As filed with the Securities and Exchange Commission on March 27, 1997
Registration No. 33-19423
File No. 811-5436
================================================================================
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. 20 [X]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 22 [X]
[ ]
(Check appropriate box or boxes)
-------------
Phoenix Multi-Portfolio Fund
(Exact Name of Registrant as Specified in Articles of Incorporation)
-------------
101 Munson Street, Greenfield, Massachusetts 01301
(Address of Principal Executive Offices) (Zip Code)
c/o Phoenix Equity Planning Corporation--Customer Service
(800) 243-1574
(Registrant's Telephone Number)
-------------
Philip R. McLoughlin
Vice Chairman and Chief Executive Officer
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115
(Name and Address of Agent for Service)
-------------
It is proposed that this filing will become effective (check
appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on March 28, 1997 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on _____________ pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on _____________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Declaration Pursuant to Rule 24f-2
-------------
Registrant has registered an indefinite number of shares under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940.
Registrant filed the notice required by Rule 24f-2 with respect to the fiscal
year ended on November 30, 1996 on January 24, 1997.
================================================================================
<PAGE>
The following pages from Post-Effective Amendment No. 19 to the Registration
Statement on Form N1-A, filed with the Securities and Exchange Commission on
April 1, 1996 are incorporated herein by reference thereto:
Part A
Version B Cross Reference Pages to Items Required by Rule 495(a)
Version B Prospectus Pages 1 through 18
Part B
Version B Statement of Additional Information Pages 1 through 33 and November
30, 1996 Annual Reports for Phoenix Endowment Equity Portfolio and Phoenix
Diversified Income Portfolio.
<PAGE>
This registration statement contains two prospectuses and two Statements of
Additional Information. These are identified as Versions A and B of each.
PHOENIX MULTI-PORTFOLIO FUND
Cross Reference Sheet
Required by Rule 495 Version A
Under the Securities Act of 1933
PART A
Information Required in Prospectus
<TABLE>
<CAPTION>
Item Number Prospectus Caption
- ------------- ------------------------------------------------------
<S> <C> <C>
1. Cover Page ........................... Cover Page
2. Synopsis .............................. Introduction
3. Condensed Financial Information ...... Financial Highlights
4. General Description of Registrant ... Introduction; Investment Objectives and Policies;
Investment Techniques; Portfolio Turnover; Description
of Shares
5. Management of the Fund ............... Introduction; Management of the Fund
6. Capital Stock and Other Securities ... Introduction; Description of Shares; Dividends,
Distributions and Taxes
7. Purchase of Securities Being Offered National Distributor and Distribution Plans; How to
Buy Shares
8. Redemption or Repurchase ............ How to Redeem Shares
9. Legal Proceedings ..................... Not applicable
</TABLE>
PART B
Information Required on Statement of Additional Information
<TABLE>
<CAPTION>
Item Number Statement of Additional Information Caption
- ------------- -------------------------------------------------------
<S> <C> <C>
10. Cover Page .................................... Cover Page
11. Table of Contents ........................... Table of Contents
12. General Information and History ............... Not applicable
13. Investment Objectives and Policies ............ Investment Objectives and Policies; Investment
Restrictions; Portfolio Turnover
14. Management of the Registrant .................. Trustees and Officers
15. Control Persons and Principal Holders of
Securities .................................... Trustees and Officers
16. Investment Advisory and Other Services ...... The Investment Advisers; The National Distributor
17. Brokerage Allocation and Other ............... Portfolio Transactions Practices
18. Capital Stock and Other Securities ............ See "Description of Shares" in Prospectus
19. Purchase, Redemption and Pricing of Securities
Being Offered ................................. Determination of Net Asset Value; How to Buy Shares;
Shareholder Services; Reinvestment Privilege;
Exchange Privilege; How to Redeem Shares
20. Tax Status .................................... Dividends, Distributions and Taxes
21. Underwriter ................................. The National Distributor; How to Buy Shares;
Alternative Purchase Arrangements
22. Calculations of Yield Quotations of Money
Market Funds ................................. Not applicable
23. Financial Statements ........................ Financial Statements
</TABLE>
<PAGE>
PHOENIX
FUNDS
Phoenix Multi-Portfolio Fund
[arrow] PHOENIX TAX-EXEMPT BOND PORTFOLIO
[arrow] PHOENIX MID CAP PORTFOLIO
[arrow] PHOENIX INTERNATIONAL PORTFOLIO
[arrow] PHOENIX REAL ESTATE SECURITIES PORTFOLIO
[arrow] PHOENIX EMERGING MARKETS BOND PORTFOLIO
PROSPECTUS
MARCH 28, 1997
[PHOENIX DUFF & PHELPS logo]
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
101 Munson Street
Greenfield, Massachusetts 01301
PROSPECTUS
March 28, 1997
Phoenix Multi-Portfolio Fund (the "Fund") is an open- end management
investment company whose shares are offered in seven series, five of which are
offered for investment as described below. Each series represents an investment
in a separate portfolio with its own investment objectives and policies. There
can be no assurance that any portfolio will achieve its objectives.
Phoenix Tax-Exempt Bond Portfolio (the "Bond Portfolio") seeks as its
investment objective the production of as high a level of current income exempt
from federal income taxation as is consistent with preservation of capital. It
intends under normal conditions to invest at least 80% of its net assets in
municipal securities, the income of which is fully exempt from federal income
taxation.
Phoenix Mid Cap Portfolio (the "Mid Cap Portfolio") seeks as its investment
objective long-term appreciation of capital. Under normal circumstances, at
least 65% of the total assets will be invested in the common stocks of medium
capitalization companies considered to have appreciation potential.
Phoenix International Portfolio (the "International Portfolio") seeks as
its investment objective a high total return consistent with reasonable risk. It
intends to invest primarily in an internationally diversified portfolio of
equity securities. It intends to reduce its risk by engaging in hedging
transactions involving options, futures contracts and foreign currency
transactions (see "Investment Techniques and Related Risks"). The International
Portfolio provides a means for investors to invest a portion of their assets
outside the United States.
Phoenix Real Estate Securities Portfolio (the "Real Estate Portfolio")
seeks as its investment objective capital appreciation and income with
approximately equal emphasis. It intends under normal circumstances to invest in
marketable securities of publicly traded real estate investment trusts (REITs)
and companies that operate, develop, manage and/or invest in real estate located
primarily in the United States.
Phoenix Emerging Markets Bond Portfolio (the "Emerging Markets Portfolio")
seeks as its primary investment objective high current income. The secondary
objective of the Emerging Markets Portfolio is long term capital appreciation.
It intends to invest primarily in high-yield (high risk) debt securities issued
by governments and corporations in certain foreign countries known as "emerging
markets." Debt securities issued by foreign issuers also entail greater risks of
default, untimely interest and principal payments, and price volatility than
higher rated securities and may present problems of liquidation and valuation.
These debt securities are commonly referred to as "junk bonds" and are
considered speculative with regard to the payment of interest and return of
principal. Investors should carefully consider these risks before investing.
================================================================================
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/EXCHANGES: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY): (800) 243-1926
<PAGE>
(continued from previous page)
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
representation, other than those contained in this Prospectus, and, if given or
made, such other information or representations must not be relied upon as
having been authorized by the Fund, Adviser or Distributor. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state in which, or to any person to whom, it is
unlawful to make such offer. Neither the delivery of this Prospectus nor any
sale hereunder shall, under any circumstances, create any implication that
information herein is correct at any time subsequent to its date. Investors
should read and retain this Prospectus for future reference. Additional
information about the Fund is contained in a Statement of Additional
Information, dated March 28, 1997, which has been filed with the Securities and
Exchange Commission (the "Commission") and is available upon request at no
charge by calling (800) 243-4361 or by writing to Phoenix Equity Planning
Corporation at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut
06083-2200. The Statement of Additional Information is incorporated herein by
reference.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, credit union, or affiliated entity and are not federally
insured or otherwise protected by the Federal Deposit Insurance Corporation
(FDIC), the Federal Reserve Board or any other agency and involve investment
risk, including possible loss of principal.
TABLE OF CONTENTS
Page
------
INTRODUCTION ................................. 3
FUND EXPENSES ................................. 5
FINANCIAL HIGHLIGHTS ........................... 7
PERFORMANCE INFORMATION ........................ 11
INVESTMENT OBJECTIVES AND POLICIES ............ 12
Tax Exempt Bond Portfolio ..................... 12
Mid Cap Portfolio ........................... 13
International Portfolio ..................... 14
Emerging Markets Bond Portfolio ............... 16
Real Estate Portfolio ........................ 18
INVESTMENT TECHNIQUES AND RELATED RISKS ...... 19
INVESTMENT RESTRICTIONS ........................ 24
PORTFOLIO TURNOVER ........................... 24
MANAGEMENT OF THE FUND ........................ 24
DISTRIBUTION PLANS ........................... 27
HOW TO BUY SHARES .............................. 28
INVESTOR ACCOUNTS AND SERVICES AVAILABLE ...... 32
NET ASSET VALUE .............................. 34
HOW TO REDEEM SHARES ........................... 35
DIVIDENDS, DISTRIBUTIONS AND TAXES ............ 36
ADDITIONAL INFORMATION ........................ 37
APPENDIX ....................................... 39
2
<PAGE>
INTRODUCTION
This Prospectus describes the shares offered by and the operations of
Phoenix Multi-Portfolio Fund (the "Fund"). The Fund is an open-end management
investment company established in 1987 as a Massachusetts business trust. Shares
of the Fund are divided into seven series or "Portfolios", five of which are
available for investment as described below. Each Portfolio has a different
investment objective and is designed to meet different investment needs. This
Prospectus offers shares of the Phoenix Tax-Exempt Bond Portfolio (the "Bond
Portfolio"), the Phoenix Mid Cap Portfolio (the "Mid Cap Portfolio"), the
Phoenix International Portfolio (the "International Portfolio"), the Phoenix
Real Estate Securities Portfolio (the "Real Estate Portfolio") and the Phoenix
Emerging Markets Bond Portfolio (the "Emerging Markets Portfolio"), five of the
portfolios currently offered by the Fund (each a "Portfolio", and, together, the
"Portfolios").
The Investment Advisers
The investment adviser for the Bond Portfolio, Mid Cap Portfolio,
International Portfolio and Emerging Markets Portfolio is Phoenix Investment
Counsel, Inc. ("PIC" or the "Adviser"). PIC is a subsidiary of Phoenix Duff &
Phelps Corporation, and prior to November 1, 1995, was an indirect subsidiary of
Phoenix Home Life Mutual Insurance Company ("Phoenix Home Life"). The investment
adviser for the Real Estate Portfolio is Phoenix Realty Securities, Inc. ("PRS"
or the "Adviser"). PRS is a wholly-owned indirect subsidiary of Phoenix Home
Life. PRS delegates certain investment decisions and research functions to
ABKB/LaSalle Securities Limited Partnership ("ABKB") for which ABKB is paid a
fee by PRS. ABKB is not affiliated with PRS, PIC or Phoenix Home Life.
See "Management of the Fund" for a description of the Investment Advisory
Contracts, management fees and each investment adviser's undertaking to
reimburse the Fund for certain expenses.
Distributor and Distribution Plans
Phoenix Equity Planning Corporation ("Equity Planning" or "Distributor"),
serves as national distributor of the Fund's shares. See "Distribution Plans"
and the Statement of Additional Information. Equity Planning also acts as
financial agent 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 distribution plans pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, (the "1940 Act") for all classes of
all Portfolios. Pursuant to the distribution plan adopted for Class A Shares,
the Fund shall reimburse the Distributor up to a maximum annual rate of 0.25% of
the Fund's average daily Class A Share net assets of a Portfolio for
distribution expenditures incurred in connection with the sale and promotion of
Class A Shares of a Portfolio and for furnishing shareholder services. Pursuant
to the distribution plan adopted for Class B Shares of a Portfolio, the Fund
shall reimburse the Distributor up to a maximum annual rate of 1.00% of the
Fund's average daily Class B Share net assets of a Portfolio for distribution
expenditures incurred in connection with the sale and promotion of Class B
Shares of a Portfolio and for furnishing shareholder services. See "Distribution
Plans."
Purchase of Shares
The Fund offers two classes of shares of each Portfolio which may be
purchased at a price equal to their net asset value per share, plus a sales
charge which, at the election of the purchaser, may be imposed (i) at the time
of purchase (the "Class A Shares") or (ii) on a contingent deferred basis (the
"Class B Shares"). Completed applications for the purchase of shares should be
mailed to the Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box
8301, Boston, MA 02266-8301.
Class A Shares are offered to the public at the next determined net asset
value after receipt of the order by State Street Bank and Trust Company, plus a
maximum sales charge of 4.75% of the offering price (4.99% of the amount
invested) on single purchases of less than $50,000. The sales charge for Class A
Shares is reduced on a graduated scale on single purchases of $50,000 or more
and subject to other conditions stated below. See "How to Buy Shares," "How to
Obtain Reduced Sales Charges--Class A Shares" and "Net Asset Value."
Class B Shares are offered to the public at the next determined net asset
value after receipt of an order by State Street Bank and Trust Company with no
sales charge. Class B Shares are subject to a sales charge if they are redeemed
within five years of purchase. See "How to Buy Shares" and "Deferred Sales
Charge Alternative--Class B Shares."
Shares of each class represent an identical interest in the investment
portfolio of the Portfolio and have the same rights, except that Class B Shares
bear the cost of higher distribution fees which cause the Class B Shares to have
a higher expense ratio and to receive 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 Price
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 and
Trust Company. 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."
3
<PAGE>
Risk Factors
There can be no assurance that any Portfolio will achieve its investment
objectives. In addition, special risks may be presented by the particular types
of securities in which a Portfolio may invest. For example, although the Real
Estate Portfolio does not invest directly in real property, it does invest
primarily in securities concentrated in and directly related to the real estate
industry and may therefore be subject to certain risks associated with the
ownership of real estate and with the real estate industry in general. The Real
Estate Portfolio is non-diversified and as such there is no restriction on the
percentage of its assets that may be invested in the securities of any one
issuer. Accordingly, its value is potentially more susceptible to adverse
developments affecting a single issuer.
The Emerging Markets Portfolio can invest entirely in high yield/high risk
bonds (commonly referred to as "junk bonds") issued by governments and
corporations in emerging market countries. It invests in lower quality
securities of issuers which may have defaulted in the past on certain of their
financial obligations. Investment in less-developed countries whose markets are
still emerging generally presents greater risks than those presented by
investment in domestic issuers or countries with developed securities markets
and more advanced regulatory systems. It is also non-diversified and as such
there is no restriction on the percentage of its assets that may be invested in
securities of one issuer. Its share price can fluctuate widely in response to
political events and currency and interest rate fluctuations. Its value is
potentially more susceptible to adverse developments affecting a single issuer.
To the extent that a Portfolio such as the Emerging Markets Portfolio
invests in lower-rated securities, such an investment 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. Although the portfolio turnover rate cannot be accurately
predicted, it is anticipated that the annual turnover rate of the Mid Cap
Portfolio may be as high as 300%. Because of PIC's strict "sell" discipline, the
portfolio's annual turnover rate will probably be substantially higher than that
of other investment companies with similar investment objectives. A high rate of
turnover involves a correspondingly greater amount of brokerage commissions and
other costs which are paid directly by the Portfolio. It may also result in the
realization of capital gains, which are taxable to the shareholders. See
"Investment Objectives and Policies."
4
<PAGE>
FUND EXPENSES
The following table illustrates all expenses and fees that a shareholder
will incur. The expenses and fees set forth in the table are based on fiscal
year ended November 30, 1996.
<TABLE>
<CAPTION>
Bond Bond
Portfolio Portfolio
(Class A (Class B
Shares) Shares)
--------- ---------
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases 4.75% None
(as percentage of offering price)
Maximum Sales Load Imposed on Reinvested None None
Dividends
Deferred Sales Load (as a percentage of original None 5% during the
purchase price or redemption proceeds, as first year,
applicable) decreasing 1%
annually to 2%
during the
4th & 5th years;
dropping from 2%
to 0% after the
5th year
Redemption Fee None(a) None
Exchange Fee None None
Annual Fund Operating Expenses (as a
percentage of average net assets)
Management Fees 0.45% 0.45%
12b-1 Fees (b) 0.25% 1.00%
Other Operating Expenses (After Reimbursement) 0.24% 0.24%
---- ----
Total Fund Operating Expenses 0.94% 1.69%
==== ====
</TABLE>
<TABLE>
<CAPTION>
Mid Cap Mid Cap International
Portfolio Portfolio Portfolio
(Class A (Class B (Class A
Shares) Shares) Shares)
--------- --------- ---------
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases 4.75% None 4.75%
(as percentage of offering price)
Maximum Sales Load Imposed on Reinvested None None None
Dividends
Deferred Sales Load (as a percentage of original None 5% during the None
purchase price or redemption proceeds, as first year,
applicable) decreasing 1%
annually to 2%
during the 4th &
5th years;
dropping from 2%
to 0% after the
5th year
Redemption Fee None(a) None None(a)
Exchange Fee None None None
Annual Fund Operating Expenses (as a
percentage of average net assets)
Management Fees 0.75% 0.75% 0.75%
12b-1 Fees (b) 0.25% 1.00% 0.25%
Other Operating Expenses (After Reimbursement) 0.35% 0.35% 0.57%
---- ---- ----
Total Fund Operating Expenses 1.35% 2.10% 1.57%
==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
Real
International Estate
Portfolio Portfolio
(Class B (Class A
. Shares) Shares)
------------- ---------
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None 4.75%
(as percentage of offering price)
Maximum Sales Load Imposed on Reinvested None None
Dividends
Deferred Sales Load (as a percentage of original 5% during the None
purchase price or redemption proceeds, as first year,
applicable) decreasing 1%
annually to 2%
during the 4th &
5th years;
dropping from 2%
to 0% after the
5th year
Redemption Fee None None(a)
Exchange Fee None None
Annual Fund Operating Expenses (as a
percentage of average net assets)
Management Fees 0.75% 0.75%
12b-1 Fees (b) 1.00% 0.25%
Other Operating Expenses (After Reimbursement) 0.57% 0.30%(c)
---- ----
Total Fund Operating Expenses 2.32% 1.30%
==== ====
</TABLE>
<TABLE>
<CAPTION>
Emerging Emerging
Real Estate Markets Markets
Portfolio Portfolio Portfolio
(Class B (Class A (Class B
Shares) Shares) Shares)
--------- --------- ---------
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None 4.75% None
(as percentage of offering price)
Maximum Sales Load Imposed on Reinvested None None None
Dividends
Deferred Sales Load (as a percentage of original 5% during the None 5% during the
purchase price or redemption proceeds, as first year, first year,
applicable) decreasing 1% decreasing 1%
annually to 2% annually to 2%
during the 4th & during the 4th &
5th years; 5th years;
dropping from 2% dropping from 2%
to 0% after the to 0% after the
5th year 5th year
Redemption Fee None None(a) None
Exchange Fee None None None
Annual Fund Operating Expenses (as a
percentage of average net assets)
Management Fees 0.75% 0.75% 0.75%
12b-1 Fees (b) 1.00% 0.25% 1.00%
Other Operating Expenses (After Reimbursement) 0.30%(c) 0.50%(d) 0.50%(d)
---- ---- ----
Total Fund Operating Expenses 2.05% 1.50% 2.25%
==== ==== ====
</TABLE>
- -----------
(a) The Trustees may, at their option, impose a redemption fee for Class A
Shares not in excess of 1% of net asset value. No redemption fee is presently
contemplated and shareholders will be given reasonable notice of any change in
this intention.
(b) "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.
(c) Phoenix Realty Securities, Inc. has agreed to reimburse the Real Estate
Portfolio's operating expenses related to Class A Shares and Class B
Shares for the amount, if any, by which such operating expenses for the fiscal
year ended November 30, 1997 exceed 1.30% and 2.05%, respectively, of the
average net assets. Total operating expenses absent expense reimbursement equal
approximately 1.88% and 2.63%, respectively, of average net assets.
(d) Phoenix Investment Counsel, Inc. has agreed to reimburse the Emerging
Markets Portfolio's operating expenses related to Class A Shares and Class B
Shares for the amount, if any, by which such operating expenses for the fiscal
year ended November 30, 1997 exceed 1.50% and 2.25%, respectively, of the
average net assets. Total operating expenses absent expense reimbursement equal
approximately 2.02% and 2.77%, respectively of average net assets.
5
<PAGE>
<TABLE>
<CAPTION>
Example* 1 year 3 years 5 years 10 years
- ---------------------------------------------------------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a hypothetical
$1,000 investment, assuming (1) a 5% annual return and (2)
redemption at the end of each time period.
Bond Portfolio (Class A Shares) $57 $ 76 $ 97 $157
Bond Portfolio (Class B Shares) 57 73 92 180
Mid Cap Portfolio (Class A Shares) 61 88 118 202
Mid Cap Portfolio (Class B Shares) 61 86 113 224
International Portfolio (Class A Shares) 63 95 129 225
International Portfolio (Class B Shares) 64 92 124 247
Real Estate Portfolio (Class A Shares) 60 87 115 197
Real Estate Portfolio (Class B Shares) 61 84 110 219
Emerging Markets Portfolio (Class A Shares) 62 93 125 218
Emerging Markets Portfolio (Class B Shares) 63 90 120 240
An investor would pay the following expenses on the same
$1,000 investment assuming no redemption at the end of each
time period:
Bond Portfolio (Class A Shares) $57 $ 76 $ 97 $157
Bond Portfolio (Class B Shares) 17 53 92 180
Mid Cap Portfolio (Class A Shares) 61 88 118 202
Mid Cap Portfolio (Class B Shares) 21 66 113 224
International Portfolio (Class A Shares) 63 95 129 225
International Portfolio (Class B Shares) 24 72 124 247
Real Estate Portfolio (Class A Shares) 60 87 115 197
Real Estate Portfolio (Class B Shares) 21 64 110 219
Emerging Markets Portfolio (Class A Shares) 62 93 125 218
Emerging Markets Portfolio (Class B Shares) 23 70 120 240
</TABLE>
*The purpose of the table above is to help the investor understand the
various costs and expenses that the investor will bear, directly or indirectly.
The Example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. 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."
6
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables set forth certain financial information for the
respective fiscal years of the Fund. This financial information has been
audited by Price Waterhouse LLP, independent accountants. Their opinion and
the Trust'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
each Portfolio's performance) are available at no charge upon request by
calling (800) 243-4361.
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
TAX-EXEMPT BOND PORTFOLIO
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------------------
Year Ended November 30,
----------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989
--------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $11.40 $10.09 $11.58 $11.10 $10.66 $10.37 $10.68 $10.18
Income from
investment
operations
Net investment
income 0.60 0.61 0.65 0.60(1) 0.66(1) 0.65(1) 0.65(1) 0.68(1)
Net realized and
unrealized gain
(loss) (0.12) 1.34 (1.49) 0.76 0.57 0.29 -- 0.52
------ ------ ------ ------ ------ ------ ------ ------
Total from
investment
operations 0.48 1.95 (0.84) 1.36 1.23 0.94 0.65 1.20
------ ------ ------ ------ ------ ------ ------ ------
Less distributions
Dividends from net
investment income (0.60) (0.61) (0.65) (0.60) (0.66) (0.65) (0.65) (0.68)
Dividends from net
realized gains -- (0.03) -- (0.28) (0.13) -- (0.31) (0.02)
------ ------ ------ ------ ------ ------ ------ ------
Total distributions (0.60) (0.64) (0.65) (0.88) (0.79) (0.65) (0.96) (0.70)
------ ------ ------ ------ ------ ------ ------ ------
Change in net asset
value (0.12) 1.31 (1.49) 0.48 0.44 0.29 (0.31) 0.50
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end
of period $11.28 $11.40 $10.09 $11.58 $11.10 $10.66 $10.37 $10.68
====== ====== ====== ====== ====== ====== ====== ======
Total return(2) 4.30% 19.87% -7.55% 12.79% 11.92% 9.32% 6.49% 12.13%
Ratios/supplemental
data:
Net assets, end of
period (thousands) $136,558 $147,821 $141,623 $171,272 $35,625 $27,093 $20,240 $17,590
Ratio to average net
assets of:
Operating expenses 0.94% 0.97% 0.96% 0.75% 0.78% 0.94% 1.00% 1.00%
Net investment
income 5.42% 5.65% 5.65% 5.33% 5.92% 6.17% 6.29% 6.55%
Portfolio turnover 27% 25% 54% 62% 145% 99% 130% 161%
</TABLE>
Class B
-------------------------------------------
From From
Inception Year Ended Inception
7/15/88 to November 30, 3/16/94 to
---------------------
11/30/88 1996 1995 11/30/94
---------- ---------- ---------- ----------
Net asset value,
beginning of period $10.00 $11.44 $10.12 $11.21
Income from
investment
operations
Net investment
income 0.24(1) 0.52 0.53 0.39
Net realized and
unrealized gain
(loss) 0.18 (0.12) 1.35 (1.09)
------ ------ ------ ------
Total from
investment
operations 0.42 0.40 1.88 (0.70)
------ ------ ------ ------
Less distributions
Dividends from net
investment income (0.24) (0.52) (0.53) (0.39)
Dividends from net
realized gains -- -- (0.03) --
------ ------ ------ ------
Total distributions (0.24) (0.52) (0.56) (0.39)
------ ------ ------ ------
Change in net asset
value 0.18 (0.12) 1.32 (1.09)
------ ------ ------ ------
Net asset value, end
of period $10.18 $11.32 $11.44 $10.12
====== ====== ====== ======
Total return(2) 11.06%(3) 3.60% 19.07% -6.42%(4)
Ratios/supplemental
data:
Net assets, end of
period (thousands) $12,226 $4,762 $3,142 $1,147
Ratio to average net
assets of:
Operating expenses 1.00%(3) 1.69% 1.72% 1.54%(3)
Net investment
income 6.26%(3) 4.68% 4.90% 5.07%(3)
Portfolio turnover 33%(3) 27% 25% 54%
(1) Includes reimbursement of operating expenses by investment adviser of
$0.03, $0.04, $0.02, $0.02, $0.09 and $0.05, respectively.
(2) Maximum sales charges are not reflected in the total return
calculation.
(3) Annualized.
(4) Not annualized.
7
<PAGE>
INTERNATIONAL PORTFOLIO
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------------------
From
Inception
Year Ended November 30, 11/1/89 to
-----------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 11/30/89
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $12.20 $12.63 $11.16 $8.96 $10.90 $10.27 $10.44 $10.00
Income from
investment
operations(5)
Net investment
income (loss) 0.04(1) 0.03(1) (0.01) -- 0.11 0.15 0.15(6) 0.02(6)
Net realized and
unrealized gain
(loss) 2.28 0.42 1.48 2.20 (1.10) 0.69 (0.22) 0.42
------ -------- -------- ------- ------- ------- ------- ------
Total from
investment
operations 2.32 0.45 1.47 2.20 (0.99) 0.84 (0.07) 0.44
------ -------- -------- ------- ------- ------- ------- ------
Less distributions
Dividends from net
investment income -- -- -- -- (0.12) (0.21) (0.10) --
Dividends from net
realized gains (0.04) (0.88) -- -- (0.64) -- -- --
Distribution in
excess of
accumulated net
investment income -- -- -- -- (0.19) -- -- --
------ -------- -------- ------- ------- ------- ------- ------
Total distributions (0.04) (0.88) -- -- (0.95) (0.21) (0.10) --
------ -------- -------- ------- ------- ------- ------- ------
Change in net asset
value 2.28 (0.43) 1.47 2.20 (1.94) 0.63 (0.17) 0.44
====== ======== ======== ======= ======= ======= ======= ======
Net asset value, end
of period $14.48 $12.20 $12.63 $11.16 $8.96 $10.90 $10.27 $10.44
====== ======== ======== ======= ======= ======= ======= ======
Total return(2) 19.03% 4.12% 13.17% 24.55% -9.91% 8.26% -0.75% 53.53%(3)
Ratios/supplemental data:
Net assets, end of
period (thousands) $135,524 $129,352 $167,918 $91,196 $26,188 $21,427 $16,583 $1,593
Ratio to average net
assets of:
Operating expenses 1.57% 1.70% 1.47% 1.78% 1.97% 2.09% 1.50% 1.50%(3)
Net investment
income (loss) 0.33% 0.23% 0.20% (0.04)% 0.85% 1.29% 1.48% 3.24%(3)
Portfolio turnover 151% 236% 186% 191% 82% 128% 99% --
Average commission
rate paid(7) $0.0205 N/A N/A N/A N/A N/A N/A N/A
</TABLE>
Class B
--------------------------------
From
Year Ended Inception
November 30, 7/15/94 to
---------------------
1996 1995 11/30/94
---------- ---------- ----------
Net asset value,
beginning of period $12.07 $12.60 $12.80
Income from
investment
operations(5)
Net investment
income (loss) (0.05)(1) (0.07)(1) (0.01)
Net realized and
unrealized gain
(loss) 2.24 0.42 (0.19)
------ ------ ------
Total from
investment
operations 2.19 0.35 (0.20)
------ ------ ------
Less distributions
Dividends from net
investment income -- -- --
Dividends from net
realized gains (0.04) (0.88) --
Distribution in
excess of
accumulated net
investment income -- -- --
------ ------ ------
Total distributions (0.04) (0.88) --
------ ------ ------
Change in net asset
value 2.15 (0.53) (0.20)
====== ====== ======
Net asset value, end
of period $14.22 $12.07 $12.60
====== ====== ======
Total return(2) 18.16% 3.28% -1.56%(4)
Ratios/supplemental data:
Net assets, end of
period (thousands) $6,955 $3,261 $1,991
Ratio to average net
assets of:
Operating expenses 2.31% 2.50% 1.93%(3)
Net investment
income (loss) (0.39)% (0.61)% 0.36%(3)
Portfolio turnover 151% 236% 186%
Average commission
rate paid(7) $0.0205 N/A N/A
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) Annualized
(4) Not annualized
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from
anticipated results depending on the time of share purchases and
redemptions.
(6) Net of reimbursement by Investment Adviser of $0.06 and $3.54,
respectively.
(7) 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.
8
<PAGE>
MID CAP PORTFOLIO
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------------------
From
Inception
Year Ended November 30, 11/1/89 to
-----------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 11/30/89
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $22.03 $18.03 $18.70 $17.95 $16.61 $11.95 $10.29 $10.00
Income from
investment
operations(5)
Net investment
income (loss) (0.03)(1) 0.05(1) 0.11 0.11 0.15 0.19 0.18(6) 0.03(6)
Net realized and
unrealized gain 2.53 4.74 0.10 1.44 2.41 4.64 1.59 0.26
------ ------ ------ ------ ------ ------ ------ ------
Total from
investment
operations 2.50 4.79 0.21 1.55 2.56 4.83 1.77 0.29
------ ------ ------ ------ ------ ------ ------ ------
Less distributions
Dividends from net
investment income -- (0.06) (0.10) (0.13) (0.21) (0.17) (0.11) --
Dividends from net
realized gains (2.88) (0.73) (0.78) (0.67) (1.01) -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Total distributions (2.88) (0.79) (0.88) (0.80) (1.22) (0.17) (0.11) --
------ ------ ------ ------ ------ ------ ------ ------
Change in net asset
value (0.38) 4.00 (0.67) 0.75 1.34 4.66 1.66 0.29
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end
of period $21.65 $22.03 $18.03 $18.70 $17.95 $16.61 $11.95 $10.29
====== ====== ====== ====== ====== ====== ====== ======
Total return(2) 13.52% 27.87% 1.03% 8.94% 16.44% 40.78% 17.26% 35.28%(3)
Ratios/supplemental
data:
Net assets, end of
period (thousands) $451,474 $487,674 $419,760 $426,027 $234,472 $119,870 $15,840 $1,568
Ratio to average net
assets of:
Operating expenses 1.35% 1.42% 1.36% 1.34% 1.40% 1.24% 1.50% 1.50%(3)
Net investment
income (loss) (0.17)% 0.28% 0.59% 0.64% 0.93% 1.94% 2.22% 4.68%(3)
Portfolio turnover 242% 218% 227% 174% 287% 458% 454% 5%(3)
Average commission
rate paid(7) $ 0.0504 N/A N/A N/A N/A N/A N/A N/A
</TABLE>
Class B
--------------------------------
From
Year Ended November Inception
30, 7/18/94 to
---------------------
1996 1995 11/30/94
---------- ---------- ----------
Net asset value,
beginning of period $21.85 $17.97 $17.68
Income from
investment
operations(5)
Net investment
income (loss) (0.18)(1) (0.12)(1) (0.01)
Net realized and
unrealized gain 2.51 4.75 0.30
------ ------ ------
Total from
investment
operations 2.33 4.63 0.29
------ ------ ------
Less distributions
Dividends from net
investment income -- (0.02) --
Dividends from net
realized gains (2.88) (0.73) --
------ ------ ------
Total distributions (2.88) (0.75) --
------ ------ ------
Change in net asset
value (0.55) 3.88 0.29
------ ------ ------
Net asset value, end
of period $21.30 $21.85 $17.97
====== ====== ======
Total return(2) 12.75% 26.92% 1.64%(4)
Ratios/supplemental
data:
Net assets, end of
period (thousands) $17,599 $10,908 $1,519
Ratio to average net
assets of:
Operating expenses 2.11% 2.18% 2.05%(3)
Net investment
income (loss) (0.92)% (0.58)% (0.23)%(3)
Portfolio turnover 242% 218% 227%
Average commission
rate paid(7) $0.0504 N/A N/A
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) Annualized
(4) Not annualized
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from
anticipated results depending on the time of share purchases and
redemptions.
(6) Includes reimbursement by Investment Adviser of $0.01 and $0.23,
respectively.
(7) 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.
9
<PAGE>
REAL ESTATE SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
Class A Class B
---------------------------------- -----------------------------------
Year Ended Year Ended
November 30, From Inception November 30, From Inception
1996 3/1/95 to 11/30/95 1996 3/1/95 to 11/30/95
-------------- ------------------- -------------- --------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.72 $10.00 $10.68 $10.00
Income from investment operations
Net investment income 0.53(1) 0.43(1)(5) 0.46(1) 0.36(1)(5)
Net realized and unrealized gain 2.50 0.55 2.47 0.56
------ ------ ------ ------
Total from investment operations 3.03 0.98 2.93 0.92
------ ------ ------ ------
Less distributions
Dividends from net investment income (0.59) (0.26) (0.49) (0.24)
------ ------ ------ ------
Dividends from net realized gains (0.02) -- (0.02) --
Total distributions (0.61) (0.26) (0.51) (0.24)
------ ------ ------ ------
Change in net asset value 2.42 0.72 2.42 0.68
------ ------ ------ ------
Net asset value, end of period $13.14 $10.72 $13.10 $10.68
====== ====== ====== ======
Total return(2) 29.20% 9.87%(4) 28.25% 9.21%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $22,872 $13,842 $ 8,259 $2,239
Ratio to average net assets of:
Operating expenses 1.30% 1.30%(3) 2.05% 2.05%(3)
Net investment income 4.55% 5.79%(3) 3.95% 5.03%(3)
Portfolio turnover 24% 9%(4) 24% 9%(4)
Average commission rate paid(6) $0.0478 N/A $0.0478 N/A
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of
$0.07 and $0.12, respectively.
(2) Maximum sales charges are not reflected in the total return
calculation.
(3) Annualized
(4) Not annualized
(5) Computed using average shares outstanding.
(6) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for
securities trades on which commissions are charged. This rate
generally does not reflect mark-ups, mark-downs or spreads on shares
traded on a principal basis.
EMERGING MARKETS BOND PORTFOLIO
<TABLE>
<CAPTION>
Class A Class B
---------------------------------- -----------------------------------
Year Ended Year Ended
November 30, From Inception November 30, From Inception
1996 9/5/95 to 11/30/95 1996 9/5/95 to 11/30/95
-------------- ------------------- -------------- --------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.18 $ 10.00 $10.18 $10.00
Income from investment operations
Net investment income 1.26(1) 0.25(1)(5) 1.19(1) 0.22(1)(5)
Net realized and unrealized gain 4.56 0.18 4.53 0.20
------- ------- ------ ------
Total from investment operations 5.82 0.43 5.72 0.42
------- ------- ------ ------
Less distributions
Dividends from net investment income (1.20) (0.25) (1.12) (0.24)
------- ------- ------ ------
Total distributions (1.20) (0.25) (1.12) (0.24)
------- ------- ------ ------
Change in net asset value 4.62 0.18 4.60 0.18
------- ------- ------ ------
Net asset value, end of period $ 14.80 $ 10.18 $14.78 $10.18
======= ======= ====== ======
Total return(2) 60.18% 4.40%(4) 58.94% 4.22%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $29,661 $12,149 $9,713 $ 596
Ratio to average net assets of:
Operating expenses 1.50% 1.50%(3) 2.25% 2.25%(3)
Net investment income 10.41% 10.48%(3) 9.79% 10.29%(3)
Portfolio turnover 378% 38%(4) 378% 38%(4)
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of
$0.07 and $0.03, respectively.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) Annualized
(4) Not annualized
(5) Computed using average shares outstanding.
10
<PAGE>
PERFORMANCE INFORMATION
The Fund may, from time to time, include its yield and total return in
advertisements or reports to shareholders or prospective investors. Both yield
and total return figures are computed separately for Class A and Class B Shares
of each Portfolio in accordance with formulas specified by the Securities and
Exchange Commission, are based on historical earnings and are not intended to
indicate future performance.
The yield of each Portfolio will be computed by dividing the Portfolio'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 Portfolio's
yield.
The Fund may also quote a "tax-equivalent yield" determined by dividing the
tax-exempt portion of quoted yield by 1 minus the stated income tax rate and
adding the result to the portion of the yield that is not tax-exempt.
Standardized quotations of average annual total return for Class A and
Class B Shares of each Portfolio 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 of each Portfolio 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 of such Portfolio
(on an annual basis), deduction of the maximum initial sales load in the case of
Class A Shares and the maximum contingent deferred sales charge applicable to a
complete redemption of the investment in the case of Class B Shares, and assume
that all dividends and distributions on Class A and Class B Shares are
reinvested when paid. It is expected that the performance of Class A Shares will
be better than that of Class B Shares as a result of lower distribution fees,
and certain incrementally lower expenses paid by Class A Shares. The Fund may
also quote supplementally a rate of total return over different periods of time
by means of aggregate, average, and year-by-year or other types of total return
figures. In addition, the Fund may from time to time, publish material citing
historical volatility for shares of the Fund.
The Fund may from time to time include advertisements containing total
return and the ranking of these performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar, Inc.
Additionally, the Fund may compare its performance results to other investment
or savings vehicles (such as certificates of deposit) and may refer to results
published in various publications such as Changing Times, Forbes, Fortune,
Money, Barrons, Business Week and Investor's Daily, Stanger's Mutual Fund
Monitor, The Stanger Register, Stanger's Investment Adviser, The Wall Street
Journal, The New York Times, Consumer Reports, Registered Representative,
Financial Planning, Financial Services Weekly, Financial World, U.S. News and
World Report, Standard and Poor's The Outlook, Personal Investor and Realty
Stock Review. 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 S&P 500, S&P 400, Dow
Jones Industrial Average, Europe Australia Far East Index (EAFE), Consumer's
Price Index, Lehman Brothers Corporate Index, Lehman Brothers T-Bond Index,
Lehman Brothers Municipal Bond Index, J.P. Morgan Emerging Markets Bond Index,
Russell 2000, Wilshire Real Estate Securities Index, NAREIT Combined Index,
NAREIT Equity Index, NCREIF Property Index and the National Real Estate Index.
The S&P 500 is a commonly quoted measure of stock market performance and
represents common stocks of companies of varying sizes segmented across 90
different industries which are listed on the New York Stock Exchange, the
American Stock Exchange and traded over the NASDAQ National Market System. The
NCREIF Index is produced by the National Council of Real Estate Investment
Fiduciaries (NCREIF) and measures the historical performance of income-
producing properties owned by commingled funds on behalf of qualified pension
and profit-sharing trusts, or owned directly by these trusts and managed on a
separate account basis. Properties in the NCREIF Index are unleveraged and the
figures represent gross returns before management fees. The National Real Estate
Index is published by Ernst & Young and Liquidity Fund. The National Real Estate
Index is a transaction-based data service that reports property prices, rental
rates and capitalization rates in the largest real estate markets in the United
States. The NAREIT Combined Index and NAREIT Equity Index are published by the
National Association of Real Estate Investment Trusts (NAREIT). The NAREIT
Combined Index is comprised of all publicly-traded equity, mortgage or hybrid
REITs. The NAREIT Equity Index is comprised of all publicly-traded Equity REITs.
The Wilshire Securities Index measures the investment characteristics of
publicly traded real estate securities such as REITs, real estate operating
companies and partnerships.
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
components; or cite separately as a return figure the equity or bond portion of
a 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
Standard & Poor's 500 Index (the "S&P 500"), S&P 400, Dow Jones
11
<PAGE>
Industrial Average, NAREIT Equity Index, Europe Australia Far East Index (EAFE),
Lehman Brothers Municipal Bond Index, J. P. Morgan Emerging Markets Bond Index,
CS First Boston High Yield Index and Salomon Brothers Corporate and Government
Bond Indices.
Performance information for a Portfolio reflects only the performance of a
hypothetical investment in Class A or Class B Shares of that Portfolio during
the particular time period in which the calculations are based. Performance
information should be considered in light of a particular Portfolio's investment
objectives and policies, characteristics and quality of the Portfolio, and the
market conditions during the given time period, and should not be considered as
a representation of what may be achieved in the future. For a description of the
methods used to determine total return for each Portfolio, see the Statement of
Additional Information.
The Fund's Annual Report, available upon request and without charge,
contains a discussion of the performance of each Portfolio and a comparison of
that performance to a securities market index.
INVESTMENT OBJECTIVES
AND POLICIES
Each Portfolio has a different investment objective and is designed to meet
different investment needs. The differences in objectives and policies among the
five Portfolios can be expected to affect the investment return of each
Portfolio and the degree of market and financial risk to which each Portfolio is
subject. The investment objective of each Portfolio is deemed to be a
fundamental policy which may not be changed without the approval of a vote of a
majority of the outstanding shares of that Portfolio. Except as noted below, a
Portfolio's investment policies are not deemed to be fundamental and, therefore,
may be changed without shareholder approval. Since certain risks are inherent in
the ownership of any security, there can be no assurance that a Portfolio will
achieve its investment objective.
Tax-Exempt Bond Portfolio
The investment objective of the Bond Portfolio is the production of as high
a level of current income exempt from federal income taxation as is consistent
with preservation of capital.
The Bond Portfolio will attempt to achieve its objective by investing at
least 80% of its net assets in municipal securities, the income of which is
fully exempt from federal income taxation. As used in this Prospectus, the term
"municipal securities" means obligations, including municipal bonds and notes
and tax-exempt commercial paper, issued by or on behalf of states, territories
and possessions of the United States, the District of Columbia and their
political subdivisions, agencies and instrumentalities, the interest from which
is, in the opinion of counsel to the issuers of such securities, exempt from
federal income taxation. In addition, municipal securities include certain types
of industrial development bonds which have been or may be issued by or on behalf
of public authorities to finance privately operated facilities. As used herein,
the term "bonds" generally refers to municipal bonds and industrial development
bonds as described above.
The Tax Reform Act of 1986 made significant changes in the federal tax
status of certain obligations which were previously fully federally tax-exempt.
As a result, three categories of such obligations issued after August 7, 1986
now exist: (1) "public purpose" bonds, the income of which remains fully exempt
from federal income taxation, (2) qualified "private activity" industrial
development bonds, the income of which, while exempt from federal income
taxation under section 103 of the Internal Revenue Code, is included in the
calculation of the federal alternative minimum tax, and (3) "private activity"
(private purpose) bonds, the income of which is not exempt from federal income
taxation. Under normal market conditions, and as a matter of fundamental policy,
the Bond Portfolio will invest at least 65% of its total assets in municipal
bonds, the income of which is fully exempt from federal income taxation, and at
least 80% of its net assets in municipal bonds and other municipal securities,
the income of which is fully exempt from federal income taxation. The Bond
Portfolio will not invest in "private activity" (private purpose) bonds, but may
invest up to 20% of its net assets in qualified "private activity" industrial
development bonds and taxable fixed income obligations.
The Bond Portfolio invests in municipal securities only if, at the date of
the investment, they are rated within the four highest grades as determined by
Moody's Investors Service, Inc. ("Moody's") (Aaa, Aa, A or Baa) or by Standard &
Poor's Corporation ("S&P") (AAA, AA, A or BBB) or, if not rated or rated under a
different system, are judged by PIC to be of equivalent quality to municipal
securities so rated. (See the Appendix for a description of these ratings.)
Purchasing unrated municipal securities, which may be less liquid than
comparable rated municipal securities, may involve somewhat greater risk and
consequently the Bond Portfolio may not invest more than 20% of its total assets
in unrated municipal securities. The Bond Portfolio may also engage in certain
options transactions, and enter into futures contracts and related options for
hedging purposes, invest in repurchase agreements and lend portfolio securities.
See "Risk Considerations" below and "Investment Techniques and Related Risks".
Up to 20% of the Bond Portfolio's assets under normal conditions, and up to
100% of its assets for temporary defensive purposes, may be invested in the
following types of taxable fixed income obligations: (1) obligations issued or
guaranteed by the U.S. Government, its agencies, authorities or
instrumentalities; (2) corporate debt securities which at the date of the
investment are rated Aa or higher by Moody's or AA or higher by S&P; (3)
commercial paper which at the date of the investment is rated P-1 by Moody's or
A-1 by S&P or, if not rated, is issued by a company which at the date of the
investment has an outstanding debt issue rated Aa or higher by Moody's or AA or
higher by S&P; (4) certificates of deposit issued by U.S. banks which at the
date of the investment have
12
<PAGE>
capital surplus and undivided profits in excess of $100,000,000 as of the date
of their most recently published financial statements; and (5) repurchase
agreements with respect to any of the foregoing obligations with commercial
banks, brokers and dealers considered by the Trust to be credit-worthy. Under
normal conditions, however, at least 80% of the net assets of the Bond Portfolio
will be invested in municipal securities, the income of which is fully exempt
from federal income taxation.
Yields on municipal securities vary depending on a number of factors,
including the general condition of the financial markets and of the municipal
securities market, the size of a particular offering, the maturity of the
obligation and the credit rating of the issuer. Like other interest-bearing
securities, the value of municipal securities changes as interest rates
fluctuate. Normally, increases in interest rates cause a decrease in the market
value of interest-bearing securities and decreases in rates cause an increase in
such market value. Although subject to greater price fluctuation due to changes
in interest rates, tax laws and other general market factors, municipal
securities with longer maturities generally produce higher current yields than
municipal securities with shorter maturities. Lower-rated municipal securities
generally produce higher yields than higher-rated municipal securities since the
ability of the issuer of a lower-rated municipal security to pay interest and
principal is perceived as entailing a greater degree of risk and therefore must
reflect a commensurately greater return. Maturities and ratings, as well as
market conditions, are given due weight by PIC in determining whether, in its
judgment, particular municipal securities will provide a high level of current
income and/or potential for capital appreciation.
Tax-Free versus Taxable Yield
Before investing in the Bond Portfolio, an investor may want to determine
which investment--tax free or taxable--will provide a higher after-tax return.
First determine the taxable equivalent yield by simply dividing the yield from
the tax-free investment by [1 minus your marginal tax rate]. For example, if
your marginal tax rate is 28% and you want to know what a taxable investment
would have to yield to equal a 7% tax-free investment, the computation would be:
7% / (1--.28 tax rate), or 7% / .72 = 9.72% Taxable Yield.
In this example, an investor's after-tax yield will be higher from the 7%
tax-free investment if taxable yields are below 9.72%, and, conversely, an
investor will get a higher yield from the taxable investment when taxable rates
exceed this figure. (The foregoing analysis assumes that the investor is not
subject to the alternative minimum tax).
Risk Considerations
The risk inherent in investing in the Bond Portfolio is that risk common to
any security, that the value of its shares will fluctuate in response to changes
in economic conditions, interest rates and the market's perception of the
underlying portfolio securities held by the Portfolio. However, municipal
securities rated in the lowest investment grade category (BBB by Standard &
Poor's or Baa by Moody's) and unrated municipal securities of equivalent quality
have speculative characteristics and changes in economic conditions or other
circumstances are more likely to weaken the issuer's capacity to make principal
and interest payments. In addition, the Fund does not have a policy requiring
the sale of a municipal security whose rating drops below investment grade.
The Bond Portfolio's ability to achieve its objective depends partially on
the prompt payment by issuers of the interest on and principal of the municipal
securities held by the Portfolio. A moratorium, default or other nonpayment of
interest or principal when due on any municipal security could, in addition to
affecting the market value and liquidity of that particular security, affect the
market value and liquidity of other municipal securities held by the Portfolio.
In addition, the market for municipal securities is often thin and can be
temporarily affected by large purchases and sales, including those by the
Portfolio. Accordingly, while the Portfolio may from time to time invest more
than 25% of its total assets in a particular segment of the municipal securities
market, such as "public purpose" bonds issued for like public purposes, it will
attempt to minimize risk by diversifying its investments broadly, by investing
no more than 5% of its total assets in the securities of any one issuer (other
than the U.S. Government) and by investing no more than 25% of its total assets
in the municipal securities issued by any one state or territory. Each political
subdivision, agency or instrumentality and each multi-state agency of which a
state is a member will be regarded as a separate issuer for the purpose of
determining the diversification of the Portfolio.
Mid Cap Portfolio
The Mid Cap Portfolio's investment objective is to seek long-term
appreciation of capital. Since income is not an objective, any income generated
by the investment of the Portfolio's assets will be incidental to its objective.
Under normal circumstances, at least 65% of the total assets of the Mid Cap
Portfolio will be invested in the common stock of medium capitalization
companies considered by PIC to have appreciation potential. The Mid Cap
Portfolio defines mid-cap companies as companies with individual market
capitalization at the time of acquisition that place them in the mid-range of
market capitalization of companies as measured by the Wilshire 5,000 Index or a
comparable index or indicies selected by PIC. Up to one third of the assets of
the Mid Cap Portfolio may be invested in foreign securities. See "International
Portfolio" and "Risk Considerations" below for relevant information about
investing in foreign securities. Unlike the International Portfolio, whose
assets will be invested for a combination of growth and income, the Mid Cap
Portfolio will invest in foreign securities with the objective of capital
appreciation.
Since no one class or type of security at all times necessarily affords the
greatest promise for capital appreciation, the Mid Cap Portfolio may invest any
amount or proportion of its assets in any class or type of security as described
in this prospectus and believed by the Adviser to offer potential for capital
appreciation over both the intermediate and the long term.
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Normally its investments will consist largely of common stocks. However, the Mid
Cap Portfolio may also invest in preferred stocks, bonds, convertible preferred
stocks and convertible debentures if, in the judgment of PIC, such investment
will further its investment objective. The Portfolio may invest up to 10% of its
total assets in bonds considered to be less than investment grade (such bonds
are commonly referred to as "junk bonds") but which are not in default at the
time of investment, and rated C by Moody's (or CC by Standard & Poor's) or
higher (see Appendix), which may subject the Portfolio to risks attendant to
such bonds. The Mid Cap Portfolio may also engage in certain options
transactions, and enter into futures contracts and related options for hedging
purposes, invest in repurchase agreements and lend portfolio securities. See
"Investment Techniques and Related Risks". Each security held in the Portfolio
will be continuously monitored to ascertain whether it continues to contribute
to the attainment of the Portfolio's basic investment objective of long-term
appreciation of capital.
While PIC intends that, under normal conditions, the Portfolio will invest
at least 65% of its total assets in the common stock of companies with
appreciation potential, for temporary defensive purposes (as when market
conditions for growth stocks are adverse), other types of investments that
appear advantageous on the basis of combined considerations of risk and the
protection of capital values may be made in fixed income securities with or
without warrants or conversion features. In an effort to protect its assets
against major market declines and for other temporary defensive purposes, the
Mid Cap Portfolio may actively pursue a policy whereby it will retain cash or
invest part or all of its assets in cash equivalents.
Diversification is an important consideration in selecting the Mid Cap
Portfolio's investments, and the Portfolio will comply with the diversification
requirements of the Investment Company Act of 1940 and Subchapter M of the
Internal Revenue Code of 1986. See "Investment Restrictions". Thus the
Portfolio's assets will be invested so that no more than 5% of the value of its
total assets will be in the securities of any one issuer, other than the U.S.
Government and, under certain circumstances, foreign governments (see the
Statement of Additional Information), and the amount invested will not represent
more than 10% of the issuer's outstanding voting securities. Within these
limitations, however, greater emphasis will be placed upon careful selection of
securities believed to have good potential for appreciation than upon wide
diversification.
Risk Considerations
Investments in common stocks for capital appreciation are subject to the
risks of changing economic and market conditions which may affect the
profitability and financial condition of the companies in whose securities the
Portfolio is invested and PIC's ability to anticipate those changes.
Since investments normally will consist primarily of mid-cap securities
considered to have appreciation potential, the assets of the Mid Cap Portfolio
may be considered to be subject to greater risks than would be involved if the
Portfolio invested in a broader range of securities which do not have such
potential.
Since the Portfolio may invest up to 10% of its total assets in bonds
considered to be less than investment grade, commonly referred to as "junk
bonds", the Portfolio may be exposed to greater risks than if it did not invest
in such bonds. With lower rated bonds, there is a greater possibility that an
adverse change in the financial condition of the issuer may affect its ability
to pay principal and interest. Bond prices fluctuate inversely to interest
rates. Generally, when interest rates rise, it may be expected that the value of
bonds may decrease. In addition, to the extent that the Portfolio holds any such
bonds, it may be negatively affected by adverse economic developments, increased
volatility or a lack of liquidity. See the Statement of Additional Information.
As set forth above, the Mid Cap Portfolio may invest up to one third of its
assets in foreign securities. Investing in foreign securities involves different
risks from those involved in investing in securities of U.S. issuers. See
"International Portfolio--Risk Considerations" below.
International Portfolio
The International Portfolio seeks as its investment objective a high total
return consistent with reasonable risk. It intends to achieve its objective by
investing primarily in an internationally diversified portfolio of equity
securities. It intends to reduce its risk by engaging in hedging transactions
involving options, futures contracts and foreign currency transactions. See
"Investment Techniques and Related Risks". Investments may be made for capital
growth or for income or any combination thereof for the purpose of achieving a
high overall return.
There is no limitation on the percentage or amount of the International
Portfolio's assets which may be invested in growth or income, and therefore at
any particular time the investment emphasis may be placed solely or primarily on
growth of capital or on income. In determining whether the International
Portfolio will be invested for capital growth or income, PIC will analyze the
international equity and fixed income markets and seek to assess the degree of
risk and level of return that can be expected from each market. The
International Portfolio will invest primarily in non-United States issuers, and
under normal circumstances more than 80% of the International Portfolio's total
assets will be invested in non-United States issuers located in not less than
three foreign countries.
In pursuing its objective, the International Portfolio will invest
primarily in common stocks of established non-United States companies believed
to have potential for capital growth,
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income or both. However, there is no requirement that the International
Portfolio invest exclusively in common stocks or other equity securities. The
International Portfolio may invest in any other type of security including, but
not limited to, convertible securities, preferred stocks, bonds, notes and other
debt securities of companies (including Euro-currency instruments and
securities) or obligations of domestic or foreign governments and their
political subdivisions, and in foreign currency transactions. The Portfolio may
invest up to 20% of its total assets in high yield high risk fixed income bonds
(commonly referred to as "junk bonds") which are not in default at the time of
investment. Lower rated and non-rated convertible securities are predominantly
speculative with respect to the issuer's capacity to repay principal and pay
interest. Investment in lower rated and non-rated convertible fixed- income
securities normally involves a greater degree of market and credit risk than
does investment in securities having higher ratings. The price of these fixed
income securities will generally move in inverse proportion to interest rates.
In addition, non-rated securities are often less marketable than rated
securities. To the extent that the Portfolio holds any lower rated or non-rated
securities, it may be negatively affected by adverse economic developments,
increased volatility and lack of liquidity. Such bonds may subject the Portfolio
to risks attendant to such bonds. When PIC believes that the total return
potential in debt securities equals or exceeds the potential return on equity
securities, the Portfolio may substantially increase its holdings in debt
securities. The International Portfolio may establish and maintain reserves of
up to 100% of its assets for temporary defensive purposes under abnormal market
or economic conditions. The International Portfolio's reserves may be invested
in domestic as well as foreign short-term money market instruments including,
but not limited to, government obligations, certificates of deposit, bankers'
acceptances, time deposits, commercial paper, short-term corporate debt
securities and repurchase agreements. The International Portfolio may also
engage in certain options transactions, and enter into futures contracts and
related options for hedging purposes, invest in repurchase agreements and lend
portfolio securities. See "Investment Techniques and Related Risks."
The International Portfolio may invest in the securities of other
investment companies subject to the limitations contained in the 1940 Act (see
"Investment Restrictions" in the Statement of Additional Information). In
certain countries, investments may only be made by investing in other investment
companies that, in turn, are authorized to invest in the securities that are
issued in such countries. Shareholders should recognize that the Fund's purchase
of the securities of such other investment companies results in the layering of
expenses such that shareholders indirectly bear a proportionate part of the
expenses for such investment companies including operating costs, and investment
advisory and administrative fees.
The International Portfolio makes investments in various countries. Under
normal circumstances, business activities in a number of different foreign
countries will be represented in the International Portfolio's investments. The
International Portfolio may, from time to time, have more than 25% of its assets
invested in any major industrial or developed country which in the view of PIC
poses no unique investment risk. The International Portfolio may purchase
securities of companies, wherever organized, which have their principal
activities and interests outside the United States. Under exceptional economic
or market conditions abroad, the International Portfolio may, for temporary
defensive purposes, invest all or a major portion of its assets in U.S.
government obligations or securities of companies incorporated in and having
their principal activities in the United States. The International Portfolio may
also invest its reserves in domestic short-term money-market instruments as
described above.
In determining the appropriate distribution of investments among various
countries and geographic regions, PIC ordinarily will consider the following
factors: prospects for relative economic growth among foreign countries;
expected levels of inflation; relative price levels of the various capital
markets; government policies influencing business conditions; the outlook for
currency relationships and the range of individual investment opportunities
available to the international investor.
Shareholders should be aware that the International Portfolio may make
investments in developing countries, which involve exposure to economic
structures that are generally less diverse and mature than in the United States,
and to political systems which may be less stable. A developing country can be
considered to be a country which is in the initial stages of its
industrialization cycle. In the past, markets of developing countries have been
more volatile than the markets of developed countries; however, such markets
often have provided higher rates of return to investors. PIC believes that these
characteristics can be expected to continue in the future.
Generally, the Portfolio will not trade in securities for short- term
profits but, when circumstances warrant, securities may be sold without regard
to the length of time held.
Risk Considerations
There are substantial and different risks involved which should be
carefully considered by any investor considering foreign investments. For
example, there is generally less publicly available information about foreign
companies than is available about companies in the United States. Foreign
companies are generally not subject to uniform audit and financial reporting
standards, practices and requirements comparable to those in the United States.
Foreign securities involve currency risks. Exchange rates are determined by
forces of supply and demand in the foreign exchange markets, and these forces
are in turn affected by a range of economic, political, financial, governmental
and other factors. Exchange rate fluctuations can affect the Portfolio's net
asset value and dividends either positively or negatively depending upon
whether foreign currencies are appreciating or depreciating in value relative to
the U.S. dollar. Exchange
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rates fluctuate over both the short and long term. The U.S. dollar value of a
foreign security tends to decrease when the value of the dollar rises against
the foreign currency in which the security is denominated and tends to increase
when the value of the dollar falls against such currency. Fluctuations in
exchange rates may also affect the earning power and asset value of the foreign
entity issuing the security. Dividend and interest payments may be returned to
the country of origin, based on the exchange rate at the time of disbursement,
and restrictions on capital flows may be imposed. Losses and other expenses may
be incurred in converting between various currencies in connection with
purchases and sales of foreign securities.
Foreign stock markets are generally not as developed or efficient as those
in the United States. In most foreign markets volume and liquidity are less than
in the United States and, at times, volatility of price can be greater than that
in the United States. Fixed commissions on foreign stock exchanges are generally
higher than the negotiated commissions on United States exchanges. There is
generally less government supervision and regulation of foreign stock exchanges,
brokers and companies than in the United States.
There is also the possibility of adverse changes in investment or exchange
control regulations, expropriation or confiscatory taxation, limitations on the
removal of funds or other assets, political or social instability, or diplomatic
developments which could adversely affect investments, assets or securities
transactions of the International Portfolio in some foreign countries. The
International Portfolio is not aware of any investment or exchange control
regulations which might substantially impair the operations of the Portfolio as
described, although this could change at any time.
Particular risks are posed by investments in third world countries or
so-called "emerging markets." These securities may be especially volatile based
on relative economic, political and market conditions present in these
countries. 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 shares 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 a
Portfolio's investments in such countries and the availability of additional
investments in such countries.
For many foreign securities, there are U.S. dollar- denominated American
Depository Receipts ("ADRs"), which are traded in the United States on exchanges
or over the counter and are sponsored and issued by domestic banks. ADRs
represent the right to receive securities of foreign issuers deposited in a
domestic bank or a correspondent bank. ADRs do not eliminate all the risk
inherent in investing in the securities of foreign issuers. However, by
investing in ADRs rather than directly in foreign issuers' stock, the
International Portfolio can avoid currency risks during the settlement period
for either purchases or sales. In general, there is a large, liquid market in
the United States for many ADRs. The information available for ADRs is subject
to the accounting, auditing and financial reporting standards of the domestic
market or exchange on which they are traded, which standards are more uniform
and more exacting than those to which many foreign issuers may be subject.
However, the International Portfolio may also invest in ADRs which are not
sponsored by domestic banks; these present the risks of foreign investments
noted above. The International Portfolio may also invest in European Depository
Receipts ("EDRs"), which are receipts evidencing an arrangement with a European
bank similar to that for ADRs and are designed for use in the European
securities markets. EDRs are not necessarily denominated in the currency of the
underlying security.
The dividends and interest payable on certain of the International
Portfolio's foreign securities may be subject to foreign withholding taxes, thus
reducing the net amount available for distribution to the International
Portfolio's shareholders. Investors should understand that the expense ratio of
the International Portfolio can be expected to be higher than those of
investment companies investing in domestic securities since the costs of
operation are higher. There can be no assurance that the International
Portfolio's investment policy will be successful or that its investment
objective will be attained.
Since the International Portfolio may invest up to 20% of its total assets
in bonds considered to be less than investment grade, commonly referred to as
"junk bonds", it may be exposed to greater risks than if it did not invest in
such bonds. With lower rated bonds, there is a greater possibility that an
adverse change in the financial condition of the issuer may affect its ability
to pay principal and interest. Bond prices fluctuate inversely to interest
rates. Generally, when interest rates rise, it may be expected that the value of
bonds may decrease. In addition, to the extent that the Portfolio holds any such
bonds, it may be negatively affected by adverse economic developments, increased
volatility or a lack of liquidity. See the Statement of Additional Information.
Emerging Markets Bond Portfolio
The Emerging Markets Portfolio has a primary investment objective of high
current income and a secondary objective of long term capital appreciation. In
seeking high current income and, secondarily, long-term capital appreciation,
the Emerging Markets Portfolio normally invests at least 65% of its total assets
in debt securities issued by governments, government-
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related entities and corporations in emerging markets, or the return from which
is derived principally from emerging markets. The Adviser considers "emerging
markets" to be any country that is defined as an emerging or developing economy
by an International Bank for Reconstruction and Development (i.e., the World
Bank), the International Finance Corporation or the United Nations or its
authorities.
Although the Portfolio may invest in any emerging market, the Adviser may
weight its investments toward countries in a region such as Latin America. In
addition to Latin America, the Adviser may pursue investment opportunities in
Asia, Africa, the Middle East and the developing countries of Europe, primarily
former Soviet Union countries and Eastern Europe. The Portfolio will deem an
issuer to be located in an emerging market if:
[bullet] the issuer is organized under the laws of an emerging market
country;
[bullet] the issuer's principal securities trading market is in an emerging
market country; or
[bullet] at least 50% of the issuer's non-current assets, capitalization,
gross revenue or profit in any one of the two most recent fiscal
years has been derived from emerging market country activities.
Under normal conditions at least 50% of the Portfolio's assets will be
invested in sovereign debt securities issued or guaranteed by governments,
government-related entities and central banks based in emerging markets
(including participations in and assignments of portions of loans between
governments and financial institutions); government-owned, controlled or
sponsored entities located in emerging markets; entities organized and operated
for the purpose of restructuring investment characteristics of instruments
issued by government or government-related entities in emerging markets; and
debt obligations issued by organizations such as the Asian Development Bank and
the Inter-American Development Bank.
The Portfolio may also purchase debt securities issued by commercial banks
and companies in emerging markets. Debt instruments held by the Portfolio may be
fixed or floating rate issues and may take the form of bonds, notes, bills,
debentures, convertible securities, warrants, bank obligations, short-term
paper, loan participations, loan assignments, and trust interests. The Portfolio
may purchase "Brady Bonds," which are debt securities issued under the Brady
Plan to enable debtor countries to restructure their outstanding bank loans.
Most "Brady Bonds" have their principal collaterized by zero coupon U.S.
Treasury bonds. To reduce currency risk, the Portfolio will invest at least 65%
of its assets in U.S. dollar-denominated debt securities.
While the Portfolio is not "diversified," it will invest in a minimum of
three countries at any one time and will not commit more than 40% of its assets
to issuers in a single country.
The Portfolio will be investing predominantly in debt securities that are
rated below investment grade, or unrated but equivalent to those rated below
investment grade by internationally recognized rating agencies such as S&P or
Moody's. Debt securities rated below BBB by S&P or below Baa by Moody's are
considered to be below investment-grade. These types of high yield/high risk
debt obligations (commonly referred to as "junk bonds") are predominantly
speculative with respect to the capacity to pay interest and repayment of
principal and generally involve a greater risk of default and more volatility in
price than securities in higher rating categories, such as investment-grade U.S.
bonds. On occasion, the Portfolio may invest up to 5% of its net assets in non-
performing securities whose quality is comparable to securities rated as low as
D by S&P or C by Moody's. A large portion of the Portfolio's bond holdings may
trade at substantial discounts from face value.
Under normal conditions, the Portfolio may invest up to 35% of its total
assets in securities other than emerging markets debt obligations such as debt
securities and money market instruments issued by corporations and governments
based in developed markets. However, for temporary defensive purposes, the
Portfolio may invest without limit in U.S. debt securities, including short-term
money market securities.
The Portfolio may invest up to 10% of its total assets in shares of
closed-end investment companies that invest primarily in emerging market debt
securities and to the extent that it does so, shareholders will incur certain
duplicative fees and expenses, including investment advisory fees. See
International Portfolio.
Risk Considerations
The risks of investing in foreign countries and companies is outlined in
detail in the International Portfolio "Risk Considerations" section above. The
risks outlined are greater with respect to emerging markets securities than they
are with respect to developed countries securities.
The Portfolio may invest up to 35% of its assets in securities denominated
in currencies of foreign countries. Accordingly, changes in the value of these
currencies will result in corresponding changes in the U.S. dollar value of the
Portfolio's assets denominated in those currencies. Some foreign countries may
have managed currencies, which are not free floating against the U.S. dollar. In
addition, there is risk that certain foreign countries may restrict the free
conversion of their currencies into other currencies. Further, it generally will
not be possible to reduce the Portfolio's emerging market currency risk through
hedging. Any devaluations in the currencies in which the Portfolio's securities
are denominated may decrease the Portfolio's net asset value.
Certain emerging markets may require governmental approval for the release
of investment income, capital or the proceeds of sales of securities to foreign
investors such as the Portfolio. In addition, if a deterioration occurs in an
emerging market's balance of payments or for other reasons, a country could
impose temporary restrictions on the release of foreign capital. Such delays
could impact the Portfolio's performance as could any restrictions on
investments.
Throughout the last decade many emerging markets have experienced high
rates of inflation, creating a negative interest
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rate environment and devaluing outstanding financial assets. Increases in
inflation could have an adverse effect on the Portfolio's non-dollar denominated
securities and on the issuers of debt obligations generally.
The Portfolio may invest in debt securities which are rated below
investment-grade (hereinafter referred to as "lower rated securities") or which
are unrated. These debt instruments generally offer a higher current yield than
that available from higher grade issues, but typically involve greater risk.
Lower rated and unrated securities are especially subject to adverse changes in
general economic conditions, to changes in the financial condition of their
issuers, and to price fluctuation in response to changes in interest rates.
During periods of economic downturn or rising interest rates, issuers of these
instruments may experience financial problems that could adversely affect their
ability to make payments of principal and interest and increase the possibility
of default. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may also decrease the value and liquidity of these
securities especially in a market characterized by limited trading. Perceived
credit quality can change suddenly and unexpectedly, and may not fully reflect
the actual risk posed nor do credit ratings assigned to lower rated securities
necessarily accurately reflect the true risks of investment. Lower rated
securities are also subject to risks associated with payment expectations and
are subject to the impact of new and proposed laws.
Investment in foreign debt can involve a high degree of risk. Holders of
sovereign debt may be requested to participate in the rescheduling of such debt
and to extend further loans to governmental entities. There is no bankruptcy
proceeding by which defaulted sovereign debt may be collected. Securities traded
in emerging markets may be subject to risks due to the inexperience of financial
intermediaries, the lack of modern technology and the lack of sufficient capital
to expand business operations. Additionally, certain countries may own property,
the claims on which have not been entirely settled. There can be no assurance
that the Portfolio's investments would not be expropriated, nationalized or
otherwise confiscated. Finally, any change in the leadership or policies of
these countries, may adversely affect existing investment opportunities.
Real Estate Portfolio
The Real Estate Portfolio seeks as its investment objective capital
appreciation and income with approximately equal emphasis. It intends under
normal circumstances to invest in marketable securities of publicly traded real
estate investment trusts (REITs) and companies that are principally engaged in
the real estate industry. Under normal circumstances, the Portfolio intends to
invest at least 75% of the value of its assets in these securities.
The Portfolio's investment objective is a fundamental policy which may not
be changed without shareholder approval. Policies and limitations are considered
at the time of purchase and the sale of instruments is not required in the event
of a change in circumstances. There can be no assurance that the Portfolio will
achieve its objective.
REITs are pooled investment vehicles which invest primarily in income
producing real estate or real estate related loans or interests. Generally,
REITs can be classified as equity REITs, mortgage REITs or hybrid REITs. Equity
REITs invest the majority of their assets directly in real property and derive
income primarily from the collection of rents. Equity REITs can also realize
capital gains by selling properties that have appreciated in value. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
income from the collection of interest payments. Hybrid REITs combine the
characteristics of both equity REITs and mortgage REITs. The Portfolio intends
to emphasize investment in equity REITs.
In determining whether an issuer is "principally engaged" in the real
estate industry, PRS seeks companies which derive at least 50% of their gross
revenues or net profits from the ownership, development, construction,
financing, management or sale of commercial, industrial or residential real
estate. The equity securities of real estate companies considered for purchase
by the Portfolio will consist of shares of beneficial interest, marketable
common stock, rights or warrants to purchase common stock, and securities with
common stock characteristics such as preferred stock and debt securities
convertible into common stock.
The Portfolio may also invest up to 25% of its total assets in (a)
marketable debt securities of companies principally engaged in the real estate
industry, (b) mortgage-backed securities such as mortgage pass- through
certificates, real estate mortgage investment conduit ("REMIC") certificates and
collateralized mortgage obligations ("CMOs") (see "Investment Techniques and
Related Risks"); or (c) short-term investments.
The Portfolio invests in debt securities only if, at the date of
investment, they are rated within the four highest grades as determined by
Moody's Investors Services, Inc. (Aaa, Aa, A or Baa) or by Standard & Poor's
Corporation (AAA, AA, A or BBB) or, if not rated or rated under a different
system, are judged by PRS to be of equivalent quality to debt securities so
rated. (See Appendix for a description of these ratings.) Securities rated Baa
or BBB are medium grade investment obligations that may have speculative
characteristics. Changes in economic conditions or other circumstances are more
likely to lead to a weakened capacity to make principal and interest payments in
the case of such obligations than is the case for higher grade securities. The
Portfolio may, but is not obligated to, dispose of debt securities whose credit
quality falls below investment grade. Unrated debt securities may be less liquid
than comparable rated debt securities and may involve somewhat greater risk than
rated debt securities.
For temporary defensive purposes (as when market conditions in real estate
securities are extremely adverse such that PRS believes there are extraordinary
risks associated with investment therein), the Portfolio may invest up to 100%
of its total assets in short-term investments such as money market instruments
consisting of securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; repurchase agreements; certificates of deposit
and bankers' acceptances issued by banks or savings and loan associations
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having net assets of at least $500 million as of the end of their most recent
fiscal year; high-grade commercial paper rated, at time of purchase, in the top
two categories by a national rating agency or determined to be of comparable
quality by PRS or ABKB at the time of purchase; and other long- and short-term
instruments which are rated A or higher by S&P or Moody's at the time of
purchase.
Risk Considerations
The Real Estate Portfolio is non-diversified under the federal securities
laws. As a non-diversified portfolio, there is no restriction under the 1940 Act
on the percentage of assets that may be invested at any time in the securities
of any one issuer. To the extent that the Real Estate Portfolio is not fully
diversified, it may be more susceptible to adverse economic, political or
regulatory developments affecting a single issuer than would be the case if it
were more broadly diversified. In addition, investments by the Real Estate
Portfolio in securities of companies providing mortgage servicing will be
subject to the risks associated with refinancings and their impact on servicing
rights.
Although the Real Estate Portfolio does not invest directly in real estate,
it does invest primarily in real estate securities and accordingly concentrates
its investment in the real estate industry. Accordingly, the value of shares of
the Real Estate Portfolio will fluctuate in response to changes in economic
conditions within the real estate industry. Risks associated with the direct
ownership of real estate and with the real estate industry in general include,
among other things, possible declines in the value of real estate; risks related
to general and local economic conditions; possible lack of availability of
mortgage funds; over-building; extended vacancies of properties; increases in
competition, property taxes and operating expenses; changes in zoning laws;
costs resulting from the clean-up of, and liability to third parties for damages
resulting from, environmental problems; casualty or condemnation losses;
uninsured damages from flood, earthquakes or other natural disasters;
limitations on and variations in rents; dependency on property management skill;
the appeal of properties to tenants; and, changes in interest rates. The Real
Estate Portfolio may also invest in mortgage-backed securities as described
above. The risks associated with such securities are described in the section
"Mortgage-Backed Securities."
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. Equity REITs
may be affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, and
are subject to the risks of financing projects. As the Portfolio may invest in
new or unseasoned REIT issuers, it may be difficult or impossible for PRS or
ABKB to necessarily ascertain the value of each of such REIT's underlying
assets, management capabilities and growth prospects. In addition, REITs are
subject to heavy cash flow dependency, default by borrowers, self-liquidation,
and the possibilities of failing to qualify for the exemption from tax on
distributed income under the Internal Revenue Code of 1986, as amended (the
"Code") and failing to maintain their exemptions from the 1940 Act. REITs whose
underlying assets include long-term health care properties, such as nursing,
retirement and assisted living homes, may be impacted by federal regulations
concerning the health care industry. The Portfolio will indirectly bear its
proportionate share of any expenses paid by REITs in which it invests in
addition to the expenses paid by the Portfolio itself.
REITs (especially mortgage REITs) are subject to interest rate risks. When
interest rates decline, the value of a REITs' investment in fixed rate
obligations usually rises. Conversely, when interest rates rise, the value of a
REIT's investment in fixed rate obligations can be expected to decline. In
contrast, as interest rates on adjustable rate mortgage loans are reset
periodically, yields on a REIT's investment in such loans will gradually align
themselves to reflect changes in market interest rates, causing the value of
such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
In addition, investing in REITs involves risks similar to those associated
with investing in small capitalization companies. REITs may have limited
financial resources, may trade less frequently and in a limited volume and may
be more subject to abrupt or erratic price movements than larger capitalization
stocks included in the S&P 500 Index.
INVESTMENT TECHNIQUES
AND RELATED RISKS
In addition to the investment policies described above, the Fund may
utilize the following investment practices or techniques.
Securities and Index Options. All Portfolios (other than the Real Estate
Portfolio) may enter into option transactions. These instruments are referred to
as "derivatives" as their value is derived from the value of any underlying
security or securities index. Securities and index options and the related risks
are summarized below and are described in more detail in the Statement of
Additional Information.
Writing (Selling) Call and Put Options. A call option on a security or a
foreign currency gives the purchaser of the option, in return for the premium
paid to the writer (seller), the right to buy the underlying security or foreign
currency at the exercise price at any time during the option period. Upon
exercise by the purchaser, the writer of a call option has the obligation to
sell the underlying security or foreign currency at the exercise price. A call
option on a securities index is similar to a call option on an individual
security, except that the value of the option depends on the weighted value of
the group of securities comprising the index and all settlements are made in
cash. A call option may be terminated by the writer (seller) by entering into a
closing purchase transaction in which it purchases an option of the same series
as the option previously written.
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A put option on a security or foreign currency gives the purchaser of the
option, in return for the premium paid to the writer (seller), the right to sell
the underlying security or foreign currency at the exercise price at any time
during the option period. Upon exercise by the purchaser, the writer of a put
option has the obligation to purchase the underlying security or foreign
currency at the exercise price. A put option on a securities index is similar to
a put option on an individual security, except that the value of the option
depends on the weighted value of the group of securities comprising the index
and all settlements are made in cash.
The Mid Cap, Bond, International and Emerging Markets Portfolios may write
exchange-traded call options on its securities. Call options may be written on
portfolio securities and on securities indices, and in addition, in the case of
the Mid Cap, International and Emerging Markets Portfolios, on foreign
currencies. These Portfolios, may write call and put options on an exchange or
over the counter. Call options on portfolio securities will be covered since the
Portfolio utilizing this investment technique will own the underlying securities
or other securities that are acceptable for a segregated account at all times
during the option period. Segregated accounts will contain any asset, including
equity securities and non-investment grade debt so long as the asset is liquid,
unencumbered and marked to market daily. Call options on securities indices will
be written only to hedge in an economically appropriate way portfolio securities
which are not otherwise hedged with options or financial futures contracts and
will be "covered" by identifying the specific portfolio securities being hedged.
Call options on foreign currencies and put options on securities and foreign
currencies will be covered by securities acceptable for a segregated account. No
Portfolio utilizing this investment technique may write options on more than 50%
of its total assets. Management presently intends to cease writing options if
and as long as 25% of such total assets are subject to outstanding options
contracts.
A Portfolio utilizing this investment technique will write call and put
options in order to obtain a return on its investments from the premiums
received and will retain the premiums whether or not the options are exercised.
Any decline in the market value of portfolio securities or foreign currencies
will be offset to the extent of the premiums received (net of transaction
costs). If an option is exercised, the premium received on the option will
effectively increase the exercise price or reduce the difference between the
exercise price and market value.
During the option period, the writer of a call option gives up the
opportunity for appreciation in the market value of the underlying security or
currency above the exercise price. It retains the risk of loss should the price
of the underlying security or foreign currency decline. Writing call options
also involves risks relating to a Portfolio's ability to close out options it
has written.
During the option period, the writer of a put option has assumed the risk
that the price of the underlying security or foreign currency will decline below
the exercise price. However, the writer of the put option has retained the
opportunity for any appreciation above the exercise price should the market
price of the underlying security or foreign currency increase. Writing put
options also involves risks relating to a Portfolio's ability to close out
options it has written.
Purchasing Call and Put Options, Warrants and Stock Rights. The Bond
Portfolio may invest up to 5% of its total assets in exchange-traded call and
put options on securities and, if appropriate, securities indices. The Mid Cap,
International and Emerging Markets Portfolios each may invest up to an aggregate
of 5% of its total assets in exchange-traded or over-the-counter call and put
options on securities and securities indices and foreign currencies. Purchases
of such options by any Portfolio may be made for the purpose of hedging against
changes in the market value of the underlying securities or foreign currencies.
A Portfolio utilizing this investment technique will invest in call and put
options whenever, in the opinion of the Adviser, a hedging transaction is
consistent with the investment objectives of a Portfolio. A Portfolio utilizing
this investment technique may sell a call option or a put option which it has
previously purchased prior to the purchase (in the case of a call) or the sale
(in the case of a put) of the underlying security or foreign currency. Any such
sale would result in a net gain or loss depending on whether the amount
received on the sale is more or less than the premium and other transaction
costs paid on the call or put which is sold. Purchasing a call or put option
involves the risk that a Portfolio may lose the premium it paid plus transaction
costs.
Warrants and stock rights are almost identical to call options in their
nature, use and effect except that they are issued by the issuer of the
underlying security, rather than an option writer, and they generally have
longer expiration dates than call options. The Mid Cap, International and
Emerging Markets Portfolios may each invest up to 5% of its net assets in
warrants and stock rights, but no more than 2% of its net assets in warrants and
stock rights not listed on the New York Stock Exchange or the American Stock
Exchange. The Bond Portfolio will not invest in warrants and stock rights except
where they are acquired in units or attached to other securities.
Over-the-Counter ("OTC") Options. OTC options differ from exchange-traded
options in several respects. They are transacted directly with dealers and not
with a clearing corporation, and there is a risk of non-performance by the
dealer. However, the premium is paid in advance by the dealer. OTC options are
available for a greater variety of securities and foreign currencies, and in a
wider range of expiration dates and exercise prices than exchange-traded
options. Since there is no exchange, pricing is normally done by reference to
information from a market maker, which information is carefully monitored or
caused to be monitored by PIC and verified in appropriate cases.
A writer or purchaser of a put or call option can terminate it voluntarily
only by entering into a closing transaction. In the case of OTC options, there
can be no assurance that a
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continuous liquid secondary market will exist for any particular option at any
specific time. Consequently, the Mid Cap, International or Emerging Markets
Portfolios may be able to realize the value of an OTC option it has purchased
only by exercising it or entering into a closing sale transaction with the
dealer that issued it. Similarly, when a Portfolio writes an OTC option, it
generally can close out that option prior to its expiration only by entering
into a closing purchase transaction with the dealer to which such Portfolio
originally wrote the option. If a covered call option writer cannot effect a
closing transaction, it cannot sell the underlying security or foreign currency
until the option expires or the option is exercised. Therefore, the writer of a
covered OTC call option may not be able to sell an underlying security even
though it might otherwise be advantageous to do so. Likewise, the writer of a
secured OTC put option may be unable to sell the securities pledged to secure
the put for other investment purposes while it is obligated as a put writer.
Similarly, a purchaser of an OTC put or call option might also find it difficult
to terminate its position on a timely basis in the absence of a secondary
market.
The Fund understands the position of the staff of the Securities and
Exchange Commission (the "SEC") to be that purchased OTC options and the assets
used as "cover" for written OTC options are illiquid securities. The Fund has
adopted procedures for engaging in OTC options transactions for the purpose of
reducing any potential adverse effect of such transactions upon the liquidity of
the Portfolio. A brief description of these procedures and related limitations
appears under "Investment Objectives and Policies--Over- the-Counter Options" in
the Statement of Additional Information.
Financial Futures and Related Options. The Bond, Mid Cap, International and
Emerging Markets Portfolios may enter into financial futures contracts and
related options as a hedge against anticipated changes in the market value of
their portfolio securities or securities which they intend to purchase or in the
exchange rate of foreign currencies. Hedging is the initiation of an offsetting
position in the futures market which is intended to minimize the risk associated
with a position's underlying securities in the cash market. Investment
techniques related to financial futures and options are summarized below and are
described more fully in the Statement of Additional Information.
Financial futures contracts consist of interest rate futures contracts,
foreign currency futures contracts and securities index futures contracts. An
interest rate futures contract obligates the seller of the contract to deliver,
and the purchaser to take delivery of, the interest rate securities called for
in the contract at a specified future time and at a specified price. A foreign
currency futures contract obligates the seller of the contract to deliver, and
the purchaser to take delivery of, the foreign currency called for in the
contract at a specified future time and at a specified price. See "Foreign
Currency Transactions". A securities index assigns relative values to the
securities included in the index, and the index fluctuates with changes in the
market values of the securities so included. A securities index futures contract
is a bilateral agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of the last trading day of the
contract and the price at which the futures contract is originally struck. An
option on a financial futures contract gives the purchaser the right to assume a
position in the contract (a long position if the option is a call and a short
position if the option is a put) at a specified exercise price at any time
during the period of the option.
The Bond, Mid Cap, International and Emerging Markets Portfolios may
purchase and sell financial futures contracts which are traded on a recognized
exchange or board of trade and may purchase exchange- or board-traded put and
call options on financial futures contracts. The Mid Cap, International and
Emerging Markets Portfolios may enter into financial futures contracts on
foreign currencies.
The Bond, Mid Cap, International and Emerging Markets Portfolios will
engage in transactions in financial futures contracts and related options only
for hedging purposes and not for speculation. In addition, the Portfolios will
not purchase or sell any financial futures contract or related option if,
immediately thereafter, the sum of all segregated account assets committed with
respect to the Portfolio's existing futures and related options positions and
the premiums paid for related options would exceed 5% of the market value of the
Portfolio's total assets. At the time of purchase of a futures contract or a
call option on a futures contract, any asset, including equity securities and
non-investment grade debt so long as the asset is liquid, unencumbered and
marked to market daily equal to the market value of the futures contract minus
the Portfolio's initial margin deposit with respect thereto, will be deposited
in a segregated account with the Fund's custodian bank to collateralize fully
the position and thereby ensure that it is not leveraged. The extent to which a
Portfolio may enter into financial futures contracts and related options may
also be limited by requirements of the Internal Revenue Code for qualification
as a regulated investment company.
Engaging in transactions in financial futures contracts involves certain
risks, such as the possibility of an imperfect correlation between futures
market prices and cash market prices and the possibility that PIC could be
incorrect in its expectations as to the direction or extent of various interest
rate movements or foreign currency exchange rates, in which case a Portfolio's
return might have been greater had hedging not taken place. There is also the
risk that a liquid secondary market may not exist, and the loss from investing
in futures contracts is potentially unlimited because the Portfolio may be
unable to close its position. The risk in purchasing an option on a financial
futures contract is that a Portfolio will lose the premium it paid. Also, there
may be circumstances when the purchase of an option on a financial futures
contract would result in a loss to a Portfolio while the purchase or sale of the
contract would not have resulted in a loss.
