------
PANAMA--1.3%
Republic of Panama 8.875%, 9/30/27........................ BB+ 11,275 11,043,863
------------
PERU--0.5%
Peru PDI 4%, 3/7/17 (e)................................... BB 5,745 3,924,553
------------
POLAND--1.3%
Poland Bearer PDI 4%, 10/27/14 (e)........................ BBB- 5,500 5,032,500
Poland Registered PDI 4%, 10/27/14 (e).................... BBB- 6,100 5,581,500
------------
10,614,000
------------
</TABLE>
6 See Notes to Financial Statements
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- ------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(UNAUDITED) (000) VALUE
----------- -------- ------------
RUSSIA--0.5%
<S> <C> <C> <C>
Russia IAN Series US 144A 6.719%, 12/15/15 (b)(e)......... NR $5,545 $ 3,995,866
------------
VENEZUELA--0.4%
Republic of Venezuela 9.25%, 9/15/27...................... B+ 4,155 3,670,943
------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $83,968,802).................................................... 87,936,586
------------
FOREIGN CORPORATE BONDS--0.6%
ARGENTINA--0.2%
Telefonica De Argentina 144A 9.125%, 5/7/08 (b)........... BBB- 1,450 1,457,250
------------
CHILE--0.4%
Compania Sud Amer Vapore 144A 7.375%, 12/8/03 (b)......... BBB 580 571,300
Petropower I Funding 144A 7.36%, 2/15/14 (b).............. BBB 2,400 2,380,920
------------
2,952,220
------------
TOTAL FOREIGN CORPORATE BONDS
(Identified cost $4,410,166)..................................................... 4,409,470
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
--------
<S> <C> <C> <C>
COMMON STOCKS--37.8%
AEROSPACE & DEFENSE--0.8%
General Dynamics Corp..................................... 138,800 5,864,300
Gulfstream Aerospace Corp. (c)............................ 4,400 184,525
Sundstrand Corp........................................... 9,300 642,281
Thiokol Corp.............................................. 4,000 215,500
------------
6,906,606
------------
AIRLINES--0.5%
AMR Corp. (c)............................................. 26,500 4,037,937
------------
AUTOMOBILES--1.4%
Chrysler Corp............................................. 47,500 1,908,906
Ford Motor Co............................................. 181,600 8,319,550
General Motors Corp....................................... 20,400 1,374,450
------------
11,602,906
------------
BANKS (MAJOR--REGIONAL)--1.4%
Banc One Corp............................................. 109,400 6,434,087
NationsBank Corp.......................................... 66,900 5,067,675
UnionBanCal Corp.......................................... 2,800 288,400
------------
11,790,162
------------
BANKS (MONEY CENTER)--2.3%
BankAmerica Corp.......................................... 68,900 5,856,500
Bankers Trust Corp........................................ 31,900 4,119,087
Chase Manhattan Corp...................................... 36,500 5,057,531
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
BANKS (MONEY CENTER)--CONTINUED
Citicorp.................................................. 23,700 $ 3,566,850
------------
18,599,968
------------
BEVERAGES (ALCOHOLIC)--0.1%
Adolph Coors Co. Cl B..................................... 11,500 411,125
------------
BEVERAGES (NON-ALCOHOLIC)--0.2%
PepsiCo, Inc.............................................. 32,000 1,270,000
------------
BUILDING MATERIALS--0.1%
Fleetwood Enterprises..................................... 8,200 378,737
------------
CHEMICAL--1.9%
Dow Chemical Co........................................... 107,000 10,345,562
Du Pont (E.I.) de Nemours & Co............................ 60,000 4,368,750
Lyondell Petrochemical Co................................. 22,900 752,837
------------
15,467,149
------------
CHEMICAL--SPECIALTY--0.1%
Dexter Corp............................................... 9,400 388,337
------------
COMMUNICATIONS EQUIPMENT--0.6%
Lucent Technologies, Inc.................................. 62,000 4,719,750
Tellabs, Inc. (c)......................................... 6,700 474,862
------------
5,194,612
------------
COMPUTER SOFTWARE & SERVICES--1.8%
Autodesk, Inc............................................. 15,400 723,800
Computer Associates International, Inc.................... 46,400 2,717,300
Electronic Data Systems Corp.............................. 5,400 232,200
Microsoft Corp. (c)....................................... 123,500 11,130,437
------------
14,803,737
------------
COMPUTERS (HARDWARE)--1.7%
Compaq Computer Corp...................................... 46,800 1,313,325
Dell Computer Corp. (c)................................... 10,000 807,500
Hewlett Packard Co........................................ 48,500 3,652,656
International Business Machines Corp...................... 66,900 7,752,037
Sun Microsystems, Inc. (c)................................ 15,200 626,050
------------
14,151,568
------------
COMPUTERS (PERIPHERALS)--0.2%
EMC Corp.................................................. 43,600 2,011,050
------------
CONSUMER GOODS (JEWELRY NOVELTIES GIFTS)--0.2%
Jostens, Inc.............................................. 69,400 1,643,912
------------
DRUGS--MAJOR PHARMACEUTICALS--2.8%
Lilly (Eli) & Co.......................................... 68,200 4,744,162
Merck & Co., Inc.......................................... 50,000 6,025,000
Pfizer, Inc............................................... 103,100 11,734,069
Schering Plough Corp...................................... 9,200 737,150
------------
23,240,381
------------
</TABLE>
See Notes to Financial Statements 7
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
ELECTRIC COMPANIES--1.3%
<S> <C> <C> <C>
CMS Energy Corp........................................... 16,900 $ 738,319
Consolidated Edison, Inc.................................. 81,300 3,678,825
Dominion Resources, Inc................................... 37,600 1,487,550
Enova Corp................................................ 84,900 2,271,075
FPL Group, Inc............................................ 35,600 2,209,425
Minnesota Power & Light Co................................ 16,900 688,675
------------
11,073,869
------------
ELECTRICAL EQUIPMENT--0.1%
General Electric Co....................................... 9,200 783,150
------------
ELECTRONICS (DEFENSE)--0.2%
Raytheon Co. Class B...................................... 28,700 1,626,931
------------
ELECTRONICS (SEMICONDUCTORS)--0.1%
Intel Corp................................................ 13,700 1,107,131
------------
ENGINEERING & CONSTRUCTION--0.4%
Vulcan Materials Co....................................... 30,500 3,509,406
------------
FINANCIAL (DIVERSIFIED)--1.7%
American Express Co....................................... 7,100 724,200
Federal National Mortgage Association..................... 15,100 904,112
Greenpoint Financial Corp................................. 15,600 619,125
Imperial Bancorp (c)...................................... 27,400 803,162
Morgan Stanley Dean Witter & Co........................... 143,200 11,294,900
------------
14,345,499
------------
FOOD--0.5%
Hormel Foods Corp......................................... 10,000 340,000
Quaker Oats Co............................................ 47,200 2,454,400
Richfood Holdings Inc..................................... 51,500 1,413,031
Smithfield Foods, Inc. (c)................................ 6,900 209,587
------------
4,417,018
------------
HEALTH CARE (MANAGED CARE)--0.1%
Wellpoint Health Network (c).............................. 11,900 858,288
------------
HEALTH CARE--DIVERSIFIED--1.2%
Bristol-Myers Squibb Co................................... 10,600 1,122,275
McKesson Corp............................................. 67,200 4,750,200
Warner-Lambert Co......................................... 21,500 4,067,531
------------
9,940,006
------------
HOUSEHOLD PRODUCTS (NON-DURABLES)--0.1%
Colgate-Palmolive Co...................................... 10,400 932,750
------------
INSURANCE (MULTI-LINE)--1.8%
Conseco, Inc.............................................. 21,100 1,047,088
Equitable Companies, Inc.................................. 51,100 3,136,263
Hartford Financial Services Group......................... 35,600 3,942,700
Travelers Group, Inc...................................... 103,800 6,351,263
------------
14,477,314
------------
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
INSURANCE (PROPERTY--CASUALTY)--0.6%
Allstate Corp............................................. 44,700 $ 4,302,375
St. Paul Co., Inc......................................... 11,500 974,625
------------
5,277,000
------------
INVESTMENT BANKING/BROKERAGE--0.3%
Merrill Lynch & Co., Inc.................................. 25,700 2,255,175
------------
LEISURE TIME PRODUCTS--0.2%
Mattel, Inc............................................... 36,300 1,390,744
------------
MACHINERY (DIVERSIFIED)--1.2%
Caterpillar, Inc.......................................... 65,300 3,718,019
Deere & Co................................................ 77,600 4,534,750
Ingersoll-Rand Co......................................... 31,600 1,455,575
------------
9,708,344
------------
MANUFACTURING (DIVERSIFIED)--1.8%
Eaton Corp................................................ 24,300 2,244,713
National Service Industries............................... 41,900 2,267,838
Teleflex, Inc............................................. 5,700 242,250
Tredegar Industries....................................... 12,500 978,906
United Technologies Corp.................................. 95,900 9,440,156
------------
15,173,863
------------
MEDICAL PRODUCTS & SUPPLIES--0.4%
Baxter International, Inc................................. 53,000 2,938,188
PSS World Medical, Inc. (c)............................... 10,000 224,375
------------
3,162,563
------------
NATURAL GAS--1.1%
Columbia Energy Group..................................... 45,400 3,688,750
Eastern Enterprises....................................... 50,000 2,118,750
New Jersey Resources Corp................................. 58,300 2,200,825
Washington Gas Light Co................................... 39,700 1,079,344
------------
9,087,669
------------
OIL & GAS (DRILLING & EQUIPMENT)--1.1%
BJ Services Co. (c)....................................... 99,800 3,742,500
Camco International, Inc.................................. 1,900 128,963
Dresser Industries, Inc................................... 2,200 116,325
Halliburton Co............................................ 10,400 572,000
Rowan Companies, Inc. (c)................................. 96,800 2,849,550
Schlumberger Ltd.......................................... 23,000 1,906,125
------------
9,315,463
------------
OIL & GAS (EXPLORATION & PRODUCTION)--0.9%
Equitable Resources, Inc.................................. 128,700 4,182,750
K N Energy, Inc........................................... 51,800 3,040,013
MDU Resources Group, Inc.................................. 10,300 357,281
------------
7,580,044
------------
PAPER & FOREST PRODUCTS--0.0%
Bowater, Inc.............................................. 2,100 117,469
------------
</TABLE>
8 See Notes to Financial Statements
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
PERSONAL CARE--0.1%
<S> <C> <C> <C>
Estee Lauder Companies-Class A............................ 7,100 $ 471,706
------------
PROFESSIONAL SERVICES--0.0%
Valassis Communications, Inc. (c)......................... 3,900 153,075
------------
REITS--0.6%
IRT Property Co........................................... 134,900 1,568,213
Meditrust Companies....................................... 115,709 3,478,510
------------
5,046,723
------------
RETAIL (BUILDING SUPPLIES)--0.1%
Home Depot, Inc........................................... 12,400 863,350
------------
RETAIL (COMPUTERS & ELECTRONICS)--0.1%
Tandy Corp................................................ 7,200 358,200
------------
RETAIL (DEPARTMENT STORES)--0.3%
Federated Department Stores, Inc. (c)..................... 25,000 1,229,688
Penny (J.C.) Co., Inc..................................... 17,400 1,236,488
------------
2,466,176
------------
RETAIL (DRUG STORES)--0.1%
CVS Corp.................................................. 3,600 265,500
Rite Aid Corp............................................. 2,200 70,675
------------
336,175
------------
RETAIL (FOOD CHAINS)--0.2%
Albertson's Inc........................................... 25,700 1,285,000
------------
RETAIL (GENERAL MERCHANDISE)--0.9%
CompUSA, Inc. (c)......................................... 25,000 464,063
Dayton Hudson Corp........................................ 13,000 1,135,063
Fingerhut Companies, Inc.................................. 32,500 962,813
Ross Stores, Inc.......................................... 15,000 694,688
Wal-Mart Stores, Inc...................................... 82,000 4,146,125
------------
7,402,752
------------
RETAIL (SPECIALTY--APPAREL)--0.0%
TJX Co., Inc.............................................. 5,000 221,250
------------
SERVICES (ADVERTISING/MARKETING)--0.8%
Interpublic Group of Companies, Inc....................... 15,900 1,015,613
Omnicom Group, Inc........................................ 121,200 5,741,850
------------
6,757,463
------------
SERVICES (COMMERCIAL & CONSUMER)--0.5%
Deluxe Corp............................................... 33,000 1,105,500
H & R Block, Inc.......................................... 34,500 1,552,500
Viad Corp................................................. 54,500 1,406,781
------------
4,064,781
------------
TELECOM (LONG DISTANCE)--1.3%
AT&T Corp................................................. 173,600 10,426,850
------------
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
TELEPHONE--0.6%
Ameritech Corp............................................ 32,400 $ 1,379,025
BellSouth Corp............................................ 48,400 3,106,675
------------
4,485,700
------------
TEXTILES (APPAREL)--0.2%
Liz Claiborne, Inc........................................ 25,000 1,229,688
VF Corp................................................... 3,300 171,600
------------
1,401,288
------------
TOBACCO--0.8%
Philip Morris Companies, Inc.............................. 121,300 4,526,006
Universal Corp............................................ 62,100 2,324,869
------------
6,850,875
------------
TOTAL COMMON STOCKS
(Identified cost $260,160,117)................................................. 310,629,247
------------
FOREIGN COMMON STOCKS--2.5%
CHEMICALS (DIVERSIFIED)--0.1%
Akzo Nobel N.V. ADR (Netherlands)......................... 9,900 1,019,700
------------
DIVERSIFIED MISCELLANEOUS--0.1%
Nordic American Tanker Shipping Ltd. (Bermuda)............ 55,200 848,700
------------
FOOD--0.2%
Unilever PLC (United Kingdom)............................. 17,300 1,291,012
------------
HOUSEHOLD FURNISHINGS & APPLIANCES--0.5%
Royal Philips Electronics NV (Netherlands)................ 42,300 3,807,000
------------
INSURANCE (MULTI-LINE)--0.1%
Mid Ocean Ltd. (Bermuda).................................. 14,000 1,055,250
Partner Re Ltd. (Bermuda)................................. 3,400 170,212
------------
1,225,462
------------
OIL (INTERNATIONAL INTEGRATED)--0.3%
Elf Aquitaine SA ADR (France)............................. 40,700 2,642,956
------------
RAILROADS--0.2%
Canadian National Railway Co. (Canada).................... 22,700 1,476,919
Canadian Pacific Ltd. (Canada)............................ 8,500 250,219
------------
1,727,138
------------
TELECOM (LONG DISTANCE)--0.1%
Telecom Corp. (New Zealand)............................... 10,000 383,125
------------
TELECOMMUNICATIONS-EQUIPMENT--0.0%
Telefonaktiebolaget LM Ericsson (Sweden).................. 1,000 51,438
------------
</TABLE>
See Notes to Financial Statements 9
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
TELEPHONE--0.9%
<S> <C> <C> <C>
BCE, Inc. (Canada)........................................ 180,400 $ 7,678,275
------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $14,301,622).................................................. 20,674,806
------------
TOTAL LONG-TERM INVESTMENTS--99.0%
(Identified cost $749,076,942)................................................. 813,978,962
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(UNAUDITED) (000)
----------- --------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--0.9%
COMMERCIAL PAPER--0.6%
AlliedSignal, Inc. 5.52%, 5/8/98.......................... A-1 $4,865 4,859,778
------------
FEDERAL AGENCY SECURITIES--0.3%
FHLMC 5.43%, 5/7/98....................................... 2,585 2,582,661
------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $7,442,439)..................................................... 7,442,439
------------
TOTAL INVESTMENTS--99.9%
(Identified cost $756,519,381)................................................... 821,421,401(a)
Cash and receivables, less liabilities--0.1%..................................... 446,578
------------
NET ASSETS--100.0%................................................................. $821,867,979
------------
------------
</TABLE>
(a) Federal Income Tax Information: net unrealized appreciation of investment
securities is comprised of gross appreciation of $71,568,162 and gross
depreciation of $6,734,594 for income tax purposes. At April 30, 1998, the
aggregate cost of securities for federal income tax purposes was
$756,587,833.
(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,
1998, these securities amount to a value of $59,794,786 or 7.3% 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.
10 See Notes to Financial Statements
<PAGE>
Phoenix Income and Growth Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
<TABLE>
<CAPTION>
<S> <C>
Assets
Investment securities at value
(Identified cost $756,519,381) $ 821,421,401
Cash 162,419
Receivables
Dividends and interest 6,026,333
Investment securities sold 4,036,802
Fund shares sold 274,562
-------------
Total assets 831,921,517
-------------
Liabilities
Payables
Investment securities purchased 7,094,876
Fund shares repurchased 1,810,917
Investment advisory fee 476,820
Distribution fee 395,655
Transfer agent fee 154,341
Financial agent fee 20,656
Trustees' fee 9,122
Accrued expenses 91,151
-------------
Total liabilities 10,053,538
-------------
Net Assets $ 821,867,979
=============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $ 694,290,251
Undistributed net investment income 2,057,869
Accumulated net realized gain 60,617,839
Net unrealized appreciation 64,902,020
-------------
Net Assets $ 821,867,979
=============
Class A
Shares of beneficial interest outstanding, $0.0001 par
value, unlimited authorization
(Net Assets $459,991,986) 45,084,238
Net asset value per share $ 10.20
Offering price per share
$10.20/(1 - 4.75%) $ 10.71
Class B
Shares of beneficial interest outstanding, $0.0001 par
value, unlimited authorization
(Net Assets $361,875,993) 35,407,595
Net asset value per share and offering price per share $ 10.22
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1998
<TABLE>
<CAPTION>
Investment Income
<S> <C>
Interest $ 28,905,450
Dividends 10,855,681
------------
Total investment income 39,761,131
------------
Expenses
Investment advisory fee 5,877,607
Distribution fee--Class A 1,161,545
Distribution fee--Class B 3,750,399
Financial agent 252,949
Transfer agent 1,009,936
Printing 76,480
Custodian 64,627
Registration 22,066
Professional 21,405
Trustees 20,582
Miscellaneous 36,306
------------
Total expenses 12,293,902
------------
Net investment income 27,467,229
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 131,617,279
Net realized loss on foreign currency transactions (1,242)
Net change in unrealized appreciation (depreciation)
on investments 4,573,207
------------
Net gain on investments 136,189,244
------------
Net increase in net assets resulting from
operations $163,656,473
============
</TABLE>
See Notes to Financial Statements 11
<PAGE>
Phoenix Income and Growth Fund
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
April 30, 1998 April 30, 1997
---------------- -----------------
<S> <C> <C>
From Operations
Net investment income $ 27,467,229 $ 29,735,468
Net realized gain 131,616,037 57,966,956
Net change in unrealized appreciation (depreciation) 4,573,207 (2,222,870)
-------------- --------------
Increase in net assets resulting from operations 163,656,473 85,479,554
-------------- --------------
From Distributions to Shareholders
Net investment income--Class A (17,182,669) (18,481,864)
Net investment income--Class B (10,988,112) (12,058,093)
Net realized gains--Class A (54,265,543) (39,142,002)
Net realized gains--Class B (43,432,965) (31,924,691)
-------------- --------------
Decrease in net assets from distributions to shareholders (125,869,289) (101,606,650)
-------------- --------------
From Share Transactions
Class A
Proceeds from sales of shares (2,818,975 and 3,227,767 shares, respectively) 29,110,549 32,305,915
Net asset value of shares issued from reinvestment of distributions
(6,091,273 and 4,817,814 shares, respectively) 58,628,750 47,024,383
Cost of shares repurchased (9,627,226 and 11,192,137 shares, respectively) (99,772,724) (112,400,718)
-------------- --------------
Total (12,033,425) (33,070,420)
-------------- --------------
Class B
Proceeds from sales of shares (2,189,770 and 2,616,679 shares, respectively) 22,255,564 26,139,385
Net asset value of shares issued from reinvestment of distributions
(4,402,084 and 3,430,811 shares, respectively) 42,377,821 33,531,068
Cost of shares repurchased (8,764,802 and 7,729,516 shares, respectively) (90,886,654) (77,728,213)
-------------- --------------
Total (26,253,269) (18,057,760)
-------------- --------------
Decrease in net assets from share transactions (38,286,694) (51,128,180)
-------------- --------------
Net decrease in net assets (499,510) (67,255,276)
Net Assets
Beginning of period 822,367,489 889,622,765
-------------- --------------
End of period (including undistributed net investment income of $2,057,869 and
$2,320,683, respectively) $ 821,867,979 $ 822,367,489
============== ==============
</TABLE>
12 See Notes to Financial Statements
<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,
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.86 $10.08 $8.88 $9.33 $ 9.92
Income from investment operations:
Net investment income 0.38 0.40 0.44 0.46 0.45
Net realized and unrealized gain (loss) 1.63 0.66 1.22 0.03 (0.08)
--------- --------- -------- -------- -------
Total from investment operations 2.01 1.06 1.66 0.49 0.37
--------- --------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.39) (0.40) (0.42) (0.45) (0.44)
Dividends from net realized gains (1.28) (0.88) (0.04) (0.33) (0.52)
In excess of accumulated net realized gains -- -- -- (0.16) --
--------- ---------- -------- -------- --------
Total distributions ( 1.67) (1.28) (0.46) (0.94) (0.96)
--------- ---------- --------- --------- --------
Change in net asset value 0.34 (0.22) 1.20 (0.45) (0.59)
--------- --------- -------- -------- --------
Net asset value, end of period $10.20 $9.86 $10.08 $8.88 $9.33
========= ========= ======== ======== ========
Total return(1) 21.87% 10.93% 19.01% 5.95% 3.38%
Ratios/supplemental data:
Net assets, end of period (thousands) $459,992 $451,439 $493,454 $490,225 $524,855
Ratio to average net assets of:
Expenses 1.13% 1.18% 1.18% 1.16% 1.23%
Net investment income 3.61% 3.82% 4.39% 5.07% 4.57%
Portfolio turnover 155% 111% 107% 90% 88%
Average commission rate paid(2) $0.0556 $0.0515 N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
------------------------------------------------------------------------
Year Ended April 30,
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.87 $10.09 $8.88 $9.32 $9.92
Income from investment operations:
Net investment income 0.30 0.31 0.36 0.39 0.38
Net realized and unrealized gain (loss) 1.64 0.67 1.23 0.04 (0.08)
-------- -------- -------- -------- --------
Total from investment operations 1.94 0.98 1.59 0.43 0.30
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.31) (0.32) (0.34) (0.38) (0.38)
Dividends from net realized gains (1.28) (0.88) (0.04) (0.33) (0.52)
In excess of accumulated net realized gains -- -- -- (0.16) --
-------- -------- -------- -------- --------
Total distributions (1.59) (1.20) (0.38) (0.87) (0.90)
-------- -------- -------- -------- --------
Change in net asset value 0.35 (0.22) 1.21 (0.44) (0.60)
-------- -------- -------- -------- --------
Net asset value, end of period $10.22 $9.87 $10.09 $8.88 $9.32
======== ======== ======== ======== ========
Total return(1) 21.03% 10.05% 18.14% 5.23% 2.62%
Ratios/supplemental data:
Net assets, end of period (thousands) $361,876 $370,929 $396,169 $386,515 $378,847
Ratio to average net assets of:
Expenses 1.88% 1.93% 1.93% 1.91% 1.91%
Net investment income 2.86% 3.06% 3.64% 4.32% 3.98%
Portfolio turnover 155% 111% 107% 90% 88%
Average commission rate paid(2) $0.0556 $0.0515 N/A N/A N/A
</TABLE>
(1) Maximum sales charge is not reflected in total return calculation.
(2) 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 13
<PAGE>
PHOENIX INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1998
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 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.
14
<PAGE>
PHOENIX INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1998 (Continued)
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.
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 $43,015 for Class A shares and
deferred sales charges of $816,905 for Class B shares for the year ended April
30, 1998. 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, 1998,
$3,121,953 was earned by the Distributor, $1,721,986 was paid to unaffiliated
participants and $68,005 was paid to W.S. Griffith, an indirect subsidiary of
PHL.
As Financial Agent of the Fund, PEPCO received a fee for bookkeeping,
administration, and pricing services at an annual rate of 0.05% of average daily
net assets up to $100 million, 0.04% of average daily net assets of $100 million
to $300 million, 0.03% of average daily net assets of $300 million through $500
million, and 0.015% of average daily net assets greater than $500 million; a
minimum fee may apply. PEPCO serves as the Fund's Transfer Agent with State
Street Bank and Trust Company as sub-transfer agent. For the year ended April
30, 1998, transfer agent fees were $1,009,936 of which PEPCO retained $420,632
which is net of fees paid to State Street.
At April 30, 1998, PHL and affiliates held 141 Class A shares and 19 Class
B shares of the Fund with a combined value of $1,632.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities, excluding short-term securities and
options, for the year ended April 30, 1998, aggregated $1,233,996,724 and
$1,333,344,087, including $254,437,110 and $212,069,259 of U.S. Government and
Agency securities, respectively.
4. POST OCTOBER LOSSES
Under current tax law, currency losses realized after October 31, 1997 may
be deferred and treated as occurring on the first day of the following fiscal
year. For the year ended April 30, 1998, the Fund deferred foreign currency
losses of $549 and was able to utilize losses deferred in the prior year in the
amount 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, 1998, the Fund increased
capital paid in on shares of beneficial interest by $99,135 and undistributed
net investment income by $440,738 and decreased accumulated net realized gains
by $539,873.
15
<PAGE>
PHOENIX INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1998 (Continued)
6. SUBSEQUENT EVENT DISCLOSURE
On May 27, 1998, the Board of Trustees of Phoenix Series Fund unanimously
approved an Agreement and Plan of Reorganization relating to the proposed
combination of the Phoenix Convertible Fund Series and Phoenix Income and Growth
Fund.
Pursuant to the Agreement, the Convertible Fund will transfer all or
substantially all of its assets to the Income and Growth Fund in exchange for
shares of the Income and Growth Fund and the assumption by the Income and Growth
Fund of certain identified liabilities of the Convertible Fund. Following the
exchange, the Convertible Fund will distribute the shares of the Income and
Growth Fund to its shareholders pro rata, in liquidation of the Convertible
Fund. The effectiveness of these transactions is subject to the satisfaction of
a number of conditions, including approval by shareholders of the Convertible
Fund.
TAX INFORMATION NOTICE (Unaudited)
Long-Term Capital Gains
The fund hereby designates $17,384,639 and $41,706,587 at 28% and 20%,
respectively, as a long-term capital gain dividend for purposes of the dividend
paid deduction on its federal income tax return.
Corporate Dividends Received Deductions
For federal income tax purposes 15.66% of the ordinary income dividends
paid by the Fund qualify for the dividends received deduction for corporate
shareholders.
This report is not authorized for distribution to prospective investors in the
Phoenix 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.
16
<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, 1998, 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, 1998 by correspondence with the
custodians and brokers, provide a reasonable basis for the opinion expressed
above.
/s/ Price Waterhouse LLP
Boston, Massachusetts
June 15, 1998
17
<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, 1998,
incorporated by reference.
(b) Exhibits:
<TABLE>
<S> <C>
1.1* Declaration of Trust of the Registrant, as amended prior to 1994, previously filed, filed via EDGAR
herewith and herein incorporated by reference.
1.2* Amendment to Declaration of Trust of the Registrant, dated May 24, 1994, filed with Post-Effective
Amendment No. 10 on August 25, 1994 filed via EDGAR herewith and herein incorporated by reference.
2.* By-laws of the Registrant, previously filed and filed via EDGAR herewith, and herein incorporated by
reference.
3. Not Applicable.
4.* Reference is made to Article VI of Registrant's Declaration of Trust, as amended, referred to in Exhibit
1.1. and 1.2.
5.1* Management Agreement between Registrant and National Securities & Research Corporation, dated May
14, 1993 and assigned to Phoenix Investment Counsel, Inc. effective June 1, 1998, previously filed, filed
via EDGAR herewith and herein incorporated by reference.
5.2* Amendment to Management Agreement between Registrant and National Securities & Research
Corporation, dated January 1, 1994 and assigned to Phoenix Investment Counsel, Inc. effective June 1,
1998, filed with Post-Effective Amendment No. 10 on August 25, 1994 filed via EDGAR herewith and
herein incorporated by reference.
6.1* Underwriting Agreement between Registrant and Phoenix Equity Planning Corporation ("Equity Planning")
dated November 19, 1997 filed herewith via EDGAR.
6.2* Form of Sales Agreement between Phoenix Equity Planning Corporation and dealers filed via EDGAR
herewith.
6.3* Form of Supplement to Phoenix Family of Funds Sales Agreement filed via EDGAR herewith.
6.4* Form of Financial Institution Sales Contract for the Phoenix Family of Funds filed via EDGAR herewith.
7. None.
8.* Custodian Contract between Registrant and State Street Bank and Trust Company dated May 1, 1997, filed
herewith via EDGAR.
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* Sub-transfer Agent Agreement between Equity Planning and State Street Bank and Trust Company dated
June 1, 1994 filed herewith via EDGAR.
9.3* Amended and Restated Financial Agent Agreement between Registrant and Phoenix Equity Planning
Corporation dated November 19, 1997 and filed via EDGAR herewith.
9.4* First Amendment to Amended and Restated Financial Agent Agreement between Registrant and Phoenix
Equity Planning Corporation dated March 23, 1998 and filed via EDGAR herewith.
9.5* Second Amendment to Amended and Restated Financial Agent Agreement between Registrant and
Phoenix Equity Planning Corporation dated July 31, 1998 and filed via EDGAR herewith.
10. Opinion as to legality of the shares previously filed, and herein incorporated by reference.
11.* Consent of Independent Accountants.
12. Not Applicable.
13. None.
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
14. None.
15.1* Amended and Restated Distribution Plan for Class A Shares effective August 27, 1997, filed herewith via
EDGAR.
15.2* Amended and Restated Distribution Plan for Class B Shares effective August 27, 1997, filed herewith via
EDGAR.
16.* Schedule for computation of yield and effective yield quotations, filed with Post-Effective Amendment
No. 10 on August 25, 1994 and filed via EDGAR herewith 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* Amended and Restated Rule 18f-3 Multi-Class Distribution Plan, effective May 1, 1997, filed herewith via
EDGAR.
</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 June 30, 1998, the number of record holders of each class of
securities of the Registrant was as follows:
<TABLE>
<CAPTION>
Number of
Title of Class Record-holders
- -------------- --------------
<S> <C>
Shares of Beneficial Interest--Class A 23,542
Shares of Beneficial Interest--Class B 18,108
</TABLE>
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 Phoenix Investment Counsel,
Inc., the Adviser, reference is made to the Adviser's current Form ADV (SEC
File No. 801-5995) filed under the Investment Advisers Act of 1940 and
incorporated herein by reference.
Item 29. Principal Underwriter
(a) Equity Planning also serves as the principal underwriter for the following
other registrants:
Phoenix Strategic Allocation Fund, Inc., Phoenix Series Fund, Phoenix
Multi-Sector Short Term Bond Fund, Phoenix Multi-Sector Fixed Income Fund,
Inc., Phoenix Multi-Portfolio Fund, Phoenix Investment Trust 97, Phoenix
California Tax Exempt Bonds, Inc., Phoenix Worldwide Opportunities Fund,
Phoenix Strategic Equity Series Fund, Phoenix Equity Series Fund,
Phoenix-Aberdeen Series Fund, Phoenix-Engemann Funds, Phoenix-Seneca
Funds, Phoenix Duff & Phelps Institutional Mutual Funds, Phoenix Home Life
Variable Universal Life Account, Phoenix Home Life Variable Accumulation
Account, PHL Variable Accumulation Account, Phoenix Life and Annuity
Variable Universal Life Account and PHL Variable Separate Account MVA1.
(b) Directors and executive officers of Phoenix Equity Planning Corporation
are as follows:
<TABLE>
<CAPTION>
Name and 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
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
Name and Position and Offices Position and Offices
Principal Address with Distributor with Registrant
- ----------------- -------------------- --------------------
<S> <C> <C>
Philip R. McLoughlin Director and President Trustee and President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Senior Vice Vice President
100 Bright Meadow Blvd. President, Chief Financial
P.O. Box 2200 Officer and Treasurer
Enfield, CT 06083-2200
John F. Sharry Executive Vice President, Executive Vice President
100 Bright Meadow Blvd. Retail Distribution
P.O. Box 2200
Enfield, CT 06083-2200
Leonard J. Saltiel Managing Director, Vice President
56 Prospect Street Operations and Service
P.O. Box 150480
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President Secretary
101 Munson Street
P.O. Box 810
Greenfield, MA 01302-0810
Nancy G. Curtiss Vice President and Treasurer, Treasurer
56 Prospect Street Fund Accounting
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
Jacqueline Porter Assistant Vice President, Assistant Treasurer
56 Prospect Street Financial Reporting
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an affiliated
person of the Registrant or an affiliated person of such affiliated person,
directly or indirectly, from the Registrant during the Registrant's last fiscal
year.
Item 30. Location of Accounts and Records
Persons maintaining physical possession of accounts, books and other
documents required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder include Registrant's
investment adviser, Phoenix Investment Counsel, Inc.; 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 Phoenix Investment
Counsel, Inc. is 56 Prospect Street, 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.
C-3
<PAGE>
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 21st day of August, 1998.
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 21st day of August, 1998:
<TABLE>
<CAPTION>
Signature Title
- ------------------------------- ----------------------
<S> <C>
- ---------------------------- Trustee
Robert Chesek*
- ---------------------------- Trustee
E. Virgil Conway*
/s/ Nancy G. Curtiss
- ---------------------------- Treasurer (principal
Nancy G. Curtiss financial and
accounting officer)
- ---------------------------- Trustee
Harry Dalzell-Payne*
- ---------------------------- Trustee
Francis E. Jeffries*
- ---------------------------- Trustee and President
Leroy Keith, Jr.*
/s/ Philip R. McLoughlin Trustee and President
- ---------------------------- (principal executive officer)
Philip R. McLoughlin
- ---------------------------- Trustee
Everett L. Morris*
- ---------------------------- Trustee
James M. Oates*
- ---------------------------- Trustee
Calvin J. Pedersen*
- ---------------------------- Trustee
Herbert Roth, Jr.*
Trustee
- ---------------------------- Trustee
Richard E. Segerson*
- ---------------------------- Trustee
Lowell P. Weicker, Jr.*
</TABLE>
By /s/ Philip R. McLoughlin
--------------------------
*Philip R. McLoughlin pursuant to powers of attorney previously filed.
S-1(c)
Exhibit 1.1
Declaration of Trust
<PAGE>
DECLARATION OF TRUST
OF
NATIONAL TOTAL INCOME FUND
Dated: June 25, 1986
THE DECLARATION OF TRUST of National Total Income Fund is made the 25th day
of June, 1986 by the parties signatory hereto, as trustees (such persons, so
long as they shall continue in office in accordance with the terms of this
Declaration of Trust, and all other persons who at the time in question have
been duly elected or appointed as trustees in accordance with the provisions of
this Declaration of Trust and are then in office, being hereinafter called the
"Trustees").
W I T N E S S E T H:
WHEREAS, the Trustees desire to form a trust fund under the law of
Massachusetts for the investment and reinvestment of funds contributed thereto;
and
WHEREAS, it is proposed that the beneficial interest in the trust assets be
divided into transferable shares of beneficial interest as hereinafter provided;
NOW, THEREFORE, the Trustees hereby declare that they will hold in trust
all money and property contributed to the trust fund to manage and dispose of
the same for the benefit of the holders from time to time of the shares of
beneficial interest issued hereunder and subject to the provisions, hereof, to
wit:
ARTICLE I
The Trust
1.1 Name. The name of the trust created hereby (the "Trust", which name
shall be deemed to include any series of the Trust, as the context requires)
shall be "National Total Income Fund", and so far as may be practicable the
Trustees shall conduct the Trust's activities, execute all documents and sue or
be sued under that name, which name (and the word "Trust" wherever hereinafter
used) shall refer to the Trustees
<PAGE>
as Trustees, and not individually, and shall not refer to the officers, agents,
employees or Shareholders of the Trust. Each Series of the Trust which shall be
established and designated by the Trustees pursuant to Section 6.9 shall conduct
its activities under such name as the Trustees shall determine and set forth in
the instrument establishing such Series. However, should the Trustees determine
that the use of the name of the Trust or any Series is not advisable, they may
select such other name for the Trust or the Series as they deem proper and the
Trust may hold its property and conduct its activities under such other name.
Any name change shall become effective upon the execution by a majority of the
then Trustees of an instrument setting forth the new name. Any such instrument
shall have the status of an amendment to this Declaration.
1.2. Definitions. As used in this Declaration, the following terms shall
have the following meanings:
The terms "Affiliated Person", "Assignment", "Commission", "Interested
Person", "Majority Shareholder Vote" (the 67% or more than 50% requirement of
the third sentence of Section 2(a)(42) of the 1940 Act, whichever may be
applicable) and "Principal Underwriter" shall have the meanings given them in
the 1940 Act, as amended from time to time.
"Declaration" shall mean this Declaration of Trust as amended from time to
time. References in this Declaration to "Declaration", "hereof", "herein" and
"hereunder" shall be deemed to refer to the Declaration rather than the article
or section in which such words appear.
"Fundamental Policies" shall mean the investment objectives and
restrictions set forth in the Prospectus and designated as fundamental policies
therein.
