As filed with the Securities and Exchange Commission on January 26, 1998
Registration Nos. 33-19423
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. 22 [X]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 24 [X]
(Check appropriate box or boxes)
-------------
Phoenix Multi-Portfolio Fund
(Exact Name of Registrant as Specified in Charter)
-------------
101 Munson Street, Greenfield, Massachusetts 01301
(Address of Principal Executive Offices) (Zip Code)
c/o Phoenix Equity Planning Shareholder Services
(800) 243-1574
(Registrant's Telephone Number, including Area Code)
-------------
Thomas N. Steenburg
Vice President, Counsel and Secretary
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115
(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)
[ ] on ------------- pursuant to paragraph (b)
[X] 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.
================================================================================
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
Cross Reference Sheet
Required by Rule 495(a)
PART A
<TABLE>
<CAPTION>
Form N-1A Item No. Prospectus Caption
- -------------------- ---------------------------------------------------
<S> <C> <C>
1. Cover Page .................................... Cover Page
2. Synopsis ...................................... Introduction; Fund Expenses
3. Condensed Financial Information ............... Financial Highlights
4. General Description of Registrant ............. Introduction; Investment Objectives and Policies;
Investment Techniques and Related Risks; Portfolio
Turnover; Description of Shares
5. Management of the Fund ........................ Introduction; Management of the Trust
6. Capital Stock and Other Securities ............ Introduction; Description of Shares; Dividends and
Distributions; Taxes
7. Purchase of Securities Being Offered .......... Plans of Distribution; How to Buy Shares; Investor
Account Services
8. Redemption or Repurchase ...................... How to Redeem Shares
9. Legal Proceedings ............................. Not applicable
</TABLE>
PART B
<TABLE>
<CAPTION>
Form N-1A Item No. Statement of Additional Information Caption
- -------------------- ------------------------------------------------
<S> <C> <C>
10. Cover Page ........................................ Cover Page
11. Table of Contents ................................. Table of Contents
12. General Information and History ................... The Fund
13. Investment Objectives and Policies ................ Investment Objectives and Policies; Investment
Restrictions; Portfolio Turnover
14. Management of the Fund ............................ Trustees and Officers
15. Control Persons and Principal Holders of
Securities ........................................ Trustees and Officers
16. Investment Advisory and Other Services ............ The Investment Adviser; The Distributor
17. Brokerage Allocation and Other Practices .......... Portfolio Transactions and Brokerage
18. Purchase, Redemption and Pricing of
Securities Being Offered .......................... How to Buy Shares; Alternative Purchase
Arrangements; Net Asset Value; Investor Account
Services; How to Redeem Shares
20. Tax Status ........................................ Taxes
21. Underwriters ...................................... The Distributor
22. Calculations of Yield Quotations of Money
Market Funds ...................................... Not applicable
23. Financial Statements .............................. Financial Statements
</TABLE>
PART C
The information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
[FRONT COVER]
P H O E N I X
FUNDS
Prospectus March 27, 1997
o PHOENIX TAX-EXEMPT
BOND PORTFOLIO
o PHOENIX MID CAP
PORTFOLIO
o PHOENIX INTERNATIONAL
PORTFOLIO
o PHOENIX REAL ESTATE
SECURITIES PORTFOLIO
o PHOENIX EMERGING MARKETS
BOND PORTFOLIO
o PHOENIX STRATEGIC INCOME FUND
[LOGOTYPE] PHOENIX
DUFF & PHELPS
<PAGE>
PHOENIX TAX EXEMPT BOND PORTFOLIO PHOENIX MID CAP PORTFOLIO
PHOENIX INTERNATIONAL PORTFOLIO
PHOENIX REAL ESTATE SECURITIES PORTFOLIO
PHOENIX EMERGING MARKETS BOND PORTFOLIO
PHOENIX STRATEGIC INCOME FUND
101 Munson Street
Greenfield, Massachusetts 01301
PROSPECTUS
March 27, 1998
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.
Phoenix Strategic Income Fund (the "Income Portfolio"), formerly the
"Diversified Income Portfolio" was previously known as the "Endowment Fixed
Income Portfolio." The Fund seeks to maximize current income by investing in
debt securities as its investment objective. Capital appreciation is a
secondary objective. The Income Portfolio will invest principally in four
market sectors: (1) debt securities of U.S. companies including lower-rated,
high yield securities, (2) mortgage securities, (3) debt securities of foreign
governments and companies including non-dollar denominated, and (4) U.S.
Government securities. There can be no assurance that the Income Portfolio will
achieve its objectives.
One of the four principal market sectors in which the Income Portfolio
intends to invest is High Yield-High Risk debt securities, commonly referred to
as "junk bonds." These lower rated securities may be more susceptible to real
or perceived adverse economic conditions than investment grade securities. High
Yield-High Risk securities are regarded as predominantly speculative with
regard to each issuer's continuing ability to make interest and principal
payments. In addition, the secondary market for High Yield-High Risk securities
may be less liquid than the market for investment grade securities. Investors
should carefully assess the risks associated with an investment in the Fund.
See "Investment Objective and Policies" and "Investment Techniques and Related
Risks."
- --------------------------------------------------------------------------------
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
CUSTOMER SERVICE: (800) 243-1574
MARKETING: (800) 243-4361
TELEPHONE ORDERS: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY): (800) 243-1926
<PAGE>
(continued from previous page)
Phoenix Multi-Portfolio Fund (the "Trust") is an open-end management
investment company whose shares are offered in six series. 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.
This Prospectus sets forth concisely the information about the Trust 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 Trust, 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 Trust is contained in a Statement of
Additional Information, dated March 27, 1998, which has been filed with the
Securities and Exchange Commission (the "Commission") and is available upon
request at no charge by calling (800) 243-4361 or by writing to Phoenix Equity
Planning Corporation at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200. The Statement of Additional Information is incorporated
herein by reference.
The Commission maintains a Web site (http://www.sec.gov) that contains
this Prospectus, the Statement of Additional Information, material incorporated
by reference, and other information regarding registrants that file
electronically with the Commission.
Shares of the Trust 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
<TABLE>
<CAPTION>
Page
-----
<S> <C>
INTRODUCTION ............................................................. 3
FUND EXPENSES ............................................................ 5
FINANCIAL HIGHLIGHTS ..................................................... 8
PERFORMANCE INFORMATION .................................................. 13
INVESTMENT OBJECTIVES AND POLICIES ....................................... 14
Tax Exempt Bond Portfolio ............................................... 14
Mid Cap Portfolio ....................................................... 15
International Portfolio ................................................. 16
Emerging Markets Bond Portfolio ......................................... 19
Real Estate Portfolio ................................................... 20
Income Portfolio ........................................................ 22
INVESTMENT TECHNIQUES AND RELATED RISKS .................................. 23
INVESTMENT RESTRICTIONS .................................................. 29
PORTFOLIO TURNOVER ....................................................... 29
MANAGEMENT OF THE TRUST .................................................. 30
DISTRIBUTION PLANS ....................................................... 32
HOW TO BUY SHARES ........................................................ 33
INVESTOR ACCOUNT SERVICES ................................................ 37
NET ASSET VALUE .......................................................... 38
HOW TO REDEEM SHARES ..................................................... 38
DIVIDENDS, DISTRIBUTIONS AND TAXES ....................................... 40
ADDITIONAL INFORMATION ................................................... 41
APPENDIX ................................................................. 42
</TABLE>
2
<PAGE>
INTRODUCTION
This Prospectus describes the shares offered by and the operations of
Phoenix Multi-Portfolio Fund (the "Trust"). The Trust is an open-end management
investment company established in 1987 as a Massachusetts business trust.
Shares of the Trust are divided into six series or "Portfolios." Each Portfolio
has a different investment objective and is designed to meet different
investment needs. 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"), the Phoenix Emerging
Markets Bond Portfolio (the "Emerging Markets Portfolio"), the Phoenix
Strategic Income Fund (the "Income Portfolio"), are the six portfolios
currently offered by the Trust (each a "Portfolio," and, together, the
"Portfolios").
The Investment Advisers
The investment adviser for the Bond Portfolio, Mid Cap Portfolio,
International Portfolio, Emerging Markets Portfolio and Income Portfolio is
Phoenix Investment Counsel, Inc. ("PIC" or the "Adviser"). PIC is a subsidiary
of Phoenix Duff & Phelps Corporation and an indirect subsidiary of Phoenix Home
Life Mutual Insurance Company ("Phoenix Home Life"). The investment adviser for
the Real Estate Portfolio at its inception was 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
Duff & Phelps Investment Management Co. ("DPIM"), a subsidiary of Phoenix Duff
& Phelps Corporation and an indirect majority owned subsidiary of Phoenix Home
Life, for which DPIM is paid a fee by PRS. On March , 1998, DPIM purchased
the management rights for the Portfolio from PRS and PRS' contract was assigned
to DPIM.
See "Management of the Trust" for a description of the Investment Advisory
Contracts, management fees and each investment adviser's undertaking to
reimburse the Trust for certain expenses.
Distributor and Distribution Plans
Phoenix Equity Planning Corporation ("Equity Planning" or "Distributor"),
serves as national distributor of the Trust'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 Trust's transfer agent. See "The Custodian and
Transfer Agent."
The Trust has adopted amended and restated distribution plans pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "1940
Act") for all classes of all Portfolios. Pursuant to the distribution plan
adopted for Class A Shares, the Trust will pay the Distributor an amount equal
to 0.25% annually of the Trust'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 ("Service Fee"). Pursuant to the distribution plan adopted for Class B
Shares of a Portfolio, the Trust shall reimburse the Distributor up to a
maximum annual rate of 0.75% of the Trust'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 0.25% for a Service
Fee. Pursuant to the distribution plan adopted for Class C Shares and Class M
Shares, the Emerging Markets Portfolio and the Income Portfolio shall reimburse
the Distributor up to a maximum annual rate of 0.75% and 0.25%, respectively,
of the average daily net assets of the Emerging Markets Portfolio and the
Income Portfolio for distribution expenses incurred in connection with the sale
and promotion of each class of shares and 0.25% for a Service Fee. See
"Distribution Plans."
Purchase of Shares
The Trust offers two classes of shares of each Portfolio and two
additional classes of shares of the Emerging Markets Portfolio and the Income
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" and "Class M Shares")
or (ii) on a contingent deferred basis (the "Class B Shares" and "Class C
Shares"). An additional class of shares of the Income Portfolio (Class X
Shares) is currently closed to new investors. 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 and M Shares are offered to the public at the next determined net
asset value after receipt of the order by State Street Bank and Trust Company
("State Street Bank") plus a sales charge. The maximum initial sales charge is
4.75% and 3.50%, respectively, of the offering price on single purchases of
less than $50,000. The sales charges are reduced on a graduated scale on single
purchases of $50,000 or more.
Class B and C Shares are offered to the public at the next determined net
asset value after receipt of an order by State Street Bank with no sales
charge. Class B Shares are subject to a sales charge if they are redeemed
within five years of purchase. Class C Shares redeemed within one year of
purchase are subject to a 1% sales charge.
Shares of each Class represent an identical interest in the investment
portfolio of a Portfolio and have the same rights. For more information on fees
and charges applicable for each Portfolio and Class, refer to "Fund Expenses"
and "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."
3
<PAGE>
Redemption of Shares
Class A, M and X Shares may be redeemed at any time at the net asset value
per share next computed after receipt of a redemption request by State Street
Bank. Class B and C shareholders redeeming shares within certain time periods
of the date of purchase will normally be assessed a contingent deferred sales
charge. See "How to Redeem Shares."
Risk Factors
There can be no assurance that 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 Income Portfolio may invest in High Yield-High Risk securities,
commonly referred to as "junk bonds." Investment in such securities is
speculative and involves risks not associated with investment in higher rated
securities, including overall greater risk of non-payment of interest and
principal and potentially greater sensitivity to general economic conditions
and changes in interest rates.
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% and the Emerging Markets Portfolio's annual
turnover rate may be as high as 600%. Because of PIC's strict "sell"
discipline, each 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, 1997.
<TABLE>
<CAPTION>
Bond Bond Mid Cap Mid Cap
Portfolio Portfolio Portfolio Portfolio
(Class A (Class B (Class A (Class B
Shares) Shares) Shares) Shares)
-------- -------------------- -------- ------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases 4.75% None 4.75% None
(as percentage of offering price)
Maximum Sales Load Imposed on Reinvested None None None None
Dividends
Deferred Sales Load (as a percentage of original None 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 during the 4th &
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(a) None None(a) None
Exchange Fee None None None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.45% 0.45% 0.75% 0.75%
12b-1 Fees (b) 0.25% 1.00% 0.25% 1.00%
Other Operating Expenses 0.26% 0.26% 0.33% 0.33%
---- ---- ------ ----
Total Fund Operating Expenses 0.96% 1.71% 1.33% 2.08%
==== ==== ====== ====
</TABLE>
<TABLE>
<CAPTION>
International International Real Estate Real Estate
Portfolio Portfolio Portfolio Portfolio
(Class A (Class B (Class A (Class B
Shares) Shares) Shares) Shares)
---- --- --------- ----
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases 4.75% None 4.75% None
(as percentage of offering price)
Maximum Sales Load Imposed on Reinvested None None None None
Dividends
Deferred Sales Load (as a percentage of original None 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(a) None None(a) None
Exchange Fee None None None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.75% 0.75% 0.75% 0.75%
12b-1 Fees (b) 0.25% 1.00% 0.25% 1.00%
Other Operating Expenses (After Reimbursement) 0.56% 0.56% 0.30%(c) 0.30%(c)
---- ---- ----- ----
Total Fund Operating Expenses 1.56% 2.31% 1.30% 2.05%
==== ==== ===== ====
</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) "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. Rule 12b-1
Fees as stated include a Service Fee. See "Distribution Plans."
(c) The Adviser 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,
1998 exceed 1.30% and 2.05%, respectively, of the average net assets. Other
operating expenses absent expense reimbursement equal approximately 0.54% and
0.54%, respectively, of average net assets. Total operating expenses absent
expense reimbursement equal approximately 1.54% and 2.29%, respectively, of
average net assets.
5
<PAGE>
<TABLE>
<CAPTION>
Emerging Markets Portfolio
--------------------------------------------------------------------
Class A Class B Class C Class M
Shares Shares Shares (c) Shares (c)
------------ ------------------------- --------------------- -----
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases 4.75% None None 3.50%
(as percentage of offering price)
Maximum Sales Load Imposed on Reinvested Dividends None None None None
Deferred Sales Load (as a percentage of original purchase None 5% during the first year, 1% during the None
price or redemption proceeds, as applicable) decreasing 1% annually first year
to 2% during the 4th & 5th
years; dropping from
2% to 0% after the 5th year
Redemption Fee None(a) None None None
Exchange Fee None None None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.75% 0.75% 0.75% 0.75%
12b-1 Fees (b) 0.25% 1.00% 1.00% 0.50%
Other Operating Expenses 0.40% 0.40% 0.38% 0.38%
----- ---- ---- -----
Total Fund Operating Expenses 1.40% 2.15% 2.13% 1.63%
===== ==== ==== =====
</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) "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. Rule 12b-1
Fees as stated include a Service Fee. See "Distribution Plans."
(c) Prior to March 27, 1998 Class C and M Shares were not offered.
<TABLE>
<CAPTION>
Income Portfolio
-----------------------------------------------------------------------
Class A Class B Class C Class M Class X
Shares (b) Shares (b) Shares (b) Shares (b) hares (d)
---------- -------------------- ------------ ---------- ----------
Pro Forma) (Pro Forma) (Pro Forma) (Pro Forma) Pro Forma)
<S> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases 4.75% None None 3.50% None
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested Dividends None None None None None
Deferred Sales Load (as a percentage of original purchase None 5% during the first 1% during the None None
price or redemption proceeds, as applicable) year, decreasing 1% first year
annually to 2% during
the fourth and fifth
years; decreasing to
0% after the fifth
year
Redemption Fee None None None None None
Exchange Fee None None None None None
Annual Fund Operating Expenses
(as a percentage of average net assets for the period
ended November 30, 1998)
Management Fees 0.55% 0.55% 0.55% 0.55% 0.55%
12b-1 Fees (a) 0.25% 1.00% 1.00% 0.50% 0.00%
Other Operating Expenses (After Reimbursement) (c) 0.20% 0.20% 0.20% 0.20% 0.20%
----- ---- ---- ----- -----
Total Fund Operating Expenses 1.00% 1.75% 1.75% 1.25% 0.75%
===== ==== ==== ===== =====
</TABLE>
(a) "12b-1 Fees" represent an asset-based sales charge that, for a
long-term shareholder, may be higher than the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc. ("NASD"). Rule
12b-1 Fees as stated include a Service Fee. See "Distribution Plans."
(b) Prior to March 27, 1998, Class A, Class B, Class C and Class M Shares
were not offered for the Income Portfolio.
(c) The Adviser has agreed to reimburse the Income Portfolio for the amount
by which other operating expenses for the fiscal year ended November 30, 1998
exceed 0.20% of the Fund's average net assets for Class A, Class B, Class C,
Class M Shares and Class X Shares, respectively. Other operating expenses are
estimated to be 1.79% for Class A, B, C, M and X Shares, respectively, absent
such reimbursement. Total fund operating expenses are estimated to be 2.59%,
3.34%, 3.34%, 2.84% and [ ]% for Class A, B, C, M and X Shares, respectively,
absent such reimbursement.
(d) Effective March 27, 1998, Class X Shares are closed to new investors.
6
<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 $ 77 $ 98 $ 160
Bond Portfolio (Class B Shares) 67 84 113 182
Mid Cap Portfolio (Class A Shares) 60 88 117 200
Mid Cap Portfolio (Class B Shares) 71 95 132 222
International Portfolio (Class A Shares) 63 94 128 224
International Portfolio (Class B Shares) 73 102 144 246
Real Estate Portfolio (Class A Shares) 60 87 115 197
Real Estate Portfolio (Class B Shares) 71 94 130 219
Emerging Markets Portfolio (Class A Shares) 61 89 119 205
Emerging Markets Portfolio (Class B Shares) 72 97 134 227
Emerging Markets Portfolio (Class C Shares) 32 67 114 246
Emerging Markets Portfolio (Class M Shares) 51 85 121 222
Income Portfolio Class A Shares 57 78 100 164
Income Portfolio Class B Shares 68 85 115 186
Income Portfolio Class C Shares 28 55 95 206
Income Portfolio Class M Shares 47 73 101 181
Income Portfolio Class X Shares 8 24 42 93
An investor would pay the following expenses on the same
$1,000 investment assuming (1) 5% annual return and (2) no
redemption at the end of each time period:
Bond Portfolio (Class A Shares) $ 57 $ 77 $ 98 $ 160
Bond Portfolio (Class B Shares) 17 54 93 182
Mid Cap Portfolio (Class A Shares) 60 88 117 200
Mid Cap Portfolio (Class B Shares) 21 65 112 222
International Portfolio (Class A Shares) 63 94 128 224
International Portfolio (Class B Shares) 23 72 124 246
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) 61 89 119 205
Emerging Markets Portfolio (Class B Shares) 22 67 114 227
Emerging Markets Portfolio (Class C Shares) 22 67 114 246
Emerging Markets Portfolio (Class M Shares) 51 85 121 222
Income Portfolio Class A Shares 57 78 100 164
Income Portfolio Class B Shares 18 55 95 186
Income Portfolio Class C Shares 18 55 95 206
Income Portfolio Class M Shares 47 73 101 181
Income Portfolio Class X Shares 8 24 42 93
</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."
7
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables set forth certain financial information for the
respective fiscal years of the Portfolios. 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 Trust'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,
-----------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value,
beginning of period........ $ 11.28 $11.40 $10.09 $11.58 $11.10 $10.66 $10.37 $10.68 $10.18
Income from
investment
operations
Net investment
income ................... 0.59 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) ................... 0.05 ( 0.12) 1.34 (1.49) 0.76 0.57 0.29 -- 0.52
------ ------- ------ ------ ------- ------- ------- ------- -------
Total from investment
operations .............. 0.64 0.48 1.95 (0.84) 1.36 1.23 0.94 0.65 1.20
------ ------- ------ ----- ------- ------- ------- ------- -------
Less distributions
Dividends from net
investment
income ................... ( 0.59) ( 0.60) ( 0.61) (0.65) (0.60) (0.66) (0.65) (0.65) (0.68)
Dividends from net
realized gains ........... ( 0.16) -- ( 0.03) -- (0.28) (0.13) -- (0.31) (0.02)
------ ------ ------ ------ ------- ------- ------- ------- ------
Total distributions ( 0.75) ( 0.60) ( 0.64) (0.65) (0.88) (0.79) (0.65) (0.96) (0.70)
------ ------ ------ ------ ------- ------- ------- ------ ------
Change in net asset
value ..................... ( 0.11) ( 0.12) 1.31 (1.49) 0.48 0.44 0.29 (0.31) 0.50
------ ------ ------ ------ ------- ------- ------- ------- ------
Net asset value, end
of period ................. $11.17 $11.28 $11.40 $10.09 $11.58 $11.10 $10.66 $10.37 $10.68
====== ====== ====== ====== ======= ======= ======= ======= ======
Total return(2) ............ 6.04% 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) ........ $122,763 $136,558 $147,821 $141,623 $171,272 $35,625 $27,093 $20,240 $17,590
Ratio to average net
assets of:
Operating expenses......... 0.96% 0.94% 0.97% 0.96% 0.75% 0.78% 0.94% 1.00% 1.00%
Net investment
income ................... 5.36% 5.42% 5.65% 5.65% 5.33% 5.92% 6.17% 6.29% 6.55%
Portfolio turnover ......... 15% 27% 25% 54% 62% 145% 99% 130% 161%
<CAPTION>
Class A Class B
--------------- -------------------------------------------
From Year Ended From
Inception November 30, Inception
7/15/88 to ------------------------------ 3/16/94 to
11/30/88 1997 1996 1995 11/30/94
-------------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period......... $10.00 $11.32 $11.44 $10.12 $11.21
Income from
investment
operations
Net investment
income .................... 0.24 (1) 0.50 0.52 0.53 0.39
Net realized and
unrealized gain
(loss) .................... 0.18 0.06 (0.12) 1.35 (1.09)
------- ------ ------- ------- -------
Total from investment
operations ............... 0.42 0.56 0.40 1.88 (0.70)
------- ------ ------- ------- -------
Less distributions
Dividends from net
investment
income .................... (0.24) (0.50) (0.52) (0.53) (0.39)
Dividends from net
realized gains ............ -- (0.16) -- (0.03) --
------- ------- ------- -------- -------
Total distributions (0.24) (0.66) (0.52) (0.56) (0.39)
------- ------- ------- -------- -------
Change in net asset
value ...................... 0.18 (0.10) (0.12) 1.32 (1.09)
------- ------- ------- -------- -------
Net asset value, end
of period .................. $10.18 $11.22 $11.32 $11.44 $10.12
======= ======= ======= ======== =======
Total return(2) ............. 11.06%(3) 5.13% 3.60% 19.07% -6.42%(4)
Ratios/supplemental data:
Net assets, end of
period (thousands) ......... $12,226 $5,797 $ 4,762 $3,142 $1,147
Ratio to average net
assets of:
Operating expenses.......... 1.00%(3) 1.71% 1.69% 1.72% 1.54%(3)
Net investment
income .................... 6.26%(3) 4.60% 4.68% 4.90% 5.07%(3)
Portfolio turnover .......... 33%(3) 15% 27% 25% 54%
</TABLE>
- -----------
(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.
8
<PAGE>
INTERNATIONAL PORTFOLIO
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------------------------------------------
Year Ended November 30,
---------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
---------------- ---------------- ---------------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period...... $14.48 $12.20 $12.63 $11.16 $8.96 $10.90 $10.27
Income from
investment
operations(5)
Net investment
income (loss) .......... 0.03(1) 0.04(1) 0.03 (1) (0.01) -- 0.11 0.15
Net realized and
unrealized gain
(loss) 1.01 2.28 0.42 1.48 2.20 (1.10) 0.69
----- ----- ------ ----- ------- ------ -------
Total from
investment
operations ............ 1.04 2.32 0.45 1.47 2.20 (0.99) 0.84
----- ------ ------ ----- ------- ------ -------
Less distributions
Dividends from net
investment
income ................. (0.29) -- -- -- -- (0.12) (0.21)
Dividends from net
realized gains ......... (1.34) (0.04) (0.88) -- -- (0.64) --
Distribution in
excess of
accumulated net
investment
income ................. -- -- -- -- -- (0.19) --
------ ------ ----- ----- ------- ------ -------
Total distributions (1.63) (0.04) (0.88) -- -- (0.95) (0.21)
------ ------ ----- ----- ------- ------ -------
Change in net asset
value ................... (0.59) 2.28 (0.43) 1.47 2.20 (1.94) 0.63
------ ------ ------ ------ ------- ------ -------
Net asset value, end
of period ............... $13.89 $14.48 $12.20 $12.63 $11.16 $8.96 $10.90
====== ===== ======= ====== ====== ====== =======
Total return(2) .......... 8.21% 19.03% 4.12% 13.17% 24.55% -9.91% 8.26%
Ratios/supplemental data:
Net assets, end of
period (thousands) ...... $131,338 $135,524 $129,352 $167,918 $91,196 $26,188 $21,427
Ratio to average net
assets of:
Operating expenses ...... 1.56% 1.57% 1.70% 1.47% 1.78% 1.97% 2.09%
Net investment
income (loss) ........... 0.22% 0.33% 0.23% 0.20% (0.04)% 0.85% 1.29%
Portfolio turnover ....... 167% 151% 236% 186% 191% 82% 128%
Average commission
rate paid(7) ............ $0.0177 $0.0205 N/A N/A N/A N/A N/A
<CAPTION>
Class A Class B
----------------------- -----------------------------------------------------------
From Year Ended From
Inception November 30, Inception
11/1/89 to ------------------------------------------ 7/15/94 to
1990 11/30/89 1997 1996 1995 11/30/94
--------- ------------ ------------ --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period...... $10.44 $10.00 $14.22 $12.07 $12.60 $12.80
Income from
investment
operations(5)
Net investment
income (loss) .......... 0.15(6) 0.02(6) (0.08)(1) (0.05)(1) (0.07)(1) (0.01)
Net realized and
unrealized gain
(loss) (0.22) 0.42 1.00 2.24 0.42 (0.19)
------- ------- ------ ----- ------ ------
Total from
investment
operations ............ (0.07) 0.44 0.92 2.19 0.35 (0.20)
------- ------- ------ ----- ------ ------
Less distributions
Dividends from net
investment
income ................. (0.10) -- (0.24) -- -- --
Dividends from net
realized gains ......... -- -- (1.34) (0.04) (0.88) --
Distribution in
excess of
accumulated net
investment
income ................. -- -- -- -- -- --
------- ------- ------ ------ ------- ------
Total distributions (0.10) -- (1.58) (0.04) (0.88) --
------- ------- ------ ------ ------- ------
Change in net asset
value ................... (0.17) 0.44 (0.66) 2.15 (0.53) (0.20)
------- ------- ------ ------ ------- ------
Net asset value, end
of period ............... $10.27 $10.44 $13.56 $14.22 $12.07 $12.60
======= ======= ====== ===== ======= ======
Total return(2) .......... -0.75% 53.53%(3) 7.37% 18.16% 3.28% -1.56%(4)
Ratios/supplemental data:
Net assets, end of
period (thousands) ...... $16,583 $1,593 $10,159 $6,955 $3,261 $1,991
Ratio to average net
assets of:
Operating expenses ...... 1.50% 1.50%(3) 2.31% 2.31% 2.50%
Net investment
income (loss) ........... 1.48% 3.24%(3) (0.55)% (0.39)% (0.61)%
Portfolio turnover ....... 99% -- 167% 151% 236% 186%
Average commission
rate paid(7) ............ N/A N/A $0.0177 $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) 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.
9
<PAGE>
MID CAP PORTFOLIO
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------------------------
Year Ended November 30,
------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
--------- ---------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period .............. $21.65 $22.03 $18.03 $18.70 $17.95 $16.61 $11.95
Income from
investment
operations(5)
Net investment
income (loss) ......... (0.02)(1) (0.03)(1) 0.05 (1) 0.11 0.11 0.15 0.19
Net realized and
unrealized gain........ 1.52 2.53 4.74 0.10 1.44 2.41 4.64
------- ------- ------ ----- ------ ------ -----
Total from
investment
operations ............ 1.50 2.50 4.79 0.21 1.55 2.56 4.83
------- ------- ------ ----- ------ ------ -----
Less distributions
Dividends from net
investment
income ................ -- -- (0.06) (0.10) (0.13) (0.21) ( 0.17)
Dividends from net
realized gains ........ (2.51) (2.88) (0.73) (0.78) (0.67) (1.01) --
------- ------- ------ ----- ------ ------ -----
Total distributions..... (2.51) (2.88) (0.79) (0.88) (0.80) (1.22) ( 0.17)
------- ------- ------ ----- ------ ------ -----
Change in net asset
value .................. (1.01) (0.38) 4.00 (0.67) 0.75 1.34 4.66
------- ------- ------ ----- ------ ------ -----
Net asset value, end
of period .............. $20.64 $21.65 $22.03 $18.03 $18.70 $17.95 $ 16.61
====== ====== ======= ====== ====== ====== ======
Total return(2) ......... 8.12% 13.52% 27.87% 1.03% 8.94% 16.44% 40.78%
Ratios/supplemental
data:
Net assets, end of
period
(thousands) $360,053 $451,474 $487,674 $419,760 $426,027 $234,472 $119,870
Ratio to average net
assets of:
Operating
expenses ............... 1.33% 1.35% 1.42% 1.36% 1.34% 1.40% 1.24%
Net investment
income (loss) ......... (0.08)% (0.17)% 0.28% 0.59% 0.64% 0.93% 1.94%
Portfolio turnover ...... 161% 242% 218% 227% 174% 287% 458%
Average commission
rate paid(7) ........... $0.0542 $0.0504 N/A N/A N/A N/A N/A
<CAPTION>
Class A Class B
--------------------- --------------------------------------------------------
From From
Inception Year Ended November 30, Inception
11/1/89 to ----------------------------------------- 7/18/94 to
1990 11/30/89 1997 1996 1995 11/30/94
--------- ---------- -------- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period .............. $10.29 $10.00 $21.30 $21.85 $17.97 $17.68
Income from
investment
operations(5)
Net investment
income (loss) ......... 0.18 (6 0.03 (6) (0.16)(1) (0.18)(1) (0.12)(1) (0.01)
Net realized and
unrealized gain........ 1.59 0.26 1.47 2.51 4.75 0.30
------- ------- ------- ------- ------ ------
Total from
investment
operations ............ 1.77 0.29 1.31 2.33 4.63 0.29
------- ------- ------ ------- ------ ------
Less distributions
Dividends from net
investment
income ................ (0.11) -- -- -- (0.02) --
Dividends from net
realized gains ........ -- -- (2.50) (2.88) (0.73) --
------- ------- ------ ------- ------ -----
Total distributions..... (0.11) -- (2.50) (2.88) (0.75) --
------- ------- ------ ------- ------ -----
Change in net asset
value .................. 1.66 0.29 (1.19) (0.55) 3.88 0.29
------- ------- ------ ------- ------ -----
Net asset value, end
of period .............. $11.95 $10.29 $20.11 $21.30 $21.85 $17.97
======= ======= ===== ====== ====== =======
Total return(2) ......... 17.26% 35.28%(3) 7.27% 12.75% 26.92%
Ratios/supplemental
data:
Net assets, end of
period
(thousands) $15,840 $1,568 $18,583 $17,599 $10,908 $1,519
Ratio to average net
assets of:
Operating
expenses ............... 1.50% 1.50%(3) 2.08% 2.11% 2.18%
Net investment
income (loss) ......... 2.22% 4.68%(3) (0.85)% (0.92)% (0.58)%
Portfolio turnover ...... 454% 5%(3) 161% 242% 218% 227%
Average commission
rate paid(7) ........... N/A N/A $0.0542 $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) 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.
10
<PAGE>
REAL ESTATE SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------ -----------------------------------------
Year Ended Year Ended
November 30, November 30,
----------------------- ---------------------
From Inception From Inception
1997 1996 3/1/95 to 11/30/95 1997 1996 3/1/95 to 11/30/95
--------- -------- ------------------ --------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $13.14 $10.72 $ 10.00 $ 13.10 $10.68 $10.00
Income from investment operations
Net investment income .................... 0.49 (1)(5) 0.53(1) 0.43 (1)(5) 0.38(1)(5) 0.46(1) 0.36(1)(5)
Net realized and unrealized gain ......... 3.52 2.50 0.55 3.50 2.47 0.56
------- ------ ---------- ------ ------- -------
Total from investment operations ........ 4.01 3.03 0.98 3.88 2.93 0.92
------- ------ ---------- ------ ------- -------
Less distributions
Dividends from net investment income ..... (0.51) ( 0.59) (0.26) (0.41) (0.49) (0.24)
Dividends from net realized gains ........ (0.25) ( 0.02) -- (0.25) (0.02) --
------- ------- ---------- ------- ------- -------
Total distributions ..................... (0.76) ( 0.61) (0.26) (0.66) (0.51) (0.24)
------- ------- ---------- ------ ------- -------
Change in net asset value ................. 3.25 2.42 0.72 3.22 2.42 0.68
------- ------- ---------- ------ ------- -------
Net asset value, end of period ............ $16.39 $ 13.14 $ 10.72 $ 16.32 $13.10 $10.68
======== ======== ========== ======= ======= =======
Total return(2) ........................... 31.44% 29.20% 9.87%(4) 30.44% 28.25% 9.21%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) ..... $36,336 $22,872 $13,842 $23,091 $8,259 $2,239
Ratio to average net assets of:
Operating expenses ....................... 1.30% 1.30% 1.30%(3) 2.05% 2.05% 2.05%(3)
Net investment income .................... 3.34% 4.55% 5.79%(3) 2.55% 3.95% 5.03%(3)
Portfolio turnover ........................ 54% 24% 9%(4) 54% 24% 9%(4)
Average commission rate paid(6) ........... $ 0.0493 $0.0478 N/A $0.0493 $0.0478 N/A
</TABLE>
- -----------
(1) Includes reimbursement of operating expenses by investment adviser of
$0.04, $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, November 30,
--------------------- ----------------------
From Inception From Inception
1997 1996 9/5/95 to 11/30/95 1997 1996 9/5/95 to 11/30/95
--------- -------- ------------------ ------- ---------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $14.80 $10.18 $ 10.00 $14.78 $10.18 $10.00
Income from investment operations
Net investment income ................... 1.38 (5) 1.26 (1) 0.25 (1)(5) 1.26 (5) 1.19 (1) 0.22 (1)(5)
Net realized and unrealized gain ........ 0.17 4.56 0.18 0.18 4.53 0.20
---------- ---------- ---------- ------- ------- --------
Total from investment operations ....... 1.55 5.82 0.43 1.44 5.72 0.42
---------- ---------- ---------- ------- ------- --------
Less distributions
Dividends from net investment income .... (1.28) (1.20) (0.25) (1.22) (1.12) (0.24)
---------- ---------- ---------- ------- ------- --------
Dividends from net realized gains ....... (2.23) -- -- (2.23) -- --
Total distributions .................... (3.51) (1.20) (0.25) (3.45) (1.12) (0.24)
---------- ---------- ---------- ------- ------- --------
Change in net asset value ................ (1.96) 4.62 0.18 (2.01) 4.60 0.18
---------- ---------- ---------- ------- ------- --------
Net asset value, end of period ........... $12.84 $14.80 $10.18 $12.77 $14.78 $10.18
========== ========== ========== ======= ======= ========
Total return(2) .......................... 11.91% 60.18% 4.40%(4) 11.07% 58.94% 4.22%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) .... $67,875 $29,661 $12,149 $38,673 $9,713 $596
Ratio to average net assets of:
Operating expenses ...................... 1.40% 1.50% 1.50%(3) 2.15% 2.25% 2.25%(3)
Net investment income ................... 9.90% 10.41% 10.48%(3) 9.14% 9.79% 10.29%(3)
Portfolio turnover ....................... 614% 378% 38%(4) 614% 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.
11
<PAGE>
INCOME PORTFOLIO
<TABLE>
<CAPTION>
Class X Shares
-------------------------------------------------
Year Ended November 30, From Inception
1997 1996 1995 1994 4/1/93 to 11/30/93
------- --------- --------- -------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............. $10.03 $ 9.45 $ 8.97 $10.12 $10.00
Income from investment operations
Net investment income ........................... 0.74 (1)(4) 0.78 (1) 0.91 (1) 0.63 (1) 0.40 (1)
Net realized and unrealized gain (loss) ......... 0.09 0.59 0.51 (1.13) 0.12
--------- --------- --------- --------- ---------
Total from investment operations ............... 0.83 1.37 1.42 (0.50) 0.52
--------- --------- --------- --------- ---------
Less distributions
Dividends from net investment income ............ (0.75) (0.79) (0.94) (0.59) (0.40)
Distributions from net realized gains ........... (0.12) -- -- (0.06) --
--------- --------- --------- --------- ---------
Total distributions ............................ (0.87) (0.79) (0.94) (0.65) (0.40)
--------- --------- --------- --------- ---------
Change in net asset value ........................ (0.04) 0.58 0.48 (1.15) 0.12
--------- --------- --------- --------- ---------
Net asset value, end of period ................... $9.99 $10.03 $ 9.45 $ 8.97 $10.12
========= ========= ========= ========= =========
Total return ..................................... 15.32% 16.65% -5.26% 5.35%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) ............ $6,480 $5,967 $5,170 $1,780 $1,989
Ratio to average net assets of:
Operating expenses .............................. 0.65% 0.65% 0.65% 0.65% 0.65%(2)
Net investment income ........................... 7.45% 8.11% 7.60% 6.64% 6.13%(2)
Portfolio turnover ............................... 194% 231% 618% 124% 183%(2)
</TABLE>
- -----------
(1) Includes reimbursement of operating expenses by Adviser of $0.22, $0.15,
$0.40, $0.34 and $0.35, respectively.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
12
<PAGE>
PERFORMANCE INFORMATION
The Trust 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 each class of shares of
each Portfolio in accordance with formulas specified by the Securities and
Exchange Commission and are based on historical earnings and are not intended
to indicate future performance.
The yield of 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 Trust 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 each class of
shares of each Portfolio will be expressed in terms of the average annual
compounded rate of return of a hypothetical investment in such class of 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 and
M Shares and the maximum contingent deferred sales charge applicable to a
complete redemption of the investment in the case of Class B and C Shares, and
assume that all dividends and distributions on each class of shares are
reinvested when paid. Performance data quoted for Class B, C and M Shares
covering periods prior to the inception of such classes of shares will reflect
historical performance of Class A Shares of a Portfolio as adjusted for the
higher operating expenses applicable to such class of shares. The Trust 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 Trust may from time to time, publish material citing
historical volatility for shares of the Trust.
The Trust 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 Trust 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 Trust 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 Trust against certain widely acknowledged outside standards
or indices for stock and bond market performance, such as Standard & Poor's 500
Composite Stock Price Index (the S&P 500), Standard & Poor's 400 Mid Cap Index
(S&P 400), Dow Jones Industrial Average, Europe Australia Far East Index
(EAFE), Consumer 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 Trust or Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Trust to
respond quickly to changing market and economic conditions. From time to time,
the Trust may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, the Trust 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 Trust's portfolio; or compare the Trust's equity
13
<PAGE>
or bond return figure to well-known indices of market performance, including,
but not limited to: the S&P 500, S&P 400, Dow Jones 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, Class B, Class C or Class M 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 Trust'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 six 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
14
<PAGE>
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 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.
The table below shows the dollar weighted average of total investments,
for the year ended November 30, 1997, listed by S&P rating categories, or
comparable rating by another Nationally Recognized Statistical Rating
Organization ("NRSRO"). The column titled "Not Rated" reflects the percentage
of portfolio holdings which were not rated by any NRSRO but which the Adviser
has judged to be comparable in quality to the corresponding rating categories.
<TABLE>
<CAPTION>
S&P Rating Rated Not Rated
- --------------- ---------- ----------
<S> <C> <C>
AAA 38.5% 0.8%
AA 12.7 0.0
A 16.7 0.5
BBB 9.8 18.0
BB 0.8 0.0
B 0.0 0.3
CCC 0.0 0.0
CC 0.0 0.0
C 0.0 0.0
D 0.0 0.0
---- ----
Total 78.5% 19.6%
</TABLE>
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 6% tax-free investment, the computation would
be: 6% / (1--.28 tax rate), or 6% / .72 = 8.33% Taxable Yield.
In this example, an investor's after-tax yield will be higher from the 6%
tax-free investment if taxable yields are below 8.33%, 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 Trust 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.
15
<PAGE>
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. 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
16
<PAGE>
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, 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
17
<PAGE>
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 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
18
<PAGE>
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- 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 collateralized 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.
The table below shows the dollar weighted average of total investments,
for the year ended November 30, 1997, listed by Moody's rating categories, or
comparable rating by another NRSRO. The column titled "Not Rated" reflects the
percentage of portfolio holdings which were not rated by any NRSRO but which
the Adviser has judged to be comparable in quality to the corresponding rating
categories.
<TABLE>
<CAPTION>
Moody's Rating Rated Not Rated
- ---------------- --------- ----------
<S> <C> <C>
Aaa 0.0% 0.0%
Aa 0.0 0.0
A 0.0 4.0
Baa 1.1 0.2
Ba 14.0 6.0
B 35.9 30.3
Caa 1.3 3.8
Ca 0.0 0.0
C 0.0 0.0
D 0.0 0.0
---- ----
Total 52.3% 44.3%
</TABLE>
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
19
<PAGE>
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 are 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 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, the Adviser 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
20
<PAGE>
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 the Adviser 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 the Adviser 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 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 the Adviser 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 the
Adviser 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.
21
<PAGE>
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.
Income Portfolio
The Income Portfolio's investment objective is to maximize current income
by investing in debt securities. Capital appreciation is a secondary objective.
In seeking its investment objectives, it is anticipated that, under normal
conditions, at least 65% of the value of the Portfolio's assets will be
invested in debt securities. The Portfolio will invest principally in four
market sectors: (1) debt securities of U.S. companies including lower-rated,
high yield securities, (2) mortgage securities, (3) debt securities of foreign
governments and companies including non-dollar denominated, and (4) U.S.
Government securities.
The table below shows the dollar weighted average of total investments for
the fiscal year ended November 30, 1997, listed by Moody's Investors Service,
Inc. ("Moody's") rating categories, or comparable rating by another NRSRO. The
column titled "Not Rated" reflects the percentage of portfolio holdings which
were not rated by any NRSRO but which the Adviser has judged to be comparable
in quality to the corresponding rating categories.
<TABLE>
<CAPTION>
Moody's Rating Rated Not Rated
<S> <C> <C>
Aaa 23.4% 0.0%
Aa 9.8 0.0
A 5.5 1.7
Baa 13.2 3.1
Ba 14.5 1.9
B 16.8 5.0
Caa 0.0 0.0
Ca 0.0 0.0
C 0.0 0.0
D 0.0 0.0
---- ----
Total 83.2 11.7
</TABLE>
Investment Grade Securities of domestic issuers in which the Portfolio may
invest are all types of long- or short-term debt obligations ("Debt
Obligations"), such as bonds, debentures, notes, equipment lease certificates,
equipment trust certificates, asset-backed securities, commercial and
residential pass-through securities, collateralized mortgage obligations
(including REMICs) issued by private issuers ("private label CMOs"),
conditional sales contracts and commercial paper (including obligations secured
by such instruments). The Investment Grade Securities that the Portfolio may
purchase consist of securities rated in the top four rating categories by a
NRSRO. 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.
High Yield-High Risk Securities of domestic issuers in which the Portfolio
may invest are preferred and preference stock and debt obligations. The High
Yield-High Risk Securities that the Portfolio may purchase are securities in
the lower rating categories of the NRSROs (BB through CCC and Ba through Caa),
and unrated securities. (The fact that certain securities are unrated does not
necessarily reflect the level of quality or risk that may be associated with
such securities. Some issuers do not seek to have their securities rated.)
These lower rated and comparable unrated securities, while selected for their
relatively high yield, may be subject to greater fluctuations in market value
and greater risks of loss of income and principal than higher rated securities.
High yields often reflect the greater risks associated with the securities that
offer such yields. Because of these greater risks, High Yield-High Risk
Securities often carry lower ratings.
Up to 50% of the assets of the Income Portfolio may be invested in
securities of foreign issuers. The foreign securities in which the Portfolio
may invest are issued by foreign issuers in developed countries considered
creditworthy by the Adviser and in so-called emerging market countries. The
Fund will invest in government obligations supported by the authority to levy
taxes sufficient to ensure the payment of all principal and interest due on
such obligations.
The U.S. Government Securities in which the Portfolio may invest are (1)
U.S. Treasury obligations, which differ only in their interest rates,
maturities and times of issuance and include U.S. Treasury bills (maturities of
one year or less), U.S. Treasury notes (maturities of one to 10 years) and U.S.
Treasury bonds (generally maturities of greater than 10 years); and (2)
obligations issued or guaranteed by U.S. Government agencies, authorities and
instrumentalities which are supported by any of the following: (a) the full
faith and credit of the U.S. Government (such as Government National Mortgage
Association ("GNMA") Certificates), (b) the right of the issuer to borrow an
amount limited to a specific line of credit from the U.S. Treasury (which line
of credit is equal to the face value of the government obligation), (c)
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality, or (d) the creditworthiness of the
instrumentality. The Portfolio may invest in U.S. Government Securities
denominated in foreign currencies, such as U.S. Treasury obligations and
securities issued by GNMA, FNMA, FHLMC and SLMA (each as defined below). An
example of such an agency issue in which the Portfolio may invest is PERLS
(Principal Exchange Rate Linked Securities), which are bonds whose principal
repayment, while paid in U.S. dollars, is linked to the level of the exchange
rate between the U.S. dollar and the currency of one or more countries.
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).
22
<PAGE>
Risk Considerations
Economic conditions can sometimes narrow the spreads between yields on
lower rated (or comparable unrated) securities and yields on higher rated
securities. If these spreads narrow to such a degree that the Adviser believes
that the yields available on lower rated or comparable unrated securities do
not justify the higher risks associated with those securities, the Portfolio
may invest in higher rated or comparable unrated securities. Investments in
High Yield-High Risk pass-through securities are subject to prepayment and
reinvestment risks similar to those described above.
High Yield-High Risk Securities may also include increasing rate notes.
Increasing rate notes are High Yielding, High Risk securities with maturities
ranging from two to five years, whose interest rates increase under specified
conditions. They are issued as temporary financing with the intent of being
replaced in six months or less. Accordingly, investments in these securities
can result in the Portfolio having a higher than normal portfolio turnover
rate. See "Portfolio Turnover."
Some High Yield-High Risk Securities are convertible into or exchangeable
for equity securities or carry the right--in the form of a warrant or as part
of a unit with the security--to acquire equity securities. The Portfolio would
ordinarily purchase these securities for their yield characteristics rather
than for the purpose of exercising the associated rights to obtain equity
securities. However, if the Portfolio obtains equity securities, the Portfolio
may hold these equity securities for such period of time as the Adviser deems
prudent, provided that the value of such equity securities will not at any time
exceed 2% of the Portfolio's assets.
The Adviser evaluates the purchase of High Yield-High Risk Securities for
the Portfolio primarily through the exercise of its own investment and credit
analysis and on the ratings assigned by NRSROs. The Portfolio will not invest
in High Yield Securities rated lower than CCC/Caa by a NRSRO. Such securities
are regarded, on balance, as being of poor standing and predominantly
speculative with respect to the capacity to pay interest and repay principal in
accordance with the terms of the obligation. Although such securities will
likely have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions. For a
more complete description of ratings of High Yield-High Risk Securities, see
the Appendix.
Because of the additional risks associated with investments in these
securities, an investor may wish to consider carefully the manner in which the
Portfolio seeks its objective, and the investor's ability to assume these
risks, before investing in the Fund.
The risks of investing in foreign countries and companies are outlined
above in the International Portfolio "Risk Considerations" section. Additional
risk factors connected to investment in emerging markets securities are also
described above in the Emerging Markets Bond Portfolio "Risk Considerations"
section.
Mortgage pass-through securities, CMOs and REMICs are sometimes referred
to as "derivatives," as their value is derived from the performance or value of
such underlying instruments. The value of these instruments can fluctuate to a
greater degree than other debt securities in response to changes in interest
rates and under some circumstances the market for these securities can be less
liquid. Mortgage backed securities may also be subject to 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.
INVESTMENT TECHNIQUES
AND RELATED RISKS
In addition to the investment policies described above, the Trust 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.
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, Emerging Markets and Income Portfolios
may write exchange-traded covered 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, Emerging Markets and
Income Portfolios, on foreign currencies. These Portfolios,
23
<PAGE>
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 pledged account at all times during the option
period. Pledged 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 and the Income Portfolio may invest up to 5% of their 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, Emerging
Markets and Income 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 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
24
<PAGE>
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 Trust understands the position of the staff of the Commission to be
that purchased OTC options and the assets used as "cover" for written OTC
options are illiquid securities. The Trust 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,
Emerging Markets and Income 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, Emerging Markets and Income 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, Emerging Markets and Income Portfolios may enter into financial
futures contracts on foreign currencies.
The Bond, Mid Cap, International, Emerging Markets and Income 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 pledged 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 pledged account with the Fund's custodian bank to collateralize fully the
position and thereby ensure that it is not leveraged. The extent to which 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. The Portfolios may invest in repurchase agreements,
either for temporary defensive 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 (15% of the Income Portfolio's
net 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
25
<PAGE>
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 Trust's account by the Trust'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 Trust 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. The Income Portfolio may similarly lend up to one-third 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, Emerging Markets and Income 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, Emerging Markets and Income 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 pledged account with the Trust'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
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
26
<PAGE>
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 Income Portfolio will invest and 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.
Each 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).
Each Portfolio may purchase pass-through securities at a premium or at a
discount. The values of pass-through securities in which the Portfolios 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 each 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.
Zero Coupon Bonds. The Emerging Markets Portfolio and the Income Portfolio
may invest in debt obligations that do not make any interest payments for a
specified period of time prior to maturity or until maturity. Even though such
bonds do not pay current interest in cash, the Emerging Markets Portfolio and
the Income Portfolio are required to accrue interest income on such investments
and to distribute such amounts to shareholders. Thus, the Emerging Markets
Portfolio and the Income Portfolio would not be able to purchase income-
producing securities to the extent of cash used to pay such distributions and
current income could be less than it otherwise would have been. Alternatively,
the Emerging Markets Portfolio and the Income Portfolio might liquidate
investments in order to satisfy these distribution requirements. The value of
these obligations fluctuates more in response to interest rate changes, if they
are of the same maturity, than does the value of debt obligations that make
current interest payments.
High Yield-High Risk Securities. "High Yield-High Risk Securities" will
ordinarily be in the lower rating categories of NRSROs or will be non-rated
securities deemed by the Adviser to be substantially equivalent to securities
in such lower rating
27
<PAGE>
categories. High Yield-High Risk Securities generally involve a greater
volatility of price and risk of nonpayment of principal and interest than
securities in higher rating categories and yields on these securities fluctuate
over time.
The risk of loss due to default by the issuer is significantly greater for
the holders of High Yield-High Risk Securities because such securities are
generally unsecured and are often subordinated to other creditors of the
issuer. During an economic downturn or a sustained period of rising interest
rates, highly leveraged issuers of High Yield-High Risk Securities may
experience financial stress and may not have sufficient revenues to meet their
interest payment obligations. The issuer's ability to service its debt
obligations may also be adversely affected by specific corporate developments,
or the issuer's inability to meet specific projected business forecasts, or the
unavailability of additional financing.
Factors adversely impacting the market value of High Yield-High Risk Securities
will adversely impact the Portfolio's net asset value to the extent the
Portfolio's assets are invested in such securities. In addition, the Portfolio
may incur additional expenses to the extent it is required to seek recovery
upon a default in the payment of principal or interest on its portfolio
holdings. Because the High Yield-High Risk Securities market is relatively new
and its growth paralleled along economic expansion, it is not clear how this
market may withstand a prolonged recession or economic downturn.
A Portfolio may have difficulty disposing of certain High Yield-High Risk
Securities because there may be a thin trading market for such securities.
Because not all dealers maintain markets in all High Yield-High Risk
Securities, there is no established retail secondary market for many of these
securities, and it is anticipated that such securities could be sold only to a
limited number of dealers or institutional investors. To the extent a secondary
trading market for High Yield-High Risk Securities does exist, it is generally
not as liquid as the secondary market for higher rated securities. The lack of
a liquid secondary market may have an adverse impact on the market price of the
security, and accordingly, the Portfolio's asset value, and on the Portfolio's
ability to dispose of particular issues when necessary to meet the Portfolio's
liquidity needs or on the Portfolio's ability to respond to a specific economic
event, or an event such as a deterioration in the creditworthiness of the
issuer. The lack of a liquid secondary market for certain securities may also
make it more difficult for the Portfolio to obtain accurate market quotations
for purposes of valuing the Portfolio's portfolio. Market quotations are
generally available on many high yield issues only from a limited number of
dealers and may not necessarily represent firm bids of such dealers of prices
for actual sales. While all these considerations are generally relevant to many
high yield securities, they may be particularly relevant to securities which
represent, for example, the right to receive only the interest payments ("IOs")
to be made on a particular security. The yield and value of IOs can be very
sensitive to the rate of principal payments on the debt security as well as to
various market factors. IOs issued by private issuers are generally considered
illiquid. Government-issued IOs backed by fixed-rate mortgages may be deemed
liquid if they can be disposed of promptly in the ordinary course of business
at a value reasonably close to that used in the calculation of net asset value
per share. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of High Yield-High
Risk Securities, especially in a thinly-traded market.
From time to time, proposals have been discussed and new legislation
adopted designed to limit the use of certain High Yield-High Risk Securities by
issuers in connection with leveraged buy-outs, mergers and acquisitions, or to
limit the deductibility of interest payments on such securities. Such laws, or
proposals, if enacted into law, could reduce the market for such securities
generally, and could negatively affect the financial condition of issuers of
High Yield-High Risk Securities and the high yield market in general. For
example, under a provision of the Internal Revenue Code ("Code") enacted in
1989, a corporate issuer may be limited from deducting all of the original
issue discount on high-yield discount obligations (i.e., certain types of debt
securities issued at a significant discount to their face amount).
The market values of High Yield-High Risk Securities tend to reflect
individual corporate developments to a greater extent than do higher rated
securities, which react primarily to fluctuations in the general level of
interest rates. Such lower rated securities also tend to be more sensitive to
economic conditions than are higher rated securities. Accordingly, these lower
rated securities are considered predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligation and will generally involve more credit risk than
securities in the higher rating categories. Even securities rated BBB or Baa,
ratings which are considered investment grade, possess some speculative
characteristics.
The Income Portfolio has no requirements regarding whether the securities
it purchases must be rated. While credit ratings evaluate the safety of
principal and interest payments, they do not evaluate market value risk of High
Yield-High Risk Securities. In addition, credit rating agencies may not change
credit ratings on a timely basis to reflect subsequent events. Accordingly, use
of lower rated securities places more importance on the ability of the Adviser
than does investing in higher quality fixed income securities. The Adviser will
base its investment decisions for the Portfolio on its own determination of
reasonable investment risk and reward. The Adviser's judgment as to the
"reasonableness" of the risk involved in any particular investment will be a
function of its experience in managing fixed-income investments and its
evaluation of (i) general economic and financial conditions; (ii) a specific
issuer's (a) business and management, (b) cash flow, (c) earnings coverage of
interest and dividends, (d) ability to operate under adverse economic
conditions, and (e) fair market value of assets, and (iii) such other
considerations as the Adviser may deem appropriate.
28
<PAGE>
Brady Bonds. The Emerging Markets and Income Portfolios 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.
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 and Income
Portfolios 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 Portfolios 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 Portfolios will be able
to enforce their rights through the lender, and not directly against the
borrower. As a result, in a loan participation the Portfolios assume credit
risk with respect to both the borrower and the lender.
When the Portfolios purchase loan assignments from lenders, they will
acquire direct rights against the borrower, but these rights and the
Portfolios' 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 Trust 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 (15% of the
Income Portfolio's net 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
29
<PAGE>
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 TRUST
The Trust is an open-end management investment company known as a mutual
fund. The Trustees of the Trust ("Trustees") are responsible for the overall
supervision of the Trust and perform the various duties imposed on Trustees by
the Investment Company Act of 1940 and Massachusetts business trust law.
The Advisers
The investment adviser to the Bond, Mid Cap, International, Emerging
Markets and Income 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. Phoenix Home Life Mutual Insurance Company ("Phoenix Home Life")
of Hartford, Connecticut 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 Trust,
PIC also serves as investment adviser to Phoenix Series Fund, Phoenix Strategic
Allocation Fund, Inc., Phoenix Strategic Equity Series Fund (except the Equity
Opportunities Fund), Phoenix Duff & Phelps Institutional Mutual Funds (except
Real Estate Equity Securities Portfolio and Enhanced Reserves Portfolio),
Phoenix Growth and Income Fund of Phoenix Equity Series Fund, Phoenix
Investment Trust 97 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 SunAmerica Series Trust. PIC was originally organized in
1932 as John P. Chase, Inc. As of September 30, 1997, PIC had approximately
$20.2 billion in assets under management.
The investment adviser to the Real Estate Portfolio is Duff & Phelps
Investment Management ("DPIM"). DPIM is a subsidiary of Phoenix Duff & Phelps
Corporation ("PD&P") and is located at 55 East Monroe Street, Suite 3600,
Chicago, Illinois 60603. PD&P is a New York Stock Exchange traded company that
provides investment management and related services to institutional investors,
corporations and individuals through operating subsidiaries. DPIM also serves
as investment adviser to the Core Equity Fund of Phoenix Equity Series Fund,
the Enhanced Reserves Portfolio and Core Equity Portfolio of Phoenix Duff &
Phelps Institutional Mutual Funds and three closed-end funds: Duff & Phelps
Utilities Income Inc., Duff & Phelps Utilities Tax-Free Income Inc. and Duff &
Phelps Utility and Corporate Bond Trust Inc. As of September 30, 1997, DPIM had
approximately $12.9 billion in assets under management on a discretionary
basis.
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. The investment advisers are responsible for
monitoring the services provided to the Trust. The investment advisers, at
their expense, furnish to the Trust 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 Trust.
The Investment Advisory Agreements have been approved by the Trustees. The
Investment Advisory Agreements between the Trust and the Advisers have been
approved by relevant Shareholders.
For managing, or directing the management of the investments of the Bond,
Mid Cap, International, Emerging Markets and Income Portfolios, PIC is entitled
to a fee, payable monthly, at the following annual rates:
1st $1-2 $2+
Portfolio $1 Billion Billion Billion
- ------------------ ------------ --------- ----------
Bond 0.45% 0.40% 0.35%
Mid Cap 0.75% 0.70% 0.65%
International 0.75% 0.70% 0.65%
Emerging Markets 0.75% 0.70% 0.65%
Income 0.55% 0.50% 0.45%
For managing, or directing the management of the investments of the Real
Estate Portfolio, DPIM 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. 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, Emerging Markets and
Income Portfolios of the Trust during the fiscal year ended November 30, 1997,
PIC received a fee of $5,292,155. For the fiscal year ended November 30, 1997,
PRS received a fee of $355,100.
The Adviser 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,
1998 exceed 1.30% and 2.05%, respectively, of the average net assets. PIC has
agreed to reimburse the Income Portfolio for the amount by which its other
operating expenses exceed 0.20% for each class of shares.
30
<PAGE>
The Portfolio Managers
Bond Portfolio
Mr. Timothy Heaney has served as portfolio manager of the Phoenix
Tax-Exempt Bond Portfolio since September 4, 1997 and as such is primarily
responsible for the day-to-day management of the portfolio. Mr. Heaney is also
the portfolio manager of Phoenix California Tax Exempt Bonds, Inc. and from
March 1, 1996 to September 3, 1997, he served as co-manager. Mr. Heaney has
been Vice President of the Fund and Director, Fixed Income Research of PIC and
National Securities and Research Corporation since 1996. From 1995 to 1996, he
was an Investment Analyst with PIC and from 1992 to 1994 he was an Investment
Analyst with Phoenix Home Life.
Mid Cap Portfolio
Mr. William J. Newman serves as Portfolio Manager of the Mid Cap Portfolio
and as such is primarily responsible for the day to day management of the
Portfolio. Mr. Newman also serves as Portfolio Manager of the Aggressive Growth
Fund Series of Phoenix Series Fund and as Portfolio Manager of each of the four
series of Phoenix Strategic Equity Series Fund. Mr. Newman is Chief Investment
Strategist and Executive Vice President of the Adviser and National Securities
& Research Corporation. Mr. Newman is also a Senior Vice President of the Fund,
and of The Phoenix Edge Series Fund, Phoenix Series Fund, Phoenix Income and
Growth Fund, Phoenix Strategic Allocation Fund, Inc., Phoenix Strategic Equity
Series Fund, Phoenix Worldwide Opportunities Fund, Phoenix-Aberdeen Series
Fund, and Phoenix Duff & Phelps Institutional Mutual Funds. Prior to his
current position Mr. Newman was Chief Investment Strategist and Managing
Director of Phoenix Home Life Mutual Insurance Company from April through
November, 1995, Chief Investment Strategist for Kidder Peabody in New York from
May, 1993 to December, 1994, and Managing Director at Bankers Trust from March,
1991 to May, 1993.
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 served as a Vice
President of PIC between April 1993 and September 1996 and a Managing Director,
Equities since 1996. Since 1993 she also served as a Vice President of the
Fund, Phoenix Worldwide Opportunities Fund and The Phoenix Edge Series Fund.
She has been Managing Director, Equities of National Securities & Research
Corporation since 1996 and previously between May 1993 and September 1996 she
served as Vice President. National Securities & Research Corporation is an
affiliate of PIC. Mr. Lui is also Co-Portfolio Manager of Phoenix Worldwide
Opportunities Fund and the International Series of The Phoenix Edge Series
Fund. Mr. Lui since 1996 has served as a Vice President of the Fund, Phoenix
Worldwide Opportunities Fund, and The Phoenix Edge Series Fund. He is also
Portfolio Manager, Equities of PIC and the National Securities & Research
Corporation since 1996. He was also a Vice President, Asian Equities, with
Alliance Capital Management from 1993 to 1995.
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. Mr. Lannigan served as a Vice President of PIC
between May 1995 and September 1996, a Director, Fixed Income Research between
1996-1997 and presently he is a Managing Director, Fixed Income. He has also
been a Director, Fixed Income Research for National Securities & Research
Corporation since 1996, an affiliate of PIC. From 1993 until 1995 he was a
Director, Fixed Income Research for Phoenix Home Life Mutual Life Insurance
Company and from 1989 to 1993, Mr. Lannigan was an Associate Director, Bond
Rating Group with Standard & Poor's Corp.
Real Estate Portfolio
Mr. Michael Schatt is responsible for managing the assets of the Real
Estate Portfolio. Mr. Schatt is employed as Managing Director of PD&P and is a
Senior Vice President of Phoenix Realty Securities, Inc., Vice President,
Phoenix Duff & Phelps Institutional Mutual Funds, The Phoenix Edge Series Fund,
Phoenix Multi-Portfolio Fund, Duff & Phelps Utilities Income, Inc. and DPIM.
His current responsibilities include serving as Portfolio Manager of the Real
Estate Equity Securities Portfolio of Phoenix Duff & Phelps Institutional
Mutual Funds and managing the real estate investment securities of Duff &
Phelps Utilities Income Inc. Previously he served as Director of the Real
Estate Advisory Practice for Coopers & Lybrand, LLC and has over 16 years
experience in the real estate industry.
Income Portfolio
Mr. David L. Albrycht has been the Portfolio Manager of the Fund since
August, 1993. As such, Mr. Albrycht is primarily responsible for the day to day
management of the Fund. Since August of 1994, Mr. Albrycht has been a Vice
President and Portfolio Manager of Phoenix Multi-Sector Fixed Income Fund, Inc.
Since August 1993, Mr. Albrycht has also been the Portfolio Manager of Phoenix
Multi-Sector Short Term Bond Fund. Mr. Albrycht has been Vice President of The
Phoenix Edge Series Fund and Phoenix Series Fund since 1997. He also served as
a Vice President of PIC between May 1995 and September 1996 and presently is a
Managing Director, Fixed Income. He also was an Investment Officer with
National Securities & Research Corporation from 1994 to 1996 and in 1996 he
became a Director, Fixed Income. National Securities & Research Corporation is
an affiliate of PIC. Until November 1995, Mr. Albrycht was a Portfolio Manager
of Phoenix Home Life Mutual Life Insurance Company and has held various
investment management positions with Phoenix Home Life during the last five
years.
31
<PAGE>
The Financial Agent
Equity Planning also acts as financial agent of the Trust and, as such,
performs bookkeeping and pricing services and certain other administrative
functions for the Trust. 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 Trust, at the following incremental annual
rates:
First $100 million .05%
$100 million to $300 million .04%
$300 million through $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 for each class of shares beyond one. For its
services during the Trust's fiscal year ended November 30, 1997, Equity
Planning received $541,814, or 0.07% of average net assets.
The Custodians and Transfer Agent
The custodian of the assets of the Bond Portfolio, Mid Cap Portfolio, Real
Estate Portfolio, Emerging Markets Portfolio and Income 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 Trust has
authorized the custodians to appoint one or more subcustodians for the assets
of the Trust held outside the United States. The securities and other assets of
each Portfolio of the Trust 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 Trust (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 plus
out-of-pocket expenses. 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 Trust.
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
Trust and a director and officer of Equity Planning. Michael E. Haylon, a
director of Equity Planning, is an officer of the Trust. 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 Trust and
officers of Equity Planning.
Equity Planning and the Trust have entered into distribution agreements
under which Equity Planning has agreed to use its best efforts to find
purchasers for Trust shares sold subject to an initial sales charge and those
sold subject to a contingent deferred sales charge. The Trust has granted
Equity Planning the exclusive right to purchase from the Trust and resell, as
principal, shares needed to fill unconditional orders for Trust shares. Equity
Planning may sell Trust shares through its registered representatives or
through securities dealers with whom it has sales agreements. Equity Planning
may also sell Trust shares pursuant to sales agreements entered into with banks
or bank-affiliated securities brokers who, acting as agent for their customers,
place orders for Trust 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
Trust.
The sale of Trust shares through a securities broker affiliated with a
particular bank is not expected to preclude the Trust from borrowing from such
bank or from availing itself of custodial or transfer agency services offered
by such bank.