Repurchase Agreements. Portfolios may invest in repurchase agreements,
either for temporary defensive
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purposes necessitated by adverse market conditions or to generate income from
its excess cash balances, provided that no more than 10% of a Portfolio's total
assets may be invested in the aggregate in repurchase agreements having
maturities of more than seven days and in all other illiquid securities. A
repurchase agreement is an agreement under which the Portfolio acquires a money
market instrument (generally a security issued by the U.S. Government or an
agency thereof, a banker's acceptance or a certificate of deposit) from a
commercial bank, a broker or a dealer, subject to resale to the seller at an
agreed upon price and date (normally the next business day). The resale price
reflects an agreed upon interest rate effective for the period the instrument is
held by the Portfolio and is unrelated to the interest rate on the underlying
instrument. A repurchase agreement acquired by a Portfolio will always be fully
collateralized by the underlying instrument, which will be marked to market
every business day. The underlying instrument will be held for the Fund's
account by the Fund's custodian bank until repurchased. Investors in the Bond
Portfolio should be aware that investments in repurchase agreements do not
generate income exempt from federal income taxation.
The use of repurchase agreements involves certain risks such as default by
or the insolvency of the other party to the repurchase agreement. Repurchase
agreements will be entered into only with commercial banks, brokers and dealers
considered by the Fund to be creditworthy.
Lending Portfolio Securities. In order to increase the return on its
investment, the Bond, Mid Cap, International and Emerging Markets Portfolios may
each lend its portfolio securities to broker-dealers and other financial
institutions in amounts up to 25% of the market or other fair value of its total
assets. Loans of portfolio securities will always be fully collateralized and
will be made only to borrowers considered by PIC to be credit-worthy. Lending
portfolio securities involves risk of delay in the recovery of the loaned
securities and in some cases the loss of rights in the collateral should the
borrower fail financially. See the Statement of Additional Information.
Variable and Floating Rate Securities. The Bond Portfolio may invest in
municipal securities which bear rates of interest that are adjusted periodically
according to a formula intended to minimize fluctuations in the values of the
instruments. These municipal securities are referred to as variable or floating
rate instruments. See the Statement of Additional Information.
When-Issued Securities. The Bond and Emerging Markets Portfolios may commit
to purchase new issues of securities on a when-issued or forward delivery basis,
for payment and delivery at a later date. The price and yield are generally
fixed on the commitment to purchase date. During the period between purchase and
settlement, the Portfolio does not earn interest. Upon settlement, the
security's market value may be more or less than the purchase price.
Foreign Currency Transactions. The value of the assets of the Mid Cap,
International and Emerging Markets Portfolios as measured in United States
dollars may be affected favorably or unfavorably by changes in foreign currency
exchange rates and exchange control regulations, and the Portfolios may incur
costs in connection with conversions between various currencies. Each Portfolio
will conduct its foreign currency exchange transactions either on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign currency exchange market,
or through forward contracts to purchase or sell foreign currencies. A forward
foreign currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of the contract. These contracts are traded directly between currency traders
(usually large commercial banks) and their customers. At the time of the
purchase of a forward foreign currency exchange contract, any asset, including
equity securities and non-investment grade debt so long as the asset is liquid,
unencumbered and marked to market daily equal to the market value of the
contract, minus the Portfolio's initial margin deposit with respect thereto,
will be deposited in a segregated account with the Fund's custodian bank to
collateralize fully the position and thereby ensure that it is not leveraged.
When a Portfolio enters into a contract for the purchase or sale of a
security denominated in a foreign currency, it may want to establish the United
States dollar cost or proceeds, as the case may be. By entering into a forward
contract in United States dollars for the purchase or sale of the amount of
foreign currency involved in the underlying security transaction, a Portfolio is
able to protect itself against a possible loss between trade and settlement
dates resulting from an adverse change in the relationship between the United
States dollar and such foreign currency. However, this tends to limit potential
gains which might result from a positive change in such currency relationships.
A Portfolio utilizing this investment technique may also hedge its foreign
currency exchange rate risk by engaging in currency financial futures and
options transactions.
When the Adviser believes that the currency of a particular foreign country
may suffer a substantial decline against the United States dollar, it may enter
into a forward contract to sell an amount of foreign currency approximating the
value of some or all of a Portfolio's portfolio securities denominated in such
foreign currency. The forecasting of short-term currency market movement is
extremely difficult and whether such a short-term hedging strategy will be
successful is highly uncertain.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration of a contract. Accordingly, it may be necessary for
a Portfolio utilizing this investment technique to purchase additional currency
on the spot market (and bear the expense of such purchase) if the market value
of the security is less than the amount of foreign currency the Portfolio is
obligated to deliver when a decision is made to sell the security and make
delivery of the foreign currency in settlement of a forward contract.
Conversely, it may be necessary to sell on the spot market some of the foreign
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currency received upon the sale of the portfolio security if its market value
exceeds the amount of foreign currency the Portfolio is obligated to deliver.
If the Portfolio utilizing this investment technique retains the portfolio
security and engages in an offsetting transaction, the Portfolio will incur a
gain or a loss (as described below) to the extent that there has been movement
in forward contract prices. If the Portfolio engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell the
foreign currency. Should forward prices decline during the period between the
Portfolio's entering into a forward contract for the sale of a foreign currency
and the date it enters into an offsetting contract for the purchase of the
foreign currency, the Portfolio would realize gains to the extent the price of
the currency it has agreed to sell exceeds the price of the currency it has
agreed to purchase. Should forward prices increase, the Portfolio would suffer a
loss to the extent the price of the currency it has agreed to purchase exceeds
the price of the currency it has agreed to sell. Although such contracts tend to
minimize the risk of loss due to a decline in the value of the hedged currency,
they also tend to limit any potential gain which might result should the value
of such currency increase. The Portfolio will have to convert its holdings of
foreign currencies into United States dollars from time to time. Although
foreign exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference (the "spread") between the prices at which they
are buying and selling various currencies.
Mortgage-Backed Securities. The Real Estate Portfolio may also invest up to
25% of its total assets in mortgage-backed securities such as mortgage
pass-through certificates, real estate mortgage investment conduit ("REMIC")
certificates and collateralized mortgage obligations ("CMOs"). CMOs are
derivative securities or "derivatives" and are hybrid instruments with
characteristics of both mortgage-backed and mortgage pass-through securities.
Similar to a bond, interest and pre-paid principal on a CMO are paid, in most
cases, semiannually. CMOs may be collateralized by whole mortgage loans but are
more typically collateralized by portfolios of mortgage pass-through securities
guaranteed by Government National Mortgage Association (GNMA), the Federal
National Mortgage Association, or Federal National Mortgage Association. CMOs
are structured into multiple classes, with each class bearing a different stated
maturity. Monthly payments of principal, including prepayments, are first
returned to investors holding the shortest maturity class; investors holding the
longer maturity classes receive principal only after the first class has been
retired. REMICs are similar to CMOs and are fixed pools of mortgages with
multiple classes of interests held by investors.
The Portfolio may also invest in pass through securities that are derived
from mortgages. A pass-through security is formed when mortgages are pooled
together and undivided interests in the pool or pools are sold. The cash flow
from the mortgages is passed through to the holders of the securities in the
form of periodic payments of interest, principal and prepayments (net of a
service fee).
The Portfolio may purchase pass-through securities at a premium or at a
discount. The values of pass-through securities in which the Portfolio may
invest will fluctuate with changes in interest rates. The value of such
securities varies inversely with interest rates, except that when interest rates
decline, the value of pass-through securities may not increase as much as other
debt securities because of the prepayment feature. Changes in the value of such
securities will not affect interest income from those obligations but will be
reflected in the Portfolio's net asset value.
A particular risk associated with pass-through securities involves the
volatility of prices in response to changes in interest rates, or prepayment
risk. Prepayment rates are important because of their effect on the yield and
price of securities. Prepayments occur when the holder of an individual mortgage
prepays the remaining principal before the mortgage's scheduled maturity date.
As a result of the pass-through of prepayments of principal on the underlying
securities, mortgage-backed securities are often subject to more rapid
prepayment of principal than their stated maturity would indicate. Although the
pattern of prepayments is estimated and reflected in the price paid for pass-
through securities at the time of purchase, the actual prepayment behavior of
mortgages cannot be known at that time. Therefore, it is not possible to predict
accurately the realized yield or average life of a particular issue of
pass-through securities. Prepayments that occur faster than estimated adversely
affect yields for pass-throughs purchased at a premium (that is, a price in
excess of principal amount) and may cause a loss of principal because the
premium may not have been fully amortized at the time the obligation is repaid.
The opposite is true for pass-throughs purchased at a discount. Furthermore,
the proceeds from prepayments usually are reinvested at current market rates,
which may be higher than, but are usually lower than, the rates earned on
the original pass-through securities. Prepayments on a pool of mortgage loans
are influenced by a variety of economic, geographic, social and other factors,
including changes in mortgagors' housing needs, job transfers, unemployment,
mortgagors' net equity in the mortgaged properties and servicing decisions.
Generally, however, prepayments on fixed rate mortgage loans will increase
during a period of falling interest rates and decrease during a period of
rising interest rates. Mortgage-backed securities may decrease in value as a
result of increases in interest rates and may benefit less than other fixed
income securities or decline in value from declining interest rates because of
risk of prepayment.
Brady Bonds. The Emerging Markets Portfolio may invest in Brady Bonds,
which are securities created through the exchange of commercial bank loans to
public and private entities in emerging markets for new bonds under a debt
restructuring plan (the "Brady Plan".) Brady Plan debt restructurings have been
implemented in Mexico, Uruguay, Venezuela, Brazil, Dominican Republic, Costa
Rica, Argentina, Nigeria and the Philippines, among other countries.
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The interest and repayment of principal of Brady Bonds may be
collateralized or uncollateralized, are issued in various currencies (primarily
the dollar) and are actively traded in over-the-counter secondary markets.
Dollar-denominated collateralized Brady Bonds, which may be fixed- or floating-
rate bonds, are generally, but may not be, collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds.
In light of the uncollateralized component of Brady Bonds and the history
of defaults of countries issuing Brady Bonds with respect to commercial bank
loans by public and private entities, investments in Brady Bonds may be
speculative.
Loan Participations and Assignments. The Emerging Markets Portfolio may
also invest in fixed- or floating-rate loans arranged through private
negotiations between an issuer of emerging market debt instruments and one or
more financial institutions ("lenders"). Generally, investments in loans would
be in the form of loan participations and assignments of loan portfolios from
third parties.
When investing in a loan participation, the Portfolio will typically have
the right to receive payments from the lender to the extent that the lender
receives payments from the borrower. In addition, the Portfolio will be able to
enforce its rights through the lender, and not directly against the borrower. As
a result, in a loan participation the Portfolio assumes credit risk with respect
to both the borrower and the lender.
When the Portfolio purchases loan assignments from lenders, it will acquire
direct rights against the borrower, but these rights and the Portfolio's
obligations may differ from, and be more limited than, those held by the
assigning lender. Loan participations and assignments may be illiquid.
INVESTMENT RESTRICTIONS
The investment restrictions to which each Portfolio is subject, together
with the investment objectives of the Portfolio, are fundamental policies of the
Fund which may not be changed as to any Portfolio without the approval of such
Portfolio's shareholders. Among the more significant restrictions, each
Portfolio (other than the Real Estate Portfolio and the Emerging Markets
Portfolio) may not (i) invest more than 5% of its total assets in securities
issued or guaranteed by any one issuer (except the U.S. Government and its
agencies or instrumentalities; and, in the case of each of the Mid Cap, Emerging
Markets and International Portfolios, any foreign government, its agencies and
instrumentalities) or (ii) purchase more than 10% of the outstanding voting
securities or more than 10% of the securities of any class of any one issuer. In
addition no Portfolio may (i) purchase a restricted security or a security for
which market quotations are not readily available or a repurchase agreement
having a maturity longer than seven days if as a result of such purchase more
than 10% of the Portfolio's total assets would be invested in such securities;
or (ii) borrow in excess of 10% of the market or other fair value of its total
assets or pledge its assets to an extent greater than 15% of the market or other
fair value of its total assets (any borrowings are to be from banks and
undertaken only as a temporary measure for administrative purposes).
The Bond Portfolio will not purchase securities while temporary bank
borrowings in excess of 5% of its net assets are outstanding. No such
restriction exists with respect to the other Portfolios. Any investment gains
made with monies borrowed in excess of interest paid will cause the net asset
value of the Portfolio's shares to rise faster than would otherwise be the case.
On the other hand, the risk of leveraging is that if the investment performance
of the additional securities purchased fails to cover their cost (including any
interest paid on the monies borrowed) to the Portfolio, the net asset value of
the Portfolio will decrease faster than would otherwise be the case.
Within certain limitations (see the Statement of Additional Information)
each Portfolio may invest up to 10% of its total assets in shares of other
investment companies provided that immediately after any such investment not
more than 3% of the voting stock of another investment company would be owned by
the Portfolio. As a shareholder in another investment company a Portfolio will
bear its ratable share of the investment company's expenses, including
management fees, and will remain subject to payment of the advisory fee to the
Adviser with respect to assets so invested.
The Portfolios' investment restrictions are fully described in the
Statement of Additional Information.
PORTFOLIO TURNOVER
Each Portfolio pays brokerage commissions for purchases and sales of
portfolio securities. A high rate of portfolio turnover involves a
correspondingly greater amount of brokerage commissions and other costs which
must be borne directly by a Portfolio and thus indirectly by its shareholders.
It may also result in the realization of larger amounts of short-
term capital gains, which are taxable to shareholders as ordinary income.
The rate of portfolio turnover is not a limiting factor when the Adviser
deems portfolio changes appropriate. Portfolio turnover rates for the fiscal
years for each Portfolio are shown in the section "Financial Highlights". The
portfolio turnover rate for the Mid Cap Portfolio will probably be substantially
higher than that of other investment companies with similar investment
objectives because of the Adviser's strict sell discipline. If a security
underperforms the Adviser's expectations it is generally sold. Portfolio
turnover rate is calculated by dividing the lesser of purchases and sales of
portfolio securities during the fiscal year by the monthly average of the value
of the Portfolio's securities (excluding short-term securities). The turnover
rate may vary greatly from year to year and may be affected by cash requirements
for redemptions of shares of a Portfolio and by compliance with provisions of
the Code relieving investment companies which distribute substantially all of
their net income from federal income taxation on the amounts distributed.
MANAGEMENT OF THE FUND
The Fund is a mutual fund known as an open-end management investment
company. The Trustees of the Trust
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("Trustees") are responsible for the overall supervision of the Fund and perform
the various duties imposed on Trustees by the 1940 Act and Massachusetts
business trust law.
The Advisers
The investment adviser to the Bond, Mid Cap, International and Emerging
Markets Portfolios is Phoenix Investment Counsel, Inc. (PIC), which is located
at 56 Prospect Street, Hartford, Connecticut 06115-0480. All of the outstanding
stock of PIC is owned by Phoenix Equity Planning Corporation ("Equity Planning"
or "Distributor"), a subsidiary of Phoenix Duff & Phelps Corporation. Prior to
November 1, 1995, PIC and Equity Planning were indirect wholly-owned
subsidiaries of Phoenix Home Life Mutual Insurance Company ("Phoenix Home Life")
of Hartford, Connecticut. Phoenix Home Life is a majority shareholder of Phoenix
Duff & Phelps Corporation. Phoenix Home Life is in the business of writing
ordinary and group life and health insurance and annuities. Its principal
offices are located at One American Row, Hartford, Connecticut 06115-2520. In
addition to the Fund, PIC also serves as investment adviser to Phoenix Series
Fund, Phoenix Strategic Allocation Fund, Inc., Phoenix Strategic Equity Series
Fund (Strategic Theme Fund and Small Cap Fund) and The Phoenix Edge Series Fund
(all Series other than the Real Estate Securities Series and the Aberdeen New
Asia Series) and as sub-adviser to the Chubb America Fund, Inc., SunAmerica
Series Trust, and JNL Trust. PIC was originally organized in 1932 as John P.
Chase, Inc. As of December 31, 1996, PIC had approximately $18.2 billion in
assets under management.
The investment adviser to the Real Estate Portfolio is Phoenix Realty
Securities, Inc., which is located at 38 Prospect Street, Hartford, Connecticut
06115. PRS was formed in 1994 as an indirect subsidiary of Phoenix Home Life. As
of December 31, 1996, PRS had approximately $6 billion in assets under
management. ABKB/LaSalle Securities Limited Partnership (ABKB), a subsidiary of
LaSalle Partners, serves as sub-adviser to the Real Estate Portfolio. ABKB's
principal place of business is located at 100 East Pratt Street, Baltimore,
Maryland 21202. ABKB has been a registered investment adviser since 1979 and has
approximately $2.2 billion under management, as of December 31, 1996.
The investment advisers furnish investment programs for each Portfolio
under their management and manage the investment and reinvestment of the assets
of each Portfolio under their management subject at all times to the supervision
of the Trustees. PRS and ABKB shall periodically assess the investment program
of the Real Estate Portfolio and, under PRS' direction, ABKB shall effectuate
investment and reinvestment decisions. The investment advisers are responsible
for monitoring the services provided to the Fund. The investment advisers, at
their expense, furnish to the Fund adequate office space and facilities and
certain administrative services, including the services of any member of their
staffs who serves as an officer of the Fund.
The Investment Advisory Agreements have been approved by the Trustees. The
Investment Advisory Agreements between the Fund and the Advisers have been
approved by relevant Shareholders.
For managing, or directing the management of the investments of the Bond,
Mid Cap, International and Emerging Markets Portfolios, PIC is entitled to a
fee, payable monthly, at the following annual rates:
1st $1-2 $2+
Portfolio $1 Billion Billion Billion
- ------------------ ------------- ---------- ---------
Bond .45% .40% .35%
Mid Cap .75% .70% .65%
International .75% .70% .65%
Emerging Markets .75% .70% .65%
For managing, or directing the management of the investments of the Real
Estate Portfolio, PRS is entitled to a monthly fee at the annual rate of 0.75%
of the average aggregate daily net asset values of the Portfolio up to $1
billion; 0.70% of such value between $1 billion and $2 billion; and 0.65% of
such value in excess of $2 billion. For implementing portfolio transactions, and
providing research and other services to the Portfolio, PRS pays a monthly
subadvisory fee to ABKB from PRS' management fees at the annual rate of 0.45% of
the average aggregate daily net asset values of the Portfolio up to $1 billion;
0.35% of such value between $1 billion and $2 billion; and 0.30% of such value
in excess of $2 billion. The total advisory fee of 0.75% of the aggregate net
assets of the Portfolios is greater than that for most mutual funds; however,
the Trustees have determined that it is similar to fees charged by other mutual
funds whose investment objectives are similar to those of the Portfolios.
For its services to the Bond, Mid Cap, International and Emerging Markets
Portfolios of the Fund during the fiscal year ended November 30, 1996, PIC
received a fee of $5,476,008. For the fiscal year ended November 30, 1996, PRS
received a fee of $168,177.
PRS has agreed to reimburse the Real Estate Securities Portfolio's
operating expenses related to Class A Shares and Class B Shares for the amount,
if any, by which such operating expenses for the fiscal year ended November 30,
1997 exceed 1.30% and 2.05%, respectively, of the average net assets. PIC has
agreed to reimburse the Emerging Markets Portfolio's operating expenses related
to Class A Shares and Class B Shares for the amount, if any, by which such
operating expenses for the fiscal year ended November 30, 1997 exceed 1.50% and
2.25%, respectively, of the average net assets.
The Portfolio Managers
Bond Portfolio
Mr. James D. Wehr has served as portfolio manager of the Phoenix Tax-Exempt
Bond Portfolio since 1988 and as such is primarily responsible for the
day-to-day management of the portfolio. Mr. Wehr has also served as a Vice
President of PIC since 1991, and as a Vice President of National Securities &
Research Corporation since May 1993. Mr. Wehr became the
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<PAGE>
Portfolio Manager of Phoenix California Tax-Exempt Bond Portfolio on July 31,
1993. Until November 1995 Mr. Wehr was also Managing Director, Public Fixed
Income, Phoenix Home Life Mutual Insurance Company and held various positions
with Phoenix Home Life since 1981.
Mid Cap Portfolio
Mr. Matthew Considine has served as portfolio manager of the Mid Cap
Portfolio since May 1996, and as such is primarily responsible for the
day-to-day management of the Portfolio. He has been an Equity Analyst with
Phoenix Investment Counsel, Inc. since April 1994. From April 1993 to January
1994, Mr. Considine was Technology Analyst with Robertson Stephens Investment
Management, and from 1989 to March 1993, he was Vice President/Equity
Analyst-Portfolio Manager with CIGNA Investments.
International Portfolio
Ms. Jeanne H. Dorey and Mr. David Lui are the co-portfolio managers of the
Phoenix International Portfolio and as such are primarily responsible for the
day-to-day management of the portfolio. Ms. Dorey is also Co-Portfolio Manager
of the International Series of The Phoenix Edge Series Fund, also advised by
PIC, and of Phoenix Worldwide Opportunities Fund. Ms. Dorey has served as a Vice
President of PIC since April, 1993, and as a Vice President of the Fund and
Portfolio Manager of the Fund, Phoenix Worldwide Opportunities Fund and Phoenix
International Series since February 1993. Since May 1993, she has also served as
Vice President of National Securities & Research Corporation, an affiliate of
PIC. From 1990 to 1992, Ms. Dorey was an Investment Analyst and Portfolio
Manager with Pioneer Group, Inc. Mr. Lui is also Co-Portfolio Manager of Phoenix
Worldwide Opportunities Fund and the International Series of The Phoenix Edge
Series Fund. Mr. Lui previously served as Associate Portfolio Manager of such
funds since June 1995. From 1993 to 1995, Mr. Lui was Vice President of Asian
Equities at Alliance Capital Management and from 1990 to 1993, he was an
Associate, Capital Markets, at Bankers Trust.
Emerging Markets Portfolio
Mr. Peter S. Lannigan is the portfolio manager of the Emerging Markets
Portfolio and as such is primarily responsible for the day-to-day management of
the portfolio. Mr. Lannigan served as co-manager of the portfolio from April
1995 until November 14, 1996. Presently, Mr. Lannigan is Vice President of PIC
and from 1993 until November 1995 he was Director, Public Fixed Income, Phoenix
Home Life Mutual Insurance Company. From 1989 to 1993, Mr. Lannigan was
Associate Director of the Bond Rating Group, Standard & Poor's Corp.
Real Estate Portfolio
Barbara Rubin, President of PRS and William K. Morrill, Jr., Managing
Director of ABKB share primary responsibility for managing the assets of the
Real Estate Portfolio. Barbara Rubin has over 20 years real estate experience
and has been associated with Phoenix Home Life for the past 14 years. William
Morrill has over 16 years of investment experience and has been a portfolio
manager with ABKB since 1985.
The Financial Agent
Equity Planning also acts as financial agent of the Fund and, as such,
performs bookkeeping and pricing services and certain other administrative
functions for the Fund. As compensation, Equity Planning is entitled to a fee,
payable monthly and based upon (a) the average of the aggregate daily net asset
values of each Portfolio of the Fund, at the following incremental annual rates:
First $100 million .05%
$100 million to $300 million .04%
$300 million to $500 million .03%
Greater than $500 million .015%
(b) a minimum fee based on the predominant type of assets of each Portfolio; and
(c) an annual fee of $12,000 together with an additional $12,000 for any
additional class of shares created in the future. For its services during the
Fund's fiscal year ended November 30, 1996, Equity Planning received $243,021,
or 0.03% of average net assets.
The Custodians and Transfer Agent
The custodian of the assets of the Bond Portfolio, Mid Cap Portfolio, Real
Estate Portfolio and Emerging Markets Portfolio is State Street Bank and Trust
Company, P.O. Box 351, Boston, Massachusetts, 02101. The custodian of the assets
of the International Portfolio is Brown Brothers Harriman & Co., 40 Water
Street, Boston, Massachusetts 02109. The Fund has authorized the custodians to
appoint one or more subcustodians for the assets of the Fund held outside the
United States. The securities and other assets of each Portfolio of the Fund are
held by each Custodian or any subcustodian separate from the securities and
assets of each other Portfolio.
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 $19.25 for each designated daily dividend shareholder account
and $14.95 for each designated non-daily dividend shareholder account. The
Transfer Agent is authorized to engage sub-agents to perform certain shareholder
servicing functions from time to time for which such agents shall be paid a fee
by the Transfer Agent.
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. Pursuant to the terms of the
Sub-Advisory Agreement between PRS and ABKB, ABKB is responsible for decisions
to buy and sell securities for the Real Estate Portfolio, for broker selection,
26
<PAGE>
and for the negotiation of brokerage commission rates under standards
established and periodically reviewed by the Trustees.
DISTRIBUTION PLANS
The offices of Equity Planning, the National Distributor of the Fund's
shares, are located at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200. Philip R. McLoughlin is a Trustee and President of the
Fund and a director and officer of Equity Planning. David R. Pepin, a director
and officer of Equity Planning, is an officer of the Fund. Michael E. Haylon, a
director of Equity Planning, is an officer of the Fund. G. Jeffrey Bohne, Nancy
G. Curtiss, William E. Keen III, William R. Moyer, William J. Newman, Leonard J.
Saltiel and Thomas N. Steenburg are officers of the Fund and officers of Equity
Planning.
Equity Planning and the Fund have entered into distribution agreements
under which Equity Planning has agreed to use its best efforts to find
purchasers for Fund shares sold subject to an initial sales charge and those
sold subject to a contingent deferred sales charge. The Fund has granted Equity
Planning the exclusive right to purchase from the Fund and resell, as principal,
shares needed to fill unconditional orders for Fund shares. Equity Planning may
sell Fund shares through its registered representatives or through securities
dealers with whom it has sales agreements. Equity Planning may also sell Fund
shares pursuant to sales agreements entered into with banks or bank- affiliated
securities brokers who, acting as agent for their customers, place orders for
Fund shares with Equity Planning. Although the Glass-Steagall Act prohibits
banks and bank affiliates from engaging in the business of underwriting,
distributing or selling securities (including mutual fund shares), banking
regulators have not indicated that such institutions are prohibited from
purchasing mutual fund shares upon the order and for the account of their
customers. If, because of changes in law or regulations, or because of new
interpretations of existing law, it is determined that agency transactions of
banks or bank-affiliated securities brokers are not permitted under the
Glass-Steagall Act, the Trustees will consider what action, if any, is
appropriate. It is not anticipated that termination of sales agreements with
banks or bank-affiliated securities brokers would result in a loss to their
customers or a change in the net asset value per share of a Portfolio 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 adopted a distribution plan on behalf of the Class A Shares of
the Bond Portfolio on February 24, 1988 and on behalf of the Class A Shares of
the Mid Cap Portfolio and the International Portfolio on August 23, 1989,
pursuant to Rule 12b-1 under the 1940 Act. The Trustees adopted a distribution
plan on behalf of the Real Estate Portfolio on November 16, 1994 and a
distribution plan for the Emerging Markets Portfolio on February 15, 1995. Each
of these Class A Share Plans have been approved by the shareholders of each
Portfolio and authorize the payment to Equity Planning of amounts not exceeding
0.25% annually of the average daily net assets of each respective Portfolio for
each year elapsed after the inception of such Plans. Under a separate plan
adopted by the Trustees (including a majority of the non- interested or
independent trustees) and ratified by the initial sole shareholder of Class B
Shares of each Portfolio, the Fund is authorized to pay up to 1.00% annually of
the average daily net assets representing Class B Shares of each Portfolio to
Equity Planning.
Although under no contractual obligation to do so, the Fund intends to make
such payments to Equity Planning (i) as commissions for shares of the Portfolios
sold, all or any part of which commissions will be paid by the Equity Planning
upon receipt from the Fund to others (who may be other dealers or registered
representatives of Equity Planning), (ii) to enable Equity Planning to pay to
such others maintenance or other fees in respect of the Portfolio shares sold by
them and remaining outstanding on the Fund's books during the period in respect
of which the fee is paid (the "Service Fee") and (iii) to enable Equity Planning
to pay to bank affiliated securities brokers maintenance or other fees in
respect of shares of the Portfolios purchased by their customers and remaining
outstanding on the Fund's books during the period in respect of which the fee is
paid. The portion of the above fees paid by the Fund to Equity Planning as
"Service Fees" shall not exceed 0.25% annually of the average daily net assets
of the class to which such fee relates. Payments, less the portion thereof paid
by Equity Planning to others, may be used by Equity Planning for its expenses of
distribution of shares of the Portfolios. If expenses of distribution of shares
of a Portfolio or a Class of a Portfolio exceed payments and any sales charges
retained by Equity Planning, the Fund is not required to reimburse Equity
Planning for excess expenses.
The Class A Share and Class B Share Rule 12b-1 plans (collectively the
"Plans") each require that at least quarterly the Trustees review a written
report with respect to the amounts expended under the Plans and the purposes for
which such expenditures were made. While the Plans are in effect, the Fund will
be required to commit the selection and nomination of candidates for Trustees
who are not interested persons of the Fund to the discretion of other Trustees
who are not interested persons.
In order to receive payments under the Plans, participants must meet such
qualifications as are to be established in the sole discretion of the
Distributor, such as services to the Fund's shareholders; or services providing
the Fund with more efficient methods of offering shares to groups of clients,
members or prospects of a participant; or services permitting bulking of
purchases or sales, or transmissions of such purchases or sales by computerized
tape or other electronic equipment; or other batch processing.
For the fiscal year ended November 30, 1996, the Fund paid $1,942,531 under
the Class A Plan and $330,561 under the Class B Plan. The fees were used to
compensate unaffiliated
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<PAGE>
broker-dealers for servicing shareholder's accounts, compensating sales
personnel and reimbursing the Distributor for commission expenses and expenses
related to preparation of the marketing material. On a quarterly basis, the
Fund's Trustees review a report on expenditures under each Plan and the purposes
for which expenditures were made.
The 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 investment is $500, and the minimum subsequent
investment is $25. Both the minimum initial and subsequent investment amounts
are $25 for investments pursuant to the "Investo-Matic" plan, a bank draft
investing program administered by Equity Planning, or pursuant to the Systematic
Exchange Privilege (see Statement of Additional Information). Completed
application for the purchase of shares should be mailed to Phoenix Funds, c/o
State Street Bank and Trust, P.O. Box 8301, Boston, MA 02266-8301.
Each class of shares of a Portfolio 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 Portfolio 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, P.O. Box 8301, Boston,
MA 02266-8301. Shares will be maintained by the Transfer Agent in book entry
form. A fee may be incurred by the shareholder for a lost or stolen share
certificate. Sales personnel of broker/dealers distributing the Fund's shares
may receive different compensation for sales of Class A and Class B Shares.
The Fund offers combination purchase privileges, letters of intent,
accumulation plans, withdrawal plans and reinvestment and exchange privileges.
Certain privileges may not be available in connection with Class B Shares. Under
certain circumstances, shares of the Fund or shares of any other Phoenix Fund,
may be exchanged for shares of the same class on the basis of the relative net
asset values per share at the time of the exchange. Exchanges are subject to the
minimum initial investment requirement of the designated Phoenix Fund, except if
made in connection with the Systematic Exchange privilege. Shareholders may
exchange shares held in book-entry form for an equivalent number (value) of the
same class of shares from any other Phoenix Fund. On Class B share exchanges,
the contingent deferred sales charge schedule of the original shares purchased
is not taken and continues to apply.
Alternative Sales Arrangements
The alternative purchase arrangement permits an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Fund, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the Fund,
the accumulated continuing distribution service fee and contingent deferred
sales charges on Class B Shares prior to conversion would be less than the
initial sales charge and accumulated distribution fee on Class A Shares
purchased at the same time, and to what extent such differential would be offset
by the higher yield of Class A Shares. In this regard, Class A Shares will
normally 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 total value of $1,000,000.
Class B Shares sold to allocated qualified employer sponsored plans,
including 401(k) plans, will be limited to a maximum total value of $250,000 for
each participant. The Distributor reserves the right to decline the sale of
Class B Shares to allocated qualified employer sponsored plans not utilizing an
approved participant tracking system. In addition, Class B Shares will not be
sold to any qualified employee benefit plan, endowment fund or foundation if, on
the date of the initial investment, the plan, fund or foundation has assets of
$10,000,000 or more or at least 100 eligible employees. Class B Shares will also
not be sold to investors who have reached the age of 85 because of such persons'
expected distribution requirements.
Class A Shares are subject to a lower distribution services fee and,
accordingly, pay correspondingly higher dividends per share. However, because
initial sales charges are deducted at the time of purchase, such investors would
not have all their funds invested initially and, therefore, would initially own
fewer shares. Investors not qualifying for reduced initial sales charges who
expect to maintain their investment for an extended period of time might
consider purchasing Class A Shares because the accumulated continuing
distribution charges on Class B Shares may exceed the initial sales charge on
Class A Shares during the life of the investment. Again, however, such investors
must weigh this consideration against
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<PAGE>
the fact that, because of such initial sales charge, not all their funds will be
invested initially. However, other investors might determine that it would be
more advantageous to purchase Class B Shares to have all their funds invested
initially, although remaining subject to higher continuing distribution charges
and, for a five-year period, being subject to a contingent deferred sales
charge.
Initial Sales Charge Alternative--Class A Shares
The public offering price of Class A Shares is the net asset value plus a
sales charge, as set forth below. Offering prices become effective at the close
of the general trading session of the New York Stock Exchange. Orders received
by dealers prior to such time are confirmed at the offering price effective at
that time, provided the order is received by State Street Bank and Trust Company
prior to its close of business.
The sales charge varies with the size of the purchase and reduced charges
apply to the aggregate of purchases of the Fund made at one time by "any
person," which term includes an individual, an individual and his/her spouse and
their children under the age of 21, or a trustee or other fiduciary purchasing
shares for a single trust, estate or fiduciary account although more than one
beneficiary is involved.
Class A Shares of the Fund are offered to the public at the net asset value
next computed after the purchase order is received by State Street Bank and
Trust Company plus a maximum sales charge of 4.75% of the offering price (4.99%
of the amount invested) on single purchases of less than $50,000. The sales
charge is reduced on a graduated scale on single purchases on $50,000 or more as
shown below.
Sales Charge Sales Charge Dealer Discount
Amount of as Percentage as Percentage or Agency Fee
Transaction of Offering of Amount as Percentage of
at Offering Price Price Invested Offering Price*
- -------------------- ---------------- ---------------- ------------------
Less than $50,000 4.75% 4.99% 4.25%
$50,000 but under
$100,000 4.50% 4.71% 4.00%
$100,000 but under
$250,000 3.50% 3.63% 3.00%
$250,000 but under
$500,000 3.00% 3.09% 2.75%
$500,000 but under
$1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None None**
- -----------
*Equity Planning will sponsor sales contests, training and educational meetings
and provide to all qualifying dealers, from its own profits and resources,
additional compensation in the form of trips, merchandise or expense
reimbursement. Brokers and dealers other than Equity Planning may also make
customary additional charges for their services in effecting purchases, if they
notify the Fund of their intention to do so. Equity Planning shall also pay
service and retention fees, from its own profits and resources, to qualified
wholesalers in connection with the sale of shares of Phoenix Funds (exclusive of
Class A Shares of Phoenix Money Market Series) by registered financial
institutions and related third party marketers.
**In connection with Class A Share purchases (and subsequent purchases in any
amount) by accounts held in the name of qualified benefit plans with at least
100 eligible employees, Equity Planning may pay broker/dealers, from its own
resources, an amount equal to 1% on the first $3 million of purchases, 0.50% on
the next $3 million, plus 0.25% on the amount in excess of $6 million.
In connection with Class A Share purchases of $1,000,000 or more (or subsequent
purchases in any amount), excluding purchases by qualified employee benefit
plans as described above, Equity Planning may pay broker- dealers, from its own
profits and resources, a percentage of the net asset value of any shares sold as
set forth below:
Purchase Amount Payment to Broker-Dealer
- -------------------------- --------------------------
$1,000,000 to $3,000,000 1%
$3,000,001 to $6,000,000 0.50 of 1%
$6,000,001 or more 0.25 of 1%
If part or all of such an investment including investments by qualified employee
benefit plans is subsequently redeemed within one year of the investment date,
the broker-dealer will refund to the Distributor a pro rata portion of any
amounts paid with respect to the investment.
How To Obtain Reduced Sales Charges--Class A Shares
Investors choosing the initial sales charge alternative under certain
circumstances may be entitled to pay reduced sales charges. The circumstances
under which such investors may pay reduced sales charges are described below.
Qualified Purchasers. No sales charge will be imposed on sales of shares
to: (1) any Phoenix Fund trustee, director or officer; (2) any director or
officer, or to any full-time employee or sales representative (who has acted as
such for at least 90 days), of the Adviser or of Equity Planning; (3) registered
representatives and employees of securities dealers with whom Equity Planning
has sales agreements; (4) any qualified retirement plan exclusively for persons
described above; (5) any officer, director or employee of a corporate affiliate
of the Adviser or Equity Planning; (6) any spouse, child, parent, grandparent,
brother or sister of any person named in (1), (2), (3) or (5) above; (7)
employee benefit plans for employees of the Adviser, Equity Planing and/or their
corporate affiliates; (8) any employee or agent who retires from Phoenix Home
Life or Equity Planning; (9) any account held in the name of a qualified
employee benefit plan, endowment fund or foundation if, on the date of the
initial investment, the plan, fund or foundation has assets of $10,000,000 or
more or at least 100 eligible employees; (10) any person with a direct rollover
transfer of shares from an established Phoenix Fund qualified plan; (11) any
Phoenix Home Life separate account which funds group annuity contracts offered
to qualified employee benefits 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 any 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
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discretionary authority and holds the account in a fiduciary, agency, custodial
or similar capacity, if in the aggregate such accounts equal or exceed
$1,000,000; or (15) any person who is investing redemption proceeds from
investment companies other than the Phoenix Funds if, in connection with the
purchase or redemption of the redeemed shares, the investor paid a sales charge
provided such investor supplies verification that the redemption occurred within
90 days of the Phoenix Fund purchase and that a sales charge was paid; provided
that sales made to persons listed in (1) through (15) above are made upon the
written assurance that the purchase is made for investment purposes and that
such shares will not be resold except to the Fund.
In addition, Class A shares purchased by the following investors are not
subject to any Class A sales charge: (1) investment advisors and financial
planners who charge an advisory, consulting or other fee for their services and
buy shares for their own accounts or the accounts of their clients, and (2)
retirement plans and deferred compensation plans and trusts used to fund those
plans (including, for example, plans qualified or created under sections 401(a),
403(b) or 457 of the Internal Revenue Code), and "rabbi trusts" that buy shares
for their own accounts, in each case if those purchases are made through a
broker or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; (3) clients of such
investment advisors or financial planners who buy shares for their own accounts
may also purchase shares without sales charge but only if their accounts are
linked to a master account of their investment advisor or financial planner on
the books and records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements (each of these investors may
be charged a fee by the broker, agent or financial intermediary for purchasing
shares).
Shares issued pursuant to the automatic reinvestment of income dividends or
capital gains distributions are not subject to any sales charges. The Fund
receives the entire net asset value of its Class A Shares sold to investors. The
Distributor's commission is the sales charge shown above less any applicable
discount or commission "re-allowed" to selected dealers and agents. The
Distributor will re-allow discounts to selected dealers and agents in the
amounts indicated in the table above. In this regard, the Distributor may elect
to re- allow the entire sales charge to selected dealers and agents for all
sales with respect to which orders are placed with the Distributor. A selected
dealer who receives re-allowance in excess of 90% of such a sales charge may be
deemed to be an "underwriter" under the Securities Act of 1933.
Combination Purchase Privilege. Purchases, either singly or in any
combination, of shares of the Fund or shares of any other Phoenix Fund
(including Class B Shares and excluding Class A Shares of the Money Market
Series), 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 purchases of Class A
Shares. Each purchase of Class A Shares will then be made at the public offering
price, as described in the then current Prospectus relating to such shares,
which at the time of such purchase is applicable to a single transaction of the
total dollar amount of all such purchases. The term "single purchaser" includes
an individual, or an individual, his spouse and their children under the age of
majority purchasing for his or their own account (including an IRA account)
including his or their own trust, commonly known as a living trust; a trustee or
other fiduciary purchasing for a single trust, estate or single fiduciary
account, although more than one beneficiary is involved; multiple trusts or
403(b) plans for the same employer; multiple accounts (up to 200) under a
qualified employee benefit plan or administered by a third party administrator;
or trust companies, bank trust departments, registered investment advisers, and
similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority and
which are held in a fiduciary, agency, custodial or similar capacity, provided
all shares are held in record in the name, or nominee name, of the entity
placing the order.
Letter of Intent. Class A Shares or shares of any other Phoenix Fund
(including Class B Shares and excluding Class A Shares of the Money Market
Series) 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 shares of the Class A Shares
of the Fund or the Class A or Class B Shares of any other Phoenix Fund then
owned by such investor, equals a specified dollar amount. Each purchase of
shares made pursuant to a Letter of Intent will be made at the public offering
price, as described in the then current Prospectus relating to such shares,
which at the time of purchase is applicable to a single transaction of the total
dollar amount specified in the Letter of Intent.
An investor's Letter of Intent is not a binding commitment of the investor
to purchase or a binding obligation of the Fund or Equity Planning to sell a
specified dollar amount of shares qualifying for a reduced sales charge.
Accordingly, out of his initial purchase (and subsequent purchases if
necessary), 5% of the dollar amount of purchases required to complete his
investment is held in escrow in the form of shares (valued at the purchase price
thereof) registered in the investor's name until he completes his investment, at
which time escrowed shares are deposited to his account. If the investor does
not complete his investment and does not within 20 days after written request by
Equity Planning or his dealer pay the difference between the sales charge on the
dollar amount specified in his Letter 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 his account.
Right of Accumulation. "Single purchasers" (as defined above) may also
qualify for reduced sales charges based on the combined value of purchases of
either class of shares of the
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Fund, or any other Phoenix Fund, made over time. Reduced sales charges are
offered to investors whose shares, in the aggregate, are valued (i.e., the
dollar amount of such purchases plus the then current value (at the public
offering price as described in the then current prospectus relating to such
shares) of shares of all Phoenix Funds owned) in excess of the threshold amounts
described in the section entitled "Initial Sales Charge Alternative--Class A
Shares". To use this option, the investor must supply sufficient account
information to Equity Planning to permit verification that one or more purchases
qualify 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) facilitates solicitation of
the membership by the investment dealer, thus assisting in 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 subject to a sales charge if
redeemed within five years of purchase.
Proceeds from the contingent deferred sales charge are paid to the
Distributor and are used in whole or in part by the Distributor to defray its
expenses related to providing distribution-related services to the Fund in
connection with the sale of the Class B Shares, such as the payment of
compensation to selected dealers and agents for selling Class B Shares. The
combination of the contingent deferred sales charge and the distribution fee
facilitates the ability of the Fund to sell the Class B Shares without a sales
charge being deducted at the time of purchase.
Contingent Deferred Sales Charge. Class B Shares which are redeemed within
five years of purchase will be subject to a contingent deferred sales charge at
the rates set forth below charged as a percentage of the dollar amount subject
thereto. The charge will be assessed on an amount equal to the lesser of the
current market value or the cost of the shares being redeemed. Accordingly, no
sales charge will be imposed on increases in net asset value above the initial
purchase price. In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions.
The Distributor intends to pay investment dealers a sales commission of 4%
of the sale price of Class B Shares sold by such dealers, subject to future
amendment or termination. The Distributor will retain all or a portion of the
continuing distribution fee assessed to Class B shareholders and will receive
the entire amount of the contingent deferred sales charge paid by shareholders
on the redemption of shares to finance the 4% commission plus interest and
related marketing expenses.
The amount of the contingent deferred sales charges, if any, will vary
depending on the number of years from the time of payment for the purchase of
Class B Shares until the time of redemption of such shares. Solely for purposes
of determining the number of years from the time of any payment for the
purchases of shares, all payments during a month will be aggregated and deemed
to have been made on the last day of the previous month.
Contingent Deferred
Sales Charge as
a Percentage of
Dollar Amount
Year Since Purchase Subject to Charge
- ---------------------- ----------------------
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth 2%
Sixth 0%
In determining whether a contingent deferred sales charge is applicable to
a redemption, it will be assumed that any Class A Shares are being redeemed
first; any Class B Shares held for over 5 years or acquired pursuant to
reinvestment of dividends or distributions are redeemed next, any Class B Shares
held longest during the five-year period are redeemed next, unless the
shareholder directs otherwise. The charge will not be applied to dollar amounts
representing an increase in the net asset value since the time of purchase.
To provide an example, assume in 1990, an investor purchased 100 Class B
Shares. In 1993, the investor purchased another 100 Class B Shares at $12
pershare. In 1995, the investor purchased 100 Class A Shares. Assume that in
1996 the investor owns 225 Class B Shares (15 Class B Shares resulting from
dividend reinvestment and distributions upon the Class B Shares purchased in
1990 and 10 Class B Shares resulting from dividend reinvestment and
distributions upon the Class B Shares purchased in 1993) as well as 100 Class A
Shares. If the investor wished to then redeem 300 shares and had not specified a
preference in redeeming shares: first, 100 Class A Shares would be redeemed
without charge. Second, 115 Class B Shares purchased in 1990 (including 15
shares issued as a result of dividend reinvestment and distributions) would be
redeemed next without charge. Finally, 85 Class B Shares purchased in 1993 would
be redeemed resulting in a deferred sales charge of $27 [75 shares (85 shares
minus 10 shares resulting from dividend reinvestment) x $12 (original price or
current NAV if less than original) x 3% (applicable rate in the third year after
purchase)].
The contingent deferred sales charge is waived on redemptions of shares (a)
if redemption is made within one year of death (i) of the sole shareholder on an
individual account, (ii) of a joint tenant where the surviving joint tenant is
the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to Minors
Act (UGMA), Uniform Transfers to Minors Act
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(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
the mandatory distributions upon reaching age 701/2 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 the Class B Shares of the Fund and
Class B Shares of other Phoenix Funds; (f) in connection with any direct
rollover transfer of shares from an established Phoenix Fund qualified plan into
a Phoenix Fund IRA by participants terminating from the qualified plan; and (g)
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 subject to the applicable
contingent deferred sales charge when redeemed.
Class B Shares of the Fund will automatically convert to Class A Shares of
the same Portfolio without a sales charge at the relative net asset values of
each of the classes after eight years from the acquisition of the Class B
Shares, and as a result, will thereafter be subject to the lower distribution
fee under the Class A Plan. Such conversion will be on the basis of the relative
net asset value of the two classes without the imposition of any sales load, fee
or other charge. The purpose of the conversion feature is to relieve the holders
of Class B Shares that have been outstanding for a period of time sufficient for
the Distributor to have been compensated for distribution-related expenses from
the burden of such distribution-related expenses.
For purposes of conversion 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) 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 of the Internal
Revenue Service ("IRS") to the effect that (i) the assessment of the higher
distribution fees and transfer agency costs with respect to Class B Shares does
not result in any dividends or distributions constituting "preferential
dividends" under the Code, and (ii) that the conversion of shares does not
constitute a taxable event under federal income tax law. The conversion of Class
B Shares to Class A Shares may be suspended if such an opinion or ruling is no
longer available. In that event, no further conversions of Class B Shares would
occur, and shares might continue to be subject to the higher distribution fee
for an indefinite period which may extend beyond the period ending eight years
after the end of the month in which affected Class B Shares were purchased. If
the Fund were unable to obtain such assurances with respect to the assessment of
distribution fees and transfer agent costs relative to the Class B Shares, 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 ACCOUNTS
AND SERVICES AVAILABLE
An account will be opened for the investor after the investor makes an
initial investment. Shares purchased will be held in the shareholder's account
by the Transfer Agent in book entry form.
The Fund mails periodic reports to its shareholders. In order to reduce the
volume of mail, to the extent possible, only one copy of most Fund reports will
be mailed to households for multiple accounts with the same surname at the same
household address. Please contact Equity Planning to request additional copies
of shareholder reports. Shareholder inquiries should be directed to the Fund at
(800) 243-1574.
Bank Draft Investing Program (Investo-Matic Plan)
By completing the Investo-Matic Section of the New Account Application, a
shareholder may authorize the bank named in the form to draw $25 or more from
his/her personal checking account, to be used to purchase additional shares for
his/her account. The amount the shareholder designates will be made available,
in form payable to the order of Equity Planning, by the bank on the date the
bank draws on his/her account and will be used to purchase shares at the
applicable offering price. The shareholder or his or her registered
representative may, by telephone or written notice, cancel or change the dollar
amount being invested pursuant to the Investo-Matic Plan unless the shareholder
has notified the Fund or Transfer Agent that his or her registered
representative shall not have this authority.
Distribution Option
The Fund currently declares all income dividends and all capital gain
distributions, if any, payable in shares of the Fund at net asset value or, at
the option of the shareholder, in cash. A shareholder 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 a
shareholder elects to receive dividends and/or distributions in cash and the
check cannot be delivered or remains uncashed by the shareholder due to an
invalid address, then the dividend and/or distribution will be reinvested after
the Transfer Agent has been informed that the proceeds are undeliverable.
Additional shares will be purchased for the shareholder's account at the then
current net asset value. Shareholders who maintain an account balance of at
least $5,000, or $2,000 for tax qualified retirement benefit
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<PAGE>
plans (calculated on the basis of the net asset value of the shares held in a
single account), may direct that any dividends and distributions paid with
respect to shares in that account be automatically reinvested in a single
account of one of the other Phoenix Funds at net asset value. Shareholders
should obtain a current prospectus and consider the objectives and policies of
each such Fund carefully before directing dividends and distributions to the
other Fund. Reinvestment election forms and prospectuses are available from
Equity Planning. Distributions may also be mailed to a second payee and/or
address. Dividends and capital gain distributions received in shares are taxable
to the shareholder and credited to the shareholder's account in full and
fractional shares and are computed at the closing net asset value on the next
business day after the record date. A distribution option may be changed at any
time by notifying Customer Service by telephone at 800-243-1574 or sending a
letter signed by the registered owner(s) of the account. Requests for directing
distributions to an alternate payee must be made in writing with a signature
guarantee of the registered owner(s). To be effective with respect to a
particular dividend or distribution, notification of the new distribution option
must be received by the Transfer Agent at least three days prior to the record
date of such dividend or distribution. If all shares in the shareholder's
account are repurchased or redeemed or transferred between the record date and
the payment date of a dividend or distribution, he/she will receive cash for the
dividend or distribution regardless of the distribution option selected.
Systematic Withdrawal Program
The Systematic Withdrawal Program allows shareholders to periodically
redeem a portion of their shares on a predetermined monthly or quarterly,
semiannual or annual basis. 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
the shareholder's bank account. In addition to the limitations stated below,
withdrawals may not be less than $25 and minimum account balance requirements
shall continue to apply.
Class A 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.
To participate in the Systematic Withdrawal Program, Class B shareholders
must initially own shares of the Fund worth $5,000 or more and elect to have all
dividends reinvested in additional Class B Shares of the Fund. Through the
Program, Class B shareholders may withdraw up to 1% of their aggregate net
investments (purchases, at initial value to date net of non- Program
redemptions) each month or up to 3% of their aggregate net investments each
quarter without incurring otherwise applicable contingent deferred sales
charges.
The purchase of shares while participating in the withdrawal program will
ordinarily be disadvantageous to the Class A Share investor since a sales charge
will be paid by the investor on the purchase of Class A Shares at the same time
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.
Class B shareholders redeeming more shares than the percentage permitted
under the Program shall 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.
Tax-Sheltered Retirement Plans
Shares of the Fund are offered in connection with the following qualified
prototype retirement plans: IRA, Rollover IRA, SEP-IRA, Profit-Sharing and Money
Purchase Pension Plans which can be adopted by self-employed persons ("Keogh")
and by corporations, and 403(b) Retirement Plans. Write or call Equity Planning
at (800) 243-4361 for further information about the plans.
Exchange Privileges
Shareholders may exchange Class A or Class B Shares held in book-entry form
for shares of the same class of other Phoenix Funds provided the following
conditions are met: (1) the shares that will be acquired in the exchange (the
"Acquired Shares") are available for sale in the shareholder's state of
residence; (2) the Acquired Shares are the same class as the shares to be
surrendered (the "Exchanged Shares"); (3) the Acquired Shares will be registered
to the same shareholder account as the Exchanged Shares; (4) the account value
of the Fund whose shares are to be acquired must equal or exceed the minimum
initial investment amount required by that Fund after the exchange is
implemented; and (5) if a shareholder has elected not to utilize the Telephone
Exchange Privilege (see below), a properly executed exchange request must be
received by State Street Bank and Trust Company.
Subject to the above requirements for an exchange, a shareholder or his/her
registered representative may, by telephone or written notice, elect to have
Class A or Class B Shares of the Fund exchanged for the same class of shares of
another Phoenix Fund automatically on a monthly, quarterly, semi-annual or
annual basis or may cancel the privilege ("Systematic Exchange").
Shareholders who maintain an account balance in the Fund of at least
$5,000, or $2,000 for tax qualified retirement benefit plans (calculated on the
basis of the net asset value of the shares held in a single account), may direct
that shares of the Fund be automatically exchanged at predetermined intervals
for shares of the same class of another Phoenix Fund. If the shareholder is
participating in the Self Security program offered by Phoenix Home Life, it is
not necessary to maintain the above account balances in order to use the
Systematic Exchange privilege.
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<PAGE>
Such exchanges will be executed upon the close of business on the 10th of a
month and if the 10th falls on a holiday or weekend, then at the close of
business on the next succeeding business day. The minimum initial and subsequent
amount that may be exchanged under the Systematic Exchange is $25. Systematic
Exchange forms are available from Equity Planning.
Exchanges will be based upon each Series' net asset value per share next
computed following receipt of a properly executed exchange request, without
sales charge. On exchanges of Class B Shares offered by other Phoenix Funds, the
contingent deferred sales charge schedule of the original shares purchased
continues to apply.
The exchange of shares from one fund to another is treated as sale of the
Exchanged Shares and a purchase of the Acquired Shares for Federal income tax
purposes. The shareholder may, therefore, realize a taxable gain or loss. See
"Dividends, Distributions and Taxes" for information concerning the Federal
income tax treatment of a disposition of shares.
Because excessive trading can hurt Fund performance and harm shareholders,
the Fund reserves the right to temporarily or permanently terminate exchange
privileges or reject any specific order for any dealer, shareholder or person
whose transactions seem to follow a timing pattern, including those who request
more than one exchange out of a fund within any 30 day period. The Distributor
has entered into agreements with certain dealers and investment advisors
permitting them to exchange their clients' shares by telephone. These privileges
are limited under those agreements and the Distributor has the right to reject
or suspend those privileges. The Fund reserves the right to terminate or modify
its exchange privileges at any time upon giving prominent notice to shareholders
at least 60 days in advance.
Each Phoenix Fund has different investment objectives and policies.
Shareholders should, therefore, obtain and review the prospectus of the fund
into which the exchange is to be made before any exchange requests are made.
Telephone Exchanges
Telephone Exchange privileges are only available in states where the shares
to be acquired may be legally sold. (See the Statement of Additional
Information.) Unless a shareholder elects in writing not to participate in the
Telephone Exchange Privilege, shares for which certificates have not been issued
may be exchanged by calling (800) 243-1574 provided that the exchange is made
between accounts with identical registrations. Under the Telephone Exchange
Privilege, telephone exchange orders may also be entered on behalf of the
shareholder by his or her legal representative.
The Fund, and the Transfer Agent will employ reasonable procedures to
confirm that telephone instructions are genuine. In addition to requiring
identical registrations on both accounts, the Transfer Agent will require
address verification and will record telephone instructions on tape. All
exchanges will be confirmed in writing with the shareholder. To the extent that
procedures reasonably designed to prevent unauthorized telephone exchanges are
not followed, the Fund and/or the Transfer Agent may be liable for following
telephone instructions for exchange transactions that prove to be fraudulent.
Broker/Dealers other than Equity Planning have agreed to bear the risk of any
loss resulting from any unauthorized telephone exchange instructions from the
firm or its registered representatives. However, the shareholder would bear the
risk of loss resulting from instruction entered by an unauthorized third party
that the Fund and/or the Transfer Agent reasonably believe to be genuine. The
Telephone Exchange Privilege may be modified or terminated at any time on 60
days' notice to shareholders. In addition, during times of drastic economic or
market changes, the Telephone Exchange Privilege may be difficult to exercise or
may be suspended temporarily. In such event an exchange may be effected by
following the procedure outlined for tendering shares represented by
certificate(s).
If a shareholder elects not to use the Telephone Exchange Privilege or if
the shares being exchanged are represented by a certificate or certificates, in
order to exchange shares the shareholder must submit a written request to
Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301, Boston,
MA 02266-8301. If the shares are being exchanged between accounts that are not
registered identically, the signature on such request must be guaranteed by an
eligible guarantor institution as defined by the Fund's transfer agent in
accordance with its signature guarantee procedures. Currently such procedures
generally permit guarantees by banks, broker/dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies and
savings associations. Any outstanding certificate or certificates for the
tendered shares must be duly endorsed and submitted.
Purchase and withdrawal plans and reinvestment and exchange privileges are
described more fully in the Statement of Additional Information. For further
information, call Equity Planning at (800) 243-1574.
NET ASSET VALUE
The net asset value per share of each Portfolio is determined as of the
close of regular trading of the New York Stock Exchange (the "Exchange") on days
when the Exchange is open for trading. The net asset value per share of a
Portfolio is determined by adding the values of all securities and other assets
of the Portfolio, subtracting liabilities, and dividing by the total number of
outstanding shares of the Portfolio. The total liability allocated to a class,
plus that class' distribution fee and any other expenses allocated solely to
that class, are deducted from the proportionate interest of such class in the
assets of the Portfolio, 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 Portfolio'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.
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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. Since the Fund does not price securities on weekends or United
States national holidays, the net asset value of a Portfolio's foreign assets
may be significantly affected on days when the investor has no access to the
Fund. 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
Shareholders have the right to have the Fund buy back shares at the net
asset value next determined after receipt of a redemption request and any other
required documentation in proper form by Phoenix Funds, c/o State Street Bank
and Trust Company, P.O. Box 8301, Boston, MA 02266-8301 (see "Net Asset Value").
In the case of Class B Share redemptions, investors will be subject to the
applicable deferred sales charge, if any, for such shares (see "Deferred Sales
Charge Alternative--Class B Shares"). To redeem, any outstanding share
certificates in proper form for transfer must be received by Phoenix Funds, c/o
State Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301. To be
in proper form to redeem shares, the signature of the shareholder(s) on the
certificate or stock power must be signed exactly as registered, including any
fiduciary title, on a written instruction letter, certificate, or accompanying
stock power, such signatures being guaranteed by an eligible guarantor
institution as determined in accordance with the standards and procedures
established by the Transfer Agent (please contact the Fund at (800) 243-1574
with any questions regarding eligible guarantors).
If no certificate has been issued, the Transfer Agent requires a written
request with signature guarantee. The Transfer Agent may waive the signature
guarantee requirement in the case of shares registered in the names of
individuals singly, jointly, or as custodian under the Uniform Gifts to Minors
Act or Uniform Transfers to Minors Act, if the proceeds do not exceed $50,000,
and the proceeds are payable to the registered owner(s) at the address of
record. Such requests must be signed by each person in whose name the account is
registered. In addition, each Portfolio maintains a continuous offer to
repurchase its shares, and shareholders may normally sell their shares through
securities dealers, brokers, or agents, who may charge customary commissions or
fees for their services. The redemption price in such case will be the price as
of the close of the general trading session of the New York Stock Exchange on
that day, provided the order is received by the dealer prior thereto, and is
transmitted to the Distributor prior to the close of its business. No charge is
made by the Fund on redemptions, but shares tendered through investment dealers
may be subject to a service charge by such dealers. Payment for shares redeemed
is made within seven days; provided, however, that redemption proceeds will not
be disbursed until each check used for purchase of shares has been cleared for
payment by the investor's bank, which may take up to 15 days after receipt of
the check.
Additional documentation may be required for redemptions by corporations,
partnership or other organizations, executors, administrators, trustees,
custodians, guardians, or from IRAs 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.
Telephone Redemptions
Unless a shareholder elects in writing not to participate in the Telephone
Redemption privilege, shares for which certificates have not been issued may be
redeemed by telephoning (800) 243-1574 and telephone redemptions will also be
accepted on behalf of the shareholder from his or her registered representative.
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, the telephone redemption instructions will be
recorded on tape, and all redemptions will be confirmed in writing to the
shareholder. 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 exchange transactions that prove to be fraudulent.
Broker/dealers other than Equity Planning have agreed to bear the risk of any
loss resulting from any unauthorized telephone redemption instruction from the
firm or its registered representatives. However, the shareholder 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 suspended temporarily and a shareholder should submit a written
redemption request, as described above.
If the amount of the redemption is over $500, the proceeds will be wired to
the shareholder's designated U.S. commercial bank account. If the amount of the
redemption is less than $500, the proceeds will be sent by check to the address
of record on the shareholder's account.
Telephone redemption orders received and accepted by the Transfer Agent on
any day when the Transfer Agent is open for business, will be entered at the
next determined net asset
35
<PAGE>
value. However, telephone redemption orders received and accepted by the
Transfer Agent after the close of trading hours on the Exchange will be executed
on the following business day. The proceeds of a telephone redemption will
normally be sent on the first business day following receipt of the redemption
request. However, with respect to the telephone redemption of shares purchased
by check, such requests will only be effected after the Fund has assured itself
that good payment has been collected for the purchase of shares, which may take
up to 15 days. This expedited redemption privilege is not available to HR-10,
IRA and 403(b)(7) Plans.
Reinvestment Privilege
Shareholders may use redemption proceeds to purchase Class A Shares of any
Phoenix Fund with no sales charge (at the net asset value next determined after
the request for purchase is made). For Federal income tax purposes, a redemption
and purchase will be treated as a sale and purchase of shares. Special rules may
apply in computing the amount of gain or loss in these situations. (See
"Dividends, Distributions and Taxes" for information on the Federal income tax
treatment of a disposition of shares.) A written request for this privilege must
be received by the Distributor within 180 days of the redemption, accompanied by
payment for the shares (not in excess of the redemption value). Class B
Shareholders who have had the contingent deferred sales charge waived through
participation in the Systematic Withdrawal Program are not eligible.
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.
DIVIDENDS, DISTRIBUTIONS
AND TAXES
All dividends and distributions with respect to the shares of any class of
a Portfolio will be payable in shares of such class of Portfolio at net asset
value or, at the option of the shareholder, in cash.
The net income of the Bond Portfolio will be declared as dividends daily.
Dividends will be invested or distributed in cash monthly after the payment date
with checks or confirmations mailed to shareholders on the second business day.
The net income of the Bond Portfolio for Saturdays, Sundays and other days on
which the New York Stock Exchange is closed will be declared as dividends on the
next business day. The Bond Portfolio will distribute net realized capital
gains, if any, to its shareholders on an annual basis.
The Real Estate Portfolio will distribute its net investment income to its
shareholders quarterly and net realized capital gains, if any, to its
shareholders annually.
The Mid Cap Portfolio and the International Portfolio each will distribute
its net investment income to its shareholders semi-annually and net realized
capital gains, if any, to its shareholders at least annually.
The Emerging Markets Portfolio will distribute its net investment income to
its shareholders monthly and net realized capital gains, if any, to its
shareholders annually.
Each Portfolio is treated as a separate entity for Federal income tax
purposes. Each Portfolio intends to qualify and elect to be treated as a
regulated investment company under the provisions of Subchapter M of the Code.
The Portfolios so qualified for the most recent fiscal year. (To remain
qualified, each Portfolio will be required to satisfy various income,
distribution and diversification requirements.) As such, each Portfolio will not
be subject to federal income tax liability on its net investment income and net
capital gains that are currently distributed (or are deemed to be distributed)
to its shareholders. Each Portfolio also intends to make timely distributions,
if necessary, sufficient in amount to avoid the non-deductible 4% excise tax
imposed on a regulated investment company to the extent that it fails to
distribute, with respect to each calendar year, at least 98% of its ordinary
income for such calendar year and 98% of its net capital gains for the one-year
period ending on October 31 of such calendar year (or for the fiscal year, if
the Portfolio so elects).
The Bond Portfolio expects that under normal conditions at least 80% of its
net assets will be invested in state, municipal and other obligations, the
interest on which is excluded from gross income for Federal income tax purposes,
and that substantially all of its dividends therefore will be exempt interest
dividends which will be treated by its shareholders as excludable from federal
gross income. Such dividends may be fully (for corporations) or partially
includable in a shareholder's alternative minimum taxable income. Dividends
received by shareholders of the Mid Cap Portfolio and the International and
Emerging Markets Portfolios and any non-exempt dividends received by
shareholders of the Bond Portfolio, as well as any short-term capital gain
distributions, whether received by shareholders in shares or in cash, will be
taxable to them as ordinary income for Federal income tax purposes. Certain
distributions of the Mid Cap Portfolio (and, possibly, the International
Portfolio) may qualify for the corporate dividends-received deduction.
Although the Real Estate and Emerging Markets Portfolios may be a
non-diversified portfolio, the Fund intends to comply with the diversification
and other requirements of the Code applicable to "regulated investment
companies" so that it will not be subject to U.S. federal income tax on income
and capital gain distributions to shareholders. Accordingly, the Real Estate
Portfolio will not purchase securities if, as a result, more than 25% of its
total assets would be invested in the securities of a single issuer or, with
respect to 50% of its total assets, more than 5% of such assets would be
invested in the securities of a single issuer. The Emerging Markets Portfolio
will invest in a minimum of three countries at any one time and will not commit
more than 40% of its assets to issuers in a single country.
36
<PAGE>
In addition, if the Real Estate Portfolio has rental income or income from
the disposition of real property acquired as a result of a default on securities
the Real Estate Portfolio owns, the receipt of such income may adversely affect
its ability to retain its tax status as a regulated investment company. See
"Dividends, Distributions and Taxes" in the Statement of Additional Information.
Distributions which are designated by the Portfolios as long- term capital
gains, whether received in shares or in cash, will be taxable to shareholders as
long-term capital gains (regardless of how long the distributee has been a
shareholder) and will not be eligible for the corporate dividends-received
deduction. Each Portfolio will be taxed on its undistributed net capital gain,
if any, at regular corporate income tax rates, and, to the extent of the amount
of such capital gain designated by the Portfolio in a notice mailed to
shareholders not later than 60 days after the close of the year, will be treated
as having been distributed to shareholders. Consequently, any undistributed net
capital gain so designated (although not actually received by the shareholders)
will be taxed to shareholders as capital gain, and shareholders will be entitled
to claim their proportionate share of the Federal income taxes paid by the
Portfolio on such gains as a credit against their own Federal income taxes.
The International and Emerging Markets Portfolios intend to qualify for,
and make the election permitted under, Section 853 of the Code. Accordingly,
shareholders will be able to claim a credit or deduction on their income tax
returns for, and will be required to include in income, their pro rata share of
the income taxes paid by these Portfolios to foreign countries.
Interest on indebtedness incurred or continued by shareholders to purchase
or carry shares of the Bond Portfolio will not be deductible for Federal income
tax purposes to the extent of the portion of the interest expense allocable to
exempt interest dividends. Also, any loss from the sale of shares in the Bond
Portfolio held for 6 months or less may be non- deductible, in whole or in part.
An individual's miscellaneous itemized deductions, including his or her
investment expenses, are deductible only to the extent that they exceed 2% of
the individual's adjusted gross income. Under current law, such limitation does
not apply to expenses incurred in connection with an investment in a
publicly-offered mutual fund, such as the Portfolios.
Written notices will be sent to shareholders following the end of each
calendar year regarding the tax status of all distributions made (or deemed to
have been made) during each taxable year, including the exempt portion (if
applicable), the amount qualifying for the dividends-received deduction (if
applicable) and the amount designated as capital gains dividends, undistributed
capital gains (if any), foreign tax credits (if applicable), and cumulative
return of capital (if any). The Portfolios may be required to withhold Federal
income tax at a rate of 31% on reportable dividends, distributions and
redemption payments paid to certain noncorporate shareholders. Generally,
shareholders subject to such backup withholding will be those for whom a
taxpayer identification number and certain required certifications are not filed
with the Portfolio or who, to the Portfolio's knowledge, have furnished an
incorrect number. Under existing provisions of the Code, non-resident alien
individuals, foreign partnerships and foreign corporations may be subject to
Federal income tax withholding at the applicable rate on income, dividends and
distributions (other than exempt-interest dividends and certain capital gain
dividends). Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
The foregoing is only a summary of some of the important tax considerations
generally affecting the Portfolios and their shareholders. In addition to the
Federal income tax consequences described above, which are applicable to any
investment in the Portfolios, there may be foreign, state or local tax
considerations, and estate tax considerations, applicable to the circumstances
of a particular investor. In particular, dividends declared by the Bond
Portfolio may be subject to state and local taxes even though exempt for Federal
income tax purposes. Additional information about taxes is set forth in the
Statement of Additional Information. Also, legislation may be enacted in the
future that could affect the tax consequences described above. Shareholders are
therefore urged to consult their tax advisers with respect to the effects of
this investment on their own tax situations.
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 capitalization of the Fund consists solely of an unlimited number of
shares of beneficial interest. The Fund currently offers shares in different
series or "Portfolios" and different classes of those Portfolios. Holders of
shares of a Portfolio are entitled to one full vote for each full share owned
and a fractional vote for any fractional share. Shares of a Portfolio
participate equally in dividends and distributions paid with respect to such
Portfolio and in such Portfolio's net
37
<PAGE>
assets on liquidation, except that Class B Shares of any Portfolio which bear
higher distribution fees and, certain incrementally higher expenses associated
with the deferred sales arrangement, pay correspondingly lower dividends per
share than Class A Shares of the same Portfolio. Shareholders of all Portfolios
vote on the election of Trustees. On matters affecting an individual Portfolio
(such as approval of an investment advisory agreement or a change in fundamental
investment policies) and on matters affecting an individual class (such as
approval of matters relating to a Plan of Distribution for a particular class of
shares), a separate vote of that Portfolio or Class is required. Shares of a
Portfolio are fully paid and non-assessable when issued and are transferable and
redeemable. Shares have no preemptive or conversion rights (other than as
described herein).
The assets received by the Fund for the issue or sale of shares of a
Portfolio and any class thereof and all income, earnings, profits and proceeds
thereof, subject only to the rights of creditors, are allocated to such
Portfolio and class respectively, subject only to the rights of creditors, and
constitute the underlying assets of such Portfolio or class. Any underlying
assets of a Portfolio are required to be segregated on the books of account and
are to be charged with the expenses in respect to such Portfolio and with a
share of the general expenses of the Fund. Any general expenses of the Fund not
readily identifiable as belonging to a particular Portfolio or class will be
allocated by or under the direction of the Trustees in such manner as the
Trustees determine to be fair and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a business trust such as the Fund may be personally liable for
debts or claims against the Fund. The Declaration of Trust provides that
shareholders will not be subject to any personal liability for the acts or
obligations of the Fund and that every written agreement, undertaking or
obligation made or issued by the Fund shall contain a provision to that effect.
The Declaration of Trust provides for indemnification out of the Trust property
for all losses and expenses of any shareholder held personally liable for the
obligations of the Fund. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability, which is considered remote, is limited
to circumstances in which the Fund itself would be unable to meet its
obligations.
Additional Inquiries
Inquiries and requests for the Statement of Additional Information, the
Annual Report to Shareholders and the Semi- Annual 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.
38
<PAGE>
APPENDIX
A-1 and P-1 Commercial Paper Ratings
The Trust will only invest in commercial paper which at the date of
investment is rated A-1 by Standard & Poor's Corporation or P-1 by Moody's
Investors Services, Inc., or, if not rated, is issued or guaranteed by companies
which at the date of investment have an outstanding debt issue rated AA or
higher by Standard & Poor's or Aa or higher by Moody's.
Commercial paper rated A-1 by Standard & Poor's Corporation ("S&P") has the
following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is rated "A" or better. The issuer has
access to at least two additional channels of borrowing. Basic earnings and
cash flow have an upward trend with allowance made for unusual circumstances.
Typically, the issuer's industry is well established and the issuer has a
strong position within the industry. The reliability and quality of management
are unquestioned.
The rating P-1 is the highest commercial paper rating assigned by Moody's
Investors Services, Inc. ("Moody's"). Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationship which exists with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.
Moody's Investors Service, Inc., Corporate Bond Ratings
Aaa: Bonds which are rated Aaa are judged to be of
the best quality. They carry the smallest degree
of investment risk and are generally referred to
as "gilt-edge." Interest payments are protected
by a large or by an exceptionally stable margin
and principal is secure. While the various
protective elements are likely to change, such
changes as can be visualized are most unlikely
to impair the fundamentally strong position of
such issues.
Aa: Bonds which are rated Aa are judged to be of
high quality by all standards. Together with the
Aaa group, they compromise 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 protected nor poorly secured. Interest
payments and principal security appear
adequate for the present but certain protective
elements may be lacking or may be
characteristically unreliable over any great
length of time. Such bonds lack outstanding
investment characteristics and in fact have
speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have
speculative elements; their future cannot be
considered as well assured. Often the
protection of interest and principal payments
may be very moderate and thereby not well
safeguarded during both good and bad times
over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack
characteristics of the desirable investment.
Assurance of interest and principal payments
or of maintenance of other terms of the contract
over any long period of time may be small.
Caa Bonds which are rated Caa are of poor
standing. Such issues may be in default or
there may be present elements of danger with
respect to principal or interest.
Ca Bonds which are rated Ca represent obligations
which are speculative in a high degree. Such
issues are often in default or have other marked
shortcomings.
C Bonds which are rated C are the lowest rated
class of bonds and issues so rated can be
regarded as having extremely poor prospects of
ever attaining any real investment standing.
Standard 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.
39
<PAGE>
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 Bonds rated BB, B, CCC and CC are regarded,
CCC,CC: on balance, as predominantly speculative with
respect to 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.
40
<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:
Account Type Give Social Security Number or Tax Identification Number of:
<TABLE>
<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 2. 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
Multi-Portfolio 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 March 28, 1997. The Statement
contains more detailed information about the Fund and is incorporated into this
Prospectus by reference. You may obtain a free copy of the Statement by writing
the Fund c/o Phoenix Equity Planning Corporation, 100 Bright Meadow, P.O. Box
2200, Enfield, Connecticut 06083-2200.
Financial information relating to the Fund is contained in the Annual Report to
Shareholders for the year ended November 30, 1996 and is incorporated into the
Statement of Additional Information by reference.
[GRAPHIC]Recycled Symbol Printed on recycled paper using soybean ink
<PAGE>
Phoenix Multi-Portfolio Fund BULK RATE MAIL
PO Box 2200 U.S. POSTAGE
Enfield CT 06083-2200 PAID
SPRINGFIELD, MA
PERMIT NO. 444
[LOGO]PHOENIX
DUFF&PHELPS
PDP 467 (3/97)
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
101 Munson Street
Greenfield, Massachusetts 01301
Statement of Additional Information
March 28, 1997
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current Prospectus of
Phoenix Multi-Portfolio Fund (the "Fund"), dated March 28, 1997, and should be
read in conjunction with it. The Fund's Prospectus may be obtained by calling
Phoenix Equity Planning Corporation ("Equity Planning") at (800) 243- 4361 or by
writing to Equity Planning at 100 Bright Meadow Boulevard, P.O. Box 2200,
Enfield, CT 06083-2200.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
THE FUND .................................... 1
INVESTMENT OBJECTIVES AND POLICIES (11) ...... 1
INVESTMENT RESTRICTIONS (22) .................. 13
PERFORMANCE (10) .............................. 15
PERFORMANCE COMPARISONS ..................... 16
PORTFOLIO TURNOVER (23) ..................... 16
TRUSTEES AND OFFICERS ........................ 17
THE INVESTMENT ADVISERS (23) .................. 24
PORTFOLIO TRANSACTIONS (23) .................. 25
DETERMINATION OF NET ASSET VALUE (33) ......... 26
HOW TO BUY SHARES ........................... 27
ALTERNATIVE PURCHASE ARRANGEMENTS ............ 27
SHAREHOLDER SERVICES ........................ 29
INVEST-BY-PHONE .............................. 30
HOW TO REDEEM SHARES (34) ..................... 31
DIVIDENDS, DISTRIBUTIONS AND TAXES (35) ...... 33
TAX SHELTERED RETIREMENT PLANS ............... 36
THE DISTRIBUTOR .............................. 36
PLANS OF DISTRIBUTION (35) .................. 37
ADDITIONAL INFORMATION ........................ 38
</TABLE>
*Numbers in parentheses are cross-references to related sections of the
Prospectus.
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders/Exchanges: (800) 367-5877
Telecommunication Device (TTY): (800) 243-1926
PEP468 (3/97)
<PAGE>
THE FUND
Phoenix Multi-Portfolio Fund (the "Fund") is an open-end management
investment company which was organized under Massachusetts law in 1987 as a
Massachusetts business trust.
The Fund's Prospectus describes the investment objectives of the Phoenix
Tax-Exempt Bond Portfolio (the "Bond Portfolio"), the Phoenix Mid Cap Portfolio
(the "Mid Cap Portfolio") the Phoenix International Portfolio (the
"International Portfolio") the Phoenix Emerging Markets Bond Portfolio (the
"Emerging Markets Portfolio") and the Phoenix Real Estate Securities Portfolio
(the "Real Estate Portfolio") (each, a "Portfolio" and, together, the
"Portfolios"), five of the Portfolios currently offered by the Fund, and
summarizes the investment policies and investment techniques each Portfolio will
employ in seeking to achieve its investment objective. The following discussion
supplements the description of the Portfolios' investment policies and
investment techniques in the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Portfolio is deemed to be a fundamental
policy and may not be changed without the approval of the shareholders of that
Portfolio. Investment restrictions described in this Statement of Additional
Information are fundamental policies of the Fund and may not be changed as to
any Portfolio without the approval of such Portfolio's shareholders.
Municipal Securities
As described more fully in the Prospectus, the Bond Portfolio intends under
normal conditions to invest at least 80% of its net assets in municipal
securities. As used in the Prospectus and this Statement of Additional
Information, the term "municipal securities" means obligations, including
municipal bonds and notes and tax exempt commercial paper, issued by or on
behalf of states, territories and possessions of the United States, the District
of Columbia and their political subdivisions, agencies and instrumentalities,
the interest from which is, in the opinion of counsel to the issuers of such
securities, exempt from federal income tax. To the extent that an investment in
municipal securities does not run counter to any of the investment policies of
the Bond Portfolio or any of the investment restrictions to which the Bond
Portfolio is subject, the Bond Portfolio may invest in any combination of the
various types of municipal securities described below which, in the judgment of
Phoenix Investment Counsel, Inc., ("PIC"), the investment adviser to the Bond,
Mid Cap and International Portfolios will contribute to the attainment of the
Bond Portfolio's investment objective. Such combination of municipal securities
may vary from time to time. The two principal classes of municipal securities
are municipal bonds and municipal notes.
Municipal Bonds. Municipal bonds, which meet longer term capital needs and
generally have maturities of more than one year when issued, have two principal
classifications: general obligation bonds and revenue bonds. Another type of
municipal bond is referred to as an industrial development bond. These three are
discussed below.
General Obligation Bonds. Issuers of general obligation bonds include
states, counties, cities, towns, and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. The basic security behind general obligation bonds is the issuer's
pledge of its full faith and credit and taxing power for the payment of
principal and interest. The taxes that can be levied for the payment of debt
service may be limited or unlimited as to the rate or amount of special
assessments.
Revenue Bonds. The principal security for a revenue bond is generally the
net revenues derived from a particular facility, group of facilities, or, in
some cases, the proceeds of a special excise or other specific revenue source.
Revenue bonds are issued to finance a wide variety of capital projects
including: electric, gas, water and sewer systems; highways, bridges, and
tunnels; port and airport facilities; colleges and universities; and hospitals.
Although the principal security behind these bonds may vary, many provide
additional security in the form of a debt service reserve fund whose money may
be used to make principal and interest payments on the issuer's obligations.
Housing finance authorities have a wide range of security, including partially
or fully insured mortgages, rent subsidized and/or collateralized mortgages,
and/or the net revenues from housing or other public projects. Some authorities
provide further security in the form of a state's ability (without obligation)
to make up deficiencies in the debt service reserve fund.
Industrial Development Bonds. Industrial development bonds, which are
considered municipal bonds if the interest paid is exempt from federal income
tax, are issued by or on behalf of public authorities to raise money to finance
various privately operated facilities for business and manufacturing, housing,
sports arenas and pollution control. These bonds are also used to finance public
facilities such as airports, mass transit systems, ports and parking. The
payment of the principal and interest on such bonds is dependent solely on the
ability of the facility's user to meet its financial obligations and the pledge,
if any, of real and personal property so financed as security for such payment.
Municipal Notes. Municipal notes generally are used to provide for
short-term working capital needs and generally have maturities of one year or
less. Municipal notes include:
Tax Anticipation Notes. Tax anticipation notes are issued to finance
working capital needs of municipalities. Generally, they are issued in
anticipation of various seasonal tax revenue, such as income, sales, use and
business taxes, and are payable from these specific future taxes.
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Revenue Anticipation Notes. Revenue anticipation notes are issued in
expectation of receipt of other types of revenue, such as federal revenues
available under federal revenue sharing programs.
Bond Anticipation Notes. Bond anticipation notes are issued to provide
interim financing until long-term financing can be arranged. In most cases, the
long-term bonds then provide the money for the repayment of the notes.
Construction Loan Notes. Construction loan notes are sold to provide
construction financing. After successful completion and acceptance, many
projects receive permanent financing through the Federal Housing Administration
under "Fannie Mae" (the Federal National Mortgage Association) or "Ginnie Mae"
(the Government National Mortgage Association).
Tax-Exempt Commercial Paper. Tax-exempt commercial paper is a short-term
obligation with a stated maturity of 365 days or less. It is issued by state and
local governments or their agencies to finance seasonal working capital needs or
as short-term financing in anticipation of longer-term financing.
In addition, other types of municipal securities similar to the
above-described municipal bonds and municipal notes are, or may become,
available.
For the purpose of the Fund's investment restrictions set forth in this
Statement of Additional Information, the identification of the "issuer" of a
municipal security which is not a general obligation bond is made by PIC on the
basis of the characteristics of the obligation, the most significant of which is
the source of funds for the payment of principal and interest on such security.
Risks Relating to Municipal Securities
There can be no assurance that the Bond Portfolio will achieve its
investment objective. Yields on municipal securities are dependent on a variety
of factors, including the general conditions of the money market and the
municipal bond market, the size of a particular offering, the maturity of the
obligations and the rating of the issue. Municipal securities with longer
maturities tend to produce higher yields and are generally subject to
potentially greater capital appreciation and depreciation than obligations with
shorter maturities and lower yields. The market prices of municipal securities
usually vary, depending upon available yields. An increase in interest rates
will generally reduce the value of portfolio investments, and a decline in
interest rates will generally increase the value of portfolio investments. The
ability of the Portfolio to achieve its investment objective is also dependent
on the continuing ability of the issuers of municipal securities in which the
Portfolio invests to meet their obligations for the payment of interest and
principal when due. The ratings of Moody's and Standard & Poor's represent their
opinions as to the quality of municipal securities which they undertake to rate.
Ratings are not absolute standards of quality; consequently, municipal
securities with the same maturity, coupon, and rating may have different yields.
There are variations in municipal securities, both within a particular
classification and between classifications, depending on numerous factors. It
should also be pointed out that, unlike other types of investments, municipal
securities have traditionally not been subject to regulation by, or registration
with, the Securities and Exchange Commission, although there have been proposals
which would provide for such regulation in the future.
The federal bankruptcy statutes relating to the debts of political
subdivisions and authorities of states of the United States provide that, in
certain circumstances, such subdivisions or authorities may be authorized to
initiate bankruptcy proceedings without prior notice to or consent of creditors,
which proceedings could result in material and adverse changes in the rights of
holders of their obligations.
Lawsuits challenging the validity under state constitutions of present
systems of financing public education have been initiated or adjusted in a
number of states, and legislation has been introduced to effect changes in
public school financing in some states. In other instances there have been
lawsuits challenging the issuance of pollution control revenue bonds or the
validity of their issuance under state or federal law which could ultimately
affect the validity of those municipal securities or the tax-free nature of the
interest thereon.
Variable and Floating Rate Securities
Some municipal securities bear rates of interest that are adjusted
periodically according to formulae intended to minimize fluctuation in values of
floating rate instruments. Variable rate instruments are those whose terms
provide for automatic establishment of a new interest rate on set dates.
Floating rate instruments are those whose terms provide for automatic adjustment
of their interest rates whenever some specified interest rate changes. Variable
rate and floating rate instruments will be referred to collectively as "Variable
Rate Securities." The interest rate on Variable Rate Securities is ordinarily
determined by reference to, or is a percentage of, a bank's prime rate, the
90-day U.S. Treasury Bill rate, the rate of return on commercial paper or bank
certificates of deposit, an index of short-term, tax-exempt rates, or some
objective standard. Generally, the changes in the interest rate on Variable Rate
Securities reduce the fluctuation in the market value of such securities.
Accordingly, as interest rates decrease or increase, the potential for capital
appreciation or depreciation is less than for fixed-rate obligations.
Variable Rate Demand Securities are Variable Rate Securities which have
demand features entitling the purchaser to resell the securities to the issuer
at an amount approximately equal to amortized cost or the principal amount
thereof plus accrued interest, which may be more or less than the price the Bond
Portfolio paid for them. The interest rate on Variable Rate Demand Securities
also varies either according to some objective standard, such as an index of
short-term, tax-exempt rates, or according to rates set by or on behalf of the
issuer.
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Taxable Securities
The Mid Cap Portfolio and the International Portfolio are expected to
invest primarily in securities the income from which (either in the form of
dividends or interest) is taxable as ordinary income.