"Person" shall mean and include individuals corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
"Prospectus" shall mean the currently effective Prospectus and Statement of
Additional Information constituting parts of the Registration Statement of the
Trust under the Securities Act of 1933 as such Prospectus and Statement of
Additional Information may be amended or supplemented and filed with the
Securities and Exchange Commission from time to time.
"Series" shall mean any series designated pursuant to Section 6.9 hereof.
2
<PAGE>
"Shareholders" shall mean as of any particular time all holders of record
of outstanding Shares at such time.
"Shares" shall mean the equal proportionate transferable units of interest
into which the beneficial interest in the Trust shall be divided from time to
time and includes fractions of Shares as well as whole Shares.
"Trustees" shall mean the signatories to this Declaration of Trust, so long
as they shall continue in office in accordance with the terms hereof, and all
other persons who at the time in question have been duly elected or appointed
and have qualified as trustees, in accordance, with the provisions hereof and
are then in office; and reference in this Declaration of Trust to a Trustee or
Trustees shall refer to such person or persons in their capacity as trustees
hereunder.
"Trust Property" shall mean as of any particular time any and all property,
real or personal, tangible or intangible, which at such time is owned or held by
or for the account of the Trust or the Trustees.
The "1940 Act" refers to the Investment Company Act of 1940, as amended
from time to time.
ARTICLE II
Trustees
2.1. Number and Qualification. The number of Trustees shall be fixed from
time to time by written instrument signed by a majority of the Trustees then in
office, provided, however, that the number of Trustees shall in no event be less
than three or more than fifteen (except prior to the first public offering of
Shares of the Trust). Any vacancy created by an increase in Trustees may be
filled by the appointment of an individual having the qualifications described
in this Article made by a written instrument signed by a majority of the Trustee
then in office. Any such appointment shall not become effective, however, until
the individual named in the written instrument of appointment shall have
accepted in writing such appointment and agreed in writing to be bound by the
terms of this Declaration of Trust. No reduction in the number of Trustees shall
have the effect of removing any Trustee from office prior to the expiration of
his term. Whenever a vacancy in the number of Trustees shall occur, until such
vacancy is filled as provided in Section 2.4 hereof, the
3
<PAGE>
Trustees in office, regardless of their number, shall have all the powers
granted to the Trustees and shall discharge all the duties imposed upon the
Trustees by this Declaration of Trust. A Trustee shall be an individual at least
21 years of age who is not under legal disability. Trustees need not own Shares.
2.2. Term and Election. Each Trustee named herein, or elected or appointed
in accordance herewith, shall (except in the event of resignations or removals
or vacancies pursuant to Section 2.3 or 2.4 hereof) hold office during the
lifetime of this Trust and until its termination as hereinafter provided unless
such Trustee resigns or is removed as provided in Section 2.3 below, provided,
however, that the Trustees shall have the power to set and alter the terms of
office of the Trustees, and they may at any time lengthen or lessen their own
terms or make their terms of unlimited duration.
2.3. Resignation and Removal. Any Trustee may resign his trust (without
need for prior or subsequent accounting) by an instrument in writing signed by
him and delivered or mailed to the Chairman, if any, the President or the
Secretary and such resignation shall be effective upon such delivery, or at a
later date according to the terms of the instrument. Any of the Trustees may be
removed by the affirmative vote of the holders of two-thirds (2/3) of the Shares
or (provided the aggregate number of Trustees after such removal shall not be
less than the number required by Section 2.1 hereof) with cause by the action of
two-thirds of the remaining Trustees. Upon the resignation or removal of a
Trustee, or his otherwise ceasing to be a Trustee, he shall execute and deliver
such documents as the remaining Trustees shall require for the purpose of
conveying to the Trust or the remaining Trustees any Trust Property held in the
name of the resigning or removed Trustee. Upon the incapacity or death of any
Trustee, his legal representative shall execute and deliver on his behalf such
documents as the remaining Trustees shall require as provided in the preceding
sentence.
2.4. Vacancies. The term of office of a Trustee shall terminate and a
vacancy shall occur in the event of the death, resignation, bankruptcy,
adjudicated incompetence or other incapacity to perform the duties of the
office, or removal, of a Trustee. No such vacancy shall operate to annul this
Declaration of Trust or to revoke any existing agency created pursuant to the
terms of this Declaration of Trust. In the case of a vacancy, the holders of at
least a majority of the Shares entitled to vote, acting at any meeting of
Shareholders held in accordance with Section 10.1 hereof, or, to the extent
4
<PAGE>
permitted by the 1940 Act, a majority of the Trustees continuing in office
acting by written instrument or instruments, may fill such vacancy, and any
Trustee so elected by the Trustees shall hold office as provided in this
Declaration.
2.5. Meetings. Meetings of the Trustees shall be held from time to time
upon the call of the Chairman, if any, the President, the Secretary, an
Assistant Secretary or any two Trustees. Regular meetings of the Trustees may be
held without call or notice at a time and place fixed by the By-Laws or by
resolution of the Trustees. Notice of any other meeting shall be mailed or
otherwise given not less than 24 hours before the meeting but may be waived in
writing by any Trustee either before or after such meeting. The attendance of a
Trustee at a meeting shall constitute a waiver of notice of such meeting except
where a Trustee attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting has not been lawfully
called or convened. The Trustees may act with or without a meeting. A quorum for
all meetings of the Trustees shall be a majority of the Trustees. Unless
provided otherwise in this Declaration of Trust, any action of the Trustees may
be taken at a meeting by vote of a majority of the Trustees present (a quorum
being present) or without a meeting by written consents of a majority of the
Trustees.
Any committee of the Trustees, including an executive committee, if any,
may act with or without a meeting. A quorum for all meetings of any such
committee shall be a majority of the members thereof. Unless provided otherwise
in this Declaration, any action of any such committee may be taken at a meeting
by vote of a majority of the members present (a quorum being present) or without
a meeting by written consent of a majority of the members.
With respect to actions of the Trustees and any committee of the Trustees,
Trustees who are Interested Persons of the Trust within the meaning of Section
1.2 hereof or otherwise interested in any action to be taken may be counted for
quorum purposes under this Section and shall be entitled to vote to the extent
permitted by the 1940 Act.
All or any one or more Trustees may participate in a meeting of the
Trustees or any committee thereof by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and participation in a meeting pursuant to such
5
<PAGE>
communications system shall constitute presence in person at such meeting.
2.6. Officers. The Trustees shall annually elect a President, a Secretary
and a Treasurer and may elect a Chairman. The Trustees may elect or appoint or
authorize the Chairman, if any, or President to appoint such other officers or
agents with such powers as the Trustees may deem to be advisable. The Chairman
and President shall be and the Secretary and Treasurer may, but need not, be a
Trustee.
2.7. By-Laws. The Trustees may adopt and from time to time amend or repeal
the By-Laws for the conduct of the business of the Trust.
ARTICLE III
Powers of Trustees
3.1. General. The Trustees shall have exclusive and absolute control over
the Trust Property and over the business of the Trust to the same extent as if
the Trustees were the sole owners of the Trust Property and business in their
own right, but with such powers of delegation as may be permitted by this
Declaration. The Trustees may perform such acts as in their sole discretion are
proper for conducting the business of the Trust. The enumeration of any specific
power herein shall not be construed as limiting the aforesaid power. Such powers
of the Trustees may be exercised without order of or resort to any court.
3.2. Investments. The Trustees shall have power, subject to the Fundamental
Policies, to:
(a) conduct, operate and carry on the business of an investment
company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute, lend
or otherwise deal in or dispose of securities including common and
preferred stocks, warrants, bonds, debentures, time notes and all other
evidences of indebtedness, negotiable or non-negotiable instruments,
obligations, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, reverse repurchase agreements, convertible
securities, commodities, commodity futures contracts and
6
<PAGE>
related options, currencies, currency futures, forward contracts, options
and other securities, including, without limitation, those issued,
guaranteed or sponsored by any state, territory or possession of the United
States and the District of Columbia and their political subdivisions,
agencies and instrumentalities, or by the United States Government or its
agencies or instrumentalities, or international instrumentalities, or by
any bank, savings institution, corporation or other business entity
organized under the laws of the United States and, to the extent provided
in the Prospectus and not prohibited by the Fundamental Policies, organized
under foreign laws; or in "when issued" contracts for any such securities,
or retain Trust assets in cash and from time to time change the investments
of the assets of the Trust; and to exercise any and all rights, powers and
privileges of ownership or interest in respect of any and all such
instruments of every kind and description, including, without limitation,
the right to consent and otherwise act with respect thereto, with power to
designate one or more persons, firms, associations, or corporations to
exercise any of said rights, powers and privileges in respect of any of
said instruments; and the Trustees shall be deemed to have the foregoing
powers with respect to any additional securities in which the Trust may
invest should the investment policies set forth in the Prospectus or the
Fundamental Policies be amended.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
3.3. Legal Title. Legal title to all the Trust Property shall be vested in
the Trustees as joint tenants except that the Trustees shall have the power to
cause legal title to any Trust Property to be held by or in the name of one or
more of the Trustees, or in the name of the Trust, or in the name of any other
Person as nominee, on such terms as the Trustees may determine, provided that
the interest of the Trust therein is appropriately protected.
The right, title and interest of the Trustees in the Trust Property shall
vest automatically in each person who may hereafter become a Trustee upon his
due election and qualification. Upon the resignation, removal or death of a
Trustee, he shall automatically cease to have any right, title or interest in
any of the Trust Property, and the right, title
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and interest of such Trustee in the Trust Property shall vest automatically in
the remaining Trustees. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered.
3.4. Issuance and Repurchase of Securities. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
reissue, dispose of, transfer, and otherwise deal in, Shares, including shares
in fractional denominations, and, subject to the more detailed provisions set
forth in Articles VIII and IX, to apply to any such repurchase, redemption,
retirement, cancellation or acquisition of Shares any funds or property of the
Trust whether capital or surplus or otherwise, to the full extent now or
hereafter permitted by the laws of the Commonwealth of Massachusetts governing
business corporations.
3.5. Borrow Money. Subject to the Fundamental Policies, the Trustees shall
have power to borrow money or otherwise obtain credit and to secure the same by
mortgaging, pledging or otherwise subjecting as security the assets of the
Trust, including the lending of portfolio securities, and to endorse, guarantee,
or undertake the performance of any obligation, contract or engagement of any
other person, firm, association or corporation.
3.6. Delegation; Committees. The Trustees shall have power, consistent with
their continuing exclusive authority over the management of the Trust and the
Trust Property, to delegate from time to time to such of their number or to
officers, employees or agents of the Trust the doing of such things and the
execution of such instruments either in the name of the Trust or the names of
the Trustees or otherwise as the Trustees may deem expedient, to the same extent
as such delegation is permitted to directors of a Massachusetts business
corporation and is permitted by the 1940 Act.
3.7. Collection and Payment. The Trustees shall have power to collect all
property due to the Trust; and to pay all claims, including taxes, against the
Trust Property; to prosecute, defend, compromise or abandon any claims relating
to the Trust Property; to foreclose any security interest securing any
obligations, by virtue of which any property is owed to the Trust; and to enter
into releases, agreements and other instruments.
3.8. Expenses. The Trustees shall have power to incur and pay any expenses
which in the opinion of the Trustees are
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necessary or incidental to carry out any of the purposes of this Declaration,
and to pay reasonable compensation from the funds of the Trust to themselves as
Trustees. The Trustees shall fix the compensation of all officers, employees and
Trustees. The Trustees may pay themselves such compensation for special
services, including legal, underwriting, syndicating and brokerage services, as
they in good faith may deem reasonable, and reimbursement for expenses
reasonably incurred by themselves on behalf of the Trust.
3.9. Miscellaneous Powers. The Trustees shall have the power to: (a) employ
or contract with such Persons as the Trustees may deem desirable for the
transaction of the business of the Trust and terminate such employees or
contractual relationships as they consider appropriate; (b) enter into joint
ventures, partnerships and any other combinations or associations; (c) purchase,
and pay for out of Trust Property, insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers, distributors,
selected dealers or independent contractors of the Trust against all claims
arising by reason of holding any such position or by reason of any action taken
or omitted by any such Person in such capacity, whether or not constituting
negligence or whether or not the Trust would have the power to indemnify such
Person against such liability; (d) establish pension's profit-sharing, share
purchase, and other retirement, incentive and benefit plans for any Trustees,
officers, employees and agents of the Trust; (e) make donations, irrespective of
benefit to the Trust, for charitable, religious, educational, scientific, civic
or similar purposes; (f) to the extent permitted by law, indemnify any Person
with whom the Trust has dealings, including the Trust's investment adviser,
distributor and selected dealers, to such extent as the Trustees shall
determine; (g) guarantee indebtedness or contractual obligations of others; (h)
determine and change the fiscal year of the Trust and the method in which its
accounts shall be kept; and (i) adopt a seal for the Trust, but the absence of
such seal shall not impair the validity of any instrument executed on behalf of
the Trust.
3.10. Further Powers. The Trustees shall have power to conduct the business
of the Trust and carry on its operations in any and all of its branches and
maintain offices both within and without the Commonwealth of Massachusetts, in
any and all states of the United States of America, in the District of Columbia,
and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of
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foreign governments, and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration, the presumption shall be in favor of a grant of power to the
Trustees. The Trustees will not be required to obtain any court order to deal
with Trust Property.
3.11. Principal Transactions. Except in transactions permitted by the 1940
Act or any rule or regulation thereunder, or any order of exemption issued by
the Securities and Exchange Commission, or effected to implement the provisions
of any agreement to which the Trust is a party, the Trustees shall not, on
behalf of the Trust, buy any securities (other than Shares) from or sell any
securities (other than Shares) to, or lend any assets of the Trust to, any
Trustee or officer of the Trust or any firm of which any such Trustee or officer
is a member acting as principal, or have any such dealings with any investment
adviser, distributor or transfer agent or with any Affiliated Person of such
Person; but the Trust may employ any such Person, or firm or company in which
such Person is an Interested Person, as broker, legal counsel, registrar,
transfer agent, dividend disbursing agent or custodian upon customary terms.
3.12. Litigation. The Trustees shall have the Power to engage in and to
prosecute, defend, compromise, abandon, or adjust, by arbitration, or otherwise,
any actions, suits, proceedings, disputes, claims and demands relating to the
Trust, and out of the assets of the Trust to pay or to satisfy any debts, claims
or expenses incurred in connection therewith, including those of litigation, and
such power shall include, without limitation, the power of the Trustees or any
appropriate committee thereof, in the exercise of their or its good faith
business judgment, to dismiss any action, suit, proceeding, dispute, claim, or
demand, derivative or otherwise, brought by any person, including a Shareholder
in its own name or the name of the Trust, whether or not the Trust or any of the
Trustees may be named individually therein or the subject matter arises by
reason of business for or on behalf of the Trust.
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ARTICLE IV
Management and Distribution Arrangements
4.1. Management Arrangements. Subject to a Majority Shareholder Vote of the
applicable Series the Trustees may in their discretion from time to time enter
into advisory, administration or management contracts whereby the other party to
such contract shall undertake to furnish the Trustees such advisory,
administrative and management services as the Trustees shall from time to time
consider desirable with respect to such Series and all upon such terms and
conditions as the Trustees may in their discretion determine. Notwithstanding
any provisions of this Declaration of Trust, the Trustees may authorize any
adviser, administrator or manager (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect purchases,
sales, loans or exchanges of portfolio securities of the Trust on behalf of the
Trustees or may authorize any officer, employee or Trustee to effect such
purchases, sales, loans or exchanges pursuant to recommendations of any such
adviser, administrator or manager (and all without further action by the
Trustees). Any such purchases, sales, loans and exchanges shall be deemed to
have been authorized by all of the Trustees.
4.2. Distribution Arrangements. The Trustees may in their discretion from
time to time enter into a contract, providing for the sale of the Shares of the
Trust or any Series to net the Trust not less than the par value per share,
whereby the Trust may either agree to sell the Shares to the other party to the
contract or appoint such other party its sales agent for such Shares. In either
case, the contract shall be on such terms and conditions as the Trustees may in
their discretion determine not inconsistent with the provisions of this Article
IV or the By-Laws; and such contract may also provide for the repurchase or sale
of Shares by such other party as principal or as agent of the Trust and may
provide that such other party may enter into selected dealer agreements with
registered securities dealers to further the purpose of the distribution or
repurchase of the Shares.
4.3. Parties to Contract. Any contract of the character described in
Sections 4.1 and 4.2 of this Article IV or in Article VII hereof may be entered
into with any corporation, firm, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, Trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or
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rendered voidable by reason of the existence of any such relationship, nor shall
any person holding such relationship be liable merely by reason of such
relationship for any loss or expense to the Trust under or by reason of said
contract or accountable for any profit realized directly or indirectly
therefrom, provided that the contract when entered into was reasonable and fair
and not inconsistent with the provisions of this Article IV or the By-Laws. The
same person (including a firm, corporation, trust, or association, may be the
other party to contracts entered into pursuant to Sections 4.1 and 4.2 above or
Article VII, and any individual may be financially interested or otherwise
affiliated with persons who are parties to any or all of the contracts mentioned
in this Section 4.3.
4.4. Provisions and Amendments. Any contract entered into pursuant to
Sections 4.1 and 4.2 of this Article IV shall be consistent with and subject to
the requirements of Section 15 of the 1940 Act with respect to its continuance
in effect, its termination, and the method of authorization and approval of such
contract or renewal thereof, and no amendment to any contract entered into
pursuant to Section 4.1 shall be effective unless assented to by a Majority
Shareholder Vote.
ARTICLE V
Limitations of Liability of Shareholders,
Trustees and Others
5.1. No Personal Liability of Shareholders, Trustees, etc. No Shareholder
shall be subject to any personal liability whatsoever to any Person in
connection with Trust Property or the acts, obligations or affairs of the Trust.
No Trustee, officer, employee or agent of the Trust shall be subject to any
personal liability whatsoever to any Person, other than the Trust or its
Shareholders, in connection with Trust Property or the affairs of the Trust,
save only that arising from his bad faith, willful misfeasance, gross negligence
or reckless disregard of his duty to such Person; and all such Persons shall
look solely to the Trust Property for satisfaction of claims of any nature
arising in connection with the affairs of the Trust. If any Shareholder,
Trustee, officer, employee, or agent, as such, of the Trust, is made a party to
any suit or proceeding to enforce any such liability, he shall not on account
thereof be held to any personal liability. The Trust shall indemnify and hold
each Shareholder harmless from and against all claims and liabilities, to which
such Shareholder
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may become subject by reason of his being or having been a Shareholder, and
shall reimburse such Shareholder for all legal and other expenses reasonably
incurred by him in connection with any such claim or liability. The rights
accruing to a Shareholder under this Section 5.1 shall not exclude any other
right to which such Shareholder may be lawfully entitled, nor shall anything
herein contained restrict the right of the Trust to indemnify or reimburse a
Shareholder in any appropriate situation even though not specifically provided
herein.
5.2. Non-Liability of Trustees, etc. No Trustee, officer, employee or agent
of the Trust shall be liable to the Trust, its Shareholders, or to any
Shareholder, Trustee, officer, employee, or agent thereof for any action or
failure to act (including, without limitation, the failure to compel in any way
any former or acting Trustee to redress any breach of trust) except for his own
bad faith, willful misfeasance, gross negligence or reckless disregard of his
duties.
5.3. Mandatory Indemnification. The Trust shall indemnify each of its
Trustees, officers, employees, and agents (including persons who serve at its
request as directors, officers or trustees of another organization in which it
has any interest, as a shareholder, creditor or otherwise) against all
liabilities and expenses (including amounts paid in satisfaction of judgments,
in compromise, as fines and penalties, and as counsel fees) reasonably incurred
by him in connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, in which he may be involved or with
which he may be threatened, while in office or thereafter, by reason of his
being or having been such a trustee, officer, employee or agent, except with
respect to any matter as to which he shall have been adjudicated to have acted
in bad faith, willful misfeasance, gross negligence or reckless disregard of his
duties; provided, however, that as to any matter disposed of by a compromise
payment by such person, pursuant to a consent decree or otherwise, no
indemnification either for said payment or for any other expenses shall be
provided unless the Trust shall have received a written opinion from independent
legal counsel approved by the Trustees to the effect that it either the matter
of willful misfeasance, gross negligence or reckless disregard of duty, or the
matter of good faith and reasonable belief as to the best interests of the
Trust, had been adjudicated, it would have been adjudicated in favor of such
person. The rights accruing to any Person under these provisions shall not
exclude any other right to which he may be lawfully entitled; provided that no
Person may satisfy any right of indemnity or reimbursement granted herein or in
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Section 5.1 or to which he may be otherwise entitled except out of the property
of the Trust, and no Shareholder shall be personally liable to any Person with
respect to any claim for indemnity or reimbursement or otherwise. The Trustees
may make advance payments in connection with indemnification under this Section
5.3, provided that the indemnified person shall have given a written undertaking
to reimburse the Trust in the event it is subsequently determined that he is not
entitled to such indemnification.
5.4. No Bond Required of Trustees. No Trustee shall, as such, be obligated
to give any bond or surety or other security for the performance of any of his
duties hereunder.
5.5. No Duty of Investigation; Notice in Trust Instruments, etc. No
purchaser, lender, transfer agent or other person dealing with the Trustees or
any officer, employee or agent of the Trust shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by the Trustees
or by said officer, employee or agent or be liable for the application of money
or property paid, loaned, or delivered to or on the order of the Trustees or of
said officer, employee or agent. Every obligation, contract, instrument,
certificate, Share, other securities of the Trust or undertaking, and every
other act or thing whatsoever executed in connection with the Trust shall be
conclusively taken to have been executed or done by the executors thereof only
in their capacity as officers, employees or agents of the Trust. Every written
obligation, contract, instrument, certificate, Share, other security of the
Trust or undertaking made or issued by the Trustees or by any officers,
employees or agents of the Trust, in their capacity as such, shall contain an
appropriate recital to the effect that the Shareholders, Trustees, officers,
employees and agents of the Trust shall not personally be bound by or liable
thereunder, nor shall resort be had to their private property for the
satisfaction of any obligation or claim thereunder, and appropriate references
shall be made therein to the Declaration of Trust, and may contain any further
recital which they may deem appropriate, but the omission of such recital shall
not operate to impose personal liability on any of the Trustees, Shareholders,
officers, employees or agents of the Trust. The Trustees may maintain insurance
for the protection of the Trust Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate to cover
possible tort liability, and such other insurance as the Trustees in their sole
judgment shall deem advisable.
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5.6. Reliance on Experts, etc. Each Trustee and officer or employee of the
Trust shall, in the performance of his duties, be fully and completely justified
and protected with regard to any act or any failure to act resulting from
reliance in good faith upon the books of account or other records of the Trust,
upon an opinion of counsel, or upon reports made to the Trust by any of its
officers or employees or by any investment adviser, distributor, selected
dealer, accountant, appraiser or other expert or consultant selected with
reasonable care by the Trustees, officers or employees of the Trust, regardless
of whether such counsel or expert may also be a Trustee.
ARTICLE VI
Shares of Beneficial Interest
6.1. Beneficial Interest. The interest of the beneficiaries hereunder shall
be divided into transferable shares of beneficial interest, all of one class,
with par value $0.0001 per share. The number of such shares of beneficial
interest authorized hereunder is unlimited. The Trustees may divide or combine
the Shares into a greater or lesser number of shares without thereby changing
the proportionate interests in the Trust. All Shares issued hereunder,
including, without limitation, Shares issued in connection with a dividend in
Shares or a split of Shares, shall be fully paid and nonassessable.
6.2. Rights of Shareholders. The ownership of the Trust Property of every
description and the right to conduct any business hereinbefore described are
vested exclusively in the Trustees, and the Shareholders shall have no interest
therein other than the beneficial interest conferred by their Shares, and they
shall have no right to call for any partition or division of any property,
profits, rights or interests of the Trust nor can they be called upon to share
or assume any losses of the Trust or suffer an assessment of any kind by virtue
of their ownership of Shares. The Shares shall be personal property giving only
the rights in this Declaration specifically set forth. The Shares shall not
entitle the holder to preference, preemptive, appraisal, conversion or exchange
rights (except for rights of appraisal specified in Section 11.4 and as the
Trustees may determine with respect to any series of Shares).
6.3. Trust Only. It is the intention of the Trustees to create only the
relationship of Trustee and beneficiary
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between the Trustees and each Shareholder from time to time. It is not the
intention of the Trustees to create a general partnership, limited partnership,
joint stock association, corporation, bailment or any form of legal relationship
other than a trust. Nothing in this Declaration of Trust shall be construed to
make the Shareholders, either by themselves or with the Trustees, partners or
members of a joint stock association.
6.4. Issuance of Shares. The Trustees, in their discretion, may from time
to time without a vote of the Shareholders issue Shares, in addition to the then
issued and outstanding Shares and Shares held in the treasury, to such party or
parties and for such amount not less than par value and type of consideration,
including cash or property, at such time or times (including, without
limitation, each business day in accordance with the maintenance of a constant
net asset value per share as set forth in Section 9.3 hereof), and on such terms
as the Trustees may deem best, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection with the
assumption of, liabilities) and businesses. In connection with any issuance of
Shares, the Trustees may issue fractional Shares. The Trustees may from time to
time divide or combine the Shares into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Trust. Reductions
in the number of outstanding Shares may be made pursuant to the constant net
asset value per share formula set forth in Section 9.3. Contributions to the
Trust may be accepted for, and Shares shall be redeemed as, whole Shares and/or
1/1,000ths of a Share or multiples thereof.
6.5. Register of Shares. A register shall be kept at the Trust or a
transfer agent duly appointed by the Trustees under the direction of the
Trustees which shall contain the names and addresses of the Shareholders and the
number of Shares held by them respectively and a record of all transfers
thereof. Such register shall be conclusive as to who are the holders of the
Shares and who shall be entitled to receive dividends or distributions or
otherwise to exercise or enjoy the rights of Shareholders. No Shareholder shall
be entitled to receive payment of any dividend or distribution, nor to have
notice given to him as herein provided, until he has given his address to a
transfer agent or such other officer or agent of the Trustees as shall keep the
said register for entry thereon. It is not contemplated that certificates will
be issued for the Shares; however, the Trustees, in their discretion, may
authorize the issuance of share certificates
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and promulgate appropriate rules and regulations as to their use.
6.6. Transfer Agent and Registrar. The Trustees shall have power to employ
a transfer agent or transfer agents, and a registrar or registrars. The transfer
agent or transfer agents may keep the said register and record therein the
original issues and transfers, if any, of the said Shares. Any such transfer
agent and registrar shall perform the duties usually performed by transfer
agents and registrars of certificates stock in a corporation, except as modified
by the Trustees.
6.7. Transfer of Shares. Shares shall be transferable on the records of the
Trust only by the record holder thereof or by his agent thereto duly authorized
in writing, upon delivery to the Trustees or a transfer agent of the Trust of a
duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery the transfer shall be recorded on the
register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereof and
neither the Trustees nor any transfer agent or registrar nor any officer,
employee or agent of the Trust shall be affected by any notice of the proposed
transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or a transfer
agent of the Trust, but until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereof and
neither the Trustees nor any transfer agent or registrar nor any officer or
agent of the Trust shall be affected by any notice of such death, bankruptcy or
incompetence, or other operation of law, except as may otherwise be provided by
the laws of the Commonwealth of Massachusetts.
6.8. Treasury Shares. Shares held in the treasury shall, until reissued,
not confer any voting rights on the Trustees, nor shall such Shares be entitled
to any dividends or other distributions declared with respect to the Shares.
6.9. Series Designation. The Trustees, in their discretion, may authorize
the division of Shares into two or
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more Series, each series relating to a separate portfolio of investments. The
different Series shall be established and designated, and the variations in the
relative rights and preferences as between the different series shall be fixed
and determined, by the Trustees; provided, that all Shares shall be identical
except that there may be variations so fixed and determined between different
series as to investment objective, purchase price, right of redemption, special
and relative rights as to dividends and on liquidation conversion rights, and
conditions under which the several series shall have separate voting rights. All
references to Shares in this Declaration shall be deemed to be shares of any or
all series as the context may require.
If the Trustees shall divide the Shares of the Trust into two or more
Series, the following provisions shall be applicable:
(a) The number of authorized Shares and the number of Shares of each
Series that may be issued shall be unlimited. The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and
reacquired of any series into one or more Series that may be established
and designated from time to time. The Trustees may hold as treasury shares
(of the same or some other Series), reissue for such consideration and on
such terms as they may determine, or cancel any Shares of any Series
reacquired by the Trust at their discretion from time to time.
(b) The power of the Trustees to invest and reinvest the Trust
Property shall be governed by Section 3.2 of this Declaration with respect
to any one or more Series which represents the interests in the assets of
the Trust immediately prior to the establishment of two or more Series and
the powers of the Trustees to invest and reinvest assets applicable to any
other Series shall be as set forth in the instrument of the Trustees
establishing such Series which is hereinafter described.
(c) All consideration received by the Trust for the issued sale of
Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series for all purposes, subject only to the
rights of creditors and
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except as may otherwise be required by applicable tax laws, and shall be so
recorded upon the books of account of the Trust. In the event that there
are any assets, income, earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as belonging to any particular
Series, the Trustees shall allocate them among any one or more of the
Series established and designated from time to time in such manner and on
such basis as they, in their sole discretion, deem fair and equitable. Each
such allocation by the Trustees shall be conclusive and binding upon the
shareholders of all series for all purposes.
(d) The assets belonging to each particular Series shall be charged
with the liabilities of the Trust in respect of that Series and all
expenses, costs, charges and reserves attributable to that series, and any
general liabilities, expenses, costs, charges or reserves of the Trust
which are not readily identifiable as belonging to any particular Series
shall be allocated and charged by the Trustees to and among any one or more
of the series established and designated from time to time in such manner
and on such basis as the Trustees in their sole discretion deem fair and
equitable. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the holders
of all Series for all purposes. The Trustees shall have full discretion, to
the extent not inconsistent with the 1940 Act, to determine which items are
capital; and each such determination and allocation shall be conclusive and
binding upon the Shareholders.
(e) The power of the Trustees to pay dividends and make distributions
with respect to any one or more Series shall be governed by Section 9.2 of
this Trust. Dividends and distributions on Shares of a particular Series
may be paid with such frequency as the Trustees may determine, which may be
daily or otherwise, pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Trustees may determine, to
the holders of Shares of that Series, from such of the income and capital
gains, accrued or realized, from the assets belonging to that Series, as
the Trustees may determine, after providing for actual and accrued
liabilities belonging to that Series. All dividends and distributions on
Shares of a particular Series shall be distributed pro rata to the holders
of that Series in proportion to the number of Shares of that Series held by
such holders at the date and time of record established for the payment of
such dividends or distributions.
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The establishment and designation of any Series of Shares shall be
effective upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preference of such series, or as otherwise provided in such instrument. At any
time that there are no Shares outstanding of any particular Series previously
established and designated, the Trustees may by an instrument executed by a
majority of their number abolish that Series and the establishment and
designation thereof. Each instrument referred to in this paragraph shall have
the status of an amendment to this Declaration.
6.10. Notices. Any and all notices to which any Shareholder hereunder may
be entitled and any and all communications shall be deemed duly served or given
if mailed, postage prepaid, addressed to any Shareholder of record at this last
known address as recorded on the register of the Trust.
ARTICLE VII
Custodian
7.1. Appointment and Duties. The Trustees shall at all times employ a
custodian or custodians, meeting the qualifications for custodians contained in
the 1940 Act, as custodian with authority as its agent, but subject to such
restrictions, limitations and other requirements, if any, as may be contained in
the By-Laws of the Trust and the 1940 Act:
(1) to hold the securities owned by the Trust, or any Series, and
deliver the same upon written order;
(2) to receive and receipt for any moneys due to the Trust, or any
Series, and deposit the same in its own banking department or elsewhere as
the Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
(4) if authorized by the Trustees, to keep the books and accounts of
the Trust, or any Series, and furnish clerical and accounting services; and
(5) if authorized to do so by the Trustees, to compute the net income
of the Trust, or any Series;
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all upon such basis of compensation as may be agreed upon between the
Trustees and the custodian. If so directed by a Majority Shareholder Vote
of the Series, the custodian shall deliver and pay over all property of the
Trust held by it with respect to the Series as specified in such vote.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall meet the qualifications for custodians
contained in the 1940 Act.
7.2. Central Certificate System. Subject to such rules, regulations and
orders as the Commission may adopt, the Trustees may direct the custodian to
deposit all or any part of the securities owned by the Trust in a system for the
central handling of securities established by a national securities exchange or
a national securities association registered with the Commission under the
Securities Exchange Act of 1934, or such other person as may be permitted by the
Commission, or otherwise in accordance with the 1940 Act and the rules and
regulations promulgated thereunder, pursuant to which system all securities of
any particular class or series of any issuer deposited within the system are
treated as fungible and may be transferred or pledged by bookkeeping entry
without physical delivery of such securities, provided that all such deposits
shall be subject to withdrawal only upon the order of the Trust.
ARTICLE VIII
Redemption
8.1. Redemptions. All outstanding Shares of any Series may be redeemed at
the option of the holders thereof, upon and subject to the terms and conditions
provided in this Article VIII. The Trust shall, upon application of any
Shareholder or pursuant to authorization from any Shareholder, redeem or
repurchase from such Shareholder outstanding Shares with respect to the
applicable Series for an amount per share determined by the application of a
formula adopted with respect to the applicable Series for such purpose by
resolution of the Trustees (which formula shall be consistent with the 1940 Act,
and the rules and regulations promulgated thereunder); provided that (a) such
amount per share shall not exceed the cash equivalent of the proportionate
interest of each share in the
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assets of the Series of the Trust at the time of the purchase or redemption and
(b) if so authorized by the Trustees, the Trust may, at any time and from time
to time, charge fees for effecting such redemption, at such rates as the
Trustees may establish, as and to the extent permitted under the 1940 Act, and
the rules and regulations promulgated thereunder, and may, at any time and from
time to time, pursuant to such Act and such rules and regulations, suspend such
right of redemption. The procedures for effecting redemption shall be as set
forth in the Prospectus from time to time. Payment will be made in such manner
as described in the Prospectus.
8.2. Redemption of Shares; Disclosure of Holding. If the Trustees shall, at
any time and in good faith, be of the opinion that direct or indirect ownership
of Shares or other securities of the Trust has or may become concentrated in any
person to an extent which would disqualify the Trust as a regulated investment
company under the Internal Revenue Code, then the Trustees shall have the power
by lot or other means deemed equitable by them (i) to call for redemption a
number, or principal amount, of Shares or other securities of the Trust
sufficient, in the opinion of the Trustees, to maintain or bring the direct or
indirect ownership of Shares or other securities of the Trust into conformity
with the requirements for such qualification and (ii) to refuse to transfer or
issue Shares or other securities of the Trust to any Person whose acquisition of
the Shares or other securities of the Trust in question would in the opinion of
the Trustees result in such disqualification. The redemption shall be effected
at a redemption price determined in accordance with Section 8.1.
The holders of Shares or other securities of the Trust shall upon demand
disclose to the Trustees in writing such information with respect to direct and
indirect ownership of Shares or other securities of the Trust as the Trustees
deem necessary to comply with the provisions of the Internal Revenue Code, or to
comply with the requirements of any other taxing authority.
8.3. Redemptions Pursuant to Constant Net Asset Value Formula. The Trust
may also reduce the number of outstanding Shares pursuant to the provisions of
Section 9.3.
8.4. Redemptions of Accounts of Less than $200. Due to the relatively high
cost of maintaining investment accounts of less than $200, the Trustees shall
have the power to redeem shares at a redemption price determined in accordance
with Section 8.1 if at any time the total investment in such account
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does not have a value of at least $200, or such lower amount as the Board of
Trustees may determine; provided, however, that the Trustees may not exercise
such power with respect to Shares if the Prospectus does not describe such
power. In the event the Trustees determine to exercise their power to redeem
Shares provided in this Section 8.4., shareholders shall be notified that the
value of their account is less than $200 and allowed 60 days to make an
additional investment before redemption is processed.
ARTICLE IX
Determination of Net Asset Value,
Net Income and Distributions
9.1. Net Asset Value. The net asset value of each outstanding Share of the
Trust shall be determined at such time or times on such days as the Trustees may
determine, in accordance with the 1940 Act. The method of determination of net
asset value shall be determined by the Trustees and shall be as set forth in the
Prospectus. The power and duty to make the daily calculations may be delegated
by the Trustees to the adviser, administrator, manager, custodian, transfer
agent or such other person as the Trustees may determine. The Trustees may
suspend the daily determination of net asset value to the extent permitted by
the 1940 Act.
9.2. Distributions to Shareholders. The Trustees shall from time to time
distribute ratably among the Shareholders of any Series such proportion of the
net profits, surplus (including paid-in surplus), capital, or assets, held by
the Trustees with respect to such Series as they may deem proper. Such
distribution may be made in cash or property (including without limitation any
type of obligations of the Trust or any assets thereof), and the Trustees may
distribute ratably among the Shareholders of any Series additional Shares of the
applicable Series issuable hereunder in such manner, at such times, and on such
terms as the Trustees may deem proper. Such distributions may be among the
Shareholders of record at the time of declaring a distribution or among the
Shareholders of record at such later date as the Trustees shall determine. The
Trustees may always retain from the net profits such amount as they may deem
necessary to pay the debts or expenses of the Trust or to meet obligations of
the Trust, or as they may deem desirable to use in the conduct of its affairs or
to retain for future requirements or extensions of the business. The Trustees
may adopt and offer to Shareholders of any Series such
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dividend reinvestment plan, cash dividend payout plans or related plans as the
Trustees shall deem appropriate for such Series.