The Trustees have adopted separate amended and restated distribution plans
under Rule 12b-1 of the 1940 Act for each class of shares of the Trust (the
"Class A Plan," the "Class B Plan," the "Class C Plan," the "Class M Plan" and
collectively the "Plans"). The Plans permit the Trust to reimburse the
Distributor for expenses incurred in connection with the sale and promotion of
Trust shares and the furnishing of shareholder services. Pursuant to the Plans,
the Trust will pay the Distributor 0.25% annually of the average daily net
assets of the Trust for providing services to shareholders, including
assistance in connection with inquiries related to shareholder accounts (the
"Service Fee"). Pursuant to the Class B Plan, the Trust may reimburse the
Distributor monthly for actual expenses of the Distributor up to 0.75% annually
for the average daily net assets of each Portfolio's Class B Shares. Under the
Class C and M Plans, the Trust may reimburse the Distributor monthly for actual
expenses of the Distributor up to 0.75% and 0.25% annually of the average daily
net assets of the Emerging Markets and Income Portfolios' Class C and M Shares,
respectively.
32
<PAGE>
Expenditures incurred under the Plans may consist of: (i) commissions to
sales personnel for selling shares of the Trust (including underwriting
commissions and finance charges related to the payment of commissions); (ii)
compensation, sales incentives and payments to sales, marketing and service
personnel; (iii) payments to broker-dealers and other financial institutions
which have entered into agreements with the Distributor for services rendered
in connection with the sale and distribution of shares of the Trust; (iv)
payment of expenses incurred in sales and promotional activities including
advertising expenditures related to the Trust; (v) the costs of preparing and
distributing promotional materials; (vi) the costs of printing the Trust's
Prospectus and Statement of Additional Information for distribution to
potential investors; and (vii) such other similar services that the Trustees
determine are reasonably calculated to result in the sale of shares of the
Trust. From the Service Fee, the Distributor expects to pay a quarterly fee to
qualifying broker-dealer firms, as compensation for providing personal services
and/or the maintenance of shareholder accounts, with respect to shares sold by
such firms. This fee will not exceed on an annual basis 0.25% of the average
annual net asset value of such shares, and will be in addition to sales charges
on Trust shares which are reallowed to such firms.
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 Trust will be required to commit the selection and nomination of candidates
for Trustees who are not interested persons of the Trust 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 Trust's shareholders; or services
providing the Trust 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, 1997, the Trust paid $1,820,372
under the Class A Plan and $733,729 under the Class B Plan. The fees were used
to compensate broker-dealers for servicing shareholder's accounts, including
$309,305 paid to W.S. Griffith & Co., Inc., an affiliate, compensating sales
personnel and reimbursing the Distributor for commission expenses and expenses
related to preparation of the marketing material. The Distributor's expenses
from selling and servicing Class B Shares may be more than the payments
received from contingent deferred sales charges collected on redeemed shares
and from the Trust under the Class B Plan. Those expenses may be carried over
and paid in future years. At November 30, 1997, the end of the last Plan year,
the Distributor had incurred unreimbursed expenses under the Class B Plan of
$ (equal to % of the Fund's net assets) which have been carried
over into the present Class B Plan year. On a quarterly basis, the Trust'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
How do you invest?
You may open a fund account with an initial investment of $500. This
amount is reduced to $25 for investments made under the "Investo-Matic" plan
(see the New Account Application), individual retirement accounts or under the
systematic exchange privilege described below. The initial investment
requirement is waived for investments made under pension, profit sharing or
employee benefit plans as well as in connection with reinvested dividends and
distributions.
You may make additional investments at any time with at least $25. The
subsequent investment minimum is waived for investments made under pension,
profit sharing or employee benefit plans as well as in connection with
reinvested dividends and distributions.
An application should be completed to open a new Phoenix Funds account. A
check for the amount you wish to invest, made payable to the "Phoenix Funds,"
(along with the completed application if opening a new account), must be sent
to: Phoenix Funds, c/o State Street Bank and Trust Company ("State Street
Bank"), P.O. Box 8301, Boston, MA 02266-8301. You may also write to the
Distributor at 100 Bright Meadow Boulevard, Enfield, Connecticut 06083-2200 or
call (800) 243-1574.
Shares are sold at the public offering price based on the net asset value
for the class of shares bought next determined after State Street Bank receives
your order. In most cases, in order to receive that day's public offering
price, State Street Bank must receive your order before the close of trading on
the New York Stock Exchange. Shares purchased will be recorded electronically
in book-entry form by the Transfer Agent. No share certificates are available.
See "Net Asset Value."
What are the classes and how do they differ?
The Portfolios presently offer investors four classes of shares which bear
sales and distribution charges in different amounts. Currently, only the
Emerging Markets Portfolio and the Income Portfolio offer Class C and M Shares.
Class A Shares. If you buy Class A Shares, you will pay a sales charge at
the time of purchase equal to 4.75% of the offering price (4.99% of the amount
invested). The sales charge may be reduced or waived under certain conditions.
Class A Shares are not subject to any charges by the Trust when they are sold.
Class A Shares have lower Rule 12b-1 fees and pay higher dividends than any
other class.
Class B Shares. If you buy Class B Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class B Shares within the first 5
years after they are bought, you will
33
<PAGE>
pay a sales charge of up to 5% of your shares' value. See "Deferred Sales
Charge Alternative--Class B Shares." This charge declines to zero over a period
of 5 years and may be waived under certain conditions. Class B shares have
higher Rule 12b-1 fees and pay lower dividends than Class A and M Shares. Class
B Shares automatically convert to Class A Shares eight years after purchase.
The Distributor intends to limit investments in Class B Shares to: (a) $250,000
for any person; (b) $1 million for any unallocated employer sponsored plan; and
(c) $250,000 for each participant in any allocated qualified employer sponsored
plan, including 401(k) plans, provided such plan uses an approved participant
tracking system. 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, such entity has assets of over $10 million or more than 200
participant employees. Class B Shares will not be sold to anyone who is over 85
years old.
Class C Shares. If you buy Class C Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class C Shares within the first year
after they are bought, you will pay a sales charge of 1% of your shares' value.
See "Deferred Sales Charge Alternative--Class C Shares." Class C Shares have
the same Rule 12b-1 fees and pay comparable dividends as Class B Shares. Class
C Shares do not convert to any other class of shares of the Trust. Class C
Shares are not currently offered for all Phoenix Funds.
Class M Shares. If you buy Class M Shares, you will pay a sales charge at
the time of purchase equal to 3.50% of the offering price (3.63% of the amount
invested). Class M Shares are not subject to any charges by the Trust when they
are sold. Class M Shares have lower Rule 12b-1 fees and pay higher dividends
than Class B and C Shares. Class M Shares do not convert to any other class of
shares of the Trust. Class M Shares are not currently offered for all Phoenix
Funds.
Class X Shares. Class X Shares are currently closed to new investors.
What arrangement is best for you?
The alternative purchase arrangement permits you to choose the method of
buying shares that is most beneficial to you given the amount of the purchase,
the length of time you expect to hold the shares, whether you wish to receive
distributions in cash or to reinvest them in additional shares, and other
circumstances. You should consider whether, during the anticipated term of your
investment, the accumulated continuing distribution and service fees and
contingent deferred sales charges of one class would be more than the initial
sales charge and accumulated distribution and service fees of another class of
shares bought at the same time. See "Distribution Plans" and "Fund Expenses."
Initial Sales Charge Alternative--Class A and M Shares
The public offering price of Class A and M Shares is the net asset value
plus a sales charge that varies depending on the size of any "person's" (see
"How To Obtain Reduced Initial Sales Charges--Class A and M Shares: Combination
Purchase Privilege") purchase. Shares issued based on the automatic
reinvestment of income dividends or capital gains distributions are not subject
to any sales charges. The sales charge is divided between your investment
dealer and the Distributor as shown on the following tables.
Class A Shares
Sales Charge as
a percentage of
---------------------------------
Amount of Net Dealer Discount
Transaction Offering Amount Percentage of
at Offering Price Price Invested Offering Price
- --------------------- --------------- --------------- --------------------
Under $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
Class M Shares
(Emerging Markets Portfolio and Income Portfolio Only)
Sales Charge as
a percentage of
---------------------------------
Amount of Net Dealer Discount
Transaction Offering Amount Percentage of
at Offering Price Price Invested Offering Price
- --------------------- --------------- --------------- --------------------
Under $50,000 3.50% 3.63% 3.00%
$50,000 but under
$ 100,000 2.50 2.56 2.00
$100,000 but under
$ 250,000 1.50 1.52 1.00
$250,000 but under
$ 500,000 1.00 1.01 1.00
$500,000 or more None None None
Deferred Sales Charge Alternative--
Class B and C Shares
Class B and C Shares are purchased without an initial sales charge;
however, shares sold within a specified time period are subject to a declining
contingent deferred sales charge (the "CDSC") at the rates set forth below. The
charge will be multiplied by the then current market value or the initial cost
of the shares being redeemed, whichever is less. No sales charge will be
imposed on increases in net asset value. In addition, shares issued based on
the automatic reinvestment of income dividends or capital gains distributions
are not subject to any sales charges. To minimize the CDSC, shares not subject
to any charge will be redeemed first, followed by shares held the longest time.
The Distributor will add up all shares bought in any month and use the last day
of the preceding month in calculating the amount of shares owned and time
period held for Class B Shares. The trade date will be used for purposes of
aging Class C Share investments.
34
<PAGE>
Deferred Sales charge you may pay to sell Class B Shares
Year 1 2 3 4 5 6+
- ------ ---- ---- ---- ---- ---- ---
CDSC 5% 4% 3% 2% 2% 0%
Deferred Sales charge you may pay to sell Class C Shares (Emerging Markets
Portfolio and Income Portfolio Only)
Year 1 2+
- ------ ---- ----
CDSC 1% 0%
Dealer Concessions
In addition to the dealer discount on purchases of Class A and M Shares,
the Distributor intends to pay investment dealers a sales commission of 4% of
the sale price of Class B Shares and a sales commission of 1% of the sale price
of Class C Shares sold by such dealers. Your broker, dealer or investment
adviser may also charge you additional commissions or fees for their services
in selling shares to you provided they notify the Distributor of their
intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of
the Trust and/or for providing other shareholder services. Depending on the
nature of the services, these fees may be paid either from the Trust through
distribution fees, service fees or transfer agent fees or in some cases, the
Distributor may pay certain fees from its own profits and resources. From its
own profits and resources, the Distributor does intend to: (a) sponsor sales
contests, training and educational meetings and provide additional compensation
to qualifying dealers in the form of trips, merchandise or expense
reimbursements; (b) from time to time pay special incentive and retention fees
to qualified wholesalers, registered financial institutions and third party
marketers; (c) pay broker/dealers an amount equal to 1% of the first $3 million
of Class A Share purchases by an account held in the name of a qualified
employee benefit plan with at least 100 eligible employees, 0.50% on the next
$3 million, plus 0.25% on the amount in excess of $6 million; and (d) excluding
purchases as described in (c) above, pay broker/dealers an amount equal to 1%
of the amount of Class A Shares sold above $1 million but under $3 million,
0.50% on the next $3 million, plus 0.25% on the amount in excess of $6 million.
If part or all of such investment, including investments by qualified employee
benefit plans, is subsequently redeemed within one year of the investment date,
the broker-dealer will refund to the Distributor such amounts paid with respect
to the investment. In addition, the Distributor may pay the entire applicable
sales charge on purchases of Class A Shares to selected dealers and agents. Any
dealer who receives more than 90% of a sales charge may be deemed to be an
"underwriter" under the Securities Act of 1933.
How To Obtain Reduced Initial Sales Charges--Class A and M Shares
Investors choosing Class A or M Shares may be entitled to reduced sales
charges. The five ways in which sales charges may be avoided or reduced are
described below.
Qualified Purchasers. If you fall within any one of the following
categories, you will not have to pay a sales charge on your purchase of Class A
or M Shares: (1) trustee, director or officer of the Phoenix Funds, the
Phoenix-Engemann Funds, Phoenix-Seneca Funds or any other mutual fund advised,
subadvised or distributed by the Adviser, Distributor or any of their corporate
affiliates (an "Affiliated Phoenix Fund"); (2) any director or officer, or any
full-time employee or sales representative (for at least 90 days), of the
Adviser or Distributor; (3) registered representatives and employees of
securities dealers with whom Distributor 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
Distributor; (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, Distributor and/or their corporate affiliates; (8)
any employee or agent who retires from Phoenix Home Life, Distributor and/or
their corporate affiliates; (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, Phoenix-Engemann Fund or
Phoenix-Seneca Fund qualified plan; (11) any Phoenix Home Life separate account
which funds group annuity contracts offered to qualified employee benefit
plans; (12) any state, county, city, department, authority or similar agency
prohibited by law from paying a sales charge; (13) any fully matriculated
student in any U.S. service academy; (14) any unallocated account held by a
third party administrator, registered investment adviser, trust company, or
bank trust department which exercises discretionary authority and holds the
account in a fiduciary, agency, custodial or similar capacity, if in the
aggregate such accounts held by such entity equal or exceed $1,000,000; (15)
any person who is investing redemption proceeds from investment companies other
than the Phoenix Funds, Phoenix-Engemann Fund or Phoenix-Seneca Fund if, in
connection with the purchases or redemption of the redeemed shares, the
investor paid a prior sales charge provided such investor supplies verification
that the redemption occurred within 90 days of the Phoenix Fund purchase and
that a sales charge was paid; (16) any deferred compensation plan established
for the benefit of any Phoenix Fund, Phoenix-Engemann Fund or Phoenix-Seneca
Fund trustee or director; provided that sales to persons listed in (1) through
(15) above are made upon the written assurance of the purchaser that the
purchase is made for investment purposes and that the shares so acquired will
not be resold except to the Fund; (17) purchasers of Class A or M Shares bought
through investment advisers and financial planners who charge an advisory,
consulting or other fee for their services and buy shares for their own
accounts or the accounts of their clients; (18) 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
35
<PAGE>
Distributor for such purchases; or (19) clients of investment advisors or
financial planners who buy shares for their own accounts 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 the investors described in (17) through (19) may be charged a fee by
the broker, agent or financial intermediary for purchasing shares).
Combination Purchase Privilege. Your purchase of any class of shares of
this or any other Affiliated Phoenix Fund (other than Phoenix Money Market Fund
Series Class A Shares), if made at the same time by the same "person," will be
added together to determine whether the combined sum entitles you to an
immediate reduction in sales charges. A "person" is defined in this and the
following sections as (a) any individual, their spouse and minor children
purchasing shares for his or their own account (including an IRA account)
including his or their own trust; (b) a trustee or other fiduciary purchasing
for a single trust, estate or single fiduciary account (even though more than
one beneficiary may exist); (c) multiple employer trusts or Section 403(b)
plans for the same employer; (d) multiple accounts (up to 200) under a
qualified employee benefit plan or administered by a third party administrator;
or (e) trust companies, bank trust departments, registered investment advisers,
and similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority
and which are held in a fiduciary, agency, custodial or similar capacity,
provided all shares are held of record in the name, or nominee name, of the
entity placing the order.
An "Affiliated Phoenix Fund" means any other mutual fund advised,
subadvised or distributed by the Adviser or Distributor or any corporate
affiliate of either or both the Adviser and Distributor provided such other
mutual fund extends reciprocal privileges to shareholders of the Phoenix Funds.
Letter of Intent. If you sign a Letter of Intent, your purchase of any
class of shares of this or any other Affiliated Phoenix Fund (other than
Phoenix Money Market Fund Series Class A Shares), if made by the same person
within a thirteen month period, will be added together to determine whether you
are entitled to an immediate reduction in sales charges. Sales charges are
reduced based on the overall amount you indicate that you will buy under the
Letter of Intent. The Letter of Intent is a mutually non-binding arrangement
between you and the Distributor. Since the Distributor doesn't know whether you
will ultimately fulfill the Letter of Intent, shares worth 5% of the amount of
each purchase will be set aside until you fulfill the Letter of Intent. When
you buy enough shares to fulfill the Letter of Intent, these shares will no
longer be restricted. If, on the other hand, you do not satisfy the Letter of
Intent, or otherwise wish to sell any restricted shares, you will be given the
choice of either buying enough shares to fulfill the Letter of Intent or paying
the difference between any sales charge you previously paid and the otherwise
applicable sales charge based on the intended aggregate purchases described in
the Letter of Intent. You will be given 20 days to make this decision. If you
do not exercise either election, the Distributor will automatically redeem the
number of your restricted shares needed to make up the deficiency in sales
charges received. The Distributor will redeem restricted Class A or M Shares
before Class C or B Shares, respectively. Oldest shares will be redeemed before
selling newer shares. Any remaining shares will then be deposited to your
account.
Right of Accumulation. Your purchase of any class of shares of this or any
other Affiliated Phoenix Fund, if made over time by the same person may be
added together to determine whether the combined sum entitles you to a
prospective reduction in sales charges. You must provide certain account
information to the Distributor to exercise this right.
Associations. Certain groups or associations may be treated as a "person"
and qualify for reduced Class A Share sales charges. The group or association
must: (1) have been in existence for at least six months; (2) have a legitimate
purpose other than to purchase mutual fund shares at a reduced sales charge;
(3) work through an investment dealer; or (4) not be a group whose sole reason
for existing is to consist of members who are credit card holders of a
particular company, policyholders of an insurance company, customers of a bank
or a broker-dealer or clients of an investment adviser.
How To Obtain Reduced Deferred Sales Charges--
Class B and C Shares
The CDSC is waived on the redemption (sale) of Class B and C Shares if the
redemption is made (a) 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 (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section
72(m)(7); (c) as a mandatory distribution upon reaching age 701/2 under any
retirement plan qualified under Code Sections 401, 408 or 403(b) or resulting
from the tax-free return of an excess contribution to an IRA; (d) 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) based on the exercise of exchange privileges among Class B and C
Shares of this or any other Affiliated Phoenix Fund; (f) based on any direct
rollover transfer of shares from an established Affiliated Phoenix Fund
qualified plan into an Affiliated Phoenix Fund IRA by participants terminating
from the qualified plan; and (g) based on the systematic withdrawal program
(Class B Shares only). If, as described in condition (a) above, an account is
transferred to an account registered in the name of a deceased's estate, the
CDSC will be waived on any redemption from the estate account occurring within
one year of the death. If the Class B or C Shares are not redeemed within one
year of the death, they will remain subject to the applicable CDSC.
Conversion Feature--Class B Shares
Class B Shares will automatically convert to Class A Shares of the same
Portfolio eight years after they are bought. Conversion will be on the basis of
the then prevailing net asset value of Class A and B Shares. There is no sales
load, fee or other charge for
36
<PAGE>
this feature. Class B Shares acquired through dividend or distribution
reinvestments will be converted into Class A Shares at the same time that other
Class B Shares are converted based on the proportion that the reinvested shares
bear to purchased Class B Shares. The conversion feature is subject to the
continuing availability of an opinion of counsel or a ruling of the Internal
Revenue Service that the assessment of the higher distribution fees and
associated costs with respect to Class B Shares does not result in any
dividends or distributions constituting "preferential dividends" under the
Code, and that the conversion of shares does not constitute a taxable event
under federal income tax law. If the conversion feature is suspended, Class B
Shares would continue to be subject to the higher distribution fee for an
indefinite period. Even if the Trust were unable to obtain such assurances, it
might continue to make distributions if doing so would assist in complying with
its general practice of distributing sufficient income to reduce or eliminate
federal taxes otherwise payable by the Funds.
INVESTOR ACCOUNT SERVICES
The Portfolios mail periodic statements and reports to shareholders. In
order to reduce the volume and cost of mailings, to the extent possible, only
one copy of most Portfolio reports will be mailed to households for multiple
accounts with the same surname at the same household address. Please contact
Equity Planning to request additional copies of shareholder reports toll free
at (800) 243-4361.
In most cases, changes to any shareholder account may be accomplished by
calling Shareholder Services at (800) 243-1574. More information relating to
the shareholder account services can be found in the Funds' Statement of
Additional Information ("SAI").
Bank Draft Investing Program (Investo-Matic Plan). By completing the
Investo-Matic Section of the New Account Application, you may authorize the
bank named in the form to draw $25 or more from your personal checking or
savings account to be used to purchase additional shares for your account. The
amount you designate will be made available, in form payable to the order of
the Transfer Agent, by the bank on the date the bank draws on your account and
will be used to purchase shares at the applicable offering price.
Distribution Option. Each Portfolio currently declares all income
dividends and all capital gain distributions, if any, payable in shares of the
Portfolio at net asset value or, at your option, in cash. By exercising the
distribution option, you may elect to: (1) receive both dividends and capital
gain distributions in additional shares or (2) receive dividends in cash and
capital gain distributions in additional shares or (3) receive both dividends
and capital gain distributions in cash. If you elect to receive dividends
and/or distributions in cash and the check cannot be delivered or remains
uncashed due to an invalid address, then the dividend and/or distribution will
be reinvested after the Transfer Agent has been informed that the proceeds are
undeliverable. Additional shares will be purchased in your account at the then
current net asset value. Dividends and capital gain distributions received in
shares are taxable to you and credited to your account in full and fractional
shares computed at the closing net asset value on the next business day after
the record date. No interest will accrue on amounts represented by uncashed
distribution or redemption checks.
Systematic Withdrawal Program. The Systematic Withdrawal Program allows
you to periodically redeem a portion of your account on a predetermined
monthly, quarterly, semiannual or annual basis. A sufficient number of full and
fractional shares will be redeemed so that the designated payment is made on or
about the 20th day of the month. Shares are tendered for redemption by the
Transfer Agent, as agent for the shareowner, on or about the 15th of the month
at the closing net asset value on the date of redemption. The Systematic
Withdrawal Program also provides for redemptions to be tendered on or about the
10th, 15th or 25th of the month with proceeds to be directed through Automated
Clearing House (ACH) to your bank account. In addition to the limitations
stated below, withdrawals may not be less than $25 and minimum account balance
requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of a Portfolio worth $5,000 or more, as determined by the then current
net asset value per share, and elect to have all dividends reinvested.
Participants in the Program redeeming Class C Shares will be subject to any
applicable contingent deferred sales charge. The purchase of shares while
participating in the withdrawal program will ordinarily be disadvantageous to
the Class A or M Shares investor since a sales charge will be paid by the
investor on the purchase of Class A or M Shares at the same time as other
shares are being redeemed. For this reason, investors in Class A or M Shares
may not participate in an automatic investment program while participating in
the Systematic Withdrawal Program.
Through the Program, Class B shareholders may withdraw up to 1% of their
aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B shareholders redeeming more shares than the
percentage permitted by the withdrawal program will be subject to any
applicable contingent deferred sales charge on all shares redeemed.
Accordingly, the purchase of Class B Shares will generally not be suitable for
an investor who anticipates withdrawing sums in excess of the above limits
shortly after purchase.
Tax Sheltered Retirement Plans. Shares of the Portfolios are offered in
connection with the following qualified prototype retirement plans: IRA,
Rollover IRA, SEP-IRA, SIMPLE IRA, SIMPLE 401(k), Profit-Sharing and Money
Purchase Pension Plans which can be adopted by self-employed persons ("Keogh")
and by corporations and 403(b) Retirement Plans. Write or call Equity Planning
at (800) 243-4361 for further information about the plans.
Exchange Privileges
You may exchange shares of one Phoenix Fund for shares of another Phoenix
Fund or any other Affiliated Phoenix Fund without paying any fees or sales
charges. On exchanges with
37
<PAGE>
share classes that carry a contingent deferred sales charge, the CDSC schedule
of the original shares purchased continues to apply. Shares held in book-entry
form may be exchanged for shares of the same class of other Phoenix Funds or
any other Affiliated Phoenix Fund, provided the following conditions are met:
(1) the shares that will be acquired in the exchange (the "Acquired Shares")
are available for sale; (2) the Acquired Shares are the same class as the
shares to be surrendered (the "Exchanged Shares"); (3) the Acquired Shares will
be registered to the same shareholder account as the Exchanged Shares; (4) the
account value of the Fund whose shares are to be acquired must equal or exceed
the minimum initial investment amount required by that Fund after the exchange
is made; and (5) if you have elected not to use the telephone exchange
privilege (see below), a properly executed exchange request must be received by
the Distributor. Exchanges may be made over the telephone or in writing and may
be made at one time or systematically over a period of time. Note, each Fund
has different investment objectives and policies. You should read the
prospectus of the Phoenix Fund or any other Affiliated Phoenix Fund into which
the exchange is to be made before making any exchanges. This privilege may be
modified or terminated at any time on 60 days' notice.
Market Timer Restrictions. Because excessive trading can hurt Portfolio
performance and harm shareholders, the Trust reserves the right to temporarily
or permanently terminate exchange privileges or reject any specific order from
anyone whose transactions seem to follow a timing pattern, including those who
request more than one exchange out of a fund within any 30 day period. The
Distributor has entered into agreements with certain market timer entities
permitting them to exchange their clients' shares by telephone. These
privileges are limited under those agreements. The Distributor has the right to
reject or suspend these privileges upon reasonable notice.
Telephone Exchanges. If permitted in your state and unless you waive this
privilege in writing, you or your broker may sell or exchange your shares over
the phone by calling the Distributor at (800) 243-1574. Reasonable procedures
will be used to confirm that telephone instructions are genuine. In addition to
requiring that the exchange is only made between accounts with identical
registrations, the Distributor may require address or other forms of
identification and will record telephone instructions. All exchanges will be
confirmed in writing to you. If procedures reasonably designed to prevent
unauthorized telephone exchanges are not followed, the Trust and/or Distributor
may be liable for following telephone instructions that prove to be fraudulent.
Broker/dealers other than the Distributor assume the risk of any loss resulting
from any unauthorized telephone exchange instructions from their firm or their
registered representatives. You assume the risk if the Distributor acts upon
unauthorized instructions it reasonably believes to be genuine. During times of
severe economic or market changes, this privilege may be difficult to exercise
or may be temporarily suspended. In such event, an exchange may be effected by
written request by the registered shareowner(s).
NET ASSET VALUE
The net asset value per share of each Portfolio is determined as of the
close of trading of the New York Stock Exchange (the "Exchange") on days when
the Exchange is open for trading. The net asset value per share of 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. 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
You have the right to have the Trust buy back shares at the net asset
value next determined after receipt of a redemption order, and any other
required documentation in proper form, by Phoenix Funds c/o State Street Bank
and Trust Company, P.O. Box 8301, Boston, MA 02266-8301. In the case of a Class
B or C Share redemption, you will be subject to the applicable deferred sales
charge, if any, for such shares (see "Deferred Sales Charge Alternative--Class
B and C Shares," above). Subject to certain restrictions, shares may be
redeemed by telephone or in writing. In addition, shares may be sold through
securities dealers, brokers or agents who may charge customary commissions or
fees for their services. The Trust does not charge any redemption fees. Payment
for shares redeemed is made within seven days, provided that redemption
proceeds will not be disbursed until each check used for purchases of shares
has been cleared for payment by your bank, which may take up to 15 days after
receipt of the check.
The requirements to redeem shares are outlined in the table below.
Additional documentation may be required for redemptions by corporations,
partnerships or other
38
<PAGE>
organizations, executors, administrators, trustees, custodians, guardians, or
from IRA's or other retirement plans, or if redemption is requested by anyone
but the shareholder(s) of record. To avoid delay in redemption or transfer,
shareholders having questions about specific requirements should contact the
Funds at (800) 243-1574. Redemption requests will not be honored until all
required documents in proper form have been received.
How can I sell my Shares?
[phone] [bullet] Sales up to $50,000
By Phone [bullet] Not available on most retirement accounts
(800) 243-1574 [bullet] Requests received after 4PM will be
executed on the following business day
[letter] [bullet] Letter of instruction from the registered
In Writing owner including the fund and account
number and the number of shares or dollar
amount you wish to sell
[bullet] No signature guarantee is required if your
shares are registered individually, jointly,
or as custodian under the Uniform Gifts to
Minors Act or Uniform Transfers to Minors
Act, the proceeds of the redemption do not
exceed $50,000, and the proceeds are
payable to the registered owner(s) at the
address of record
[hand] [bullet] Select checkwriting on your New Account
By Check Application
[bullet] Bond Portfolio, Emerging Markets Portfolio
and Income Portfolio only
[bullet] $500 or more per check
[bullet] Cannot be used to close an account
Shares previously issued in certificate form cannot be redeemed until the
certificated shares have been deposited to your account.
Telephone Redemptions
The Trust and the Transfer Agent will employ reasonable procedures to
confirm that telephone instructions are genuine. Address and bank account
information will be verified, telephone redemption instructions will be
recorded on tape, and all redemptions will be confirmed in writing to you. If
there has been an address change within the past 60 days, a telephone
redemption will not be authorized. To the extent that procedures reasonably
designed to prevent unauthorized telephone redemptions are not followed, the
Trust and/or the Transfer Agent may be liable for following telephone
instructions for redemption transactions that prove to be fraudulent.
Broker/dealers other than Equity Planning have agreed to bear the risk of any
loss resulting from any unauthorized telephone redemption instruction from the
firm or its registered representatives. However, you would bear the risk of
loss resulting from instructions entered by an unauthorized third party that
the Trust and/or the Transfer Agent reasonably believe to be genuine. The
Telephone Redemption Privilege may be modified or terminated at any time on 60
days' notice to shareholders. In addition, during times of drastic economic or
market changes, the Telephone Redemption Privilege may be difficult to exercise
or may be temporarily suspended. In such event, a redemption may be effected by
written request by following the procedure outlined above.
Written Redemptions
If you elect not to use the telephone redemption or telephone exchange
privileges, you must submit your request in writing. If the shares are being
exchanged between accounts that are not identically registered, the signature
on such request must be guaranteed by an eligible guarantor institution as
defined by the Transfer Agent in accordance with its signature guarantee
procedures. Currently, such procedures generally permit guarantees by banks,
broker dealers, credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings associations.
Redemption in Kind
To the extent consistent with state and federal law, the Trust may make
payment of the redemption price either in cash or in kind. However, the Trust
has elected to pay in cash all requests for redemption by any shareholder of
record, limited in respect to each shareholder during any 90 day period to the
lesser of $250,000 or 1% of the net asset value of the Trust at the beginning
of such period. This election has been made pursuant to Rule 18f-1 under the
Investment Company Act of 1940 Act and is irrevocable while the Rule is in
effect unless the Securities and Exchange Commission, by order, permits the
withdrawal thereof. In case of a redemption in kind, securities delivered in
payment for shares would be readily marketable and valued at the same value
assigned to them in computing the net asset value per share of a Portfolio. A
shareholder receiving such securities would incur brokerage costs when he sold
the securities.
Account Reinstatement Privilege
You have a one time privilege of using redemption proceeds from Class A,
B, C and M Shares to purchase Class A Shares of any Phoenix Fund or any other
Affiliated Phoenix Fund with no sales charge (at net asset value next
determined after the request for reinvestment is made). For Federal income tax
purposes, a redemption and reinvestment will be treated as a sale and purchase
of shares. Special rules may apply in computing the amount of gain or loss in
these situations. (See "Dividends, Distributions and Taxes" for information on
the Federal income tax treatment of a disposition of shares.) A written request
to reinstate your account must be received by the Transfer Agent within 180
days of the redemption, accompanied by payment for the shares (not in excess of
the redemption value). Class B shareholders who have had the contingent
deferred sales charge waived through participation in the Systematic Withdrawal
Program are not eligible to use the Reinstatement Privilege.
Redemption of Small Accounts
Due to the relatively high cost of maintaining small accounts, the Trust
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
Trust
39
<PAGE>
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
60 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 and the Income Portfolio will distribute
their net investment income to its shareholders monthly and net realized
capital gains, if any, to their 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, International
Portfolio, Emerging Markets Portfolio and the Income Portfolio 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 Trust 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.
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 Portfolio intends to qualify for, and may make the
election permitted under, Section 853 of the Code. Accordingly, shareholders
may be able to claim a credit or deduction on their income tax returns for, and
may be required
40
<PAGE>
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 Trust 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 Trust 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 Trust 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 Trust
The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest. The Trust 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 assets on liquidation, except that Class
B and C 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 and M
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 Trust 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 Trust. Any general expenses of the Trust
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
41
<PAGE>
Trust may be personally liable for debts or claims against the Trust. The
Declaration of Trust provides that shareholders will not be subject to any
personal liability for the acts or obligations of the Trust and that every
written agreement, undertaking or obligation made or issued by the Trust 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 Trust. 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
Trust 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.
Registration Statement
This Prospectus omits certain information included in the Statement of
Additional Information and Part C of the Registration Statement filed with the
Securities and Exchange Commission under the Securities Act of 1933 and the
1940 Act. A copy of the Registration Statement may be obtained from the
Securities and Exchange Commission in Washington, D.C.
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.
42
<PAGE>
B: Bonds which are rated B generally lack
characteristics of the desirable investment.
Assurance of interest and principal payments
or of maintenance of other terms of the contract
over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor
standing. Such issues may be in default or
there may be present elements of danger with
respect to principal or interest.
Ca: Bonds which are rated Ca represent obligations
which are speculative in a high degree. Such
issues are often in default or have other marked
shortcomings.
C: Bonds which are rated C are the lowest rated
class of bonds and issues so rated can be
regarded as having extremely poor prospects of
ever attaining any real investment standing.
Standard and Poor's Corporation's Corporate Bond Ratings
AAA: This is the highest rating assigned by Standard
& Poor's to a debt obligation and indicates an
extremely strong capacity to pay principal and
interest.
AA: Bonds rated AA also qualify as high-quality
debt obligations. Capacity to pay principal and
interest is very strong, and in the majority of
instances they differ from AAA issues only in
small degree.
A: Bonds rated A have a strong capacity to pay
principal and interest, although they are
somewhat more susceptible to the adverse
effects of changes in circumstances and
economic conditions.
BBB: Bonds rated BBB are regarded as having an
adequate capacity to pay principal and
interest. Whereas they normally exhibit
protection parameters, adverse economic
conditions or changing circumstances are more
likely to lead to a weakened capacity to pay
principal and interest for bonds in this category
than for bonds in the A category.
BB, B, 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.
43
<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 "Trust") which you should know before investing.
Please read it carefully and retain it for future reference.
The Trust has filed with the Securities and Exchange Commission a Statement of
Additional Information about the Trust, dated March 27, 1998. The Statement
contains more detailed information about the Trust and is incorporated into
this Prospectus by reference. You may obtain a free copy of the Statement by
writing the Trust c/o Phoenix Equity Planning Corporation, 100 Bright Meadow,
P.O. Box 2200, Enfield, Connecticut 06083-2200.
Financial information relating to the Trust is contained in the Annual Report
to Shareholders for the year ended November 30, 1997 and is incorporated into
the Statement of Additional Information by reference.
[RECYLCLE] Printed on recycled paper using soybean ink
<PAGE>
[BACK COVER]
Phoenix Funds -----------------
PO Box 2200 BULK RATE MAIL
Enfield CT 06083-2200 U.S. POSTAGE
PAID
SPRINGFIELD, MA
PERMIT NO. 444
----------------
[LOGOTYPE] PHOENIX
DUFF & PHELPS
PDP 467(3/98)
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
101 Munson Street
Greenfield, Massachusetts 01301
Statement of Additional Information
March 27, 1998
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 "Trust"), dated March 27, 1998, and should be
read in conjunction with it. The Trust'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 TRUST .................................. 1
INVESTMENT OBJECTIVES AND POLICIES ......... 1
INVESTMENT RESTRICTIONS .................... 12
PERFORMANCE ................................ 14
PERFORMANCE COMPARISONS .................... 15
PORTFOLIO TURNOVER ......................... 16
TRUSTEES AND OFFICERS ...................... 16
PRINCIPAL SHAREHOLDERS ..................... 22
THE INVESTMENT ADVISERS .................... 23
PORTFOLIO TRANSACTIONS ..................... 24
DETERMINATION OF NET ASSET VALUE ........... 25
HOW TO BUY SHARES .......................... 26
ALTERNATIVE PURCHASE ARRANGEMENTS .......... 26
INVESTOR ACCOUNT SERVICES .................. 27
HOW TO REDEEM SHARES ....................... 28
TAX SHELTERED RETIREMENT PLANS ............. 29
DIVIDENDS, DISTRIBUTIONS AND TAXES ......... 29
THE DISTRIBUTOR ............................ 32
PLANS OF DISTRIBUTION ...................... 33
ADDITIONAL INFORMATION ..................... 34
</TABLE>
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunication Device (TTY): (800) 243-1926
PDP468 (3/98)
<PAGE>
THE TRUST
Phoenix Multi-Portfolio Fund (the "Trust") is an open-end management
investment company which was organized under Massachusetts law in 1987 as a
Massachusetts business trust.
The Trust'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"), the Phoenix Real Estate Securities Portfolio
(the "Real Estate Portfolio") and the Phoenix Strategic Income Fund (the
"Income Portfolio") (each, a "Portfolio" and, together, the "Portfolios"), the
six Portfolios currently offered by the Trust, 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 Trust 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.
1
<PAGE>
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 Trust'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 (the "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.
2
<PAGE>
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 Trust'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, the Adviser, 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 and the Income Portfolio may invest up to 100% of their 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, 1997.
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, Emerging Markets and Income 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.
3
<PAGE>
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.
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 Commission 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 Portfolios have 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 Portfolios and PIC believe that the approved dealers present
minimal credit risks to the Portfolios 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 Portfolios anticipate entering into agreements with dealers to which
the Portfolios sell OTC options. Under these agreements the Portfolios 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 Portfolios to repurchase a
specific OTC option written by the Portfolios, the "liquidity charge" will be
the current market value of the assets serving as "cover" for such OTC option.
Limitations on Options on Securities and Securities Indices
The Bond, Mid Cap, International, Emerging Markets and Income 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 pledged 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 pledged account in accordance with
clearing corporation and exchange rules.
4
<PAGE>
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 pledge with the Trust'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 pledged may be applied to
the Portfolio's other obligations to pledge 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 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.
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 index. If this occurred, a Portfolio utilizing
this investment technique would not be able to close out options which it had
written
5
<PAGE>
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 Trust'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, Emerging Markets and Income 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, Emerging Markets and
Income 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, Emerging Markets and Income 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.
6
<PAGE>
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
pledged account with the Trust'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 pledged account with the
Trust'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
7
<PAGE>
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 Trust's Prospectus, will be
entered into only with commercial banks, brokers and dealers considered by the
Trust to be credit-worthy. The Trustees of the Trust will monitor each
Portfolio's repurchase agreement transactions periodically and, with the
Portfolios' investment advisers will consider standards which the 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 (15% of the Income Portfolio's net 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 Trust 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 (one-third of the Income Portfolio's 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
8
<PAGE>
the Portfolio. If the borrower fails 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 Trust to be
creditworthy and when the Adviser 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, Emerging Market and Income 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, Emerging Market and Income 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 Trust'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, Emerging Market and Income 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, Emerging Market and Income 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, Emerging Market and Income
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, Emerging Market and Income 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. The Adviser 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 Trust'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.
9
<PAGE>
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 pledged 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 and the Income 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 and the Income 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 Portfolios are uninvested
and no return is earned thereon. The inability of the Portfolios to make
intended security purchases due to settlement problems could cause the
Portfolios to miss attractive investment opportunities. Inability to dispose of
portfolio securities due to settlement problems could result either in losses
to the Portfolios due to subsequent declines in value of portfolio securities
or, if the Portfolios have 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
10
<PAGE>
suffer from extreme and volatile debt burdens or inflation rates. Local
securities markets may trade a small number of securities 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 Portfolios
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 Portfolios of 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 Portfolios.
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 Portfolio is
exercised or the Portfolio 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.
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.
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.
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
11
<PAGE>
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.
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 the Adviser 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 the Adviser. In choosing debt securities
for purchase by the Portfolio, the Adviser 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 the Adviser's
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.
INVESTMENT RESTRICTIONS
The following information supplements the information included in the
Prospectus with respect to the investment restrictions to which the Portfolios
of the Trust 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 Trust
shareholders at which the holders of 50% or more of the Portfolio's outstanding
shares are present. No Portfolio of the Trust 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.
(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 and the
Income 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
12
<PAGE>
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, Emerging Markets and Income
Portfolios may buy and sell securities outside the United States which are
not registered with the Commission 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, Emerging Markets and
Income 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; however this limitation does not apply to the
Income Portfolio, 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 Trust
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; however this limitation does not apply to the Income
Portfolio.
(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) (a) 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 each Portfolio's, excluding the Income
Portfolio, total assets would be invested in the aggregate in such
securities.
(b) Purchase securities for which market quotations are not readily
available, including but not limited to repurchase agreements having
maturities of more than seven days, or which are not deemed liquid
pursuant to procedures adopted by the Trustees if as a result of such
purchase more than 15% of the Income Portfolio's net assets would be
invested in the aggregate in such securities.
(15) Invest in interests in oil, gas, or other mineral exploration or
development programs.
13
<PAGE>
(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 a violation 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, Emerging
Markets Portfolio, and the Income Portfolio and as "average annual total
return" and "total return" of any of the other Portfolios.
Quotations of the yield for the Bond Portfolio, Emerging Markets
Portfolio, and the Income 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/cd + 1)(6)-1]
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, 1997, the yield for the Bond
Portfolio Class A shares and Class B shares was 4.67% and 4.14%, respectively;
the Emerging Markets Portfolio Class A shares and Class B shares was 10.68% and
11.38%; and the Income Portfolio Class X shares was 7.23%.
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 illustrates average annual total return
for each Portfolio for the 1, 5 and 10 year periods ended November 30, 1997.
14
<PAGE>
AVERAGE ANNUAL TOTAL RETURN AS OF NOVEMBER 30, 1997
PERIODS ENDED
-----------------------------
PORTFOLIO 1 YEAR 5 YEAR SINCE INCEPTION*
- ----------------- ------------- ------------- ------------------
Bond
Class A 6.04% 5.67% 8.25%
Class B 5.13% N/A 5.36%
Mid Cap
Class A 8.12% 11.55% 16.41%
Class B 7.27% N/A 14.17%
International
Class A 8.21% 13.58% 8.34%
Class B 7.37% N/A 7.82%
Real Estate
Class A 31.44% N/A 25.42%
Class B 30.44% N/A 24.47%
Emerging Markets
Class A 11.91% N/A 29.63%
Class B 11.07% N/A 30.48%
Class C N/A N/A N/A
Class M N/A N/A N/A
Income
Class X 8.58% N/A 8.43%
Class A N/A N/A N/A
Class B N/A N/A N/A
Class C N/A N/A N/A
Class M N/A N/A N/A
- -------------
*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, B, C and M commenced operations on March 1, 1995, September 5, 1995, March
27, 1998 and March 27, 1998, respectively. The Income Portfolio Class X
commenced operations on April 1, 1993 and Class A, B, C and M commenced
operations on March 27, 1998.
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 Portfolio'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 Trust also may quote annual, average annual and annualized total return and
aggregate total return performance data, for each class of shares of the
Portfolios, 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 Composite Stock Price Index (the
"S&P 500"), Standard & Poor's 400 Midcap Index (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
15
<PAGE>
Municipal Bond Index, Lehman Brothers Aggregate 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. Historical
turnover rates can be found under the heading "Financial Highlights" located in
the Trust's Prospectus.
TRUSTEES AND OFFICERS
The Trustees and Officers of the Trust 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.
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Trust During the Past 5 Years
- -------------------------- ---------------- ------------------------------------------------------------------------
<S> <C> <C>
Robert Chesek (63) Trustee Trustee/Director (1981-present) and Chairman (1989-1994), Phoenix
49 Old Post Road Funds. Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff &
Wethersfield, CT 06109 Phelps Institutional Mutual Funds (1996-present). Vice President,
Common Stock, Phoenix Home Life Mutual Insurance Company (1980-
1994). Director/Trustee, the National Affiliated Investment Companies
(until 1993).
E. Virgil Conway (68) Trustee Chairman, Metropolitan Transportation Authority (1992-present).
9 Rittenhouse Road Trustee/Director, Consolidated Edison Company of New York, Inc.
Bronxville, NY 10708 (1970-present), Pace University (1978-present), Atlantic Mutual
Insurance Company (1974-present), HRE Properties (1989-present),
Greater New York Councils, Boy Scouts of America (1985-present),
Union Pacific Corp. (1978-present), Blackrock Freddie Mac Mortgage
Securities Fund (Advisory Director) (1990-present), Centennial
Insurance Company (1974-present), Josiah Macy, Jr., Foundation
(1975-present), The Harlem Youth Development Foundation (1987-
present), Accuhealth (1994-present), Trism, Inc. (1994-present), Realty
Foundation of New York (1972-present), New York Housing Partnership
Development Corp. (Chairman) (1981-present) and Fund Directions
(Advisory Director) (1993-present). Director/Trustee, Phoenix Funds
(1993-present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Duff & Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present). Member, Audit
Committee of the City of New York (1981-1996). Advisory Director,
Blackrock Fannie Mae Mortgage Securities Fund (1989-1996).
Chairman, Financial Accounting Standards Advisory Council (1992-
1995). Director/Trustee, the National Affiliated Investment Companies
(until 1993).
Harry Dalzell-Payne (68) 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
New York, NY 10016 Income Inc. and Duff & Phelps Utility and Corporate Bond Trust Inc.
(1995-present). Director, Farragut Mortgage Co., Inc. (1991-1994).
Director/Trustee, the National Affiliated Investment Companies (1983-
1993). Formerly a Major General of the British Army.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Trust During the Past 5 Years
- ---------------------------- ---------------- --------------------------------------------------------------------------
<S> <C> <C>
*Francis E. Jeffries (66) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-
6585 Nicholas Blvd. Aberdeen Series Inc. and Phoenix Duff & Phelps Institutional Mutual
Apt. 1601 Funds (1996-present). Director, Duff & Phelps Utilities Income Inc.
Naples, FL 33963 (1987-present), Duff & Phelps Utilities Tax-Free Income Inc. (1991-
present) and Duff & Phelps Utility and Corporate Bond Trust Inc.
(1993-present). Director, The Empire District Electric Company (1984-
present). Director (1989-1997), Chairman of the Board (1993-1997),
President (1989-1993), and Chief Executive Officer (1989-1995),
Phoenix Duff & Phelps Corporation.
Leroy Keith, Jr. (59) Trustee Chairman and Chief Executive Officer, Carson Products Company
Chairman and Chief (1995-present). Director/Trustee, Phoenix Funds (1980-present).
Executive Officer Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Carson Product Company Institutional Mutual Funds (1996-present). Director, Equifax Corp.
64 Ross Road (1991-present) and Keystone International Fund, Inc. (1989-present).
Savannah, GA 30750 Trustee, Keystone Liquid Trust, Keystone Tax Exempt Trust, Keystone
Tax Free Fund, Master Reserves Tax Free Trust, and Master Reserves
Trust. President, Morehouse College (1987-1994). Chairman and Chief
Executive Officer, Keith Ventures (1992-1994). Director/Trustee, the
National Affiliated Investment Companies (until 1993). Director, Blue
Cross/Blue Shield (1989-1993) and First Union Bank of Georgia
( 1989-1993).
*Philip R. McLoughlin (50) Trustee and Chairman (1997-present), Vice Chairman (1995-1997) and
President Chief Executive Officer (1995-present), Phoenix Duff & Phelps
Corporation. Director (1994-present) and Executive Vice President,
Investments (1988-present), Phoenix Home Life Mutual Insurance
Company. Director/Trustee and President, Phoenix Funds (1989-present).
Trustee and President, Phoenix-Aberdeen Series Fund and Phoenix Duff
& Phelps Institutional Mutual Funds (1996-present). Director, Duff &
Phelps Utilities Tax-Free Income Inc. (1995-present) and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present). Director (1983-
present) and Chairman (1995-present), Phoenix Investment Counsel, Inc.
Director (1984-present) and President (1990- present), Phoenix Equity
Planning Corporation. Director (1993-present), Chairman (1993-present)
and Chief Executive Officer (1993-1995), National Securities & Research
Corporation. Director, Phoenix Realty Group, Inc. (1994-present), Phoenix
Realty Advisors, Inc. (1987-present), Phoenix Realty Investors, Inc.
(1994-present), Phoenix Realty Securities, Inc. (1994-present), PXRE
Corporation (Delaware) (1985-present), and World Trust Fund (1991-
present). Director and Executive Vice President, Phoenix Life and Annuity
Company (1996-present). Director and Executive Vice President, PHL
Variable Insurance Company (1995-present). Director, Phoenix Charter
Oak Trust Company (1996-present). Director and Vice President, PM
Holdings, Inc. (1985-present). Director and President, Phoenix Securities
Group, Inc. (1993-1995). Director (1992-present) and President (1992-
1994), W.S. Griffith & Co., Inc. Director (1992-present) and President
(1992-1994), Townsend Financial Advisers, Inc. Director/Trustee, the
National Affiliated Investment Companies (until 1993).
Everett L. Morris (69) Trustee Vice President, W.H. Reaves and Company (1993-present). Director/
164 Laird Road Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
Colts Neck, NJ 07722 Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Duff & Phelps Utilities Tax-Free Income Inc.
(1991-present) and Duff & Phelps Utility and Corporate Bond Trust
Inc. (1993-present). Director, Public Service Enterprise Group,
Incorporated (1986-1993). President and Chief Operating Officer,
Enterprise Diversified Holdings, Incorporated (1989-1993).
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Trust During the Past 5 Years
- ----------------------------- ---------------- -----------------------------------------------------------------------
<S> <C> <C>
*James M. Oates (51) Trustee Chairman, IBEX Capital Markets LLC (1997-present). Managing
Managing Director Director, Wydown Group (1994-present). Director, Phoenix Duff &
The Wydown Group Phelps Corporation (1995-present). Director/Trustee, Phoenix Funds
IBEX Capital Markets LLC (1987-present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
60 State Street Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Suite 950 Govett Worldwide Opportunity Funds, Inc. (1991-present), Blue Cross
Boston, MA 02109 and Blue Shield of New Hampshire (1994-present), Investors Financial
Service Corporation (1995-present), Investors Bank & Trust Corporation
(1995-present), Plymouth Rubber Co. (1995-present), Stifel Financial
(1996-present) and Command Systems, Inc. (1998-present). Member,
Chief Executives Organization (1996-present). Director (1984-1994),
President (1984-1994) and Chief Executive Officer (1986-1994),
Neworld Bank. Director/Trustee, the National Affiliated Investment
Companies (until 1993).
*Calvin J. Pedersen (56) Trustee Director (1986-present), President (1993-present) and Executive Vice
Phoenix Duff & Phelps President (1992-1993), Phoenix Duff & Phelps Corporation. Director/
Corporation Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
55 East Monroe Street Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
Suite 3600 (1996-present). President and Chief Executive Officer, Duff & Phelps
Chicago, IL 60603 Utilities Tax-Free Income Inc. (1995-present), Duff & Phelps Utilities
Income Inc. (1994-present) and Duff & Phelps Utility and Corporate
Bond Trust Inc. (1995-present).
Herbert Roth, Jr. (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 (1978-
Sherborn, MA 01770 present), Phoenix Home Life Mutual Insurance Company (1972-
present), Landauer, Inc. (medical services) (1970-present),Tech Ops./
Sevcon, Inc. (electronic controllers) (1987-present), and Mark IV
Industries (diversified manufacturer) (1985-present). Director, Key
Energy Group (oil rig service) (1988-1994). Director/Trustee, the
National Affiliated Investment Companies (until 1993).
Richard E. Segerson (52) Trustee Managing Director, Mullin Associates (1993-present). Director/Trustee,
102 Valley Road Phoenix Funds (1993-present). Trustee, Phoenix-Aberdeen Series Fund
New Canaan, CT 07840 and Phoenix Duff & Phelps Institutional Mutual Funds (1996-present).
Vice President and General Manager, Coats & Clark, Inc. (previously
Tootal American, Inc.) (1991-1993). Director/Trustee, the National
Affiliated Investment Companies (1984-1993).
Lowell P. Weicker, Jr. (66) Trustee Trustee/Director, Phoenix Funds (1995-present). Trustee, Phoenix-
731 Lake Avenue Aberdeen Series Fund and Phoenix Duff & Phelps Institutional Mutual
Greenwich, CT 06830 Funds (1996-present). Director, UST Inc. (1995-present), HPSC Inc.
(1995-present), Duty Free International, Inc. (1997-present) and
Compuware (1996-present) and Burroughs Wellcome Fund (1996-
present). Visiting Professor, University of Virginia (1997-present).
Chairman, Dresing, Lierman, Weicker (1995-1996). Governor of the
State of Connecticut (1991-1995).
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Trust During the Past 5 Years
- ------------------------ ---------------- --------------------------------------------------------------------------
<S> <C> <C>
Michael E. Haylon (40) Executive Director and Executive Vice President--Investments, Phoenix Duff &
Vice Phelps Corporation (1995-present). Executive Vice President, Phoenix
President Funds (1993-present) and Phoenix-Aberdeen Series Fund (1996-present).
Executive Vice President (1997-present), Vice President (1996-1997),
Phoenix Duff & Phelps Institutional Mutual Funds. Director (1994-
present), President (1995-present), Executive Vice President (1994-1995),
Vice President (1991-1994), Phoenix Investment Counsel, Inc. Director
(1994-present), President (1996-present), Executive Vice President (1994-
1996), Vice President (1993-1994), National Securities & Research
Corporation. Director, Phoenix Equity Planning Corporation (1995-
present). Senior Vice President, Securities Investments, Phoenix Home
Life Mutual Insurance Company (1993-1995). Various other positions with
Phoenix Home Life Mutual Insurance Company (1990-1993).
William J. Newman (59) Senior Vice Executive Vice President (1995-present) and Chief Investment
President Strategist (1996-present), Phoenix Investment Counsel, Inc. Senior Vice
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).
James D. Wehr (40) Senior Vice Managing Director, Fixed Income (1996-present), Vice President
President (1991-1996), Phoenix Investment Counsel, Inc. Managing Director,
Fixed Income (1996-present), Vice President (1993-1996), National
Securities & Research Corporation. Senior Vice President (1997-
present), Vice President (1988-1997) Phoenix Multi-Portfolio Fund;
Senior Vice President (1997-present), Vice President (1990-1997)
Phoenix Series Fund; Senior Vice President (1997-present), Vice
President (1991-1997) The Phoenix Edge Series Fund; Senior Vice
President (1997-present), Vice President (1993-1997) Phoenix
California Tax Exempt Bonds, Inc., and Senior Vice President
(1997-present), Vice President (1996-1997) Phoenix Duff & Phelps
Institutional Mutual Funds. Senior Vice President (1997-present)
Phoenix Multi-Sector Fixed Income Fund, Inc., Phoenix Multi-Sector
Short Term Bond Fund, Phoenix Income and Growth Fund and Phoenix
Strategic Allocation Fund, Inc. Managing Director, Public Fixed
Income, Phoenix Home Life Insurance Company (1991-1995).
David L. Albrycht (36) 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 & Securities Research Corporation. Vice President,
Phoenix Multi-Portfolio Fund (1993-present), Phoenix Multi-Sector
Short Term Bond Fund (1993-present), Phoenix Multi-Sector Fixed
Income Fund, Inc. (1994-present), The Phoenix Edge Series Fund
(1997-present) and Phoenix Series Fund (1997-present). Portfolio
Manager, Phoenix Home Life Mutual Insurance Company (1995-1996).
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Trust During the Past 5 Years
- --------------------------- ---------------- -----------------------------------------------------------------------
<S> <C> <C>
Jeanne H. Dorey (36) 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-
present) and Portfolio Manager, Common Stock (1993-1996), Phoenix
Home Life Mutual Insurance Company. Vice President, The Phoenix
Edge Series Fund (1993-present), Phoenix Multi-Portfolio Fund (1993-
present), and Phoenix Worldwide Opportunities Fund (1993-present).
Timothy M. Heaney (33) Vice Managing Director, Public Fixed Income (1997-present), Director,
President Fixed Income Research (1996-1997), Investment Analyst (1995-1996),
Phoenix Investment Counsel, Inc. Managing Director, Public Fixed
Income (1997-present), Director, Fixed Income Research (1996-1997),
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 (34) Vice Assistant Vice President, Phoenix Equity Planning Corporation (1996-
100 Bright Meadow Blvd. President present). Vice President, Phoenix Funds, Phoenix Duff & Phelps
PO Box 2200 Institutional Mutual Funds and Phoenix-Aberdeen Series Fund (1996-
Enfield, CT 06083-2200 present). Assistant Vice President, USAffinity Investments LP (1994-
1995). Treasurer and Secretary, USAffinity Funds (1994-1995).
Manager, Fund Administration, SEI Corporation (1991-1994).
Peter S. Lannigan (38) 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. Vice President, Phoenix Multi-Portfolio Fund (1995-present).
Director, Public Fixed Income, Phoenix Home Life Mutual Insurance
Company (1993-1995). Various positions with Standard & Poor's
Corporation (1989-1993).
David Lui (38) 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), The Phoenix Edge Series Fund (1996-present), and Phoenix
Worldwide Opportunities Fund (1996-present). Vice President, Asian
Equities, Alliance Capital Management (1993-1995).
William R. Moyer (53) Vice Senior Vice President and Chief Financial Officer, Phoenix Duff &
100 Bright Meadow Blvd. President Phelps Corporation (1995-present). Senior Vice President, Finance
PO Box 2200 (1990-present), Chief Financial Officer (1996-present), and Treasurer
Enfield, CT 06083-2200 (1994-1996), Phoenix Equity Planning Corporation. Senior Vice
President (1990-present), Chief Financial Officer (1996-present) and
Treasurer (1994-present), Phoenix Investment Counsel, Inc. Senior Vice
President, Finance (1993-present), Chief Financial Officer (1996-
present), and Treasurer (1994-present), National Securities & Research
Corporation. Senior Vice President and Chief Financial Officer, Duff &
Phelps Investment Management Co. (1996-present). Vice President,
Phoenix Funds (1990-present), Phoenix-Duff & Phelps Institutional
Mutual Funds (1996-present) and Phoenix-Aberdeen Series Fund
(1996-present). Senior Vice President and Chief Financial Officer, W.
S. Griffith & Co., Inc. (1992-1995) and Townsend Financial Advisers,
Inc. (1993-1995). Vice President, the National Affiliated Investment
Companies (until 1993). Vice President, Investment Products Finance,
Phoenix Home Life Mutual Insurance Company (1990-1995).
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Trust During the Past 5 Years
- ------------------------- ---------------- ------------------------------------------------------------------------
<S> <C> <C>
Leonard J. Saltiel (44) Vice Managing Director, Operations and Service (1996-present), Senior Vice
President President, (1994-1996), Phoenix Equity Planning Corporation. Vice
President, Phoenix Funds (1994-present), Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present), and Phoenix-Aberdeen
Series Fund (1996-present). Vice President, National Securities &
Research Corporation (1994-1996). Vice President, Investment
Operations, Phoenix Home Life Mutual Insurance Company (1994-
1995). Various positions with Home Life Insurance Company and
Phoenix Home Life Mutual Insurance Company (1987-1994).
Michael Schatt (50) Vice Managing Director, Phoenix Duff & Phelps Corporation (1994-present).
President Senior Vice President, Phoenix Realty Securities, Inc. (1997-present).
Vice President, Duff & Phelps Investment Management Co. (1997-
present), Duff & Phelps Utilities Income, Inc. (1997-present), Phoenix
Duff & Phelps Institutional Mutual Funds (1997-present), The Phoenix
Edge Series Fund (1997-present), and Phoenix Multi-Portfolio Fund
(1997-present). Director, Real Estate Advisory Practice, Coopers &
Lybrand (1990-1994).
Nancy G. Curtiss (45) Treasurer Vice President, Fund Accounting (1994-present) and Treasurer (1996-
present), Phoenix Equity Planning Corporation. Treasurer, Phoenix Funds
(1994-present), Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present) and Phoenix-Aberdeen Series Fund (1996-present). Second Vice
President and Treasurer, Fund Accounting, Phoenix Home Life Mutual
Insurance Company (1994-1995). Various positions with Phoenix Home
Life Insurance Company (1987-1994).
G. Jeffrey Bohne (50) Secretary Vice President and General Manager, Phoenix Home Life Mutual
101 Munson Street Insurance Co. (1993-present). Vice President, Transfer Agent
Greenfield, MA 01301 Operations (1993-1996). Vice President, Mutual Fund Customer
Service (1996-present), Phoenix Equity Planning Corporation, Secretary
and/or Clerk, Phoenix Funds (1993-present), Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present) and Phoenix-Aberdeen
Series Fund (1996-present). Vice President, Home Life of New York
Insurance Company (1984-1992).
</TABLE>
- -------------
*Trustees identified with an asterisk are considered to be interested persons
of the Trust (within the meaning of the Investment Company Act of 1940, as
amended) because of their affiliation with Phoenix Investment Counsel, Inc.,
or Phoenix Equity Planning Corporation or Phoenix Duff & Phelps Corporation.
For services rendered to the Trust for the fiscal year ended November 30,
1997, the Trustees received an aggregate of $124,115. 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 employees of the Adviser who are not interested persons are
compensated for their services by the Adviser and receive no compensation from
the Trust.
21
<PAGE>
For the Trust'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 13 Funds
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
- -------------------- ------------- --------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Robert Chesek $ 7,403 $113,000
E. Virgil Conway+ 9,623 146,000
Harry Dalzell-Payne+ 8,258 127,500
Francis E. Jeffries 7,125* 110,000
Leroy Keith, Jr. 7,403 None None 113,000
Philip R. McLoughlin+ 0 for any for any 0
Everett L. Morris+ 7,980* Trustee Trustee 126,000
James M. Oates+ 7,980 124,500
Calvin J. Pedersen 0 0
Herbert Roth, Jr.+ 9,900* 149,500
Richard E. Segerson 8,355 129,500
Lowell P. Weicker 7,875 122,500
</TABLE>
- -------------
*This compensation (and the earnings thereon) will be deferred pursuant to the
Deferred Compensation Plan. At November 30, 1997, the total amount of deferred
compensation (including interest and other accumulation earned on the original
amounts deferred) accrued for Messrs. Jeffries, Morris and Roth was $59,194,
$124,928 and $136,802, respectively. At present, by agreement among the Fund,
the Distributor and the electing director, director fees that are deferred are
paid by the Fund to the Distributor. The liability for the deferred
compensation obligation appears only as a liability of the Distributor.
+Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are members
of the Executive Committee.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of November 30, 1997 with
respect to each person who owns of record or is known by the Registrant to own
of record or beneficially own 5% or more of any class of the Registrant's
equity securities.
<TABLE>
<CAPTION>
Name of shareholder Name of Portfolio Number of Shares Percent of Class
<S> <C> <C> <C>
Phoenix Home Life Emerging Markets 1,702,082.308 34.20%
One American Row Class A
Hartford, CT 06115 Real Estate Class A 557,798.738 25.65%
Income Class X 644,591.667 100.00%
MLPF&S for the sole benefit Emerging Markets 655,116.000 22.26%
of its customers Class B
ATTN: Fund Administration Real Estate Class B 99,167.000 7.16%
4800 Deer Lake Dr E 3rd FL International Class A 948,465.000 10.24%
Jacksonville, FL 32246-6484 International Class B 46,557.000 6.10%
Bond Class B 51,031.000 10.10%
Theda M Schultz TOD Bond Class B 25,353.690 5.02%
Dale A Schultz
1100 W Western Reserve Rd
Apt 3
Youngstown, OH 44514
Donaldson Lufkin Jenrette Bond Class B 46,245.342 9.16%
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303
</TABLE>
At November 30, 1997, the Trustees and officers as a group owned less than 1% of
the then outstanding shares of the Trust.
22
<PAGE>
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 (except
Equity Opportunities Fund), Phoenix Duff & Phelps Institutional Mutual Funds
(except Real Estate Equity Securities Portfolio and Enhanced Reserves
Portfolio), Phoenix Growth and Income Fund of Phoenix Equity Series Fund,
Phoenix Investment Trust 97 and as subadviser to SunAmerica Series Trust among
others.
The offices of Duff & Phelps Investment Management Co., Inc. ("DPIM") are
located at 55 East Monroe Street, Suite 3600, Chicago, Illinois 60603. DPIM
serves as investment adviser to the Core Equity Fund of the Phoenix Equity
Series Fund, the Enhanced Reserves Portfolio and the Core Equity Portfolio of
Phoenix Duff & Phelps Institutional Mutual Funds and three closed end funds:
Duff & Phelps Utilities Income, Inc., Duff & Phelps Utilities Tax-Free Income
Inc., and Duff & Phelps Utility and Corporate Bond Trust, Inc. The investment
adviser for the Real Estate Portfolio at its inception was 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 Duff & Phelps Investment Management Co. ("DPIM"), a
subsidiary of Phoenix Duff & Phelps Corporation and an indirect majority owned
subsidiary of Phoenix Home Life, for which DPIM is paid a fee by PRS. On March
, 1998, DPIM purchased the management rights for the Portfolio from PRS and
PRS' contract was assigned to DPIM.
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning"), a subsidiary of Phoenix Duff & Phelps
Corporation ("Phoenix Duff & Phelps"). DPIM is also a subsidiary of Phoenix
Duff & Phelps. The majority shareholder of Phoenix Duff & Phelps is Phoenix
Home Life Mutual Insurance Company ("Phoenix Home Life") of Hartford,
Connecticut. 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 Trust's shares and as
Financial Agent of the Trust. 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, Jeanne H. Dorey, Michael E. Haylon, Timothy M. Heaney,
Peter S. Lannigan, David Lui, William R. Moyer, William J. Newman and James D.
Wehr, officers of the Trust, are officers of PIC. Michael Schatt is an officer
of the Trust and also an officer of DPIM. Philip R. McLoughlin, President and
Trustee of the Trust, is a director and officer of PIC. Michael E. Haylon is an
officer of the Trust, a director of PIC and also an officer of DPIM.
The investment advisory agreements provide that the Trust will bear all
costs and expenses (other than those specifically referred to as being borne by
the Adviser) incurred in the operation of the Trust. Such expenses include, but
shall not be limited to, all expenses 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 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
Trust), expenses of printing and mailing share certificates representing shares
of the Trust, association membership dues, charges of custodians, transfer
agents, dividend disbursing agents and financial agents, and 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. If authorized
by the Trustees, the Trust 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 Trust is a party.
Each Portfolio will pay expenses incurred in its own operation and will
also pay a portion of the Trust'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 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. PIC is also entitled to a fee, payable monthly, for the Income
Portfolio at the annual rate of 0.55% of the average of the aggregate daily net
assets up to $1 billion; 0.50% of such value between $1 billion and $2 billion;
and 0.45% of such value in excess of $2 billion. For managing or directing the
investments of the Real Estate Portfolio, DPIM 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.