The Bond Portfolio may also invest a portion of its net assets (up to 20%
under normal conditions and more under extraordinary circumstances, as described
in the Prospectus) in taxable securities.
Interest earned on investments in taxable securities may be taxable to
shareholders as ordinary income. Investors should be aware that investments in
taxable securities by the Bond Portfolio are restricted to:
U.S. Government Securities--obligations issued or guaranteed by the U.S.
Government, its agencies, authorities or instrumentalities (collectively
referred to as "U.S. Government" issues). Some of these securities are supported
by the full faith and credit of the U.S. Government; others are supported by the
right of the issuer to borrow from the U.S. Treasury; and the remainder are
supported only by the credit of the instrumentality.
Bank Obligations--certificates of deposit, bankers' acceptances, and other
short-term obligations of U.S. banks which at the date of the investment have
capital, surplus and undivided profits in excess of $100,000,000 as of the date
of their most recently published financial statements.
Commercial Paper--commercial paper which at the date of the investment is
rated P-l by Moody's Investors Service, Inc. or A-1 by Standard & Poor's
Corporation or, if not rated, is issued by a company which at the date of the
investment has an outstanding debt issue rated Aa or higher by Moody's or AA or
higher by Standard & Poor's.
Corporate Debt Securities--corporate debt securities which at the date of
the investment are rated Aa or higher by Moody's or AA or higher by Standard &
Poor's.
Repurchase Agreements--repurchase agreements with respect to any of the
foregoing, as described in the Fund's Prospectus.
The Bond Portfolio also has the right to hold cash reserves as the Adviser
deems necessary. For example, a Portfolio may invest in money market securities
or hold cash pending investment of proceeds from sales of its shares or from the
sale of portfolio securities and/or in anticipation of redemptions.
Ratings
If the rating of a security purchased by a Portfolio is subsequently
reduced below the minimum rating required for purchase or a security purchased
by the Portfolio ceases to be rated, neither event will require the sale of the
security. However, PIC and/or Phoenix Realty Securities, Inc. ("PRS"), as
applicable, will consider any such event in determining whether the Portfolio
should continue to hold the security. To the extent that ratings established by
Moody's or Standard & Poor's may change as a result of changes in such
organizations or their rating systems, the Portfolios will invest in securities
which are deemed by the Portfolio's adviser to be of comparable quality to
securities whose current ratings render them eligible for purchase by the
Portfolio.
Risks of High Yield Bonds
The Mid Cap and International Portfolios may invest up to 10% and 20%
respectively of their total assets in bonds considered to be less than
investment grade, commonly known as "junk" bonds. The Emerging Markets Portfolio
may invest up to 100% of its total assets in these bonds. The Mid Cap and
International Portfolios did not invest in any bonds considered less than
investment grade for the fiscal year ended November 30, 1996.
While management will seek to minimize risk through diversification and
continual evaluation of current developments in interest rates and economic
conditions, the market prices of lower-rated securities generally fluctuate 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 Portfolios will not normally affect cash income from such
securities but will be reflected in the Portfolio'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 Portfolio seeking recovery from the
issuer. Also, to the extent that the Portfolio invests in securities in the
lower rating categories, the achievement of its goals will be more dependent on
management's ability than would be the case if it were only investing in
securities in the higher rating categories. Lower-rated securities may be thinly
traded and therefore harder to value and more susceptible to adverse publicity
concerning the issuer.
Writing and Purchasing Options on Securities and Securities Indices
The Bond, Mid Cap, International and Emerging Markets Portfolios may engage
in option transactions as described more fully in the Prospectus.
Call options on securities and securities indices written by the Portfolios
normally will have expiration dates between three and nine months from the date
written. The exercise price of a call option written by a Portfolio utilizing
this investment technique may be below, equal to or above the current market
value of the underlying security or securities index at the time the option is
written.
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During the option period, a Portfolio utilizing this investment technique
may be assigned an exercise notice by the broker-dealer through which the call
option was sold, requiring the Portfolio to deliver the underlying security (or
cash in the case of securities index calls) against payment of the exercise
price. This obligation is terminated upon the expiration of the option period or
at such earlier time as the Portfolio effects a closing purchase transaction. A
closing purchase transaction cannot be effected with respect to an option once
the Portfolio has received an exercise notice.
A multiplier for an index option performs a function similar to the unit of
trading for an option on an individual security. It determines the total dollar
value per contract of each point between the exercise price of the option and
the current level of the underlying index. A multiplier of 100 means that a
one-point difference will yield $100. Options on different indices may have
different multipliers.
Securities indices for which options are currently traded include the
Standard & Poor's 100 and 500 Composite Stock Price Indices, Computer/Business
Equipment Index, Major Market Index, Amex Market Value Index, Computer
Technology Index, Oil and Gas Index, NYSE Options Index, Gaming/Hotel Index,
Telephone Index, Transportation Index, Technology Index, and Gold/ Silver Index.
The Mid Cap and International Portfolios may write call options and purchase
call and put options on these and any other indices traded on a recognized
exchange.
Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option written by a Portfolio, to prevent an
underlying security from being called, or to enable the Portfolio to write
another call option with either a different exercise price or expiration date or
both. A Portfolio may realize a net gain or loss from a closing purchase
transaction, depending upon whether the amount of the premium received on the
call option is more or less than the cost of effecting the closing purchase
transaction. If a call option written by a Portfolio expires unexercised, the
Portfolio will realize a gain in the amount of the premium on the option less
the commission paid.
The option activities of a Portfolio may increase its portfolio turnover
rate and the amount of brokerage commissions paid. A Portfolio will pay a
commission each time it purchases or sells a security in connection with the
exercise of an option. These commissions may be higher than those which would
apply to purchases and sales of securities directly.
Limitations on Options on Securities and Securities Indices
The Bond, Mid Cap, International and Emerging Markets Portfolios may write
call options only if they are covered and remain covered for as long as the
Portfolio is obligated as a writer. Thus, if a Portfolio utilizing this
investment technique writes a call option on an individual security, the
Portfolio must own the underlying security or other securities that are
acceptable for a segregated account at all times during the option period. The
Portfolios will write call options on indices only to hedge in an economically
appropriate way portfolio securities which are not otherwise hedged with options
or financial futures contracts. Call options on securities indices written by a
Portfolio will be "covered" by identifying the specific portfolio securities
being hedged.
To secure the obligation to deliver the underlying security, the writer of
a covered call option on an individual security is required to deposit the
underlying security or other assets in a segregated account in accordance with
clearing corporation and exchange rules. In the case of an index call option
written by a Portfolio, the Portfolio will be required to deposit qualified
securities. A "qualified security" is a security against which the Portfolio has
not written a call option and which has not been hedged by the Portfolio by the
sale of a financial futures contract. If at the close of business on any day the
market value of the qualified securities falls below 100% of the current index
value times the multiplier times the number of contracts, the Portfolio will
deposit an amount of cash, U.S. Government Securities or other liquid high
quality debt obligations equal in value to the difference. In addition, when a
Portfolio writes a call on an index which is "in-the-money" at the time the call
is written, the Portfolio will segregate with the Fund's custodian bank cash,
U.S. Government securities or other liquid high quality debt obligations equal
in value to the amount by which the call is "in-the-money" times the multiplier
times the number of contracts. Any amount otherwise segregated may be applied to
the Portfolio's other obligations to segregate assets in the event that the
market value of the qualified securities falls below 100% of the current index
value times the multiplier times the number of contracts.
Each Portfolio utilizing this investment technique may invest up to 5% of
its total assets in exchange-traded call and put options on securities and
securities indices. A Portfolio may sell a call option or a put option which it
has previously purchased prior to the purchase (in the case of a call) or the
sale (in the case of a put) of the underlying security. Any such sale of a call
option or a put option would result in a net gain or loss, depending on whether
the amount received on the sale is more or less than the premium and other
transaction costs paid.
In connection with a Portfolio's qualifying as a regulated investment
company under the Internal Revenue Code of 1986, other restrictions on the
Portfolio's ability to enter into option transactions may apply from time to
time. See "Dividends, Distributions and Taxes."
Risks Relating to Options on Securities
During the option period, the writer of a call option has, in return for
the premium received on the option, given up the opportunity for capital
appreciation above the exercise price should the market price of the underlying
security increase, but has retained
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the risk of loss should the price of the underlying security decline. The writer
has no control over the time within the option period when it may be required to
fulfill its obligation as a writer of the option.
The risk of purchasing a call option or a put option is that the Portfolio
utilizing this investment technique may lose the premium it paid plus
transaction costs, if the Portfolio does not exercise the option and is unable
to close out the position prior to expiration of the option.
An option position may be closed out on an exchange only if the exchange
provides a secondary market for an option of the same series. Although the
Portfolios utilizing this investment technique will write and purchase options
only when PIC believes that a liquid secondary market will exist for options of
the same series, there can be no assurance that a liquid secondary market will
exist for a particular option at a particular time and that any Portfolio, if it
so desires, can close out its position by effecting a closing transaction. If
the writer of a covered call option is unable to effect a closing purchase
transaction, it cannot sell the underlying security until the option expires or
the option is exercised. Accordingly, a covered call writer may not be able to
sell the underlying security at a time when it might otherwise be advantageous
to do so.
Possible reasons for the absence of a liquid secondary market on an
exchange include the following: (i) insufficient trading interest in certain
options; (ii) restrictions on transactions imposed by an exchange; (iii) trading
halts, suspensions or other restrictions imposed with respect to particular
classes or series of options or underlying securities; (iv) inadequacy of the
facilities of an exchange or the clearing corporation to handle trading volume;
and (v) a decision by one or more exchanges to discontinue the trading of
options in general or of particular options or impose restrictions on orders.
Each exchange has established limitations governing the maximum number of
call options, whether or not covered, which may be written by a single investor
acting alone or in concert with others (regardless of whether such options are
written on the same or different exchanges or are held or written on one or more
accounts or through one or more brokers). An exchange may order the liquidation
of positions found to be in violation of these limits and it may impose other
sanctions or restrictions. PIC believes that the position limits established by
the exchanges will not have any adverse impact upon the Portfolios.
Over-the-Counter Options
As indicated in the Prospectus (see "Investment Techniques and Related
Risks"), the Mid Cap Portfolio, International and Emerging Markets Portfolios
may deal in over-the-counter options ("OTC options"). PIC understands the
position of the staff of the Securities and Exchange Commission (the "SEC") to
be that purchased OTC options and the assets used in "cover" for written OTC
options are illiquid securities. As indicated in the Prospectus, the Fund has
adopted procedures for engaging in OTC options for the purpose of reducing any
potential adverse effect of such transactions upon the liquidity of a Portfolio.
A brief description of such procedures is set forth below.
The Mid Cap, International and Emerging Markets Portfolios will engage in
OTC options transactions only with dealers that meet certain credit and other
criteria. The Fund and PIC believe that the approved dealers present minimal
credit risks to the Fund and, therefore, should be able to enter into closing
transactions if necessary. A Portfolio currently will not engage in OTC options
transactions if the amount invested by the Portfolio in OTC options, plus a
"liquidity charge" related to OTC options written by the Portfolio (as described
below) plus the amount invested by the Portfolio in other illiquid securities,
would exceed 10% of the Portfolio's total assets. The "liquidity charge"
referred to above is computed as described below.
The Fund anticipates entering into agreements with dealers to which the
Fund sells OTC options. Under these agreements the Fund would have the absolute
right to repurchase the OTC options from the dealer at any time at a price no
greater than a price established under the agreements (the "Repurchase Price").
The "liquidity charge" referred to above for a specific OTC option transaction
will be the Repurchase Price related to the OTC option less the intrinsic value
of the OTC option. The intrinsic value of an OTC call option for such purposes
will be the amount by which the current market value of the underlying security
exceeds the exercise price. In the case of an OTC put option, intrinsic value
will be the amount by which the exercise price exceeds the current market value
of the underlying security. If there is no such agreement requiring a dealer to
allow the Fund to repurchase a specific OTC option written by the Fund, the
"liquidity charge" will be the current market value of the assets serving as
"cover" for such OTC option.
Risks of Options on Securities Indices
Because the value of an index option depends upon movements in the level of
the index rather than movements in the price of a particular security, whether a
Portfolio utilizing this investment technique will realize a gain or loss on the
purchase or sale of an option on an index depends upon movements in the level of
prices in the market generally or in an industry or market segment (depending on
the index option in question) rather than upon movements in the price of an
individual security. Accordingly, successful use by a Portfolio of options on
indices will be subject to PIC's ability to predict correctly movements in the
direction of the market generally or in the direction of a particular industry.
This requires different skills and techniques than predicting changes in the
prices of individual securities.
Index prices may be distorted if trading of certain securities included in
the index is interrupted. Trading in index options also may be interrupted in
certain circumstances, such as if trading were halted in a substantial number of
securities included in the
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index. If this occurred, a Portfolio utilizing this investment technique would
not be able to close out options which it had written or purchased and, if
restrictions on exercise were imposed, might be unable to exercise an option it
purchased, which would result in substantial losses to the Portfolio. However,
it is the Fund's policy to write or purchase options only on indices which
include a sufficient number of securities so that the likelihood of a trading
halt in the index is minimized.
Because the exercise of an index option is settled in cash, an index call
writer cannot determine the amount of its settlement obligation in advance and,
unlike call writing on portfolio securities, cannot provide in advance for its
potential settlement obligation by holding the underlying securities.
Consequently, the Portfolios will write call options only on indices which meet
the interim described above.
Price movements in securities held by a Portfolio utilizing this investment
technique will not correlate perfectly with movements in the level of the index
and, therefore, the Portfolio bears the risk that the price of the securities
held by the Portfolio might not increase as much as the level of the index. In
this event, the Portfolio would bear a loss on the call which would not be
completely offset by movements in the prices of the securities held by the
Portfolio. It is also possible that the index might rise when the value of the
securities held by the Portfolio does not. If this occurred, the Portfolio would
experience a loss on the call which would not be offset by an increase in the
value of its portfolio and might also experience a loss in the market value of
its portfolio securities.
Unless a Portfolio utilizing this investment technique has other liquid
assets which are sufficient to satisfy the exercise of a call on an index, the
Portfolio will be required to liquidate securities in order to satisfy the
exercise. Because an exercise must be settled within hours after receiving the
notice of exercise, if the Portfolio fails to anticipate an exercise, it may
have to borrow from a bank (in an amount not exceeding 10% of the Portfolio's
total assets) pending settlement of the sale of securities in its portfolio and
pay interest on such borrowing.
When a Portfolio has written a call on an index, there is also a risk that
the market may decline between the time the Portfolio has the call exercised
against it, at a price which is fixed as of the closing level of the index on
the date of exercise, and the time the Portfolio is able to sell its securities.
As with options on its securities, the Portfolio will not learn that a call has
been exercised until the day following the exercise date but, unlike a call on a
security where the Portfolio would be able to deliver the underlying security in
settlement, the Portfolio may have to sell some of its securities in order to
make settlement in cash, and the price of such securities may decline before
they can be sold.
If a Portfolio exercises a put option on an index which it has purchased
before final determination of the closing index value for that day, it runs the
risk that the level of the underlying index may change before closing. If this
change causes the exercised option to fall "out-of-the-money" the Portfolio will
be required to pay the difference between the closing index value and the
exercise price of the option (multiplied by the applicable multiplier) to the
assigned writer. Although the Portfolio may be able to minimize this risk by
withholding exercise instructions until just before the daily cutoff time or by
selling rather than exercising an option when the index level is close to the
exercise price, it may not be possible to eliminate this risk entirely because
the cutoff times for index options may be earlier than those fixed for other
types of options and may occur before definitive closing index values are
announced.
Financial Futures Contracts and Related Options
The Bond, Mid Cap, International and Emerging Markets Portfolios may use
financial futures contracts and related options to hedge against changes in the
market value of their portfolio securities or securities which they intend to
purchase. The Mid Cap, International and Emerging Markets Portfolios may use
foreign currency futures contracts to hedge against changes in the value of
foreign currencies. (See "Foreign Currency Transactions" below.) Hedging is
accomplished when an investor takes a position in the futures market opposite to
the investor's cash market position. There are two types of hedges--long (or
buying) and short (or selling) hedges. Historically, prices in the futures
market have tended to move in concert with (although in inverse relation to)
cash market prices, and prices in the futures market have maintained a fairly
predictable relationship to prices in the cash market. Thus, a decline in the
market value of securities or the value of foreign currencies may be protected
against to a considerable extent by gains realized on futures contracts sales.
Similarly, it is possible to protect against an increase in the market price of
securities which the Portfolio utilizing this investment technique may wish to
purchase in the future by purchasing futures contracts.
The Bond, Mid Cap, International and Emerging Markets Portfolios may
purchase or sell any financial futures contracts which are traded on a
recognized exchange or board of trade and may purchase exchange- or board-traded
put and call options on financial futures contracts as a hedge against
anticipated changes in the market value of its portfolio securities or
securities which it intends to purchase. Financial futures contracts consist of
interest rate futures contracts, securities index futures contracts and foreign
currency futures contracts. A public market presently exists in interest rate
futures contracts covering long-term U.S. Treasury bonds, U.S. Treasury notes,
three-month U.S. Treasury bills and GNMA certificates. Securities index futures
contracts are currently traded with respect to the Standard & Poor's 500
Composite Stock Price Index and such other broad-based stock market indices as
the New York Stock Exchange Composite Stock Index and the Value Line Composite
Stock Price Index. A clearing corporation associated with the exchange or board
of trade on which a financial futures contract trades assumes responsibility for
the completion of transactions and also guarantees that open futures contracts
will be performed.
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In contrast to the situation in which a Portfolio purchases or sells a
security, no security is delivered or received by the Portfolio upon the
purchase or sale of a financial futures contract (although an obligation to
deliver or receive the underlying security in the future is created by such a
contract). Initially, when it enters into a financial futures contract, a
Portfolio utilizing this investment technique will be required to deposit in a
segregated account with the Fund's custodian bank with respect to such Portfolio
an amount of cash or U.S. Treasury bills. This amount is known as an initial
margin and is in the nature of a performance bond or good faith deposit on the
contract. The current initial margin deposit required per contract is
approximately 5% of the contract amount. Brokers may establish deposit
requirements higher than this minimum. However, subsequent payments, called
variation margin, will be made to and from the account on a daily basis as the
price of the futures contract fluctuates. This process is known as marking to
market.
The writer of an option on a futures contract is required to deposit a
margin balance pursuant to requirements similar to those applicable to futures
contracts. Upon exercise of an option on a futures contract, the delivery of the
futures position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's margin
account. This amount will be equal to the amount by which the market price of
the futures contract at the time of exercise exceeds, in the case of a call, or
is less than, in the case of a put, the exercise price of the option on the
futures contract.
Although financial futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed out
before the settlement date without the making or taking of delivery. Closing out
is accomplished by effecting an offsetting transaction. A futures contract sale
is closed out by effecting a futures contract purchase for the same aggregate
amount of securities and the same delivery date. If the sale price exceeds the
offsetting purchase price, the seller immediately would be paid the difference
and would realize a gain. If the offsetting purchase price exceeds the sale
price, the seller immediately would pay the difference and would realize a loss.
Similarly, a futures contract purchase is closed out by effecting a futures
contract sale for the same securities and the same delivery date. If the
offsetting sale price exceeds the purchase price, the purchaser would realize a
gain, whereas if the purchase price exceeds the offsetting sale price, the
purchaser would realize a loss.
The Portfolios utilizing this investment technique will pay commissions on
financial futures contracts and related options transactions. These commissions
may be higher than those which would apply to purchases and sales of securities
directly, and will be in addition to those paid for direct purchases and sales
of securities.
Limitations on Futures Contracts and Related Options
The Portfolios utilizing this investment technique may not engage in
transactions in financial futures contracts or related options for speculative
purposes but only as a hedge against anticipated changes in the market value of
portfolio securities or securities which it intends to purchase or foreign
currencies. A Portfolio utilizing this investment technique may not purchase or
sell financial futures contracts or related options if, immediately thereafter,
the sum of the amount of initial margin deposits on the Portfolio's existing
futures and related options positions and the premiums paid for related options
would exceed 5% of the market value of the Portfolio's total assets after taking
into account unrealized profits and losses on any such contracts. At the time of
purchase of a futures contract or a call option on a futures contract, any
asset, including equity securities and non-investment grade debt so long as the
asset is liquid, unencumbered and marked to market daily equal to the market
value of the futures contract minus the Portfolio's initial margin deposit with
respect thereto will be deposited in a segregated account with the Fund's
custodian bank with respect to such Portfolio to collateralize fully the
position and thereby ensure that it is not leveraged.
The extent to which a Portfolio may enter into financial futures contracts
and related options also may be limited by the requirements of the Internal
Revenue Code of 1986 for qualification as a regulated investment company. See
"Dividends, Distributions and Taxes."
Risks Relating to Futures Contracts and Related Options
Positions in futures contracts and related options may be closed out on an
exchange if the exchange provides a secondary market for such contracts or
options. A Portfolio utilizing this investment technique will enter into a
futures or futures related option position only if there appears to be a liquid
secondary market. However, there can be no assurance that a liquid secondary
market will exist for any particular option or futures contract at any specific
time. Thus, it may not be possible to close out a futures or related option
position. In the case of a futures position, in the event of adverse price
movements the Portfolio would continue to be required to make daily margin
payments. In this situation, if the Portfolio has insufficient cash to meet
daily margin requirements it may have to sell portfolio securities to meet its
margin obligations at a time when it may be disadvantageous to do so. In
addition, the Portfolio may be required to take or make delivery of the
securities underlying the futures contracts it holds. The inability to close out
futures positions also could have an adverse impact on the Portfolio's ability
to hedge its positions effectively.
There are several risks in connection with the use of futures contracts as
a hedging device. While hedging can provide protection against an adverse
movement in market prices, it can also limit a hedger's opportunity to benefit
fully from favorable market movement. In addition, investing in futures
contracts and options on futures contracts will cause a Portfolio to incur
additional brokerage commissions and may cause an increase in a Portfolio's
turnover rate.
The successful use of futures contracts and related options depends on the
ability of the Adviser to forecast correctly the direction and extent of market
movements within a given time frame. To the extent market prices remain stable
during the period a futures
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contract or option is held by a Portfolio or such prices move in a direction
opposite to that anticipated, the Portfolio may realize a loss on the hedging
transaction which is not offset by an increase in the value of its portfolio
securities. As a result, the Portfolio's total return for the period may be less
than if it had not engaged in the hedging transaction.
Utilization of futures contracts by a Portfolio involves the risk of
imperfect correlation in movements in the price of futures contracts and
movements in the price of the securities or currencies which are being hedged.
If the price of the futures contract moves more or less than the price of the
securities or currency being hedged, the Portfolio will experience a gain or
loss which will not be completely offset by movements in the price of the
securities or currency. It is possible that, where a Portfolio has sold futures
contracts to hedge against decline in the market, the market may advance and the
value of securities held in the Portfolio or the currencies in which its foreign
securities are denominated may decline. If this occurred, the Portfolio would
lose money on the futures contract and would also experience a decline in value
in its portfolio securities. Where futures are purchased to hedge against a
possible increase in the prices of securities or foreign currencies before the
Portfolio is able to invest its cash (or cash equivalents) in securities (or
options) in an orderly fashion, it is possible that the market may decline; if
the Portfolio then determines not to invest in securities (or options) at that
time because of concern as to possible further market decline or for other
reasons, the Portfolio will realize a loss on the futures that would not be
offset by a reduction in the price of the securities purchased.
The market prices of futures contracts may be affected if participants in
the futures market elect to close out their contracts through offsetting
transactions rather than to meet margin deposit requirements. In such cases,
distortions in the normal relationship between the cash and futures markets
could result. Price distortions could also result if investors in futures
contracts opt to make or take delivery of the underlying securities or
currencies rather than to engage in closing transactions because such action
would reduce the liquidity of the futures market. In addition, because, from the
point of view of speculators, the deposit requirements in the futures markets
are less onerous than margin requirements in the underlying securities market,
increased participation by speculators in the futures market could cause
temporary price distortions. Because of the possibility of price distortions in
the futures market and of the imperfect correlation between movements in the
prices of securities or foreign currencies and movements in the prices of
futures contracts, a correct forecast of market trends may still not result in a
successful hedging transaction.
Compared to the purchase or sale of futures contracts, the purchase of put
or call options on futures contracts involves less potential risk for a
Portfolio because the maximum amount at risk is the premium paid for the options
plus transaction costs. However, there may be circumstances when the purchase of
an option on a futures contract would result in a loss to the Portfolio (i.e.,
the loss of the premium paid) while the purchase or sale of the futures contract
would not have resulted in a loss, such as when there is no movement in the
price of the underlying securities.
Repurchase Agreements
Repurchase agreements, as described in the Fund's Prospectus, will be
entered into only with commercial banks, brokers and dealers considered by the
Fund to be credit-worthy. The Trustees of the Fund will monitor each Portfolio's
repurchase agreement transactions periodically and, with the Fund's investment
advisers will consider standards which the Fund's investment advisers will use
in reviewing the creditworthiness of any party to a repurchase agreement with a
Portfolio. No more than an aggregate of 10% of a Portfolio's total assets, at
the time of investment, will be invested in repurchase agreements having
maturities longer than seven days and other investments subject to legal or
contractual restrictions on resale, or for which there are not readily available
market quotations.
The use of repurchase agreements involves certain risks. For example, if
the seller under a repurchase agreement defaults on its obligation to repurchase
the underlying instrument at a time when the value of the instrument has
declined, a Portfolio may incur a loss upon its disposition. If the seller
becomes insolvent and subject to liquidation or reorganization under bankruptcy
or other laws, a bankruptcy court may determine that the underlying instrument
is collateral for a loan by the Portfolio and therefore is subject to sale by
the trustee in bankruptcy. Finally, it is possible that the Portfolio may not be
able to substantiate its interest in the underlying instrument. While the
Trustees of the Fund acknowledge these risks, it is expected that they can be
controlled through careful structuring of repurchase agreement transactions to
meet requirements for treatment as a purchase and sale under the bankruptcy laws
and through monitoring procedures designed to assure the creditworthiness of
counter-parties to such transactions.
Lending Portfolio Securities
The Portfolios may lend portfolio securities to broker-dealers and other
financial institutions in amounts up to 25% of the market or other fair value
for its total assets, provided that such loans are callable at any time by the
Portfolio utilizing this investment technique and are at all times secured by
collateral held by the Portfolio at least equal to the market value, determined
daily, of the loaned securities. The Portfolio utilizing this investment
technique will continue to receive any income on the loaned securities, and at
the same time will earn interest on cash collateral (which will be invested in
short-term debt obligations) or a securities lending fee in the case of
collateral in the form of U.S. Government securities. A loan may be terminated
at any time by either the Portfolio or the borrower. Upon termination of a loan,
the borrower will be required to return the securities to the Portfolio, and any
gain or loss in the market price during the period of the loan would accrue to
the Portfolio. If the borrower fails
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to maintain the requisite amount of collateral, the loan will automatically
terminate, and the Portfolio may use the collateral to replace the loaned
securities while holding the borrower liable for any excess of the replacement
cost over the amount of the collateral.
When voting or consent rights which accompany loaned securities pass to the
borrower, the Portfolio will follow the policy of calling the loan, in whole or
in part as may be appropriate, in order to exercise such rights if the matters
involved would have a material effect on the Portfolio's investment in the
securities which are the subject of the loan. The Portfolio may pay reasonable
finders, administrative and custodial fees in connection with loans of its
portfolio securities.
As with any extension of credit, there are risks of delay in recovery of
the loaned securities and in some cases loss of rights in the collateral should
the borrower of the securities fail financially. However, loans of portfolio
securities will be made only to firms considered by the Fund to be creditworthy
and when PIC believes the consideration to be earned justifies the attendant
risks.
When-Issued Securities
New issues of municipal and emerging market securities are often offered on
a when-issued basis, that is, delivery and payment for the securities normally
takes place 15 to 45 days or more after the date of the commitment to purchase.
The payment obligation and the interest rate that will be received on the
securities are each fixed at the time the buyer enters into the commitment. The
Bond and Emerging Market Portfolios will generally make a commitment to purchase
such securities with the intention of actually acquiring the securities.
However, the Portfolios may sell these securities before the settlement date if
it is deemed advisable as a matter of investment strategy. When the Bond and
Emerging Market Portfolios purchase securities on a when-issued basis, cash or
liquid high quality debt securities equal in value to commitments for the
when-issued securities will be deposited in a segregated account with the Fund's
custodian bank. Such segregated securities either will mature or, if necessary,
be sold on or before the settlement date.
Securities purchased on a when-issued basis and the securities held in the
Bond and Emerging Market Portfolios are subject to changes in market value based
upon the public perception of the creditworthiness of the issuer and changes in
the level of interest rates which will generally result in similar changes in
value; i.e., both experiencing appreciation when interest rates decline and
depreciation when interest rates rise. Therefore, to the extent the Bond and
Emerging Market Portfolios remain substantially fully invested at the same time
that they have purchased securities on a when-issued basis, there will be
greater fluctuations in the net asset values than if the Portfolios merely set
aside cash to pay for when-issued securities. In addition, there will be a
greater potential for the realization of capital gains, which are not exempt
from federal income taxation. When the time comes to pay for when-issued
securities, the Bond and Emerging Market Portfolios will meet their obligations
from then available cash flow, the sale of securities or, although it would not
normally expect to do so, from the sale of the when-issued securities themselves
(which may have a value greater or less than the payment obligation). The
policies described in this paragraph are not fundamental and may be changed
without shareholder approval.
Foreign Currency Transactions
The Mid Cap, International and Emerging Market Portfolios (each a "Foreign
Currency Portfolio") each may engage in foreign currency transactions, although
the Mid Cap Portfolio has no present intention of doing so. The following is a
description of these transactions.
Forward Foreign Currency Exchange Contracts. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days ("Term") from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded directly between currency traders (usually
large commercial banks) and their customers.
No Portfolio will enter into such forward contracts or maintain a net
exposure in such contracts where it would be obligated to deliver an amount of
foreign currency in excess of the value of its portfolio securities and other
assets denominated in that currency. PIC believes that it is important to have
the flexibility to enter into such forward contracts when it determines that to
do so is in the best interests of a Portfolio. The Fund's custodian banks will
segregate any asset, including equity securities and non-investment grade debt
so long as the asset is liquid, unencumbered and marked to market daily in an
amount not less than the value of a Foreign Currency Portfolio's total assets
committed to forward foreign currency exchange contracts entered into for the
purchase of a foreign currency. If the value of the securities segregated
declines, additional cash or securities will be added so that the segregated
amount is not less than the amount of the Foreign Currency Portfolio's
commitments with respect to such contracts. Generally, the Foreign Currency
Portfolios do not enter into forward contracts with terms longer than one year.
Foreign Currency Options. A foreign currency option provides the option
buyer with the right to buy or sell a stated amount of foreign currency at the
exercise price at a specified date or during the option period. A call option
gives its owner the right, but not the obligation, to buy the currency, while a
put option gives its owner the right, but not the obligation, to sell the
currency. The option seller (writer) is obligated to fulfill the terms of the
option sold if it is exercised. However, either seller or buyer may close its
position during the option period for such options any time prior to expiration.
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A call rises in value if the underlying currency appreciates. Conversely, a
put rises in value if the underlying currency depreciates. While purchasing a
foreign currency option can protect a Foreign Currency Portfolio against an
adverse movement in the value of a foreign currency, it does not limit the gain
which might result from a favorable movement in the value of such currency. For
example, if a Foreign Currency Portfolio were holding securities denominated in
an appreciating foreign currency and had purchased a foreign currency put to
hedge against a decline in the value of the currency, it would not have to
exercise its put. Similarly, if a Foreign Currency Portfolio had entered into a
contract to purchase a security denominated in a foreign currency and had
purchased a foreign currency call to hedge against a rise in the value of the
currency but instead the currency had depreciated in value between the date of
purchase and the settlement date, the Foreign Currency Portfolio would not have
to exercise its call but could acquire in the spot market the amount of foreign
currency needed for settlement.
Foreign Currency Futures Transactions. Each Foreign Currency Portfolio may
use foreign currency futures contracts and options on such futures contracts.
Through the purchase or sale of such contracts, a Foreign Currency Portfolio may
be able to achieve many of the same objectives attainable through the use of
foreign currency forward contracts, but more effectively and possibly at a lower
cost.
Unlike forward foreign currency exchange contracts, foreign currency
futures contracts and options on foreign currency futures contracts are
standardized as to amount and delivery period and are traded on boards of trade
and commodities exchanges. It is anticipated that such contracts may provide
greater liquidity and lower cost than forward foreign currency exchange
contracts.
Regulatory Restrictions. To the extent required to comply with Securities
and Exchange Commission Release No. IC-10666, when purchasing a futures contract
or writing a put option, each Foreign Currency Portfolio will maintain in a
segregated account any asset, including equity securities and non-investment
grade debt so long as the asset is liquid, unencumbered and marked to market
daily equal to the value of such contracts.
To the extent required to comply with Commodity Futures Trading Commission
Regulation 4.5 and thereby avoid "commodity pool operator" status, a Foreign
Currency Portfolio will not enter into a futures contract or purchase an option
thereon if immediately thereafter the initial margin deposits for futures
contracts (including foreign currency and all other futures contracts) held by
the Foreign Currency Portfolio plus premiums paid by it for open options on
futures would exceed 5% of the Foreign Currency Portfolio's total assets.
Neither Foreign Currency Portfolio will engage in transactions in financial
futures contracts or options thereon for speculation, but only to attempt to
hedge against changes in market conditions affecting the values of securities
which the Portfolio holds or intends to purchase. When futures contracts or
options thereon are purchased to protect against a price increase on securities
intended to be purchased later, it is anticipated that at least 75% of such
intended purchases will be completed. When other futures contracts or options
thereon are purchased, the underlying value of such contracts will at all times
not exceed the sum of: (1) accrued profit on such contracts held by the broker;
(2) cash or high quality money market instruments set aside in an identifiable
manner; and (3) cash proceeds from investments due in 30 days.
Emerging Market Securities. The Emerging Markets Portfolio may invest in
countries or regions with relatively low gross national product per capita
compared to the world's major economies, and in countries or regions with the
potential for rapid economic growth (emerging markets). Emerging markets will
include any country: (i) having an "emerging stock market" as defined by the
International Finance Corporation; (ii) with low-to-middle-income economies
according to the International Bank for Reconstruction and Development (the
"World Bank"); (iii) listed in World Bank publications as developing; or (iv)
determined by the Adviser to be an emerging market as defined above. The
Emerging Markets Portfolio may also invest in securities of: (i) companies the
principal securities trading market for which is an emerging market country;
(ii) companies organized under the laws of, and with a principal office in, an
emerging market country, or (iii) companies whose principal activities are
located in emerging market countries.
The risks of investing in foreign securities may be intensified in the case
of investments in emerging markets. Securities of many issuers in emerging
markets may be less liquid and more volatile than securities of comparable
domestic issuers. Emerging markets also have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when a portion of the assets of the Portfolio is uninvested
and no return is earned thereon. The inability of the Portfolio to make intended
security purchases due to settlement problems could cause the Portfolio to miss
attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result either in losses to the Fund
due to subsequent declines in value of the portfolio securities or, if the
Portfolio has entered into a contract to sell the security, in possible
liability to the purchaser. Securities prices in emerging markets can be
significantly more volatile than in the more developed nations of the world,
reflecting the greater uncertainties of investing in less established markets
and economies. In particular, countries with emerging markets may have
relatively unstable governments, present the risk of nationalization of
businesses, restrictions on foreign ownership, or prohibitions of repatriation
of assets, and may have less protection of property rights than more developed
countries. The economies of countries with emerging markets may be predominantly
based on only a few industries, may be highly vulnerable to changes in local or
global trade conditions, and may suffer from extreme and volatile debt burdens
or inflation rates. Local securities markets may trade a small number of
securities
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and may be unable to respond effectively to increases in trading volume,
potentially making prompt liquidation of substantial holdings difficult or
impossible at times. Securities of issuers located in countries with emerging
markets may have limited marketability and may be subject to more abrupt or
erratic price movements.
Certain emerging markets may require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in an
emerging market's balance of payments or for other reasons, a country could
impose temporary restrictions on foreign capital remittances. The Portfolio
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation of capital, as well as by the application
to the Portfolio any restrictions on investments.
Investments in certain foreign emerging market debt obligations may be
restricted or controlled to varying degrees. These restrictions or controls may
at times preclude investment in certain foreign emerging market debt obligations
and increase the expenses of the Portfolio.
Additional Risk Factors. As a result of its investments in foreign
securities, the Emerging Markets Portfolio may receive interest or dividend
payments, or the proceeds of the sale or redemption of such securities, in the
foreign currencies in which such securities are denominated. In that event, the
Portfolio may convert such currencies into dollars at the then current exchange
rate. Under certain circumstances, however, such as where the Adviser believes
that the applicable rate is unfavorable at the time the currencies are received
or the Adviser anticipates, for any other reason, that the exchange rate will
improve, the Portfolio may hold such currencies for an indefinite period of
time.
In addition, the Portfolio may be required to receive delivery of the
foreign currency underlying forward foreign currency contracts it has entered
into. This could occur, for example, if an option written by the Fund is
exercised or the Fund is unable to close out a forward contract. The Portfolio
may hold foreign currency in anticipation of purchasing foreign securities. The
Portfolio may also elect to take delivery of the currencies underlying options
or forward contracts if, in the judgment of the Adviser, it is in the best
interest of the Portfolio to do so. In such instances as well, the Portfolio may
convert the foreign currencies to dollars at the then current exchange rate, or
may hold such currencies for an indefinite period of time.
While the holding of currencies will permit the Portfolio to take advantage
of favorable movements in the applicable exchange rate, it also exposes the
Portfolio to risk of loss if such rates move in a direction adverse to the
Portfolio's position. Such losses could reduce any profits or increase any
losses sustained by the Portfolio from the sale or redemption of securities, and
could reduce the dollar value of interest or dividend payments received. In
addition, the holding of currencies could adversely affect the Portfolio's
profit or loss on currency options or forward contracts, as well as its hedging
strategies.
Russian Securities
The Emerging Markets Portfolio may invest in Russian securities. While
investment risks exist in many markets around the world, some of the risks
inherent in investing in Russia appear to be greater than those in other
established markets. These risks include, without limitation:
Political and Economic Risks
There is no history of stability in this market and no guarantee of future
stability. The emerging nature of the Russian political system in its current
democratic form leaves it more vulnerable to break down in the event of economic
instability or popular unrest. The dynamic nature of the political environment
can make the future uncertain. The economic infrastructure is poor, and the
country maintains a high level of external and internal debt. Tax regulations
are ambiguous and unclear, and there is a risk of imposition of arbitrary or
onerous taxes due to the lack of a fair and economically-rational tax regime.
Commercial and Credit Risks
Banks and other financial systems are not well developed or regulated, and
as a result tend to be untested and have low credit ratings. Organized crime and
corruption are a feature of the business environment, and bankruptcy and
insolvency are commonplace as businesses are learning how to cope in new
conditions. In terms of cash, securities and other investment transactions, the
risk of broker, counterparty and other third party default is high. The same
holds true for issuers, where the risk of default is high. Insurance is
expensive and difficult to obtain in light of the volatility of the commercial
environment.
Liquidity Risks
Foreign investment is affected by restrictions in terms of repatriation and
convertibility of the currency. The ruble is only convertible internally, and
the value of investments may be affected by fluctuations in available currency
rates and exchange control regulations. The repatriation of profits may be
restricted in some cases. Due to the undeveloped nature of the banking system,
considerable delays can occur in transferring funds, converting rubles into
other currencies and remitting funds out of Russia.
Legal and Regulatory Risks
Russia's legal system is evolving and is not as developed as that of a
western country. It is based on a civil code with no system of judicial
precedents. The regulatory environment is sometimes uncertain since the total
law can encompass the civil code,
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legislative laws, presidential decrees, and ministry resolutions. The code,
laws, decrees, and resolutions ("Regulations") are promulgated at separate times
and are not necessarily consistent. The issuance of Regulations does not always
keep pace with market developments, thereby creating ambiguities and
inconsistencies.
Regulations governing securities investment may not exist or may be
interpreted and applied in an arbitrary or inconsistent manner. There may be a
risk of conflict between the rules and regulations of the local, regional, and
national governments. The concept of share ownership rights and controls may not
be in place or be enforceable. The independence of the courts from economic,
political, or national influence is basically untested and the courts and judges
are not experienced in business and corporate law. Foreign investors cannot be
guaranteed redress in a court of law for a breach of local laws, regulations or
contracts.
The securities market regulatory body, the Federal Commission on the
Capital Market, was established in 1994 and is responsible for overseeing market
participants, including registrars. However, the monitoring of and enforcement
of the obligations of registrar companies is difficult due to geographic
dispersion and inconsistent interpretation and application of regulations.
Operational Risks
Shareholder Title to Securities: Shareholder risk is a major risk for
equity investment in Russia. For example, shares are dematerialized and the only
legal evidence of ownership is the shareholder's name entered in the register of
the company. The concept of fiduciary duty on the part of companies' management
is generally non-existent. Therefore, shareholders may suffer a dilution or loss
of investment, due to arbitrary changes in the shareholder register, with little
or no recourse or redress available. Local laws and regulations may not prohibit
or restrict a company's management from materially changing the company's
structure without the consent of shareholders. Legislation prohibiting insider
trading activities is rudimentary.
Clearing and Settlement: For equity settlements, the payments are usually
handled offshore in US dollars after the shares are reregistered on the books of
the company or its registrar. However, the only evidence of the registration is
a company "extract" which is a photocopy of the appropriate page from the
register reflecting the new shareholder's name. The extract does not have a
legal basis for establishing ownership in the event of a loss.
For Ministry of Finance (MinFin) bond settlements, payments are made
offshore in US dollars upon settlement of the bearer bonds at Vneshtorgbank's
(VTB) office in Moscow. If the bonds are transported between the local
subcustodian and VTB, the investor is exposed to transportation risk as the
MinFins are bearer bonds and are not replaceable in the event they are lost,
stolen, or destroyed.
Foreign investors can also invest in treasury issues through the Moscow
Interbank Currency Exchange (MICEX). These issues settle book-entry at MICEX in
rubles only.
Transparency: The rules regulating corporate governance may not exist or
are underdeveloped and offer little protection to minority shareholders.
Disclosure and reporting requirements are not to the expected level of most
developed western nations. The accounting standards generally used in Russia are
not international standards and in many cases may be cash based, nonaccrual
method of accounting. The quality, reliability, and availability of information
on companies in Russia is lower than in most western markets.
Derivative Investments. In order to seek to hedge various portfolio
positions, including to hedge against price movements in markets in which the
Fund anticipates increasing its exposure, the Fund may invest in certain
instruments which may be characterized as derivative investments. These
investments include various types of interest rate transactions, options and
futures. Such investments also may consist of indexed securities, including
inverse securities. The Fund has express limitations on the percentage of its
assets that may be committed to certain of such investments. Other of such
investments have no express quantitative limitations, although they may be made
solely for hedging purposes, not for speculation, and may in some cases require
limitations as to the type of permissible counter-party to the transaction.
Interest rate transactions involve the risk of an imperfect correlation between
the index used in the hedging transactions and that pertaining to the securities
which are the subject of such transactions. Similarly, utilization of options
and futures transactions involves the risk of imperfect correlation in movements
in the price of options and futures and movements in the price of the securities
or interest rates which are the subject of the hedge. Investments in indexed
securities, including inverse securities, subject the Fund to the risks
associated with changes in the particular indices, which may include reduced or
eliminated interest payments and losses of invested principal.
Real Estate Investment Trusts
As described in the Prospectus, the Real Estate Portfolio intends under
normal conditions to invest in real estate investment trusts ("REITs"). REITs
pool investors' funds for investment primarily in income-producing commercial
real estate or real estate related loans. A REIT is not taxed on income
distributed to shareholders if it complies with several requirements relating to
its organization, ownership, assets, and income and a requirement that it
distribute to its shareholders at least 95% of its taxable income (other than
net capital gains) for each taxable year.
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REITs can generally be classified as follows:
--Equity REITs, which invest the majority of their assets directly in real
property and derive their income primarily from rents. Equity REITs can also
realize capital gains by selling properties that have appreciated in value.
--Mortgage REITs, which invest the majority of their assets in real estate
mortgages and derive their income primarily from interest payments.
--Hybrid REITs, which combine the characteristics of both equity REITs and
mortgage REITs.
REITs are like closed-end investment companies in that they are essentially
holding companies which rely on professional managers to supervise their
investments. A shareholder in the Real Estate Portfolio should realize that by
investing in REITs indirectly through the Portfolio, he will bear not only his
proportionate share of the expenses of the Portfolio, but also, indirectly,
similar expenses of underlying REITs.
Debt Securities
Up to 25% of the Real Estate Portfolio's total assets may be invested in
debt securities (which include for purposes of this investment policy
convertible debt securities which PRS believes have attractive equity
characteristics). The Real Estate Portfolio may invest in debt securities rated
BBB or better by Standard & Poor's Corporation ("S&P") or Baa or better by
Moody's Investor Service, Inc. ("Moody's") or, if not rated, are judged to be of
comparable quality as determined by PRS. In choosing debt securities for
purchase by the Portfolio, PRS will employ the same analytical and valuation
techniques utilized in managing the equity portion of the Real Estate
Portfolio's holdings (see "Investment Advisory and Other Services") and will
invest in debt securities only of companies that satisfy PRS' investment
criteria.
The value of the Real Estate Portfolio's investments in debt securities
will change as interest rates fluctuate. When interest rates decline, the values
of such securities generally can be expected to increase and when interest rates
rise, the values of such securities can generally be expected to decrease. The
lower-rated and comparable unrated debt securities described above are subject
to greater risks of loss of income and principal than are higher-rated fixed
income securities. The market value of lower- rated securities generally tends
to reflect the market's perception of the creditworthiness of the issuer and
short-term market developments to a greater extent than is the case with more
highly rated securities, which reflect primarily functions in general levels of
interest rates.
Risks of Investment in Real Estate Securities
Selecting REITs requires an evaluation of the merits of each type of asset
a particular REIT owns, as well as regional and local economics. Due to the
proliferation of REITs in recent years and the relative lack of sophistication
of certain REIT managers, the quality of REIT assets has varied significantly.
The Real Estate Portfolio will not invest in real estate directly, but only in
securities issued by real estate companies. However, the Portfolio may be
subject to risks similar to those associated with the direct ownership of real
estate because of its policy of concentrating in the securities of companies in
the real estate industry. These include declines in the value of real estate,
risks related to general and local economic conditions, dependence on management
skill, cash flow dependence, possible lack of availability of long-term mortgage
funds, over-building, extended vacancies of properties, decreased occupancy
rates and increased competition, increases in property taxes and operating
expenses, changes in neighborhood values and the appeal of the properties to
tenants and changes in interest rates.
In addition to these risks, equity REITs may be affected by changes in the
value of the underlying properties owned by the trusts, while mortgage REITs may
be affected by the quality of any credit extended. Further, equity and mortgage
REITs are dependent upon management skills and generally are not diversified.
Equity and mortgage REITs are also subject to potential defaults by borrowers,
self-liquidation, and the possibility of failing to qualify for tax-free status
of income under the Code and failing to maintain exemption from the Investment
Company Act of 1940. In the event of a default by a borrower or lessee, the REIT
may experience delays in enforcing its rights as a mortgagee or lessor and may
incur substantial costs associated with protecting its investments. In addition,
investment in REITs could cause the Portfolio to possibly fail to qualify as a
regulated investment company.
INVESTMENT RESTRICTIONS
The following information supplements the information included in the
Prospectus with respect to the investment restrictions to which the Portfolios
of the Fund are subject. The investment restrictions described below are
fundamental policies and may not be changed as to any Portfolio without the
approval of the lesser of (i) a majority of the Portfolio's outstanding shares
or (ii) 67% of the Portfolio's shares represented at a meeting of Fund
shareholders at which the holders of 50% or more of the Portfolio's outstanding
shares are present. No Portfolio of the Fund may:
(1) Make short sales of securities, unless at the time of sale the Portfolio
owns an equal amount of such securities.
(2) Purchase securities on margin, except that the Portfolio may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities. The deposit or payment by the Portfolio of initial or
maintenance margin in connection with financial futures contracts or related
options transactions is not considered the purchase of a security on margin.
13
<PAGE>
(3) Write, purchase or sell puts, calls or combinations thereof, except that
the Portfolios may (a) write exchange-traded covered call options on
portfolio securities and enter into closing purchase transactions with
respect to such options, and Portfolios, other than the Bond Portfolio, may
write exchange-traded covered call options on foreign currencies and secured
put options on securities and foreign currencies and write covered call and
secured put options on securities and foreign currencies traded over the
counter, and enter into closing purchase transactions with respect to such
options, (b) purchase exchange- traded call options and put options, and
such Portfolios, other than the Bond Portfolio, may purchase call and put
options traded over the counter, provided that the premiums on all
outstanding call and put options do not exceed 5% of its total assets, and
enter into closing sale transactions with respect to such options, and (c)
engage in financial futures contracts and related options transactions,
provided that the sum of the initial margin deposits on such Portfolio's
existing futures and related options positions and the premiums paid for
related options would not exceed 5% of its total assets.
(4) Borrow in excess of 10% of the market or other fair value of its total
assets, or pledge its assets to an extent greater than 15% of the market or
other fair value of its total assets. Any such borrowings shall be from
banks and shall be undertaken only as a temporary measure for administrative
purposes. Deposits in escrow in connection with the writing of covered call
options, secured put options, or the purchase or sale of financial futures
contracts and related options are not deemed to be a pledge or other
encumbrance. The Bond Portfolio will not purchase securities while temporary
bank borrowings in excess of 5% of its net assets are outstanding.
(5) Underwrite the securities of other issuers, except to the extent that in
connection with the disposition of its portfolio securities, a Portfolio may
be deemed to be an underwriter. The Mid Cap (with respect to up to one third
of its assets), International and Emerging Markets Portfolios may buy and
sell securities outside the United States which are not registered with the
SEC or marketable in the United States.
(6) Concentrate its assets in the securities of issuers which conduct their
principal business activities in the same industry, except that the Real
Estate Portfolio may so concentrate its assets and the Bond Portfolio may
invest more than 25% of its assets in a particular segment of the municipal
securities market. This restriction does not apply to obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.
(7) Make any investment in real estate, real estate limited partnerships,
commodities or commodities contracts, except that a Portfolio may (a)
purchase or sell readily marketable securities which are secured by
interests in real estate, including real estate investment and mortgage
investment trusts, and (b) engage in financial futures contracts and related
options transactions, provided that the sum of the initial margin deposits
on the Portfolio's futures and related options positions and the premiums
paid for related options would not exceed 5% of the Portfolio's total
assets, and (c) the Mid Cap, International and Emerging Markets Portfolios
may enter into foreign currency transactions.
(8) Make loans, except that the Portfolio may (a) purchase bonds, notes,
debentures or similar obligations which are customarily purchased by
institutional investors, whether publicly distributed or not, (b) invest in
repurchase agreements, provided that an aggregate of no more than 10% of the
Portfolio's net assets (taken at market value) may be invested in repurchase
agreements having maturities of more than seven days and all other illiquid
securities, and (c) loan its portfolio securities in amounts up to one third
of the market or other fair value of its total assets, subject to
restrictions described more fully above.
(9) Purchase securities of other investment companies, except that the
Portfolio may make such a purchase (a) in the open market involving no
commission or profit to a sponsor or dealer (other than the customary
broker's commission), provided that immediately thereafter (i) not more than
10% of the Portfolio's total assets would be invested in such securities and
(ii) not more than 3% of the voting stock of another investment company
would be owned by the Portfolio, or (b) as part of a merger, consolidation,
or acquisition of assets.
(10) Invest more than 5% of its total assets in the securities of any one
issuer (except the U.S. Government and, in the case of the Mid Cap,
International and Emerging Markets Portfolios any foreign government, its
agencies and instrumentalities) or purchase more than 10% of the outstanding
voting securities or more than 10% of the securities of any class of any one
issuer; however, the foregoing limitations do not apply to the Real Estate
Portfolio and Emerging Markets Portfolio. With respect to 75% of its assets,
a Portfolio which may invest in foreign securities will limit its
investments in the securities of any one foreign government, its agencies
and instrumentalities, to 5% of the Portfolio's total assets.
(11) Invest in securities of any issuer if any officer or Trustee of the Fund
or any officer or director of the Adviser owns more than 1/2 of 1% of the
outstanding securities of such issuer and all such persons own in the
aggregate more than 5% of the securities of such issuer.
(12) Invest in the aggregate more than 5% of its total assets in the securities
of any issuers (other than real estate investment trusts) which have (with
predecessors) a record of less than three years of continuous operations.
(13) Invest in warrants or rights except where acquired in units or attached to
other securities. The Mid Cap, Real Estate, International and Emerging
Markets Portfolios each may invest up to 5% of its total assets in warrants
or rights which are not in units or attached to other securities.
14
<PAGE>
(14) Purchase restricted securities (including repurchase agreements having
maturities of more than seven days) or securities for which market value
quotations are not readily available if as a result of such purchase more
than 10% of the Portfolio's total assets would be invested in the aggregate
in such securities.
(15) Invest in interests in oil, gas, or other mineral exploration or
development programs.
(16) Issue senior securities as defined in the Investment Company Act of 1940
except to the extent that it is permissible to (a) borrow money from banks
pursuant to the Trust's investment restrictions regarding the borrowing of
money, and (b) enter into transactions involving forward foreign currency
contracts and options thereon, as described in the Trust's Prospectus and
this Statement of Additional Information.
If a percentage restriction on investment or utilization of assets as set
forth is adhered to at the time an investment is made, a later change in the
percentage resulting from a change in the value or costs of the Portfolio's
assets will not be considered violate of the restriction except as provided in
(11) above.
PERFORMANCE
Performance information for each Portfolio (and Class of Portfolio) may
appear in advertisements, sales literature, or reports to shareholders or
prospective shareholders. Performance information in advertisements and sales
literature may be expressed as the "yield" of the Bond Portfolio and as "average
annual total return" and "total return" of any of the other Portfolios.
Quotations of the yield for the Bond Portfolio will be based on all
investment income per share earned during a particular 30-day period (including
dividends and interest), less expenses (including pro rata Trust expenses and
expenses applicable to each particular Portfolio or Class of Portfolio) accrued
during the period ("net investment income"), and are computed by dividing net
investment income by the value of a share of the Portfolio or Class on the last
day of the period, according to the following formula:
YIELD = 2[((a-b) + 1)(6)-1]
----
(cd)
where a = dividends and interest earned during the period by the Portfolio.
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 net asset value per share on the last day of the period.
For the thirty day period ended November 30, 1996, the yield for the Bond
Portfolio Class A shares and Class B shares was 4.99% and 4.49% respectively;
and the Emerging Markets Portfolio was 9.99% and 9.74%.
A Portfolio's average annual total return quotation is computed in
accordance with a standardized method prescribed by rules of the Securities and
Exchange Commission. The average annual total return for the Portfolio for a
specific period is found by first taking a hypothetical $1,000 investment
("initial investment") in the Portfolio's shares on the first day of the period,
adjusting to deduct the maximum sales charge, and computing the "redeemable
value" of that investment at the end of the period. The redeemable value is then
divided by the initial investment, and this quotient is taken to the Nth root (N
representing the number of years in the period) and 1 is subtracted from the
result, which is then expressed as a percentage. The calculation assumes that
all income and capital gains dividends paid by the Portfolio have been
reinvested at net asset value on the reinvestment dates during the period.
Calculation of a Portfolio's total return is subject to a standardized
formula. Total return performance for a specific period is calculated by first
taking an investment ("initial investment") in the Portfolio's shares on the
first day of the period, either adjusting or not adjusting to deduct the maximum
sales charge, and computing the "redeemable value" of that investment at the end
of the period. The total return percentage is then determined by subtracting the
initial investment from the redeemable value and dividing the remainder by the
initial investment and expressing the result as a percentage. The calculation
assumes that all income and capital gains dividends by the Portfolio have been
reinvested at net asset value on the reinvestment dates during the period. Total
return may also be shown as the increased dollar value of the hypothetical
investment over the period. Total return calculations that do not include the
effect of the sales charge would be reduced if such charge were included.
The manner in which total return will be calculated for public use is
described above. The following table summarizes the calculation of total return
for each Portfolio, where applicable, through November 30, 1996.
The following table illustrates average annual total return for each
Portfolio for the 1, 5 and 10 year periods ended November 30, 1996.
15
<PAGE>
AVERAGE ANNUAL TOTAL RETURN AS OF NOVEMBER 30, 1996
<TABLE>
<CAPTION>
PERIODS ENDED
------------------------
PORTFOLIO 1 YEAR 5 YEAR SINCE INCEPTION*
- ----------------- --------- --------- ------------------
<S> <C> <C> <C>
Bond
Class A -0.66% 6.81% 7.89%
Class B -0.35% N/A 4.42%
Mid Cap
Class A 8.12% 12.12% 16.84%
Class B 8.85% N/A 16.10%
International
Class A 13.38% 8.44% 7.62%
Class B 14.16% N/A 6.87%
Real Estate
Class A 23.11% N/A 18.80%
Class B 24.25% N/A 19.24%
Emerging Markets
Class A 52.53% N/A 45.54%
Class B 54.94% N/A 47.49%
</TABLE>
- -------------
*The Bond, Mid Cap, and International Portfolios Class A commenced operations on
July 15, 1988, November 1, 1989 and November 1, 1989, respectively. Bond
Portfolio Class B commenced operations on March 16, 1994. Mid Cap and
International Portfolios Class B commenced operations on July 18, 1994 and July
15, 1994, respectively. The Real Estate and Emerging Markets Portfolios Class A
and B commenced operations on March 1, 1995 and September 5, 1995 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 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.
PERFORMANCE COMPARISONS
Each Portfolio or Class of Portfolio 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 rating services such as Morningstar, Inc. Additionally, a
Portfolio 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, Stanger's Mutual Fund Monitor, The Stanger Register, Stanger's
Investment Adviser, The Wall Street Journal, New York Times, Consumer Reports,
Registered Representative, Financial Planning, Financial Services Weekly,
Financial World, U.S. News and World Report, Standard and Poor's The Outlook,
Investor's Daily and Personal Investor. The total return may be used to compare
the performance of the Portfolios against certain widely acknowledged outside
standards or indices for stock and bond market performance, such as the Standard
& Poor's 500 Stock Index (the "S&P 500"), S&P 400, Dow Jones Industrial Average,
Europe Australia Far East Index (EAFE), NAREIT Equity Index, Consumer Price
Index, J.P. Morgan Emerging Markets Bond Index, Lehman Brothers Municipal Bond
Index, Lehman Brothers Corporate Index and Lehman Brothers T-Bond Index. The S&P
500 is a commonly quoted measure of stock market performance and represents
common stocks of companies of varying sizes segmented across 90 different
industries which are listed on the New York Stock Exchange, the American Stock
Exchange and traded over the NASDAQ National Market System.
PORTFOLIO TURNOVER
The Portfolios pay brokerage commissions for purchases and sales of
portfolio securities. A high rate of portfolio turnover generally involves a
correspondingly greater amount of brokerage commissions and other costs which
must be borne directly by a Portfolio and thus indirectly by its shareholders.
It may also result in the realization of larger amounts of short-term capital
gains, which are taxable to shareholders as ordinary income. If such rate of
turnover exceeds 100%, the Portfolios will pay more in brokerage commissions
than would be the case if they had lower portfolio turnover rates.
16
<PAGE>
TRUSTEES AND OFFICERS
The Trustees and Officers of the Fund and their business affiliations for
the past five years are set forth below and, unless otherwise noted, the address
of each Trustee and executive officer is 56 Prospect Street, Hartford,
Connecticut, 06115-0480. On February 20, 1996, the shareholders elected to fix
the number of trustees at fourteen and to elect Francis E. Jeffries, Everett L.
Morris and Calvin J. Pedersen to fill the vacancies caused by the increase. The
trustees and executive officers are listed below.
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Fund During the Past 5 Years
- --------------------------- ----------------- -------------------------------------------------------------------------
<S> <C> <C>
C. Duane Blinn (69) Trustee Partner in the law firm of Day, Berry & Howard. Director/Trustee,
Day, Berry & Howard Phoenix Funds (1980-present). Trustee, Phoenix-Aberdeen Series Fund
City Place and Phoenix Duff & Phelps Institutional Mutual Funds (1996-present).
Hartford, CT 06103 Director/Trustee, the National Affiliated Investment Companies
(until 1993).
Robert Chesek (62) Trustee Trustee/Director, Phoenix Funds (1981-present) and Chairman
49 Old Post Road (1989-1994). Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff
Wethersfield, CT 06109 & Phelps Institutional Mutual Funds (1996-present). Director/Trustee,
the National Affiliated Investment Companies (until 1993). Vice
President, Common Stock, Phoenix Home Life Mutual Insurance
Company (1980-1994).
E. Virgil Conway (67) Trustee Chairman (1992-present), Metropolitan Transportation Authority.
9 Rittenhouse Road Trustee/Director, Consolidated Edison Company of New York, Inc.
Bronxville, NY 10708 (1970-present), Pace University (1978-present), Atlantic Mutual
Insurance Company (1974-present), HRE Properties (1989-present),
Greater New York Councils, Boy Scouts of America (1985-present),
Union Pacific Corp. (1978-present), Blackrock Fund for Fannie Mae
Mortgage Securities (Advisory Director) (1990-present), Centennial
Insurance Company (1974-present), Josiah Macy, Jr., Foundation
(1975-present), and The Harlem Youth Development Foundation
(1987-present). Chairman, Audit Committee of the City of New York
(1981-1996). Director/Trustee, the National Affiliated Investment
Companies (until 1993). 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). Director, Accuhealth
(1994-present), Trism, Inc. (1994-present), and Realty Foundation of
New York (1972-present). Chairman, New York Housing Partnership
Development Corp. (1981-present), and Blackrock Fannie Mae
Mortgage Securities Fund (Advisory Director) (1989-1996) and
Advisory Director, Fund Directions (1993-present). Chairman,
Financial Accounting Standards Advisory Council (1992-1995).
Harry Dalzell-Payne (67) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee, Phoenix-
330 East 39th Street Aberdeen Series Fund and Phoenix Duff & Phelps Institutional Mutual
Apartment 29G Funds (1996-present). Director, Duff & Phelps Utilities Tax-Free Income
New York, NY 10016 Inc. and Duff & Phelps Utility and Corporate Bond Trust Inc.
(1995-present). Director, Farragut Mortgage Co., Inc. (1991-1994).
Director/Trustee, the National Affiliated Investment Companies (1983-
1993). Formerly a Major General of the British Army.
*Francis E. Jeffries (66) Trustee Director and Chairman of the Board, Phoenix Duff & Phelps
6585 Nicholas Blvd. Corporation (1995-present). Director/Trustee, Phoenix Funds (1995-
Apt. 1601 present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff &
Naples, FL 33963 Phelps Institutional Mutual Funds (1996-present). Director, Duff &
Phelps Utilities Income Fund (1987-present), Duff & Phelps Utilities
Electric Company (1984-present). Director (1989-1995), Chairman of
the Board (1993-1995), President (1989-1993), and Chief Executive
Officer (1989-1995), Duff & Phelps Corporation.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Fund During the Past 5 Years
- ---------------------------- ---------------- ------------------------------------------------------------------------
<S> <C> <C>
Leroy Keith, Jr. (58) Trustee Chairman and Chief Executive Officer, Carson Products Company
64 Ross Road (1995-present). Director/Trustee, Phoenix Funds (1980-present).
Savannah, GA 31405 Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director Equifax Corp.
(1991-present) and Keystone International Fund, Inc. (1989-present).
Trustee, Keystone Liquid Trust, Keystone Tax Exempt Trust, Keystone
Tax Free Fund, Master Reserves Tax Free Trust, and Master Reserves
Trust. Director/Trustee, the National Affiliated Investment Companies
(until 1993). Director, Blue Cross/Blue Shield (1989-1993) and First
Union Bank of Georgia (1989-1993). President, Morehouse College
(1987-1994). Chairman and Chief Executive Officer, Keith Ventures
(1994-1995).
*Philip R. McLoughlin (50) Trustee and Director, Vice Chairman and Chief Executive Officer, Phoenix Duff &
President Phelps Corporation (1995-present). Director (1994-present) and
Executive Vice President, Investments, Phoenix Home Life Mutual
Insurance Company (1988-present). Director/Trustee and President,
Phoenix Funds (1989-present). Trustee, 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, 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), and
Director, Phoenix Charter Oak Trust Company (1996-present). Director/
Trustee, the National Affiliated Investment Companies (until 1993).
Director (1994-present), Chairman (1996-present) and Chief Executive
Officer (1995-1996), National Securities & Research Corporation, and
Director and President, Phoenix Securities Group, Inc. (1993-1995).
Director (1992-present) and President (1992-1994) W.S. Griffith & Co.,
Inc. and Director (1992-1995) and President (1992-1994), Townsend
Financial Advisers, Inc. Director and Vice President, PM Holdings,
Inc. (1985-present).
Everett L. Morris (68) Trustee Vice President, W.H. Reaves and Company (1993-present). Director/
164 Laird Road Trustee, Phoenix Funds (1995-present). Trustee, Duff & Phelps Mutual
Colts Neck, NJ 07722 Funds (1994-present). Trustee, Phoenix-Aberdeen Series Fund and
Phoenix Duff & Phelps Institutional Mutual Funds (1996-present).
Director, Duff & Phelps Utilities Tax-Free Income Inc. (1991-present),
Incorporated (1989-1993). Senior Executive Vice President and Chief
Financial Officer, Public Service Electric and Gas Company (1986-
1992). Director, First Fidelity Bank, N.A., N.J. (1984-1991).
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------- ---------------- ---------------------------------------------------------------------------
<S> <C> <C>
*James M. Oates (50) Trustee Managing Director, The Wydown Group (1994-present). Chairman,
60 State Street IBEX Capital Markets LLC (1997-present). Director Phoenix Duff &
Suite 950 Phelps Corporation (1995-present). Director/Trustee, Phoenix Funds
Boston, MA 02109 Chairman, IBEX Capital Markets LLC (1987-present). Trustee,
Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director, Govett Worldwide
Opportunity Funds, Inc. (1991-present), Blue Cross & Blue Shield of
New Hampshire (1994-present), Stifel Financial (1996-present),
Investors Bank and Trust Corporation (1995-present), Investors
Financial Services Corporation (1995-present) and Plymouth Rubber
Co. (1995-present). Member, Chief Executives Organization (1996-
present). Director/Trustee, the National Affiliated Investment
Companies (until 1993). Director (1984-1994), President (1984-1994)
and Chief Executive Officer (1986-1994).
*Calvin J. Pedersen (55) Trustee Director and President, Phoenix Duff & Phelps Corporation (1995-
55 East Monroe Street present). Director/Trustee, Phoenix Funds (1984-present). Trustee,
Suite 3600 Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Chicago, IL 60603 Institutional Mutual Funds (1996-present). President and Chief
Executive Officer Duff & Phelps Utilities Tax-Free Income Inc. (1995-
present), Duff & Phelps Utilities Income Fund. (since inception), and
Duff & Phelps Utility and Corporate Bond Trust Inc. (1995-present).
Director (1986-1995), President (1993-1995) and Executive Vice
President (1992-1993), Duff & Phelps Corporation.
Philip R. Reynolds (69) Trustee Director/Trustee, Phoenix Funds (1984-present). Trustee, Phoenix-
43 Montclair Drive Aberdeen Series Fund and Phoenix Duff & Phelps Institutional Mutual
West Hartford, CT 06107 Funds (1996-present). Director, Vestaur Securities, Inc. (1972-present).
Trustee and Treasurer, J. Walton Bissell Foundation Inc. (1988-
present). Director/Trustee, the National Affiliated Investment
Companies (until 1993).
Herbert Roth, Jr. (68) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee, Phoenix-
134 Lake Street Aberdeen Series Fund and Phoenix Duff & Phelps Institutional Mutual
P.O. Box 909 Funds (1996-present). Director, Boston Edison Company (1972-
Sherborn, MA 01770 present), Landauer, Inc. (medical services) (1970-present), Tech Ops./
Sevcon, Inc. (electronic controllers) (1987-present), Key Energy Group
(oil rig service) (1988-1994), and Mark IV Industries (diversified
manufacturer) (1985-present). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
Richard E. Segerson (51) Trustee Director/Trustee, Phoenix Funds, (1993-present). Trustee, Phoenix-
102 Valley Road Aberdeen Series Fund and Phoenix Duff & Phelps Institutional Mutual
New Canaan, CT 06840 Funds (1996-present). Managing Director, Mullin Associates (1993-
present). Vice President and General Manager, Coates & Clark, Inc.
(previously Tootal American, Inc.) (1991-1993). Director/ Trustee, the
National Affiliated Investment Companies (1984-1993).
Lowell P. Weicker, Jr. (65) Trustee Trustee/Director, the Phoenix Funds (1995-present). Trustee, Phoenix-
731 Lake Avenue Aberdeen Series Fund and Phoenix Duff & Phelps Institutional Mutual
Greenwich, CT 06830 Funds (1995-present). Director, UST Inc. (1995-present) and HPSC Inc.
(1995-present). Chairman, Dresing, Lierman, Weicker (1995-present).
Director, Duty Free International (1997-present). Former Governor of the
State of Connecticut (1991-1995). Director, UST, Inc. (1995-present).
- -----------
* Indicates that the Trustee is an "interested person" of the Fund within the meaning of the definition set forth in Section
2(a)(19) of the Investment Company Act of 1940.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Fund During the Past 5 Years
- ------------------------ ---------------- -------------------------------------------------------------------------
<S> <C> <C>
Michael E. Haylon (39) Executive Director and Executive Vice President-Investments, Phoenix Duff &
Vice Phelps Corporation (1995-present). Senior Vice President, Securities
President Investments, Phoenix Home Life Mutual Insurance Company (1993-
1995). Executive Vice President, the Phoenix Funds (1995-present),
Phoenix-Aberdeen Series Fund (1996-present), and Vice President,
Phoenix Duff & Phelps Institutional Mutual Funds (1996-present).
Director (1994-present), President (1995-present), and Executive Vice
President (1994-1995), Phoenix Investment Counsel, Inc. Director
(1994-present), President (1996-present) and Executive Vice President
(1994-1996), National Securities & Research Corporation. Director,
Phoenix Equity Planning Corporation (1995-present). Various other
positions with Phoenix Home Life Insurance Company (1990-1993).
David R. Pepin (54) Executive Executive Vice President, Phoenix Funds, Phoenix-Aberdeen Series
Vice Fund and Phoenix Duff & Phelps Institutional Mutual Funds (1996-
President present). Director, Phoenix Investment Counsel, Inc., National
Securities & Research Corporation and Phoenix Equity Planning
Corporation (1996-present). Executive Vice President, Mutual Fund
Sales and Operations, Phoenix Equity Planning Corporation (1996-
present). Managing Director, Phoenix-Aberdeen International Advisors,
LLC (1996-present). Executive Vice President (1996-present) and
Director (1997-present), Phoenix Duff & Phelps Corporation. Vice
President, Phoenix Home Life Mutual Insurance Company (1994-
1995). Vice Corporation (1980-1994).
William J. Newman (57) Senior Executive Vice President (1995-present) and Chief Investment
Vice Strategist (1996-present), Phoenix Investment Counsel, Inc. Senior Vice
President President (1995-1996), Executive Vice President and Chief Investment
Strategist (1996-present), National Securities & Research Corporation.
Senior Vice President, Phoenix Equity Planning Corporation (1995-
1996). Vice President, Common Stock and Chief Investment Strategist,
Phoenix Home Life Insurance Company (April, 1995-November, 1995).
Senior Vice President, Phoenix Strategic Equity Series Fund (1996-
present), The Phoenix Edge Series Fund (1996-present), Phoenix
Multi-Portfolio Fund (1995-present), Phoenix Income and Growth Fund
(1996-present), Phoenix Series Fund (1995-present), Phoenix Strategic
Allocation Fund, Inc. (1996-present), Phoenix Worldwide Opportunities
Fund (1996-present), Phoenix Duff & Phelps Institutional Funds
(1996-present), and Phoenix-Aberdeen Series Fund (1996-present).
Chief Investment Strategist, Kidder, Peabody Co., Inc. (1993-1994).
Managing Director, Equities, Bankers Trust Company (1991-1993).
David L. Albrycht (35) Vice Managing Director, Fixed Income (1996-present) and Vice President
President (1995-1996), Phoenix Investment Counsel, Inc. Managing Director,
Fixed Income (1996-present) and Investment Officer (1994-1996),
National Securities & Research Corporation. Portfolio Manager (1994-
1995) and Director, Public Fixed Income (1990-1994), Phoenix Home
Life Mutual Insurance Company. Vice President, Phoenix Multi-Sector
Short Term Bond Fund (1993-present) and Phoenix Multi-Sector Fixed
Income Fund, Inc. (1994-present).
Matthew Considine (34) Vice Director, Equity Research, (1996-present) and Equity Analyst (1994-
President 1996) Phoenix Investment Counsel, Inc. and Director, Equity Research,
National Securities & Research Corporation (1996-present). Technology
Analyst, Robertson Stephens Investment Management (1993-1994) and
Vice President/Analyst-Portfolio Manager, CIGNA Investments
(1992-1993).
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Fund During the Past 5 Years
- ---------------------------- ---------------- -----------------------------------------------------------------------
<S> <C> <C>
Jeanne H. Dorey (35) Vice Managing Director, Equities (1996-present) and Vice President (1993-
President 1996) Phoenix Investment Counsel, Inc. Managing Director, Equities
(1996-present) and Vice President (1993-1996), National Securities &
Research Corporation, Inc. Portfolio Manager, International (1992-
1993) and Portfolio Manager, Common Stock (1993-1996), Phoenix
Home Life Mutual Insurance Company. Vice President, The Phoenix
Edge Series Fund (1993-present) and Phoenix Worldwide Opportunities
Fund (1993-present).
Timothy M. Heaney (32) Vice Director, Fixed Income Research (1996-present), Investment Analyst
President (1995-1996), Phoenix Investment Counsel, Inc. Director, Fixed Income
Research (1996-present), National Securities & Research Corporation.
Investment Analyst, Phoenix Home Life Mutual Insurance Company
(1992-1994). Vice President, Phoenix California Tax Exempt Bonds,
Inc. (1996-present).
William E, Keen III (33) Vice Assistant Vice President, Phoenix Equity Planning Corporation (1996-
100 Bright Meadow Blvd. President present). Vice President, Phoenix Funds, Phoenix-Aberdeen Series
PO Box 2200 Fund, and Phoenix Duff & Phelps Institutional Mutual Funds (1996-
Enfield, CT 06083-2200 present). Assistant Vice President, US Affinity Funds, US Affinity
Investments LP, (1994-1995). Manager, Fund Administration, SEI
Corporation (1991-1994).
Peter S. Lannigan (36) Vice Director, Fixed Income Research (1996-present) and Vice President
President (1995-1996), Phoenix Investment Counsel, Inc. Director, Fixed Income
Research (1996-present), National Securities & Research Corporation,
Inc. Director, Public Fixed Income, Phoenix Home Life Mutual
Insurance Company (1993-1995). Various positions with Standard &
Poor's Corporation (1989-1993).
David Lui (37) Vice Portfolio Manager, Equities, Phoenix Investment Counsel, Inc. (1996-
President present) and Portfolio Manager, Equities, National Securities &
Research Corporation (1996-present). Associate Portfolio Manager,
International Portfolios, Phoenix Home Life Mutual Insurance Company
(1995-1996). Vice President, The Phoenix Edge Series Fund, (1996-
present) and Phoenix Worldwide Opportunities Fund (1996-present).
Vice President, Asian Equities, Alliance Capital Management (1993-
1995) and Associate, Global Markets, Bankers Trust (1990-1993).
Thomas S. Melvin, Jr. (53) Vice Managing Director, Equities, (1996-present), Vice President (1994-
President 1996) and Executive Vice President (1992-1994), Phoenix Investment
Counsel, Inc. and Managing Director, Equities, (1996-present), Vice
President (1994-1996) and Executive Vice President (1993-1994),
National Securities & Research Corporation. Portfolio Manager,
Common Stock, Phoenix Home Life Mutual Insurance Company (1991-
1995). Vice President, Phoenix Duff & Phelps Institutional Mutual
Funds (1996-present).
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Fund During the Past 5 Years
- ------------------------- ---------------- ----------------------------------------------------------------------------
<S> <C> <C>
William R. Moyer (52) Vice Senior Vice President and Chief Financial Officer, Phoenix Duff & Phelps
100 Bright Meadow Blvd. President Corporation (1995-present). Vice President, Investment Products Finance,
PO Box 2200 Phoenix Home Life Mutual Insurance Company (1990-1995). Senior Vice
Enfield, CT 06083-2200 President (1990-present), Chief Financial Officer (1996-present), Finance
(until 1996) and Treasurer (1994-1996), Phoenix Equity Planning
Corporation. Senior Vice President (1990-present), Chief Financial Officer
(1996-present), Finance (until 1996) and Treasurer (1994-present),
Phoenix Investment Counsel, Inc. Senior Vice President (1994-present),
Chief Financial Officer (1996-present), Finance (until 1996), and
Treasurer (1994-present), National Securities & Research Corporation.
Vice President, Phoenix Funds (1990-present) and Phoenix-Aberdeen
Series Fund (1996-present). Vice President, the National Affiliated
Companies (until 1993). Senior Vice President, Finance, Phoenix
Securities Group, Inc. (1993-present). Senior Vice President and Chief
Financial Officer (1993-1995) and Treasurer (1994-1995) W.S. Griffith &
Co., Inc. and Townsend Financial Advisers, Inc. Senior Vice President and
Chief Financial Officer, Duff & Phelps Investment Management Co.
(1996-Present).
Scott C. Noble (50) Vice Senior Vice President, Real Estate, Phoenix Home Life Mutual
President Insurance Company (1991-present). Vice President, The Phoenix Edge
Series Fund (1995-present). Director (1991-present), Chief Executive
Officer (1991-present) and President (1991-1995), Phoenix Realty
Advisors, Inc. Director, President and Chief Executive Officer, Phoenix
Realty Investors, Inc. (1994-present). Director (1994-present) and Chief
Executive Officer (1995-present), Phoenix Realty Securities, Inc.
Director (1994-present), President (1994-present) and Chief Executive
Officer (1995-present), Phoenix Realty Group, Inc. Director and
Executive Vice President, Phoenix Real Estate Securities, Inc. (1993-
present). Director (1991-present) and President (1993-present), Phoenix
Founders, Inc.
Barbara Rubin (43) Vice Vice President, Real Estate (1995-present) and Managing Director,
President Real Estate (1992-1995) Phoenix Home Life Mutual Insurance
Company. Vice President, The Phoenix Edge Series Fund (1995-
present). Director, Phoenix Home Life Federal Credit Union (1985-
present). Chairperson, VNA Health Care, Inc. (1991-present). Vice
President, Broad Park Development Corporation (until 1992). Vice
President, Phoenix American Life Insurance Company (1994-present).
Vice President, 238 Columbus Blvd. Inc. (1991-present). Director
(1988-present), President (1988-1993) and Vice President (1993-
present), Phoenix Founders, Inc. Vice President (1993-present),
Phoenix Real Estate Securities, Inc. Executive Vice President, Phoenix
Realty Advisors, Inc. (1991-1994). Executive Vice President, Phoenix
Realty Group, Inc. (1994-present), President (1995-present), Executive
Vice President (1994-1995), Phoenix Realty Securities, Inc. and
Executive Vice President, Phoenix Realty Investors, Inc.
(1994-present).
Leonard J. Saltiel (43) Vice Managing Director, Operations and Service (1996-present), Senior Vice
100 Bright Meadow Blvd. President President, (1994-1996), Phoenix Equity Planning Corporation. Phoenix
PO Box 2200 Funds Vice President, (1994-present), Phoenix Duff & Phelps Fund
Enfield, CT 06083-2200 (1996-present), and National Securities & Research Corporation (1994-
1996). Vice President, Investment Operations, Phoenix Home Life
Mutual Insurance Company. Various positions with Phoenix Home Life
Mutual Insurance Company (1987-1994).
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------- ---------------- -------------------------------------------------------------------------
<S> <C> <C>
James D. Wehr (39) Vice Managing Director, Fixed Income (1996-present), Vice President
President (1991-1996), Phoenix Investment Counsel, Inc. Managing Director,
Fixed Income (1996-present), Vice President (1993-1996), National
Securities & Research Corporation. Vice President, Phoenix Multi-
Portfolio Fund (1988-present), Phoenix Series Fund (1990-present),
The Phoenix Edge Series Fund (1991-present), Phoenix California Tax
Exempt Bonds, Inc. (1993-present) and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Managing Director, Public
Fixed Income, Phoenix Home Life Insurance Company (1991-1995).
Various positions with Phoenix Home Life Mutual Insurance Company
(1981-1991).
Nancy G. Curtiss (44) Treasurer Treasurer (1996-present), Vice President, Fund Accounting (1994-1996),
Phoenix Equity Planning Corporation. Treasurer, Phoenix Funds (1994-
present), Phoenix-Aberdeen Series Fund (1996-present), and Phoenix Duff
& Phelps Institutional Mutual Funds (1996-present). Second Vice
President and Treasurer, Fund Accounting, Phoenix Home Life Mutual
Insurance Company (1994-1995). Various positions with Phoenix Home
Life Mutual Insurance Company (1987-1994).
G. Jeffrey Bohne (49) Secretary Vice President, Mutual Fund Customer Service, Phoenix Equity Planning
101 Munson Street Corporation (1996-present). Vice President, Transfer Agent Operations,
Greenfield, MA 01301 Phoenix Equity Planning Corporation (1993-1996). Clerk, Phoenix
Investment Counsel, Inc. (1995-present). Secretary, the Phoenix Funds
(1993-present), and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Clerk and Secretary, Phoenix-Aberdeen Series Fund
(1996-present). Vice President and General Manager, Phoenix Home Life
Mutual Insurance Company (1993-present). Assistant Vice President,
Phoenix Home Life Mutual Insurance Company (1992-1993).
</TABLE>
For services rendered to the Fund for the fiscal year ended November 30,
1996, the Trustees received aggregate of $129,010. For services on the Boards of
Directors/Trustees of the Phoenix Funds, each Trustee who is not a full-time
employee of the Adviser or any of its affiliates currently receives a retainer
at the annual rate of $40,000 and a fee of $2,500 per joint meeting of the
Boards. Each Trustee who serves on the Audit Committee receives a retainer at
the annual rate of $2,000 and a fee of $2,000 per joint Audit Committee meeting
attended. Each Trustee who serves on the Nominating Committee receives a
retainer at the annual rate of $1,000 and a fee of $1,000 per joint Nominating
Committee meeting attended. Each Trustee who serves on the Executive Committee
and who is not an interested person of the Fund receives a retainer at the
annual rate of $1,000 and $1,000 per joint Executive Committee meeting attended.
The function of the Executive Committee is to serve as a contract review,
compliance review and performance review delegate of the full Board of Trustees.
Trustee fee costs are allocated equally to each of the Portfolios and the Funds
within the Phoenix Funds complex. The foregoing fees do not include
reimbursement of expenses incurred in connection with meeting attendance.
Officers and interested Trustees of the Fund are compensated for their services
by the Adviser and receive no compensation from the Fund. Any other interested
person not compensated by the Adviser receives no fees 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 11 Funds
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
- ----------------------- --------------- ---------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
C. Duane Blinn $ 12,465* $ 60,500*
Robert Chesek $ 10,880 $ 53,500
E. Virgil Conway+ $ 12,690 $ 61,750
Harry Dalzell-Payne+ $ 10,880 $ 53,750
Francis E. Jeffries $ 0 $ 0
Leroy Keith, Jr. $ 10,880 None None $ 53,500
Philip R. McLoughlin+ $ 0 for any for any $ 0
Everett L. Morris+ $ 10,215 Trustee Trustee $ 50,750
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Total
Compensation
Pension or From Fund and
Aggregate Retirement Benefits Estimated Fund Complex
Compensation Accrued as Part Annual Benefits 11 Funds
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
- --------------------- --------------- ---------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
James M. Oates+ $11,940 $58,000
Calvin J. Pedersen $ 0 $ 0
Philip R. Reynolds $10,880 $53,500
Herbert Roth, Jr.+ $13,355* $64,750
Richard E. Segerson $12,360 $60,250
Lowell P. Weicker $12,465 $60,500
</TABLE>
- -------------
*At the request of Messrs. Blinn and Roth, arrangements have been established to
permit their compensation (and the earnings thereon) to be deferred until their
retirement or resignation from the Board of Trustees, or their death or
permanent disability.
+Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are members
of the Executive Committee.
THE INVESTMENT ADVISERS
The offices of Phoenix Investment Counsel, Inc., (PIC) are located at 56
Prospect Street, Hartford, Connecticut 06115-0480. PIC was organized in 1932 as
John P. Chase, Inc. In addition to the Fund, the PIC also serves as investment
adviser to The Phoenix Edge Series Fund (all Series other than Real Estate
Securities Series and Aberdeen New Asia Series), Phoenix Series Fund, Phoenix
Strategic Allocation Fund, Inc., Phoenix Strategic Equity Series Fund (Strategic
Theme Fund and Small Cap Fund) and as subadviser to Chubb America Fund, Inc.,
JNL Series Trust, and SunAmerica Series Trust among others. The offices of
Phoenix Realty Securities, Inc. (PRS) are located at 38 Prospect Street,
Hartford, Connecticut 06115. PRS was formed on August 25, 1994 and has no other
account which it manages and no prior operating history.
All of the outstanding stock of the PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning"), a subsidiary of Phoenix Duff & Phelps
Corporation. Prior to November 1, 1995, PIC and Equity Planning were indirect,
wholly-owned subsidiaries of Phoenix Home Life Mutual Insurance Company
("Phoenix Home Life") of Hartford, Connecticut. All of the outstanding stock of
PRS is owned by Phoenix Realty Group, Inc. an indirect subsidiary of Phoenix
Home Life. Phoenix Home Life is in the business of writing ordinary and group
life and health insurance and annuities. Equity Planning, a mutual fund
distributor, acts as the national distributor of the Fund's shares and as
Financial Agent of the Fund. The principal office of Phoenix Home Life is
located at One American Row, Hartford, Connecticut, 06115. The principal office
of Equity Planning is located at 100 Bright Meadow Boulevard, Enfield,
Connecticut, 06083-2200.