Inasmuch as the computation of net income and gains for Federal income tax
purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes.
9.3. Constant Net Asset Value; Reduction of Outstanding Shares. The
Trustees shall have the power to determine the net income of any Series of the
Trust once on each day the net asset value of the Series is determined as
provided in Section 9.1 and at each such determination to declare such net
income as dividends with the result that the net asset value per share of the
Series shall remain at a constant dollar value. The determination of net income
and the resultant declaration of dividends shall be as set forth in the
Prospectus. In the event the Trustees determine net asset value of a Series as
described herein, fluctuations in value of shares of the Series will be
reflected in the number of outstanding Shares of the Series in each
shareholder's account. It is expected that the Series will have a positive net
income at the time of each determination. If for any reason the net income of
the Series is a negative amount, the Trust may offset such amount against
dividends accrued in the account of each shareholder of the Series. If and to
the extent such negative amount exceeds such accrued dividends, the Trustees
shall have authority to reduce the number of outstanding Shares of the Series.
Such reduction will be effected by having each Shareholder of the Series
proportionately contribute to the Series' capital the necessary Shares of the
Series that represent the amount of the excess upon such determination. Each
Shareholder of the Series will be deemed to have agreed to such contribution in
these circumstances by his investment in the Series. This procedure will permit
the net asset value per share of the Series to be maintained at a constant
dollar value per share.
The Trustees, by resolution, may discontinue or amend the practice of
maintaining the net asset value per share of any Series at a constant dollar
amount at any time and such modification shall be evidenced by appropriate
changes in the Prospectus.
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9.4. Power to Modify Foregoing Procedures. Notwithstanding any of the
foregoing provisions of this Article IX, the Trustees may prescribe, in their
absolute discretion, such other bases and times for determining the per share
net asset value of the Trust's Shares or net income, or the declaration and
payment of dividends and distributions as they may deem necessary or desirable
or to enable the Trust to comply with any provision of the 1940 Act, or any rule
or regulation thereunder, including any rule or regulation adopted pursuant to
Section 22 of the 1940 Act by the Commission or any securities association
registered under the Securities Exchange Act of 1934, or any order of exemption
issued by said Commission, all as in effect now or hereafter amended or
modified.
ARTICLE X
Shareholders
10.1. Meetings of Shareholders. Meetings of Shareholders may be called at
any time by a majority of the Trustees and shall be called by any Trustee upon
written request of Shareholders of any Series holding in the aggregate not less
than 10% of the outstanding Shares of such Series having voting rights, such
request specifying the purpose or purposes for which such meeting is to be
called. Any such meeting shall be held within or without the Commonwealth of
Massachusetts on such day and at such time as the Trustees may designate. The
holders of one-third of the outstanding Shares present in person or by proxy
shall constitute a quorum for the transaction of any business, except as may
otherwise be required by the 1940 Act or other applicable law or by this
Declaration or the By-Laws of the Trust. If a quorum is present at a meeting,
the affirmative vote of a majority of the Shares represented at the meeting
constitutes the action of the Shareholders, unless the 1940 Act, other
applicable law, this Declaration or the By-Laws of the Trust requires a greater
number of affirmative votes.
10.2. Notice of Meetings. Notice of all meetings of the Shareholders,
stating the time, place and purposes of the meeting, shall be given by the
Trustees by mail to each Shareholder at his registered address, mailed at least
10 days and not more than 60 days before the meeting. Only the business stated
in the notice of the meeting shall be considered at such meeting. Any adjourned
meeting may be held as adjourned without further notice.
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10.3. Record Date for Meetings. For the purpose of determining the
Shareholders who are entitled to notice of and to vote at any meeting, or to
participate in any distribution, or for the purpose of any other action, the
Trustees may from time to time close the transfer books for such period, not
exceeding 30 days, as the Trustees may determine; or without closing the
transfer books the Trustees may fix a date not more than 60 days prior to the
date of any meeting of Shareholders or distribution or other action as a record
date for the determination of the Persons to be treated as Shareholders of
record for such purposes, except for dividend payments which shall be governed
by Section 9.2 hereof.
10.4. Proxies, etc. At any meeting of Shareholders, any holder of Shares
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken.
Pursuant to a resolution of a majority of the Trustees, proxies may be solicited
in the name of one or more Trustees or one or more of the officers of the Trust.
Only Shareholders of record shall be entitled to vote. Each full Share shall be
entitled to one vote and fractional Shares shall be entitled to a vote of such
fraction. When any Share is held jointly by several persons, any one of them may
vote at any meeting in person or by proxy in respect of such Share, but if more
than one of them shall be present at such meeting in person or by proxy, and
such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Share. A proxy
purporting to be executed by or on behalf of a Shareholder shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. If the holder of any such Share is a
minor or a person of unsound mind, and subject to guardianship or to the legal
control of any other person as regards the charge or management of such Share,
he may vote by his guardian or such other person appointed or having such
control, and such vote may be given in person or by proxy.
10.5. Reports. The Trustees shall cause to be prepared at least annually a
report of operations containing a balance sheet and statement of income and
undistributed income of the Trust prepared in conformity with generally accepted
accounting principles and an opinion of an independent public accountant on such
financial statements. Copies of such reports shall be mailed to all Shareholders
of record within the time required
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by the 1940 Act. The Trustees shall, in addition, furnish to the Shareholders at
least semi-annually interim reports containing an unaudited balance sheet of the
Trust as of the end of such period and an unaudited statement of income and
surplus for the period from the beginning of the current fiscal year to the end
of such period.
10.6. Inspection of Records. The records of the Trust shall be open to
inspection by Shareholders to the same extent as is permitted shareholders of a
Massachusetts business corporation.
10.7. Shareholder Action by Written Consent. Any action which may be taken
by Shareholders may be taken without a meeting if a majority of Shareholders
entitled to vote on the matter (or such larger proportion thereof as shall be
required by any express provision of this Declaration) consent to the action in
writing and the written consents are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as a vote taken at
a meeting of Shareholders.
10.8. Voting. Each shareholder shall be entitled to vote on any matter
required to be submitted to shareholders by the provisions of this Declaration,
the 1940 Act, the laws of the Commonwealth of Massachusetts or otherwise. Any
matter requiring such a vote and affecting a particular Series, including
without limitation matters affecting the investment advisory arrangements or
investment policies or restrictions of a Series, shall not be deemed to have
been effectively acted upon unless approved by the required vote of the
Shareholders of such Series. Notwithstanding the foregoing, to the extent
permitted by the 1940 Act, only Shares of the respective Series are entitled to
vote on matters concerning only that Series and each Series shall not be
required to vote separately on the selection of independent public accountants,
the election of Trustees and any submission with respect to a contract with a
principal underwriter or distributor.
ARTICLE XI
Duration; Termination of Trust;
Amendment; Mergers; Etc.
11.1. Duration. Subject to possible termination in accordance with the
provisions of Section 11.2 hereof, the Trust created hereby shall continue
indefinitely.
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11.2. Termination of Trust.
(a) The Trust may be terminated by the affirmative vote of the holders of
not less than two-thirds of the Shares of each Series at any meeting of
Shareholders or by an instrument in writing, without a meeting, signed by a
majority of the Trustees and consented to by the holders of not less than
two-thirds of such Shares. The termination of any Series of the Trust shall only
require an affirmative vote of the holders of not less than two-thirds of the
shares of that Series, as provided above. Upon any such termination,
(i) The Trust or such Series shall carry on no business except for the
purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust or
such Series and all of the powers of the Trustees under this Declaration
shall continue until the affairs of the Trust or such Series shall have
been wound up, including the power to fulfill or discharge the contracts of
the Trust, collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining Trust Property to one
or more persons at public or private sale for consideration which may
consist in whole or in part of cash, securities or other property of any
kind, discharge or pay its liabilities, and do all other acts appropriate
to liquidate its business; provided that any sale, conveyance, assignment,
exchange, transfer or other disposition of all or substantially all the
Trust Property shall require approval of the principal terms of the
transaction and the nature and amount of the consideration by vote or
consent of the holders of a majority of the Shares entitled to vote.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements, as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property of any Series, in cash or in kind
or partly each, among the Shareholders of the applicable Series according
to their respective rights.
(b) Upon termination of the Trust, and distribution to the Shareholders as
herein provided, a majority of the Trustees shall execute and lodge among the
records of the Trust an instrument in writing setting forth the fact of
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such termination. The Trustees shall thereupon be discharged from all further
liabilities and duties hereunder, and the rights and interests of all
Shareholders shall thereupon cease. Upon termination of any Series, the Trustees
shall thereupon be discharged from all further liabilities and duties with
respect to such Series and the rights and interests of all Shareholders of such
Series shall thereupon cease.
11.3. Amendment Procedure.
(a) This Declaration may be amended by the affirmative vote of the holders
of not less than a majority of the Shares or by an instrument in writing,
without a meeting, signed by a majority of the Trustees and consented to by the
holders of not less than a majority of the Shares. Shareholders of each Series
shall have the right to vote separately on amendments to this Declaration to the
extent provided by Section 10.8. The Trustees may also amend this Declaration
without the vote or consent of Shareholders if they deem it necessary to conform
this Declaration to the requirements of applicable federal laws or regulations
or the requirements of the regulated investment company provisions of the
Internal Revenue Code, but the Trustees shall not be liable for failing so to
do.
(b) No amendment may be made, under Section. 11.3(a) above, which would
change any rights with respect to any Shares of the Trust by reducing the amount
payable thereon upon liquidation of the Trust or by diminishing or eliminating
any voting rights pertaining thereto, except with the vote or consent of the
holders of two-thirds of the Shares of each Series. Nothing contained in this
Declaration shall permit the amendment of this Declaration to impair the
exemption from personal liability of the Shareholders, Trustees, officers,
employees and agents of the Trust or to permit assessments upon Shareholders.
(c) A certification in recordable form signed by a majority of the Trustees
setting forth an amendment and reciting that it was duly adopted by the
Shareholders or by the Trustees as aforesaid or a copy of the Declaration, as
amended, in recordable form, and executed by a majority of the Trustees, shall
be conclusive evidence of such amendment when lodged among the records of the
Trust.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of Shares
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of the Trust shall have become effective, this Declaration may be
terminated or amended in any respect by the affirmative vote of a majority
of the Trustees or by an instrument signed by a majority of the Trustees.
11.4. Merger, Consolidation and Sale of Assets. The Trust, or any series
thereof, may merge or consolidate with other corporation, association, trust or
other organization or may sell, lease or exchange all or substantially all of
its property, including its good will, upon such terms and conditions and for
such consideration when and as authorized at any meeting of Shareholders called
for the purpose by affirmative vote of the holders of not less than one-half of
the shares of each Series of the Trust (if approving the merger of the Trust) or
such Series (if approving the merger of a Series), or by an instrument or
instruments in writing without a meeting, consented to by the holders of not
less than one-half of such shares, and any such merger, consolidation, sale,
lease or exchange shall be deemed for all purposes to have been accomplished
under and pursuant to the statutes of the Commonwealth of Massachusetts. In
respect of any such merger, consolidation, sale or exchange of assets, any
Shareholder shall be entitled to rights of appraisal of his Shares to the same
extent as a shareholder of a Massachusetts business corporation in respect of a
merger, consolidation, sale or exchange of assets of a Massachusetts business
corporation, and such rights shall be his exclusive remedy in respect of his
dissent from any such action.
11.5. Incorporation. With the approval of the holders of a majority of the
Shares, the Trustees may cause to be organized or assist in organizing a
corporation or corporation under the laws of any jurisdiction or any other
trust, partnership, association or other organization to take over all of the
Trust Property or to carry on any business in which the Trust shall directly or
indirectly have any interest, and to sell, convey and transfer the Trust
Property to any such corporation, trust, association or organization in exchange
for the Shares or securities thereof or otherwise, and to lend money to,
subscribe for the Shares or securities of, and enter into any contracts with any
such corporation, trust, partnership, association or organization, or any
corporation, partnership, trust, association or organization in which the Trust
holds or is about to acquire shares or any other interest. The Trustees may also
cause a merger or consolidation between the Trust or any successor thereto and
any such corporation, trust, partnership, association or other organization if
and to the extent permitted by law, as provided
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under the law then in effect. Nothing contained herein shall be construed as
requiring approval of Shareholders for the Trustees to organize or assist in
organizing one or more corporations, trusts, partnerships, associations or other
organizations and selling, conveying or transferring a portion of the Trust
Property to such organizations or entities.
11.6. Derivative and Class Actions. The holders of Shares shall have the
power to vote to the same extent as the shareholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class action on behalf
of the Trust or its holders of shares.
ARTICLE XII
Miscellaneous
12.1. Filing. This Declaration and any amendment hereto shall be filed in
the office of the Secretary of the Commonwealth of Massachusetts and in such
other places as may be required under the laws of Massachusetts and may also be
filed or recorded in such other places as the Trustees deem appropriate. Each
amendment so filed shall be accompanied by a certificate signed and acknowledged
by a Trustee stating that such action was duly taken in a manner provided
herein, and unless such amendment or such certificate sets forth some later time
for the effectiveness of such amendment, such amendment shall be effective upon
its filing. A restated Declaration, containing the original Declaration and all
amendments theretofore made, may be executed from time to time by a majority of
the Trustees and shall, upon filing with the Secretary of the Commonwealth of
Massachusetts, be conclusive evidence of all amendments contained therein and
may thereafter be referred to in lieu of the original Declaration and the
various amendments thereto.
12.2. Resident Agent. The Trust shall maintain a resident agent in the
Commonwealth of Massachusetts, which agent shall initially be CT Corporation
System, 2 Oliver Street, Boston, Massachusetts 02109. The Trustees may designate
a successor resident agent, provided, however, that such appointment shall not
become effective until written notice thereof is delivered to the office of the
Secretary of the Commonwealth.
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12.3. Governing Law. This Declaration is executed by the Trustees and
delivered in the Commonwealth of Massachusetts and with reference to the laws
thereof, and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed according to the laws
of said State and reference shall be specifically made to the business
corporation law of the Commonwealth of Massachusetts as to the construction of
matters not specifically covered herein or as to which an ambiguity exists.
12.4. Counterparts. This Declaration may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and such
counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
12.5. Reliance by Third Parties. Any certificate executed by an individual
who, according to the records of the Trust, or of any recording office in which
this Declaration may be recorded, appears to be a Trustee hereunder, certifying
to: (a) the number or identity of Trustees or Shareholders, (b) the due
authorization of the execution of any instrument or writing, (c) the form of any
vote passed at a meeting of Trustees or Shareholders, (d) the fact that the
number of Trustees or Shareholders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration, (e) the form
of any By-Laws adopted by or the identity of any officers elected by the
Trustees, or (f) the existence of any fact or facts which in any manner relate
to the affairs of the Trust, shall be conclusive evidence as to the matters so
certified in favor of any person dealing with the Trustees and their successors.
12.6. Provisions in Conflict With Law or Regulations.
(a) The provisions of this Declaration are severable, and if the Trustees
shall determine, with the advice of counsel, that any of such provisions is in
conflict with 1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of this
Declaration; provided, however, that such determination shall not affect any of
the remaining provisions of this Declaration or render invalid or improper any
action taken or omitted prior to such determination.
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<PAGE>
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
/s/ JOHN FITTING, JR.
----------------------------------
John Fitting, Jr.
/s/ RODD BAXTER
----------------------------------
Rodd Baxter
/s/ LEONARD I. CHUBINSKY
----------------------------------
Leonard I. Chubinsky
/s/ JEREMIAH J. BRESNANAN, JR.
----------------------------------
Jeremiah J. Bresnanan, Jr.
33
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STATE OF NEW YORK )
: ss.: June 25, 1986
COUNTY OF NEW YORK )
Then personally appeared before me, John Fitting, Jr., who resides at 290
Park Avenue, New York, New York 10028, Rodd Baxter, who resides at 402 Westwood
Road, Woodmere, New York 11598, and Leonard I. Chubinsky, who resides at 199
Lake Drive, Pleasantville, New York 10570, who acknowledged the foregoing
instrument to be their free act and deed and the free act and deed of the
Trustees of National Total Return Fund.
/s/ MIGDALIA SANTIAGO
----------------------------------
Notary Public
My Commission expires:
MIGDALIA SANTIAGO
Notary Public, State of New York
No. 31-4750902
Qualified in New York County
Commission Expires March 30, 1987
34
<PAGE>
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. City of Boston,
June 26, 1986
Then personally appeared before me, Jeremiah J. Bresnahan, Jr., who resides
at 511 Ward Street, Newton Center, Massachusetts 02159, who acknowledged the
foregoing instrument to be his free act and deed and the free act and deed of a
Trustee of National Total Return Fund.
/s/ PAULINE FRANCES MARTIN
----------------------------------
Notary Public
My Commission Expires:
10/31/86
- ----------------------
PAULINE FRANCES MARTIN, Notary Public
My Commission Expires October 31, 1986
35
<PAGE>
AMENDMENT TO DECLARATION OF TRUST
OF NATIONAL TOTAL INCOME FUND
I, Lisa M. Hurley, Secretary of NATIONAL TOTAL INCOME FUND (the "Trust"), a
business trust established under the laws of the Commonwealth of Massachusetts
by Declaration of Trust dated June 25, 1986 ("Declaration of Trust"), hereby
certify that a majority of the Trust's Board of Trustees adopted and a majority
of the outstanding shares of beneficial interest of the Trust entitled to vote
at the special meeting called for such purposes approved the following
amendments to the Trust's Declaration of Trust effective December 19, 1991.
FIRST: Section 6.1 of the Declaration of Trust is amended to delete the
bracketed material and to add the underlined language as follows:
6.1 Beneficial Interest. The interest of beneficiaries hereunder shall be
divided into transferable shares of beneficial interest [,all of one
class,] OF ONE OR MORE SEPARATE AND DISTINCT SERIES OR CLASSES THEREOF AS
THE TRUSTEES SHALL FROM TIME TO TIME CREATE AND ESTABLISH, with par value
$0.0001 per share. The number of such shares of beneficial interest
authorized hereunder is unlimited. The Trustees may divide or combine the
Shares into a greater of lesser number of shares without thereby changing
the proportionate interests in the Trust. All Shares issued hereunder,
including, without limitation, Shares issued in connection with a dividend
in Shares or a split of Shares, shall be fully paid and nonassessable.
SECOND: The following section is added as new Section 6.10:
"6.10 Class Designation. The Trustees, in their discretion, may authorize
the division of the Shares of the Trust, or, if any Series be established,
the Shares of any Series, into two or more Classes, and the different
Classes shall be established and designated, and the variations in the
relative rights and preferences as between the different Classes shall be
fixed and determined, by the Trustees; provided, that all Shares of the
Trust or of any Series shall be identical to all other Shares of the Trust
or the same Series, as the case may be, except that there may be variations
between different classes as to allocation of expenses, right of
redemption, special and relative rights as to dividends and on liquidation,
conversion rights, and conditions under which the several Classes shall
have separate voting rights. All references to Shares in this
<PAGE>
Declaration shall be deemed to be Shares of any or all Classes as the
context may require.
If the Trustees shall divide the Shares of the Trust or any Series
into two or more Classes, the following provisions shall be applicable:
(a) All provisions herein relating to the Trust, or any Series of the
Trust, shall apply equally to each Class of Shares of the Trust or of any
Series of the Trust, except as the context requires otherwise.
(b) The number of Shares of each Class that may be issued shall be
unlimited. The Trustees may classify or reclassify any unissued Shares of
the Trust or any Series or any Shares previously issued and reacquired of
any Class of the Trust or of any Series into one or more Classes that may
be established and designated from time to time. The Trustees may hold as
treasury Shares (of the same or some other Class), reissue for such
consideration and on such terms as they may determine, or cancel any Shares
of any Class reacquired by the Trust at their discretion from time to time.
(c) Liabilities, expenses, costs, charges and reserves related to the
distribution of, and other identified expenses that should properly be
allocated to, the Shares of a particular Class may be charged to and borne
solely by such Class and the bearing of expenses solely by a Class of
Shares may be appropriately reflected (in a manner determined by the
Trustees) and cause differences in the net asset value attributable to, and
the dividend, redemption and liquidation rights of, the Shares of different
Classes. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the
Shareholders of all Classes for all purposes.
(d) The establishment and designation of any Class of Shares shall be
effective upon the execution of a majority of the then Trustees of an
instrument setting forth such establishment and designation and the
relative rights and preferences of such Class, or as otherwise provided in
such instrument. The Trustees may, by an instrument executed by a majority
of their number, abolish any Class and the establishment and designation
thereof. Each instrument referred to in this paragraph shall have the
status of an amendment to this Declaration."
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THIRD: Existing Section 6.10 is renumbered as Section 6.11.
Dated: December 19, 1991 /s/ LISA M. HURLEY
----------------------------------
Lisa M. Hurley
Secretary
National Total Income Trust
Greenwich, Connecticut
Subscribed and sworn to before me this 19th day of December, 1991.
/s/ LISETTE RIVERA
- -----------------------------------
Notary Public
LISETTE RIVERA
Commissioner for the State of Conn.
Resident in the State of New York
Term Expires February 7, 1995
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NATIONAL TOTAL INCOME FUND
Redesignation of
Shares of Beneficial Interest,
Par Value $0.0001 Per Share
The undersigned, being at least a majority of the Trustees of NATIONAL
TOTAL INCOME FUND, a Massachusetts business trust (the "Trust"), acting pursuant
to Sections 6.10 (d) and 11.3 (c) of the Declaration of Trust dated June 25,
1986, as amended, of the Trust, hereby confirm the redesignation of shares of
beneficial interest of the Trust originally designated as shares of beneficial
interest of "National Total Income Fund" to "National Total Income Fund - Class
A."
Dated: December 19, 1991
/s/ MARK L. LIPSON
- ---------------------------------- ----------------------------------
Jonathan W.P. Aitken, MP Mark L. Lipson
Trustee Trustee
/s/ LINCOLN W. ALLAN /s/ EDWARD L. PALMER
- ---------------------------------- ----------------------------------
Lincoln W. Allan Edward L. Palmer
Trustee Trustee
/s/ GERALD W. BLAKELEY, JR. /s/ RICHARD E. SERGERSON
- ---------------------------------- ----------------------------------
Gerald W. Blakeley, Jr. Richard E. Sergerson
Trustee Trustee
/s/ E. VIRGIL CONWAY /s/ DAVID W. WALLACE
- ---------------------------------- ----------------------------------
E. Virgil Conway David W. Wallace
Trustee Trustee
/s/ HARRY DALZELL-PAYNE
- ----------------------------------
Gen. Harry Dalzell-Payne
Trustee
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NATIONAL TOTAL INCOME FUND
Establishment and Designation of
Additional Class of Shares of Beneficial Interest,
Par Value $0.0001 Per Share
The undersigned, being a majority of the Trustees of NATIONAL TOTAL INCOME FUND
(the "Trust"), a business trust established under the laws of the Commonwealth
of Massachusetts by Declaration of Trust dated June 25, 1986 ("Declaration of
Trust"), as amended, whereby "National Total Income Fund" was established, and
having redesignated, by an instrument dated December 19, 1991, the National
Total Income Fund shares of beneficial interest as "National Total Income Fund -
Class A," hereby divides, pursuant to Section 6.10 (d) of the Declaration of
Trust, the shares of beneficial interest of the Trust into one additional class,
having the following special and relative rights:
1. The class shall be designated "National Total Income Fund - Class B."
2. The shares of beneficial interest of National Total Income Fund -
Class B, $0.0001 par value per share (hereinafter, "Class B Shares")
shall have the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption set forth in the Trust's
Declaration of Trust and shall be subject to all provisions of the
Declaration of Trust relating to shares of the Trust generally, and
those set forth as follows:
(a) The assets belonging to the Class B Shares shall be invested in
the same investment portfolio of the Trust as the assets belonging to
National Total Income Fund - Class A Shares.
(b) The dividends and distributions of investment income and capital
gains with respect to Class B Shares shall be in such amount as may be
declared from time to time by the Board of Trustees, and such
dividends and distributions may vary from dividends and distributions
of investment income and capital gains with respect to the National
Total Income Fund - Class A Shares to reflect differing allocations of
the expenses of the Trust between the holders of the two classes and
any resultant differences between the net asset value per share of the
two classes, to such extent and for such purposes as the Board of
Trustees may deem appropriate. The allocation of investment income or
capital gains and expenses and liabilities of the Trust between the
National Total Income Fund - Class A Shares and the Class B Shares
shall be determined by the Board of Trustees in a manner that is
consistent with the order issued by the Securities and Exchange
Commission in connection with the application for exemption filed by
National Multi-Sector Fixed Income Fund, Inc., et al., any amendment
to
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such order or any rule or interpretation under the Investment Company Act
of 1940 that modifies or supersedes such order.
(c) The proceeds of the redemption of Class B Shares (including a
fractional share) shall be reduced by the amount of any contingent deferred
sales charge payable on such redemption pursuant to the terms of the
issuance of such share.
(d) The holders of Class B Shares shall have (i) exclusive voting rights
with respect to provisions of any distribution plan adopted by the Trust
pursuant to Rule 12b-l under the Investment Company Act of 1940 (a "Plan")
applicable to the Class B Shares and (ii) no voting rights with respect to
provisions of any Plan applicable to the National Total Income Fund - Class
A Shares or with regard to any other matter submitted to a vote of
shareholder which does not affect holders of Class B Shares.
(e) (1) Each Class B Share, other than a share purchased through the
automatic reinvestment of a dividend or a distribution with respect to
Class B Shares, shall be converted automatically, and without any action or
choice on the part of the holder thereof, into National Total Income Fund -
Class A Shares on the date that is the first Trust business day following
the month in which the eighth anniversary date of the date of the issuance
of the share falls (the "Conversion Date").
(2) Each Class B Share purchased through the automatic reinvestment of a
dividend or a distribution with respect to Class B Shares shall be
segregated in a separate sub-account. Each time any Class B Shares in a
shareholder's Fund account (other than those in the sub-account) convert
to National Total Income Fund - Class A Shares, a pro rata portion of the
Class B Shares then in the sub-account will also convert to National Total
Income Fund - Class A Shares. The portion will be determined by the ratio
that the shareholder's Class B Shares converting to National Total Income
Fund - Class A Shares bears to the shareholder's total Class B Shares not
acquired through dividends and distributions.
(3) The conversion of Class B Shares to National Total Income Fund - Class
A Shares is subject to the continuing availability of an opinion of counsel
or a ruling of the Internal Revenue Service that payment of different
dividends on Class A and Class B Shares does not result in the Trust's
dividends or distributions constituting "preferential dividends" under the
Internal Revenue Code of 1986, as amended, and that the conversion of
shares does not constitute a taxable event under federal income tax law.
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(4) The number of shares of National Total Income Fund - Class A
Shares into which a share of Class B Shares is converted pursuant to
paragraphs (e) (1) and (e) (2) hereof shall equal the number (including for
this purpose fractions of a share) obtained by dividing the net asset value
per share of the Class B Shares for purposes of sales and redemptions
thereof on the Conversion Date by the net asset value per share of the
National Total Income Fund - Class A Shares for purposes of sales and
redemptions thereof on the Conversion Date.
(5) On the Conversion Date, the Class B Shares converted into shares
of National Total Income Fund - Class A Shares will cease to accrue
dividends and will no longer be deemed outstanding and the rights of the
holders thereof (except the right to receive the number of shares of
National Total Income Fund - Class A Shares into which the shares of Class
B Shares have been converted and declared but unpaid dividends to the
Conversion Date) will cease. Certificates representing shares of the
National Total Income Fund - Class A Shares resulting from the conversion
need not be issued until certificates representing shares of Class B Shares
converted, if issued, have been received by the Corporation or its agent
duly endorsed for transfer.
Dated: December 19, 1991
/s/ MARK L. LIPSON
- ----------------------------- ------------------------------
Jonathan W.P. Aitken, MP Mark L. Lipson
Trustee Trustee
/s/ LINCOLN W. ALLAN /s/ EDWARD L. PALMER
- ----------------------------- ------------------------------
Lincoln W. Allan Edward L. Palmer
Trustee Trustee
/s/ GERALD W. BLAKELEY, JR. /s/ RICHARD E. SEGERSON
- ----------------------------- ------------------------------
Gerald W. Blakeley, Jr. Richard E. Segerson
Trustee Trustee
/s/ E. VIRGIL CONWAY /s/ DAVID W. WALLACE
- ----------------------------- ------------------------------
E. Virgil Conway David W. Wallace
Trustee Trustee
/s/ HARRY DALZELL-PAYNE
- -----------------------------
Gen. Harry Dalzell-Payne
Trustee
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CERTIFICATE OF AMENDMENT OF
DECLARATION OF TRUST OF
NATIONAL TOTAL INCOME FUND
The undersigned hereby certify that each is a Trustee of National Total
Income Fund, a Massachusetts business trust (the "Fund"), and further certify
that:
(1) The Declaration of Trust of the Fund is hereby amended to change the
name of the Fund to "National Income and Growth Fund" and to
substitute said name for the name "National Total Income Fund" in each
place it appears in said Declaration of Trust.
(2) Said amendment was duly adopted in accordance with the terms of the
Declaration of Trust by unanimous vote of the Trustees of the Fund
cast at Meeting called for such purpose and held on March 13, 1992.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the
13th day of March, 1992.
/s/ JONATHAN W.P. AITKEN /s/ LINCOLN W. ALLAN
- ----------------------------- ------------------------------
Jonathan W.P. Aitken, MP Lincoln W. Allan
/s/ GERALD W. BLAKELEY, JR. /s/ E. VIRGIL CONWAY
- ----------------------------- ------------------------------
Gerald W. Blakeley, Jr. E. Virgil Conway
/s/ HARRY DALZELL-PAYNE /s/ MARK L. LIPSON
- ----------------------------- ------------------------------
Harry Dalzell-Payne Mark L. Lipson
/s/ RICHARD E. SEGERSON /s/ DAVID W. WALLACE
- ----------------------------- ------------------------------
Richard E. Segerson David W. Wallace
- -----------------------------
Edward L. Palmer
Exhibit 1.2
CERTIFICATE OF AMENDMENT OF
DECLARATION OF TRUST
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CERTIFICATE OF AMENDMENT OF
DECLARATION OF TRUST OF
NATIONAL INCOME AND GROWTH FUND
The undersigned hereby certify that each is a Trustee of National Income
and Growth Fund, a Massachusetts business trust (the "Trust") and further
certify that:
1. The Declaration of Trust filed with the Secretary of the State for the
Commonwealth of Massachusetts on June 27, 1986, as amended by instruments
filed with said Secretary of the State on December 30, 1991 and March 18,
1992 (collectively, the "Declaration") is hereby further amended effective
as of January 1, 1994 to change the name of the Trust to "Phoenix Income
and Growth Fund" and to substitute said name for the name of "National
Income and Growth Fund" in each place it appears in the Declaration.
2. Said amendment was duly adopted in accordance with Article XI, Section
11.3(a) of the Declaration by a vote of the Trustees of the Trust at a
meeting called for such purpose held on June 30, 1993.
IN WITNESS WHEREOF, the undersigned have executed this instrument this 25th
day of May, 1994.
/s/ C. DUANE BLINN /s/ PHILIP R. MCLOUGHLIN
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C. Duane Blinn Philip R. McLoughlin
/s/ ROBERT CHESEK /s/ JAMES M. OATES
- ----------------------------- ------------------------------
Robert Chesek James M. Oates
/s/ E. VIRGIL CONWAY /s/ PHILIP R. REYNOLDS
- ----------------------------- ------------------------------
E. Virgil Conway Philip R. Reynolds
/s/ HARRY DALZELL-PAYNE /s/ HERBERT ROTH, JR.
- ----------------------------- ------------------------------
Harry Dalzell-Payne Herbert Roth, Jr.
/s/ LEROY KEITH, JR. /s/ RICHARD E. SEGERSON
- ------------------------------- -------------------------------
Leroy Keith, Jr. Richard E. Segerson
Exhibit 2
BY-LAWS
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Amended Effective
March 18, 1992
BY-LAWS
OF
NATIONAL INCOME & GROWTH FUND
ARTICLE I
Definitions
The terms "Commission", "Declaration", "Majority Shareholder Vote", "1940 Act",
"Shareholder", "Shares", "Trust", "Trust Property", and "Trustees", have the
respective meanings given them in the Declaration of Trust of National Income &
Growth Fund (formerly National Total Income Fund) dated June 25, 1986 as amended
from time to time.
ARTICLE II
Offices
SECTION 2.1. Principal Office. Until changed by the Trustees, the principal
office of the Trust in the Commonwealth of Massachusetts shall be the City of
Boston, County of Suffolk.
SECTION 2.2. Other Offices. In addition to its principal office in the
Commonwealth of Massachusetts, the Trust may have an office or offices in the
City of New York, State of New York and at such other places within and around
the Commonwealth as the Trustees may from time to time designate or the business
of the Trust may require.
ARTICLE III
Shareholders' Meetings
SECTION 3.1. Place of Meetings. Meetings of Shareholders shall be held at
such place within or without the Commonwealth of Massachusetts, as may be
designated from time to time by the Trustees.
SECTION 3.2. Meetings. Meetings of Shareholders of the Trust shall be held
whenever called by the Trustees or the President of the Trust and whenever
election of a Trustee or Trustees by Shareholders is required by the provisions
of Section 16(a) of the 1940 Act for that purpose. Meetings of Shareholders
shall also be called by the Secretary upon the written request of the holders of
Shares entitled to vote not less than ten percent (10%) of all the votes
entitled to be cast at such meeting. Such request shall state the purpose or
purposes of such meeting and the matters proposed to be acted on thereat. The
Secretary shall inform such Shareholders of the reasonable estimated cost of
preparing and mailing such notice of the meeting, and upon payment to the Trust
of such costs, the Secretary shall give notice stating the purpose or purposes
of the meeting to all entitled to vote at such meeting. No meeting need be
called upon the request of the holders of Shares entitled to vote at such
meeting, to consider any matter which is substantially the same as a matter
voted upon at any meeting of Shareholders held during the preceding twelve
months.
SECTION 3.3. Notice of Meetings. Written or printed notice of every
Shareholders' meeting stating the place, date, and purpose or purposes thereof,
shall be given by the Secretary not less than ten (10) nor more than ninety (90)
days before such meeting to each Shareholder entitled to vote at such meeting.
Such notice shall be deemed to be given when deposited in the United States
mail, postage prepaid, directed to the Shareholder at his address as it appears
on the records of the Trust.
SECTION 3.4. Quorum and Adjournment of Meetings. Except as otherwise
provided by law, by the Declaration or by these By-Laws, at all meetings of
Shareholders the holders of a majority of the Shares issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall be
requisite and shall constitute a quorum for the transaction of business. In the
absence of a quorum, the Shareholders present or represented by proxy and
entitled to vote thereat shall have power to adjourn the meeting from time to
time. Any adjourned meeting may be held as adjourned without further notice. At
any adjourned meeting at which a quorum shall be present, any business may be
transacted as if the meeting had been held as originally called.
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SECTION 3.5. Voting Rights, Proxies. At each meeting of Shareholders, each
holder of record Shares entitled to vote thereat shall be entitled to one vote
in person or by proxy, executed in writing by the Shareholder or his duly
authorized attorney-in-fact for each Share of beneficial interest of the Trust
and for the fractional portion of one vote for each fractional Share entitled to
vote so registered in his name on the records of the Trust on the date fixed as
the record date for the determination of Shareholders entitled to vote at such
meeting. No proxy shall be valid after eleven months from its date, unless
otherwise provided in the proxy. At all meetings of Shareholders, unless the
voting is conducted by inspectors, all questions relating to the qualifications
of voters and the validity of proxies and the acceptance or rejection of votes
shall be decided by the chairman of the meeting. Pursuant to a resolution of a
majority of the Trustees, proxies may be solicited in the name of one or more
Trustees or Officers of the Trust.
SECTION 3.6. Vote Required. Except as otherwise provided by law, by the
Declaration of Trust, or by these By-Laws, at each meeting of Shareholders at
which a quorum is present, all matters shall be decided by Majority Shareholder
Vote.
SECTION 3.7. Inspectors of Election. In advance of any meeting of
Shareholders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the chairman of any meeting of Shareholders may, and on the request
of any Shareholder or his proxy, shall appoint Inspectors of Election of the
meeting. In case any person appointed as Inspector fails to appear or fails or
refuses to act, the vacancy may be filled by appointment made by the Trustees in
advance of the convening of the meeting or at the meeting by the person acting
as chairman. The Inspectors of Election shall determine the number of Shares
outstanding, the Shares represented at the meeting, the existence of a quorum,
the authenticity, validity and effect of proxies, shall receive votes, ballots
or consents, shall hear and determine all challenges and questions in any way
arising in connection with the right to vote, shall count and tabulate all votes
or consents, determine the results, and do such other acts as may be proper to
conduct the question or vote with fairness to all Shareholders. On request of
the chairman of the meeting, or of any Shareholder or his proxy, the Inspectors
of Election shall make a report in writing of any challenge or question or
matter determined by them and shall execute a certificate of any facts found by
them.
SECTION 3.8. Inspection of Books and Records. Shareholders shall have such
rights and procedures of inspection of the books and records of the Trust as are
granted to Shareholders under the Business Corporation Law of the State of
Massachusetts.