23
<PAGE>
The investment advisory agreements provide that the applicable adviser
will reimburse the Trust 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 Trust 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 Trust 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 Trust would take such action necessary to eliminate this
expense limitation.
For its services to the Bond, Mid Cap, International, Emerging Markets and
Income Portfolios of the Trust during the fiscal year ended November 30, 1997,
PIC received a fee of $5,292,155. For its services to the Real Estate Portfolio
during the year ended November 30, 1997, PRS received a fee of $355,100. Of
these totals, PIC received fees from each Portfolio as follows:
1995 1996 1997
Bond $ 669,273 $ 646,989 $ 593,217
Mid Cap 3,394,485 3,579,657 3,027,757
International 1,112,314 1,071,572 1,062,391
Emerging Markets 19,244 177,790 577,472
Income 12,581 27,273 31,318
For the fiscal year ended November 30, 1995, it was necessary that the
Adviser bear ordinary operating expenses of the Trust in the amount of
$175,341; accordingly, the fee of $44,964 to which the Adviser would otherwise
have been entitled was reduced to a loss of $130,377.
For the fiscal year ended November 30, 1996, it was necessary that the
Adviser bear ordinary operating expenses of the Trust in the amount of
$189,883; accordingly, the fee of $48,133 to which the Adviser would otherwise
have been entitled was reduced to a loss of $141,750.
For the fiscal year ended November 30, 1997, it was necessary that the
Adviser bear ordinary operating expenses of the Trust in the amount of
$[ ]; accordingly, the fee of $[ ] to which the Adviser would
otherwise have been entitled was reduced to a loss of $[ ].
The investment advisory agreements also provide that each 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 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.
Provided it has been approved by a vote of the majority of the outstanding
shares of a Portfolio of the Trust 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 Trust 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 Trust 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 Trust 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 Trust, each adviser adheres to
the Trust'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 Trust (involving both
price paid or received and any commissions and other costs paid), the
efficiency with which the transaction is effected, the ability to effect the
transaction at all where a large block is involved, availability of the broker
to stand ready to execute possibly difficult transactions in the future and the
financial strength and stability of the broker. Such considerations are
judgmental and are weighed by each adviser and the Subadviser in determining
the overall reasonableness of brokerage commissions paid by the Trust.
24
<PAGE>
Each adviser may cause the Trust 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 Trust 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 Trust and may benefit both the Trust and
other accounts of such adviser. Conversely, brokerage and research services
provided by brokers to other accounts of an adviser may benefit the Trust.
If the securities in which a particular Portfolio of the Trust 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 Trust.
The Trust has adopted a policy and procedures governing the execution of
aggregated advisory client orders ("bunching procedures") in an attempt to
lower commission costs on a per-share and per-dollar basis. According to the
bunching procedures, the Adviser shall aggregate transactions unless it
believes in its sole discretion that such aggregation is inconsistent with its
duty to seek best execution (which shall include the duty to seek best price)
for the Trust. 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 Trust'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, 1995, 1996 and 1997, brokerage
commissions paid by the Trust on Portfolio transactions totaled $3,531,634,
$3,104,255, and $[ ], respectively. Brokerage commissions of
$[ ] paid during the fiscal year ended November 30, 1997, were paid on
portfolio transactions aggregating $[ ] executed by brokers who
provided research and other statistical and factual information.
Investment decisions for the Trust 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 Trust is concerned. In other cases, however, it
is believed that the ability of the Trust to participate in volume transactions
will produce better executions for the Trust. It is the opinion of the Board of
Trustees of the Trust that the desirability of utilizing each adviser as
investment adviser to the Trust 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 holidays: New Year's Day, Martin Luther King Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Since the Trust does not price securities
on weekends or United States national holidays,
25
<PAGE>
the net asset value of a Portfolio's foreign assets may be significantly
affected on days when the investor has no access to the Trust. 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.
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 minimum initial investment is $500 and the minimum subsequent
investment is $25. However, both the minimum initial and subsequent investment
amounts are $25 for investments pursuant to the "Investo-Matic" plan, a bank
draft investing program administered by Distributor, or pursuant to the
Systematic Exchange privilege or for an individual retirement account (IRA). In
addition, there are no subsequent investment minimum amounts in connection with
the reinvestment of dividend or capital gain distributions. Completed
applications for the purchase of shares should be mailed to: Phoenix Funds, c/o
State Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301.
The Trust has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when
an authorized broker or, if applicable, a broker's authorized designee, accepts
the order. Customer orders will be priced at the Portfolios' net asset values
next computed after they are accepted by an authorized broker or the broker's
authorized designee.
ALTERNATIVE PURCHASE ARRANGEMENTS
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"). Orders received by dealers prior to the
close of trading on the New York Stock Exchange are confirmed at the offering
price effective at that time, provided the order is received by the Distributor
prior to its close of business.
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is more beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Portfolios, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the
Portfolio, the accumulated continuing distribution services fee and contingent
deferred sales charges on Class B or C Shares would be less than the initial
sales charge and accumulated distribution services fee on Class A or M Shares
purchased at the same time. Note, only the Emerging Markets Portfolio and the
Income Portfolio currently offer Class C and Class M Shares.
Dividends paid by the Portfolio, if any, with respect to each Class of
Shares will be calculated in the same manner at the same time on the same day,
except that fees such as higher distribution services fee and any incremental
transfer agency costs relating to each Class of Shares will be borne
exclusively by that class. See "Dividends, Distributions and Taxes."
Class A Shares
Class A Shares incur a sales charge when they are purchased and enjoy the
benefit of not being subject to any sales charge when they are redeemed. Class
A Shares are subject to an ongoing distribution services fee at an annual rate
of 0.25% of the Portfolio's aggregate average daily net assets attributable to
the Class A Shares. In addition, certain purchases of Class A Shares qualify
for reduced initial sales charges. See the Portfolios' current Prospectus for
additional information.
Class B Shares
Class B Shares do not incur a sales charge when they are purchased, but
they are subject to a sales charge if they are redeemed within five years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions. See the Portfolios' current Prospectus for additional
information.
26
<PAGE>
Class B Shares are subject to an ongoing distribution and services fee at
an aggregate annual rate of up to 1.00% of the Portfolio's aggregate average
daily net assets attributable to the Class B Shares. Class B Shares enjoy the
benefit of permitting all of the investor's dollars to work from the time the
investment is made. The higher ongoing distribution and services fee paid by
Class B Shares will cause such shares to have a higher expense ratio and to pay
lower dividends, to the extent any dividends are paid, than those related to
Class A Shares. Class B Shares will automatically convert to Class A Shares
eight years after the end of the calendar month in which the shareholder's
order to purchase was accepted, in the circumstances and subject to the
qualifications described in the Portfolios' Prospectus. The purpose of the
conversion feature is to relieve the holders of the Class B Shares that have
been outstanding for a period of time sufficient for the adviser and the
Distributor to have been compensated for distribution expenses related to the
Class B Shares from most of the burden of such distribution related expenses.
Class B Shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were issued. At the
end of this period, Class B Shares will automatically convert to Class A Shares
and will no longer be subject to the higher distribution and services fee. Such
conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge.
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 Portfolio account will be considered to be held in a
separate sub-account. Each time any Class B Shares in the shareholder's
Portfolio account (other than those in the sub-account) convert to Class A, an
equal pro rata portion of the Class B Share dividends in the sub-account will
also convert to Class A Shares.
Class C Shares--Emerging Markets Portfolio and Income Portfolio Only
Class C Shares are purchased without an initial sales charge but are
subject to a deferred sales charge if redeemed within one year of purchase. The
deferred sales charge may be waived in connection with certain qualifying
redemptions. Shares issued in conjunction with the automatic reinvestment of
income distributions and capital gain distributions are not subject to any
sales charges. Class C Shares are subject to an ongoing distribution and
services fee at an aggregate annual rate of up to 1.00% of the Portfolio's
aggregate average daily net assets attributable to Class C Shares. See the
Portfolios' current Prospectus for more information.
Class M Shares--Emerging Markets Portfolio and Income Portfolio Only
Class M Shares incur a sales charge at the time of purchase but are not
subject to any sales charge when redeemed. Certain purchases of Class M Shares
may qualify for reduced initial sales charges as described in the Portfolios'
Prospectus. Class M Shares are subject to an ongoing distribution and services
fee at an aggregate annual rate of up to 0.50% of the Portfolio's aggregate
average daily net assets attributable to Class M Shares.
Class X Shares--Income Portfolio Only
Class X Shares are currently closed to new investors.
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 Trusts
directly pursuant to the following instructions. (Federal Trusts are monies
held in a bank account with a Federal Reserve Bank.)
(1) For initial investments, telephone the Trust 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 Trusts 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 Trusts will be
accepted on the business day Federal Trusts are wired provided the Federal
Trusts 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 Trusts
directly, the shareholder should complete and mail to Equity Planning an
Account Application.
INVESTOR ACCOUNT SERVICES
The Portfolios offer combination purchase privileges, letters of intent,
accumulation plans, withdrawal plans and reinvestment and exchange privileges
as described in the Portfolios' current Prospectus. Certain privileges may not
be available in connection
27
<PAGE>
with all classes. In most cases, changes to account services may be
accomplished over the phone. Inquiries regarding policies and procedures
relating to shareholder account services should be directed to Shareholder
Services at (800) 243-1574.
Exchanges. Under certain circumstances, shares of any Phoenix Fund may be
exchanged for shares of the same Class of another Phoenix Fund or any other
Affiliated Phoenix Fund 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 Fund, Series, or Portfolio, except if
made in connection with the Systematic Exchange privilege. Shareholders may
exchange shares held in book-entry form for an equivalent number (value) of the
same class of shares of any other Affiliated Phoenix Fund, if currently
offered. On exchanges with share classes that carry a contingent deferred sales
charge, the CDSC schedule of the original shares purchased continues to apply.
The exchange of shares is treated as a sale and purchase for federal income tax
purposes (see also "Dividends, Distributions and Taxes").
Systematic Exchanges. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Phoenix Fund or any other Affiliated
Phoenix Fund automatically on a monthly, quarterly, semi-annual or annual basis
or may cancel this privilege at any time. If you maintain an account balance of
at least $5,000, or $2,000 for tax qualified retirement benefit plans
(calculated on the basis of the net asset value of the shares held in a single
account), you may direct that shares be automatically exchanged at
predetermined intervals for shares of the same class of another Affiliated
Phoenix Fund. This requirement does not apply to Phoenix "Self Security"
program participants. Systematic exchanges will be executed upon the close of
business on the 10th day of each month or the next succeeding business day.
Systematic exchange forms are available from the Distributor. Exchanges will be
based upon each Fund's net asset value per share next computed after the close
of business on the 10th day of each month (or next succeeding business day),
without sales charge.
Dividend Reinvestment Across Accounts. If you maintain an account balance
of at least $5,000, or $2,000 for tax qualified retirement benefit plans
(calculated on the basis of the net asset value of the shares held in a single
account), you may direct that any dividends and distributions paid with respect
to shares in that account be automatically reinvested in a single account of
one of the other Phoenix Funds or any other Affiliated Phoenix Fund at net
asset value. You should obtain a current prospectus and consider the objectives
and policies of each Fund carefully before directing dividends and
distributions to another Fund. Reinvestment election forms and prospectuses are
available from Equity Planning. Distributions may also be mailed to a second
payee and/or address. Requests for directing distributions to an alternate
payee must be made in writing with a signature guarantee of the registered
owner(s). To be effective with respect to a particular dividend or
distribution, notification of the new distribution option must be received by
the Transfer Agent at least three days prior to the record date of such
dividend or distribution. If all shares in your account are repurchased or
redeemed or transferred between the record date and the payment date of a
dividend or distribution, you will receive cash for the dividend or
distribution regardless of the distribution option selected.
Invest-by-Phone. This expedited investment service allows a shareholder
to make an investment in an account by requesting a transfer of funds from the
balance of their bank account. Once a request is phoned in, Equity Planning
will initiate the 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 Equity Planning 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, please complete an Invest-by-Phone Application
and attach a voided check if applicable. Upon Equity Planning's acceptance of
the authorization form (usually within two weeks) shareholders may call toll
free (800) 367-5877 prior to 3:00 p.m. (New York time) to place their purchase
request. Instructions as to the account number and 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 Trust may delay the mailing of a check for redemption
proceeds of Trust shares purchased with a check or via Invest-by-Phone service
until the Trust has assured itself that good payment has been collected for the
purchase of the shares, which may take up to 15 days. The Trust 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.
HOW TO REDEEM SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefor postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for the Trust to dispose of its securities or to determine fairly the value of
its net assets or during any other period permitted by order of the Securities
and Exchange Commission for the protection of investors. Furthermore, the
Transfer Agent will not mail redemption proceeds until checks received for
shares purchased have cleared, which may take up to 15 days or more after
receipt of the check. See the Funds' current Prospectus for further
information.
28
<PAGE>
The Trust has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when
an authorized broker or, if applicable, a broker's authorized designee, accepts
the order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
Redemptions by Class B and Class C shareholders will be subject to the
applicable deferred sales charge, if any.
Each shareholder account in the Portfolios which has been in existence for
at least one year and has a value of less than $200 may be redeemed upon the
giving of not less than 30 days written notice to the shareholder mailed to the
address of record. During the 60 day period the shareholder has the right to
add to the account to bring its value to $200 or more. See the Portfolio's
current Prospectus for more information.
By Mail
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the possession of the shareholder, they must be mailed or
presented, duly endorsed in the full name of the account, with a written
request to Equity Planning that the Trust redeem the shares. See the
Portfolios' current Prospectus for more information.
Telephone Redemptions
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Portfolios' current Prospectus for
additional information.
By Check (Bond Portfolio, Emerging Markets Portfolio and Income Portfolio Only)
Any shareholder of these Portfolios may elect to redeem shares held in his
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 Trust 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 number of 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. Checks drawn from Class B and Class C accounts are subject to
the applicable deferred sales charge, if any.
The checkwriting 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. Inasmuch 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's rules governing checking accounts. A shareholder should make sure
that there are sufficient shares in his 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 Trust 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.
Reinvestment Privilege
Shareholders who may have overlooked features of their investment at the
time they redeemed have a privilege of reinvestment of their investment at net
asset value. See the Portfolios' current Prospectus for more information and
conditions attached to this privilege.
TAX-SHELTERED RETIREMENT PLANS
Shares of the Trust 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 (800) 243-4361 for further information about the plans.
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
29
<PAGE>
(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: (a) derive in each taxable
year at least 90% of its gross income from dividends, interest and gains from
the sale or other disposition of securities; and (b) meet certain
diversification requirements imposed under the Code at the end of each quarter
of the taxable year. Under certain state tax laws, each Portfolio must also
comply with the "short-short" test to qualify for treatment as a RIC for state
tax purposes. Under the "short-short" test the Portfolio must derive less than
30% of its gross income each taxable year as gains (without deduction for
losses) from the sale or other disposition of securities for less than three
months. If in any taxable year each Portfolio does not qualify as a regulated
investment company, all of its taxable income will be taxed at corporate rates.
In addition, if in any tax year the Portfolio does not qualify as a RIC for
state tax purposes a capital gain dividend may not retain its character in the
hands of the shareholder for state tax purposes.
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 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
30
<PAGE>
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.
Distributions by the Mid Cap, International, Real Estate, Emerging Markets
and Income 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 Portfolio may incur liability for foreign income and
withholding taxes on investment income. The Portfolio intends to qualify for
and may make an election permitted under Section 853 of the Code. The effect of
such election is that the shareholders of such Portfolio will be able to claim
a credit or deduction on their U.S. federal income tax returns for, and may
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
31
<PAGE>
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 Portfolio intends to meet the
requirements of the Code to "pass through" such taxes, there can be no
assurance that it 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).
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.
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 Trust's shares. Philip R. McLoughlin, a Trustee and
President of the Trust, is a director and officer of Equity Planning. Michael
E. Haylon, an officer of the Trust, 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 Trust, are officers of Equity Planning.
The Trust and Equity Planning have entered into distribution agreements
under which Equity Planning has agreed to use its best efforts to find
purchasers for Trust shares and the Trust has granted to Equity Planning the
exclusive right to purchase from the Trust and resell, as principal, shares
needed to fill unconditional orders for Trust shares. Equity Planning may sell
Trust shares through its registered representatives or through securities
dealers with whom it has sales agreements. Equity Planning may also sell Trust
shares pursuant to sales agreements entered into with bank-affiliated
securities brokers who, acting as agent for their customers, place orders for
Trust 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
32
<PAGE>
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 Trust.
For its services under the distribution agreements, Equity Planning
receives sales charges on transactions in Trust shares (see "How to Buy 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 Trust pursuant to the Distribution Plans described below. For
the fiscal years ended November 30, 1995, 1996, and 1997. Equity Planning's
gross commissions on sales of Trust shares totalled $1,655,136, $1,599,637 and
$2,114,382, respectively. Of these amounts, $1,454,880, $1,340,721 and
$1,620,047, respectively, were paid to dealers with whom Equity Planning had
sales agreements.
Equity Planning also acts as Financial Agent of the Trust and as such
performs administrative, bookkeeping and pricing functions for the Trust. As
compensation for such services, 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 through $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
Income Portfolio $70,000
In addition, Equity Planning is paid $12,000 for each class of shares of
each Portfolio beyond one. For services to the Trust during the fiscal years
ended November 30, 1995, 1996, and 1997, the Financial Agent received fees of
$227,721, $243,021 and $541,814, respectively.
PLANS OF DISTRIBUTION
The Trust has adopted separate amended and restated distribution plans
under Rule 12b-1 of the 1940 Act for each class of shares of each Portfolio of
the Trust (the "Class A Plan," the "Class B Plan," the "Class C Plan," the
"Class M Plan" and collectively the "Plans"). The Plans permit the Trust to
reimburse the Distributor for expenses incurred in connection with activities
intended to promote the sale of shares of each class of shares of the Trust.
Pursuant to the Plans, the Trust may reimburse the Distributor for actual
expenses of the Distributor of 0.25% of the average daily net assets of the
Trust's average daily net assets for providing services to shareholders,
including assistance with inquiries related to shareholder accounts (the
"Service Fee"). Pursuant to the Class B Plan, the Trust may reimburse the
Distributor monthly for actual expenses of the Distributor up to 0.75% annually
of the average daily net assets of each Portfolio's Class B Shares. Pursuant to
the Class C and M Plans, the Trust may reimburse the Distributor monthly for
actual expenses of the Distributor up to 0.75% and 0.25% annually of the
average daily net assets of the Emerging Markets and Income Portfolios' Class C
and M Shares, respectively.
Expenditures under the Plans shall consist of: (i) commissions to sales
personnel for selling shares of the Trust (including underwriting fees and
financing expenses incurred in connection with the payment of commissions);
(ii) compensation, sales incentives and payments to sales, marketing and
service personnel; (iii) payments to broker-dealers and other financial
institutions which have entered into agreements with the Distributor in the
form of the Dealer Agreement for Phoenix Funds for services rendered in
connection with the sale and distribution of shares of the Fund; (iv) payment
of expenses incurred in sales and promotional activities, including advertising
expenditures related to the Fund; (v) the costs of preparing and distributing
promotional materials; (vi) the cost of printing the Trust's Prospectus and
Statement of Additional Information for distribution to potential investors;
and (vii) such other similar services that the Trustees determine are
reasonably calculated to result in the sale of shares of the Trust.
33
<PAGE>
Each Plan requires that at least quarterly the Trustees of the Trust
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 Trust will be required to commit the selection and nomination of
candidates for Trustees who are not interested persons of the Trust 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 Trust 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, 1997 the Trust paid Rule 12b-1 Fees
in the amount of $2,554,101, of which the Distributor received $876,201,
unaffiliated broker-dealers received $1,368,595 and W.S. Griffith & Co., Inc.,
an affiliate, received $309,305. The Rule 12b-1 payments were used for (1)
compensating dealers $[ ], (2) compensating sales personnel $[ ], (3)
advertising $[ ], (4) printing and mailing of prospectuses to other than
current shareholders $[ ], (5) service costs $[ ] and (6) other
$[ ]. No interested person of the Trust and no Trustee who is not an
interested person of the Trust, 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 Trust'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 Trust is contained in the Annual
Reports to Shareholders for the year ended November 30, 1997 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 Reports are incorporated into this Statement of Additional Information
by reference. A copy of the Annual Reports must precede or accompany this
Statement of Additional Information.
Reports to Shareholders
The fiscal year of the Trust ends on November 30. The Trust will send
financial statements to its shareholders at least semi-annually. An annual
report containing financial statements audited by the Trust's independent
accountants, will be sent to shareholders each year.
Independent Accountants
Price Waterhouse LLP, 160 Federal Street, Boston, MA 02110, has been
selected independent accountants for the Trust. Price Waterhouse LLP audits the
Trust's annual financial statements and expresses an opinion thereon.
Custodians and Transfer Agent
State Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02105-8301,
serves as the Trust's custodian for all Portfolios except the International
Portfolio which is served by Brown Brothers Harriman & Company, 40 Water
Street, Boston, MA 02109. Equity Planning serves as the Trust's transfer agent.
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 plus out-of-pocket expenses. Transfer
Agent fees are also utilized to offset costs and fees paid to subtransfer
agents employed by Equity Planning. State Street Bank and Trust Company serves
as a subtransfer agent pursuant to a Subtransfer Agency Agreement.
34
<PAGE>
Consolidated Report For
Phoenix Multi-portfolio Fund
For The Fiscal Year Ended November 30, 1997
<PAGE>
Table of Contents
Page
Phoenix Tax-Exempt Bond Portfolio ............ 3
Phoenix Mid Cap Portfolio ..................... 10
Phoenix International Portfolio ............... 17
Phoenix Real Estate Securities Portfolio ...... 25
Phoenix Emerging Markets Bond Portfolio ...... 31
Notes to Financial Statements .................. 38
2
<PAGE>
Phoenix Tax-Exempt Bond Portfolio
- --------------------------------------------------------------------------------
[Tabular representation of line chart]
Lehman Brothers Municipal Phoenix Tax-Exempt Bond
Bond Index* Portfolio--Class A
7/15/88 $10,000 $ 9,525
11/30/88 $10,341 $ 9,924
11/30/89 $11,479 $11,128
11/30/90 $12,362 $11,851
11/30/91 $13,632 $12,956
11/30/92 $15,000 $14,500
11/30/93 $16,661 $16,354
11/30/94 $15,786 $15,119
11/30/95 $18,770 $18,124
11/30/96 $19,875 $18,904
11/30/97 $21,301** $20,046
Average Annual Total Returns
for Periods Ending 11/30/97
<TABLE>
<CAPTION>
From Inception From Inception
7/15/88 to 3/16/94 to
1 Year 5 Years 11/30/97 11/30/97
-------- --------- ---------------- ---------------
<S> <C> <C> <C> <C>
Class A with 4.75% sales charge 1.02% 5.67% 7.70% --
- ----------------------------------------------------------------------------------------------------
Class A at net asset value 6.04% 6.69% 8.25% --
- ----------------------------------------------------------------------------------------------------
Class B with CDSC 1.17% -- -- 4.89%
- ----------------------------------------------------------------------------------------------------
Class B at net asset value 5.13% -- -- 5.36%
- ----------------------------------------------------------------------------------------------------
Lehman Brothers
Municipal Bond Index* 7.18% 7.27% 8.35%** 6.59%***
- ----------------------------------------------------------------------------------------------------
</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 11/30/97.
***Index information from 2/28/94 to 11/30/97.
3
<PAGE>
Phoenix Tax-Exempt Bond Portfolio
- --------------------------------------------------------------------------------
INVESTMENTS AT NOVEMBER 30, 1997
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- -------- -------------
<S> <C> <C> <C>
MUNICIPAL TAX-EXEMPT BONDS--95.5%
Alabama--0.7%
Alabama Special Care Facility
5%, 11/1/25 .................. AA+ $1,000 $ 942,860
------------
Alaska--1.0%
Valdez Marine Terminal
Revenue 7%, 12/1/25 (c) ...... AA 1,125 1,239,851
------------
Arizona--0.9%
Pima County Pre-refunded
6.75%, 7/1/15 (FGIC
Insured) ..................... AAA 460 502,532
Pima County Unrefunded
6.75%, 7/1/15 (FGIC
Insured) ..................... AAA 540 585,063
------------
1,087,595
------------
Arkansas--1.4%
Drew County Public Facilities
Board 7.90%, 8/1/11
(FNMA Collateralized) ......... Aaa(b) 345 376,958
Jacksonville Residential
Housing 7.90%, 1/1/11
(FNMA Collateralized) ......... Aaa(b) 519 563,212
Lonoke County Residential
Housing 7.90%, 4/1/11
(FNMA Collateralized) ......... Aaa(b) 540 602,854
Stuttgart Public Facilities
Board 7.90%, 9/1/11
(FNMA Collateralized) ......... Aaa(b) 243 263,170
------------
1,806,194
------------
California--5.9%
California Housing Financing
Agency Series A 7.75%,
8/1/17 (FHA Insured) ......... AA- 250 262,660
Pittsburg Redevelopment
Series A 4.625%, 8/1/21
(AMBAC Insured) ............... AAA 1,650 1,474,077
Riverside County 8.625%,
5/1/16 (GNMA
Collateralized) (d) ............ AAA 4,300 5,782,812
------------
7,519,549
------------
Colorado--3.4%
Arapahoe County Highway
Revenue 6.90%, 8/31/15 (c) .... Aaa(b) 2,500 2,932,550
Jefferson County School
District 6.50%, 12/15/07
(MBIA Insured) ............... AAA 1,250 1,443,013
------------
4,375,563
------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- -------- -------------
<S> <C> <C> <C>
Connecticut--3.1%
Mashantucket Western Pequot
Tribe 144A 5.60%,
9/1/09 (e) ..................... NR $1,000 $ 1,028,160
Mashantucket Western Pequot
Tribe Pre-refunded 144A
6.50%, 9/1/05 (e) ............ BBB- 845 951,461
Mashantucket Western Pequot
Tribe Pre-refunded 144A
6.50%, 9/1/06 (e) ............ BBB- 483 548,791
Mashantucket Western Pequot
Tribe Unrefunded 144A
6.50%, 9/1/05 (e) ............ BBB- 855 938,816
Mashantucket Western Pequot
Tribe Unrefunded 144A
6.50%, 9/1/06 (e) ............ BBB- 517 568,783
------------
4,036,011
------------
Florida--1.4%
Martin County Industrial
Cogeneration 7.875%,
12/15/25 ..................... BBB- 1,500 1,739,325
------------
Georgia--4.8%
Atlanta Water and Sewer
Revenue 4.50%, 1/1/18
(FGIC Insured) ............... AAA 2,250 1,995,682
Cartersville Development
Authority Revenue 5.625%,
5/1/09 ........................ A+ 2,000 2,135,640
Georgia Electric Authority
Series Z 5.50%, 1/1/20
(FGIC Insured) ............... AAA 2,000 2,081,000
------------
6,212,322
------------
Illinois--6.6%
Chicago Board of Education
6%, 1/1/20 (MBIA Insured) AAA 500 548,025
Chicago Gas Supply Revenue
7.50%, 3/1/15 (c) ............ AA- 1,000 1,080,020
Chicago O'Hare International
Airport 8.85%, 5/1/18 ......... Baa(b) 875 989,161
Illinois Development Finance
Authority 7.60%, 9/1/13 ...... AA 2,000 2,175,920
Illinois Health Facilities
Authority 7%, 4/1/08 (FSA
Insured) ..................... AAA 1,100 1,297,714
Illinois Housing Development
Authority Residential 7%,
8/1/17 ........................ Aa(b) 735 755,293
Metropolitan Pier & Exposition
Authority Pre-refunded
6.50%, 6/15/07 (FGIC
Insured) ..................... Aaa(b) 1,470 1,643,225
</TABLE>
See Notes to Financial Statements
4
<PAGE>
Phoenix Tax-Exempt Bond Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- -------- -------------
<S> <C> <C> <C>
Illinois--continued
Metropolitan Pier & Exposition
Authority Unrefunded 6.50%,
6/15/07 (FGIC Insured) ...... Aaa(b) $ 30 $ 33,294
------------
8,522,652
------------
Indiana--2.5%
Indianapolis Public
Improvement Series A 0%,
2/1/05 ........................ Aa(b) 1,765 1,237,018
Indianapolis Public
Improvement Series C 0%,
1/1/03 ........................ A(b) 2,500 1,968,575
------------
3,205,593
------------
Kentucky--2.2%
Kentucky Turnpike Authority 0%,
1/1/10 (FGIC Insured) ......... AAA 3,300 1,800,546
Perry County Solid Waste
Disposal Revenue 7%,
6/1/24 ........................ NR 1,000 1,078,290
------------
2,878,836
------------
Louisiana--0.9%
East Baton Rouge Parish
Series ST-A 4.90%, 2/1/16
(FGIC Insured) ............... AAA 1,000 950,150
St. Mary Public Authority
7.625%, 3/25/12 ............... Aaa(b) 112 125,915
St. Tammany Public Authority
7%, 6/1/02 (FNMA
Collateralized) ............... Aaa(b) 124 130,212
------------
1,206,277
------------
Maryland--0.5%
Baltimore G.O. 7%, 10/15/09
(MBIA Insured) ............... AAA 500 604,045
------------
Massachusetts--6.5%
Massachusetts Bay
Transportation Authority
Series B 6.20%, 3/1/16 ...... A+ 1,000 1,120,630
Massachusetts Industrial
Financing Agency 0%,
8/1/05 ........................ A+ 1,100 763,466
Massachusetts State Health &
Education Revenue 3.10%,
7/1/13 (MBIA Insured) (c) . AAA 6,000 5,428,380
Massachusetts State Turnpike
Authority Series B 5.25%,
1/1/17 (MBIA Insured) ......... AAA 1,000 1,000,370
------------
8,312,846
------------
Michigan--2.6%
Western Townships Utilities
Authority 8.20%, 1/1/18 ...... BBB+ 1,500 1,584,615
Williamston Community
School 5.50%, 5/1/25
(MBIA Insured) ............... AAA 1,725 1,785,047
------------
3,369,662
------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- -------- -------------
<S> <C> <C> <C>
Mississippi--1.4%
Lowndes County Waste
Disposal 6.80%, 4/1/22 ...... A $1,450 $ 1,745,713
------------
Nebraska--1.2%
Nebraska Higher Education
6.70%, 12/1/02 ............... A(b) 1,500 1,600,035
------------
Nevada--1.2%
Clark County School District
Series B 0%, 6/1/03 (MBIA
Insured) ..................... AAA 2,000 1,573,800
------------
New Jersey--2.0%
Atlantic City Improvement
Authority Pre-refunded
8.875%, 2/1/10 ............... NR 1,000 1,054,680
Camden County Municipal
Utilities Authority 0%,
9/1/11 (FGIC Insured) ......... AAA 3,000 1,452,150
------------
2,506,830
------------
New York--10.8%
Erie County Water Authority
0%, 12/1/17 (AMBAC
Insured) ..................... AAA 550 131,175
New York State Dormitory
Authority 6.375%, 7/1/08 ...... BBB 1,000 1,076,260
Niagara Falls Bridge
Commission 5.25%, 10/1/15
(FGIC Insured) ............... AAA 4,000 4,111,760
Port Authority Revenue
6.75%, 10/1/11 ............... NR 3,000 3,261,720
Port Authority Revenue
6.125%, 6/1/94 ............... AA- 2,000 2,252,580
Triborough Bridge & Tunnel
Authority Series A 4.75%,
1/1/14 ........................ Aa(b) 2,250 2,185,447
Triborough Bridge & Tunnel
Authority Series X 6.625%,
1/1/12 ........................ Aa(b) 750 877,808
------------
13,896,750
------------
North Carolina--1.2%
North Carolina Municipal
Power Agency 6%, 1/1/09
(AMBAC Insured) ............... AAA 1,385 1,529,733
------------
Pennsylvania--11.2%
Delaware Valley Finance
Authority Series B 5.70%,
7/1/27 (AMBAC Insured) ...... AAA 2,000 2,157,120
Pennsylvania Economic
Development Financing
Authority 6.40%, 1/1/09 ...... NR 5,000 5,217,850
</TABLE>
See Notes to Financial Statements
5
<PAGE>
Phoenix Tax-Exempt Bond Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- -------- -------------------
<S> <C> <C> <C>
Pennsylvania--continued
Pennsylvania Economic
Development Financing
Authority 9.25%, 1/1/22 ...... NR $3,995 $ 2,716,600
Pennsylvania Finance
Authority 6.60%, 11/1/09 ...... A 4,000 4,358,760
--------------
14,450,330
--------------
Tennessee--1.3%
Metropolitan Government Health
& Educational Facilities Board
6%, 12/1/16 (AMBAC
Insured) ..................... AAA 1,500 1,655,295
--------------
Texas--10.3%
Alliance Airport Authority 7%,
12/1/11 ........................ BBB- 1,100 1,279,377
Austin Convention Center
8.25%, 11/15/14 ............... Aaa(b) 955 1,047,110
Brazos River Authority
7.75%, 10/1/15 ............... A- 750 786,053
Brazos River Authority
7.625%, 5/1/19 ............... A- 1,000 1,069,320
Colorado River Water District
Pre-refunded 8.25%, 1/1/15 ..... NR 540 601,668
Harris County Toll Road
Multimode 8.125%, 8/15/17 ...... AAA 700 726,796
La Vernia School District 5%,
8/15/22 (PSFG Insured) ......... AAA 1,125 1,080,304
San Antonio Electric & Gas
5%, 2/1/12 ..................... AA 2,000 2,017,600
Texas Public Finance Authority
6.25%, 8/1/09 (MBIA Insured) AAA 1,250 1,415,937
Texas State Turnpike Authority
5.25%, 1/1/23 (FGIC
Insured) ..................... AAA 2,300 2,265,454
Texas Water Resources
Finance Authority 7.625%,
8/15/08 ........................ A 945 977,007
--------------
13,266,626
--------------
Virginia--5.0%
Pittsylvania County Revenue
Series A 7.30%, 1/1/04 ......... NR 1,000 1,072,290
Pittsylvania County Revenue
Series A 7.45%, 1/1/09 ......... NR 3,000 3,288,780
Upper Occoquan Sewer
Authority 5.15%, 7/1/20
(MBIA Insured) ............... AAA 2,000 2,002,720
--------------
6,363,790
--------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- -------- -------------------
<S> <C> <C> <C>
West Virginia--2.5%
Upshur Solid Waste Revenue
7%, 7/15/25 .................. NR $2,000 $ 2,173,240
West Virginia Housing
Development 6.625%,
7/1/20 (FHA Insured) ......... AA 1,000 1,002,250
--------------
3,175,490
--------------
Wisconsin--0.9%
Wisconsin Clean Water
Revenue 6.875%, 6/1/11 ......... AA+ 750 887,498
Wisconsin Housing &
Economic Development
Authority 7.375%, 9/1/17 ...... Aa(b) 305 313,665
--------------
1,201,163
--------------
Wyoming--0.4%
Wyoming Community
Development Authority
7.875%, 6/1/18 (FHA
Insured) ..................... AA 545 564,854
--------------
Other Territories--1.7%
Puerto Rico Commonwealth
Aqueduct & Sewer
Authority 7.875%, 7/1/17 ...... AAA 500 521,735
Puerto Rico Commonwealth
Highway & Transportation
Authority 6.625%, 7/1/12 ...... A 1,500 1,643,685
--------------
2,165,420
--------------
TOTAL MUNICIPAL TAX-EXEMPT BONDS
(Identified cost $116,152,396).............................. 122,755,010
--------------
SHORT-TERM OBLIGATIONS--3.1%
Commercial Paper--3.1%
BellSouth Telecommunications,
Inc. 5.75%, 12/1/97 ............ A-1+ 735 735,000
Koch Industries, Inc. 5.62%,
12/1/97 ........................ A-1+ 3,295 3,295,000
--------------
4,030,000
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $4,030,000) .............................. 4,030,000
--------------
TOTAL INVESTMENTS--98.6%
(Identified cost $120,182,396).............................. 126,785,010(a)
Cash and receivables, less liabilities--1.4% ............... 1,774,686
--------------
NET ASSETS--100.0% .......................................... $ 128,559,696
==============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $8,822,558 and gross
depreciation of $2,162,504 for federal income tax purposes. At November
30, 1997, the aggregate cost of securities for federal income tax purposes
was $120,124,956.
(b) As rated by Moody's, Fitch, or Duff & Phelp's.
(c) Variable or step coupon security; interest rate reflects the rate currently
in effect.
(d) All or a portion segregated as collateral.
(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,
1997, these securities amounted to a value of $4,036,011 or 3.1% of net
assets.
At November 30, 1997, 40.5% of the securities in the portfolio are backed by
insurance of financial institutions and financial guaranty assurance
agencies. Insurers with a concentration greater than 10% of net assets are
as follows: FGIC, 13.6%; and MBIA 12.3%.
See Notes to Financial Statements
6
<PAGE>
Phoenix Tax-Exempt Bond Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $120,182,396) $126,785,010
Receivables
Interest 2,150,121
Fund shares sold 47,924
------------
Total assets 128,983,055
------------
Liabilities
Payables
Custodian 1,459
Dividend distributions 123,642
Fund shares repurchased 136,111
Investment advisory fee 47,382
Distribution fee 29,875
Transfer agent fee 14,168
Financial agent fee 6,740
Trustees' fee 292
Accrued expenses 63,690
------------
Total liabilities 423,359
------------
Net Assets $128,559,696
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $121,978,076
Distributions in excess of net investment income (123,643)
Accumulated net realized gain 107,337
Net unrealized appreciation 6,597,926
------------
Net Assets $128,559,696
============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $122,762,744) 10,986,249
Net asset value per share $ 11.17
Offering price per share
$11.17/(1-4.75%) $ 11.73
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $5,796,952) 516,856
Net asset value and offering price per share $ 11.22
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<S> <C>
Investment Income
Interest $8,324,902
----------
Total investment income 8,324,902
----------
Expenses
Investment advisory fee 593,217
Distribution fee--Class A 316,781
Distribution fee--Class B 51,136
Financial agent fee 78,549
Transfer agent 115,916
Professional 42,301
Registration 24,594
Trustees 21,061
Printing 20,122
Custodian 15,032
Miscellaneous 21,063
----------
Total expenses 1,299,772
----------
Net investment income 7,025,130
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 199,858
Net realized loss on futures contracts (24,757)
Net change in unrealized appreciation (depreciation) on
investments 420,432
----------
Net gain on investments 595,533
----------
Net increase in net assets resulting from
operations $7,620,663
==========
</TABLE>
See Notes to Financial Statements
7
<PAGE>
Phoenix Tax-Exempt Bond Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, 1997 November 30, 1996
------------------- ------------------
<S> <C> <C>
From Operations
Net investment income $ 7,025,130 $ 7,756,296
Net realized gain 175,101 1,670,133
Net change in unrealized appreciation (depreciation) 420,432 (3,275,493)
------------- -------------
Increase in net assets resulting from operations 7,620,663 6,150,936
------------- -------------
From Distributions to Shareholders
Net investment income--Class A (6,755,466) (7,504,351)
Net investment income--Class B (233,919) (191,960)
Net realized gains--Class A (1,898,761) --
Net realized gains--Class B (65,944) --
In excess of net investment income--Class A (5,836) --
In excess of net investment income--Class B (202) --
------------- -------------
Decrease in net assets from distributions to shareholders (8,960,128) (7,696,311)
------------- -------------
From Share Transactions
Class A
Proceeds from sales of shares (5,119,900 and 7,599,558 shares, respectively) 56,427,974 84,574,148
Net asset value of shares issued from reinvestment of distributions (458,029 and
371,771 shares, respectively) 5,044,059 4,153,807
Cost of shares repurchased (6,702,201 and 8,830,124 shares, respectively) (73,960,582) (98,463,997)
------------- -------------
Total (12,488,549) (9,736,042)
------------- -------------
Class B
Proceeds from sales of shares (200,165 and 197,502 shares, respectively) 2,212,684 2,219,054
Net asset value of shares issued from reinvestment of distributions (15,780 and
10,179 shares, respectively) 174,441 113,899
Cost of shares repurchased (119,828 and 61,609 shares, respectively) (1,319,055) (695,116)
------------- -------------
Total 1,068,070 1,637,837
------------- -------------
Decrease in net assets from share transactions (11,420,479) (8,098,205)
------------- -------------
Net decrease in net assets (12,759,944) (9,643,580)
Net Assets
Beginning of period 141,319,640 150,963,220
------------- -------------
End of period (including distributions in excess of net investment income
of ($123,643) and ($117,605), respectively) $ 128,559,696 $ 141,319,640
============= =============
</TABLE>
See Notes to Financial Statements
8
<PAGE>
Phoenix Tax-Exempt Bond Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------
Year Ended November 30,
1997 1996 1995 1994 1993
------------ ------------ ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.28 $11.40 $10.09 $11.58 $11.10
Income from investment operations
Net investment income 0.59 0.60 0.61 0.65 0.60(4)
Net realized and unrealized gain (loss) 0.05 (0.12) 1.34 (1.49) 0.76
-------- -------- -------- -------- -----------
Total from investment operations 0.64 0.48 1.95 (0.84) 1.36
-------- -------- -------- -------- -----------
Less distributions
Dividends from net investment income (0.59) (0.60) (0.61) (0.65) (0.60)
Dividends from net realized gains (0.16) -- (0.03) -- (0.28)
-------- -------- -------- -------- -----------
Total distributions (0.75) (0.60) (0.64) (0.65) (0.88)
-------- -------- -------- -------- -----------
Change in net asset value (0.11) (0.12) 1.31 (1.49) 0.48
-------- -------- -------- -------- -----------
Net asset value, end of period $11.17 $11.28 $11.40 $10.09 $11.58
======== ======== ======== ======== ===========
Total return(1) 6.04% 4.30% 19.87% (7.55)% 12.79%
Ratios/supplemental data:
Net assets, end of period (thousands) $122,763 $136,558 $147,821 $141,623 $171,272
Ratio to average net assets of:
Operating expenses 0.96% 0.94% 0.97% 0.96% 0.75%
Net investment income 5.36% 5.42% 5.65% 5.65% 5.33%
Portfolio turnover 15% 27% 25% 54% 62%
</TABLE>
<TABLE>
<CAPTION>
Class B
-------------------------------------------------------------
From
Inception
Year Ended November 30, 3/16/94 to
1997 1996 1995 11/30/94
----------- ----------- ----------- -------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.32 $11.44 $10.12 $11.21
Income from investment operations
Net investment income 0.50 0.52 0.53 0.39
Net realized and unrealized gain (loss) 0.06 (0.12) 1.35 (1.09)
-------- -------- -------- ----------
Total from investment operations 0.56 0.40 1.88 (0.70)
-------- -------- -------- ----------
Less distributions
Dividends from net investment income (0.50) (0.52) (0.53) (0.39)
Dividends from net realized gains (0.16) -- (0.03) --
-------- -------- -------- ----------
Total distributions (0.66) (0.52) (0.56) (0.39)
-------- -------- -------- ----------
Change in net asset value (0.10) (0.12) 1.32 (1.09)
-------- -------- -------- ----------
Net asset value, end of period $11.22 $11.32 $11.44 $10.12
======== ======== ======== ==========
Total return(1) 5.13% 3.60% 19.07% (6.42%)(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $5,797 $4,762 $3,142 $1,147
Ratio to average net assets of:
Operating expenses 1.71% 1.69% 1.72% 1.54%(2)
Net investment income 4.60% 4.68% 4.90% 5.07%(2)
Portfolio turnover 15% 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.
See Notes to Financial Statements
9
<PAGE>
Phoenix Mid Cap Portfolio
10
<PAGE>
Phoenix Mid Cap Portfolio
- --------------------------------------------------------------------------------
[Tabular representation of line chart]
Phoenix MidCap
S&P MidCap 400* Portfolio--Class A
11/1/89 $10,000 $ 9,525
11/30/89 $10,221 $ 9,800
11/30/90 $ 9,493 $11,491
11/30/91 $13,482 $16,178
11/30/92 $16,324 $18,838
11/30/93 $18,373 $20,522
11/30/94 $18,369 $20,733
11/30/95 $24,335 $26,512
11/30/96 $28,903 $30,095
11/30/97 $36,842 $32,540
Average Annual Total Returns
for Periods Ending 11/30/97
<TABLE>
<CAPTION>
From Inception From Inception
11/1/89 to 7/18/94 to
1 Year 5 Years 11/30/97 11/30/97
---------- ----------- ---------------- ---------------
<S> <C> <C> <C> <C>
Class A with 4.75% sales charge 2.99% 10.47% 15.72% --
- --------------------------------------------------------------------------------------------------------
Class A at net asset value 8.12% 11.55% 16.41% --
- --------------------------------------------------------------------------------------------------------
Class B with CDSC 3.49% -- -- 13.69%
- --------------------------------------------------------------------------------------------------------
Class B at net asset value 7.27% -- -- 14.10%
- --------------------------------------------------------------------------------------------------------
S&P MidCap 400* 27.47% 17.68% 17.50% 21.89%
- --------------------------------------------------------------------------------------------------------
</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 MidCap 400's
performance does not reflect sales charges.
11
<PAGE>
Phoenix Mid Cap Portfolio
- --------------------------------------------------------------------------------
INVESTMENTS AT NOVEMBER 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS--83.8%
Airlines--3.3%
AMR Corp. (b) ........................... 45,000 $ 5,453,438
Alaska Air Group, Inc. (b) ............... 87,400 3,266,575
Southwest Airlines Co. .................. 150,000 3,665,625
-----------
12,385,638
-----------
Banks--4.5%
Republic New York Corp. .................. 60,000 6,525,000
Wachovia Corp. ........................... 45,000 3,465,000
Washington Mutual, Inc. .................. 100,000 6,912,500
-----------
16,902,500
-----------
Beverages (Non-Alcoholic)--1.7%
Coca-Cola Enterprises, Inc. ............ 210,000 6,418,125
-----------
Broadcasting (Television, Radio & Cable)--1.5%
Heftel Broadcasting Corp. Class A (b) ... 75,500 5,577,562
-----------
Communications Equipment--1.9%
Ciena Corp. (b) ........................ 135,000 7,290,000
-----------
Computers (Peripherals)--1.0%
EMC Corp. (b) ........................... 120,000 3,637,500
-----------
Computers (Software & Services)--5.9%
BMC Software, Inc. (b) .................. 120,000 7,785,000
Computer Associates International, Inc. 137,500 7,158,594
Compuware Corp. (b) ..................... 105,000 3,668,437
PeopleSoft, Inc. (b) ..................... 59,000 3,860,813
-----------
22,472,844
-----------
Distributors (Food & Health)--3.0%
Cardinal Health, Inc. .................. 150,000 11,362,500
-----------
Electronics (Component Distributors)--1.9%
Grainger (W.W.), Inc. .................. 75,000 7,021,875
-----------
Electronics (Semiconductors)--0.7%
Integrated Circuit Systems, Inc. (b) ... 93,000 2,615,625
-----------
Entertainment--1.8%
Liberty Media Group (b) .................. 200,000 6,750,000
-----------
Financial (Diversified)--4.7%
Franklin Resources, Inc. ............... 60,000 5,392,500
Greenpoint Financial Corp. ............... 90,000 5,996,250
Price (T. Rowe) Associates ............... 100,000 6,500,000
-----------
17,888,750
-----------
Foods--3.3%
Interstate Bakeries Corp. ............... 360,000 12,442,500
-----------
Health Care (Diversified)--1.0%
Bristol-Myers Squibb Co. ............... 40,000 3,745,000
-----------
Health Care (Drugs--Major Pharmaceuticals)--1.4%
Lilly (Eli) & Co. ........................ 80,000 5,045,000
Viropharma, Inc. (b) ..................... 20,000 362,500
-----------
5,407,500
-----------
Health Care (Hospital Management)--1.2%
HBO & Co. .............................. 100,000 4,487,500
-----------
Health Care (Long Term Care)--2.1%
HEALTHSOUTH Corp. (b) .................. 300,000 7,875,000
-----------
SHARES VALUE
--------- ------------
<S> <C> <C>
Health Care (Medical Products & Supplies)--3.3%
ATL Ultrasound, Inc. (b) ............... 40,000 $ 1,720,000
Guidant Corp. ........................... 57,000 3,662,250
Mentor Corp. ........................... 100,000 3,400,000
Sofamor Danek Group, Inc. (b) ............ 55,000 3,870,625
-----------
12,652,875
-----------
Health Care (Specialized Services)--0.6%
Covance, Inc. (b) ........................ 120,000 2,175,000
-----------
Household Furn. & Appliances--0.3%
Ethan Allen Interiors, Inc. ............ 30,300 1,166,550
-----------
Insurance (Life/Health)--3.2%
Jefferson-Pilot Corp. .................. 110,000 8,394,375
Torchmark Corp. ........................ 92,000 3,772,000
-----------
12,166,375
-----------
Insurance (Multi-Line)--3.7%
SunAmerica, Inc. ........................ 135,000 5,467,500
TIG Holdings, Inc. ..................... 140,000 4,506,250
Travelers Property Casualty Corp.
Class A .............................. 103,500 4,114,125
-----------
14,087,875
-----------
Insurance (Property-Casualty)--1.5%
St. Paul Co., Inc. ..................... 72,000 5,760,000
-----------
Investment Banking/Brokerage--1.1%
Charles Schwab Corp. ..................... 105,000 4,049,062
-----------
Oil & Gas (Drilling & Equipment)--10.3%
BJ Services Co. (b) ..................... 145,000 10,412,813
Diamond Offshore Drilling, Inc. ......... 100,000 4,987,500
Rowan Companies, Inc. (b) ............... 250,000 8,500,000
Smith International, Inc. (b) ............ 115,000 7,360,000
Transocean Offshore, Inc. ............... 160,000 7,590,000
-----------
38,850,313
-----------
Oil & Gas (Exploration & Production)--1.5%
Apache Corp. ........................... 160,000 5,880,000
-----------
Retail (General Merchandise)--5.7%
Borders Group, Inc. (b) .................. 300,000 8,568,750
Kohl's Corp. (b) ........................ 180,000 13,027,500
-----------
21,596,250
-----------
Services (Advertising/Marketing)--2.3%
Outdoor Systems, Inc. (b) ............... 278,850 8,609,494
-----------
Services (Commercial & Consumer)--0.3%
Galileo International, Inc. ............ 50,000 1,340,625
-----------
Telephone--2.6%
Teleport Communications Group, Inc.
Class A (b) ........................... 200,000 9,800,000
-----------
Textiles (Apparel)--6.3%
Jones Apparel Group, Inc. (b) ............ 185,000 9,018,750
Liz Claiborne, Inc. ..................... 130,000 6,532,500
Nautica Enterprises, Inc. (b) ............ 300,000 8,418,750
-----------
23,970,000
-----------
</TABLE>
See Notes to Financial Statements
12
<PAGE>
Phoenix Mid Cap Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
Truckers--0.2%
CNF Transportation, Inc. ............ 20,000 $ 870,000
------------
TOTAL COMMON STOCKS
(Identified cost $261,640,777) ............... 317,254,838
------------
FOREIGN COMMON STOCKS--0.5%
Biotechnology--0.5%
Elan PLC Sponsored ADR (Ireland) (b) 38,900 2,051,975
------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $2,047,821).................. 2,051,975
------------
TOTAL LONG-TERM INVESTMENTS--84.3%
(Identified cost $263,688,598) ............... 319,306,813
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------- --------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--22.1%
Commercial Paper--21.0%
BellSouth Telecommunications,
Inc. 5.75%, 12/1/97 ...... A-1+ $2,600 2,600,000
Koch Industries, Inc. 5.53%,
12/1/97 .................. A-1+ 4,765 4,765,000
Koch Industries, Inc. 5.62%,
12/1/97 .................. A-1+ 1,930 1,930,000
Pitney Bowes Credit Corp.
5.56%, 12/1/97 ............ A-1+ 1,345 1,345,000
Vermont American Corp.
5.70%, 12/1/97 ............ A-1+ 8,517 8,517,000
Deutsche Bank Financial
5.53%, 12/2/97 ............ A-1+ 2,480 2,479,619
International Lease Finance
Corp. 5.52%, 12/2/97 ...... A-1 6,570 6,568,993
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- --------------------
<S> <C> <C> <C>
Commercial Paper--continued
BellSouth Telecommunications,
Inc. 5.53%, 12/3/97 ...... A-1+ $ 7,000 $ 6,997,849
Ameritech Corp. 5.57%,
12/4/97 .................. A-1+ 1,136 1,135,473
Corporate Receivables Corp.
5.60%, 12/4/97 ............ A-1 700 699,673
BellSouth Telecommunications,
Inc. 5.55%, 12/8/97 ...... A-1+ 5,000 4,994,604
Du Pont (E.I.) de Nemours &
Co. 5.54%, 12/9/97 ...... A-1+ 5,000 4,993,844
Du Pont (E.I.) de Nemours &
Co. 5.54%, 12/10/97 ...... A-1+ 5,265 5,257,708
Abbott Laboratories 5.48%,
12/11/97 .................. A-1+ 9,160 9,146,056
Coca-Cola Co. 5.56%,
12/11/97 .................. A-1+ 3,485 3,479,618
Abbott Laboratories 5.52%,
12/12/97 .................. A-1+ 455 454,233
Deutsche Bank Financial
5.56%, 12/17/97 ......... A-1+ 10,000 9,975,289
Private Export Funding Corp.
5.67%, 1/20/98 ............ A-1+ 4,000 3,968,500
--------------
79,308,459
--------------
Federal Agency Securities--1.1%
FHLMC 5.63%, 12/1/97 .................. 4,190 4,190,000
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $83,498,459) ..................... 83,498,459
--------------
TOTAL INVESTMENTS--106.4%
(Identified cost $347,187,057) ..................... 402,805,272(a)
Cash and receivables, less liabilities--(6.4)% ... (24,169,022)
--------------
NET ASSETS--100.0% ................................. $ 378,636,250
==============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $57,666,829 and gross
depreciation of $2,130,922 for federal income tax purposes. At November
30, 1997, the aggregate cost of securities for federal income tax purposes
was $347,269,365.
(b) Non-income producing.
See Notes to Financial Statements
13
<PAGE>
Phoenix Mid Cap Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $347,187,057) $402,805,272
Cash 5,589
Receivables
Investment securities sold 2,511,986
Dividends and interest 124,587
Fund shares sold 72,753
------------
Total assets 405,520,187
------------
Liabilities
Payables
Investment securities purchased 25,863,915
Fund shares repurchased 421,222
Investment advisory fee 235,746
Transfer agent fee 137,861
Distribution fee 89,713
Financial agent fee 13,704
Trustees' fee 292
Accrued expenses 121,484
------------
Total liabilities 26,883,937
------------
Net Assets $378,636,250
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $288,268,160
Accumulated net realized gain 34,749,875
Net unrealized appreciation 55,618,215
------------
Net Assets $378,636,250
============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $360,053,199) 17,444,849
Net asset value per share $ 20.64
Offering price per share
$20.64/(1-4.75%) $ 21.67
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $18,583,051) 924,153
Net asset value and offering price per share $ 20.11
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<S> <C>
Investment Income
Dividends $ 2,465,050
Interest 2,251,951
Security lending 320,180
-----------
Total investment income 5,037,181
-----------
Expenses
Investment advisory fee 3,027,757
Distribution fee--Class A 966,258
Distribution fee--Class B 171,978
Financial agent fee 168,694
Transfer agent 893,293
Printing 87,971
Registration 39,983
Professional 39,919
Custodian 33,369
Trustees 21,089
Miscellaneous 37,701
-----------
Total expenses 5,488,012
-----------
Net investment loss (450,831)
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 36,321,860
Net change in unrealized appreciation (depreciation) on
investments (8,036,315)
-----------
Net gain on investments 28,285,545
-----------
Net increase in net assets resulting from
operations $27,834,714
===========
</TABLE>
See Notes to Financial Statements
14
<PAGE>
Phoenix Mid Cap Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, 1997 November 30, 1996
------------------- ------------------
<S> <C> <C>
From Operations
Net investment income (loss) $ (450,831) $ (914,819)
Net realized gain 36,321,860 53,975,757
Net change in unrealized appreciation (depreciation) (8,036,315) 7,327,088
-------------- --------------
Increase in net assets resulting from operations 27,834,714 60,388,026
-------------- --------------
From Distributions to Shareholders
Net realized gains--Class A (51,980,339) (63,370,772)
Net realized gains--Class B (2,025,912) (1,485,800)
-------------- --------------
Decrease in net assets from distributions to shareholders (54,006,251) (64,856,572)
-------------- --------------
From Share Transactions
Class A
Proceeds from sales of shares (2,046,000 and 4,975,113 shares, respectively) 41,010,257 98,337,401
Net asset value of shares issued from reinvestment of distributions (2,624,028 and
3,203,933 shares, respectively) 49,101,364 59,432,948
Cost of shares repurchased (8,074,195 and 9,465,735 shares, respectively) (156,230,117) (189,179,115)
-------------- --------------
Total (66,118,496) (31,408,766)
-------------- --------------
Class B
Proceeds from sales of shares (229,655 and 391,167 shares, respectively) 4,456,304 7,718,870
Net asset value of shares issued from reinvestment of distributions (102,293 and
74,668 shares, respectively) 1,877,087 1,371,654
Cost of shares repurchased (234,195 and 138,583 shares, respectively) (4,479,411) (2,722,739)
-------------- --------------
Total 1,853,980 6,367,785
-------------- --------------
Decrease in net assets from share transactions (64,264,516) (25,040,981)
-------------- --------------
Net decrease in net assets (90,436,053) (29,509,527)
Net Assets
Beginning of period 469,072,303 498,581,830
-------------- --------------
End of period (including undistributed net investment income of $0 and
$0, respectively) $ 378,636,250 $ 469,072,303
============== ==============
</TABLE>
See Notes to Financial Statements
15
<PAGE>
Phoenix Mid Cap Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------------------------
Year Ended November 30,
1997 1996 1995 1994 1993
------------------ ------------------ --------------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $21.65 $22.03 $18.03 $18.70 $17.95
Income from investment operations(5)
Net investment income (loss) (0.02)(1) (0.03)(1) 0.05(1) 0.11 0.11
Net realized and unrealized gain 1.52 2.53 4.74 0.10 1.44
-------- --------- -------- ------ --------
Total from investment operations 1.50 2.50 4.79 0.21 1.55
-------- --------- -------- ------ --------
Less distributions
Dividends from net investment income -- -- (0.06) (0.10) (0.13)
Dividends from net realized gains (2.51) (2.88) (0.73) (0.78) (0.67)
-------- --------- -------- ------ --------
Total distributions (2.51) (2.88) (0.79) (0.88) (0.80)
-------- --------- -------- ------ --------
Change in net asset value (1.01) (0.38) 4.00 (0.67) 0.75
-------- --------- -------- ------ --------
Net asset value, end of period $20.64 $21.65 $22.03 $18.03 $18.70
========== ========= ======== ====== ========
Total return(2) 8.12% 13.52% 27.87% 1.03% 8.94%
Ratios/supplemental data:
Net assets, end of period (thousands) $360,053 $ 451,474 $487,674 $419,760 $426,027
Ratio to average net assets of:
Operating expenses 1.33% 1.35% 1.42% 1.36% 1.34%
Net investment income (loss) (0.08)% (0.17)% 0.28% 0.59% 0.64%
Portfolio turnover 161% 242% 218% 227% 174%
Average commission rate paid(6) $0.0542 $0.0504 N/A N/A N/A
Class B
-----------------------------------------------------------------
From
Year Ended November 30, Inception
7/18/94 to
1997 1996 1995 11/30/94
-------------- -------------- ------------ ------------
Net asset value, beginning of period $21.30 $21.85 $17.97 $17.68
Income from investment operations(5)
Net investment income (loss) (0.16)(1) (0.18)(1) (0.12)(1) (0.01)
Net realized and unrealized gain 1.47 2.51 4.75 0.30
-------------- -------------- ------------ ----------
Total from investment operations 1.31 2.33 4.63 0.29
-------------- -------------- ------------ ----------
Less distributions
Dividends from net investment income -- -- (0.02) --
Dividends from net realized gains (2.50) (2.88) (0.73) --
-------------- -------------- ------------ ----------
Total distributions (2.50) (2.88) (0.75) --
-------------- -------------- ------------ ----------
Change in net asset value (1.19) (0.55) 3.88 0.29
-------------- -------------- ------------ ----------
Net asset value, end of period $20.11 $21.30 $21.85 $17.97
============== ============== ============ ==========
Total return(2) 7.27% 12.75% 26.92% 1.64%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $18,583 $17,599 $10,908 $1,519
Ratio to average net assets of:
Operating expenses 2.08% 2.11% 2.18% 2.05%(3)
Net investment income (loss) (0.85)% (0.92)% (0.58)% (0.23)%(3)
Portfolio turnover 161% 242% 218% 227%
Average commission rate paid(6) $0.0542 $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 timing 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
16
<PAGE>
PHOENIX INTERNATIONAL PORTFOLIO
17
<PAGE>
Phoenix International Portfolio
- --------------------------------------------------------------------------------
[Tabular representation of line chart]
MSCI EAFE EAFE Excluding Phoenix International
Index* Japan Portfolio--Class A
11/1/89 $10,000 $10,000 $ 9,525
11/30/89 $10,505 $10,493 $ 9,943
11/30/90 $ 8,230 $11,221 $ 9,869
11/30/91 $ 8,946 $11,982 $10,685
11/30/92 $ 8,251 $12,209 $ 9,626
11/30/93 $10,284 $15,583 $11,989
11/30/94 $11,841 $16,977 $13,569
11/30/95 $12,776 $19,853 $14,127
11/30/96 $14,321 $24,498 $16,816
11/30/97 $14,303** $27,723** $18,195
Average Annual Total Returns
for Periods Ending 11/30/97
<TABLE>
<CAPTION>
From Inception From Inception
11/1/89 to 7/15/94 to
1 Year 5 Years 11/30/97 11/30/97
---------- ----------- ---------------- ---------------
<S> <C> <C> <C> <C>
Class A with 4.75% sales charge 3.08% 12.47% 7.69% --
- --------------------------------------------------------------------------------------------------------
Class A at net asset value 8.21% 13.58% 8.34% --
- --------------------------------------------------------------------------------------------------------
Class B with CDSC 3.56% -- -- 7.33%
- --------------------------------------------------------------------------------------------------------
Class B at net asset value 7.37% -- -- 7.82%
- --------------------------------------------------------------------------------------------------------
The Morgan Stanley Capital
International EAFE Index* -0.13% 11.63% 4.53%** 5.23%***
- --------------------------------------------------------------------------------------------------------
</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, 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 11/30/97.
***Index information from 6/30/94 to 11/30/97.
18
<PAGE>
Phoenix International Portfolio
- --------------------------------------------------------------------------------
INVESTMENTS AT NOVEMBER 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C>
FOREIGN COMMON STOCKS--80.4%
Australia--0.6%
Westpac Banking Corporation Ltd.