David L. Albrycht, Matthew Considine, Jeanne H. Dorey, Michael E. Haylon,
Timothy M. Heaney, Peter S. Lannigan, David Lui, Thomas S. Melvin, Jr., William
R. Moyer, William J. Newman and James D. Wehr, officers of the Fund, are
officers of PIC. Scott C. Noble and Barbara Rubin, officers of the Fund, are
officers of PRS. Mr. Philip R. McLoughlin, an officer and Trustee of the Fund,
is a director of PIC and PRS. Michael E. Haylon and David R. Pepin, are
directors of PIC.
The investment advisory agreements provide that the Fund will bear all
costs and expenses (other than those specifically referred to as being borne by
the Adviser) incurred in the operation of the Fund. Such expenses include, but
shall not be limited to, all expenses incurred in the operation of the Fund and
any public offering of its shares, including, among others, interest, taxes,
brokerage fees and commissions, fees of Trustees who are not employees of PIC or
PRS or any of its affiliates, expenses of Trustees, and shareholders' meetings,
expenses of printing and mailing proxy soliciting material, expenses of the
insurance premiums for fidelity and other coverage, expenses of the repurchase
and redemption of shares, expenses of the issue and sale of shares (to the
extent not borne by Equity Planning under its agreement with the Fund), expenses
of printing and mailing share certificates representing shares of the Fund,
association membership dues, charges of custodians, transfer agents, dividend
disbursing agents and financial agents, and bookkeeping, auditing and legal
expenses. The Fund will also pay the fees and bear the expense of registering
and maintaining the registration of the Fund and its shares with the Securities
and Exchange Commission and registering or qualifying its shares under state or
other securities laws and the expense of preparing and mailing prospectuses and
reports to shareholders. If authorized by the Trustees, the Fund will also pay
for extraordinary expenses and expenses of a non-recurring nature which may
include, but shall not be limited to, the reasonable cost of any reorganization
or acquisition of assets and the cost of legal proceedings to which the Fund is
a party.
Each Portfolio will pay expenses incurred in its own operation and will
also pay a portion of the Fund's general administration expenses allocated on
the basis of the asset values of the respective Portfolios.
For managing, or directing the management of the investments of each
Portfolio, PIC is entitled to a fee for the Bond Portfolio, payable monthly, at
the annual rate of 0.45% of the average of the aggregate daily net asset values
of the Portfolio up to $1 billion; 0.40% of such value between $1 billion and $2
billion; and 0.35% of such value in excess of $2 billion. PIC is entitled to a
monthly fee for the Mid Cap Portfolio, Emerging Markets Portfolio and
International Portfolio at the annual rate of 0.75% of the average
24
<PAGE>
of the aggregate daily net asset values of each Portfolio up to $1 billion;
0.70% of such value between $1 billion and $2 billion; and 0.65% of such value
in excess of $2 billion. For managing or directing the investments of the Real
Estate Portfolio, PRS is entitled to a fee payable monthly, at the annual rate
of 0.75% of the average of the aggregate daily net asset values of the Portfolio
up to $1 billion; 0.70% of such value between $1 billion and $2 billion; and
0.65% of such value in excess of $2 billion.
The investment advisory agreements provide that the applicable adviser will
reimburse the Fund for the amount, if any, by which the total operating and
management expenses of any Portfolio (including the investment adviser's
compensation, but excluding interest, taxes, brokerage fees and commissions and
extraordinary expenses) for any fiscal year exceed the level of expenses which
such Portfolio is permitted to bear under the most restrictive expense
limitation (which is not waived) imposed on mutual funds by any state in which
shares of such Portfolio are then qualified for sale. Currently the most
restrictive state expense limitation provisions limit such expenses of any
Portfolio of the Fund to 2.5% of the first $30 million of average net assets, 2%
of the next $70 million of such net assets and 1.5% of such net assets in excess
of $100 million. Such reimbursement, if any, will be made by the applicable
adviser to the Fund within five days after the end of each month. In the event
legislation were to be adopted in each state so as to eliminate this
restriction, the Fund would take such action necessary to eliminate this expense
limitation.
For its services to the Bond, Mid Cap, International Portfolios and
Emerging Markets Portfolios of the Fund during the fiscal year ended November
30, 1996, PIC received a fee of $5,476,008. For its services to the Real Estate
Portfolio PRS during the year ended November 30, 1996, PRS received a fee of
$168,177. Of these totals, PIC received fees from each Portfolio as follows:
<TABLE>
<CAPTION>
1994 1995 1996
<S> <C> <C> <C>
Mid Cap $3,277,801 $3,394,485 $3,579,657
International 1,150,757 1,112,314 1,071,572
Bond 735,312 669,273 646,989
Emerging Markets -- 19,244 177,790
</TABLE>
The investment advisory agreements also provide that each adviser shall not
be liable to the Fund or to any shareholder of the Fund for any error of
judgment or mistake of law or for any loss suffered by the Fund or by any
shareholder of the Fund in connection with the matters to which the agreement
relates, except a loss resulting from willful misfeasance, bad faith, gross
negligence or reckless disregard on the part of such adviser in the performance
of its duties thereunder.
In accordance with the Sub-Advisory Agreement between the Fund and ABKB,
ABKB is paid a monthly fee at the annual rate of 0.45% of the average aggregate
daily net asset values of the Portfolio up to $1 billion; 0.35% of such value
between $1 billion and $2 billion; and 0.30% of such value in excess of $2
billion. The sub-advisory agreement relating to the Real Estate Portfolio
provides, among other things, that ABKB shall maintain certain records for the
Portfolio, effectuate the purchase and sale of securities for the Portfolio and
provide quarterly reports to the Trustees. In addition, ABKB provides investment
research, advice and analysis to PRS, including, without limitation, initial and
ongoing assessment of national, regional and specific real estate markets and
real estate related equities, and detailed analysis of real estate investment
trust assets considered for purchase and held by the Portfolio with respect to,
among other things, local market conditions, fair market value, overall property
condition, insurance coverages and deductibles, tenant composition and
vacancies, compliance matters relating to zoning, handicap accessibility,
environmental, and other applicable codes, and such other matters as PRS shall
from time to time request.
Provided it has been approved by a vote of the majority of the outstanding
shares of a Portfolio of the Fund which is subject to its terms and conditions,
each investment advisory agreement continues from year to year with respect of
such Portfolio so long as (1) such continuance is approved at least annually by
the Trustees or by a vote of the majority of the outstanding shares of such
Portfolio and (2) the terms and any renewal of the agreement with respect to
such Portfolio have been approved by the vote of a majority of the Trustees who
are not parties to the agreement or interested persons, as that term is defined
in the Investment Company Act of 1940, of the Fund or the relevant adviser, cast
in person at a meeting called for the purpose of voting on such approval. On
sixty days' written notice and without penalty the agreement may be terminated
as to the Fund or as to a Portfolio by the Trustees or by the relevant adviser
and may be terminated as to a Portfolio by a vote of the majority of the
outstanding shares of such Portfolio. The Agreement automatically terminates
upon its assignment (within the meaning of the Investment Company Act). The
agreement provides that upon its termination, or at the request of the relevant
adviser, the Fund will eliminate all reference to Phoenix from its name, and
will not thereafter transact business in a name using the word Phoenix.
PORTFOLIO TRANSACTIONS
In effecting portfolio transactions for the Fund, each adviser adheres to
the Fund's policy of seeking best execution and price, determined as described
below, except to the extent it is permitted to pay higher brokerage commissions
for "brokerage and research services" as defined herein. The determination of
what may constitute best execution and price in the execution of a securities
transaction by a broker involves a number of considerations including, without
limitation, the overall direct net economic result to the Fund (involving both
price paid or received and any commissions and other costs paid), the efficiency
with which the transaction is effected, the ability to effect the transaction at
all where a large block is involved, availability of the broker to stand
25
<PAGE>
ready to execute possibly difficult transactions in the future and the financial
strength and stability of the broker. Such considerations are judgmental and are
weighed by each adviser and the Subadviser in determining the overall
reasonableness of brokerage commissions paid by the Fund.
Each adviser may cause the Fund to pay a broker an amount of commission for
effecting a securities transaction in excess of the amount of commission which
another broker or dealer would have charged for effecting that transaction if
such adviser determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker. As provided in Section 28(e) of the Securities Exchange
Act of 1934, "brokerage and research services" include advising as to the value
of securities, the advisability of investing in, purchasing or selling
securities, the availability of securities or purchasers or sellers of
securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts, and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Brokerage and research
services provided by brokers to the Fund are considered to be in addition to and
not in lieu of services required to be performed by each adviser under its
contract with the Fund and may benefit both the Fund and other accounts of such
adviser. Conversely, brokerage and research services provided by brokers to
other accounts of an adviser may benefit the Fund.
If the securities in which a particular Portfolio of the Fund invests are
traded primarily in the over-the-counter market, where possible the Portfolio
will deal directly with the dealers who make a market in the securities involved
unless better prices and executions are available elsewhere. Such securities may
be purchased directly from the issuer. Bonds and money market instruments are
generally traded on a net basis and do not normally involve either brokerage
commissions or transfer taxes.
As described in the Prospectus, some portfolio transactions are, subject to
the Conduct Rules of the National Association of Securities Dealers, Inc. and
subject to obtaining best prices and executions, effected through dealers
(excluding Equity Planning) who sell shares of the Fund.
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 consistent 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 share pro rata based on the
Fund's participation in the transaction. If the aggregated order is filled in
its entirety, it shall be allocated among the Adviser's accounts in accordance
with the allocation order, and if the order is partially filled, it shall be
allocated pro rata based on the allocation order. Notwithstanding the foregoing,
the order may be allocated on a basis different from that specified in the
allocation order if all accounts of the Adviser whose orders are allocated
receive fair and equitable treatment and the reason for such different
allocation is explained in writing and is approved in writing by the Adviser's
compliance officer as soon as practicable after the opening of the markets on
the trading day following the day on which the order is executed. If an
aggregated order is partially filled and allocated on a basis different from
that specified in the allocation order, no account that is benefited by such
different allocation may intentionally and knowingly effect any purchase or sale
for a reasonable period following the execution of the aggregated order that
would result in it receiving or selling more shares than the amount of shares it
would have received or sold had the aggregated order been completely filled. The
Trustees will annually review these procedures or as frequently as shall appear
appropriate.
For the fiscal years ended November 30, 1994, 1995 and 1996, brokerage
commissions paid by the Fund on Portfolio transactions totaled $3,679,752,
$3,531,634 and $3,104,255 respectively. Brokerage commissions of $2,699,578 paid
during the fiscal year ended November 30, 1996, were paid on portfolio
transactions aggregating $1,340,718,800 executed by brokers who provided
research and other statistical and factual information.
Investment decisions for the Fund are made independently from those of the
other investment companies or accounts advised by either adviser. It may
frequently happen that the same security is held in the portfolio of more than
one fund. Simultaneous transactions are inevitable when several funds are
managed by the same investment adviser, particularly when the same security is
suited for the investment objectives of more than one fund. When two or more
funds advised by either adviser (or any subadviser) are simultaneously engaged
in the purchase or sale of the same security, the transactions are allocated
among the funds in a manner equitable to each fund. It is recognized that in
some cases this system could have a detrimental effect on the price or volume of
the security as far as the Fund is concerned. In other cases, however, it is
believed that the ability of the Fund to participate in volume transactions will
produce better executions for the Fund. It is the opinion of the Board of
Trustees of the Fund that the desirability of utilizing each adviser as
investment adviser to the Fund outweighs the disadvantages that may be said to
exist from simultaneous transactions.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each Portfolio is determined as of the
close of regular trading of the New York Stock Exchange (the "Exchange") on days
when the Exchange is open for trading. The Exchange will be closed on the
following observed national
26
<PAGE>
holidays: New Year's 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 a Portfolio'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 a Portfolio is determined by adding the values of all securities and other
assets of the Portfolio, subtracting liabilities, and dividing by the total
number of outstanding shares of the Portfolio. Assets and liabilities are
determined in accordance with generally accepted accounting principles and
applicable rules and regulations of the Securities and Exchange Commission. The
total liability allocated to a class, plus that class's distribution fee and any
other expenses allocated solely to that class, are deducted from the
proportionate interest of such class in the assets of the Portfolio, 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.
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. Short term investments having a remaining maturity of sixty days or less
are valued at amortized cost, which the Trustees have determined approximates
market. A security that is listed or traded on more than one exchange is valued
at the quotation on the exchange determined to be the primary exchange for such
security by the Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world, the
calculation of net asset value may not take place for any Portfolio which
invests in foreign securities contemporaneously with the determination of the
prices of the majority of the portfolio securities of such Portfolio. All assets
and liabilities initially expressed in foreign currency values will be converted
into United States dollar values at the mean between the bid and ask quotations
of such currencies against United States dollars as last quoted by any
recognized dealer. If an event were to occur after the value of an investment
was so established but before the net asset value per share was determined,
which was likely to materially change the net asset value, then the instrument
would be valued using fair value considerations by the Trustees or their
delegates. If at any time a Portfolio 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 Prospectus includes information as to the offering price of shares of
the Portfolios, the sales charge, if any, included in the offering price, and
the minimum initial and subsequent investments which may be made in a Portfolio.
Sales of shares are made through registered representatives of the National
Distributor, Equity Planning, or through securities dealers with whom Equity
Planning has sales agreements. Dealers purchase Class A shares at a discount
from the applicable offering price, the maximum discount on transactions of less
than $50,000 being 4.25%. The balance of the sales charge is retained by Equity
Planning. Dealers receiving such discounts may be deemed "underwriters" within
the meaning of that term under the Securities Act of 1933. Sales of shares are
also made to customers of banks or bank-affiliated securities brokers with whom
Equity Planning has sales agreements. Customers purchase shares at the
applicable offering price. Out of the sales charge included in the offering
price the securities broker is allowed an agency fee equal to the dealer
discount on a like transaction through a dealer and the balance of the sales
charge is retained by Equity Planning. The discount from the applicable offering
price of agency fee is the same for all brokers or dealers.
Where customers of a securities dealer or broker with whom Equity Planning
has a sales agreement hold Class A shares of a Portfolio with an aggregate value
of $50,000 or more, Equity Planning may pay to such securities dealer or
securities broker from its own resources (which may include payments received
from the Trust under the Distribution Plan) a fee equal to 0.25% on an
annualized basis of the aggregate average daily net asset values of the shares
of the Portfolio held by customers of such securities dealer or securities
broker.
ALTERNATIVE PURCHASE ARRANGEMENTS
Each Portfolio is authorized to offer two classes of shares. Shares may be
purchased from investment dealers at a price equal to their net asset value per
share, plus a sales charge which, at the election of the purchaser, may be
imposed either (i) at the time of the purchase (the "initial sales charge
alternative"), or (ii) on a contingent deferred basis (the "deferred sales
charge alternative"). Shares of all other Portfolios are sold subject to an
initial sales charge or at net asset value per share.
Class A Shares. An investor who pays an initial sales charge or purchases
at net asset value acquires Class A shares. Class A shares are subject to an
ongoing distribution fee at an annual rate of up to 0.25% of the Series'
aggregate average daily net assets attributable to Class A shares. Certain
purchases of Class A shares qualify for reduced initial sales charges.
Class B Shares. An investor who elects the deferred sales charge
alternative acquires Class B shares. Class B shares do not incur a sales charge
when they are purchased, but are subject to a sales charge if they are redeemed
within six years of purchase. The deferred sales charge may be waived in
connection with certain qualifying redemptions.
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Class B shares are subject to an ongoing distribution fee at an annual rate
of up to 1.00% of the Portfolios' aggregate average daily net assets
attributable to Class B shares. Class B shares permit the investor's payment to
be invested in full from the time the investment is made. The higher ongoing
distribution fee paid by Class B shares will cause such shares to have a higher
expense ratio and to pay lower dividends than those related to Class A shares.
Class B shares will automatically convert to Class A shares eight years after
the end of the calendar month in which the shareholder's order to purchase was
accepted. The purpose of the conversion feature is to eliminate the higher
distribution fee after the Distributor has been compensated for distribution
expenses related to the Class B shares. See "Conversion Feature" below.
The alternative purchase arrangement permits an investor to choose the
method of purchasing shares that is more beneficial given such factors as the
amount of the purchase, the length of time the investor expects to hold the
shares, and whether the investor wishes to receive distributions in cash or to
reinvest them in additional shares. Investors should consider whether, during
the anticipated term of their investment in the Portfolio, the accumulated
continuing distribution fees and contingent deferred sales charges on Class B
shares prior to conversion would be less than the initial sales charge and
accumulated distribution fees on Class A shares purchased at the same time, and
the extent to which such differential would be offset by the lower expenses
attributable to Class A shares.
Class A shares are subject to a lower distribution fee and, accordingly,
pay correspondingly higher dividends. However, because initial sales charges are
deducted at the time of purchase, Class A investors do not have all their funds
invested initially and initially own fewer shares. Investors not qualifying for
reduced initial sales charges who expect to maintain their investment for an
extended period of time should consider purchasing Class A shares because the
accumulated continuing distribution charges on Class B shares may exceed the
initial sales charge on Class A shares during the term of the investment.
However, such investors must weigh this consideration against the fact that,
because of the initial Class A sales charges, not all of their funds will be
invested initially.
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 fees and, in
the case of Class B shares, from the proceeds of the ongoing distribution fees
and the contingent deferred sales charge imposed upon redemptions within six
years of purchase. Sales personnel of broker-dealers distributing a Portfolio's
shares may receive differing compensation for selling Class A or Class B shares.
The purpose and function of the contingent deferred sales charge and ongoing
distribution fees with respect to the Class B shares are the same as those of
the initial sale charge and ongoing distribution fees with respect to the Class
A shares.
Dividends paid by the Portfolio with respect to Class A and Class B shares
will be calculated in the same manner, at the same time and on the same day,
except that the higher distribution fees and any incremental transfer agency
costs relating to Class B shares will be borne exclusively by that Class and
will result in a lower dividend.
The Trustees of the Fund have determined that no conflict of interest will
exist between the Class A and Class B shares. The Trustees shall, pursuant to
their fiduciary duties under the Investment Company Act of 1940 and state law,
monitor the question of Class A and Class B shares and seek to ensure that no
such conflict arises.
Conversion Feature
Class B shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were purchased. At
the end of this period, Class B shares will automatically convert to Class A
shares and will no longer be subject to the higher distribution fees. Such
conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge. The
purpose of the conversion feature is to eliminate the higher distribution fee
after the Distributor has been compensated for distribution expenses related to
the Class B shares.
For purposes of conversion to Class A, shares purchased through the
reinvestment of dividends and distributions paid in respect of the Class B
shares will be considered to be held in a separate sub-account. Each time any
Class B shares in the shareholder's 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.
The conversion of Class B shares to Class A shares is subject to the
continuing availability of an opinion of counsel or a ruling of the Internal
Revenue Service 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
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) that the
conversion of shares does not constitute a taxable event under federal income
tax law. The conversion of Class B shares to Class A shares may be suspended if
such an opinion or ruling is no longer available. In that event, no further
conversions of Class B shares would occur, and shares might continue to be
subject to the higher distribution fee for an indefinite period which may extend
beyond the period ending eight years after the end of the month in which the
shares were purchased. If the Fund were unable to obtain such assurances with
respect to the assessment of distribution fees and transfer agent costs relative
to the Class B Shares, it might make additional distributions if doing so would
assist in complying with the Trust's general practice of distributing sufficient
income to reduce or eliminate U.S. federal taxes.
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Immediate Investment
In order to obtain immediate investment of funds, initial and subsequent
purchases of shares of a Portfolio may also be made by wiring Federal Funds
directly pursuant to the following instructions. (Federal Funds are monies held
in a bank account with a Federal Reserve Bank.)
(1) For initial investments, telephone the Fund at (800) 367-5877. Certain
information will be requested from you regarding the account, and an account
number will be assigned.
(2) Once an account number has been assigned, direct your bank to wire the
Federal Funds to State Street Bank and Trust Company, Custody & Shareholder
Services Division, Boston, Massachusetts 02105, attention of the appropriate
Portfolio of the Phoenix Multi-Portfolio Fund. Your bank must include the
account number and the name(s) in which your account is registered in its
wire and also request a telephone advice. Your bank may charge a fee to you
for transmitting funds by wire.
An order for shares of a Portfolio purchased with Federal Funds will be
accepted on the business day Federal Funds are wired provided the Federal Funds
are received by 4:00 p.m. on that day; otherwise, the order will not be accepted
until the next business day. Shareholders should bear in mind that wire
transfers may take two or more hours to complete.
Promptly after an initial purchase of shares made by wiring Federal Funds
directly, the shareholder should complete and mail to Equity Planning an Account
Application.
SHAREHOLDER SERVICES
Any shareholder desiring additional information concerning the Fund or any
services offered by the Fund may call Equity Planning at 1-800-243-1574.
Open Account
As a convenience to the shareholder, all shares of a Portfolio of the Fund
registered in the shareholder's name are automatically credited to an Open
Account maintained in book entry form for the shareholder on the books of the
Fund by its sub-transfer agent, State Street Bank and Trust Company. An Open
Account offers the shareholder ready access to the following options and
services:
Tax Reports. Shortly after the end of each calendar year the shareholder
will receive information as to the Federal tax status of dividends and any
capital gain distribution paid by the Portfolio during the year.
Safekeeping of Shares. All shares of a Portfolio acquired by the
shareholder will be credited to the shareholder's Open Account and recorded in
book entry form by the Transfer Agent. Certificates previously acquired may be
surrendered to the transfer agent; the surrendered certificates will be canceled
and the shares represented thereby will continue to be credited to the Open
Account of the shareholder.
Investing by Mail. An Open Account provides a simple and convenient way of
setting up a flexible investment program for the accumulation of shares of a
Portfolio. At any time the shareholder may send to Phoenix Funds, c/o State
Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301, ATTN:
Phoenix Multi-Portfolio Fund, a check, payable to the order of Phoenix
Multi-Portfolio Fund, for $25 or more to be used to purchase additional shares
for his or her Open Account at the applicable offering price next determined
after the check is received. Information as to the shareholder's account
registration and account number should accompany each such investment.
Bank Draft Investing Program (Investo-Matic Plan). By completing the
Investo-Matic section of the New Account Application, a shareholder may
authorize the bank (the "Bank") named in the Application to draw $25 or more
from the shareholder's personal checking account to be used to purchase
additional shares of a Portfolio for the shareholder's Open Account. The amount
the shareholder designates will be made available, in form payable to the order
of Equity Planning by the bank on the date the Bank draws on the shareholder's
account and will be used to purchase shares at the applicable offering price.
The shareholder or his or her registered representative may, by telephone
or written notice, cancel or change the dollar amount being invested pursuant to
the Investo-Matic Plan unless the shareholder has notified the Fund or transfer
agent that his or her registered representative shall not have this authority.
Distribution Option. Each Portfolio currently declares all income dividends
and all capital gain distributions payable in shares of the Portfolio or, at the
option of the shareholder, in cash. By exercising a distribution option the
shareholder may elect (1) to receive both dividends and capital gain
distributions in additional shares or (2) to receive dividends in cash and
capital gain distributions in additional shares or (3) to receive both dividends
and capital gains distributions in cash. If a shareholder elects to receive
dividends and/or distributions in cash and the check cannot be delivered or
remains uncashed by the shareholder for a period of six months, the dividend or
distribution will automatically be used to purchase additional shares for the
shareholder's account at the then current net asset value. Shareholders who
maintain an account balance of at least $5,000 or $2,000 for tax qualified
retirement benefit plans (calculated on the basis of the net asset value of the
shares held in a single account) may direct
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that any dividends and distributions paid with respect to shares in that account
be automatically reinvested at net asset value in shares in a single account of
another Portfolio or one of the other Phoenix Funds. Shareholders should obtain
a current prospectus and consider the objectives and policies of each Portfolio,
Series or Fund carefully before directing dividends and distributions to another
Portfolio, Series or Fund. A shareholder who elects to receive all distributions
in cash may also elect to have distribution checks mailed to another address or
made payable to a payee other than the shareholder. However, if the check cannot
be delivered due to invalid address information, the distribution option will be
changed to share reinvestment. Dividends and distributions received in shares
are credited to the shareholder's Open Account in full and fractional shares
computed at the closing net asset value on the business day following the record
date. The shareholder may change a distribution option at any time either by
calling 800-243-1574 or by sending a letter signed by the registered owner(s) of
the shares in the shareholder's Open Account to Equity Planning, 100 Bright
Meadow Boulevard, P.O. Box 2200, Enfield, CT 06083-2200, ATTN: Phoenix Funds.
Requests for directing distributions to an alternate payee must be made in
writing with the registered owner(s) signature(s) guaranteed. To be effective
with respect to a particular dividend or distribution, the new distribution
option must be received by the transfer agent three days prior to the record
date of such dividend or distribution. If all shares in the shareholder's
account are repurchased or redeemed or transferred between the record date and
the payment date for a dividend or distribution, the shareholder will receive
cash for the dividend or distribution regardless of the shareholder's
distribution option.
INVEST-BY-PHONE
This expedited investment service enables a shareholder to purchase shares
for the shareholder's account by requesting that funds be transferred from the
shareholder's bank account. Once a request is phoned in, Equity Planning will
initiate the purchase transaction by wiring a request for monies to the
shareholder's commercial bank, savings bank or credit union via Automated
Clearing House (ACH). The shareholder's bank, which must be an ACH member, will
in turn forward the monies to State Street for credit to the shareholder's
account. ACH is a computer based clearing and settlement operation established
for the exchange of electronic transactions among participating depository
institutions.
To establish this service, the shareholder should complete an
Invest-by-Phone Application and attach a voided check if applicable. Upon Equity
Planning's acceptance of the authorization form (usually in about two weeks),
the shareholder may call toll free 800-367-5877 prior to 3:00 P.M. (New York
time) to place a purchase request. Instructions as to the shareholder's account
number and the amount to be invested must be communicated to Equity Planning.
Equity Planning will then contact the shareholder's bank via ACH with
appropriate instructions. The purchase is normally credited to the shareholder's
account the day following receipt of the verbal instructions. The Fund may delay
the mailing of a check for the proceeds of the redemption of shares of a
Portfolio purchased via the Invest-by-Phone Service until the Fund has assured
itself that good payment has been collected for the shares, which may take up to
fifteen days.
Phoenix Multi-Portfolio Fund and Equity Planning reserve the right to
modify or terminate the Invest-by-Phone service for any reason or to institute
charges for maintaining an Invest-by-Phone account.
Exchange Privileges
Shareholders may exchange Class A or Class B Shares held in book-entry form
for shares of the same class of other Phoenix Funds provided the following
conditions are met: (1) the shares that will be acquired in the exchange (the
"Acquired Shares") are available for sale in the shareholder's state of
residence; (2) the Acquired Shares are the same class as the shares to be
surrendered (the "Exchanged Shares"); (3) the Acquired Shares will be registered
to the same shareholder account as the Exchanged Shares; (4) the account value
of the Fund whose shares are to be acquired must equal or exceed the minimum
initial investment amount required by that Fund after the exchange is
implemented; and (5) if a shareholder has elected not to utilize the Telephone
Exchange Privilege (see below), a properly executed exchange request must be
received by Equity Planning.
Subject to the above requirements for an exchange, a shareholder or his or
her registered representative may, by telephone or written notice, elect to have
Class A or Class B Shares of the Fund exchanged for the same class of shares of
another Phoenix Fund automatically on a monthly, quarterly, semi-annual or
annual basis or may cancel the privilege ("Systematic Exchange").
Shareholders who maintain an account balance in the Fund of at least
$5,000, or $2,000 for tax qualified retirement benefit plans (calculated on the
basis of the net asset value of the shares held in a single account), may direct
that shares of the Fund be automatically exchanged at predetermined intervals
for shares of the same class of another Phoenix Fund. If the shareholder is
participating in the Self Security program offered by Phoenix Home Life, it is
not necessary to maintain the above account balances in order to use the
Systematic Exchange privilege.
Such exchanges will be executed upon the close of business on the 10th of a
month and if the 10th falls on a holiday or weekend, then at the close of
business on the next succeeding business day. The minimum initial and subsequent
amount that may be exchanged under the Systematic Exchange is $25. Systematic
Exchange forms are available from Equity Planning.
Exchanges will be based upon each Fund's net asset value per share next
computed following receipt of a properly executed exchange request, without
sales charge. On exchanges of Class B shares offered by other Phoenix Funds, the
contingent deferred sales charge schedule of the original shares purchased
continues to apply.
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The exchange of shares from one fund to another is treated as sale of the
Exchanged Shares and a purchase of the Acquired Shares for Federal income tax
purposes. The shareholder may, therefore, realize a taxable gain or loss. See
"Dividends, Distributions and Taxes" for information concerning the Federal
income tax treatment of a disposition of shares.
It is the policy of the Fund to discourage and prevent frequent trading by
shareholders among the Fund and other Phoenix Funds in response to market
fluctuations. The Fund reserves the right to terminate or modify its exchange
privileges at any time upon giving prominent notice to shareholders at least 60
days in advance.
Each Phoenix Fund has different investment objectives and policies.
Shareholders should, therefore, obtain and review the prospectus of the fund
into which the exchange is to be made before any exchange requests are made.
Telephone Exchanges
Telephone Exchange privileges are only available in states where the shares
to be acquired may be legally sold. Unless a shareholder elects in writing not
to participate in the Telephone Exchange Privilege, shares for which
certificates have not been issued may be exchanged by calling (800) 243-1574
provided that the exchange is made between accounts with identical
registrations. Under the Telephone Exchange Privilege, telephone exchange orders
may also be entered on behalf of the shareholder by his or her legal
representative.
The Fund, and the Transfer Agent will employ reasonable procedures to
confirm that telephone instructions are genuine. In addition to requiring
identical registrations on both accounts, the Transfer Agent will require
address verification and will record telephone instructions on tape. All
exchanges will be confirmed in writing with the shareholder. To the extent that
procedures reasonably designed to prevent unauthorized telephone exchanges are
not followed, the Fund and/or the Transfer Agent may be liable for following
telephone instructions for exchange transactions that prove to be fraudulent.
Broker-dealers other than Equity Planning have agreed to bear the risk of any
loss resulting from any unauthorized telephone exchange instructions from the
firm or its registered representatives. However, the shareholder would bear the
risk of loss resulting from instruction entered by an unauthorized third party
that the Fund and/or the Transfer Agent reasonably believe to be genuine. The
Telephone Exchange Privilege may be modified or terminated at any time on 60
days' notice to shareholders. In addition, during times of drastic economic or
market changes, the Telephone Exchange Privilege may be difficult to exercise or
may be suspended temporarily. In such event an exchange may be effected by
following the procedure outlined for tendering shares represented by
certificate(s).
If a shareholder elects not to use the Telephone Exchange Privilege or if
the shares being exchanged are represented by a certificate or certificates, in
order to exchange shares the shareholder must submit a written request to Equity
Planning, 100 Bright Meadow Boulevard, Enfield, Connecticut 06083-2200, ATTN:
Phoenix Funds. If the shares are being exchanged between accounts that are not
registered identically, the signature on such request must be guaranteed by an
eligible guarantor institution as defined by the 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.
Purchase and withdrawal plans and reinvestment and exchange privileges are
described in the Prospectus. For further information, call Equity Planning at
(800) 243-1574.
HOW TO REDEEM SHARES
Any holder of shares may require the Fund to redeem the shares at any time.
The redemption price is the net asset value next determined following the
receipt of a duly executed request for redemption of shares, together with any
outstanding certificate or certificates for such shares, duly endorsed, less
such amount not in excess of 1% of such net asset value as the Trustees may
determine. The Trustees do not presently intend to impose a redemption charge
and shareholders will be given 60 days' notice of any change in this intention.
However, Class B shares are subject to a contingent deferred sales charge upon a
redemption of shares within six years of the date of purchase. Redemptions may
be made in the following manner:
By Mail. Non-certificated shares registered on the books of the Fund may be
redeemed by submitting a written request for redemption to Phoenix Funds, c/o
State Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301. The
redemption request must contain the name of the Portfolio, the shareholder(s)'
account name(s) and number, the number of shares to be redeemed and the
signature(s) of the registered shareholder(s). If the shares are registered in
the name of individuals, singly, jointly or as custodian under the Uniform Gifts
to Minors Act or Uniform Transfers to Minors Act, and the proceeds of the
redemption do not exceed $50,000 and are to be paid to the registered owner(s)
at the address of record, the signature(s) on the redemption request need not be
guaranteed. Otherwise, the signature(s) must be guaranteed by an eligible
guarantor institution as defined by the 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. A signature notarized by a notary public is not acceptable. Shares
represented by certificates in the possession of the shareholder may be redeemed
by submitting a written request for redemption to Phoenix Funds, c/o State
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Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301, together
with the certificates, duly endorsed by all persons in whose names the shares
are registered, with signatures guaranteed, if required, in the manner described
above. Signature(s) also must be guaranteed on any change of address request
submitted in conjunction with a redemption request.
Additional documentation may be required where shares are held by a
corporation, partnership, trustee or executor. Therefore, it is suggested that
shareholders holding shares registered in other than individual names call
800-243-1574 prior to redemption to ensure that all necessary documents
accompany the redemption request.
By Telephone. Unless a shareholder elects in writing not to participate in
the Telephone Redemption Privilege, shares for which certificates have not been
issued may be redeemed by calling (800) 243-1574 and telephone redemptions will
also be accepted on behalf of the shareholder from his or her registered
representative as described in the Prospectus. Address and bank account
information will be verified, telephone redemption instructions will be recorded
on tape, and all redemptions will be confirmed in writing to the shareholder. If
there has been an address change within the past 60 days, a telephone redemption
will not be authorized. The Fund and the Transfer Agent will employ reasonable
procedures to confirm that telephone instructions are genuine. To the extent
that procedures reasonable 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, the
shareholder 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.
Telephone redemption orders received and accepted by Equity Planning on a
day when Equity Planning is open for business, will be entered at the next
determined net asset value. However, telephone redemption orders received and
accepted by Equity Planning after the close of trading hours on the Exchange
will be executed on the following business day. The proceeds of a redemption
request received by telephone will normally be paid on the first business day
following receipt of the request. If the amount of the redemption is $500 or
more, the proceeds will be wired to the designated U.S. commercial bank account.
If the amount of the redemption is less than $500, the proceeds will be sent by
mail to the address of record on the shareholder's account. However, with
respect to the telephone redemption of shares purchased by check, such requests
will only be effected after the Fund has assured itself that good payment has
been collected for the purchase of shares, which may take up to 15 days. The
Telephone Redemption Privilege is not available to HR-10, IRA and 403(b)(7)
Plans.
By Check. (Bond Portfolio and Emerging Markets Portfolio Only) Any
shareholder of the Bond Portfolio or Emerging Markets Portfolio may elect to
redeem shares held in his or her Open Account by check. Checks will be sent to
an investor upon receipt by Equity Planning of a completed application and
signature card (attached to the application). If the signature card accompanies
an individual's initial account application, the signature guarantee section of
the form may be disregarded. However, the Fund reserves the right to require
that all signatures be guaranteed prior to the establishment of a check writing
service account. When an authorization form is submitted after receipt of the
initial account application, all signatures must be guaranteed regardless of
account value.
Checks may be drawn payable to any person in an amount of not less than
$500, provided that immediately after the payment of the redemption proceeds the
balance in the shareholder's Open Account is $500 or more.
When a check is presented to Equity Planning for payment, a sufficient
number of full and fractional shares in the shareholder's Open Account will be
redeemed to cover the amount of the check. The value of the shares to be
redeemed will be determined on the date the check is received by the Transfer
Agent. Presently there is no charge to the shareholder for the check writing
service, but this may be changed or modified in the future upon two weeks
written notice to shareholders.
The check writing procedure for redemption enables a shareholder to receive
income accruing on the shares to be redeemed until such time as the check is
presented to Equity Planning for payment. In as much as canceled checks are
returned to shareholders monthly, no confirmation statement is issued at the
time of redemption.
Shareholders utilizing withdrawal checks will be subject to Equity Planning
rules governing checking accounts. A shareholder should make sure that there are
sufficient shares in his or her Open Account to cover the amount of any check
drawn. If insufficient shares are in the account and the check is presented to
Equity Planning on a banking day on which the Portfolio does not redeem shares
(for example, a day on which the New York Stock Exchange is closed), or if the
check is presented against redemption proceeds of an investment made by check
which has not been in the account for at least fifteen calendar days, the check
may be returned marked "Non-sufficient Funds" and no shares will be redeemed. A
shareholder may not close his account by a withdrawal check because the exact
value of the account will not be known until after the check is received by
Equity Planning.
The Fund also maintains a continuous offer to repurchase its shares and
shareholders may normally sell their shares through securities dealers, brokers
or agents who may charge customary commissions or fees for their services.
Unless made in connection with an exchange of shares, a request for repurchase
must be placed with a securities dealer or placed by a securities broker acting
as agent for the customer and communicated by the dealer or broker to Equity
Planning. The repurchase price is the net asset value next determined following
the receipt of the request by Equity Planning, except that a repurchase order
placed through a
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dealer or by a broker before the close of trading on the New York Stock Exchange
on any day will be executed at the net asset value determined as of such close
provided the dealer or broker communicates the order to Equity Planning prior to
its close of business (normally 4:00 P.M. New York City time) on such day and
subsequently confirms the order to Equity Planning in writing, time-stamping his
confirmation with the time of the dealer's or broker's receipt of the order. It
is the responsibility of dealers and brokers to communicate such orders. Dealers
may be liable to investors for failing to do so. The offer to repurchase may be
suspended at any time.
Payment for shares redeemed is normally made within seven days after
receipt of a duly executed request for redemption of shares, together with any
outstanding certificate or certificates for such shares, duly endorsed, and, if
required, a proper signature guarantee. Payment for shares repurchased is
normally made within seven days after receipt of the repurchase order and a duly
executed stock power or other instrument of transfer, together with any
outstanding certificate or certificates for such shares and, if required, a
proper signature guarantee. However, if the Fund is requested to redeem or
repurchase shares for which it has not yet received good payment, the mailing of
a check for the proceeds of the redemption or repurchase may be delayed until
the Fund has assured itself that good payment has been collected, which may take
up to fifteen days. Although the mailing of a check for the proceeds of a
redemption or repurchase may be delayed, the redemption price or repurchase
price will be determined in the manner described above.
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. The Fund has elected
to pay in cash all requests for redemption by any shareholder of record, but may
limit such cash 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 of a Portfolio would be readily marketable and valued at the same value
assigned to them in computing the net asset value per share of the Portfolio. A
shareholder receiving such securities would incur brokerage costs when he sold
the securities.
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 New York Stock 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 during any other period permitted by order of the
Securities and Exchange Commission. 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 more information.
A shareholder may receive more or less than the shareholder paid for his or
her shares, depending on the net asset value of the shares at the time they are
redeemed or repurchased.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Qualification as a Regulated Investment Company ("RIC")
As stated in the Prospectus, each Portfolio is treated as a separate entity
for federal income tax purposes. Each Portfolio has elected to qualify and
intends to remain qualified as a RIC under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"). In each taxable year a Portfolio
qualifies as a RIC, it (but not its shareholders) will be relieved of federal
income tax on that portion of its net investment income and net capital gains
that are currently distributed (or deemed distributed) to its shareholders. To
the extent that a Portfolio fails to distribute all of its taxable income, it
will be subject to corporate income tax (currently 35%) on any retained ordinary
investment income or short-term capital gains, and corporate income tax
(currently 35%) on any undistributed long-term capital gains. Each Portfolio
intends to make timely distributions, if necessary, sufficient in amount to
avoid the non-deductible 4% excise tax that is imposed on a RIC to the extent
that it fails to distribute, with respect to each calendar year, at least 98% of
its ordinary income for such calendar year and 98% of its net capital gains as
determined for a one-year period ending on October 31 of such calendar year (or
as determined on a fiscal year basis, if the Portfolio so elects).
The Code sets forth numerous criteria that must be satisfied in order for
each Portfolio to qualify as a RIC. Among these requirements, each Portfolio
must meet the following tests for each taxable year: (1) at least 90% of the
Portfolio's gross income must be derived from dividends, interest, payments with
respect to securities loans, gains from the sale or other disposition of stocks
or securities or foreign currencies (except to the extent provided in
regulations not yet issued), or other income (including gains from options,
futures or forward contracts) derived by the Portfolio with respect to its
business of investing in stock, securities or currencies; and (2) less than 30%
of the Portfolio's gross income must be derived from gains realized on the sale
or other disposition of stock or securities (or other instruments) held for less
than three months.
In determining the Portfolio's gross income for purposes of the 30% test,
any gain realized by the Portfolio on a hedged position that is part of a
"designated hedge" will be offset by any decrease in value (whether realized or
not) of any offsetting position
33
<PAGE>
in the hedge during the period that the hedge was outstanding. Thus, only the
net gain (if any) from the hedge will be included in the computation of the 30%
test. At the present time, however, it is not clear whether or to what extent
such hedging exception will be available to the Portfolios' contemplated hedging
transactions. To the extent that the hedging exception is not available, gains
realized by the Portfolios from actual dispositions of futures or forward
contracts or options will be included in the calculation of the 30% test if less
than three months has elapsed between the date such instruments are acquired and
the date of their sale. This provision may limit the Portfolios' ability to
engage in such transactions.
In the case of the International and Emerging Markets Portfolios, gains
from foreign currencies (i.e., gains from foreign currency options, foreign
currency futures and foreign currency forward contracts) are anticipated to
constitute qualifying income for purposes of the 90% test.
Section 988 of the Code provides special rules for foreign currency
transactions under which foreign currency gains or losses from forward
contracts, futures contracts that are not required to be marked-to-market and
unlisted options generally will be treated as ordinary income or loss.
In addition to meeting the 90% and 30% tests, in order to qualify as a RIC
each Portfolio will be required to distribute annually to its shareholders as
dividends (not including "capital gains dividends", discussed below) at least
90% of its ordinary investment income, short-term capital gains and tax exempt
income, with certain modifications. Each Portfolio intends to make distributions
to shareholders that will be sufficient to meet the 90% distribution
requirement.
Each Portfolio must also diversify its holdings so that, at the close of
each quarter of its taxable year, (i) at least 50% of the value of its total
assets consists of cash, cash items, U.S. Government Securities, and other
securities limited generally with respect to any one issuer to not more than 5%
of the total assets of that Portfolio and not more than 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities of any issuer (other than U.S. Government
Securities). For purposes of these diversification tests, the issuer of an
option on a particular security is the issuer of the underlying security. In the
case of a stock index futures contract or option thereon, the position taken by
the Internal Revenue Service in a recent letter ruling is that the issuers of
the stocks underlying the index, in proportion to the weighing of the stocks in
the computation of the index, are treated as the issuers of the instrument
irrespective of whether the underlying index is broad- based or narrow-based. In
the case of a foreign currency option, futures contract or forward contract,
however, there is as yet no specific guidance in the tax law concerning who will
be treated as the issuer of such instruments or how they will be valued for
purposes of these diversification tests.
Each Portfolio intends to comply with all of the foregoing criteria for
qualification as a RIC; however, there can be no assurance that the Portfolio
will so qualify and continue to maintain its status as a RIC. If a Portfolio
were unable for any reason to maintain its status as a RIC for any taxable year,
adverse tax consequences would ensue.
Taxation of Shareholders
The Bond Portfolio expects that under normal conditions, at least 80% of
its net assets will be invested in state, municipal and other obligations the
interest on which is excluded from gross income for federal income tax purposes,
and that substantially all of its dividends therefore will be exempt interest
dividends which will be treated by its shareholders as excludable from federal
gross income. (The character of tax-exempt interest distributed by the Bond
Portfolio will flow through as tax-exempt interest to its shareholders provided
that 50% or more of the value of its assets at the end of each quarter of its
taxable year is invested in obligations the interest on which is excluded from
gross income for federal income tax purposes.) An exempt interest dividend is
any dividend or part thereof (other than a capital gain dividend) paid by the
Bond Portfolio with respect to its net federal excludable municipal security
interest, and designated as an exempt interest dividend in a written notice
mailed to shareholders not later than 60 days after the close of the taxable
year. The percentage of total dividends paid by the Bond Portfolio with respect
to any taxable year which qualify as exempt interest dividends will be the same
for all shareholders receiving dividends with respect to such year. If a
shareholder receives an exempt interest dividend with respect to any share and
such share is held for 6 months or less, any loss on the sale or exchange of
such share will not be allowed to the extent of the exempt interest dividend
amount.
Interest on certain "private activity bonds" issued after August 7, 1986,
although otherwise tax-exempt, is treated as a tax preference item for
alternative minimum tax purposes. Under regulations to be promulgated, the Bond
Portfolio's exempt interest dividends will be treated as a tax preference item
for purposes of computing the alternative minimum tax liability of shareholders
in such Portfolio to the extent attributable to interest paid on "private
activity" bonds. Corporate shareholders should also be aware that the receipt of
exempt interest dividends could subject them to alternative minimum tax under
the provisions of Code Section 56(f) (relating generally to book income or
adjusted current earnings in excess of taxable income).
Interest on indebtedness incurred or continued by shareholders to purchase
or carry shares of the Bond Portfolio will not be deductible for federal income
tax purposes to the extent of the portion of the interest expense relating to
exempt interest dividends; that portion is determined by multiplying the total
amount of interest paid or accrued on the indebtedness by a fraction, the
numerator of which is the exempt interest dividends received by a shareholder in
the shareholder's taxable year and the denominator of which is the sum of the
exempt interest dividends and the taxable distributions received by the
shareholder.
34
<PAGE>
Distributions by the Mid Cap, International, Real Estate and Emerging
Markets Portfolios from ordinary investment income and net short-term capital
gains will be taxed to the shareholders as ordinary dividend income to the
extent of the earnings and profits of the respective Portfolios. Similarly, any
portion of the Bond Portfolio's dividends which does not qualify as exempt
interest dividends and any short-term capital gain distribution will be taxed to
the Bond Portfolio shareholders as ordinary income for federal income tax
purposes. Ordinary income dividends received by corporate shareholders will
qualify for the 70% dividends- received deduction to the extent the Portfolios
designate such amounts as qualifying dividend distributions; however, the
portion that may be so designated is subject to certain limitations. As a result
of these limitations, it is not currently anticipated that certain distributions
by Portfolios will be qualifying dividend distributions. Distributions by a
Portfolio that are designated as capital gain distributions will be taxed to the
shareholders as capital gains, and will not be eligible for the corporate
dividends-received deduction.
Dividends declared by the Portfolios to shareholders of record in October,
November or December will be taxable to such shareholders in the year that the
dividend is declared, even if it is not paid until the following year (so long
as it is actually paid by the Portfolio prior to February 1). Also, shareholders
will be taxable on the amount of long-term capital gains designated by a
Portfolio by written notice mailed to shareholders within 60 days after the
close of the year, even if such amounts are not actually distributed to them.
Shareholders will be entitled to claim a credit against their own federal income
tax liability for taxes paid by the Portfolio on such undistributed gains, if
any. If a shareholder receives a long-term capital dividend with respect to any
share and such share is held for less than 6 months, any loss on sale or
exchange of such share will be long-term capital loss to the extent of long-term
capital dividend payments.
Dividends (other than exempt interest dividends) and capital gain
distributions will be taxable to shareholders as described above whether
received in cash or in shares under a Portfolio's distribution reinvestment
plan. With respect to distributions received in cash or reinvested in shares
purchased on the open market, the amount of the distribution for tax purposes
will be the amount of cash distributed or allocated to the shareholder. With
respect to distributions made in shares issued by the Portfolio as a stock
dividend, the amount of the distribution will be the fair market value of the
shares on the payment date.
Shareholders should be aware that the price of shares of a Portfolio that
are purchased prior to a dividend or distribution by the Portfolio may reflect
the amount of the forthcoming dividend or distribution. Such dividend or
distribution, when made, would be taxable to shareholders under the principles
discussed above even though the dividend or distribution may reduce the net
asset value of shares below a shareholder's cost and thus represent a return of
a shareholder's investment in an economic sense.
Foreign Tax Credit
The International and Emerging Markets Portfolios may incur liability for
foreign income and withholding taxes on investment income. These Portfolios
intend to qualify for and make an election permitted under Section 853 of the
Code. The effect of such election is that the shareholders of such Portfolios
will be able to claim a credit or deduction on their U.S. federal income tax
returns for, and will be required to treat as part of the amounts distributed to
them, their pro rata share of the income taxes paid by the Portfolio to foreign
countries. (The election is not available unless stocks or securities in foreign
corporations represent more than 50% of the value of the total assets of the
Portfolio.) The shareholders may claim a deduction or credit by reason of the
Portfolio's election subject to the limitations imposed under Section 904 of the
Code. The deduction for foreign taxes paid may not be claimed by individual
shareholders who do not elect to itemize deductions on their federal income tax
returns although such shareholders may claim a credit for foreign income taxes
paid. In either case, shareholders will be required to report taxable income in
the amount of their respective pro rata share of foreign taxes paid by the
Portfolio. Although the International and Emerging Markets Portfolios intend to
meet the requirements of the Code to "pass through" such taxes, there can be no
assurance that they will be able to do so in the future.
Sale or Exchange of Portfolio Shares
Gain or loss will be recognized by a shareholder upon the sale of his
shares in a Portfolio or upon an exchange of his shares in a Portfolio for
shares in another Portfolio. Provided that the shareholder is not a dealer in
such shares, such gain or loss will generally be treated as capital gain or
loss, measured by the difference between the adjusted basis of the shares and
the amount realized therefrom. Under current law, capital gains (whether
long-term or short-term) of individuals and corporations are fully includable in
income and are taxed at the regular federal income tax rates applicable to the
shareholder's ordinary income. Capital losses (whether long-term or short-term)
may offset capital gains plus (for non-corporate taxpayers only) up to $3,000
per year of ordinary income.
Tax Information
Written notices will be sent to shareholders regarding the tax status of
all distributions made (or deemed to have been made) during each taxable year,
including the tax-exempt portion thereof (if applicable), the amount qualifying
for the dividends-received deduction (if applicable) and the amount designated
as capital gains dividends, undistributed capital gains (if any), tax credits
(if applicable), and cumulative return of capital (if any).
35
<PAGE>
Backup Withholding
The Portfolios may be required to withhold federal income tax at a rate of
31% on reportable dividends paid to certain noncorporate shareholders.
Generally, shareholders subject to such backup withholding will be those for
whom a taxpayer identification number and certain required certifications are
not filed with the Portfolios or who, to a Portfolio's knowledge, have furnished
an incorrect number.
Foreign Shareholders
Dividends paid by a Portfolio from net investment income and net realized
short-term capital gains to a shareholder who is a nonresident alien individual,
a foreign trust or estate, a foreign corporation or a foreign partnership (a
"foreign shareholder") will be subject to United States withholding tax at a
rate of 30% unless a reduced rate of withholding or a withholding exemption is
provided under applicable treaty law. Foreign shareholders are urged to consult
their own tax advisors concerning the applicability of the United States
withholding tax and any foreign taxes.
Other Tax Consequences
In addition to the federal income tax consequences, described above,
applicable to an investment in a Portfolio, there may be state or local tax
considerations and estate tax considerations applicable to the circumstances of
a particular investor. In particular, distributions by the Bond Portfolio may be
subject to state and local taxation even though wholly or partially exempt for
federal income tax purposes. The foregoing discussion is based upon the Code,
judicial decisions and administrative regulations, rulings and practices, all of
which are subject to change and which, if changed, may be applied retroactively
to a Portfolio, its shareholders and/or its assets. No rulings have been sought
from the Internal Revenue Service with respect to any of the tax matters
discussed above.
The information included in the Prospectus with respect to taxes, in
conjunction with the foregoing, is a general and abbreviated summary of
applicable provisions of the Code and Treasury regulations now in effect as
currently interpreted by the courts and the Internal Revenue Service. The Code
and these Regulations, as well as the current interpretations thereof, may be
changed at any time by legislative, judicial, or administrative action.
TAX SHELTERED RETIREMENT PLANS
Shares of the Fund and other Phoenix Funds may be offered in connection
with employer-sponsored 401(k) plans. Distributor and its affiliates may provide
administrative services to these plans and to their participants, in addition to
the services that Distributor and its affiliates provide to the Phoenix Funds,
and may receive compensation therefor. For information on the terms and
conditions applicable to employee participation in such plans, including
information on applicable plan administrative charges and expenses, prospective
investors should consult the plan documentation and employee enrollment
information which is available from participating employers.
THE DISTRIBUTOR
Equity Planning, a registered broker-dealer which is an indirect less than
wholly-owned subsidiary of Phoenix Home Life Mutual Insurance Company, serves as
Distributor of the Fund's shares.
The Fund and Equity Planning have entered into distribution agreements
under which Equity Planning has agreed to use its best efforts to find
purchasers for Fund shares and the Fund has granted to Equity Planning the
exclusive right to purchase from the Fund and resell, as principal, shares
needed to fill unconditional orders for Fund shares. Equity Planning may sell
Fund shares through its registered representatives or through securities dealers
with whom it has sales agreements. Equity Planning may also sell Fund shares
pursuant to sales agreements entered into with bank-affiliated securities
brokers who, acting as agent for their customers, place orders for Fund shares
with Equity Planning. Although the Glass-Steagall Act prohibits banks and bank
affiliates from engaging in the business of underwriting, distributing or
selling securities (including mutual fund shares), banking regulators have
indicated that such institutions are not 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 and bank affiliated
securities brokers are not permitted under the Glass-Steagall Act, the Trustees
will consider what action, if any, is appropriate. In addition, state securities
laws on this issue may differ from federal law, and banks and bank affiliates
may be required to register as securities dealers pursuant to state law. It is
not anticipated that termination of sales agreements with banks and bank
affiliated securities brokers would result in a loss to their customers or a
change in the net asset value per share of a Portfolio of the Fund.
For its services under the distribution agreements, Equity Planning
receives sales charges on transactions in Fund shares (see "Purchase of Shares"
in the Prospectus) and retains such charges less the portion thereof allowed to
its registered representatives and to securities dealers and securities brokers
with whom it has sales agreements. In addition, Equity Planning may receive
payments from the Fund pursuant to the Distribution Plans described below. For
the fiscal years ended November 30, 1994, 1995
36
<PAGE>
and 1996, Equity Planning's gross commissions on sales of Fund shares totalled
$3,280,958, $1,655,136 and $1,599,637, respectively. Of these amounts,
$2,912,614, $1,454,880 and $1,340,721, respectively, were paid to dealers with
whom Equity Planning had sales agreements.
Equity Planning also acts as Financial Agent of the Fund and as such
performs administrative, bookkeeping and pricing functions for the Fund. As
compensation for such services, effective as of January 1, 1997, Equity Planning
is entitled to a fee, payable monthly and based upon the average of the
aggregate daily net asset values of each Portfolio, at the following incremental
annual rates:
First $100 million .05% plus a minimum fee
$100 million to $300 million .04%
$300 million to $500 million .03%
Greater than $500 million .015%
A minimum fee applies to each Portfolio as follows:
Mid Cap Portfolio $50,000
Emerging Markets Portfolio $70,000
International Portfolio $70,000
Real Estate Securities Portfolio $70,000
Bond Portfolio $70,000
In addition, Equity Planning is paid $12,000 for each class of shares of
each Portfolio beyond one. Until December 31, 1996, Equity Planning's fee for
these services was based on an annual rate of 0.03% of the Fund's aggregate
daily net asset value. For services to the Fund during the fiscal years ended
November 30, 1994, 1995 and 1996, the Financial Agent received fees of $231,177,
$227,721 and $243,021, respectively.
Equity Planning also acts as Transfer Agent of the Fund. As compensation,
Equity Planning receives a fee equivalent to $19.25 for each designated daily
dividend shareholder account and $14.95 for each designated non-daily dividend
shareholder account. 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.
Philip R. McLoughlin, a Trustee and officer of the Fund, is a director and
officer of Equity Planning; David R. Pepin, an officer of the Fund, is a
director of Equity Planning. Michael E. Haylon, an officer of the Fund, is a
director of Equity Planning; and G. Jeffrey Bohne, Nancy G. Curtiss, William E.
Keen III, William R. Moyer, and Leonard J. Saltiel, officers of the Fund, are
officers of Equity Planning.
PLANS OF DISTRIBUTION
To permit the use of assets of a Portfolio to encourage activities
primarily intended to result in the sale of shares of that Portfolio, the Fund
has adopted distribution plans for the Portfolios (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940. The Plan for shares sold subject
to an initial sales charge was adopted on behalf of the Bond Portfolio on
February 24, 1988, the Mid Cap Portfolio and the International Portfolio on
August 23, 1989, Real Estate Portfolio on November 16, 1994, and the Emerging
Markets Portfolio on February 15, 1995 by the Board of Trustees of the Fund,
including a majority of the Trustees who are not interested persons of the Fund
and who have no direct or indirect financial interest in the Plan or any
agreement related thereto (the "Rule 12b-1 Trustees"). It has been approved by
the shareholders of each Portfolio. The Plan for Class B shares with respect to
the Bond, Mid Cap and International Portfolios was adopted by the Board of
Trustees of the Fund, including the Rule 12b-1 Trustees, on November 17, 1993.
The Plans for Class B Shares with respect to the Real Estate and Emerging
Markets Portfolios were adopted by the Board of Trustees, including the Rule
12b-1 Trustees, on November 16, 1994 and February 15, 1995, respectively.
The Class A and Class B Plans authorize the payment by the Fund to the
Distributor of a Portfolio's shares of amounts not exceeding 0.25% and 1.00%
annually, respectively, of the Portfolio's average net assets for each year
elapsed after the inception of the Plan. Although under no contractual
obligation to do so, the Fund intends to make such payments to the Distributor
(1) as commissions for Portfolio shares sold, all or any part of which
commissions will be paid by the Distributor upon receipt from the Fund to others
who may be other dealers or registered representatives of the Distributor), (ii)
to enable the Distributor to pay to such others maintenance or other fees in
respect of a Portfolio's shares sold by them and remaining outstanding on the
Fund's books during the period in respect of which the fee is paid and (iii) to
enable the Distributor to pay to bank-affiliated securities brokers maintenance
or other fees in respect of a Portfolio's shares purchased by their customers
and remaining outstanding on the Fund's books during the period in respect of
which the fee is paid; provided, however, that payments under (ii) and (iii) are
subject to limits of 0.25% and 1.00% annually of the average daily net assets of
the Class A or Class B shares respectively to which the payments relate.
Payments, less the portion thereof paid by the Distributor to others, may be
used by the Distributor for its expenses of distribution of a Portfolio's
shares. If expenses of distribution of a Portfolio's shares exceed payments and
any sales charges retained by the Distributor, the Fund is not required to
reimburse the Distributor for excess expenses.
37
<PAGE>
Each Plan requires that at least quarterly the Trustees of the Fund review
a written report with respect to the amounts expended under the Plan and the
purposes for which such expenditures were made. While the Plan is in effect, the
Fund will be required to commit the selection and nomination of candidates for
Trustees who are not interested persons of the Fund to the discretion of other
Trustees who are not interested persons. Each Plan continues in effect from year
to year only provided such continuance is approved annually in advance by votes
of the majority of both (a) the Board of Trustees of the Fund and (b) the Rule
12b-1 Trustees, cast in person at a meeting called for the purpose of voting on
the Plan and any agreements related to the Plan. For the fiscal year ended
November 30, 1996 the Fund paid Rule 12b-1 Fees in the amount of $2,273,092, of
which the Distributor received $508,107 and unaffiliated broker-
dealers received $1,764,985. The Rule 12b-1 payments were used for (1)
compensating dealers $2,217,930, (2) compensating sales and shareholder services
personnel $40,471 and (3) compensating the Distributor for marketing materials
$14,691. No interested person of the Fund and no Trustee who is not an
interested person of the Fund, as that term is defined in the Investment Company
Act of 1940, had any direct or indirect financial interest in the operation of
the Plans.
ADDITIONAL INFORMATION
The Fund's Prospectus and this Statement of Additional Information omit
certain information contained in the registration statement filed with the
Securities and Exchange Commission which may be obtained from the Commission's
principal office at 450 Fifth Street, N.W. Washington, DC 20549, upon payment of
the fee prescribed by the rules and regulations promulgated by the Commission.
FINANCIAL STATEMENTS
Financial information relating to the Fund is contained in the Annual
Report to Shareholders for the year ended November 30, 1996 and is available by
calling Equity Planning at (800) 243-4361, or by writing to Equity Planning at
100 Bright Meadow Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200. The
Annual Report is incorporated into this Statement of Additional Information by
reference. A copy of the Annual Report must precede or accompany this Statement
of Additional Information.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP with principal offices at 160 Federal Street, Boston,
MA 02110, has been selected independent accountants for the Fund. Price
Waterhouse LLP audits the Fund's annual financial statements and expresses an
opinion thereon.
38
<PAGE>
[FRONT COVER]
P H O E N I X
ANNUAL REPORT
NOVEMBER 30, 1996
Phoenix
Multi-Portfolio Fund
Annual Report
| Tax-Exempt Bond Portfolio
| Mid Cap Portfolio
| International Portfolio
| Real Estate Securities Portfolio
| Emerging Markets Bond Portfolio
- -----------------------------------------------------------
MUTUAL FUNDS, ANNUITIES AND INSURANCE PRODUCTS ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY ANY BANK, NOR
ARE THEY INSURED BY THE FDIC; THEY ARE SUBJECT TO INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
- ------------------------------------------------------------
[LOGOTYPE] PHOENIX
DUFF & PHELPS
<PAGE>
Table of Contents
Page
The Tax-Exempt Bond Portfolio 1
The Mid Cap Portfolio 9
The International Portfolio 16
The Real Estate Securities Portfolio 25
The Emerging Markets Bond Portfolio 32
Notes to Financial Statements 39
<PAGE>
PHOENIX TAX-EXEMPT BOND PORTFOLIO
MARKET AND PORTFOLIO REVIEW
Fund Description
Phoenix Tax-Exempt Bond Portfolio invests in high-quality municipal
securities and seeks to maximize both tax-exempt yield and after-tax total
return. The Fund is well diversified geographically and stresses regions of the
country with the most promising economic prospects.
Investment Environment
Shifting market opinion over the direction of the U.S. economy was
responsible for much of the volatility in interest rates during this latest
twelve-month reporting period. During December and January, the Federal Reserve
cut the Fed Funds Rate in an effort to stimulate what was believed to be a
sluggish economy. Although it was widely anticipated that the Fed would have to
lower rates again, a surprisingly strong February employment report provided
conflicting evidence about the economy's condition. As more information became
available, it became evident that the economy had grown robustly over the first
half of 1996. During this period, interest rates were pushed higher as the
financial markets had to consider the threat of future inflation.
By late summer, the consensus view on Wall Street shifted once again as signs
of more moderate economic growth became increasingly more apparent and concerns
over inflation declined. These signs of a slower economy allowed interest rates
to fall for the remainder of the reporting period. In total, the yield on the
bell weather 30-year Treasury bond ranged from as low as 5.95% to as high as
7.19% over the last twelve months. Despite all these market gyrations, the "long
bond" finished the reporting period at 6.36% -- only 28 basis points higher than
where it was one year ago.
In the municipal market, lower-quality investment grade bonds ("BBB" and "A")
outperformed higher-quality investment grade issues ("AA" and "AAA") over the
last twelve months, as investors reached down the credit spectrum for higher
yields. On the tax-reform front, the election results have calmed investor fears
regarding any radical tax reform -- Bill Clinton was re-elected to another term
and the Republicans maintained control of the Congress. Lastly, the limited
supply of new tax-exempt issues was beneficial from a technical standpoint as
demand for these securities continued to be strong.
Portfolio Review
Despite a challenging bond market environment, the Fund posted solid gains
over this latest reporting cycle. For the twelve-month period ended November 30,
1996, class A shares provided a total return of 4.30% and class B shares
returned 3.60%. These results trailed the Lehman Brothers Municipal Bond Index,
which returned 5.89% over the same period. All of these returns assume
reinvestment of any distributions, but exclude the effect of sales charges.
The Fund's focus on higher-quality credits held back performance during this
latest fiscal reporting period. Despite the relative underperformance of
top-tier investment-grade bonds, we continue to believe that the ongoing fiscal
problems of many municipalities warrants a high-quality portfolio. Additionally,
credit quality spreads remain narrow, making this an unfavorable environment to
take municipal credit risk. As of November 30, 1996, 51% of the portfolio's
assets were rated "AA" or higher, with maturities ranging from intermediate to
long.
Outlook
Moving forward, we believe that the outlook for the municipal bond market and
our Fund appears favorable. At current rate levels, demand for tax-exempt
securities from individuals should be strong as we head into tax season in the
first quarter of 1997. Additionally, increasing investor caution regarding
aggressive equity market valuations may lead to a reallocation of some funds
into tax-exempt securities.
In terms of geographic distribution, the Fund is currently emphasizing the
mid-atlantic, midwest and oil patch states which look attractive from both an
economic and fiscal perspective. Although the U.S. economy appears to be in
excellent health, a number of states and municipalities continue to experience
fiscal difficulties, making issuer selection a critical factor for success. As
always, we will continue to focus on high credit quality assets for the Fund and
carefully monitor the market for attractive investment opportunities.
1
<PAGE>
Tax-Exempt Bond Portfolio
-----------------------------------------------------------------------------
[LINE CHART]
Lehman Phoenix
Brothers Tax-Exempt
Municipal Bond Portfolio
Bond Index* -- Class A
7/15/88 10000 9525
11/30/88 10341 9924
11/30/89 11479 11128
11/30/90 12362 11850
11/30/91 13632 12954
11/30/92 15000 14498
11/30/93 16661 16353
11/30/94 15786 15118
11/30/95 18770 18122
11/30/96 19875 18903
[/LINE CHART]
Average Annual Total Returns
for Periods Ending 11/30/96
<TABLE>
<CAPTION>
From Inception From Inception
7/15/88 to 3/16/94 to
1 Year 5 Years 11/30/96 11/30/96
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Class A with 4.75% sales
charge -0.66% 6.81% 7.89% --
- --------------------------------------------------------------------------------
Class A at net asset value 4.30% 7.85% 8.52% --
- --------------------------------------------------------------------------------
Class B with CDSC -0.35% -- -- 4.42%
- --------------------------------------------------------------------------------
Class B at net asset value 3.60% -- -- 5.44%
- --------------------------------------------------------------------------------
Lehman Brothers
Municipal Bond Index* 5.89% 7.83% 8.49 %** 6.38%***
- --------------------------------------------------------------------------------
</TABLE>
This chart assumes an initial gross investment of $10,000 made on 7/15/88
(inception of the Fund) for Class A shares. The total return for Class A
shares reflects the maximum sales charge of 4.75% on the initial investment
and assumes reinvestment of dividends and capital gains. Class B share
performance will be greater or less than that shown based on differences in
inception date, fees and sales charges. The total return (since inception
3/16/94) for Class B shares reflects the 5% contingent deferred sales charge
(CDSC), which is applicable on all shares redeemed during the 1st year after
purchase and 4% for all shares redeemed during the 2nd year after purchase
(scaled down to 3%--3rd year; 2%--4th and 5th year and 0% thereafter).
Returns indicate past performance, which is not predictive of future
performance. Investment return and net asset value will fluctuate, so that
your shares, when redeemed, may be worth more or less than the original cost.
*The Lehman Brothers Municipal Bond Index is an unmanaged but commonly used
measure of long-term, investment-grade, tax-exempt municipal bond total
return performance. The Lehman Brothers Municipal Bond Index performance
does not reflect sales charges.
**Index information from 6/30/88 to 11/30/96.
***Index information from 2/28/94 to 11/30/96.
2
<PAGE>
Tax-Exempt Bond Portfolio
-----------------------------------------------------------------------------
INVESTMENTS AT NOVEMBER 30, 1996
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ -------- ---------------
<S> <C> <C> <C>
MUNICIPAL TAX-EXEMPT BONDS--96.8%
Alabama--0.7%
Alabama Housing Finance Authority
6.50%, '17 Aaa(b) $ 970 $ 999,866
---------
Alaska--0.9%
Valdez Marine Terminal Revenue 7%,
'25 AA 1,125 1,221,064
---------
Arizona--0.8%
Pima County 6.75%, '15 AAA 540 588,989
Pima County Prerefunded 6.75%, '15 AAA 460 511,129
---------
1,100,118
---------
Arkansas--1.4%
Drew County 7.90%, '11 Aaa(b) 406 438,666
Jacksonville Housing 7.90%, '11 Aaa(b) 604 658,137
Lonoke County Residential Housing
7.90%, '11 Aaa(b) 594 651,580
Stuttgart Revenue 7.90%, '11 Aaa(b) 283 300,719
---------
2,049,102
---------
California--8.1%
California HFA Mortgage 7.75%, '17 AA- 270 285,484
Pittsburg Redevelopment Series A
4.625%, '21 AAA 1,650 1,438,107
Riverside County 8.625%, '16 (d) AAA 4,300 5,667,830
University of California Series C
5.125%, '18 AAA 4,300 4,101,641
---------
11,493,062
---------
Colorado--2.0%
Arapahoe County Hwy Revenue 6.90%,
'15 Baa(b) 2,500 2,767,500
---------
Connecticut--2.0%
Mashantucket Pequot Tribe 144A
6.50%, '05 (e) BBB 1,700 1,788,162
Mashantucket Pequot Tribe 144A
6.50%, '06 (e) BBB 1,000 1,048,920
---------
2,837,082
---------
Florida--1.2%
Martin County Indl. Cogeneration
7.875%, '25 BBB- 1,500 1,722,150
---------
Georgia--2.2%
Fulton County Water and Sewer
6.375%, '14 AAA 1,000 1,123,320
Georgia Electric Authority Series Z
5.50%, '20 AAA 2,000 2,028,900
---------
3,152,220
---------
Illinois--6.0%
Chicago Board of Education 6%, '20 AAA 500 537,340
Chicago O'Hare International Airport
8.85%, '18 BB 890 1,009,687
Chicago PCR (Peoples Light & Gas)
7.50%, '15 AA- 1,000 1,090,260
Illinois Development Finance
Authority 7.60%, '13 (d) AA 2,000 2,202,880
Illinois Health Facilities Authority
7%, '08 AAA 1,100 1,265,352
Illinois Housing Development
Authority Residual Series A 7%, '17 A+ 780 803,135
Metro Pier & Exposition 0%,
'07 (c) Aaa(b) 1,470 1,589,599
Metro Pier & Exposition 0%,
'07 (c) Aaa(b) 30 31,889
---------
8,530,142
---------
Indiana--2.1%
Indianapolis Public Imp. 0%, '03 A(b) 2,500 1,863,200
Indianapolis Public Imp. 0%, '05 Aa(b) 1,765 1,159,781
---------
3,022,981
---------
Kentucky--2.6%
Greater Kentucky Housing Assistance
7.125%, '24 AA- 1,000 1,050,070
Kentucky Turnpike Authority 0%, '10 AAA 3,300 1,650,528
Perry County Solid Waste Disposal
Revenue 7%, '24 NR 1,000 1,041,120
---------
3,741,718
---------
Louisiana--1.9%
East Baton Rouge Parish Series ST-A
4.90%, '16 AAA 1,000 921,480
St. Charles Parish Revenue 7.50%,
'21 AAA 1,250 1,383,188
St. Mary Public Authority 7.625%,
'12 Aaa(b) 163 176,090
St. Tammany Public Authority 7%, '02 Aaa(b) 162 168,589
---------
2,649,347
---------
Maryland--0.4%
Baltimore G.O. 7%, '09 AAA 500 591,700
---------
See Notes to Financial Statements
3
<PAGE>
Tax-Exempt Bond Portfolio
-----------------------------------------------------------------------------
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ -------- ---------------
<S> <C> <C> <C>
Massachusetts--6.6%
Massachusetts Bay Transportation
Authority 5.80%, '11 A+ $2,000 $ 2,116,560
Massachusetts Bay Transportation
Authority Series B 6.20%, '16 A+ 1,000 1,101,300
Massachusetts Indl. Fin. Agency 0%,
'05 A 1,100 703,296
Massachusetts State Health
& Education Revenue
3.10%, '13 (c) AAA 6,000 4,799,820
Massachusetts State Series B 7%, '09 AAA 500 594,345
---------
9,315,321
---------
Michigan--2.1%
Western Townships Sewage Authority
8.20%, '18 BBB+ 1,500 1,631,355
Western Townships Sewage Authority
6.50%, '19 AAA 1,200 1,267,380
---------
2,898,735
---------
Mississippi--1.2%
Lowndes County Waste Disposal 6.80%,
'22 A 1,450 1,678,027
---------
Nebraska--1.1%
Nebraska Higher Education 6.70%, '02 A(b) 1,500 1,590,210
---------
Nevada--1.1%
Clark County School District Series
A 0%, '03 AAA 2,000 1,484,320
---------
New Jersey--1.7%
Atlantic City Improvement Authority
8.875%, '10 NR 1,000 1,096,490
Camden County Municipal Utility 0%,
'11 AAA 3,000 1,296,960
---------
2,393,450
---------
New York--11.8%
Erie County Water Authority 0%, '17 AAA 550 122,095
New York City University Dormitory
6.375%, '08 BBB 1,000 1,056,770
Niagara Falls 5.25%, '15 AAA 4,000 3,999,440
Port Authority Revenue 6.75%, '11 NR 3,000 3,125,070
Port Authority Revenue 6.125%, '94 AA- 5,000 5,374,500
Triborough Bridge & Tunnel 6.625%,
'12 A+ 750 866,595
Triborough Bridge & Tunnel 4.75%,
'14 A+ 2,250 2,128,545
---------
16,673,015
---------
North Carolina--1.1%
North Carolina Municipal Power 6%,
'09 AAA 1,385 1,503,681
---------
Pennsylvania--14.7%
Pennsylvania Economic Development
Series D 7.05%, '10 BBB- 2,000 2,098,900
Pennsylvania Economic Development
9.25%, '22 NR 6,000 5,677,980
Pennsylvania Finance Authority
6.60%, '09 A 4,000 4,235,600
Pennsylvania Financial Development
6.75%, '07 NR 3,000 3,096,390
Pennsylvania Financial Development
6.40%, '09 NR 5,000 4,993,950
Pittsburgh G.O. Series C 0%, '04 AAA 1,025 709,228
---------
20,812,048
---------
Tennessee--1.1%
Met. Gov't Tennessee Health &
Educational Facilities Board 6%,
'16 AAA 1,500 1,620,780
---------
Texas--8.8%
Alliance Airport Authority 7%, '11 BB+ 1,100 1,231,780
Austin Convention Center 8.25%, '14 AAA(b) 980 1,106,253
Brazos River Authority 7.75%, '15 A- 750 804,225
Brazos River Authority 7.625%, '19 A- 1,000 1,087,090
Colorado River Water District 8.25%,
'15 NR 540 616,756
Harris County Toll Road Multimode
8.125%, '17 AAA 700 754,684
La Vernia School District 5%, '22 AAA 1,125 1,048,118
San Antonio Texas Electric & Gas 5%,
'12 AA 2,000 1,947,560
Texas State Technical College 6.25%,
'09 AAA 1,250 1,386,125
Texas Turnpike Authority 5%, '25 AAA 1,500 1,401,570
Texas Water Resources Finance Agency
7.625%, '08 A 995 1,069,386
---------
12,453,547
---------
Utah--1.7%
Intermountain Power Agency Series B
7%, '21 A+ 1,250 1,331,338
Intermountain Power Agency Series B
7.50%, '21 A+ 1,000 1,061,980
---------
2,393,318
See Notes to Financial Statements
4
<PAGE>
Tax-Exempt Bond Portfolio
-----------------------------------------------------------------------------
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ -------- ---------------
<S> <C> <C> <C>
Virginia--4.4%
Pittsylvania County Revenue Series A
7.30%, '04 NR $1,000 $ 1,037,630
Pittsylvania County Revenue Series A
7.45%, '09 NR 3,000 3,159,690
Upper Occoquan Sewer Authority
5.15%, '20 AAA 2,000 1,965,220
---------
6,162,540
---------
Washington--1.3%
Walla Walla Waste Recycling Revenue
9.125%, '26 NR 2,000 1,865,480
---------
West Virginia--2.2%
Upshur Solid Waste Revenue 7%, '25 NR 2,000 2,089,360
West Virginia Housing Development
Fund 6.625%, '20 AA 1,000 1,001,770
---------
3,091,130
---------
Wisconsin--0.9%
Wisconsin Clean Water Revenue
6.875%, '11 AA 750 868,215
Wisconsin Housing & Development
Authority 7.375%, '17 A+ 335 345,164
---------
1,213,379
---------
Wyoming--0.5%
Wyoming Community Development
Authority 7.875%, '18 AA 625 651,356
---------
Other Territories--2.2%
Puerto Rico Commonwealth Aqueduct &
Sewer 7.875%, '17 AAA 500 541,070
Puerto Rico Commonwealth Highway
Revenue Series V 6.625%, '12 A 2,400 2,571,912
---------
3,112,982
---------
TOTAL MUNICIPAL TAX-EXEMPT BONDS
(Identified cost $130,596,377) 136,791,371
---------
SHORT-TERM OBLIGATIONS--1.5%
Commercial Paper--1.5%
CIESCO 5.40%, 12-2-96 2,160 2,159,676
---------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $2,159,676) 2,159,676
---------
TOTAL INVESTMENTS--98.3%
(Identified cost $132,756,053) 138,951,047(a)
Cash and receivables, less liabilities--1.7% 2,368,593
---------
NET ASSETS--100.0% $141,319,640
=========
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $8,417,371 and gross
depreciation of $2,170,887 for income tax purposes. At November 30, 1996,
the aggregate cost of securities for federal income tax purposes was
$132,704,563.
(b) As rated by Moody's, Fitch, or Duff & Phelp's.
(c) Variable or step coupon bond; interest rate reflects the rate currently
in effect.
(d) Segregated as collateral for futures contracts.
(e) 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 November 30,
1996, these securities amount to a value of $2,837,082 or 2.0% of net
assets.
See Notes to Financial Statements
5
<PAGE>
Tax-Exempt Bond Portfolio
-----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Assets
Investment securities at value
(Identified cost $132,756,053) $138,951,047
Cash 46,426
Receivables
Interest 2,668,556
Fund shares sold 11,862
-----------
Total assets 141,677,891
-----------
Liabilities
Payables
Dividend distributions 140,857
Fund shares repurchased 18,566
Variation margin for futures contracts 18,125
Investment advisory fee 52,086
Distribution fee 31,847
Transfer agent fee 24,049
Trustees' fee 11,197
Financial agent fee 3,472
Accrued expenses 58,052
-----------
Total liabilities 358,251
-----------
Net Assets $141,319,640
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $133,392,611
Distributions in excess of net investment income (117,605)
Accumulated net realized gain 1,867,140
Net unrealized appreciation 6,177,494
-----------
Net Assets $141,319,640
===========
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $136,558,079) 12,110,521
Net asset value per share $11.28
Offering price per share
$11.28/(1-4.75%) $11.84
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $4,761,561) 420,739
Net asset value and offering price per share $11.32
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Interest $9,145,280
-----------
Total investment income 9,145,280
-----------
Expenses
Investment advisory fee 646,989
Distribution fee--Class A 349,074
Distribution fee--Class B 41,458
Financial agent fee 43,133
Transfer agent 159,941
Professional 43,923
Printing 33,814
Registration 32,713
Trustees 20,461
Custodian 15,963
Miscellaneous 1,515
-----------
Total expenses 1,388,984
-----------
Net investment income 7,756,296
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 981,871
Net realized gain on futures contracts 688,262
Net change in unrealized appreciation (depreciation) on
investments (3,275,493)
-----------
Net loss on investments (1,605,360)
-----------
Net increase in net assets resulting from operations $6,150,936
===========
</TABLE>
See Notes to Financial Statements
6
<PAGE>
Tax-Exempt Bond Portfolio
-----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Year
Ended Ended
November 30, 1996 November 30, 1995
------------------ ------------------
<S> <C> <C>
From Operations
Net investment income $7,756,296 $8,381,854
Net realized gain 1,670,133 457,881
Net change in unrealized appreciation
(depreciation) (3,275,493) 18,057,793
----------- -----------
Increase in net assets resulting from
operations 6,150,936 26,897,528
----------- -----------
From Distributions to Shareholders
Net investment income--Class A (7,504,351) (8,208,943)
Net investment income--Class B (191,960) (99,894)
Distributions in excess of net investment
income--Class A -- (45,855)
Distributions in excess of net investment
income--Class B -- (558)
Net realized gains--Class A -- (482,063)
Net realized gains--Class B -- (4,381)
----------- -----------
Decrease in net assets from distributions to
shareholders (7,696,311) (8,841,694)
----------- -----------
From Share Transactions
Class A
Proceeds from sales of shares (7,599,558 and
2,629,097 shares, respectively) 84,574,148 29,051,453
Net asset value of shares issued from
reinvestment of distributions (371,771 and
460,362 shares, respectively) 4,153,807 4,987,475
Cost of shares repurchased (8,830,124 and
4,162,067 shares, respectively) (98,463,997) (45,663,425)
----------- -----------
Total (9,736,042) (11,624,497)
----------- -----------
Class B
Proceeds from sales of shares (197,502 and
166,058 shares, respectively) 2,219,054 1,813,528
Net asset value of shares issued from
reinvestment of distributions (10,179 and
5,729, respectively) 113,899 62,670
Cost of shares repurchased (61,609 and 10,452
shares, respectively) (695,116) (114,346)
----------- -----------
Total 1,637,837 1,761,852
----------- -----------
Decrease in net assets from share
transactions (8,098,205) (9,862,645)
----------- -----------
Net increase (decrease) in net assets (9,643,580) 8,193,189
Net Assets
Beginning of period 150,963,220 142,770,031
----------- -----------
End of period (including distributions in
excess of net investment income of
($117,605) and ($130,874), respectively) $141,319,640 $150,963,220
=========== ===========
</TABLE>
See Notes to Financial Statements
7
<PAGE>
Tax-Exempt Bond Portfolio
-----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------
Year Ended November 30,
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.40 $10.09 $11.58 $11.10 $10.66
Income from investment operations
Net investment income 0.60 0.61 0.65 0.60(4) 0.66(4)
Net realized and unrealized gain (loss) (0.12) 1.34 (1.49) 0.76 0.57
-------- -------- -------- -------- --------
Total from investment operations 0.48 1.95 (0.84) 1.36 1.23
-------- -------- -------- -------- --------
Less distributions
Dividends from net investment income (0.60) (0.61) (0.65) (0.60) (0.66)
Dividends from net realized gains -- (0.03) -- (0.28) (0.13)
-------- -------- -------- -------- --------
Total distributions (0.60) (0.64) (0.65) (0.88) (0.79)
-------- -------- -------- -------- --------
Change in net asset value (0.12) 1.31 (1.49) 0.48 0.44
-------- -------- -------- -------- --------
Net asset value, end of period $11.28 $11.40 $10.09 $11.58 $11.10
======== ======== ======== ======== ========
Total return(1) 4.30% 19.87% -7.55% 12.79% 11.92%
Ratios/supplemental data:
Net assets, end of period (thousands) $136,558 $147,821 $141,623 $171,272 $35,625
Ratio to average net assets of:
Operating expenses 0.94% 0.97% 0.96% 0.75% 0.78%
Net investment income 5.42% 5.65% 5.65% 5.33% 5.92%
Portfolio turnover 27% 25% 54% 62% 145%
</TABLE>
<TABLE>
<CAPTION>
Class B
--------------------------------
From
Year Ended November 30, Inception
3/16/94 to
1996 1995 11/30/94
-------- -------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $11.44 $10.12 $11.21
Income from investment operations
Net investment income 0.52 0.53 0.39
Net realized and unrealized gain (loss) (0.12) 1.35 (1.09)
-------- -------- --------
Total from investment operations 0.40 1.88 (0.70)
-------- -------- --------
Less distributions
Dividends from net investment income (0.52) (0.53) (0.39)
Dividends from net realized gains -- (0.03) --
-------- -------- --------
Total distributions (0.52) (0.56) (0.39)
-------- -------- --------
Change in net asset value (0.12) 1.32 (1.09)
-------- -------- --------
Net asset value, end of period $11.32 $11.44 $10.12
======== ======== ========
Total return(1) 3.60% 19.07% -6.42%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $4,762 $3,142 $1,147
Ratio to average net assets of:
Operating expenses 1.69% 1.72% 1.54%(2)
Net investment income 4.68% 4.90% 5.07%(2)
Portfolio turnover 27% 25% 54%
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Includes reimbursement of operating expenses by investment adviser of
$0.03 and $0.04, respectively.
See Notes to Financial Statements
8
<PAGE>
PHOENIX MID CAP PORTFOLIO
Fund Description
Phoenix Mid Cap Portfolio invests primarily in common stocks of medium-size
U.S. companies which have the potential to provide long-term capital
appreciation. More specifically, at least 65% of the Fund's total assets are
invested in stocks which range in market capitalization from $1 billion to
$10 billion.
Investment Environment
Despite increasing interest rates and waning corporate earnings momentum,
U.S. stock prices forged higher over this reporting period, fueled by
unprecedented cash inflows into equity mutual funds and continued corporate
share buybacks. Although this remarkable rally dates back to December 1994,
the past year has been one of tremendous rotation among various sectors of
the stock market -- a manifestation of increasing investor uncertainty over
the direction of interest rates and the economy. As measured by market
capitalization, large company stocks outperformed small- and mid-cap issues
by wide margins during the fiscal year ended November 30, 1996.
Portfolio Review
Aided by this long bull market, Phoenix Mid Cap Portfolio posted double
digit gains over this latest reporting cycle. For the twelve months ended
November 30, 1996, the Fund's class A shares provided a total return of
13.52% and class B shares returned 12.75%. Despite the solid results, the
Fund trailed the Standard & Poor's MidCap 400 Index, which returned 18.77%
over the same period. All of these figures assume reinvestment of any
distributions, but exclude the effect of sales charges.