SECTION 3.9. Action by Shareholders Without Meeting. Except as otherwise
provided by law, the provisions of these By-Laws relating to notices and
meetings to the contrary notwithstanding, any action required or permitted to be
taken at any meeting of Shareholders may be taken without a meeting if a
majority of the Shareholders entitled to vote upon the action consent to the
action in writing and such consents are filed with the records of the Trust.
Such consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
ARTICLE IV
Trustees
SECTION 4.1. Meetings of the Trustees. The Trustees may in their discretion
provide for regular or special meetings of the Trustees. Regular meetings of the
Trustees may be held at such time and place as shall be determined from time to
time by the Trustees without further notice. Special meetings of the Trustees
may be called at any time by the President and shall be called by the President
or the Secretary upon the written request of any two (2) Trustees.
SECTION 4.2. Notice of Special Meetings. Written notice of special meetings
of the Trustees, stating the place, date and time thereof, shall be given not
less than two (2) days before such meeting to each Trustee, personally, by
telegram, by mail, or by leaving such notice at his place of residence or usual
place of business. If mailed, such notice shall be deemed to be given when
deposited in the United States mail, postage prepaid, directed to the Trustee at
his address as it appears on the records of the Trust. Subject to the provisions
of the 1940 Act, notice or waiver of notice need not specify the purpose of any
special meeting.
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SECTION 4.3. Telephone Meetings. Subject to the provisions of the 1940 Act,
any Trustee, or any member or members of any committee designated by the
Trustees, may participate in a meeting of the Trustees, or any such committee,
as the case may be, by means of a conference telephone or similar communications
equipment if all persons participating in the meeting can hear each other at the
same time. Participation in a meeting by these means constitutes presence in
person at the meeting.
SECTION 4.4. Quorum, Voting and Adjournment of Meetings. At all meetings of
the Trustees, a majority of the Trustees shall be requisite to and shall
constitute a quorum for the transaction of business. If a quorum is present, the
affirmative vote of a majority of the Trustees present shall be the act of the
Trustees, unless the concurrence of a greater proportion is expressly required
for such action by law, the Declaration or these By-Laws. If at any meeting of
the Trustees there be less than a quorum present, the Trustees present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall have been obtained.
SECTION 4.5. Action by Trustees Without Meeting. The provisions of these
By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at any
meeting of the Trustees may be taken without a meeting if a consent in writing
setting forth the action shall be signed by all of the Trustees entitled to vote
upon the action and such written consent is filed with the minutes of the
proceedings of the Trustees.
SECTION 4.6. Expenses and Fees. Each Trustee may be allowed expenses, if
any, for attendance at each regular or special meeting of the Trustees, and each
Trustee who is not an officer or employee of the Trust or of its investment
manager or underwriter or of any corporate affiliate of any of said persons
shall receive for services rendered as a Trustee of the Trust such compensation
as may be fixed by the Trustees. Nothing herein contained shall be construed to
preclude any Trustee from serving the Trust in any other capacity and receiving
compensation therefor.
SECTION 4.7. Execution of Instruments and Documents and Signing of Checks
and Other Obligations and Transfers. All instruments, documents and other papers
shall be executed in the name and on behalf of the Trust and all checks, notes,
drafts and other obligations for the payment of money by the Trust shall be
signed, and all transfer of securities standing in the name of the Trust shall
be executed, by the President, any Vice President or the Treasurer or by any one
or more officers or agents of the Trust as shall be designated for that purpose
by vote of the Trustees.
SECTION 4.8. Indemnification of Trustees, Officers, Employees and Agents.
(a) The Trust shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending, or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Trust) by reason of the fact that he is or
was a Trustee, officer, employee, or agent of the Trust. The indemnification
shall be against expenses, including attorneys' fees, judgments, fines, and
amounts paid in settlement, actually and reasonably incurred by him in
connection with the action, suit, or proceeding, if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the Trust, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(b) The Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or on behalf of the Trust to obtain a judgment or decree in its favor by
reason of the fact that he is or was a Trustee, officer, employee, or agent of
the Trust. The indemnification shall be against expenses, including attorneys'
fees actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust;
except that no indemnification shall be made in respect of any claim, issue, or
matter as to which the person has been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Trust, except to the extent
that the court in
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which the action or suit was brought, or a court of equity in the county in
which the Trust has its principal office, determines upon application that,
despite the adjudication of liability but in view of all circumstances of the
case, the person is fairly and reasonably entitled to indemnity for those
expenses which the court shall deem proper, provided such Trustee, officer,
employee or agent is not adjudged to be liable by reason of his willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
(c) To the extent that a Trustee, officer, employee or agent of the Trust
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsection (a) or (b) or in defense of any claim,
issue, or matter therein, he shall be indemnified against expenses, including
attorneys' fees, actually and reasonably incurred by him in connection
therewith.
(d)(1) Unless a court orders otherwise, any indemnification under
subsections (a) or (b) of this section may be made by the Trust only as
authorized in the specific case after a determination that indemnification of
the Trustee, officer, employee, or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in subsections (a) or
(b).
(2) The determination shall be made:
(i) By the Trustees, by a majority vote of a quorum which consists
of Trustees who were not parties to the action, suit or proceeding; or
(ii) If the required quorum is not obtainable, or if a quorum of
disinterested Trustees so directs, by independent legal counsel in a
written opinion; or
(iii) By the Shareholders.
(3) Notwithstanding any provision of this Section 4.8, no person shall
be entitled to indemnification for any liability, whether or not there is an
adjudication of liability, arising by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of duties as described in Section 17(h)
and (i) of the Investment Company Act of 1940 ("disabling conduct"). A person
shall be deemed not liable by reason of disabling conduct if, either:
(i) a final decision on the merits is made by a court or other body
before whom the proceeding was brought that the person to be indemnified
("indemnitee") was not liable by reason of disabling conduct; or
(ii) in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that the indemnitee was not liable by
reason of disabling conduct, is made by either--
(A) a majority of a quorum of Trustees who are neither
"interested persons" of the Trust, as defined in Section 2(a)(19)
of the Investment Company Act of 1940, nor parties to the action,
suit or proceeding, or
(B) an independent legal counsel in a written opinion.
(e) Expenses, including attorneys' fees, incurred by a Trustee, officer,
employee or agent of the Trust in defending a civil or criminal action, suit or
proceeding may be paid by the Trust in advance of the final disposition thereof
if:
(1) authorized in the specific case by the Trustees; and
(2) the Trust receives an undertaking by or on behalf of the Trustee,
officer, employee or agent of the Trust to repay the advance if it is not
ultimately determined that such person is entitled to be indemnified by the
Trust; and
(3) either, (i) such person provides a security for his undertaking, or
(ii) the Trust is insured against losses by reason of any unlawful
advances, or
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(iii) a determination, based on a review of readily available facts,
that there is reason to believe that such person ultimately will be found
entitled to indemnification, is made by either--
(A) a majority of a quorum which consists of Trustees, who are
neither "interested persons" of the Trust, as defined in Section
2(a)(19) of the Investment Company Act of 1940, nor parties to the
action, suit or proceeding, or
(B) an independent legal counsel in a written opinion.
(f) The indemnification provided by this Section shall not be deemed
exclusive of any other rights to which a person may be entitled under any
by-law, agreement, vote of Shareholders or disinterested Trustees or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding the office, and shall continue as to a person who has ceased to be
a Trustee, officer, employee, or agent and inure to the benefit of the heirs,
executors and administrators of such person; provided that no person may satisfy
any right of indemnity or reimbursement granted herein or to which he may be
otherwise entitled except out of the property of the Trust, and no Shareholder
shall be personally liable with respect to any claim for indemnity or
reimbursement or otherwise.
(g) The Trust may purchase and maintain insurance on behalf of any person
who is or was a Trustee, officer, employee, or agent of the Trust, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such. However, in no event will the Trust purchase
insurance to indemnify any officer or Trustee against liability for any act for
which the Trust itself is not permitted to indemnify him.
(h) Nothing contained in this Section shall be construed to protect any
Trustee or officer of the Trust against any liability to the Trust or to its
security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
ARTICLE V
Committees
SECTION 5.1. Executive and Other Committees. The Trustees, by resolution
adopted by a majority of the Trustees, may designate an Executive Committee
and/or other committees, each committee to consist of two (2) or more of the
Trustees of the Trust and may delegate to such committees, in the intervals
between meetings of the Trustees, any or all of the powers of the Trustees in
the management of the business and affairs of the Trust. In the absence of any
member of any such committee, the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint a Trustee to act in place
of such absent member. Each such committee shall keep a record of its
proceedings.
The Executive Committee and any other committee shall fix its own rules or
procedure, but the presence of at least fifty percent (50%) of the members of
the whole committee shall in each case be necessary to constitute a quorum of
the committee and the affirmative vote of the majority of the members of the
committee present at the meeting shall be necessary to take action.
All actions of the Executive Committee shall be reported to the Trustees at
the meeting thereof next succeeding to the taking of such action.
SECTION 5.2. Advisory Committee. The Trustees may appoint an advisory
committee which shall be composed of persons who do not serve the Trust in any
other capacity and which shall have advisory functions with respect to the
investments of the Trust but which shall have no power to determine that any
security or other investment shall be purchased, sold or otherwise disposed of
by the Trust. The number of persons constituting any such advisory committee
shall be determined from time to time by the Trustees. The members of any such
advisory committee may receive compensation for their services and may be
allowed such fees and expenses for the attendance at meetings as the Trustees
may from time to time determine to be appropriate.
5
<PAGE>
SECTION 5.3. Committee Action Without Meeting. The provisions of these
By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at any
meeting of any Committee of the Trustees appointed pursuant to Section 5.1 of
these By-Laws may be taken without a meeting if a consent in writing setting
forth the action shall be signed by all members of the Committee entitled to
vote upon the action and such written consent is filed with the records of the
proceedings of the Committee.
ARTICLE VI
Officers
SECTION 6.1. Executive Officers. The executive officers of the Trust shall
be a Chairman, a President, one or more Vice Presidents, a Secretary and a
Treasurer. The President shall be selected from among the Trustees but none of
the other executive officers need be a Trustee. Two or more officers, except
those of President and any Vice President, may be held by the same person, but
no officer shall execute, acknowledge or verify any instrument in more than one
capacity. The executive officers of the Trust shall be elected annually by the
Trustees and each executive officer so elected shall hold office until his
successor is elected and has qualified.
SECTION 6.2. Other Officers and Agents. The Trustees may also elect one or
more Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers
and may elect, or may delegate to the President the power to appoint, such other
officers and agents as the Trustees shall at any time or from time to time deem
advisable.
SECTION 6.3. Term and Removal and Vacancies. Each officer of the Trust
shall hold office until his successor is elected and has qualified. Any officer
or agent of the Trust may be removed by the Trustees whenever, in their
judgment, the best interests of the Trust will be served thereby, but such
removal shall be without prejudice to the contractual rights, if any, of the
person so removed.
SECTION 6.4. Compensation of Officers. The compensation of officers and
agents of the Trust shall be fixed by the Trustees, or by the President to the
extent provided by the Trustees with respect to officers appointed by the
President.
SECTION 6.5. Power and Duties. All officers and agents of the Trust, as
between themselves and the Trust, shall have such authority and perform such
duties in the management of the Trust as may be provided in or pursuant to these
By-Laws, or to the extent not so provided, as may be prescribed by the Trustees;
provided, that no rights of any third party shall be affected or impaired by any
such By-Law or resolution of the Trustees unless he has knowledge thereof.
SECTION 6.6. The Chairman. The Chairman shall preside at all meetings of
the Shareholders and of the Trustees, shall be a signatory on all Annual and
Semi-Annual Reports as may be sent to shareholders, and he shall perform such
other duties as the Trustees may from time to time prescribe.
SECTION 6.7. The President. The President shall be the chief executive
officer of the Trust; he shall have general and active management of the
business of the Trust, shall see that all orders and resolutions of the Trustees
are carried into effect, and, in connection therewith, shall be authorized to
delegate to one or more Vice Presidents such of his powers and duties at such
times and in such manner as he may deem advisable.
SECTION 6.8. The Vice Presidents. The Vice Presidents shall be of such
number and shall have such titles as may be determined from time to time by the
Trustees. The Vice President, or, if there be more than one, the Vice Presidents
in the order of their seniority as may be determined from time to time by the
Trustees or the President, shall, in the absence or disability of the President,
exercise the powers and perform the duties of the President, and he or they
shall perform such other duties as the Trustees or the President may from time
to time prescribe.
6
<PAGE>
SECTION 6.9. The Assistant Vice Presidents. The Assistant Vice President,
or, if there be more than one, the Assistant Vice Presidents, shall perform such
duties and have such powers as may be assigned them from time to time by the
Trustees or the President.
SECTION 6.10. The Secretary. The Secretary shall attend all meetings of the
Trustees and all meetings of the Shareholders and record all the proceedings of
the meetings of the Shareholders and of the Trustees in a book to be kept for
that purpose, and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
Shareholders and special meetings of the Trustees, and shall perform such other
duties and have such powers as the Trustees, or the President, may from time to
time prescribe. He shall keep in safe custody the seal of the Trust and affix or
cause the same to be affixed to any instrument requiring it, and, when so
affixed, it shall be attested by his signature or by the signature of an
Assistant Secretary.
SECTION 6.11. The Assistant Secretaries. The Assistant Secretary, or, if
there be more than one, the Assistant Secretaries in the order determined by the
Trustees or the President, shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary and shall perform
such duties and have such other powers as the Trustees or the President from
time to time prescribe.
SECTION 6.12. The Treasurer. The Treasurer shall be the chief financial
officer of the Trust. He shall keep or cause to be kept full and accurate
accounts of receipts and disbursements in books belonging to the Trust, and he
shall render to the Trustees and the President, whenever any of them require it,
an account of his transactions as Treasurer and of the financial condition of
the Trust and he shall perform such other duties as the Trustees, or the
President, from time to time prescribe.
SECTION 6.13. The Assistant Treasurers. The Assistant Treasurer, or, if
there shall be more than one, the Assistant Treasurers in the order determined
by the Trustees or the President, shall, in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the Treasurer and shall
perform such other duties and have such other powers as the Trustees, or the
President, may from time to time prescribe.
SECTION 6.14. Delegation of Duties. Whenever an officer is absent or
disabled, or whenever for any reason the Trustees may deem it desirable, the
Trustees may delegate the powers and duties of an officer or officers to any
other officer or officers or to any Trustee or Trustees.
ARTICLE VII
Dividends and Distributions
Subject to any applicable provisions of law and the Declaration, dividends
and distributions upon the Shares may be declared at such intervals as the
Trustees may determine, in cash, in securities or other property, or in Shares,
from any sources permitted by law, all as the Trustees shall from time to time
determine.
Inasmuch as the computation of net income and net profits from the sale of
securities or other properties for federal income tax purposes may vary from the
computation thereof on the records of the Trust, the Trustees shall have power,
in their discretion, to distribute as income dividends and as capital gain
distributions, respectively, amounts sufficient to enable the Trust to avoid or
reduce liability for federal income taxes.
ARTICLE VIII
Certificates of Shares
SECTION 8.1. Stock Certificates. Each holder of stock of the Trust shall be
entitled upon request to have a certificate or certificates, in such form as
shall be approved by the Board of Trustees, representing the number of shares of
stock of the Trust owned by such Shareholder, provided, however, that
certificates for fractional shares will not be delivered in any case. The
certificates representing shares and class of stock shall be signed by or in the
name of the Trust by the President or a Vice President and by the Secretary or
an Assistant Secretary or the
7
<PAGE>
Treasurer and sealed with the seal of the Trust. Any or all of the signatures or
the seal on the certificate may be a facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate shall be issued, it may be issued by the Trust
with the same effect as if such officer, transfer agent or registrar were still
in office at the date of issue.
SECTION 8.2. Rules and Regulations. The Board may make such additional
rules and regulations, not inconsistent with these By-Laws, as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of stock of the Trust. It may appoint, or authorize any officer or
officers to appoint, one or more transfer agents or one or more transfer clerks
and one or more registrars and may require all certificates for shares of stock
to bear the signature or signatures of any of them.
SECTION 8.3. Lost, Stolen, Destroyed or Mutilated Certificates. The holder
of any certificates representing shares of stock of the Trust shall immediately
notify the Trust of any loss, theft, destruction or mutilation of such
certificate, and the Trust may issue a new certificate of stock, subject to the
requirements of the Lost and Stolen Securities Program, if any, established from
time to time, by the transfer agent or registrar, in the place of any
certificate therefore issued by it which the owner thereof shall allege to have
been lost, stolen or destroyed or which shall have been mutilated, and the Board
of Trustees may, in its discretion, require such owner or such owner's legal
representatives to give to the Trust a bond in such sum, limited or unlimited,
and in such form and with such surety of sureties, as the Board of Trustees in
its absolute discretion shall determine, to indemnify the Trust and its agents
or designees against any claim that may be made against it or them, individually
or collectively, on account of the alleged loss, theft or destruction of any
such certificate, or issuance of a new certificate. Anything herein to the
contrary notwithstanding, the Board of Trustees, in its absolute discretion, may
refuse to issue any such new certificate, except pursuant to legal proceedings
under the laws of the Commonwealth of Massachusetts.
SECTION 8.4. Stock Ledger. The Trust shall maintain at the principal office
of the Trust or any transfer agent designated by the Board of Trustees, an
original or a duplicate stock ledger containing the names and addresses of all
stockholders and the number of shares of each class held by each Shareholder.
Such stock ledger may be in written form or any other form capable of being
converted into written form within a reasonable time for visual inspection. The
Trust shall be entitled to recognize the exclusive right of a person registered
on its books as the owner of shares entitled to receive dividends and to vote as
such owner, and shall not be bound to recognize any equitable or other claim to
interest in such shares on the part of any other person, whether or not it shall
have received express or other notice thereof, except as otherwise provided by
the laws of Massachusetts.
SECTION 8.5. Transfer of Stock. Transfers of shares of stock of the Trust
shall be made on the stock records of the Trust only by the registered holder of
thereof, or by his attorney duly executed and filed with the Secretary or with a
transfer agent or transfer clerk, and on
<PAGE>
surrender of the certificate or certificates, if issued, for such shares
properly endorsed or accompanied by a duly executed transfer power and the
payment of all taxes thereon.
ARTICLE IX
Custody of Securities
SECTION 9.1. Employment of a Custodian. The Trust shall place and at all
times maintain in the custody of a Custodian (including any sub-custodian for
the Custodian) all funds, securities and similar investments included in the
Trust Property. The Custodian (any sub-custodian) shall be a bank having not
less than $2,000,000 aggregate capital, surplus and undivided profits and shall
be appointed from time to time by the Trustees, who shall fix its remuneration.
SECTION 9.2. Action Upon Termination of Custodian Agreement. Upon
termination of a Custodian Agreement or inability of the Custodian to continue
to serve, the Trustees shall promptly appoint a successor custodian, but in the
event that no successor custodian can be found who has the required
qualifications and is willing to serve, the Trustees shall call as promptly as
possible a special meeting of the Shareholders to determine whether the Trust
shall function without a custodian or shall be liquidated. If so directed by
vote of the holders of a majority of the outstanding voting securities, the
Custodian shall deliver and pay over all Trust Property held by it as specified
in such vote.
SECTION 9.3. Central Certificate System. Subject to such rules, regulations
and orders as the Commission may adopt, the Trustees may direct the Custodian to
deposit all or any part of the securities owned by the Trust in a system for the
central handling of securities established by a national securities exchange or
a national securities association registered with the Commission under the
Securities Exchange Act of 1934, or such other person as may be permitted by the
Commission, or otherwise in accordance with the 1940 Act, pursuant to which
system all securities of any particular class or series of any issuer deposited
within the
8
<PAGE>
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of such securities, provided that all such
deposits shall be subject to withdrawal only upon the order of the Trust.
ARTICLE X
Waiver of Notice
Whenever any notice of time, place or purpose of any meeting of
Shareholders, Trustees, or of any committee is required to be given in
accordance with law or under the provisions of the Declaration or these By-Laws,
a waiver thereof in writing, signed by the person or persons entitled to such
notice and filed with the records of the meeting, whether before or after the
holding thereof, or actual attendance at the meeting of Shareholders, Trustees
or committee, as the case may be, in person, shall be deemed equivalent to the
giving of such notice to such person.
ARTICLE XI
Miscellaneous
SECTION 11.1. Location of Books and Records. The books and records of the
Trust may be kept outside the Commonwealth of Massachusetts at such place or
places as the Trustees may from time to time determine, except as otherwise
required by law.
SECTION 11.2. Record Date. The Trustees may fix in advance a date as the
record date for the purpose of determining Shareholders entitled to notice of,
or to vote at, any meeting of Shareholders, or Shareholders entitled to receive
payment of any dividend or the allotment of any rights, or in order to make a
determination of Shareholders for any other proper purpose. Such date, in any
case, shall be not more than sixty (60) days, and in case of a meeting of
Shareholders not less than ten (10) days, prior to the date on which particular
action requiring such determination of Shareholders is to be taken. In lieu of
fixing a record date the Trustees may provide that the transfer books shall be
closed for a stated period but not to exceed, in any case, twenty (20) days. If
the transfer books are closed for the purpose of determining Shareholders
entitled to notice of a vote at a meeting of Shareholders, such books shall be
closed for at least ten (10) days immediately preceding such meeting.
SECTION 11.3. Seal. The Trustees shall adopt a seal, which shall be in such
form and shall have such inscription thereon as the Trustees may from time to
time provide. The seal of the Trust may be affixed to any document, and the seal
and its attestation may be lithographed, engraved or otherwise printed on any
document with the same force and effect as if it had been imprinted and attested
manually in the same manner and with the same effect as if done by a
Massachusetts business corporation under Massachusetts law.
SECTION 11.4. Fiscal year. The fiscal year of the Trust shall end on such
date as the Trustees may by resolution specify, and the Trustees may by
resolution change such date for future fiscal years at any time and from time to
time.
SECTION 11.5. Orders for Payment of Money. All orders or instructions for
the payment of money of the Trust, and all notes or other evidences of
indebtedness issued in the name of the Trust, shall be signed by such officer or
officers or such other person or persons as the Trustees may from time to time
designate, or as may be specified in or pursuant to the agreement between the
Trust and the bank or trust company appointed as Custodian of the securities and
funds of the Trust.
ARTICLE XII
Compliance with Federal Regulations
The Trustees are hereby empowered to take such action as they may deem to
be necessary, desirable or appropriate so that the Trust is or shall be in
compliance with any federal or state statute, rule or regulation with which
compliance by the Trust is required.
9
<PAGE>
ARTICLE XIII
Amendments
These By-Laws may be amended, altered, or repealed, or new By-Laws may be
adopted, (a) by a Majority Shareholder Vote, or (b) by the Trustees; provided,
however, that no By-Law may be amended, adopted or repealed by the Trustees if
such amendment, adoption or repeal requires, pursuant to law, the Declaration,
or these By-Laws, a vote of the Shareholders. The Trustees shall in no event
adopt By-Laws which are in conflict with the Declaration, and any apparent
inconsistency shall be construed in favor of the related provisions in the
Declaration.
ARTICLE XIV
Declaration of Trust
The Declaration of Trust establishing National Total Income Fund, dated
June 25, 1986, a copy of which, together will all amendments thereto, is on file
in the office of the Secretary of the Commonwealth of Massachusetts, provides
that the name National Total Income Fund refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally, and
no Trustee, Shareholder, officer, employee or agent of National Total Income
Fund shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of said National Total Income Fund, but the Trust
Estate only shall be liable.
10
Exhibit 5.1
MANAGEMENT AGREEMENT
<PAGE>
NATIONAL INCOME AND GROWTH FUND
MANAGEMENT AGREEMENT
AGREEMENT made this 14th day of May, 1993 by and between NATIONAL INCOME
AND GROWTH FUND, a Massachusetts business trust (hereinafter called the "Fund")
and NATIONAL SECURITIES & RESEARCH CORPORATION, a New York corporation
(hereinafter called "National")
1. National, at its expense, undertakes to afford to the Fund the advice and
assistance of National's organization with respect to the selection,
acquisition, holding and the disposal of securities; and advice and
recommendations with respect to other aspects of the business and affairs of the
Fund; and shall, subject to the direction of the Trustees of the Fund and in
cooperation with the officers of the Fund, administer the business and affairs
of the Fund, including clerical, bookkeeping and administrative services. In
acting hereunder, National shall be an independent contractor and shall not be
an agent of the Fund.
2. National, at its expense, shall assemble and furnish to the Trustees and
officers of the Fund all statistical information reasonably requested by them
and reasonably available to National; shall furnish the Fund with office space
and equipment; and shall permit such of its directors, officers and employees as
may be elected as trustees or officers of the Fund to serve in the capacities to
which they are elected. All services to be furnished by National under this
agreement may be furnished through the medium of any such directors, officers or
employees of National. The investment policies, the administration of its
business and affairs, and all other acts of the Fund are and shall at all times
be subject to the approval and direction of the Trustees of the Fund.
3. The Fund shall at all times keep National fully informed with regard to the
securities owned by it, its funds available or to become available for
investment, and generally as to the condition of its affairs. It shall furnish
National with a certified copy of all financial statements, and a signed copy of
each report prepared by independent public accountants and with such other
information with regard to its affairs as National may, from time to time,
reasonab1y request.
4. The Fund will pay all its expenses other than those expressly stated to be
assumed by National hereunder. Expenses payable by the Fund shall include, but
not be limited to, out-of-pocket expenses of trustees and fees of trustees who
are not interested persons of National, interest charges, taxes, fees and
commissions of every kind, expenses of pricing portfolio securities, expenses of
issue, repurchase or redemption of shares, expenses of registering or qualifying
shares for sale (including the printing of the Fund's registration statements
and prospectuses), insurance expense, association membership dues, all charges
of custodians (including sums as custodian and for keeping books and rendering
<PAGE>
other services to the Fund), transfer agents, registrars, auditors and legal
counsel, expenses of preparing, printing and distributing all proxy material,
prospectuses, reports and notices to shareholders, and all, costs incident to
the Fund's organization and existence.
5. The services of National to the Fund are not to be deemed to be exclusive,
National being free to render services to others and to engage in other
activities.
6. As compensation to National, the Fund will pay National a monthly management
fee at the annual rate of 3/4 of 1% on the first $410,000,000 of the aggregate
average daily net assets of the Fund; .70% on the next $300,000,000 of such
assets; .65% on the next $200,000,000 of such assets; .60% on the next
$200,000,000 of such assets; .55% on the next $100,000,000 of such assets; .50%
on the next $100,000,000 of such assets; .45% on the next $100,000,000 of such
assets; .40% on the next $100,000,000 of such assets and 3/8 of 1% per annum on
the next aggregate average daily net assets of the Fund in excess of
$1,510,000,000.
Notwithstanding any of the above provisions, National shall reimburse the Fund
to the extent that in any fiscal year the total expenses of the Fund, exclusive
of taxes, interest, brokerage fees, and extraordinary charges, such as
litigation costs, exceed the most restrictive expense limitations applicable to
the Fund under state securities laws or published regulations thereunder, as
such limitations may be raised or lowered from time to time.
7. National assumes no responsibility under this agreement other than to render
the services called for hereunder in good faith and shall not be responsible for
any action of the Fund in following or declining to follow any advice or
recommendation of National. In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder on the
part of National, National shall not be subject to liability to the Fund or to
any shareholder of the Fund for any act or omission in the course of or in
connection with rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
8. This agreement shall terminate automatically in the event of its assignment;
the term "assignment" for this purpose having the meaning defined in Section
2(a) (4) of the Investment Company Act of 1940, as amended (the "Act").
9. This agreement may be terminated at any time, without the payment of any
penalty, (a) by the Trustees of the Fund or by vote of a majority of the
outstanding voting securities of the Fund as defined in the Act, by 60 days'
written notice addressed to National at its principal place of business; and (b)
by National by 60 days' written notice addressed to the Fund at its principal
-2-
<PAGE>
place of business.
10. The Declaration of Trust ("Declaration") establishing the Fund, dated June
25, 1986, a copy of which in on file in the office of the Secretary of the
Commonwealth of Massachusetts, provides that the name "National Total Income
Fund," as amended to reflect a change in the name of the Fund to "National
Income and Growth Fund" on March 18, 1992, refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally; and
no Trustee, shareholder, officer, employee or agent of the Fund may be held to
any personal liability, nor may resort be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of said Fund but the Fund property only shall be liable.
11. This agreement has been approved by the Trustees and shall be submitted for
approval by the Shareholders of the Fund. If approved by a vote of the majority
of the outstanding voting securities of the Fund, as defined in the Act, this
agreement shall continue in effect for a period of two years from its effective
date. Thereafter, this agreement shall continue in effect for successive annual
periods, provided that such continuance is specifically approved annually by a
majority of the Trustees who are not interested persons of the parties hereto as
defined in the Act and either by (a) the Trustees of the Fund or (b) vote of a
majority of the outstanding voting securities of the Fund, as defined in the
Act.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their officers thereunto duly authorized.
NATIONAL INCOME AND GROWTH FUND
By: /s/ ERNEST N. MYSOGLAND
---------------------------------------------
Attest: Ernest N. Mysogland / Vice President
By: /s/ MAIREAD M. COLLINS
------------------------------
Mairead M. Collins
Assistant Secretary
NATIONAL SECURITIES & RESEARCH CORPORATION
By: /s/ DENIS MCAULEY
---------------------------------------------
Denis McAuley, Senior Vice President and
Chief Financial Officer
Attest:
By: /s/ MAIREAD M. COLLINS
------------------------------
Mairead M. Collins
Assistant Secretary
-3-
Exhibit 5.2
FIRST AMENDMENT TO
MANAGEMENT AGREEMENT
<PAGE>
FIRST AMENDMENT TO
PHOENIX INCOME AND GROWTH FUND
MANAGEMENT AGREEMENT
THIS AMENDMENT made effective as of the 1st day of January, 1994 by and
between PHOENIX INCOME AND GROWTH FUND, f/k/a National Income and Growth Fund
(hereinafter called the "Trust") and NATIONAL SECURITIES & RESEARCH CORPORATION
(hereinafter called "National").
Preamble
The Trust and National have entered into a certain Management Agreement
dated May 14, 1993 (the "Agreement") wherein National agreed inter alia, to
provide its advice and assistance to the Trust in exchange for which the Trust
agreed to pay a prescribed fee to National.
On June 30, 1993, the Board of Trustees of the Trust approved an amendment
to the Trust's Declaration of Trust changing the name of the Trust to Phoenix
Income and Growth Fund.
On August 25, 1993, the Board of Trustees of the Trust also approved an
amendment reducing the management fees payable to National to a monthly fee
equivalent to the annual rate of 0.70% of the Trust's average daily net assets
up to $1 billion, 0.65% of the Trust's average daily net assets from $1 to $2
billion, and 0.60% of the Trust's average daily net assets in excess of $2
billion.
Accordingly, parties intend to amend the Agreement to reflect the present
name of the Trust and the revised management fees payable to National.
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the parties mutually agree that the Agreement is
hereby revised as follows:
1. Any and all references to "National Income and Growth Fund" are hereby
deleted and "Phoenix Income and Growth Fund" is substituted therefor.
2. Paragraph numbered 6 of the Agreement is hereby deleted and the
following is inserted in lieu thereof:
As compensation to National, the Trust will pay National a management fee
equivalent to the annual rate of 0.70% of the Trust's average daily net
assets up to $1 billion, 0.65% of the Trust's average daily net assets from
$1 to $2 billion, and 0.60% of the Trust's average daily net assets in
excess of $2 billion.
-1-
<PAGE>
National's fee will be accrued daily against the value of the Trust's net
assets and will be payable by the Trust on the last business day of each
month.
Except as herein modified, all other terms and provisions set forth in the
Agreement shall be and remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their officers thereunto duly authorized as of the day and year
first above written.
PHOENIX INCOME AND GROWTH FUND
By: /s/ PHILIP R. MCLOUGHLIN
----------------------------------
Name: Philip R. McLouglin
Title: President
Attest:
By: /s/ RICHARD WIRTH
---------------------------
Richard Wirth
Asst. Secretary
NATIONAL SECURITIES & RESEARCH CORPORATION
By: /s/ MICHAEL HAYLON
----------------------------------
Name: Michael Haylon
Title: Vice President
Attest:
By: /s/ PATRICIA O. MCLAUGHLIN
---------------------------
Patricia O. McLaughlin
Assistant Secretary
-2-
EXHIBIT 6.1
UNDERWRITING AGREEMENT
<PAGE>
UNDERWRITING AGREEMENT
THIS AGREEMENT made as of this 19th day of November, 1997, by and
between Phoenix Income and Growth Fund, a Massachusetts business trust having a
place of business located at 101 Munson Street, Greenfield, Massachusetts (the
"Fund") and Phoenix Equity Planning Corporation, a Connecticut corporation
having a place of business located at 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Underwriter").
WITNESSETH THAT:
1. The Fund hereby grants to the Underwriter the right to purchase shares of
beneficial interest of each class of each series of the Fund established and
designated as of the date hereof and of any additional series and classes
thereof which the Board of Directors or Board of Trustees, as applicable
("Trustees") may establish and designate during the term of this Agreement
(called the "Series" and "Classes", respectively) and to resell shares of
various Classes, as applicable, of each Series (collectively called the
"Shares") as principal and not as agent. The Underwriter accepts such
appointment and agrees to render the services described in this Agreement for
the compensation herein provided.
2. The Underwriter's right to purchase Shares shall be exclusive except that the
terms of this Agreement shall not apply to Shares issued or transferred:
a) pursuant to an offer of exchange exempted under Section 22(d) of the
Investment Company Act of 1940, as amended (the "Act") by reason of the
fact that said offer is permitted by Section 11 of the Act, including any
offer made pursuant to clause (1) or (2) of Section 11(b);
b) upon the sale to a registered unit investment trust which is the issuer
of periodic payment plan certificates the net proceeds of which are
invested in redeemable securities;
c) pursuant to an offer made solely to all registered holders of Shares, or
all registered holders of Shares of any Series, proportionate to their
holdings or proportionate to any cash distribution made to them by the
Fund (subject to appropriate qualifications designed solely to avoid
issuance of fractional securities);
d) in connection with any merger or consolidation of the Fund or of any
Series with any other investment company or the acquisition by the Fund,
by purchase or otherwise, of any other investment company;
<PAGE>
e) pursuant to sales exempted from Section 22(d) of the Act, by rule or
regulation or order of the Securities and Exchange Commission as provided
in the then current registration statement of the Fund; or
f) in connection with the reinvestment by Fund shareholders of dividend and
capital gains distributions.
3. The "Net Asset Value" and the "Public Offering Price" of the Shares as
referred to in this Agreement shall be computed in accordance with the
provisions of the then current registration statement of the Fund. The
Underwriter shall be notified promptly by the Fund of such computations.
4. The Underwriter has and shall enter into written sales agreements with
broker/dealers ("dealers") and with banks as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, as amended, (Exchange Act) that are not
required to register as a broker/dealer under the Exchange Act or the
regulations thereunder ("Banks"). Such sales agreements shall provide that
dealers or Banks shall use their best efforts to promote the sale of Shares.
Such sales agreements shall include such terms and conditions as Underwriter may
determine not inconsistent with this Agreement; provided, however, that such
sales agreements shall specify a) that the dealer is registered as a
broker/dealer under the Exchange Act and a member of the National Association of
Securities Dealers, Inc. or, in the alternative, that the Bank is exempt from
broker/dealer registration under the Exchange Act; and b) that such dealers and
Banks agree that they will comply with all applicable state, and federal laws
and the rules and regulations of applicable regulatory agencies.
5. Each day the Underwriter shall have the right to purchase from the Fund, as
principal, the amount of Shares needed to fill unconditional orders for such
Shares received by the Underwriter from dealers, Banks, or investors, but no
more than the Shares needed, at a price equal to the Net Asset Value of the
Shares. Any purchase of Shares by the Underwriter under this Agreement shall be
subject to reasonable adjustment for clerical errors, delays and errors of
transmission and cancellation of orders.
6. With respect to transactions other than with dealers or Banks, the
Underwriter will sell Shares only at the Public Offering Price then in effect,
except to the extent that sales at less than the Public Offering Price may be
allowed by the Act, any rule or regulation promulgated thereunder or by order of
the Securities and Exchange Commission, provided, however, that any such sales
at less than the Public Offering Price shall be consistent with the terms of the
then current registration statement of the Fund. The Underwriter will sell at
Net Asset Value Shares of any Classes which are offered by the then current
registration statement or prospectus of the Fund for sale at such Net Asset
Value or at Net Asset Value with a contingent deferred sales charge ("CDSC
Shares"). The Underwriter shall receive from the Fund all contingent deferred
sales charges applied on redemptions of CDSC Shares.
2
<PAGE>
7. Sales at a discount from the Public Offering Price shall be made in
accordance with the terms and conditions of the terms of the current
registration statement of the Fund allowing such discounts. Such discounts shall
not exceed the difference between the Net Asset Value and the Public Offering
Price; however, the Underwriter may offer compensation in excess of the
difference between the Net Asset Value and the Public Offering Price, at its
discretion and from its own profits and resources, and only as described in the
current registration statement of the Fund. With respect to sales of CDSC
Shares, the Underwriter, in accordance with the terms of the current
registration statement of the Fund, shall pay dealers a commission on such sales
from its own profits and resources.