(Banks) ................................. 131,000 $ 823,792
-----------
Canada--3.0%
Bank of Montreal (Banks) .................. 35,400 1,515,828
Northern Telecom Ltd. (Communications
Equipment) .............................. 29,800 2,679,781
-----------
4,195,609
-----------
Finland--3.5%
Nokia Oyj Class A (Communications
Equipment) .............................. 31,300 2,518,796
Nokia Oyj Sponsored ADR
(Communications Equipment) (c) ............ 9,000 748,125
Raisio Group PLC (Foods) .................. 15,000 1,724,817
-----------
4,991,738
-----------
France--9.4%
Alcatel Alsthom (Communications
Equipment) .............................. 19,600 2,456,889
Axa-UAP (Insurance (Multi-Line)) ............ 24,931 1,809,202
Banque Nationale de Paris (Banks) ......... 30,500 1,487,956
Bertrand Faure SA (Auto Parts &
Equipment) .............................. 29,300 1,995,223
Grand Optical Photoservice (Retail) ......... 4,300 745,147
Rhone-Poulenc (Healthcare (Diversified))..... 31,100 1,398,167
Total SA (Oil (Integrated)) ............... 32,800 3,444,795
-----------
13,337,379
-----------
Germany--2.6%
Adidas AG (Textiles (Apparel)) ............ 16,150 2,275,357
Muenchener Rueckversicherungs-
Gesellschaft AG (Insurance
(Reinsurance)) ........................... 4,400 1,374,533
-----------
3,649,890
-----------
Hong Kong--0.0%
Henderson China Holding Ltd. (Real
Estate) ................................. 780 691
-----------
Hungary--0.4%
Matav Rt. Sponsored ADR (Utility-
Telephone) (b) ........................... 25,000 506,250
-----------
Italy--4.2%
Banca Fideuram SPA (Financial
(Diversified)) ........................... 173,100 721,229
Ericsson SPA (Communications
Equipment) .............................. 30,000 1,163,161
Mediolanum SPA (Financial (Diversified)) ... 61,000 1,028,992
Telecom Italia Mobile SPA
(Telecommunications
(Cellular/Wireless)) ..................... 365,000 1,477,489
Telecom Italia SPA (Utility-Telephone) ...... 255,000 1,589,277
-----------
5,980,148
-----------
SHARES VALUE
--------- ------------
<S> <C> <C>
Japan--1.1%
Credit Saison Co. Ltd. (Consumer Credit) ... 16,400 $ 411,205
Nintendo Co. Ltd. (Leisure Time
(Products)) .............................. 7,000 723,996
Sankyo Co. Ltd. (Health Care (Drugs-
Major Pharmaceuticals)) .................. 13,000 414,574
-----------
1,549,775
-----------
Netherlands--9.5%
Benckiser NV Class B (Cosmetics &
Soaps) (b) .............................. 21,000 737,361
Getronics NV (Computers (Software &
Services)) .............................. 68,700 2,360,385
ING Groep NV (Financial (Diversified)) ...... 32,500 1,320,992
Oce NV (Office Equipment
& Supplies) .............................. 11,100 1,264,727
Philips Electronics NV
(Electrical/Electronics) .................. 40,600 2,681,614
VNU-Verenigde Bezit (Publishing) ............ 96,400 2,308,285
Vendex International NV (Retail (General
Merchandise)) ........................... 52,300 2,730,892
-----------
13,404,256
-----------
Norway--0.5%
Smedvig ASA A Shares (Oil Service) ......... 28,600 755,593
-----------
Poland--0.5%
Amica Wronki SA (Manufacturing
(Consumer Durables)) (b) .................. 42,000 736,217
-----------
Portugal--3.0%
Brisa-Auto Estradas de Portugal SA
(Utility-Toll Road) (b) .................. 3,100 95,162
Portugal Telecom SA (Utility-Telephone) ... 47,500 2,187,725
Telecel-Comunicacoes Pessoais SA
(Telecommunications
(Cellular/Wireless)) (b) .................. 21,300 1,950,225
-----------
4,233,112
-----------
Spain--5.4%
Banco Santander SA (Banks) .................. 51,900 1,569,616
Dragados & Construcciones SA
(Construction) ........................... 28,500 605,834
Endesa SA (Utility-Electric) ............... 68,000 1,279,061
Tabacalera SA (Tobacco) ..................... 24,000 1,834,702
Telefonica de Espana (Utility-Telephone)..... 79,200 2,283,722
-----------
7,572,935
-----------
Sweden--0.5%
Biora AB (Health Care (Medical Products
& Supplies)) (b) ........................ 38,200 390,861
Biora AB Sponsored ADR (Health Care
(Medical Products & Supplies)) (b) ...... 14,000 278,250
-----------
669,111
-----------
</TABLE>
See Notes to Financial Statements
19
<PAGE>
Phoenix International Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C>
Switzerland--12.5%
Ares-Serono Group Bearer Shares (Health
Care (Diversified)) ..................... 1,300 $ 2,256,944
Ciba Specialty Chemicals AG Registered
Shares (Chemicals (Specialty)) (b) ...... 16,100 1,713,787
Credit Suisse Group Registered Shares
(Financial (Diversified)) ............... 15,500 2,266,940
Novartis AG Registered Shares (Health
Care (Drugs-Major Pharmaceuticals)) ...... 3,040 4,857,688
Roche Holding AG (Health Care
(Diversified)) ........................... 150 1,342,593
Schweizerische Lebensversicherungs
(Insurance (Life/Health)) ............... 2,900 1,928,451
Zurich Versichierungs Registered Shares
(Financial (Diversified)) ............... 7,710 3,244,950
-----------
17,611,353
-----------
United Kingdom--23.7%
British Aerospace PLC
(Aerospace/Defense) ..................... 140,500 3,835,046
British Petroleum Co. PLC (Oil
(Integrated)) ........................... 177,000 2,424,617
British Petroleum Co. PLC Sponsored
ADR (Oil (Integrated)) (c) ............... 6,500 539,500
Compass Group PLC (Service (Catering))...... 149,300 1,776,003
GKN PLC (Engineering) ..................... 88,700 1,932,420
Granada Group PLC (Leisure Time
(Products)) .............................. 61,000 871,575
Legal & General Group PLC (Insurance
(Life)) ................................. 188,000 1,585,409
Lloyds TSB Group PLC (Financial
(Diversified)) ........................... 354,500 4,067,641
Misys PLC (Computers (Software &
Services)) .............................. 40,600 1,142,410
Next PLC (Retail (General Merchandise))..... 250,500 3,131,778
Norwich Union PLC 144A (Insurance
(Life/Health)) (b) (d) .................. 140,000 845,661
Rentokil Initial PLC (Service (Catering)) 408,000 1,720,337
Shell Transport & Trading Co. PLC (Oil
(Integrated)) ........................... 378,000 2,587,405
Siebe PLC (Electrical Equipment) ......... 89,000 1,616,546
Vodafone Group PLC
(Telecommunications
(Cellular/Wireless)) ..................... 255,000 1,692,839
WPP Group PLC (Services
(Advertising/Marketing)) ............... 552,000 2,469,351
Williams PLC (Manufacturing (Fire
Safety/Security Products)) ............... 243,000 1,334,760
-----------
33,573,298
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- --------------
<S> <C> <C>
TOTAL FOREIGN COMMON STOCKS
(Identified cost $95,390,345)............... $ 113,591,147
-------------
PREFERRED STOCKS--2.6%
Germany--2.6%
SAP AG-Vorzug Pfd. (Computers
(Software & Services)) ............ 12,100 3,725,082
-------------
TOTAL PREFERRED STOCKS
(Identified cost $2,944,141) ............... 3,725,082
-------------
WARRANTS--0.1%
France--0.1%
Rhone-Poulenc Warrant (Personal Care)
(b) .............................. 51,700 191,793
-------------
TOTAL WARRANTS
(Identified cost $170,026).................. 191,793
-------------
TOTAL LONG-TERM INVESTMENTS--83.1%
(Identified cost $98,504,512)............... 117,508,022
-------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------- --------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--17.6%
Commercial Paper--13.8%
Donnelley (R.R.) & Sons Co.
5.52%, 12/1/97 ............ A-1 $3,500 3,500,000
Wal-Mart Stores, Inc. 5.55%,
12/3/97 .................. A-1+ 5,000 4,998,458
Private Export Funding Corp.
5.75%, 12/5/97 ............ A-1+ 3,095 3,093,023
Exxon Imperial U.S., Inc.
5.52%, 12/11/97 ............ A-1+ 1,315 1,312,984
Du Pont (E.I.) de Nemours &
Co. 5.57%, 12/12/97 ...... A-1+ 3,680 3,673,737
Heinz (H.J.) Co. 5.55%,
12/22/97 .................. A-1 2,000 1,993,525
Enterprise Funding Corp.
5.73%, 2/25/98 ............ A-1+ 1,000 986,520
---------
19,558,247
----------
Federal Agency Securities--3.8%
FNMA 5.48%, 12/4/97 ..................... 5,410 5,407,529
----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $24,965,567) ..................... 24,965,776
----------
TOTAL INVESTMENTS--100.7%
(Identified cost $123,470,079) ..................... 142,473,798(a)
Cash and receivables, less liabilities--(0.7%) ... (976,111)
-----------
NET ASSETS--100.0% ................................. $ 141,497,687
==============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $20,893,484 and gross
depreciation of $1,889,765 for federal income tax purposes. At November
30, 1997, the aggregate cost of securities for federal income tax purposes
was $123,470,079.
(b) Non-income producing.
(c) All or a portion segregated as collateral.
(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,
1997, these securities amounted to a value of $845,661 or 0.6% of net
assets.
See Notes to Financial Statements
20
<PAGE>
Phoenix International Portfolio
- --------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Long-Term Investments
(Unaudited)
Aerospace/Defense ................................. 3.3%
Auto Parts & Equipment .............................. 1.7
Banks ............................................. 4.6
Chemicals (Specialty) .............................. 1.5
Communications Equipment ........................... 8.1
Computers (Software & Services) ..................... 6.1
Construction ....................................... 0.5
Consumer Credit .................................... 0.3
Cosmetics & Soaps ................................. 0.6
Electrical/Electronics .............................. 2.3
Electrical Equipment .............................. 1.4
Engineering ....................................... 1.6
Financial (Diversified) ........................... 10.8
Foods ............................................. 1.5
Health Care (Diversified) ........................... 4.2
Health Care (Drugs-Major Pharmaceuticals) ......... 4.5
Health Care (Medical Products & Supplies) ......... 0.6
Insurance (Life) .................................... 1.3
Insurance (Life/Health) ........................... 2.4
Insurance (Multi-Line) .............................. 1.5
Insurance (Reinsurance) ........................... 1.2
Leisure Time (Products) ........................... 1.4
Manufacturing (Consumer Durables) .................. 0.6
Manufacturing (Fire Safety/Security Products) ...... 1.1
Office Equipment & Supplies ........................ 1.1
Oil (Integrated) .................................... 7.6
Oil Service ....................................... 0.6
Personal Care ....................................... 0.2
Publishing .......................................... 2.0
Real Estate ....................................... 0.0
Retail ............................................. 0.6
Retail (General Merchandise) ........................ 5.0
Service (Catering) ................................. 3.0
Services (Advertising/Marketing) .................. 2.1
Telecommunications (Cellular/Wireless) ............ 4.4
Textiles (Apparel) ................................. 1.9
Tobacco ............................................. 1.6
Utility-Electric .................................... 1.1
Utility-Telephone ................................. 5.6
Utility-Toll Road ................................. 0.1
-----
100.0%
=====
See Notes to Financial Statements
21
<PAGE>
Phoenix International Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $123,470,079) $142,473,798
Cash 8,575
Foreign currency at value
(Identified cost $6) 35
Receivables
Investment securities sold 168,474
Fund shares sold 155,734
Dividends and interest 123,434
Tax reclaim 52,627
------------
Total assets 142,982,677
------------
Liabilities
Payables
Closed foreign currency contracts 850,856
Fund shares repurchased 180,638
Investment securities purchased 72,774
Transfer agent fee 92,887
Investment advisory fee 87,011
Distribution fee 35,153
Financial agent fee 6,740
Trustees' fee 292
Accrued expenses 158,639
------------
Total liabilities 1,484,990
------------
Net Assets $141,497,687
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $111,404,143
Distributions in excess of net investment income (332,438)
Accumulated net realized gain 11,420,415
Net unrealized appreciation 19,005,567
------------
Net Assets $141,497,687
============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $131,338,284) 9,453,645
Net asset value per share $ 13.89
Offering price per share
$13.89/(1-4.75%) $ 14.58
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $10,159,403) 749,072
Net asset value and offering price per share $ 13.56
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<S> <C>
Investment income
Dividends $ 2,012,556
Interest 714,509
Foreign taxes withheld (212,503)
-----------
Total investment income 2,514,562
-----------
Expenses
Investment advisory fee 1,062,391
Distribution fee--Class A 329,978
Distribution fee--Class B 96,609
Financial agent fee 78,454
Transfer agent 370,722
Custodian 189,272
Printing 51,106
Professional 36,637
Registration 28,939
Trustees 21,079
Miscellaneous 14,549
-----------
Total expenses 2,279,736
-----------
Net investment income 234,826
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 13,013,448
Net realized loss on foreign currency transactions (1,570,339)
Net change in unrealized appreciation (depreciation)
on investments (180,231)
Net change in unrealized appreciation (depreciation) on
foreign currency and foreign currency transactions (442,095)
-----------
Net gain on investments 10,820,783
-----------
Net increase in net assets resulting from
operations $11,055,609
===========
</TABLE>
See Notes to Financial Statements
22
<PAGE>
Phoenix International Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, 1997 November 30, 1996
------------------- ------------------
<S> <C> <C>
From Operations
Net investment income $ 234,826 $ 430,320
Net realized gain 11,443,109 14,699,299
Net change in unrealized appreciation (depreciation) (622,326) 9,723,676
------------- --------------
Increase in net assets resulting from operations 11,055,609 24,853,295
------------- --------------
From Distributions to Shareholders
Net investment income--Class A (2,608,239) --
Net investment income--Class B (129,259) --
Net realized gains--Class A (12,021,547) (365,795)
Net realized gains--Class B (658,133) (9,318)
------------- --------------
Decrease in net assets from distributions to shareholders (15,417,178) (375,113)
------------- --------------
From Share Transactions
Class A
Proceeds from sales of shares (4,286,206 and 11,106,013 shares, respectively) 59,385,258 151,805,606
Net asset value of shares issued from reinvestment of distributions (1,013,490 and
27,365 shares, respectively) 12,960,134 332,491
Cost of shares repurchased (5,208,361 and 12,375,802 shares, respectively) (72,329,439) (169,679,302)
------------- --------------
Total 15,953 (17,541,205)
------------- --------------
Class B
Proceeds from sales of shares (728,032 and 357,180 shares, respectively) 9,939,001 4,778,686
Net asset value of shares issued from reinvestment of distributions (56,632 and
673 shares, respectively) 713,037 8,087
Cost of shares repurchased (524,764 and 138,908 shares, respectively) (7,287,447) (1,858,546)
------------- --------------
Total 3,364,591 2,928,227
------------- --------------
Increase (decrease) in net assets from share transactions 3,380,544 (14,612,978)
------------- --------------
Net increase (decrease) in net assets (981,025) 9,865,204
Net Assets
Beginning of period 142,478,712 132,613,508
------------- --------------
End of period (including distributions in excess of net investment
income and undistributed net investment income of
($332,438) and $2,213,316, respectively) $141,497,687 $142,478,712
============= ==============
</TABLE>
See Notes to Financial Statements
23
<PAGE>
Phoenix International Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------------
Year Ended November 30,
1997 1996 1995 1994 1993
--------------- --------------- --------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.48 $12.20 $12.63 $11.16 $8.96
Income from investment operations(5)
Net investment income (loss) 0.03(1) 0.04(1) 0.03(1) (0.01) --
Net realized and unrealized gain 1.01 2.28 0.42 1.48 2.20
----------- ----------- ---------- --------- -------
Total from investment operations 1.04 2.32 0.45 1.47 2.20
----------- ----------- ---------- --------- -------
Less distributions
Dividends from net investment income (0.29) -- -- -- --
Dividends from net realized gains (1.34) (0.04) (0.88) -- --
----------- ----------- ---------- --------- -------
Total distributions (1.63) (0.04) (0.88) -- --
----------- ----------- ---------- --------- -------
Change in net asset value (0.59) 2.28 (0.43) 1.47 2.20
----------- ----------- ---------- --------- -------
Net asset value, end of period $13.89 $14.48 $12.20 $12.63 $11.16
============ ============ ========== ========= =======
Total return(2) 8.21% 19.03% 4.12% 13.17% 24.55%
Ratios/supplemental data:
Net assets, end of period (thousands) $131,338 $135,524 $129,352 $167,918 $91,196
Ratio to average net assets of:
Operating expenses 1.56% 1.57% 1.70% 1.47% 1.78%
Net investment income (loss) 0.22% 0.33% 0.23% 0.20% (0.04)%
Portfolio turnover 167% 151% 236% 186% 191%
Average commission rate paid(6) $0.0177 $0.0205 N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
--------------------------------------------------------------------------
From Inception
Year Ended November 30, 7/15/94 to
1997 1996 1995 11/30/94
----------------- ----------------- --------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $14.22 $12.07 $12.60 $12.80
Income from investment operations(5)
Net investment income (loss) (0.08)(1) (0.05)(1) (0.07)(1) (0.01)
Net realized and unrealized gain (loss) 1.00 2.24 0.42 (0.19)
------- ------- --------- -----------
Total from investment operations 0.92 2.19 0.35 (0.20)
------- ------- --------- -----------
Less distributions
Dividends from net investment income (0.24) -- -- --
Dividends from net realized gains (1.34) (0.04) (0.88) --
------- ------- --------- -----------
Total distributions (1.58) (0.04) (0.88) --
------- ------- --------- -----------
Change in net asset value (0.66) 2.15 (0.53) (0.20)
------- ------- --------- -----------
Net asset value, end of period $13.56 $14.22 $12.07 $12.60
======= ======= ========= ===========
Total return(2) 7.37% 18.16% 3.28% (1.56)%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $10,159 $6,955 $3,261 $1,991
Ratio to average net assets of:
Operating expenses 2.31% 2.31% 2.50% 1.93%(3)
Net investment income (loss) (0.55)% (0.39)% (0.61)% 0.36%(3)
Portfolio turnover 167% 151% 236 % 186%
Average commission rate paid(6) $0.0177 $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 timing 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
25
<PAGE>
Phoenix Real Estate Securities Portfolio
- --------------------------------------------------------------------------------
[Tabular representation of line chart]
Phoenix Real Estate Phoenix Real Estate
Securities Portfolio-- Securities Portfolio--
Class A Class B NAREIT Index*
3/1/95 $ 9,525 $10,000 $10,000
11/30/95 $10,463 $10,921 $10,903
11/30/96 $13,519 $14,006 $14,087
11/30/97 $17,769 $17,970 $18,275
Average Annual Total Returns
for Periods Ending 11/30/97
<TABLE>
<CAPTION>
From Inception
3/1/95 to
1 Year 11/30/97
----------- ---------------
<S> <C> <C>
Class A with 4.75% sales charge 25.15% 23.27%
- ------------------------------------------------------------------------
Class A at net asset value 31.44% 25.42%
- ------------------------------------------------------------------------
Class B with CDSC 26.44% 23.78%
- ------------------------------------------------------------------------
Class B at net asset value 30.44% 24.47%
- ------------------------------------------------------------------------
NAREIT Index* 29.73% 24.48%
- ------------------------------------------------------------------------
</TABLE>
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 A shares reflects the maximum sales charge of 4.75%
on the initial investment and assumes reinvestment of dividends and capital
gains.
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.
26
<PAGE>
Phoenix Real Estate Securities Portfolio
- --------------------------------------------------------------------------------
INVESTMENTS AT NOVEMBER 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
--------- --------------
<S> <C> <C>
COMMON STOCKS--97.0%
REAL ESTATE INVESTMENT TRUSTS--96.1%
COMMERCIAL--32.1%
Office/Industrial--30.0%
Beacon Properties Corp. ............ 28,700 $ 1,291,500
Boston Properties, Inc. ............ 62,200 2,029,275
Cali Realty Corp. .................. 57,900 2,297,906
Duke Realty Investments, Inc. ...... 93,400 2,148,200
First Industrial Realty Trust, Inc. 59,000 2,083,437
Highwoods Properties, Inc. ......... 73,000 2,623,438
Reckson Associates Realty Corp. ...... 60,700 1,612,344
Spieker Properties, Inc. ............ 62,900 2,555,313
Weeks Corp. ........................ 37,300 1,193,600
-------------
17,835,013
-------------
Storage--2.1%
Storage USA, Inc. .................. 31,700 1,238,281
-------------
TOTAL COMMERCIAL .............................. 19,073,294
-------------
DIVERSIFIED--14.2%
Colonial Properties Trust ............ 50,000 1,434,375
Crescent Real Estate Equities Co. ... 86,400 3,326,400
Vornado Realty Trust ............... 81,500 3,652,219
-------------
8,412,994
-------------
HEALTH CARE--3.1%
Nationwide Health Properties, Inc. ... 56,400 1,332,450
OMEGA Healthcare Investors, Inc. ... 14,000 506,625
-------------
1,839,075
-------------
HOTELS--18.8%
FelCor Suite Hotels, Inc. ............ 48,300 1,753,894
Patriot American Hospitality, Inc. ... 111,301 3,478,156
Starwood Lodging Trust combined
certificate ........................ 72,600 3,893,175
Sunstone Hotel Investors, Inc. ...... 118,200 2,075,888
-------------
11,201,113
-------------
NET LEASE--2.3%
TriNet Corporate Realty Trust, Inc. 35,000 1,347,500
-------------
RESIDENTIAL--17.0%
Apartments--13.4%
Bay Apartment Communities, Inc. ...... 38,700 1,545,581
Camden Property Trust ............... 31,600 1,032,925
Equity Residential Properties Trust 54,800 2,740,000
Essex Property Trust, Inc. ......... 38,400 1,387,200
Irvine Apartment Communities, Inc. ... 40,500 1,258,031
-------------
7,963,737
-------------
Manufactured Homes--3.6%
Manufactured Home Communities, Inc. 41,500 1,130,875
Sun Communities, Inc. ............... 28,200 1,027,538
-------------
2,158,413
-------------
TOTAL RESIDENTIAL .............................. 10,122,150
-------------
SHARES VALUE
--------- --------------
<S> <C> <C>
RETAIL--8.6%
Community/Neighborhood--2.3%
Developers Diversified Realty Corp. 24,600 $ 957,862
Regency Realty Corp. ............... 16,800 446,250
-------------
1,404,112
-------------
Factory Outlet--1.8%
Chelsea GCA Realty, Inc. ............ 27,600 1,048,800
-------------
Regional Malls--4.5%
Macerich Co. (The) .................. 36,800 998,200
Simon DeBartolo Group, Inc. ......... 22,208 725,924
Urban Shopping Centers, Inc. ......... 28,000 932,750
-------------
2,656,874
-------------
TOTAL RETAIL ....................................... 5,109,786
-------------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Identified cost $46,093,545)..................... 57,105,912
-------------
REAL ESTATE OPERATING COMPANIES--0.9%
Regional Malls--0.9%
Rouse Co. ........................... 16,500 519,750
-------------
TOTAL REAL ESTATE OPERATING COMPANIES
(Identified cost $412,555)........................ 519,750
-------------
TOTAL COMMON STOCKS
(Identified cost $46,506,100)..................... 57,625,662
-------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------- --------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--3.0%
Commercial Paper
BellSouth Telecommunications,
Inc. 5.75%, 12/1/97 ...... A-1+ $1,795 1,795,000
---------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $1,795,000)........................ 1,795,000
---------
TOTAL INVESTMENTS--100.0%
(Identified cost $48,301,100) ..................... 59,420,662(a)
Cash and receivables, less liabilities--0.0% ...... 5,525
----------
NET ASSETS--100.0% ................................. $ 59,426,187
=============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $11,246,387 and gross
depreciation of $127,829 for federal income tax purposes. At November 30,
1997, the aggregate cost of securities for federal income tax purposes was
$48,302,104.
See Notes to Financial Statements
27
<PAGE>
Phoenix Real Estate Securities Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $48,301,100) $59,420,662
Cash 66
Receivables
Fund shares sold 102,010
Dividends and interest 53,134
-----------
Total assets 59,575,872
-----------
Liabilities
Payables
Fund shares repurchased 33,322
Distribution fee 25,761
Investment advisory fee 20,349
Financial agent fee 6,740
Trustees' fee 6,292
Transfer agent fee 5,611
Accrued expenses 51,610
-----------
Total liabilities 149,685
-----------
Net Assets $59,426,187
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $44,325,532
Undistributed net investment income 212,484
Accumulated net realized gain 3,768,609
Net unrealized appreciation 11,119,562
-----------
Net Assets $59,426,187
===========
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $36,335,668) 2,217,584
Net asset value per share $ 16.39
Offering price per share
$16.39/(1-4.75%) $ 17.21
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $23,090,519) 1,414,714
Net asset value and offering price per share $ 16.32
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<S> <C>
Investment Income
Dividends $ 2,114,353
Interest 74,560
-----------
Total investment income 2,188,913
-----------
Expenses
Investment advisory fee 355,100
Distribution fee--Class A 77,163
Distribution fee--Class B 164,812
Financial agent fee 75,881
Transfer agent 71,201
Professional 35,119
Printing 20,219
Trustees 20,035
Registration 17,608
Custodian 10,691
Miscellaneous 3,592
-----------
Total expenses 851,421
Less expenses borne by investment adviser (112,306)
-----------
Net expenses 739,115
-----------
Net investment income 1,449,798
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 3,771,039
Net change in unrealized appreciation (depreciation) on
investments 6,590,856
-----------
Net gain on investments 10,361,895
-----------
Net increase in net assets resulting from
operations $11,811,693
===========
</TABLE>
See Notes to Financial Statements
28
<PAGE>
Phoenix Real Estate Securities Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, 1997 November 30, 1996
------------------- ------------------
<S> <C> <C>
From Operations
Net investment income $ 1,449,798 $ 993,652
Net realized gain 3,771,039 605,112
Net change in unrealized appreciation (depreciation) 6,590,856 4,233,859
------------- ------------
Increase in net assets resulting from operations 11,811,693 5,832,623
------------- ------------
From Distributions to Shareholders
Net investment income--Class A (1,017,253) (861,331)
Net investment income--Class B (412,660) (163,427)
Net realized gains--Class A (436,592) (22,396)
Net realized gains--Class B (164,397) (3,977)
------------- ------------
Decrease in net assets from distributions to shareholders (2,030,902) (1,051,131)
------------- ------------
From Share Transactions
Class A
Proceeds from sales of shares (1,072,429 and 603,974 shares, respectively) 15,754,217 7,207,751
Net asset value of shares issued from reinvestment of distributions (96,059 and
73,246 shares, respectively) 1,368,531 838,272
Cost of shares repurchased (692,074 and 227,727 shares, respectively) (10,024,000) (2,803,944)
------------- ------------
Total 7,098,748 5,242,079
------------- ------------
Class B
Proceeds from sales of shares (851,567 and 436,484 shares, respectively) 12,428,285 5,218,052
Net asset value of shares issued from reinvestment of distributions (32,975 and
12,304 shares, respectively) 472,566 141,327
Cost of shares repurchased (100,202 and 28,003 shares, respectively) (1,484,452) (333,067)
------------- ------------
Total 11,416,399 5,026,312
------------- ------------
Increase in net assets from share transactions 18,515,147 10,268,391
------------- ------------
Net increase in net assets 28,295,938 15,049,883
Net Assets
Beginning of period 31,130,249 16,080,366
------------- ------------
End of period (including undistributed net investment income of
$212,484 and $192,599, respectively) $ 59,426,187 $ 31,130,249
============= ============
</TABLE>
See Notes to Financial Statements
29
<PAGE>
Phoenix Real Estate Securities Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------
Year Ended November 30, From Inception
3/1/95
1997 1996 to 11/30/95
--------------------- --------------- ---------------------
<S> <C> <C> <C>
Net asset value, beginning of period $13.14 $10.72 $10.00
Income from investment operations
Net investment income 0.49(4)(5) 0.53(5) 0.43(4)(5)
Net realized and unrealized gain 3.52 2.50 0.55
------------ ----------- ----------
Total from investment operations 4.01 3.03 0.98
------------ ----------- ----------
Less distributions
Dividends from net investment income (0.51) (0.59) (0.26)
Dividends from net realized gains (0.25) (0.02) --
------------ ----------- ----------
Total distributions (0.76) (0.61) (0.26)
------------ ----------- ----------
Change in net asset value 3.25 2.42 0.72
------------ ----------- ----------
Net asset value, end of period $16.39 $13.14 $10.72
============== ============ ==========
Total return(1) 31.44% 29.20% 9.87%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $36,336 $22,872 $13,842
Ratio to average net assets of:
Operating expenses 1.30% 1.30% 1.30%(2)
Net investment income 3.34% 4.55% 5.79%(2)
Portfolio turnover 54% 24% 9%(3)
Average commission rate paid(7) $0.0493 $0.0478 N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
---------------------------------------------------------------
Year Ended November 30, From Inception
3/1/95
1997 1996 to 11/30/95
--------------------- --------------- ---------------------
<S> <C> <C> <C>
Net asset value, beginning of period $13.10 $10.68 $10.00
Income from investment operations
Net investment income 0.38(4)(6) 0.46(6) 0.36(4)(6)
Net realized and unrealized gain 3.50 2.47 0.56
------------ ----------- -----------
Total from investment operations 3.88 2.93 0.92
------------ ----------- -----------
Less distributions
Dividends from net investment income (0.41) (0.49) (0.24)
Dividends from net realized gains (0.25) (0.02) --
------------ ----------- -----------
Total distributions (0.66) (0.51) (0.24)
------------ ----------- -----------
Change in net asset value 3.22 2.42 0.68
------------ ----------- -----------
Net asset value, end of period $16.32 $13.10 $10.68
============== ============ ===========
Total return(1) 30.44% 28.25% 9.21%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $23,091 $8,259 $2,239
Ratio to average net assets of:
Operating expenses 2.05% 2.05% 2.05%(2)
Net investment income 2.55% 3.95% 5.03%(2)
Portfolio turnover 54% 24% 9%(3)
Average commission rate paid(7) $0.0493 $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
$0.04, $0.07 and $0.12, respectively.
(6) Includes reimbursement of operating expenses by investment adviser of
$0.04, $0.07 and $0.12, 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.
See Notes to Financial Statements
30
<PAGE>
PHOENIX EMERGING MARKETS BOND PORTFOLIO
31
<PAGE>
Phoenix Emerging Markets Bond Portfolio
- --------------------------------------------------------------------------------
[Tabular representation of line chart]
Phoenix Emerging Phoenix Emerging J.P. Morgan Emerging
Markets Bond Markets Bond Markets Bond
Portfolio--Class A Portfolio--Class B Index Plus*
9/5/95 $ 9,525 $10,000 $10,000
11/30/95 $ 9,943 $10,422 $10,537
11/30/96 $15,926 $16,565 $15,531
11/30/97 $17,824 $18,094 $17,172
Average Annual Total Returns
for Periods Ending 11/30/97
<TABLE>
<CAPTION>
From Inception
9/5/95 to
1 Year 11/30/97
---------- ---------------
<S> <C> <C>
Class A with 4.75% sales charge 6.58% 29.54%
- -----------------------------------------------------------------------
Class A at net asset value 11.91% 32.31%
- -----------------------------------------------------------------------
Class B with CDSC 7.62% 30.44%
- -----------------------------------------------------------------------
Class B at net asset value 11.07% 31.31%
- -----------------------------------------------------------------------
JP Morgan Emerging Markets
Bond Index Plus* 10.57% 27.32%
- -----------------------------------------------------------------------
</TABLE>
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 A shares reflects the maximum sales charge of 4.75%
on the initial investment and assumes reinvestment of dividends and capital
gains.
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.
32
<PAGE>
Phoenix Emerging Markets Bond Portfolio
- --------------------------------------------------------------------------------
INVESTMENTS AT NOVEMBER 30, 1997
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- ------------------- -------------
<S> <C> <C> <C>
NON-CONVERTIBLE BONDS--0.8%
United States--0.8%
InterAmericas Communications
Corp. Unit 144A 14%,
10/27/07 (Telephone) (d) (h)..... NR $ 830 $ 838,300
------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $830,000) .......................................... 838,300
------------
FOREIGN GOVERNMENT SECURITIES--87.9%
Algeria--6.9%
Algeria Tranch 1 Unaffected
Loans 7.375%, 3/4/00 (c) ......... NR 4,091 3,354,545
Algeria Tranch A Loans
6.668%, 9/4/06 (c) ............... NR 4,909 4,025,455
------------
7,380,000
------------
Argentina--23.5%
City of Buenos Aires 144A
10.50%, 5/28/04 (d) ............ B 1,000(i) 886,500
Republic of Argentina Bocon
Pre3 Euro, PIK interest
capitalization, 3.205%,
9/1/02 (c) ..................... B 6,166(i) 4,898,722
Republic of Argentina Bocon Pro1
M1, PIK interest capitalization,
3.205%, 4/1/07 (c) ............... B 6,518(i) 4,628,387
Republic of Argentina RegS
8.75%, 7/10/02 .................. Ba 12,000(i) 10,320,000
Republic of Argentina RegS
11.75%, 2/12/07 (e) ............ Ba 4,530(i) 4,258,200
------------
24,991,809
------------
Brazil--14.4%
Republic of Brazil C Bond,
PIK interest capitalization,
8%, 4/15/14 (c) .................. B 18,216 13,616,201
Republic of Brazil C Bond
Registered, PIK interest
capitalization, 8%,
4/15/14 (c) ..................... B 2,281 1,704,689
------------
15,320,890
------------
Bulgaria--7.8%
Republic of Bulgaria FLIRB
RegA 2.25%, 7/28/12 (c) ......... NR 1,250 740,625
Republic of Bulgaria FLIRB
Series A Bearer Euro
2.25%, 7/28/12 (c) (e) ......... B 12,865 7,622,512
------------
8,363,137
------------
Congo--0.3%
Congo Loans (b) .................. NR 1,206 349,716
------------
Ecuador--2.8%
Ecuador Bearer PDI Euro, PIK
interest capitalization,
6.688%, 2/27/15 (c) (e) ......... B 3,838 2,406,828
Ecuador Registered PDI, PIK
interest capitalization,
6.688%, 2/27/15 (c) ............ B 875 548,565
------------
2,955,393
------------
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- ------------------- -------------
<S> <C> <C> <C>
Ivory Coast--2.6%
Ivory Coast FLIRB WI 2% (c) (f) .NR $ 5,500 $ 1,870,000
Ivory Coast FLIRB WI 2% (c) (f) .NR 7,250(j) 405,275
Ivory Coast Non-Performing
Loans 12/31/05 (b) ............... NR 1,356(j) 98,767
Ivory Coast PDI WI 2% (c) (f) ...... NR 1,000 400,000
------------
2,774,042
------------
Macedonia--1.5%
Macedonia C Bond, PIK
interest capitalization,
6.884%, 7/2/12 (c) ............... NR 2,500 1,575,000
------------
Panama--1.2%
Republic of Panama 8.875%,
9/30/27 ........................ Ba 1,350 1,255,500
------------
Peru--1.5%
Peru FLIRB 3.25%, 3/7/17 (c) ...... NR 1,500 862,500
Peru PDI 4%, 3/7/17 (c) ............ NR 1,211 756,875
------------
1,619,375
------------
Russia--14.5%
Russia Principal Loans WI
6.719%, 12/15/20 (c) (f) ......... NR 19,750 11,356,250
Russian Federation OFZ
Linked Notes 18.29%,
9/3/99 (c) ..................... NR 28,528,000(k) 4,113,424
------------
15,469,674
------------
Turkey--2.4%
Turkey T-Bill 0%, 6/4/98 ......... NR 300,000,000(l) 980,037
Turkey T-Bill 0%, 9/16/98 ......... NR 580,000,000(l) 1,533,578
------------
2,513,615
------------
Ukraine--1.9%
BT Trust Ukrainian Notes 0%,
1/23/98 (n) ..................... NR 1,000 955,336
ING Ukrainian Notes 0%,
12/30/98 (o) ..................... NR 3,587(m) 1,079,131
------------
2,034,467
------------
Venezuela--6.6%
Republic of Venezuela 9.25%,
9/15/27 (e) ..................... Ba 8,000 7,050,000
------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $96,513,769) .......................................... 93,652,618
------------
FOREIGN NON-CONVERTIBLE BONDS--12.1%
Argentina--1.1%
CEI Citicorp 144A 11.25%,
2/14/07 (Banks (Money
Center)) (d) ..................... NR 500(i) 405,000
CEI Citicorp RegS 11.25%,
2/14/07 (Banks (Money
Center)) ........................ NR 1,000(i) 810,000
------------
1,215,000
------------
Brazil--4.2%
MRS Logistica SA RegS
10.625%, 8/15/05
(Railroads) (e) .................. B(g) 1,000 920,000
Paging Network Do Brasil
13.50%, 6/6/05 (Industrial) .NR 1,000 890,000
Tevecap SA 12.625%,
11/26/04 (Industrial) ............ NR 2,000 1,800,000
</TABLE>
See Notes to Financial Statements
33
<PAGE>
Phoenix Emerging Markets Bond Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- -------- ------------
<S> <C> <C> <C>
Brazil--continued
TV Filme, Inc. 12.875%,
12/15/04 (Publishing) ............ B $1,000 $ 912,500
-----------
4,522,500
-----------
Mexico--3.3%
Grupo Televisa SA 0%,
5/15/08 (Broadcasting
(Television, Radio, &
Cable)) (c) ..................... Ba 2,000 1,525,000
Innova S de R.L. RegS
12.875%, 4/1/07
(Industrial) ..................... B-(g) 2,000 1,957,500
-----------
3,482,500
-----------
Netherlands--0.6%
Netia Holdings 144A 0%,
11/1/07 (Telephone) (c) (d) ...... NR 1,000 600,000
-----------
Nigeria--1.3%
Central Bank of Nigeria Par
Series WW 6.25%,
11/15/20 (Banks (Major
Regional)) (c) (h) ............... NR 2,000 1,365,000
-----------
Russia--1.6%
Unexim International Finance
BV RegS 9.875%, 8/1/00
(Financial (Diversified)) ...... Ba 2,000 1,680,000
-----------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $13,129,782) ........................... 12,865,000
-----------
FOREIGN CONVERTIBLE BONDS--7.0%
Canada--1.5%
Petersburg Long Cv. 144A 9%,
6/1/06 (Telephone) (d) ......... NR 1,267 1,580,583
-----------
Mexico--0.5%
Consorcio Grupo Dina Cv. 8%,
8/8/04 (Trucks & Parts) (e) ...... CCC(g) 700 570,500
-----------
Russia--5.0%
Lukinter Finance BV Cv. RegS
3.50%, 5/6/02 (Oil
(International Integrated)) (e) Ba 4,300 5,321,250
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
-------------------
<S> <C>
TOTAL FOREIGN CONVERTIBLE BONDS
(Identified Cost $8,267,700) ........................... $ 7,472,333
--------------
TOTAL LONG-TERM INVESTMENTS--107.8%
(Identified cost $118,741,251) ........................ 114,828,251
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF
CONTRACTS
--------------
<S> <C> <C>
OPTIONS--0.0%
Argentina Global Call Options 12/8/97
$115 (Par subject to call $4,000,000) ... 4 4,000
Brazil DCB Call Options 12/17/97
$80.75 (Par subject to call
$3,500,000) .............................. 3.5 3,818
Bulgaria IAB Call Options 1/12/98
$78.50 (Par subject to call
$3,000,000) .............................. 3 0
Peru PDI Call Options 1/12/98 $66
(Par subject to call $3,000,000) ......... 3 4,413
Venezuela DCB Call Options 12/8/97
$91 (Par subject to call $5,000,000)...... 5 10,000
--------------
TOTAL OPTIONS
(Identified cost $682,350) 22,231
--------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
---------- ------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--6.4%
Commercial Paper--6.4%
BellSouth Telecommunications,
Inc. 5.75%, 12/1/97 ......... A-1+ $2,260 2,260,000
Donnelley (R.R.) & Sons Co.
5.52%, 12/1/97 ............... A-1 4,535 4,535,000
6,795,000
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $6,795,000) ........................... 6,795,000
--------------
TOTAL INVESTMENTS--114.2%
(Identified cost $126,218,601) ........................ 121,645,482(a)
Cash and receivables, less liabilities--(14.2%)......... (15,097,404)
--------------
NET ASSETS--100.0% ....................................... $ 106,548,078
==============
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $1,843,741 and gross
depreciation of $7,773,916 for income tax purposes. At November 30, 1997,
the aggregate cost of securities for federal income tax purposes was
$127,575,657.
(b) Non-income producing.
(c) Variable or step coupon security; 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,
1997, these securities amounted to a value of $4,310,383 or 4.0% of net
assets.
(e) All or a portion segregated as collateral.
(f) When issued.
(g) As rated by Standard & Poor's, Fitch or Duff & Phelps.
(h) Warrants incorporated as a unit.
(i) Par value represents Argentine Pesos.
(j) Par value represents French Francs.
(k) Par value represents Russian Rubles.
(l) Par value represents Turkish Lira.
(m) Par value represents Ukrainian Hryvnas.
(n) Restricted as to public resale. At the date of Acquisition, this security
was valued at cost of $709,827.
(o) Restricted as to public resale. At the date of Acquisition, this security
was valued at a cost of $1,452,987.
See Notes to Financial Statements
34
<PAGE>
Phoenix Emerging Markets Bond Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $126,218,601) $121,645,482
Cash 2,965,964
Receivables
Investment securities sold 17,692,154
Interest 2,904,247
Fund shares sold 1,173,695
------------
Total assets 146,381,542
------------
Liabilities
Payables
Investment securities purchased 39,581,271
Fund shares repurchased 72,617
Investment advisory fee 63,871
Distribution fee 44,573
Financial agent fee 6,740
Transfer agent fee 5,679
Trustees' fee 292
Accrued expenses 58,421
------------
Total liabilities 39,833,464
------------
Net Assets $106,548,078
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $108,859,293
Undistributed net investment income 362,088
Accumulated net realized gain 1,899,816
Net unrealized depreciation (4,573,119)
------------
Net Assets $106,548,078
============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $67,875,459) 5,286,835
Net asset value per share $ 12.84
Offering price per share
$12.84/(1-4.75%) $ 13.48
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $38,672,619) 3,027,576
Net asset value and offering price per share $ 12.77
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<S> <C>
Investment Income
Interest $8,683,069
----------
Total investment income 8,683,069
----------
Expenses
Investment advisory fee 577,472
Distribution fee--Class A 130,192
Distribution fee--Class B 249,194
Financial agent fee 76,030
Transfer agent 74,351
Professional 40,843
Registration 27,140
Custodian 41,388
Printing 21,471
Trustees 20,035
Miscellaneous 3,997
----------
Total expenses 1,262,113
Custodian fees paid indirectly (14,657)
----------
Net expenses 1,247,456
----------
Net investment income 7,435,613
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 1,493,514
Net realized gain on foreign currency transactions 1,904
Net realized loss on written options (28,454)
Net change in unrealized appreciation (depreciation) on
investments (7,091,439)
------------
Net loss on investments (5,624,475)
-----------
Net increase in net assets resulting from
operations $1,811,138
===========
</TABLE>
See Notes to Financial Statements
35
<PAGE>
Phoenix Emerging Markets Bond Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, 1997 November 30, 1996
------------------- ------------------
<S> <C> <C>
From Operations
Net investment income $ 7,435,613 $ 2,436,105
Net realized gain 1,466,964 6,344,543
Net change in unrealized appreciation (depreciation) (7,091,439) 2,233,148
------------- ------------
Increase in net assets resulting from operations 1,811,138 11,013,796
------------- ------------
From Distributions to Shareholders
Net investment income--Class A (4,916,690) (1,792,007)
Net investment income--Class B (2,280,551) (458,779)
Net realized gains--Class A (4,477,700) --
Net realized gains--Class B (1,490,259) --
------------- ------------
Decrease in net assets from distributions to shareholders (13,165,200) (2,250,786)
------------- ------------
From Share Transactions
Class A
Proceeds from sales of shares (4,047,705 and 923,074 shares, respectively) 56,372,468 12,175,504
Net asset value of shares issued from reinvestment of distributions (636,006 and
131,956 shares, respectively) 8,387,234 1,635,413
Cost of shares repurchased (1,401,387 and 243,677 shares, respectively) (19,377,800) (3,184,227)
------------- ------------
Total 45,381,902 10,626,690
------------- ------------
Class B
Proceeds from sales of shares (2,934,383 and 700,581 shares, respectively) 41,013,074 8,585,460
Net asset value of shares issued from reinvestment of distributions (163,679 and
17,331 shares, respectively) 2,172,877 219,353
Cost of shares repurchased (727,786 and 119,165 shares, respectively) (10,039,719) (1,565,347)
------------- ------------
Total 33,146,232 7,239,466
------------- ------------
Increase in net assets from share transactions 78,528,134 17,866,156
------------- ------------
Net increase in net assets 67,174,072 26,629,166
Net Assets
Beginning of period 39,374,006 12,744,840
------------- ------------
End of period (including undistributed net investment income of
$362,088 and $161,377, respectively) $ 106,548,078 $ 39,374,006
============= ============
</TABLE>
See Notes to Financial Statements
36
<PAGE>
Phoenix Emerging Markets Bond Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------
Year Ended November 30, From Inception
9/5/95 to
1997 1996 11/30/95
----------------- --------------- ---------------------
<S> <C> <C> <C>
Net asset value, beginning of period $14.80 $10.18 $10.00
Income from investment operations
Net investment income 1.38(4) 1.26(5) 0.25(4)(5)
Net realized and unrealized gain 0.17 4.56 0.18
----------- ----------- ------------
Total from investment operations 1.55 5.82 0.43
----------- ----------- ------------
Less distributions
Dividends from net investment income (1.28) (1.20) (0.25)
Dividends from net realized gains (2.23) -- --
----------- ----------- ------------
Total distributions (3.51) (1.20) (0.25)
----------- ----------- ------------
Change in net asset value (1.96) 4.62 0.18
----------- ----------- ------------
Net asset value, end of period $12.84 $14.80 $10.18
============ =========== ==============
Total return(1) 11.91% 60.18% 4.40%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $67,875 $29,661 $12,149
Ratio to average net assets of:
Operating expenses 1.40%(7) 1.50% 1.50%(2)
Net investment income 9.90% 10.41% 10.48%(2)
Portfolio turnover 614% 378% 38%(3)
</TABLE>
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------------
Year Ended November 30, From Inception
9/5/95 to
1997 1996 11/30/95
----------------- --------------- ---------------------
<S> <C> <C> <C>
Net asset value, beginning of period $14.78 $10.18 $10.00
Income from investment operations
Net investment income 1.26(4) 1.19(6) 0.22(4)(6)
Net realized and unrealized gain 0.18 4.53 0.20
----------- ----------- ------------
Total from investment operations 1.44 5.72 0.42
----------- ----------- ------------
Less distributions
Dividends from net investment income (1.22) (1.12) (0.24)
Dividends from net realized gains (2.23) -- --
----------- ----------- ------------
Total distributions (3.45) (1.12) (0.24)
----------- ----------- ------------
Change in net asset value (2.01) 4.60 0.18
----------- ----------- ------------
Net asset value, end of period $12.77 $14.78 $10.18
============ =========== ==============
Total return(1) 11.07% 58.94% 4.22%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $38,673 $9,713 $596
Ratio to average net assets of:
Operating expenses 2.15%(7) 2.25% 2.25%(2)
Net investment income 9.14% 9.79% 10.29%(3)
Portfolio turnover 614% 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.
(6) Includes reimbursement of operating expenses by investment adviser of $0.07
and $0.03, respectively.
(7) For the year ended November 30, 1997, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees. Prior period ratios include these amounts.
See Notes to Financial Statements
37
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1997
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, six Portfolios are offered for sale: Tax-Exempt Bond Portfolio, Mid
Cap Portfolio, International Portfolio, Real Estate Securities Portfolio,
Emerging Markets Bond Portfolio, and Diversified Income Portfolio. The
Diversified Income Portfolio is 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. 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 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 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
38
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1997 (Continued)
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. Options:
Each Portfolio may write covered options or purchase options contracts for
the purpose of hedging against changes in the market value of the underlying
securities or foreign currencies.
Each Portfolio will realize a gain or loss upon the expiration or closing
of the option transaction. Gains and losses on written options are reported
separately in the Statement of Operations. When a written option is exercised,
the proceeds on sales or amounts paid are adjusted by the amount of premium
received. Options written are reported as a liability in the Statement of
Assets and Liabilities and subsequently marked-to-market to reflect the current
value of the option. The risk associated with written options is that the
change in value of options contracts may not correspond to the change in value
of the hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, or if a liquid secondary market does not
exist for the contracts.
Each Portfolio may purchase options which are included in the Portfolio's
Schedule of Investments and subsequently marked-to-market to reflect the
current value of the option. When a purchased option is exercised, the cost of
the security is adjusted by the amount of premium paid. The risk associated
with purchased options is limited to the premium paid.
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, 1997, none of the Portfolios
had security loans outstanding.
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.
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.
39
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1997 (Continued)
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
Securities Portfolio, are entitled to a fee, based upon the following annual
rates as a percentage of the average daily net assets of each Portfolio:
<TABLE>
<CAPTION>
1st $1-2 $2+
$1 Billion Billion Billion
------------ --------- --------
<S> <C> <C> <C>
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%
</TABLE>
Pursuant to a Sub-Advisory Agreement with the Trust, PRS delegates certain
investment decisions and research functions to Duff & Phelps Investment
Management Co. ("DPIM") for which DPIM is paid a fee by PRS equal to 0.45% of
the average daily net assets of the Real Estate Securities Portfolio. Formerly,
ABKB/LaSalle Securities Limited Partnership ("ABKB") served as sub-advisor for
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
$200,220 for Class A shares and deferred sales charges of $294,116 for Class B
shares for the year ended November 30, 1997. 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, 1997, $876,201 was retained by the
Distributor, $1,368,595 was paid out to unaffiliated Participants and $309,305
was paid to W.S. Griffith, an indirect subsidiary of PHL.
As Financial Agent of the Trust, PEPCO received a fee for bookkeeping,
administration, and pricing services at an annual rate of 0.03% of the average
daily net assets of each Portfolio through December 31, 1996, and starting on
January 1, 1997, at an annual rate of 0.05% of average daily net assets up to
$100 million, 0.04% of average daily net assets of $100 million to $300
million, 0.03% of average daily net assets of $300 million through $500
million, and 0.015% of average daily net assets greater than $500 million; a
minimum fee may apply. PEPCO serves as the Trust's Transfer Agent with State
Street Bank and Trust Company as sub-transfer agent. For the year ended
November 30, 1997, transfer agent fees were $1,525,483 of which PEPCO retained
$560,294 which is net of fees paid to State Street.
At November 30, 1997, PHL and its affiliates held Phoenix Multi-Portfolio
Fund shares which aggregated the following:
<TABLE>
<CAPTION>
Aggregate
Shares Net Asset Value
----------- ----------------
<S> <C> <C>
Tax-Exempt Bond
Portfolio--Class A ...... 230,671 $ 2,576,595
Real Estate Securities
Portfolio--Class A ...... 557,799 9,142,321
Portfolio--Class B ......... 11,196 182,721
Emerging Markets Bond
Portfolio--Class A ...... 1,702,082 21,854,733
Portfolio--Class B ......... 14,287 182,445
</TABLE>
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended November 30, 1997
(excluding U.S. Government and agency securities, short-term securities,
futures contracts and forward currency contracts) aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
-------------- -------------
<S> <C> <C>
Tax-Exempt Bond Portfolio ............ $ 18,740,420 $ 34,016,449
Mid Cap Portfolio .................. 578,334,569 694,407,130
International Portfolio ............ 213,360,270 237,377,574
Real Estate Securities Portfolio ..... 41,106,626 24,920,724
Emerging Markets Bond
Portfolio ........................ 548,432,231 474,955,002
</TABLE>
There were no purchases or sales of long-term U.S. Government and agency
securities during the year ended November 30, 1997.
40
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1997 (Continued)
At November 30, 1997, the Tax-Exempt Bond Portfolio had entered into
futures contracts as follows:
<TABLE>
<CAPTION>
Value of
Contracts Market Net
Number of when Value of Unrealized
Description Contracts Opened Contracts Depreciation
- -------------- ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
U.S. Treasury
March, '98
(Short) 30 $3,566,250 $3,570,938 $ (4,688)
</TABLE>
Written option activity for the year ended November 30, 1997 aggregated
the following:
<TABLE>
<CAPTION>
Emerging Markets Bond Portfolio Call Options
- ------------------------------------------ ------------------------
Number of Amount
Options of Premiums
----------- ------------
<S> <C> <C>
Options outstanding at
November 30, 1996 -- $ --
Options written 11.5 129,046
Options canceled in closing
purchase transactions (5.5) (40,500)
Options expired (3.0) (27,046)
Options exercised (3.0) (61,500)
---- ---------
Options outstanding at November 30, 1997 -- $ --
==== =========
</TABLE>
4. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a fund's ability to
repatriate such amounts.
5. 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. For loans which the Trust is a participant, the Trust may not sell
its participation in the loan without the lender's prior consent. 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.
6. 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, 1997, the Portfolios recorded the following reclassifications to
increase (decrease) the accounts listed below.
<TABLE>
<CAPTION>
Capital paid
Undistributed Accumulated in on shares
net investment net realized of beneficial
income gain (loss) interest
---------------- -------------- --------------
<S> <C> <C> <C>
Tax-Exempt Bond
Portfolio ......... $ (35,745) $ 29,801 $ 5,944
Mid Cap
Portfolio ......... 450,831 (448,263) (2,568)
International
Portfolio ......... (43,082) 43,082 --
Emerging Markets
Bond Portfolio ... (37,661) 39,127 (1,466)
</TABLE>
TAX NOTICE (Unaudited)
For the fiscal year ended November 30, 1997, the Tax-Exempt Bond Portfolio
distributed $6,810,497 of exempt-interest dividends.
For the fiscal year ended November 30, 1997, the following Portfolios
distributed long-term capital gains dividends as follows:
<TABLE>
<S> <C>
Tax-Exempt Bond Portfolio ......... $ 1,614,748
Mid Cap Portfolio .................. 16,751,508
International Portfolio ............ 5,783,374
Real Estate Securities Portfolio ... 333,679
Emerging Markets Bond Portfolio ... 91,354
</TABLE>
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.
41
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
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, 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, 1997, 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, 1997 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 21, 1998
<PAGE>
DIVERSIFIED INCOME PORTFOLIO
<PAGE>
Diversified Income Portfolio
- --------------------------------------------------------------------------------
[LINE CHART]
(data representation of plot points)
Diversified
Income Lehman Brothers
Year End Portfolio Aggregate Bond Index*
4/1/93 $10,000 $10,000
11/30/93 $10,535 $10,482
11/30/94 $9,981 $10,162
11/30/95 $11,643 $11,955
11/30/96 $13,427 $12,681
11/30/97 $14,582 $13,638
[/LINE CHART]
Average Annual Total Returns for Periods Ending 11/30/97
From Inception
4/1/93 to
1 Year 11/30/97
- --------------------------------------------------------------------------------
Diversified Income Portfolio 8.58% 8.41%
- --------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index* 7.55% 6.87%
- --------------------------------------------------------------------------------
This chart assumes an initial gross investment of $10,000 made on 4/1/93
(inception of the Fund). Returns shown include the reinvestment of all
distributions at net asset value and the Change in share price for the stated
period. 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 Aggregate Bond Index is an unmanaged but commonly used
measure of bond performance. It is a combination of several Lehman Brothers
fixed income indices.
The index's performance does not include sales charges.
2
<PAGE>
Diversified Income Portfolio
- -------------------------------------------------------------------------------
INVESTMENTS AT NOVEMBER 30, 1997
MOODY'S
BOND PAR
RATING VALUE
Unaudited) (000) VALUE
--------- ------- ---------
U.S. GOVERNMENT AND AGENCY SECURITIES 4.0%
U.S. Treasury Bonds 2.0%
U.S. Treasury Bonds 6.375%, 8/15/27 Aaa $ 125 $129,726
---------
U.S. Treasury Notes 2.0%
U.S. Treasury Notes 6.125%, 8/15/07 Aaa 125 127,266
---------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $251,443) 256,992
---------
MUNICIPAL BONDS 12.6%
California 4.4%
Kern County Pension Obligation
Taxable 7.26%, 8/15/14 (f) Aaa 150 156,735
Orange County Pension Series A Taxable
7.67%, 9/1/09 Aaa 120 130,163
---------
286,898
---------
Colorado 2.0%
Denver City and County School District
Taxable 6.76%, 12/15/07 Aaa 125 127,420
---------
Florida 2.1%
University of Miami Exchangeable Revenue
Series A Taxable 7.40%, 4/1/11 (f) Aaa 85 88,515
University of Miami Exchangeable Revenue
Series A Taxable 7.65%, 4/1/20 (f) Aaa 45 46,771
---------
135,286
---------
Illinois 2.0%
Illinois Educational Facilities Authority
Revenue - Loyola University
Series A Taxable 7.84%, 7/1/24 Aaa 125 132,199
---------
Pennsylvania 2.1%
Pennsylvania Economic Development
Financing Authority 9.50%, 1/1/12 NR 200 136,000
---------
TOTAL MUNICIPAL BONDS
(Identified cost $858,768) 817,803
---------
NON-CONVERTIBLE BONDS 54.3%
Asset-Backed Securities 7.1%
BankAmerica Manufactured Housing
Contract 97-1, B1 6.94%, 6/10/21 Baa 125 125,390
Green Tree Financial Corp. 95-8,
A2 6.15%, 12/15/26 Aaa 124 124,600
Green Tree Financial Corp. 97-3,
A6 7.32%, 7/15/28 Aaa 200 206,250
---------
456,240
---------
Banks (Major Regional) 2.8%
First Union Institutional Capital I
8.04%, 12/1/26 A 125 132,625
Wachovia Capital Trust II
6.258%, 1/15/27 (c) Aa 50 48,379
---------
181,004
---------
See Notes to Financial Statements 3
<PAGE>
Diversified Income Portfolio
- -------------------------------------------------------------------------------
INVESTMENTS AT NOVEMBER 30, 1997
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- -------- ----------
Containers & Packaging (Paper) 1.6%
Riverwood International Corp.
10.625%, 8/1/07 B- (b) $100 $ 104,250
----------
Engineering & Construction 1.3%
Neenah Corp. Series B
11.125%, 5/1/07 B 80 86,800
----------
Gaming, Lottery & Parimutuel Cos. 1.6%
Mashantucket Pequot Revenue 144A
6.91%, 9/1/12 (d) Aaa 100 103,299
----------
Non-Agency Mortgage-Backed Securities 33.9%
DLJ Mortgage Acceptance Corp. 97-CF2, B2 144A
7.14%, 11/15/08 (d) Baa 100 99,875
FDIC REMIC Trust 96-C1, 1D
7.25%, 5/25/26 Baa 150 151,781
G.E. Capital Mortgage Services, Inc.
96-8, 2A5 7.50%, 5/25/26 AAA (b) 222 229,074
G.E. Capital Mortgage Services, Inc.
97-1, A14 7.50%, 3/25/27 AAA (b) 150 154,172
Norwest Asset Securities Corp.
96-3, B1 7.25%, 9/25/26 A (b) 148 151,170
Norwest Asset Securities Corp.
96-3, B2 7.25%, 9/25/26 BBB (b) 148 149,899
Residential Asset Securitization Trust
96-A8, A1 8%, 12/25/26 AAA (b) 154 161,327
Resolution Trust Corp.
92-C3, B 9.05%, 8/25/23 AA (b) 155 156,854
Resolution Trust Corp.
93-C1, B 8.75%, 5/25/24 Aa 119 118,905
Resolution Trust Corp.
95-1, B2 7.50%, 10/25/28 Aa 87 87,633
Resolution Trust Corp.
95-1, C2 7.50%, 10/25/28 A 85 85,977
Resolution Trust Corp.
95-2, C1 7.45%, 5/25/29 Baa 104 105,181
Structured Asset Securities Corp.
95-C1, D 7.375%, 9/25/24 BBB (b) 150 151,828
Structured Asset Securities Corp.
93-C1, B 6.60%, 10/25/24 A+ (b) 250 244,942
Structured Asset Securities Corp.
95-C4, D 7%, 6/25/26 BBB (b) 150 149,719
----------
2,198,337
----------
Oil & Gas (Exploration & Production) 1.2%
Lomak Petroleum, Inc. 8.75%, 1/15/07 B 75 76,688
----------
Publishing 3.2%
Hollinger International Publishing, Inc.
9.25%, 3/15/07 BB- (b) 200 207,000
---------
Telecommunications (Cellular/Wireless) 1.6%
Comcast Cellular Holdings
Series B 9.50%, 5/1/07 BB+ (b) 100 104,500
----------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $3,429,687) 3,518,118
----------
FOREIGN GOVERNMENT SECURITIES 24.7%
Argentina 3.6%
Republic of Argentina RegS
11.75%, 2/12/07 BBB- (b) 250(g) 235,000
---------
See Notes to Financial Statements 4
<PAGE>
Diversified Income Portfolio
- -------------------------------------------------------------------------------
INVESTMENTS AT NOVEMBER 30, 1997
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ------- ----------
Brazil 4.0%
Republic of Brazil C Bond, PIK interest
capitalization, 8%, 4/15/14 (c) BB- (b) $342 $ 255,703
----------
Bulgaria 2.7%
Republic of Bulgaria IAB PDI Euro
6.688%, 7/28/11 (c) B 250 177,734
----------
Ecuador 2.6%
Ecuador Bearer PDI Euro,
PIK interest capitalization,
6.688%, 2/27/15 (c) B 273 171,427
----------
Mexico 2.2%
United Mexican States Global Bond
11.375%, 9/15/16 Ba 125 141,563
----------
Panama 1.8%
Republic of Panama 8.875%, 9/30/27 Ba 125 116,250
----------
Peru 1.2%
Peru PDI 4%, 3/7/17 (c) NR 125 78,125
----------
Russia 3.1%
Russia Principal Loans WI
6.719%, 12/15/20 (c) (e) NR 350 201,250
----------
Venezuela 3.5%
Republic of Venezuela DCB Euro
6.75%, 12/18/07 (c) Ba 250 223,750
----------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $1,682,031) 1,600,802
----------
SHARES
-------
PREFERRED STOCKS 3.8%
REITS 3.8%
Home Ownership Funding 2,
Step-down Pfd. 144A 13.338% (d) 250 247,698
----------
TOTAL PREFERRED STOCKS
(Identified cost $241,507) 247,698
----------
TOTAL LONG-TERM INVESTMENTS 99.4%
(Identified cost $6,463,436) 6,441,413
----------
See Notes to Financial Statements 5
<PAGE>
Diversified Income Portfolio
- -------------------------------------------------------------------------------
INVESTMENTS AT NOVEMBER 30, 1997
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ------- ---------
SHORT-TERM OBLIGATIONS 3.4%
Commercial Paper 3.4%
BellSouth Telecommunications, Inc.
5.75%, 12/1/97 A-1+ $150 $ 150,000
Koch Industries, Inc.
5.62%, 12/1/97 A-1+ 70 70,000
----------
220,000
----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $220,000) 220,000
----------
TOTAL INVESTMENTS 102.8%
(Identified cost $6,683,436) 6,661,413(a)
----------
Cash and receivables, less liabilities (2.8%) (181,283)
==========
NET ASSETS 100.0% $6,480,130
===========
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $184,040 and gross
depreciation of $214,662. At November 30, 1997, the aggregate cost of
securities for federal income tax purposes was $6,692,035.
(b) As rated by Standard & Poor's, Fitch, or Duff & Phelps.
(c) Variable or step coupon security; the interest rate shown 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, 1997, these securities amounted to a value of
$450,872 or 7.0% of net assets.
(e) When issued.
(f) All or a portion segregated as collateral.
(g) Par value represents Argentine Pesos.
See Notes to Financial Statements 6
<PAGE>
Diversified Income Portfolio
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
Assets
Investment securities at value
(Identified cost $6,683,436) $6,661,413
Cash 4,131
Receivables
Investment securities sold 135,119
Interest and dividends 96,982
----------
Total assets 6,897,645
----------
Liabilities
Payables
Investment securities purchased 367,875
Trustees' fee 7,222
Investment advisory fee 5,854
Financial agent fee 5,753
Transfer agent fee 1,647
Accrued expenses 29,164
----------
Total liabilities 417,515
----------
Net Assets $6,480,130
==========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $6,245,891
Undistributed net investment income 14,837
Accumulated net realized gain 241,425
Net unrealized depreciation (22,023)
----------
Net Assets $6,480,130
==========
Shares of beneficial interest outstanding,
$1 par value, unlimited authorization 648,866
Net asset value and offering price per share $9.99
See Notes to Financial Statements 7
<PAGE>
Diversified Income Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
NOVEMBER 30, 1997
Investment Income
Interest $492,509
Dividends 14,779
----------
Total investment income 507,288
----------
Expenses
Investment advisory fee 31,318
Financial agent fee 64,206
Professional 24,400
Trustees 20,816
Transfer agent 18,562
Registration 14,544
Custodian 5,707
Printing 1,408
Miscellaneous 718
----------
Total expenses 181,679
Less expenses borne by investment adviser (140,966)
----------
Net expenses 40,713
----------
Net investment income 466,575
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 251,177
Net change in unrealized appreciation (depreciation)
on investments (194,058)
----------
Net gain on investments 57,119
----------
Net increase in net assets resulting from operations $523,694
==========
See Notes to Financial Statements 8
<PAGE>
Diversified Income Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, 1997 November 30, 1996
----------------- ------------------
<S> <C> <C>
From Operations
Net investment income $ 466,575 $ 442,214
Net realized gain 251,177 254,797
Net change in unrealized appreciation (depreciation) (194,058) 100,101
---------- ----------
Increase in net assets resulting from operations 523,694 797,112
---------- ----------
From Distributions to Shareholders
Net investment income (469,335) (451,539)
Net realized gains (72,586) -
---------- ----------
Decrease in net assets from distributions to shareholders (541,921) (451,539)
---------- ----------
From Share Transactions
Proceeds from sales of shares
(27,068 and 0 shares, respectively) 263,374 -
Net asset value of shares issued from reinvestment of
distributions (54,582 and 47,353 shares, respectively) 541,924 451,539
Cost of shares repurchased
(27,376 and 1 shares, respectively) (273,623) (5)
---------- ----------
Increase in net assets from share transactions 531,675 451,534
---------- ----------
Net increase in net assets 513,448 797,107
Net Assets
Beginning of period 5,966,682 5,169,575
---------- ----------
End of period (including undistributed net investment
income of $14,837 and $3,918, respectively) $6,480,130 $5,966,682
========== ==========
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Diversified Income Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
From
Year Ended November 30, Inception
4/1/93 to
1997 1996 1995 1994 11/30/93
-------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.03 $ 9.45 $ 8.97 $10.12 $ 10.00
Income from investment operations
Net investment income 0.74(1)(4) 0.78(1) 0.91(1) 0.63(1) 0.40(1)
Net realized and unrealized gain (loss) 0.09 0.59 0.51 (1.13) 0.12
-------- -------- --------- -------- ---------
Total from investment operations 0.83 1.37 1.42 (0.50) 0.52
-------- -------- --------- -------- ---------
Less distributions
Dividends from net investment income (0.75) (0.79) (0.94) (0.59) (0.40)
Dividends from net realized gains (0.12) -- -- (0.06) --
-------- -------- --------- -------- ---------
Total distributions (0.87) (0.79) (0.94) (0.65) (0.40)
-------- -------- --------- -------- ---------
Change in net asset value (0.04) 0.58 0.48 (1.15) 0.12
-------- -------- --------- -------- ---------
Net asset value, end of period $ 9.99 $10.03 $ 9.45 $ 8.97 $ 10.12
======== ======== ========= ======== =========
Total return 8.58% 15.32% 16.65% (5.26)% 5.35% (3)
Ratios/supplemental data:
Net assets, end of period (thousands) $6,480 $5,967 $5,170 $1,780 $ 1,989
Ratio to average net assets of:
Operating expenses 0.65% 0.65% 0.65% 0.65% 0.65% (2)
Net investment income 7.45% 8.11% 7.60% 6.64% 6.13% (2)
Portfolio turnover 194% 231% 618% 124% 183% (2)
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of
$0.22, $0.15, $0.40, $0.34 and $0.35, respectively.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
See Notes to Financial Statements 10
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
DIVERSIFIED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
November 30, 1997
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, six Portfolios are offered for sale: Diversified Income Portfolio,
Tax-Exempt Bond Portfolio, International Portfolio, Mid Cap Portfolio, Emerging
Markets Bond Portfolio and Real Estate Securities Portfolio. This report only
covers the Diversified Income Portfolio (the "Portfolio"). On November 19, 1997,
the Trustees approved an amendment to the Articles, changing the Portfolio name
to the Phoenix Strategic Income Fund. The Portfolio's investment objective is to
achieve current income through investment primarily in publicly-traded,
investment quality debt securities.
The following is a summary of significant accounting policies
consistently followed by the Portfolio in the preparation of its financial
statements. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets, liabilities, revenues and
expenses. Actual results could differ from those estimates.
A. Security valuation:
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.
Equity securities are valued at the last sale price, or if there had been no
sale that day, at the last bid price.
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. The Portfolio does not amortize premiums but does amortize discounts
using the effective interest method. Realized gains or losses are determined on
the identified cost basis.
C. Security lending:
The Portfolio loans securities to qualified brokers through an
agreement with State Street Bank & Trust (the Custodian). Under the terms of the
agreement, the Portfolio 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 Portfolio 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, 1997, the Portfolio had no security loans
outstanding.