Please note that this Fund has changed its market benchmark from the
Standard & Poor's 500, an Index consisting primarily of large capitalization
stocks, to that of the Standard & Poor's MidCap 400 Index. We believe that
the S&P MidCap 400 Index, which is composed of medium-size companies with
market capitalizations between $300 million and $5 billion, is more
indicative of the type of stocks that are typically held in this Fund.
During the fiscal year, Fund performance benefited from our strong stock
selection in the energy and capital goods sectors as well as the portfolio's
significant exposure to the solidly performing technology group. Individual
stocks which provided impressive gains for the Fund included ENSCO
International, Altera, Teleport Communications and OrNda Healthcorp. Negative
contributors to performance over this same period included some of our health
care and consumer cyclical holdings as well as the portfolio's underweighted
positions in the consumer staples and financial sectors.
Outlook
As we move closer to 1997, we continue to find investment opportunities in
this extended bull market. Given this current environment of moderate
economic growth and low inflation expectations, we are focusing on such
compelling investment themes as Next Generation Semiconductors (technology),
21st Century Medicine (health care) and Energy Technology (energy). With the
recent relative underperformance of smaller company stocks, we are also
scouring this segment of the market for high-growth companies selling at
attractive valuations. As of November 30, 1996, the Fund's asset allocation
mix was 86% equities and 14% cash equivalents.
*Standard & Poor's MidCap 400 Index consists of 400 domestic stocks chosen
for the market size (median market capitalization of about $610 million),
liquidity and industry group representation. It is a market-weighted index
with each stock affecting the index in proportion to its market value.
9
<PAGE>
Mid Cap Portfolio
[LINE CHART]
Phoenix
Mid Cap S&P
Portfolio Mid Cap
--Class A S&P 500** 400*
---------- --------- -------
11/1/89 9525 10000 10000
11/30/89 9800 10206 10221
11/30/90 11491 9841 9493
11/30/91 16177 11849 13482
11/30/92 18837 14035 16324
11/30/93 20521 15450 18373
11/30/94 20733 15617 18369
11/30/95 26511 21396 24335
11/30/96 30095 27390 28903
[/LINE CHART]
Average Annual Total Returns
for Periods Ending 11/30/96
<TABLE>
<CAPTION>
From Inception From Inception
11/1/89 to 7/18/94 to
1 Year 5 Years 11/30/96 11/30/96
--------------------------------- -------- --------- ---------------- ----------------
<S> <C> <C> <C> <C>
Class A with 4.75% sales charge 8.12% 12.12% 16.84% --
--------------------------------- ------- -------- -------------- ---------------
Class A at net asset value 13.52% 13.22% 17.65% --
--------------------------------- ------- -------- -------------- ---------------
Class B with CDSC 8.85% -- -- 16.10%
--------------------------------- ------- -------- -------------- ---------------
Class B at net asset value 12.75% -- -- 17.13%
--------------------------------- ------- -------- -------------- ---------------
S&P MidCap 400* 18.77% 16.48% 16.16% 19.61%
--------------------------------- ------- -------- -------------- ---------------
S&P 500 Stock Index** 28.02% 18.25% 15.28 % 21.24%
--------------------------------- ------- -------- -------------- ---------------
</TABLE>
This chart assumes an initial gross investment of $10,000 made on 11/1/89
(inception of the Fund) for Class A shares. The total return for Class A
shares reflects the maximum sales charge of 4.75% on the initial investment
and assumes reinvestment of dividends and capital gains. Class B share
performance will be greater or less than that shown based on differences in
inception date, fees and sales charges. The total return (since inception
7/18/94) for Class B shares reflects the 5% contingent deferred sales charge
(CDSC), which is applicable on all shares redeemed during the 1st year after
purchase and 4% for all shares redeemed during the 2nd year after purchase
(scaled down to 3%--3rd year; 2%--4th and 5th year and 0% thereafter).
Returns indicate past performance, which is not predictive of future
performance. Investment return and net asset value will fluctuate, so that
your shares, when redeemed, may be worth more or less than the original cost.
*The S&P MidCap 400 is an unmanaged index composed of companies with market
capitalizations between $300 million and $5 billion. Performance is
calculated on a total return basis, as reported by Frank Russell Co. The
S&P 400's performance does not reflect sales charges.
**The S&P 500 Stock Index is an unmanaged but commonly used measure of stock
return performance. The S&P 500's performance does not reflect sales charges.
10
<PAGE>
Mid Cap Portfolio
INVESTMENTS AT NOVEMBER 30, 1996
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
COMMON STOCKS--85.1% ----------- -------------
Airlines--0.5%
Southwest Airlines Co. 100,000 $ 2,475,000
-----------
Banks--4.1%
Fleet Financial Group, Inc. 190,000 10,521,250
Republic New York Corp. 100,000 8,825,000
-----------
19,346,250
-----------
Computer Software & Services--9.2%
Netscape Communications Corp. (b) 150,000 8,381,250
Network General Corp. (b) 300,000 7,256,250
Parametric Technology Corp. (b) 150,000 8,156,250
Peoplesoft, Inc. (b) 90,000 8,235,000
Rogue Wave Software, Inc. (b) 20,000 257,500
Security Dynamics Technologies, Inc. (b) 160,000 6,580,000
Shiva Corp. (b) 100,000 4,125,000
-----------
42,991,250
-----------
Diversified Financial Services--3.0%
Associates First Capital Corp. Class A 110,000 5,321,250
First USA, Inc. 260,000 8,547,500
-----------
13,868,750
-----------
Diversified Miscellaneous--0.9%
Central Garden & Pet Company (b) 185,000 4,000,625
-----------
Electrical Equipment--1.8%
General Signal Corp. 150,000 6,468,750
Grainger (W.W.), Inc. 25,000 1,987,500
-----------
8,456,250
-----------
Electronics--7.9%
Altera Corp. (b) 49,000 3,699,500
Analog Devices, Inc. (b) 112,000 3,598,000
C-Cube Microsystems, Inc. (b) 125,000 5,453,125
Linear Technology Corp. 86,000 4,052,750
LSI Logic Corp. (b) 240,000 7,230,000
Maxim Integrated Products, Inc. (b) 82,000 3,802,750
Microchip Technology, Inc. (b) 70,000 3,342,500
S3, Inc. (b) 150,000 2,550,000
Xilinx, Inc. (b) 80,000 3,510,000
-----------
37,238,625
-----------
Food--1.4%
Interstate Bakeries Corp. 150,000 6,768,750
-----------
Healthcare--Diversified--1.5%
Warner-Lambert Co. 100,000 7,150,000
-----------
Healthcare--Drugs--1.7%
Genetics Institute, Inc. (b) 50,000 3,400,000
Genzyme Corp. (b) 200,000 4,550,000
-----------
7,950,000
-----------
Hospital Management Services--4.9%
Health Management Association, Inc. Class A (b) 221,000 4,889,625
HEALTHSOUTH Corp. (b) 155,000 5,831,875
PhyCor, Inc. (b) 240,000 7,755,000
Tenet Healthcare Corp. (b) 200,000 4,475,000
-----------
22,951,500
-----------
Insurance--3.3%
Ace Ltd. 165,000 9,549,375
Travelers/Aetna Property Casualty Corp. 165,000 5,692,500
-----------
15,241,875
-----------
Lodging & Restaurants--2.9%
Boston Chicken (b) 250,000 9,687,500
Lone Star Steakhouse & Saloon (b) 140,000 4,007,500
-----------
13,695,000
-----------
Medical Products & Supplies--2.5%
Boston Scientific Corp. (b) 100,000 5,837,500
OrNda HealthCorp (b) 200,000 5,825,000
-----------
11,662,500
-----------
Metals & Mining--1.6%
Phelps Dodge Corp. 100,000 7,262,500
-----------
Natural Gas--2.6%
Columbia Gas System, Inc. 75,000 4,846,875
Consolidated Natural Gas Co. 80,000 4,570,000
UtiliCorp United, Inc. 100,000 2,687,500
-----------
12,104,375
-----------
Oil Service & Equipment--11.5%
BJ Services Co. (b) 165,000 7,878,750
Diamond Offshore Drilling (b) 10,000 637,500
ENSCO International, Inc. (b) 180,000 7,897,500
Global Marine, Inc. (b) 375,000 7,312,500
Halliburton Co. 10,000 602,500
Reading & Bates Corp. (b) 220,000 6,380,000
Rowan Companies, Inc. (b) 300,000 7,087,500
Smith International, Inc. (b) 100,000 4,087,500
Tidewater, Inc. 140,000 6,125,000
Transocean Offshore, Inc. 100,000 6,025,000
-----------
54,033,750
-----------
Retail--3.4%
Office Depot, Inc. (b) 225,000 4,387,500
Staples, Inc. (b) 300,000 5,925,000
Toys "R" Us, Inc. (b) 170,000 5,865,000
-----------
16,177,500
-----------
Retail--Food--4.2%
Albertson's, Inc. 200,000 6,975,000
American Stores Co. 130,000 5,183,750
Safeway, Inc. (b) 185,000 7,515,625
-----------
19,674,375
-----------
Telecommunications Equipment--7.6%
Ascend Communications, Inc. (b) 120,000 8,535,000
LCI International, Inc. (b) 215,000 7,014,375
Panamsat Corp. (b) 245,000 7,043,750
Premisys Communications, Inc. (b) 135,000 6,969,375
Teleport Communications Group, Inc. Class A (b) 180,000 5,962,500
-----------
35,525,000
-----------
</TABLE>
See Notes to Financial Statements
11
<PAGE>
Mid Cap Portfolio
<TABLE>
<CAPTION>
SHARES VALUE
--------- --------------
<S> <C> <C>
Textile & Apparel--6.5%
Jones Apparel Group, Inc. (b) 280,000 $ 8,610,000
Liz Claiborne, Inc. 250,000 10,593,750
Nautica Enterprises, Inc. (b) 180,000 5,760,000
Tommy Hilfiger Corp. (b) 100,000 5,400,000
------------
30,363,750
------------
Utility--Electric--2.1%
FPL Group, Inc. 70,000 3,228,750
Public Service Co. of Colorado 100,000 3,900,000
Sierra Pacific Resources 100,000 2,862,500
------------
9,991,250
------------
TOTAL COMMON STOCKS
(Identified cost $338,271,185) 398,928,875
------------
WARRANTS--1.3%
Electronics--1.3%
Intel Corp. Warrants (b) 70,000 6,142,500
------------
TOTAL WARRANTS
(Identified cost $3,145,660) 6,142,500
------------
TOTAL LONG-TERM INVESTMENTS--86.4%
(Identified cost $341,416,845) 405,071,375
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- ---------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--16.5%
Commercial Paper--10.7%
Receivables Capital Corp.
5.29%, 12-2-96 A-1 $5,000 4,999,265
Abbott Laboratories 5.25%,
12-4-96 A-1+ 3,000 2,998,688
Pfizer, Inc. 5.24%, 12-9-96 A-1+ 5,000 4,994,178
Exxon Imperial U.S., Inc.
5.23%, 12-11-96 A-1+ 2,500 2,496,368
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ -------- ---------------
<S> <C> <C> <C>
Commercial Paper--continued
AlliedSignal, Inc. 5.25%, 12-13-96 A-1 $5,000 $ 4,991,250
General Electric Capital Corp. 5.25%,
12-18-96 A-1+ 7,292 7,292,000
Schering Corp. 5.25%, 12-18-96 A-1+ 4,120 4,109,786
Ameritech Capital Funding Corp.
5.25%, 12-23-96 A-1+ 4,960 4,944,087
Kellogg Co. 5.26%, 12-23-96 A-1+ 4,625 4,610,133
General Re Corp. 5.27%, 12-24-96 A-1+ 5,500 5,481,481
Receivables Capital Corp. 5.37%,
1-16-97 A-1 3,580 3,555,435
-----------
50,472,671
-----------
Federal Agency Securities--4.7%
Federal Home Loan Mortgage 5.70%, 12-2-96 2,670 2,669,577
Federal National Mortgage Assoc.
5.22%, 12-6-96 1,625 1,623,822
Federal Home Loan Mortgage
5.215%, 12-11-96 3,295 3,290,227
Federal Home Loan Banks 5.22%, 12-19-96 9,965 9,939,091
Federal Home Loan Mortgage 5.21%,
12-23-96 4,460 4,445,800
-----------
21,968,517
-----------
U.S. Treasury Bills--1.1%
U.S. Treasury Bills 5.115%, 12-19-96 5,000 4,987,213
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $77,428,401) 77,428,401
-----------
TOTAL INVESTMENTS--102.9%
(Identified cost $418,845,246) 482,499,776(a)
Cash and receivables, less liabilities--(2.9%) (13,427,473)
-----------
NET ASSETS--100.0% $469,072,303
===========
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $67,142,817 and gross
depreciation of $3,935,372 for federal income tax purposes. At November
30, 1996, the aggregate cost of securities for federal income tax
purposes was $419,292,331.
(b) Non-income producing.
See Notes to Financial Statements
12
<PAGE>
Mid Cap Portfolio
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $418,845,246) $482,499,776
Short-term investments held as collateral for loaned
securities 29,424,800
Cash 1,792
Receivables
Investment securities sold 5,333,732
Fund shares sold 110,887
Dividends and interest 280,820
-----------
Total assets 517,651,807
-----------
Liabilities
Payables
Investment securities purchased 17,778,496
Collateral on securities loaned 29,424,800
Fund shares repurchased 635,345
Investment advisory fee 288,085
Transfer agent fee 168,879
Distribution fee 106,623
Financial agent fee 11,523
Trustees' fee 11,179
Accrued expenses 154,574
-----------
Total liabilities 48,579,504
-----------
Net Assets $469,072,303
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $352,535,244
Accumulated net realized gain 52,882,529
Net unrealized appreciation 63,654,530
-----------
Net Assets $469,072,303
===========
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $451,473,543) 20,849,016
Net asset value per share $21.65
Offering price per share
$21.65/(1-4.75%) $22.73
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $17,598,760) 826,400
Net asset value and offering price per share $21.30
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Interest $3,366,781
Dividends 2,146,098
Security lending 142,965
-----------
Total investment income 5,655,844
-----------
Expenses
Investment advisory fee 3,579,657
Distribution fee--Class A 1,157,450
Distribution fee--Class B 143,076
Financial agent fee 143,186
Transfer agent 1,116,125
Printing 226,813
Custodian 55,355
Registration 51,707
Professional 49,266
Trustees 20,444
Miscellaneous 27,584
-----------
Total expenses 6,570,663
-----------
Net investment loss (914,819)
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 53,981,348
Net realized loss on foreign currency transactions (5,591)
Net change in unrealized appreciation (depreciation) on
investments 7,327,088
-----------
Net gain on investments 61,302,845
-----------
Net increase in net assets resulting from operations $60,388,026
===========
</TABLE>
See Notes to Financial Statements
13
<PAGE>
Mid Cap Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Year
Ended Ended
November 30, 1996 November 30, 1995
------------------ ------------------
<S> <C> <C>
From Operations
Net investment income (loss) $(914,819) $1,216,555
Net realized gain 53,975,757 66,738,232
Net change in unrealized appreciation
(depreciation) 7,327,088 43,684,291
----------- -----------
Increase in net assets resulting from operations 60,388,026 111,639,078
----------- -----------
From Distributions to Shareholders
Net investment income--Class A -- (1,350,030)
Net investment income--Class B -- (5,608)
Net realized gains--Class A (63,370,772) (17,010,194)
Net realized gains--Class B (1,485,800) (73,125)
----------- -----------
Decrease in net assets from distributions to
shareholders (64,856,572) (18,438,957)
----------- -----------
From Share Transactions
Class A
Proceeds from sales of shares (4,975,113 and
5,517,176 shares, respectively) 98,337,401 105,808,213
Net asset value of shares issued from
reinvestment of distributions (3,203,933 and
999,234 shares, respectively) 59,432,948 17,312,320
Cost of shares repurchased (9,465,735 and
7,668,150 shares, respectively) (189,179,115) (146,988,778)
----------- -----------
Total (31,408,766) (23,868,245)
----------- -----------
Class B
Proceeds from sales of shares (391,167 and
452,091 shares, respectively) 7,718,870 8,748,909
Net asset value of shares issued from
reinvestment of distributions (74,668 and 4,305,
respectively) 1,371,654 74,521
Cost of shares repurchased (138,583 and 41,778
shares, respectively) (2,722,739) (853,309)
----------- -----------
Total 6,367,785 7,970,121
----------- -----------
Decrease in net assets from share transactions (25,040,981) (15,898,124)
----------- -----------
Net increase (decrease) in net assets (29,509,527) 77,301,997
Net Assets
Beginning of period 498,581,830 421,279,833
----------- -----------
End of period (including undistributed net
investment income of $0 and $0, respectively) $469,072,303 $498,581,830
=========== ===========
</TABLE>
See Notes to Financial Statements
14
<PAGE>
Mid Cap Portfolio
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------
Year Ended November 30,
1996 1995 1994 1993 1992
----------- ------------ ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $22.03 $18.03 $18.70 $17.95 $16.61
Income from investment operations(5)
Net investment income (loss) (0.03)(1) 0.05(1) 0.11 0.11 0.15
Net realized and unrealized gain 2.53 4.74 0.10 1.44 2.41
-------- -------- -------- -------- --------
Total from investment operations 2.50 4.79 0.21 1.55 2.56
-------- -------- -------- -------- --------
Less distributions
Dividends from net investment income -- (0.06) (0.10) (0.13) (0.21)
Dividends from net realized gains (2.88) (0.73) (0.78) (0.67) (1.01)
-------- -------- -------- -------- --------
Total distributions (2.88) (0.79) (0.88) (0.80) (1.22)
-------- -------- -------- -------- --------
Change in net asset value (0.38) 4.00 (0.67) 0.75 1.34
-------- -------- -------- -------- --------
Net asset value, end of period $21.65 $22.03 $18.03 $18.70 $17.95
======== ======== ======== ======== ========
Total return(2) 13.52% 27.87% 1.03% 8.94% 16.44%
Ratios/supplemental data:
Net assets, end of period (thousands) $451,474 $487,674 $419,760 $426,027 $234,472
Ratio to average net assets of:
Operating expenses 1.35% 1.42% 1.36% 1.34% 1.40%
Net investment income (loss) (0.17)% 0.28% 0.59% 0.64% 0.93%
Portfolio turnover 242% 218% 227% 174% 287%
Average commission rate paid(6) $0.0504 N/A N/A N/A N/A
Class B
-------------------------------------
From
Inception
7/18/94
Year Ended November 30, to
1996 1995 11/30/94
-------- -------- --------
Net asset value, beginning of period $21.85 $17.97 $17.68
Income from investment operations(5)
Net investment income (loss) (0.18)(1) (0.12)(1) (0.01)
Net realized and unrealized gain 2.51 4.75 0.30
-------- -------- --------
Total from investment operations 2.33 4.63 0.29
-------- -------- --------
Less distributions
Dividends from net investment income -- (0.02) --
Dividends from net realized gains (2.88) (0.73) --
-------- -------- --------
Total distributions (2.88) (0.75) --
-------- -------- --------
Change in net asset value (0.55) 3.88 0.29
-------- -------- --------
Net asset value, end of period $21.30 $21.85 $17.97
======== ======== ========
Total return(2) 12.75% 26.92% 1.64%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $17,599 $10,908 $1,519
Ratio to average net assets of:
Operating expenses 2.11% 2.18 % 2.05%(3)
Net investment income (loss) (0.92)% (0.58)% (0.23)%(3)
Portfolio turnover 242% 218 % 227 %
Average commission rate paid(6) $0.0504 N/A N/A
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) Annualized
(4) Not annualized
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from
anticipated results depending on the time of share purchases and
redemptions.
(6) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
See Notes to Financial Statements
15
<PAGE>
PHOENIX INTERNATIONAL PORTFOLIO
Fund Description
The Fund generally invests in quality stocks with strong managements, solid
growth prospects and attractive relative valuations. We believe that earnings
growth is the primary factor which drives stock prices and will place emphasis
on markets and stocks where relative earnings growth is strongest. We will sell
a stock that no longer looks attractive relative to the growth and valuation of
its market or peer group, that has surpassed the top of its valuation range, or
that sees a fundamental deterioration in its business prospects. This
disciplined approach allows the Fund to continually emphasize securities that
will provide stronger growth potential over the long-term.
World Markets
Most foreign equity markets have produced excellent returns over the last
twelve months, despite a rising U.S. dollar. In addition to the continued strong
performance in the U.S., Europe also stood out. Almost all European markets
benefited from corporate restructuring, falling interest rates, and the
likelihood of more shareholder-friendly policies. Additionally, countries such
as Germany, Sweden, Finland and the United Kingdom have been further bolstered
by share buybacks and M&A activity.
Despite a strong start, Japan's performance over this reporting period has
been a major disappointment. Poor corporate earnings growth and a weak domestic
economy led to a serious deterioration in investor sentiment. In contrast to
Japan, other Far East countries such as Taiwan, Malaysia, Indonesia and Hong
Kong posted stellar gains during this twelve-month period.
Lastly, most Latin American markets moved higher over this reporting period,
earning double digit returns. An improved economic outlook, lower interest rates
and strong capital inflows served as catalysts for this solid performance. As
measured in U.S. dollars, Venezuela, Brazil and Argentina were among the best
performing countries in this region, while Chile and Peru were among the
laggards.
Portfolio Review
The Phoenix International Portfolio posted strong results over this reporting
cycle. For twelve months ended November 30, 1996, class A shares returned 19.03%
and class B shares returned 18.16%. These results compared very favorably to the
Morgan Stanley International EAFE Index, which gained 12.09% over the same
period. All of these figures assume reinvestment of any distributions, but
exclude the effect of sales charges.
During the fiscal year, Fund performance benefited from the portfolio's
modest overweighting in Europe and its underweighted position in Japan. Strong
stock selection in Europe and our continued focus on such themes as Corporate
Restructuring and Growth in Services also boosted results. Other positive
contributors included our recent overweighting of certain Asian countries,
particularly Hong Kong and Taiwan, as well as the Fund's use of currency hedges.
Outlook
After a dismal first half in 1996, European economic growth is beginning to
improve. We expect 1997 GDP to grow at about 2.5%, but it is unlikely that
demand will be strong enough to exert much upward pressure on interest rates
until late in the year. Except for the United Kingdom and a few smaller European
countries, unemployment is showing no signs of declining. Moreover, the pressure
on governments to cut spending will continue to be a drag on growth going
forward. This, coupled with both public and private sector restructuring, means
it will be even more important to focus on those companies that are making the
difficult choices that will deliver value to their shareholders.
In Japan, the outlook for 1997 is also modest. It appears that most globally
active companies in this country have already done as much restructuring as
possible without a radical philosophical change towards "U.S. style
restructuring." This would entail layoffs and unfriendly takeovers, supported by
government deregulation and tax-reform, and it is doubtful that this type of
change will occur in the near term. On the positive side, the potential for
improved economic growth in the rest of the world could tighten overall capacity
and allow even the weakest Japanese companies to improve their profit margins.
We will continue to monitor Japan's economy for signs of improvement, but
currently see better prospects elsewhere.
In Asia, we remain very positive on Hong Kong's near-term outlook. As a
country, we believe that Hong Kong will remain self-confident immediately prior
to and after the
16
<PAGE>
International Portoflio
handover to China on June 30, 1997. We also expect Taiwan and Malaysia to
continue to do well. However, our outlook for Singapore is rather negative
due to slowing economic growth and a lack of choice in this market. We are
also concerned about the prospects for India and Thailand, given their weak
governments and the severe structural changes needed to turn around both
economies.
In Latin America, Mexico and Argentina are seeing economic re-acceleration
after the severe recession of 1995 and early 1996. While this is clearly good
news, flawed economic reform processes still remain and are now causing problems
in Brazil. The Fund intends to have exposure to this region, but potential
currency depreciation may limit prospective gains. Since other emerging
countries may provide better opportunities, we will look for new markets which
can provide above-average economic and earnings growth.
Overall, we expect foreign markets to continue to perform well in 1997 due to
low interest rates, improved economic growth, and corporate restructuring
efforts. If world economic growth begins to accelerate dramatically, we will
increase the Fund's exposure to economically sensitive stocks. At present,
however, we continue to focus on themes that should provide secular growth and
hence, strong performance. Moving forward, we believe the Fund is well
positioned for the coming new year.
17
<PAGE>
International Portfolio
[LINE CHART]
MSCI EAFE Phoenix
EAFE Excluding International
Index* Japan Portfolio-
Class A
------ --------- -------------
11/1/89 10000 10000 9525
11/30/89 10505 10493 9943
11/30/90 8230 11221 9868
11/30/91 8946 11982 10684
11/30/92 8251 12209 9625
11/30/93 10284 15583 11989
11/30/94 11841 16977 13568
11/30/95 12776 19853 14127
11/30/96 14321** 24498 16816
[/LINE CHART]
Average Annual Total Returns
for Periods Ending 11/30/96
<TABLE>
<CAPTION>
From Inception From Inception
11/1/89 to 7/15/94 to
1 Year 5 Years 11/30/96 11/30/96
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A with 4.75% sales charge 13.38% 8.44% 7.62% --
---------------------------------------------------------------------------------------
Class A at net asset value 19.03% 9.49% 8.36% --
---------------------------------------------------------------------------------------
Class B with CDSC 14.16% -- -- 6.87%
---------------------------------------------------------------------------------------
Class B at net asset value 18.16% -- -- 8.01%
---------------------------------------------------------------------------------------
The Morgan Stanley Capital
International EAFE Index* 12.09% 9.87% 5.20 %** 7.52%***
---------------------------------------------------------------------------------------
</TABLE>
This chart assumes an initial gross investment of $10,000 made on 11/1/89
(inception of the Fund) for Class A shares. The total return for Class A
shares reflects the maximum sales charge of 4.75% on the initial investment
and assumes reinvestment of dividends and capital gains. Class B share
performance will be greater or less than that shown based on differences in
inception date, fees and sales charges. The total return (since inception
7/15/94) for Class B shares reflects the 5% contingent deferred sales charge
(CDSC), which is applicable on all shares redeemed during the 1st year after
'purchase and 4% for all shares redeemed during the 2nd year after purchase
(scaled down to 3%--3rd year; 2%--4th and 5th year and 0% thereafter).
Returns indicate past performance, which is not predictive of future
performance. Investment return and net asset value will fluctuate, so that
your shares, when redeemed, may be worth more or less than the original cost.
*The Morgan Stanley Capital International EAFE Index is an unmanaged but
commonly used measure of foreign stock fund performance which includes net
dividends reinvested. The EAFE index is an aggregate of 19 individual
country indexes in Europe, Australia, New Zealand and the Far East. The
index's performance does not reflect sales charges.
**Index information from 10/31/89 to 11/30/96.
***Index information from 6/30/94 to 11/30/96.
18
<PAGE>
International Portfolio
INVESTMENTS AT NOVEMBER 30, 1996
<TABLE>
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C>
COMMON STOCKS--89.1%
Belgium--2.1%
Barco Industries NV (Electronics) 6,450 $ 1,113,684
Credit Communal Holding/Dexia (Banks) (b) 20,000 1,818,182
-----------
2,931,866
-----------
Brazil--1.5%
Telebras Sponsored ADR (Utility-Telephone) 29,000 2,196,750
-----------
France--8.9%
AXA SA (Insurance) 24,931 1,498,457
BIC SA (Miscellaneous) 9,850 1,474,878
Cardif SA (Insurance) 11,500 1,772,585
Carrefour Supermarche (Retail-Food) 2,510 1,550,427
Louis Dreyfus Citrus (Food) (b) 33,000 1,117,145
Pathe SA (Publishing, Broadcasting, Printing
& Cable) (b) 4,174 975,047
Rexel SA (Wholesale & Distribution) 3,354 1,000,561
Salomon SA (Entertainment, Leisure & Gaming) 15,000 1,321,181
Sommer-Allibert (Auto & Truck Parts) 24,000 666,335
Thomson CSF (Aerospace & Defense) 42,101 1,361,555
-----------
12,738,171
-----------
Germany--4.5%
Adidas AG (Textile & Apparel) 22,850 1,984,565
BASF AG (Chemical) 50,000 1,850,563
SGL Carbon AG (Chemical) 20,400 2,508,360
-----------
6,343,488
-----------
Hong Kong--13.8%
Cheung Kong Holdings Ltd. (Real Estate) 448,000 3,939,990
Dao Heng Bank Group Ltd. (Banks) 208,000 987,274
Great Eagle Holdings Ltd. (Real Estate) 182,000 755,587
Guoco Group Ltd. (Diversified Financial
Services) 266,000 1,448,344
Henderson China Holding Ltd. (Real Estate) 780 1,957
Henderson Land Development Co. Ltd. (Real
Estate) 468,000 4,706,027
Hutchison Whampoa Ltd. (Conglomerates) 469,000 3,624,256
Hysan Development Co. Ltd. (Real Estate) 364,000 1,391,128
New World Development Co. Ltd. (Real Estate) 192,000 1,297,465
Sun Hung Kai Properties Ltd. (Real Estate) 125,000 1,551,992
-----------
19,704,020
-----------
Indonesia--1.5%
PT Semen Gresik (Building & Materials) 500,000 1,524,520
Wicaksana Overseas International (Wholesale
& Distribution) 520,000 587,633
-----------
2,112,153
-----------
Italy--6.5%
Fila Holding SPA ADR (Textile & Apparel) 44,800 3,315,200
Gucci Group NV (Textile & Apparel) 19,600 1,428,658
Gucci Group NV-NY (Textile & Apparel) 24,800 1,819,700
Parmalat Finanziaria SPA (Food) 343,000 537,735
Saipem SPA (Engineering & Construction) 165,200 764,431
Stet-Societa Finanziaria Telefonica SPA
(Utility-Telephone) 327,000 1,390,093
-----------
9,255,817
-----------
Japan--9.8%
Canon, Inc. (Office & Business Equipment) 71,000 1,497,364
Circle K Japan Co. Ltd. (Retail-Food) 32,000 1,434,095
Hitachi Maxell (Electronics) 36,000 743,409
Honda Motor Co. Ltd. (Autos & Trucks) 63,000 1,860,105
Keyence Corp. Ltd. (Electronics) 8,800 1,067,135
Nintendo Corp. Ltd. (Entertainment, Leisure
& Gaming) 21,500 1,520,870
Nippon Television Network (Publishing,
Broadcasting, Printing & Cable) 2,500 751,318
Takeda Chemical Industries (Health
Care-Drugs) 85,000 1,665,641
TDK Corp. (Electronics) 24,000 1,547,979
Toyota Motor Corp. (Autos & Trucks) 47,000 1,284,446
Xebio Co. Ltd. (Retail) 19,000 659,490
-----------
14,031,852
-----------
Malaysia--3.1%
Commerce Asset Holding Berhad (Banks) 192,000 1,466,113
Renong Berhad (Engineering & Construction) 800,000 1,474,975
United Engineers Ltd. (Building & Materials) 161,000 1,458,714
-----------
4,399,802
-----------
Mexico--2.6%
Apasco SA de CV (Building & Materials) 188,000 1,247,856
Grupo Carso (Conglomerates) 286,000 1,452,733
Grupo Industrial Maseca SA de CV (Food) 779,800 968,021
-----------
3,668,610
-----------
Netherlands--4.8%
Ahrend Groep NV (Office & Business
Equipment) 23,079 1,191,088
IHC Caland (Oil Service & Equipment) 29,400 1,646,877
Oce-Van Der Grinten NV-Venlo (Office &
Business Equipment) 10,000 1,090,171
Samas Groep-CVA (Office & Business
Equipment) 16,668 665,947
See Notes to Financial Statements
19
<PAGE>
International Portfolio
SHARES VALUE
------- ------------
Netherlands--continued
VNU-Verenigd Bezit (Publishing,
Broadcasting, Printing & Cable) 106,700 $ 2,177,930
-----------
6,772,013
-----------
Norway--1.0%
Storebrand ASA (Insurance) (b) 245,000 1,462,698
-----------
Peru--1.0%
Telefonica Del Peru SA (Utility-Telephone) 693,541 1,360,568
-----------
Portugal--1.8%
Cimpor-Cimentos de Portugal SA (Building &
Materials) 64,000 1,338,231
Portugal Telecom SA (Utility-Telephone) 47,300 1,255,725
-----------
2,593,956
South Korea--1.0%
Daegu Bank (Banks) 75,060 909,331
Hana Bank (Banks) 19,240 253,408
Hana Bank New Common (Banks) (b) 9,007 110,908
Shinhan Bank (Banks) 8,460 150,636
-----------
1,424,283
-----------
Spain--1.7%
Empresa Nacional de Electricidad SA
(Utility-Electric) 16,700 1,128,378
Telefonica de Espana (Utility-Telephone) 59,700 1,309,251
-----------
2,437,629
-----------
Sweden--2.1%
Frontec AB (Computer Software & Services) (b) 90,400 1,643,024
Nordbanken AB (Banks) 47,000 1,330,354
-----------
2,973,378
------------
Switzerland--5.6%
Ares-Serono Group B (Health Care-Drugs) 1,370 1,281,318
CS Holding AG Registered Shares (Banks) 14,000 1,491,592
Sandoz AG (Health Care-Diversified) 1,910 2,223,420
Stratec Holding AB Reg. B (Medical Products
& Supplies) (b) 1,230 1,539,507
Swiss Reinsurance-Reg. (Insurance) 1,300 1,420,487
------------
7,956,324
------------
Taiwan--0.0%
China Bills Finance Corp. (Commercial
Finance) (b) 70,345 64,233
------------
United Kingdom--15.1%
Astec (BSR) PLC (Electronics) 437,000 1,167,585
Barclays PLC (Diversified Financial
Services) 88,000 1,513,494
British Aerospace PLC (Aerospace & Defense) 140,500 2,731,617
Carlton Communications PLC (Publishing,
Broadcasting, Printing & Cable) 196,000 1,653,369
Compass Group PLC (Lodging & Restaurants) 237,300 2,418,458
Granada Group PLC (Entertainment, Leisure &
Gaming) 132,000 1,917,560
Lloyds TSB Group PLC (Diversified Financial
Services) 220,000 1,524,954
Next PLC (Retail) 140,000 1,385,649
Shell Transport & Trading Co. PLC (Oil) 126,000 2,094,001
Siebe PLC (Electrical Equipment) 136,000 2,169,921
WPP Group PLC (Advertising) 788,000 2,919,745
------------
21,496,353
------------
United States--0.7%
Latin American Discovery Fund, Inc.
(Multi-Industry) (b) 82,000 1,066,000
------------
TOTAL COMMON STOCKS
(Identified cost $107,997,123) 126,989,964
------------
PREFERRED STOCKS--1.2%
Germany--0.6%
Porsche AG (Autos & Trucks) 1,100 862,338
------------
United Kingdom--0.6%
Egypt Investment Co. (Multi-Industry) (b) 73,000 839,500
------------
TOTAL PREFERRED STOCKS
(Identified cost $1,510,729) 1,701,838
------------
TOTAL LONG-TERM INVESTMENTS--90.3%
(Identified cost $109,507,852) 128,691,802
------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
SHORT-TERM OBLIGATIONS--6.5% ----------- -------- ------------
Commercial Paper--6.4%
AlliedSignal, Inc. 5.28%,
12-2-96 A-1 $1,985 1,984,709
Receivables Capital Corp.
5.30%, 12-2-96 A-1 3,500 3,499,485
Du Pont (E.I.) de Nemours &
Co. 5.27%, 12-9-96 A-1+ 185 184,784
Corporate Receivables Corp.
5.27%, 12-10-96 A-1 420 419,447
Du Pont (E.I.) de Nemours &
Co. 5.30%, 12-10-96 A-1+ 355 354,530
McKenna Triangle National
Corp. 5.26%, 12-18-96 A-1+ 1,020 1,017,466
Heinz (H.J.) Co. 5.24%,
12-30-96 (c) A-1 1,690 1,682,866
--------------
9,143,287
Federal Agency Securities--0.1% --------------
Federal National Mortgage Assoc. 5.23%,
12-19-96 175 174,543
TOTAL SHORT-TERM OBLIGATIONS --------------
(Identified cost $9,317,830) 9,317,830
TOTAL INVESTMENTS--96.8% --------------
(Identified cost $118,825,682) 138,009,632(a)
Cash and receivables, less liabilities--3.2% 4,469,080
--------------
NET ASSETS--100.0% $142,478,712
==============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $20,497,344 and gross
depreciation of $1,396,144 for federal income tax purposes. At November
30, 1996, the aggregate cost of securities for federal income tax
purposes was $118,908,432.
(b) Non-income producing.
(c) Segregated as collateral for foreign currency contracts.
See Notes to Financial Statements
20
<PAGE>
International Portfolio
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Long-Term
Investments
(Unaudited)
Advertising 2.3%
Aerospace & Defense 3.2
Auto & Truck Parts 0.5
Autos & Trucks 3.1
Banks 6.6
Building & Materials 4.3
Chemical 3.4
Commercial Finance 0.1
Computer Software & Services 1.3
Conglomerates 4.0
Diversified Financial Services 3.5
Electrical Equipment 1.7
Electronics 4.4
Engineering & Construction 1.7
Entertainment, Leisure & Gaming 3.7
Food 2.0
Health Care-Diversified 1.7
Health Care-Drugs 2.3
Insurance 4.8
Lodging & Restaurants 1.9
Medical Products & Supplies 1.2
Miscellaneous 1.1
Multi-Industry 1.5
Office & Business Equipment 3.5
Oil 1.6
Oil Service & Equipment 1.3
Publishing, Broadcasting, Printing & Cable 4.3
Real Estate 10.6
Retail 1.6
Retail-Food 2.3
Textile & Apparel 6.6
Utility-Electric 0.9
Utility-Telephone 5.8
Wholesale & Distribution 1.2
------
100.0%
======
See Notes to Financial Statements
21
<PAGE>
International Portfolio
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $118,825,682) $138,009,632
Foreign currency at value
(Identified cost $106,834) 103,121
Cash 3,320
Receivables
Investment securities sold 6,270,237
Dividends and interest 133,754
Fund shares sold 150,190
Tax reclaim 65,534
Net unrealized appreciation on forward currency contracts 451,182
-----------
Total assets 145,186,970
-----------
Liabilities
Payables
Investment securities purchased 2,282,763
Fund shares repurchased 100,997
Closed foreign currency contracts 1,206
Investment advisory fee 86,384
Transfer agent fee 77,000
Distribution fee 32,886
Trustees' fee 11,179
Financial agent fee 3,455
Accrued expenses 112,388
-----------
Total liabilities 2,708,258
-----------
Net Assets $142,478,712
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $108,023,599
Undistributed net investment income 2,213,316
Accumulated net realized gain 12,613,904
Net unrealized appreciation 19,627,893
-----------
Net Assets $142,478,712
===========
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $135,524,109) 9,362,310
Net asset value per share $14.48
Offering price per share
$14.48/(1-4.75%) $15.20
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $6,954,603) 489,172
Net asset value and offering price per share $14.22
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
<TABLE>
<S> <C>
Investment income
Dividends $2,235,516
Interest 665,080
Foreign taxes withheld (191,453)
-----------
Total investment income 2,709,143
-----------
Expenses
Investment advisory fee 1,071,572
Distribution fee--Class A 344,573
Distribution fee--Class B 50,471
Financial agent fee 42,863
Transfer agent 388,848
Custodian 194,890
Printing 74,431
Professional 45,311
Registration 30,931
Trustees 20,443
Miscellaneous 14,490
-----------
Total expenses 2,278,823
-----------
Net investment income 430,320
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 12,620,342
Net realized gain on foreign currency transactions 2,078,957
Net change in unrealized appreciation (depreciation)
on investments 9,051,592
Net change in unrealized appreciation (depreciation) on
foreign currency and foreign currency transactions 672,084
-----------
Net gain on investments 24,422,975
-----------
Net increase in net assets resulting from operations $24,853,295
===========
</TABLE>
See Notes to Financial Statements
22
<PAGE>
International Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Year
Ended Ended
November 30, 1996 November 30, 1995
----------------- ------------------
<S> <C> <C>
From Operations
Net investment income $430,320 $313,901
Net realized gain 14,699,299 202,864
Net change in unrealized appreciation
(depreciation) 9,723,676 4,460,307
----------- -----------
Increase in net assets resulting from operations 24,853,295 4,977,072
----------- -----------
From Distributions to Shareholders
Net realized gains--Class A (365,795) (11,650,763)
Net realized gains--Class B (9,318) (157,020)
----------- -----------
Decrease in net assets from distributions to
shareholders (375,113) (11,807,783)
----------- -----------
From Share Transactions
Class A
Proceeds from sales of shares (11,106,013 and
3,960,774 shares, respectively) 151,805,606 46,334,510
Net asset value of shares issued from
reinvestment of distributions (27,365 and
967,317 shares, respectively) 332,491 10,969,371
Cost of shares repurchased (12,375,802 and
7,623,764 shares, respectively) (169,679,302) (89,077,200)
----------- -----------
Total (17,541,205) (31,773,319)
----------- -----------
Class B
Proceeds from sales of shares (357,180 and
171,608 shares, respectively) 4,778,686 2,007,010
Net asset value of shares issued from
reinvestment of distributions (673 and 10,925
shares, respectively) 8,087 123,448
Cost of shares repurchased (138,908 and 70,364
shares, respectively) (1,858,546) (821,816)
----------- -----------
Total 2,928,227 1,308,642
----------- -----------
Decrease in net assets from share transactions (14,612,978) (30,464,677)
----------- -----------
Net increase (decrease) in net assets 9,865,204 (37,295,388)
Net Assets
Beginning of period 132,613,508 169,908,896
----------- -----------
End of period (including undistributed net
investment income and distributions in excess of
net investment income of $2,213,316 and
($295,961), respectively) $142,478,712 $132,613,508
=========== ===========
</TABLE>
See Notes to Financial Statements
23
<PAGE>
International Portfolio
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------
Year Ended November 30,
1996 1995 1994 1993 1992
----------------------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.20 $12.63 $11.16 $ 8.96 $10.90
Income from investment operations(5)
Net investment income (loss) 0.04(1) 0.03(1) (0.01) -- 0.11
Net realized and unrealized gain (loss) 2.28 0.42 1.48 2.20 (1.10)
-------- -------- -------- -------- --------
Total from investment operations 2.32 0.45 1.47 2.20 (0.99)
-------- -------- -------- -------- --------
Less distributions
Dividends from net investment income -- -- -- -- (0.12)
Dividends from net realized gains (0.04) (0.88) -- -- (0.64)
Distribution in excess of accumulated net
investment income -- -- -- -- (0.19)
-------- -------- -------- -------- --------
Total distributions (0.04) (0.88) -- -- (0.95)
-------- -------- -------- -------- --------
Change in net asset value 2.28 (0.43) 1.47 2.20 (1.94)
-------- -------- -------- -------- --------
Net asset value, end of period $14.48 $12.20 $12.63 $11.16 $ 8.96
======== ======== ======== ======== ========
Total return(2) 19.03% 4.12% 13.17% 24.55% -9.91%
Ratios/supplemental data:
Net assets, end of period (thousands) $135,524 $129,352 $167,918 $91,196 $26,188
Ratio to average net assets of:
Operating expenses 1.57% 1.70% 1.47% 1.78% 1.97%
Net investment income (loss) 0.33% 0.23% 0.20% (0.04)% 0.85%
Portfolio turnover 151% 236% 186% 191% 82%
Average commission rate paid(6) $0.0205 N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
------------------------------------------
Year Ended November 30, From Inception
7/15/94 to
1996 1995 11/30/94
------------------------ ----------------
<S> <C> <C> <C>
Net asset value, beginning of period $12.07 $12.60 $12.80
Income from investment operations(5)
Net investment income (loss) (0.05)(1) (0.07)(1) (0.01)
Net realized and unrealized gain (loss) 2.24 0.42 (0.19)
-------- -------- --------
Total from investment operations 2.19 0.35 (0.20)
-------- -------- --------
Less distributions
Dividends from net investment income -- -- --
Dividends from net realized gains (0.04) (0.88) --
Distribution in excess of accumulated net
investment income -- -- --
-------- -------- --------
Total distributions (0.04) (0.88) --
-------- -------- --------
Change in net asset value 2.15 (0.53) (0.20)
-------- -------- --------
Net asset value, end of period $14.22 $12.07 $12.60
======== ======== ========
Total return(2) 18.16% 3.28% -1.56%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $6,955 $3,261 $1,991
Ratio to average net assets of:
Operating expenses 2.31% 2.50% 1.93%(3)
Net investment income (loss) (0.39%) (0.61%) 0.36%(3)
Portfolio turnover 151% 236% 186%
Average commission rate paid(6) $0.0205 N/A N/A
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) Annualized
(4) Not annualized
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from
anticipated results depending on the time of share purchases and
redemptions.
(6) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
See Notes to Financial Statements
24
<PAGE>
PHOENIX REAL ESTATE SECURITIES PORTFOLIO
Fund Description
Phoenix Real Estate Securities Portfolio invests in marketable securities of
publicly-traded real estate investment trusts (REITs) and companies that
develop, acquire, operate, and/or manage real estate located primarily in the
United States.
Investment Environment
Since our last shareholders report some six months ago, the real estate
markets have continued to stabilize. Leasing activity, rents, and market
values all moved ahead as the economy continued to improve and overall
construction activity supplied less space than required by increased demand.
Transaction prices in the private real estate markets shot up, with
capitalization rates falling by at least one-half of a percentage point. In
some regions, market prices on existing properties are beginning to approach
replacement cost, leading to investor concerns of overbuilding in some
sectors.
Performance by property type sector has varied considerably over this
reporting period. The apartment sector, which enjoyed the recovery in advance
of most other property types, has experienced more modest rental rate growth
as market vacancy rates have reached equilibrium. In the office sector, we
continue to see declines in vacancy rates -- at least a 2% drop in 1996 --
and strong gains in rental rates. Concerns about oversupply in the retail
sector have reduced investor demand. However, construction in this sector has
finally slowed and there has been increased interest in certain categories,
including regional malls and anchored community centers. Full-service hotels
have seen limited new construction, continued strong demand and very high
occupancy levels. By comparison, economy hotels are experiencing significant
overbuilding and accompanying deterioration in occupancy levels and room
rates.
As measured by the NAREIT Equity Index, real estate securities posted a
strong 29.21% return over the past twelve months. The best performing
property sectors during this period were office and hotel REITs. However, all
sectors other than outlet center REITs generated very attractive returns.
Stock prices were propelled upward by strong growth in funds from operations
resulting from positive trends in occupancy levels and rental rates, and by
expanding market capitalizations generated from both significant capital
inflows and aggressive acquisition programs.
The real estate securities market has continued to expand at a dramatic
pace, notwithstanding the modest volume of IPOs over the past twelve months.
Growth has been driven by strong performance of the held assets and by an
active secondary market. Year-to-date, there have been 87 equity offerings
raising a total of $8.9 billion. In addition, unsecured debt offerings have
raised another $3.3 billion.
Portfolio Review
Phoenix Real Estate Securities Portfolio posted strong returns over this
fiscal reporting period. For twelve months ended November 30, 1996, the
Fund's class A shares returned 29.20% and class B earned 28.25%. During the
same period, the NAREIT Equity Index recorded a total return of 29.21%. All
of these figures assume reinvestment of any distributions, but exclude the
effect of sales charges.
The Fund's investment strategy is to focus on market sectors which have
strong underlying fundamentals and prospects for growth in excess of market
averages over the intermediate- and long-term. We also look for sectors that
are significantly undervalued on a risk-adjusted basis. Three of the targeted
sectors are apartment, hotel, and office/industrial REITs.
The Fund has been consistently overweighted in the apartment sector, which
we believe will offer stable earnings growth and reduced risk. Apartment
REITs, as a group, have had strong earnings growth over the last two years,
yet their stock prices have failed to keep pace with the broader REIT
averages due to investor fears of overbuilding.
We have also been significantly overweighted in the hotel sector, which has
posted very strong returns over this reporting period. Our outlook for hotels
remains positive, given the limited amount of new construction in the full
service sector which comprises the bulk of the product held by REITs
represented in the Fund.
Finally, the Fund has had an increasing allocation to the office/industrial
sector, which participated in the overall real estate recovery later than
other property types and
25
<PAGE>
Real Estate Securities Portfolio
currently has strong upside potential. Office/industrial REITs were among the
top performers in 1996.
The Fund has maintained a neutral posture with respect to regional mall REITs
which significantly outperformed this year. At the same time, we remained
underweighted in strip retail REITs because of concerns of underlying market
fundamentals. Strip retail REITs have generated market-based returns
year-to-date.
Outlook
Looking ahead, we anticipate continued strong performance in the REIT market
for a number of reasons. First, the underlying markets are continuing to
strengthen and, with construction levels lower than projected demand in nearly
all property types, the outlook remains very positive. Second, there is
increasing interest by both individual and institutional investors in REIT
stocks. We attribute this to increased liquidity, attractive current yields, and
a view held by some that REITs could provide a 'safe haven' for equity investors
in 1997. Lastly, the increases in REIT prices experienced during 1996 have been
more or less in line with the increases in funds from operation, and
accordingly, multiples have not been driven up in line with the broader markets.
Over the long-term, we expect to see continued growth in total market
capitalization, although limited if any growth in the numbers of companies as
focus on efficiencies of scale leads to more mergers and larger companies.
Nineteen companies today have market capitalizations in excess of $1 billion. We
expect that number will grow to as many at 40 companies by the year 2000. The
Fund will attempt to take advantage of this trend by focusing on market dominant
companies that have the potential to significantly increase in size because they
are positioned to acquire smaller private and public companies. We will also
continue to look for smaller undervalued companies that are attractive takeover
candidates for some of the larger REITs.
26
<PAGE>
Real Estate Securities Portfolio
[LINE CHART]
Phoenix Phoenix
Real Estate Real Estate
Securities Securities
Portfolio Portfolio
NAREIT* -- Class A -- Class B
------- ---------- ----------
3/1/95 10000 9525 10000
11/30/95 10903 10463 10921
11/30/96 14087 13519 13606
[/LINE CHART]
Average Annual Total Returns
for Periods Ending 11/30/96 From Inception
3/1/95 to
1 Year 11/30/96
- -------------------------------------------------------------------------
Class A with 4.75% sales charge 23.11% 18.80%
- -------------------------------------------------------------------------
Class A at net asset value 29.20% 22.16%
- -------------------------------------------------------------------------
Class B with CDSC 24.25% 19.24%
- -------------------------------------------------------------------------
Class B at net asset value 28.25% 21.23%
- -------------------------------------------------------------------------
NAREIT Index* 29.21% 21.59%
- -------------------------------------------------------------------------
The total return for Class A shares reflects the maximum sales charge of
4.75% on the initial investment and assumes reinvestment of dividends and
capital gains. This chart assumes an initial gross investment of $10,000 made
on 3/1/95 (inception of the Fund) for Class A and B shares.
The total return for Class B shares reflects the 5% contingent deferred sales
charge (CDSC), which is applicable on all shares redeemed during the 1st year
after purchase and 4% for all shares redeemed during the 2nd year after
purchase (scaled down to 3%--3rd year; 2%--4th and 5th year and 0%
thereafter). Returns indicate past performance, which is not predictive of
future performance. Investment return and net asset value will fluctuate, so
that your shares, when redeemed, may be worth more or less than the original
cost.
*The National Association of Real Estate Investment Trusts (NAREIT) Equity
Index is a commonly used, unmanaged indicator of REIT performance. The index
does not reflect sales charges.
27
<PAGE>
Real Estate Securities Portfolio
INVESTMENTS AT NOVEMBER 30, 1996
<TABLE>
<CAPTION>
SHARES VALUE
-------- ----------------
<S> <C> <C>
COMMON STOCKS--100.7%
REAL ESTATE INVESTMENT TRUSTS--97.2%
COMMERCIAL--24.0%
Office/Industrial--17.8%
Arden Realty Group, Inc. (b) 6,300 $ 151,987
Beacon Properties Corp. 15,400 487,025
Cali Realty Corp. 4,500 127,125
CarrAmerica Realty Corp. 11,800 306,800
Duke Realty Investments, Inc. 28,800 1,033,200
Highwoods Properties, Inc. 46,300 1,423,725
Spieker Properties, Inc. 38,700 1,185,188
Weeks Corp. 28,600 811,525
-----------
5,526,575
-----------
Storage--6.2%
Public Storage, Inc. 29,000 735,875
Shurgard Storage Centers, Inc. Class A 14,500 398,750
Storage USA, Inc. 21,300 804,075
-----------
1,938,700
-----------
TOTAL COMMERCIAL 7,465,275
-----------
HEALTH CARE--6.1%
Health Care Properties Inv., Inc. 23,300 795,112
Nationwide Health Properties, Inc. 49,000 1,090,250
-----------
1,885,362
-----------
RESIDENTIAL--31.2%
Apartments--27.5%
Avalon Properties, Inc. 24,900 638,063
Bay Apartments Community, Inc. 29,600 962,000
Camden Property Trust 17,900 494,487
Columbus Realty Trust 7,300 155,125
Equity Residential Properties Trust 23,600 946,950
Evans Withycombe Residential, Inc. 44,200 900,575
Irvine Apartment Communities, Inc. 33,000 804,375
Merry Land & Investment Co. 53,200 1,064,000
Oasis Residential, Inc. 29,900 627,900
Post Properties, Inc. 26,800 1,035,150
United Dominion Realty Trust 63,500 936,625
-----------
8,565,250
-----------
Manufactured Homes--3.7%
Manufactured Home Communities 23,700 474,000
Sun Communities, Inc. 21,600 688,500
-----------
1,162,500
-----------
TOTAL RESIDENTIAL 9,727,750
-----------
RETAIL--35.9%
Community/Neighborhood--9.9%
Developers Diversified Realty Corp. 23,800 800,275
Federal Realty Investment Trust 21,100 548,600
Kimco Realty Corp. 21,850 636,381
Regency Realty Corp. 12,000 288,000
Vornado Realty Trust 17,900 807,738
-----------
3,080,994
-----------
Factory Outlet--2.6%
Chelsea G.C.A. Realty, Inc. 26,100 822,150
-----------
Hotels--14.4%
Capstar Hotel Company (b) 38,900 714,787
FelCor Suite Hotels, Inc. 34,100 1,214,813
Patriot American Hospitality 37,400 1,416,525
Starwood Lodging Trust 23,700 1,131,675
-----------
4,477,800
-----------
Regional Malls--9.0%
Rouse Co. 11,400 302,100
Simon DeBartolo Group, Inc. 52,808 1,445,619
Taubman Centers, Inc. 77,800 904,425
The Macerich Company 6,300 146,475
-----------
2,798,619
-----------
TOTAL RETAIL 11,179,563
-----------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Identified cost $25,830,868) 30,257,950
-----------
REAL ESTATE OPERATING COMPANIES--3.5%
Hotels--3.5%
Host Marriott Corp. (b) 63,900 974,475
Red Roof Inns, Inc. (b) 7,400 116,550
-----------
1,091,025
-----------
TOTAL REAL ESTATE OPERATING COMPANIES
(Identified cost $989,401) 1,091,025
-----------
TOTAL COMMON STOCKS
(Identified cost $26,820,269) 31,348,975
-----------
TOTAL INVESTMENTS--100.7%
(Identified cost $26,820,269) 31,348,975(a)
Cash and receivables, less liabilities--(0.7%) (218,726)
-----------
NET ASSETS--100.0% $31,130,249
===========
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $4,645,702 and gross
depreciation of $118,955 for federal income tax purposes. At November 30,
1996 the aggregate cost of securities for federal income tax purposes was
$26,822,228.
(b) Non-income producing.
See Notes to Financial Statements
28
<PAGE>
Real Estate Securities Portfolio
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Assets
Investment securities at value
(Identified cost $26,820,269) $31,348,975
Receivables
Investment securities sold 342,456
Fund shares sold 127,088
Dividends and interest 19,274
-----------
Total assets 31,837,793
-----------
Liabilities
Payables
Custodian 550,421
Fund shares repurchased 50,153
Investment advisory fee 21,046
Trustees' fee 11,179
Distribution fee 11,054
Transfer agent fee 5,541
Financial agent fee 758
Accrued expenses 57,392
-----------
Total liabilities 707,544
-----------
Net Assets $31,130,249
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $25,810,385
Undistributed net investment income 192,599
Accumulated net realized gain 598,559
Net unrealized appreciation 4,528,706
-----------
Net Assets $31,130,249
===========
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $22,871,669) 1,741,170
Net asset value per share $13.14
Offering price per share
$13.14/(1-4.75%) $13.80
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $8,258,580) 630,374
Net asset value and offering price per share $13.10
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Dividends $1,304,929
Interest 13,332
-----------
Total investment income 1,318,261
-----------
Expenses
Investment advisory fee 168,177
Distribution fee--Class A 45,025
Distribution fee--Class B 44,137
Financial agent fee 6,727
Registration 47,775
Transfer agent 47,638
Professional 40,536
Printing 24,285
Trustees 20,443
Custodian 9,734
Miscellaneous 1,076
-----------
Total expenses 455,553
Less expenses borne by investment adviser (130,944)
-----------
Net expenses 324,609
-----------
Net investment income 993,652
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 605,112
Net change in unrealized appreciation (depreciation) on
investments 4,233,859
-----------
Net gain on investments 4,838,971
-----------
Net increase in net assets resulting from operations $5,832,623
===========
</TABLE>
See Notes to Financial Statements
29
<PAGE>
Real Estate Securities Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year From Inception
Ended 3/1/95 to
November 30, 1996 11/30/95
------------------ ----------------
<S> <C> <C>
From Operations
Net investment income $993,652 $391,699
Net realized gain 605,112 19,820
Net change in unrealized appreciation
(depreciation) 4,233,859 294,847
----------- -----------
Increase in net assets resulting from operations 5,832,623 706,366
----------- -----------
From Distributions to Shareholders
Net investment income--Class A (861,331) (192,639)
Net investment income--Class B (163,427) (26,085)
Net realized gains--Class A (22,396) --
Net realized gains--Class B (3,977) --
----------- -----------
Decrease in net assets from distributions to
shareholders (1,051,131) (218,724)
----------- -----------
From Share Transactions
Class A
Proceeds from sales of shares (603,974 and
1,293,809 shares, respectively) 7,207,751 13,414,115
Net asset value of shares issued from
reinvestment of distributions (73,246 and 17,043
shares, respectively) 838,272 180,926
Cost of shares repurchased (227,727 and 19,175
shares, respectively) (2,803,944) (210,731)
----------- -----------
Total 5,242,079 13,384,310
----------- -----------
Class B
Proceeds from sales of shares (436,484 and
208,805 shares, respectively) 5,218,052 2,200,102
Net asset value of shares issued from
reinvestment of distributions (12,304 and 1,955
shares, respectively) 141,327 20,860
Cost of shares repurchased (28,003 and 1,171
shares, respectively) (333,067) (12,548)
----------- -----------
Total 5,026,312 2,208,414
----------- -----------
Increase in net assets from share transactions 10,268,391 15,592,724
----------- -----------
Net increase in net assets 15,049,883 16,080,366
Net Assets
Beginning of period 16,080,366 0
----------- -----------
End of period (including undistributed net
investment income of $192,599 and $211,093,
respectively) $31,130,249 $16,080,366
=========== ===========
</TABLE>
See Notes to Financial Statements
30
<PAGE>
Real Estate Securities Portfolio
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A Class B
----------------------------- -----------------------------
From From
Year Ended Inception Year Ended Inception
November 30, 3/1/95 November 30, 3/1/95
1996 to 11/30/95 1996 to 11/30/95
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.72 $10.00 $10.68 $10.00
Income from investment operations
Net investment income 0.53(5) 0.43(4)(5) 0.46(5) 0.36(4)(5)
Net realized and unrealized gain 2.50 0.55 2.47 0.56
-------- -------- -------- --------
Total from investment operations 3.03 0.98 2.93 0.92
-------- -------- -------- --------
Less distributions
Dividends from net investment income (0.59) (0.26) (0.49) (0.24)
Dividends from net realized gains (0.02) -- (0.02) --
-------- -------- -------- --------
Total distributions (0.61) (0.26) (0.51) (0.24)
-------- -------- -------- --------
Change in net asset value 2.42 0.72 2.42 0.68
-------- -------- -------- --------
Net asset value, end of period $13.14 $10.72 $13.10 $10.68
======== ======== ======== ========
Total return(1) 29.20% 9.87%(3) 28.25% 9.21%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $22,872 $13,842 $8,259 $2,239
Ratio to average net assets of:
Operating expenses 1.30% 1.30%(2) 2.05% 2.05%(2)
Net investment income 4.55% 5.79%(2) 3.95% 5.03%(2)
Portfolio turnover 24% 9%(3) 24% 9%(3)
Average commission rate paid(6) $0.0478 N/A $0.0478 N/A
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of $0.07
and $0.12, respectively.
(6) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
See Notes to Financial Statements
31
<PAGE>
PHOENIX EMERGING MARKETS BOND PORTFOLIO
Fund Description
Phoenix Emerging Markets Bond Portfolio seeks high current income and
long-term capital appreciation by investing in emerging markets debt. The
Fund currently concentrates its investments in three main geographic areas:
Latin America, Central and Eastern Europe, and developing Asian Countries.
Investors should note that foreign investments pose added risks, such as
currency fluctuation, less public information and political and economic
uncertainty.
Investment Environment
It has been another stellar year for emerging market bond investors. Over
the last twelve months, this fixed- income sector has significantly
outperformed all other bond categories as well as most of the world's equity
markets. For the year ended November 30, 1996, this market as measured by the
J.P. Morgan Emerging Markets Bond Index Plus returned 47.26%. While virtually
every country represented within this Index earned double-digit returns,
Russia, Ecuador and Venezuela posted the biggest gains over this period.
Overall, improving fundamentals and strong investor demand served as the
catalysts for this sector's impressive results.
Portfolio Review
Phoenix Emerging Markets Bond Portfolio made a strong showing over the
latest fiscal reporting period. For the twelve-month period ended November
30, 1996, the Fund's class A shares returned 60.18% and class B shares earned
58.94%. These results compare very favorably with the J.P. Morgan Emerging
Markets Bond Index Plus, which earned 47.26% for the same period. All of
these figures assume reinvestment of any distributions, but exclude the
effect of sales charges. The outstanding performance over this reporting
period can be attributed to a number of factors, but most notably the Fund's
relative overweighting in Russia, combined with its underweighting in both
the Philippines and Poland. The portfolio's exposure to Panama, Peru, Ecuador
and Venezuela also significantly boosted results.
Outlook
Despite its extended rally, we remain bullish on emerging markets debt.
While last year's gains were exceptionally high relative to other
fixed-income groups, returns of this nature are not unprecedented for this
sector. Overall, we believe valuations are still attractive by historical
standards and demand for these types of fixed-income securities continues to
rise. With more long-term institutional investors entering this maturing
market, we also expect volatility to continue to decline. In terms of country
selection, we see tremendous potential in such areas as Russia, Argentina,
Mexico and Brazil. As of November 30, 1996, the Fund had an average duration
of 3.4 years.
32
<PAGE>
Emerging Markets Bond Portfolio
[LINE CHART]
J.P. Morgan Phoenix Phoenix
Emerging Emerging Emerging
Markets Markets Markets
Bond Index Bond Portfolio Bond Portfolio
Plus* -- Class A -- Class B
----- ---------- ----------
9/5/95 10000 9525 10000
11/30/95 10537 9942 10422
11/30/96 15517 15926 16165
[/LINE CHART]
Average Annual Total Returns
for Periods Ending 11/30/96 From Inception
9/5/95 to
1 Year 11/30/96
- ------------------------------------------------------------------
Class A with 4.75% sales charge 52.53% 45.54%
- ------------------------------------------------------------------
Class A at net asset value 60.18% 51.38%
- ------------------------------------------------------------------
Class B with CDSC 54.94% 47.49%
- ------------------------------------------------------------------
Class B at net asset value 58.94% 50.23%
- ------------------------------------------------------------------
JP Morgan Emerging Markets
Bond Index Plus* 47.26 % 42.59%
- ------------------------------------------------------------------
The total return for Class A shares reflects the maximum sales charge of
4.75% on the initial investment and assumes reinvestment of dividends and
capital gains. This chart assumes an initial gross investment of $10,000 made
on 9/5/95 (inception of the Fund) for Class A and B shares.
The total return for Class B shares reflects the 5% contingent deferred sales
charge (CDSC), which is applicable on all shares redeemed during the 1st year
after purchase and 4% for all shares redeemed during the 2nd year after
purchase (scaled down to 3%--3rd year; 2%--4th and 5th year and 0%
thereafter). Returns indicate past performance, which is not predictive of
future performance. Investment return and net asset value will fluctuate, so
that your shares, when redeemed, may be worth more or less than the original
cost.
*The JP Morgan Emerging Markets Bond Index Plus tracks total returns for
traded external debt instruments in the emerging markets. Included in the
index are U.S. dollar- and other external-denominated Brady bonds, loans,
Eurobonds, and local markets instruments. The index does not reflect sales
charges.
33
<PAGE>
Emerging Markets Bond Portfolio
INVESTMENTS AT NOVEMBER 30, 1996
<TABLE>
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------------ -------------
<S> <C> <C> <C>
FOREIGN NON-CONVERTIBLE BONDS--3.0%
Mexico--3.0%
Aerovias De Mexico S.A. 9.75%, '00
(Aerospace & Airline) NR $ 700 $ 668,500
Grupo Televisa S.A. 0%, '08 (Media) (c) Ba 750 493,125
--------
1,161,625
--------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $1,110,833) 1,161,625
--------
FOREIGN GOVERNMENT SECURITIES--104.0%
Algeria--2.8%
Algeria Tranch A Loans 6.625%-7.3125%,
'06 (c) NR 1,500 1,087,500
--------
Argentina--17.1%
Republic of Argentina Bearer FRB 6.625%,
'05 (c) B 1,666 1,440,049
Republic of Argentina Bocon Pre1 Euro,
PIK interest capitalization, 3.515%,
'01 (c) NR 300 347,812
Republic of Argentina Bocon Pre3 Euro,
PIK interest capitalization, 3.515%,
'02 (c) NR 826 733,488
Republic of Argentina Bocon Pro2, PIK
interest capitalization, 5.375%, '07
(c) NR 1,000 1,077,000
Republic of Argentina Bocon Pro1 M1, PIK
interest capitalization, 3.515%, '07
(c) NR 3,350 3,138,113
--------
6,736,462
--------
Brazil--24.1%
Republic of Brazil C Bond, PIK interest
capitalization, 8%, '14 (c) (e) B 5,623 4,150,613
Republic of Brazil DCB-L Euro 6.563%,
'12 (c) (e) B 5,525 4,098,859
Republic of Brazil FLIRB L-BR 4.50%, '09
(c) (e) B 1,750 1,231,562
--------
9,481,034
--------
Bulgaria--3.2%
Republic of Bulgaria Euro Reg'd IAB, PDI
6.688%, '11 (c) NR 250 122,344
Republic of Bulgaria FLIRB-A Bearer Euro
2.25%, '12 (c) B 3,000 1,104,375
Republic of Bulgaria IAB, PDI Euro
6.688%, '11 (c) B 100 48,937
--------
1,275,656
--------
Ecuador--2.6%
Ecuador Bearer PDI Euro, PIK interest
capitalization, 6.50%, '15 (c) NR 1,385 843,865
Ecuador Reg'd PDI, PIK interest
capitalization, 6.50%, '15 (c) NR 317 193,251
--------
1,037,116
--------
Ivory Coast--1.5%
Ivory Coast Non-Performing
Loans (b) NR 2,000 607,500
--------
Mexico--13.7%
Mexican Cetes 0%, '97 NR 6,697(g) 763,051
Mexican Cetes 0%, '97 NR 8,597(g) 1,026,133
Mexican Cetes 0%, '97 NR 21,134(g) 2,509,942
United Mexican States Global Bond
11.50%, '26 (e) Ba 1,050 1,100,662
--------
5,399,788
--------
Nigeria--2.2%
Nigeria Promissory Notes 5.092%, '10 NR 1,228 872,425
--------
Panama--1.6%
Panama PDI 144A, PIK interest
capitalization, 6.75%, '16 (c) (d) NR 825 629,298
--------
Peru--5.3%
Peru Citibank Non-performing Loans (b) NR 175 210,875
Peru Non-Citibank
Non-performing Loans (b) NR 880 1,060,400
Peru PDI WI, 144A 4%, (c) (d) (f) NR 1,300 801,125
--------
2,072,400
--------
Philippines--1.8%
Central Bank of Philippines FLIRB-B Euro
5%, '08 (c) Ba 750 708,750
--------
Russia--15.5%
Russia Principal Loans WI, 6.36% (c) (f) NR 5,000 2,910,938
Vnescheconombank Loans Yankee (b) NR 4,050 3,184,313
--------
6,095,251
--------
See Notes to Financial Statements
34
<PAGE>
Emerging Markets Bond Portfolio
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------------ -------------
<S> <C> <C> <C>
Ukraine--2.7%
CS Boston Ukraine 144A 0%,
'97 (d) NR $1,150 $1,063,520
--------
Venezuela--9.9%
Banco Central Venezuela NMB B-P 6.625%,
'05 (c) (e) Ba 500 430,625
Republic of Venezuela DCB Euro 6.625%,
'07 (c) (e) Ba 2,000 1,727,500
Republic of Venezuela-FLIRB A Euro
6.625%, '07 (c) (e) Ba 750 654,844
Republic of Venezuela Series A NMB
6.75%, '05 (c) (e) Ba 1,250 1,076,563
--------
3,889,532
--------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $38,488,704) $ 40,956,232
-----------
TOTAL LONG-TERM INVESTMENTS--107.0%
(Identified cost $39,599,537) 42,117,857
-----------
TOTAL INVESTMENTS--107.0%
(Identified cost $39,599,537) 42,117,857(a)
Cash and receivables, less liabilities--(7.0%) (2,743,851)
-----------
NET ASSETS--100.0% $ 39,374,006
===========
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $2,442,963 and gross
depreciation of $126,036 for income tax purposes. At November 30, 1996,
the aggregate cost of securities for federal income tax purposes was
$39,800,930.
(b) Non-income producing.
(c) Variable or step coupon bond; interest rate reflects the rate currently
in effect.
(d) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At November 30,
1996, these securities amount to a value of $2,493,943 or 6.3% of net
assets.
(e) Segregated as collateral.
(f) When issued.
(g) Par value represents Mexican Pesos.
See Notes to Financial Statements
35
<PAGE>
Emerging Markets Bond Portfolio
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $39,599,537) $42,117,857
Receivables
Investment securities sold 10,864,175
Fund shares sold 350,734
Interest 396,137
---------
Total assets 53,728,903
---------
Liabilities
Payables
Investment securities purchased 11,380,738
Custodian 2,785,176
Fund shares repurchased 87,037
Investment advisory fee 16,689
Distribution fee 13,382
Trustees' fee 11,179
Transfer agent fee 7,393
Financial agent fee 920
Accrued expenses 52,383
---------
Total liabilities 14,354,897
---------
Net Assets $39,374,006
=========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $30,332,625
Undistributed net investment income 161,377
Accumulated net realized gain 6,361,684
Net unrealized appreciation 2,518,320
---------
Net Assets $39,374,006
=========
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $29,660,948) 2,004,511
Net asset value per share $14.80
Offering price per share
$14.80/(1-4.75%) $15.54
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $9,713,058) 657,300
Net asset value and offering price per share $14.78
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
<TABLE>
<S> <C>
Investment Income
Interest $2,830,250
-----------
Total investment income 2,830,250
-----------
Expenses
Investment advisory fee 177,790
Distribution fee--Class A 46,409
Distribution fee--Class B 51,419
Financial agent fee 7,112
Registration 68,083
Transfer agent 51,062
Professional 44,500
Printing 26,321
Custodian 22,885
Trustees 21,543
Miscellaneous 1,000
-----------
Total expenses 518,124
Less expenses borne by investment adviser (123,979)
-----------
Net expenses 394,145
-----------
Net investment income 2,436,105
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 6,414,105
Net realized loss on foreign currency transactions (69,562)
Net change in unrealized appreciation (depreciation) on
investments 2,233,148
-----------
NET GAIN ON INVESTMENTS 8,577,691
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $11,013,796
===========
</TABLE>
See Notes to Financial Statements
36
<PAGE>
Emerging Markets Bond Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year From Inception
Ended 9/5/95 to
November 30, 1996 11/30/95
----------------- ----------------
<S> <C> <C>
From Operations
Net investment income $2,436,105 $268,890
Net realized gain (loss) 6,344,543 (47,814)
Net change in unrealized appreciation
(depreciation) 2,233,148 285,172
----------- -----------
Increase in net assets resulting from operations 11,013,796 506,248
----------- -----------
From Distributions to Shareholders
Net investment income--Class A (1,792,007) (273,459)
Net investment income--Class B (458,779) (6,598)
----------- -----------
Decrease in net assets from distributions to
shareholders (2,250,786) (280,057)
----------- -----------
From Share Transactions
Class A
Proceeds from sales of shares (923,074 and
1,168,270 shares, respectively) 12,175,504 11,682,486
Net asset value of shares issued from
reinvestment of distributions (131,956 and 26,928
shares, respectively) 1,635,413 269,932
Cost of shares repurchased (243,677 and 2,040
shares, respectively) (3,184,227) (19,703)
----------- -----------
Total 10,626,690 11,932,715
----------- -----------
Class B
Proceeds from sales of shares (700,581 and 58,050
shares, respectively) 8,585,460 580,946
Net asset value of shares issued from
reinvestment of distributions (17,331 and 592
shares, respectively) 219,353 5,911
Cost of shares repurchased (119,165 and 89
shares, respectively) (1,565,347) (923)
----------- -----------
Total 7,239,466 585,934
----------- -----------
Increase in net assets from share transactions 17,866,156 12,518,649
----------- -----------
Net increase in net assets 26,629,166 12,744,840
Net Assets
Beginning of period 12,744,840 0
----------- -----------
End of period (including undistributed net
investment income of $161,377 and $5,701,
respectively) $39,374,006 $12,744,840
=========== ===========
</TABLE>
See Notes to Financial Statements
37
<PAGE>
Emerging Markets Bond Portfolio
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A Class B
---------------------------- ----------------------------
From From
Year Ended Inception Year Ended Inception
November 30, 9/5/95 to November 30, 9/5/95 to
1996 11/30/95 1996 11/30/95
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.18 $10.00 $10.18 $10.00
Income from investment operations
Net investment income 1.26(5) 0.25(4)(5) 1.19(5) 0.22(4)(5)
Net realized and unrealized gain 4.56 0.18 4.53 0.20
-------- -------- -------- --------
Total from investment operations 5.82 0.43 5.72 0.42
-------- -------- -------- --------
Less distributions
Dividends from net investment income (1.20) (0.25) (1.12) (0.24)
-------- -------- -------- --------
Total distributions (1.20) (0.25) (1.12) (0.24)
-------- -------- -------- --------
Change in net asset value 4.62 0.18 4.60 0.18
-------- -------- -------- --------
Net asset value, end of period $14.80 $10.18 $14.78 $10.18
======== ======== ======== ========
Total return(1) 60.18% 4.40%(3) 58.94% 4.22%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $29,661 $12,149 $9,713 $596
Ratio to average net assets of:
Operating expenses 1.50% 1.50%(2) 2.25% 2.25%(2)
Net investment income 10.41% 10.48%(2) 9.79% 10.29%(2)
Portfolio turnover 378% 38%(3) 378% 38%(3)
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of
$0.07 and $0.03, respectively.
See Notes to Financial Statements
38
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix Multi-Portfolio Fund ("the Trust") 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. To date, seven Portfolios are offered for sale: Tax- Exempt Bond
Portfolio, Mid Cap Portfolio (formerly the Capital Appreciation Portfolio),
International Portfolio, Real Estate Securities Portfolio, Emerging Markets
Bond Portfolio, Endowment Equity Portfolio and Diversified Income Portfolio.
The Endowment Equity Portfolio and Diversified Income Portfolio are reported
separately from these financial statements. Each Portfolio has distinct
investment objectives. The Tax-Exempt Bond Portfolio seeks as high a level of
current income exempt from federal income taxation as is consistent with
preservation of capital. The Mid Cap Portfolio seeks as its investment
objective long-term appreciation of capital. The International Portfolio
seeks a high total return consistent with reasonable risk through investment
in an internationally diversified portfolio of equity securities. The Real
Estate Securities Portfolio seeks capital appreciation and income with
approximately equal emphasis. The Emerging Markets Bond Portfolio seeks to
achieve high current income with a secondary objective of long-term capital
appreciation.
The Trust 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 each Portfolio 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 Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and
expenses. Actual results could differ from those estimates.
A. Security valuation:
Equity securities are valued at the last sale price, or if there had been no
sale that day, at the last bid price. Debt securities are valued on the basis
of broker quotations or valuations provided by a pricing service which
utilizes information with respect to recent sales, market transactions in
comparable securities, quotations from dealers, and various relationships
between securities in determining value. Short-term investments having a
remaining maturity of 60 days or less are valued at amortized cost which
approximates market. All other securities and assets are valued at fair value
as determined in good faith by or under the direction of the Trustees.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date or, in the case of certain foreign securities, as soon as the portfolio
is notified. Realized gains and losses are determined on the identified
cost basis. The Trust does not amortize premiums but does amortize discounts
except for the Tax-Exempt Bond Portfolio which amortizes both premiums and
discounts over the life of the respective securities using the effective
interest method.
C. Income taxes:
Each of the Portfolios is treated as a separate taxable entity. It is the
policy of each Portfolio in the Trust to comply with the requirements of the
Internal Revenue Code (the Code), applicable to regulated investment
companies, and to distribute substantially all of its taxable and tax-exempt
income to its shareholders. In addition, each Portfolio 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 are recorded by each Portfolio 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,
operating losses and losses deferred due to wash sales and excise tax
regulations. Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
E. Foreign currency translation:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at
the
39
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1996 (Continued)
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 Trust
does not separate that portion of the results of operations arising from
changes in exchange rates and that portion arising from changes in the market
prices of securities.
F. Forward currency contracts:
The Mid Cap Portfolio, the Emerging Markets Bond Portfolio and the
International Portfolio may enter into forward currency contracts in
conjunction with the planned purchase or sale of foreign denominated
securities in order to hedge the U.S. dollar cost or proceeds. Forward
currency contracts involve, to varying degrees, elements of market risk in
excess of the amount recognized in the statement of assets and liabilities.
Risks arise from the possible movements in foreign exchange rates or if the
counterparty does not perform under the contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time
of the contract. These contracts are traded directly between currency traders
and their customers. The contract is marked- to-market daily and the change
in market value is recorded by each Portfolio as an unrealized gain (or
loss). When the contract is closed or offset with the same counterparty, the
Portfolio records a realized gain (or loss) equal to the change in the value
of the contract when it was opened and the value at the time it was closed or
offset.
G. Futures contracts:
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. A Portfolio may enter into
financial futures contracts as a hedge against anticipated changes in the
market value of their portfolio securities. Upon entering into a futures
contract the Portfolio is required to pledge to the broker an amount of cash
and/or securities equal to the "initial margin" requirements of the futures
exchange on which the contract is traded. Pursuant to the contract, the
Portfolio agrees to receive from or pay to the broker an amount of cash equal
to the daily fluctuation in value of the contract. Such receipts or payments
are known as variation margin and are recorded by the Portfolio as unrealized
gains or losses. When the contract is closed, the Portfolio records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
The potential risk to the Portfolio is that the change in value of the
futures contract may not correspond to the change in value of the hedged
instruments.
H. Loan agreements:
The Trust may invest in direct debt instruments which are interests in
amounts owned by a corporate, governmental, or other borrower to lenders or
lending syndicates. The Trust's investments in loans may be in the form of
participations in loans or assignments of all or a portion of loans from
third parties. A loan is often administered by a bank or other financial
institution (the lender) that acts as agent for all holders. The agent
administers the terms of the loan, as specified in the loan agreement. When
investing in a loan participation, the Trust has the right to receive
payments of principal, interest and any fees to which it is entitled only
from the lender selling the loan agreement and only upon receipt by the
lender of payments from the borrower. The Trust generally has no right to
enforce compliance with the terms of the loan agreement with the borrower. As
a result, the Trust may be subject to the credit risk of both the borrower
and the lender that is selling the loan agreement. When the Trust purchases
assignments from lenders it acquires direct rights against the borrower on
the loan. Direct indebtedness of emerging countries involves a risk that the
government entities responsible for the repayment of the debt may be unable,
or unwilling to pay the principal and interest when due.
I. Security lending:
The Trust (with the exception of the Real Estate Securities Portfolio) loans
securities to qualified brokers through an agreement with State Street Bank &
Trust (the Custodian) and Brown Brothers, Harriman, custodian for the
International Portfolio. Under the terms of the agreement, the Trust receives
collateral with a market value not less than 100% of the market value of
loaned securities. Collateral consists of cash, securities issued or
guaranteed by the U.S. Government or its agencies and the sovereign debt of
foreign countries. Interest earned on the collateral and premiums paid by the
borrower are recorded as income by the Trust net of fees charged by the
Custodian for its services in connection with this securities lending
program. Lending portfolio securities involves a risk of delay in the
recovery of the loaned securities or in the foreclosure on collateral. At
November 30, 1996, the Trust had the following market value of security loans
and collateral:
Value of
Securities Value of
on Loan Collateral
-------------- -------------
Mid Cap Portfolio $28,440,000 $29,424,800
J. Expenses:
Expenses incurred by the Trust with respect to any two or more Portfolios
are allocated in proportion to the net assets of each Portfolio, except where
allocation of direct expense to each Portfolio or an alternative allocation
method can be more fairly made.
40
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1996 (Continued)
K. When-Issued and delayed delivery transactions:
The Trust may engage in when-issued or delayed delivery transactions. The
Trust records when-issued securities on the trade date and maintains
collateral for the securities purchased. Securities purchased on a
when-issued or delayed delivery basis begin earning interest on the
settlement date.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Trust, the Advisers, Phoenix
Investment Counsel, Inc., an indirect majority-owned subsidiary of Phoenix
Home Life Insurance Company ("PHL"), and Phoenix Realty Securities, Inc.
("PRS"), an indirect wholly-owned subsidiary of PHL, the Adviser for the Real
Estate Portfolio, are entitled to a fee, based upon the following annual
rates as a percentage of the average daily net assets of each Portfolio:
1st $1-2 $2+
$1 Billion Billion Billion
------------- --------- ----------
Tax-Exempt Bond Portfolio 0.45% 0.40% 0.35%
Mid Cap Portfolio 0.75% 0.70% 0.65%
International Portfolio 0.75% 0.70% 0.65%
Real Estate Securities Portfolio 0.75% 0.70% 0.65%
Emerging Markets Bond Portfolio 0.75% 0.70% 0.65%
Pursuant to a Sub-Advisory Agreement with the Trust, PRS delegates certain
investment decisions and research functions to ABKB/LaSalle Securities
Limited Partnership ("ABKB") for which ABKB is paid a fee by PRS equal to
0.45% of the average daily net assets of the Real Estate Securities
Portfolio.
The respective Advisers have agreed to reimburse the Real Estate Securities
Portfolio and the Emerging Markets Bond Portfolio to the extent that total
expenses (excluding interest, taxes, brokerage fees and commissions and
extraordinary expenses) exceed 1.30% and 1.50%, respectively, of the average
daily net assets for Class A shares and 2.05% and 2.25%, respectively, for
Class B shares.
Phoenix Equity Planning Corporation ("PEPCO") an indirect majority-owned
subsidiary of PHL, which serves as the national distributor of the Trust's
shares has advised the Trust that it retained net selling commissions of
$165,918 for Class A shares and deferred sales charges of $92,998 for Class B
shares for the year ended November 30, 1996. In addition, each Portfolio pays
PEPCO a distribution fee at an annual rate of 0.25% for Class A shares and
1.00% for Class B shares applied to the average daily net assets of each
Portfolio. The distributor has advised the Trust that of the total amount
expensed for the year ended November 30, 1996, $508,107 was retained by the
Distributor and $1,764,985 was paid out to unaffiliated Participants.
As Financial Agent to the Trust and to each Portfolio, PEPCO receives a fee
at an annual rate of 0.03% of the average daily net assets of each Portfolio
for bookkeeping, administrative and pricing services.
PEPCO serves as the Trust's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent. For the year ended November 30, 1996, transfer
agent fees were $1,763,614 of which PEPCO retained $605,114 which is net of
fees paid to State Street.
At November 30, 1996, PHL and its affiliates held Phoenix Multi-Portfolio
Fund shares which aggregated the following:
Aggregate
Shares Net Asset Value
------------ ---------------
Tax-Exempt Bond Portfolio--Class A 392,329 $ 4,421,551
International
Portfolio--Class A 407,330 5,898,138
Real Estate Securities
Portfolio--Class A 529,336 6,955,469
--Class B 10,693 140,079
Emerging Markets Bond
Portfolio--Class A 1,331,192 19,688,325
--Class B 11,215 165,651
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended November 30, 1996
(excluding U.S. Government and agency securities, short-term securities,
futures contracts and forward currency contracts) aggregated the following:
Purchases Sales
---------------- ----------------
Tax-Exempt Bond Portfolio $ 37,685,259 $ 46,657,738
Mid Cap Portfolio 1,014,089,046 1,112,672,033
International Portfolio 194,049,666 203,267,130
Real Estate Securities Portfolio 15,913,498 5,320,765
Emerging Markets Bond Portfolio 111,943,459 90,091,682
There were no purchases or sales of long-term U.S. Government and agency
securities during the year ended November 30, 1996.
At November 30, 1996, the Tax-Exempt Bond Portfolio had entered into futures
contracts as follows:
Value of
Contracts Market Net
Number of when Value of Unrealized
Description Contracts Opened Contracts Depreciation
- -------------------- ------------ ------------- ------------- ---------------
U.S. Treasury
March, '97 (Short) 20 $2,300,000 $2,317,500 $(17,500)
41
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1996 (continued)
4. FORWARD CURRENCY CONTRACTS
As of November 30, 1996, the International Portfolio had entered into the
following forward currency contracts which contractually obligate the Fund to
deliver currencies at specified dates:
In Net
Contracts Exchange Settlement Unrealized
to Deliver For Date Value Appreciation
- -------------------- --------------- ------------ ------------ --------------
DM 8,250,000 US 5,415,518 1/6/97 $5,386,794 $ 28,724
SF 6,530,000 US 5,242,033 1/6/97 5,044,672 197,361
YEN 1,073,000,000 US 9,710,846 1/6/97 9,485,749 225,097
--------
$451,182
========
DM = German Deutschemark US = U.S. Dollar
SF = Swiss Franc YEN = Japanese Yen
5. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Portfolios of the Trust
have recorded several reclassifications in the capital accounts. These
reclassifications have no impact on the net asset value of the Portfolios 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 November 30, 1996, the Portfolios recorded the following reclassifications
to increase (decrease) the accounts listed below.