8. As reimbursement for expenditures made in connection with providing certain
distribution-related services, the Underwriter may receive from the Fund a
distribution service fee under the terms and conditions set forth in the Fund's
distribution plan adopted under Rule 12b-1 under the Investment Company Act of
1940, as amended, as the plan may be amended from time to time and subject to
any further limitations on such fees as the Trustees may impose. The Underwriter
may receive from the Fund a service fee to be retained by the Underwriter as
compensation for providing services to shareholders of the Fund or to be paid to
dealers and Banks for providing services to their clients who are also
shareholders of the Fund.
9. The Fund shall furnish the Underwriter with copies of its organizational
documents, as amended from time to time. The Fund shall also furnish the
Underwriter with any other documents of the Fund which will assist the
Underwriter in the performance of its duties hereunder.
10. The Underwriter agrees to use its best efforts (in states where it may
lawfully do so) to obtain from investors unconditional orders for Shares
authorized for issue by the Fund and registered under applicable Federal
securities laws, and, so long as it does so, nothing herein contained shall
prevent the Underwriter from entering into similar arrangements with other
registered investment companies. The Underwriter may, in the exercise of its
discretion, refuse to accept orders for Shares from any person.
11. Upon receipt by the Fund of a purchase order from the Underwriter,
accompanied by proper delivery instructions, the Fund shall, as promptly as
practicable thereafter, cause evidence of ownership of Shares to be delivered as
indicated in such purchase order. Payment for such Shares shall be made by the
Underwriter to the Fund in a manner acceptable to the Fund, provided that the
Underwriter shall pay for such Shares no later than the third business day after
the Underwriter shall have contracted to purchase such shares.
12. In connection with offering for sale and selling Shares, the Fund authorizes
the Underwriter to give only such information and to make only such statements
or representations as are contained in the then current registration statement
of the Fund. The Underwriter shall be responsible for the approval and filing of
sales material as required under SEC and NASD regulations.
3
<PAGE>
13. The Fund agrees to pay the following expenses:
a) the cost of mailing stock certificates representing Shares;
b) fees and expenses (including legal expenses) of registering and
maintaining registrations of the Fund and of each Series and Class with
the Securities and Exchange Commission including the preparation and
printing of registration statements and prospectuses for filing with said
Commission;
c) fees and expenses (including legal expenses) incurred in registering and
qualifying Shares for sale with any state regulatory agency and fees and
expenses of maintaining, renewing, increasing or amending such
registrations and qualifications;
d) the expense of any issue or transfer taxes upon the sale of Shares to the
Underwriter by the Fund;
e) the cost of preparing and distributing reports and notices to
shareholders; and
f) fees and expenses of the transfer agent, including the cost of preparing
and mailing notices to shareholders pertaining to transactions with
respect to such shareholders accounts.
14. The Underwriter agrees to pay the following expenses:
a) all expenses of printing prospectuses and statements of additional
information used in connection with the sale of Shares and printing and
preparing all other sales literature;
b) all fees and expenses in connection with the qualification of the
Underwriter as a dealer in the various states and countries;
c) the expense of any stock transfer tax required in connection with the
sale of Shares by the Underwriter as principal to dealers or to
investors; and
d) all other expenses in connection with offering for sale and the sale of
Shares which have not been herein specifically allocated to the Fund.
15. The Fund hereby appoints the Underwriter its agent to receive requests to
accept the Fund's offer to repurchase Shares upon such terms and conditions as
may be described in the Fund's then current registration statement. The agency
granted in this paragraph 15 is terminable at the discretion of the Fund. As
compensation for acting as such agent and as part of the
4
<PAGE>
consideration for acting as underwriter, Underwriter shall receive from the Fund
all contingent deferred sales charges imposed upon the redemption of Shares.
Whether and to what extent a contingent deferred sales charge will be imposed
shall be determined in accordance with, and in the manner set forth in, the
Fund's prospectus.
16. The Fund agrees to indemnify and hold harmless the Underwriter, its officers
and directors and each person, if any, who controls the Underwriter within the
meaning of section 15 of the Securities Act of 1933, as amended, against any
losses, claims, damages, liabilities and expenses (including the cost of any
legal fees incurred in connection therewith) which the Underwriter, its
officers, directors or any such controlling person may incur under said Act,
under any other statute, at common law or otherwise, arising out of or based
upon
a) any untrue statement or alleged untrue statement of a material fact
contained in the Fund's registration statement or prospectus (including
amendments and supplements thereto), or
b) any omission or alleged omission to state a material fact required to be
stated in the Fund's registration statement or prospectus or necessary to
make the statements in either not misleading, provided, however, that
insofar as losses, claims, damages, liabilities or expenses arise out of
or are based upon any such untrue statement or omission or alleged untrue
statement or omission made in reliance and in conformity with information
furnished to the Fund by the Underwriter for use in the Fund's
registration statement or prospectus, such indemnification is not
applicable. In no case shall the Fund indemnify the Underwriter or its
controlling persons as to any amounts incurred for any liability arising
out of or based upon any action for which the Underwriter, its officers
and directors or any controlling person would otherwise be subject to
liability by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of the reckless
disregard of its obligations and duties under this Agreement.
17. The Underwriter agrees to indemnify and hold harmless the Fund, its officers
and trustees and each person, if any, who controls the Fund within the meaning
of Section 15 of the Securities Act of 1933, as amended, against any losses,
claims, damages, liabilities and expenses (including the cost of any legal fees
incurred in connection therewith) which the Fund, its officers, trustees or any
such controlling person may incur under said Act, under any other statute, at
common law or otherwise arising out of the acquisition of any shares by any
person which
a) may be based upon any wrongful act by the Underwriter or any of its
employees or representatives, or
5
<PAGE>
b) may be based upon any untrue statement or alleged untrue statement of a
material fact contained in the Fund's registration statement, prospectus
(including amendments and supplements thereto) or sales material, or any
omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading
if such statement or omission was made in reliance upon information
furnished or confirmed in writing to the Fund by the Underwriter.
18. It is understood that:
a) trustees, officers, employees, agents and shareholders of the Fund are or
may be interested persons, as that term is defined in the Act
("Interested Persons"), of the Underwriter as directors, officers,
stockholders or otherwise;
b) directors, officers, employees, agents and stockholders of the
Underwriter are or may be Interested Persons of the Fund as trustees,
officers, shareholders or otherwise;
c) the Underwriter may be an Interested Person of the Fund as shareholder or
otherwise; and
d) the existence of any such dual interest shall not offset the validity
hereof or of any transactions hereunder.
19. The Fund may terminate this Agreement by 60 days written notice to the
Underwriter at any time, without the payment of any penalty, by vote of the
Trustees or by a vote of a majority of the outstanding voting securities, as
that term is defined in the Act, of the Fund. The Underwriter may terminate this
Agreement by 60 days written notice to the Fund, without the payment of any
penalty. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in the Act.
20. Subject to prior termination as provided in paragraph 19, this Agreement
shall continue in force for one year from the date of execution and from year to
year thereafter so long as the continuance after such one year period shall be
specifically approved at least annually by vote of the Trustees, or by a vote of
a majority of the appropriate class of outstanding voting securities, as that
term is defined in the Act, of the Fund. Additionally, each annual renewal of
this Agreement must be approved by the vote of a majority of the Trustees who
are not parties to the Agreement or Interested Persons of any such party, cast
in person at a meeting of the Trustees called for the purpose of voting on such
approval.
21. It is expressly agreed that the obligations of the Fund hereunder shall not
be binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Fund personally, but bind only the trust property of the Fund,
as provided in the Declaration of Trust. The execution and delivery of this
Agreement by the President of the Fund has been authorized by the Trustees
acting as such, and neither such execution and delivery by such officer nor such
6
<PAGE>
authorization by such Trustees shall be deemed to have been made by any of them
individually or be binding upon or impose any liability on any of them
personally, but shall bind only the trust property of the Fund as provided in
the Declaration of Trust. The Declaration of Trust is on file with the Secretary
of the Commonwealth of Massachusetts.
22. This Agreement shall become effective upon the date first set forth above.
This Agreement shall be governed by the laws of the State of Connecticut and
shall be binding on the successors and assigns of the parties to the extend
permitted by law.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
PHOENIX INCOME AND GROWTH 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 6.2
SALES AGREEMENT
<PAGE>
[logo]PHOENIX Phoenix Funds
DUFF&PHELPS Sales Agreement
- --------------------------------------------------------------------------------
PHOENIX EQUITY PLANNING CORPORATION
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, Connecticut 06083-2200
Dealer Name:
Address:
Phoenix Equity Planning Corporation ("PEPCO", "we", "us", or "our") invites you
to participate in the sale and distribution of shares of registered investment
companies (which shall collectively be referred to hereinafter as the "Funds")
for which we are national distributor or principal underwriter, and which may be
listed in Annex A hereto which such Annex may be amended by us from time to
time. Upon acceptance of this agreement by PEPCO, you may offer and sell shares
of each of the Funds (hereafter "Shares") subject, however, to the terms and
conditions hereof including our right to suspend or cease the sale of such
shares. For the purposes hereof, the above referenced dealer shall be referred
to as "you".
1. You understand and agree that in all sales of Shares to the public, you
shall act as dealer for your own account. All purchase orders and
applications are subject to acceptance or rejection by us in our sole
discretion and are effective only upon confirmation by us. Each purchase
will be deemed to have been consummated in our principal office subject to
our acceptance and effective only upon confirmation to you by us.
2. You agree that all purchases of Shares by you shall be made only for the
purpose of covering purchase orders already received from your customers
(who may be any person other than a securities dealer or broker) or for
your own bona-fide investment.
3. You shall offer and sell Shares pursuant to this agreement for the purpose
of covering purchase orders of your customers, to the extent applicable,
(a) at the current public offering price ("Offering Price") for Class A
Shares or (b) at the Net Asset Value for Class B shares as set forth in the
current prospectus of each of the funds. The offer and sale of Class B
Shares by you is subject to Annex B hereto, "Compliance Standards for the
Sale of the Phoenix Funds Under Their Alternative Purchase Arrangements".
4. You shall pay us for Shares purchased within three (3) business days of the
date of our confirmation to you of such purchase or within such time as
required by applicable rule or law. The purchase price shall be (a) the
Offering Price, less only the applicable dealer discount (Dealer Discount)
for Class A Shares, if applicable, or (b) the Net Asset Value, less only
the applicable sales commission (Sales Commission) for Class B Shares, if
applicable, as set forth in the current prospectus at the time the purchase
is received by us. We have the right, without notice, to cancel any order
for which payment of good and sufficient funds has not been received by us
as provided in this paragraph, in which case you may be held responsible
for any loss suffered resulting from your failure to make payment as
aforesaid.
5. You understand and agree that any Dealer Discount, Sales Commission or fee
is subject to change from time to time without prior notice. Any orders
placed after the effective date of any such change shall be subject to the
Dealer Discount or Sales Commission in effect at the time such order is
received by us.
6. You understand and agree that Shares purchased by you under this Agreement
will not be delivered until payment of good and sufficient funds has been
received by us. Delivery of Shares will be made by credit to a shareholder
open account unless delivery of certificates is specified in the purchase
order. In order to avoid unnecessary delay, it is understood that, at your
request, any Shares resold by you to one of your customers will be
delivered (whether by credit to a shareholder open account or by delivery
of certificates) in the name of your customer.
<PAGE>
7. You understand that on all purchases of Shares to which the terms of this
Agreement are applicable by a shareholder for whom you are dealer of
record, we will pay you an amount equal to the Dealer Discount, Sales
Commission or fees which would have been paid to you with respect to such
Shares if such Shares had been purchased through you. You understand and
agree that the dealer of record for this purpose shall be the dealer
through whom such shareholder most recently purchased Shares of such fund,
unless the shareholder or you have instructed us otherwise. You understand
that all amounts payable to you under this paragraph and currently payable
under this agreement will be paid as of the end of the month unless
specified otherwise for the total amount of Shares to which this paragraph
is applicable but may be paid more frequently as we may determine in our
discretion. Your request for Dealer Discount or Sales Commission reclaims
will be considered if adequate verification and documentation of the
purchase in question is supplied to us, and the reclaim is requested within
three years of such purchase.
8. We appoint the transfer agent (or identified sub-transfer agent) for each
of the Funds as our agent to execute the purchase transaction of Shares and
to confirm such purchases to your customers on your behalf, and you
guarantee the legal capacity of your customers so purchasing such Shares.
You further understand that if a customer's account is established without
the customer signing the application form, you hereby represent that the
instructions relating to the registration and shareholder options selected
(whether on the application form, in some other document or orally) are in
accordance with the customer's instructions and you agree to indemnify the
Funds, the transfer agent (or identified sub-transfer agent) and us for any
loss or liability resulting from acting upon such instructions.
9. Upon the purchase of Class A Shares pursuant to a Letter of Intent, you
will promptly return to us any excess of the Dealer Discount previously
allowed or paid to you over that allowable in respect to such larger
purchases.
10. Unless at the time of transmitting a purchase order you advise us to the
contrary, we may consider that the investor owns no other Shares and may
further assume that the investor is not entitled to any lower sales charge
than that accorded to a single transaction in the amount of the purchase
order, as set forth in the current prospectus.
11. You understand and agree that if any Shares purchased by you under the
terms of this Agreement are, within seven (7) business days after the date
of our confirmation to you of the original purchase order for such Shares,
repurchased by us as agent for such fund or are tendered to such fund for
redemption, you shall forfeit the right to, and shall promptly pay over to
us the amount of any Dealer Discount or Sales Commission allowed to you
with respect to such Shares. We will notify you of such repurchase or
redemption within ten (10) days of the date upon which certificates are
delivered to us or to such fund or the date upon which the holder of Shares
held in a shareholder open account places or causes to be placed with us or
with such fund an order to have such shares repurchased or redeemed.
12. You agree that, in the case of any repurchase of any Shares made more than
seven (7) business days after confirmation by us of any purchase of such
Shares, except in the case of Shares purchased from you by us for your own
bona fide investment, you will act only as agent for the holders of such
Shares and will place the orders for repurchase only with us. It is
understood that you may charge the holder of such Shares a fair commission
for handling the transaction.
13. Our obligations to you under this Agreement are subject to all the
provisions of the respective distribution agreements entered into between
us and each of the Funds. You understand and agree that in performing your
services under this agreement you are acting in the capacity of an
independent contractor, and we are in no way responsible for the manner of
your performance or for any of your acts or omissions in connection
therewith. Nothing in the Agreement shall be construed to constitute you or
any of your agents, employees, or representatives as our agent, partner or
employee, or the agent, partner of employee of any of the Funds.
In connection with the sale and distribution of shares of Phoenix Funds,
you agree to indemnify and hold us and our affiliates, employees, and/or
officers harmless from any damage or expense as a result of (a) the
negligence, misconduct or wrongful act by you or any employee,
representative, or agent of yours and/or (b) any actual or alleged
violation of any securities laws, regulations or orders. Any indebtedness
or obligation of yours to us whether arising hereunder or otherwise, and
any liabilities incurred or moneys paid by us to any person as a result of
any misrepresentation, wrongful or unauthorized act or omission, negligence
of, or failure of you or your employees, representatives or agents to
comply with the Sales Agreement, shall be set off against any compensation
payable under this agreement. Any differential between such expenses and
compensation payable hereunder shall be payable to us upon demand. The
terms of this provision shall not be impaired by the termination of this
agreement.
In connection with the sale and distribution of shares of Phoenix Funds, we
agree to indemnify and hold you, harmless from any damage or expense on
account of the gross and willful negligence, misconduct or wrongful act of
us or any employee, representative, or agent of ours which arises out of or
is based upon any untrue statement or alleged untrue statement of material
fact, or the omission or alleged omission of a material fact in: (i) any
registration statement, including any prospectus or any post-effective
amendment thereto; or (ii) any material prepared and/or supplied by us for
use in conjunction with the offer or sale of Phoenix Funds; or (iii) any
state registration or other document filed in any state or jurisdiction in
order to qualify any Fund under the securities laws of such state or
jurisdiction. The terms of this provision shall not be impaired by the
termination of this agreement.
<PAGE>
14. We will supply you with reasonable quantities of the current prospectus,
periodic reports to shareholders, and sales materials for each of the
Funds. You agree not to use any other advertising or sales material
relating to the sale of shares of any of the Funds unless such other
advertising or sales material is pre-approved in writing by us.
15. You agree to offer and sell Shares only in accordance with the terms and
conditions of the then current prospectus of each of the Funds and subject
to the provisions of this Agreement, and you will make no representations
not contained in any such prospectus or any authorized supplemental sales
material supplied by us. You agree to use your best efforts in the
development and promotion of sales of the Shares covered by this Agreement,
and agree to be responsible for the proper instruction, training and
supervision of all sales representatives employed by you in order that such
Shares will be offered in accordance with the terms and conditions of this
Agreement and all applicable laws, rules and regulations. All expenses
incurred by you in connection with your activities under this Agreement
shall be borne by you. In consideration for the extension of the right to
exercise telephone exchange and redemption privileges to you and your
registered representatives, you agree to bear the risk of any loss
resulting from any unauthorized telephone exchange or redemption
instructions from you or your registered representatives. In the event we
determine to refund any amounts paid by any investor by reason of such
violation on your part, you shall forfeit the right to, and pay over to us,
the amount of any Dealer Discount or Sales Commission allowed to you with
respect to the transaction for which the refund is made.
16. You represent that you are properly registered as a broker or dealer under
the Securities and Exchange Act of 1934 and are member of the National
Association of Securities Dealers, Inc. (NASD) and agree to maintain
membership in the NASD or in the alternative, that you are a foreign dealer
not eligible for membership in the NASD. You agree to notify us promptly of
any change, termination or suspension of the foregoing status. You agree to
abide by all the rules and regulations of the NASD including Section 26 of
Article III of the Rules of Fair Practice, which is incorporated herein by
reference as if set forth in full. You further agree to comply with all
applicable state and Federal laws and the rules and regulations of
applicable regulatory agencies. You further agree that you will not sell,
or offer for sale, Shares in any jurisdiction in which such Shares have not
been duly registered or qualified for sale. You agree to promptly notify us
with respect to (a) the initiation and disposition of any formal
disciplinary action by the NASD or any other agency or instrumentality
having jurisdiction with respect to the subject matter hereof against you
or any of your employees or agents; (b) the issuance of any form of
deficiency notice by the NASD or any such agency regarding your training,
supervision or sales practices; and (c) the effectuation of any consensual
order with respect thereto.
17. Either party may terminate this agreement for any reason by written or
electronic notice to the other party which termination shall become
effective fifteen (15) days after the date of mailing or electronically
transmitting such notice to the other party. We may also terminate this
agreement for cause or as a result of a violation by you, as determined by
us in our discretion, of any of the provisions of this Agreement, said
termination to be effective on the date of mailing written or transmitting
electronic notice to you of the same. Without limiting the generality of
the foregoing, your own expulsion from the NASD will automatically
terminate this Agreement without notice. Your suspension from the NASD or
violation of applicable state or Federal laws or rules and regulations of
applicable regulatory agencies will terminate this Agreement effective upon
the date of our mailing written notice or transmitting electronic notice to
you of such termination. Our failure to terminate this Agreement for any
cause shall not constitute a waiver of our right to so terminate at a later
date.
18. All communications and notices to you or us shall be sent to the addresses
set forth at the beginning of this Agreement or to such other address as
may be specified in writing from time to time.
19. This agreement shall become effective upon the date of its acceptance by us
as set forth herein. This agreement may be amended by PEPCO from time to
time. This Agreement and all rights and obligations of the parties
hereunder shall be governed by and construed under the laws of the State of
Connecticut. This agreement is not assignable or transferable, except that
we may assign or transfer this agreement to any successor distributor of
the Shares described herein.
ACCEPTED ON BEHALF OF ACCEPTED ON BEHALF OF
PHOENIX EQUITY PLANNING DEALER FIRM:
CORPORATION:
Date ______________________________ Date __________________________________
By /s/ John F. Sharry By
________________________________ ____________________________________
Print Name John F. Sharry Print Name
_________________________ ____________________________
Managing Director, Retail Sales
Print Title _______________________ Print Title ___________________________
NASD CRD Number _______________________
<PAGE>
[LOGO]PHOENIX AMENDED ANNEX A, DEALER AGREEMENT WITH
DUFF&PHELPS PHOENIX EQUITY PLANNING CORPORATION, FEBRUARY 27, 1998
================================================================================
I. PHOENIX FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PHOENIX SERIES FUND
Balanced Fund Series
Convertible Fund Series
Growth Fund Series
Aggressive Growth Fund Series
High Yield Fund Series
Money Market Fund Series
U.S. Government Securities Fund Series
PHOENIX-ABERDEEN SERIES FUND
Aberdeen New Asia Fund
Aberdeen Global Small Cap Fund
PHOENIX MULTI-PORTFOLIO FUND
Tax-Exempt Bond Portfolio
Mid Cap Portfolio
International Portfolio
Real Estate Securities Portfolio
Emerging Markets Bond Portfolio
Strategic Income Fund
PHOENIX STRATEGIC EQUITY SERIES FUND
Equity Opportunities Fund
Strategic Theme Fund
Small Cap Fund
PHOENIX EQUITY SERIES FUND
Core Equity Fund
Growth and Income Fund
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX VALUE EQUITY FUND
PHOENIX SMALL CAP VALUE FUND
PHOENIX-ENGEMANN FUNDS
Balanced Return Fund
Global Growth Fund
Growth Fund
Nifty Fifty Fund
Small & Mid-Cap Growth Fund
Value 25 Fund
- --------------------------------------------------------------------------------
Equity Planning may sponsor, to all qualifying dealers, on a non-discriminatory
basis, sales contests, training and educational meetings and provide to all
qualifying broker/dealers, from its own profits and resources, additional
compensation in the form of trips, merchandise or expense reimbursement. Brokers
or dealers other than Equity Planning may also make customary additional charges
for their services in effecting purchases, if they notify the Fund of their
intention to do so. Applicable waivers of Class A sales loads and Class B
contingent deferred sales charges are described in the prospectus.
================================================================================
CLASS A SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A SHARES (EXCEPT MULTI-SECTOR SHORT TERM MULTI-SECTOR SHORT TERM
BOND FUND & MONEY MARKET) BOND FUND CLASS A SHARES
DEALER DISCOUNT DEALER DISCOUNT
SALES CHARGE OR AGENCY FEE SALES CHARGE OR AGENCY FEE
AMOUNT OF AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
TRANSACTION OFFERING PRICE OFFERING PRICE OFFERING PRICE OFFERING PRICE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.25% 2.25% 2.00%
- ---------------------------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 4.50 4.00 1.25 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 3.50 3.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 3.00 2.75 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 2.00 1.75 0.75 0.75
- ---------------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Shares of the Money Market Series are offered to the public at their constant
net asset value of $1.00 per share with no sales charge on Class A shares.
$1 MILLION NAV SALES FINDERS FEE: In connection with Class A Share purchases of
$1,000,000 or more (or subsequent purchases in any amount), Equity Planning may
pay broker/dealers, from its own profits and resources, a percentage of the net
asset value of shares sold (excluding Money Market shares) as set forth in the
table below. If part or all of such investment, is subsequently redeemed within
one year of the investment date, the broker/dealer will refund to Equity
Planning any such amounts paid with respect to the investment.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PURCHASE AMOUNT $1,000,000 to $3,000,000 $3,000,001 to $6,000,000 $6,000,001 or more
- ---------------------------------------------------------------------------------------------------------------------------------
PAYMENT TO BROKER/DEALERS 1% 0.50 of 1% 0.25 of 1%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
CLASS A SHARES
- --------------------------------------------------------------------------------
TRAIL: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.25% annually, based on the average
daily net asset value of Class A shares sold by such broker/dealers (except
Money Market Series) and remaining outstanding on the Funds' books during the
period in which the fee is calculated. Dealers must have an aggregate value of
$50,000 or more in one Fund to qualify for payment in that Fund.
<PAGE>
================================================================================
CLASS B SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B SHARES
(EXCEPT MULTI-SECTOR SHORT TERM BOND FUND) MULTI-SECTOR SHORT TERM BOND FUND CLASS B
<S> <C>
Sales Commission 4.00% Sales Commission 2.00%
</TABLE>
Broker/Dealer firms maintaining house/omnibus accounts, upon redemption of a
customer account within the time frames specified below, shall forward to Equity
Planning the indicated contingent deferred sales charge.
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE CONTINGENT DEFERRED CONTINGENT DEFERRED
SALES CHARGES SALES CHARGES
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
First 5.00% 2.00%
- -----------------------------------------------------------------------------------------------------------------------------
Second 4.00 1.50
- -----------------------------------------------------------------------------------------------------------------------------
Third 3.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------
Fourth and Fifth 2.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------
Sixth 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
TRAIL: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.25% annually, based on the average
daily net asset value of shares sold by such broker/dealers (except Money Market
Series) and remaining outstanding on the Funds' books during the period in which
the fee is calculated, commencing one year after the investment date. Dealers
must have an aggregate value of $50,000 or more in one Fund to qualify for
payment in that Fund.
================================================================================
CLASS C SHARES - MULTI-SECTOR SHORT TERM BOND FUND ONLY
- --------------------------------------------------------------------------------
TRAIL: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.50% annually, based on the average
daily net asset value of shares sold by such broker/dealers and remaining
outstanding on the Funds' books during the period in which the fee is
calculated. Dealers must have an aggregate value of $50,000 or more in the Fund
to qualify for payment.
FINDERS FEE:
In connection with Class C Share purchases of $250,000 or more (or subsequent
purchases in any amount), Equity Planning may pay broker-dealers,
from its own resources, on amount equal to 0.50% of purchases above $250,000
but under $3 million plus 0.25% on purchases in excess of $3 million.
If all or part of the investment is subsequently redeemed, except for exchanges
or purchases of other Phoenix funds, within one year of the investment date, the
broker-dealer will refund to the Distributor such amount paid with respect to
the investment.
================================================================================
CLASS C SHARES - AVAILABLE ONLY FOR THE FUNDS LISTED BELOW:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CORE EQUITY FUND PHOENIX-ENGEMANN GLOBAL GROWTH FUND PHOENIX-ENGEMANN SMALL & MID-CAP
EMERGING MARKETS BOND PORTFOLIO MULTI-SECTOR FIXED INCOME FUND GROWTH FUND
(EFFECTIVE 3-27-98) STRATEGIC INCOME FUND VALUE EQUITY FUND
GROWTH AND INCOME FUND (EFFECTIVE 3-27-98) SMALL CAP VALUE FUND
HIGH YIELD FUND SERIES STRATEGIC THEME FUND PHOENIX-ENGEMANN BALANCED RETURN FUND
(EFFECTIVE 2-27-98) PHOENIX-ENGEMANN NIFTY FIFTY FUND PHOENIX-ENGEMANN VALUE 25 FUND
PHOENIX-ENGEMANN GROWTH FUND
</TABLE>
Sales Commission: 1%. Contingent deferred sales charge: 1% for one year from the
date of each purchase. Broker/Dealer firms maintaining house/omnibus accounts,
upon redemption of a customer account within one year of purchase date, shall
forward to Equity Planning the indicated contingent deferred sales charge.
TRAIL AND SERVICE FEE: Equity Planning intends to pay a fee after the first year
to qualifying broker/dealer firms at the equivalent of 0.75% annually, and a
Service Fee at the equivalent of 0.25% annually, based on the average daily net
asset value of shares sold by such broker/dealers and remaining outstanding on
the Funds' books during the period in which the fee is calculated. Dealers must
have an aggregate value of $50,000 or more in the Fund to qualify for payment.
<PAGE>
================================================================================
CLASS M SHARES - AVAILABLE ONLY FOR THE FUNDS LISTED BELOW:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CORE EQUITY FUND MULTI-SECTOR FIXED INCOME FUND VALUE EQUITY FUND
GROWTH AND INCOME FUND STRATEGIC THEME FUND SMALL CAP VALUE FUND
PHOENIX-ENGEMANN GROWTH FUND PHOENIX-ENGEMANN NIFTY FIFTY FUND PHOENIX-ENGEMANN BALANCED RETURN FUND
PHOENIX-ENGEMANN GLOBAL GROWTH FUND PHOENIX-ENGEMANN SMALL & MID-CAP PHOENIX-ENGEMANN VALUE 25 FUND
GROWTH FUND
</TABLE>
<TABLE>
<CAPTION>
DEALER DISCOUNT
SALES CHARGE OR AGENCY FEE
AMOUNT OF AS PERCENTAGE OF AS PERCENTAGE OF
OFFERING PRICE OFFERING PRICE OFFERING PRICE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 3.50% 3.00%
- ------------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 2.50 2.00
- ------------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 1.50 1.00
- ------------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 1.00 1.00
- ------------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 None None
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
TRAIL: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.50% annually, based on the average
daily net asset value of shares sold by such broker/dealers and remaining
outstanding on the Funds' books during the period in which the fee is
calculated. Dealers must have an aggregate value of $50,000 or more in the Fund
to qualify for payment.
================================================================================
II. A. PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
- --------------------------------------------------------------------------------
Balanced Portfolio Growth Stock Portfolio
Enhanced Reserves Portfolio Money Market Portfolio
Managed Bond Portfolio U.S. Government Securities Portfolio
FINDER'S FEE: Equity Planning may pay broker/dealers, from its own profits and
resources, a percentage of the net asset value of Class X and Class Y shares
sold as set forth in the table below. If part of any investment is subsequently
redeemed within one year of the investment date, the broker/dealer will refund
to Equity Planning any such amounts paid with respect to the investment.
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PURCHASE AMOUNT 0 to $5,000,000 $5,000,001 to $10,000,000 $10,000,001 or more
- ------------------------------------------------------------------------------------------------------------------------------------
PAYMENT TO BROKER/DEALERS 0.50% 0.25% 0.10%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TRAIL: (Class Y shares only): Equity Planning intends to pay broker/dealers a
quarterly service fee at the equivalent of 0.25% annually, based on the average
daily net asset value of Class Y shares sold by such broker/dealers and
remaining outstanding on the Funds' books during the period in which the fee is
calculated, subject to future amendment or termination.
================================================================================
II. B. PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
- --------------------------------------------------------------------------------
Phoenix Real Estate Equity Securities Portfolio
TRAIL: (Class Y shares only): Equity Planning intends to pay broker/dealers a
quarterly service fee at the equivalent of 0.25% annually, based on the average
daily net asset value of Class Y shares sold by such broker/dealers and
remaining outstanding on the Funds' books during the period in which the fee is
calculated, subject to future amendment or termination.
<PAGE>
PDP80A (2-98) Distributed by Phoenix Equity Planning Corporation,
Enfield, CT, 06083
<PAGE>
[logo]PHOENIX Annex B To Dealer Agreement With
DUFF&PHELPS Phoenix Equity Planning Corporation
- --------------------------------------------------------------------------------
Compliance Standards for
the Sale of the Phoenix Funds
Under Their Alternative Purchase Arrangements
As national distributor or principal underwriter of the Phoenix Funds, which
offer their shares on both a front-end and deferred sales charge basis, Phoenix
Equity Planning Corporation ("PEPCO") has established the following compliance
standards which set forth the basis upon which shares of the Phoenix Funds may
be sold. These standards are designed for those broker/dealers ("dealers") that
distribute shares of the Phoenix Funds and for each dealer's financial
advisors/registered representatives.
As shares of the Phoenix Funds are offered with two different sales arrangements
for sales and distribution fees, it is important for an investor not only to
choose a mutual fund that best suits his investment objectives, but also to
choose the sales financing method which best suits his particular situation. To
assist investors in these decisions and to ensure proper supervision of mutual
fund purchase recommendations, we are instituting the following compliance
standards to which dealers must adhere when selling shares of the Phoenix Funds:
1. Any purchase of a Phoenix Fund for less than $250,000 may be either of
shares subject to a front-end load (Class A shares) or subject to deferred
sales charge (Class B shares).
2. Any purchase of a Phoenix Fund by an unallocated qualified employer
sponsored plan for less than $1,000,000 may be either of shares subject to
a front-end load (Class A shares) or subject to deferred sales charge
(Class B shares). Class B shares sold to allocated qualified employer
sponsored plans will be limited to a maximum total value of $250,000 per
participant.
3. Any purchase of a Phoenix Fund for $250,000 or more (except as noted above)
or which qualifies under the terms of the prospectus for net asset value
purchase of Class A shares should be for Class A shares.
General Guidelines
These are instances where one financing method may be more advantageous to an
investor than the other. Class A shares are subject to a lower distribution fee
and, accordingly, pay correspondingly higher dividends per share. However,
because initial sales charges are deducted at the time of purchase, such
investors would not have all of their funds invested initially and, therefore,
would initially own fewer shares. Investors not qualifying for reduced initial
sales charges who expect to maintain their investment for an extended period of
time might consider purchasing Class A Shares because the accumulated continuing
distribution charges on Class B Shares may exceed the initial sales charge on
Class A Shares during the life of the investment.
Again, however, such investors must weigh this consideration against the fact
that, because of such initial sales charge, not all of their funds will be
invested initially. However, other investors might determine that it would be
more advantageous to purchase Class B Shares to have all of their funds invested
initially, although remaining subject to higher continuing distribution charges
and, for a five-year period, being subject to a contingent deferred sales charge
(three years for Asset Reserve).
A National Association of Securities Dealers rule specifically prohibits
"breakpoint sales" of front-end load shares. A "breakpoint sale" is a sale to
the client of an amount of front-end load (Class A) shares just below the amount
which would be subject to the next breakpoint on the fund's sales charge
schedule. Because the deferred sales charge on Class B shares is reduced by 1%
for each year the shares are held, a redemption of Class B shares just before an
"anniversary date" is in some ways analogous to a breakpoint sale. A client
might wish to redeem just before an anniversary date for tax or other reasons,
and a client who chose to wait would continue to be at market risk.
Nevertheless, investment executives should inform clients intending to redeem
Class B shares near an anniversary date that, if the redemption were delayed,
the deferred sales charge would be reduced.
Responsibilities of Branch Office Manager (or other appropriate reviewing
officer).
A dealer's branch manger or other appropriate reviewing officer ("the Reviewing
Officer") must ensure that the financial advisor/registered representative has
advised the client of the available financing methods offered by the Phoenix
Funds, and the impact of choosing one method over another. In certain instances,
it may be appropriate for the Reviewing Officer to discuss the purchase directly
with the client. The reviewing officer should review purchases for Class A or
Class B shares given the relevant facts and circumstances, including but not
limited to: (a) the specific purchase order dollar amount; (b) the length of
time the investor expects to hold his shares; and (c) any other relevant
circumstances, such as the availability of purchases under letters of intent or
pursuant to rights of accumulation and distribution requirements. The foregoing
guidelines, as well as the examples cited above, should assist the Reviewing
Officer in reviewing and supervising purchase recommendations and orders.
Effectiveness
These compliance guidelines are effective immediately with respect to any order
for shares of those Phoenix Funds which offer their shares pursuant to the
alternative purchase arrangement.
Questions relating to these compliance guidelines should be directed by the
dealer to its national mutual fund sales and market group or its legal
department or compliance director. PEPCO will advise dealers in writing of any
future changes in these guidelines.
PEP80B 11/95
Exhibit 6.3
SUPPLEMENT TO PHOENIX FAMILY OF FUNDS
SALES AGREEMENT
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
SUPPLEMENT TO PHOENIX FAMILY OF FUNDS
SALES AGREEMENT
It is hereby agreed that this AGREEMENT, dated this __________ day
of __________, 19__, between ________________________________________ ("Dealer")
and Phoenix Equity Planning Corporation ("Distributor"), supplements and amends
the Sales Agreement between Dealer and Distributor dated by Distributor
_______________________ 19__ ("Sales Agreement').
WHEREAS, Dealer wishes to use shares of the Funds in a fee-based
program made available by Dealer to clients of Dealer (the "Fee-Based Program");
WHEREAS, Dealer wishes to afford its fee-based clients the
opportunity to qualify for the ability to purchase shares of the Funds at net
asset value; and
WHEREAS, Distributor is willing to allow Dealer to purchase shares
of the Funds for clients in the Fee-Based Program subject to the provisions of
this agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by both parties, Dealer
and Distributor hereby agree as follows:
1. Dealer may sell shares of any Funds made available by
Distributor, from time to time, at net asset value to bona fide clients of
Dealer for use solely in their Fee-Based Program. Dealer will earn no concession
or commission on any such sale.
2. Distributor, after consulting Dealer, will determine, from time
to time, which Funds it will make available to Dealer for use in the Fee-Based
Program. Dealer will comply with all provisions of the Prospectus and Statement
of Additional Information of each Fund.
1
<PAGE>
3. All shares made available to Dealer under the Fee-Based Program
must be purchased by Dealer for the benefit of Dealer's clients participating in
its Fee-Based Program under which Dealer provides portfolio management and other
services to such clients for a fee. Such fee to be paid in connection with
investment in the Funds shall at all times be at a level acceptable to
Distributor. Dealer acknowledges that it has sent the Distributor the current
fee schedule for the Fee-Based Program and Dealer agrees to notify Distributor
at least thirty (30) days in advance in writing of any amendment to such fee
schedule. The current fee schedule is attached. Dealer shall not prepare, use or
distribute brochures, written materials or advertising in any form that refers
to sales of the Funds as no-load or at net asset value except, in the case of
brochures, it may refer to the Funds as available at net asset value under the
Fee-Based Program if the fees and expenses of the Fee-Based Program are given at
least equal prominence. Notwithstanding the foregoing, in connection with
explaining the fees and expenses of the Fee-Based Program, representatives of
Dealer may describe to customers the option of purchasing Fund shares through
the Fee-Based Program at net asset value.