D. Income taxes:
The Portfolio is treated as a separate taxable entity. It is the policy
of the Portfolio in the Trust to comply with the requirements of the Internal
Revenue Code (the "Code"), applicable to regulated investment companies, and to
distribute all of its taxable income to its shareholders. In addition, the
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.
E. Distributions to shareholders:
Distributions are recorded by the 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 expiring capital loss carryforwards,
foreign currency gain/loss, 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.
11
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
DIVERSIFIED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
November 30, 1997 (Continued)
F. 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.
G. When-issued and delayed delivery transactions:
The Portfolio may engage in when-issued or delayed delivery
transactions. The Portfolio 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 Adviser, Phoenix
Investment Counsel, Inc. ("PIC"), an indirect majority-owned subsidiary of
Phoenix Home Life Mutual Insurance Company ("PHL") is entitled to a fee, based
on an annual rate of 0.50% of the average daily net assets of the Diversified
Income Portfolio. The Adviser has agreed to reimburse the Diversified Income
Portfolio to the extent that expenses exceed 0.65% of the average daily net
assets.
As Financial Agent to the Portfolio, Phoenix Equity Planning
Corporation ("PEPCO"), received a fee for bookkeeping, administration, and
pricing services at an annual rate of 0.03% of the average daily net assets of
the Portfolio through December 31, 1996, and starting on January 1, 1997, at an
annual rate of 0.05% of average daily net assets up to $100 million, 0.04% of
average daily net assets of $100 million to $300 million, 0.03% of average daily
net assets of $300 million through $500 million, and 0.015% of average daily net
assets greater than $500 million; a minimum fee may apply.
PEPCO serves as the Portfolio's Transfer Agent with State Street Bank
and Trust Company as sub-transfer agent. For the year ended November 30, 1997,
transfer agent fees were $18,562 which were all paid to State Street.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended November 30,
1997 (excluding U.S. Government and agency securities and short-term securities)
were $8,480,831 and $8,142,131, respectively.
Purchases and sales of U.S. Government and agency securities during the
year ended November 30, 1997 were $3,919,912 and $3,860,396, respectively.
4. OTHER
As of November 30, 1997, substantially all shares of the Diversified
Income Portfolio were owned by PHL.
At the October 30, 1997 shareholder meeting, a change in the
Portfolio's investment objective, the investment advisory agreement, and the
offering of additional classes of shares were approved. The investment objective
of the Portfolio was changed to maximize current income by investing in debt
securities, with capital appreciation remaining as the secondary objective. The
new investment advisory agreement provides for the Adviser, PIC, to receive a
fee, based on an annual rate of 0.55% of the average aggregate daily net assets
up to $1 billion, 0.50% of the average aggregate daily net assets of $1 billion
through $2 billion, and 0.45% of average aggregate daily net assets over $2
billion. These changes are expected to become effective in March, 1998.
5. CREDIT RISK
In countries with limited or developing markets, investments may
present greater risks than in more developed markets and the prices of such
investments may be volatile. The consequences of political, social or economic
changes in these markets may have disruptive effects on the market prices of
these investments and the income they generate, as well as a fund's ability to
repatriate such amounts.
12
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
DIVERSIFIED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
November 30, 1997 (Continued)
6. LOAN AGREEMENTS
The Portfolio 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 Portfolio'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 Portfolio 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 Portfolio generally has no right to enforce compliance with the
terms of the loan agreement with the borrower. As a result, the Portfolio may be
subject to the credit risk of both the borrower and the lender that is selling
the loan agreement. For loans which the Portfolio is a participant, the
Portfolio may not sell its participation in the loan without the lender's prior
consent. When the Portfolio 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.
7. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Portfolio has
recorded several reclassifications in the capital accounts. These
reclassifications have no impact on the net asset value of the Portfolio 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, 1997, the Portfolio has decreased capital paid in on shares of
beneficial interest by $9,113, increased undistributed net investment income by
$13,679, and decreased accumulated net realized gains by $4,566.
TAX INFORMATION NOTICE (Unaudited)
For the fiscal year ended November 30, 1997, the Portfolio distributed
long-term capital gains dividends of $26,162.
This report is not authorized for distribution to prospective investors in the
Phoenix Diversified Income Portfolio unless preceded or accompanied by an
effective prospectus which includes information concerning the sales charge, the
Fund's record and other pertinent information.
13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
To the Trustees and Shareholders of
Phoenix Diversified Income Portfolio
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments (except for bond ratings), and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Phoenix Diversified Income Portfolio (the "Portfolio") at November 30, 1997, and
the results of its operations, the changes in its net assets and the financial
highlights for each of the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Portfolio'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, 1997 by
correspondence with the custodian and brokers, and the application of
alternative procedures where confirmations from brokers were not received,
provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Boston, Massachusetts
January 21, 1998
<PAGE>
RESULTS OF SHAREHOLDER MEETING (Unaudited)
A special meeting in lieu of the Annual Meeting of shareholders of the Phoenix
Multi-Portfolio Diversified Income Portfolio was held on October 30, 1997 to
approve the following matters:
1. Approve a new investment advisory agreement providing for changes to
the fees to the investment adviser.
2. Approve a change in investment objective.
3. Approve the revisions in the restrictions of the use of call and put
options, futures contracts and related options to increase the
applicable limit to 5% of net assets.
4. Approve the elimination of a restriction on the use of futures
contracts and related options.
5. Approve the elimination of restrictions on investments in the
securities of any issuer with a record of less than three years of
continuous operations.
6. Approve the increase in the limitation on the use of illiquid
securities from 10% of total assets to 15% of net assets and to
eliminate the restriction on the purchase of restricted securities.
7. Approve the elimination of the limitation on the use of repurchase
agreements.
8. Approve the adoption of a service fee plan.
On the record date for this meeting, there were 636,491 shares outstanding and
99.99% of the shares outstanding and entitled to vote were present by proxy.
NUMBER OF VOTES: For Against
1. Advisory Agreement 636,466 0
2. Investment Objective 636,466 0
3. Revisions in Restrictions 636,466 0
4. Elimination of Restriction 636,466 0
5. Restrictions on Issuers 636,466 0
6. Illiquid Securities 636,466 0
7. Repurchase Agreements 636,466 0
8. Service Fee Plan 636,466 0
<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
covering the Strategic Income Fund are included in the Annual Report to
Shareholders for the year ended November 30, 1997, incorporated by reference.
Financial Statements and Notes Thereto, and Report of Independent Accountants
covering the Tax Exempt Bond Portfolio, the Mid Cap Portfolio, the International
Portfolio, the Real Estate Portfolio and the Emerging Markets Portfolio are included
in the Annual Report to Shareholders for the year ended November 30, 1997,
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 via EDGAR with Post-Effective Amendment No. 20 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 via EDGAR with Post-Effective Amendment No. 20 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
via EDGAR with Post-Effective Amendment No. 20 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 via EDGAR with Post-Effective Amendment No.
20 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 via EDGAR with Post-Effective Amendment No. 20 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.
1.8 Amendment to Declaration of Trust changing the name of the Phoenix Capital Appreciation Portfolio to
Phoenix Mid Cap Portfolio dated May 22, 1996 and filed via EDGAR with Post-Effective Amendment
No. 20 and incorporated herein by reference.
1.9 Amendment to Declaration of Trust changing the name of Phoenix Diversified Income Portfolio to Phoenix-
Strategic Income Fund and designating Classes of Shares, filed herewith via EDGAR and incorporated
herein by reference.
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.
5.1 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 via EDGAR with Post-Effective Amendment No. 20 and incorporated
herein by reference.
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
5.2 Form of Investment Advisory Agreement between Registrant and Duff & Phelps Investment Management
Co., filed herewith via EDGAR and incorporated by reference.
5.3 Investment Advisory Agreement between the Registrant and Phoenix Investment Counsel, Inc. dated
October 30, 1997 covering the Phoenix Strategic Income Fund (f/k/a Phoenix Diversified Income Portfolio),
and filed herewith via EDGAR and incorporated herein by reference.
6.1 Underwriting Agreement between Registrant and Phoenix Equity Planning Corporation dated November 19,
1997 and filed via EDGAR herewith.
6.2 Form of Sales Agreement between Phoenix Equity Planning Corporation and dealers, filed via EDGAR
herewith.
6.3 Form of Supplement to Phoenix Family of Funds Sales Agreement filed via EDGAR herewith.
6.4 Form of Financial Institution Sales Contract for the Phoenix Family of Funds filed via EDGAR herewith.
7. Not applicable.
8.1 Custodian Contract between Registrant and State Street Bank and Trust Company dated May 1, 1997, filed
via EDGAR herewith.
8.2 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 via
EDGAR with Post-Effective Amendment No. 20 and incorporated herein by reference.
9.1 Amended and Restated Financial Agent Agreement between Registrant and Phoenix Equity Planning
Corporation dated November 19, 1997 and 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 via EDGAR with Post-
Effective Amendment No. 20 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 via EDGAR
with Post-Effective Amendment No. 20 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 filed via EDGAR herewith.
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 filed
via EDGAR herewith.
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 filed
via EDGAR herewith.
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 via EDGAR with Post-Effective Amendment
No. 20 and incorporated herein by reference.
11. Consent of Independent Accountants, filed herewith.
12. Not applicable.
13. Initial Capital Agreement, filed with Pre-Effective Amendment No. 2 July 7, 1988, and filed via EDGAR
herewith.
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 filed via EDGAR herewith.
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 filed via EDGAR
herewith.
</TABLE>
C-2
<PAGE>
<TABLE>
<S> <C>
15.1 Class A Shares Amended and Restated Distribution Plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940, filed herewith via EDGAR and incorporated herein by reference.
15.2 Class B Shares Amended and Restated Distribution Plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940, filed herewith via EDGAR and incorporated herein by reference.
15.3 Class C Shares Amended and Restated Distribution Plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940, filed herewith via EDGAR and incorporated herein by reference.
15.4 Class M Shares Amended and Restated Distribution Plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940, 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 Amended and Restated Rule 18f-3 Dual Distribution Plan effective November 19, 1997 filed via EDGAR
herewith.
19. Powers of Attorney, filed via EDGAR with Post-Effective Amendment No. 20 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 November 30, 1997.
<TABLE>
<CAPTION>
Number of
Shareholder
Title of Class Accounts
- ----------------------------------------------------------------------- ------------------
<S> <C> <C>
Shares of Beneficial Interest, $1 par value, of the Phoenix Class A 3,319
Tax-Exempt Bond Portfolio Class B 163
Shares of Beneficial Interest, $1 par value of the Phoenix Class A 12,026
International Portfolio Class B 1,567
Shares of Beneficial Interest, $1 par value, of the Phoenix Class A 30,928
Mid Cap Portfolio Class B 2,235
Shares of Beneficial Interest, $1 par value, of the Phoenix
Endowment Equity Portfolio 0
Shares of Beneficial Interest, $1 par value, of the Phoenix
Strategic Income Fund formerly the Diversified Income Portfolio Class X 5
Class A 0
Class B 0
Class C 0
Class M 0
Shares of Beneficial Interest, $1 par value, of the Class A 2,325
Real Estate Securities Portfolio Class B 1,773
Shares of Beneficial Interest, $1 par value, of the Class A 3,912
Phoenix Emerging Markets Portfolio Class B 2,167
Class C 0
Class M 0
</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" and "Trustees and Officers" 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 801-14813
(DPIM)) filed under the Investment Advisers Act of 1940, incorporated herein by
reference.
Item 29. Principal Underwriter
(a) Equity Planning also serves as the principal underwriter for the following
other registrants:
Phoenix Series Fund, Phoenix Strategic Allocation Fund, Inc., Phoenix Duff
& Phelps Institutional Mutual Funds, Phoenix Multi-Sector Fixed Income Fund,
Inc., Phoenix Multi-Sector Short Term Bond Fund, Phoenix-Aberdeen Series Fund,
Phoenix California Tax Exempt Bonds, Inc., Phoenix Income and Growth Fund,
Phoenix Worldwide Opportunities Fund, Phoenix Strategic Equity Series Fund,
Phoenix Equity Series Fund, Phoenix-Engemann Funds, Phoenix Investment Trust
97, Phoenix Home Life Variable Universal Life Account, Phoenix Home Life
Variable Accumulation Account, PHL Variable Accumulation Account, Phoenix Life
and Annuity Variable Universal Life Account and PHL Variable Separate Account
MVA1.
(b) Directors and executive officers of Phoenix Equity Planning Corporation
are as follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
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
Leonard J. Saltiel Managing Director, Vice President
56 Prospect St. Infrastructure
P.O. Box 150480
Hartford, CT 06115-0480
Paul A. Atkins Senior Vice President and None
56 Prospect St. Sales Manager
P.O. Box 150480
Hartford, CT 06115-0480
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 Executive Vice President, None
56 Prospect St. Mutual Fund Sales and
P.O. Box 150480 Operations
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President, Mutual Fund Secretary
101 Munson Street Customer Service
P.O. Box 810
Greenfield, MA 01302-0810
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Distributor with Registrant
- ------------------------- ------------------------------- -----------------------
<S> <C> <C>
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
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
William E. Keen, III Assistant Vice President, Vice President
100 Bright Meadow Blvd. Mutual Fund Regulation
P.O. Box 1900
Enfield, CT 06083-1900
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an affiliated
person of the Registrant or an affiliated person of such affiliated person,
directly or indirectly, from the Registrant during the Registrant's last fiscal
year.
Item 30. Location of Accounts and Records
Persons maintaining physical possession of accounts, books and other
documents required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder include Registrant's
investment advisers, Phoenix Investment Counsel, Inc. and Duff & Phelps
Investment Management Co.; 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 Trust is 101 Munson Street, Greenfield, Massachusetts
01301; the address of Phoenix Investment Counsel, Inc. is 56 Prospect Street,
Hartford, Connecticut 06115 and Duff & Phelps Investment Management Co. is 55
East Monroe Street, Suite 3600, Chicago, Illinois 60603; 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 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.
C-5
<PAGE>
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.
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 has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Hartford, and State of Connecticut on
the 26th day of January, 1998.
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 January, 1998.
<TABLE>
<CAPTION>
Signature Title
- ----------------------------------- ---------------------
<S> <C>
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
--------------------------------
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
previously filed.
S-1(c)
PHOENIX MULTI-PORTFOLIO FUND
Certificate of Amendment to Declaration of Trust
The undersigned, individually as Trustee 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, November
15, 1995 and June 3, 1996 (the "Declaration"), and as attorney-in-fact for each
of the other Trustees of the Trust pursuant to a certain Delegation and Power of
Attorney dated August 27, 1997, executed by each of such Trustees, a copy of
which is attached hereto, hereby certifies that at a duly held meeting of the
Board of Trustees of the Trust held November 19, 1997, at which a quorum was
present, the Board of Trustees 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 III, Section 3.8 and Article VI, Section
6.3 of the Declaration, for the purposed of establishing three additional
classes of shares, and clarifying the classification of the currently existing
shares of Phoenix Diversified Income Portfolio and for the further purposes of
changing the name of the Series designated "Phoenix Diversified Income
Portfolio" to "Phoenix Strategic Income Fund" and eliminating the Series
designated "Phoenix Endowment Equity Portfolio", voted to further amend said
Declaration and Trust, effective November 19, 1997 as follows:
1. Article III, Section 3.8 is hereby amended and restated to read as follows:
Section 3.8 Multi-Class Distribution System. Without in any
manner limiting the rights of the Trustees pursuant to Section 3.7, the above,
the Trustees hereby divide the Shares of each of the Series designated and
hereafter to be designated by the Trustees pursuant to Section 3.2, above, into
five classes. The classes of each such respective Series, so established, shall
be designated as "Class A Shares," "Class B Shares," "Class C Shares," "Class M
Shares," and "Class X Shares." All shares of Phoenix Diversified Income
Portfolio outstanding as of the date of this amendment shall be deemed Class X
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 of the Trust.
(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 classes of that Series to reflect
differing allocations of the expenses of the Trust between the holders of the
classes of such Series and any resultant differences between the net asset value
per share of each class of such Series, to such extent and for such purposes as
the Trustees may deem appropriate. The allocation of investment income or
<PAGE>
capital gains and expenses and liabilities of the Trust among the classes of
each Series 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, Inc., 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 and Class M 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 and Class C 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.
(e) The holders of each class of 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 the respective class of a particular Series, and (ii) no voting
rights with respect to provisions of any Plan applicable to any other class of
that Series, or with regard to any other matter submitted to a vote of
shareholders 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 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.
<PAGE>
(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 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 Class A Shares of the same Series into which the Class
B Shares 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 such certificates have been issued, have been received by
the Trust or its agent duly endorsed for transfer.
2. 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 six
Series are hereby established and designated: Phoenix Tax-Exempt Bond
Portfolio, Phoenix Mid Cap Portfolio, Phoenix International Portfolio,
Phoenix Strategic Income Fund, Phoenix Real Estate Securities Portfolio
and Phoenix Emerging Markets Bond Portfolio."
All shares of the Series heretofore designated "Phoenix Diversified
Income Portfolio" shall hereafter constitute shares of the "Phoenix Strategic
Income Fund."
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of
November, 1997.
/s/ Philip R. McLoughlin
-----------------------------------------------------------
Philip R. McLoughlin, individually and as
attorney-in-fact for C. Duane Blinn, Robert Chesek,
E. Virgil Conway, Harry Dalzell-Payne, Francis E. Jeffries,
Leroy Keith, Jr., Everett L. Morris, James M. Oates,
Calvin J. Pedersen, Philip R. Reynolds, Herbert Roth, Jr.,
Richard E. Segerson and Lowell P. Weicker, Jr.
<PAGE>
DELEGATION AND POWER OF ATTORNEY
PHOENIX EQUITY SERIES FUND
PHOENIX-ABERDEEN SERIES FUND
THE PHOENIX EDGE SERIES FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
The undersigned, being all of the Trustees of Phoenix Equity Series Fund,
Phoenix-Aberdeen Series Fund, The Phoenix Edge Series Fund, Phoenix Income and
Growth Fund, Phoenix Multi-Portfolio Fund, Phoenix Multi-Sector Short Term Bond
Fund, Phoenix Series Fund, Phoenix Strategic Equity Series Fund, and Phoenix
Worldwide Opportunities Fund (sometimes hereafter collectively, the "Funds"),
other than Philip R. McLoughlin, do hereby declare, delegate and certify as
follows:
1. Pursuant to Section 2.2 of that certain Agreement and Declaration of Trust
dated May 30, 1997, establishing Phoenix Equity Series Fund, pursuant to
Section 2.2 of that certain Agreement and Declaration of Trust dated May
31, 1996, as amended, establishing Phoenix-Aberdeen Series Fund, pursuant
to Section 2.2 of that certain Agreement and Declaration of Trust dated
February 18, 1986, as amended, establishing The Big Edge Series Fund, now
known as The Phoenix Edge Series Fund, pursuant to Section 2.2 of that
certain Declaration of Trust of Phoenix-Chase Series Fund, as amended and
restated July 28, 1980, as further amended, now known as Phoenix Series
Fund, and Section 2.2 of that certain Agreement and Declaration of Trust
dated October 15, 1987, as amended, establishing the Phoenix Multi-Portfolio
Fund, the undersigned, and each of them, hereby appoints PHILIP R.
MCLOUGHLIN, his agent and attorney-in-fact for a period of one (1) year
from the date hereof, to execute any and all instruments including
specifically but without limitation amendments of either of said trust
instruments and appointments of trustee(s), provided that such action as
evidenced by such instrument shall have been adopted by requisite vote of
the Trustees and, where necessary, the Shareholders of such funds, such
vote or votes to be conclusively presumed by the execution of such
instrument by such attorney-in-fact.
2. Pursuant to Section 3.6 of that certain Declaration of Trust dated June 25,
1986, as amended, establishing National Total Income Fund, now known as
Phoenix Income and Growth Fund, pursuant to Section 3.6 of that certain
Declaration of Trust dated June 25, 1986, as amended, establishing
National Stock Fund, now known as Phoenix Strategic Equity Series Fund,
and pursuant to Section 2.5 of that certain Declaration of Trust dated
February 20, 1992, as amended, establishing National Short-Term Income
Series, now known as Phoenix Multi-Sector Short Term Bond Fund, and
pursuant to Section 2.5 of that certain Declaration of Trust of National
Worldwide Opportunities Fund dated November 4, 1991, as amended, now known
as Phoenix Worldwide Opportunities Fund, the undersigned, and each of
them, hereby delegates to and appoints PHILIP R. MCLOUGHLIN, his agent and
attorney-in-fact for a period of one (1) year from the date hereof, to
execute any and all instruments, including specifically but without
limitation amendments of each and every said trust instrument and
appointments of trustee(s), provided that such action as evidenced by such
instrument shall have been adopted by requisite vote of the Trustees and,
where necessary, the Shareholders of such funds, such vote or votes to be
conclusively presumed by the execution of such instrument by such
attorney-in-fact.
<PAGE>
3. The undersigned Trustees, and each of them, hereby further declare that a
photostatic, xerographic or other similar copy of this original instrument
shall be as effective as the original, and that, as to any such amendment
of any of the aforementioned trust agreements or declarations, such copy
shall be filed with such instrument of amendment in the records of the
Office of the Secretary of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, we have hereunto subscribed this Delegation and Power of
Attorney this 27th day of August, 1997.
/s/ C. Duane Blinn
- -----------------------
C. Duane Blinn
/s/ Robert Chesek
- -----------------------
Robert Chesek
/s/ E. Virgil Conway
- -----------------------
E. Virgil Conway
/s/ Harry Dalzell-Payne
- -----------------------
Harry Dalzell-Payne
/s/ Francis E. Jeffries
- -----------------------
Francis E. Jeffries
/s/ Leroy Keith, Jr.
- -----------------------
Leroy Keith, Jr.
/s/ Everett L. Morris
- -----------------------
Everett L. Morris
/s/ James M. Oates
- -----------------------
James M. Oates
/s/ Calvin J. Pedersen
- -----------------------
Calvin J. Pedersen
/s/ Philip R. Reynolds
- -----------------------
Philip R. Reynolds
/s/ Herbert Roth, Jr.
- -----------------------
Herbert Roth, Jr.
/s/ Richard E. Segerson
- -----------------------
Richard E. Segerson
/s/ Lowell P. Weicker, Jr.
- -----------------------
Lowell P. Weicker, Jr.
Exhibit 5.2
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made effective as of the ___ day of ___________, 199__ by
and between [NAME OF FUND], a [____________ corporation or a Massachusetts
business trust] having a business located at 101 Munson Street, Greenfield,
Massachusetts (the "Trust") and [NAME OF ADVISOR], a ________________
corporation having a place of business located at [ADDRESS OF ADVISER] (the
"Adviser").
WITNESSETH THAT:
1. The Trust hereby appoints the Adviser to act as investment adviser to
the Trust on behalf of the following series of the Trust established and
designated by the Trustees on or before the date hereof, namely [NAME OF SERIES]
(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 the
Existing Series 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; and
<PAGE>
(e) Regular reports to the Trustees on the implementation of
each Series' investment program.
5. The Adviser shall, for all purposes herein, be deemed to be an
independent contractor.
6. The Adviser shall furnish at its own expense, or pay the expenses of
the 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 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; and
(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 the 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
<PAGE>
-3-
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 eight days after the end of each month, the Trust
shall pay the Adviser a monthly fee with respect to each
Series at the following annual rate of [insert fee
structure]. 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 Trust's 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 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 and
subject to the prior approval of the Trustees and subject further to compliance
with applicable provisions of the Investment Company Act of 1940, as amended,
the Adviser may appoint one or more agents to perform any of the functions and
<PAGE>
-4-
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 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 as directors, officers, stockholders or
otherwise;
(b) Directors, officers, employees, agents and stockholders
of the Adviser 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 Existing
Series 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 provided, this Agreement shall remain in full force and effect for a
period of two years following the Contract Date, and, with respect to each
Additional Series, until the next anniversary of the Contract Date following the
date on which such Additional Series became subject to the terms and conditions
of this Agreement and shall continue in full force and effect for periods of one
year thereafter with respect to each Series so long as (a) such continuance with
respect to any such Series is approved at least annually by either the 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
<PAGE>
-5-
such Additional Series on or before the next anniversary of the Contract Date
following the date on which such Additional Series became a Series hereunder.
Any approval of this Agreement by a vote of the holders of a "majority
of the outstanding voting securities" of any Series shall be effective to
continue this Agreement with respect to such Series notwithstanding (a) that
this Agreement has not been approved by a "vote of a majority of the outstanding
voting securities" of any other Series of the 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 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 the 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,
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 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
<PAGE>
-6-
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 State of
Connecticut.
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.
[NAME OF FUND]
By:
---------------------------
Philip R. McLoughlin
President
[NAME OF ADVISER]
By:
---------------------------
[NAME]
[TITLE]
EXHIBIT 5.3
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made effective as of the 30th day of October, 1997 by
and between Phoenix Multi-Portfolio Fund, a Massachusetts business trust having
a place of business located at 101 Munson Street, Greenfield, Massachusetts (the
"Trust") and Phoenix Investment Counsel, Inc., a Massachusetts corporation
having a place of business located at 56 Prospect Street, Hartford, Connecticut
(the "Adviser").
WITNESSETH THAT:
1. The Trust hereby appoints the Adviser to act as investment adviser to
the Trust on behalf of the Phoenix Strategic Income Fund formerly the Phoenix
Diversified Income Portfolio, previously established and designated by the
Trustees, (the "Portfolio"), 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. The Adviser shall furnish continuously an investment program for the
Portfolio and shall manage the investment and reinvestment of the assets of each
Portfolio, subject at all times to the supervision of the Trustees.
3. With respect to managing the investment and reinvestment of the
Portfolio's assets, the Adviser shall provide, at its own expense:
(a) Investment research, advice and supervision;
(b) An investment program for each Portfolio consistent with
its investment objectives;
(c) Implementation of the investment program for each
Portfolio including the purchase and 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 Portfolio's investment program.
4. The Adviser shall, for all purposes herein, be deemed to be an
independent contractor.
5. 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 each
Portfolio's assets (including those required for
research, statistical and investment work);
<PAGE>
(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; and
(e) Any subadviser recommended by the Adviser and appointed
to act on behalf of the Trust.
6. 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.
7. For providing the services and assuming the expenses outlined herein,
the Trust agrees that the Adviser shall be compensated as follows:
(a) Within eight calendar days after the end of each month,
the Trust shall pay the Adviser a monthly fee with
respect to each Portfolio at the annual rate of 0.55% of
the average aggregate daily net asset values of each
Portfolio up to $1 billion, 0.50% of the average
aggregate daily net asset values of each Portfolio up to
$1 billion to 2 billion and 0.45% of the average
aggregate daily net asset values in excess of $2
billion. The amounts payable to the Adviser with respect
to each 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 Trust's 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 Portfolio's fee for that month shall be
proportionately computed upon the average of the daily
net asset values of such Portfolio 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 Portfolio (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 Portfolio 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
2
<PAGE>
in which shares of such Portfolio are then qualified.
Such reimbursement, if any, will be made by the Adviser
to the Trust within fifteen calendar 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.
8. 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 and
subject to the prior approval of the Trustees and subject further to compliance
with applicable provisions of the Investment Company Act of 1940, as amended,
the Adviser may appoint one or more agents to perform any of the functions and
services which are to be provided under the terms of this Agreement upon such
terms and conditions as may be mutually agreed upon among the Trust, the Adviser
and any such agent.
9. 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 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.
10. It is understood that:
(a) Trustees, officers, employees, agents and shareholders
of the Trust are or may be "interested persons" of the
Adviser as directors, officers, stockholders or
otherwise;
(b) Directors, officers, employees, agents and stockholders
of the Adviser 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.
11. This Agreement shall become effective with respect to the Portfolio
as of the date above (the "Contract Date"). Unless terminated as herein
provided, this Agreement shall remain in full force and effect for a period of
two years following the Contract Date, and shall continue in full force and
effect for periods of one year thereafter with respect to each Portfolio so long
as (a) such continuance with respect to any such Portfolio is approved at least
annually by either the Trustees or by a "vote of the majority of the outstanding
voting securities" of such Portfolio and (b) the terms and any renewal of this
Agreement with respect to any such Portfolio 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.
Any approval of this Agreement by a vote of the holders of a "majority
of the outstanding voting securities" of any Portfolio shall be effective to
continue this Agreement with respect to such Portfolio notwithstanding (a) that
this Agreement has not been approved by a "vote of a majority of the outstanding
voting securities" of any other Portfolio 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.
12. The Trust may terminate this Agreement with respect to the Trust or
to any 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
Portfolio, by a "vote of the majority of the outstanding voting securities" of
such Portfolio. 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".
3
<PAGE>
13. 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.
14. 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 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.
15. 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, as amended, is or shall be on file with the
Secretary of The Commonwealth of Massachusetts.
16. 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.
4
<PAGE>
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 INVESTMENT COUNSEL, INC.
By: /s/ Michael E. Haylon
---------------------------------
Michael E. Haylon
President
5
UNDERWRITING AGREEMENT
THIS AGREEMENT made as of this 19th day of November, 1997, by and between
Phoenix Multi-Portfolio Fund, a Massachusetts business trust having a place of
business located at 101 Munson Street, Greenfield, Massachusetts (the "Fund")
and Phoenix Equity Planning Corporation, a Connecticut corporation having a
place of business located at 100 Bright Meadow Boulevard, Enfield, Connecticut
(the "Underwriter").
WITNESSETH THAT:
1. The Fund hereby grants to the Underwriter the right to purchase shares of
beneficial interest of each class of each series of the Fund established and
designated as of the date hereof and of any additional series and classes
thereof which the Board of Directors or Board of Trustees, as applicable
("Trustees") may establish and designate during the term of this Agreement
(called the "Series" and "Classes", respectively) and to resell shares of
various Classes, as applicable, of each Series (collectively called the
"Shares") as principal and not as agent. The Underwriter accepts such
appointment and agrees to render the services described in this Agreement for
the compensation herein provided.
2. The Underwriter's right to purchase Shares shall be exclusive except that the
terms of this Agreement shall not apply to Shares issued or transferred:
a) pursuant to an offer of exchange exempted under Section 22(d) of the
Investment Company Act of 1940, as amended (the "Act") by reason of
the fact that said offer is permitted by Section 11 of the Act,
including any offer made pursuant to clause (1) or (2) of Section
11(b);
b) upon the sale to a registered unit investment trust which is the
issuer of periodic payment plan certificates the net proceeds of which
are invested in redeemable securities;
c) pursuant to an offer made solely to all registered holders of Shares,
or all registered holders of Shares of any Series, proportionate to
their holdings or proportionate to any cash distribution made to them
by the Fund (subject to appropriate qualifications designed solely to
avoid issuance of fractional securities);
d) in connection with any merger or consolidation of the Fund or of any
Series with any other investment company or the acquisition by the
Fund, by purchase or otherwise, of any other investment company;
<PAGE>
e) pursuant to sales exempted from Section 22(d) of the Act, by rule or
regulation or order of the Securities and Exchange Commission as
provided in the then current registration statement of the Fund; or
f) in connection with the reinvestment by Fund shareholders of dividend
and capital gains distributions.
3. The "Net Asset Value" and the "Public Offering Price" of the Shares as
referred to in this Agreement shall be computed in accordance with the
provisions of the then current registration statement of the Fund. The
Underwriter shall be notified promptly by the Fund of such computations.
4. The Underwriter has and shall enter into written sales agreements with
broker/dealers ("dealers") and with banks as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, as amended, (Exchange Act) that are not
required to register as a broker/dealer under the Exchange Act or the
regulations thereunder ("Banks"). Such sales agreements shall provide that
dealers or Banks shall use their best efforts to promote the sale of Shares.
Such sales agreements shall include such terms and conditions as Underwriter may
determine not inconsistent with this Agreement; provided, however, that such
sales agreements shall specify a) that the dealer is registered as a
broker/dealer under the Exchange Act and a member of the National Association of
Securities Dealers, Inc. or, in the alternative, that the Bank is exempt from
broker/dealer registration under the Exchange Act; and b) that such dealers and
Banks agree that they will comply with all applicable state, and federal laws
and the rules and regulations of applicable regulatory agencies.
5. Each day the Underwriter shall have the right to purchase from the Fund, as
principal, the amount of Shares needed to fill unconditional orders for such
Shares received by the Underwriter from dealers, Banks, or investors, but no
more than the Shares needed, at a price equal to the Net Asset Value of the
Shares. Any purchase of Shares by the Underwriter under this Agreement shall be
subject to reasonable adjustment for clerical errors, delays and errors of
transmission and cancellation of orders.
6. With respect to transactions other than with dealers or Banks, the
Underwriter will sell Shares only at the Public Offering Price then in effect,
except to the extent that sales at less than the Public Offering Price may be
allowed by the Act, any rule or regulation promulgated thereunder or by order of
the Securities and Exchange Commission, provided, however, that any such sales
at less than the Public Offering Price shall be consistent with the terms of the
then current registration statement of the Fund. The Underwriter will sell at
Net Asset Value Shares of any Classes which are offered by the then current
registration statement or prospectus of the Fund for sale at such Net Asset
Value or at Net Asset Value with a contingent deferred sales
2
<PAGE>
charge ("CDSC Shares"). The Underwriter shall receive from the Fund all
contingent deferred sales charges applied on redemptions of CDSC Shares.
7. Sales at a discount from the Public Offering Price shall be made in
accordance with the terms and conditions of the terms of the current
registration statement of the Fund allowing such discounts. Such discounts shall
not exceed the difference between the Net Asset Value and the Public Offering
Price; however, the Underwriter may offer compensation in excess of the
difference between the Net Asset Value and the Public Offering Price, at its
discretion and from its own profits and resources, and only as described in the
current registration statement of the Fund. With respect to sales of CDSC
Shares, the Underwriter, in accordance with the terms of the current
registration statement of the Fund, shall pay dealers a commission on such sales
from its own profits and resources.
8. As reimbursement for expenditures made in connection with providing certain
distribution-related services, the Underwriter may receive from the Fund a
distribution service fee under the terms and conditions set forth in the Fund's
distribution plan adopted under Rule 12b-1 under the Investment Company Act of
1940, as amended, as the plan may be amended from time to time and subject to
any further limitations on such fees as the Trustees may impose. The Underwriter
may receive from the Fund a service fee to be retained by the Underwriter as
compensation for providing services to shareholders of the Fund or to be paid to
dealers and Banks for providing services to their clients who are also
shareholders of the Fund.
9. The Fund shall furnish the Underwriter with copies of its organizational
documents, as amended from time to time. The Fund shall also furnish the
Underwriter with any other documents of the Fund which will assist the
Underwriter in the performance of its duties hereunder.
10. The Underwriter agrees to use its best efforts (in states where it may
lawfully do so) to obtain from investors unconditional orders for Shares
authorized for issue by the Fund and registered under applicable Federal
securities laws, and, so long as it does so, nothing herein contained shall
prevent the Underwriter from entering into similar arrangements with other
registered investment companies. The Underwriter may, in the exercise of its
discretion, refuse to accept orders for Shares from any person.
11. Upon receipt by the Fund of a purchase order from the Underwriter,
accompanied by proper delivery instructions, the Fund shall, as promptly as
practicable thereafter, cause evidence of ownership of Shares to be delivered as
indicated in such purchase order. Payment for such Shares shall be made by the
Underwriter to the Fund in a manner acceptable to the Fund, provided that the
Underwriter shall pay for such Shares no later than the third business day after
the Underwriter shall have contracted to purchase such shares.
3
<PAGE>
12. In connection with offering for sale and selling Shares, the Fund authorizes
the Underwriter to give only such information and to make only such statements
or representations as are contained in the then current registration statement
of the Fund. The Underwriter shall be responsible for the approval and filing of
sales material as required under SEC and NASD regulations.
13. The Fund agrees to pay the following expenses:
a) the cost of mailing stock certificates representing Shares;
b) fees and expenses (including legal expenses) of registering and
maintaining registrations of the Fund and of each Series and Class
with the Securities and Exchange Commission including the preparation
and printing of registration statements and prospectuses for filing
with said Commission;
c) fees and expenses (including legal expenses) incurred in registering
and qualifying Shares for sale with any state regulatory agency and
fees and expenses of maintaining, renewing, increasing or amending
such registrations and qualifications;
d) the expense of any issue or transfer taxes upon the sale of Shares to
the Underwriter by the Fund;
e) the cost of preparing and distributing reports and notices to
shareholders. ; and
f) fees and expenses of the transfer agent, including the cost of
preparing and mailing notices to shareholders pertaining to
transactions with respect to such shareholders accounts.
14. The Underwriter agrees to pay the following expenses:
a) all expenses of printing prospectuses and statements of additional
information used in connection with the sale of Shares and printing
and preparing all other sales literature;
b) all fees and expenses in connection with the qualification of the
Underwriter as a dealer in the various states and countries;
c) the expense of any stock transfer tax required in connection with the
sale of Shares by the Underwriter as principal to dealers or to
investors; and
4
<PAGE>
d) all other expenses in connection with offering for sale and the sale
of Shares which have not been herein specifically allocated to the
Fund.
15. The Fund hereby appoints the Underwriter its agent to receive requests to
accept the Fund's offer to repurchase Shares upon such terms and conditions as
may be described in the Fund's then current registration statement. The agency
granted in this paragraph 15 is terminable at the discretion of the Fund. As
compensation for acting as such agent and as part of the consideration for
acting as underwriter, Underwriter shall receive from the Fund all contingent
deferred sales charges imposed upon the redemption of Shares. Whether and to
what extent a contingent deferred sales charge will be imposed shall be
determined in accordance with, and in the manner set forth in, the Fund's
prospectus.
16. The Fund agrees to indemnify and hold harmless the Underwriter, its officers
and directors and each person, if any, who controls the Underwriter within the
meaning of section 15 of the Securities Act of 1933, as amended, against any
losses, claims, damages, liabilities and expenses (including the cost of any
legal fees incurred in connection therewith) which the Underwriter, its
officers, directors or any such controlling person may incur under said Act,
under any other statute, at common law or otherwise, arising out of or based
upon
a) any untrue statement or alleged untrue statement of a material fact
contained in the Fund's registration statement or prospectus
(including amendments and supplements thereto), or
b) any omission or alleged omission to state a material fact required to
be stated in the Fund's registration statement or prospectus or
necessary to make the statements in either not misleading, provided,
however, that insofar as losses, claims, damages, liabilities or
expenses arise out of or are based upon any such untrue statement or
omission or alleged untrue statement or omission made in reliance and
in conformity with information furnished to the Fund by the
Underwriter for use in the Fund's registration statement or
prospectus, such indemnification is not applicable. In no case shall
the Fund indemnify the Underwriter or its controlling persons as to
any amounts incurred for any liability arising out of or based upon
any action for which the Underwriter, its officers and directors or
any controlling person would otherwise be subject to liability by
reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of the reckless disregard of
its obligations and duties under this Agreement.
17. The Underwriter agrees to indemnify and hold harmless the Fund, its officers
and trustees and each person, if any, who controls the Fund within the meaning
of Section 15 of the Securities Act of 1933, as amended, against any losses,
claims, damages, liabilities and expenses (including
5
<PAGE>
the cost of any legal fees incurred in connection therewith) which the Fund, its
officers, trustees or any such controlling person may incur under said Act,
under any other statute, at common law or otherwise arising out of the
acquisition of any shares by any person which
a) may be based upon any wrongful act by the Underwriter or any of its
employees or representatives, or
b) may be based upon any untrue statement or alleged untrue statement of
a material fact contained in the Fund's registration statement,
prospectus (including amendments and supplements thereto) or sales
material, or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in
reliance upon information furnished or confirmed in writing to the
Fund by the Underwriter.
18. It is understood that:
a) trustees, officers, employees, agents and shareholders of the Fund are
or may be interested persons, as that term is defined in the Act
("Interested Persons"), of the Underwriter as directors, officers,
stockholders or otherwise;
b) directors, officers, employees, agents and stockholders of the
Underwriter are or may be Interested Persons of the Fund as trustees,
officers, shareholders or otherwise;
c) the Underwriter may be an Interested Person of the Fund as shareholder
or otherwise; and
d) the existence of any such dual interest shall not offset the validity
hereof or of any transactions hereunder.
19. The Fund may terminate this Agreement by 60 days written notice to the
Underwriter at any time, without the payment of any penalty, by vote of the
Trustees or by a vote of a majority of the outstanding voting securities, as
that term is defined in the Act, of the Fund. The Underwriter may terminate this
Agreement by 60 days written notice to the Fund, without the payment of any
penalty. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in the Act.
20. Subject to prior termination as provided in paragraph 19, this Agreement
shall continue in force for one year from the date of execution and from year to
year thereafter so long as the continuance after such one year period shall be
specifically approved at least annually by vote of
6
<PAGE>
the Trustees, or by a vote of a majority of the appropriate class of outstanding
voting securities, as that term is defined in the Act, of the Fund.
Additionally, each annual renewal of this Agreement must be approved by the vote
of a majority of the Trustees who are not parties to the Agreement or Interested
Persons of any such party, cast in person at a meeting of the Trustees called
for the purpose of voting on such approval.
21. It is expressly agreed that the obligations of the Fund hereunder shall not
be binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Fund personally, but bind only the trust property of the Fund,
as provided in the Declaration of Trust. The execution and delivery of this
Agreement by the President of the Fund has been authorized by the Trustees
acting as such, and neither such execution and delivery by such officer nor such
authorization by such Trustees shall be deemed to have been made by any of them
individually or be binding upon or impose any liability on any of them
personally, but shall bind only the trust property of the Fund as provided in
the Declaration of Trust. The Declaration of Trust is on file with the Secretary
of the Commonwealth of Massachusetts.
22. This Agreement shall become effective upon the date first set forth above.
This Agreement shall be governed by the laws of the State of Connecticut and
shall be binding on the successors and assigns of the parties to the extend
permitted by law.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first written above.
PHOENIX MULTI-PORTFOLIO 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
7
[logo]PHOENIX Phoenix Funds
DUFF&PHELPS Sales Agreement
- --------------------------------------------------------------------------------
PHOENIX EQUITY PLANNING CORPORATION
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, Connecticut 06083-2200
Dealer Name:
Address:
Phoenix Equity Planning Corporation ("PEPCO", "we", "us", or "our") invites you
to participate in the sale and distribution of shares of registered investment
companies (which shall collectively be referred to hereinafter as the "Funds")
for which we are national distributor or principal underwriter, and which may be
listed in Annex A hereto which such Annex may be amended by us from time to
time. Upon acceptance of this agreement by PEPCO, you may offer and sell shares
of each of the Funds (hereafter "Shares") subject, however, to the terms and
conditions hereof including our right to suspend or cease the sale of such
shares. For the purposes hereof, the above referenced dealer shall be referred
to as "you".
1. You understand and agree that in all sales of Shares to the public, you
shall act as dealer for your own account. All purchase orders and
applications are subject to acceptance or rejection by us in our sole
discretion and are effective only upon confirmation by us. Each purchase
will be deemed to have been consummated in our principal office subject to
our acceptance and effective only upon confirmation to you by us.
2. You agree that all purchases of Shares by you shall be made only for the
purpose of covering purchase orders already received from your customers
(who may be any person other than a securities dealer or broker) or for
your own bona-fide investment.
3. You shall offer and sell Shares pursuant to this agreement for the purpose
of covering purchase orders of your customers, to the extent applicable,
(a) at the current public offering price ("Offering Price") for Class A
Shares or (b) at the Net Asset Value for Class B shares as set forth in the
current prospectus of each of the funds. The offer and sale of Class B
Shares by you is subject to Annex B hereto, "Compliance Standards for the
Sale of the Phoenix Funds Under Their Alternative Purchase Arrangements".
4. You shall pay us for Shares purchased within three (3) business days of the
date of our confirmation to you of such purchase or within such time as
required by applicable rule or law. The purchase price shall be (a) the
Offering Price, less only the applicable dealer discount (Dealer Discount)
for Class A Shares, if applicable, or (b) the Net Asset Value, less only
the applicable sales commission (Sales Commission) for Class B Shares, if
applicable, as set forth in the current prospectus at the time the purchase
is received by us. We have the right, without notice, to cancel any order
for which payment of good and sufficient funds has not been received by us
as provided in this paragraph, in which case you may be held responsible
for any loss suffered resulting from your failure to make payment as
aforesaid.
5. You understand and agree that any Dealer Discount, Sales Commission or fee
is subject to change from time to time without prior notice. Any orders
placed after the effective date of any such change shall be subject to the
Dealer Discount or Sales Commission in effect at the time such order is
received by us.
6. You understand and agree that Shares purchased by you under this Agreement
will not be delivered until payment of good and sufficient funds has been
received by us. Delivery of Shares will be made by credit to a shareholder
open account unless delivery of certificates is specified in the purchase
order. In order to avoid unnecessary delay, it is understood that, at your
request, any Shares resold by you to one of your customers will be
delivered (whether by credit to a shareholder open account or by delivery
of certificates) in the name of your customer.
<PAGE>
7. You understand that on all purchases of Shares to which the terms of this
Agreement are applicable by a shareholder for whom you are dealer of
record, we will pay you an amount equal to the Dealer Discount, Sales
Commission or fees which would have been paid to you with respect to such
Shares if such Shares had been purchased through you. You understand and
agree that the dealer of record for this purpose shall be the dealer
through whom such shareholder most recently purchased Shares of such fund,
unless the shareholder or you have instructed us otherwise. You understand
that all amounts payable to you under this paragraph and currently payable
under this agreement will be paid as of the end of the month unless
specified otherwise for the total amount of Shares to which this paragraph
is applicable but may be paid more frequently as we may determine in our
discretion. Your request for Dealer Discount or Sales Commission reclaims
will be considered if adequate verification and documentation of the
purchase in question is supplied to us, and the reclaim is requested within
three years of such purchase.
8. We appoint the transfer agent (or identified sub-transfer agent) for each
of the Funds as our agent to execute the purchase transaction of Shares and
to confirm such purchases to your customers on your behalf, and you
guarantee the legal capacity of your customers so purchasing such Shares.
You further understand that if a customer's account is established without
the customer signing the application form, you hereby represent that the
instructions relating to the registration and shareholder options selected
(whether on the application form, in some other document or orally) are in
accordance with the customer's instructions and you agree to indemnify the
Funds, the transfer agent (or identified sub-transfer agent) and us for any
loss or liability resulting from acting upon such instructions.
9. Upon the purchase of Class A Shares pursuant to a Letter of Intent, you
will promptly return to us any excess of the Dealer Discount previously
allowed or paid to you over that allowable in respect to such larger
purchases.
10. Unless at the time of transmitting a purchase order you advise us to the
contrary, we may consider that the investor owns no other Shares and may
further assume that the investor is not entitled to any lower sales charge
than that accorded to a single transaction in the amount of the purchase
order, as set forth in the current prospectus.
11. You understand and agree that if any Shares purchased by you under the
terms of this Agreement are, within seven (7) business days after the date
of our confirmation to you of the original purchase order for such Shares,
repurchased by us as agent for such fund or are tendered to such fund for
redemption, you shall forfeit the right to, and shall promptly pay over to
us the amount of any Dealer Discount or Sales Commission allowed to you
with respect to such Shares. We will notify you of such repurchase or
redemption within ten (10) days of the date upon which certificates are
delivered to us or to such fund or the date upon which the holder of Shares
held in a shareholder open account places or causes to be placed with us or
with such fund an order to have such shares repurchased or redeemed.
12. You agree that, in the case of any repurchase of any Shares made more than
seven (7) business days after confirmation by us of any purchase of such
Shares, except in the case of Shares purchased from you by us for your own
bona fide investment, you will act only as agent for the holders of such
Shares and will place the orders for repurchase only with us. It is
understood that you may charge the holder of such Shares a fair commission
for handling the transaction.
13. Our obligations to you under this Agreement are subject to all the
provisions of the respective distribution agreements entered into between
us and each of the Funds. You understand and agree that in performing your
services under this agreement you are acting in the capacity of an
independent contractor, and we are in no way responsible for the manner of
your performance or for any of your acts or omissions in connection
therewith. Nothing in the Agreement shall be construed to constitute you or
any of your agents, employees, or representatives as our agent, partner or
employee, or the agent, partner of employee of any of the Funds.
In connection with the sale and distribution of shares of Phoenix Funds,
you agree to indemnify and hold us and our affiliates, employees, and/or
officers harmless from any damage or expense as a result of (a) the
negligence, misconduct or wrongful act by you or any employee,
representative, or agent of yours and/or (b) any actual or alleged
violation of any securities laws, regulations or orders. Any indebtedness
or obligation of yours to us whether arising hereunder or otherwise, and
any liabilities incurred or moneys paid by us to any person as a result of
any misrepresentation, wrongful or unauthorized act or omission, negligence
of, or failure of you or your employees, representatives or agents to
comply with the Sales Agreement, shall be set off against any compensation
payable under this agreement. Any differential between such expenses and
compensation payable hereunder shall be payable to us upon demand. The
terms of this provision shall not be impaired by the termination of this
agreement.
In connection with the sale and distribution of shares of Phoenix Funds, we
agree to indemnify and hold you, harmless from any damage or expense on
account of the gross and willful negligence, misconduct or wrongful act of
us or any employee, representative, or agent of ours which arises out of or
is based upon any untrue statement or alleged untrue statement of material
fact, or the omission or alleged omission of a material fact in: (i) any
registration statement, including any prospectus or any post-effective
amendment thereto; or (ii) any material prepared and/or supplied by us for
use in conjunction with the offer or sale of Phoenix Funds; or (iii) any
state registration or other document filed in any state or jurisdiction in
order to qualify any Fund under the securities laws of such state or
jurisdiction. The terms of this provision shall not be impaired by the
termination of this agreement.
<PAGE>
14. We will supply you with reasonable quantities of the current prospectus,
periodic reports to shareholders, and sales materials for each of the
Funds. You agree not to use any other advertising or sales material
relating to the sale of shares of any of the Funds unless such other
advertising or sales material is pre-approved in writing by us.
15. You agree to offer and sell Shares only in accordance with the terms and
conditions of the then current prospectus of each of the Funds and subject
to the provisions of this Agreement, and you will make no representations
not contained in any such prospectus or any authorized supplemental sales
material supplied by us. You agree to use your best efforts in the
development and promotion of sales of the Shares covered by this Agreement,
and agree to be responsible for the proper instruction, training and
supervision of all sales representatives employed by you in order that such
Shares will be offered in accordance with the terms and conditions of this
Agreement and all applicable laws, rules and regulations. All expenses
incurred by you in connection with your activities under this Agreement
shall be borne by you. In consideration for the extension of the right to
exercise telephone exchange and redemption privileges to you and your
registered representatives, you agree to bear the risk of any loss
resulting from any unauthorized telephone exchange or redemption
instructions from you or your registered representatives. In the event we
determine to refund any amounts paid by any investor by reason of such
violation on your part, you shall forfeit the right to, and pay over to us,
the amount of any Dealer Discount or Sales Commission allowed to you with
respect to the transaction for which the refund is made.
16. You represent that you are properly registered as a broker or dealer under
the Securities and Exchange Act of 1934 and are member of the National
Association of Securities Dealers, Inc. (NASD) and agree to maintain
membership in the NASD or in the alternative, that you are a foreign dealer
not eligible for membership in the NASD. You agree to notify us promptly of
any change, termination or suspension of the foregoing status. You agree to
abide by all the rules and regulations of the NASD including Section 26 of
Article III of the Rules of Fair Practice, which is incorporated herein by
reference as if set forth in full. You further agree to comply with all
applicable state and Federal laws and the rules and regulations of
applicable regulatory agencies. You further agree that you will not sell,
or offer for sale, Shares in any jurisdiction in which such Shares have not
been duly registered or qualified for sale. You agree to promptly notify us
with respect to (a) the initiation and disposition of any formal
disciplinary action by the NASD or any other agency or instrumentality
having jurisdiction with respect to the subject matter hereof against you
or any of your employees or agents; (b) the issuance of any form of
deficiency notice by the NASD or any such agency regarding your training,
supervision or sales practices; and (c) the effectuation of any consensual
order with respect thereto.
17. Either party may terminate this agreement for any reason by written or
electronic notice to the other party which termination shall become
effective fifteen (15) days after the date of mailing or electronically
transmitting such notice to the other party. We may also terminate this
agreement for cause or as a result of a violation by you, as determined by
us in our discretion, of any of the provisions of this Agreement, said
termination to be effective on the date of mailing written or transmitting
electronic notice to you of the same. Without limiting the generality of
the foregoing, your own expulsion from the NASD will automatically
terminate this Agreement without notice. Your suspension from the NASD or
violation of applicable state or Federal laws or rules and regulations of
applicable regulatory agencies will terminate this Agreement effective upon
the date of our mailing written notice or transmitting electronic notice to
you of such termination. Our failure to terminate this Agreement for any
cause shall not constitute a waiver of our right to so terminate at a later
date.
18. All communications and notices to you or us shall be sent to the addresses
set forth at the beginning of this Agreement or to such other address as
may be specified in writing from time to time.
19. This agreement shall become effective upon the date of its acceptance by us
as set forth herein. This agreement may be amended by PEPCO from time to
time. This Agreement and all rights and obligations of the parties
hereunder shall be governed by and construed under the laws of the State of
Connecticut. This agreement is not assignable or transferable, except that
we may assign or transfer this agreement to any successor distributor of
the Shares described herein.
ACCEPTED ON BEHALF OF ACCEPTED ON BEHALF OF
PHOENIX EQUITY PLANNING DEALER FIRM:
CORPORATION:
Date ______________________________ Date __________________________________
By /s/ John F. Sharry By
________________________________ ____________________________________
Print Name John F. Sharry Print Name
_________________________ ____________________________
Managing Director, Retail Sales
Print Title _______________________ Print Title ___________________________
NASD CRD Number _______________________
<PAGE>
[logo]PHOENIX Amended Annex A, Dealer Agreement with
DUFF&PHELPS Phoenix Equity Planning Corporation, Nov. 5, 1997
- --------------------------------------------------------------------------------
I. Phoenix Family of Funds
- --------------------------------------------------------------------------------
Phoenix Series Fund
Balanced Fund Series
Convertible Fund Series
Growth Fund Series
Aggressive Growth Fund Series
High Yield Fund Series
Money Market Fund Series
U.S. Government Securities Fund Series
Phoenix-Aberdeen Series Fund
Aberdeen New Asia Fund
Aberdeen Global Small Cap Fund
Phoenix Multi-Portfolio Fund
Tax-Exempt Bond Portfolio
Mid Cap Portfolio
International Portfolio
Real Estate Securities Portfolio
Emerging Markets Bond Portfolio
Phoenix Strategic Equity Series Fund
Equity Opportunities Fund
Strategic Theme Fund
Small Cap Fund
Phoenix Equity Series Fund
Core Equity Fund
Growth and Income Fund
Phoenix California Tax Exempt Bonds, Inc.
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Worldwide Opportunities Fund
Phoenix Strategic Allocation Fund, Inc.
Phoenix Income and Growth Fund
Phoenix Value Equity Fund
Phoenix Small Cap Value Fund
(effective 11-20-97)
- --------------------------------------------------------------------------------
Equity Planning may sponsor, to all qualifying dealers, on non-discriminatory
basis, sales contests, training and educational meetings and provide to all
qualifying broker/dealers, from its own profits and resources, additional
compensation in the form of trips, merchandise or expense reimbursement. Brokers
or dealers other than Equity Planning may also make customary additional charges
for their services in effecting purchases, if they notify the Fund of their
intention to do so. Applicable waivers of Class A sales loads and Class B
contingent deferred sales charges are described in the prospectus.
- --------------------------------------------------------------------------------
Class A Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares (Except Multi-Sector Short Term Multi-Sector Short Term
Bond Fund & Money Market) Bond Fund Class A Shares
Dealer Discount Dealer Discount
Sales Charge or Agency Fee Sales Charge or Agency Fee
Amount of as Percentage of as Percentage of as Percentage of as Percentage of
Transaction Offering Price Offering Price Offering Price Offering Price
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.25% 2.25% 2.00%
- -------------------------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 4.50 4.00 1.25 1.00
- -------------------------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 3.50 3.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 3.00 2.75 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 2.00 1.75 0.75 0.75
- -------------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more None None None None
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Shares of the Money Market Series are offered to the public at their constant
net asset value of $1.00 per share with no sales charge on Class A shares.
Finders Fee: In connection with Class A Share purchases of $1,000,000 or more
(or subsequent purchases in any amount), Equity Planning may pay broker/dealers,
from its own profits and resources, a percentage of the net asset value of
shares sold (excluding Money Market shares) as set forth in the table below. If
part or all of such investment, is subsequently redeemed within one year of the
investment date, the broker/dealer will refund to Equity Planning any such
amounts paid with respect to the investment.
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchase Amount $1,000,000 to $3,000,000 $3,000,001 to $6,000,000 $6,000,001 or more
- -------------------------------------------------------------------------------------------------------------------------------
Payment to Broker/Dealers 1% 0.50 of 1% 0.25 of 1%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*In the case of accounts held in the name of qualified employees, 1% is paid on
the first $1 million.
Trail: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.25% annually, based on the average
daily net asset value of Class A shares sold by such broker/dealers (except
Money Market Series) and remaining outstanding on the Funds' books during the
period in which the fee is calculated. Dealers must have an aggregate value of
$50,000 or more in one Fund to qualify for payment in that Fund.
<PAGE>
- --------------------------------------------------------------------------------
Class B Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Shares
(Except Multi-Sector Short Term Bond Fund) Multi-Sector Short Term Bond Fund Class B
<S> <C>
Sales Commission 4.00% Sales Commission 2.00%
</TABLE>
Broker/Dealer firms maintaining house/omnibus accounts, upon redemption of a
customer account within the time frames specified below, shall forward to Equity
Planning the indicated contingent deferred sales charge.
<TABLE>
<CAPTION>
Years Since Purchase Contingent Deferred Contingent Deferred
Sales Charges Sales Charges
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
First 5.00% 2.00%
- ---------------------------------------------------------------------------------------------------------------------------
Second 4.00 1.50
- ---------------------------------------------------------------------------------------------------------------------------
Third 3.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------
Fourth and Fifth 2.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------
Sixth 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Trail: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.25% annually, based on the average
daily net asset value of shares sold by such broker/dealers (except Money Market
Series) and remaining outstanding on the Funds' books during the period in which
the fee is calculated, commencing one year after the investment date. Dealers
must have an aggregate value of $50,000 or more in one Fund to qualify for
payment in that Fund.
- --------------------------------------------------------------------------------
Class C Shares - Multi-Sector Short Term Bond Fund Only
- --------------------------------------------------------------------------------
Trail: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.50% annually, based on the average
daily net asset value of shares sold by such broker/dealers and remaining
outstanding on the Funds' books during the period in which the fee is
calculated. Dealers must have an aggregate value of $50,000 or more in the Fund
to qualify for payment.
Finders Fee:
In connection with Class C Share purchases of $250,000 or more (or subsequent
purchases in any amount) excluding purchases by qualified employee benefit plans
with at least 100 eligible employees, Equity Planning may pay broker-dealers,
from its own resources, an amount equal to 0.50% of purchases above $250,000
but under $3 million plus 0.25% on purchases in excess of $3 million.
If all or part of the investment is subsequently redeemed, except for exchanges
or purchases of other Phoenix funds, within one year of the investment date, the
broker-dealer will refund to the Distributor such amount paid with respect to
the investment.
- --------------------------------------------------------------------------------
Class C Shares - Available only for the Funds listed below:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Core Equity Fund Multi-Sector Fixed Income Fund Value Equity Fund
Growth and Income Fund Strategic Theme Fund Small Cap Value Fund
(effective 11-20-97)
</TABLE>
Sales Commission: 1%. Contingent deferred sales charge: 1% for one year from the
date of each purchase. Broker/Dealer firms maintaining house/omnibus accounts,
upon redemption of a customer account within one year of purchase date, shall
forward to Equity Planning the indicated contingent deferred sales charge.
Trail and Service Fee: Equity Planning intends to pay a fee after the first year
to qualifying broker/dealer firms at the equivalent of 0.75% annually, and a
Service Fee at the equivalent of 0.25% annually, based on the average daily net
asset value of shares sold by such broker/dealers and remaining outstanding on
the Funds' books during the period in which the fee is calculated. Dealers must
have an aggregate value of $50,000 or more in the Fund to qualify for payment.
<PAGE>
- --------------------------------------------------------------------------------
Class M Shares - Available only for the Funds listed below:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Core Equity Fund Multi-Sector Fixed Income Fund Value Equity Fund
Growth and Income Fund Strategic Theme Fund Small Cap Value Fund
(effective 11-20-97)
</TABLE>
<TABLE>
<CAPTION>
Dealer Discount
Sales Charge or Agency Fee
Amount of as Percentage of as Percentage of
Offering Price Offering Price Offering Price
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 3.50% 3.00%
- ----------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 2.50 2.00
- ----------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 1.50 1.00
- ----------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 1.00 1.00
- ----------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 None None
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Trail: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.50% annually, based on the average
daily net asset value of shares sold by such broker/dealers and remaining
outstanding on the Funds' books during the period in which the fee is
calculated. Dealers must have an aggregate value of $50,000 or more in the Fund
to qualify for payment.
- --------------------------------------------------------------------------------
II. A. Phoenix Duff & Phelps Institutional Mutual Funds
- --------------------------------------------------------------------------------
Balanced Portfolio Growth Stock Portfolio
Enhanced Reserves Portfolio Money Market Portfolio
Managed Bond Portfolio U.S. Government Securities Portfolio
Finder's Fee: Equity Planning may pay broker/dealers, from its own profits and
resources, a percentage of the net asset value of Class X and Class Y shares
sold as set forth in the table below. If part of any investment is subsequently
redeemed within one year of the investment date, the broker/dealer will refund
to Equity Planning any such amounts paid with respect to the investment.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchase Amount 0 to $5,000,000 $5,000,001 to $10,000,000 $10,000,001 or more
- -----------------------------------------------------------------------------------------------------------------------------------
Payment to Broker/Dealers 0.50% 0.25% 0.10%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Trail: (Class Y shares only): Equity Planning intends to pay broker/dealers a
quarterly service fee at the equivalent of 0.25% annually, based on the average
daily net asset value of Class Y shares sold (except Money Market Portfolio) by
such broker/dealers and remaining outstanding on the Funds' books during the
period in which the fee is calculated, subject to future amendment or
termination.
- --------------------------------------------------------------------------------
II. B. Phoenix Duff & Phelps Institutional Mutual Funds
- --------------------------------------------------------------------------------
Phoenix Real Estate Equity Securities Portfolio
Trail: (Class Y shares only): Equity Planning intends to pay broker/dealers a
quarterly service fee at the equivalent of 0.25% annually, based on the average
daily net asset value of Class Y shares sold by such broker/dealers and
remaining outstanding on the Funds' books during the period in which the fee is
calculated, subject to future amendment or termination.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sales Promotion:
- --------------------------------------------------------------------------------
In connection with net purchases of any combination of classes of eligible Funds
between October 1, 1997 and December 31, 1997, Equity Planning may pay
participating broker/dealers, from its profits and resources, an additional
dealer discount or sales commission equal to 0.50% of the purchase price. This
promotion will not apply to shares acquired through non-commissionable
exchanges.
Eligible Funds:
Phoenix Value Equity Fund Phoenix Small Cap Value Fund
(effective 11-20-97)
Phoenix-Engemann Funds:
Growth Fund Nifty Fifty Fund
Balanced Return Fund Global Growth Fund
Small & Mid-Cap Growth Fund Value 25 Fund
Phoenix Equity Series Fund:
Core Equity Fund Growth and Income Fund
<PAGE>
- --------------------------------------------------------------------------------
III. Phoenix - Engemann Funds
- --------------------------------------------------------------------------------
Nifty Fifty Fund Growth Fund
Small & Mid-Cap Growth Fund Global Growth Fund
Balanced Return Fund Value 25 Fund
Equity Planning at its expense, may from time to time also provide additional
compensation to dealers who sell shares of any of the Funds. Compensation may
include financial assistance to dealers in connection with conferences, sales
training or promotional programs for their employees, seminars for the public,
advertising campaigns regarding one or more of the Funds and/ or other
dealer-sponsored special events.
Service Fees: Dealers may be eligible to receive a continuing service fee equal
to 0.25% per annum of the average net asset value of the Funds' shares held by
such persons in order to compensate them for providing certain services to their
clients, including processing redemption transactions and providing account
maintenance and certain information and assistance with respect to the Funds,
and responding to shareholder inquiries.
Class B and C CDSC: Broker/Dealer firms maintaining house/omnibus accounts, upon
redemption of a customer account within the time frames specified below, shall
forward to Equity Planning the indicated contingent deferred sales charge.
- --------------------------------------------------------------------------------
III. A. Phoenix - Engemann Funds: Class A Shares
- --------------------------------------------------------------------------------
Class A Shares for Initial Sales Charge Alternative
The public offering price of Class A shares for purchasers choosing the initial
sales charge alternative is the net asset value per share plus a sales charge
depending upon the amount purchases as described in the following table.
<TABLE>
<CAPTION>
Dealer Commission
Sales Charge as of Percentage of as percentage of
Amount of Purchase Public the Public
at the Public Offering Price Offering Price Offering Price
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 5.50% 5.00%
- ---------------------------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 4.75 4.25
- ---------------------------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 3.75 3.25
- ---------------------------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 2.50 2.00
- ---------------------------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 2.00 1.75
- ---------------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more None *
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Finders Fee: On purchases made at net asset value, as described in the
prospectus, dealers may receive a one-time fee, as follows: 1% on purchases up
through $2 million, plus 0.80% on the next $1 Million, plus 0.20% on the next $2
million, and 0.10% on the excess over $5 million.
- --------------------------------------------------------------------------------
III. B. Phoenix - Engemann Funds: Class B Shares
- --------------------------------------------------------------------------------
Class B Shares for Deferred Sales Charge Alternative
Equity Planning may pay out of its own resources to the selling dealer a
commission equal to 4.25% of the amount of the purchase.
Years Since Purchase CDSC as a Percentage of
Dollar Amount
Subject to Charge
- --------------------------------------------------------------------------------
First 5.00%
- --------------------------------------------------------------------------------
Second 4.00
- --------------------------------------------------------------------------------
Third 3.00
- --------------------------------------------------------------------------------
Fourth 3.00
- --------------------------------------------------------------------------------
Fifth and Thereafter None
- --------------------------------------------------------------------------------
III. C. Phoenix - Engemann Funds: Class C Shares
- --------------------------------------------------------------------------------
Equity Planning may pay out of its own resources to the selling dealer a
commission equal to 1% of the amount of the purchase.