Capital paid
Undistributed Accumulated in on shares
net investment net realized of beneficial
income gain (loss) interest
---------------- -------------- --------------
Tax-Exempt Bond Portfolio $ (46,716) $ 88,101 $(41,385)
Mid Cap Portfolio 914,819 (917,387) 2,568
International Portfolio 2,078,957 (2,078,957) --
Real Estate Securities Portfolio 12,612 -- (12,612)
Emerging Markets Bond Portfolio (29,643) 69,562 (39,919)
TAX NOTICE (Unaudited)
For the fiscal year ended November 30, 1996, the Tax-Exempt Bond Portfolio
distributed $7,556,869 of exempt-interest dividends.
For the fiscal year ended November 30, 1996 the Mid Cap Portfolio and the
International Portfolio distributed $8,612,420 and $375,113 of long-term
capital gain dividends, respectively.
This report is not authorized for distribution to prospective investors in
the Phoenix Multi-Portfolio Fund unless preceded or accompanied by an
effective prospectus which includes information concerning the sales charge,
the Fund's record and other pertinent information.
42
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGOTYPE] Price Waterhouse LLP [LOGO]
To the Trustees and Shareholders of
Phoenix Multi-Portfolio Fund
In our opinion, the accompanying statements of assets and liabilities,
including the schedules 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 the Tax-Exempt Bond Portfolio, the Mid Cap Portfolio (formerly
the Capital Appreciation Portfolio), the International Portfolio, the Real
Estate Securities Portfolio and the Emerging Markets Bond Portfolio
(constituting separate series of the Multi-Portfolio Fund, hereafter referred
to as the "Fund") at November 30, 1996, and the results of each of their
operations, the changes in each of their net assets and the financial
highlights for each of the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at November 30, 1996 by
correspondence with the custodians and brokers (and the application of
alternative auditing procedures where confirmations from brokers were not
received), provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Boston, Massachusetts
January 10, 1997
43
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
101 Munson Street
Greenfield, MA 01301
Trustees
C. Duane Blinn
Robert Chesek
E. Virgil Conway
Harry Dalzell-Payne
Francis E. Jeffries
Leroy Keith, Jr.
Philip R. McLoughlin
Everett L. Morris
James M. Oates
Calvin J. Pedersen
Philip R. Reynolds
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
Officers
Philip R. McLoughlin, President
Michael E. Haylon, Executive Vice President
David R. Pepin, Executive Vice President
William J. Newman, Senior Vice President
David L. Albrycht, Vice President
Curtiss O. Barrows, Vice President
Mathew Considine, Vice President
Jeanne H. Dorey, Vice President
Timothy M. Heaney, Vice President
William E. Keen III, Vice President
Peter S. Lannigan, Vice President
David Lui, Vice President
Thomas S. Melvin, Jr., Vice President
William R. Moyer, Vice President
Scott C. Noble, Vice President
Barbara Rubin, Vice President
Leonard J. Saltiel, Vice President
James D. Wehr, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary
Investment Advisers
Phoenix Investment Counsel, Inc.
56 Prospect St.
Hartford, CT 06115-0480
Phoenix Realty Securities, Inc.
(Real Estate Securities Portfolio)
38 Prospect St.
Hartford, CT 06115-0479
Principal Underwriter
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, CT 06083-2200
Custodians
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Brown Brothers Harriman & Co.
(International Portfolio)
40 Water Street
Boston, MA 02109
Transfer Agent
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, CT 06083-2200
Legal Counsel
Jorden, Burt, Berenson & Johnson, LLP
Suite 400 East
1025 Thomas Jefferson Street N.W.
Washington, D.C. 20007-0805
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Phoenix Multi-Portfolio Fund [POSTAGE PERMIT]
Bulk Rate Mail
P.O. Box 2200 U.S. Postage
Enfield, CT 06083-2200 PAID
Springfield, MA
Permit No.444
[LOGO] PHOENIX
DUFF & PHELPS
PDP 490 (1/97)
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
PART C--OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
<TABLE>
<S> <C>
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 November 30,
1996, incorporated by reference.
Included in Part C: Consent of Independent Accountants
</TABLE>
(b) Exhibits:
<TABLE>
<S> <C>
1.1 Agreement and Declaration of Trust, previously filed with the Registration Statement on December 31,
1987 and filed herewith via EDGAR and incorporated herein by reference.
1.2 Amendment to Declaration of Trust, filed with Post-Effective Amendment No. 2 on September 1, 1989, and
filed herewith via EDGAR and incorporated herein by reference.
1.3 Amendment to Declaration of Trust, filed with Post-Effective Amendment No. 8 on April 8, 1993, and filed
herewith via EDGAR and incorporated herein by reference.
1.4 Amendment to Declaration of Trust adding the Phoenix Real Estate Securities Portfolio, filed with Post-
Effective Amendment No. 14 on March 1, 1995, and filed herewith via EDGAR and incorporated herein
by reference.
1.5 Amendment to Declaration of Trust designating Classes of Shares, filed with Post-Effective Amendment No.
14 on March 1, 1995, and filed herewith via EDGAR and incorporated herein by reference.
1.6 Amendment to Declaration of Trust adding the Phoenix Emerging Markets Bond Portfolio filed via EDGAR
with Post-Effective Amendment No. 17 on August 29, 1995 and incorporated herein by reference.
1.7 Amendment to Declaration of Trust changing the name of the Phoenix Endowment Fixed-Income Portfolio
to Phoenix Diversified Income Portfolio, filed via EDGAR with Post-Effective Amendment No. 19 on
April 19, 1996 and incorporated herein by reference.
1.9 Amendment to Declaration of Trust dated May 22, 1996 and filed herewith via EDGAR.
2. Not applicable.
3. Not applicable.
4. Reference is made to Article III of Registrant's Agreement and Declaration of Trust, as amended, and filed
with those Registration Statements referred to in Exhibit 1, above.
5. Form of Investment Advisory Agreement between the Registrant and Phoenix Investment Counsel, Inc.
covering the Phoenix Tax-Exempt Bond, Phoenix Capital Appreciation, Phoenix International, Phoenix
Endowment Equity and Phoenix Endowment Fixed Income Portfolios, filed with Post-Effective Amendment
No. 12 on April 1, 1994, and filed herewith via EDGAR and incorporated herein by reference.
5.1 Form of Investment Advisory Agreement between Registrant and Phoenix Realty Securities, Inc. covering
the Phoenix Real Estate Securities Portfolio, filed with Post-Effective Amendment No. 14 on March 1,
1995, and filed herewith via EDGAR and incorporated herein by reference.
5.2 Form of Subadvisory Agreement among the Registrant, Phoenix Realty Securities, Inc. and ABKB/LaSalle
Partners Limited Partnership, filed with Post-Effective Amendment No. 14 on March 1, 1995, and filed
herewith via EDGAR and incorporated herein by reference.
6.1 Form of Distribution Agreement for Class A shares between the Registrant and Phoenix Equity Planning
Corporation, filed with Post-Effective Amendment No. 10 on December 13, 1993, and filed herewith via
EDGAR and incorporated herein by reference.
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
6.1a Form of Distribution Agreement for Class B shares between Registrant and Phoenix Equity Planning
Corporation, filed with Post-Effective Amendment No. 10 on December 13, 1993, and filed herewith via
EDGAR and incorporated herein by reference.
6.2 Form of Sales Agreement between Phoenix Equity Planning Corporation and dealers, filed with Post-
Effective Amendment No. 10 on December 13, 1993, and filed herewith via EDGAR and incorporated
herein by reference.
6.3 Form of Broker Agreement, filed with Pre-Effective Amendment No. 1 on May 19, 1988 and incorporated
herein by reference.
7. Not applicable.
8.1 Custodian Contract between Registrant and State Street Bank and Trust Company, filed with Pre-Effective
Amendment No. 2 on July 7, 1988 and incorporated herein by reference.
8.2 Schedule A to Custodian Contract between Registrant and State Street Bank and Trust Company, filed with
Post-Effective Amendment No. 3 on October 30, 1989 and incorporated herein by reference.
8.2a Amendment to Custodian Contract between Registrant and State Street Bank and Trust Company dated
October 17, 1996 and filed herewith via EDGAR.
8.3 Custodian Agreement between Registrant and Brown Brothers Harriman & Co. covering the Phoenix
International Portfolio, filed with Post-Effective Amendment No. 13 on December 12, 1994 and filed
herewith via EDGAR and incorporated herein by reference.
9.1 Financial Agent Agreement between Registrant and Phoenix Equity Planning Corporation, filed with
Post-Effective Amendment No. 13 on December 12, 1994 and filed herewith via EDGAR and incorporated
herein by reference.
9.1a Financial Agent Agreement between Registrant and Phoenix Equity Planning Corporation dated December
11, 1996 filed herewith via EDGAR.
9.2 Transfer Agency and Service Agreement between Registrant and Phoenix Equity Planning Corporation,
filed with Post-Effective Amendment No. 13 on December 12, 1994 and filed herewith via EDGAR and
incorporated herein by reference.
9.3 Sub-Transfer Agency Agreement between Phoenix Equity Planning Corporation and State Street Bank and
Trust Company, filed with Post-Effective Amendment No. 13 on December 12, 1994 and filed herewith via
EDGAR and incorporated herein by reference.
10.1 Opinion and Consent of Counsel covering shares of the Phoenix Tax-Exempt Bond Portfolio, filed with
Pre-Effective Amendment No. 2 on July 7, 1988, and incorporated herein by reference.
10.2 Opinion and Consent of Counsel covering shares of the Phoenix Capital Appreciation Portfolio and the
Phoenix International Portfolio, filed with Post-Effective Amendment No. 3 on October 30, 1989 and
incorporated herein by reference.
10.3 Opinion and Consent of Counsel covering shares of the Phoenix Endowment Equity Portfolio and
Endowment Fixed-Income Portfolio, filed with Post-Effective Amendment No. 8 on April 8, 1993, and
incorporated herein by reference.
10.4 Opinion and Consent of Counsel covering shares of the Phoenix Real Estate Securities Portfolio, filed with
Post-Effective Amendment No. 14 on March 1, 1995, and filed herewith via EDGAR and incorporated
herein by reference.
10.5 Opinion and Consent of Counsel covering shares of the Phoenix Emerging Markets Bond Portfolio, filed via
EDGAR with Post-Effective Amendment No. 17 on August 29, 1995, and incorporated herein by
reference.
11. Consent of Independent Accountants, filed herewith via EDGAR.
12. Not applicable.
13. Initial Capital Agreement, filed with Pre-Effective Amendment No. 2 July 7, 1988, and incorporated herein
by reference.
</TABLE>
C-2
<PAGE>
<TABLE>
<S> <C>
14.1 Custodial Agreement and supporting documentation and information relating to Internal Revenue Code
Section 403(b) (7) tax sheltered accounts, filed with Post-Effective Amendment No. 3 on October 30, 1989,
and incorporated herein by reference.
14.2 Custodial Agreement and supporting documentation and information relating to Individual Retirement
Accounts ("IRAs"), filed with Post-Effective Amendment No. 3 on October 30, 1989, and incorporated
herein by reference.
15.1 Class A Shares Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940, filed
with Post-Effective Amendment No. 10 on December 13, 1993, and filed herewith via EDGAR and
incorporated herein by reference.
15.1a Class B Shares Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940, filed
with Post-Effective Amendment No. 10 on December 13, 1993, and filed herewith via EDGAR and
incorporated herein by reference.
16. Not applicable.
17. Financial Data Schedule filed herewith via EDGAR and reflected on EDGAR as Exhibit 27.
18.1 Rule 18f-3 Dual Distribution Plan effective March 15, 1996 filed via EDGAR with Post-Effective
Amendment No. 18 on March 1, 1996, and incorporated herein by reference.
18.2 Rule 18f-3 Dual Distribution Plan effective December 1, 1996 and filed herewith via EDGAR.
19. Powers of Attorney, filed herewith via EDGAR and Powers of Attorney filed via EDGAR with Post-
Effective Amendment No. 19 on April 1, 1996.
</TABLE>
Item 25. Persons Controlled by or Under Common Control with Registrant.
None
Item 26. Number of Holders of Securities
The following information is given as of January 31, 1997.
<TABLE>
<CAPTION>
Title of Class Number of Shareholde
- -------------------------------------------------------------- ---------------------
<S> <C> <C>
Shares of Beneficial Interest, $1 par value, of the Phoenix Class A 3,693
Tax-Exempt Bond Portfolio Class B 145
Shares of Beneficial Interest, $1 par value of the Phoenix Class A 12,843
International Portfolio Class B 1,068
Shares of Beneficial Interest, $1 par value, of the Phoenix Class A 37,514
Mid Cap Portfolio Class B 2,160
Shares of Beneficial Interest, $1 par value, of the Phoenix
Endowment Equity Portfolio 7
Shares of Beneficial Interest, $1 par value, of the Phoenix
Diversified Income Portfolio 5
Shares of Beneficial Interest, $1 par value, of the Class A 1,243
Real Estate Securities Portfolio Class B 855
Shares of Beneficial Interest, $1 par value, of the Class A 1,006
Phoenix Emerging Markets Portfolio Class B 567
</TABLE>
Item 27. Indemnification
Under the Agreement and Declaration of Trust establishing the Registrant
any present or former Trustee or officer of the Registrant and any person who
serves at the Registrant's request as a director, officer or trustee of another
organization in which the Registrant has any interest as a shareholder, creditor
or otherwise is indemnified against all liabilities incurred in connection with
the defense or disposition of any action, suit or other proceeding in which he
may be or may have been involved as a party or otherwise by reason of being or
having been such a Trustee, officer or director, except with respect to any
matter as to which he shall have been finally adjudicated in any such action,
suit or other proceeding not to have acted in good faith in the reasonable
belief that his action was in or not opposed to the best interest of the
Registrant and with respect to any liability to the Registrant or its
shareholders 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in
C-3
<PAGE>
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a Trustee,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such Trustee, officer or controlling
person, the Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 28. Business and Other Connections of the Investment Advisers
See "Management of the Fund" in the Prospectus and "The Investment
Advisers" in the Statement of Additional Information for information regarding
the business of the Advisers. For information as to the business, profession,
vocation or employment of a substantial nature of directors and officers of the
Advisers, reference is made to the Advisers' current Form ADV (SEC File Nos.
801-5995 (PIC) and 801-48190 (PRS)) filed under the Investment Advisers Act of
1940, incorporated herein by reference.
Item 29. Principal Underwriter
(a) Phoenix Equity Planning Corporation ("Equity Planning"), which is
located at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut
06083-2200, serves as the principal underwriter of the Registrant's shares.
Equity Planning also acts as principal underwriter for the Phoenix Funds and for
the variable contracts issued by the Phoenix Home Life Variable Accumulation
Account and Phoenix Home Life Variable Universal Life Account.
(b) Directors and executive officers of Phoenix Equity Planning Corporation
are as follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Distributor with Registrant
- ------------------------- ---------------------------- --------------------------
<S> <C> <C>
Michael E. Haylon Director Executive Vice President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Trustee and President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
David R. Pepin Executive Vice President, Executive Vice President
56 Prospect St. Mutual Fund Sales and
P.O. Box 150480 Operations
Hartford, CT 06115-0480
Leonard J. Saltiel Managing Director, Vice President
100 Bright Meadow Blvd. Operations and Service
P.O. Box 1900
Enfield, CT 06083-1900
Paul A. Atkins Senior Vice President and None
56 Prospect St. Sales Manager
P.O. Box 150480
Hartford, CT 06115-0480
Maris L. Lambergs Senior Vice President, None
100 Bright Meadow Blvd. Insurance and Independent
P.O. Box 1900 Division
Enfield, CT 06083-1900
William R. Moyer Senior Vice President and Vice President
100 Bright Meadow Blvd. Chief Financial Officer
P.O. Box 1900
Enfield, CT 06083-1900
John F. Sharry Managing Director, Mutual None
100 right Meadow Blvd. Fund Distribution
P.O. Box 1900
Enfield, CT 06083-1900
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Distributor with Registrant
- -------------------------- -------------------------------- ------------------------
<S> <C> <C>
G. Jeffrey Bohne Vice President, Mutual Fund Secretary
101 Munson Street Customer Service
P.O. Box 810
Greenfield, MA 01302-0810
Eugene A. Charon Vice President and Controller None
100 Bright Meadow Blvd.
P.O. Box 1900
Enfield, CT 06083-1900
Nancy G. Curtiss Vice President and Treasurer, Treasurer
56 Prospect St. Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
William E. Keen III Assistant Vice President, Vice President
100 Bright Meadow Blvd. Mutual Fund Regulation
P.O. Box 1900
Enfield, CT 06083-1900
Elizabeth R. Sadowinski Vice President, None
56 Prospect St. Administration
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Counsel and Assistant Secretary
56 Prospect St. Secretary
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
(c) Equity Planning received the following commissions or other
compensation from the Registrant during the fiscal year ending November 30,
1996:
<TABLE>
<CAPTION>
Net Underwriting Compensation on
Name of Principal Discounts and Redemption and Brokerage Other
Underwriter Commissions Repurchase Commissions Compensation
- ------------------- ------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C>
Equity Planning $165,918 $92,998 $0 $245,491
</TABLE>
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
advisers, Phoenix Investment Counsel, Inc. and Phoenix Realty Securities, Inc.;
Registrant's financial agent, transfer agent and principal underwriter, Phoenix
Equity Planning Corporation; Registrant's dividend disbursing agent, State
Street Bank and Trust Company; and Registrant's custodians, State Street Bank
and Trust Company and Brown Brothers Harriman & Co. (custodian for the Phoenix
International Portfolio). The address of the Secretary of the Fund is 101 Munson
Street, Greenfield, Massachusetts 01301; the address of Phoenix Investment
Counsel, Inc. is 56 Prospect Street, Hartford, Connecticut 06115 and Phoenix
Realty Securities, Inc. is 38 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.0. Box 8301, Boston, Massachusetts 02266-8301,
Attention: Phoenix Funds; the address of the custodian State Street Bank and
Trust Company is P.0. Box 351, Boston, Massachusetts 02101 and the address for
the custodian of the Phoenix International Portfolio is Brown Brothers Harriman
& Co., 40 Water Street, Boston, Massachusetts 02109.
Item 31. Management Services
The information required by this Item is included in the Statement of
Additional Information.
Item 32. Undertakings
The information called for by Item 5A of Form N-1A is contained in the
Fund's annual report to shareholders: accordingly, the Fund hereby undertakes to
furnish each person to whom a prospectus is delivered with a copy of the Fund's
latest annual report, upon request and without charge.
C-5
<PAGE>
The Fund undertakes, if requested to do so by the holders of at least 10%
of the Fund's outstanding shares, to call a meeting of shareholders for the
purpose of voting upon the question of removal of a trustee or trustees and to
assist to communications with other shareholders as required by Section 16(c) of
the Investment Company Act of 1940.
Registrant undertakes to call a special meeting of shareholders for the
purpose of voting upon the question of removal of a trustee or trustees and to
assist in communications with other shareholders, as required by Section 16(c)
of the 1940 Act, if requested to do so by holders of at least 10% of a Series'
outstanding shares.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Amendment to its Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Hartford, and State of
Connecticut on the 26th day of March, 1997.
PHOENIX MULTI-PORTFOLIO FUND
ATTEST: /s/ Thomas N. Steenburg
By: /s/ Philip R. McLoughlin
------------------------------- -----------------------------------
Thomas N. Steenburg Philip R. McLoughlin
Assistant Secretary President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities indicated, on this 26th day of March, 1997.
<TABLE>
<CAPTION>
Signature Title
- ------------------------------------ ----------------------
<S> <C>
Trustee
--------------------------------
C. Duane Blinn*
Trustee
--------------------------------
Robert Chesek*
Trustee
--------------------------------
E. Virgil Conway*
Treasurer (principal
-------------------------------- financial and
Nancy G. Curtiss* accounting officer)
Trustee
--------------------------------
Harry Dalzell-Payne*
Trustee
--------------------------------
Francies E. Jeffries**
Trustee
--------------------------------
Leroy Keith, Jr.*
Trustee and
/s/ Philip R. McLoughlin President
--------------------------------
Philip R. McLoughlin
Trustee
--------------------------------
Everett L. Morris**
Trustee
--------------------------------
James M. Oates*
Trustee
--------------------------------
Calvin J. Pedersen**
Trustee
--------------------------------
Philip R. Reynolds*
Trustee
--------------------------------
Herbert Roth, Jr.*
Trustee
--------------------------------
Richard E. Segerson*
Trustee
--------------------------------
Lowell P. Weicker, Jr.*
</TABLE>
*By /s/ Philip R. McLoughlin
-------------------------
*Philip R. McLoughlin Attorney-in-fact pursuant to powers of attorney filed
with Post-Effective Amendment No. 19.
**Philip R. McLoughlin Attorney-in-fact pursuant to powers of attorney filed
herewith
S-1(c)
Exhibit 1.1
DECLARATION OF TRUST
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
AGREEMENT AND DECLARATION OF TRUST
OCTOBER 15, 1987
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
AGREEMENT AND DECLARATION OF TRUST
Page
ARTICLE 1 NAME AND DEFINITIONS.................................... 1
Section 1.1 Name.................................................... 1
Section 1.2 Definitions............................................. 1
(a) "Commission"................................... 1
(b) "Declaration of Trust"......................... 1
(c) "1940 Act"..................................... 2
(d) "Shareholder".................................. 2
(e) "Shares"....................................... 2
(f) "Series"....................................... 2
(g) "Trust"........................................ 2
(h) "Trustees"..................................... 2
(i) "Vote of a Majority of the Outstanding
Voting Securities"............................ 2
ARTICLE 2 THE TRUSTEES
Section 2.1 Number, Designation, Election, Term, etc................ 2
(a) Number and Election............................ 2
(b) Term........................................... 3
(c) Resignation and Retirement..................... 3
(d) Removal........................................ 3
(e) Vacancies...................................... 3
(f) Effect of Vacancy.............................. 3
(g) No Accounting.................................. 4
Section 2.2 Powers of Trustees...................................... 4
(a) Investments.................................... 5
(b) Disposition of Assets.......................... 5
(c) Ownership Powers............................... 5
(d) Subscription................................... 5
(e) Form of Holding................................ 5
(f) Reorganization, etc............................ 5
(g) Voting Trusts, etc............................. 5
(h) Compromise..................................... 6
(i) Partnerships, etc.............................. 6
(j) Borrowing and Security......................... 6
(k) Insurance...................................... 6
Section 2.3 Action by Trustees...................................... 6
Section 2.4 Certain Contracts....................................... 6
(a) Advisory....................................... 7
(b) Administration................................. 7
(c) Financial Agency............................... 7
(d) Distribution................................... 7
(e) Custodian...................................... 7
(f) Transfer Agency................................ 7
(g) Dividend Disbursing Agency..................... 8
- i -
<PAGE>
(h) Shareholder Servicing.......................... 8
Section 2.5 Certain Conflicts of Interest........................... 8
Section 2.6 Payment of Trust Expenses and Compensation
of Trustees............................................. 9
Section 2.7 Ownership of Assets of the Trust........................ 9
ARTICLE 3 SHARES
Section 3.1 Description of Shares................................... 9
Section 3.2 Establishment and Designation of Series................. 10
(a) Assets Belonging to Series..................... 10
(b) Liabilities Belonging to Series................ 11
(c) Dividends...................................... 11
(d) Liquidation.................................... 12
(e) Voting......................................... 12
(f) Redemption by Shareholder...................... 13
(g) Repurchase..................................... 13
(h) Redemption by Trust............................ 13
(i) Net Asset Value................................ 13
(j) Transfer....................................... 14
(k) Equality....................................... 14
(l) Fractions...................................... 14
(m) Exchange Privilege............................. 15
Section 3.3 Ownership of Shares..................................... 15
Section 3.4 Investments in the Trust................................ 15
Section 3.5 No Preemptive or Appraisal Rights....................... 15
Section 3.6 Status of Shares and Limitation of
Personal Liability...................................... 15
ARTICLE 4 SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 4.1 Voting Powers........................................... 16
Section 4.2 Meetings................................................ 16
Section 4.3 Record Dates............................................ 17
Section 4.4 Quorum and Required Vote................................ 17
Section 4.5 Action by Written Consent............................... 17
Section 4.6 Inspection of Records................................... 18
ARTICLE 5 LIMITATION OF LIABILITY; INDEMNIFICATION
Section 5.1 Trustees, Shareholders, etc. Not
Personally Liable; Notice............................... 18
Section 5.2 Trustee's Good Faith Action; Expert
Advice; No Bond or Surety............................... 18
Section 5.3 Indemnification of Shareholders......................... 19
Section 5.4 Indemnification of Trustees, Officers, etc.............. 19
Section 5.5 Compromise Payment...................................... 20
Section 5.6 Indemnification Not Exclusive, etc...................... 20
Section 5.7 Liability of Third Persons Dealing
with Trustees........................................... 21
ARTICLE 6 MISCELLANEOUS
Section 6.1 Duration and Termination of Trust....................... 21
Section 6.2 Reorganization.......................................... 21
Section 6.3 Amendments.............................................. 22
Section 6.4 Name of Trust........................................... 22
- ii -
<PAGE>
Section 6.5 Filing of Copies; References; Headings.................. 23
Section 6.6 Applicable Law.......................................... 23
- iii -
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
AGREEMENT AND DECLARATION OF TRUST
----------------------------------
AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts this
fifteenth day of October, 1987, by the Trustees hereunder and by the holders of
shares of beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH
WHEREAS this Trust has been formed to carry on the business of an
investment company; and
WHEREAS this Trust is authorized to issue its shares of beneficial interest
in accordance with the provisions hereinafter set forth; and
WHEREAS the Trustees have agreed to manage all property coming into their
hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the benefit of the holders from time to time
of shares of beneficial interest in this Trust as hereinafter set forth.
ARTICLE 1
---------
NAME AND DEFINITIONS
--------------------
Section 1.1 Name. This Trust shall be known as "Phoenix Multi-Portfolio
Fund" and the Trustees shall conduct the business of the Trust under that name
or such other name as they may from time to time determine.
Section 1.2 Definitions. Whenever used herein, unless otherwise required
by the context or specifically provided:
(a) "Commission" shall have the meaning given it in the 1940 Act;
(b) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust as amended or restated from time to time;
<PAGE>
- 2 -
(c) "1940 Act" refers to the Investment Company Act of 1940 and the Rules
and Regulations thereunder, all as amended from time to time;
(d) "Shareholder" means a record owner of Shares;
(e) "Shares" refers to the transferable units of interest into which
beneficial interest in the Trust or any Series of the Trust (as the
context may require) shall be divided from time to time;
(f) "Series" refers to a series of Shares established and designated under
or in accordance with the provisions of Article 3;
(g) "Trust" refers to the Massachusetts business trust established by this
Declaration of Trust, as amended from time to time;
(h) "Trustees" refers to the Trustees of the Trust named herein or elected
in accordance with the provisions of Article 2;
(i) "Vote of a Majority of the Outstanding Voting Securities" of the Trust
or any Series of the Trust (as the context may require) means the
lesser of (i) 67% of the Shares represented at a meeting at which more
than 50% of the outstanding Shares are represented or (ii) more than
50% of the outstanding Shares.
ARTICLE 2
---------
THE TRUSTEES
------------
Section 2.1 Number, Designation, Election, Term, etc.
(a) Number and Election. At each meeting of Shareholders called for the
purpose of electing Trustees, the Shareholders shall fix the number of
Trustees, which shall be not less than five (5) or more than twelve
(12) Trustees, to serve for a term of three (3) years or until the
election and qualification of their successors, and shall at such
meeting elect the number of Trustees so fixed. The Trustees serving as
such may increase (to not more than 12) or decrease (to not less than
five) the number of Trustees to a number other than the number
theretofore fixed. No decrease in the number of Trustees shall have
the effect of removing any Trustee from office prior to the expiration
of his term. However, the number of Trustees may be decreased in
conjunction with the removal of a Trustee pursuant to subsection (d)
of this Section 2.1.
<PAGE>
- 3 -
(b) Term. Each Trustee shall serve as a Trustee until the next meeting of
Shareholders called for the purpose of electing Trustees and until the
election and qualification of his successor, or until such Trustee
sooner dies, resigns, retires or is removed.
(c) Resignation and Retirement. Any Trustee may resign his trust or retire
as a Trustee, by written instrument signed by him and delivered to the
remaining Trustees or to any officer of the Trust. Such resignation or
retirement shall take effect upon such delivery or upon such later
date as is specified in such instrument.
(d) Removal. Any Trustee may be removed with or without cause at any time
either by written instrument, signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date upon
which such removal shall become effective, or by the Shareholders at
any meeting called for the purpose.
(e) Vacancies. Any vacancy resulting from any reason, including without
limitation the death, resignation, retirement, removal or incapacity
of any of the Trustees, or resulting from an increase in the number of
Trustees by the Trustees, may be filled by a majority of the remaining
Trustees through the appointment in writing of a successor Trustee to
hold office until the next meeting of Shareholders called for the
purpose of electing Trustees and until the election and qualification
of his successor, provided that immediately after filling any such
vacancy at least two-thirds (2/3) of the Trustees then holding office
shall have been elected to such office by the Shareholders at a
meeting. Such appointment of a successor Trustee shall be effective
upon the written acceptance of the person named therein to serve as a
Trustee and written agreement by such person to be bound by the
provisions of this Declaration of Trust whereupon the Trust estate
shall vest in the new Trustee, together with the continuing Trustees,
without any further act or conveyance.
(f) Effect of Vacancy. The death, resignation, retirement, removal or
incapacity of the Trustees, or of any one of them, shall not operate
to annul or terminate the Trust or to revoke or terminate any existing
agency or contract created or entered into pursuant to the terms of
this Declaration of Trust. During any vacancy a majority of the
remaining Trustees may exercise any and all of the powers of the
Trustees hereunder. The determination of a vacancy or vacancies in the
number of Trustees by reason of death, resignation or disability when
made by the remaining Trustees and set forth in any
<PAGE>
- 4 -
instrument filling such vacancy or vacancies shall be final and
conclusive for all purposes.
(g) No Accounting. Except to the extent required by the 1940 Act or under
circumstances which would justify his removal for cause, no person
ceasing to be a Trustee as a result of his death, resignation,
retirement, removal or incapacity (nor the estate of any such person)
shall be required to make an accounting to the Shareholders or
remaining Trustees upon such cessation.
Section 2.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility. Without limiting the foregoing, the Trustees may adopt
By-Laws not inconsistent with this Declaration of Trust providing for the
conduct of the business and affairs of the Trust and may amend and repeal them
to the extent that such By-Laws do not reserve that right to the Shareholders;
they may, as they consider appropriate, elect and remove officers, appoint and
terminate agents and consultants, and hire and terminate employees, any one or
more of the foregoing of whom may be a Trustee, and may provide for the
compensation of all of the foregoing; they may appoint from their own number,
and terminate, any one or more committees consisting of two or more Trustees,
including without implied limitation an executive committee, which may, when the
Trustees are not in session and subject to the provisions of the 1940 Act,
exercise some or all of the power and authority of the Trustees as the Trustees
may determine; in accordance with Section 2.4 they may retain one or more
advisers, administrators, financial agents and custodians and may authorize any
such custodian to employ sub-custodians or agents and to deposit all or any part
of the Trust's assets in a system or systems for the central handling of
securities and debt instruments, retain one or more transfer, dividend,
accounting or Shareholder servicing agents, provide for the distribution of
Shares by the Trust through one or more distributors, principal underwriters or
otherwise, set record dates or times for the determination of Shareholders or
certain of them with respect to various matters; they may compensate or provide
for the compensation of the Trustees, officers, advisers, administrators,
financial agents, custodians, other agents, consultants and employees of the
Trust or the Trustees on such terms as they deem appropriate; and in general
they may delegate to any officer of the Trust, to any committee of the Trustees
and to any employee, adviser, administrator, distributor, financial agent,
custodian, transfer agent, dividend disbursing agent, or any other agent or
consultant of the Trust such authority, powers, functions and duties as they
consider desirable or appropriate for the conduct of the business and affairs of
the Trust, including without implied limitation the power and authority to act
in the name of the Trust and of the Trustees, to sign documents and to act as
attorney-in-fact for the Trustees.
<PAGE>
- 5 -
Without limiting the foregoing but subject to the fundamental investment
policies of the Trust and to the extent not inconsistent with the 1940 Act or
other applicable law, the Trustees shall have power and authority:
(a) Investments. To invest and reinvest cash and other assets of the
Trust, and to hold cash or other assets of the Trust uninvested
without in any event being bound or limited by any present or future
law or custom in regard to investments by trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of
the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities, debt instruments
or property, and to execute and deliver proxies or powers of attorney
to such person or persons as the Trustees shall deem proper, granting
to such person or persons such power and discretion with relation to
securities, debt instruments or property as the Trustees shall deem
proper;
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities or
debt instruments or property;
(e) Form of Holding. Subject to the provisions of Section 2.7, to hold any
security, debt instrument or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in
the name of the Trustees or of the Trust or in the name of a
custodian, subcustodian or other depository or a nominee or nominees
or otherwise;
(f) Reorganization, etc. To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer,
any security or debt instrument or property of which is or was held in
the Trust; to consent to any contract, lease, mortgage, purchase or
sale of property by such corporation or issuer, and to pay calls or
subscriptions with respect to any security or debt instrument held in
the Trust;
(g) Voting Trusts, etc. To join with other holders of any securities or
debt instruments or property in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to
deposit any security or debt instrument with, or transfer any security
or debt instrument to, any such committee, depositary or trustee, and
to delegate to them such power and authority with relation to any
security or
<PAGE>
- 6 -
debt instrument (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay, such
portion of the expenses and compensation of such committee, depositary
or trustee as the Trustees shall deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any matter in controversy, including
but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage and pledge the
assets of the Trust or any part thereof to secure obligations arising
in connection with such borrowing; and
(k) Insurance. To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of
the business, including, without limitation, a bond insuring the Trust
against larceny and embezzlement by any Trustee, officer or employee
of the Trust and insurance covering each Trustee, officer and employee
of the Trust with respect to liability for any errors or omissions or
other matters which may be committed or omitted or incurred by any of
them.
Section 2.3 Action by Trustees. Except as otherwise provided by the 1940
Act or other applicable law or this Declaration of Trust, any action to be taken
by the Trustees may be taken by a majority of the Trustees present at a meeting
of Trustees (a quorum, consisting of at least a majority of the Trustees then in
office, being present), within or without Massachusetts, including any meeting
held by means of a conference telephone or other communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time and participation by such means shall constitute presence in
person at a meeting, or by written consents of a majority of the Trustees then
in office.
Section 2.4 Certain Contracts. Subject to compliance with the provisions
of the 1940 Act, but notwithstanding any limitations of present and future law
or custom in regard to delegation of powers by trustees generally, the Trustees
may, at any time and from time to time and without limiting the generality of
their powers and authority otherwise set forth herein, enter into one or more
contracts with any one or more corporations, trusts, associations, partnerships,
limited partnerships, other types of organizations, or individuals ("Contracting
Party") to provide for the performance and assumption of some or all of the
<PAGE>
- 7 -
following services, duties and responsibilities to, for or of the Trust and/or
the Trustees, and to provide for the performance and assumption of such other
services, duties and responsibilities in addition to those set forth below as
the Trustees may determine to be appropriate:
(a) Advisory. Subject to the general supervision of the Trustees and in
conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Series, to
manage such investments and assets, to make investment decisions with
respect thereto, and to place purchase and sale orders for portfolio
transactions relating to such investments and assets;
(b) Administration. Subject to the general supervision of the Trustees and
in conformity with any policies of the Trustees with respect to the
operations of the Trust, to provide all or any part of the
administrative and clerical personnel, office space and office
equipment and services appropriate for the efficient administration
and operation of the Trust;
(c) Financial Agency. Subject to the general supervision of the Trustees
and in conformity with any policies of the Trustees with respect to
the operations of the Trust, to provide financial and accounting
services whether with respect to the Trust's assets, or otherwise,
including but not limited to the preparation and supervision of the
Trust's financial statements and reports, bookkeeping services,
pricing services, periodic reports to Shareholders and others,
supporting schedules in connection with any audit of the Trust's
business or operations, and registration statements, prospectuses and
other documents required to be filed under all applicable Federal and
state laws and to provide any services involved in registering and
maintaining the registration of the Trust and of its Shares with the
Commission and registering or qualifying its Shares under state or
other securities laws or any services involved in preparing reports to
Shareholders;
(d) Distribution. To distribute the Shares of the Trust; to be principal
underwriter of such Shares or to act as agent of the Trust in the sale
of Shares and the acceptance or rejection of orders for the purchase
of Shares;
(e) Custodian. To maintain custody of the property of the Trust and
accounting records in connection therewith;
(f) Transfer Agency. To maintain records of the ownership of outstanding
Shares, the issuance and redemption and the transfer thereof;
<PAGE>
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(g) Dividend Disbursing Agency. To disburse any dividends and other
distributions declared by the Trustees and in accordance with the
policies of the Trustees and/or the instructions of any particular
Shareholder to reinvest any such dividends; and
(h) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with respect
to Shareholders and their Shares, and similar matters.
Section 2.5 Certain Conflicts of Interest. The same person may be the
Contracting Party for some or all of the services, duties and responsibilities
to, for and of the Trust and/or the Trustees, and the contracts with respect
thereto may contain such terms interpretive of or in addition to the delineation
of the services, duties and responsibilities provided for, including provisions
that are not inconsistent with the 1940 Act relating to the standard of duty of
and the rights to indemnification of the Contracting Party and others, as the
Trustees may determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter, distributor or agent of or for any
Contracting Party, or of or for any parent or affiliate of any
Contracting Party, or that the Contracting Party or any parent or
affiliate thereof is a Shareholder or has an interest in the Trust, or
that
(ii) any Contracting Party may have a contract providing for the rendering
of any similar services to one or more other corporations, trusts,
associations, partnerships, limited partnerships or other
organizations, or has other business or interests
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust and/or the
Trustees or disqualify any Shareholder, Trustee or officer of the Trust from
voting upon or executing the same or create any liability or accountability to
the Trust or its Shareholders provided that in the case of any relationship or
interest referred to in the preceding clause (i) on the part of any Trustee or
officer of the Trust either (x) the material facts as to such relationship or
interest have been disclosed to or are known by the Trustees not having any such
relationship or interest and the contract involved is approved in good faith by
a majority of such Trustees not having such relationship or interest (even
though such unrelated or disinterested Trustees are less than a quorum of all
the Trustees), or (y) the material facts as to such relationship or interest and
as to the contract have been
<PAGE>
- 9 -
disclosed to or are known by the Shareholders entitled to vote thereon and the
contract involved is specifically approved in good faith by vote of the
Shareholders, and (z) the specific contract involved is fair to the Trust as of
the time it is authorized, approved or ratified by the Trustees or by the
Shareholders.
Section 2.6 Payment of Trust Expenses and Compensation of Trustees. The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust, or partly out of principal and partly out of income, and to
charge or allocate the same to, between or among such one or more of the Series
that may be established and designated pursuant to Article 3, as the Trustees
deem fair, all expenses, fees, charges, taxes and liabilities incurred or
arising in connection with the Trust, or in connection with the management
thereof, including, but not limited to, the Trustees' compensation and such
expenses and charges for the services of the Trust's officers, employees,
adviser, administrator, financial agent, distributor, principal underwriter,
auditor, counsel, custodian, transfer agent, dividend disbursing agent,
Shareholder servicing agent, and such other agents, consultants, and independent
contractors and such other expenses and charges, including non-recurring
expenses and other expenses which may be deemed extraordinary expenses, as the
Trustees may deem necessary or proper to incur. Without limiting the generality
of any other provision hereof, the Trustees shall be entitled to reasonable
compensation from the Trust for their services as Trustees and may fix the
amount of such compensation.
Section 2.7 Ownership of Assets of the Trust. Notwithstanding the
provisions of subsection (e) of Section 2.2, title to all of the assets of the
Trust shall at all times be considered as vested in the Trustees as joint
tenants.
ARTICLE 3
---------
SHARES
------
Section 3.1 Description of Shares. The beneficial interest in the Trust
shall be divided into an unlimited number of Shares, with a par value of one
dollar each. The Trustees shall have the authority from time to time to
establish and designate two or more Series of Shares (including without
limitation the Series specifically established and designated in Section 3.2),
as they deem necessary or desirable.
The Trustees may issue Shares of any Series for such consideration and on
such terms as they may determine (or for no consideration if pursuant to a Share
dividend or split), all without action or approval of the Shareholders. All
Shares when so issued on the terms determined by the Trustees shall be fully
paid and non-assessable (but may be subject to mandatory contribution back to
the Trust as provided in subsection (i) of Section 3.2). The Trustees may
classify or reclassify any
<PAGE>
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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 treasurey Shares (of the same or some other
Series), reissue for such consideration and on such terms as they may determine,
or cancel, at their discretion from time to time, any Shares of any Series
reacquired by the Trust.
The Trustees may from time to time close the transfer books or establish
record dates and times for the purposes of determining the holders of Shares
entitled to be treated as such, to the extent provided for or referred to in
Section 4.3.
The establishment and designation of any Series of Shares in addition to
the Series established and designated in Section 3.2 shall be effective upon the
execution by a majority of the then Trustees of an instrument setting forth such
establishment and designation and the relative rights and preferences of such
Series, or 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.
Any Trustee, officer or other agent of the Trust and any organization in
which any such person is interested may acquire, own, hold and dispose of Shares
of any Series of the Trust to the same extent as if such person were not a
Trustee, officer or other agent of the Trust; and the Trust may issue and sell
or cause to be issued and sold and may purchase Shares of any Series from any
such person or any such organization subject only to the general limitations,
restrictions or other provisions applicable to the sale or purchase of Shares of
such Series generally.
Section 3.2 Establishment and Designation of Series. Without limiting the
authority of the Trustees set forth in Section 3.1 to establish and designate
any further Series, the following Series is hereby established and designated:
"Phoenix Tax-Exempt Bond Portfolio."
Shares of the Series established and designated in this Section 3.2 and any
Shares of any further Series that may from time to time be established and
designated by the Trustees shall (unless the Trustee otherwise determine with
respect to some further Series at the time of establishing and designating the
same) have the following relative rights and preferences:
(a) Assets Belonging to Series. All consideration received by the Trust
for the issue or sale of Shares of a particular Series, together with
all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments
<PAGE>
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derived from any reinvestment of such proceeds in whatever form the
same may be, shall irrevocably belong to that Series for all purposes,
subject only to the rights of creditors, and shall be so recorded upon
the books of account of the Trust. Such consideration, assets, income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds, in
whatever form the same may be, together with any General Items, as
defined herein, allocated to that Series as provided herein, are
herein referred to as "assets belonging to" that Series. In the event
that there are any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as
belonging to any particular Series (collectively "General Items"), the
Trustees shall allocate such General Items to and among any one or
more of the Series established and designated from time to time in
such manner and on such basis as they, in their sole discretion, deem
fair and equitable; and any General Items so allocated to a particular
Series shall belong to that Series. Each such allocation by the
Trustees shall be conclusive and binding upon the Shareholders of all
Series for all purposes.
(b) Liabilities Belonging to Series. The assets belonging to each
particular Series shall be charged with the liabilities of the Trust
in respect to that Series and all expenses, costs, charges and
reserves attributable to that Series, and any general liabilities,
expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series shall be
allocated and charged by the Trustees to and among any one or more of
the Series established and designated from time to time in such manner
and on such basis as the Trustees in their sole discretion deem fair
and equitable. The liabilities, expenses, costs, charges and reserves
allocated and so charged to a Series are herein referred to as
"liabilities belonging to" that Series. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees
shall be conclusive and binding upon the holders of all Series for all
purposes.
The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be
treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon the
Shareholders.
(c) Dividends. Dividends and distributions on Shares of a particular
Series may be paid with such frequency as the Trustees may determine,
which may be daily or otherwise
<PAGE>
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pursuant to a standing resolution or resolutions adopted only once or
with such frequency as the Trustees may determine, to the holders of
Shares of that Series, from such of the income and capital gains,
accrued or realized, from the assets belonging to that Series as the
Trustees may determine, after providing for actual and accrued
liabilities belonging to that Series. All dividends and distributions
on Shares of a particular Series shall be distributed pro rata to the
holders of that Series in proportion to the number of Shares of that
Series held by such holders at the date and time of record established
for the payment of such dividends or distributions, except that in
connection with any dividend or distribution program or procedure the
Trustees may determine that no dividend or distribution shall be
payable on Shares as to which the Shareholder's purchase order and/or
payment have not been received by the time or times established by the
Trustees under such program or procedure. Such dividends and
distributions may be made in cash or Shares or a combination thereof
as determined by the Trustees or pursuant to any program that the
Trustees may have in effect at the time for the election by each
Shareholder of the mode of the making of such dividend or distribution
to that Shareholder. Any such dividend or distribution paid in Shares
will be paid at the net asset value thereof as determined in
accordance with subsection (i) of this Section 3.2.
(d) Liquidation. In the event of the liquidation or dissolution of the
Trust or redemption of all of the Shares of any Series, the
Shareholders of each Series that has been established and designated
shall be entitled to receive, as a Series, when and as declared by the
Trustees, the excess of the assets belonging to that Series over the
liabilities belonging to that Series. The assets so distributable to
the Shareholders of any Series shall be distributed among such
Shareholders in proportion to the number of Shares of that Series held
by them and recorded on the books of the Trust. The redemption of all
the Shares of any particular Series may be authorized by a vote of a
majority of the Trustees then in office subject to the approval of a
Vote of a Majority of the Outstanding Voting Securities of that
Series.
(e) Voting. On each matter submitted to a vote of the Shareholders, each
holder of a Share shall be entitled to one vote for each Share, and a
proportionate vote for each fractional Share, standing in his name on
the books of the Trust irrespective of the Series thereof and all
Shares of all Series shall vote as a single class ("Single Class
Voting"); provided, however, that as to any matter with respect to
which a separate vote of any Series is required, such requirement as
to a separate
<PAGE>
- 13 -
vote by that Series shall apply in lieu of Single Class Voting as
described above and only the holders of Shares of the Series affected
shall be entitled to vote.
(f) Redemption by Shareholder. Each holder of Shares of a particular
Series, upon request to the Trust and compliance with appropriate
transfer requirements, shall be entitled to require the Trust to
redeem all or any part of the Shares of that Series standing in the
name of such holder on the books of Trust at a redemption price equal
to the net asset value per Share of that Series next determined in
accordance with subsection (i) of this Section 3.2 after the receipt
in good order of the request for redemption, less such amount not to
exceed one percent (1%) of such net asset value as the Trustees may
determine.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of
any Series to require the Trust to redeem Shares of that Series during
any period or at any time when and to the extent permissible under the
1940 Act.
(g) Repurchase. The Trust may maintain, or authorize its agent to
maintain, an offer to repurchase its outstanding Shares. During any
period when such an offer is being maintained, each Share for which a
repurchase order is received shall be repurchased at a price equal to
the net asset value per Share next determined in accordance with
subsection (i) of this Section 3.2 after receipt of such repurchase
order less such amount not in excess of 1% of such net asset value as
the Trustees may determine.
(h) Redemption by Trust. Each Share of each Series that has been
established and designated is subject to redemption by the Trust at
the redemption price which would be applicable if such Share was then
being redeemed by the Shareholder pursuant to subsection (f) of this
Section 3.2 at any time if the Trustees determine in their sole
discretion that such redemption is in the best interest of the holders
of the Shares, or any Series thereof, of the Trust, and upon such
redemption the holders of the Shares so redeemed shall have no further
right with respect thereto other than to receive payment of such
redemption price.
(i) Net Asset Value. The net asset value per Share of any Series shall be
the quotient obtained by dividing the value of the net assets of that
Series (being the value of the assets belonging to that Series less
the liabilities belonging to that Series) by the total number of
Shares of that Series outstanding, all
<PAGE>
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determined in accordance with the methods and procedures established
by the Trustees from time to time.
The Trustees may determine to maintain the net asset value per Share
of any Series that may be established and designated by the Trustees
as a money market fund series at a designated constant dollar amount
and in connection therewith may adopt procedures not inconsistent with
the 1940 Act for the continuing declarations of income and capital
gains attributable to that Series as dividends payable in additional
Shares of that Series at the designated constant dollar amount and for
the handling of any losses attributable to that Series. Such
procedures may provide that in the event of any loss each Shareholder
shall be deemed to have contributed to the capital of the Trust
attributable to that Series his pro rata portion of the total number
of Shares required to be cancelled in order to permit the net asset
value per Share of that Series to be maintained, after reflecting such
loss, at the designated constant dollar amount. Each Shareholder of
the Trust shall be deemed to have agreed, by his investment in any
Series with respect to which the Trustees shall have adopted any such
procedure, to make the contribution referred to in the preceding
sentence in the event of any such loss.
(j) Transfer. All Shares of each particular Series shall be transferable,,
but transfers of Shares of a particular Series will be recorded on the
Share transfer records of the Trust applicable to that Series only at
such times as may be permitted by the Trustees.
(k) Equality. All Shares of each particular Series shall represent an
equal proportionate interest in the assets belonging to that Series
(subject to the liabilities belonging to that Series), and each Share
of any particular Series shall be equal to each other Share of that
Series; but the provisions of this sentence shall not restrict any
distinctions permissible under subsection (c) or subsection (h) of
this Section 3.2 that may exist with respect to Shares of the same
Series. The Trustees may from time to time divide or combine the
Shares of any particular Series into a greater or lesser number of
Shares of that Series without thereby changing the proportionate
beneficial interest in the assets belonging to that Series or in any
way affecting the rights of Shares of any other Series.
(l) Fractions. Any fractional Share of any Series, if any such fractional
Share is outstanding, shall carry proportionately all the rights and
obligations of a whole Share of that Series, including rights with
<PAGE>
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respect to voting, receipt of dividends and distributions, redemption
of Shares, and liquidation of the Trust.
(m) Exchange Privilege. Subject to compliance with the requirements of the
1940 Act, the Trustees shall have the authority to provide that
holders of Shares of any Series shall have the right to exchange said
Shares for Shares of one or more other Series of Shares in accordance
with such requirements and procedures as may be established by the
Trustees.
Section 3.3 Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Series
that has been established and designated. No certificates certifying the
ownership of Shares need be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the use of facsimile
signatures, the transfer of Shares, and similar matters. The record books of the
Trust as kept by the Trust or any transfer or similar agent, as the case may be,
shall be conclusive as to who are the Shareholders and as to the number of
Shares of each Series held from time to time by each such Shareholder.
Section 3.4 Investments in the Trust. The Trustees may accept investments
in the Trust from such persons and on such terms and for such consideration, not
inconsistent with the provisions of the 1940 Act, as they from time to time
authorize. The Trustees may authorize any distributor, principal underwriter,
transfer agent or other person to accept orders for the purchase of Shares that
conform to such authorized terms and to reject any purchase orders for Shares
whether or not conforming to such authorized terms.
Section 3.5 No Preemptive or Appraisal Rights. Shareholders shall have
no preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust. Shareholders shall have no appraisal rights
other than as may from time to time be provided by applicable law.
Section 3.6 Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the Trust nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Trust. Ownership of Shares shall not entitle
the
<PAGE>
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Shareholder to any title in or to the whole or any part of the Trust property or
right to call for a partition or division of the same or for an accounting. The
Trust shall not be deemed or otherwise construed to be a partnership nor shall
the ownership of Shares constitute the Shareholders partners. Neither the Trust
nor the Trustees nor any officer, employee or agent of the Trust shall have any
power to bind personally any Shareholder nor, except as specifically provided
herein, to call upon any Shareholder for the payment of any sum of money or
assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay.
ARTICLE 4
---------
SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------
Section 4.1 Voting Powers. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section 2.1,
(ii) with respect to any contract with a Contracting Party as provided in
Section 2.4 as to which Shareholder approval is required by the 1940 Act, (iii)
with respect to any termination or reorganization of the Trust or any Series to
the extent and as provided in Sections 6.1 and 6.2, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Section
6.3, (v) to the same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class action on behalf
of the Trust or the Shareholders, and (vi) with respect to such additional
matters relating to the Trust as may be required by the 1940 Act, this
Declaration of Trust or any registration of the Trust with the Commission or
state regulatory agency, or as the Trustees may consider necessary or desirable.
There shall be no cumulative voting in the election of Trustees. Shares may be
voted in person or by proxy. A proxy with respect to Shares held in the name of
two or more persons shall be valid if executed by any one of them unless at or
prior to exercise of the proxy the Trust receives a specific written notice to
the contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest on the challenger.
At any time when no Shares of a Series are outstanding, the Trustees may with
respect to that Series exercise all rights of Shareholders and may take any
action required by law or this Declaration of Trust to be taken by Shareholders
with respect to that Series.
Section 4.2 Meetings. A special meeting of Shareholders at which Trustees
shall be elected by the Shareholders shall be called by the Trustees within one
year following the initial public offering of Shares of the Trust. Thereafter a
special meeting of the Shareholders for the purpose of electing Trustees shall
be called by the Trustees every third year. Any such
<PAGE>
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special meeting shall be held on such day during the Trust's fiscal year and at
such time as shall be designated by the Trustees and stated in the notice of the
meeting. Special meetings may also be called by the Trustees from time to time
for the purpose of taking action upon any matter requiring the vote or authority
of the Shareholders as herein provided or upon any other matter deemed by the
Trustees to be necessary or desirable. Written notice of any meeting of
Shareholders shall be given or caused to be given by the Trustees by mailing
such notice at least ten days before such meeting, postage prepaid, stating the
time, place and purpose of the meeting, to each Shareholder at the Shareholder's
address as it appears on the records of the Trust. If the Trustees shall fail to
call or give notice of any meeting of Shareholders for a period of 60 days after
written application by Shareholders holding at least 10% of the Shares then
outstanding requesting a meeting be called for a purpose requiring action by the
Shareholders as provided herein, then Shareholders holding at least 10% of the
Shares then outstanding may call and give notice of such meeting, and thereupon
the meeting shall be held in the manner provided for herein in case of call
thereof by the Trustees.
Section 4.3 Record Dates. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof, or
who are entitled to participate in any dividend or distribution, or for the
purpose of any other action, the Trustees may from time to time close the
transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than 60 days prior to the date of any meeting of Shareholders or other action as
the date and time of record for the determination of Shareholders entitled to
vote at such meeting or any adjournment thereof or to be treated as Shareholders
of record for purposes of such action and no Shareholder becoming such after
that date and time shall be so entitled to vote at such meeting or any
adjournment thereof or to be treated as a Shareholder of record for purposes of
such other action.
Section 4.4 Quorum and Required Vote. A majority of the Shares entitled
to vote shall be a quorum for the transaction of business at a Shareholders'
meeting, but any lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held, within a reasonable time after the
date set for the original meeting, without the necessity of further notice. A
majority of the Shares voted, at a meeting at which a quorum is present, shall
decide any questions and a plurality shall elect a Trustee, except when a
different vote is provided for by any provision of the 1940 Act or other
applicable law or by this Declaration of Trust.
Section 4.5 Action by Written Consent. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders of the Trust
or of any Series may be taken
<PAGE>
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without a meeting if a majority of Shareholders entitled to vote on the matter
(or such larger proportion thereof as shall be required by the 1940 Act or by
any express provision of this Declaration of Trust) consent to the action in
writing and such written consents are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as a vote taken at
a meeting of Shareholders.
Section 4.6 Inspection of Records. The records of the Trust shall be open
to inspection by Shareholders to the extent permitted by the Trustees.
ARTICLE 5
---------
LIMITATION OF LIABILITY; INDEMNIFICATION
----------------------------------------
Section 5.1 Trustees, Shareholders, etc. Not Personally Liable; Notice.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Trust for payment under such
credit, contract or claim; and neither the Shareholders nor the Trustees, nor
any of the Trust's officers, employees or agents, whether past, present or
furture, shall be personally liable therefor. Every note, bond, contract,
instrument, certificate or undertaking and every other act or thing whatsoever
executed or done by or on behalf of the Trust or the Trustees or any of them in
connection with the Trust shall be conclusively deemed to have been executed or
done only by or for the Trust or the Trustees and not personally. Nothing in
this Declaration of Trust shall protect any Trustee or officer against any
liability to the Trust or the Shareholders to which such Trustee or officer
would otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee or of such officer.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officers or officer shall give notice that this
Declaration of Trust is on file with the Secretary of The Commonwealth of
Massachusetts and shall recite to the effect that the same was executed or made
by or on behalf of the Trust or by them as Trustees or Trustee or as officers or
officer and not individually and that the obligations of such instrument are not
binding upon any of them or the Shareholders individually but are binding only
upon the assets and property of the Trust, but the omission thereof shall not
operate to bind any Trustees or Trustee or officers or officer or Shareholders
or Shareholder individually.
Section 5.2 Trustee's Good Faith Action; Expert Advice; No Bond or Surety.
The exercise by the Trustees of their powers and discretions hereunder shall be
binding upon everyone interested. A Trustee shall be liable for his own wilful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
<PAGE>
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involved in the conduct of the office of Trustee, and for nothing else, and
shall not be liable for errors of judgment or mistakes of fact or law. Subject
to the foregoing, (a) the Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee, consultant,
adviser, administrator, distributor or principal underwriter, financial agent,
custodian or transfer, dividend disbursing, Shareholder servicing or other agent
of the Trust, nor shall any Trustee be responsible for the act or omission of
any other Trustee; (b) the Trustees may take advice of counsel or other experts
with respect to the meaning and operation of this Declaration of Trust and their
duties as Trustees, and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice; and (c) in
discharging their duties, the Trustees, when acting in good faith, shall be
entitled to rely upon the books of account of the Trust and upon written reports
made to the Trustees by any officer appointed by them, any independent public
accountant, and (with respect to the subject matter of the contract involved)
any officer, partner or responsible employee of a Contracting Party appointed by
the Trustees pursuant to Section 2.4. The Trustees as such shall not be required
to give any bond or surety or any other security for the performance of their
duties.
Section 5.3 Indemnification of Shareholders. In case any Shareholder or
former Shareholder shall be charged or held to be personally liable for any
obligation or liability of the Trust solely by reason of being or having been a
Shareholder and not because of such Shareholder's acts or omissions or for some
other reason, the Trust (upon proper and timely request by the Shareholder)
shall assume the defense against such charge and satisfy any judgment thereon,
and the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or, in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled out
of the assets of the Trust estate to be held harmless from and indemnified
against all loss and expense arising from such charge or liability.
Section 5.4 Indemnification of Trustees, Officers, etc. The Trust shall
indemnify each of its Trustees and officers, may indemnify any of its employees
or agents and shall indemnify any persons who serve at the Trust's request as
directors, officers or trustees, and may indemnify any persons who serve at the
Trust's request as employees or agents, of another organization in which the
Trust has any interest as a shareholder, creditor or otherwise (any such person
being hereinafter referred to as a "Covered Person") against all liabilities,
including but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by any Covered Person in connection with
the defense or disposition of any action, suit or other proceeding, whether
civil or criminal, before any court or administrative or legislative body, in
which such Covered Person
<PAGE>
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may be or may have been involved as a party or otherwise or with which such
Covered Person may be or may have been threatened, while in office or
thereafter, by reason of being or having been such a Trustee, officer, director,
employee or agent, except with respect to any matter as to which such Covered
Person shall have been finally adjudicated in any such action, suit or other
proceeding not to have acted in good faith in the reasonable belief that such
Covered Person's action was in or not opposed to the best interests of the Trust
and except that no Covered Person shall be indemnified against any liability to
the Trust or its Shareholders to which such Covered Person would otherwise be
subject by reason of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office.
Expenses, including accountants' and counsel fees so incurred by any such
Covered Person (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), may be paid from time to time by the Trust
in advance of the final disposition of any such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such Covered Person to repay
amounts so paid to the Trust if it is ultimately determined that indemnification
of such expenses is not authorized under this Article 5.
Section 5.5 Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 5.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (a) by a majority of the Trustees who are not
parties to the proceeding, or (b) by an independent legal counsel in a written
opinion to the effect that such Covered Person appears to have acted in good
faith in the reasonable belief that his action was in the best interests of the
Trust and that such indemnification would not protect such covered Person
against any liability to the Trust to which such Covered Person would otherwise
be subject by reason of wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office, or (c)
by the Vote of a Majority of the Outstanding Voting Securities of the Trust.
Approval by the Trustees pursuant to clause (a) or by independent legal counsel
pursuant to clause (b) or by the Vote of a Majority of the Outstanding Voting
Securities of the Trust pursuant to clause (c) shall not prevent the recovery
from any Covered Person of any amount paid to such Covered Person in accordance
with any of such clauses as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction not to have acted
in good faith in the reasonable belief that such Covered Person's action was in
or not opposed to the best interests of the Trust or to have been liable to the
Trust or its Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
Covered Person's office.
Section 5.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article 5 shall not be
<PAGE>
- 21 -
exclusive of or affect any other rights to which any such Covered Person may be
entitled. As used in this Article 5, "Covered Person" shall include such
person's heirs, executors and administrators. Nothing contained in this Article
shall affect any rights to indemnification to which personnel of the Trust,
other than Trustees and officers, and other persons may be entitled by contract
or otherwise under law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such person.
Section 5.7 Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
ARTICLE 6
---------
MISCELLANEOUS
-------------
Section 6.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by a majority of the Trustees then in office
subject to the approval by a Vote of a Majority of the Outstanding Voting
Securities of each Series voting separately by Series.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated, as may
be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of subsection (d) of Section 3.2.
Section 6.2 Reorganization. The Trustees may sell, convey and transfer the
assets of the Trust, or the assets belonging to any one or more Series, to
another trust, partnership, association or corporation organized under the laws
of any state of the United States, or to the Trust, to be held as assets
belonging to another Series of the Trust, in exchange for cash, shares or other
securities (including, in the case of a transfer to another Series of the Trust,
Shares of such other Series) with such transfer being made subject to, or with
the assumption by the transferee of, the liabilities belonging to each Series
the assets of which are so transferred; provided, however, that no assets
belonging to any particular Series shall be so transferred unless the terms of
such transfer shall have first been approved at a meeting called for the purpose
by a Vote of a Majority of the Outstanding Voting Securities of that Series.
Following such transfer, the Trustees shall distribute such cash, shares or
other securities (giving due
<PAGE>
- 22 -
effect to the assets and liabilities belonging to and any other differences
among the various Series the assets belonging to which have so been transferred)
among the Shareholders of the Series the assets belonging to which have been so
transferred; and if all of the assets of the Trust have been so transferred, the
Trust shall be terminated.
Section 6.3 Amendments. All rights granted to the Shareholders under this
Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment except as herein provided upon the
Shareholders without the express consent of each Shareholder or Trustee
involved. Subject to the foregoing and subject to approval of any amendment
which would adversely affect the rights of holders of Shares of any Series by a
Vote of a Majority of the Outstanding Voting Securities of that Series, the
provisions of this Declaration of Trust (whether or not related to the rights of
Shareholders) may be amended at any time by an instrument in writing signed by a
majority of the then Trustees (or by a Trustee or officer of the Trust pursuant
to the vote of a majority of such Trustees), provided, however, that no
authorization by Shareholder vote shall be required in the case of amendments
(a) establishing and designating any further Series of Shares, as provided in
Section 3.1, or (b) abolishing any Series of Shares of which there are no Shares
outstanding, or (c) having the purpose of changing the name of the Trust or the
name of any Series theretofore established and designated, or of supplying any
omission, curing any ambiguity or curing, correcting or supplementing any
provision hereof which is internally inconsistent with any other provision
hereof or which is defective or inconsistent with the 1940 Act or with the
requirements of the Internal Revenue Code and applicable regulations for the
Trust's obtaining the most favorable treatment thereunder available to regulated
investment companies. Subject to the foregoing, any such amendment shall be
effective as provided in the instrument containing the terms of such amendment
or, if there is no provision therein with respect to effectiveness, upon the
execution of such instrument and of a certificate (which may be a part of such
instrument) executed by a Trustee or officer of the Trust to the effect that
such amendment has been duly adopted.
Section 6.4 Name of Trust. The Trust is adopting its name through
permission of Phoenix Mutual Life Insurance Company which has granted to Phoenix
Investment Counsel, Inc. the right to grant licenses to investment companies
pursuant to which such investment companies will be permitted to use the name
"Phoenix" upon such terms and conditions as are agreed to by Phoenix Mutual Life
Insurance Company. Phoenix Mutual Life Insurance Company has reserved to itself
or any successor to its business the right to grant the nonexclusive right to
use the name "Phoenix" or "Phoenix Mutual" to any other entity. The Trustees
agree to eliminate promptly at the request of Phoenix Investment Counsel, Inc.
all
<PAGE>
- 23 -
references to "Phoenix" in the name of this Trust and will cause the business of
this Trust to be conducted thereafter under a name not using the word "Phoenix"
in any form or combination.
Section 6.5 Filing of Copies; References; Headings. The original or a
conformed copy of this Declaration of Trust and of each amendment thereto shall
be kept at the office of the Trust where it may be inspected by any Shareholder.
A copy of this Declaration of Trust and of each amendment thereto shall be filed
by the Trust with the Secretary of The Commonwealth of Massachusetts as well as
with any other governmental office where such filing may from time to time be
required, but the failure to make any such filing shall not impair the
effectiveness of this Declaration of Trust or any such subsequent amendment.
Anyone dealing with the Trust may rely on a certificate by a Trustee or officer
of the Trust as to whether or not any such amendments have been made, as to the
identities of the Trustees and officers, and as to any matters in connection
with Trust hereunder; and, with the same effect as if it were the original, may
rely on a copy certified by an officer of the Trust to be a copy of this
Declaration of Trust or of any such subsequent amendment. In this instrument and
in any such amendment, references to this instrument, and all expressions like
"herein", "hereof" and "hereunder" shall be deemed to refer to this instrument
as a whole as the same may be amended or affected by any such amendments. The
masculine gender shall include the feminine and neuter genders. Headings are
placed herein for convenience of reference only and shall not be taken as a part
hereof or control or affect the meaning, construction or effect of this
instrument. This instrument or any amendment thereto may be executed in any
number of counterparts each of which shall be deemed an original.
Section 6.6 Applicable Law. This Declaration of Trust, made in The
Commonweath of Massachusetts, and the Trust created hereunder, is governed by
the laws of said Commonwealth and is construed and administered according to
said laws. The Trust is of the type referred to in Section 1 of Chapter 182 of
the Massachusetts General Laws and of the type commonly called a Massachusetts
business trust, and, without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust.
IN WITNESS WHEREOF, the undersigned hereunto set their hands and seals in
the City of Boston, Massachusetts for themselves and their assigns, as of the
day and year first above written.
/s/ John Hand
---------------------------
/s/ Virginia Spencer
---------------------------
Exhibit 1.2
AMENDMENT TO DECLARATION OF TRUST
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
Amendment to Declaration of Trust
We, the undersigned, being a majority of the members of the Board of
Trustees of the Phoenix Multi-Portfolio Fund, a Massachusetts business trust
organized under an Agreement and Declaration of Trust dated October 15, 1987,
acting pursuant to Section 6.3 of ARTICLE VI of said Agreement and Declaration
of Trust for the purpose of establishing and designating new Series of Shares
denominated the Phoenix Capital Appreciation Portfolio and Phoenix International
Portfolio, hereby amend said Declaration of Trust, effective August 23, 1989, by
deleting the first paragraph of Section 3.2 of ARTICLE III thereof and by
inserting in lieu of such paragraph the following paragraph:
"Without limiting the authority of the Trustees set forth in Section 3.1 to
establish and designate any further Series, the following three Series are
hereby established and designated: "Phoenix Tax-Exempt Bond Portfolio",
"Phoenix Capital Appreciation Portfolio" and "Phoenix International
Portfolio".
WITNESS our hands this 23rd day of August, 1989.
/s/ C. Duane Blinn /s/ James M. Oates
------------------------ ---------------------------
C. Duane Blinn James M. Oates
/s/ Robert Chesek /s/ Philip R. Reynolds
------------------------ ---------------------------
Robert Chesek Philip R. Reynolds
/s/ James R. Dempsey /s/ Herbert Roth, Jr.
------------------------ ---------------------------
James R. Dempsey Herbert Roth, Jr.
/s/ Leroy Keith, Jr. /s/ Richard Scheuch
------------------------ ---------------------------
Leroy Keith, Jr. Richard Scheuch
Exhibit 1.3
AMENDMENT TO DECLARATION OF TRUST
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
Amendment to Declaration of Trust
We, the undersigned, being a majority of the members of the Board of
Trustees of the Phoenix Multi-Portfolio Fund, a Massachusetts business trust
organized under an Agreement and Declaration of Trust dated October 15, 1987, as
amended August 23, 1989, acting pursuant to Section 6.3 of ARTICLE VI of said
Agreement and Declaration of Trust for the purpose of establishing and
designating new Series of Shares denominated the Phoenix Endowment Equity
Portfolio ("Equity Portfolio") and Phoenix Endowment Fixed-Income Portfolio
("Fixed Income Portfolio") hereby amend said Declaration of Trust, effective
April 1, 1993 by deleting the first paragraph of Section 3.2 of ARTICLE III
thereof and by inserting in lieu of such paragraph the following paragraph:
"Without limiting the authority of the Trustees set forth in
Section 3.1 to establish and designate any further Series, the
following five Series are hereby established and designated:
"Phoenix Tax-Exempt Bond Portfolio", "Phoenix Capital
Appreciation Portfolio", "Phoenix International Portfolio",
"Phoenix Endowment Equity Portfolio" and "Phoenix Endowment
Fixed-Income Portfolio".
WITNESS our hands this 24th day of February, 1993.
/s/ C. Duane Blinn /s/ James M. Oates
-------------------------- --------------------------
C. Duane Blinn James M. Oates
/s/ Robert Chesek /s/ Philip R. Reynolds
-------------------------- --------------------------
Robert Chesek Philip R. Reynolds
/s/ Leroy Keith, Jr. /s/ Herbert Roth, Jr.
-------------------------- --------------------------
Leroy Keith, Jr. Herbert Roth, Jr.
/s/ Philip R. McLoughlin
--------------------------
Philip R. McLoughlin
EXHIBIT 1.4
AMENDMENT TO DECLARATION OF TRUST
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
Amendment to Declaration of Trust
We, the undersigned, being all of the members of the Board of Trustees of
the Phoenix Multi-Portfolio Fund, a Massachusetts business trust organized under
an Agreement and Declaration of Trust dated October 15, 1987, as amended August
23, 1989, April 1, 1993 and May 25, 1994, acting pursuant to Section 6.3 of
ARTICLE VI of said Agreement and Declaration of Trust for the purpose of
establishing and designating new Series of Shares denominated the Phoenix Real
Estate Securities Portfolio hereby further amend said Agreement and Declaration
of Trust, effective January 1, 1995, by deleting the first paragraph of Section
3.2 of ARTICLE III thereof and by inserting in lieu of such paragraph the
following paragraph:
"Without limiting the authority of the Trustees set forth in Section
3.1 to establish and designate any further Series, the following six
Series are hereby established and designated: Phoenix Tax-Exempt Bond
Portfolio, Phoenix Capital Appreciation Portfolio, Phoenix
International Portfolio, Phoenix Endowment Equity Portfolio, Phoenix
Endowment Fixed-Income Portfolio and Phoenix Real Estate Securities
Portfolio."
WITNESS our hands this 16th day of November, 1994.
/s/ C. Duane Blinn /s/ Philip R. McLoughlin
---------------------------- ----------------------------
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 1.5
AMENDMENT TO DECLARATION OF TRUST
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
Certificate of
Amendment to Declaration of Trust
The undersigned, being all of the Board of Trustees of the Phoenix
Multi-Portfolio Fund, a Massachusetts business trust (the "Trust"), do hereby
certify that, in accordance with certain implied powers vested in the Board of
Trustees pursuant to Article II, Section 2.2 and the authority conferred upon
the Trustees of the Trust pursuant to Article VI, Section 6.3 of that certain
Agreement and Declaration of Trust dated October 15, 1987, as amended
(hereinafter collectively referred to as the "Declaration"), the Declaration is
further amended in order to reflect the following modifications deemed
necessary, proper and desirable in order to promote the interests of the Trust:
1. The first paragraph of Article III, Section 3.1 is hereby deleted and the
following is inserted in lieu thereof:
The interest of the beneficiaries hereunder shall be divided into an
unlimited number of transferable shares of beneficial interest, in one or
more distinct and separate Series or Classes thereof as the Trustees from
time to time may create and establish in accordance with Sections 3.2, 3.7
and 3.8 hereof, par value of $1.00 per share.
2. The words "subject to Sections 3.7 and 3.8 hereof" are hereby inserted after
the words "the following relative rights and preferences" appearing at the
conclusion of the second unnumbered paragraph within Article III, Section 3.2.
3. Article III, Section 3.7 is hereby added, to wit:
Section 3.7. Class Designation. The Trustees, in their discretion,
may authorize the division of the Shares of any Series into two or more
Classes, and the different Classes shall be established and designated, 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 any Series shall be identical to all other Shares of the
same Series, except, subject to Section 3.8, below, that there may be
variations between different classes as to allocation of expenses, rights
of redemption, special and relative rights as to dividends and on
liquidation, conversion rights, and conditions under which the several
Classes shall have separate voting rights. All references to Shares in this
Declaration shall be deemed to refer to Shares of any or all Classes as the
context may require.
<PAGE>
- 2 -
4. Article III, Section 3.8 is hereby added, to wit:
Section 3.8. Dual Distribution System. Without in any manner limiting
the rights of the Trustees pursuant to Section 3.7, above, the Trustees
hereby divide the Shares of each of the Series described in Section 3.2,
above, other than Phoenix Endowment Equity Portfolio and Phoenix Endowment
Fixed-Income Portfolio, into two Classes. The Classes of each such
respective Series, so established, shall be designated as "Class A Shares"
and "Class B Shares". The following preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption shall pertain to all
Shares in each of the foregoing Classes:
(a) The assets belonging to each Class shall be invested in the same
investment portfolio as the applicable Series.
(b) The dividends and distributions of investment income and capital
gains with respect to each Class shall be in such amounts as may be
declared from time to time by the Trustees, and the dividends and
distributions of each Class of a Series may vary from dividends and
distributions of investment income and capital gains with respect to the
other Class of that Series to reflect differing allocations of the expenses
of the Trust between the holders of the two classes of such Series and any
resultant differences between the net asset value per share of the two
classes of such Series, to such extent and for such purposes as the
Trustees may deem appropriate. The allocation of investment income or
capital gains and expenses and liabilities of each Series between the Class
A Shares and the Class B Shares shall be determined by the Trustees in a
manner that is consistent with the order dated September 13, 1993
(Investment Company Act of 1940 Release No. IC-19706) issued by the
Securities and Exchange Commission in connection with the application for
exemption filed by National Multi-Sector Fixed Income Fund, et al., any
amendment to such order or any rule or interpretation under the Investment
Company Act of 1940 that modifies or supersedes such order.
(c) Class A Shares (including fractional shares thereof) may be
subject to an initial sales charge pursuant to the terms of the issuance of
such Shares.
(d) The proceeds of the redemption of Class B Shares (including a
fractional share thereof) 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 Shares.
<PAGE>
- 3 -
(e) The holders of Class A Shares and 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-1 under the Investment Company
Act of 1940 (a "Plan") applicable to each respective Class of a particular
Series, and (ii) no voting rights with respect to provisions of any Plan
applicable to the other Class of that Series, any other Series, or with
regard to any other matter submitted to a vote of shareholders of the Trust
which does not affect holders of that respective Class of such Series.
(f) (i) Each Class B Share, other than a share purchased through the
automatic reinvestment of a dividend or a distribution with respect to
Class B Shares, shall be converted automatically, and without any action or
choice on the part of the holder thereof, into Class A Shares of the same
Series on the date that is the first business day following the month in
which the eighth anniversary date of the date of the issuance `of the Class
B Share falls (the "Conversion Date"). With respect to Class B Shares
issued in an exchange or series of exchanges for shares of shares of
beneficial interest or common stock, as the case may be, of another
investment company or class or series thereof registered under the
Investment Company Act of 1940 pursuant to an exchange privilege granted by
the Trust, the date of issuance of the Class B Shares for purposes of the
immediately preceding sentence shall be the date of issuance of the
original shares of beneficial interest or common stock, as the case may be.
(ii) Each Class B Share acquired through the automatic
reinvestment of a dividend or a distribution with respect to Class B
Shares shall be segregated in a separate sub-account. Each time any
Class B Shares in a shareholder's Fund account (other than those in
the aforedescribed applicable sub-account) convert to Class A Shares
of the same Series, an equal pro rata portion of the Class B Shares
then in the sub-account will also convert to Class A Shares of the
same Series without any action or choice on the part of the holder
thereof. The portion will be determined by the ratio that the
shareholder's Class B Shares converting to Class A Shares bears to the
shareholder's total Class B Shares not acquired through dividends and
distributions.
(iii) The conversion of Class B Shares to Class A Shares is
subject to the continuing availability of an opinion of counsel or a
ruling 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
<PAGE>
- 4 -
shares does not constitute a taxable event under federal income tax
law.
(iv) The number of shares of Class A Shares into which a share of
Class B Shares is converted pursuant to paragraphs (f) (i) and (f)
(ii) hereof shall equal the number (including for this purpose
fractions of a Share) obtained by dividing the net asset value per
share of the Class B Shares (for purposes of sales and redemptions
thereof on the Conversion Date) by the net asset value per share of
the Class A Shares of the same Series (for purposes of sales and
redemptions thereof on the Conversion Date).
(v) On the Conversion Date, the Class B Shares converted into
shares of Class A Shares will cease to accrue dividends and will no
longer be deemed outstanding and the rights of the holders thereof
(except the right to receive (i) the number of shares of Class A
Shares of the same Series have been converted and (ii) declared but
unpaid dividends to the Conversion Date) will cease. Certificates
representing Class A Shares resulting from the conversion need not be
issued until certificates representing Class B Shares converted, if
issued, have been received by the Trust or its agent duly endorsed for
transfer.
5. The following is hereby added at the conclusion of the first paragraph
appearing in Article III, Section 3.2(i):
The net asset value of a Share shall reflect all indebtedness, expenses and
liabilities attributable to each applicable Class within each respective
Series. The net asset value of a Share shall be determined by dividing the
net asset value of each applicable Class of a particular Series by the
number of Shares of that Class outstanding within that Series.
6. The following is hereby inserted at the conclusion of the first sentence
within Article III, Section 3.2(k):
Notwithstanding the foregoing, Shares of each Class shall represent an
equal proportionate interest in the assets belonging to the applicable
Class within that Series, subject to the liabilities of that particular
Class. Shares of each Class shall also represent an interest in the assets
belonging to such Series which shall be proportionate to the relative
aggregate net asset value of such Class relative to the aggregate net asset
value of the other Class within said Series, subject to the liabilities of
that particular Series.
7. The following is hereby added to the conclusion of Article III, Section
3.2(m):
<PAGE>
- 5 -
, or as may otherwise be described in the Trust's then effective
registration statement under the Securities Act of 1933.
Except as hereinabove and hereinbefore modified, all other terms and
conditions set forth in the Declaration shall be and remain in full force and
effect.
WITNESS our hands this 25th day of May, 1994.
/s/ C. Duane Blinn /s/ Philip R. McLoughlin
--------------------------- ----------------------------
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 1.8
AMENDMENT TO DECLARATION OF TRUST
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
Amendment to Declaration of Trust
We, the undersigned, being a majority of the members of the Board of
Trustees of the Phoenix Multi-Portfolio Fund, a Massachusetts business trust
organized under an Agreement and Declaration of Trust dated October 15, 1987, as
amended August 23, 1989, April 1, 1993, May 25, 1994, January 1, 1995, March 1,
1995, and May 24, 1995 acting pursuant to Section 6.3 of ARTICLE VI of said
Agreement and Declaration of Trust, for the purpose of changing the number of
Trustees, hereby further amend said Agreement and Declaration of Trust,
effective November 15, 1995, by deleting the first paragraph of Section 2.1 of
ARTICLE II thereof and by inserting in lieu of such paragraph the following
paragraph:
"(a) "Number and Election. At each meeting for the purpose, the
Shareholders shall fix the number of Trustees, to serve until the
election and qualification of their successors, and shall at such
meeting elect the number of Trustees so fixed. The Trustees serving as
such may increase or decrease the number of Trustees to a number other
than the number theretofore fixed. No decrease in the number of
Trustees shall have the effect of removing any Trustee from office
prior to the expiration of his term. However, the number of Trustees
may be decreased in conjunction with the removal of a Trustee pursuant
to subsection (d) of this Section 2.1."
WITNESS our hands this 15th day of November, 1995.
/s/ Philip R. McLoughlin
--------------------------- ---------------------------
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
/s/ Lowell P. Weicker, Jr.
---------------------------
Lowell P. Weicker, Jr.
Exhibit 1.9
AMENDMENT TO DECLARATION OF TRUST
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
Certificate of Amendment to Declaration of Trust
The undersigned, being all of the Trustees of the Phoenix Multi-Portfolio
Fund, a Massachusetts business trust (the "Trust") under an Agreement and
Declaration of Trust dated October 15, 1987, as amended August 23, 1989, April
1, 1993, May 25, 1994, January 1, 1995, March 1, 1995, May 24, 1995 and November
15, 1995 (the "Declaration"), acting in accordance with certain implied powers
vested in the Board of Trustees pursuant to Article II, Section 2.2 and the
authority conferred pursuant to Article VI, Section 6.3 of the Declaration, for
the purpose of clarifying the intent and purpose of Article III, Section 3.8 and
for the further purpose of changing the name of the Series designated "Phoenix
Capital Appreciation Portfolio" to "Phoenix Mid Cap Portfolio", hereby further
amend said Declaration and Trust, effective upon filing of this Certificate of
Amendment in the office of the Secretary of State of the Commonwealth of
Massachusetts, as follows:
1. The first paragraph of Section 3.2 of Article III of the Declaration is
hereby amended and restated to read as follows:
"Without limiting the authority of the Trustees set forth in
Section 3.1 to establish and designate any further Series, the
following seven Series are hereby established and designated:
Phoenix Tax-Exempt Bond Portfolio, Phoenix Mid Cap Portfolio,
Phoenix International Portfolio, Phoenix Endowment Equity
Portfolio, Phoenix Diversified Income Portfolio, Phoenix Real
Estate Securities Portfolio and Phoenix Emerging Markets Bond
Portfolio." All shares of the Series heretofore designated
"Phoenix Capital Appreciation Portfolio" shall hereafter
constitute shares of the "Phoenix Mid Cap Portfolio".
2. The first paragraph of Section 3.8 of Article III of the Declaration is
hereby amended to add the phrase "as amended" after the words "described in
Section 3.2, above" in the first sentence of such paragraph.
Pursuant to Section 3.1 of Article III of the Declaration, the Trustees
hereby approve, ratify and confirm the classification of unissued shares of the
Trust into such seven series and the respective classes thereof, and do further
approve, ratify and confirm the classification of all shares of each Series and
class thereof heretofore issued with respect to each such Series and class in
the name of such Series and class.
<PAGE>
WITNESS our hands this 22nd day of May, 1996.
/s/ C. Duane Blinn /s/ Everett L. Morris
-------------------------- ----------------------------
C. Duane Blinn Everett L. Morris
/s/ Robert Chesek /s/ James M. Oates
-------------------------- ----------------------------
Robert Chesek James M. Oates
/s/ E. Virgil Conway /s/ Calvin J. Pedersen
-------------------------- ----------------------------
E. Virgil Conway Calvin J. Pedersen
/s/ Harry Dalzell-Payne /s/ Philip R. Reynolds
-------------------------- ----------------------------
Harry Dalzell-Payne Philip R. Reynolds
/s/ Francis E. Jeffries /s/ Herbert Roth, Jr.
-------------------------- ----------------------------
Francis E. Jeffries Herbert Roth, Jr.
/s/ Leroy Keith, Jr. /s/ Richard E. Segerson
-------------------------- ----------------------------
Leroy Keith, Jr. Richard E. Segerson
/s/ Philip R. McLoughlin /s/ Lowell P. Weicker, Jr.
-------------------------- ----------------------------
Philip R. McLoughlin Lowell P. Weicker, Jr.
Exhibit 5
Form of Investment Advisory Agreement
<PAGE>
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this ___ day of December, 1993 by and between
Phoenix Multi-Portfolio Fund (the "Trust"), a Massachusetts business trust
authorized to issue shares of beneficial interest in separate series, and
Phoenix Investment Counsel, Inc. (the "Adviser"), a Massachusetts corporation.
WITNESSETH THAT:
1. The Trust hereby appoints the Adviser to act as investment adviser to
the Trust on behalf of five series of the Trust established and designated by
the Trustees on or before the date hereof, namely Phoenix Capital Appreciation
Portfolio, Phoenix International Portfolio, Phoenix Tax-Exempt Bond Portfolio,
Phoenix Endowment Equity Portfolio and Phoenix Endowment Fixed-Income Portfolio
(the "Existing Series"), for the period and on the terms set forth herein. The
Adviser accepts such appointment and agrees to render the services described in
this Agreement for the compensation herein provided.
2. In the event that the Trustees desire to retain the Adviser to render
investment advisory services hereunder with respect to one or more additional
series ("Additional Series"), the Trust shall notify the Adviser in writing. If
the Adviser is willing to render such services, it shall notify the Trust in
writing, whereupon such Additional Series shall become subject to the terms and
conditions of this Agreement.
3. The Adviser shall furnish continuously an investment program for each of
the Existing Series and any Additional Series which may become subject to the
terms and conditions set forth herein (collectively, "Series") and shall manage,
or cause to be managed, the investment and reinvestment of the assets of each
Series, subject at all times to the supervision of the Trustees.