4. Distributor warrants that all necessary disclosures regarding
the sale of shares at net asset value will be set forth in the Prospectus and
Statement of Additional Information of the Funds available under this Agreement.
5. Dealer may maintain either an omnibus account(s) solely for the
clients of its Fee-Based program or may maintain separate accounts for each
client of its Fee-Based Program with the Fund's transfer agent. If an omnibus
account(s) is maintained, Dealer shall be solely responsible for meeting all
legal obligations with respect to each beneficial owner including, but not
limited to, the delivery of proxies, annual and semi-annual reports and other
materials.
6. This Agreement shall be governed and interpreted in accordance
with the laws of the State of Connecticut. This Agreement shall not relieve
Dealer or Distributor from any obligations either may have under any other
agreements between them (except with respect to the payment of service fees),
including but not limited to the Sales Agreement, which is incorporated by
reference herein and shall control in case of any conflict with this Agreement.
7. Distributor is not endorsing, recommending or otherwise involved
in providing any investment product or advisory service of Dealer (including but
not limited to the Fee-Based Program). Distributor is merely affording Dealer
the opportunity to use shares of the Funds distributed by Distributor as an
investment medium for the Fee-Based Program.
8. This Agreement is not exclusive and may be terminated by either
party upon sixty (60) days prior written notice to the other party. It shall
terminate automatically upon termination of the Sales Agreement between the
parties. This Agreement may be amended only by a written instrument, signed by
both parties.
IN WITNESS WHEREOF, this Agreement has been executed as of the date set
forth above by a duly authorized officer of each party.
2
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
By: _______________________________________
John F. Sharry
Managing Director, Retail Sales
Dealer: _____________________________
By: _________________________________
Name: _______________________________
Title: ______________________________
Address: ____________________________
____________________________
____________________________
Phone: ______________________________
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P O Box 2200
Enfield, CT 06083-2200
(230) 253-1000
3
Exhibit 6.4
FINANCIAL INSTITUTION SALES CONTRACT
FOR THE PHOENIX FAMILY OF FUNDS
<PAGE>
FINANCIAL INSTITUTION SALES CONTRACT
FOR THE PHOENIX FAMILY OF FUNDS
Between: and
PHOENIX EQUITY PLANNING CORPORATION
Distributor of: The Phoenix Family of Funds
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
As distributor of The Phoenix Family of Funds (the "Funds"), we agree that you
may make available to your customers, under an agency relationship with your
customers, shares of beneficial interest issued by the Funds (the "Shares"),
subject to any limitation imposed by the Funds and to confirmation by us of each
transaction. By your acceptance hereof, you agree to all of the following terms
and conditions:
I. Offering Prices and Fees
The public offering price at which you may make Shares available to your
customers is the net asset value thereof, as computed from time to time, plus
any applicable sales charge described in the then current prospectus of the
applicable Fund. In the case of purchases by you, as agent for your customers,
of shares sold with a sales charge, you will receive an agency fee consisting of
a portion of the public offering price, determined on the same basis as the
"dealer discount" described in the then current Prospectus of the Funds, and
such other compensation to dealers as may be described therein, which shall be
payable to you at the same time and on the same basis as the same is paid to
such dealers, consistent with applicable law, rules and regulations. In
determining the amount of any agency fee payable to you hereunder, we reserve
the right to revise the agency fee referred to herein upon written notice to
you. We will furnish you upon request with the public offering prices for the
Shares and you agree to quote such prices in connection with any Shares made
available by you as agent for your customers. Each purchase of Shares by your
customers is made subject to confirmation by us at the public offering price
next computed after receipt of the order. There is no sales charge or agency fee
to you on the reinvestment of dividends and distributions.
II. Manner of Making Shares Available for Purchase
We will, upon request, deliver to you a copy of each Fund's then current
Prospectus and will provide you with such number of copies of each Fund's
current Prospectus, Statement of Additional Information and shareholder reports
and of supplementary sales materials prepared by us, as you may reasonably
request. It shall be your obligation to ensure that all such information and
materials are distributed to your customers who own Shares in accordance with
securities and/or banking law and regulations and any other applicable
regulations. Neither you nor any other person is authorized to give any
information or make any representations other than those contained in such
prospectuses, Statements of Additional Information and shareholder reports or in
such supplemental sales materials. You shall not furnish or cause to be
furnished to any person, display or publish any information or materials
relating to any Fund (including, without limitation, promotional materials and
sales literature, advertisements, press releases, announcements, statements,
posters, signs or similar material), except such information and materials as
may be furnished to you by us or the Fund, and such other information and
materials as may be approved in writing by us. We reserve the right to reject
any purchases for any accounts which we reasonably determine are not made in
accordance with the terms of the applicable Fund Prospectus and the provisions
of this Agreement.
You hereby agree:
(i) to not purchase any Shares as agent for any customer, unless you
deliver or cause to be delivered to such customer, at or prior to the
time of such purchase, a copy of the then-current Prospectus of the
applicable Fund unless such customer has acknowledged receipt of the
Prospectus of such Fund. You hereby represent that you understand your
obligation to deliver a prospectus to customers who purchase Shares
pursuant to federal securities laws and you have taken all necessary
steps to comply with such prospectus delivery requirements;
PEP 613 12-92
<PAGE>
(ii) to transmit to us promptly upon receipt any and all orders received by
you, it being understood that no conditional orders will be accepted;
(iii) to obtain from each customer for whom you act as agent for the
purchase of Shares any taxpayer identification number certification
and backup withholding information required under the Internal Revenue
Code, as amended from time to time (the "Code"), and the regulations
set forth thereunder, or other sections of the Code which may become
applicable and to provide us or our designee with timely written
notice of any failure to obtain such taxpayer identification number
certification or information in order to enable the implementation of
any required backup withholding in accordance with the Code and the
regulations thereunder;
(iv) to pay to us the offering price, less any agency fee to which you are
entitled, within five (5) business days of our confirmation of your
customer's order, or such shorter time as may be required by law. You
may, subject to our approval, remit the total public offering price to
us, and we will return to you your agency fee. If such payment is not
received within said time period, we reserve the right, without prior
notice, to cancel the sale, or at our option to return the Shares to
the issuer for redemption or repurchase. In the latter case, we shall
have the right to hold you responsible for any loss resulting to us.
Should payment be made by local bank check, liquidation of Shares may
be delayed pending clearance of your check; and
(v) to offer and sell Shares, and execute telephone transactions only in
accordance with the terms and conditions of the then current
prospectuses of the relevant Funds and to make no representations not
contained in any such prospectus or in any authorized supplemental
material supplied to you. In addition, in consideration for the
extension of the right to exercise telephone transaction privileges,
you acknowledge that neither the Funds nor the Transfer Agent nor
Equity Planning will be liable for any loss, injury or damage incurred
as a result of acting upon, nor will they be responsible for the
authenticity of, any telephone instructions, and you agree to
indemnify and hold harmless the Funds, Equity Planning and the
Transfer Agent against any loss, injury or damage resulting from any
unauthorized telephone transaction instruction from you or your
representatives. (Telephone instructions will be recorded on tape).
Unless otherwise mutually agreed in writing or except as provided below, each
transaction placed by you shall be promptly confirmed by us in writing to you,
and shall be confirmed to the customer promptly upon receipt by us of
instructions from you as to such customer. In the case of a purchase order by
customer's application, each transaction shall be promptly confirmed in writing
directly to the customer and a copy of each confirmation shall be sent
simultaneously to you. You understand that in the case of an Omnibus Account we
shall send a confirmation to you as the shareholder of record only. We reserve
the right, at our discretion and without notice, to suspend the sale of Shares
or withdraw entirely the sale of Shares of any or all of the Funds. All orders
are subject to acceptance or rejection by us in our sole discretion, and by the
Funds in their sole discretion. The procedure stated herein relating to the
pricing and handling of orders shall be subject to instructions which we may
forward to you from time to time.
III. Compliance With Law
You hereby represent that you are either (1) a "bank" as defined in Section
3(a)(6) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and at the time of each transaction in shares of the Funds, are not required to
register as a broker-dealer under the Exchange Act or regulations thereunder; or
(2) registered as a broker-dealer under the Exchange Act, a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD") and
affiliated with a bank.
(i) If you are a bank, not required to register as a broker-dealer under
the Exchange Act, you further represent and warrant to us that with
respect to any sales in the United States, you will use your best
efforts to ensure that any purchase of Shares by your customers
constitutes a suitable investment for such customers. You shall not
effect any transaction in, or induce any purchase or sale of, any
Shares by means of any manipulative deceptive or other fraudulent
device or contrivance and shall otherwise deal equitable and fairly
with your customers with respect to transactions in Shares of a Fund.
-2-
<PAGE>
(ii) If you are a NASD member broker-dealer affiliated with a bank and
registered under the Exchange Act, you further represent and warrant
to us that with respect to any sales in the United States, you agree
to abide by all of the applicable laws, rules and regulations
including applicable provisions of the Securities Act of 1933 as
amended, and the applicable rules and regulations of the NASD,
including, without limitation, its Rules of Fair Practice, and the
applicable rules and regulations of any jurisdiction in which you make
Shares available for sale to your customers. You agree not to make
available for sale to your customers the Shares in any jurisdiction in
which the Shares are not qualified for sale or in which you are not
qualified as a broker-dealer. We shall have no obligation or
responsibility as to your right to make Shares of any Fund available
to your customers in any jurisdiction. You agree to notify us
immediately in the event of (a) your expulsion or suspension from the
NASD or your becoming subject to any enforcement action by the
Securities and Exchange Commission, NASD, or any other self-regulatory
organization, or (b) your violation of any applicable federal or state
law, rule or regulation including, but not limited to, those of the
SEC, NASD, or other self-regulatory organization, arising out of or in
connection with this Agreement, or which may otherwise affect in any
material way your ability to act in accordance with the terms of this
Agreement.
You shall not make Shares of any Fund available to your customers, including
your fiduciary customers, except in compliance with all federal and state laws
and rules and regulations of regulatory agencies or authorities applicable to
you, or any of your affiliates engaging in such activity, which may affect your
business practices. You confirm that you are not in violation of any banking law
or regulations to which you are subject. You agree to hold us and the Funds
harmless and indemnify us in the event that you or any of your representatives
should violate any law, rule or regulation or any provisions of this Agreement.
In the event that we determine to refund any amounts paid by a customer in
connection with any such violation on your part, you shall forfeit the right to
the amount of any agency fee allowed by us with respect to the transaction for
which the refund is made. All expenses which you incur in connection with your
activities under this Agreement shall be borne by you.
IV. Relationship With Customer
With respect to any and all transactions in the Shares of any Fund pursuant to
this Agreement, it is understood and agreed in each case that: (i) you shall be
acting solely as agent for the account of your customer; (ii) each transaction
shall be initiated solely upon the order of your customer; (iii) we shall
execute transactions only upon receiving instructions from you acting as agent
for your customer or upon receiving instructions directly from your customer;
(iv) as between you and your customer, your customer will have full beneficial
ownership of all Shares; and (v) each transaction shall be for the account of
your customer and not for your account.
Subject to the foregoing, however, you may maintain record ownership of such
customers' Shares in an "Omnibus Account" or an account registered in your name
or the name of your nominee, for the benefit of such customers. You understand
that such Shares must be held in a separate account for each shareholder of such
Funds. You represent and warrant to us that you will have full right, power and
authority to effect transactions (including, without limitation, any purchases
and redemptions) in Shares on behalf of all customer accounts provided by you.
V. Relationship With Financial Institutions
Your obligations to us under this Agreement are subject to all the provisions of
the respective distribution agreements entered into between us and each of the
Funds. You understand and agree that in performing your services under this
Agreement you are acting in the capacity of an independent contractor, and we
are in no way responsible for the manner of your performance or for any of your
acts or omissions in connection therewith. It is further understood that neither
this Agreement nor the performance of the services of the respective parties
hereunder shall be considered to constitute an exclusive arrangement, or to
create a partnership, association or joint venture between you and us. In making
available Shares of the Funds under this Agreement, nothing herein shall be
construed to constitute you or any of your agents, employees or representatives
as our agent or employee, or as an agent or employee of the Funds, and you shall
not make any representations to the contrary. As distributor of the Funds, we
shall have full authority to take such action as we may deem advisable in
respect of all matters pertaining to the distribution of the Shares. We shall
not be under any obligation to you, except for obligations expressly assumed by
us in this Agreement.
-3-
<PAGE>
VI. Termination
Either party hereto may terminate this Agreement, without cause, upon ten days'
written notice to the other party. We may terminate this Agreement for cause
upon the violation by you of any of the provisions hereof, such termination to
become effective on the date such notice of termination is mailed to you. If you
are registered as a broker-dealer and affiliated with a bank, this Agreement
shall terminate automatically if either Party ceases to be a member of the NASD.
VII. Assignability
This Agreement is not assignable or transferable, except that we may assign or
transfer this Agreement to any successor distributor of the Funds.
VIII. Miscellaneous
(i) All communications mailed to us should be sent to the above address.
Any notice to you shall be duly given if mailed or delivered to you at
the address specified by you below.
(ii) This Agreement constitutes the entire agreement and understanding
between the parties and supersedes any and all prior agreements
between the parties.
(iii) This Agreement and the rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of
Connecticut.
Very truly yours,
PHOENIX EQUITY PLANNING CORPORATION
By _________________________________________
Authorized Signature
____________________________________________
Name and Title
We accept and agree to the foregoing Agreement as of the date set forth below
Financial Institution: __________________________________
By _________________________________________
Authorized Signature, Title
____________________________________________
____________________________________________
Address
(NASD CRD # if applicable _________________ )
Date: ______________________________________
Please return the signed copy of this Sales Contract to Phoenix Equity Planning
Corporation at the above address.
Exhibit 8
CUSTODIAN CONTRACT
<PAGE>
CUSTODIAN CONTRACT
Between
EACH OF THE PARTIES LISTED ON APPENDIX 1
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Employment of Custodian and Property to be Held By It....................................................1
2. Duties of the Custodian with Respect to Property
of each Fund Held by the Custodian in the United States..................................................2
2.1 Holding Securities..............................................................................2
2.2 Delivery of Securities..........................................................................2
2.3 Registration of Securities......................................................................4
2.4 Bank Accounts...................................................................................4
2.5 Availability of Federal Funds...................................................................5
2.6 Collection of Income............................................................................5
2.7 Payment of Fund Moneys..........................................................................5
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.............................6
2.9 Appointment of Agents...........................................................................7
2.10 Deposit of Fund Assets in U.S. Securities System................................................7
2.11 Fund Assets Held in the Custodian's Direct Paper System.........................................8
2.12 Segregated Account..............................................................................9
2.13 Ownership Certificates for Tax Purposes.........................................................9
2.14 Proxies.........................................................................................9
2.15 Communications Relating to Fund Securities.....................................................10
3. Duties of the Custodian with Respect to Property of
each Fund Held Outside of the United States.............................................................10
3.1 Appointment of Foreign Sub-Custodians..........................................................10
3.2 Assets to be Held..............................................................................10
3.3 Foreign Securities Systems.....................................................................10
3.4 Holding Securities.............................................................................11
3.5 Agreements with Foreign Banking Institutions...................................................11
3.6 Access of Independent Accountants of each Fund.................................................11
3.7 Reports by Custodian...........................................................................11
3.8 Transactions in Foreign Custody Account........................................................12
3.9 Liability of Foreign Sub-Custodians............................................................12
3.10 Liability of Custodian.........................................................................12
3.11 Reimbursement for Advances.....................................................................13
3.12 Monitoring Responsibilities....................................................................13
3.13 Branches of U.S. Banks.........................................................................13
3.14 Tax Law........................................................................................13
4. Payments for Sales or Repurchase or Redemptions
of Shares of each Fund..................................................................................14
5. Proper Instructions.....................................................................................14
6. Actions Permitted Without Express Authority.............................................................15
7. Evidence of Authority...................................................................................15
8. Duties of Custodian With Respect to the Books of Account and Calculation of Net Asset Value
and Net Income..........................................................................................15
9. Records 16
10. Opinion of Fund's Independent Accountants...............................................................16
11. Reports to Fund by Independent Public Accountants.......................................................16
12. Compensation of Custodian...............................................................................16
13. Responsibility of Custodian.............................................................................16
14. Effective Period, Termination and Amendment.............................................................18
15. Successor Custodian.....................................................................................18
16. Interpretive and Additional Provisions..................................................................19
17. Additional Funds........................................................................................19
18. Massachusetts Law to Apply..............................................................................20
19. Prior Contracts.........................................................................................20
20. Shareholder Communications..............................................................................20
21. Limitation of Liability................................................................................21
</TABLE>
<PAGE>
MASTER CUSTODIAN CONTRACT
This Contract between each fund or series of a fund listed on Appendix 1
which evidences its agreement to be bound hereby by executing a copy of this
Contract (each such fund, any and all separate series or portfolios thereof and
any additional portfolios or separate series thereof which become subject to
this Contract pursuant to Section 17 hereof, are individually hereafter referred
to as a "Fund"), and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, each of the Funds has previously entered into a Custodian Contract
with the Custodian;
WHEREAS, the Custodian and each of the Funds desire to replace such
existing Custodian Contracts with this Master Custodian Contract between the
Custodian and all of the Funds;
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
-----------------------------------------------------
Each Fund hereby employs the Custodian as the custodian of the assets of
such Fund, including securities which such Fund desires to be held in places
within the United States ("domestic securities") and securities it desires to be
held outside the United States ("foreign securities") pursuant to the provisions
of such Fund's governing documents (domestic securities and foreign securities
are sometimes collectively referred to herein as "Securities"). Each Fund agrees
to deliver to the Custodian all securities and cash of such Fund, and all
payments of income, payments of principal or capital distributions received by
it with respect to all securities owned by such Fund from time to time, and the
cash consideration received by it for such new or treasury shares each class of
capital stock or beneficial interest, as applicable, of such Fund, ("Shares") as
may be issued or sold from time to time. The Custodian shall not be responsible
for any property of a Fund held or received by such Fund and not delivered to
the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Fund from time to time employ
one or more sub-custodians, located in the United States but only in accordance
with an applicable vote by the Board of the Fund, and provided that the
Custodian shall have no more or less responsibility or liability to the Fund on
account of any actions or omissions of any sub-custodian so employed than any
such sub-custodian has to the Custodian. The Fund shall approve in writing the
terms of any subcustodian agreement with a United States subcustodian. The
Custodian may employ as sub-custodian for each Fund's foreign securities the
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.
<PAGE>
2. Duties of the Custodian with Respect to Property of each Fund Held By the
Custodian in the United States
--------------------------------------------------------------------------
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Fund all non-cash property, to be held by it in the
United States including all domestic securities owned by such Fund, other
than (a) securities which are maintained pursuant to Section 2.10 in a
clearing agency which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury (each, a "U.S.
Securities System") and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the Direct Paper System of
the Custodian (the "Direct Paper System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by a Fund held by the Custodian or in a U.S. Securities
System account of the Custodian or in the Custodian's Direct Paper book
entry system account ("Direct Paper System Account") only upon receipt of
Proper Instructions from such Fund, which may be continuing instructions
when deemed appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of such Fund and receipt
of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by such Fund;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of such Fund;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of
such Fund or into the name of any nominee or nominees of the Custodian
or into the name or nominee name of any agent appointed pursuant to
Section 2.9 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same
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<PAGE>
aggregate face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of such Fund, to the
broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by such
Fund, but only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and such Fund, which may be in the
form of cash or obligations issued by the United States government,
its agencies or instrumentalities, except that in connection with any
loans for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S. Department of
the Treasury, the Custodian will not be held liable or responsible for
the delivery of securities owned by such Fund prior to the receipt of
such collateral;
11) For delivery as security in connection with any borrowings by such
Fund requiring a pledge of assets by such Fund, but only against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among
such Fund, the Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of
The National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by such Fund;
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<PAGE>
13) For delivery in accordance with the provisions of any agreement among
such Fund, the Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations, regarding
account deposits in connection with transactions by such Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for such Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may be
described from time to time in the currently effective prospectus and
statement of additional information of such Fund ("Prospectus"), in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions from such Fund, a certified copy of a
resolution of the Board or of the Executive Committee of such Fund
signed by an officer of such Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of such Fund to be
delivered, setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of such securities shall
be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of each Fund
or in the name of any nominee of each Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to each Fund, unless
a Fund has authorized in writing the appointment of a nominee to be used in
common with other registered investment companies having the same
investment adviser as such Fund, or in the name or nominee name of any
agent appointed pursuant to Section 2.9 or in the name or nominee name of
any sub-custodian appointed pursuant to Article 1. All securities accepted
by the Custodian under the terms of this Contract shall be in "street name"
or other good delivery form. If, however, a Fund directs the Custodian to
maintain securities in "street name", the Custodian shall utilize
commercially reasonable means to timely collect income due such Fund on
such securities and to timely notify each Fund of relevant corporate
actions including, without limitation, pendency of calls, maturities,
tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Fund, subject
only to draft or order by the Custodian acting pursuant to the terms of
this Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of such
Fund, other than cash maintained by such Fund in a bank account established
and used
4
<PAGE>
in accordance with Rule 17f-3 under the Investment Company Act of 1940.
Funds held by the Custodian for each Fund may be deposited by it to its
credit as Custodian in the Banking Department of the Custodian or in such
other banks or trust companies as it may in its discretion deem necessary
or desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment Company Act
of 1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of each
applicable Fund be approved by vote of a majority of the Board of such
Fund. Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between a Fund and the
Custodian, the Custodian shall, upon the receipt of Proper Instructions
from such Fund, make federal funds available to such Fund as of specified
times agreed upon from time to time by such Fund and the Custodian in the
amount of checks received in payment for Shares of such Fund which are
deposited into such Fund's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to Securities held hereunder to which each Fund shall be
entitled either by law or pursuant to custom in the securities business,
and shall collect on a timely basis all income and other payments with
respect to bearer securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent thereof and shall credit
such income, as collected, to such Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach and
present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when
due on securities held hereunder. Unless otherwise agreed to by the
parties, income due each Fund on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of the Fund. The
Custodian will have no duty or responsibility in connection therewith,
other than to provide each Fund with such information or data as may be
necessary to assist each Fund in arranging for the timely delivery to the
Custodian of the income to which each Fund is properly entitled.
2.7 Payment of Fund Moneys. Upon receipt of Proper Instructions from a Fund,
which may be continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out moneys of each Fund in the following
cases only:
1) Upon the purchase of Securities, options, futures contracts or options
on futures contracts for the account of such Fund but only (a) against
the delivery of such securities or evidence of title to such options,
futures contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the United
States or abroad which is qualified under the Investment
5
<PAGE>
Company Act of 1940, as amended, to act as a custodian and has been
designated by the Custodian as its agent for this purpose) registered
in the name of such Fund or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for transfer; (b)
in the case of a purchase effected through a U.S. Securities System,
in accordance with the conditions set forth in Section 2.10 hereof;
(c) in the case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section 2.11; (d) in the
case of repurchase agreements entered into between such Fund and the
Custodian, or another bank, or a broker-dealer which is a member of
NASD, (i) against delivery of the securities either in certificate
form or through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against delivery of
the receipt evidencing purchase by such Fund of securities owned by
the Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from such Fund or (e) for
transfer to a time deposit account of such Fund in any bank, whether
domestic or foreign; such transfer may be effected prior to receipt of
a confirmation from a broker and/or the applicable bank pursuant to
Proper Instructions from such Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of Securities
owned by such Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by such Fund as set
forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by such Fund,
including but not limited to the following payments for the account of
such Fund: interest, taxes, management, accounting, transfer agent and
legal fees, and operating expenses of such Fund whether or not such
expenses are to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends on Shares of such Fund declared
pursuant to the governing documents of such Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in addition to
Proper Instructions from such Fund, a certified copy of a resolution
of the Board or of the Executive Committee of such Fund signed by an
officer of such Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
6
<PAGE>
purpose to be a proper purpose, and naming the person or persons to
whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except
as specifically stated otherwise in this Contract, in any and every case
where payment for purchase of Securities for the account of such Fund is
made by the Custodian in advance of receipt of the securities purchased in
the absence of specific Proper Instructions from such Fund to so pay in
advance, the Custodian shall be absolutely liable to such Fund for such
securities to the same extent as if the securities had been received by the
Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times, subject to
the applicable Fund's prior approval, in its discretion appoint (and may at
any time remove) any other bank or trust company which is itself qualified
under the Investment Company Act of 1940, as amended, to act as a
custodian, as its agent to carry out such of the provisions of this Article
2 as the Custodian may from time to time direct; provided, however, that
the appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of
the Exchange Act, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein as "U.S.
Securities System" in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
1) The Custodian may keep securities of each Fund in a U.S. Securities
System provided that such securities are represented in an account
("Account") of the Custodian in the U.S. Securities System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of each Fund
which are maintained in a U.S. Securities System shall identify by
book-entry those securities belonging to each Fund;
3) The Custodian shall pay for securities purchased for the account of
each Fund upon (i) receipt of advice from the U.S. Securities System
that such securities have been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of each Fund. The Custodian shall
transfer securities sold for the account of each Fund upon (i) receipt
7
<PAGE>
of advice from the U.S. Securities System that payment for such
securities has been transferred to the Account, and (ii) the making of
an entry on the records of the Custodian to reflect such transfer and
payment for the account of each Fund. Copies of all advices from the
U.S. Securities System of transfers of securities for the account of
each Fund shall identify each Fund, be maintained for each Fund by the
Custodian and be provided to each Fund at its request. Upon request,
the Custodian shall furnish each Fund confirmation of each transfer to
or from the account of each Fund in the form of a written advice or
notice and shall furnish to each Fund copies of daily transaction
sheets reflecting each day's transactions in the U.S. Securities
System for the account of each Fund.
4) The Custodian shall provide each Fund with any report obtained by the
Custodian on the U.S. Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the U.S. Securities System;
5) The Custodian shall have received from each Fund the initial
certificate required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to each Fund for the benefit of such Fund
for any loss or damage to such Fund resulting from use of the U.S.
Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or any such agent to
enforce effectively such rights as it may have against the U.S.
Securities System; at the election of the affected Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect
to any claim against the U.S. Securities System or any other person
which the Custodian may have as a consequence of any such loss or
damage if and to the extent that such Fund has not been made whole for
any such loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
deposit and/or maintain securities owned by each Fund in the Direct Paper
System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions from each Fund;
2) The Custodian may keep securities of each Fund in the Direct Paper
System only if such securities are represented in an account of the
Custodian in the Direct Paper System which shall not include any
assets of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
8
<PAGE>
3) The records of the Custodian with respect to securities of each Fund
which are maintained in the Direct Paper System shall identify by
book-entry those securities belonging to each Fund;
4) The Custodian shall pay for securities purchased for the account of
each Fund upon the making of an entry on the records of the Custodian
to reflect such payment and transfer of securities to the account of
each Fund. The Custodian shall transfer securities sold for the
account of each Fund upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for the
account of each Fund;
5) The Custodian shall furnish each Fund confirmation of each transfer to
or from the account of each Fund, in the form of a written advice or
notice, of Direct Paper on the next business day following such
transfer and shall furnish to each Fund copies of daily transaction
sheets reflecting each day's transactions in the Direct Paper System
for the account of each Fund;
6) The Custodian shall provide each Fund with any report on its system of
internal accounting control as each Fund may reasonably request from
time to time.
2.12 Pledged Account. The Custodian shall upon receipt of Proper
Instructions from a Fund establish and maintain a pledged account or
accounts for and on behalf of such Fund, into which account or accounts
may be transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to Section 2.10
hereof, (i) in accordance with the provisions of any agreement among
such Fund, the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by such Fund, (ii) for
purposes of segregating cash or government securities in connection
with options purchased, sold or written by such Fund or commodity
futures contracts or options thereon purchased or sold by such Fund,
(iii) for the purposes of compliance by such Fund with the procedures
required by Investment Company Act Release No. 10666, and subsequent
release or releases of the Securities and Exchange Commission relating
to the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in
the case of clause (iv), upon receipt of, in addition to Proper
Instructions from such Fund, a certified copy of a resolution of the
Board or of the Executive Committee of such Fund signed by an
9
<PAGE>
officer of such Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated
account.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to securities of each Fund held by it and in connection with
transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
such Fund or a nominee of such Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to
the applicable Fund such proxies, all proxy soliciting materials and all
notices relating to such securities.
2.15 Communications Relating to Fund Securities. Subject to the provisions of
Section 2.3, the Custodian shall transmit promptly to each Fund all written
information (including, without limitation, pendency of calls and
maturities of domestic securities and expirations of rights in connection
therewith and notices of exercise of call and put options written by such
Fund and the maturity of futures contracts purchased or sold by such Fund)
received by the Custodian from issuers of the securities being held for
such Fund. With respect to tender or exchange offers, the Custodian shall
transmit promptly to each Fund all written information received by the
Custodian from issuers of the securities whose tender or exchange is sought
and from the party (or his agents) making the tender or exchange offer. If
a Fund desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, such Fund shall notify the
Custodian at least three business days prior to the date on which the
Custodian is to take such action.
3. Duties of the Custodian with Respect to Property of each Fund Held Outside
of the United States
--------------------------------------------------------------------------
3.1 Appointment of Foreign Sub-Custodians. Each Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for such Fund's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated
on Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper
Instructions", as defined in Section 5 of this Contract, together with a
certified resolution of such Fund's Board, the Custodian and such Fund may
agree to amend Schedule A hereto from time to time to designate additional
foreign banking institutions and foreign securities depositories to act as
sub-custodian. Upon receipt of Proper Instructions, a Fund may instruct the
Custodian to cease the employment of any one or more such sub-custodians
for maintaining custody of such Fund's assets.
10
<PAGE>
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or each Fund may determine to be reasonably
necessary to effect such Fund's foreign securities transactions. The
Custodian shall identify on its books as belonging to each Fund, the
foreign securities of each Fund held by each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and each Fund, assets of each Fund shall be
maintained in a clearing agency which acts as a securities depository or in
a book-entry system for the central handling of securities located outside
of the United States (each a "Foreign Securities System") only through
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof (Foreign Securities Systems and
U.S. Securities Systems are collectively referred to herein as the
"Securities Systems"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.6
hereof.
3.4 Holding Securities. The Custodian may hold securities and other non-cash
property for all of its customers, including each Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash
property of each Fund which are maintained in such account shall identify
by book-entry those securities and other non-cash property belonging to
each Fund and (ii) the Custodian shall require that securities and other
non-cash property so held by the foreign sub-custodian be held separately
from any assets of the foreign sub-custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a foreign
banking institution shall provide that: (a) the assets of each Fund will
not be subject to any right, charge, security interest, lien or claim of
any kind in favor of the foreign banking institution or its creditors or
agents, except a claim of payment for their safe custody or administration;
(b) beneficial ownership for the assets of each Fund will be freely
transferable without the payment of money or value other than for custody
or administration; (c) adequate records will be maintained identifying the
assets as belonging to each Fund; (d) officers of or auditors employed by,
or other representatives of the Custodian, including to the extent
permitted under applicable law the independent public accountants for each
Fund, will be given access to the books and records of the foreign banking
institution relating to its actions under its agreement with the Custodian;
and (e) assets of each Fund held by the foreign sub-custodian will be
subject only to the instructions of the Custodian or its agents. Agreements
with
11
<PAGE>
foreign banking institutions shall contain those provisions required by
subparagraph (c) of Section 17f-5 under the Investment Company Act of 1940.
3.6 Access of Independent Accountants of each Fund. Upon request of each Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of each Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to each Fund from time to
time, as mutually agreed upon, statements in respect of the securities and
other assets of each Fund held by foreign sub-custodians, including but not
limited to an identification of entities having possession of such Fund's
securities and other assets and advices or notifications of any transfers
of securities to or from each custodial account maintained by a foreign
banking institution for the Custodian on behalf of such Fund indicating, as
to securities acquired for such Fund, the identity of the entity having
physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, the provisions of Sections 2.2 and
2.7 of this Contract shall apply, mutatis mutandis to the foreign
securities of each Fund held outside the United States by foreign
sub-custodians. (b) Notwithstanding any provision of this Contract to the
contrary, settlement and payment for securities received for the account of
each Fund and delivery of securities maintained for the account of each
Fund may be effected in accordance with the customary established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with
the expectation of receiving later payment for such securities from such
purchaser or dealer. (c) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's nominee to the
same extent as set forth in Section 2.3 of this Contract, and each Fund
agrees to hold any such nominee harmless from any liability as a holder of
record of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and each Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of a Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent
that such Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
12
<PAGE>
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians generally in this Contract and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by Section 3.13 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has otherwise exercised
reasonable care. Notwithstanding the foregoing provisions of this Section
3.10, in delegating custody duties to State Street London Ltd., the
Custodian shall not be relieved of any responsibility to each Fund for any
loss due to such delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization, insurrection,
civil strife or armed hostilities) or (b) other losses (excluding a
bankruptcy or insolvency of State Street London Ltd. not caused by
political risk) due to Acts of God, nuclear incident or other losses under
circumstances where the Custodian and State Street London Ltd. have
exercised reasonable care.
3.11 Reimbursement for Advances. If, pursuant to Proper Instructions, a Fund
requires the Custodian to advance cash or securities for any purpose for
the benefit of a Fund including the purchase or sale of foreign exchange or
of contracts for foreign exchange, or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of
this Contract, except such as may arise from events or circumstances for
which the Custodian or a sub-custodian are liable pursuant to Sections 3.9
and 3.10 above, or from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Fund shall be security therefor and
should such Fund fail to repay the Custodian promptly, the Custodian shall
upon prior written notice be entitled to utilize available cash and to
dispose of such Fund's assets to the extent necessary to obtain
reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to each
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian and such other information needed
to permit the Fund to comply with Section 17f-5 under the 1940 Act. Such
information shall be similar in kind and scope to that furnished to each
Fund in connection with the initial approval of this Contract. In addition,
the Custodian will promptly inform each Fund in the event that the
Custodian learns of a material adverse change in the financial condition of
a foreign sub-custodian or any material loss of the assets of each Fund or
in the case of any foreign sub-custodian not the subject of an exemptive
order from the Securities and Exchange Commission is notified by such
foreign sub-custodian that there appears to be a substantial likelihood
that its shareholders' equity
13
<PAGE>
will decline below $200 million (U.S. dollars or the equivalent thereof) or
that its shareholders' equity has declined below $200 million (in each case
computed in accordance with generally accepted U.S. accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this Contract,
the provisions hereof shall not apply where the custody of a Fund's assets
are maintained in a foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the Investment Company Act of 1940
meeting the qualification set forth in Section 26(a) of said Act. The
appointment of any such branch as a sub-custodian shall be governed by
Article 1 of this Contract. (b) Cash held for each Fund in the United
Kingdom shall be maintained in an interest bearing account established for
each Fund with the Custodian's London branch, which account shall be
subject to the direction of the Custodian, State Street London Ltd. or
both.
3.14 Tax Law. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on any Fund or the Custodian as
custodian of such Fund by the tax law of the United States of America or
any state or political subdivision thereof. It shall be the responsibility
of each Fund to notify the Custodian of the obligations imposed on each
Fund or the Custodian as custodian of each Fund by the tax law of
jurisdictions other than those mentioned in the above sentence, including
responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist each Fund with respect to any claim for
exemption or refund under the tax law of jurisdictions for which each Fund
has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Shares of each Fund
-----------------------------------------------------------------------
The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent of each Fund and deposit into the account of each Fund such
payments as are received for Shares of each Fund issued or sold from time to
time by each Fund. The Custodian will provide timely notification to each Fund
and the Transfer Agent of any receipt by it of payments for Shares of such Fund.
From such funds as may be available for the purpose but subject to the
limitations of each Fund's governing documents and any applicable votes of the
Board of each Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of each Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of each Fund, the Custodian shall honor checks drawn on
the
14
<PAGE>
Custodian by a holder of Shares, which checks have been furnished by such
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between each Fund and the Custodian.
5. Proper Instructions
-------------------
Proper Instructions as used throughout this Contract means a writing signed
or initialed by one or more person or persons as the Board of each Fund shall
have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. Each Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of each Fund
accompanied by a detailed description of procedures approved by the Board,
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board and the
Custodian are satisfied that such procedures afford adequate safeguards for such
Fund's assets. For purposes of this Section, Proper Instructions shall include
instructions received by the Custodian pursuant to any three-party agreement
which requires a segregated asset account in accordance with Section 2.12.
6. Actions Permitted without Express Authority
-------------------------------------------
The Custodian may in its discretion, without express authority from each
Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the applicable Fund;
1) surrender securities in temporary form for securities in definitive
form;
2) endorse for collection, in the name of each Fund, checks, drafts and
other negotiable instruments; and
3) in general, attend to all ministerial details in connection with the
sale, exchange, substitution, purchase, transfer and other dealings
with the securities and property of each Fund except as otherwise
directed by the Board of each Fund.
15
<PAGE>
7. Evidence of Authority
---------------------
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed by or on behalf
of each Fund. The Custodian may receive and accept a certified copy of a vote of
the Board of each Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board pursuant to the governing documents of each Fund as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and Calculation of
Net Asset Value and Net Income
---------------------------------------------------------------------------
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of each Fund to keep the books of
account of each Fund and/or compute the net asset value per share of the
outstanding shares of each Fund or, if directed in writing to do so by each
Fund, shall itself keep such books of account and/or compute such net asset
value per share. If so directed, the Custodian shall also calculate daily the
net income of each Fund as described in each Fund's currently effective
Prospectus and shall advise each Fund and the Transfer Agent daily of the total
amounts of such net income and, if instructed in writing by an officer of each
Fund to do so, shall advise the Transfer Agent periodically of the division of
such net income among its various components. The calculations of the net asset
value per share and the daily income of each Fund shall be made at the time or
times described from time to time in each Fund's currently effective Prospectus.