Trail: To the extent dealer provides distribution, marketing or administrative
services in connection with the sale of the Shares of a Fund, dealer may receive
a fee based on the average net asset value of such Shares which are attributable
to customers of dealer, at the rate of 0.75% per annum.
Global Growth Fund, Small & Mid-Cap Growth Fund, Value 25 Fund only: 1% CDSC for
1 year.
PDP80A (11-97) Distributed by Phoenix Equity Planning Corporation,
Enfield, CT, 06083
<PAGE>
[logo]PHOENIX Annex B To Dealer Agreement With
DUFF&PHELPS Phoenix Equity Planning Corporation
- --------------------------------------------------------------------------------
Compliance Standards for
the Sale of the Phoenix Funds
Under Their Alternative Purchase Arrangements
As national distributor or principal underwriter of the Phoenix Funds, which
offer their shares on both a front-end and deferred sales charge basis, Phoenix
Equity Planning Corporation ("PEPCO") has established the following compliance
standards which set forth the basis upon which shares of the Phoenix Funds may
be sold. These standards are designed for those broker/dealers ("dealers") that
distribute shares of the Phoenix Funds and for each dealer's financial
advisors/registered representatives.
As shares of the Phoenix Funds are offered with two different sales arrangements
for sales and distribution fees, it is important for an investor not only to
choose a mutual fund that best suits his investment objectives, but also to
choose the sales financing method which best suits his particular situation. To
assist investors in these decisions and to ensure proper supervision of mutual
fund purchase recommendations, we are instituting the following compliance
standards to which dealers must adhere when selling shares of the Phoenix Funds:
1. Any purchase of a Phoenix Fund for less than $250,000 may be either of
shares subject to a front-end load (Class A shares) or subject to deferred
sales charge (Class B shares).
2. Any purchase of a Phoenix Fund by an unallocated qualified employer
sponsored plan for less than $1,000,000 may be either of shares subject to
a front-end load (Class A shares) or subject to deferred sales charge
(Class B shares). Class B shares sold to allocated qualified employer
sponsored plans will be limited to a maximum total value of $250,000 per
participant.
3. Any purchase of a Phoenix Fund for $250,000 or more (except as noted above)
or which qualifies under the terms of the prospectus for net asset value
purchase of Class A shares should be for Class A shares.
General Guidelines
These are instances where one financing method may be more advantageous to an
investor than the other. Class A shares are subject to a lower distribution fee
and, accordingly, pay correspondingly higher dividends per share. However,
because initial sales charges are deducted at the time of purchase, such
investors would not have all of their funds invested initially and, therefore,
would initially own fewer shares. Investors not qualifying for reduced initial
sales charges who expect to maintain their investment for an extended period of
time might consider purchasing Class A Shares because the accumulated continuing
distribution charges on Class B Shares may exceed the initial sales charge on
Class A Shares during the life of the investment.
Again, however, such investors must weigh this consideration against the fact
that, because of such initial sales charge, not all of their funds will be
invested initially. However, other investors might determine that it would be
more advantageous to purchase Class B Shares to have all of their funds invested
initially, although remaining subject to higher continuing distribution charges
and, for a five-year period, being subject to a contingent deferred sales charge
(three years for Asset Reserve).
A National Association of Securities Dealers rule specifically prohibits
"breakpoint sales" of front-end load shares. A "breakpoint sale" is a sale to
the client of an amount of front-end load (Class A) shares just below the amount
which would be subject to the next breakpoint on the fund's sales charge
schedule. Because the deferred sales charge on Class B shares is reduced by 1%
for each year the shares are held, a redemption of Class B shares just before an
"anniversary date" is in some ways analogous to a breakpoint sale. A client
might wish to redeem just before an anniversary date for tax or other reasons,
and a client who chose to wait would continue to be at market risk.
Nevertheless, investment executives should inform clients intending to redeem
Class B shares near an anniversary date that, if the redemption were delayed,
the deferred sales charge would be reduced.
Responsibilities of Branch Office Manager (or other appropriate reviewing
officer).
A dealer's branch manger or other appropriate reviewing officer ("the Reviewing
Officer") must ensure that the financial advisor/registered representative has
advised the client of the available financing methods offered by the Phoenix
Funds, and the impact of choosing one method over another. In certain instances,
it may be appropriate for the Reviewing Officer to discuss the purchase directly
with the client. The reviewing officer should review purchases for Class A or
Class B shares given the relevant facts and circumstances, including but not
limited to: (a) the specific purchase order dollar amount; (b) the length of
time the investor expects to hold his shares; and (c) any other relevant
circumstances, such as the availability of purchases under letters of intent or
pursuant to rights of accumulation and distribution requirements. The foregoing
guidelines, as well as the examples cited above, should assist the Reviewing
Officer in reviewing and supervising purchase recommendations and orders.
Effectiveness
These compliance guidelines are effective immediately with respect to any order
for shares of those Phoenix Funds which offer their shares pursuant to the
alternative purchase arrangement.
Questions relating to these compliance guidelines should be directed by the
dealer to its national mutual fund sales and market group or its legal
department or compliance director. PEPCO will advise dealers in writing of any
future changes in these guidelines.
PEP80B 11/95
PHOENIX EQUITY PLANNING CORPORATION
SUPPLEMENT TO PHOENIX FAMILY OF FUNDS
SALES AGREEMENT
It is hereby agreed that this AGREEMENT, dated this __________ day
of __________, 19__, between ________________________________________ ("Dealer")
and Phoenix Equity Planning Corporation ("Distributor"), supplements and amends
the Sales Agreement between Dealer and Distributor dated by Distributor
_______________________ 19__ ("Sales Agreement').
WHEREAS, Dealer wishes to use shares of the Funds in a fee-based
program made available by Dealer to clients of Dealer (the "Fee-Based Program");
WHEREAS, Dealer wishes to afford its fee-based clients the
opportunity to qualify for the ability to purchase shares of the Funds at net
asset value; and
WHEREAS, Distributor is willing to allow Dealer to purchase shares
of the Funds for clients in the Fee-Based Program subject to the provisions of
this agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by both parties, Dealer
and Distributor hereby agree as follows:
1. Dealer may sell shares of any Funds made available by
Distributor, from time to time, at net asset value to bona fide clients of
Dealer for use solely in their Fee-Based Program. Dealer will earn no concession
or commission on any such sale.
2. Distributor, after consulting Dealer, will determine, from time
to time, which Funds it will make available to Dealer for use in the Fee-Based
Program. Dealer will comply with all provisions of the Prospectus and Statement
of Additional Information of each Fund.
1
<PAGE>
3. All shares made available to Dealer under the Fee-Based Program
must be purchased by Dealer for the benefit of Dealer's clients participating in
its Fee-Based Program under which Dealer provides portfolio management and other
services to such clients for a fee. Such fee to be paid in connection with
investment in the Funds shall at all times be at a level acceptable to
Distributor. Dealer acknowledges that it has sent the Distributor the current
fee schedule for the Fee-Based Program and Dealer agrees to notify Distributor
at least thirty (30) days in advance in writing of any amendment to such fee
schedule. The current fee schedule is attached. Dealer shall not prepare, use or
distribute brochures, written materials or advertising in any form that refers
to sales of the Funds as no-load or at net asset value except, in the case of
brochures, it may refer to the Funds as available at net asset value under the
Fee-Based Program if the fees and expenses of the Fee-Based Program are given at
least equal prominence. Notwithstanding the foregoing, in connection with
explaining the fees and expenses of the Fee-Based Program, representatives of
Dealer may describe to customers the option of purchasing Fund shares through
the Fee-Based Program at net asset value.
4. Distributor warrants that all necessary disclosures regarding
the sale of shares at net asset value will be set forth in the Prospectus and
Statement of Additional Information of the Funds available under this Agreement.
5. Dealer may maintain either an omnibus account(s) solely for the
clients of its Fee-Based program or may maintain separate accounts for each
client of its Fee-Based Program with the Fund's transfer agent. If an omnibus
account(s) is maintained, Dealer shall be solely responsible for meeting all
legal obligations with respect to each beneficial owner including, but not
limited to, the delivery of proxies, annual and semi-annual reports and other
materials.
6. This Agreement shall be governed and interpreted in accordance
with the laws of the State of Connecticut. This Agreement shall not relieve
Dealer or Distributor from any obligations either may have under any other
agreements between them (except with respect to the payment of service fees),
including but not limited to the Sales Agreement, which is incorporated by
reference herein and shall control in case of any conflict with this Agreement.
7. Distributor is not endorsing, recommending or otherwise involved
in providing any investment product or advisory service of Dealer (including but
not limited to the Fee-Based Program). Distributor is merely affording Dealer
the opportunity to use shares of the Funds distributed by Distributor as an
investment medium for the Fee-Based Program.
8. This Agreement is not exclusive and may be terminated by either
party upon sixty (60) days prior written notice to the other party. It shall
terminate automatically upon termination of the Sales Agreement between the
parties. This Agreement may be amended only by a written instrument, signed by
both parties.
IN WITNESS WHEREOF, this Agreement has been executed as of the date set
forth above by a duly authorized officer of each party.
2
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
By: _______________________________________
John F. Sharry
Managing Director, Retail Sales
Dealer: _____________________________
By: _________________________________
Name: _______________________________
Title: ______________________________
Address: ____________________________
____________________________
____________________________
Phone: ______________________________
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P O Box 2200
Enfield, CT 06083-2200
(230) 253-1000
3
FINANCIAL INSTITUTION SALES CONTRACT
FOR THE PHOENIX FAMILY OF FUNDS
Between: and
PHOENIX EQUITY PLANNING CORPORATION
Distributor of: The Phoenix Family of Funds
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
As distributor of The Phoenix Family of Funds (the "Funds"), we agree that you
may make available to your customers, under an agency relationship with your
customers, shares of beneficial interest issued by the Funds (the "Shares"),
subject to any limitation imposed by the Funds and to confirmation by us of each
transaction. By your acceptance hereof, you agree to all of the following terms
and conditions:
I. Offering Prices and Fees
The public offering price at which you may make Shares available to your
customers is the net asset value thereof, as computed from time to time, plus
any applicable sales charge described in the then current prospectus of the
applicable Fund. In the case of purchases by you, as agent for your customers,
of shares sold with a sales charge, you will receive an agency fee consisting of
a portion of the public offering price, determined on the same basis as the
"dealer discount" described in the then current Prospectus of the Funds, and
such other compensation to dealers as may be described therein, which shall be
payable to you at the same time and on the same basis as the same is paid to
such dealers, consistent with applicable law, rules and regulations. In
determining the amount of any agency fee payable to you hereunder, we reserve
the right to revise the agency fee referred to herein upon written notice to
you. We will furnish you upon request with the public offering prices for the
Shares and you agree to quote such prices in connection with any Shares made
available by you as agent for your customers. Each purchase of Shares by your
customers is made subject to confirmation by us at the public offering price
next computed after receipt of the order. There is no sales charge or agency fee
to you on the reinvestment of dividends and distributions.
II. Manner of Making Shares Available for Purchase
We will, upon request, deliver to you a copy of each Fund's then current
Prospectus and will provide you with such number of copies of each Fund's
current Prospectus, Statement of Additional Information and shareholder reports
and of supplementary sales materials prepared by us, as you may reasonably
request. It shall be your obligation to ensure that all such information and
materials are distributed to your customers who own Shares in accordance with
securities and/or banking law and regulations and any other applicable
regulations. Neither you nor any other person is authorized to give any
information or make any representations other than those contained in such
prospectuses, Statements of Additional Information and shareholder reports or in
such supplemental sales materials. You shall not furnish or cause to be
furnished to any person, display or publish any information or materials
relating to any Fund (including, without limitation, promotional materials and
sales literature, advertisements, press releases, announcements, statements,
posters, signs or similar material), except such information and materials as
may be furnished to you by us or the Fund, and such other information and
materials as may be approved in writing by us. We reserve the right to reject
any purchases for any accounts which we reasonably determine are not made in
accordance with the terms of the applicable Fund Prospectus and the provisions
of this Agreement.
You hereby agree:
(i) to not purchase any Shares as agent for any customer, unless you
deliver or cause to be delivered to such customer, at or prior to the
time of such purchase, a copy of the then-current Prospectus of the
applicable Fund unless such customer has acknowledged receipt of the
Prospectus of such Fund. You hereby represent that you understand your
obligation to deliver a prospectus to customers who purchase Shares
pursuant to federal securities laws and you have taken all necessary
steps to comply with such prospectus delivery requirements;
PEP 613 12-92
<PAGE>
(ii) to transmit to us promptly upon receipt any and all orders received by
you, it being understood that no conditional orders will be accepted;
(iii) to obtain from each customer for whom you act as agent for the
purchase of Shares any taxpayer identification number certification
and backup withholding information required under the Internal Revenue
Code, as amended from time to time (the "Code"), and the regulations
set forth thereunder, or other sections of the Code which may become
applicable and to provide us or our designee with timely written
notice of any failure to obtain such taxpayer identification number
certification or information in order to enable the implementation of
any required backup withholding in accordance with the Code and the
regulations thereunder;
(iv) to pay to us the offering price, less any agency fee to which you are
entitled, within five (5) business days of our confirmation of your
customer's order, or such shorter time as may be required by law. You
may, subject to our approval, remit the total public offering price to
us, and we will return to you your agency fee. If such payment is not
received within said time period, we reserve the right, without prior
notice, to cancel the sale, or at our option to return the Shares to
the issuer for redemption or repurchase. In the latter case, we shall
have the right to hold you responsible for any loss resulting to us.
Should payment be made by local bank check, liquidation of Shares may
be delayed pending clearance of your check; and
(v) to offer and sell Shares, and execute telephone transactions only in
accordance with the terms and conditions of the then current
prospectuses of the relevant Funds and to make no representations not
contained in any such prospectus or in any authorized supplemental
material supplied to you. In addition, in consideration for the
extension of the right to exercise telephone transaction privileges,
you acknowledge that neither the Funds nor the Transfer Agent nor
Equity Planning will be liable for any loss, injury or damage incurred
as a result of acting upon, nor will they be responsible for the
authenticity of, any telephone instructions, and you agree to
indemnify and hold harmless the Funds, Equity Planning and the
Transfer Agent against any loss, injury or damage resulting from any
unauthorized telephone transaction instruction from you or your
representatives. (Telephone instructions will be recorded on tape).
Unless otherwise mutually agreed in writing or except as provided below, each
transaction placed by you shall be promptly confirmed by us in writing to you,
and shall be confirmed to the customer promptly upon receipt by us of
instructions from you as to such customer. In the case of a purchase order by
customer's application, each transaction shall be promptly confirmed in writing
directly to the customer and a copy of each confirmation shall be sent
simultaneously to you. You understand that in the case of an Omnibus Account we
shall send a confirmation to you as the shareholder of record only. We reserve
the right, at our discretion and without notice, to suspend the sale of Shares
or withdraw entirely the sale of Shares of any or all of the Funds. All orders
are subject to acceptance or rejection by us in our sole discretion, and by the
Funds in their sole discretion. The procedure stated herein relating to the
pricing and handling of orders shall be subject to instructions which we may
forward to you from time to time.
III. Compliance With Law
You hereby represent that you are either (1) a "bank" as defined in Section
3(a)(6) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and at the time of each transaction in shares of the Funds, are not required to
register as a broker-dealer under the Exchange Act or regulations thereunder; or
(2) registered as a broker-dealer under the Exchange Act, a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD") and
affiliated with a bank.
(i) If you are a bank, not required to register as a broker-dealer under
the Exchange Act, you further represent and warrant to us that with
respect to any sales in the United States, you will use your best
efforts to ensure that any purchase of Shares by your customers
constitutes a suitable investment for such customers. You shall not
effect any transaction in, or induce any purchase or sale of, any
Shares by means of any manipulative deceptive or other fraudulent
device or contrivance and shall otherwise deal equitable and fairly
with your customers with respect to transactions in Shares of a Fund.
-2-
<PAGE>
(ii) If you are a NASD member broker-dealer affiliated with a bank and
registered under the Exchange Act, you further represent and warrant
to us that with respect to any sales in the United States, you agree
to abide by all of the applicable laws, rules and regulations
including applicable provisions of the Securities Act of 1933 as
amended, and the applicable rules and regulations of the NASD,
including, without limitation, its Rules of Fair Practice, and the
applicable rules and regulations of any jurisdiction in which you make
Shares available for sale to your customers. You agree not to make
available for sale to your customers the Shares in any jurisdiction in
which the Shares are not qualified for sale or in which you are not
qualified as a broker-dealer. We shall have no obligation or
responsibility as to your right to make Shares of any Fund available
to your customers in any jurisdiction. You agree to notify us
immediately in the event of (a) your expulsion or suspension from the
NASD or your becoming subject to any enforcement action by the
Securities and Exchange Commission, NASD, or any other self-regulatory
organization, or (b) your violation of any applicable federal or state
law, rule or regulation including, but not limited to, those of the
SEC, NASD, or other self-regulatory organization, arising out of or in
connection with this Agreement, or which may otherwise affect in any
material way your ability to act in accordance with the terms of this
Agreement.
You shall not make Shares of any Fund available to your customers, including
your fiduciary customers, except in compliance with all federal and state laws
and rules and regulations of regulatory agencies or authorities applicable to
you, or any of your affiliates engaging in such activity, which may affect your
business practices. You confirm that you are not in violation of any banking law
or regulations to which you are subject. You agree to hold us and the Funds
harmless and indemnify us in the event that you or any of your representatives
should violate any law, rule or regulation or any provisions of this Agreement.
In the event that we determine to refund any amounts paid by a customer in
connection with any such violation on your part, you shall forfeit the right to
the amount of any agency fee allowed by us with respect to the transaction for
which the refund is made. All expenses which you incur in connection with your
activities under this Agreement shall be borne by you.
IV. Relationship With Customer
With respect to any and all transactions in the Shares of any Fund pursuant to
this Agreement, it is understood and agreed in each case that: (i) you shall be
acting solely as agent for the account of your customer; (ii) each transaction
shall be initiated solely upon the order of your customer; (iii) we shall
execute transactions only upon receiving instructions from you acting as agent
for your customer or upon receiving instructions directly from your customer;
(iv) as between you and your customer, your customer will have full beneficial
ownership of all Shares; and (v) each transaction shall be for the account of
your customer and not for your account.
Subject to the foregoing, however, you may maintain record ownership of such
customers' Shares in an "Omnibus Account" or an account registered in your name
or the name of your nominee, for the benefit of such customers. You understand
that such Shares must be held in a separate account for each shareholder of such
Funds. You represent and warrant to us that you will have full right, power and
authority to effect transactions (including, without limitation, any purchases
and redemptions) in Shares on behalf of all customer accounts provided by you.
V. Relationship With Financial Institutions
Your obligations to us under this Agreement are subject to all the provisions of
the respective distribution agreements entered into between us and each of the
Funds. You understand and agree that in performing your services under this
Agreement you are acting in the capacity of an independent contractor, and we
are in no way responsible for the manner of your performance or for any of your
acts or omissions in connection therewith. It is further understood that neither
this Agreement nor the performance of the services of the respective parties
hereunder shall be considered to constitute an exclusive arrangement, or to
create a partnership, association or joint venture between you and us. In making
available Shares of the Funds under this Agreement, nothing herein shall be
construed to constitute you or any of your agents, employees or representatives
as our agent or employee, or as an agent or employee of the Funds, and you shall
not make any representations to the contrary. As distributor of the Funds, we
shall have full authority to take such action as we may deem advisable in
respect of all matters pertaining to the distribution of the Shares. We shall
not be under any obligation to you, except for obligations expressly assumed by
us in this Agreement.
-3-
<PAGE>
VI. Termination
Either party hereto may terminate this Agreement, without cause, upon ten days'
written notice to the other party. We may terminate this Agreement for cause
upon the violation by you of any of the provisions hereof, such termination to
become effective on the date such notice of termination is mailed to you. If you
are registered as a broker-dealer and affiliated with a bank, this Agreement
shall terminate automatically if either Party ceases to be a member of the NASD.
VII. Assignability
This Agreement is not assignable or transferable, except that we may assign or
transfer this Agreement to any successor distributor of the Funds.
VIII. Miscellaneous
(i) All communications mailed to us should be sent to the above address.
Any notice to you shall be duly given if mailed or delivered to you at
the address specified by you below.
(ii) This Agreement constitutes the entire agreement and understanding
between the parties and supersedes any and all prior agreements
between the parties.
(iii) This Agreement and the rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of
Connecticut.
Very truly yours,
PHOENIX EQUITY PLANNING CORPORATION
By _________________________________________
Authorized Signature
____________________________________________
Name and Title
We accept and agree to the foregoing Agreement as of the date set forth below
Financial Institution: __________________________________
By _________________________________________
Authorized Signature, Title
____________________________________________
____________________________________________
Address
(NASD CRD # if applicable _________________ )
Date: ______________________________________
Please return the signed copy of this Sales Contract to Phoenix Equity Planning
Corporation at the above address.
Exhibit 8.1
Custodian Contract
<PAGE>
CUSTODIAN CONTRACT
Between
EACH OF THE PARTIES LISTED ON APPENDIX 1
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Employment of Custodian and Property to be Held By It....................................................1
2. Duties of the Custodian with Respect to Property
of each Fund Held by the Custodian in the United States..................................................2
2.1 Holding Securities..............................................................................2
2.2 Delivery of Securities..........................................................................2
2.3 Registration of Securities......................................................................4
2.4 Bank Accounts...................................................................................4
2.5 Availability of Federal Funds...................................................................5
2.6 Collection of Income............................................................................5
2.7 Payment of Fund Moneys..........................................................................5
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.............................6
2.9 Appointment of Agents...........................................................................7
2.10 Deposit of Fund Assets in U.S. Securities System................................................7
2.11 Fund Assets Held in the Custodian's Direct Paper System.........................................8
2.12 Segregated Account..............................................................................9
2.13 Ownership Certificates for Tax Purposes.........................................................9
2.14 Proxies.........................................................................................9
2.15 Communications Relating to Fund Securities.....................................................10
3. Duties of the Custodian with Respect to Property of
each Fund Held Outside of the United States.............................................................10
3.1 Appointment of Foreign Sub-Custodians..........................................................10
3.2 Assets to be Held..............................................................................10
3.3 Foreign Securities Systems.....................................................................10
3.4 Holding Securities.............................................................................11
3.5 Agreements with Foreign Banking Institutions...................................................11
3.6 Access of Independent Accountants of each Fund.................................................11
3.7 Reports by Custodian...........................................................................11
3.8 Transactions in Foreign Custody Account........................................................12
3.9 Liability of Foreign Sub-Custodians............................................................12
3.10 Liability of Custodian.........................................................................12
3.11 Reimbursement for Advances.....................................................................13
3.12 Monitoring Responsibilities....................................................................13
3.13 Branches of U.S. Banks.........................................................................13
3.14 Tax Law........................................................................................13
4. Payments for Sales or Repurchase or Redemptions
of Shares of each Fund..................................................................................14
5. Proper Instructions.....................................................................................14
6. Actions Permitted Without Express Authority.............................................................15
7. Evidence of Authority...................................................................................15
8. Duties of Custodian With Respect to the Books of Account and Calculation of Net Asset Value
and Net Income..........................................................................................15
9. Records ................................................................................................16
10. Opinion of Fund's Independent Accountants...............................................................16
11. Reports to Fund by Independent Public Accountants.......................................................16
12. Compensation of Custodian...............................................................................16
13. Responsibility of Custodian.............................................................................16
14. Effective Period, Termination and Amendment.............................................................18
15. Successor Custodian.....................................................................................18
16. Interpretive and Additional Provisions..................................................................19
17. Additional Funds........................................................................................19
18. Massachusetts Law to Apply..............................................................................20
19. Prior Contracts.........................................................................................20
20. Shareholder Communications..............................................................................20
21. Limitation of Liability................................................................................21
</TABLE>
<PAGE>
MASTER CUSTODIAN CONTRACT
This Contract between each fund or series of a fund listed on Appendix 1
which evidences its agreement to be bound hereby by executing a copy of this
Contract (each such fund, any and all separate series or portfolios thereof and
any additional portfolios or separate series thereof which become subject to
this Contract pursuant to Section 17 hereof, are individually hereafter referred
to as a "Fund"), and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, each of the Funds has previously entered into a Custodian Contract
with the Custodian;
WHEREAS, the Custodian and each of the Funds desire to replace such
existing Custodian Contracts with this Master Custodian Contract between the
Custodian and all of the Funds;
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
-----------------------------------------------------
Each Fund hereby employs the Custodian as the custodian of the assets of
such Fund, including securities which such Fund desires to be held in places
within the United States ("domestic securities") and securities it desires to be
held outside the United States ("foreign securities") pursuant to the provisions
of such Fund's governing documents (domestic securities and foreign securities
are sometimes collectively referred to herein as "Securities"). Each Fund agrees
to deliver to the Custodian all securities and cash of such Fund, and all
payments of income, payments of principal or capital distributions received by
it with respect to all securities owned by such Fund from time to time, and the
cash consideration received by it for such new or treasury shares each class of
capital stock or beneficial interest, as applicable, of such Fund, ("Shares") as
may be issued or sold from time to time. The Custodian shall not be responsible
for any property of a Fund held or received by such Fund and not delivered to
the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Fund from time to time employ
one or more sub-custodians, located in the United States but only in accordance
with an applicable vote by the Board of the Fund, and provided that the
Custodian shall have no more or less responsibility or liability to the Fund on
account of any actions or omissions of any sub-custodian so employed than any
such sub-custodian has to the Custodian. The Fund shall approve in writing the
terms of any subcustodian agreement with a United States subcustodian. The
Custodian may employ as sub-custodian for each Fund's foreign securities the
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.
<PAGE>
2. Duties of the Custodian with Respect to Property of each Fund Held By the
Custodian in the United States
--------------------------------------------------------------------------
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Fund all non-cash property, to be held by it in the
United States including all domestic securities owned by such Fund, other
than (a) securities which are maintained pursuant to Section 2.10 in a
clearing agency which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury (each, a "U.S.
Securities System") and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the Direct Paper System of
the Custodian (the "Direct Paper System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by a Fund held by the Custodian or in a U.S. Securities
System account of the Custodian or in the Custodian's Direct Paper book
entry system account ("Direct Paper System Account") only upon receipt of
Proper Instructions from such Fund, which may be continuing instructions
when deemed appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of such Fund and receipt
of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by such Fund;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of such Fund;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of
such Fund or into the name of any nominee or nominees of the Custodian
or into the name or nominee name of any agent appointed pursuant to
Section 2.9 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same
2
<PAGE>
aggregate face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of such Fund, to the
broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by such
Fund, but only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and such Fund, which may be in the
form of cash or obligations issued by the United States government,
its agencies or instrumentalities, except that in connection with any
loans for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S. Department of
the Treasury, the Custodian will not be held liable or responsible for
the delivery of securities owned by such Fund prior to the receipt of
such collateral;
11) For delivery as security in connection with any borrowings by such
Fund requiring a pledge of assets by such Fund, but only against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among
such Fund, the Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of
The National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by such Fund ;
3
<PAGE>
13) For delivery in accordance with the provisions of any agreement among
such Fund, the Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations, regarding
account deposits in connection with transactions by such Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for such Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may be
described from time to time in the currently effective prospectus and
statement of additional information of such Fund ("Prospectus"), in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions from such Fund, a certified copy of a
resolution of the Board or of the Executive Committee of such Fund
signed by an officer of such Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of such Fund to be
delivered, setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of such securities shall
be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of each Fund
or in the name of any nominee of each Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to each Fund, unless
a Fund has authorized in writing the appointment of a nominee to be used in
common with other registered investment companies having the same
investment adviser as such Fund, or in the name or nominee name of any
agent appointed pursuant to Section 2.9 or in the name or nominee name of
any sub-custodian appointed pursuant to Article 1. All securities accepted
by the Custodian under the terms of this Contract shall be in "street name"
or other good delivery form. If, however, a Fund directs the Custodian to
maintain securities in "street name", the Custodian shall utilize
commercially reasonable means to timely collect income due such Fund on
such securities and to timely notify each Fund of relevant corporate
actions including, without limitation, pendency of calls, maturities,
tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Fund , subject
only to draft or order by the Custodian acting pursuant to the terms of
this Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of such
Fund, other than cash maintained by such Fund in a bank account established
and used
4
<PAGE>
in accordance with Rule 17f-3 under the Investment Company Act of 1940.
Funds held by the Custodian for each Fund may be deposited by it to its
credit as Custodian in the Banking Department of the Custodian or in such
other banks or trust companies as it may in its discretion deem necessary
or desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment Company Act
of 1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of each
applicable Fund be approved by vote of a majority of the Board of such
Fund. Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between a Fund and the
Custodian, the Custodian shall, upon the receipt of Proper Instructions
from such Fund, make federal funds available to such Fund as of specified
times agreed upon from time to time by such Fund and the Custodian in the
amount of checks received in payment for Shares of such Fund which are
deposited into such Fund's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to Securities held hereunder to which each Fund shall be
entitled either by law or pursuant to custom in the securities business,
and shall collect on a timely basis all income and other payments with
respect to bearer securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent thereof and shall credit
such income, as collected, to such Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach and
present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when
due on securities held hereunder. Unless otherwise agreed to by the
parties, income due each Fund on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of the Fund. The
Custodian will have no duty or responsibility in connection therewith,
other than to provide each Fund with such information or data as may be
necessary to assist each Fund in arranging for the timely delivery to the
Custodian of the income to which each Fund is properly entitled.
2.7 Payment of Fund Moneys. Upon receipt of Proper Instructions from a Fund,
which may be continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out moneys of each Fund in the following
cases only:
1) Upon the purchase of Securities, options, futures contracts or options
on futures contracts for the account of such Fund but only (a) against
the delivery of such securities or evidence of title to such options,
futures contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the United
States or abroad which is qualified under the Investment
5
<PAGE>
Company Act of 1940, as amended, to act as a custodian and has been
designated by the Custodian as its agent for this purpose) registered
in the name of such Fund or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for transfer; (b)
in the case of a purchase effected through a U.S. Securities System,
in accordance with the conditions set forth in Section 2.10 hereof;
(c) in the case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section 2.11; (d) in the
case of repurchase agreements entered into between such Fund and the
Custodian, or another bank, or a broker-dealer which is a member of
NASD, (i) against delivery of the securities either in certificate
form or through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against delivery of
the receipt evidencing purchase by such Fund of securities owned by
the Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from such Fund or (e) for
transfer to a time deposit account of such Fund in any bank, whether
domestic or foreign; such transfer may be effected prior to receipt of
a confirmation from a broker and/or the applicable bank pursuant to
Proper Instructions from such Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of Securities
owned by such Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by such Fund as set
forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by such Fund,
including but not limited to the following payments for the account of
such Fund: interest, taxes, management, accounting, transfer agent and
legal fees, and operating expenses of such Fund whether or not such
expenses are to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends on Shares of such Fund declared
pursuant to the governing documents of such Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in addition to
Proper Instructions from such Fund, a certified copy of a resolution
of the Board or of the Executive Committee of such Fund signed by an
officer of such Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
6
<PAGE>
purpose to be a proper purpose, and naming the person or persons to
whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except
as specifically stated otherwise in this Contract, in any and every case
where payment for purchase of Securities for the account of such Fund is
made by the Custodian in advance of receipt of the securities purchased in
the absence of specific Proper Instructions from such Fund to so pay in
advance, the Custodian shall be absolutely liable to such Fund for such
securities to the same extent as if the securities had been received by the
Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times, subject to
the applicable Fund's prior approval, in its discretion appoint (and may at
any time remove) any other bank or trust company which is itself qualified
under the Investment Company Act of 1940, as amended, to act as a
custodian, as its agent to carry out such of the provisions of this Article
2 as the Custodian may from time to time direct; provided, however, that
the appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of
the Exchange Act, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein as "U.S.
Securities System" in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
1) The Custodian may keep securities of each Fund in a U.S. Securities
System provided that such securities are represented in an account
("Account") of the Custodian in the U.S. Securities System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of each Fund
which are maintained in a U.S. Securities System shall identify by
book-entry those securities belonging to each Fund;
3) The Custodian shall pay for securities purchased for the account of
each Fund upon (i) receipt of advice from the U.S. Securities System
that such securities have been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of each Fund. The Custodian shall
transfer securities sold for the account of each Fund upon (i) receipt
7
<PAGE>
of advice from the U.S. Securities System that payment for such
securities has been transferred to the Account, and (ii) the making of
an entry on the records of the Custodian to reflect such transfer and
payment for the account of each Fund. Copies of all advices from the
U.S. Securities System of transfers of securities for the account of
each Fund shall identify each Fund, be maintained for each Fund by the
Custodian and be provided to each Fund at its request. Upon request,
the Custodian shall furnish each Fund confirmation of each transfer to
or from the account of each Fund in the form of a written advice or
notice and shall furnish to each Fund copies of daily transaction
sheets reflecting each day's transactions in the U.S. Securities
System for the account of each Fund.
4) The Custodian shall provide each Fund with any report obtained by the
Custodian on the U.S. Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the U.S. Securities System;
5) The Custodian shall have received from each Fund the initial
certificate required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to each Fund for the benefit of such Fund
for any loss or damage to such Fund resulting from use of the U.S.
Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or any such agent to
enforce effectively such rights as it may have against the U.S.
Securities System; at the election of the affected Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect
to any claim against the U.S. Securities System or any other person
which the Custodian may have as a consequence of any such loss or
damage if and to the extent that such Fund has not been made whole for
any such loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
deposit and/or maintain securities owned by each Fund in the Direct Paper
System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions from each Fund ;
2) The Custodian may keep securities of each Fund in the Direct Paper
System only if such securities are represented in an account of the
Custodian in the Direct Paper System which shall not include any
assets of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
8
<PAGE>
3) The records of the Custodian with respect to securities of each Fund
which are maintained in the Direct Paper System shall identify by
book-entry those securities belonging to each Fund;
4) The Custodian shall pay for securities purchased for the account of
each Fund upon the making of an entry on the records of the Custodian
to reflect such payment and transfer of securities to the account of
each Fund. The Custodian shall transfer securities sold for the
account of each Fund upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for the
account of each Fund;
5) The Custodian shall furnish each Fund confirmation of each transfer to
or from the account of each Fund, in the form of a written advice or
notice, of Direct Paper on the next business day following such
transfer and shall furnish to each Fund copies of daily transaction
sheets reflecting each day's transactions in the Direct Paper System
for the account of each Fund;
6) The Custodian shall provide each Fund with any report on its system of
internal accounting control as each Fund may reasonably request from
time to time.
2.12 Pledged Account. The Custodian shall upon receipt of Proper
Instructions from a Fund establish and maintain a pledged account or
accounts for and on behalf of such Fund, into which account or accounts
may be transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to Section 2.10
hereof, (i) in accordance with the provisions of any agreement among
such Fund , the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by such Fund, (ii) for
purposes of segregating cash or government securities in connection
with options purchased, sold or written by such Fund or commodity
futures contracts or options thereon purchased or sold by such Fund,
(iii) for the purposes of compliance by such Fund with the procedures
required by Investment Company Act Release No. 10666, and subsequent
release or releases of the Securities and Exchange Commission relating
to the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in
the case of clause (iv), upon receipt of, in addition to Proper
Instructions from such Fund , a certified copy of a resolution of the
Board or of the Executive Committee of such Fund signed by an
9
<PAGE>
officer of such Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated
account.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to securities of each Fund held by it and in connection with
transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
such Fund or a nominee of such Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to
the applicable Fund such proxies, all proxy soliciting materials and all
notices relating to such securities.
2.15 Communications Relating to Fund Securities. Subject to the provisions of
Section 2.3, the Custodian shall transmit promptly to each Fund all written
information (including, without limitation, pendency of calls and
maturities of domestic securities and expirations of rights in connection
therewith and notices of exercise of call and put options written by such
Fund and the maturity of futures contracts purchased or sold by such Fund)
received by the Custodian from issuers of the securities being held for
such Fund. With respect to tender or exchange offers, the Custodian shall
transmit promptly to each Fund all written information received by the
Custodian from issuers of the securities whose tender or exchange is sought
and from the party (or his agents) making the tender or exchange offer. If
a Fund desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, such Fund shall notify the
Custodian at least three business days prior to the date on which the
Custodian is to take such action.
3. Duties of the Custodian with Respect to Property of each Fund Held Outside
of the United States
--------------------------------------------------------------------------
3.1 Appointment of Foreign Sub-Custodians. Each Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for such Fund's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated
on Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper
Instructions", as defined in Section 5 of this Contract, together with a
certified resolution of such Fund's Board, the Custodian and such Fund may
agree to amend Schedule A hereto from time to time to designate additional
foreign banking institutions and foreign securities depositories to act as
sub-custodian. Upon receipt of Proper Instructions, a Fund may instruct the
Custodian to cease the employment of any one or more such sub-custodians
for maintaining custody of such Fund's assets.
10
<PAGE>
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or each Fund may determine to be reasonably
necessary to effect such Fund's foreign securities transactions. The
Custodian shall identify on its books as belonging to each Fund, the
foreign securities of each Fund held by each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and each Fund, assets of each Fund shall be
maintained in a clearing agency which acts as a securities depository or in
a book-entry system for the central handling of securities located outside
of the United States (each a "Foreign Securities System") only through
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof (Foreign Securities Systems and
U.S. Securities Systems are collectively referred to herein as the
"Securities Systems"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.6
hereof.
3.4 Holding Securities. The Custodian may hold securities and other non-cash
property for all of its customers, including each Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash
property of each Fund which are maintained in such account shall identify
by book-entry those securities and other non-cash property belonging to
each Fund and (ii) the Custodian shall require that securities and other
non-cash property so held by the foreign sub-custodian be held separately
from any assets of the foreign sub-custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a foreign
banking institution shall provide that: (a) the assets of each Fund will
not be subject to any right, charge, security interest, lien or claim of
any kind in favor of the foreign banking institution or its creditors or
agents, except a claim of payment for their safe custody or administration;
(b) beneficial ownership for the assets of each Fund will be freely
transferable without the payment of money or value other than for custody
or administration; (c) adequate records will be maintained identifying the
assets as belonging to each Fund; (d) officers of or auditors employed by,
or other representatives of the Custodian, including to the extent
permitted under applicable law the independent public accountants for each
Fund, will be given access to the books and records of the foreign banking
institution relating to its actions under its agreement with the Custodian;
and (e) assets of each Fund held by the foreign sub-custodian will be
subject only to the instructions of the Custodian or its agents. Agreements
with
11
<PAGE>
foreign banking institutions shall contain those provisions required by
subparagraph (c) of Section 17f-5 under the Investment Company Act of 1940.
3.6 Access of Independent Accountants of each Fund. Upon request of each Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of each Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to each Fund from time to
time, as mutually agreed upon, statements in respect of the securities and
other assets of each Fund held by foreign sub-custodians, including but not
limited to an identification of entities having possession of such Fund's
securities and other assets and advices or notifications of any transfers
of securities to or from each custodial account maintained by a foreign
banking institution for the Custodian on behalf of such Fund indicating, as
to securities acquired for such Fund, the identity of the entity having
physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, the provisions of Sections 2.2 and
2.7 of this Contract shall apply, mutatis mutandis to the foreign
securities of each Fund held outside the United States by foreign
sub-custodians. (b) Notwithstanding any provision of this Contract to the
contrary, settlement and payment for securities received for the account of
each Fund and delivery of securities maintained for the account of each
Fund may be effected in accordance with the customary established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with
the expectation of receiving later payment for such securities from such
purchaser or dealer. (c) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's nominee to the
same extent as set forth in Section 2.3 of this Contract, and each Fund
agrees to hold any such nominee harmless from any liability as a holder of
record of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and each Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of a Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent
that such Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
12
<PAGE>
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians generally in this Contract and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by Section 3.13 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has otherwise exercised
reasonable care. Notwithstanding the foregoing provisions of this Section
3.10, in delegating custody duties to State Street London Ltd., the
Custodian shall not be relieved of any responsibility to each Fund for any
loss due to such delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization, insurrection,
civil strife or armed hostilities) or (b) other losses (excluding a
bankruptcy or insolvency of State Street London Ltd. not caused by
political risk) due to Acts of God, nuclear incident or other losses under
circumstances where the Custodian and State Street London Ltd. have
exercised reasonable care.
3.11 Reimbursement for Advances. If, pursuant to Proper Instructions, a Fund
requires the Custodian to advance cash or securities for any purpose for
the benefit of a Fund including the purchase or sale of foreign exchange or
of contracts for foreign exchange, or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of
this Contract, except such as may arise from events or circumstances for
which the Custodian or a sub-custodian are liable pursuant to Sections 3.9
and 3.10 above, or from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Fund shall be security therefor and
should such Fund fail to repay the Custodian promptly, the Custodian shall
upon prior written notice be entitled to utilize available cash and to
dispose of such Fund's assets to the extent necessary to obtain
reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to each
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian and such other information needed
to permit the Fund to comply with Section 17f-5 under the 1940 Act. Such
information shall be similar in kind and scope to that furnished to each
Fund in connection with the initial approval of this Contract. In addition,
the Custodian will promptly inform each Fund in the event that the
Custodian learns of a material adverse change in the financial condition of
a foreign sub-custodian or any material loss of the assets of each Fund or
in the case of any foreign sub-custodian not the subject of an exemptive
order from the Securities and Exchange Commission is notified by such
foreign sub-custodian that there appears to be a substantial likelihood
that its shareholders' equity
13
<PAGE>
will decline below $200 million (U.S. dollars or the equivalent thereof) or
that its shareholders' equity has declined below $200 million (in each case
computed in accordance with generally accepted U.S. accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this Contract,
the provisions hereof shall not apply where the custody of a Fund's assets
are maintained in a foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the Investment Company Act of 1940
meeting the qualification set forth in Section 26(a) of said Act. The
appointment of any such branch as a sub-custodian shall be governed by
Article 1 of this Contract. (b) Cash held for each Fund in the United
Kingdom shall be maintained in an interest bearing account established for
each Fund with the Custodian's London branch, which account shall be
subject to the direction of the Custodian, State Street London Ltd. or
both.
3.14 Tax Law. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on any Fund or the Custodian as
custodian of such Fund by the tax law of the United States of America or
any state or political subdivision thereof. It shall be the responsibility
of each Fund to notify the Custodian of the obligations imposed on each
Fund or the Custodian as custodian of each Fund by the tax law of
jurisdictions other than those mentioned in the above sentence, including
responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist each Fund with respect to any claim for
exemption or refund under the tax law of jurisdictions for which each Fund
has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Shares of each Fund
-----------------------------------------------------------------------
The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent of each Fund and deposit into the account of each Fund such
payments as are received for Shares of each Fund issued or sold from time to
time by each Fund. The Custodian will provide timely notification to each Fund
and the Transfer Agent of any receipt by it of payments for Shares of such Fund.
From such funds as may be available for the purpose but subject to the
limitations of each Fund's governing documents and any applicable votes of the
Board of each Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of each Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of each Fund, the Custodian shall honor checks drawn on
the
14
<PAGE>
Custodian by a holder of Shares, which checks have been furnished by such
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between each Fund and the Custodian.
5. Proper Instructions
-------------------
Proper Instructions as used throughout this Contract means a writing signed
or initialed by one or more person or persons as the Board of each Fund shall
have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. Each Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of each Fund
accompanied by a detailed description of procedures approved by the Board,
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board and the
Custodian are satisfied that such procedures afford adequate safeguards for such
Fund's assets. For purposes of this Section, Proper Instructions shall include
instructions received by the Custodian pursuant to any three-party agreement
which requires a segregated asset account in accordance with Section 2.12.
6. Actions Permitted without Express Authority
-------------------------------------------
The Custodian may in its discretion, without express authority from each
Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the applicable Fund;
1) surrender securities in temporary form for securities in definitive
form;
2) endorse for collection, in the name of each Fund, checks, drafts and
other negotiable instruments; and
3) in general, attend to all ministerial details in connection with the
sale, exchange, substitution, purchase, transfer and other dealings
with the securities and property of each Fund except as otherwise
directed by the Board of each Fund.
15
<PAGE>
7. Evidence of Authority
---------------------
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed by or on behalf
of each Fund. The Custodian may receive and accept a certified copy of a vote of
the Board of each Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board pursuant to the governing documents of each Fund as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and Calculation of
Net Asset Value and Net Income
---------------------------------------------------------------------------
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of each Fund to keep the books of
account of each Fund and/or compute the net asset value per share of the
outstanding shares of each Fund or, if directed in writing to do so by each Fund
, shall itself keep such books of account and/or compute such net asset value
per share. If so directed, the Custodian shall also calculate daily the net
income of each Fund as described in each Fund's currently effective Prospectus
and shall advise each Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of each Fund to do
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value per
share and the daily income of each Fund shall be made at the time or times
described from time to time in each Fund's currently effective Prospectus.
9. Records
-------
The Custodian shall with respect to each Fund create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of each Fund under the Investment Company
Act of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of each Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the applicable
Fund and employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the request of any Fund, supply such Fund with a tabulation
of securities owned by such Fund and held by the Custodian and shall, when
requested to do so by a Fund and for such compensation as shall be agreed upon
between such Fund and the Custodian, include certificate numbers in such
tabulations.
10. Opinion of Fund's Independent Accountant
----------------------------------------
The Custodian shall take all reasonable action, as each Fund may from time
to time request, to obtain from year to year favorable opinions from each Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of each Fund's Form N-1A,
16
<PAGE>
and Form N-SAR or other annual reports to the Securities and Exchange Commission
and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
--------------------------------------------------
The Custodian shall provide each Fund, at such times as each Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports, shall be
of sufficient scope and in sufficient detail, as may reasonably be required by
each Fund to provide reasonable assurance that any material inadequacies would
be disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
12. Compensation of Custodian
-------------------------
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, determine in accordance with the fee
schedule attached hereto as Schedule B, as amended from time to time as agreed
by each Fund and the Custodian.
13. Responsibility of Custodian
---------------------------
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to any Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for a Fund) on
all matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to any Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
17
<PAGE>
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts provided Custodian has maintained an adequate
disaster recovery plan; (ii) errors by a Fund or its investment advisor in their
instructions to the Custodian provided such instructions have been in accordance
with this Contract; (iii) the insolvency of or acts or omissions by a Securities
System; (iv) any delay or failure of any broker, agent or intermediary, central
bank or other commercially prevalent payment or clearing system to deliver to
the Custodian's sub-custodian or agent securities purchased or in the remittance
or payment made in connection with securities sold; (v) any delay or failure of
any company, corporation, or other body in charge or registering or transferring
securities in the name of the Custodian, a Fund, the Custodian's sub-custodians,
nominees or agents or any consequential losses arising out of such delay or
failure to transfer such securities including non-receipt of bonus, dividends
and rights and other accretions or benefits; (vi) delays or inability to perform
its duties due to any disorder in market infrastructure with respect to any
particular security or Securities System; and (vii) any provision of any present
or future law or regulation or order of the United States of America, or any
state thereof, or any other country, or political subdivision thereof or of any
court of competent jurisdiction.
Except as expressly provided in Section 3.9, the Custodian shall be liable
for the acts or omissions of a foreign banking institution appointed pursuant to
the provisions of Article 3 to the same extent as set forth in Article 1 hereof
with respect to sub-custodians located in the United States.
If a Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the reasonable opinion of the Custodian, result in the Custodian or its nominee
assigned to a Fund being liable for the payment of money or incurring liability
of some other form, such Fund, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If a Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlements)
or in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of such Fund shall be security
therefor and should such Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of such
Fund's assets to the extent necessary to obtain reimbursement.
18
<PAGE>
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. Effective Period, Termination and Amendment
-------------------------------------------
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not with respect to each Fund act under Section 2.10 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of each Fund has approved the initial use of
a particular Securities System by each Fund, as required by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian shall not with
respect to a Fund act under Section 2.11 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant Secretary that the Board
has approved the initial use of the Direct Paper System by each Fund; provided
further, however, that a Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of its governing documents, and further provided, that a Fund may at any time by
action of its Board (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, each Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination as provided
herein.
15. Successor Custodian
-------------------
If a successor custodian for a Fund shall be appointed by the Board of such
Fund, the Custodian shall, upon termination, and upon receipt of a certified
copy of such vote, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of such
Fund then held by it hereunder and shall transfer to an account of the successor
custodian all of the securities of such Fund held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of the
applicable Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board shall have been delivered to the Custodian
on or before the date when such
19
<PAGE>
termination shall become effective, then the Custodian shall have the right to
deliver to a bank or trust company, which is a "bank" as defined in the
Investment Company Act of 1940, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published report,
of not less than $25,000,000, all securities, funds and other properties held by
the Custodian on behalf of such Fund and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract on behalf
of such Fund and to transfer to an account of such successor custodian all of
the securities of such Fund held in any Securities System. Thereafter, such bank
or trust company shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of a Fund to procure the certified copy of the vote referred to above or
of the Board to appoint a successor custodian, the Custodian shall be entitled
to fair compensation for its services during such period as the Custodian
retains possession of such securities, funds and other properties and the
provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Contract, the Custodian and each
Fund, may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the governing documents of any Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
17. Additional Funds
----------------
In the event that any mutual funds in addition to the Funds are hereafter
established which desire to have the Custodian render services as custodian
under the terms hereof, it shall so notify the Custodian in writing, and if the
Custodian agrees in writing to provide such services, such fund shall become a
Fund hereunder, subject to the delivery by the new Fund of resolutions
authorizing the appointment of the Custodian and such other supporting or
related documentation as the Custodian may request. All references to the "Fund"
are to each of the Funds listed on Appendix 1 individually, as if this Contract
were between each such individual Fund and the Custodian.
18. Massachusetts Law to Apply
--------------------------
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
20
<PAGE>
19. Prior Contracts
---------------
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between each of the Funds and the Custodian relating to the custody of
such Fund's assets.
20. Shareholder Communications
--------------------------
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs each Fund to indicate whether such Fund authorizes
the Custodian to provide such Fund's name, address, and share position to
requesting companies whose stock each Fund owns. If a Fund tells the Custodian
"no", the Custodian will not provide this information to requesting companies.
If a Fund tells the Custodian "yes" or do not check either "yes" or "no" below,
the Custodian is required by the rule to treat such Fund as consenting to
disclosure of this information for all securities owned by such Fund or any
funds or accounts established by each Fund. For each Fund's protection, the Rule
prohibits the requesting company from using such Fund's name and address for any
purpose other than corporate communications. Please indicate below whether each
Fund consents or objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the name,
address, and share positions of each Fund listed on
Appendix 1.
NO [X] The Custodian is not authorized to release the
name, address, and share positions of each Fund listed
on Appendix 1.
21. Limitation of Liability.
------------------------
The execution of this Contract has been authorized by each Fund's Board.
This Contract is executed on behalf of each Fund or, in the case of a Fund
organized as a business trust, the trustees of such Fund as trustees and not
individually and the obligations of each Fund under this Contract are not
binding upon any of such Fund's trustees, officers or shareholders individually
but are binding only upon the assets and property of such Fund. A Certificate of
Trust in respect of each Fund organized as a business trust is on file with the
Secretary of the Commonwealth of Massachusetts.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 1st day of May, 1997.
EACH OF THE FUNDS LISTED ON APPENDIX 1
By: /s/ Michael E. Haylon
--------------------------
Michael E. Haylon
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
--------------------------
Executive Vice President
Ronald E. Logue
<PAGE>
APPENDIX 1
Fund Names
(as of May 1, 1997)
Phoenix California Tax Exempt Bonds, Inc.
The Phoenix Edge Series Fund
Real Estate Securities Series
Phoenix Income and Growth Fund
Phoenix Multi-Portfolio Fund
Phoenix Diversified Income Portfolio
Phoenix Emerging Markets Bond Portfolio
Phoenix Endowment Equity Portfolio
Phoenix Real Estate Securities Portfolio
Phoenix Mid Cap Portfolio
Phoenix Tax-Exempt Bond Portfolio
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Series Fund
Phoenix Aggressive Growth Fund Series
Phoenix Balanced Fund Series
Phoenix Convertible Fund Series
Phoenix Growth Fund Series
Phoenix High Yield Fund Series
Phoenix Money Market Series
Phoenix U.S. Government Securities Fund Series
Phoenix Strategic Allocation Fund, Inc.
Phoenix Strategic Equity Series Fund
Phoenix Equity Opportunities Fund
Phoenix Micro Cap Fund
Phoenix Small Cap Fund
Phoenix Strategic Theme Fund
Phoenix Duff & Phelps Institutional Mutual Funds
Enhanced Reserves Portfolio
Real Estate Equity Securities Portfolio
<PAGE>
Schedule A
----------
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of each Fund for use as
sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
- ----------------------------
Fund's Authorized Officer
Date:
-------------------------
<PAGE>
[LOGO]State Street
SCHEDULE B
STATE STREET BANK AND TRUST COMPANY
Custodian Fee Schedule
Effective June 1, 1996
Phoenix Duff and Phelps Funds
- --------------------------------------------------------------------------------
I. Administration
Domestic Custody - Maintain custody of fund assets. Settle portfolio
purchases and sales. Report buy and sell fails. Determine and collect
portfolio income. Make cash disbursements and report cash transactions.
Monitor corporate actions. Report portfolio positions. The custody fee
shown below is an annual charge, billed and payable monthly, based on
average monthly net assets.
Average Monthly Net Assets Annual Fees in Basis Points
-------------------------- ---------------------------
First $3 Billion .5
Next $2 Billion .375
Thereafter .25
II. Domestic Portfolio Trades - For each line item processed
State Street Bank Repos $ 7.00
DTC or Fed Book Entry $ 6.00
New York Physical Settlements $25.00
Physical Maturities-delivery and collection fee $33.00
All other trades $16.00
III. International Custody - Maintain custody of funds assets. Settle portfolio
purchases and sales. Report buy and sell fails. Determine and collect
portfolio income. Make cash disbursements and report cash transactions in
local and base currency. Report foreign taxes. File foreign tax reclaims.
Monitor corporate actions. Report portfolio positions.
<PAGE>
[LOGO]State Street
A. Country Grouping
- ---------------------
Group A Group B Group C Group D Group E
- ------- ------- ------- ------- -------
Austria Australia Denmark Indonesia Argentina
Canada Belgium Finland Malaysia Bangladesh
Euroclear Hong Kong France Mexico Brazil
Germany Netherlands Ireland Portugal Chile
Japan New Zealand Italy South Korea China
Singapore Luxembourg Spain Columbia
Switzerland Norway Sri Lanka Cyprus
Philippines Sweden Greece
Thailand Taiwan Hungary
United Kingdom India
Israel
Pakistan
Peru
Turkey
Uruguay
Venezuela
B. Transaction Charges
- ------------------------
Group A Group B Group C Group D Group E
- ------- ------- ------- ------- -------
$26 $30 $45 $60 $75
C. Holding Charges in Basis Points (Annual Fee)
- -------------------------------------------------
Assets Group A Group B Group C Group D Group E
- ------ ------- ------- ------- ------- -------
First $100 MM 5.0 8.0 13.0 15.0 25.0
Next $100 MM 4.0 6.0 10.0 13.0 25.0
Excess 3.0 5.0 8.0 13.0 25.0
IV. Options
Option charge for each option written or
closing contract, per issue, per broker $25.00
Option expiration charge, per issue, per broker $15.00
Option exercised charge, per issue, per broker $15.00
<PAGE>
[LOGO]State Street
V. Lending of Securities
Deliver loaned securities versus cash collateral $20.00
Deliver loaned securities versus securities collateral $30.00
Receive/deliver additional cash collateral $ 6.00
Substitutions of securities collateral $30.00
Deliver cash collateral versus receipt of loaned securities $15.00
Deliver securities collateral versus receipt of
loaned securities $25.00
Loan administration -- mark-to-market per day, per loan $ 3.00
VI. Interest Rate Futures
Transactions -- no security movement $ 8.00
VII. Coupon Bonds
Monitoring for calls and processing coupons --
for each coupon issue held -- monthly charge $ 5.00
VIII. Holdings Charge
For each issue maintained -- monthly charge $ 5.00
IX. Principal Reduction Payments Per Paydown $10.00
<PAGE>
[LOGO]State Street
X. Special Services
Fees for activities of a non-recurring nature such as fund
consolidations or reorganizations, extraordinary security shipments
and the preparation of special reports will be subject to negotiation.
Fees for tax accounting/recordkeeping for options, financial futures,
and other special items will be negotiated separately.
Account Position Appraisal
--------------------------
Special appraisal by industry classification:
Monthly fee - per portfolio $50.00
XI. Out-of-Pocket Expenses
----------------------
A billing for the recovery of applicable out-of-pocket expenses will
be made as of the end of each month. Out-of-pocket expenses include,
but are not limited to the following:
Telephone
Wire Charges ($4.70 per wire in and $4.55 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer -- $8.00 Each
Transfer Fees
Sub-custodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over $2,500 - $4.25
GNMA Transfer - $15 each
PTC Deposit/Withdrawal for same day turnarounds - $50.00
XII. Payment
The above fees will be charged against the fund's custodian checking
account five (5) days after the invoice is mailed to the fund's
offices.
<PAGE>
[LOGO]State Street
PHOENIX DUFF AND PHELPS FUNDS STATE STREET BANK & TRUST CO.
By /s/ Nancy G. Curtiss By /s/ Charles R. Whittemore, Jr.
------------------------------ ------------------------------
Title Treasurer Title Vice President
------------------------------ ------------------------------
Date June 13, 1997 Date June 11, 1996
------------------------------ ------------------------------
Exhibit 9.1
Amended and Restated
Financial Agent Agreement
<PAGE>
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
THIS AGREEMENT made and concluded as of this 19th day of November, 1997 by
and between Phoenix Equity Planning Corporation, a Connecticut corporation
having a place of business located at 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Financial Agent") and each of the undersigned mutual funds
(hereinafter collectively and singularly referred to as the "Trust").
WITNESSETH THAT:
1. Financial Agent shall keep the books of the Trust and compute the daily
net asset value of shares of the Trust in accordance with instructions received
from time to time from the Board of Trustees of the Trust; which instructions
shall be certified to Financial Agent by the Trust's Secretary. Financial Agent
shall report such net asset value so determined to the Trust and shall perform
such other services as may be requested from time to time by the Trust as are
reasonably incidental to Financial Agent's duties hereunder.
2. Financial Agent shall be obligated to maintain, for the periods and in
the places required by Rule 31a-2 under the Investment Company Act of 1940, as
amended, those books and records maintained by Financial Agent. Such books and
records are the property of the Trust and shall be surrendered promptly to the
Trust upon its request. Furthermore, such books and records shall be open to
inspection and audit at reasonable times by officers and auditors of the Trust.
3. As compensation for its services hereunder during any fiscal year of the
Trust, Financial Agent shall receive, within eight days after the end of each
month, a fee as specified in Schedule A.
4. Financial Agent shall not be liable for anything done or omitted by it
in the exercise of due care in discharging its duties specifically described
hereunder and shall be answerable and accountable only for its own acts and
omissions and not for those of any agent employed by it nor for those of any
bank, trust company, broker, depository, correspondent or other person.
Financial Agent shall be protected in acting upon any instruction, notice,
request, consent, certificate, resolution, or other instrument or paper believed
by Financial Agent to be genuine, and to have been properly executed, and shall,
unless otherwise specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be
<PAGE>
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
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 (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.such
Agreement have been approved by the vote of a majority of the trustees of the
Trust who are not parties to this Agreement or interested persons, as that term
is defined in the Investment Company Act of 1940, as amended, of any such party,
cast in person at a meeting called for the purpose of voting on such approval. A
"majority of the outstanding voting securities of the Trust" shall have, for all
purposes of this Agreement, the meaning provided therefor in said Investment
Company Act.
7. Either party may terminate the within Agreement by tendering written
notice to the other, whereupon Financial Agent will be relieved of the duties
described herein. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in said Investment Company Act.
8. Additional funds may become party to this Agreement by notifying the
Financial Agent in writing, and if the Financial agent agrees in writing to
provide its services, such fund shall become a Trust subject to the terms of the
Agreement. Such notification shall include a revised Schedule A reflecting the
new fund(s) as added to the appropriate fund classification(s).
<PAGE>
9. This Agreement shall be construed and the rights and obligations of the
parties hereunder enforced in accordance with the laws of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first written above.
PHOENIX CALIFORNIA TAX EXEMPT
BONDS, INC.
PHOENIX EQUITY SERIES FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX INVESTMENT TRUST 97
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED
INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT
TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION
FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPOR-
TUNITIES FUND
By: /s/ Michael E. Haylon
-----------------------------
Michael E. Haylon
Executive Vice President
PHOENIX EQUITY PLANNING
CORPORATION
By: /s/ Philip R. McLoughlin
-----------------------------
Philip R. McLoughlin
President
<PAGE>
SCHEDULE A
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS FINANCIAL AGENT
Annual Financial Agent Fees shall be based on the following formula:
(1) An incremental schedule applies as follows:
Up to $100 million: 5 basis points on average daily net assets
$100 million to $300 million: 4 basis points on average daily net assets
$300 million through $500 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 Core Equity Fund
Phoenix Equity Opportunities Fund
Phoenix Growth and Income Fund
Phoenix Growth Fund Series
Phoenix Micro Cap Fund
Phoenix Mid Cap Portfolio
Phoenix Small Cap Fund
Phoenix Small Cap Value Fund
Phoenix Strategic Theme Fund
Phoenix Value Equity Fund
<PAGE>
Classification Series Name
-------------- -----------
Balanced Phoenix Balanced Fund Series
Phoenix Convertible Fund Series
Phoenix Income and Growth Fund
Phoenix Strategic Allocation Fund, Inc.
Fixed Income Phoenix California Tax Exempt Bonds, Inc.
Phoenix Strategic Income Fund
Phoenix Emerging Markets Bond Portfolio
Phoenix High Yield Fund Series
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Tax-Exempt Bond Portfolio
Phoenix U.S. Government Securities Fund Series
International Phoenix International Portfolio
Phoenix Worldwide Opportunities Fund
REIT Phoenix Real Estate Securities Portfolio
Exhibit 10.1
Opinion and Consent of Counsel
<PAGE>
[letter head]
SULLIVAN & WORCESTER
ONE POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
IN WASHINGTON, D.C. (617) 338-2800 IN NEW YORK CITY
1025 CONNECTICUT AVENUE, N.W. 767 THIRD AVENUE
WASHINGTON, D.C. 20036 TELECOPIER NO. 617-338-2880 NEW YORK, NEW YORK 10017
(202) 775-8190 TWX: 710-321-1976 (212) 486-8200
TELECOPIER NO. 202-293-2275 TELECOPIER NO. 212-758-2?5?
June 30, 1988
Phoenix Multi-Portfolio Fund
101 Munson Street
Greenfield, MA 01301
Gentlemen:
This opinion is being delivered to you in connection with your
Registration Statement on Form N-1A under the Securities Act of 1933, as amended
(the "1933 Act"), and the Investment Company Act of 1940, as amended (the "1940
Act"), under which you are registering an indefinite number of your shares of
beneficial interest (the "Shares"), $1 par value per share, pursuant to Rule
24f-2 under the 1940 Act.
We have made such inquiry of your officers and Trustees and have
examined such organizational documents, records and certificates and other
documents and such questions of law as we have deemed necessary for the purposes
of this opinion.
In rendering this opinion, we have relied, with your approval, as to
all questions of fact material to this opinion, upon certificates of public
officials and of your officers and have assumed, with your approval, that the
signatures on all documents examined by us are genuine, which matters we have
not independently verified.
Based upon and subject to the foregoing, it is our opinion that the
Shares may be legally and validly issued from time to time upon receipt of
proper consideration and that the Shares, when so issued, will be fully paid and
non-assessable.
We consent to your filing this opinion as an exhibit to the
Registration Statement referred to above and to any application or registration
statement filed under the securities laws of any of the States of the United
States. In giving such consent, we do not hereby admit that we come within the
category of persons whose consent is required under Section 7 of the 1933 Act,
or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Sullivan & Worcester
Sullivan & Worcester
Exhibit 10.2
Opinion and Consent of Counsel
<PAGE>
[letter head]
TEDESCHI and GRASSO
Counsellors At Law
185 DEVONSHIRE STREET
BOSTON, MASSACHUSETTS 02110
TELEPHONE (617) 338-8000
FAX (617) 338-9466
September 27, 1989
Phoenix Multi-Portfolio Fund
101 Munson Street
Greenfield, Massachusetts 01301
Gentlemen:
You have asked for our opinion with respect to the issuance of shares
of Phoenix Capital Appreciation Portfolio and Phoenix International Portfolio of
Phoenix Multi-Portfolio Fund ("the Shares") under its Agreement and Declaration
of Trust, dated and filed with the Massachusetts Secretary of State, Corporation
Division, ("the Secretary") October 15, 1987, as amended by Amendment to
Declaration of Trust dated August 23, 1989 and filed with the Secretary on
September 14, 1989 ("the Trust") which you have provided us. You have provided
us with Post-effective Amendment No. 2 to the Registration Statement under the
Securities Act of 1933 and Amendment No. 4 to the Registration Statement under
The Investment Company Act of 1940 on Form N-1A ("the Registration Statement")
of the Trust which has been filed with the Securities and Exchange Commission
("SEC") on September 1, 1989. You have also provided us certified copies of the
resolutions of your board of trustees of November 6, 1987 and February 24, 1988
authorizing: the issuance of an unlimited number of shares or series of the
"Portfolios"; the filing of the Registration Statement; the qualifying or
registering the Shares in various states; and ratifying the filing of the
Registration Statement.
In our opinion, after the effectiveness of the Registration Statement
and the registration or qualification of the Shares in the appropriate states,
the Shares when issued and paid for in accordance with the provisions of the
Registration Statement, will be legally issued, fully paid and nonassessable,
entitling the holders thereof to the rights set forth in the Trust and subject
to the limitations stated therein. Under paragraph 3.2 of the Trust, in the
event of redemption by a shareholder, repurchase by an agent of the Trust or
redemption by the Trust of the Shares, the shareholder may receive the net asset
value of the Shares, as determined in accordance with the Trust, less such
amount not in excess of 1% of such net asset value as the trustees of the Trust
may determine.
Our opinion is based upon our examination of documents you have
provided us as stated in the first paragraph above.
We hereby consent to the use of this opinion in connection with the
Registration Statement.
Very truly yours,
/s/ Tedeschi and Grasso
Exhibit 10.3
Opinion and Consent of Counsel covering shares of the Phoenix Endowment
Equity Portfolio and the Phoenix Endowment Fixed-Income Portfolio
<PAGE>
Patricia O'Leary McLaughlin
[letter head]
[logo] Phoenix Home Life
March 30, 1993
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington D.C. 20549
Re: Phoenix Multi-Portfolio Fund
Post-Effective Amendment No. 8 to
Registration Statement No. 33-19423
Dear Sirs:
As counsel to Phoenix Investment Counsel, Inc., I have participated in
the development of and am familiar with the Phoenix Multi-Portfolio Fund, an
open-end, diversified management investment company whose shares are the subject
of the above-captioned Registration Statement on Form N-1A. Post-effective
amendment No. 8 to this Registration Statement adds the two new portfolios of
the Fund referred to below.