4. With respect to managing the investment and reinvestment of the Trust's
assets, the Adviser shall provide, or cause to be provided, at its own expense:
(a) Investment research, advice and supervision;
(b) An investment program for each Series consistent with its investment
objectives;
(c) Implementation of the investment program for each Series including the
purchase and sale of sale of securities;
(d) Advice and assistance on the general operations of the Trust; and
(e) Regular reports to the Trustees on the implementation of each Series'
investment program.
(f) Continuous monitoring and evaluation of the performance and investment
style of any Subadviser recommended by Adviser and appointed to act on
behalf of the Trust.
5. The Adviser shall, for all purposes herein, be deemed to be an
independent contractor.
<PAGE>
- 2 -
6. The Adviser shall furnish at its own expense, or pay the expenses of the
Trust for the following:
(a) Office facilities, including office space, furniture and equipment;
(b) Personnel necessary to perform the functions required to manage the
investment and reinvestment of the Trust's assets (including those
required for research, statistical and investment work);
(c) Personnel to serve without salaries from the Trust as officers or
agents of the Trust. The Adviser need not provide personnel to
perform, or pay the expenses of the Trust for, services customarily
performed for an open-end management investment company by its
national distributor, custodian, financial agent, transfer agent,
auditors and legal counsel; and
(d) Compensation and expenses, if any, of the Trustees who are also
full-time employees of the Adviser or any of its affiliates.
(e) Any Subadviser recommended by Adviser and appointed to act on behalf
of the Trust.
7. All costs and expenses not specifically enumerated herein as payable by
the Adviser shall be paid by the Trust. Such expenses shall include, but shall
not be limited to, all expenses (other than those specifically referred to as
being borne by the Adviser) incurred in the operation of the Trust and any
public offering of its shares, including, among others, interest, taxes,
brokerage fees and commissions, fees of Trustees who are not full-time employees
of the Adviser or any of its affiliates, expenses of Trustees' and shareholders'
meetings including the cost of printing and mailing proxies, expenses of
insurance premiums for fidelity and other coverage, expenses of repurchase and
redemption of shares, expenses of issue and sale of shares (to the extent not
borne by its national distributor under its agreement with the Trust), expenses
of printing and mailing stock certificates representing shares of the Trust,
association membership dues, charges of custodians, transfer agents, dividend
disbursing agents and financial agents, bookkeeping, auditing and legal
expenses. The Trust will also pay the fees and bear the expense of registering
and maintaining the registration of the Trust and its shares with the Securities
and Exchange Commission and registering or qualifying its shares under state or
other securities laws and the expense of preparing and mailing prospectuses and
reports to shareholders. Additionally, if authorized by the Trustees, the Trust
shall pay for extraordinary expenses and expenses of a non-recurring nature
which may include, but not be limited to the reasonable and proportionate cost
of any reorganization or acquisition of assets and the cost of legal proceedings
to which the Trust is a party.
8. For providing the services and assuming the expenses outlined herein,
the Trust agrees that the Adviser shall be compensated as follows:
(a) Within five days after the end of each month, the Trust shall pay the
Adviser with respect to each Series a fee based on the following
annual rates as a percentage of the average aggregate daily net asset
values of the Series:
<PAGE>
- 3 -
- --------------------------------------------------------------------------------
1st $1-2 $2+
SERIES $1 Billion Billion Billion
- --------------------------------------------------------------------------------
Phoenix Capital Appreciation .75% .70% .65%
Portfolio
- --------------------------------------------------------------------------------
Phoenix International Portfolio .75% .70% .65%
- --------------------------------------------------------------------------------
Phoenix Endowment Equity .75% .70% .65%
Portfolio
- --------------------------------------------------------------------------------
Phoenix Endowment Fixed Income .50% .45% .40%
Portfolio
- --------------------------------------------------------------------------------
Phoenix Tax-Exempt Bond .45% .40% .35%
Portfolio
- --------------------------------------------------------------------------------
The amounts payable to the Adviser with respect to each Series shall be based
upon the average of the values of the net assets of such Series as of the close
of business each day, computed in accordance with the Declaration of Trust.
(b) Compensation shall accrue immediately upon the effective date of this
Agreement.
(c) If there is termination of this Agreement during a month, each Series'
fee for that month shall be proportionately computed upon the average
of the aggregate daily net asset values of such Series for such
partial period in such month.
(d) The Adviser agrees to reimburse the Trust for the amount, if any, by
which the total operating and management expenses for any Series
(including the Adviser's compensation, pursuant to this paragraph, but
exclusing taxes, interest, costs of portfolio acquisitions and
dispositions and extraordinary expenses), for any "fiscal year" exceed
the level of expenses which such Series is permitted to bear under the
most restrictive expense limitations (which is not waived by the
State) imposed on open-end investment companies by any state in which
shares of such Series are then qualified. Such reimbursement, if any,
will be made by the Adviser to the Trust within five days after the
end of each month. For the purpose of this subparagraph (d), the term
"fiscal year" shall include the portion of the then current fiscal
year which shall have elapsed at the date of termination of this
Agreement.
9. The services of the Adviser to the Trust are not to be deemed exclusive,
the Adviser being free to render serivces to others and to engage in other
activities. Without relieving the Adviser of its duties hereunder the subject to
the prior approval of the Trustees and subject further to compliance with and
applicable provisions of the Investment Company Act of 1940, as amended, the
Adviser may appoint one or more agents to perform any of the functions and
services which are to be provided under the terms of this Agreement upon such
terms and conditions as may be mutually agreed upon among the Trust, the Adviser
and any such Agent.
<PAGE>
- 4 -
10. The Adviser shall not be liable to the Trust or to any shareholder of
the Trust for any error of judgment or mistake of law or for any loss suffered
by the Trust or by any shareholder of the Trust in connection with the matters
to which this Agreement or any Subadvisory Agreement relates, except a loss
resulting from willful misfeasance, bad faith, gross negligence or reckless
disregard on the part of the Adviser in the performance of its duties hereunder.
11. It is understood that:
(a) Trustees, officers, employees, agents and shareholders of the Trust
are or may be "interested persons" of the Adviser or any Subadviser as
directors, officers, stockholders or otherwise;
(b) Directors, officers, employees, agents and stockholders of the Adviser
or any Subadviser are or may be "interested persons" of the Trust as
Trustees, officers, shareholders or otherwise;
(c) The existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder.
12. This Agreement shall become effective with respect to the Existing
Series as of the date hereof (the "Contract Date"), and, with respect to any
Additional Series, on the date specified in the notice to the Trust from the
Adviser in accordance with paragraph 2 hereof that the Adviser is willing to
serve as Adviser with respect to such Additional Series. Unless terminated as
herein provided, this Agreement shall remain in full force and effect for a
period of one year following the Contract Date, and, with respect to each
Additional Series, until the next anniversary of the Contract Date following the
date on which such Additional Series became subject to the terms and conditions
of this Agreement and shall continue in full force and effect for periods of one
year thereafter with respect to each Series so long as (a) such continuance with
respect to any such Series is approved at least annually by either the Trustees
or by a "vote of the majority of the outstanding voting securities" of such
Series and (b) the terms and any renewal of this Agreement with respect to any
such Series have been approved by a vote of a majority of the Trustees who are
not parties to this Agreement or "interested persons" of any such party cast in
person at a meeting called for the purpose of voting on such approval; provided,
however, that the continuance of this Agreement with respect to each Additional
Series is subject to its approval by a "vote of a majority of the outstanding
voting securities" of any such Additional Series on or before the next
anniversary of the Contract Date following the date on which such Additional
Series became a Series hereunder.
Any approval of this Agreement by a vote of the holders of a "majority of
the outstanding voting securities" of any Series shall be effective to continue
this Agreement with respect to any such Series notwithstanding (a) that this
Agreement has not been approved by a "vote of a majority of the outstanding
voting securities" of any other Series affected thereby and (b) that this
Agreement has not been approved by the holders of a "vote of a majority of the
outstanding voting securities" of the Trust, unless either such additional
approval shall be required by any other applicable law or otherwise.
13. The Trust may terminate this Agreement with respect to the Trust or to
any Series upon 60 days' written notice to the Adviser at any time, without the
payment of any penalty, by vote of the Trustees or, as to each Series, by a
"vote of a majority of the outstanding voting securities" of
<PAGE>
- 5 -
such Series. The Adviser may terminate this Agreement with respect to any Series
upon 60 days' written notice to the Trust, without the payment of any penalty.
This Agreement shall immediately terminate in the event of its "assignment".
14. The terms "majority of the outstanding voting securities", "interested
persons" and "assignment", when used herein, shall have the respective meanings
specified in the Investment Company Act of 1940, as amended.
15. In the event of termination of this Agreement, or at the request of the
Adviser, the Trust will eliminate all reference to "Phoenix" from its name, and
will not thereafter transact business in a name using the word "Phoenix" in any
form or combination whatsoever, or otherwise use the word "Phoenix" as a part of
its name. The Trust will thereafter in all prospectuses, advertising materials,
letterheads, and other material designed to be read by investors and prospective
investors delete from its name the word "Phoenix" or any approximation thereof.
If the Adviser chooses to withdraw the Trust's right to use the word "Phoenix",
it agrees to submit the question of continuing this Agreement to a vote of the
Trust's shareholders at the time of such withdrawal.
16. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but bind only the trust property of
the Trust, as provided in the Declaration of Trust. The execution and delivery
of this Agreement have been authorized by the Trustees and shareholders of the
Trust and signed by the President of the Trust, acting as such, and neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
be binding upon or impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. The Declaration of Trust is on file with the Secretary of The
Commonwealth of Massachusetts.
17. This Agreement shall be construed and the rights and obligations of the
parties hereunder enforced in accordance with the laws of The Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
PHOENIX MULTI-PORTFOLIO FUND
BY
-----------------------------------
Philip R. McLoughlin, President
PHOENIX INVESTMENT COUNSEL, INC.
BY
-----------------------------------
Patricia A. Bannan, President
EXHIBIT 5.1
INVESTMENT ADVISORY AGREEMENT
<PAGE>
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made effective as of the 28th day of February, 1995 by and
between Phoenix Multi-Portfolio Fund (the "Trust"), a Massachusetts business
trust authorized to issue shares of beneficial interest in separate series, and
Phoenix Realty Securities, Inc. (the "Adviser"), a Connecticut corporation.
WITNESSETH THAT:
1. The Trust hereby appoints the Adviser to act as investment adviser to
the Trust on behalf of the Phoenix Real Estate Securities Portfolio (the
"Portfolio" or "Series"), for the period and on the terms set forth herein. The
Adviser accepts such appointment and agrees to render the services described in
this Agreement for the compensation herein provided.
2. In the event that the Trustees desire to retain the Adviser to render
investment advisory services hereunder with respect to one or more additional
series ("Additional Series"), the Trust shall notify the Adviser in writing. If
the Adviser is willing to render such services, it shall notify the Trust in
writing, whereupon such Additional Series shall become subject to the terms and
conditions of this Agreement.
3. The Adviser shall furnish continuously an investment program for the
Portfolio and any Additional Series which may become subject to the terms and
conditions set forth herein (sometimes collectively referred to as the "Series")
and shall manage the investment and reinvestment of the assets of each Series,
subject at all times to the supervision of the Trustees.
4. With respect to managing the investment and reinvestment of the Series'
assets, the Adviser shall provide, at its own expense:
(a) Investment research, advice and supervision;
(b) An investment program for each Series consistent with its investment
objectives;
(c) Implementation of the investment program for each Series including the
purchase and sale of securities;
(d) Advice and assistance on the general operations of the Trust;
(e) Regular reports to the Trustees on the implementation of each Series'
investment program; and
(f) Continuous monitoring and evaluation of the performance and investment
style of any subadviser recommended by Adviser and appointed to act on
behalf of the Trust.
5. The Adviser shall, for all purposes herein, be deemed to be an
independent contractor.
6. The Adviser shall furnish at its own expense, or pay the expenses of the
Trust for the following:
(a) Office facilities, including office space, furniture and equipment;
<PAGE>
- 2 -
(b) Personnel necessary to perform the functions required to manage the
investment and reinvestment of each Series' assets (including those
required for research, statistical and investment work);
(c) Personnel to serve without salaries from the Trust as officers or
agents of the Trust. The Adviser need not provide personnel to
perform, or pay the expenses of the Trust for, services customarily
performed for an open-end management investment company by its
national distributor, custodian, financial agent, transfer agent,
auditors and legal counsel;
(d) Compensation and expenses, if any, of the Trustees who are also
full-time employees of the Adviser or any of its affiliates; and
(e) Any subadviser recommended by Adviser and appointed to act on behalf
of the Trust.
7. All costs and expenses not specifically enumerated herein as payable by
the Adviser shall be paid by the Trust. Such expenses shall include, but shall
not be limited to, all expenses (other than those specifically referred to as
being borne by the Adviser) incurred in the operation of the Trust and any
public offering of its shares, including, among others, interest, taxes,
brokerage fees and commissions, fees of Trustees who are not full-time employees
of the Adviser or any of its affiliates, expenses of Trustees' and shareholders'
meetings including the cost of printing and mailing proxies, expenses of
insurance premiums for fidelity and other coverage, expenses of repurchase and
redemption of shares, expenses of issue and sale of shares (to the extent not
borne by its national distributor under its agreement with the Trust), expenses
of printing and mailing stock certificates representing shares of the Trust,
association membership dues, charges of custodians, transfer agents, dividend
disbursing agents and financial agents, bookkeeping, auditing and legal
expenses. The Trust will also pay the fees and bear the expense of registering
and maintaining the registration of the Trust and its shares with the Securities
and Exchange Commission and registering or qualifying its shares under state or
other securities laws and the expense of preparing and mailing prospectuses and
reports to shareholders. Additionally, if authorized by the Trustees, the Trust
shall pay for extraordinary expenses and expenses of a non-recurring nature
which may include, but not be limited to the reasonable and proportionate cost
of any reorganization or acquisition of assets and the cost of legal proceedings
to which the Trust is a party.
8. For providing the services and assuming the expenses outlined herein,
the Trust agrees that the Adviser shall be compensated as follows:
(a) Within five days after the end of each month, the Trust shall pay the
Adviser a fee based on the following annual rates as a percentage of
the average aggregate daily net asset values of the Portfolio: 0.75%
of the first $1 billion; 0.70% of the next billion dollars and 0.65%
of all sums in excess of the foregoing. The amounts payable to the
Adviser with respect to the Portfolio shall be based upon the average
of the values of the net assets of such Portfolio as of the close of
business each day, computed in accordance with the Declaration of
Trust.
(b) Compensation shall accrue immediately upon the effective date of this
Agreement.
<PAGE>
- 3 -
(c) If there is termination of this Agreement during a month, each Series'
fee for that month shall be proportionately computed upon the average
of the daily net asset values of such Series for such partial period
in such month.
(d) The Adviser agrees to reimburse the Trust for the amount, if any, by
which the total operating and management expenses for any Series
(including the Adviser's compensation, pursuant to this paragraph, but
excluding taxes, interest, costs of portfolio acquisitions and
dispositions and extraordinary expenses), for any "fiscal year" exceed
the level of expenses which such Series is permitted to bear under the
most restrictive expense limitation (which is not waived by the State)
imposed on open-end investment companies by any state in which shares
of such Series are then qualified. Such reimbursement, if any, will be
made by the Adviser to the Trust within five days after the end of
each month. For the purpose of this subparagraph (d), the term "fiscal
year" shall include the portion of the then current fiscal year which
shall have elapsed at the date of termination of this Agreement.
9. The services of the Adviser to the Trust are not to be deemed exclusive,
the Adviser being free to render services to others and to engage in other
activities. Without relieving the Adviser of its duties hereunder the subject to
the prior approval of the Trustees and subject further to compliance with the
applicable provisions of the Investment Company Act of 1940, as amended, the
Adviser may appoint one or more agents to perform any of the functions and
services which are to be provided under the terms of this Agreement upon such
terms and conditions as may be mutually agreed upon among the Trust, the Adviser
and any such agent.
10. The Adviser shall not be liable to the Trust or to any shareholder of
the Trust for any error of judgment or mistake of law or for any loss suffered
by the Trust or by any shareholder of the Trust in connection with the matters
to which this Agreement or any Subadvisory Agreement relates, except a loss
resulting from willful misfeasance, bad faith, gross negligence or reckless
disregard on the part of the Adviser in the performance of its duties hereunder.
11. It is understood that:
(a) Trustees, officers, employees, agents and shareholders of the Trust
are or may be "interested persons" of the Adviser or any subadviser as
directors, officers, stockholders or otherwise;
(b) Directors, officers, employees, agents and stockholders of the Adviser
or any subadviser are or may be "interested persons" of the Trust as
Trustees, officers, shareholders or otherwise; and
(c) The existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder.
12. This Agreement shall become effective with respect to the Portfolio as
of the date stated above (the "Contract Date") and with respect to any
Additional Series, on the date specified in the notice to the Trust from the
Adviser in accordance with paragraph 2 hereof that the Adviser is willing to
serve as Adviser with respect to such Additional Series. Unless terminated as
herein
<PAGE>
- 4 -
provided, this Agreement shall remain in full force and effect for a period of
one year following the Contract Date, and, with respect to each Additional
Series, until the next anniversary of the Contract Date on which such Additional
Series became subject to the terms and conditions of this Agreement and shall
continue in full force and effect for the periods of one year thereafter with
respect to each Series so long as (a) such continuance with respect to any such
Series is approved at least annually by either the Trustees or by a "vote of the
majority of the outstanding voting securities" of such Series and (b) the terms
and any renewal of this Agreement with respect to any such Series have been
approved by a vote of a majority of the Trustees who are not parties to this
Agreement or "interested persons" of any such party cast in person at a meeting
called for the purpose of voting on such approval; provided, however, that the
continuance of this Agreement with respect to each Additional Series is subject
to its approval by a "vote of a majority of the outstanding voting securities"
of any such Additional Series on or before the next anniversary of the Contract
Date following the date on which such Additional Series became a Series
hereunder.
Any approval of this Agreement by a vote of the holders of a "majority of
the outstanding voting securities" of any Series shall be effective to continue
this Agreement with respect to any such Series notwithstanding (a) that this
Agreement has not been approved by a "vote of a majority of the outstanding
voting securities" of any other Series of the Trust affected thereby and (b)
that this Agreement has not been approved by the holders of a "vote of a
majority of the outstanding voting securities" of the Trust, unless either such
additional approval shall be required by any other applicable law or otherwise.
13. The Trust may terminate this Agreement with respect to the Trust or to
the Portfolio upon 60 days' written notice to the Adviser at any time, without
the payment of any penalty, by vote of the Trustees or, as to each Series, by a
"vote of a majority of the outstanding voting securities" of such Series. The
Adviser may terminate this Agreement upon 60 days' written notice to the Trust,
without the payment of any penalty. This Agreement shall immediately terminate
in the event of its "assignment".
14. The terms "majority of the outstanding voting securities", "interested
persons" and "assignment", when used herein, shall have the respective meanings
in the Investment Company Act of 1940, as amended.
15. In the event of termination of this Agreement, or at the request of the
Adviser, the Trust will eliminate all reference to "Phoenix" from its name, an
will not thereafter transact business in a name using the word "Phoenix" in any
form or combination whatsoever, or otherwise use the word "Phoenix" as part of
its name. The Trust will thereafter in all prospectuses, advertising materials,
letterheads, and other material designed to be read by investors and prospective
investors delete from its name the word "Phoenix" or any approximation thereof.
If the Adviser chooses to withdraw the Trust's right to use the word " Phoenix",
it agrees to submit the question of continuing this Agreement to a vote of the
Trust's shareholders at the time of such withdrawal.
16. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but bind only the trust property of
the Trust, as provided in the Declaration of Trust. The execution and delivery
of this Agreement have been authorized by the Trustees and shareholders of the
Trust and signed by the President of the Trust, acting as such, and neither such
authorization by
<PAGE>
- 5 -
such Trustees and shareholders nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or be binding upon
or impose any liability on any of them personally, but shall bind only the trust
property of the Trust as provided in its Declaration of Trust. The Declaration
of Trust, as amended, is or shall be on file with the Secretary of The
Commonwealth of Massachusetts.
17. This Agreement shall be construed and the rights and obligations of the
parties hereunder enforced in accordance with the laws of The Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
PHOENIX MULTI-PORTFOLIO FUND
By: /s/ Philip R. McLoughlin
----------------------------------
Philip R. McLoughlin, President
PHOENIX REALTY SECURITIES, INC.
BY: /s/ Barbara Rubin
----------------------------------
Barbara Rubin, Executive Vice President
EXHIBIT 5.2
SUBADVISORY AGREEMENT
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
SUBADVISORY AGREEMENT
February 28, 1995
ABKB/LaSalle Securities Limited Partnership
100 East Pratt Street
Baltimore, MD 21202
RE: Subadvisory Agreement
Gentlemen:
The Phoenix Multi-Portfolio Fund (the "Fund") is a diversified open-end
investment company of the series type registered under the Investment Company
Act of 1940 (the "Act"), and is subject to the rules and regulations promulgated
thereunder. The shares of the Fund are offered in six portfolios, one of which
is the Real Estate Securities Portfolio (the "Portfolio").
Phoenix Realty Securities, Inc. (the "Adviser") evaluates and recommends
portfolio advisers for the Portfolio and is responsible for the day-to-day
management of the Portfolio.
1. Employment as a Subadviser. The Adviser, being duly authorized, hereby
employs ABKB/LaSalle Securities Partnership (the "Subadviser") as a
discretionary portfolio adviser to invest and reinvest the assets of the
Portfolio on the terms and conditions set forth herein. The services of the
Subadviser hereunder are not to be deemed exclusive; the Subadviser may
render services to others and engage in other activities which do not
conflict in any material manner in the Subadviser's performance hereunder.
2. Acceptance of Employment; Standard of Performance. The Subadviser accepts
its employment as a discretionary portfolio adviser of the Portfolio and
agrees to use its best professional judgment to make investment decisions
for the Portfolio in accordance with the provisions of this Agreement and
as set forth in Schedule D attached hereto and made a part hereof.
3. Services of Subadviser. In providing management services to the Portfolio,
the Subadviser shall be subject to the investment objectives, policies and
restrictions of the Fund as they apply to the Portfolio and as set forth in
the Fund's then current Prospectus and Statement of Additional Information
(as the same may be modified from time to time and provided to the
Subadviser by Adviser), and to the investment restrictions set forth in the
Act and the Rules thereunder, to the supervision and control of the
Trustees of the Fund (the "Trustees"), and to instructions from the
Adviser. The Subadviser shall not, without the Fund's prior approval,
effect any transactions which would cause the Portfolio to be out of
compliance with any of such restrictions or policies.
4. Transaction Procedures. All portfolio transactions for the Portfolio will
be consummated by payment to, or delivery by, State Street Bank & Trust
Company (the "Custodian"), or such depositories or agents as may be
designated by the Custodian in writing, of all cash and/or
<PAGE>
ABKB/LaSalle Securities
Limited Partnership
Page 2
securities due to or from the Portfolio. The Subadviser shall not have
possession or custody of such cash and/or securities or any responsibility
or liability with respect to such custody. The Subadviser shall advise the
Custodian and confirm in writing to the Fund all investment orders for the
Portfolio placed by it with brokers and dealers at the time and in the
manner set forth in Schedule A hereto (as amended from time to time). The
Fund shall issue to the Custodian such instructions as may be appropriate
in connection with the settlement of any transaction initiated by the
Subadviser. The Fund shall be responsible for all custodial arrangements
and the payment of all custodial charges and fees, and, upon giving proper
instructions to the Custodian, the Subadviser shall have no responsibility
or liability with respect to custodial arrangements or the act, omissions
or other conduct of the Custodian.
5. Allocation of Brokerage. The Subadviser shall have authority and discretion
to select brokers and dealers to execute portfolio transactions initiated
by the Subadviser, and to select the markets on or in which the
transactions will be executed.
A. In placing orders for the sale and purchase of portfolio securities
for the Fund, the Subadviser's primary responsibility shall be to seek the
best execution of orders at the most favorable prices. However, this
responsibility shall not obligate the Subadviser to solicit competitive
bids for each transaction or to seek the lowest available commission cost
to the Fund, so long as the Subadviser reasonably believes that the broker
or dealer selected by it can be expected to obtain a "best execution"
market price on the particular transaction and determines in good faith
that the commission cost is reasonable in relation to the value of the
brokerage and research services (as defined in Section 28(e)(3) of the
Securities Exchange Act of 1934) provided by such broker or dealer to the
Subadviser, viewed in terms of either that particular transaction or of the
Subadviser's overall responsibilities with respect to its clients,
including the Fund, as to which the Subadviser exercises investment
discretion, notwithstanding that the Fund may not be the direct or
exclusive beneficiary of any such services or that another broker may be
willing to charge the Fund a lower commission on the particular
transaction.
B. Subject to the requirements of paragraph A above, the Adviser shall
have the right to require that transactions giving rise to brokerage
commissions, in an amount to be agreed upon by the Adviser and the
Subadviser, shall be executed by brokers and dealers that provide brokerage
or research services to the Fund or that will be of value to the Fund in
the management of its assets, which services and relationship may, but need
not, be of direct benefit to the Portfolio. In addition, subject to
paragraph A above and the applicable Rules of Fair Practice of the National
Association of Securities Dealers, Inc., the Fund shall have the right to
request that portfolio transactions be executed by brokers and dealers by
or through whom sales of shares of the Fund are made.
C. The Subadviser shall not execute any portfolio transactions for the
Portfolio with a broker or dealer which is an "affiliated person" (as
defined in the Act) of the Fund, the Subadviser or the Adviser without the
prior written approval of the Fund. The Fund and Subadviser shall each
provide the other with a list of brokers and dealers which are "affiliated
persons" of each respective entity and/or Adviser.
<PAGE>
ABKB/LaSalle Securities
Limited Partnership
Page 3
6. Proxies. The Fund, or the Adviser as its authorized agent, will vote all
proxies solicited by or with respect to the issuers of securities in which
assets of the Portfolio may be invested. At the request of the Fund, the
Subadviser shall provide the Fund with its recommendations as to the voting
of particular proxies.
7. Fees for Services. The compensation of the Subadviser for its services
under this Agreement shall be calculated and paid by the Adviser in
accordance with the attached Schedule C. Pursuant to the Investment
Advisory Agreement between the Fund and the Adviser, the Adviser is
responsible for the payment of fees to the Subadviser.
8. Limitation of Liability. The Subadviser shall not be liable for any action
taken, omitted or suffered to be taken by it in its best professional
judgment, in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement, or in
accordance with specific directions or instructions from the Fund,
provided, however, that all such acts or omissions shall not have
constituted a breach of the investment objectives, policies and
restrictions applicable to the Portfolio and that such acts or omissions
shall not have resulted from the Subadviser's willful misfeasance, bad
faith or gross negligence, a violation of the standard of care established
by and applicable to the Subadviser in its actions under this Agreement or
a breach of its duty or of its obligations hereunder (provided, however,
that the foregoing shall not be construed to protect the Subadviser from
liability under the Act).
9. Confidentiality. Subject to the duty of the Subadviser and the Fund to
comply with applicable law, including any demand of any regulatory or
taxing authority having jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Portfolio and the actions of
the Subadviser and the Fund in respect thereof.
10. Assignment. This Agreement shall terminate automatically in the event of
its assignment, as that term is defined in Section 2(a)(4) of the Act. The
Subadviser shall notify the Fund in writing sufficiently in advance of any
proposed change of control, as defined in Section 2(a)(9) of the Act, as
will enable the Fund to consider whether an assignment as defined in
Section 2(a)(4) of the Act will occur, and to take the steps necessary to
enter into a new contract with the Subadviser.
11. Representations, Warranties and Agreements of the Subadviser. The
Subadviser represents, warrants and agrees that:
A. It is registered as an "Investment Adviser" under the Investment
Advisers Act of 1940 ("Advisers Act").
B. It will maintain, keep current and preserve on behalf of the Fund,
in the manner required or permitted by the Act and the Rules thereunder,
the records identified in Schedule B (as Schedule B may be amended from
time to time). The Subadviser agrees that such records are the property of
the Fund, and will be surrendered to the Fund promptly upon request.
<PAGE>
ABKB/LaSalle Securities
Limited Partnership
Page 4
C. It has or shall adopt a written code of ethics complying with the
requirements of Rule 17j-1 under the Act and will provide the Fund with a
copy of the code of ethics and evidence of its adoption. Subadviser
acknowledges receipt of the written code of ethics adopted by and on behalf
of the Phoenix Funds (the "Phoenix Code of Ethics"). Within 10 days of the
end of each calendar quarter while this Agreement is in effect, a duly
authorized compliance officer of the Subadviser shall certify to the Fund
that the Subadviser has complied with the requirements of Rule 17j-1 during
the previous calendar quarter and that there has been no violation of its
code of ethics, or the Phoenix Code of Ethics, or if such a violation has
occurred, that appropriate action was taken in response to such violation.
The Subadviser shall permit the Fund to examine the reports required to be
made by the Subadviser under Rule 17j-1(c)(1) and this subparagraph.
D. Upon request, the Subadviser will promptly supply the Fund with any
information concerning the Subadviser and its stockholders, employees and
affiliates which the Fund may reasonably require in connection with reports
to the Fund's Board of Trustees or the preparation of its registration
statement, proxy material, reports and other documents required to be filed
under the Act, the Securities Act of 1933, or under applicable securities
laws.
E. Reference is hereby made to the Declaration of Trust dated October
15, 1987, as amended, establishing the Fund, a copy of which has been filed
with the Secretary of the Commonwealth of Massachusetts and elsewhere as
required by law, and to any and all amendments thereto so filed with the
Secretary of the Commonwealth of Massachusetts and elsewhere as required by
law, and to any and all amendments thereto so filed or thereafter filed.
The name Phoenix Multi-Portfolio Fund refers to the Trustees under said
Declaration of Trust, as Trustees and not personally, and no Trustee,
shareholder, officer, agent or employee of the Fund shall be held to any
personal liability hereunder or in connection with the affairs of the Fund;
only the trust estate under said Declaration of Trust is liable under this
Agreement. Without limiting the generality of the foregoing, neither the
Subadviser nor any of its officers, directors, partners, shareholders or
employees shall, under any circumstances, have recourse or cause or
willingly permit recourse to be had directly to any personal, statutory, or
other liability of any shareholder, Trustee, officer, agent or employee of
the Fund or of any successor of the Fund, whether such liability now exists
or is hereafter incurred for claims against the trust estate, but shall
look for payment solely to said trust estate, or to the assets of a
successor of the Fund.
12. Amendment. This Agreement may be amended at any time, but only by written
agreement among the Subadviser the Adviser and the Fund, which amendment,
other than amendments to Schedules A, B, and D, is subject to the approval
of the Trustees and the Shareholders of the Fund as and to the extent
required by the Act.
13. Effective Date: Term. This Agreement shall become effective on the date set
forth on the first page of this Agreement, and shall continue in effect
until the first meeting of the shareholders of the Portfolio, and, if its
renewal is approved at that meeting in the manner
<PAGE>
ABKB/LaSalle Securities
Limited Partnership
Page 5
required by the Act, shall continue in effect thereafter only so long as
its continuance has been specifically approved at least annually by the
Trustees in accordance with Section 15(a) of the Investment Company Act,
and by the majority vote of the disinterested Trustees in accordance with
the requirements of Section 15(c) thereof.
14. Termination. This Agreement may be terminated by any party, without
penalty, immediately upon written notice to the other parties in the event
of a breach of any provision thereof by a party so notified, or otherwise
upon thirty (30) days' written notice to the other parties, but any such
termination shall not affect the status, obligations or liabilities of any
party hereto to the other parties.
15. Applicable Law. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the
Commonwealth of Massachusetts.
18. Severability. If any term or condition of this Agreement shall be invalid
or unenforceable to any extent or in any application, then the remainder of
this Agreement shall not be affected thereby, and each and every term and
condition of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
PHOENIX MULTI-PORTFOLIO FUND
By /s/ Philip R. McLoughlin
-----------------------------
Title: President
<PAGE>
ABKB/LaSalle Securities
Limited Partnership
Page 6
PHOENIX REALITY SECURITIES, INC.
By /s/ Barbara Rubin
-----------------------------
Title: Executive Vice President
ACCEPTED:
ABKB/:LaSalle Securities Limited Partnership
By /s/ Keith R. Pauley
---------------------------
Title: Senior Vice President
SCHEDULES: A. Operational Procedures
B. Record Keeping Requirements
C. Fee Schedule
D. Subadviser Functions
<PAGE>
SCHEDULE A
----------
OPERATIONAL PROCEDURES
In order to minimize operational problems, it will be necessary for a flow of
information to be supplied to State Street Bank & Trust Company (the
"Custodian"), the custodian for the Fund.
The Subadviser must furnish the Custodian with daily information as to executed
trades, or, if no trades are executed, with a report to that effect, no later
than 5 p.m. (Eastern Standard time) on the day of the trade (confirmation
received from broker). The necessary information can be sent via facsimile
machine to the Custodian. Information provided to the Custodian shall include
the following:
1. Purchase or sale;
2. Security name;
3. CUSIP number (if applicable);
4. Number of shares and sales price per share;
5. Executing broker;
6. Settlement agent;
7. Trade date;
8. Settlement date;
9. Aggregate commission or if a net trade;
10. Interest purchased or sold from interest bearing security;
11. Other fees;
12. Net proceeds of the transaction;
13. Exchange where trade was executed; and
14. Identified tax lot (if applicable).
When opening accounts with brokers for, and in the name of, the Fund, the
account must be a cash account. No margin accounts are to be maintained in the
name of the Fund. Delivery instructions are as specified by the Custodian. The
Custodian will supply the Subadviser daily with a cash availability report. This
will normally be done by telex so that the Subadviser will know the amount
available for investment purposes.
<PAGE>
SCHEDULE B
----------
RECORDS TO BE MAINTAINED BY THE SUBADVISER
1. (Rule 31a-1(b)(5)) A record of each brokerage order, and all other
portfolio purchases and sales, given by the Subadviser on behalf of the
Fund for, or in connection with, the purchase or sale of securities,
whether executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modifications or
cancellations thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the Fund.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within ten
(10) days after the end of the quarter, showing specifically the basis or
bases upon which the allocation of orders for the purchase and sale of
portfolio securities named brokers or dealers was effected, and the
division of brokerage commissions or other compensation on such purchase
and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) The Fund,
(b) The Adviser (Phoenix Realty Securities, Inc.)
(c) The Subadviser, and
(d) Any person other than the foregoing.
(iii) Any other consideration other than the technical qualifications
of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made available.
C. Shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions or
other compensation.
D. The name of the person responsible for making the determination of
such allocation and such division of brokerage commissions or other
compensation.
3. (Rule 31a-(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is made by
a committee or group, a record shall be kept of the names of its members
who participate in the authorization. There shall be retained as part of
this record: any memorandum, recommendation or instruction supporting or
authorizing the purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are required to
be maintained by registered investment advisers by rule adopted under
Section 204 of the Investment
<PAGE>
Advisers Act of 1940, to the extent such records are necessary or
appropriate to record the Subadviser's transactions for the Fund.
- -------------------------------
*Such information might include: current financial information, annual and
quarterly reports, press releases, reports by analysts and from brokerage firms
(including their recommendation; i.e., buy, sell, hold) or any internal reports
or subadviser review.
<PAGE>
SCHEDULE C
----------
SUBADVISORY FEE
For services provided to the Phoenix Real Estate Securities Portfolio (the
"Portfolio"), the Adviser will pay to the Subadviser, on or before the 10th day
of each month, a fee, payable in arrears, at the annual rate of 0.45% of the
average daily net asset values of the Portfolio up to $1 billion: 0.35% of such
values from $1 billion to $2 billion; and 0.30% of such values in excess of $2
billion. The fees shall be prorated for any month during which this agreement is
in effect for only a portion of the month. In computing the fee to be paid to
the Subadviser, the net asset value of the Portfolio shall be valued as set
forth in the then current registration statement of the Fund.
<PAGE>
SCHEDULE D
----------
SUBADVISER FUNCTIONS
With respect to managing the investment and reinvestment of the Portfolio's
assets, the Subadviser shall provide, at its own expense:
(a) Investment research, advice and analysis, including, without
limitation, initial and ongoing i) assessment of national, regional
and specific real estate markets and real estate related equities, and
ii) detailed analysis of real estate investment trust assets
considered for purchase and held by the Portfolio with respect to
inter alia local market conditions, fair market value, overall
property condition, insurance coverages and deductibles, tenant
composition and vacancies, compliance matters relating to zoning,
handicap accessibility, environmental, and other applicable codes, and
such other matters as the Adviser shall from time to time request;
(b) An investment program for the Portfolio consistent with its investment
objectives based upon the development, review and adjustment of
buy/sell strategies approved from time to time by the Board of
Trustees and Adviser;
(c) Implementation of the investment program for the Portfolio based upon
the foregoing criteria;
(d) Quarterly reports, in form and substance acceptable to the Adviser,
with respect to: i) compliance with the Phoenix Code of Ethics and the
Subadviser's code of ethics; ii) compliance with procedures adopted
from time to time by the Trustees of the Fund relative to securities
eligible for resale under Rule 144A under the Securities Act of 1933,
as amended; iii) diversification of Portfolio assets in accordance
with the then prevailing prospectus and statement of additional
information pertaining to the Portfolio and governing laws; iv)
compliance with governing restrictions relating to the fair valuation
of securities for which market quotations are not readily available or
considered "illiquid" for the purposes of complying with the
Portfolio's limitation on acquisition of illiquid securities; v) any
and all other reports reasonably requested in accordance with or
described in this Agreement; and, vi) the implementation of the
Portfolio's investment program, including, without limitation,
analysis of Portfolio performance;
(e) Attendance by appropriate representatives of the Subadviser at
meetings requested by the Adviser or Trustees at such time(s) and
location(s) as requested by the Adviser or Trustees, including
furnishing of adequate conference space at the offices of the
Subadviser (or such other acceptable meeting location in Baltimore,
Maryland) if requested; and
(f) Participation, overall assistance and support in marketing the
Portfolio, including, without limitation, meetings with pension fund
representatives, broker/dealers who have a sales agreement with
Phoenix Equity Planning Corporation, and other parties requested by
the Adviser.
Exhibit 6.1
Form of Distribution Agreement
for Class A Shares
<PAGE>
DISTRIBUTION AGREEMENT
CLASS A SHARES
THIS AGREEMENT is made this _____ day of _________, 1993, by and between
Phoenix Multi-Portfolio Fund (the "Trust"), a Massachusetts business trust
authorized to issue shares of beneficial interest in separate series, and
Phoenix Equity Planning Corporation (the "Distributor"), a Connecticut
corporation.
WITNESSETH THAT:
1. The Trust hereby grants to the Distributor the right to purchase Class A
shares of beneficial interest of each series of the Trust established and
designated as of the date hereof and of any additional series which the Trustees
may establish and designate during the term of this Agreement (collectively
called the "Portfolios") and to resell Class A shares of each Portfolio
(collectively called the "Shares") as principal and not as agent. The
Distributor accepts such appointment and agrees to render the services described
in this Agreement for the compensation herein provided.
2. The Distributor'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 Portfolio, proportionate to
their holdings or proportionate to any cash distribution made to them
by the Trust (subject to appropriate qualifications designed solely to
avoid issuance of fractional securities);
d) in connection with any merger or consolidation of the Trust or of any
Portfolio with any other investment company or the acquisition by the
Trust, by purchase or otherwise, of any other investment company;
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 Trust; or
f) in connection with the reinvestment by Trust shareholders of dividend
and capital gains distributions.
1
<PAGE>
3. The "Net Asset Value" and the "Public Offering Price" of the Shares of
each Portfolio as referred to in this Agreement shall be computed in accordance
with the provisions of the then current registration statement of the Trust. The
Distributor shall be notified promptly by the Trust of such computations.
4. Each day the Distributor shall have the right to purchase from the
Trust, as principal, the amount of Shares of each Portfolio needed to fill
unconditional orders for Shares of such Portfolio received by the Distributor
from dealers or investors, but no more than the Shares needed, at a price equal
to the Net Asset Value of the Shares of such Portfolio. Any purchase of Shares
by the Distributor under this Agreement shall be subject to reasonable
adjustment for clerical errors, delays and errors of transmission and
cancellation of orders.
5. With respect to transactions other than with dealers, the Distributor
will sell Shares of each Portfolio 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 Trust. Any sale of
Shares of each Portfolio to or through a person other than a dealer will be at
the Public Offering Price; however, the Distributor may pay a commission to such
person equal to no more than the difference between the Public Offering Price
and the Net Asset Value of those Shares. The Distributor will sell at Net Asset
Value Shares of any Portfolio which are offered by the then current registration
statement or prospectus of the Trust of sale at such Net Asset Value.
6. Sales at a discount from the Public Offering Price shall be made in
accordance with the terms and conditions of uniform selling agreements allowing
such discounts. Such discounts shall not exceed the difference between the Net
Asset Value and the Public Offering Price.
7. The Trust shall furnish the Distributor with copies of its Declaration
of Trust, as amended from time to time. The Trust shall also furnish the
Distributor with any other documents of the Trust which will assist the
Distributor in the performance of its duties hereunder.
8. The Distributor 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 Trust and registered under applicable Federal
securities laws, and, so long as it does so, nothing herein contained shall
prevent the Distributor from entering into similar arrangements with other
registered investment companies. The Distributor may, in the exercise of its
discretion, refuse to accept orders for Shares from any person.
9. Upon receipt by the Trust of a purchase order from the Distributor,
accompanied by proper applications for the purchase of Shares and delivery
instructions, the Trust shall, as promptly as practicable thereafter, cause
evidence of ownership of such Shares to be delivered as indicated in such
purchase order. Payment for such Shares shall be made by the Distributor to the
Trust in a manner acceptable to the Trust, provided that the Distributor shall
pay for such Shares no later than the tenth business day after the Distributor
shall have contracted to purchase such shares.
10. In connection with offering for sale and selling Shares, the Trust
authorizes the Distributor to give only such information and to make only such
statements or representations as are contained
2
<PAGE>
in the then current registration statement of the Trust or in then current sales
literature or advertisements.
11. The Trust 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 Trust and of each Portfolio 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 sales of Shares to
the Distributor by the Trust; and
e) the cost of preparing and distributing reports and notices to
shareholders.
12. The Distributor agrees to pay the following expenses:
a) all expenses of printing prospectuses and statements of additional
information sued 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
Distributor 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 Distributor 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
Trust.
13. The Trust hereby appoints the Distributor its agent to receive requests
to accept the Trust's offer to repurchase Shares upon such terms and conditions
as may be described in the Trust's then current registration statement. The
agency granted in this paragraph 13 is terminable at the discretion of the
Trust.
14. The Trust agrees to indemnify and hold harmless the Distributor, its
officers and directors and each person, if any, who controls the Distributor
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 Distributor,
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
3
<PAGE>
a) any untrue statement or alleged untrue statement of a material fact
contained in the Trust'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 Trust'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 Trust by the
Distributor for use in the Trust's registration statement or
prospectus, such indemnification is not applicable. In no case shall
the Trust indemnify the Distributor or its controlling persons as to
any amounts incurred for any liability arising out of or based upon
any action for which the Distributor, 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.
15. The Distributor agrees to indemnify and hold harmless the Trust, its
officers and trustees and each person, if any, who controls the Trust 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 Trust, its officers,
trustees or any such controlling person any 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 Distributor of any of its
employees or representatives, or
b) may be based upon any untrue statement or alleged untrue statement of
a material fact contained in the Trust's registration statement or
prospectus (including amendments and supplements thereto), 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 Trust by the
Distributor.
16. It is understood that;
a) trustees, officers, employees, agents and shareholders of the Trust
are or may be interested persons, as that term is defined in the Act
("Interested Persons"), of the Distributor as directors, officers,
stockholders or otherwise;
b) directors, officers, employees, agents and stockholders of the
Distributor are or may be Interested Persons of the Trust as trustees,
officers, shareholders or otherwise;
c) the Distributor may be an Interested Person of the Trust as
shareholder or otherwise; and
4
<PAGE>
d) the existence of any such dual interest shall not offset the validity
hereof or of any transactions hereunder.
17. The Trust may terminate this Agreement by 60 days written notice to the
Distributor 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 Trust. The Distributor may terminate
this Agreement by 60 days written notice to the Trust, 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.
18. Subject to prior termination as provided in paragraph 17, 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 Class A outstanding voting securities, as that
term is defined in the Act, of the Trust. 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.
19. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but bind only the trust property of
the Trust, as provided in the Declaration of Trust. The execution and delivery
of this Agreement by the President of the Trust has been authorized by the
Trustees acting as such, and neither such execution and delivery by such officer
nor such 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 Trust as provided in
the Declaration of Trust. The Declaration of Trust is on file with the Secretary
of The Commonwealth of Massachusetts.
20. This Agreement shall become effective upon the date first set forth
above. This Agreement shall be governed by the laws of The Commonwealth of
Massachusetts 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 MULTI-PORTFOLIO FUND
By:__________________________________
PHOENIX EQUITY PLANNING CORPORATION
By:__________________________________
5
Exhibit 6.1a
Form of Distribution Agreement
for Class B Shares
<PAGE>
DISTRIBUTION AGREEMENT
CLASS B SHARES
This AGREEMENT is made this ____ day of _________, 1993, by and between
Phoenix Multi-Portfolio Fund (the "Trust"), a Massachusetts business trust
authorized to issue shares of beneficial interest in separate series, and
Phoenix Equity Planning Corporation (the "Distributor"), a Connecticut
corporation.
WITNESSETH THAT:
1. The Trust hereby grants to the Distributor the right to purchase Class B
shares of beneficial interest of each series of the Trust established and
designated as of the date hereof and of any additional series which the Trustees
may establish and designate during the term of this Agreement (collectively
called the "Portfolios") and to resell Class B shares of each Portfolio
(collectively called the "Shares") as principal and not as agent. The
Distributor accepts such appointment and agrees to render the services described
in this Agreement for the compensation herein provided.
2. The Distributor'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 Portfolio, proportionate to
their holdings or proportionate to any cash distribution made to them
by the Trust (subject to appropriate qualifications designed solely to
avoid issuance of fractional securities);
d) in connection with any merger or consolidation of the Trust or of any
Portfolio with any other investment company or the acquisition by the
Trust, by purchase or otherwise, of any other investment company;
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 Trust; or
f) in connection with the reinvestment by Trust shareholders of dividend
and capital gains distributions.
1
<PAGE>
3. The "Net Asset Value" and the "Public Offering Price" of the Shares of
each Portfolio as referred to in this Agreement shall be computed in accordance
with the provisions of the then current registration statement of the Trust. The
Distributor shall be notified promptly by the Trust of such computations.
4. Each day the Distributor shall have the right to purchase from the
Trust, as principal, the amount of Shares of each Portfolio needed to fill
unconditional orders for Shares of such Portfolio received by the Distributor
from dealers or investors, but no more than the Shares needed, at a price equal
to the Net Asset Value of the Shares of such Portfolio. Any purchase of Shares
by the Distributor under this Agreement shall be subject to reasonable
adjustment for clerical errors, delays and errors of transmission and
cancellation of orders.
5. With respect to transactions other than with dealers, the Distributor
will sell Shares of each Portfolio 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 Trust. Any sale of
Shares of each Portfolio to or through a person other than a dealer will be at
the Public Offering Price; however, the Distributor may pay a commission to such
person equal to no more than the difference between the Public Offering Price
and the Net Asset Value of those Shares. The Distributor will sell at Net Asset
Value Shares of any Portfolio which are offered by the then current registration
statement or prospectus of the Trust of sale at such Net Asset Value.
6. Sales at a discount from the Public Offering Price shall be made in
accordance with the terms and conditions of uniform selling agreements allowing
such discounts. Such discounts shall not exceed the difference between the Net
Asset Value and the Public Offering Price.
7. The Trust shall furnish the Distributor with copies of its Declaration
of Trust, as amended from time to time. The Trust shall also furnish the
Distributor with any other documents of the Trust which will assist the
Distributor in the performance of its duties hereunder.
8. The Distributor 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 Trust and registered under applicable Federal
securities laws, and, so long as it does so, nothing herein contained shall
prevent the Distributor from entering into similar arrangements with other
registered investment companies. The Distributor may, in the exercise of its
discretion, refuse to accept orders for Shares from any person.
9. Upon receipt by the Trust of a purchase order from the Distributor,
accompanied by proper applications for the purchase of Shares and delivery
instructions, the Trust shall, as promptly as practicable thereafter, cause
evidence of ownership of such Shares to be delivered as indicated in such
purchase order. Payment for such Shares shall be made by the Distributor to the
Trust in a manner acceptable to the Trust, provided that the Distributor shall
pay for such Shares no later than the tenth business day after the Distributor
shall have contracted to purchase such shares.
10. In connection with offering for sale and selling Shares, the Trust
authorizes the Distributor to give only such information and to make only such
statements or representations as are contained
2
<PAGE>
in the then current registration statement of the Trust or in then current sales
literature or advertisements.
11. The Trust 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 Trust and of each Portfolio 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 sales of Shares to
the Distributor by the Trust; and
e) the cost of preparing and distributing reports and notices to
shareholders.
12. The Distributor agrees to pay the following expenses:
a) all expenses of printing prospectuses and statements of additional
information sued 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
Distributor 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 Distributor 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
Trust.
13. The Trust hereby appoints the Distributor its agent to receive requests
to accept the Trust's offer to repurchase Shares upon such terms and conditions
as may be described in the Trust's then current registration statement. The
agency granted in this paragraph 13 is terminable at the discretion of the
Trust.
14. The Trust agrees to indemnify and hold harmless the Distributor, its
officers and directors and each person, if any, who controls the Distributor
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 Distributor,
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
3
<PAGE>
a) any untrue statement or alleged untrue statement of a material fact
contained in the Trust'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 Trust'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 Trust by the
Distributor for use in the Trust's registration statement or
prospectus, such indemnification is not applicable. In no case shall
the Trust indemnify the Distributor or its controlling persons as to
any amounts incurred for any liability arising out of or based upon
any action for which the Distributor, 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.
15. The Distributor agrees to indemnify and hold harmless the Trust, its
officers and trustees and each person, if any, who controls the Trust 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 Trust, its officers,
trustees or any such controlling person any 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 Distributor of any of its
employees or representatives, or
b) may be based upon any untrue statement or alleged untrue statement of
a material fact contained in the Trust's registration statement or
prospectus (including amendments and supplements thereto), 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 Trust by the
Distributor.
16. It is understood that;
a) trustees, officers, employees, agents and shareholders of the Trust
are or may be interested persons, as that term is defined in the Act
("Interested Persons"), of the Distributor as directors, officers,
stockholders or otherwise;
b) directors, officers, employees, agents and stockholders of the
Distributor are or may be Interested Persons of the Trust as trustees,
officers, shareholders or otherwise;
c) the Distributor may be an Interested Person of the Trust as
shareholder or otherwise; and
4
<PAGE>
d) the existence of any such dual interest shall not offset the validity
hereof or of any transactions hereunder.
17. The Trust may terminate this Agreement by 60 days written notice to the
Distributor 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 Trust. The Distributor may terminate
this Agreement by 60 days written notice to the Trust, 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.
18. Subject to prior termination as provided in paragraph 17, 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 Class B outstanding voting securities, as that
term is defined in the Act, of the Trust. 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.
19. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but bind only the trust property of
the Trust, as provided in the Declaration of Trust. The execution and delivery
of this Agreement by the President of the Trust has been authorized by the
Trustees acting as such, and neither such execution and delivery by such officer
nor such 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 Trust as provided in
the Declaration of Trust. The Declaration of Trust is on file with the Secretary
of The Commonwealth of Massachusetts.
20. This Agreement shall become effective upon the date first set forth
above. This Agreement shall be governed by the laws of The Commonwealth of
Massachusetts 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 MULTI-PORTFOLIO FUND
By:__________________________________
PHOENIX EQUITY PLANNING CORPORATION
By:__________________________________
5
Exhibit 6.2
Form of Sales Agreement
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
100 Bright Meadow Boulevard
Enfield, Connecticut 06082-1989
800-243-4361
(203) 253-1000
PHOENIX FAMILY OF FUNDS
SALES AGREEMENT
To: Phoenix Equity Planning Corporation From:
100 Bright Meadow Boulevard
Enfield, Connecticut 06082
Sir/Madam:
We desire to enter into an Agreement with you for the sale and distribution of
shares of registered investment companies (which shall collectively be referred
to hereafter as the "Funds") for which you are national distributor or principal
underwriter and which may be listed in the Annex A hereto which such Annex may
be amended by you from time to time. Upon acceptance of this Agreement by you,
we understand that we may offer and sell shares of each of the Funds (hereafter
"Shares") subject, however, to all of the terms and conditions hereof including
your right to suspend or cease the sale of such shares.
1. We understand and agree that in all sales of Shares to the public we shall
be acting as dealer for our own account: that all purchase orders and
applications submitted to you by us are subject to acceptance or rejection
by you in your sole discretion: and that each purchase will be deemed to
have been consummated in your principal office subject to your acceptance
and effective only upon confirmation in us by you.
2. We agree that all purchases of Shares by us shall be made only for the
purpose of covering purchase orders already received from our customers
(who may be any person other than a securities dealer or broker) or for our
own bona fide investment.
3. We shall offer and sell shares purchased pursuant to this Agreement for the
purpose of covering purchase orders of our customers at the current public
offering price for such Shares ("Offering Price") as set forth in the
current prospectus of each of the funds.
4. We shall pay you for Shares purchased by us within five (5) business days
of the date of your confirmation to us of such purchase. The purchase price
shall be the Offering Price, less only the applicable dealer discount
("Dealer Discount"), if any, as set forth in Annex A hereto. We agree that
you have the right, without notice, to cancel any order for which payment
has not been received by you as provided in this paragraph, in which case
you may hold us responsible for any loss suffered by you resulting from our
failure to make payment as aforesaid.
5. We understand and agree that any Dealer Discount or fee is subject to
change from time to time. Any orders placed after the effective date of any
sguch Dealer Discount change shall be subject to the Dealer Discounts in
effect at the time such order is received by you.
6. We understand and agree that Shares purchased by us under this Agreement
will not be delivered until payment has been received by you. Delivery of
shares will be made by credit to a shareholder open account unless delivery
of certificates is specified in the purchase order. In order to avoid
unnecessary delay, it is understood that, at our request, any Shares resold
by us to one of our customers will be delivered (whether by credit to a
shareholder open account or by delivery of certificates) in the name of our
customer.
<PAGE>
7. We understand that on all purchases of Shares to which the terms of this
Agreement are applicable by a person for whom we are dealer of record, you
will pay us an amount equal to the Dealer Discount or fees which would have
been paid to us with respect to such Shares if such Shares had been
purchased through us. We understand and agree that the dealer of record for
this purpose shall be the dealer through whom such person most recently
purchased Shares of such fund. We understand that all amounts payable to us
under this paragraph and currently payable under this agreement will be
paid as of the end of each month unless specified otherwise for the total
amount of Shares to which this paragraph is applicable but may be paid more
frequently as you may determine in your discretion.
8. You appoint the transfer agent for each of the Funds as your agent to
execute the purchase transaction of Shares and to confirm such purchases to
our customers on our behalf, and we guarantee the legal capacity of our
customers so purchasing such shares. We further understand if a customer's
account is established without the customer signing the application form,
we represent that the instructions relating to the registration and
shareholder options selected (whether on the application form, in some
other document or orally) are in accordance with the customer's
instructions and we agree to indemnify the Funds, the transfer agent and
you for any loss or liability resulting from acting upon such instructions.
9. Upon the purchase of Shares pursuant to a Letter of Intent, we will
promptly return to you any excess of the Dealer Discount previously allowed
or paid to us over that allowable in respect to such larger purchase.
10. Unless at the time of transmitting a purchase order we advise you to the
contrary, you may consider that the investor owns no other Shares and may
further assume that the investor is not entitled to any lower sales charge
than that accorded to a single transaction in the amount of the purchase
order as set forth in Annex A hereto.
11. We understand and agree that if any Shares purchased by us under the terms
of this Agreement are, within seven (7) business days after the date of
your confirmation to us of the original purchase order for such shares,
repurchased by you as agent for such fund or are tendered to such fund for
redemption, we shall forfeit the right to, and shall pay over to you the
amount of, any Dealer Discount allowed to us with respect to such Shares.
It is understood that you will forthwith pay over such amount to such fund
and also shall pay over to such fund your share of the Sales Charge, if
any, on the original transaction. We understand that you will notify us of
such repurchase or redemption within ten (10) days of the date upon which
certificates are delivered to you or to such fund or the date upon which
the holder of Shares held in a shareholder open account places or causes to
be placed to you or with such fund an order to have such Shares repurchased
or redeemed.
12. We agree that, in the case of any repurchase of any Shares made more than
seven (7) business days after confirmation by you of any purchase of such
Shares, except in the case of Shares purchased by us from you for our own
bona fide investment, we will act only as agent for the holders of such
Shares and will place the orders for repurchase only with you. It is
understood that we may charge the holder of such Shares a fair commission
for handling the transaction.
13. Your obligations to us under this Agreement are subject to all the
provisions of the respective distribution agreements entered into between
you and each of the Funds. We understand and agree that in performing our
services under this agreement we are acting in the capacity of an
independent contractor, and you are in no way responsible for the manner of
our performance or for any of our acts or omissions in connection
therewith. Nothing in the Agreement shall be construed to constitute us or
any of our agents, employees or representatives as your agent, partner or
employee or the agent, partner or employee of any of the Funds.
14. We understand that you will supply us with reasonable quantities of the
current prospectus and periodic reports to shareholders for each of the
Funds. We agree not to use any other advertising or sales material relating
to the sale of shares of any of the Funds unless other advertising or sales
material is approved in writing by you.
<PAGE>
15. We shall offer and sell Shares, and execute telephone exchanges, only in
accordance with the terms and conditions of the then current prospectus of
each of the Funds and subject to the provisions of this Agreement, and we
will make no representations not contained in any such prospectus or in any
authorized supplemental material supplied by you. We will use our best
efforts in the development and promotion of sales of the Shares covered by
this Agreement, and agree to be responsible for the proper instruction and
training of all sales representatives employed by us in order that such
Shares will be offered in accordance with terms and conditions of this
Agreement and all applicable laws, rules and regulations. We agree to hold
you harmless and indemnify you in the event that we or any of our sales
representatives should violate any law, rule or regulation or any
provisions of this Agreement which may result in possible liability to you.
In addition, in consideration for the extension of the right to exercise
the telephone exchange privilege to us and our registered representatives,
we acknowledge that neither the Funds nor the Transfer Agent nor Equity
Planning will be liable for any loss, injury or damage incurred as a result
of acting upon, nor will they be responsible for the authenticity of any
telephone instructions, and agree that we will indemnify and hold harmless
the Funds, Equity Planning and the Transfer Agent against any loss, injury
or damage resulting from any telephone exchange instruction from us or our
registered representatives. (Telephone instructions will be recorded on
tape.) In the event you determine to refund any amounts paid by any
investor by reason of any such violation on our part, we shall forfeit the
right to, and pay over to you, the amount of any dealer discount allowed to
us with respect to the transaction for which the refund is made. All
expenses which we incur in connection with our activities under this
Agreement shall be borne by us.
16. We represent that we are properly registered as a broker or dealer under
the Securities Exchange Act of 1934 and are members of the National
Assocation of Securities Dealers, Inc. ("NASD") and agree to maintain
membership in the NASD or, in the alternative, that we are foreign dealers
not eligible for membership in the NASD. We agree to notify you promptly of
any change, termination, or suspension of the foregoing status. We agree to
abide by all the rules and regulations of the NASD including Section 26 of
Article III of the Rules of Fair Practice which is incorporated herein by
reference as if set forth in full. We further agree to comply with all
applicable state and Federal laws and the rules and regulations of
applicable regulatory agencies. We further agree that we will not sell, or
offer for sale, Shares in any state or jurisdiction in which such Shares
have not been duly registered or qualified for sale.
17. Either party may terminate this Agreement for any reason by written or
telegraphic notice to the other party which termination shall become
effective fifteen (15) days after the date of mailing or telegraphing such
notice to the other party. You may also terminate this Agreement for cause
or as a result of a violation by us, as determined by you in your
discretion, of any of the provisions of this Agreement, said termination to
be effective on the date of mailing written or telegraphing notice to us of
the same. Without limiting the generality of the foregoing, our own
expulsion from the NASD will automatically terminate this Agreement without
notice. Our suspension from the NASD of violation or applicable state or
Federal laws or rules and regulations of applicable regulatory agencies
will terminate this Agreement effective upon the date of your mailing
written notice or telegraphing notice to us of such termination. Your
failure to terminate this Agreement for any cause shall not constitute a
waiver of your right to so terminate at a later date for such cause.
18. We understand and agree that all communications and notices to you or to us
shall be sent to the addresses set forth at the beginning of this Agreement
or to such other addresses as either party may specify in writing from time
to time.
19. This Agreement shall become effective upon the date of its acceptance by
you as set forth herein. This Agreement and all rights and obligations of
the parties hereunder shall be governed by and construed under the laws of
the State of Connecticut. This Agreement is not assignable or transferable,
except that you may assign or transfer this Agreement to any successor
distributor of the Shares described herein.
ACCEPTED ON BEHALF OF
PHOENIX EQUITY PLANNING CORPORATION
Date ____________________________________________________
By John W. Filoon, Jr., Snr. Vice Pres., Sales & Mktg.
_________________________________________________________
NAME AND TITLE
/s/ John W. Filoon, Jr.
_________________________________________________________
AUTHORIZED SIGNATURE
DEALER FIRM
__________________________________________________________
NAME OF DEALER
Date ____________________________________________________
By ______________________________________________________
NAME AND TITLE
__________________________________________________________
AUTHORIZED SIGNATURE
NASD - CRD -NUMBER _______________________________________
<PAGE>
ANNEX A
DEALER'S AGREEMENT WITH
PHOENIX EQUITY PLANNING CORPORATION
The public offering price of Class A Shares of all Series of the Phoenix Series
Fund (except the Money Market Fund Series) all Portfolios of the Phoenix
Multi-Portfolio Fund and the Phoenix Total Return Fund Inc., is the net asset
value plus a sales charge. The offering price so determined becomes effective
after the purchase order is received by Equity Planning or the Trust's agent,
State Street Bank and Trust Company. The sales charge is reduced on a graduated
scale on single purchases of $50,000 or more as shown below:
Class A Shares
- --------------
<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Discount or Agency
Amount of Transaction as percentage as percentage fee as percentage
at offering price of offering price of amount invested of offering price*
- ----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 but under $100,000 4.50% 4.71% 4.00%
$100,000 but under $250,000 3.50% 3.63% 3.00%
$250,000 but under $500,000 3.00% 3.09% 2.75%
$500,000 but under $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more ... None None (see below*)
</TABLE>
*In connection with purchase of Class A shares of $1,000,000 or more (and
subsequent purchases in any amount) including purchases of shares of the Phoenix
Money Market Fund Series, Equity Planning may pay broker-dealers from its own
profits and resources, a percentage of the net asset value of any shares sold
(excluding Phoenix Money Market Fund Series) as set forth below:
Purchase Amount Payment to Broker/Dealers
- --------------- -------------------------
$1,000,000 - $2,000,000 .75 of 1%
$2,000,000 - $4,000,000 .50 of 1%
$4,000,000 or more .25 of 1%
Effective January 1, 1994: Class B shares will be offered on sales of shares of
the Phoenix High Yield Fund Series and Phoenix U.S. Government Fund Series both
of which are Series of the Phoenix Series Fund, on sales of Shares of the
Phoenix Tax Exempt Bond Portfolio which is a Portfolio of the Phoenix
Multi-Portfolio Fund and on shares of the Phoenix Total Return Fund Inc. Class B
shares are sold at net asset value per share without the imposition of a sales
charge at the time of purchase. Shares which are redeemed within six years of
purchase will be subject to a contingent deferred sales charge, as described in
the Fund's current prospectus, at the rates set forth below:
Class B Shares:
- ---------------
Contingent Deferred Sales Charge
as a percentage of dollar amount
Years Since Purchase subject to charge
- -------------------- --------------------------------
First 4%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh 0
PHOENIX FUNDS DISTRIBUTION PLAN
Under their respective Distribution Plans, each of the Phoenix Funds may pay
Equity Planning an amount annually not to exceed a certain percentage of the
average daily net assets of the Fund, as shown below. Equity Planning may pay to
qualifying dealers an amount up to this percentage of the average daily net
assets in qualifying shares sold by such dealers as described in the Fund's
prospectus.
<PAGE>
FUND NAME DISTRIBUTION PLAN
- --------- -----------------
Phoenix Series Fund Class A .25% Class B .75%
Phoenix Multi-Portfolio Fund .25% .75%
Phoenix Total Return Fund .25% .75%
*Equity Planning may sponsor sales contests and provide to all qualifying
dealers from its own profits and resources, additional compensation in the form
of trips and merchandise. Brokers or dealers other than Equity Planning may also
make customary additional charges for their Services in effecting purchases, if
they notify the Trust of their intention to do so.
Exhibit 8.2a
AMENDMENT TO CUSTODIAN CONTRACT
<PAGE>
AMENDMENT TO CUSTODIAN CONTRACT
Agreement made by and between State Street Bank and Trust Company (the
"Custodian") and Phoenix Multi-Portfolio Fund (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated June 16, 1988 (the "Custodian Contract") governing the terms and
conditions under which the Custodian maintains custody of the securities and
other assets of the Fund; and
WHEREAS, the Custodian and the Fund desire to amend the terms and
conditions under which the Custodian maintains the Fund's securities and other
non-cash property in the custody of certain foreign sub-custodians in conformity
with the requirements of Rule 17f-5 under the Investment Company Act of 1940, as
amended;
NOW THEREFORE, in consideration of the premises and convenants contained
herein, the Custodian and the Fund hereby amend the Custodian Contract by the
addition of the following terms and provisions;
1. Notwithstanding any provisions to the contrary set forth in the
Custodian Contract, the Custodian may hold securities and other non-cash
property for all of its customers, including the 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 the Fund which are maintained in such account shall identify by book-entry
those securities and other non-cash property belonging to the 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.
2. Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force and
effect.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed as a sealed instrument in its name and behalf by its duly authorized
representative this 17th day of October , 1996.
PHOENIX MULTI-PORTFOLIO FUND
By: /s/ Michael E. Haylon
-----------------------------
Title: Executive Vice President
-----------------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
-----------------------------
Title: Executive Vice President
-----------------------------
Exhibit 8.3
Custodian Agreement
<PAGE>
AGREEMENT BETWEEN
BROWN BROTHERS HARRIMAN & CO.
AND
PHOENIX MULTI-PORTFOLIO FUND
<PAGE>
TABLE OF CONTENTS
1. Employment of Custodian 1
2. Powers and Duties of the Custodian
with respect to Property of the Fund
held by the Custodian 1
2.1 Safekeeping 2
2.2 Manner of Holding Securities 2
2.3 Registration 2
2.4 Purchases 2
2.5 Exchanges 4
2.6 Sales of Securities 4
2.7 Depositary Receipts 5
2.8 Exercise of Rights; Tender Offers 6
2.9 Stock Dividends, Rights, Etc. 6
2.10 Options 6
2.11 Borrowings 8
2.12 Demand Deposit Bank Accounts 8
2.13 Interest Bearing Call or Time Deposits 9
2.14 Futures Contracts 10
2.15 Foreign Exchange Transactions 12
2.16 Stock Loans 13
2.17 Collections 13
2.18 Dividends, Distributions and Redemptions 14
2.19 Proxies, Notices, Etc. 15
2.20 Nondiscretionary Details 15
2.21 Bills 16
2.22 Deposit of Fund Assets in Securities Systems 16
2.23 Other Transfers 18
2.24 Investment Limitations 19
2.25 Custodian Advances 19
2.26 Restricted Securities 21
2.27 Proper Instructions 22
2.28 Segregated Account 23
3. Powers and Duties of the Custodian with
Respect to the Appointment of Subcustodians 24
4. Assistance by the Custodian as to Certain Matters 28
5. Powers and Duties of the Custodian with
Respect to its Role as Recordkeeping Agent 29
5.1 Records 29
5.2 Accounts 29
5.3 Access to Records 29
<PAGE>
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6. Standard of Care and Related Matters 29
6.1 Liability of the Custodian with
Respect to Proper Instructions;
Evidence of Authority; Etc. 30
6.2 Liability of the Custodian with
Respect to Use of Securities Systems
and Foreign Depositories 31
6.3 Standard of Care; Liability;
Indemnification 31
6.4 Reimbursement of Disbursements, Etc. 33
6.5 Security for Obligations to Custodian 33
6.6 Appointment of Agents 34
6.7 Powers of Attorney 34
7. Compensation of the Custodian 35
8. Termination; Successor Custodian 35
9. Amendment 36
10. Governing Law 36
11. Notices 36
12. Binding Effect 37
13. Counterparts 37
14. Miscellaneous 37
<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made this 9th day of August, 1994, between PHOENIX
MULTI-PORTFOLIO FUND (for the International Portfolio) (the "Fund") and Brown
Brothers Harriman & Co. (the "Custodian");
WITNESSETH: That in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Employment of Custodian: The Fund hereby employs and appoints the
Custodian as a custodian for the term and subject to the provisions of this
Agreement. The Custodian shall not be under any duty or obligation to require
the Fund to deliver to it any securities or funds owned by the Fund and shall
have no responsibility or liability for or on account of securities or funds not
so delivered. The Fund will deposit with the Custodian copies of the Declaration
of Trust or Certificate of Incorporation and By-Laws (or comparable documents)
of the Fund and all amendments thereto, and copies of such votes and other
proceedings of the Fund as may be necessary for or convenient to the Custodian
in the performance of its duties.
2. Powers and Duties of the Custodian with respect to Property of the Fund
held by the Custodian: Except for securities and funds held by any Subcustodians
appointed pursuant to the provisions of Section 3 hereof or held by any Foreign
Depositories (as said term is defined in Section 3) utilized by a
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Subcustodian, the Custodian shall have and perform the following powers and
duties:
2.1 Safekeeping - To keep safely the securities and other assets of the
Fund that have been delivered to the Custodian and, on behalf of the Fund, from
time to time to receive delivery of securities for safekeeping.
2.2 Manner of Holding Securities - To hold securities of the Fund (1) by
physical possession of the share certificates or other instruments representing
such securities in registered or bearer form, or (2) in book-entry form by a
Securities System (as said term is defined in Section 2.22) or a Foreign
Depository.
2.3 Registration - To hold registered securities of the Fund, with or
without any indication of fiduciary capacity, provided that securities are held
in an account of the Custodian containing only assets of the Fund or only assets
held as fiduciary or custodian for customers.
2.4 Purchases - Upon receipt of Proper Instructions, as defined in Section
2.27, insofar as funds are available for the purpose, to pay for and receive
securities purchased for the account of the Fund, payment being made only upon
receipt of the securities (1) by the Custodian, or (2) by a clearing corporation
of a national securities exchange of which the Custodian is a member, or (3) by
a Securities System or a Foreign Depository. However, (i) in the case of
repurchase agreements entered into by the Fund, the Custodian (as well as an
Agent) may release funds to a Securities System, a Foreign Depository or a
Subcustodian
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prior to the receipt of advice from the Securities System, Foreign Depository or
Subcustodian that the securities underlying such repurchase agreement have been
transferred by book entry into the Account (as defined in Section 2.22) of the
Custodian (or such Agent) maintained with such Securities System or to the
Foreign Depository or Subcustodian, so long as such payment instructions to the
Securities System, Foreign Depository or Subcustodian include a requirement that
delivery is only against payment for securities, (ii) in the case of foreign
exchange contracts, options, time deposits, call account deposits, currency
deposits, and other deposits, contracts or options pursuant to Sections 2.10,
2.12, 2.13, 2.14 and 2.15, the Custodian may make payment therefor without
receiving an instrument evidencing said deposit, contract or option so long as
such payment instructions detail specific securities to be acquired, and (iii)
in the case of securities as to which payment for the security and receipt of
the instrument evidencing the security are under generally accepted trade
practice or the terms of the instrument representing the security expected to
take place in different locations or through separate parties, such as
commercial paper which is indexed to foreign currency exchange rates,
derivatives and similar securities, the Custodian may make payment for such
securities prior to receipt thereof in accordance with such generally accepted
trade practice or the terms of the instrument representing such security.
Except as specifically permitted in this Agreement or as
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authorized or permitted in Proper Instructions, in any and every case where
payment for purchase of domestic securities for the Fund is made by the
Custodian in advance of receipt of the securities, the Custodian shall be liable
to the Fund for such securities to the same extent as if the securities had been
received by the Custodian.
2.5 Exchanges - Upon receipt of proper instructions, to exchange securities
held by it for the account of the Fund for other securities in connection with
any reorganization, recapitalization, split-up of shares, change of par value,
conversion or other event relating to the securities or the issuer of such
securities and to deposit any such securities in accordance with the terms of
any reorganization or protective plan. Without proper instructions, the
Custodian may surrender securities in temporary form for definitive securities,
may surrender securities for transfer into an account as permitted in Section
2.3, and may surrender securities for a different number of certificates or
instruments representing the same number of shares or same principal amount of
indebtedness, provided the securities to be issued are to be delivered to the
Custodian.
2.6 Sales of Securities - Upon receipt of proper instructions, to make
delivery of securities which have been sold for the account of the Fund, but
only against payment therefor (1) in cash, by a certified check, bank cashier's
check, bank credit, or bank wire transfer, or (2) by credit to the account of
the Custodian with a clearing corporation of a national
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securities exchange of which the Custodian is a member, or (3) by credit to the
account of the Custodian or an Agent of the Custodian with a Securities System
or a Foreign Depository; provided, however, that (i) in the case of delivery of
physical certificates or instruments representing securities, the Custodian may
make delivery to the broker buying the securities, against receipt therefor, for
examination in accordance with "street delivery" custom, provided that the
payment therefor is to be made to the Custodian (which payment may be made by a
broker's check) or that such securities are to be returned to the Custodian, and
(ii) in the case of securities referred to in clause (iii) of the last sentence
of Section 2.4, the Custodian may make settlement, including with respect to the
form of payment, in accordance with generally accepted trade practice relating
to such securities or the terms of the instrument representing said security.
2.7 Depositary Receipts - Upon receipt of proper instructions, to instruct
a Subcustodian or an Agent to surrender securities to the depositary used by an
issuer of American Depositary Receipts or International Depositary Receipts
(hereinafter collectively referred to as "ADRs") for such securities against a
written receipt therefor adequately describing such securities and written
evidence satisfactory to the Subcustodian or Agent that the depositary has
acknowledged receipt of instructions to issue with respect to such securities
ADRs in the name of the Custodian, or a nominee of the Custodian,
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for delivery to the Custodian in Boston, Massachusetts, or at such other place
as the Custodian may from time to time designate.
Upon receipt of proper instructions, to surrender ADRs to the issuer
thereof against a written receipt therefor adequately describing the ADRs
surrendered and written evidence satisfactory to the Custodian that the issuer
of the ADRs has acknowledged receipt of instructions to cause its depositary to
deliver the securities underlying such ADRs to a Subcustodian or an Agent.
2.8 Exercise of Rights; Tender Offers - Upon timely receipt of proper
instructions, to deliver to the issuer or trustee thereof, or to the agent of
either, warrants, puts, calls, rights or similar securities for the purpose of
being exercised or sold, provided that the new securities and cash, if any,
acquired by such action are to be delivered to the Custodian, and, upon receipt
of proper instructions, to deposit securities upon invitations for tenders of
securities, provided that the consideration is to be paid or delivered or the
tendered securities are to be returned to the Custodian.
2.9 Stock Dividends, Rights, Etc. - To receive and collect all stock
dividends, rights and other items of like nature; and to deal with the same
pursuant to proper instructions relative thereto.
2.10 Options - Upon receipt of proper instructions or upon receipt of
instructions given pursuant to any agreement relating to an option or as
otherwise provided in any such agreement to
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(i) receive and retain, to the extent provided to the Custodian, confirmations
or other documents evidencing the purchase, sale or writing of an option of any
type on or in respect of a security, securities index or similar form of
property by the Fund; (ii) deposit and maintain in a segregated account, either
physically or by book-entry in a Securities System or Foreign Depository or with
a broker, dealer or other entity, securities, cash or other assets in connection
with options transactions entered into by the Fund; (iii) transfer securities,
cash or other assets to a Securities System, Foreign Depository, broker, dealer
or other entity, as margin (including variation margin) or other security for
the Fund's obligations in respect of any option; and (iv) pay, release and/or
transfer such securities, cash or other assets in accordance with a notice or
other communication evidencing the expiration, termination or exercise of or
default under any such option furnished by The Options Clearing Corporation, by
the securities or options exchange on which such option is traded or by such
broker, dealer or other entity as may be responsible for handling such options
transaction or have authority to give such notice or communication. The
Custodian shall not be responsible for the sufficiency of assets held in any
segregated account established in compliance with applicable margin maintenance
requirements or the performance of the other terms of any agreement relating to
an option. Notwithstanding the foregoing, options on futures contracts and
options to purchase and sell foreign currencies shall be governed by Sections
2.14 and 2.15.
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<PAGE>
2.11 Borrowings - Upon receipt of proper instructions, to deliver
securities of the Fund to lenders or their agents as collateral for borrowings
effected by the Fund, provided that such borrowed money is payable to or upon
the Custodian's order as Custodian for the Fund.
2.12 Demand Deposit Bank Accounts - To open and operate an account or
accounts in the name of the Fund, subject only to draft or order by the
Custodian, and to hold in such account or accounts as a deposit accepted on the
Custodian's books cash, including foreign currency, received for the account of
the Fund other than cash held as deposits with Banking Institutions in
accordance with the following paragraph. The responsibilities of the Custodian
for cash, including foreign currency, of the Fund accepted on the Custodian's
books as a deposit shall be that of a U. S. bank for a similar deposit.
If and when authorized by proper instructions, the Custodian may open and
operate an additional account(s) in such other banks or trust companies as may
be designated by the Fund in such instructions (any such bank or trust company
so designated by the Fund being referred to hereafter as a "Banking
Institution"), and may deposit cash, including foreign currency, of the Fund in
such account or accounts, provided that such account(s) (hereinafter
collectively referred to as "demand deposit bank accounts") shall be in the name
of the Custodian or a nominee of the Custodian for the account of the Fund or
for the account of the Custodian's customers generally and shall be subject only
to the Custodian's
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<PAGE>
draft or order; provided that any such demand deposit bank account shall contain
only assets held by the Custodian as a fiduciary or custodian for the Fund
and/or other customers and that the records of the Custodian shall indicate at
all times the Fund and/or other customers for which such funds are held in such
account and the respective interests therein. Such demand deposit accounts may
be opened with Banking Institutions in the United States and in other countries
and may be denominated in either U. S. Dollars or other currencies as the Fund
may determine. The records for each such account will be maintained by the
Custodian but the deposits in any such account shall not constitute a deposit
liability of the Custodian. All such deposits, including with Subcustodians,
shall be deemed to be portfolio securities of the Fund and accordingly the
responsibility of the Custodian therefor shall be the same as and no greater
than the Custodian's responsibility in respect of other portfolio securities of
the Fund. The authorization by the Fund. to appoint a Subcustodian as such shall
also constitute a proper instruction to open a demand deposit bank account
subject to the provisions of this paragraph with such Subcustodian.
2.13 Interest Bearing Call or Time Deposits - To place interest bearing
fixed term and call deposits with such banks and in such amounts as the Fund may
authorize pursuant to proper instructions. Such deposits may be placed with the
Custodian or with Subcustodians or other Banking Institutions as the Fund may
determine, in the name of the Custodian or a nominee of the
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<PAGE>
Custodian for the account of the Fund or the account of the Custodian's
customers generally and subject only to the Custodian's draft or order; provided
that any such deposit shall be held in an account containing only assets held by
the Custodian as a fiduciary or custodian for the Fund and/or other customers
and that the records of the Custodian shall indicate at all times the Fund
and/or other customers for which such funds are held in such account and the
respective interests therein. Deposits may be denominated in U. S. Dollars or
other currencies and need not be evidenced by the issuance or delivery of a
certificate to the Custodian, provided that the Custodian shall include in its
records with respect to the assets of the Fund appropriate notation as to the
amount and currency of each such deposit, the accepting Banking Institution and
other appropriate details, and shall retain such forms of advice or receipt
evidencing the deposit, if any, as may be forwarded to the Custodian by the
Banking Institution. Funds, other than those accepted on the Custodian's books
as a deposit, but including those placed with Subcustodians, shall be deemed
portfolio securities of the Fund and the responsibilities of the Custodian
therefor shall be the same as those for demand deposit bank accounts placed with
other banks, as described in the second paragraph of Section 2.12 of this
Agreement. The responsibility of the Custodian for funds accepted on the
Custodian's books as a deposit shall be that of a U. S. bank for a similar
deposit.
2.14 Futures Contracts. Upon receipt of proper
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<PAGE>
instructions or upon receipt of instructions given pursuant to any agreement
relating to a futures contract or an option thereon or as otherwise provided in
any such agreement, to (i) receive and retain, to the extent provided to the
Custodian, confirmations or other documents evidencing the purchase or sale of a
futures contract or an option on a futures contract by the Fund; (ii) deposit
and maintain in a segregated account, either physically or by book-entry in a
Securities System or Foreign Depository, for the benefit of any futures
commission merchant, or pay to such futures commission merchant, securities,
cash or other assets designated by the Fund as intitial, maintenance or
variation "margin" deposits intended to secure the Fund's performance of its
obligations under any futures contract purchased or sold or any option on a
futures contract written, purchased or sold by the Fund, in accordance with the
provisions of any agreement relating thereto or the rules of the Commodity
Futures Trading Commission and/or any contract market or any similar
organization on which such contract or option is traded; and (iii) pay, release
and/or transfer securities, cash or other assets into or out of such margin
accounts only in accordance with any such agreement or rules. The Custodian
shall not be responsible for the sufficiency of assets held in any segregated
account established in compliance with applicable margin maintenance
requirements or the performance of the other terms of any agreement relating to
a futures contract or an option thereon.
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<PAGE>
2.15 Foreign Exchange Transactions - Pursuant to proper instructions, to
settle foreign exchange contracts or options to purchase and sell foreign
currencies for spot and future delivery on behalf and for the account of the
Fund with such currency brokers or Banking Institutions, including
Subcustodians, as the Fund may direct pursuant to proper instructions. The
Custodian shall be responsible for the transmission of cash and instructions to
and from the currency broker or Banking Institution with which the contract or
option is made, the safekeeping of all certificates and other documents and
agreements evidencing or relating to such foreign exchange transactions as the
Custodian may receive and the maintenance of proper records as set forth in
Section 5.1. In connection with such transactions, as to which Proper
Instructions have been sent, the Custodian is authorized to make free outgoing
payments of cash in the form of U. S. Dollars or foreign currency without
receiving confirmation of a foreign exchange contract or option or confirmation
that the countervalue currency completing the foreign exchange contract has been
delivered or received or that the option has been delivered or received. The
Fund accepts full responsibility for its use of third-party foreign exchange
dealers and for execution of said foreign exchange contracts and options and
understands that the Fund shall be responsible for any and all costs and
interest charges which may be incurred by the Fund or the Custodian as a result
of the failure or delay of third parties to deliver foreign exchange.
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<PAGE>
Alternatively, such transactions may be undertaken by the Custodian as
principal, if instructed by the Fund.
Foreign exchange contracts and options, other than those executed with the
Custodian as principal, but including those executed with Subcustodians, shall
be deemed to be portfolio securities of the Fund and the responsibility of the
Custodian therefor shall be the same as and no greater than the Custodian's
responsibility in respect of other portfolio securities of the Fund. The
responsibility of the Custodian with respect to foreign exchange contracts and
options executed with the Custodian as principal shall be that of a U. S. bank
with respect to a similar contract or option.
2.16 Stock Loans - Upon receipt of proper instructions, to deliver
securities of the Fund, in connection with loans of securities by the Fund, to
the borrower thereof prior to receipt of the collateral, if any, for such
borrowing, provided that for stock loans secured by cash collateral the
Custodian's instructions to any Securities System holding such securities
require that the Securities System may deliver the securities to the borrower
thereof only upon receipt of the collateral for such borrowing.
2.17 Collections - (i) To collect and receive all income, payments of
principal and other payments with respect to the securities held hereunder, and
in connection therewith to deliver the certificates or other instruments
representing the securities to the issuer thereof or its agent when securities
are called,
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<PAGE>
redeemed, retired or otherwise become payable; provided, that the payment is to
be made in such form and manner and at such time, which may be after delivery by
the Custodian of the instrument representing the security, as is in accordance
with the terms of the instrument representing the security, or such proper
instructions as the Custodian may receive, or governmental regulations, the
rules of Securities Systems, Foreign Depositories or other U.S. or foreign
securities depositories and clearing agencies or, with respect to securities
referred to in clause (iii) of the last sentence of Section 2.4, in accordance
with generally accepted trade practice; (ii) to execute ownership and other
certificates and affidavits for all federal and state tax purposes in connection
with receipt of income, principal or other payments with respect to securities
of the Fund or in connection with transfer of securities; and (iii) pursuant to
proper instructions to take such other actions with respect to collection or
receipt of funds or transfer of securities which involve an investment decision.
2.18 Dividends, Distributions and Redemptions - Upon receipt of proper
instructions from the Fund, or upon receipt of instructions from the Fund's
shareholder servicing agent or agent with comparable duties (the "Shareholder
Servicing Agent") (given by such person or persons and in such manner on behalf
of the Shareholder Servicing Agent as the Fund shall have authorized), the
Custodian shall release funds or securities to the Shareholder Servicing Agent
or otherwise apply funds or
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securities, insofar as available, for the payment of dividends or other
distributions to Fund shareholders. Upon receipt of proper instructions from the
Fund, or upon receipt of instructions from the Shareholder Servicing Agent
(given by such person or persons and in such manner on behalf of the Shareholder
Servicing Agent as the Fund shall have authorized), the Custodian shall release
funds or securities, insofar as available, to the Shareholder Servicing Agent or
as such Agent shall otherwise instruct for payment to Fund shareholders who have
delivered to such Agent a request for repurchase or redemption of their shares
of the Fund.