9. Records
-------
The Custodian shall with respect to each Fund create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of each Fund under the Investment Company
Act of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of each Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the applicable
Fund and employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the request of any Fund, supply such Fund with a tabulation
of securities owned by such Fund and held by the Custodian and shall, when
requested to do so by a Fund and for such compensation as shall be agreed upon
between such Fund and the Custodian, include certificate numbers in such
tabulations.
10. Opinion of Fund's Independent Accountant
----------------------------------------
The Custodian shall take all reasonable action, as each Fund may from time
to time request, to obtain from year to year favorable opinions from each Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of each Fund's Form N-1A,
16
<PAGE>
and Form N-SAR or other annual reports to the Securities and Exchange Commission
and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
--------------------------------------------------
The Custodian shall provide each Fund, at such times as each Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports, shall be
of sufficient scope and in sufficient detail, as may reasonably be required by
each Fund to provide reasonable assurance that any material inadequacies would
be disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
12. Compensation of Custodian
-------------------------
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, determine in accordance with the fee
schedule attached hereto as Schedule B, as amended from time to time as agreed
by each Fund and the Custodian.
13. Responsibility of Custodian
---------------------------
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to any Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for a Fund) on
all matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to any Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
17
<PAGE>
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts provided Custodian has maintained an adequate
disaster recovery plan; (ii) errors by a Fund or its investment advisor in their
instructions to the Custodian provided such instructions have been in accordance
with this Contract; (iii) the insolvency of or acts or omissions by a Securities
System; (iv) any delay or failure of any broker, agent or intermediary, central
bank or other commercially prevalent payment or clearing system to deliver to
the Custodian's sub-custodian or agent securities purchased or in the remittance
or payment made in connection with securities sold; (v) any delay or failure of
any company, corporation, or other body in charge or registering or transferring
securities in the name of the Custodian, a Fund, the Custodian's sub-custodians,
nominees or agents or any consequential losses arising out of such delay or
failure to transfer such securities including non-receipt of bonus, dividends
and rights and other accretions or benefits; (vi) delays or inability to perform
its duties due to any disorder in market infrastructure with respect to any
particular security or Securities System; and (vii) any provision of any present
or future law or regulation or order of the United States of America, or any
state thereof, or any other country, or political subdivision thereof or of any
court of competent jurisdiction.
Except as expressly provided in Section 3.9, the Custodian shall be liable
for the acts or omissions of a foreign banking institution appointed pursuant to
the provisions of Article 3 to the same extent as set forth in Article 1 hereof
with respect to sub-custodians located in the United States.
If a Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the reasonable opinion of the Custodian, result in the Custodian or its nominee
assigned to a Fund being liable for the payment of money or incurring liability
of some other form, such Fund, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If a Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlements)
or in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of such Fund shall be security
therefor and should such Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of such
Fund's assets to the extent necessary to obtain reimbursement.
18
<PAGE>
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. Effective Period, Termination and Amendment
-------------------------------------------
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not with respect to each Fund act under Section 2.10 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of each Fund has approved the initial use of
a particular Securities System by each Fund, as required by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian shall not with
respect to a Fund act under Section 2.11 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant Secretary that the Board
has approved the initial use of the Direct Paper System by each Fund; provided
further, however, that a Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of its governing documents, and further provided, that a Fund may at any time by
action of its Board (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, each Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination as provided
herein.
15. Successor Custodian
-------------------
If a successor custodian for a Fund shall be appointed by the Board of such
Fund, the Custodian shall, upon termination, and upon receipt of a certified
copy of such vote, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of such
Fund then held by it hereunder and shall transfer to an account of the successor
custodian all of the securities of such Fund held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of the
applicable Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board shall have been delivered to the Custodian
on or before the date when such
19
<PAGE>
termination shall become effective, then the Custodian shall have the right to
deliver to a bank or trust company, which is a "bank" as defined in the
Investment Company Act of 1940, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published report,
of not less than $25,000,000, all securities, funds and other properties held by
the Custodian on behalf of such Fund and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract on behalf
of such Fund and to transfer to an account of such successor custodian all of
the securities of such Fund held in any Securities System. Thereafter, such bank
or trust company shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of a Fund to procure the certified copy of the vote referred to above or
of the Board to appoint a successor custodian, the Custodian shall be entitled
to fair compensation for its services during such period as the Custodian
retains possession of such securities, funds and other properties and the
provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Contract, the Custodian and each
Fund, may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the governing documents of any Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
17. Additional Funds
----------------
In the event that any mutual funds in addition to the Funds are hereafter
established which desire to have the Custodian render services as custodian
under the terms hereof, it shall so notify the Custodian in writing, and if the
Custodian agrees in writing to provide such services, such fund shall become a
Fund hereunder, subject to the delivery by the new Fund of resolutions
authorizing the appointment of the Custodian and such other supporting or
related documentation as the Custodian may request. All references to the "Fund"
are to each of the Funds listed on Appendix 1 individually, as if this Contract
were between each such individual Fund and the Custodian.
18. Massachusetts Law to Apply
--------------------------
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
20
<PAGE>
19. Prior Contracts
---------------
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between each of the Funds and the Custodian relating to the custody of
such Fund's assets.
20. Shareholder Communications
--------------------------
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs each Fund to indicate whether such Fund authorizes
the Custodian to provide such Fund's name, address, and share position to
requesting companies whose stock each Fund owns. If a Fund tells the Custodian
"no", the Custodian will not provide this information to requesting companies.
If a Fund tells the Custodian "yes" or do not check either "yes" or "no" below,
the Custodian is required by the rule to treat such Fund as consenting to
disclosure of this information for all securities owned by such Fund or any
funds or accounts established by each Fund. For each Fund's protection, the Rule
prohibits the requesting company from using such Fund's name and address for any
purpose other than corporate communications. Please indicate below whether each
Fund consents or objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the name,
address, and share positions of each Fund listed on
Appendix 1.
NO [X] The Custodian is not authorized to release the
name, address, and share positions of each Fund listed
on Appendix 1.
21. Limitation of Liability.
------------------------
The execution of this Contract has been authorized by each Fund's Board.
This Contract is executed on behalf of each Fund or, in the case of a Fund
organized as a business trust, the trustees of such Fund as trustees and not
individually and the obligations of each Fund under this Contract are not
binding upon any of such Fund's trustees, officers or shareholders individually
but are binding only upon the assets and property of such Fund. A Certificate of
Trust in respect of each Fund organized as a business trust is on file with the
Secretary of the Commonwealth of Massachusetts.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 1st day of May, 1997.
EACH OF THE FUNDS LISTED ON APPENDIX 1
By: /s/ Michael E. Haylon
--------------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
--------------------------
Executive Vice President
<PAGE>
APPENDIX 1
Fund Names
(as of May 1, 1997)
Phoenix California Tax Exempt Bonds, Inc.
The Phoenix Edge Series Fund
Real Estate Securities Series
Phoenix Income and Growth Fund
Phoenix Multi-Portfolio Fund
Phoenix Diversified Income Portfolio
Phoenix Emerging Markets Bond Portfolio
Phoenix Endowment Equity Portfolio
Phoenix Real Estate Securities Portfolio
Phoenix Mid Cap Portfolio
Phoenix Tax-Exempt Bond Portfolio
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Series Fund
Phoenix Aggressive Growth Fund Series
Phoenix Balanced Fund Series
Phoenix Convertible Fund Series
Phoenix Growth Fund Series
Phoenix High Yield Fund Series
Phoenix Money Market Series
Phoenix U.S. Government Securities Fund Series
Phoenix Strategic Allocation Fund, Inc.
Phoenix Strategic Equity Series Fund
Phoenix Equity Opportunities Fund
Phoenix Micro Cap Fund
Phoenix Small Cap Fund
Phoenix Strategic Theme Fund
Phoenix Duff & Phelps Institutional Mutual Funds
Enhanced Reserves Portfolio
Real Estate Equity Securities Portfolio
<PAGE>
Schedule A
----------
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of each Fund for use as
sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
- ----------------------------
Fund's Authorized Officer
Date:
-------------------------
<PAGE>
[LOGO]State Street
SCHEDULE B
STATE STREET BANK AND TRUST COMPANY
Custodian Fee Schedule
Effective June 1, 1996
Phoenix Duff and Phelps Funds
- --------------------------------------------------------------------------------
I. Administration
Domestic Custody - Maintain custody of fund assets. Settle portfolio
purchases and sales. Report buy and sell fails. Determine and collect
portfolio income. Make cash disbursements and report cash transactions.
Monitor corporate actions. Report portfolio positions. The custody fee
shown below is an annual charge, billed and payable monthly, based on
average monthly net assets.
Average Monthly Net Assets Annual Fees in Basis Points
-------------------------- ---------------------------
First $3 Billion .5
Next $2 Billion .375
Thereafter .25
II. Domestic Portfolio Trades - For each line item processed
State Street Bank Repos $ 7.00
DTC or Fed Book Entry $ 6.00
New York Physical Settlements $25.00
Physical Maturities-delivery and collection fee $33.00
All other trades $16.00
III. International Custody - Maintain custody of funds assets. Settle portfolio
purchases and sales. Report buy and sell fails. Determine and collect
portfolio income. Make cash disbursements and report cash transactions in
local and base currency. Report foreign taxes. File foreign tax reclaims.
Monitor corporate actions. Report portfolio positions.
<PAGE>
[LOGO]State Street
A. Country Grouping
- ---------------------
Group A Group B Group C Group D Group E
- ------- ------- ------- ------- -------
Austria Australia Denmark Indonesia Argentina
Canada Belgium Finland Malaysia Bangladesh
Euroclear Hong Kong France Mexico Brazil
Germany Netherlands Ireland Portugal Chile
Japan New Zealand Italy South Korea China
Singapore Luxembourg Spain Columbia
Switzerland Norway Sri Lanka Cypress
Philippines Sweden Greece
Thailand Taiwan Hungary
United Kingdom India
Israel
Pakistan
Peru
Turkey
Uruguay
Venezuela
B. Transaction Charges
- ------------------------
Group A Group B Group C Group D Group E
- ------- ------- ------- ------- -------
$26 $30 $45 $60 $75
C. Holding Charges in Basis Points (Annual Fee)
- -------------------------------------------------
Assets Group A Group B Group C Group D Group E
- ------ ------- ------- ------- ------- -------
First $100 MM 5.0 8.0 13.0 15.0 25.0
Next $100 MM 4.0 6.0 10.0 13.0 25.0
Excess 3.0 5.0 8.0 13.0 25.0
IV. Options
Option charge for each option written or
closing contract, per issue, per broker $25.00
Option expiration charge, per issue, per broker $15.00
Option exercised charge, per issue, per broker $15.00
<PAGE>
[LOGO]State Street
V. Lending of Securities
Deliver loaned securities versus cash collateral $20.00
Deliver loaned securities versus securities collateral $30.00
Receive/deliver additional cash collateral $ 6.00
Substitutions of securities collateral $30.00
Deliver cash collateral versus receipt of loaned securities $15.00
Deliver securities collateral versus receipt of
loaned securities $25.00
Loan administration -- mark-to-market per day, per loan $ 3.00
VI. Interest Rate Futures
Transactions -- no security movement $ 8.00
VII. Coupon Bonds
Monitoring for calls and processing coupons --
for each coupon issue held -- monthly charge $ 5.00
VIII. Holdings Charge
For each issue maintained -- monthly charge $ 5.00
IX. Principal Reduction Payments Per Paydown $10.00
<PAGE>
[LOGO]State Street
X. Special Services
Fees for activities of a non-recurring nature such as fund
consolidations or reorganizations, extraordinary security shipments
and the preparation of special reports will be subject to negotiation.
Fees for tax accounting/recordkeeping for options, financial futures,
and other special items will be negotiated separately.
Account Position Appraisal
--------------------------
Special appraisal by industry classification:
Monthly fee - per portfolio $50.00
XI. Out-of-Pocket Expenses
----------------------
A billing for the recovery of applicable out-of-pocket expenses will
be made as of the end of each month. Out-of-pocket expenses include,
but are not limited to the following:
Telephone
Wire Charges ($4.70 per wire in and $4.55 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer -- $8.00 Each
Transfer Fees
Sub-custodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over $2,500 - $4.25
GNMA Transfer - $15 each
PTC Deposit/Withdrawal for same day turnarounds - $50.00
XII. Payment
The above fees will be charged against the fund's custodian checking
account five (5) days after the invoice is mailed to the fund's
offices.
<PAGE>
[LOGO]State Street
PHOENIX DUFF AND PHELPS FUNDS STATE STREET BANK & TRUST CO.
By /s/ Nancy G. Curtiss By /s/ Charles R. Whittemore, Jr.
------------------------------ ------------------------------
Title Treasurer Title Vice President
------------------------------ ------------------------------
Date June 13, 1997 Date June 11, 1996
------------------------------ ------------------------------
Exhibit 9.2
Sub-Transfer Agent Agreement
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
between
PHOENIX EQUITY PLANNING CORPORATION
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
1. Terms of Appointment; Duties of the Bank and 1-4
Transfer Agent
2. Fees and Expenses 4
3. Bank as Trustee or Custodian of Retirement Plans 4-5
4. Wire Transfer Operating Guidelines 5-7
5. Data Access and Proprietary Information 7-8
6. Indemnification 8-9
7. Standard of Care 10
8. Covenants of the Transfer Agent and the Bank 10
9. Representations and Warranties of the Bank 11
10. Representations and Warranties of the Transfer Agent 11
11. Termination of Agreement 12
12. Assignment 12
13. Amendment 12
14. Massachusetts Law to Apply 13
15. Force Majeure 13
16. Consequential Damages 13
17. Limitation of Shareholder Liability 13
18. Merger of Agreement 13
19. Counterparts 13
<PAGE>
AGREEMENT effective as of the 1st day of June, 1994, by and between
PHOENIX EQUITY PLANNING CORPORATION, a Connecticut corporation, having its
principal office and place of business at 100 Bright Meadow Boulevard, Enfield,
Connecticut, 06083, (the "Transfer Agent"), and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company having its principal office and place of
business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank");
WHEREAS, the Transfer Agent has been appointed by each of the investment
companies (including each series thereof) listed on Schedule A (the "Fund(s)"),
each an open-end diversified management investment company registered under the
Investment Company Act of 1940 as amended, as transfer agent, dividend
disbursing agent and shareholder servicing agent in connection with certain
activities, and the Transfer Agent has accepted each such appointment;
WHEREAS, the Transfer Agent has entered into a Transfer Agency and Service
Agreement with each of the Funds (including each series thereof) listed on
Schedule A pursuant to which the Transfer Agent is responsible for certain
transfer agency and dividend disbursing functions for each Fund's shares
("Shares") and each Fund's shareholders ("Shareholders") and the Transfer Agent
is authorized to subcontract for the performance of its obligations and duties
thereunder in whole or in part with the Bank;
WHEREAS, the Transfer Agent desires to appoint the Bank as sub-transfer
agent, and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenant herein contained,
the parties hereto agree as follows:
1. Duties of the Bank and the Transfer Agent
1.1 Subject to the terms and conditions set forth in this Agreement, the
Bank shall act as the Transfer Agent's non-exclusive sub-transfer agent for
Shares in connection with any accumulation plan, open-account, dividend
reinvestment plan, retirement plan or similar plan provided to Shareholders and
set out in each Fund's currently effective prospectus and statement of
additional information ("Prospectus"), including without limitation any
periodic investment plan or periodic withdrawal program. As used herein the
term "Shares" means the authorized and issued shares of common stock, or shares
of beneficial interest, as the case may be, for each Fund listed in Schedule A.
In accordance with procedures established from time to time by agreement
between the Transfer Agent and the Bank, the Bank and Transfer Agent shall
provide the services listed in this Section 1.
(a) According to the service responsibility schedule attached hereto
for Shareholder accounts and record-keeping the Bank or the
Transfer Agent shall:
(i) receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation
thereof to the custodian of each Fund authorized pursuant
to the articles of incorporation or organization of each
Fund (the "Custodian");
(ii) pursuant to purchase orders, issue the appropriate number
of Shares and hold such Shares in the appropriate
Shareholder account;
(iii) receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation
thereof to the Custodian;
(iv) in respect to the transactions in items (i), (ii), and
(iii) above, the Bank shall execute transactions directly
with broker-dealers authorized by each Fund;
(v) at the appropriate time as and when it receives monies
paid to it by the 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;
<PAGE>
(viii) issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon
receipt by the Bank of indemnification satisfactory to the
Bank and protecting the Bank and each Fund, and the Bank
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 the Transfer
Agent and its Shareholders as to the foregoing;
(x) record the issuance of Shares of each Fund and maintain
pursuant to Rule 17Ad-10 (e) of the Securities Exchange
Act of 1934 as amended (the "Exchange Act") a record of
the total number of Shares of each Fund that are
authorized, based upon data provided to it by each Fund or
the Transfer Agent and issued and outstanding, the Bank
shall also provide each Fund on a regular basis with the
total number of Shares which are authorized and issued and
outstanding and 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
issues or sale of such Shares, which functions shall be
the sole responsibility of each Fund or the Transfer
Agent.
1.2 (a) For reports, the Bank shall:
(i) maintain all Shareholder accounts, prepare meeting, proxy,
and mailing lists, withhold taxes on U.S. resident and
non-resident alien accounts, prepare and file U.S.
Treasury reports required with respect to dividends and
distributions by federal authorities for all Shareholders,
prepare confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder account
information.
(b) For blue sky reporting the Bank shall provide a system that will
enable each Fund or the Transfer Agent to monitor the total
number of Shares sold in each State, and each Fund or the
Transfer Agency shall:
(i) identify to the Bank 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 activity for each State, the
responsibility of the Bank for each Fund's blue sky State
registration status is solely limited to the initial
establishment of transactions subject to blue sky
compliance by the Fund or the Transfer Agent and the
reporting of such transactions to the Fund as provided
above.
1.3 Per the attached service responsibility schedule procedures as to who
shall provide certain of the services in Section 1 may be established from time
to time by agreement between the Transfer Agent and the Bank. The Bank may at
times perform only a portion of these services and the Transfer Agent may
perform these services on each Fund's behalf.
1.4 The Bank shall provide additional services on behalf of the Transfer
Agent (i.e., escheat services) as may be agreed upon in writing between the Bank
and the Transfer Agent.
2. Fees and Expenses
2.1 For the performance by the Bank pursuant to this Agreement, the
Transfer Agent agrees to pay the Bank an annual maintenance fee for each
Shareholder account as set out in the initial fee schedule attached hereto. Such
fees and out-of-pocket expenses and advances identified under Section 2.2 below
may be changed from time to time subject to mutual written agreement between the
Transfer Agent and the Bank. For purposes hereof the term account should refer
to any Shareholder account designated as such on the DST mutual fund system (or
any replacement system) provided further that so called omnibus accounts shall
be considered to be a single account.
2.2 In addition to the fees paid under Section 2.1 above, the Transfer
Agent agrees to reimburse the Bank for out-of-pocket expenses, including but not
limited to confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by the Bank at the request or with the consent of the
Transfer Agent, will be reimbursed by the Transfer Agent.
<PAGE>
2.3 The Transfer Agent agrees to pay all fees and reimbursable expenses
within five days following the receipt of the respective billing notice. Postage
for mailing of dividends, proxies, Fund reports and other mailings to all
accounts shall be advanced to the Bank by the Transfer Agent at least seven (7)
days prior to the mailing date of such materials.
3. Bank as Trustee or Custodian of Retirement Plans
As agreed upon in writing between the parties, the Bank and Transfer Agent
agree that the Bank may serve as the named custodian or trustee of individual
retirement accounts established under section 408 of the Internal Revenue Code
(the "Code"), tax-sheltered plans established under section 403 (b) of the Code,
qualified plans under section 401(a) of the Code, or money purchase plans,
pension plans or profit sharing plans with a cash deferred arrangement under
section 401(k) of the Code (collectively "Retirement Plans").
3.1 The Bank shall provide certain recordkeeping services as more fully
described in the TRAC-2000 Procedures manual provided to the Fund for
Shareholders who become plan participants of Retirement Plans using TRAC-2000
System.
3.2 The Bank shall:
(a) have no investment responsibility for the selection of
investments, no liability for any investments made for Retirement
Plans other than to maintain custody and provide recordkeeping of
the investments subject to the terms of the Agreement; and
(b) not serve as "Plan Administrator" (as defined in the Employee
Retirement Income Securities Act of 1974, as amended) of any
Retirement Plan, or in any other administrative capacity or other
capacity except as trustee or custodian thereof, the Bank shall
not keep records of Retirement Plan accounts except as provided
herein.
3.3 The Transfer Agent agrees that in any communications from the Transfer
Agent or the Funds to any prospective or actual Shareholder, neither the Funds
nor the Transfer Agent shall state or represent that the Bank has any investment
discretion or other power concerning investments of any Retirement Plan or the
Bank shall serve as plan administrator or have any administrative or other
responsibility for the administration or operation of any Retirement Plan. The
Funds, the Funds' designee, or the Transfer Agent as may be required to comply
with the Code and all other applicable federal and state laws shall:
(a) serve as third party administrators of all Retirement Plans; and
(b) provide all Retirement Plan prototype document design, tax form
preparation (excluding services performed by the Bank under
section 1.2 of this Agreement), discrimination testing and
consulting about Retirement Plan qualification and maintenance.
4. Wire Transfer Operating Guidelines/Articles 4A of the Uniform Commercial Code
4.1 The Bank is authorized to promptly debit the appropriate Transfer Agent
account(s) upon the receipt of a payment order in compliance with the selected
security procedure (the "Security Procedure") chosen for funds transfer and in
the amount of money that the Bank has been instructed to transfer. The Bank
shall execute payment orders in compliance with the Security Procedure and with
the Transfer Agent instructions on the execution date provided that such payment
order is received by the customary deadline for processing such a request,
unless the payment order specifies a later time. All payment orders and
communications received after this time-frame will be deemed to have been
received the next business day.
4.2 The Transfer Agent acknowledges that the Security Procedure it has
designated on the Transfer Agent Selection Form was selected by the Transfer
Agent from Security Procedures offered by the Bank. The Transfer Agent shall
restrict access to confidential information relating to the Security Procedure
to authorized persons as communicated to the Bank in writing. The Transfer Agent
must notify the Bank immediately if it has reason to believe unauthorized
persons may have obtained access to such information or of any change in the
Transfer Agent's authorized personnel. The Bank shall verify the authenticity of
all such instructions according to the Security Procedure.
<PAGE>
4.3 The Bank shall process all payment orders on the basis of the account
number contained in the payment order. In the event of a discrepancy between any
name indicated on the payment order and the account number, the account number
shall take precedence and govern.
4.4 When the Transfer Agent initiates or receives Automated Clearing House
("ACH") credit and debit entries pursuant to these guidelines and the rules of
the National Automated Clearing House Association and the New England Clearing
House Association, the Bank will act as an Originating Depository Financial
Institution and/or receiving depository Financial Institution, as the case may
be, with respect to such entries. Credits given by the Bank with respect to an
ACH credit entry are provisional until the Bank receives final settlement for
such entry from the Federal Reserve Bank. If the Bank does not receive such
final settlement, the Transfer Agent agrees that the Bank shall receive a refund
of the amount credited to the Transfer Agent in connection with such entry, and
the party making payment to the Transfer Agent via such entry shall not be
deemed to have paid the amount of the entry.
4.5 The Bank reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance in
the account to be charged at the time of the Bank's receipt of such payment
order; (b) if initiating such payment order would cause the Bank, in the Bank's
sole judgement, to exceed any volume, aggregate dollar, network, time, credit or
similar limits upon wire transfers which are applicable to the Bank; or (c) if
the Bank, in good faith, is unable to satisfy itself that the transaction has
been properly authorized.
4.6 The Bank shall use reasonable efforts to act on all authorized requests
to cancel or amend payment orders received in compliance with the Security
Procedure provided that such requests are received in a timely manner affording
the Bank reasonable opportunity to act. However, the Bank assumes liability if
the request for amendment or cancellation cannot be satisfied.
4.7 The Bank shall assume no responsibility for failure to detect any
erroneous payment order provided that the Bank complies with the payment order
instructions as received and the Bank complies with the Security Procedure. The
Security Procedure is established for the purpose of authenticating payment
orders only and not for the detection of errors in payment orders.
4.8 The Bank shall assume no responsibility for lost interest with respect
to the refundable amount of any unauthorized payment order unless the Bank is
notified of the unauthorized payment order within (30) days or notification by
the Bank of the acceptance of such payment order. In no event (including failure
to execute a payment order) shall the Bank be liable for special, indirect or
consequential damages, even if advised of the possibility of such damages.
4.9 Confirmation of Bank's execution of payment orders shall ordinarily be
provided within 24 hours notice of which may be delivered through the Bank's
proprietary information systems, or by facsimile or call-back. Client must
report any objections to the execution of an order within 30 days.
5. Data Access and Proprietary Information
5.1 The Transfer Agent acknowledges that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and other
information furnished to the Transfer Agent by the Bank are provided solely in
connection with the services rendered under this Agreement and constitute
copyrighted trade secrets or proprietary information of substantial value to the
Bank. Such databases, programs, formats, designs, techniques and other
information are collectively referred to below as "Proprietary Information". The
Transfer Agent agrees that it shall treat all Proprietary Information as
proprietary to the Bank and further agrees that it shall not divulge any
Proprietary Information to any person or organization except as expressly
permitted hereunder. The Transfer Agent agrees for itself and its employees and
agents:
(a) to use such programs and databases (i) solely on the Transfer
Agent's computers, or (ii) solely from equipment at the locations
agreed to between the Transfer Agent and the Bank and (iii) in
accordance with the Bank's applicable user documentation;
<PAGE>
(b) to refrain from copying or duplicating in any way (other than in
the normal course of performing processing on the Transfer Agents
computers) any part of any Proprietary Information;
(c) to refrain from obtaining unauthorized access to any programs,
data or other information not owned by the Transfer Agent, and if
such access if accidently obtained, to respect and safeguard the
same Proprietary Information;
(d) to refrain from causing or allowing information transmitted from
the Bank's computer to the Transfer Agent's terminal to be
retransmitted to any other computer terminal or other device
except as expressly permitted by the Bank, such permission not to
be unreasonably withheld;
(e) that the Transfer Agent shall have access only to those
authorized transactions as agreed to between the Transfer Agent
and the Bank; and
(f) to honor reasonable written requests made by the Bank to protect
at the Bank's expense the rights of the Bank in Proprietary
Information at common law and under applicable statutes.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section 5 shall
survive any earlier termination of this Agreement.
6. Indemnification
6.1 The Bank shall not be responsible for, and the Transfer Agent shall
indemnify and hold the Bank harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payment, expenses and liability arising
out of or attributable to:
(a) all actions of the Bank 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 Transfer Agents' lack of good faith, negligence or willful
misconduct;
(c) the reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services
which (i) are received by the Bank or its agents or
subcontractors from the Transfer Agent or its duly authorized
representative, and (ii) have been prepared, maintained or
performed by the Transfer Agent including but not limited to any
previous transfer agent or registrar excluding the Bank;
(d) the reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Transfer
Agent;
(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.
6.2 At any time the Bank may apply to any officer of the Transfer Agent for
instructions, and may consult with legal counsel acceptable to the Transfer
Agent with respect to any matter arising in connection with the services to be
performed by the Bank under this Agreement, and the Bank and its agents or
subcontractors shall not be liable and shall be indemnified by the Transfer
Agent for any action taken or omitted by it in reliance upon such instructions
or upon the opinion of such counsel.
The Bank, its agents and subcontractors shall be protected and indemnified
in acting upon any paper or document furnished by or on behalf of the Transfer
Agent, 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 the Bank or its agents or subcontractors by machine readable
input, telex, tape, CRT data entry or other similar means authorized by the
Transfer Agent, and shall not be held to have notice of any change of authority
of any person, until receipt of written notice thereof from the Transfer Agent.
The Bank, its agents and subcontractors shall also be protected and indemnified
in recognizing stock certificates which are reasonably believed to bear the
proper manual or facsimile signatures of the officers of the Fund, and the
proper countersignature of any former transfer agent or former registrar, or of
a co-transfer agent or co-registrar.
<PAGE>
6.3 In order that the indemnification provisions contained in this Section
6 shall apply, upon the assertion of a claim for which the Transfer Agent may be
required to indemnify the Bank, the Bank shall promptly notify the Transfer
Agent of such assertion, and shall keep the Transfer Agent advised with respect
to all developments concerning such claim. The Transfer Agent shall have the
option to participate with the Bank in the defense of such claim or to defend
against said claim in its own name or in the name of the Bank.
The Bank shall in no case confess any claim or make any compromise in any
case in which the Transfer Agent may be required to indemnify the Bank except
with the Transfer Agent's prior written consent.
6.4 The indemnity provisions of Section 6 shall survive any earlier
termination of this Agreement.
7. Standard of Care
The Bank shall at all times act in good faith and agrees to use its best
efforts 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 or that of its employees.
8. Covenants of the Transfer Agent and the Bank
8.1 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Transfer Agent 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.
8.2 The Bank 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, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of each Fund or the Transfer Agent and will be
preserved, maintained and made available in accordance with such section and
rules, for monitoring by the Transfer Agent, and will be surrendered promptly to
the Transfer Agent on and in accordance with its request. The Bank shall furnish
adequate resources and office space in order to allow the Transfer Agent or any
governmental authority to inspect all books, procedures, information and records
required hereby.
8.3 The Bank and the Transfer Agent 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
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.4 In case of any requests or demands for the inspection of the
Shareholder records of the Transfer Agent, the Bank will endeavor to notify the
Transfer Agent and to secure instructions from an authorized officer of the
Transfer Agent as to such inspection. The Bank reserves the right, however, to
exhibit the Shareholder records to any person, whenever it is advised by counsel
that it may be held liable for the failure to exhibit the Shareholder records to
such person.
9. Representations and Warranties of the Bank
The Bank represents and warrants to the Transfer Agent that:
(a) it is a trust company duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts;
(b) it is duly qualified to carry on its business in the Commonwealth of
Massachusetts;
(c) it is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement;
(d) all requisite corporation proceedings have been taken to authorize it
to enter into and perform this Agreement;
(e) it has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement;
<PAGE>
(f) it is registered as a transfer agent under Section 17A(c)(2) of the
Exchange Act.
10. Representations and Warranties of the Transfer Agent
The Transfer Agent represents and warrants to the Bank that:
(a) it is a Connecticut corporation duly organized and existing and in
good standing under the laws of Connecticut;
(b) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(c) all corporate proceedings required by said articles of incorporation
and by-law have been taken to authorize it to enter into and perform
this Agreement;
(d) it is registered as a transfer agent under Section 17A(c)(2) of the
Exchange Act.
11. Termination of Agreement
11.1 This Agreement shall continue for a period of three years (the
"Initial Term") and be renewed or terminated as stated below.
11.2 This Agreement shall terminate upon the termination of the Transfer
Agency Agreement between the Funds and the Transfer Agent.
11.3 This Agreement may be terminated or renewed after the Initial Term by
either party upon ninety (90) days written notice to the other.
11.4 Should either party exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the party exercising its right to terminate. Additionally, the party receiving
the notice to terminate reserves the right to charge the terminating party for
any other reasonable expenses associated with such termination.
12. Assignment
12.1 Except as provided in Section 12.3 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
12.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
12.3 The Bank may, without further consent on the part of the Transfer
Agent, subcontract for the performance hereof with (a) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered as
a transfer agent pursuant to Section 17A (c)(2) of the Exchange Act ("Section
17A (c)(2); (b) National Financial Data Services, Inc., a subsidiary of BFDS
duly registered as a transfer agent pursuant to Section 17A (c)(2) or (c) a BFDS
affiliate; provided, however, that the Bank shall be as fully responsible to the
Transfer Agent for the acts and omissions of any subcontractor as it is for its
own acts and omissions.
13. Amendment
This Agreement may be amended or modified by a written agreement executed
by both parties.
14. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
15. Force Majeure
In the event either party is unable to perform its obligations under the
terms of this Agreement because of 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.
<PAGE>
16. Consequential Damages
Neither party to this agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
17. Limitations of Shareholder Liability
The Bank hereby expressly acknowledges that recourse against the Funds
shall be subject to those limitations provided by governing law and the
Declaration of Trust of the Funds, as applicable, and agrees that obligations
assumed by the Funds pursuant to the Transfer Agency Agreement shall be limited
in all cases to the Funds and their respective assets. The Bank shall not seek
satisfaction from the Shareholders or any Shareholders of the Funds, nor shall
the Bank seek satisfaction of any obligations from the Trustees/Directors or any
individual Trustee/Director of the Funds.
18. Merger of Agreement
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.
19. Counterparts
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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the 21st day of July 1994.
PHOENIX EQUITY PLANNING CORPORATION
BY: /s/ William R. Moyer
---------------------------------------
William R. Moyer
Senior Vice President, Finance
ATTEST:
/s/Patricia O. McGlaughlin
- -----------------------------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/Donald E. Logue
---------------------------
Executive Vice President
ATTEST:
/s/S. Cesso
- -------------------------------
<PAGE>
STATE STREET BANK & TRUST COMPANY
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS PLAN
TRANSFER AND DIVIDEND DISBURSEMENT AGENT
THE PHOENIX FUNDS
PHOENIX SERIES FUNDS
PHOENIX HIGH YIELD FUND SERIES--A & B SHARES
*NATIONAL BOND FUND MERGED WITH A SHARES
PHOENIX U.S. GOVERNMENT SECURITIES FUND SERIES--A & B SHARES
*NATIONAL FEDERAL SECURITIES TRUST MERGED WITH A SHARES
PHOENIX BALANCED FUND SERIES--A & B SHARES
PHOENIX CONVERTIBLE FUND SERIES--A & B SHARES
PHOENIX GROWTH FUND SERIES--A & B SHARES
PHOENIX MONEY MARKET FUND SERIES--A & B SHARES
PHOENIX MULTI PORTFOLIO FUNDS
PHOENIX TAX EXEMPT BOND PORTFOLIO--A & B SHARES
*NATIONAL SECURITIES TAX EXEMPT BONDS MERGED WITH A SHARES
PHOENIX CAPITAL APPRECIATION PORTFOLIO--A & B SHARES
PHOENIX INTERNATIONAL PORTFOLIO--A & B SHARES
PHOENIX ENDOWMENT EQUITY PORTFOLIO
PHOENIX ENDOWMENT FIXED-INCOME PORTFOLIO
OTHER PHOENIX FUNDS
PHOENIX TOTAL RETURN FUND, INC.--A & B SHARES
*NATIONAL TOTAL RETURN MERGED WITH A SHARES
PHOENIX MULTI-SECTOR FIXED INCOME FD, INC.--A & B SHARES
*PHOENIX HIGH QUALITY MERGED WITH A SHARES
PHOENIX EQUITY OPPORTUNITIES FUND--A & B SHARES
*A SHARES FORMERLY NATIONAL STOCK FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND--A & B SHARES
PHOENIX INCOME AND GROWTH FUND--A & B SHARES
PHOENIX CALIFORNIA TAX EXEMPT BOND FUND--A & B SHARES
PHOENIX ASSET RESERVE--A & B SHARES
<PAGE>
STATE STREET BANK & TRUST COMPANY
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS PLAN
TRANSFER AND DIVIDEND DISBURSEMENT AGENT
THE PHOENIX FUNDS
State Street shall charge PEPCO an annual fee based on a per shareholder
account per fund class for the next three (3) years equal to the following:
PHOENIX FEE SCHEDULE
Annual Per Account Fee
1994 $6.75
1995-1996* 1-600,000 ACCTS $7.00
600,000-1,000,000 ACCTS $6.75
OVER 1,000,000 ACCTS $6.60
Monthly Minimum/Fund Applied to Acct. Fee $1,500.00
Annual Closed Account Fee $1.20
Checkwriting Fees:
Per Check Cleared $1.00
Privilege Set-Up $5.00
Annual 12(B)1 Fee (Billed Quarterly) $1.00
Annual Investor Processing Fee
(Per Investor) $1.80
Other Fees: (1994-1996)
Management $27.00-$37.00 Per Hr. Per FTE
Fund Administrator $29.00 Per Hr. Per FTE
All Transfer Agent Functions $22.50 Per Hr. Per FTE
Liaisons Over 4,000/mth $26.00 Per Item
[bullet] This schedule is based on 700K accounts, 26 funds, and 4,000 liaison
items.
[bullet] If the account base decreases significantly, the per account fee will
be reviewed by both parties.
[bullet] If 12(B)1 product is discontinued the annual per account fee will be
increased by $1.00 [bullet]
[bullet] Additional Fund Administrators will be added as new funds are opened
(ratio 1:8) and charged as detailed above.
[bullet] This schedule does not include fees for Image terminals, conversions,
acquisitions, customer service, audio response, 401 recordkeeping, new product
lines, and out-of-pockets.
In witness whereof, Phoenix Equity Planning Corporation and State Street
Bank and Trust Company have agreed upon this fee schedule and have caused this
fee schedule to be executed in their names and on their behalf through their
duly authorized officers for the next three years.