In connection with this opinion, I have reviewed relevant materials
including the Registration Statement, the Declaration of Trust, and the
proceedings of the Board of Trustees.
Based upon this review, I am of the opinion that the shares of all
Portfolios of the Phoenix Multi-Portfolio Fund have been validly and duly
issued, fully paid and non-assessable. Furthermore, I am of the opinion that,
after effectiveness of the post-effective amendment and the registration or
qualification in the appropriate states, the shares of the Phoenix Endowment
Equity Portfolio and the Phoenix Endowment Fixed-Income Portfolio, when issued,
will have been validly and duly issued, fully paid and non-assessable.
I further consent to the use of this opinion as an exhibit to the
above-captioned Registration Statement.
Very truly yours,
/s/ Patricia O. McLaughlin
Patricia O. McLaughlin
/el
fund/398
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. 22 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated January 21, 1998, relating to the financial
statements and financial highlights appearing in the November 30, 1997 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 and of our report dated
January 28, 1998, relating to the financial statements and financial highlights
appearing in the November 30, 1997 Annual Report to Shareholders of the
Diversified Income 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
Boston, Massachusetts
January 26, 1998
Exhibit 13
Initial Capital Agreement
<PAGE>
INITIAL CAPITAL AGREEMENT
June 28, 1988
Phoenix Multi-Portfolio Fund
101 Munson Street
Greenfield, MA 01301
Dear Sirs:
Phoenix Multi-Portfolio Fund (the "Trust") proposes to issue and sell
to the public shares of beneficial interest, $1 par value, of its Phoenix
Tax-Exempt Bond Portfolio (the "Shares") pursuant to a registration statement on
Form N-1A (the "Registration Statement") filed with the Securities and Exchange
Commission. In order to provide the Trust with a net worth of at least $100,000
as required by Section 14 of the Investment Company Act of 1940, as amended, we
hereby offer to purchase 10,000 Shares at a price of $10.00 per Share two days
prior to the effective date of the Registration Statement (or such earlier date
as may be agreed upon).
We will make payment for the 10,000 Shares by delivery of a certified
or official bank check payable to the order of the Trust at least two business
days prior to the date specified by the Trust as the proposed effective date of
the Registration Statement.
We represent and warrant to the Trust that the Shares are being
acquired by us for investment and not with a view to the resale or further
distribution thereof and that we have no present intention to redeem the Shares.
Please confirm that the foregoing correctly sets forth our agreement
with the Trust.
Very truly yours,
PHOENIX INVESTMENT COUNSEL, INC.
By: /s/ Robert Chesek
------------------------------
Robert Chesek, President
Confirmed, as of the date
first above mentioned.
PHOENIX MULTI-PORTFOLIO FUND
By: /s/ Janice L. Scites
--------------------------------
Janice L. Scites, Vice President
P11.61
Exhibit 14.1
Revenue Code Section 403(b)(7)
tax sheltered accounts
<PAGE>
ANSWERS TO YOUR
QUESTIONS REGARDING
403(b)
<PAGE>
What is a 403(b) plan?
403(b) is a section of the Internal Revenue Code which permits a tax-sheltered
retirement program for employees of non-profit organizations defined in section
501(c)(3) and 170(b)(i)(A)(ii) of the Internal Revenue Code. A non-profit
organization is defined as a corporation, fund, or foundation organized and
operated exclusively for religious, charitable, scientific, testing for public
safety, or educational purposes. Some examples are hospitals, public school
systems and humane associations.
Who is eligible to participate in a 403(b) plan?
Employees of the non-profit organizations described above are eligible to
participate in a 403(b) plan. Under a 403(b) plan, contributions made on behalf
of an individual must be invested in a mutual fund or an annuity.
What are the advantages of investing in a 403(b) plan?
*The employee has a tax-favored means for setting aside retirement savings out
of current income. Contributions and earnings compound tax deferred until they
are withdrawn, usually when the individual is in a lower tax bracket.
*Your principal investment as well as any earnings are vested
immediately.
*Benefits are usually distributed at retirement when you are in a lower tax
bracket and standard deductions are increased.
How do I contribute to a 403(b) plan?
You instruct your employer to make the contributions from future income to a
403(b) plan on your behalf. Contributions may be deducted from your salary or
they may be derived by foregoing an increase in pay. The salary reduction may be
expressed as a specific number of dollars per year or per pay period, or it may
be expressed as a percentage of pay.
<PAGE>
How do I establish a 403(b) plan?
Your employer must complete the Employer Adoption Agreement. You must sign a
Salary Reduction Agreement which describes the amount of compensation to be
contributed to your 403(b) plan. Remember, 403(b) contributions pertain to
compensation for the taxable year after the Salary Reduction Agreement is
signed. Contributions cannot be derived from funds previously received by the
employee (i.e., past earnings, savings).
How are my contributions invested?
Contributions are directed to the Phoenix Funds by your employer. We will invest
the funds as you direct on your Employee Adoption Agreement form.
How much can I contribute to a 403(b) plan?
Contributions cannot exceed a specified limit known as the exclusion allowance.
The employee's exclusion allowance for a taxable year is the lesser of $9,500 or
20 percent of includable compensation for that year, multiplied by the number of
years of service, and reduced by the total contributions paid in prior taxable
years to other retirement plans. We have included a Salary Reduction Worksheet
in this booklet in order to help you calculate your contribution amount.
May I increase/decrease my contributions at any time?
An employee is permitted only one agreement in any given taxable calendar year.
The contributions may be increased/decreased on, or after, the first day of the
next taxable year. The Salary Reduction Agreement may be terminated at any time
with respect to unearned compensation.
When can I begin taking distributions from my plan?
Distribution of your 403(b) funds can be taken without penalty for any of the
following reasons:
A. Attaining age 59-1/2.
B. Terminating employment with your current organization and taking periodic
payments over your lifetime or life expectancy, or over joint lives or life
expectancy of you and your designated beneficiary.
C. Death.
D. Becoming disabled.
E. Experiencing financial hardship. (limited to amounts that do not
exceed medical expense deduction)*
F. Having attained age 55, separating from service, and having met 403(b)
early retirement requirement guidelines.
G. Rollover of distributions within 60 days of receipt to an IRA or another
403(b)(7).
H. Pursuant to "qualified domestic relations order" (divorce proceedings).
*Any funds withdrawn for other types of financial hardship will be subject to a
10% penalty income tax.
You must begin taking distributions from your plan when you reach age 70-1/2.
<PAGE>
How are distributions made?
You direct how your distributions are to be made. Distributions can be made in a
lump sum payment, spread over your life expectancy or spread over the combined
life expectancy of you and your beneficiary(ies).
How would my distributions be taxed?
All distributions are taxed as ordinary income. State income tax laws may
differ. You should contact your state concerning taxation of your 403(b)
distributions.
What if I change employers; can I continue to contribute?
Yes, but only if your new employer opens a 403(b) plan for you.
As another alternative, proceeds may be transferred to an IRA account, or you
may set up a tax-deferred IRA rollover account.
You may not make contributions to a 403(b) account on your own.
What investment funds are available to me under the 403(b) plan?
The following Phoenix Funds are available to meet your 403(b) investment needs:
A. High Yield Fund* - Seeks high current income; capital growth is a secondary
objective. This Series invests primarily in a diversified portfolio of high
yield fixed income securities.
B. High Quality Bond Fund* - Seeks income and appreciation of capital. This
Series invests primarily in publicly-traded investment quality debt
securities.
C. U.S. Government Securities Fund* - Seeks a high level of current income
consistent with safety of principal. This Series invests solely in
securities which are issued or guaranteed by the U.S. Government or its
agencies and instrumentalities and backed by the full faith and credit of
the United States (U.S. Government Securities).
D. Balanced Fund* - Seeks reasonable income, long-term capital growth and
conservation of capital. This Series invests primarily in common stocks and
fixed income securities, with emphasis on income-producing securities which
appear to have a potential for capital enhancement.
E. Convertible Fund* - Seeks income and the potential for capital
appreciation, objectives which are considered as relatively equal. This
Series invests at least 65 percent of its total assets (exclusive of cash
and government securities) in debt securities and preferred stocks
which are convertible into, or carry the right to purchase, common
stock or other equity securities. This Series may employ leveraging
techniques by borrowing money and using such funds to increase its
investments in securities above the amounts otherwise possible.
<PAGE>
F. Growth Fund* - Seeks long-term appreciation of capital. Since income is not
an objective, any income generated by the investment of this Series' assets
will be incidental to its objective. This Series invests primarily in the
common stocks of companies believed by the advisor to have appreciation
potential.
G. Stock Fund* - Seeks appreciation of capital through the use of aggressive
investment techniques. This Series invests primarily in common stocks
believed by management to have a substantial potential for capital growth
without being subject to unreasonable risks.
H. Total Return Fund** - Seeks the highest total return consistent with
reasonable risk. The Fund invests primarily in stocks, bonds and money
market instruments and may adjust the proportion of assets invested in the
different types of securities whenever, in the opinion of the advisor, the
adjustment will contribute to attaining the investment objective.
I. Phoenix Money Market Fund - Seeks as high a level of current income as is
consistent with the preservation of capital and the maintenance of
liquidity. It is intended that this Series will invest primarily in a
portfolio of high-grade money market instruments generally maturing in less
than one year.
What if my investment objectives change?
The Phoenix 403(b)(7) Tax-Sheltered Account allows you to transfer your
investment within the Phoenix Family of Funds free of charge. Transfers may be
subject to certain limitations contained in the Phoenix Funds Prospectuses.
*A Series of the Phoenix Series Fund
**Phoenix Total Return Fund, Inc.
<PAGE>
PHOENIX
TAX-SHELTERED ACCOUNT
SALARY REDUCTION
ANNUAL CONTRIBUTION WORKSHEET
<PAGE>
SALARY REDUCTION WORKSHEETS
The following 403(b) Salary Reduction Worksheets were designed to assist you in
calculating your maximum annual employee salary reduction contribution. The
worksheet helps you determine the amount to be contributed for one year only. It
is important for you to review this information with your tax advisor to be
certain that your contributions will not exceed allowable limitations. Legal or
tax advice is not provided by the custodian, the sponsor of the Phoenix
Tax-Sheltered Account 403(b)(7), or their agents.
These worksheets will not apply to you if your present employer contributes to a
403(b) account on your behalf, other than by salary reduction. In addition,
these worksheets may not be appropriate if:
A. You are a church employee.
B. You will make salary reduction contributions to other retirement plans
(another 403(b), 401(k), SEP-IRA, 457 Deferred Compensation Plan) in this
calendar year.
C. You are a part-time employee.
1. $__________ = Annual compensation this calendar year with current employer
(before salary reduction).
2. __________ = Years of service with current employer (full and fractional
years from date hired to end of current calendar year.)
If less than one year, use one year.
3. $__________ = Total of all past contributions made to any nontaxable
retirement plan by you and your present employer during the above years of
service. This includes you and your employer's past contributions to any
retirement plan including this and other 403(b) plans, State Retirement
Plans, 401(k), or SEP-IRA.*
4. $__________ = __________ multiplied by __________.
(amount on line 1) (number on line 2)
5. $__________ = __________ multiplied by 5.
(amount on line 3)
6. $__________ = __________ minus __________.
(amount on line 4) (amount on line 5)
7. __________ = __________ plus 5.
(number on line 2)
8. $__________ = __________ divided by __________ = Basic Exclusion
(amount on line 6) (amount on line 7) Allowance
9. $__________ = __________ multiplied by 20% = Maximum Annual
(amount on line 1) Addition
Note: If the number on line 2 is less than 15, skip lines 10-13 and enter $9,500
on line 14.
*If you have contributed to a 457 Deferred Compensation plan in the past, be
sure to consult with your tax advisor as your years of service may need to be
adjusted.
<PAGE>
10. $__________ = __________ multiplied by $5,000
(number on line 2)
11. $__________ = Total of all salary reduction contributions made to any
403(b) plans by your present employer (but not including present year
contributions).
12. $__________ = __________ minus __________.
(number on line 10) (number on line 11)
(If less than zero, use zero.)
13. $__________ = The lesser of $3,000 or the amount on line 12 = Special
catch-up salary reduction amount. This is subject to a lifetime limitation
of $15,000.
14. $__________ = __________ plus $9,500 = Dollar Limitation
(amount on line 13)
15. $__________ = The lesser of lines 8, 9 or 14 = Maximum Allowable
Contribution.
An employee of an educational institution, home health service and certain
church organizations who wants to contribute more than the exclusion allowance
calculated on the previous page can use one of three special options. The option
selected is irrevocable; no other option may be selected in any other year.
However, an individual may elect to use the amount on line 15 instead of the
selected alternative option in any given tax year. Please refer to calculations
completed on the previous page in order to complete the following information.
Option A - Year of Separation from Service Limitation
May be elected only in the year in which the employee separates from service.
1. $__________ = Amount on line 8 recalculated using only the last 10 years of
service (Basic Exclusion Allowance).
2. $__________ = Amount on line 14 (Dollar Limitation).
The Maximum Allowance Contribution is the lesser of 1 or 2.
Option B - Any Year Limitation
May be elected during any year.
1. $__________ = Amount on line 8 (Basic Exclusion Allowance).
2. $__________ = Amount on line 14 (Dollar Limitation).
3. $__________ = Amount on line 9 plus $3,200.
Option C - Overall Limitation
May be elected in any year of service.
1. $__________ = Amount on line 14 (Dollar Limitation).
2. $__________ = Amount on line 9 (Maximum Annual Addition).
The Maximum Allowable Contribution is the lesser of 1 or 2.
<PAGE>
A GREAT
TAX-SHELTERED PLAN
IS ONLY 5 STEPS AWAY!
A Tax-Sheltered Account 403(b)(7) is a great way to reduce tax burdens while
investing in your future. To get started, just:
1. Complete the Employee Adoption Agreement.
2. Have your employer complete the Employer Adoption Agreement.
3. Complete the Salary Reduction form and keep it on file with your employer.
(Note: Your company/organization may have its own Salary Reduction Form.)
4. Have your employer prepare one check for your TSA investment and
establishment fee payable to the Phoenix Fund you have selected for
investment. The establishment fee of $10.00 will be deducted from your
initial contribution.
5. Mail the Employee Adoption Agreement, Employer Adoption Agreement, and
check to:
Phoenix Equity Planning Corporation
Attn: TSA Department
100 Bright Meadow Boulevard
Enfield, CT 06082-1989
<PAGE>
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard, Enfield, CT 06082-1989
{LOGO} Phoenix Tax-Sheltered Mutual Fund Account
The PHOENIX(R) EMPLOYEE ADOPTION AGREEMENT
- --------------------------------------------------------------------------------
The Participant named below, by execution and acknowledgement of this Adoption
Agreement, hereby applies for a Custodial Account pursuant to Section 403(b) (7)
of the Internal Revenue Code and the Employer Adoption Agreement and agrees to
the terms of the Phoenix Equity Planning Corporation Tax-Sheltered Mutual
Fund Plan.
================================================================================
1. PARTICIPANT INFORMATION
================================================================================
NAME OF PARTICIPANT BIRTHDATE
- --------------------------------------------------------------------------------
ADDRESS
- --------------------------------------------------------------------------------
CITY STATE ZIP CODE SOCIAL SECURITY NUMBER
- --------------------------------------------------------------------------------
PARTICIPANT AND/OR HIS/HER SPOUSE IS AFFILIATED IN ANY WAY WITH A FIRM ENGAGED
IN THE SECURITIES INDUSTRY* *IF YES, PROVIDE NAME OF SECURITY FIRM
[ ] NO [ ] YES
================================================================================
2. EMPLOYER INFORMATION
================================================================================
NAME
- --------------------------------------------------------------------------------
ADDRESS CITY STATE ZIP CODE
- --------------------------------------------------------------------------------
Does employer have other active participants in this 403(b) plan? [ ] YES [ ] NO
================================================================================
3. CUSTODIAN INFORMATION
================================================================================
NAME
State Street Bank and Trust Company
- --------------------------------------------------------------------------------
ADDRESS
Custody and Shareholders Services Division, P.O. Box 1912, Boston, MA 02105
- --------------------------------------------------------------------------------
The Participant accepts the Plan as a Custodial Account treated as an annuity
contract under Section 403(b) of the Code. The Participant (a) designates the
following fund(s) as the investments to be purchased with contributions by the
Employer under the Plan on behalf of the Participant, and (b) acknowledges
receipt of the current prospectus(es) of the designated fund(s). (Elect one or
more)
- --------------------------------------------------------------------------------
FUND INVESTMENT OBJECTIVES INITIAL SUBSEQUENT
CONTRIBUTION CONTRIBUTION
----------------------------------
WHOLE PERCENTAGES ONLY
================================================================================
Phoenix Series Fund
================================================================================
[ ] Balanced REASONABLE INCOME,
LONG-TERM CAPITAL GROWTH $ %
- --------------------------------------------------------------------------------
[ ] Convertible INCOME WITH POTENTIAL FOR
CAPITAL APPRECIATION $ %
- --------------------------------------------------------------------------------
[ ] Growth LONG-TERM APPRECIATION
OF CAPITAL $ %
- --------------------------------------------------------------------------------
[ ] High Quality INCOME AND THE APPRECIATION
Bond OF CAPITAL $ %
- --------------------------------------------------------------------------------
[ ] High Yield HIGH CURRENT INCOME $ %
- --------------------------------------------------------------------------------
[ ] Money Market HIGH CURRENT INCOME
CONSISTENT WITH THE
PRESERVATION OF CAPITAL
AND THE MAINTENANCE
OF LIQUIDITY $ %
- --------------------------------------------------------------------------------
[ ] Stock APPRECIATION OF CAPITAL
THROUGH THE USE OF
AGGRESSIVE INVESTMENT
TECHNIQUES $ %
- --------------------------------------------------------------------------------
[ ] U.S. Government HIGH LEVEL OF CURRENT INCOME
Securities Fund CONSISTENT WITH SAFETY OF
PRINCIPAL $ %
================================================================================
Phoenix Total HIGHEST TOTAL RETURN
Return Fund, Inc. CONSISTENT WITH REASONABLE
RISK $ %
================================================================================
The Participant agrees to pay the following fees to the Custodian: (a) New
Account fee: $10 (b) Annual Maintenance fee (per fund selected above): $15 (c)
Distributions from the plan: Termination or Transfer out of the Phoenix Equity
Planning Corp. TSA Agreement: $25. The new account fee will be deducted from the
initial contribution. Custodian will collect Annual Maintenance fee during the
first quarter of the year by: (a) liquidating sufficient shares from each
Phoenix Fund Account, or, (b) billing you at your mailing address.
================================================================================
4. GENERAL PROVISIONS
================================================================================
The Participant agrees that the duties imposed by the PLAN or law on either the
Custodian or PEPCO may be performed in full reliance upon the instructions and
directions of the Participant to PEPCO and of PEPCO to the Custodian as provided
in the Plan. The Custodian agrees to establish and maintain the Custodial
Account for the benefit of the Participant in accordance with the provisions of
the Plan and to accept contributions of cash thereto from the Employer.
The Participant represents that the Participant's participation in the Plan is
completely voluntary and that the sole involvement of the Employer in the Plan
is, without endorsement of the Plan, to permit registered representatives of
securities dealers to publicize the Plan to the Participant and to perform its
obligations under the Salary Reduction Agreement.
The Participant acknowledges that he or she has received and read a current
prospectus relating to the Investment Company Shares in which he or she has
directed investments. The Participant acknowledges that he or she has received
and read a copy of the Phoenix Custodial Agreement. The Participant designates
the Beneficiaries and elects the method of distribution.
(Continued on Reverse Side)
PEP 429 C 6-89
<PAGE>
The Participant understands that he or she is responsible for computing the
annual maximum salary reduction amounts on his or her behalf and agrees to
indemnify PEPCO and State Street Bank and Trust Company, Custodian, for any act
done or omitted to be done in good faith reliance on information provided by or
at the direction of the Participant, the Participant's Beneficiary(ies), or the
legal representative of the Participant or Participant's Beneficiary(ies). The
Participant also certifies, under penalty of perjury, that the Taxpayer
Identification Number is true, correct, and complete.
The Participant is responsible for determining the tax effect of the Salary
Reduction Agreement, including determining that the salary reduction does not
exceed the amount to be contributed in that year in accordance with the
provisions of Section 415 or the "exclusion allowance" as determined in
accordance with the provisions of Code Section 403(b)(2) (as modified by Code
Sections 415(a)(2) and 457(c)(2)) and the limit on excess deferrals in Code
Section 402(g).
================================================================================
5. TELEPHONE EXCHANGE [ ] Yes [ ] No
================================================================================
Telephone exchanges are subject to the terms of the Prospectus. If the
shareholder checks the "yes" box, telephone exchange orders will be accepted
from the shareholder and may be accepted from PEPCO and from the shareholder's
broker/dealer. By signing this New Account Application, the shareholder agrees
that the Phoenix Series Fund, Phoenix Total Return Fund, Inc., the Transfer
Agent, and PEPCO will not be liable for any loss, injury or damage incurred as a
result of acting upon, and neither will they be responsible for the authenticity
of any telephone instructions, other than those instructions delivered by PEPCO.
If the shareholder checks the "no" box, only the shareholder may authorize an
exchange, by writing to State Street Bank and Trust Company according to the
terms of the Prospectus. If the shareholder does not check either the "yes" or
"no" box, it will be assumed that the shareholder is NOT electing the Telephone
Exchange Privilege.
================================================================================
6. DESIGNATION OF BENEFICIARY
================================================================================
PRIMARY BENEFICIARY: The Participant hereby designates the following named
individual(s) as Primary Beneficiary(ies) to receive all amounts payable from
his or her Custodial Account by reason of his or her death and hereby revokes
any and all prior beneficiary designations heretofore made and filed with the
Custodian.
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. FULL LEGAL NAME (Last, first, middle) SOCIAL SECURITY NUMBER DATE OF BIRTH RELATIONSHIP TO PARTICIPANT
- ----------------------------------------------------------------------------------------------------------------------
COMPLETE ADDRESS (Number, street, city, state & zip code)
- ----------------------------------------------------------------------------------------------------------------------
2. FULL LEGAL NAME (Last, first, middle) SOCIAL SECURITY NUMBER DATE OF BIRTH RELATIONSHIP TO PARTICIPANT
- ----------------------------------------------------------------------------------------------------------------------
COMPLETE ADDRESS (Number, street, city, state & zip code)
======================================================================================================================
CONTINGENT BENEFICIARY
In the event the Primary Beneficiary(ies) does/do not survive the Participant, the Participant hereby designates the
following as Contingent Beneficiary(ies) of all such amounts:
- ----------------------------------------------------------------------------------------------------------------------
1. FULL LEGAL NAME (Last, first, middle) SOCIAL SECURITY NUMBER DATE OF BIRTH RELATIONSHIP
- ----------------------------------------------------------------------------------------------------------------------
COMPLETE ADDRESS (Number, street, city, state & zip code)
- ---------------------------------------------------------------------------------------------------------------------
2. FULL LEGAL NAME (Last, first, middle) SOCIAL SECURITY NUMBER DATE OF BIRTH RELATIONSHIP
- ----------------------------------------------------------------------------------------------------------------------
COMPLETE ADDRESS (Number, street, city, state & zip code)
======================================================================================================================
7. SIGNATURES
======================================================================================================================
PARTICIPANT'S SIGNATURE DATE
</TABLE>
================================================================================
8. FOR DEALER USE ONLY
================================================================================
REPRESENTATIVE CODE NUMBER AND NAME (Please print) REPRESENTATIVE SIGNATURE
X
- --------------------------------------------------------------------------------
DEALER NAME IN FULL (Please print) BRANCH MANAGER'S SIGNATURE
X
- --------------------------------------------------------------------------------
BRANCH CODE AND BRANCH ADDRESS AUTHORIZED DEALER SIGNATURE
X
- --------------------------------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER PHOENIX EQUITY PLANNING
CORPORATION
( ) - X
- --------------------------------------------------------------------------------
State Street Bank and Trust Company shall become a party hereto upon mailing to
the Participant a document acknowledging its receipt of the Agreement and
confirming its acceptance thereof.
<PAGE>
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard, Enfield, CT 06082-1989
The Phoenix
[LOGO] Tax-Sheltered Mutual Fund Account
The PHOENIX(R) EMPLOYER ADOPTION AGREEMENT
The Employer hereby adopts the Phoenix Equity Planning Corporation Tax-Sheltered
Mutual Fund Plan (the "Plan"), appoints State Street Bank and Trust Company to
act as Custodian under the Plan, delegates certain duties under the Plan to
Phoenix Equity Planning Corporation and agrees to abide by the provisions of the
plan. The employer represents that it is an organization described in Section
403(b)(1)(a) of the Code and that its only responsibilities with respect to this
plan are to make salary reductions in accordance with agreements with the
Participants and to transfer such salary reduction contributions to the
Custodian.
The Employer agrees to make all contributions in accordance with the terms of an
executed Salary Reduction Agreement between Employer and each Participant.
The Employer represents that the Participant's participation in the Plan is
completely voluntary.
Employer hereby represents and warrants that its Tax Shelter Account plans under
403(b) of the Code are and will be administered in conformity with a reasonable
and good faith interpretation of the non-discrimination rules under Section
403(b)(12) of the Code.
<TABLE>
<S> <C>
Name of Employer: Accepted by State Street
Bank and Trust Company
____________________________________________ By:_________________________________________
By:_________________________________________ Title:______________________________________
Title:______________________________________ Date:_______________________________________
Date:_______________________________________ Accepted by Phoenix Equity
Planning Corporation
Address:
Street______________________________________ By:_________________________________________
City________________________________________ Title:______________________________________
State ___________________ Zip _____________ Date:_______________________________________
Telephone: ( )
_________________________________
</TABLE>
*The Employer is required to sign this Agreement only if the Employer does not
already have a signed 403(b) Agreement with Phoenix.
PEP 429 D (6-89)
<PAGE>
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard, Enfield, CT 06082-1989
The Phoenix
[LOGO] Tax-Sheltered Mutual Fund Account
The PHOENIX(R) SALARY REDUCTION AGREEMENT
This Salary Reduction Agreement is entered into by the Employer and the
Participant to provide the source for contributions made on behalf of the
Participant under the Phoenix Equity Planning Corporation Tax-Sheltered Mutual
Fund Plan, which is incorporated herein by reference.
1. The Employer and the Participant hereby agree that, with respect to
services to be rendered hereafter by the Participant, the Participant's
salary for such services shall be reduced by the
amount of _________% or $_________ per year commencing with the pay due on
_______________, 19 _____. The Employer agrees to forward the amount of
such reduction in compensation of the Custodian for investment in the
Participant's Account.
2. The rights of the Participant in the Account under the Plan shall be
nonforfeitable at all times.
3. This Salary Reduction Agreement shall continue indefinitely until amended
or terminated, provided that no more than one such agreement may be made in
any taxable year of the Employee. The Employer and the Participant may
amend or terminate this agreement by thirty (30) days written notice. This
agreement will automatically terminate upon the termination of the Plan or
the termination of the Participant's employment by the Employer.
4. The Participant is responsible for determining the tax effect of this
Salary Reduction Agreement, including determining that the salary reduction
in Paragraph 1 does not exceed the amount permitted to be contributed in
that year in accordance with the provisions of Section 415 or the
"exclusion allowance" as determined in accordance with the provisions of
Code Section 403(b)(2) (as modified by Code Sections 415(a)(2) and
457(c)(2)) and the limit on excess deferrals in Code Section 402(g). The
Employer will provide to the Participant, upon request, any available
information from the Employer's records which is necessary to enable the
Participant to make these tax determinations.
The parties have signed this Salary Reduction Agreement this ___________ day of
____________________, 19 _____.
Employer:__________________________ Participant:_________________________
By:________________________________
Title:_____________________________
PEP 429 A (6-89)
<PAGE>
INSTRUCTIONS FOR TSA TRANSFERS
Complete the following forms and submit them to:
Phoenix Equity Planning Corporation, 100 Bright Meadow Boulevard,
Enfield, CT 06082-1989:
1) Tax-Sheltered Mutual Fund Account Employee Adoption Agreement
2) Tax-Sheltered Mutual Fund Account Transfer Agreement
Upon our receipt of the appropriate paperwork, an account will be established.
The Transfer Agreement Form will be sent to the existing issuer or custodian
(Transferor Company) after obtaining State Street Bank and Trust Company's
acceptance.
The Transferor Company should then mail the proceeds from your existing TSA
account/annuity to Phoenix Equity Planning Corporation for investment in your
Tax-Sheltered Mutual Fund Account.
Please direct any questions to our Shareholder Service Department by calling
toll-free 1-800-243-1574.
<PAGE>
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard, Enfield, CT 06082-1989
The Phoenix
[LOGO] Tax-Sheltered Mutual Fund Account
The PHOENIX(R) TRANSFER AGREEMENT
TRANSFEROR COMPANY (existing issuer or custodian)
- -----------------------------------------------
NAME
- -----------------------------------------------
STREET
( )
- ----------------------------------------------- ----------------------------
CITY STATE ZIP PHONE NUMBER OF EXISTING
CUSTODIAN/ISSUER
The Parties hereto do hereby agree as follows:
Said annuity/account is more specifically described as follows:
Policy/Account/Contract/Certificate Number:
#_______________________________________________________________________________
The Employee hereby requests that all or $__________ from the proceeds of the
above-described annuity/account be transferred from the Transferor Company to
State Bank and Trust Company for investment in an individual custodial account
pursuant to Section 403(b)(7) of the Code and intends such transfer to be a
non-taxable transfer.
The Employee does hereby surrender the above-described to the Transferor Company
and directs that such Transferor Company forward the proceeds therefrom to State
Street Bank and Trust Company for Employee's benefit as hereinafter provided.
Upon execution of this Agreement by the Employee and the State Street Bank and
Trust Company, this Agreement shall become binding and irrevocable. No
distribution shall be made until after the execution of this Agreement by the
Employee.
Any amounts may be payable directly from the Transferor Company to the order of
Phoenix Equity Planning Corporation in accordance with the instructions below.
Employee Signature:__________________________________
Employee Name:_______________________________________
PLEASE PRINT
Employee Address:____________________________________
____________________________________
NOTE: Your existing custodian may require a signature guarantee. Please check
with them for requirements.
- --------------------------------------------------------------------------------
SIGNATURE GUARANTEE BY: NAME OF BANK OR FIRM
-------------------------------------
SIGNATURE OF OFFICER & TITLE
================================================================================
FOR CUSTODIAN USE ONLY
================================================================================
ACCEPTANCE BY NEW CUSTODIAN (to be completed by State Street Bank and Trust
Company) We agree to accept custodianship and the transfer described above for
the Distributors 403(b) Plan established on behalf of the above named
individual. State Street Bank and Trust Company accepts its appointment as
successor custodian of the above 403(b) account and requests the liquidation and
transfer of assets indicated above. FORMER CUSTODIAN: Please mail the proceeds
made payable to PHOENIX SERIES FUND, and/or PHOENIX TOTAL RETURN FUND, INC. to:
PHOENIX EQUITY PLANNING CORPORATION
Attn: Transfer of Assets
Acct. No: __________________________________
100 Bright Meadow Boulevard
Enfield, CT 06082-1989
- --------------------------------------------------------------------------------
BY: (CUSTODIAN) DATE
STATE STREET BANK AND TRUST COMPANY
- --------------------------------------------------------------------------------
PEP 429 B (6-89)
<PAGE>
PHOENIX
TAX-SHELTERED
ACCOUNT
403 (b)(7)
TERMS AND
CONDITIONS
<PAGE>
The Phoenix Equity Planning Corporation's Tax-Sheltered Mutual Fund Plan will be
established for the exclusive benefit of the Participant and his or her
Beneficiaries upon the execution of the Employee Adoption Agreement and the
Salary Reduction Agreement. The Plan is intended to satisfy the requirements of
Code Sections 403(b)(7) and 401(f)(2). The parties to the Plan are PEPCO, the
Participant, the Employer and the Custodian.
The Custodian will accept contributions made by the Employer on behalf of the
Participant for investment in the funds elected in the Employee Adoption
Agreement to provide retirement benefits for the Participant. The Custodial
Account shall be subject to the terms and conditions of the Plan. The State
Street Bank and Trust Company shall serve as the Plan's Custodian.
Article I--Definitions
As used in the Plan, the following terms shall have the following meaning unless
a different meaning is clearly required by the context:
1.01 Account or "Custodial Account" means the separate investment account
established for the Participant in accordance with Section 2.01 of this
Plan.
1.02 Agreement or "Custodial Agreement" means the Plan, including the Employer
Adoption Agreement, the Employee Adoption Agreement and the Salary
Reduction Agreement, as may be amended from time to time.
1.03 Beneficiary means a person designated in writing by a Participant to
receive any benefit then vested under the Plan in the event of such
Participant's death.
1.04 PEPCO means Phoenix Equity Planning Corporation, a Connecticut
corporation, a wholly owned subsidiary of Phoenix Mutual Life Insurance
Company.
1.05 Code means the Internal Revenue Code of 1986, as amended.
1.06 Custodian means the State Street Bank and Trust Company and any successor
thereto under Section 6.05 hereof.
1.07 Disability means the inability of a Participant to engage in any
substantial gainful activity by reason of physical or mental impairment
which can be expected to result in death or to be of long continued and
indefinite duration as determined independently by a duly licensed
physician; or such other definition as defined in Section 72(m) of the
Code, should such Section be amended in the future.
1.08 Employer means the signatory corporation or organization, as the case may
be, which is either (a) an educational institution or system described in
Section 170(b)(1)(A)(ii) of the Code, or (b) a tax-exempt organization
described in Section 501(c)(3) of the Code which is exempt from tax under
Section 501(a) thereof, and any like successor to either which in writing
elects with the written acceptance of the Custodian to continue the Plan.
1.09 Financial Hardship means a financial need of the Participant resulting
from (i) purchase of principal residence; (ii) threat of eviction from a
foreclosure on a principal residence; (iii) tuition for higher education
for participant or dependent; and (iv) substantial uninsured medical
expenses for participant or dependent.
1.10 Investment Company Shares means the shares of the Phoenix Funds,
open-ended, regulated investment companies within the meaning of Section
851(a) of the Code, whose shares may be purchased through PEPCO.
<PAGE>
1.11 Participant means any employee of the Employer who executes the Agreement
and who executes a Salary Reduction Agreement with the Employer which
directs the Employer to contribute a specified contribution of salary to
the Plan.
1.12 Plan means the Phoenix Equity Planning Corporation Tax-Sheltered Mutual
Fund Plan, as amended from time to time.
1.13 Salary Reduction Agreement means a written agreement between the Employer
and the Employee whereby the Employee irrevocably agrees to reduce salary
(or to forego an increase in salary) with respect to amounts earned after
the effective date of the Agreement, and whereby the Employer agrees to
contribute the amount of salary reduced or foregone by the Employee to the
Custodial Account. The Salary Reduction Agreement may be terminated at any
time either by the Employer or Employee with respect to amounts not yet
earned by the Employee; provided that no more than one Agreement for
salary reduction may be made within any taxable calendar year of the
Employee.
Article II--Contributions
2.01 Custodial Account: The Custodian shall establish a Custodial Account which
satisfies the requirements of Code 401(f)(2), and which shall receive all
contributions made by the Employer on behalf of the Participant.
2.02 Employer Contributions: The Employer shall make contributions under the
Plan on behalf of the Participant in accordance with the Salary Reduction
Agreement that has been entered into with the Participant. However,
contributions made during a Participant's taxable year by the Employer,
as computed by the Employer or the Participant, shall not exceed an amount
equal to the lesser of the amount permitted to be contributed in that year
in accordance with the provisions of Section 415 of the Code or the
Participant's exclusion allowance as determined for that year in
accordance with the provisions of Section 403(b)(2) of the Code, as
modified by Section 414(a)(2) and 457(c)(2). If an excess contribution
exists with respect to a Participant's Account for any taxable year within
the meaning of Code Section 4973 (c), the Participant may notify the
Custodian through PEPCO in writing of the amount of such excess and
request a refund of such amount. Upon receiving such written notification,
the Custodian shall redeem sufficient Investment Company Shares to refund
the amount of such excess contribution to the Participant, plus the net
income to the Account on such excess contribution. Neither the Custodian,
PEPCO, nor any agent thereof shall have any duty to determine whether an
excess contribution has been made on behalf of a Participant to the Plan.
2.03 Transfer to the Custodial Account: At the written direction of the
Participant through PEPCO, the Custodian shall accept as a contribution on
behalf of the Participant:
(a) The amount of the Participant's interest in any other custodial
account maintained for the benefit of the Participant in accordance
with the provisions of Section 403(b)(7) of the Code which is
transferred directly to it in cash by the Custodian of the custodial
account;
(b) the amount, or portion thereof, of the Participant's interest in any
other custodial account maintained for the benefit of the
Participant or of the proceeds from an annuity contract for the
benefit of the Participant in accordance with the provisions of
Section 403(b) of the Code which is transferred to it in cash by or
on behalf of the Participant if the Custodian and PEPCO receive
adequate assurance that such transfer either constitutes a tax-free
transfer or a rollover contribution as described in Section
403(b)(8) or 408(d)(3) of the Code.
<PAGE>
2.04 Transfers from the Custodial Account: At the written direction of the
Participant through PEPCO, the Custodian shall transfer, in cash, the
balance in the Participant's Custodial Account less the amount of any
taxes, charges or other expenses then chargeable thereto to:
(a) the Custodian of any other Custodial Account maintained for the
benefit of the Participant in accordance with the provisions of
Sections 403(b)(7) of the Code; or
(b) the insurance company designated by the Participant for the
purchase, for the benefit of the Participant, of an annuity contract
described in Section 403(b) of the Code, if the transfer meets the
requirements for a tax-free transfer. Any determination as to
whether the transfer is a tax-free transfer shall be made by the
Participant upon the advice of his or her tax counsel.
Article III--Investment of Contributions
3.01 Contributions: All contributions under the Plan shall be credited to the
Participant's Account and shall be used to purchase full and fractional
Investment Company Shares specified by the Participant in the Employee
Adoption Agreement. The execution of the Employee Adoption Agreement shall
be deemed the Participant's acknowledgement of receipt of the current
prospectus relating to the Investment Company Shares in which he or she
has directed investment. With each contribution, the Employer shall notify
the Custodian of the name of each Participant on whose behalf a
contribution is made and the amount to be credited to each Participant's
Account. The usual sales and service charges described in the prospectus
concerning the acquisition and accumulation of such shares shall be
charged to the Participant's Account.
3.02 Reinvestment: All dividends and capital gain distributions received on
particular Investment Company Shares held in a Participant's Account shall
be reinvested in full and fractional shares of the same investment company
and shall be credited to that Participant's Account. If such dividends
or distributions may be received in additional shares or in cash or other
property, the Custodian shall elect to receive the same in additional
shares.
3.03 Vesting: Each Participant's interest in the Account attributable to
contributions on his or her behalf, together with earnings credited
thereto shall be at all times fully vested and nonforfeitable.
3.04 Investment Direction: The investment instructions specified in the
Employee Adoption Agreement shall be followed by the Custodian until such
instructions are modified by the Participant in writing, or in such other
form approved by the Custodian. If either PEPCO or the Custodian finds any
investment instructions of the Participant to be incomplete, conflicting
or otherwise unacceptable, it may return the same to the Participant for
clarification, and until clarification or further instructions acceptable
to PEPCO and the Custodian are received, any Employer contribution which
was uninvested due to such unacceptable instructions may be invested in
accordance with the Participant's last previous written instructions with
respect to investment of contributions.
3.05 Exchanges: The Participant, by a suitable writing or such other method
approved by the Custodian, may at any time direct the Custodian to
exchange all or any portion of the Investment Company Shares held in the
Participant's Custodial Account for other Investment Company Shares if
such exchange is permitted by the current prospectus relating to the
Investment Company Shares involved in the transaction, and such direction
shall be deemed the Participant's acknowledgement of receipt of the
current prospectus relating to the Investment Company Shares in which he
or she has directed investment.
<PAGE>
3.06 Ownership of Investment Company Shares: Title in all Investment Company
Shares purchased under the Plan shall be registered in the name of the
Custodian (or its nominee) as custodian for the account of the
Participant. The Custodian shall cause PEPCO to forward all proxy and
other materials that relate to the Investment Company Shares held in the
Custodial Account to the Participant and shall follow the Participant's
written instructions with respect to voting shares. If instructions of the
Participant are not received, the shares shall not be voted.
Article IV- Payment of Benefits
4.01 General:
(a) Subject to the restrictions on distributions from ORP Accounts
described in Section 4.11, distribution of the assets in an Account
may be made to the Participant on account of one of the following:
1. the Participant has attained age 59-1/2 as described in
Section 4.02 below;
2. the Participant retires early as described in Section 4.03
below;
3. the Participant has separated from service with the Employer
as described in Section 4.04 below;
4. the Participant has become disabled as described in Section
4.05 below; or
5. the Participant encounters financial hardship as described in
Section 4.06 below.
(b) The Participant may elect a form of distribution from among the
following alternatives:
i. a single sum, in cash or kind.
ii. equal or substantially equal monthly, quarterly or annual
installments over the life of the Participant or over the
lives of the Participant and designated Beneficiary, or a
period certain not to exceed the life expectancy of such
participant or the joint and last survivor life expectancy of
such Participant and Beneficiary.
iii. an immediate or deferred annuity contract purchased by the
Custodian, which provides for payments over the life of the
Participant or, if Participant so elects, for payments over
the lives of the Participant and the Participant's
Beneficiary.
4.02 Age 59-1/2: Distribution shall be made on the Participant's written
application at anytime after a Participant has attained the age of 59-1/2
years.
4.03 Early Retirement: Distribution shall be made on the Participant's written
application if the Participant retires (with separation from service with
the Employer) under either the early or normal retirement provisions,
under any other retirement plan maintained by the Employer, and the
Participant has attained the age of 55 years at the time of such early or
normal retirement.
4.04 Separation from Service: Distribution shall be made on the Participant's
written application at any time after a Participant has separated from
service with the Employer provided, however, any such distribution shall
be made only under paragraph 4.01(b) ii above.
<PAGE>
4.05 Disability: Distribution on account of disability shall be made on the
Participant's written application for such distribution accompanied by a
physician's statement certifying that the Participant is unable to engage
in any substantial gainful activity by reason of any medically determined
physical or mental impairment which can be expected to result in death or
to be of long-continued and indefinite duration.
4.06 Financial Hardship: Before the Custodian may make a Distribution for a
Financial Hardship, the Custodian must receive a written certification
from an independent person (or persons) certifying the existence of, and
the amount necessary to satisfy the Financial Hardship. The Custodian
may not distribute more than an amount required to meet the immediate
financial need created by the Financial Hardship and not reasonably
available from other resources of the participant. The independent person
must determine the existence of the Financial Hardship in accordance
with uniform and nondiscriminatory standards, and such independent
person must not be the Participant, the Custodian, an employee or director
of a regulated investment company, or any person who would be a
disqualified person under Code Section 4975 if the Custodian Account was a
qualified plan under Code Section 401(a). Distributions on account of
Financial Hardship after December 31, 1988 shall only be made from
contributions made, and not from earnings thereon, pursuant to a Salary
Reduction Agreement. Contributions on behalf of a Participant shall be
suspended for the twelve month period following the Distribution for
Financial Hardship. Any contributions after the suspension shall be
limited during the subsequent twelve month period to the amount of
contributions made during the taxable year in which the Distribution was
made.
4.07 Minimum Required Distributions:
(a) A Participant's entire remaining interest in the Account will be
distributed to the Participant no later than the required
beginning date or, if elected by Participant in a written
application, will be distributed beginning not later than such date
in substantially equal monthly, quarterly, or annual installments
over a period certain not extending beyond the life expectancy of
such Participant and a designated Beneficiary. If such designated
Beneficiary is anyone other than the spouse of the Participant, then
the amount of any such periodic distribution will be in a sufficient
amount so that the Participant will be actuarially expected to
receive more than one-half of the payments in his lifetime.
(b) The phrase "required beginning date" as used herein shall mean the
April 1 following the calendar year in which the Participant attains
age 70-1/2 years.
4.08 Death:
(a) In the event of the Participant's death, distribution of assets in
the Participant's Account shall be made to his designated
Beneficiary or Beneficiaries. If there is no valid beneficiary
designation in effect at the time of the Participant's death, such
distribution shall be made to his spouse, if living, otherwise to
his estate. Any such distribution shall only be made on the written
application of the party entitled thereto and submission of evidence
satisfactory to the Custodian of the Participant's death.
(b) If distribution of the Participant's Account(s) has begun in
accordance with Section 4.07 above and the Participant dies before
his entire interest has been distributed to him, the remaining
portion of such interest shall be distributed at least as rapidly as
under the method of distribution being used under Section 4.07 as of
the date of his death.
<PAGE>
(c) If a Participant dies before the distribution of his Account has
begun in accordance with Section 4.07, then the distribution of the
Participant's Account shall be made to his Beneficiary within (5)
years of his death, except if:
(1) the distribution is to be made to a designated Beneficiary and
such benefit is to be paid over a period not extending beyond
the life expectancy of such Beneficiary and such distribution
begins not later than 1 year after the date of the Partici-
pant's death (or such later date as regulations may permit);
or
(2) the designated Beneficiary is the surviving spouse of the
Participant and distribution is to be made over a period not
extending beyond the life expectancy of such spouse and such
distribution commences no later than that date on which the
Participant would have attained age 70-1/2; then distribution
may be made in accordance with paragraph (1) or (2) above,
whichever is applicable.
(d) The Participant may designate and change his Beneficiary or
Beneficiaries under this Agreement on a form provided by the
Custodian or otherwise acceptable to the Custodian for such purpose.
All elections with respect to the mode of distribution of the
Custodial Account on the death of the Participant may be made by the
Participant, or, in the absence of an irrevocable election by the
Participant, by his Beneficiary. The designation of beneficiary form
shall not become effective until it is filed with the Custodian. The
last designation filed with the Custodian shall be controlling, and
whether or not it fully disposes the Custodial Account, shall revoke
all such other designation previously filed by the Participant. Each
such executed designation is specifically incorporated herein by
reference and shall be construed, enforced, and administered
according to the laws of the Commonwealth of Massachusetts.
4.09 Methods of Payment: Payments may be made in cash or shares or a
combination thereof as may be directed by the Participant, provided,
however, that any payments made on account of financial hardship shall be
in cash, and any periodic payments to be made by the Custodian shall be in
cash unless the Custodian otherwise agrees to make such periodic payments
in shares.
4.10 Written Application: The Custodian shall not have any responsibility to
make distributions other than upon the Participant's written application
for such benefits and providing such information as the Custodian may
require. Any written application shall be on a form provided by the
Custodian or in such other manner as may be acceptable to the Custodian.
The Custodian shall not, however, be responsible for complying with a
written document which does not appear on its face to be genuine, and
assumes no duty of further inquiry.
4.11 Reductions on Distributions from ORP Accounts: Notwithstanding anything
herein to the contrary, except as may be required under Section 4.12 in
accordance with the requirements of the Code Sections 403(b)(10) and
401(a)(9), distributions are to be made from ORP Accounts only if the
Participant terminated participation in the Optional Retirement Program as
provided in Section 36, 105, Title 110B, Vernon's Texas Civil Statutes, by
reason of his death, retirement or termination of employment and such dis-
tributions from the ORP Accounts shall only be made upon the written
authorization of the Employer.
4.12 Assignment of Benefits: The Custodial Account and/or the benefits payable
to the Participant, a spouse or a Beneficiary are not subject to the
claims of their creditors and may not be voluntarily or involuntarily
assigned or alienated or encumbered.
<PAGE>
Article V--Amendment and Termination
5.01 Plan Termination: The Plan may be terminated at any time by a written
notice to the Custodian and PEPCO, signed by the Participant and the
Employer, and specifying the date of the Plan's termination. However, the
Plan may be continued by a successor Employer described in Section 1.08 of
the Plan that executes an Adoption Agreement to the Plan, together with
the Participant and PEPCO. Upon termination of the Plan, the Participant's
Account shall be distributed in accordance with the Provisions of Article
IV hereof.
5.02 Plan Amendment: The Plan may be amended at any time by delivering to the
Custodian and PEPCO a written copy of such modification or amendment,
signed by the Employer, provided, however, that:
(a) No modification or amendment shall cause or permit any part of the
assets in the Participant's Account to be diverted to purposes other
than for the exclusive benefit of the Participant or his or her
Beneficiary or as would cause or permit any portion of such assets
to revert to, or become the property of, the Employer; and
(b) No retroactive modification or amendment shall deprive the
Participant or his or her Beneficiary of any benefit to which the
Participant was entitled under the Plan by reason of contributions
made prior to the effective date of modification or amendment,
unless such modification or amendment is necessary to conform the
Plan to, or satisfy the conditions of, any law, governmental
regulation or filing, and to permit the Plan to meet the
requirements of Section 403(b)(7) of the Internal Revenue Code or
any similar statute enacted in lieu thereof.
(c) No modification or amendment shall take effect without the prior
written approval of PEPCO and the Custodian (but such consent shall
not be construed as approval of the sufficiency of any such
modification or amendment).
5.03 Amendment Delegation: The Employer hereby delegates to PEPCO the power to
amend the Plan in any respect at any time (including retroactive
amendment) by submitting a copy of the amendment to the Employer in order
to meet the requirements of Section 403(b)(7) of the Code or obtain a
ruling or determination from the Internal Revenue Service that the Plan,
as so amended, meets said requirements. Employer shall be deemed to have
consented to any such amendment. However, no such amendment shall deprive
any Participant or his or her Beneficiary of any benefit to which the same
was entitled by reason of contributions made prior thereto or permit Plan
assets to be diverted to purposes other than for the exclusive benefit of
Participants or their Beneficiaries or to revert to or become the property
of the Employer.
<PAGE>
Article VI--Custodian
6.01 Powers of Custodian: The Custodian shall have all powers necessary for the
performance of its duties, including the ability to delegate the
performance of any of its administrative duties. The Custodian shall hold
the contributions received by it subject to the terms of the Plan and the
purposes herein set forth and the Custodian shall be responsible only for
such assets as shall actually be received by it hereunder. The Custodian
is by the terms of the Plan subject to directions of the Participant, in
writing or in such other form approved by the Custodian, in the
investment, distribution, transfer and exchange of assets held in custody
in the name of Custodian on behalf of the Participant and his or her
Beneficiaries. The Custodian shall not be liable for following such
instructions, nor shall the Custodian be liable for its actions or failure
to act due to the absence of such instructions. Furthermore, the Custodian
may conclusively rely upon and shall be protected in acting upon any
written from the Employer, the Participant or their legal representatives
or any other notice, request, consent certificate or other instrument or
paper believed by it to be genuine and to have been properly executed,
and, so long as it acts in good faith, in taking or omitting to take any
other action in reliance thereon.
6.02 Maintenance of Records: The Custodian shall maintain such records with
respect to the Participant as may be necessary for the proper
administration of the Custodial Account. The Custodian shall file annually
an accounting with the Participant after the close of each calendar year
and shall file such information as shall be required of it by the
Secretary of the Treasury. Upon the expiration of sixty (60) days after
such a report is rendered, the Custodian and PEPCO shall be forever
released and discharged from all liability and accountability to anyone
with respect to transactions shown in or reflected by such report except
with respect as to any such acts or transactions as to which the
Participant shall have filed written objections with the Custodian or
PEPCO within such sixty-day period.
6.03 Fees, Taxes, and Expenses: Each Participant shall pay the Custodian fees
in accordance with the fee schedule set forth in the Employee Adoption
Agreement with respect to the Participant's Account. Upon thirty (30) days
prior written notice, the Custodian may substitute a fee schedule
differing from the schedule in said Adoption Agreement. Except as
otherwise agreed, the Custodian shall not make any charge in addition to
its agreed fees for services rendered by any of its officers or employees
in the performance of its duties hereunder. The Custodian's fees, any
income, gift, estate and inheritance taxes and other taxes of any kind
whatsoever, including transfer taxes incurred in connection with the
investment or reinvestment of the assets of the Custodial Account, that
may be levied or assessed in respect to such assets, and all other
administrative expenses incurred by the Custodian in the performance of
its duties including fees for legal services rendered to the Custodian,
may be charged to the Participant's Account, with the right to liquidate
Investment Company Shares for this purpose, or (at the Custodian's option)
charged to the Participant.
<PAGE>
6.04 Resignation or Removal of Custodian: The Custodian may resign at any time
upon sixty (60) days notice in writing to PEPCO, the Employer and the
Participant and may be removed by PEPCO at any time upon sixty (60) days
notice in writing to the Custodian. Upon such resignation or removal,
PEPCO shall appoint a Successor Custodian to serve under the Plan. Upon
receipt by the Custodian of written acceptance of such appointment by the
Successor Custodian, the Custodian shall transfer to such Successor the
assets of the Participant's Accounts and all necessary records (or copies
thereof) pertaining thereto, provided that (at the Custodian's request)
any Successor Custodian shall agree not to dispose of any records without
the Custodian's consent. The Custodian is authorized, however, to reserve
such a portion of such assets as it may deem advisable for payment of all
its fees, compensation, costs and expenses or for the payment of any other
liabilities constituting a charge on or against the Custodian with any
balance of such reserve remaining after the payment of all such items to
be paid over to the Successor Custodian. If within one hundred twenty
(120) days after the Custodian's resignation or removal, PEPCO has not
appointed a Successor Custodian who has accepted such appointment, this
Plan shall terminate and all assets in the Participant's Accounts shall be
distributed in accordance with the provisions of Article IV hereof.
6.05 Successor Custodian: A Successor Custodian appointed to serve under this
Plan must be a bank as defined in Code Section 401(d)(1) or such other
person who qualifies under Section 401(f)(2) of the Code and satisfies the
Custodian, upon request, as to such qualification. After the Custodian has
transferred the assets of the Participant's Accounts (including any
reserve balance as contemplated above) to the Successor Custodian, the
Custodian shall be relieved of all further responsibility with respect to
the Plan, the Custodial Account, and the assets thereof, and the Custodian
shall not be liable for the acts or omissions of such successor.
Article VII-Miscellaneous
7.01 Action by Parties to Plan: The Parties to the Plan and all persons
claiming any interest whatsoever hereunder agree to perform any and all
acts and to execute any and all documents and papers which may be
necessary or desirable for the carrying out of the Plan or any of its
provisions. The Plan shall be binding upon the heirs, executors,
administrators, successors and assignees of any and all parties hereto and
Participants hereunder whether present or future.
7.02 Rights Reserved by Employer: The Plan shall not be construed as creating
and modifying any contract of employment between the Employer and the
Participant.
7.03 Limitation of Liability: An investment company whose shares are issued in
connection with the Plan shall not be considered to be a party to the Plan
and shall be fully protected in presuming that the Custodian is as shown
on the latest notification received at its principal office, and shall be
protected in acting in accordance with any written direction of the
Custodian and shall have no duty to see to the application of funds paid
by it to the Custodian. Neither such investment company nor PEPCO shall be
responsible for the propriety of contributions or distributions made under
the Plan.
7.04 Failure to Qualify Plan: The Plan is established and created with the
intent that it shall meet the terms of Section 403(b)(7) of the Code;
however, if it is determined by the Internal Revenue Service that the Plan
does not initially and cannot be amended retroactively to qualify under
Section 403(b)(7) of the Code, all assets acquired with contributions
hereunder together with income earned thereon (less reasonable expenses
and agreed Custodian fees) shall be distributed to the Participant and the
Plan shall be considered to be rescinded and of no force and effect. If
the Plan, after initially meeting such terms shall fail to do so, the Plan
shall be terminated and the assets held hereunder shall be disposed of in
accordance with the Section 5.01 hereof within thirty (30) days following
the Custodian's receipt of notice of such failure from the Employer or the
Participant.
<PAGE>
7.05 This Agreement is an amendment to, and restatement of, any prior agreement
entitled Phoenix Equity Planning Corporation Tax-Sheltered Mutual Fund
Plan as existing on January 1, 1987 under which State Street Bank and
Trust Company served as Custodian for contributions contributed by the
Employer to a Custodial Account established for the benefit of the
Participant under Code Section 403(b)(7) for investment in the Phoenix
Funds. Said Amendment and restatement is effective retroactive to January
1, 1987.
7.06 Governing Law: The Plan shall be construed and administered in accordance
with the laws of the Commonwealth of Massachusetts, provided no provision
shall be construed to conflict with any provision of Federal law.
Article VIII--Administration
8.01 Instructions: All instructions, notices, forms and remittances received by
PEPCO from the Participant shall be forwarded to the Custodian.
8.02 Performance: Custodian and PEPCO shall be agents for the Participant to
perform the duties conferred on each of them, respectively, hereunder as
directed by Participant. The parties do not intend to confer any fiduciary
duties on the Custodian or PEPCO, and none shall be implied. Neither shall
be liable (or assumes any responsibility) for the collection of
contributions, the deductibility of any contribution or the propriety of
any contributions under this Agreement, or the purpose or propriety of any
distribution ordered in accordance with Article IV, which matters are the
responsibility of Participant and Participant's Beneficiary.
8.03 Indemnification: Participant shall always fully indemnify PEPCO and
Custodian and save PEPCO and Custodian harmless from any and all liability
whatsoever which may arise either in connection with this Agreement and
matters which it contemplates, except that which arises due to PEPCO's or
Custodian's negligence or willful misconduct, or with respect to making or
failing to make any distribution, other than for failure to make
distribution in accordance with an order therefore which is in full
compliance with Article IV. Neither PEPCO nor Custodian shall be obligated
or expected to commence or defend any legal action or proceeding in
connection with this Agreement or such matters as may arise therefrom
unless agreed upon by that party and Participant, and unless fully
indemnified for so doing to that party's satisfaction.
8.04 Duties: The Custodian and PEPCO shall each be responsible solely for
performance of those duties expressly assigned to it in this Agreement;
neither assumes any responsibility as to duties assigned to anyone else
hereunder or by operation of law.
Exhibit 14.2
Information relating to Individual Retirement
Accounts
<PAGE>
----------------------------
PULL
--------------------
[graphic--swash]
--------------
- ----------------------------------------
- ----------------------------------------
FOUR EASY
- ----------------------------------------
STEPS TO
- ----------------------------------------
AN IRA
- ----------------------------------------
It's so easy to get the investment flexibility the Phoenix IRA offers. A
variety of portfolios, each with a different investment objective, allows
you to choose the right one for your Individual Retirement Account. Get
the Phoenix IRA advantage in 4 easy steps.
1 Complete the Easy IRA Application (and Transfer Form if you are
transferring your assets from an existing IRA),
2 Make one personal check payable to the Phoenix Fund you choose for your
investment and a separate check to State Street Bank & Trust for the
establishment fee (see fee card for details),
3 Mail the application, transfer form (if required) and both checks to
Phoenix Equity Planning Corp., One American Row, Hartford, Connecticut
06115,
4 Read carefully and keep the IRA Agreement and Fee Schedule in your files
for future reference.
What could be easier!
<PAGE>
CUSTODIAN FEE SCHEDULE FOR
INDIVIDUAL RETIREMENT ACCOUNTS
(Payable to the Custodian)
Fees payable to the Custodian, State Street Bank and Trust Company, are outlined
below and vary according to the investment products held in your IRA Account.
Plan Establishment Fee is payable upon the opening of your account and
maintenance fees are payable annually thereafter.
<TABLE>
<S> <C>
Plan Establishment Fee
If the investment is in one or more of the Phoenix Funds (per shareholder)....................$10.00
Annual Maintenance Fee
Phoenix Funds (per fund account)..............................................................$15.00
Distributions From The Plan
Termination or Transfer out of the Phoenix Equity Planning Corp. IRA Agreement................$25.00
Tax Withholding (only if applicable)
Each distribution requiring tax withholding...................................................$10.00
</TABLE>
(over)
- -------------------------------------------------------------------------------
FOR REGISTERED REPS. OF PHOENIX EQUITY PLANNING CORP. ONLY
----------------------------------------------------------
Limited Partnership and Outside Fund Charges
<TABLE>
<S> <C>
Plan Establishment Fee
1. If the investment is in a Limited Partnership..............................................$10.00
2. Investment in both (Limited Partnership and Mutual Fund)...................................$10.00
Annual Maintenance Fee
1. Limited Partnership and/or outside Mutual Fund (per limited partnership or mutual fund or
series thereof)...........................................................................$20.00
Distributions From The Plan
Termination or Transfer out of the Phoenix Equity Planning Corp. IRA Agreement................$25.00
Transaction Fee
1. Purchase, Sale or Reregistration of a Limited Partnership..................................$15.00
2. Purchase, Sale or Reregistration of an outside Mutual Fund.................................$10.00
</TABLE>
The Custodian will collect the annual maintenance fee during the first quarter
of each year by: a) liquidating sufficient shares from each Phoenix Fund
account, or, b) billing you at your mailing address.
<PAGE>
The PHOENIX Transfer Of Assets*
Phoenix Equity Planning Corp.
Hartford, CT 06115
PRINT & PRESS HARD; YOU ARE MAKING 4 COPIES
================================================================================
INSTRUCTIONS FOR COMPLETION (by client)
================================================================================
1. Complete sections 1. through 4.
2. Mail all 4 copies of this form with any additional documents, if necessary
(policies, certificates, set-up fee, application) to:
PHOENIX EQUITY PLANNING CORPORATION, Attn: PEPCO Transfer of Assets,
One American Row, Hartford, CT 06115
*(FOR TRANSFERS IN KIND PLEASE CONTACT US AT (800) 243-1574, CONN. RESIDENTS
CALL COLLECT 275-5901)
================================================================================
1. EXISTING IRA INFORMATION
================================================================================
NAME OF EXISTING CUSTODIAN/ISSUER
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
STREET ADDRESS OF EXISTING CUSTODIAN/ISSUER --(P.O. BOX UNACCEPTABLE) CITY STATE ZIP CODE
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT VEHICLE MATURITY DATE ACCOUNT NO. PHONE NO. OF EXISTING CUSTODIAN/ISSUER
(CD, Mutual Fund, etc.) (if applicable) (with existing custodian)
</TABLE>
================================================================================
2. FOR ALL TRANSFERS (Please check one)
================================================================================
[ ] Please deposit proceeds in my existing Phoenix IRA:_________________________
FUND NAME ACCOUNT NUMBER
[ ] Establish an IRA account in my name (Please enclose a Phoenix IRA
application and a check for the set-up fee made payable to State Street Bank
& Trust Company)
- --------------------------------------------------------------------------------
FUND USE ONLY: New account number:
================================================================================
3. NAME & ADDRESS OF DEPOSITOR
================================================================================
State Street Bank & Trust Company, Custodian for the IRA of:
- --------------------------------------------------------------------------------
NAME SOCIAL SECURITY NUMBER DAYTIME PHONE NUMBER
- --------------------------------------------------------------------------------
ADDRESS CITY STATE ZIP CODE
================================================================================
4. AUTHORIZATION TO TRANSFER FUNDS
================================================================================
TO EXISTING CUSTODIAN:
This will serve as authorization to liquidate and transfer
[ ] ALL or [ ] PART $____________
DOLLAR AMOUNT
of my account as listed in Section I above to transfer the assets to an IRA
I have established through Phoenix Equity Planning Corporation.
- --------------------------------------------------------------------------------
NOTE: Depositor's signature is required for DEPOSITOR'S SIGNATURE DATE
ALL TRANSFERS (triangle)
- --------------------------------------------------------------------------------
NOTE: Your existing custodian may require signature guarantee. Please check with
them for requirements.
- --------------------------------------------------------------------------------
SIGNATURE GUARANTEE BY: NAME OF BANK OR FIRM
- --------------------------------------------------------------------------------
SIGNATURE OF OFFICER & TITLE
================================================================================
FOR INTERNAL USE ONLY
================================================================================
ACCEPTANCE BY NEW CUSTODIAN (to be completed by State Street Bank & Trust
Company) We agree to accept custodianship and the transfer described above for
the Distributors' IRA Plan established on behalf of the above named individual.
State Street Bank & Trust Company accepts its appointment as successor custodian
of the above IRA account and requests the liquidation and transfer of assets
indicated above. Custodian: Please mail the proceeds made payable to PHOENIX
SERIES FUND, and/or PHOENIX TOTAL RETURN FUND, INC. along with the 2nd (canary)
copy of this form to:
PHOENIX EQUITY PLANNING CORPORATION
Attn: Transfer of Assets
Acct. No.: _________________________
1 American Row
Hartford, CT 06115
- --------------------------------------------------------------------------------
BY: (CUSTODIAN) DATE
STATE STREET BANK & TRUST COMPANY /s/ GL Reeves
- --------------------------------------------------------------------------------
PEP 340 2-88
<PAGE>
[logo]
The PHOENIX PHOENIX EASY IRA APPLICATION
(One application per investor please.)
================================================================================
<TABLE>
<S> <C>
Complete all information and mail to: If you have any questions, call us toll free on 1-800-243-1574
Phoenix Equity Planning Corporation -----------------------------------------------------------------
Attention: PEPCO IRA Department For Internal Use Only
One American Row -----------------------------------------------------------------
Hartford, CT 06115 [ ] Establishment Fee Paid
</TABLE>
- --------------------------------------------------------------------------------
SECTION I - Individual Retirement Account
- --------------------------------------------------------------------------------
[ ] Individual Mutual Fund (one account, $2,000 maximum contribution)
[ ] Spousal IRA (Individual & non-working spouse, two separate accounts,
$2,250 maximum combined contributions)
[ ] SEP IRA
[ ] Individual Limited Partnership IRA - Phoenix Agent use only
[ ] Transfer of Assets from Custodian to Custodian (Please also
complete a Transfer of Assets Form)
[ ] IRA Rollover
Source of Contribution
[ ] Rollover IRA
[ ] Qualified Plan
[ ] Combination IRA (IRA Rollover and a contributory IRA)
================================================================================
SECTION II - Account Registration
- --------------------------------------------------------------------------------
IRA Registration
- --------------------------------------------------------------------------------
NAME
- --------------------------------------------------------------------------------
STREET
- --------------------------------------------------------------------------------
CITY STATE ZIP CODE
- --------------------------------------------------------------------------------
SOCIAL SECURITY NUMBER BIRTHDATE
- --------------------------------------------------------------------------------
Are you/your spouse a current Phoenix Fund Client?