2.19 Proxies, Notices, Etc. - Promptly to deliver or mail to the Fund all
forms of proxies and all notices of meetings and any other notices or
announcements affecting or relating to securities owned by the Fund that are
received by the Custodian, and upon receipt of proper instructions, to execute
and deliver or cause its nominee to execute and deliver such proxies or other
authorizations as may be required. Neither the Custodian nor its nominee shall
vote upon any of such securities or execute any proxy to vote thereon or give
any consent or take any other action with respect thereto (except as otherwise
herein provided) unless ordered to do so by proper instructions.
2.20 Nondiscretionary Details - Without the necessity of express
authorization from the Fund, (1) to attend to all nondiscretionary details in
connection with the sale, exchange, substitution, purchase, transfer or other
dealings with securities, funds or other property of the Fund held by the
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Custodian except as otherwise directed from time to time by the Directors of
Trustees of the Fund, and (2) to make payments to itself or others for minor
expenses or handling securities or other similar items relating to the
Custodian's duties under this Agreement, provided that all such payments shall
be accounted for to the Fund.
2.21 Bills - Upon receipt of proper instructions, to pay or cause to be
paid, insofar as funds are availabe for the purpose, bills, statements and other
obligations of the Fund (including but not limited to interest charges, taxes,
management fees, compensation to Fund officers and employees, and other
operating expenses of the Fund).
2.22 Deposit of Fund Assets in Securities Systems - The Custodian may
deposit and/or maintain securities owned by the Fund in (i) The Depository Trust
Company, (ii) the Participants Trust Company, (iii) any book-entry system as
provided in Subpart O of Treasury Circular No. 300, 31 CFR 306, Subpart B of 31
CFR Part 350, or the book-entry regulations of federal agencies substantially in
the form of Subpart O, or (iv) any other domestic clearing agency registered
with the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934 which acts as a securities depository and whose use the
Fund has previously approved in writing (each of the foregoing being referred to
in this Agreement as a "Securities System"). Utilization of a Securities System
shall be in accordance with applicable Federal Reserve Board and Securities
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and Exchange Commission rules and regulations, if any, and subject to the
following provisions:
1) The Custodian may deposit and/or maintain Fund securities, either
directly or through one or more Agents appointed by the Custodian (provided that
any such agent shall be qualified to act as a custodian of the Fund pursuant to
the Investment Company Act of 1940 and the rules and regulations thereunder), in
a Securities System provided that such securities are represented in an account
("Account") of the Custodian or such Agent in the Securities System which shall
not include any assets of the Custodian or Agent other than assets held as a
fiduciary, custodian, or otherwise for customers;
2) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall identify by book-entry those
securities belonging to the Fund;
3) The Custodian shall pay for securities purchased for the account of the
Fund upon (i) receipt of advice from the 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
the Fund. The Custodian shall transfer securities sold for the account of the
Fund upon (i) receipt of advice from the 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 the Fund. Copies of all advices from the
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Securities System of transfers of securities for the account of the Fund shall
identify the Fund, be maintained for the Fund by the Custodian or an Agent as
referred to above, and be provided to the Fund at its request. The Custodian
shall furnish the Fund confirmation of each transfer to or from the account of
the Fund in the form of a written advice or notice and shall furnish to the Fund
copies of daily transaction sheets reflecting each day's transactions in the
Securities System for the account of the Fund on the next business day;
4) The Custodian shall provide the Fund with any report obtained by the
Custodian or any Agent as referred to above on the Securities System's
accounting system, internal accounting control and procedures for safeguarding
securities deposited in the Securities System; and the Custodian and such Agents
shall send to the Fund such reports on their own systems of internal accounting
control as the Fund may reasonably request from time to time.
5) At the written request of the Fund, the Custodian will terminate the use
of any such Securities System on behalf of the Fund as promptly as practicable.
2.23 Other Transfers - To deliver securities, funds and other property of
the Fund to a Subcustodian or another custodian as necessary to effect
transactions authorized by proper instructions and upon receipt of proper
instructions, to deliver securities, funds and other property of the Fund to a
Subcustodian or another custodian of the Fund; and, upon receipt
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of proper instructions, to make such other disposition of securities, funds or
other property of the Fund in a manner other than or for purposes other than as
enumerated elsewhere in this Agreement, provided that the instructions relating
to such disposition shall state the amount of securities to be delivered and the
name of the person or persons to whom delivery is to be made.
2.24 Investment Limitations - In performing its duties generally, and more
particularly in connection with the purchase, sale and exchange of securities
made by or for the Fund, the Custodian may assume unless and until notified in
writing to the contrary that proper instructions received by it are not in
conflict with or in any way contrary to any provisions of the Fund's Declaration
of Trust or Certificate of Incorporation or By-Laws (or comparable documents) or
votes or proceedings of the shareholders or Trustees or Directors of the Fund.
The Custodian shall in no event be liable to the Fund and shall be indemnified
by the Fund for any violation which occurs in the course of carrying out
instructions given by the Fund of any investment limitations to which the Fund
is subject or other limitations with respect to the Fund's powers to make
expenditures, encumber securities, borrow or take similar actions affecting the
Fund.
2.25 Custodian Advances. - In the event that the Custodian is directed by
proper instructions to make any payment or transfer of funds on behalf of the
Fund for which there would be, at the close of business on the date of such
payment or
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transfer, insufficient funds held by the Custodian on behalf of the Fund, the
Custodian may, in its discretion without further proper instructions, provide an
advance ("Advance") to the Fund in an amount sufficient to allow the completion
of the transaction by reason of which such payment or transfer of funds is to be
made. In addition, in the event the Custodian is directed by proper instructions
to make any payment or transfer of funds on behalf of the Fund as to which it is
subsequently determined that the Fund has overdrawn its cash account with the
Custodian as of the close of business on the date of such payment or transfer,
said overdraft shall constitute an Advance. Any Advance shall be payable on
demand by Custodian, unless otherwise agreed by the Fund and the Custodian, and
shall accrue interest from the date of the Advance to the date of payment by the
Fund at a rate agreed upon from time to time by the Custodian and the Fund. It
is understood that any transaction in respect of which the Custodian shall have
made an Advance, including but not limited to a foreign exchange contract or
transaction in respect of which the Custodian is not acting as a principal, is
for the account of and at the risk of the Fund, and not, by reason of such
Advance, deemed to be a transaction undertaken by the Custodian for its own
account and risk. The Custodian and the Fund acknowledge that the purpose of
Advances is to finance temporarily the purchase or sale of securities for prompt
delivery in accordance with the settlement terms of such transactions or to meet
emergency expenses not reasonably foreseeable by the Fund.
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2.26 Restricted Securities. - In the case of a "restricted security", the
Fund shall have the responsibility to provide to or obtain for the Custodian,
the issuer of the security or other appropriate third party any necessary
documentation, including without limitation, legal opinions or consents, and to
take any necessary actions required in connection with the registration of
restricted securities in the manner provided in Section 2.3 upon acquisition
thereof by the Fund or required in connection with any sale or other disposition
thereof by the Fund. Upon acquisition and until so registered, the Custodian
shall have no duty to service such restricted securities, including without
limitation, the receipt and collection of cash and stock dividends, rights and
other items of like nature, nor shall the Custodian have responsibility for the
inability of the Fund to exercise in a timely manner any right in respect of any
restricted security or to take any action in a timely manner in respect of any
other type of corporate action relating to a restricted security. Similarly, the
Custodian shall not have responsibility for the inability of the Fund to sell or
otherwise transfer in a timely manner any restricted security in the absence of
any such documentation or action to be provided, obtained or taken by the Fund.
At such time as the Custodian shall receive any restricted security, regardless
of when it shall be registered as aforesaid, the Fund shall also deliver to the
Custodian a term sheet summarizing those rights, restrictions or other matters
of which the Custodian should have
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knowledge, such as exercise periods, expiration dates and payment dates, in
order to assist the Custodian in servicing such securities. As used herein, the
term "restricted security" shall mean a security which is subject to
restrictions on transfer, whether by reason of contractual restrictions or
federal, state or foreign securities or similar laws, or a security which has
special rights or contractual features which do not apply to publicly-traded
shares of, or comparable interests representing, such security.
2.27 Proper Instructions - Proper instructions shall mean a tested
telex from the Fund or a written request, direction, instruction or
certification signed or initialled on behalf of the Fund by one or more person
or persons as the Board of Trustees or Directors of the Fund shall have from
time to time authorized, provided, however, that no such instructions directing
the delivery of securities or the payment of funds to an authorized signatory of
the Fund shall be signed by such person. Those persons authorized to give proper
instructions may be identified by the Board of Trustees or Directors by name,
title or position and will include at least one officer empowered by the Board
to name other individuals who are authorized to give proper instructions on
behalf of the Fund. Telephonic or other oral instructions or instructions given
by facsimile transmission may be given by any one of the above persons and will
be considered proper instructions if the Custodian reasonably believes them to
have been given by a person authorized to give
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<PAGE>
such instructions with respect to the transaction involved. Oral instructions
will be confirmed by tested telex or in writing in the manner set forth above
but the lack of such confirmation shall in no way affect any action taken by the
Custodian in reliance upon such oral instructions. The Fund authorizes the
Custodian to tape record any and all telephonic or other oral instructions given
to the Custodian by or on behalf of the Fund (including any of its officers,
Directors, Trustees, employees or agents or any investment manager or adviser or
person or entity with similar responsibilities which is authorized to give
proper instructions on behalf of the Fund to the Custodian). Proper instructions
may relate to specific transactions or to types or classes of transactions, and
may be in the form of standing instructions.
Proper instructions may include communications effected directly between
electro-mechanical or electronic devices or systems, in addition to tested
telex, provided that the Fund and the Custodian agree to the use of such device
or system.
2.28 Segregated Account - The Custodian shall upon receipt of proper
instructions establish and maintain on its books a segregated account or
accounts for and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities of the Fund, including securities maintained
by the Custodian pursuant to Section 2.22 hereof, (i) in accordance with the
provisions of any agreement among the Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of
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1934 and a member of the National Association of Securities Dealers, Inc. (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
Commision or any registered contract market), or any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Fund, (ii) for purposes of segregating cash or securities in
connection with options purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the Fund, (iii) for
the purposes of compliance by the Fund with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release or releases
of the Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies, and (iv) as mutually
agreed from time to time between the Fund and the Custodian.
3. Powers and Duties of the Custodian with Respect to the Appointment of
Subcustodians: The Funds hereby authorizes and instructs the Custodian to hold
securities, funds and other property of the Fund which are maintained outside
the United States at subcustodians appointed pursuant to the provisions of this
Section 3 (a "Subcustodian"). The Fund shall approve in writing (1) the
appointment of each Subcustodian and the subcustodian agreement to be entered
into between such Subcustodian and the Custodian, and (2) if the Subcustodian is
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<PAGE>
organized under the laws of a country other than the United States, the country
or countries in which the Subcustodian is authorized to hold securities, cash
and other property of the Fund. The Fund hereby further authorizes and instructs
the Custodian and any Subcustodian to utilize such securities depositories
located outside the United States which are approved in writing by the Fund to
hold securities, cash and other property of the Fund (a "Foreign Depository").
Upon such approval by the Fund, the Custodian is authorized on behalf of the
Fund to notify each Subcustodian of its appointment as such.
Those Subcustodians, and the countries where and the Foreign Depositories
through which they or the Custodian may hold securities, cash and other property
of the Fund which the Fund has approved to date are set forth on Appendix A
hereto. Such Appendix shall be amended from time to time as Subcustodians,
and/or countries and/or Foreign Depositories are changed, added or deleted. The
Fund shall be responsible for informing the Custodian sufficiently in advance of
a proposed investment which is to be held in a country not listed on Appendix A,
in order that there shall be sufficient time for the Fund to give the approval
required by the preceding paragraph and for the Custodian to put the appropriate
arrangements in place with such Subcustodian, including negotiation of a
subcustodian agreement and submission of such subcustodian agreement to the Fund
for approval.
If the Fund shall have invested in a security to be held in
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<PAGE>
a country before the foregoing procedures have been completed, such security
shall be held by such agent as the Custodian may appoint. In any event, the
Custodian shall be liable to the Fund for the actions of such agent if and only
to the extent the Custodian shall have recovered from such agent for any damages
caused the Fund by such agent. At the request of the Fund, Custodian agrees to
remove any securities held on behalf of the Fund by such agent, if practical, to
an approved Subcustodian. Under such circumstances the Custodian will collect
income and respond to corporate actions on a best efforts basis.
With respect to securities and funds held by a Subcustodian, either
directly or indirectly (including by a Foreign Depository or foreign clearing
agency) or by a Foreign Depository or foreign clearing agency utilized by the
Custodian, notwithstanding any provision of this Agreement to the contrary,
payment for securities purchased and delivery of securities sold may be made
prior to receipt of the securities or payment, respectively, and securities or
payment may be received in a form, in accordance with governmental regulations,
rules of Foreign Depositories and foreign clearing agencies, or generally
accepted trade practice in the applicable local market.
With respect to the securities and funds held by a Subcustodian, either
directly or indirectly (including by a Foreign Depository or a foreign clearing
agency), including demand and interest bearing deposits, currencies or other
deposits and foreign exchange contracts as referred to in
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<PAGE>
Section 2.12, 2.13, 2.14 and 2.15, the Custodian shall be liable to the Fund if
and only to the extent that such Subcustodian is liable to the Custodian and the
Custodian recovers under the applicable subcustodian agreement. The Custodian
shall nevertheless be liable to the Fund for its own negligence in transmitting
to any such Subcustodian any instructions received by it from the Fund and for
its own negligence in connection with the delivery of any securities or funds
held by it to any such Subcustodian.
In the event that any Subcustodian appointed pursuant to the provisions of
this Section 3 fails to perform any of its obligations under the terms and
conditions of the applicable subcustodian agreement, the Custodian shall use its
best efforts to cause such Subcustodian to perform such obligations. In the
event that the Custodian is unable to cause such Subcustodian to perform fully
its obligations thereunder, the Custodian shall forthwith upon the Fund's
request terminate such Subcustodian in accordance with the termination
provisions under the applicable subcustodian agreement and, if necessary or
desirable, appoint another subcustodian in accordance with the provisions of
this Section 3. At the election of the Fund, it shall have the right to enforce,
to the extent permitted by the subcustodian agreement and applicable law, the
Custodian's rights against any such Subcustodian for loss or damage caused the
Fund by such Subcustodian.
The Custodian will not amend any subcustodian agreement or
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<PAGE>
agree to change or permit any changes thereunder except upon the prior written
approval of the Fund.
The Custodian may, at any time in its discretion upon notification to the
Fund, terminate any Subcustodian of the Fund in accordance with the termination
provisions under the applicable Subcustodian Agreement, and at the written
request of the Fund, the Custodian will terminate any Subcustodian in accordance
with the termination provisions under the applicable Subcustodian Agreement.
If necessary or desirable, the Custodian may appoint another subcustodian
to replace a Subcustodian terminated pursuant to the foregoing provisions of
this Section 3, such appointment to be made upon approval of the successor
subcustodian by the Fund's Board of Directors or Trustees in accordance with the
provisions of this Section 3.
In the event the Custodian receives a claim from a Subcustodian under the
indemnification provisions of any subcustodian agreement, the Custodian shall
promptly give written notice to the Fund of such claim. No more than thirty days
after written notice to the Fund of the Custodian's intention to make such
payment, the Fund will reimburse the Custodian the amount of such payment except
in respect of any negligence or misconduct of the Custodian.
4. Assistance by the Custodian as to Certain Matters: The Custodian may
assist generally in the preparation of reports to Fund shareholders and others,
audits of accounts, and other ministerial matters of like nature.
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<PAGE>
5. Powers and Duties of the Custodian with Respect to its Role as
Recordkeeping Agent: The Custodian shall have and perform the following duties
with respect to recordkeeping:
5.1 Records - To create, maintain and retain such records relating to its
activities and obligations under this Agreement as are required under the
Investment Company Act of 1940 and the rules and regulations thereunder
(including Section 31 thereof and Rules 31a-1 and 31a-2 thereunder) and under
applicable Federal and State tax laws. All such records will be the property of
the Fund and in the event of termination of this Agreement shall be delivered to
the successor custodian.
5.2 Accounts - To keep books of account and render statements, including
interim monthly and complete quarterly financial statements, or copies thereof,
from time to time as reasonably requested by proper instructions.
5.3 Access to Records - The books and records maintained by the Custodian
pursuant to Sections 5.1 and 5.2 shall at all times during the Custodian's
regular business hours be open to inspection and audit by officers of, attorneys
for and auditors employed by the Fund and by employees and agents of the
Securities and Exchange Commission, provided that all such individuals shall
observe all security requirements of the Custodian applicable to its own
employees having access to similar records within the Custodian and such
regulations as may be reasonably imposed by the Custodian.
6. Standard of Care and Related Matters:
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<PAGE>
6.1 Liability of the Custodian with Respect to Proper Instructions;
Evidence of Authority, Etc. The Custodian shall not be liable for any action
taken or omitted in reliance upon proper instructions believed by it to be
genuine or upon any other written notice, request, direction, instruction,
certificate or other instrument believed by it to be genuine and signed by the
proper party or parties.
The Secretary or Assistant Secretary of the Fund shall certify to the
Custodian the names, signatures and scope of authority of all persons authorized
to give proper instructions or any other such notice, request, direction,
instruction, certificate or instrument on behalf of the Fund, the names and
signatures of the officers of the Fund, the name and address of the Shareholder
Servicing Agent, and any resolutions, votes, instructions or directions of the
Fund's Board of Directors or Trustees or shareholders. Such certificate may be
accepted and relied upon by the Custodian as conclusive evidence of the facts
set forth therein and may be considered in full force and effect until receipt
of a similar certificate to the contrary.
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 Agreement.
The Custodian shall be entitled to receive and act upon advice of (i)
counsel regularly retained by the Custodian in
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<PAGE>
respect of Custodian matters, or (ii) at the expense of the Fund, and upon the
Fund's approval, (x) counsel for the Fund, or (y) such other counsel as the Fund
and the Custodian may agree upon, with respect to all matters, and the Custodian
shall be without liability for any action reasonably taken or omitted pursuant
to such advice.
6.2 Liability of the Custodian with Respect to Use of Securities Systems
and Foreign Depositories - With respect to the portfolio securities, cash and
other property of the Fund held by a Securities System or by a Foreign
Depository utilized by the Custodian or any Subcustodian, the Custodian shall be
liable to the Fund only for any loss or damage to the Fund resulting from use of
the Securities System or Foreign Depository if caused by any negligence,
misfeasance or misconduct of the Custodian or any of its Agents (as said term is
defined in Section 6.6) or of any of its or its Agents' employees or from any
failure of the Custodian or any such Agent to enforce effectively such rights as
it may have against the Securities System or Foreign Depository. At the election
of the Fund, it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claim against the Securities System, Foreign
Depository or any other person which the Custodian may have as a consequence of
any such loss or damage to the Fund if and to the extent that the Fund has not
been made whole for any such loss or damage.
6.3 Standard of Care; Liability; Indemnification - The Custodian shall be
held only to the exercise of reasonable care
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<PAGE>
and diligence in carrying out the provisions of this Agreement, provided that
the Custodian shall not thereby be required to take any action which is in
contravention of any applicable law, rule or regulation or any order or judgment
of any court of competent jurisdiction.
The Fund agrees to indemnify and hold harmless the Custodian and its
nominees from all claims and liabilities (including counsel fees) incurred or
assessed against it or its nominees in connection with the performance of this
Agreement, except such as may arise from its or its nominee's breach of the
relevant standard of conduct set forth in this Agreement. Without limiting the
foregoing indemnification obligation of the Fund, the Fund agrees to indemnify
the Custodian and any nominee in whose name portfolio securities or other
property of the Fund is registered against any liability the Custodian or such
nominee may incur by reason of taxes assessed to the Custodian or such nominee
or other costs, liability or expense incurred by the Custodian or such nominee
resulting directly or indirectly from the fact that portfolio securities or
other property of the Fund is registered in the name of the Custodian or such
nominee.
In no event shall the Custodian incur liability under this Agreement if the
Custodian or any Subcustodian, Securities System, Foreign Depository, Banking
Institution or any agent or entity utilized by any of them is prevented,
forbidden or delayed from performing, or omits to perform, any act or thing
which this Agreement provides shall be performed or omitted to be performed,
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<PAGE>
by reason of (i) any Sovereign Risk or (ii) any provision of any present or
future law or regulation or order of the United States of America or any state
thereof, or of any foreign country or political subdivision thereof, or of any
securities depository or clearing agency which operates a central system for
handling of securities or equivalent book-entries in a country or which operates
a transnational system for the central handling of securities or equivalent
book-entries, or (iii) any provision of any order or judgment of any court of
competent jurisdiction. A "Sovereign Risk" shall mean nationalization,
expropriation, devaluation, revaluation, confiscation, seizure, cancellation,
destruction or similar action by any governmental authority, de facto or de
jure; or enactment, promulgation, imposition or enforcement by any such
governmental authority of currency restrictions, exchange controls, taxes,
levies or other charges affecting the Fund's property; or acts of war,
terrorism, insurrection or revolution; or any other act or event beyond the
Custodian's control.
6.4 Reimbursement of Disbursements, Etc. - The Custodian shall be entitled
to receive reimbursement from the Fund on demand, in the manner provided in
Section 7, for its cash disbursements, expenses and charges (including the fees
and expenses of any Subcustodian or any Agent) in connection with this
Agreement, but excluding salaries and usual overhead expenses.
6.5 Security for Obligations to Custodian - If the
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<PAGE>
Custodian or any nominee thereof shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Agreement (collectively a "Liability"), except such as may arise from
its or such nominee's breach of the relevant standard of conduct set forth in
this Agreement, or if the Custodian shall make any Advance to the Fund, then in
such event any property at any time held for the account of the Fund by the
Custodian or a Subcustodian shall be security for such Liability or for such
Advance and the interest thereon, and if the Fund shall fail to pay such Advance
or interest when due or shall fail to reimburse or indemnify the Custodian
promptly in respect of a Liability, the Custodian shall be entitled to utilize
available cash and to dispose of the Fund's property, including securities, to
the extent necessary to obtain repayment, reimbursement or indemnification.
6.6 Appointment of Agents - The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust company
as its agent (an "Agent") to carry out such of the provisions of this Agreement
as the Custodian may from time to time direct, provided, however, that the
appointment of such Agent (other than an Agent appointed pursuant to the third
paragraph of Section 3) shall not relieve the Custodian of any of its
responsibilities under this Agreement.
6.7 Powers of Attorney - Upon request, the Fund shall deliver to the
Custodian such proxies, powers of attorney or
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<PAGE>
other instruments as may be reasonable and necessary or desirable in connection
with the performance by the Custodian or any Subcustodian of their respective
obligations under this Agreement or any applicable subcustodian agreement.
7. Compensation of the Custodian: The Fund shall pay the Custodian a
custody fee based on such fee schedule as may from time to time be agreed upon
in writing by the Custodian and the Fund. Such fee, together with all amounts
for which the Custodian is to be reimbursed in accordance with Section 6.4,
shall be billed to the Fund and be paid in cash to the Custodian.
8. Termination; Successor Custodian: This Agreement shall continue in full
force and effect until 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 seventy five (75) days after the date of such
delivery or mailing. In the event of termination the Custodian shall be entitled
to receive prior to delivery of the securities, funds and other property held by
it all accrued fees and unreimbursed expenses the payment of which is
contemplated by Sections 6.4 and 7, and all Advances and Liabilities, upon
receipt by the Fund of a statement setting forth such fees, expenses, Advances
and Liabilities.
In the event of the appointment of a successor custodian, it is agreed that
the funds and securities owned by the Fund and held by the Custodian or any
Subcustodian shall be delivered to the successor custodian, and the Custodian
agrees to cooperate
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<PAGE>
with the Fund in execution of documents and performance of other actions
necessary or desirable in order to substitute the successor custodian for the
Custodian under this Agreement.
9. Amendment: This Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof. No
provision of this Agreement may be amended or terminated except by a statement
in writing signed by the party against which enforcement of the amendment or
termination is sought.
In connection with the operation of this Agreement, the Custodian and the
Fund may agree in writing from time to time on such provisions interpretative of
or in addition to the provisions of this Agreement as may in their joint opinion
be consistent with the general tenor of this Agreement. No interpretative or
additional provisions made as provided in the preceding sentence shall be deemed
to be an amendment of this Agreement.
The section headings in this Agreement are for the convenience of the
parties and in no way alter, amend, limit or restrict the contractual
obligations of the parties set forth in this Agreement.
10. Governing Law: This Agreement is executed and delivered in The
Commonwealth of Massachusetts and shall be governed by and construed according
to the laws of said Commonwealth.
11. Notices: Notices and other writings delivered or
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<PAGE>
mailed postage prepaid to the Fund addressed to the Fund at__________________
_____________________________________________________________________________
______________________________ or to such other address as the Fund may have
designated to the Custodian in writing, or to the Custodian at 40 Water Street,
Boston, Massachusetts 02109, Attention: Manager, Securities Department, or to
such other address as the Custodian may have designated to the Fund in writing,
shall be deemed to have been properly delivered or given hereunder to the
respective addressee.
12. Binding Effect: This Agreement shall be binding on and shall inure to
the benefit of the Fund and the Custodian and their respective successors and
assigns, provided that neither party hereto may assign this Agreement or any of
its rights or obligations hereunder without the prior written consent of the
other party.
13. Counterparts: This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered by
each of the parties.
14. Miscellaneous: 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 Trust personally, but bind only
the Trust property as provided in the Declaration of Trust on file with the
Secretary of the Commonwealth of Massachusetts.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and behalf on the day and year first above written.
PHOENIX MULTI-PORTFOLIO FUND BROWN BROTHERS HARRIMAN & CO.
By /s/ Philip R. McLoughlin per pro /s/ R. A. Hill
----------------------------- -------------------------
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<PAGE>
Schedule A
PHOENIX MULTI-PORTFOLIO FUND
International Portfolio
I, Patricia O. McLaughlin, Assistant Secretary of the Fund, hereby certify
that the following votes were duly adopted by action of the Board of Trustees of
the Fund, effective August 24, 1994, and that said votes have not been rescinded
or modified and are in effect on the date hereof.
VOTED: That it is hereby determined that it is consistent with the
best interests of the Funds and its shareholders to maintain
assets of the Funds in Argentina, Australia, Austria, Bangladesh,
Belgium, Brazil, Canada, Chile, China (Shenzhen and Shanghai),
Columbia, Czech Republic, Denmark, Finland, France, Germany,
Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Israel,
Italy, Japan, Korea, Malaysia, Mexico, Netherlands, New Zealand,
Norway, Pakistan, Peru, Philippines, Poland, Portugal, Singapore,
South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan,
Thailand, Turkey, the United Kingdom, Uruguay, and Venezuela,
provided that the assets are maintained in the custody of a
foreign banking institution meeting the requirements of Rule 17f-
5 under the Investment Company Act of 1940 and any exemptions
granted thereunder; and
VOTED: That it is hereby determined that it is consistent with the
best interests of the Funds and its shareholders to maintain
assets of the Funds in foreign depositories that operate the
central system for handling securities or equivalent book-entries
in Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile,
China (Shenzhen and Shanghai), Czech Republic, Denmark, Finland,
France, Germany, Greece, Hong Kong, Ireland, Israel, Italy,
Japan, Korea, Malaysia, Mexico, Netherlands, New Zealand, Norway,
Peru, Poland, Portugal, Singapore, South Africa, Spain, Sri
Lanka, Sweden, Switzerland, Taiwan, Thailand, Turkey, and the
United Kingdom and the use of such foreign despositories for the
deposit of foreign securities owned or hereafter acquired by the
Funds are hereby approved, provided that the foreign securities
are maintained in the custody of the foreign depositories acting
as subcustodians in conformity with the requirements of Rule
17f-5 under the Investment Company Act of 1940; and further
VOTED: That it is hereby determined that it is consistent with the
best interests of the Funds and its shareholders to maintain
assets of the Funds in the Euro-Clear System and Cedel S.A., and
the use of the Euro-Clear System and Cedel S.A. for the deposit
of foreign securities owned or hereafter acquired by the Funds
are hereby approved, provided that the foreign securities are
maintained in the custody of the Euro-Clear
<PAGE>
System or Cedel S.A. acting as subcustodian in conformity with
requirements of Rule 17f-5 under the Investment Company Act of
1940.
/s/ Patricia O. McLaughlin 10/25/94
- ------------------------------ -----------------
Patricia O. McLaughlin, Date
Assistant Secretary
Exhibit 9.1
Financial Agent Agreement
<PAGE>
FINANCIAL AGENT AGREEMENT
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, CT 06083-2200
May 25, 1994
Gentlemen:
1. Each of the undersigned mutual funds (hereinafter collectively and
singularly referred to as the "Fund") hereby appoints you, subject to your
acceptance, as Financial Agent subject to the terms and conditions set forth
below, effective January 1, 1994. You shall keep the books of each Fund and
compute the daily net asset value of shares of each Fund in accordance with
instructions received from time to time from the Board of Directors/Trustees of
each Fund; which instructions shall be certified to you by each Fund's
Secretary. You shall report such net asset value so determined to each Fund and
shall perform such other services as may be requested from time to time by each
or any Fund as are reasonably incidental to your duties as Financial Agent.
2. You 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 you as Financial Agent. Such books and
records are the property of each respective Fund and shall be surrendered
promptly to the appropriate Fund upon its request. Furthermore, such books and
records shall be open to inspection and audit at reasonable times by officers
and auditors of each respective Fund.
3. As compensation for your services hereunder during any fiscal year of
each respective Fund, you shall receive, within five days after the end of each
fiscal quarter of each respective Fund, a fee based on the average of the
aggregate daily net asset values of each respective Fund at the annual rate per
each $1 million of $300.
4. You shall not be liable for anything done or omitted by you in the
exercise of due care in discharging your duties as Financial Agent and shall be
answerable and accountable only for your own acts and omissions and not for
those of any agent employed by you nor for those of any bank, trust company,
broker, depository, correspondent or other person. You shall be protected in
acting upon any instruction, notice, request, consent, certificate, resolution,
or other instrument or paper believed by you to be genuine, and to have been
properly executed, and shall, unless otherwise specifically provided herein, be
entitled to receive as conclusive proof of any fact or matter required to be
ascertained by you hereunder a certificate signed by the Secretary of each
respective Fund. You shall be entitled, with respect to questions of law
relating to your duties hereunder, to advice of counsel (which may be counsel
for any Fund) and, with respect to anything done or omitted by you in good faith
hereunder in conformity with the advice of or based upon an opinion of counsel,
to be held harmless by each respective Fund from all claims of loss or damage.
Nothing herein shall protect you against any liability to any Fund or to its
respective shareholders to which you would otherwise be subject by reason of
your wilful misfeasance, bad faith, gross negligence or reckless disregard of
your duties hereunder. Except as provided in this Paragraph 4, you shall not be
entitled to any indemnification by any Fund.
5. Subject to prior approval of the Board of Directors/Trustees of each
Fund, you 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 among
each respective Fund, you 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
Directors/Trustees of each Fund or by a vote of a majority of the outstanding
voting securities of each respective Fund, and (b) the terms and any renewal of
such Agreement
<PAGE>
have been approved by the vote of a majority of the directors/trustees of each
respective Fund who are not parties to the Agreement or interested persons, as
that term is defined in the Investment Company Act of 1940, of any such party,
cast in person at a meeting called for the purpose of voting on such approval. A
"majority of the outstanding voting securities of each respective Fund" shall
have, for all purposes of this Agreement, the meaning provided therefor in the
Investment Company Act.
7. Either you or any Fund may terminate your appointment as Financial Agent
hereunder on written notice to the other, whereupon you will be relieved of the
duties described herein with respect to such Fund. Any Fund may terminate this
Agreement without in any manner affecting the continued existence of the same
with respect to any and all other Fund(s) not terminating the Agreement. This
Agreement shall immediately terminate in the event of its assignment, as that
term is defined in the Investment Company Act of 1940.
8. This Agreement shall be construed and the rights and obligations of the
parties hereunder enforced in accordance with the laws of the State of
Connecticut.
If this letter correctly sets forth your understanding of the powers to be
granted to you and the restrictions to be imposed upon you as Financial Agent,
kindly confirm the same by signing in the appropriate space provided below.
Very truly yours,
Phoenix Asset Reserve
Phoenix California Tax Exempt Bonds, Inc.
Phoenix Equity Opportunities Fund
Phoenix Income and Growth Fund
Phoenix Multi-Portfolio Fund
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Series Fund
Phoenix Total Return Fund, Inc.
Phoenix Worldwide Opportunities Fund
By: /s/ Philip R. McLoughlin
-----------------------------------
President
Accepted as of date first above written:
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Martin J. Gavin
----------------------------
Executive Vice President
Exhibit 9.1a
Financial Agent Agreement
<PAGE>
FINANCIAL AGENT AGREEMENT
THIS AGREEMENT made and concluded as of this 11th day of December, 1996 by
and between Phoenix Equity Planning Corporation, a Connecticut corporation
having a place of business located at 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Financial Agent") and each of the undersigned mutual funds
(hereinafter collectively and singularly referred to as the "Trust").
WITNESSETH THAT:
1. Financial Agent shall keep the books of the Trust and compute the daily
net asset value of shares of the Trust in accordance with instructions received
from time to time from the Board of Trustees of the Trust; which instructions
shall be certified to Financial Agent by the Trust's Secretary. Financial Agent
shall report such net asset value so determined to the Trust and shall perform
such other services as may be requested from time to time by the Trust as are
reasonably incidental to Financial Agent's duties hereunder.
2. Financial Agent shall be obligated to maintain, for the periods and in
the places required by Rule 31a-2 under the Investment Company Act of 1940, as
amended, those books and records maintained by Financial Agent. Such books and
records are the property of the Trust and shall be surrendered promptly to the
Trust upon its request. Furthermore, such books and records shall be open to
inspection and audit at reasonable times by officers and auditors of the Trust.
3. As compensation for its services hereunder during any fiscal year of the
Trust, Financial Agent shall receive, within eight days after the end of each
month, a fee as specified in Schedule A.
4. Financial Agent shall not be liable for anything done or omitted by it
in the exercise of due care in discharging its duties specifically described
hereunder and shall be answerable and accountable only for its own acts and
omissions and not for those of any agent employed by it nor for those of any
bank, trust company, broker, depository, correspondent or other person.
Financial Agent shall be protected in acting upon any instruction, notice,
request, consent, certificate, resolution, or other instrument or paper believed
by Financial Agent to be genuine, and to have been properly executed, and shall,
unless otherwise specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be ascertained by Financial
Agent hereunder a certificate signed by the Secretary of the Trust. Financial
Agent shall be entitled, with respect to questions of law relating to its duties
hereunder, to advice of counsel (which may be counsel for the Trust) and, with
respect to anything done or omitted by it in good faith hereunder in conformity
with the advice of or based upon an opinion of counsel, to be held harmless by
the Trust from all claims of loss or damage. Nothing herein shall protect
Financial Agent against any liability to the Trust or to its respective
shareholders to which Financial Agent would otherwise be subject by reason of
its willful misfeasance, bad faith, gross negligence or reckless disregard of
its duties hereunder. Except as provided in this paragraph, Financial Agent
shall not be entitled to any indemnification by the Trust.
<PAGE>
5. Subject to prior approval of the Board of Trustees of the Trust,
Financial Agent may appoint one or more sub-financial agents to perform any of
the functions and services which are to be provided under the terms of this
Agreement upon such terms and conditions as may be mutually agreed upon by the
Trust, Financial Agent and such sub-financial agent.
6. This Agreement shall continue in effect only so long as (a) such
continuance is specifically approved at least annually by the Board of Trustees
of the Trust or by a vote of a majority of the outstanding voting securities of
the Trust, and (b) the terms and any renewal of such Agreement have been
approved by the vote of a majority of the trustees of the Trust who are not
parties to this Agreement or interested persons, as that term is defined in the
Investment Company Act of 1940, as amended, of any such party, cast in person at
a meeting called for the purpose of voting on such approval. A "majority of the
outstanding voting securities of the Trust" shall have, for all purposes of this
Agreement, the meaning provided therefor in said Investment Company Act.
7. Either party may terminate the within Agreement by tendering written
notice to the other, whereupon Financial Agent will be relieved of the duties
described herein. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in said Investment Company Act.
8. This Agreement shall be construed and the rights and obligations of the
parties hereunder enforced in accordance with the laws of the Commonwealth of
Massachusetts.
<PAGE>
9. This Agreement shall become effective on January 1, 1997.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first written above.
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
By: /s/ Philip R. McLoughlin
------------------------------
Philip R. McLoughlin
President
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ David R. Pepin
------------------------------
David R. Pepin
Executive Vice President
<PAGE>
SCHEDULE A
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS FINANCIAL AGENT
Annual Financial Agent Fees shall be based on the following formula:
(1) An incremental schedule applies as follows:
Up to $100 million: 5 basis points on average daily net assets
$100 million to $300 million: 4 basis points on average daily net assets
$300 million thru $500 million: 3 basis points on average daily net assets
Greater than $500 million: 1.5 basis points on average daily net assets
A minimum fee will apply as follows:
Money Market $35,000
Equity $50,000
Balanced $60,000
Fixed Income $70,000
International $70,000
REIT $70,000
(2) An additional charge of $12,000 applies for each additional class of
shares above one, over and above the minimum asset-based fee previously noted.
The following tables indicates the classification and effective date for
each of the applicable fund/series/portfolio:
Classification Series Name
-------------- -----------
Money Market Phoenix Money Market Fund Series
Equity Phoenix Aggressive Growth Fund Series
Phoenix Convertible Fund Series
Phoenix Endowment Equity Portfolio
Phoenix Equity Opportunities Fund
Phoenix Growth Fund Series
Phoenix Micro Cap Fund
Phoenix Mid Cap Portfolio
Phoenix Small Cap Fund
Phoenix Strategic Theme Fund
<PAGE>
Classification Series Name
-------------- -----------
Balanced Phoenix Balanced Fund Series
Phoenix Income and Growth Fund
Phoenix Strategic Allocation Fund, Inc.
Fixed Income Phoenix California Tax Exempt Bonds, Inc.
Phoenix Diversified Income Portfolio
Phoenix Emerging Markets Bond Portfolio
Phoenix High Yield Fund Series
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Tax-Exempt Bond Portfolio
Phoenix U.S. Government Securities Fund Series
International Phoenix International Portfolio
Phoenix Worldwide Opportunities Fund
REIT Phoenix Real Estate Securities Portfolio
Exhibit 9.2
Transfer Agency Agreement
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
between
PHOENIX FUNDS
and
PHOENIX EQUITY PLANNING CORPORATION
<PAGE>
Table of Contents
Page
Article 1 - Terms of Appointment; Duties of Transfer Agent...................1
Article 2 - Fees and Expenses................................................3
Article 3 - Representations and Warranties of Transfer Agent.................3
Article 4 - Representations and Warranties of the Phoenix Funds..............3
Article 5 - Data Access and Proprietary Information..........................4
Article 6 - Indemnification..................................................5
Article 7 - Standard of Care.................................................6
Article 8 - Covenants........................................................6
Article 9 - Termination......................................................7
Article 10 - Assignment.......................................................7
Article 11 - Amendment........................................................7
Article 12 - Connecticut Law to Apply.........................................7
Article 13 - Force Majeure....................................................7
Article 14 - Consequential Damages............................................8
Article 15 - Merger of Agreement..............................................8
Article 16 - Limitations of Liability of the Trustees
and Shareholders.................................................8
Article 17 - Counterparts.....................................................8
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the 1st day of June, 1994, by and between the
undersigned entities (hereinafter singularly referred to as a "Fund" and
collectively referred to as the "Phoenix Funds"), and PHOENIX EQUITY PLANNING
CORPORATION (hereinafter referred to as the "Transfer Agent").
WITNESSETH:
WHEREAS, the Phoenix Funds desire to appoint Transfer Agent as their
transfer agent, dividend disbursing agent and agent in connection with certain
other activities, and Transfer Agent desires to accept such appointment; and
WHEREAS, the parties wish to set forth herein their mutual understandings
and agreements.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and other good and valuable consideration, the receipt and sufficiency whereof
being hereby acknowledged and affirmed, the parties hereto agree as follows:
Article 1 Terms of Appointment; Duties of Transfer Agent
-----------------------------------------------
1.01 Subject to the terms and conditions set forth in this Agreement, the
Phoenix Funds hereby employ and appoint Transfer Agent to act as, and Transfer
Agent agrees to act as, transfer agent for the authorized and issued shares of
beneficial interest or common stock, as the case may be, of each of the Phoenix
Funds (hereinafter collectively and singularly referred to as "Shares"),
dividend disbursing agent and agent in connection with any accumulation,
open-account or similar plans provided to the shareholders of the Phoenix Funds
("Shareholders") and as set out in the currently effective registration
statement of each Fund (the prospectus and statement of additional information
portions of such registration statement being referred to as the "Prospectus"),
including, without limitation, any periodic investment plan or periodic
withdrawal program.
1.02 Transfer Agent agrees that it will perform the following services
pursuant to this Agreement:
(a) In accordance with procedures established from time to time by
agreement between the Phoenix Funds and Transfer Agent, Transfer Agent shall:
i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation therefor to the
Custodian appointed from time to time by the Trustees/Directors of
each Fund (which entity or entities, as the case may be, shall be
referred to as the "Custodian");
ii) Pursuant to purchase orders, issue the appropriate number of Shares
and hold such Shares in the each appropriate Shareholder account;
iii) Receive for acceptance, redemption requests and redemption directions
and deliver the appropriate documentation therefor to the Custodian;
iv) In respect to the transactions in items (i), (ii) and (iii) above, the
Transfer Agent shall execute transactions directly with broker-dealers
authorized by the Phoenix Funds who shall thereby be deemed to be
acting on behalf of the Phoenix Funds;
<PAGE>
v) At the appropriate time as and when it receives monies paid to it by
any Custodian with respect to any redemption, pay over or cause to be
paid over in the appropriate manner such monies as instructed by the
redeeming Shareholders;
vi) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
vii) Prepare and transmit payments for dividends and distributions declared
by each Fund, if any;
viii) Issue replacement certificates for those certificates alleged to have
been lost, stolen or destroyed upon receipt by the Transfer Agent of
indemnification satisfactory to the Transfer Agent and the Phoenix
Funds, and the Transfer Agent at its option, may issue replacement
certificates in place of mutilated stock certificates upon
presentation thereof and without such indemnity;
ix) Maintain records of account for and advise each Fund and its
respective Shareholders as to the foregoing; and
x) Record the issuance of Shares and maintain pursuant to Rule 17Ad-10(e)
under the Exchange Act of 1934, a record of the total number of Shares
which are authorized, issued and outstanding based upon data provided
to it by each Fund. The Transfer Agent shall also provide on a regular
basis to each Fund the total number of Shares which are authorized,
issued and outstanding shall have no obligation, when recording the
issuance of Shares, to monitor the issuance of such Shares or to take
cognizance of any laws relating to the issue or sale of such Shares,
which functions shall be the sole responsibility of each respective
Fund.
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), Transfer Agent shall: (i) perform all of the customary services
of a transfer agent, dividend disbursing agent and, as relevant, agent in
connection with accumulation, open-account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal program),
including, but not limited to, maintaining all Shareholder accounts, preparing
Shareholder meeting lists, mailing proxies, receiving and tabulating proxies,
mailing Shareholder reports and Prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts, preparing
and filing U.S. Treasury Department Forms 1099 and other appropriate forms
required with respect to dividends and distributions by federal authorities for
all Shareholders, preparing and mailing confirmation forms and statements of
account to Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts, preparing and mailing activity
statements for Shareholders, and providing Shareholder account information; and
(ii) provide a system which will enable each Fund to monitor the total number of
Shares sold in each State.
(c) In addition, the Phoenix Funds shall (i) identify to Transfer Agent in
writing those transactions and assets to be treated as exempt from blue sky
reporting for each State, and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of Transfer Agent for a Fund's blue
sky State registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Phoenix Funds and the
reporting of such transactions to each Fund as provided above.
(d) Procedures as to who shall provide certain of the services in Article 1
may be established from time to time by agreement between the Phoenix Funds and
Transfer Agent per the attached service responsibility schedule, if any. The
Transfer Agent may at times perform only a portion of these services and the
Phoenix Funds or its agent may perform these services on behalf of any Fund.
- 2 -
<PAGE>
(e) The Transfer Agent shall provide additional services on behalf of the
Phoenix Funds (i.e., escheatment services) which may be agreed upon in writing
between the Phoenix Funds and the Transfer Agent.
Article 2 Fees and Expenses
-----------------
2.01 In consideration of the services provided by the Transfer Agent
pursuant to this Agreement, each Fund agrees to pay Transfer Agent an annual
maintenance fee for each Shareholder account as set forth in Schedule A attached
hereto and made a part hereof. Annual Maintenance Fees and out-of-pocket
expenses and advances identified under Section 2.02 below may be changed from
time to time subject to mutual written agreement between each Fund and Transfer
Agent. Nothing herein shall preclude the assignment of all or any portion of the
foregoing fees and expense reimbursements to any sub-agent contracted by
Transfer Agent.
2.02 In addition to the fee paid under Section 2.01 above, the Phoenix
Funds agree to reimburse Transfer Agent for out-of-pocket expenses or advances
incurred by Transfer Agent for the items set out in Schedule A attached hereto.
In addition, any other expenses incurred by Transfer Agent at the request or
with the consent of any Fund, will be reimbursed by the Fund requesting the
same.
2.03 The Phoenix Funds agree to pay all fees and reimbursable expenses
within five days following the mailing of the respective billing notice. The
above fees will be charged against each Fund's custodian checking account five
(5) days after the invoice is transmitted to the Phoenix Funds. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
Shareholder accounts shall be advanced to Transfer Agent at least seven (7) days
prior to the mailing date of such materials.
Article 3 Representations and Warranties of Transfer Agent
------------------------------------------------
The Transfer Agent represents and warrants to the Phoenix Funds that:
3.01 It is a corporation organized and existing and in good standing under
the laws of the State of Connecticut.
3.02 It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.03 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.04 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3.05 It is and shall continue to be a duly registered transfer agent
pursuant to Section 17A(c)(2) of the Securities Exchange Act of 1934.
Article 4 Representations and Warranties of Phoenix Funds
------------------------------------------------
The Phoenix Funds represent and warrant to Transfer Agent that:
4.01 All corporate or trust proceedings, as the case may be, required to
enter into and perform this Agreement have been undertaken and are in full force
and effect.
4.02 Each Fund is an open-end, diversified management investment companies
registered under the Investment Company Act of 1940.
- 3 -
<PAGE>
4.03 A registration statement under the Securities Act of 1933 is currently
effective for each Fund that is offering its securities for sale and such
registration statement will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with respect to all
Shares being offered for sale.
Article 5 Data Access and Proprietary Information
---------------------------------------
5.02 The Phoenix Funds acknowledge that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and documentation
manuals furnished to the Phoenix Funds by the Transfer Agent as part of each
Fund's ability to access certain Fund-related data ("Customer Data") maintained
by the Transfer Agent on data bases under the control and ownership of the
Transfer Agent or other third party ("Data Access Services") constitute
copyrighted, trade secret, or other proprietary information (collectively,
"Proprietary Information") of substantial value to the Transfer Agent or other
third party. In no event shall Proprietary Information be deemed Customer Data.
The Phoenix Funds agree to treat all Proprietary Information as proprietary to
the Transfer Agent and further agree that it shall not divulge any Proprietary
Information to any person or organization except as may be provided hereunder.
Without limiting the foregoing, the Phoenix Funds agree for itself and its
employees and agents:
(a) to access Customer Data solely from location as may be designated in
writing by the Transfer Agent and solely in accordance with the Transfer Agent's
applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained, to inform
in a timely manner of such fact and dispose of such information in accordance
with the Transfer Agent's instructions;
(d) to refrain from causing or allowing third-party data acquired hereunder
from being retransmitted to any other computer facility or other location,
except with the prior written consent of the Transfer Agent;
(e) that the Phoenix Funds shall have access only to those authorized
transactions agreed upon by the parties; and
(f) to honor all reasonable written requests made by the Transfer Agent to
protect at the Transfer Agent's expense the rights of the Transfer Agent in
Propriety Information at common law, under federal copyright law and under other
federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Article 5. The obligations of this Article shall
survive any earlier termination of this Agreement.
5.02 If the Phoenix Funds notified the Transfer Agent that any of the Data
Access Services do not operate in material compliance with the most recently
issued user documentation for such services, the Transfer Agent shall endeavor
in a timely manner to correct such failure. Organizations from which the
Transfer Agent may obtain certain data included in the Data Access Services are
solely responsible for the contents of such data and the Phoenix Funds agree to
make no claim against the Transfer Agent arising out of the contents of such
third-party data, including, but not limited to, the accuracy thereof. DATA
ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN
CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE TRANSFER
AGENT EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
- 4 -
<PAGE>
5.03 If the transactions available to the Phoenix Funds include the ability
to originate electronic instructions to the Transfer Agent in order to (i)
effect the transfer or movement of cash or Shares or (ii) transmit Shareholder
information or other information (such transactions constituting a "COEFI"),
then in such event the Transfer Agent shall be entitled to rely on the validity
and authenticity of such instruction without undertaking any further inquiry as
long as such instruction is undertaken in conformity with security procedures
established by the Transfer Agent from time to time.
Article 6 Indemnification
---------------
6.01 The Transfer Agent shall not be responsible for, and the Phoenix Funds
shall indemnify and hold Transfer Agent harmless from and against, any and all
losses, damages, costs, charges, counsel fees, payments, expenses and liability
arising out of or attributable to:
(a) All actions of Transfer Agent or its agent or subcontractors required
to be taken pursuant to this Agreement, provided that such actions are taken in
good faith and without negligence or willful misconduct.
(b) The lack of good faith, negligence or willful misconduct by the Phoenix
Funds which arise out of the breach of any representation or warranty of the
Phoenix Funds hereunder.
(c) The reliance on or use by the Transfer Agent or its agents or
subcontractors of information, records and documents which (i) are received by
Transfer Agent or its agents or subcontractors, and (ii) have been prepared,
maintained or performed by the Phoenix Funds or any other person or firm on
behalf of the Phoenix Funds including but not limited to any previous transfer
agent or registrar.
(d) The reliance on, or the carrying out by Transfer Agent or its agents or
subcontractors of any instructions or requests of the Phoenix Funds.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or regulations of
any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
6.02 Transfer Agent shall indemnify and hold each of the Phoenix Funds
harmless from and against any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liability arising out of or attributable to any
action or failure or omission to act by Transfer Agent, or any sub-agent, as a
result of Transfer Agent's, or such sub-agent's, lack of good faith, negligence
or willful misconduct.
6.03 At any time the Transfer Agent may apply to any officer of the
Phoenix Funds for instructions, and may consult with legal counsel with respect
to any matter arising in connection with the services to be performed by
Transfer Agent under this Agreement, and Transfer Agent and its agents or
subcontractors shall not be liable and shall be indemnified by the Phoenix Funds
for any action taken or omitted by it in reliance upon such instructions or upon
the opinion of such counsel. The Transfer Agent, its agents and subcontractors
shall be protected and indemnified in acting upon any paper or document
furnished by or on behalf of the Phoenix Funds, reasonably believed to be
genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided Transfer Agent or
its agents or subcontrators by machine readable input, telex, CRT data entry or
other similar means authorized by the Phoenix Funds, and shall not be held to
have notice of any change of authority of any person, until receipt of written
notice thereof from the Phoenix Funds. Transfer Agent, its agents and
subcontractors shall also be protected and indemnified in recognizing stock
certificates which are reasonably
- 5 -
<PAGE>
believed to bear the proper manual or facsimile signatures of the officers of
any Fund, and the proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
6.04 In order that the indemnification provisions contained in this Article
6 shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
6.05 Transfer Agent hereby expressly acknowledges that recourse against any
of the Phoenix Funds, if any, shall be subject to those limitations provided by
governing law and the Declaration of Trust of the Phoenix Funds, as applicable,
and agrees that obligations assumed by the Phoenix Funds hereunder shall be
limited in all cases to the Phoenix Funds and their respective assets. Transfer
Agent shall not seek satisfaction of any such obligation from the shareholders
or any shareholder of the Phoenix Funds, nor shall the Transfer Agent seek
satisfaction of any obligations from the Trustees/Directors or any individual
Trustee/Director of the Phoenix Funds.
Article 7 Standard of Care
----------------
7 .01 The Transfer Agent shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy of all
services performed under this Agreement, but assumes no responsibility and shall
not be liable for loss or damage due to errors unless said errors are caused by
its negligence, bad faith, or willful misconduct of that of its employees.
Article 8 Covenants
---------
8.01 The Phoenix Funds shall promptly furnish to Transfer Agent the
following:
(a) A certified copy of the resolution of its Trustees/Directors
authorizing the appointment of Transfer Agent and the execution and delivery of
this Agreement.
(b) A copy of the Declaration of Trust or Articles of Incorporation, as the
case may be, and ByLaws, if any, and all amendments thereto of each Fund.
8.02 The Transfer Agent hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Phoenix Funds for safekeeping of
stock certificates, check forms and facsimile signature imprinting devices, if
any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices.
8.03 The Transfer Agent shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, Transfer Agent agrees that all such records prepared
or maintained by Transfer Agent relating to the services to be performed by
Transfer Agent hereunder are the property of each respective Fund and will be
preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to each respective Fund on and in
accordance with its request.
8.04 The parties agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this
- 6 -
<PAGE>
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records, Transfer Agent will endeavor to notify the affected Fund
and to secure instructions from an authorized officer of such Fund as to such
inspection. Transfer Agent reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that it
may be held liable for the failure to exhibit the Shareholder records to such
person.
Article 9 Termination
-----------
9.01 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other. The parties mutually acknowledge
that the termination of this Agreement by one, but not each Fund shall not
effect a termination of this Agreement as to any and all other Phoenix Fund(s)
which have not terminated the Agreement.
9.02 Should any Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the terminating Fund. Additionally, Transfer Agent reserves the right to charge
any other reasonable expenses associated with such termination and/or a charge
equivalent to the average of three (3) months' fees to the terminating Fund.
Article 10 Assignment
----------
10.01 Except as provided in Section 10.03 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
10.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
10.03 The Transfer Agent may, without further consent on the part of any of
the Phoenix Funds, subcontract for the performance hereof with one or more
sub-agents; provided, however, that Transfer Agent shall be as fully responsible
to each Fund for the acts and omissions of any subcontractor as it is for its
own acts and omissions.
Article 11 Amendment
---------
11.01 This Agreement may be amended or modified by a written agreement
executed by the parties and authorized or approved by a resolution of the
Trustees/Directors of each respective Fund.
Article 12 Connecticut Law to Apply
------------------------
12.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Connecticut.
Article 13 Force Majeure
-------------
13.01 In the event either party is unable to perform its obligations under
the terms of this Agreement because of the acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
- 7 -
<PAGE>
Article 14 Consequential Damages
---------------------
14.01 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
Article 15 Merger of Agreement
-------------------
15.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
15.02 This Agreement shall not be merged with or construed in conjunction
with any other current or future agreement between the Phoenix Funds (including
any Fund) and Phoenix Equity Planning Corporation, each and all of which
agreements shall at all times remain separate and distinct.
Article 16 Limitations of Liability of the Trustees and Shareholders
---------------------------------------------------------
16.01 For the Funds which that are formed as Massachusetts business trusts,
notice is hereby given that the Agreement and Declaration of such Trusts are on
file with the Secretary of the Commonwealth of Massachusetts and was executed on
behalf of the Trustees of such Trusts as Trustees and not individually and that
the obligations of this instrument are not binding upon any of the Trustees or
Shareholders individually but are binding only upon the assets and property of
each Fund.
Article 17 Counterparts
------------
17.01 This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
- 8 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
Phoenix Asset Reserve
Phoenix California Tax Exempt Bonds, Inc.
Phoenix Equity Opportunities Fund
Phoenix Income and Growth Fund
Phoenix Multi-Portfolio Fund
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Series Fund
Phoenix Total Return Fund, Inc.
Phoenix Worldwide Opportunities Fund
By: /s/ Philip R. McLoughlin
-------------------------------
Name: Philip R. McLoughlin
Title: President
ATTEST:
By: /s/ Richard Wirth
--------------------------
Name: Richard Wirth
Title: Asst. Secretary
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Martin J. Gavin
-------------------------------
Executive Vice President
ATTEST:
By: /s/ Patricia O. McLaughlin
----------------------------
Name: Patricia O. McLaughlin
Title: Assistant Secretary
- 9 -
<PAGE>
Schedule A
----------
Fee Schedule
Annual Maintenance Fees shall be based on the following formula:
AMF(Fund) = BAMF x SA
where, AMF(Fund) refers to the aggregate Annual Maintenance Fee levied
against each respective Fund,
BAMF refers to the Base Annual Maintenance Fee levied against each
respective Fund for each shareholder account, as more particularly
described below, at the basic annual per account rate of $19.25 for
daily dividend accounts and $14.95 for non-daily dividend accounts,
and
SA refers to the number of Shareholder Accounts subject to the terms
of this Agreement and any and all sub-transfer agent agreements which
presently or hereafter may be entered into by the Transfer Agent. For
the purpose of computing the foregoing, the Transfer Agent will
ascertain the number of Shareholders of each Fund regardless of
whether any such Shares are held in accordance with any pooled or
omnibus accounts or arrangement managed or controlled by any entity,
broker/dealer or sub-transfer agent.
Other Fees
- ----------
o Omnibus Accounts, Per Transaction $2.50
o Closed Accounts, per Account, per month $0.20
o Check writing Fees:
o Privilege set-up $5.00
o Per Cleared Check $1.00
Out-of-Pocket Expenses
- ----------------------
Out-of-pocket expenses include, but are not limited to: confirmation production,
postage, forms, telephone, microfilm, microfiche, stationary and supplies billed
as .1122% of postage costs and expenses incurred at the specific direction of
any Fund. Postage for mass mailings is due seven days in advance of the mailing
date.
Exhibit 9.3
Sub-Transfer Agency Agreement
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
between
PHOENIX EQUITY PLANNING CORPORATION.
and
STATE STREET BANK AND TRUST COMPANY
contracts/Phoenix3
Sub-TA
<PAGE>
TABLE OF CONTENTS
1. Terms of Appointment; Duties of the Bank 1-4
and Transfer Agent
2. Fees and Expenses 4
3. Bank as Trustee or Custodian 4-5
of Retirement Plans
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 form 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.
1
<PAGE>
(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;
(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;
2
<PAGE>
(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.
3
<PAGE>
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.
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").
4
<PAGE>
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 Security 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 Retirment 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
5
<PAGE>
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.
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
6
<PAGE>
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 propriety 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;
(b) to refrain form 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;
7
<PAGE>
(c) to refrain from obtaining unauthorized access to any programs, data or
other information not owned by the Transfer Agent, and if such access
is accidently obtained, to respect and safeguard the same Proprietary
Information;
(d) to refrain form causing or allowing information transmitted from the
Bank's computer to the Transfer Agents 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 statues.
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 on 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;
8
<PAGE>
(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.
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.
9
<PAGE>
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 govermental 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.
10
<PAGE>
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;
(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
<PAGE>
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.
12
<PAGE>
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.
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 limitiations 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.
13
<PAGE>
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. McLaughlin
- --------------------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
---------------------------
Executive Vice President
ATTEST:
/s/ S. Cesso
- --------------------------
14
<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 $1.80
(Per Investor)
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
o This schedule is based on 700K accounts, 26 funds, and 4,000 liaison items.
o If the account base decreases significantly, the per account fee will be
reviewed by both parties.
o If 12(B) 1 product is discontinued the annual per account fee will be
increased by $1.00
o Additional Fund Administrators will be added as new funds are opened (ratio
1:8) and charged as detailed above.
o 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 Hourihan By /s/ Mark Toomey
-------------------------------- -----------------------------
Title Vice President Title Vice President
-------------------------------- -----------------------------
Date 7/15/94 Date 7-12-94
-------------------------------- -----------------------------
*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
PEPCO BFDS
FUNCTIONAL RESPONSIBILITIES (Transfer Agent) (Sub Transfer Agent)
- --------------------------- ---------------- --------------------
A. Transaction Processing:
Remittance Cash Processing X
New Account Setup
o Regular X
o Fiduciary X
o Quality Assurance X
Transfers
o Regular X
o Fiduciary X
o Dealer X
o Quality Assurance X
Redemptions
o Regular X
o Fiduciary X
o Quality Assurance X
Wire Order
o Set-up X
o Settlement X
o Quality Assurance X
o Monitoring of Outstanding Trades X
Maintenance
o Registration X
o Rep/Dealer File X *X
o Sub Files X
o Quality Assurance X
o ACH Prenote Reject X
o All Account Options X
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
SERVICE RESPONSIBILITY SCHEDULE
PEPCO BFDS
FUNCTIONAL RESPONSIBILITIES (Transfer Agent) (Sub Transfer Agent)
- --------------------------- ---------------- --------------------
Adjustments (through 12/94)
o Account Corrections *X
o LOI Processing *X
o Year-End Accounts Adjustments *X
o Sharelot Adjustments *X
o Bounced Checks *X
o ACH Cancellations *X
o Quality Assurance *X
B. Customer Service:
Telephones
o Customer Inquiry X
o Transaction Line X
o Timer Exchanges *X
o Liaison Support (Through 12/4) *X
Correspondence X
Shareholder/Dealer Letters X
Transfer of Assets Letters/Followup X
Notice of Levy X
Dealer Services
o FundServ/Networking Implementation X
o Dealer Security Access X
o Enhancements-Communication/Testing X
Client Services
o Product Development/Implementation X
o Mailings X
o Year End Reporting X
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
SERVICE RESPONSIBILITY SCHEDULE
PEPCO BFDS
FUNCTIONAL RESPONSIBILITIES (Transfer Agent) (Sub Transfer Agent)
- --------------------------- ---------------- --------------------
C. Support:
Image/AWD
o Scanning X X
o Work Distribution X
o Retrieval X
o Technical Support X
Microfilm/Research Prior Agent X *X
Media Production
o Design/Printing X
o Marketing Materials X
o Forms Development X
Corporate Actions
o Report Generation X
o Proxy Solicitation X
o Periodic Financial Activities (DIVs X
PACs, SWPs etc
Compliance/Regulatory
o Escheatment X
o Tax Filings X
o Lost Shareholder Recovery X
o BNotice/CNotice Reporting *X
o Lost Certificate Processing/SIC *X
Reporting
Recon/Control
o Cash Settlement X
o Account Reconcilement X
o Commission Payment X
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
SERVICE RESPONSIBILITY SCHEDULE
PEPCO BFDS
FUNCTIONAL RESPONSIBILITIES (Transfer Agent) (Sub Transfer Agent)
- --------------------------- ---------------- --------------------
Recon/Control (continued)
o Automated Trade Settlement X
o Balance Credit Review X
o Reclaims *X
o Dividend Processing X
Financial Reporting
o Billing to the Fund X
Will be internalized to PEPCO
EXHIBIT 10.4
OPINION AND CONSENT OF COUNSEL
<PAGE>
[LETTERHEAD]
THE PHOENIX FUNDS
February 24, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington D.C. 20549
Re: Phoenix Multi-Portfolio Fund
Post-Effective Amendment No. 14 to
Registration Statement No. 33-19423
Dear Sirs:
As counsel to Phoenix Investment Counsel, Inc. and Phoenix Realty
Securities, Inc., we have participated in the development of and are familiar
with the Phoenix Multi-Portfolio Fund, an open-end, management investment
company whose shares are the subject of the above-captioned Registration
Statement on Form N-1A. Post-effective amendment No. 14 to this Registration
Statement added a new portfolio to the Fund referred to below.
In rendering our opinion, we have examined such documents, records, and
matters of law as we deemed necessary for purposes of this opinion. We have
assumed the genuineness of all signatures of all parties, the authenticity of
all documents submitted as originals, the correctness of all copies, and the
correctness of all facts set forth in the certificates delivered to us and the
correctness of all written or oral statements made to us.
Based upon this review, we are of the opinion that each class of shares of
all Portfolios of the Phoenix Multi-Portfolio Fund have been validly and duly
issued, fully paid and non-assessable. Furthermore, we are of the opinion that,
after effectiveness of the post-effective amendment and the registration or
qualification in the appropriate states, each class of shares of the Phoenix
Real Estate Securities Portfolio, when issued, will have been validly and duly
issued, fully paid and non-assessable.
Our opinion is rendered solely in connection with the Registration
Statement on Form N-1A under which the Shares will be registered and may not be
relied upon for any other purposes without our written consent. We hereby
consent to the use of this opinion as an exhibit to such Registration Statement.
Very truly yours,
/s/ Richard J. Wirth
-----------------------
Richard J. Wirth
fund/1489
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. 20 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated January 10, 1997, relating to the financial
statements and financial highlights appearing in the November 30, 1996 Annual
Report to Shareholders of the Tax-Exempt Bond Portfolio, Mid Cap Portfolio,
International Portfolio, Real Estate Securities Portfolio and Emerging
Markets Bond Portfolio of The Phoenix Multi-Portfolio 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 "Additional Information - Independent Accountants" in the
Statement of Additional Information.
/s/Price Waterhouse LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
March 26, 1997
Exhibit 15.1
Class A Shares Distribution Plan
<PAGE>
DISTRIBUTION PLAN OF PHOENIX MULTI-PORTFOLIO FUND
CLASS A SHARES
Section 1. Phoenix Multi-Portfolio Fund (the "Trust"), issuer of Class A
shares of Phoenix Tax-Exempt Bond Portfolio (the "Bond Portfolio"), Phoenix
Capital Appreciation Portfolio ("Capital Appreciation Portfolio"), and Phoenix
International Portfolio ("International Portfolio") may act as the distributor
of such shares pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Act") according to the terms of this Distribution Plan (the "Plan").
Section 2. Amounts not exceeding in the aggregate a maximum amount equal to
0.25% of the average of the daily aggregate net asset value of the Class A
shares of the Bond Portfolio, Capital Appreciation Portfolio, and International
Portfolio during each year of the Trust elapsed after the inception of the Plan
may be paid by the Trust to its principal underwriter at any time after the
inception of the Plan in order to pay the principal underwriter for efforts
expended in respect of or in furtherance of sales of Class A shares of the Bond
Portfolio, Capital Appreciation Portfolio, and International Portfolio,
respectively, and to enable the principal underwriter, in its sole discretion,
to pay or to have paid to others who sell or have sold Class A shares of the
Portfolios a maintenance or other fee, at such intervals as the principal
underwriter may determine, in respect of Class A shares of the Portfolios
previously sold by any such others at any time and remaining outstanding during
the period in respect of which such fee is or has been paid.
Section 3. This Plan shall not take effect as to a Portfolio or Class until
it has been approved by a vote of at least a majority (as defined in the Act) of
the outstanding shares of that Portfolio or Class.
Section 4. This Plan shall not take effect until it has been approved
together with any related agreements of the Trust by votes of the majority of
both (a) the Board of Trustees of the Trust and (b) those Trustees who are not
"interested persons" of the Trust as defined in the Act and who have no direct
or indirect financial interest in the operation of this Plan or any agreements
of the Trust or any other person related to this Plan (the "Rule 12b-1
Trustees"), cast in person at a meeting called for the purpose of voting on this
Plan or such agreements.
Section 5. Unless sooner terminated pursuant to Section 8, this Plan shall
continue in effect for a period of one year from the date it takes effect
thereafter shall continue in effect so long as such continuance is specifically
approved at least annually in the manner provided for approval of this Plan in
Section 4.
Section 6. Any person authorized to direct the disposition of monies paid
or payable by the Trust pursuant to this Plan or any related agreements shall
provide to the Trust's Board and the Board shall review at least quarterly a
written report of the amounts so expended and the purposes for which such
expenditures were made.
Section 7. This Plan may be terminated as to a Portfolio at any time by
vote of a majority of the Rule 12b-1 Trustees, or by vote of a majority of that
Portfolio's outstanding shares.
Section 8. Any agreement of the Trust related to this Plan shall be in
writing, and shall provide:
<PAGE>
- 2 -
A. That such agreement may be terminated as to a Portfolio at any time,
without payment of any penalty, by vote of a majority of the Rule
12b-1 Trustees or by a vote of a majority of that Portfolio's
outstanding shares or on not more than sixty days written notice to
any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
Section 9. This Plan may not be amended to increase materially the amount
of distribution expenses provided for in Section 2 hereof unless such amendment
is approved in the manner provided in Section 3 hereof and no material amendment
to this Plan shall be made unless approved in the manner provided for in Section
4 hereof.
Exhibit 15.1a
Class B Shares Distribution Plan
<PAGE>
DISTRIBUTION PLAN OF
PHOENIX MULTI-PORTFOLIO FUND
PURSUANT TO RULE 12B-1
CLASS B SHARES
Distribution Plan for Class B shares dated ___________________ (the "Plan") of
PHOENIX MULTI-PORTFOLIO FUND (the "Fund"), a Massachusetts business trust.
WHEREAS, the Fund and Phoenix Equity Planning Corporation ("PEPCO" or the
"Distributor"), a wholly owned subsidiary of Phoenix Home Life Mutual Insurance
Company ("Phoenix Home Life") and 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 shares of
the Fund for sale to the public; and
WHEREAS, the Trustees of the Fund have determined to adopt this Distribution
Plan (the "Plan"), in accordance with the requirements of the Investment Company
Act of 1940, as amended (the "Act") and have determined that there is a
reasonable likelihood that the Plan will benefit the Fund and its shareholders.
NOW THEREFORE, the Fund hereby adopts the Plan on the following terms and
conditions:
1. The Fund shall reimburse the Distributor, at the end of each month, up
to a maximum on an annual basis of 1.00% 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 PEPCO 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; provided however, that a portion of such
amount paid to the Distributor, which portion shall be equal to or less than
0.25% annually of the average daily net assets of the Fund's Class B shares, may
be paid for reimbursing the costs of providing services to Class B shareholders
including assistance in connection with inquiries related to shareholder
accounts (the "Service Fee").
Amounts paid or payable by the Fund under this Plan or any agreement with
any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have
<PAGE>
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.
2. At least quarterly in each year the 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-1 under the
Act regarding the amounts expended under the Plan and the purposes for which
such expenditures were made.
3. 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 the Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
for the purpose of voting on the Plan or any related agreement and the 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 defined
in the Act).
4. 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 1 hereof (including the
Service Fee) without the approval of at least a majority of the outstanding
voting securities (as defined in the Act) of the Class B shares of the Fund and
(b) all material amendments to this Plan must be approved by a majority vote of
the Trustees of the Fund and of the Disinterested Trustees cast in person at a
meeting called for the purpose of such vote.
5. 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.
6. 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.
7. 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 by the Plan.
8. The Fund shall preserve copies of this Plan and any related agreements
and all reports made pursuant to Paragraph 2 hereof, and any other information,
estimates, projections and other
- 2 -
<PAGE>
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.
9. The Fund's Declaration of Trust dated October 15, 1987, 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.
IN WITNESS WHEREOF, the Fund and its Trustees have adopted this Plan as of
this day of , 1993.
PHOENIX MULTI-PORTFOLIO FUND
By:
-------------------------------
Attest:
- -------------------------
fund\698
- 3 -
Exhibit 18.2
RULE 18f-3 DUAL DISTRIBUTION PLAN
<PAGE>
PHOENIX FUNDS
(the "Funds")
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended
("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the original effective date of this Plan, the Funds shall offer
multiple classes of shares, as described herein, pursuant to Rule 18f-3 and this
Plan.
2. The Multi-Class Structure
-------------------------
The portfolios of the Funds listed on Schedule A hereto shall offer two
classes of shares, Class A and Class B ("Multi-Class Portfolios"). Shares of the
Multi-Class Portfolios shall represent an equal pro rata interest in the
respective Multi-Class Portfolio and, generally, shall have identical voting,
dividend, liquidation, and other rights, preferences, powers, restrictions,
limitations, qualifications and terms and conditions, except that: (a) each
class shall have a different designation; (b) each class shall bear any Class
Expenses, as defined by Section B, below; (c) each class shall have exclusive
voting rights on any matter submitted to shareholders that relates solely to its
distribution arrangement; and (d) each class shall have separate voting rights
on any matter submitted to shareholders in which the interests of one class
differ from the interests of any other class. In addition, Class A and Class B
shares shall have the features described in Sections a, b, c and d, below.
a. Distribution Plans
------------------
The Funds have adopted Distribution Plans pursuant to Rule 12b-1 with
respect to each Multi-Class Portfolio, containing substantially the following
terms:
i. Class A shares of each Multi-Class Portfolio shall reimburse
Phoenix Equity Planning Corporation (the "Distributor") for costs and expenses
incurred in connection with distribution and marketing of shares thereof, as
provided in the Class A Distribution Plan and any supplements thereto, subject
to an annual limit of 0.25%, or in some cases 0.30%, of the average daily net
assets of a Multi-Class Portfolio's Class A shares.
<PAGE>
- 2 -
ii. Class B shares of each Multi-Class Portfolio shall reimburse the
Distributor for costs and expenses incurred in connection with distribution and
marketing of shares thereof, as provided in the Class B Distribution Plan and
any supplements thereto, subject to an annual limit of 1.00% of the average
daily net assets of a Multi-Class Portfolio's Class B shares.
b. Allocation of Income and Expenses
---------------------------------
i. General.
--------
The gross income, realized and unrealized capital gains and losses and
expenses (other than Class Expenses, as defined below) of each Multi-Class
Portfolio shall be allocated to each class on the basis of its net asset value
relative to the net asset value of the Multi-Class Portfolio. Expenses to be so
allocated include expenses of the Funds that are not attributable to a
particular Multi-Class Portfolio or class of a Multi-Class Portfolio but are
allocated to a Multi-Class Portfolio ("Fund Expenses") and expenses of a
particular Multi-Class Portfolio that are not attributable to a particular class
of that Multi-Class Portfolio ("Portfolio Expenses"). Fund Expenses include, but
are not limited to, trustees' fees, insurance costs and certain legal fees.
Portfolio Expenses include, but are not limited to, certain state registration
fees, custodial fees, advisory fees and other expenses relating to the
management of the Multi-Class Portfolio's assets.
ii. Class Expenses.
---------------
Expenses attributable to a particular class ("Class Expenses") shall
be limited to: (1) transfer agency fees; (2) stationery, printing, postage, and
delivery expenses relating to preparing and distributing shareholder reports,
prospectuses, and proxy statements; (3) state Blue Sky registration fees; (4)
SEC registration fees; (5) expenses of administrative personnel and services to
the extent related to another category of class-specific expenses; (6) trustees'
fees and expenses; (7) accounting expenses, auditors' fees, litigation expenses,
and legal fees and expenses; and (8) expenses incurred in connection with
shareholder meetings. Expenses described in subsection (a) of this paragraph
must be allocated to the class for which they are incurred. All other expenses
described in this paragraph may be allocated as Class Expenses, if a Fund's
President and Treasurer have determined, subject to Board approval or
ratification, which of such categories of expenses will be treated as Class
Expenses, consistent with applicable legal principles under the 1940 Act and the
Internal Revenue Code of 1986, as amended ("Code"). The difference between the
Class Expenses allocated to each share of a class during a year and the Class
Expenses allocated to each share of any other class during such year shall at
all times be less than .50% of the average daily net asset value of the class of
shares with the smallest average net asset value. The afore-described
description of Class Expenses and any amendment thereto shall be subject to the
continuing availability of an opinion of counsel or a ruling from the Internal
Revenue Service to the effect that any such allocation of expenses or the
assessment of higher distribution fees and transfer agency costs on any class of
shares does not result in any dividends or distributions constituting
"preferential dividends" under the Code.
<PAGE>
- 3 -
In the event that a particular expense is no longer reasonably
allocable by class or to a particular class, it shall be treated as a Fund
Expense or Portfolio Expense as applicable, and in the event a Fund Expense or
Portfolio Expense becomes allocable as a Class Expense, it shall be so
allocated, subject to compliance with Rule 18f-3 and Board approval or
ratification.
The initial determination of expenses that will be allocated as Class
Expenses and any subsequent changes thereto as set forth in this Plan shall be
reviewed by the Board of Trustees and approved by such Board and by a majority
of the Trustees who are not "interested persons" of the Fund, as defined in the
1940 Act ("Independent Trustees")
iii. Waivers or Reimbursements of Expenses
-------------------------------------
Expenses may be waived or reimbursed by the Fund's investment
adviser(s), its principal underwriters, or any other provider of services to a
Multi-Class Portfolio without the prior approval of the Board of Trustees.
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.
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 the Independent Trustees, at a meeting
held on August 21, 1996, approved the Amended and Restated Plan based on a
determination that the Plan, including the expense allocation, is in the best
interests of each class and Multi-Class Portfolio individually and of the Funds.
<PAGE>
- 4 -
b. Approval of Amendments
-----------------------
The Plan may not be amended materially unless the Board of Trustees, 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.
c. Periodic Review
---------------
The Board shall review reports of expense allocations and such other
information as they request at such times, or pursuant to such schedule, as they
may determine consistent with applicable legal requirements.
4. Contracts
---------
Any agreement related to the Multi-Class System shall require the parties
thereto to furnish to the Board of Trustees, upon their request, such
information as is reasonably necessary to permit the Trustees to evaluate the
Plan or any proposed amendment.
5. Effective Date
--------------
The Amended and Restated Plan, having been reviewed and approved by the
Board of Trustees and the Independent Trustees, shall take effect as of the
first day of each Fund's current fiscal year.
6. Amendments
----------
The Plan may not be amended to modify materially its terms unless such
amendment has been approved in the manner specified in Section 3(b) of this
Plan.
<PAGE>
SCHEDULE A
----------
PHOENIX CALIFORNIA TAX-EXEMPT BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND:
DIVERSIFIED INCOME PORTFOLIO
EMERGING MARKETS BOND PORTFOLIO
INTERNATIONAL PORTFOLIO
REAL ESTATE SECURITIES PORTFOLIO
MID CAP PORTFOLIO
TAX-EXEMPT BOND PORTFOLIO
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND:
AGGRESSIVE GROWTH FUND SERIES
BALANCED FUND SERIES
CONVERTIBLE FUND SERIES
GROWTH FUND SERIES
HIGH YIELD FUND SERIES
MONEY MARKET FUND SERIES
U.S. GOVERNMENT SECURITIES FUND SERIES
PHOENIX TOTAL RETURN FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND
MICRO CAP FUND
STRATEGIC THEME FUND
SMALL CAP FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
Exhibit 19
POWERS OF ATTORNEY
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Multi-Portfolio Fund, hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg or either of them as my true and lawful attorneys and agents
with full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Multi-Portfolio Fund, and hereby ratify
and confirm my signature as it may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
May 22, 1996 /s/ Everett L. Morris, Trustee
----------- ---------------------
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Multi-Portfolio Fund, hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg or either of them as my true and lawful attorneys and agents
with full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Multi-Portfolio Fund, and hereby ratify
and confirm my signature as it may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
May 22 , 1996 /s/ Calvin J. Pedersen , Trustee
- --------- ------------------------
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Multi-Portfolio Fund, hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg or either of them as my true and lawful attorneys and agents
with full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Multi-Portfolio Fund, and hereby ratify
and confirm my signature as it may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
May 22 , 1996 /s/ Francis E. Jeffries, Trustee
- ---------- -----------------------
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 011
<NAME> TAX-EXEMPT BOND PORTFOLIO CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
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<OTHER-ITEMS-LIABILITIES> 358
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<SHARES-COMMON-STOCK> 12111
<SHARES-COMMON-PRIOR> 12969
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (118)
<ACCUMULATED-NET-GAINS> 1867
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6178
<NET-ASSETS> 141320
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9145
<OTHER-INCOME> 0
<EXPENSES-NET> (1389)
<NET-INVESTMENT-INCOME> 7756
<REALIZED-GAINS-CURRENT> 1670
<APPREC-INCREASE-CURRENT> (3275)
<NET-CHANGE-FROM-OPS> 6151
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7504
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<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7600
<NUMBER-OF-SHARES-REDEEMED> (8830)
<SHARES-REINVESTED> 372
<NET-CHANGE-IN-ASSETS> (11263)
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<GROSS-EXPENSE> 1389
<AVERAGE-NET-ASSETS> 143775
<PER-SHARE-NAV-BEGIN> 11.40
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<PER-SHARE-GAIN-APPREC> (0.12)
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<PER-SHARE-NAV-END> 11.28
<EXPENSE-RATIO> 0.94
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> TAX-EXEMPT BOND PORTFOLIO CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 132756
<INVESTMENTS-AT-VALUE> 138951
<RECEIVABLES> 2680
<ASSETS-OTHER> 47
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 141678
<PAYABLE-FOR-SECURITIES> 0
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<OTHER-ITEMS-LIABILITIES> 358
<TOTAL-LIABILITIES> 358
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<PAID-IN-CAPITAL-COMMON> 133393
<SHARES-COMMON-STOCK> 421
<SHARES-COMMON-PRIOR> 275
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (118)
<ACCUMULATED-NET-GAINS> 1867
<OVERDISTRIBUTION-GAINS> 0
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<INTEREST-INCOME> 9145
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<EXPENSES-NET> (1389)
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<APPREC-INCREASE-CURRENT> (3275)
<NET-CHANGE-FROM-OPS> 6151
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<DISTRIBUTIONS-OF-INCOME> 192
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 198
<NUMBER-OF-SHARES-REDEEMED> (62)
<SHARES-REINVESTED> 10
<NET-CHANGE-IN-ASSETS> 1620
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> (131)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 647
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1389
<AVERAGE-NET-ASSETS> 143775
<PER-SHARE-NAV-BEGIN> 11.44
<PER-SHARE-NII> 0.52
<PER-SHARE-GAIN-APPREC> (0.12)
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<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.32
<EXPENSE-RATIO> 1.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> MID CAP PORTFOLIO CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 418845
<INVESTMENTS-AT-VALUE> 482500
<RECEIVABLES> 5725
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<OTHER-ITEMS-ASSETS> 29425
<TOTAL-ASSETS> 517652
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<PAID-IN-CAPITAL-COMMON> 352535
<SHARES-COMMON-STOCK> 20849
<SHARES-COMMON-PRIOR> 22136
<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> 52882
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 63655
<NET-ASSETS> 469072
<DIVIDEND-INCOME> 2146
<INTEREST-INCOME> 3510
<OTHER-INCOME> 0
<EXPENSES-NET> (6571)
<NET-INVESTMENT-INCOME> (915)
<REALIZED-GAINS-CURRENT> 53976
<APPREC-INCREASE-CURRENT> 7327
<NET-CHANGE-FROM-OPS> 60388
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<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 63371
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<SHARES-REINVESTED> 3204
<NET-CHANGE-IN-ASSETS> (36200)
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<PER-SHARE-NAV-END> 21.65
<EXPENSE-RATIO> 1.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> MID CAP PORTFOLIO CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
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<DISTRIBUTIONS-OF-GAINS> 1486
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<SHARES-REINVESTED> 75
<NET-CHANGE-IN-ASSETS> 6691
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> INTERNATIONAL PORTFOLIO CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
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<PAID-IN-CAPITAL-COMMON> 108024
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<SHARES-COMMON-PRIOR> 10605
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<NET-ASSETS> 142479
<DIVIDEND-INCOME> 2044
<INTEREST-INCOME> 665
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<EXPENSES-NET> (2279)
<NET-INVESTMENT-INCOME> 430
<REALIZED-GAINS-CURRENT> 14699
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 032
<NAME> INTERNATIONAL PORTFOLIO CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
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<OVERDISTRIB-NII-PRIOR> (296)
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<PER-SHARE-NII> (0.05)
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 061
<NAME> REAL ESTATE SECURITIES PORTFOLIO CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 26820
<INVESTMENTS-AT-VALUE> 31349
<RECEIVABLES> 489
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 31838
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<PAID-IN-CAPITAL-COMMON> 25810
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<ACCUMULATED-NET-GAINS> 598
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4529
<NET-ASSETS> 31130
<DIVIDEND-INCOME> 1305
<INTEREST-INCOME> 13
<OTHER-INCOME> 0
<EXPENSES-NET> (324)
<NET-INVESTMENT-INCOME> 994
<REALIZED-GAINS-CURRENT> 605
<APPREC-INCREASE-CURRENT> 4234
<NET-CHANGE-FROM-OPS> 5833
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 861
<DISTRIBUTIONS-OF-GAINS> 22
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<NUMBER-OF-SHARES-SOLD> 604
<NUMBER-OF-SHARES-REDEEMED> (228)
<SHARES-REINVESTED> 73
<NET-CHANGE-IN-ASSETS> 9030
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<ACCUMULATED-GAINS-PRIOR> 20
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-EXPENSE> 455
<AVERAGE-NET-ASSETS> 22424
<PER-SHARE-NAV-BEGIN> 10.72
<PER-SHARE-NII> 0.53
<PER-SHARE-GAIN-APPREC> 2.50
<PER-SHARE-DIVIDEND> (0.59)
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<PER-SHARE-NAV-END> 13.14
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 062
<NAME> REAL ESTATE PORTFOLIO SECURITIES CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 26820
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<PAID-IN-CAPITAL-COMMON> 25810
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<ACCUMULATED-NET-GAINS> 598
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<ACCUM-APPREC-OR-DEPREC> 4529
<NET-ASSETS> 31130
<DIVIDEND-INCOME> 1305
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<EXPENSES-NET> (324)
<NET-INVESTMENT-INCOME> 994
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<APPREC-INCREASE-CURRENT> 4234
<NET-CHANGE-FROM-OPS> 5833
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 163
<DISTRIBUTIONS-OF-GAINS> 4
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<NUMBER-OF-SHARES-SOLD> 436
<NUMBER-OF-SHARES-REDEEMED> (28)
<SHARES-REINVESTED> 12
<NET-CHANGE-IN-ASSETS> 6020
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<GROSS-EXPENSE> 455
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<PER-SHARE-NAV-BEGIN> 10.68
<PER-SHARE-NII> 0.46
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<PER-SHARE-DIVIDEND> (0.49)
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<PER-SHARE-NAV-END> 13.10
<EXPENSE-RATIO> 2.05
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
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<NAME> EMERGING MARKETS BOND PORTFOLIO CLASS B
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