PHOENIX EQUITY PLANNING CORPORATION STATE STREET BANK & TRUST CO.
By /s/Edward P. Hourihan By /s/ Mark Toomey
------------------------ --------------------------
Title Vice President Title Vice President
Date 7/15/94 Date 7/12/74
*The fee for this period shall be adjusted by the parties to reflect then
prevailing levels of service furnished by State Street.
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
SERVICE RESPONSIBILITY SCHEDULE
<TABLE>
<CAPTION>
FUNCTIONAL PEPCO BFDS
RESPONSIBILITIES (Transfer Agent) (Sub Transfer Agent)
<S> <C> <C>
A. Transmission Processing:
Remittance Cash Processing X
New Account Setup
[bullet] Regular X
[bullet] Fiduciary X
[bullet] Quality Assurance X
Transfers
[bullet] Regular X
[bullet] Fiduciary X
[bullet] Dealer X
[bullet] Quality Assurance X
Redemptions
[bullet] Regular X
[bullet] Fiduciary X
[bullet] Quality Assurance X
Wire Order
[bullet] Set-Up X
[bullet] Settlement X
[bullet] Quality Assurance X
[bullet] Monitoring of Outstanding Trades X
Maintenance
[bullet] Registration X
[bullet] Rep/Dealer File X *X
[bullet] Sub Files X
[bullet] Quality Assurance X
[bullet] ACH Prenote Reject X
[bullet] All Account Options X
Adjustments (through 12/94)
[bullet] Account Corrections *X
[bullet] LOI Processing *X
[bullet] Year-End Accounts Adjustments *X
[bullet] Sharelot Adjustments *X
[bullet] Bounced Checks *X
[bullet] ACH Cancellations *X
[bullet] Quality Assurance *X
B. Customer Service:
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Telephones X
[bullet] Customer Inquiry X
[bullet] Transaction Line
[bullet] Timer Exchanges *X
[bullet] Liaison Support (Through 12/4) *X
Correspondence X
[bullet] Shareholder/Dealer Letters X
[bullet] Transfer of Assets Letters/Followup X
[bullet] Notice of Levy X
Dealer Services
[bullet] FundsServ/Networking Implementation X
[bullet] Dealer Security Access X
[bullet] Enhancements-Communications/Testing X
???ent Services
[bullet] Product Development/Implementation X
[bullet] Mailings X
[bullet] Year End Reporting X
C. Support:
Image/AWD
[bullet] Scanning X X
[bullet] Work Distribution X
[bullet] Retrieval X
[bullet] Technical Support X
Microfilm/Research Prior Agent X *X
[bullet] Media Production
[bullet] Design/Printing X
[bullet] Marketing Materials X
[bullet] Forms Development X
Corporate Actions
[bullet] Report Generation X
[bullet] Proxy Solicitation X
[bullet] Periodic Financial Activities (DIVs, PACs,
SWPs, etc.) X
Compliance/Regulatory
[bullet] Escheatment X
[bullet] Tax Filings X
[bullet] Lost Shareholder Recovery X
[bullet] BNotice/CNotice Reporting *X
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[bullet] Lost Certificate Processing/SIC *X
[bullet] Reporting
Recon/Control
[bullet] Cash Settlement X
[bullet] Account Reconcilement X
[bullet] Commission Payment X
[bullet] Automated Trade Settlement X
[bullet] Balance Credit Review X
[bullet] Reclaims *X
[bullet] Dividend Processing X
Financial Reporting
[bullet] Billing to the Fund X
Will be internalized to PEPCO
</TABLE>
EXHIBIT 9.3
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
<PAGE>
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
THIS AGREEMENT made and concluded as of this 19th day of November, 1997
by and between Phoenix Equity Planning Corporation, a Connecticut corporation
having a place of business located at 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Financial Agent") and each of the undersigned mutual funds
(hereinafter collectively and singularly referred to as the "Trust").
WITNESSETH THAT:
1. Financial Agent shall keep the books of the Trust and compute the
daily net asset value of shares of the Trust in accordance with instructions
received from time to time from the Board of Trustees of the Trust; which
instructions shall be certified to Financial Agent by the Trust's Secretary.
Financial Agent shall report such net asset value so determined to the Trust and
shall perform such other services as may be requested from time to time by the
Trust as are reasonably incidental to Financial Agent's duties hereunder.
2. Financial Agent shall be obligated to maintain, for the periods and
in the places required by Rule 31a-2 under the Investment Company Act of 1940,
as amended, those books and records maintained by Financial Agent. Such books
and records are the property of the Trust and shall be surrendered promptly to
the Trust upon its request. Furthermore, such books and records shall be open to
inspection and audit at reasonable times by officers and auditors of the Trust.
3. As compensation for its services hereunder during any fiscal year of
the Trust, Financial Agent shall receive, within eight days after the end of
each month, a fee as specified in Schedule A.
4. Financial Agent shall not be liable for anything done or omitted by
it in the exercise of due care in discharging its duties specifically described
hereunder and shall be answerable and accountable only for its own acts and
omissions and not for those of any agent employed by it nor for those of any
bank, trust company, broker, depository, correspondent or other person.
Financial Agent shall be protected in acting upon any instruction, notice,
request, consent, certificate, resolution, or other instrument or paper believed
by Financial Agent to be genuine, and to have been properly executed, and shall,
unless otherwise specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be ascertained
<PAGE>
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.
5. Subject to prior approval of the Board of Trustees of the Trust,
Financial Agent may appoint one or more sub-financial agents to perform any of
the functions and services which are to be provided under the terms of this
Agreement upon such terms and conditions as may be mutually agreed upon by the
Trust, Financial Agent and such sub-financial agent.
6. This Agreement shall continue in effect only so long as (a) such
continuance is specifically approved at least annually by the Board of Trustees
of the Trust or by a vote of a majority of the outstanding voting securities of
the Trust, and (b) the terms and any renewal of such Agreement have been
approved by the vote of a majority of the trustees of the Trust who are not
parties to this Agreement or interested persons, as that term is defined in the
Investment Company Act of 1940, as amended, of any such party, cast in person at
a meeting called for the purpose of voting on such approval. A "majority of the
outstanding voting securities of the Trust" shall have, for all purposes of this
Agreement, the meaning provided therefor in said Investment Company Act.
7. Either party may terminate the within Agreement by tendering written
notice to the other, whereupon Financial Agent will be relieved of the duties
described herein. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in said Investment Company Act.
8. Additional funds may become party to this Agreement by notifying the
Financial Agent in writing, and if the Financial agent agrees in writing to
provide its services, such fund shall become a Trust subject to the terms of the
Agreement. Such notification shall include a revised Schedule A reflecting the
new fund(s) as added to the appropriate fund classification(s).
<PAGE>
9. This Agreement shall be construed and the rights and obligations of
the parties hereunder enforced in accordance with the laws of the Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
PHOENIX CALIFORNIA TAX EXEMPT
BONDS, INC.
PHOENIX EQUITY SERIES FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX INVESTMENT TRUST 97
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED
INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT
TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION
FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
By: /s/ Michael E. Haylon
--------------------------------
Michael E. Haylon
Executive Vice President
PHOENIX EQUITY PLANNING
CORPORATION
By: /s/ Philip R. McLoughlin
--------------------------------
Philip R. McLoughlin
President
<PAGE>
SCHEDULE A
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS FINANCIAL AGENT
Annual Financial Agent Fees shall be based on the following formula:
(1) An incremental schedule applies as follows:
<TABLE>
<S> <C>
Up to $100 million: 5 basis points on average daily net assets
$100 million to $300 million: 4 basis points on average daily net assets
$300 million through $500 million: 3 basis points on average daily net assets
Greater than $500 million: 1.5 basis points on average daily net assets
</TABLE>
A minimum fee will apply as follows:
Money Market $35,000
Equity $50,000
Balanced $60,000
Fixed Income $70,000
International $70,000
REIT $70,000
(2) An additional charge of $12,000 applies for each additional class
of shares above one, over and above the minimum asset-based fee previously
noted.
The following tables indicates the classification and effective date
for each of the applicable fund/series/portfolio:
<TABLE>
<CAPTION>
Classification Series Name
- -------------- -----------
<S> <C>
Money Market Phoenix Money Market Fund Series
Equity Phoenix Aggressive Growth Fund Series
Phoenix Core Equity Fund
Phoenix Equity Opportunities Fund
Phoenix Growth and Income Fund
Phoenix Growth Fund Series
Phoenix Micro Cap Fund
Phoenix Mid Cap Portfolio
Phoenix Small Cap Fund
Phoenix Small Cap Value Fund
Phoenix Strategic Theme Fund
Phoenix Value Equity Fund
<PAGE>
<CAPTION>
Classification Series Name
- -------------- -----------
<S> <C>
Balanced Phoenix Balanced Fund Series
Phoenix Convertible Fund Series
Phoenix Income and Growth Fund
Phoenix Strategic Allocation Fund, Inc.
Fixed Income Phoenix California Tax Exempt Bonds, Inc.
Phoenix Strategic Income Fund
Phoenix Emerging Markets Bond Portfolio
Phoenix High Yield Fund Series
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Tax-Exempt Bond Portfolio
Phoenix U.S. Government Securities Fund Series
International Phoenix International Portfolio
Phoenix Worldwide Opportunities Fund
REIT Phoenix Real Estate Securities Portfolio
</TABLE>
EXHIBIT 9.4
FIRST AMENDMENT TO
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
<PAGE>
FIRST AMENDMENT TO
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
THIS AMENDMENT made effective as of the 27th day of February, 1998 amends that
certain Amended and Restated Financial Agent Agreement dated November 19, 1997
by and among the following parties (the "Agreement") as hereinbelow provided.
W I T N E S S E T H :
WHEREAS, the parties hereto wish to amend the Agreement to eliminate
the provision that states that Financial Agent is not responsible for the acts
or omissions of any agent appointed by it:
NOW, THEREFORE, in consideration of the foregoing premise, the first
sentence of Paragraph 4 of the Agreement is amended to read as follows:
"Financial Agent shall not be liable for anything done or omitted to be
done by it in the exercise of due care in discharging its duties
specifically described hereunder."
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their duly authorized officers on this 23rd day of March, 1998.
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX EQUITY SERIES FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX INVESTMENT TRUST 97
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
By: /s/ Michael E. Haylon
----------------------------------------
Michael E. Haylon
Executive Vice President
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Philip R. McLoughlin
----------------------------------------
Philip R. McLoughlin
President
EXHIBIT 9.5
SECOND AMENDMENT TO
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
<PAGE>
SECOND AMENDMENT TO
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
THIS AMENDMENT made effective as of the 1st day of June, 1998 amends that
certain Amended and Restated Financial Agent Agreement dated November 19, 1997,
as amended March 23, 1998, 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 Schedule A of the Agreement to
reflect the recently approved fee structure:
NOW, THEREFORE, in consideration of the foregoing premise, Schedule A is
hereby replaced with the 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 31st day of July, 1998.
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX EQUITY SERIES FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX INVESTMENT TRUST 97
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
By: /s/ Michael E. Haylon
------------------------------
Michael E. Haylon
Executive Vice President
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Philip R. McLoughlin
------------------------------
Philip R. McLoughlin
President
<PAGE>
Schedule A
Revised Fee Schedule
Fee Information For Services as Financial Agent
For its services hereunder Financial Agent shall be paid a fee equal to the sum
of (1) the documented cost of fund accounting and related services provided by
PFPC, Inc., as subagent, to Financial Agent, plus (2) the documented cost to
Financial Agent to provide financial reporting and tax services and oversight
of subagent's performance.
The current PFPC fees are attached hereto and made a part hereof.
<PAGE>
PFPC Fee Schedule
<TABLE>
<CAPTION>
Assets Under Management Fees
---------------------------------------------------------
<S> <C>
$0 - $200,000,000 0.0850%
---------------------------------------------------------
$200 - $400,000,000 0.0500%
---------------------------------------------------------
$400 - $600,000,000 0.0300%
---------------------------------------------------------
$600 - $800,000,000 0.0200%
---------------------------------------------------------
$800 - $1,000,000,000 0.0150%
---------------------------------------------------------
greater than $1,000,000,000 0.0125%
---------------------------------------------------------
Minimum Fund Fee $84,000
---------------------------------------------------------
Additional Class $12,000
---------------------------------------------------------
</TABLE>
Existing Portfolios:
- --------------------
Asset Based Fees less than $50MM WAIVED
Class Fees - WAIVED
Minimum Fund Fees - WAIVED
New Portfolios (First Year):
- ----------------------------
Asset Based Fees less than $50MM - 50% WAIVED
Class Fees less than $25MM per Class - WAIVED
Minimum Fund Fees - WAIVED
New Portfolios (There After):
- -----------------------------
Asset Based Fees less than $50MM - 25% WAIVED
Class Fees less than $25MM per Class - 50% WAIVED
Minimum Fund Fees less than $50MM - 50% WAIVED
Minimum Fund Fees $50-100MM - 25% WAIVED
Variable Unit Investment Trust Valuation and Reporting
- ------------------------------------------------------
$1,500 per Unit Investment Trust
Exhibit 11
Consent of Independent Accountants
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 14 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated June 15, 1998, relating to the financial
statements and financial highlights appearing in the April 30, 1998 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/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 21, 1998
EXHIBIT 15.1
CLASS A SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
<PAGE>
PHOENIX INCOME AND GROWTH FUND
(the "Fund")
CLASS A SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have entered
into a Distribution Agreement pursuant to which the Distributor will act as
principal underwriter of each class of shares of the Fund for sale to the
permissible purchasers. The Trustees of the Fund have determined to adopt this
Distribution Plan (the "Plan"), in accordance with the requirements of Section
12b-1 of the Investment Company Act of 1940, as amended (the "Act") with respect
to Class A shares of the Fund and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its Class A shareholders.
2. Rule 12b-1 Fees
---------------
The Fund shall reimburse the Distributor, at the end of each month, up to a
maximum on an annual basis of .05% the average daily value of the net assets of
the Fund's Class A shares, subject to any applicable restrictions imposed by
rules of the National Association of Securities Dealers, Inc., for distribution
expenditures incurred by Distributor subsequent to the effectiveness of this
Plan, in connection with the sale and promotion of the Class A shares of the
Fund and the furnishing of services to Class A shareholders of the Fund. Such
expenditures shall consist of: (i) commissions to sales personnel for selling
Class A shares of the Fund (including underwriting commissions and finance
charges related to the payment of commissions); (ii) compensation, sales
incentives and payments to sales, marketing and service personnel; (iii)
payments to broker-dealers and other financial institutions which have entered
into selling agreements with the Distributor for services rendered in connection
with the sale and distribution of Class A shares of the Fund; (iv) payment of
expenses incurred in sales and promotional activities, including advertising
expenditures related to the Class A shares of the Fund; (v) the costs of
preparing and distributing promotional materials; (vi) the cost of printing the
Fund's Prospectus and Statement of Additional Information for distribution to
potential investors; and (vii) such other similar services that the Trustees of
the Fund determine are reasonably calculated to result in the sale of Class A
shares of the Fund. The Fund shall also pay the Distributor, at the end of each
month, an amount on an annual basis equal to 0.25% of the average daily value of
the net assets of the Fund's Class A shares, as compensation for providing
personal service to shareholders, including assistance in connection with
inquiries relating to shareholder accounts, and for maintaining shareholder
accounts (the "Service Fee").
<PAGE>
Any reduction to amounts payable under this Plan shall first be to the
extent of the Service Fee, and then from the balance of the 12b-1 Fee.
Amounts paid or payable by the Fund under this Plan or any agreement
with any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections. No amounts paid or payable by the Fund under this Plan or any
related agreement 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
service or activity was made by a third party on behalf of the Fund.
3. Reports
-------
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare and
furnish to the Trustees of the Fund for their review, and the Trustees shall
review, a written report complying with the requirements of Rule 12b-l under the
Act regarding the amounts expended under this Plan and the purposes for which
such expenditures were made.
<PAGE>
4. Required Approval
-----------------
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of this Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or any related agreement and this
Plan shall not take effect with respect to the Fund until it has been approved
by a vote of at least a majority of the outstanding voting Class A shares (as
such phrase is defined in the Act).
5. Term
----
This Plan shall remain in effect for one year from the date of its
adoption and may be continued thereafter if specifically approved at least
annually by a vote of at least a majority of the Trustees of the Fund as well as
a majority of the Disinterested Trustees. This Plan may be amended at any time,
provided that (a) the Plan may not be amended to increase materially the amount
of the distribution expenses provided in Paragraph 2 hereof (including the
Service Fee)
<PAGE>
without the approval of at least a majority of the outstanding voting securities
(as defined in the Act) of the Class A shares of the Fund and (b) all material
amendments to this Plan must be approved by a majority vote of the Trustees of
the Fund and of the Disinterested Trustees cast in person at a meeting called
for the purpose of such vote.
6. Selection of Disinterested Trustees
------------------------------------
While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
------------------
Any related agreement shall be in writing and shall provide that (a)
such agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class A shares of the Fund on not more than 60 days' written notice to the other
party to the agreement and (b) such agreement shall terminate automatically in
the event of its assignment.
8. Termination
-----------
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class A shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
<PAGE>
9. Records
-------
The Fund shall preserve copies of this Plan and any related agreements
and all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
10. Non-Recourse
------------
The Fund's Declaration of Trust dated June 25, 1986, a copy of which,
together with the amendments thereto ("Declaration"), is on file in the office
of the Secretary of the Commonwealth of Massachusetts, refers to the Trustees
under the Declaration of Trust collectively as Trustees, but not as individuals
or personally, and no Trustee, shareholder, officer, employee or agent of the
Fund may be held to any personal liability, nor may any resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Fund but the Fund property only shall be
liable.
[Adopted at a duly held meeting of the Board of Directors on August 27, 1997.]
EXHIBIT 15.2
CLASS B SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
<PAGE>
PHOENIX INCOME AND GROWTH FUND
(the "Fund")
CLASS B SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have entered
into a Distribution Agreement pursuant to which the Distributor will act as
principal underwriter of each class of shares of the Fund for sale to the
permissible purchasers. The Trustees of the Fund have determined to adopt this
Distribution Plan (the "Plan"), in accordance with the requirements of Section
12b-1 of the Investment Company Act of 1940, as amended (the "Act") with respect
to Class B shares of the Fund and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its Class B shareholders.
2. Rule 12b-1 Fees
---------------
The Fund shall reimburse the Distributor, at the end of each month, up to a
maximum on an annual basis of .75% of the average daily value of the net assets
of the Fund's Class B shares, subject to any applicable restrictions imposed by
rules of the National Association of Securities Dealers, Inc., for distribution
expenditures incurred by Distributor subsequent to the effectiveness of this
Plan, in connection with the sale and promotion of the Class B shares of the
Fund and the furnishing of services to Class B shareholders of the Fund. Such
expenditures shall consist of: (i) commissions to sales personnel for selling
Class B shares of the Fund (including underwriting commissions and finance
charges related to the payment of commissions); (ii) compensation, sales
incentives and payments to sales, marketing and service personnel; (iii)
payments to broker-dealers and other financial institutions which have entered
into selling agreements with the Distributor for services rendered in connection
with the sale and distribution of Class B shares of the Fund; (iv) payment of
expenses incurred in sales and promotional activities, including advertising
expenditures related to the Class B shares of the Fund; (v) the costs of
preparing and distributing promotional materials; (vi) the cost of printing the
Fund's Prospectus and Statement of Additional Information for distribution to
potential investors; and (vii) such other similar services that the Trustees of
the Fund determine are reasonably calculated to result in the sale of Class B
shares of the Fund. The Fund shall also pay the Distributor, at the end of each
month, an amount on an annual basis equal to 0.25% of the average daily value of
the net assets of the Fund's Class B shares, as compensation for providing
personal service to
<PAGE>
shareholders, including assistance in connection with inquiries relating to
shareholder accounts, and for maintaining shareholder accounts (the "Service
Fee").
Any reduction to amounts payable under this Plan shall first be to the
extent of the Service Fee, and then from the balance of the 12b-1 Fee.
Amounts paid or payable by the Fund under this Plan or any agreement with
any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
3. Reports
-------
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare and
furnish to the Trustees of the Fund for their review, and the Trustees shall
review, a written report complying with the requirements of Rule 12b-l under the
Act regarding the amounts expended under this Plan and the purposes for which
such expenditures were made.
4. Required Approval
-----------------
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of this Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or any related agreement and this
Plan shall not take effect with respect to the Fund until it has been approved
by a vote of at least a majority of the outstanding voting Class B shares (as
such phrase is defined in the Act).
5. Term
----
This Plan shall remain in effect for one year from the date of its adoption
and may be continued thereafter if specifically approved at least annually by a
vote of at least a majority of the Trustees of the Fund as well as a majority of
the Disinterested Trustees. This Plan may be amended at any time, provided that
(a) the Plan may not be amended to increase materially the amount of the
distribution expenses provided in Paragraph 2 hereof (including the Service Fee)
<PAGE>
without the approval of at least a majority of the outstanding voting securities
(as defined in the Act) of the Class B shares of the Fund and (b) all material
amendments to this Plan must be approved by a majority vote of the Trustees of
the Fund and of the Disinterested Trustees cast in person at a meeting called
for the purpose of such vote.
6. Selection of Disinterested Trustees
-----------------------------------
While this Plan is in effect, the selection and nomination of Trustees who
are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
------------------
Any related agreement shall be in writing and shall provide that (a) such
agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class B shares of the Fund on not more than 60 days' written notice to the other
party to the agreement and (b) such agreement shall terminate automatically in
the event of its assignment.
8. Termination
-----------
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class B shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
9. Records
-------
The Fund shall preserve copies of this Plan and any related agreements and
all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
10. Non-Recourse
------------
The Fund's Declaration of Trust dated June 25, 1986, a copy of which,
together with the amendments thereto ("Declaration"), is on file in the office
of the Secretary of the Commonwealth of Massachusetts, refers to the Trustees
under the Declaration of Trust collectively as Trustees, but not as individuals
or personally, and no Trustee, shareholder, officer, employee or agent of the
Fund may be held to any personal liability, nor may any resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Fund but the Fund property only shall be
liable.
[Adopted at a duly held meeting of the Board of Trustees on August 27,
1997.]
Exhibit 16
EXPLANATION OF YIELD AND EFFECTIVE YIELD CALCULATION
<PAGE>
EXPLANATION OF YIELD AND EFFECTIVE YIELD CALCULATION
The following is an example of the yield calculation for the Phoenix Income and
Growth Fund based on a 30 day period ending April 30, 1994.
The yield is computed by dividing the net investment income per share earned
during the accounting period by the maximum price per share on the last day of
the period, according to the following formula:
Yield = 2 [ (a-b/cxd + 1)^6 - 1]
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 period that
were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the period
The yield of the Phoenix Income and Growth Fund is computed as follows:
Class A Shares
Yield = 2 [(2,667,615-497,012/56,285,644x9.80) + 1)^6 - 1] = 4.77%
Class B Shares
Yield = 2 [(1,901,137-585,028/39,909,668x9.32) + 1)^6 - 1] = 4.28%
EXHIBIT 19.1
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
<PAGE>
PHOENIX FUNDS
(the "Funds")
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended
("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the original effective date of this Plan, the Funds shall offer
multiple classes of shares, as described herein, pursuant to Rule 18f-3 and this
Plan.
2. The Multi-Class Structure
-------------------------
The portfolios of the Funds listed on Schedule A hereto shall offer up to
four classes of shares as indicated on Schedule A: Class A, Class B, Class C and
Class M ("Multi-Class Portfolios"). Shares of the Multi-Class Portfolios shall
represent an equal pro rata interest in the respective Multi-Class Portfolio
and, generally, shall have identical voting, dividend, liquidation, and other
rights, preferences, powers, restrictions, limitations, qualifications and terms
and conditions, except that: (a) each class shall have a different designation;
(b) each class shall bear any Class Expenses, as defined by Section 2(b), below;
(c) each class shall have exclusive voting rights on any matter submitted to
shareholders that relates solely to its distribution arrangement; and (d) each
class shall have separate voting rights on any matter submitted to shareholders
in which the interests of one class differ from the interests of any other
class. In addition, Class A, Class B, Class C and Class M shares shall have the
features described in Sections a, b, c and d, below.
a. Distribution Plans
------------------
The Funds have adopted Distribution Plans pursuant to Rule 12b-1 with
respect to each Multi-Class Portfolio, containing substantially the following
terms:
i. Class A shares of each Multi-Class Portfolio shall reimburse
Phoenix Equity Planning Corporation (the "Distributor") for costs and expenses
incurred in connection with distribution and marketing of shares thereof, as
provided in the Class A Distribution Plan and any supplements thereto, subject
to an annual limit of 0.25%, or in some cases 0.30%, of the average daily net
assets of a Multi-Class Portfolio's Class A shares.
<PAGE>
-2-
ii. Class B shares of each Multi-Class Portfolio shall reimburse
the Distributor for costs and expenses incurred in connection with distribution
and marketing of shares thereof, as provided in the Class B Distribution Plan
and any supplements thereto, subject to an annual limit of 1.00% of the average
daily net assets of a Multi-Class Portfolio's Class B shares.
iii. Class C shares of each Multi-Class Portfolio shall reimburse
the Distributor for costs and expenses incurred in connection with distribution
and marketing of shares thereof, as provided in the Class C Distribution Plan
and any supplements thereto, subject to an annual limit of 1.00%, or in some
cases 0.50%, of the average daily net assets of a Multi-Class Portfolio's Class
C shares.
iv. Class M shares of each Multi-Class Portfolio shall reimburse
the Distributor for costs and expenses incurred in connection with distribution
and marketing of shares thereof, as provided in the Class M Distribution Plan
and any supplements thereto, subject to an annual limit of 0.50% of the average
daily net assets of a Multi-Class Portfolio's Class M shares.
b. Allocation of Income and Expenses
---------------------------------
i. General.
--------
The gross income, realized and unrealized capital gains and losses
and expenses (other than Class Expenses, as defined below) of each Multi-Class
Portfolio shall be allocated to each class on the basis of its net asset value
relative to the net asset value of the Multi-Class Portfolio. Expenses to be so
allocated include expenses of the Funds that are not attributable to a
particular Multi-Class Portfolio or class of a Multi-Class Portfolio but are
allocated to a Multi-Class Portfolio ("Fund Expenses") and expenses of a
particular Multi-Class Portfolio that are not attributable to a particular class
of that Multi-Class Portfolio ("Portfolio Expenses"). Fund Expenses include, but
are not limited to, trustees' fees, insurance costs and certain legal fees.
Portfolio Expenses include, but are not limited to, certain state registration
fees, custodial fees, advisory fees and other expenses relating to the
management of the Multi-Class Portfolio's assets.
ii. Class Expenses.
---------------
Expenses attributable to a particular class ("Class Expenses")
shall be limited to: (1) transfer agency fees; (2) stationery, printing,
postage, and delivery expenses relating to preparing and distributing
shareholder reports, prospectuses, and proxy statements; (3) state Blue Sky
registration fees; (4) SEC registration fees; (5) expenses of administrative
personnel and services to the extent related to another category of
class-specific expenses; (6) trustees' fees and expenses; (7) accounting
expenses, auditors' fees, litigation expenses, and legal fees and expenses; and
(8) expenses incurred in connection with shareholder meetings. Expenses
described in
<PAGE>
-3-
subsection (a) (i) and (ii) above of this paragraph must be allocated to the
class for which they are incurred. All other expenses described in this
paragraph will be allocated as Class Expenses, if a Fund's President and
Treasurer have determined, subject to Board approval or ratification, which of
such categories of expenses will be treated as Class Expenses, consistent with
applicable legal principles under the 1940 Act and the Internal Revenue Code of
1986, as amended ("Code"). The difference between the Class Expenses allocated
to each share of a class during a year and the Class Expenses allocated to each
share of any other class during such year shall at all times be less than .50%
of the average daily net asset value of the class of shares with the smallest
average net asset value. The afore-described description of Class Expenses and
any amendment thereto shall be subject to the continuing availability of an
opinion of counsel or a ruling from the Internal Revenue Service to the effect
that any such allocation of expenses or the assessment of higher distribution
fees and transfer agency costs on any class of shares does not result in any
dividends or distributions constituting "preferential dividends" under the Code.
In the event that a particular expense is no longer reasonably
allocable by class or to a particular class, it shall be treated as a Fund
Expense or Portfolio Expense as applicable, and in the event a Fund Expense or
Portfolio Expense becomes allocable as a Class Expense, it shall be so
allocated, subject to compliance with Rule 1 8f-3 and Board approval or
ratification.
The initial determination of expenses that will be allocated as
Class Expenses and any subsequent changes thereto as set forth in this Plan
shall be reviewed by the Board of Trustees and approved by such Board and by a
majority of the Trustees who are not "interested persons" of the Fund, as
defined in the 1940 Act ("Independent Trustees").
iii. Waivers or Reimbursements of Expenses.
--------------------------------------
Investment Advisor may waive or reimburse its management fee in
whole or in part provided that the fee is waived or reimbursed to all shares of
the Fund in proportion to the relative average daily net asset values.
Investment Advisor or a related entity who charges a fee for a
Class Expense may waive or reimburse that fee in whole or in part only if the
revised fee more accurately reflects the relative cost of providing to each
Multi-Class Portfolio the service for which the Class Expense is charged.
Distributor may waive or reimburse a Rule 12b-1 Plan fee payment
in whole or in part.
c. Exchange Privileges
-------------------
Shareholders of a Multi-Class Portfolio may exchange shares of a
particular class for shares of the same class in another Multi-Class Portfolio,
at the relative net asset values of the respective shares to be exchanged and
with no sales charge, provided the shares to be acquired in the exchange are, as
may be necessary, qualified for sale in the shareholder's state of residence and
subject to the applicable requirements, if any, as to minimum amount. Each
Multi-Class
<PAGE>
-4-
Portfolio reserves the right to temporarily or permanently terminate exchange
privileges, impose conditions upon the exercision of exchange privileges, or
reject any specific order for any dealer, shareholder or person whose
transactions seem to follow a timing pattern, including those who request more
than one exchange out of a Multi-Class Portfolio within any thirty (30) day
period. Each Multi-Class Portfolio reserves the right to terminate or modify
these exchange privileges at any time upon giving prominent notice to
shareholders at least 60 days in advance.
d. Conversion Feature
------------------
Class B Shares of a Multi-Class Portfolio will automatically
convert to Class A Shares of that portfolio, without sales charge, at the
relative net asset values of each such classes, not later than eight years from
the acquisition of the Class B Shares. The conversion of Class B Shares to Class
A Shares is subject to the continuing availability of an opinion of counsel or a
ruling from the Internal Revenue Service to the effect that the conversion of
shares does not constitute a taxable event under federal income tax law.
3. Board Review
------------
a. Approval of Amended and Restated Plan
-------------------------------------
The Board of Trustees, including a majority of the Independent
Trustees, at a meeting held on November 19, l997, approved the Amended and
Restated Plan based on a determination that the Plan, including the expense
allocation, is in the best interests of each class and Multi-Class Portfolio
individually and of the Funds. Their determination was based on their review of
information furnished to them which they deemed reasonably necessary and
sufficient to evaluate the Plan.
b. Approval of Amendments
----------------------
The Plan may not be amended materially unless the Board of Trustees,
including a majority of the Independent Trustees, have found that the proposed
amendment, including any proposed related expense allocation, is in the best
interests of each class and Multi-Class Portfolio individually and of the Funds.
Such funding shall be based on information required by the Board and furnished
to them that the Board deems reasonably necessary to evaluate the proposed
amendment.
c. Periodic Review
---------------
The Board shall review reports of expense allocations and such other
information as they request at such times, or pursuant to such schedule, as they
may determine consistent with applicable legal requirements.
<PAGE>
-5-
4. Contracts
---------
Any agreement related to the Multi-Class System shall require the
parties thereto to furnish to the Board of Trustees, upon their request, such
information as is reasonably necessary to permit the Trustees to evaluate the
Plan or any proposed amendment.
5. Effective Date
--------------
The Amended and Restated Plan, having been reviewed and approved by the
Board of Trustees and the Independent Trustees, shall take effect as of the
first day of each Fund's current fiscal year.
6. Amendments
----------
The Plan may not be amended to modify materially its terms unless such
amendment has been approved in the manner specified in Section 3(b) of this
Plan.
<PAGE>
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 EQUITY SERIES FUND:
PHOENIX CORE EQUITY FUND X X X X
PHOENIX GROWTH AND INCOME FUND X X X X
PHOENIX INCOME AND GROWTH FUND X X __ __
PHOENIX INVESTMENT TRUST 97:
PHOENIX SMALL CAP VALUE FUND X X X X
PHOENIX VALUE EQUITY FUND X X X X
PHOENIX MULTI-PORTFOLIO FUND:
EMERGING MARKETS BOND PORTFOLIO X X X X
INTERNATIONAL PORTFOLIO X X __ __
MID CAP PORTFOLIO X X __ __
REAL ESTATE SECURITIES PORTFOLIO X X __ __
STRATEGIC INCOME PORTFOLIO X X X X
TAX-EXEMPT BOND PORTFOLIO X X __ __
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC. X X X X
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND X X X __
PHOENIX SERIES FUND:
AGGRESSIVE GROWTH FUND SERIES X X __ __
BALANCED FUND SERIES X X __ __
CONVERTIBLE FUND SERIES X X __ __
GROWTH FUND SERIES X X __ __
HIGH YIELD FUND SERIES X X X X
MONEY MARKET FUND SERIES X X X X
U.S. GOVERNMENT SECURITIES FUND X X __ __
SERIES
<PAGE>
<S> <C> <C> <C> <C>
PHOENIX STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND X X __ __
MICRO CAP FUND X X __ __
SMALL CAP FUND X X __ __
STRATEGIC THEME FUND X X X X
PHOENIX STRATEGIC ALLOCATION FUND, INC. X X __ __
PHOENIX WORLDWIDE OPPORTUNITIES FUND X X __ __
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000796298
<NAME> PHOENIX INCOME & GROWTH FUND
<SERIES>
<NUMBER> 001
<NAME> CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 756519
<INVESTMENTS-AT-VALUE> 821421
<RECEIVABLES> 10338
<ASSETS-OTHER> 163
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 831922
<PAYABLE-FOR-SECURITIES> 7095
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2959
<TOTAL-LIABILITIES> 10054
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 694290
<SHARES-COMMON-STOCK> 45084
<SHARES-COMMON-PRIOR> 45801
<ACCUMULATED-NII-CURRENT> 2058
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 60618
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 64902
<NET-ASSETS> 821868
<DIVIDEND-INCOME> 10856
<INTEREST-INCOME> 28905
<OTHER-INCOME> 0
<EXPENSES-NET> (12294)
<NET-INVESTMENT-INCOME> 27467
<REALIZED-GAINS-CURRENT> 131616
<APPREC-INCREASE-CURRENT> 4573
<NET-CHANGE-FROM-OPS> 163656
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (17183)
<DISTRIBUTIONS-OF-GAINS> (54266)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2819
<NUMBER-OF-SHARES-REDEEMED> (9627)
<SHARES-REINVESTED> 6091
<NET-CHANGE-IN-ASSETS> 8553
<ACCUMULATED-NII-PRIOR> 2321
<ACCUMULATED-GAINS-PRIOR> 27240
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5878
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12294
<AVERAGE-NET-ASSETS> 839658
<PER-SHARE-NAV-BEGIN> 9.86
<PER-SHARE-NII> .38
<PER-SHARE-GAIN-APPREC> 1.63
<PER-SHARE-DIVIDEND> (.39)
<PER-SHARE-DISTRIBUTIONS> (1.28)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.20
<EXPENSE-RATIO> 1.13
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000796298
<NAME> PHOENIX INCOME & GROWTH FUND
<SERIES>
<NUMBER> 002
<NAME> CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 756519
<INVESTMENTS-AT-VALUE> 821421
<RECEIVABLES> 10338
<ASSETS-OTHER> 163
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 831922
<PAYABLE-FOR-SECURITIES> 7095
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2959
<TOTAL-LIABILITIES> 10054
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 694290
<SHARES-COMMON-STOCK> 35408
<SHARES-COMMON-PRIOR> 37581
<ACCUMULATED-NII-CURRENT> 2058
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 60618
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 64902
<NET-ASSETS> 821868
<DIVIDEND-INCOME> 10856
<INTEREST-INCOME> 28905
<OTHER-INCOME> 0
<EXPENSES-NET> (12294)
<NET-INVESTMENT-INCOME> 27467
<REALIZED-GAINS-CURRENT> 131616
<APPREC-INCREASE-CURRENT> 4573
<NET-CHANGE-FROM-OPS> 163656
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (10988)
<DISTRIBUTIONS-OF-GAINS> (43433)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2190
<NUMBER-OF-SHARES-REDEEMED> (8765)
<SHARES-REINVESTED> 4402
<NET-CHANGE-IN-ASSETS> (9053)
<ACCUMULATED-NII-PRIOR> 2321
<ACCUMULATED-GAINS-PRIOR> 27240
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5878
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12294
<AVERAGE-NET-ASSETS> 839658
<PER-SHARE-NAV-BEGIN> 9.87
<PER-SHARE-NII> .30
<PER-SHARE-GAIN-APPREC> 1.64
<PER-SHARE-DIVIDEND> (.31)
<PER-SHARE-DISTRIBUTIONS> (1.28)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.22
<EXPENSE-RATIO> 1.88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