[ ] No [ ] Yes
Are you/your spouse affiliated in any way with a firm engaged
in the securities industry? [ ] No [ ] Yes
If yes, indicate name of firm __________________________________________________
- --------------------------------------------------------------------------------
SECTION III - Investment Selection
- --------------------------------------------------------------------------------
IRA Investment Selection
- --------------------------------------------------------------------------------
Year in which deduction will be taken. 19__ 19__ Rollover
- --------------------------------------------------------------------------------
[ ] Stock $ $ $
- --------------------------------------------------------------------------------
[ ] Growth $ $ $
- --------------------------------------------------------------------------------
[ ] Convertible $ $ $
- --------------------------------------------------------------------------------
[ ] Balanced $ $ $
- --------------------------------------------------------------------------------
[ ] High Yield $ $ $
- --------------------------------------------------------------------------------
[ ] High Quality Bond $ $ $
- --------------------------------------------------------------------------------
[ ] Money Market $ $ $
- --------------------------------------------------------------------------------
[ ] U.S. Government $ $ $
- --------------------------------------------------------------------------------
[ ] Total Return $ $ $
- --------------------------------------------------------------------------------
[ ] _____________________ $ $ $
OTHER
- --------------------------------------------------------------------------------
[ ] ___________________________ $ $ $
NAME OF LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
Make your check for your IRA contribution payable to the Phoenix Fund of your
choice. Plus make another check for the applicable establishment fee payable to
STATE STREET BANK AND TRUST COMPANY.
================================================================================
SECTION IV
- --------------------------------------------------------------------------------
COMBINED PURCHASE DISCOUNT/RIGHTS OF ACCUMULATION - If this account
qualifies for a Reduced Sales Charge under the terms of the
REDUCED Prospectus, please give the following information:
SALES ----------------------------------------------------------------------
CHARGE FUND NAME ACCOUNT NUMBER ACCOUNT REGISTRATION RELATIONSHIP TO INVESTOR
-----------------------------------------------------------------------
[ ] YES
-----------------------------------------------------------------------
[ ] NO
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
LETTER OF INTENT - Intended Investment of $10,000 or more.
(Check appropriate box below.)
[ ] Yes [ ] No This is a new Letter of Intent. Date ______________.
I have completed and attached a Letter of Intent
form with this application. (Letter of Intent form
found within Prospectus.)
[ ] Yes [ ] No This is an existing Letter of Intent. The Letter of
Intent form was signed on _______________ $ ________
DATE AMOUNT
By: ________________________________________________
================================================================================
SECTION V - For dealer use only.
- --------------------------------------------------------------------------------
REPRESENTATIVE CODE NUMBER AND NAME (Please print) REPRESENTATIVE'S SIGNATURE
X
- --------------------------------------------------------------------------------
DEALER NAME IN FULL BRANCH MANAGER'S SIGNATURE
X
- --------------------------------------------------------------------------------
BRANCH CODE AND BRANCH ADDRESS AUTHORIZED DEALER SIGNATURE
X
- --------------------------------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER
(---) --- - ----
- --------------------------------------------------------------------------------
This is a [ ] Mail Order [ ] Wire Order
- --------------------------------------------------------------------------------
PEP 339 1-89
<PAGE>
================================================================================
SECTION VI - Beneficiary Designation
- --------------------------------------------------------------------------------
GENERAL PROVISIONS
Except as otherwise provided in this Designation of Beneficiary, all amounts
payable from a Participant's Custodial Account by reason of his or her death:
1) Shall be paid in equal shares to the named Primary Beneficiaries who survive
the participant.
2) If no Primary Beneficiary survives the participant, such amount shall be paid
in equal shares to the Contingent Beneficiaries who survive the participant.
3) If the Participant does not designate a beneficiary or if no designated
Beneficiary survives the Participant, such amounts shall be paid to the
Participant's surviving spouse, or if the Participant does not have a
surviving spouse to the Participant's issue by right of representation, or if
the Participant does not leave a surviving spouse or surviving issue, to the
Participant's estate.
NOTE: If you have more than one Primary or Contingent Beneficiary, please
provide a signed and dated attachment indicating their names, addresses, social
security numbers and your relationships.
- --------------------------------------------------------------------------------
INDIVIDUAL BENEFICIARY DESIGNATION
PRIMARY BENEFICIARY CONTINGENT BENEFICIARY
- --------------------------------------------------------------------------------
NAME BIRTH DATE NAME BIRTHDATE
- --------------------------------------------------------------------------------
STREET STREET
- --------------------------------------------------------------------------------
CITY STATE ZIP CITY STATE ZIP
- --------------------------------------------------------------------------------
RELATIONSHIP SOCIAL SECURITY NUMBER RELATIONSHIP SOCIAL SECURITY NUMBER
- --------------------------------------------------------------------------------
A statement will be sent to your firm confirming the above transaction and will
serve as notification of State Street Bank's acceptance.
- --------------------------------------------------------------------------------
TELEPHONE
EXCHANGE
[ ] Yes [ ] No
Telephone exchanges are subject to the terms of the Prospectus. If the
shareholder checks the "yes" box, telephone exchange orders will be accepted
from the shareholder, and may be accepted from Equity Planning and from the
shareholders' broker/dealer. By signing this New Account Application, the
shareholder agrees that the Fund, the Transfer Agent, and Equity Planning will
not be liable for any loss, injury or damage incurred as a result of acting
upon, and neither will they be responsible for the authenticity of, any
telephone instructions, other than those instructions delivered by Equity
Planning. If the shareholder for the authenticity of, any telephone
instructions, other than those instructions delivered by Equity Planning. If the
shareholder checks the "no" box, only the shareholder may authorize an exchange,
by writing to State Street Bank & Trust Company according to the terms of the
Prospectus. If the shareholder does not check either the "yes" or "no" box, it
will be assumed that the shareholder is NOT electing the Telephone Exchange
Privilege.
================================================================================
SECTION VII - Signatures
- --------------------------------------------------------------------------------
PLEASE READ AND SIGN
I hereby establish a Phoenix Individual Retirement Account Plan. I have
received and read a current prospectus, and appoint State Street Bank & Trust
Company of Boston, Massachusetts as custodian of the separate plan. I have
received and read the IRA Custodial Agreement and Disclosure Statement
enclosed. The applicable account establishment fee (for a Mutual Fund),
(Limited Partnership), or (both a Limited Partnership and Mutual Fund
Distribution Account) is enclosed in the form of a check made payable to
State Street Bank & Trust Company. See enclosed Fee Schedule for amount(s).
If an IRA is being established for your spouse, please note that separate
establishment fees apply. I understand that if I make any contributions to
the funds rolled over from a qualified plan, or otherwise commingle rollover
amounts with accumulation amounts, I will have relinquished the right to
ultimately roll over the funds distributed to me to another qualified plan.
If I do establish a combination IRA and make future contributions to this
account, I hereby release and hold harmless State Street Bank and Trust
Company from any liability for any loss, damage, or injury which I may
sustain as a result of my election not to establish two separate Individual
Retirement Custodial Accounts. Furthermore, if I am making a rollover
contribution from a qualified plan, I understand that such a rollover is
irrevocable.
X ____________________________________________ Date ___________________________
INDIVIDUAL'S SIGNATURE
================================================================================
SECTION VIII - Limited Partnership IRA Distribution Account
- --------------------------------------------------------------------------------
All distributions from the above named limited partnership IRA should be
invested as follows:
[ ] Please establish a separate Mutual Fund IRA in the Phoenix ________________
Fund. FUND NAME
_____________________________
ACCOUNT NUMBER
[ ] Please deposit distributions to my existing ______________________ Fund
IRA Account Number ____________________________________.
================================================================================
SECTION IX - For Internal Use Only
- --------------------------------------------------------------------------------
x _____________________________________________________
ACCEPTED BY STATE STREET BANK AND TRUST COMPANY
/s/ W. F. Sheridan
Assistant Vice President
<PAGE>
INTERNAL REVENUE SERVICE'S ANNOUNCEMENT 86-121,
ON 1986 TAX REFORM ACT'S EFFECTS ON INDIVIDUAL RETIREMENT ACCOUNTS
The Tax Reform Act of 1986 (which we will call the Act) makes a number of
major changes to the law governing the deductibility of contributions to
Individual Retirement Arrangements (IRAs).
The changes made by the Act are generally not effective until January 1,
1987. This means that contributions made for 1987 are subject to the Act's new
rules; however, you can still make a contribution for 1986 as late as April 15,
1987, under the old rules.
ELIGIBILITY
Under the new law, if neither you, nor your spouse, is an active participant
(see A. below) you may make a contribution of up to the lesser of $2,000 (or
$2,250 in the case of Spousal IRA) or 100% of compensation and take a deduction
for the entire amount contributed. If you are an active participant but have an
adjusted gross income (AGI) below a certain level (see B. below), you may make a
deductible contribution as under current law. If, however, you or your spouse is
an active participant and your combined AGI is above the specified level, the
amount of the deductible contribution you may make to an IRA is phased down and
eventually eliminated.
A. Active Participant
You are an "active participant" for a year if you are covered by a retirement
plan. You are covered by a "retirement plan" for a year if your employer or
union has a retirement plan under which money is added to your account or you
are eligible to earn retirement credits. For example, if you are covered under a
profit-sharing plan, certain government plans, a salary reduction arrangement
(such as a tax sheltered annuity arrangement or a 401(k) plan), a simplified
employee pension plan (SEP) or a plan which promises you a retirement benefit
which is based upon the number of years of service you have with the employer,
you are likely to be an active participant. Your Form W-2 for the year,
starting with the 1987 tax year, should indicate your participation status.
You are an active participant for a year even if you are not yet vested in
your retirement benefit. Also, if you make required contributions or voluntary
employee contributions to a retirement plan, you are an active participant. In
certain plans you may be an active participant even if you were only with the
employer for part of the year.
You are not considered an active participant if you are covered in a plan
only because of your service as (1) an Armed Forces Reservist, for less than 90
days of active service, or (2) a volunteer firefighter covered for firefighting
service by a government plan. Of course, if you are covered in any other plan,
these exceptions do not apply.
If you are married but file a separate tax return, your spouse's active
participation does not affect your ability to make deductible contributions.
<PAGE>
B. Adjusted Gross Income (AGI)
If you are an active participant, you must look at your Adjusted Gross Income
for the year (if you and your spouse file a joint tax return you use your
combined AGI) to determine whether you can make a deductible IRA contribution.
Your tax return will show you how to calculate your AGI for this purpose. If you
are at or below a certain AGI level, called the Threshold Level, you are treated
as if you were not an active participant and can make a deductible contribution
under the same rules as a person who is not an active participant.
If you are single, your threshold AGI level is $25,000. The threshold level
if you are married and file a joint tax return is $40,000, and if you are
married but file a separate tax return, the threshold level is $0.
If your AGI is less than $10,000 above your threshold level, you will still
be able to make a deductible contribution but it will be limited in amount. The
amount by which your AGI exceeds your Threshold Level (AGI - Threshold Level) is
called your Excess AGI. The Maximum Allowable Deduction is $2,000 (or $2,250 for
a Spousal IRA). You can estimate your Deduction Limit using Table 1 or calculate
it as follows:
(Your Deduction Limit may be slightly higher if you use this formula rather
than the Table.)
$10,000 - Excess AGI x Maximum Allowable Deduction = Deduction Limit
- --------------------
$10,000
You must round up the result to the next highest $10 level (the next highest
number which ends in zero). For example, if the result is $1,525, you must round
it up to $1,530. If the final result is below $200 but above zero, your
Deduction Limit is $200. Your Deduction Limit cannot, in any event, exceed 100%
of your compensation.
Example 1: Ms. Smith, a single person, is an active participant and has an
AGI of $31,619. She calculates her deductible IRA contribution as follows:
Her AGI is $31,619
Her Threshold Level is $25,000
Her Excess AGI is (AGI - Threshold Level) or
($31,619 - $25,000) = $6,619
Her Maximum Available Deduction is $2,000
<PAGE>
So, her IRA deduction limit is:
$10,000 - $6,619 x $2,000 = $676 (rounded to $680).
----------------
$10,000
Example 2: Mr. and Mrs. Young file a joint tax return. Each spouse earns more
than $2,000 and one is an active participant. They have combined AGI of
$44,255. They may each contribute to an IRA and calculate their deductible
contributions to each IRA as follows:
Their AGI is $44,255
Their Threshold Level is $40,000
Their Excess AGI is (AGI - Threshold Level) or
($44,255 - $40,000) = $4,255
The Maximum Allowable Deduction for each spouse is
$2,000
So, each spouse may compute his or her IRA deduction
limit as follows:
$10,000 - $4,255 x $2,000 = $1,149 (rounded to $1,150).
----------------
$10,000
Example 3: If, in example 2, Mr. Young did not earn any compensation, or
elected to be treated as earning no compensation, Mrs. Young could establish a
Spousal IRA (consisting of an account for herself and one for her husband).
The amount of deductible contributions which could be made to the two IRAs is
calculated using a Maximum Allowable Deduction of $2,250 rather than $2,000.
$10,000 - $4,255 x $2,250 = $1,293 (rounded to $1,300).
----------------
$10,000
The $1,300 can be divided between the two accounts, but neither IRA may receive
a deductible contribution of more than $1,150.
Example 4: Mr. Jones, a married person, files a separate tax return and is an
active participant. He has $1,500 of compensation and wishes to make a
deductible contribution to an IRA.
His AGI is $1,500
His Threshold Level is $0
His Excess AGI is (AGI - Threshold Level) or
($1,500 - $0) = $1,500
His Maximum Allowable Deduction is $2,000
So, his IRA deduction limit is:
$10,000 - $1,500 x $2,000 = $1,700
----------------
$10,000
Even though his IRA deduction limit under the formula is $1,700, Mr. Jones may
not deduct an amount in excess of his compensation, so, his actual deduction is
limited to $1,500.
SPOUSAL IRAs
As noted in Example 3 above, under the Act you may contribute to a Spousal
IRA even if your spouse has earned some compensation during the year. Provided
your spouse does not make a contribution to an IRA, you may set up a Spousal IRA
consisting of an account for your spouse as well as an account for yourself. The
maximum deductible amount for the Spousal IRA is the lesser of $2,250 or 100% of
compensation. This rule applies for 1986 Spousal IRAs as well as 1987 Spousal
IRAs.
NONDEDUCTIBLE CONTRIBUTIONS TO IRAs
Even if you are above your threshold level and thus may not make a deductible
contribution of $2,000 ($2,250 for a Spousal IRA), you may still contribute up
to the lesser of 100% of compensation or $2,000 to an IRA ($2,250 for a Spousal
IRA). The amount of your contribution which is not deductible will be a
nondeductible contribution to the IRA. You may also choose to make a
contribution nondeductible even if you could have deducted part or all of the
contribution. Interest or other earnings on your IRA contribution, whether from
deductible or nondeductible contributions, will not be taxed until taken out of
your IRA and distributed to you.
If you make a nondeductible contribution to an IRA you must report the amount
of the nondeductible contribution to the IRS as a part of your tax return for
the year.
You may make a $2,000 contribution at any time during the year, if your
compensation for the year will be at least $2,000, without having to know how
much will be deductible. When you fill out your tax return you may then figure
out how much is deductible.
You may withdraw an IRA contribution made for a year any time before April 15
of the following year. If you do so, you must also withdraw the earnings
attributable to that portion and report the earnings as income for the year
for which the contribution was made. If some portion of your contribution is
not deductible, you may decide either to withdraw the nondeductible amount, or
to leave it in the IRA and designate that portion as a nondeductible
contribution on your tax return.
<PAGE>
Phoenix
Equity Planning
Corporation
IRA Agreement
Sponsored by
Phoenix Mutual
Life Insurance
Company
Here are the terms and conditions that apply to your IRA as amended and
restated, effective January 1, 1985
<PAGE>
Phoenix Equity Planning Corporation
Individual Retirement Account
(IRA)
Sponsored by Phoenix Mutual Life
Insurance Company
As amended and restated effective
January 1, 1985
The use of this material is authorized only when preceded or accompanied by a
current prospectus disclosing any applicable sales charges.
The Phoenix Equity Planning Corporation (PEPCO), Prototype Individual
Retirement Account Plan has been filed for approval with the Internal Revenue
Service.
Execution of the Account Application by the Depositor and acceptance by
the Custodian (no later than the time prescribed by law for filing the Federal
Income Tax return for the Depositor's tax year) will establish an individual
retirement account (IRA) for Depositor which meets the requirements of IRS Code
Section 408(a).
The Depositor desires to provide for his/her retirement and for the
support of his/her beneficiaries upon his/her death.
To accomplish this purpose, the Depositor establishes an Individual
Retirement Account as described in Section 408(a) of the Internal Revenue Code
of 1954, as amended, or any successor statute (hereinafter referred to as the
"Code") under the terms of the agreement set forth herein (the "Agreement").
The sponsor has furnished the Depositor with a disclosure statement as
required under the Income Tax Regulations under Code Section 408(i).
The Depositor has deposited with the Custodian the amount indicated on the
Application; and the Depositor and Custodian agree as follows:
Phoenix Equity Planning Corporation
Prototype Individual Retirement Account
Custodial Agreement
Article I--Contributions
- -------------------------------------
1.1 The Custodian may accept additional contributions in cash from the
Depositor
1
<PAGE>
during a taxable year of the Depositor except as limited by Sections 1.2,
1.6 and 1.7.
1.2 Limitations. Except in the case of a rollover contribution as that term
is described in Section 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8),
405(d)(3), 408(d)(3) or 409(b)(3)(C) of the Code, or in the case of a
transfer of assets directly from the trustee or custodian of an Indi-
vidual Retirement Account (as described in Section 408 of the Code) of the
Depositor, the Custodian will only accept cash and will not accept
contributions on behalf of the Depositor in excess of: for the taxable
year of the Depositor, the lesser of $2,000 or 100% of includible
compensation, less, if any, the amount of any qualified voluntary
employee contributions, as described in Section 219(e) of the Code, that
the Depositor has made, for the taxable year, as an employee under a
qualified employer plan or governmental plan, as described in Sections
219(e)(3) and (4) of the Code, respectively.
(a) Compensation means wages, salaries, professional fees, or other
amounts derived from or received for personal service actually
rendered (including, but not limited to commissions paid
salesmen, compensation for services on the basis of a percentage
of profits, commissions on insurance premiums, tips and
bonuses) and includes earned income, as defined in Code Section
401(c)(2) reduced by the deduction the self-employed individual
takes for contributions made to a retirement plan qualified under
Code Section 401 by an employer for an owner-employee.
Compensation for tax years beginning after 1984 includes any
amount includible in gross income under Code Section 71 with re-
spect to a divorce or separation instrument described in
Section 71(b)(2)(A). Compensation does not include amounts
derived from or received as earnings or profits
2
<PAGE>
from property (including, but not limited to, interest and
dividends) or amounts not includible in gross income.
Compensation also does not include any amount received as a
pension or annuity or as deferred compensation.
1.3 Initial Periodic Contribution. Initial contributions, which Depositor
intends to be tax-deductible, shall be in cash and are to be invested
under this Agreement. Depositor contemplates future periodic contributions
within the limits allowed by law. Depositor assumes full and sole re-
sponsibility for determining that the sum of periodic contributions during
a single taxable year of Depositor does not exceed those limits. Depositor
shall not contribute after the custodial account ceases to be exempt by
reason of either Section 408(e) or 415(g) of the Internal Revenue Code.
All future contributions shall be in cash and shall be sent to Custodian
by Depositor directly and not through an intermediary employer.
1.4 Rollover Contribution. If the Depositor indicates on the Application that
the contribution is a rollover contribution, the Depositor warrants that:
(a) such amount was received by Depositor as--
(i) a "qualifying rollover distribution" or a "partial
distribution" from an employees' trust;
(ii) a distribution from another individual retirement account
or annuity, a qualified bond purchase plan or a U.S.
retirement bond; all as described in Code Section
402(a)(5) (including subparagraph D describing partial
distributions), 402(a)(7), 403(a)(4), 403(b)(8),
405(d)(3), 408(d)(3), or 409(b)(3)(C), as the case may be;
and is contributed within sixty (60) days of its receipt by Depositor;
(b) in the case of a contribution of a
3
<PAGE>
qualifying rollover distribution from an employees' trust or
employee annuity, the amount of such rollover contribution is an
amount equal to or less than the excess of the total distribution
from such trust or plan over amounts considered to be contributed
by Depositor pursuant to Section 72 of the Code and, such
rollover shall in any event be cash unless otherwise agreed by
the Custodian;
(c) in the case of a rollover contribution from another individual
retirement account or individual retirement annuity, such other
account or annuity was not itself funded by a rollover
contribution from any other source within one (1) year of the
date of the contribution hereto;
(d) if the Depositor makes any further contribution to the custodial
account after making the rollover contribution, Depositor
warrants that:
(i) either such contribution constitutes part of the original
account after making the rollover contribution hereto and
is made within the limitations of this Subsection; or
(ii) such contribution is an Annual Contribution which Depositor
agrees may be made ONLY if the initial rollover
contribution was from another individual retirement account
or annuity and none of the assets thereof were attributable
to a rollover from an employee trust as described in
Subsection 1.4(b) above;
(e) in the case of a rollover contribution comprised of a
distribution from another individual retirement account or
individual retirement annuity by reason of the death
4
<PAGE>
of an individual other than the Depositor in a tax year beginning
after 1983, that Depositor is the surviving spouse of the
decedent.
1.5 Transfer Contributions. A transfer contribution shall be a deposit in cash
or any other property to be invested under this Agreement if the funds in
another Individual Retirement Account of the Depositor are transferred
directly from the Trustee/Custodian of the Account directly to the
Custodian. A transfer contribution shall not be considered a Rollover
Contribution under Section 1.4 above.
1.6 Spousal IRA.
(a) A Depositor who has established an IRA for the benefit of a non-
working spouse may make contributions to his/her own IRA and to
the IRA established for the benefit of the non-working spouse
during any taxable year of the Depositor for which the Depositor
and the non-working spouse remain eligible. The Custodian will
accept contributions up to the lesser of 100% of includible com-
pensation or, $2,250, for a taxable year of a Depositor who has
also established an IRA for the benefit of a non-working spouse,
provided, however, that a maximum contribution of only $2,000
may be made to any one such IRA.
(b) Contributions by Divorced or Separated Spouses. For contribu-
tions relating to 1984 tax years (and earlier) the following
rules apply. If a divorced or separated spouse (a) maintained a
spousal IRA for at least five years preceding the divorce, and
(b) if the ex-spouse has contributed to the spousal IRA for at
least three of the preceding five years, then the contribution to
such IRA shall not exceed the lesser of $1,125 or the sum of
Compensation and taxable alimony. For taxable years
5
<PAGE>
beginning after 1984 these rules are repealed and the
Compensation for IRA Contribution purposes of a divorced spouse
shall be any amount includible in gross income under Code Section
71 with respect to a divorce or separation instrument described
in Section 71(b)(2)(A).
1.7 SEP. In addition to any contributions made by the Depositor under Section
1.2, the Custodian may accept Employer contributions made on behalf of the
Depositor for the taxable year of the Depositor who is an eligible
employee under a Simplified Employee Pension-Individual Retirement
Account Contribution Agreement (under Section 408(k) of the Code). The
maximum amount allowable under this paragraph is the lesser of $30,000
(or, if applicable, the amount specified in Section 415(c)(1)(A), as ad-
justed in accordance with Code Section 415(d)), or 15% of compensation.
Article II--Nonforfeitability The interest of the Depositor in the balance in
the custodial account shall at all times be nonforfeitable. This account is
created for the exclusive benefit of Depositor and Depositor's beneficiaries.
Article III--Investment of
Contributions
3.1 As used herein the term "Broker" means Phoenix Equity Planning Corporation
(PEPCO), a securities broker-dealer registered under the Securities
Exchange Act of 1934.
3.2 "Investment Company Shares" shall mean any open ended investment company
shares marketed by PEPCO and for which the Custodian has agreed to act as
Custodian.
3.3 "Securities" shall mean one or more units or shares of a security (other
than Investment Company Shares) marketed by PEPCO and permitted by
applicable laws
6
<PAGE>
and regulations as investments of Individ- ual Retirement Accounts and for
which the Custodian has agreed to act as Custodian.
(a) Securities shall include but not be limited to limited
partnership interests traded by or obtainable through PEPCO which
are acceptable to the Custodian - such acceptance or
non-acceptance not to be construed as a judgment concerning the
prudence or advisability of such an investment.
3.4 "Savings Instrument" shall mean an interest bearing deposit in the
Custodian's banking department of a type made available by the Custodian
from time to time for investment hereunder.
3.5 Custodian is to invest and reinvest all custodial funds in Investment
Company Shares, Securities, and Savings Instruments as Depositor directs
from time to time. The Depositor's investment selection shall remain in
effect until Depositor gives the Custodian contrary instructions pursuant
to this Article III or Article VII, which governs investment of the cus-
todial account.
3.6 Investment Prohibitions. No part of the custodial funds shall be invested
in life insurance contracts, nor may the assets of the custodial account
be commingled with other property except in a common trust bond or common
investment fund (within the meaning of Code Section 408(a)(5)). No
investment of custodial funds shall be made in a work of art, rug,
antique, metal, gem, stamp, coin, alcoholic beverage, or any other
tangible property which is designated as a collectible by the Internal
Revenue Service pursuant to Code Section 408(m). Any such investment is
treated as a distribution.
Article IV--Distributions
- ------------------------------------
4.1 Except in the case of the Depositor's death or disability (as defined in
Section 72(m) of the Code) or attainment of age 59-1/2, before
distributing an amount from the account, the Custodian shall
7
<PAGE>
receive from the Depositor a declaration of the Depositor's intention as
to the disposition of the amount distributed.
4.2 The entire interest of the Depositor in the custodial account must be, or
commence to be, distributed as of the required beginning date, which is
April 1 of the calendar year following the calendar year in which the
Depositor attains age 70-1/2.
4.3 Distribution of the assets of the custodial account shall be made in a
manner set forth in Section 4.5 or 4.6, whichever applies, and at such
time as Depositor (or Depositor's Beneficiary if Depositor is deceased)
shall elect by written order to Custodian, provided, that distribution
(except for distribution on account of Depositor's disability or death,
return of an "excess contribution" referred to in Section 4.8, or a
"rollover" from this account) made earlier than age 59-1/2 may subject
Depositor to an "early distribution penalty tax" described under Section
408(f) of the Code. For that purpose, Depositor will be considered
disabled if Depositor can prove, as provided in Section 72(m)(7) of the
Code, that Depositor is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or be of
long-continued and indefinite duration. Depositor (or Depositor's
Beneficiary if Depositor is decreased) shall order distribution in the
manner and at the time permitted or required by this Section 4.3.
Neither Custodian nor any other party providing services to the
custodial account assumes any responsibility for the tax treatment of any
distribution from the custodial account; such responsibility rests solely
with the person ordering the distribution.
4.4 Custodian assumes (and shall have) no responsibility to make any
distribution on order of Depositor (or Depositor's Beneficiary if
Depositor is deceased) unless and until such order specifies the occasion
for such distribution, the elected manner
8
<PAGE>
of distribution, and any declaration required by Section 4.1. Also, before
making any such distribution or before honoring any assignment of the
custodial account, Custodian shall be furnished with any and all
applications, certificates, tax waivers, signature guarantees and other
documents (including proof of any legal representative's authority) deemed
necessary or advisable by Custodian, but Custodian shall not be
responsible for complying with an order which appears on its face to be
genuine, or for refusing to comply if not satisfied it is genuine, and
Custodian assumes no duty of further inquiry.
4.5 Upon receipt of a proper written order as required above, Custodian shall
cause the assets of the custodial account to be distributed in cash or in
kind, as the Custodian shall determine, as follows:
(a) If the distribution order calls for the custodial account to be
paid to Depositor under Section 4.3, then distribution shall be
made in one or more of the following ways as specified in the
order:
(1) In a lump sum.
(2) In installments ratably over a period which may either be
(i) not longer than the life expectancy of Depositor or
(ii) not longer than the joint and survivor life
expectancies of Depositor and Depositor's beneficiary. The
life expectancy and joint and last survivor expectancy
referred to in this Agreement will be computed by the use
of the return multiples, contained in Section 1.72-9 of the
Income Tax Regulations; first when installment payments
commence, and thereafter at least as of the time Depositor
attains age 70-1/2. The entire interest of the Depositor
for whose benefit the custodial account is maintained, will
be distributed or commence to be distributed, no later than
the
9
<PAGE>
first day of April following the calendar year in which the
Depositor attains age 70-1/2 (required beginning date), in
equal or substantially equal amounts. If the period is
measured by one or more such expectancies, then beginning
with the year Depositor attains age 70-1/2, the amount
distributed each year shall be at least equal to the
quotient obtained by dividing the entire custodial account
remaining at the beginning of that year by the life
expectancy of Depositor, or the joint life and last
survivor expectancy of Depositor and Depositor's
beneficiary (whichever is applicable), determined as of the
time Depositor attains age 70, reduced by the number of
whole years elapsed since Depositor attained 70-1/2;
provided, however, that no distribution need be made in any
year, or a lesser amount may be distributed during such
year, if the aggregate amounts distributed through the end
of such year are at least equal to the aggregate of the
minimum amounts required by this Subsection 4.5(a)(2) to
have been so distributed. For purposes of this computation,
a Depositor's life expectancy may be recalculated no more
frequently than annually, however, the life expectancy of a
nonspouse beneficiary may not be recalculated. During
Depositor's lifetime the entire custodial account remaining
for distribution at any time under this Subsection
4.5(a)(2) may, pursuant to a proper supplementary written
order as specified above, be distributed to Depositor.
(3) By the purchase and distribution of a single-premium
contract meeting the
10
<PAGE>
requirements of Sections 408(b)(1), (3), (4) and (5) of the
Code applicable to an "individual retirement annuity."
If the Depositor fails to elect any of the methods of distribution
described above on or before the required beginning date, the Custodian shall
have no liability to the Depositor for any tax penalty or other damages
resulting from any inadvertent failure by the Custodian to make such
distribution.
4.6 (a) Where distributions have commenced to the Depositor and the
Depositor dies before the entire interest in the custodial
account has been distributed, Custodian, upon notification, shall
distribute the then remaining custodial account to the
Depositor's designated beneficiary in accordance with the
original election made by the Depositor, or in any other mode of
distribution which will result in distribution of the entire
account balance at least as rapidly as the Depositor's original
election.
(b) Where distributions have not commenced to the Depositor as of
the time of the Depositor's death and a beneficiary other than a
spouse is designated, the entire remaining interest in the
custodial account shall be distributed within five years
following the death of Depositor unless:
(i) any portion of Depositor's interest in the custodial
account is payable to, or for the benefit of, a desig-
nated beneficiary,
(ii) the portion of the Depositor's entire interest to which
the designated beneficiary is entitled will be
distributed in substantially equal installments over the
life of the beneficiary or over a period certain not
11
<PAGE>
extending beyond the life expectancy of the beneficiary,
and
(iii) the distributions to the designated beneficiary commence no
later than one year after date of Depositor's death, or
such later date as may be prescribed by the Secretary of
the Treasury. The designated beneficiary may elect at any
time to receive greater payments.
(c) Where distributions have not commenced to depositor as of the
time of the Depositor's death and the spouse is the designated
beneficiary, the entire remaining interest in the custodial
account shall be distributed within five years following the date
of the Depositor's death unless the spouse elects within the five
year period commencing with Depositor's death to receive
benefits as outlined below:
(i) the portion of Depositor's interest to which the surviving
spouse is entitled will be distributed in equal or
substantially equal payments over the life of the spouse or
over a period certain not extending beyond the life
expectancy of the spouse, and
(ii) the distributions to the spouse commence at any date prior
to but no later than the date on which the Depositor would
have attained age 70-1/2. The surviving spouse may
accelerate these payments at any time, i.e., increase the
frequency or amount of such payments.
(d) If a surviving spouse beneficiary dies before distributions to
such spouse begin, 4.6(b) and (c) shall be applied as if the
spouse beneficiary were the Depositor.
12
<PAGE>
(e) If the Depositor dies before the entire interest has been
distributed and the beneficiary of the IRA is other than the
surviving spouse, no additional cash or rollover contribution may
be accepted by the IRA.
(f) If the Depositor dies before the entire interest has been
distributed and the designated beneficiary is the Depositor's
surviving spouse, the spouse may treat the account as his or her
own individual retirement arrangement. This election will be
deemed to have been made if such surviving spouse makes a regular
IRA contribution to the account, makes a rollover to or from such
account, or fails to elect a distribution in conjunction with
paragraph (c) of this Section 4.6.
(g) For purposes of distributions from this Article, payments will be
calculated by use of the return multiples specified in
Section 1.72-9 of the regulations. Life expectancy of a surviving
spouse may be recalculated annually. In the case of any other
designated beneficiary, life expectancy will be calculated at
the time payment first commences and payments for any
12-consecutive month period will be based on such life expectancy
minus the number of whole years passed since distribution first
commenced.
(h) Amounts paid to a child of the Depositor will be treated as if
paid to the surviving spouse if the remainder of the interest
becomes payable to the surviving spouse when the child reaches
the age of majority.
4.7 (a) The term "Depositor's Beneficiary" means the person or
persons designated as such by the "designating person" (as
defined below) on a form acceptable to Custodian for use in
connection with this Agreement, signed by the designating
person, and filed with the Custo-
13
<PAGE>
dian. The form may name individuals to take upon the contingency
of survival; it may also order that payments to Depositor's
Beneficiary be made ratably over a period not to exceed five
years or, if the Beneficiary is the Depositor's spouse, over a
period not exceeding that permitted under Section 4.5(a)(2), and
such order shall be binding on the Beneficiary.
(b) The term "designating person" means Depositor; after Deposi-
tor's death, it also means the person or persons (other than
Depositor's estate) who begin to receive a portion of the
custodial account pursuant to such a designation by Depositor,
and designations by such a person shall relate solely to the
balance of that portion remaining in the custodial account as
of when distribution pursuant to a designation by that person is
to commence. The Custodian shall accept all such forms only in
the Commonwealth of Massachusetts, and they shall be considered
part of this Agreement for purposes of Section 8.5. However, if
no such designation on such a form effectively disposes of the
custodial account as of the time such distribution is to com-
mence, the term Depositor's Beneficiary shall then mean the
Designating Person's estate.
(c) When and after distributions of the custodial account to Deposi-
tor's Beneficiary commence, all rights and obligations assigned
to Depositor by provisions of this Agreement shall inure to, and
be enjoyed and exercised by, Depositor's Beneficiary instead of
Depositor.
4.8 If during a taxable year Depositor contributed under Article I total
amounts which exceed the amount deductible by Depositor for that year; or
because Depositor attained age 70-1/2 in that year except in the case of
employer contribu-
14
<PAGE>
tions to a SEP, then upon receiving written notice specifying the year in
question, the amount of the excess, the reason it is an excess, and the
amount of net income in the custodial account attributable to such excess
Custodian shall distribute cash to Depositor in an amount equal to the sum
of such excess and earnings. If the excess contribution did not arise
because Distributor attained age 70-1/2, then (in Custodian's discretion
unless otherwise instructed by Depositor) in lieu of being distributed,
said sum shall be treated by Depositor as a contribution in the then
current or a succeeding taxable year.
4.9 The terms of such annuity provided as a form of distribution under this
agreement shall provide for payments over the life of the Beneficiary or
for a term certain not exceeding the life expectancy of such Beneficiary.
Any annuity contract so purchased shall be immediately distributed to
such Beneficiary. However, no such annuity contract shall be required to
be purchased if distributions over a term certain is for a period
extending beyond the life expectancy of the Depositor, or the joint and
survivor life expectancies of the Depositor and his/her Beneficiary.
Any annuity which Custodian is to purchase and distribute under this
Agreement may be fixed or variable, but Custodian shall not be required to
distribute in the form of an annuity unless the annuity premium is at
least $1,000.
Article V--Reports
- --------------------------------
5.1 The Depositor agrees to provide information to the Custodian at such time
and in such manner as may be necessary for the Custodian to prepare any
reports required pursuant to Section 408(i) of the Code and the
regulations thereunder.
5.2 The Custodian agrees to submit reports to the Internal Revenue Service and
the Depositor at such time and in such manner and containing such
information as is prescribed by the Internal Revenue Service; provided,
however, that Deposi-
15
<PAGE>
tor shall prepare any return or report required as a result of
(1) the generation by assets of the custodial account of unrelated
business taxable income or unrelated debt financed income as
defined in the Code or
(2) the incurrence of a windfall profits tax, or any return or report
necessary to preserve the availability of any credit or deduction
with respect thereto.
Depositor shall sign such return as preparer, and forward it to the
Custodian at least 10 days prior to the due date thereof.
5.3 The Depositor, Custodian, Broker and, if applicable, the general partner
of any partnership interests which are held by the Custodian hereunder
shall furnish to each other such information relevant to the custodial
account as may be required under the Code and any regulations issued
or forms adopted by the Treasury Department thereunder.
Article VI--Amendment and
Termination
- ---------------------------------
6.1 (a) Depositor retains the right to amend this Agreement in any
respect at any time, effective on a stated date which shall be
at least sixty (60) days after giving written notice of the
amendment (including its exact terms) to Custodian by
registered or certified mail, unless Custodian waives notice as
to such amendment. If the Custodian does not wish to continue
serving in its respective capacity under this Agreement as so
amended, it may resign in accordance with Article VII.
(b) Depositor also delegates to the Sponsor, the Depositor's right so
to amend, including retroactively, as necessary or appropriate in
the opinion of counsel satisfactory to the Sponsor, in order to
conform this custodial account to pertinent provisions of the
Code
16
<PAGE>
and other laws or successor provisions of law, or to obtain a
governmental ruling that such requirements are met, to adopt a
prototype or master form of agreement in substitution for this
Agreement, or as otherwise may be advisable in the opinion of
such counsel. Any amendment by the Sponsor shall be communicated
in writing to Depositor and Custodian, and Depositor shall be
deemed to have consented thereto unless, within thirty (30) days
after such communication to Depositor is mailed, Depositor either
(i) gives Custodian a written order for a lump-sum distribution
of the custodial account, or (ii) removes the Custodian and
appoints a successor under Article VII.
(c) Notwithstanding the provisions of Subsections 6.1(a) and (b), no
amendment shall increase the responsibilities or duties of
Custodian without its prior written consent.
(d) This Section 6.1 shall not be construed to restrict the
Custodian's right to substitute fee schedules in the manner
provided by Article VII, and no such substitution shall be deemed
to be an amendment of this Agreement.
(e) This Section 6.1 shall not be construed to restrict Custodian's
freedom to agree with PEPCO upon the terms by which additional
Investment Company Shares or Securities may be made available for
investment.
6.2 (a) Custodian shall terminate the custodial account if this
Agreement is terminated, or, if within thirty (30) days (or such
longer time as Custodian may agree) after resignation or
removal of Custodian pursuant to Article VII, Depositor has not
appointed a successor which has accepted such appoint-
17
<PAGE>
ment. Termination of the custodial account shall be affected by
distributing all assets thereof in a lump sum in cash or in kind
to Depositor, subject to Custodian's right to reserve funds as
provided in Article VII.
(b) Upon termination of the custodial account, this Agreement shall
terminate and have no further force and effect, and Custodian
shall be relieved from all further liability with respect to
this Agreement, the custodial account, and all assets thereof
so distributed.
Article VII--Custodial Account
- ----------------------------------------
7.1 This Agreement shall take effect only when accepted by the Custodian. As
directed, Custodian shall then open and maintain a separate custodial
account for Depositor and invest the initial contribution as directed by
Depositor in accordance with Article III.
7.2 (a) Every subsequent contribution shall be accompanied by written
instructions from Depositor stating Depositor's choice of in-
vestment. Depositor shall state Depositor's choice of one or more
of the Investment Company Shares available from PEPCO and/ or one
or more of the Securities available from PEPCO. Depositor agrees
that the availability of an investment shall not be construed as
an endorsement by the Custodian of the Investment Company
Shares or Securities in which contributions may be invested, fi-
nal choice of which is at the sole discretion of Depositor. The
Custodian does not undertake to render any investment advice
whatsoever to Depositor; its sole duties are those prescribed in
Section 7.5.
(b) The Custodian shall invest subsequent contributions as
directed. However, if any such written
18
<PAGE>
instructions are not received as required, or if received, are in
the opinion of Custodian unclear, or if the accompanying
contribution exceeds the maximum amounts as described in Article
I, Custodian may hold or return, within a reasonable time, all or
a portion of the contribution uninvested without liability for
loss of income or appreciation, and without liability for
interest, pending receipt of written instructions or
clarification.
(c) All dividends and capital gain distributions received on
account of Investment Company Shares held in the custodial
account shall (unless received in additional such shares) be
reinvested in full and fractional shares, if available, which
shall be credited to the account. If any distribution on such
shares may be received at the election of the shareholder in
additional such shares or in cash or other property, Custodian
shall elect to receive it in additional such shares.
Any dividends and capital gains or other distributions
received on account of Securities held in the custodial account
shall be reinvested in accordance with written instructions by
the Depositor, in one or more of the following: (i) full and
fractional Investment Company Shares, (ii) Securities, or (iii)
Savings Instruments.
All interest earned on Savings Instruments shall be credited
as a deposit thereto.
7.3 All Investment Company Shares or Securities, whether in shares or
otherwise, acquired by Custodian hereunder shall be registered in the name
of the Custodian (with or without identifying Depositor) or of its
nominee. Custodian shall deliver, or cause to be executed and delivered,
to Depositor all notices, prospectuses, financial statements, proxies
and proxy soliciting materials relating to such investment held in the
(custodial) account.
19
<PAGE>
Custodian shall not vote any Investment Company Share or any shares or
units of any security except in accordance with written instructions
received from Depositor.
7.4 Custodian shall keep adequate records of transactions it is required to
perform hereunder. Not later than sixty (60) days after the close of each
calendar year or after the Custodian's resignation or removal, Custodian
shall render to Depositor a written report or reports reflecting the
transactions affected by it during such period and the assets of the
custodial account at the close of the period. Sixty (60) days after
rendering such report(s), Custodian shall be forever released and
discharged from all liability and accountability to anyone with respect
to its acts and transactions shown in or reflected by such report(s),
except where, within the sixty day period, written objections have been
filed with the Custodian by the recipient of such reports.
7.5 Custodian shall be an agent for Depositor to receive and invest
contributions as directed by Depositor, hold and distribute such
investments, and keep adequate records and report thereon, all in accor-
dance with this Agreement. The parties do not intend to confer any
fiduciary duties on Custodian, and none shall be implied. Custodian may
perform any of its administrative duties through other persons designated
by Custodian from time to time, except that all Investment Company Shares
and Securities must be registered as stated in Section 7.3 of this
Article; and Custodian intends initially to delegate all such duties to
Boston Financial Data Services, Inc., which is partially owned by the
Custodian's parent company; but no such delegation or future change
therein shall be considered as an amendment to this Agreement. Custodian
shall not be liable (and assumes no responsibility) for the collection of
contributions, the deductibility of any contributions or their
propriety under the Agreement, or the purpose or propriety of any
distribution ordered in accordance
20
<PAGE>
with Article IV, whose matters are the responsibility of Depositor and
Depositor's Beneficiary.
7.6 Depositor shall always fully indemnify Custodian and save it harmless from
any and all liability whatsoever which may arise either (1) in connection
with this Agreement and matters which it contemplates except that which
arises due to Custodian's negligence or willful misconduct, or (2) with
respect to making or failing to make any distribution therefor which is in
full compliance with Article IV. Custodian shall not be obligated or
expected to commence or defend any legal action or proceeding in
connection with this Agreement or such matters unless agreed upon by
Custodian and Depositor, and unless fully indemnified for so doing to
Custodian's satisfaction.
7.7 Custodian may conclusively rely upon and shall be protected in acting upon
any written order from Depositor or Depositor's Beneficiary or any other
notice, request, consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly executed, and so
long as it acts in good faith, in taking or omitting to take any other
action in reliance thereon.
7.8 (a) The Custodian may charge the Depositor reasonable fees,
including an annual maintenance fee, for services hereunder
according to standard schedules of rates which may be in effect
from time to time. Initially, the fees payable to the Custodian
shall be in amounts as specified in the fee schedule provided
with this Agreement. Upon thirty (30) days prior written
notice, Custodian may substitute a fee schedule differing from
that schedule initially provided.
(b) Any income, gift, estate and inheritance taxes and other taxes of
any kind whatsoever, including transfer taxes incurred in
connection with the investment or reinvestment of the assets of
the custodial account, that may be
21
<PAGE>
levied or assessed in respect to such assets, and all other
administrative expenses incurred by the Custodian in the
performance of its duties, including fees for legal services
rendered to it shall be charged to the custodial account.
(c) All such fees and taxes and other administrative expenses charged
to the custodial account shall be collected either from the
amount of any contribution or distribution to be credited to such
account, or (at the option of the person entitled to collect
such amounts) to the extent possible under the circumstances by
the conversion into cash of sufficient assets of the account.
Notwithstanding the foregoing, the Custodian may make demand upon
the Depositor for payment of the amount of such fees, taxes and
other administrative expenses if, in the discretion of the
Custodian, conversion of sufficient assets of the custodial ac-
count is not feasible under the circumstances.
7.9 Resignation or Removal of Custodian.
(a) Upon thirty (30) days' prior written notice to the Custodian,
Depositor may remove it from its office hereunder. Such notice,
to be effective, shall designate a successor Custodian and shall
be accompanied by the successor's written acceptance. The
Custodian also may at any time resign unilaterally upon thirty
(30) days' prior written notice to Depositor, whereupon the
Depositor shall appoint a successor to the Custodian.
(b) The successor Custodian shall be a bank, insured credit union, or
other person satisfactory to the Secretary of the Treasury
pursuant to Section 408(a)(2) of the Code. Upon receipt by
Custodian of written acceptance by its successor
22
<PAGE>
of such successor's appointment, Custodian shall transfer and pay
over to such successor the assets of the custodial account and
all records (or copies thereof) of Custodian pertaining thereto,
provided that the successor Custodian agrees not to dispose of
any such records without the Custodian's consent. Custodian is
authorized, however, to reserve such sum of money or property as
it may deem advisable for payment of all its fees, compensation,
costs, and expenses, or for payment of any other liabilities
constituting a charge on or against the assets of the custodial
account or on or against the Custodian, with any balance of such
reserve remaining after the payment of all such items to be paid
over to the successor Custodian.
(c) If within thirty (30) days after Custodian's resignation or
removal or such longer time as Custodian may agree to, Depositor
has not appointed a Successor Custodian which has accepted such
appointment, Custodian shall terminate the custodial account
pursuant to paragraph (d) unless within that time the Sponsor
appoints such successor and gives written notice thereof to
Depositor and Custodian.
(d) Custodian shall terminate the Custodial Account, if, within the
time referred to in paragraph (c) neither Depositor nor the
Sponsor has appointed a Successor Custodian which has accepted
such appointment. Termination of the Custodial Account shall be
affected by distributing all assets thereof in a lump sum in
cash or in kind to Depositor, subject to Custodian's right to
reserve funds as provided in this Article VII.
(e) Upon termination of the Custodial Account, this Agreement shall
terminate and have no further force and effect, and Custodian
23
<PAGE>
shall be relieved from all further liability with respect to this
Agreement, the Custodial Account, and all assets so distributed.
Article VIII--Miscellaneous
- -------------------------------------------------
8.1 References herein to the "Internal Revenue Code" or "Code" and Sections
thereof shall mean the same as amended from time to time, including
successors to such Sections.
8.2 "Sponsor" shall mean Phoenix Mutual Life Insurance Company.
8.3 Except where otherwise specifically required in this Agreement, any
notice from Custodian to any person provided for in this Agreement shall
be effective if sent by first-class mail to such person at that person's
last address on Custodian's records.
8.4 Depositor's Beneficiary shall not have the right or power to anticipate
any part of the custodial account or to sell, assign, transfer, pledge or
hypothecate any part thereof. The custodial account shall not be liable
for the debts of Depositor's Beneficiary or subject to any seizure,
attachment, execution or other legal process in respect thereof. At no
time shall it be possible for any part of the assets of the custodial
account to be used for or diverted to purposes other than for the
exclusive benefit of the Depositor or his/ her Beneficiary.
8.5 This Agreement is accepted by Custodian in, and shall be construed and
administered in accordance with the law of, the Commonwealth of
Massachusetts. This Agreement is intended to qualify under Section 408(a)
of the Code as an individual retirement account and to entitle Depositor
to the retirement savings deduction under Section 219 of the Code, and if
any provision hereof is subject to more than one interpretation or any
term used herein is subject to more than one construction, such ambiguity
shall be resolved in favor of that interpretation or construction which
is consistent with that intent. However, neither Custodian nor the Sponsor
shall be re-
24
<PAGE>
sponsible for whether or not such intentions are achieved through use of
this Agreement, and Depositor is referred to Depositor's attorney for any
such assurances.
8.6 Depositor should seek advice from Depositor's attorney regarding the
legal consequences (including but not limited to federal and state tax
matters) of entering into this Agreement, contributing to the custodial
account, and ordering Custodian to make distributions from the account.
Depositor should understand that Custodian, Sponsor, and Broker (and any
company associated therewith) are prohibited by law from rendering such
advice.
Article IX--Controlling Article
- ---------------------------------------
Notwithstanding any other articles which may be added or incorporated, the
provisions of Section 1.1, Article II and Section 3.6 and this sentence shall be
controlling. Furthermore, any other Article or Section shall be wholly- invalid,
if it is inconsistent in whole or in part, with Section 408(a) of the Code and
the regulations thereunder.
This admendment and restatement is effective as of January 1, 1985. Dated at
Hartford, Connecticut this 25th day of November, 1985.
/s/ Richard C. Shaw
-------------------------------------------
Richard C. Shaw
Vice President, Phoenix Mutual
Life Insurance Company.
Disclosure Statement
This Disclosure Statement is being provided to assist you in understanding your
individual retirement account and is a general review of portions of the federal
income tax law applicable to it. IRA's are intended to benefit individuals in
preparation for their retirement. Therefore, they may not be used like an
ordinary savings account and are subject to many restrictions imposed by the
Internal Revenue Code. Consequently, please read the following information in
addition to the Custodial Agreement carefully. THE PROVISIONS OF THE CUSTODIAL
AGREEMENT WILL PREVAIL WHERE THE DISCLOSURE
25
<PAGE>
STATEMENT IS INCOMPLETE OR
APPEARS TO BE IN CONFLICT.
Revocation
You may cancel your IRA custodial agreement and your IRA application for any
reason within seven days of the date you signed the IRA Account application. To
cancel within this seven-day period, write a note or a letter which contains
your name and address in it and which says that your IRA custodial agreement is
canceled. Mail or deliver your note or letter to:
Phoenix Equity Planning
Corporation (PEPCO)
One American Row
Hartford, Connecticut 06115
If you mail the note or letter, it is considered received on the date of the
postmark (or the date of registration or certification if sent by registered or
certified mail).
If you do cancel your IRA within the seven-day period after you signed the PEPCO
IRA Account application, your initial contribution will be refunded to you
without cost, charge or decrease of any kind.
Contributions
Annual Contributions
Your contributions, not including rollover contributions or IRA to IRA
transfers, must be in cash or a cash equivalent (such as a check). Except for
rollovers or IRA to IRA transfers, the maximum amount that you may contribute to
an IRA for your taxable year is $2,000, but you can contribute less if you
choose. However, if the compensation included in your gross income for a taxable
year is less than $2,000, your contribution is limited to the total amount of
that compensation.
Spousal IRA
In addition to establishing your own IRA, you may also establish an IRA for your
spouse, provided the following requirements are met: (a) you and your spouse are
married at the end of the taxable year; (b) you must be eligible to contribute
to your own IRA; (c) you and your spouse file a joint income tax return for the
taxable year; (d) your spouse has received no compensation for personal services
or earned income from self-employment.
26
<PAGE>
IRAs for Divorced Spouses
A divorced spouse is allowed a deduction for contributions to a spousal IRA
established by the individual's former spouse if:
(a) the spousal IRA was established at least 5 years before the beginning of
the taxable year in which the decree of divorce or separate maintenance
decree was issued; and
(b) the former spouse made deductible contributions to the IRA for at least
3 of the five years preceding the year in which the decree was issued.
If the above conditions are met, then the divorced spouse may contribute the
lesser of (a) the sum of the divorced spouse's compensation and alimony
includible in gross income or (b) $1,125 to the IRA. These rules are only
applicable for contributions that relate to taxable years prior to 1985. For
1985 tax years or later, all taxable alimony received by a divorced spouse under
a decree of divorce or separate maintenance is treated as compensation for the
purposes of the IRA deduction limit and the rules.
If you have established an IRA for yourself and for your spouse, the maximum
deductible contributions you may make may not exceed the lesser of (a) 100% of
your compensation for the taxable year, or (b) $2,250; provided, however, that a
maximum contribution of $2,000 may be made to either IRA. Separate IRA's must be
established for yourself and your spouse.
Other Contribution Limitations
If you make deductible voluntary employee contributions to a qualified employer
plan for any taxable year, the above maximum contribution must be reduced by the
amount of deductible contribution to the qualified employer plan. For instance,
if your gross income for a taxable year is $2,000 or greater, and you make a
$500 deductible voluntary employee contribution to a qualified employer plan,
you may only contribute $1,500 to your IRA custodial account for that taxable
year. Amounts contributed to a 401(k) plan on your behalf by an employer which
reduce your income do not count against this $2,000 limit.
If you are an eligible employee under a Simplified Employer Pension
Individual Re-
27
<PAGE>
tirement Account, your employer may contribute up to the lesser of 25% of your
calendar year compensation or $30,000 on your behalf. Any such employer
contributions may be made in addition to any contributions you may make to your
individual IRA.
Because the IRS does not allow deductions for any contributions made for the
taxable year in which you reach age 70-1/2, the IRA custodial agreement provides
that no cash contributions may be made to your account for that or any following
taxable year. However, deductible employer contributions may be made to your SEP
for you even though you have attained age 70-1/2. Rollover contributions and IRA
to IRA transfers, however, can be made at any time.
Tax Advantages of an IRA
Allowable contributions made to your IRA are fully-deductible from gross income
for federal income tax purposes. This is true whether or not you itemize
deductions. The maximum amount deductible from an annual contribution is the
lesser of $2,000 or 100% of your compensation. The dollar limit is $2,250 if
contributions are made for a nonworking spouse.
Unlike an ordinary savings account, the earnings on your IRA custodial
account are not taxable in the year they are earned. Your contributions and the
earnings on them will be taxed only in the taxable year you withdraw them. If
you withdraw only a part of your contributions and earnings in a taxable year,
only the part withdrawn will be taxable for that year.
Time for Making Contributions
Except for rollover contributions or IRA to IRA transfers, contributions to your
IRA for a taxable year may be made up through the due date, without extensions,
for that year's federal income tax return. Because of this time flexibility, you
must advise us of the taxable year to which each of your contributions apply.
Tax Penalties for Excess Contributions
Except for a rollover contribution or IRA to IRA transfers, any contribution in
excess of the limits specified in the section entitled Contributions, will not
be deductible and will
28
<PAGE>
also be subject to an annual 6% excise tax. This excise tax is not deductible.
You can avoid the excise tax by withdrawing the excess and any earnings on it
before the due date (including extensions) for filing your federal tax return
for that taxable year. The withdrawn earnings, if any, must be included in
income for the tax year in which the excess contribution was made. Also, the
earnings portion of the withdrawn excess contribution may be subject to a 10%
premature withdrawal penalty. The 6% excise tax will be payable for future years
if you do not withdraw the excess or if you do not eliminate the excess by
making reduced contributions for future years.
Rollover To and From Your
Custodial Account
Certain distributions from qualified plans, annuity plans, Keogh plans, bond
purchase plans and other arrangements may be contributed to your IRA custodial
account. These distributions are often referred to as "lump-sum distributions."
Certain partial distributions are also eligible to be contributed to your IRA.
This is called a rollover contribution. The rollover contribution must be made
within 60 days after your receipt of the funds or property in order to be
contributed to your IRA custodial account. If the rollover is made within that
60 day period, you will not be taxed on the amount of the rollover for that
taxable year. Taxation of the rollover occurs only when it is withdrawn from
your IRA custodial account.
Because only one rollover from a particular IRA to any other IRA may be made
in any twelve-month period and because in certain situations it may not be to
your tax advantage to make a rollover contribution to a particular IRA or other
allowable arrangement, you should consult with your tax advisor before making
any type of rollover contribution to or from your IRA custodial account.
You may also have the Custodian transfer funds or property from your IRA
custodial account into another IRA and certain types of plans and annuities. The
twelve-month rollover restriction does not apply to IRA to IRA transfers.
A transfer of any portion of your interest in your IRA to your former spouse
under a divorce decree is not considered a distribution
29
<PAGE>
taxable to you. The amount transferred is considered an IRA for your former
spouse.
Tax Penalties for Early Withdrawal
Because IRAs are intended to be used for income during retirement years, early
withdrawal of money from your IRA account is subject to a federal penalty tax.
The tax is 10% of the amount withdrawn. The amount withdrawn will also be
included in your income for the tax year in which it is withdrawn. This tax
penalty may also apply if an individual borrows from their account or uses the
value of the account as security or collateral for a loan. There is no penalty
tax if a withdrawal is made:
* after reaching age 59-1/2
* because of death or disability at any age
* because of a rollover from the IRA
* to correct an excess contribution before the due date of your tax return
* to correct an excess rollover contribution which was caused by erroneous
tax information supplied by your employer on which you reasonably relied.
Under the IRA custodial agreement, you must advise us of your intended use of
a withdrawal if the withdrawal is made prior to death, disability or age 59-1/2.
Also under the IRA custodial agreement, you may not borrow funds from your IRA
or use IRA funds as collateral for a loan. Such a use is viewed as a withdrawal
under the Internal Revenue Code.
Withdrawals from your IRA will be taxed at ordinary income tax rates and, if
eligible, you may use the 5-year income averaging method if that will help
reduce your taxes in the year of a withdrawal. The favorable income tax
treatment for certain lump-sum distributions which are granted by Section 402 of
the Internal Revenue Code (i.e., ten-year forward averaging) do not apply to
distributions from your IRA custodial account. This is true regardless of the
type of distribution you receive from your IRA and regardless of the source of
your contribution to the IRA.
State Income, inheritance or other taxes may apply to IRA distributions. You
should ask your tax advisor for information.
30
<PAGE>
Distributions from Your IRA
Custodial Account
You must begin to receive distributions from your IRA custodial account no
later than April 1 of the calendar year following the year in which you reach
age 70-1/2.
You may choose to have your IRA custodial account distributed to you in a
lump sum or in a series of monthly, quarterly or annual payments over a period
of years not exceeding your life expectancy (as determined by IRS tables). After
age 70-1/2, the period can be no longer than your lifetime, the lifetime of you
and your beneficiary, or any period of years which does not exceed the life
expectancy of you and your beneficiary.
If you die after distributions to you from your IRA have started and if you
chose a method of payment which provides for continued payments to your spouse
when you die, then your spouse, if living at your death, will receive those
payments until he or she dies, unless the surviving spouse requests a more rapid
distribution.
If you die before distribution from your IRA custodial account has started
and you have designated a beneficiary other than your spouse, your IRA account
must be distributed within five years of the date of your death unless:
(a) a beneficiary has been designated by you,
(b) distribution to the designated beneficiary will be made over the life of
that beneficiary or over a period certain not extending beyond the life
expectancy of the beneficiary, and
(c) distributions will commence no later than one year after the date of
your death.
If you die before distribution from your IRA custodial account has started
and you have designated your spouse as beneficiary, distributions to your spouse
must begin no later than the date you would have reached age 70-1/2 and be
distributed over a period not extending beyond the life expectancy of your
spouse, or the entire interest to which your spouse is entitled must be
distributed within five years of the date of your death.
If you die before your entire interest has been distributed from your IRA and
your ben-
31
<PAGE>
eficiary is not your surviving spouse, no additional cash or rollover
contributions may be accepted in the account. If your beneficiary is your
spouse, he or she may treat the IRA as his or her own. Additional contributions
may be made to the IRA, provided compensation and age requirements are met, and
no distribution would be required until the year in which the surviving spouse
reached 70-1/2.
The methods of distributions which are available under your IRA custodial
account are designed so that you will be withdrawing the required amount of
money when the required time comes. However, if for any reason you or your
beneficiary do not withdraw the amount required by law, you or your beneficiary
must pay a tax equal to 50% of the required amount not withdrawn.
Beneficiaries
The IRA custodial account application includes a section where you may choose
your beneficiary or beneficiaries and choose the type of distribution your
beneficiaries will receive if you die. If you want to change that designation,
you may do so at any time on a form we will provide. Any change in beneficiary
will cancel all your prior designations of beneficiary.
The last designation of beneficiary which is filed with us during your
lifetime will be the controlling designation at death.
Prohibited Transactions
If you engage in certain transactions with the money in your IRA custodial
account, your IRA will lose its tax exemption. You would then have to include
the entire value of your IRA account in your gross income for federal tax
purposes for that year. These transactions which are prohibited (such as
borrowing money from the account) are listed in Section 4975 of the Internal
Revenue Code.
Tax Filing Requirements
Allowable deductions for your IRA contributions are reported on your regular
Form 1040 tax return every year. However, if you owe penalty taxes for excess
contributions, early withdrawal or for "under distributions", you must also file
Form 5329.
For more information about tax filing requirements or general information
about IRAs, contact any IRS district office and/or
32
<PAGE>
your tax advisor. Note that Publications 590, available from the IRS, explains
much of the information in this Disclosure Statement, and provides additional
information about IRAs.
IRS Approval
The Plan has been filed for approval by the Internal Revenue Service as to form
for use in establishing IRAs. Such approval when received will not, however,
represent determination of the deductibility of any particular contribution made
by you or merits of your particular IRA.
Miscellaneous Information
Your interest in your IRA custodial account is non-forfeitable at all times. No
part of your IRA account will be invested in life insurance contracts. No part
of your IRA account will be mixed with other property except it may be invested
with a common trust fund or a common investment fund.
Financial Disclosure/Fees/
Commissions on Products
Your contributions to this IRA will be subject to custodial fees which have been
furnished to you in a separate schedule.
If the investment(s) you choose to fund this IRA is (are) sold by prospectus,
consult the applicable prospectus(es) you have been furnished for information
concerning (i) the types and amounts of charges which are made against your
contributions, (ii) the method for computing and allocating annual earnings, and
(iii) the types of other charges which may be applied to your interest in the
investment(s) in determining the net amount of money available to you and the
method of computing each such charge. Growth in value of this IRA is neither
guaranteed nor projected. The prospectus also outlines the investment objectives
of the Fund or Limited Partnership, or other security. You should consider those
objectives carefully to determine if they are consistent with your own planning
for retirement.
33
<PAGE>
Limited Partnership Interests
Investments in this IRA are directed by you. The permitted range of investments
includes only limited partnership interests and mutual funds made available by
the Broker and accepted by the Custodian. Any decision by you to direct your
investment into partnership interests should only be made after consideration of
the following general facts regarding such interests. These general statements
regarding possible tax and other implications of such an investment in no way
override or supplement any applicable prospectus and are intended only to
acquaint you with possible issues arising out of such an investment. The
prospectus should always be referred to in making any investment decision.
- -- While usually all income received from investments in an IRA are tax free
to the account, there are tax rules which state, in effect, that certain
income from the active conduct of a trade or business of a partnership or
debt financed income generate unrelated business taxable income (UBTI)
which may be taxable to the Custodial Account if it exceeds $1,000 on an
annual basis.
- -- These taxes, if any, are an expense of the Account and should be paid by
the Account. The Custodian may, in its sole discretion, liquidate any
assets in the Account to satisfy such taxes.
- -- Funds may be sent to the Custodian to pay these taxes in order to avoid
liquidation of an asset. Attention should be given to the possibility of
an excess contribution from this procedure.
- -- Liquidity. There may be no ready market to sell an interest after it has
been purchased. (Refer to the prospectus for a complete description of
the liquidity of the units.) This may cause the Custodian an unavoidable
delay in effecting your investment directions or in arranging for
distributions to you or your beneficiary.
34
<PAGE>
Internal Revenue Service Department of the Treasury
Plan Name: IRA 006 Washington, DC 20224
FF#: 50147410000-006 Person to Contact: Mrs. Fleming
Case #: 8570677 Telephone Number: (202) 566-6421
Letter Serial #: B110013a Refer Reply to: OP:E:EP:RQ:1:1
Phoenix Mutual Life Insurance Date: 03/27/86
One American Row E.I.N.: 06-0493340
Hartford, CT 06115
Dear Applicant:
In our opinion, the form of the prototype trust, custodial account or annuity
contract identified above is acceptable under section 408 of the Internal
Revenue Code.
Each individual who adopts this approved plan will be considered to have a
retirement savings program that satisfies the requirements of Code section 408,
provided they follow the terms of the program and do not engage in certain
transactions specified in Code section 408(e). Please provide a copy of this
letter to each person affected.
The Internal Revenue Service has not evaluated the merits of this savings
program and does not guarantee contributions or investments made under the
savings program. Furthermore, this letter does not express any opinion as to the
applicability of Code section 4975, regarding prohibited transactions.
Code section 408(i) and related regulations require that the trustee, custodian
or issuer of a contract provide a disclosure statement to each participant in
this program as specified in the regulations. Publication 590, Tax Information
on Individual Retirement Arrangements, gives information about the items to be
disclosed.
The trustee, custodian or issuer of a contract is also required to provide each
adopting individual with annual reports of savings program transactions.
Your program may have to be amended to include or revise provisions in order to
comply with future changes in the law or regulations.
35
<PAGE>
If you have any questions concerning IRS processing of this case, call us at the
above telephone number. Please refer to the Letter Serial Number and File Folder
Number shown in the heading of this letter. Please provide those adopting this
plan with your phone number, and advise them to contact your office if they have
any questions about the operation of this plan.
You should keep this letter as a permanent record. Please notify us if you
terminate the form of this plan.
Sincerely yours,
/s/ John Swieca
John Swieca
Chief, Employee Plans
Rulings & Qualifications Branch
36
<PAGE>
PHOENIX EQUITY
Planning Corporation
a Phoenix Mutual company
For assistance call 800-243-1574
(Connecticut residents call collect)
278-8050
Exhibit 15.1
Amended and Restated Distribution Plan
for Class A Shares
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
(the "Fund")
CLASS A SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
The Fund and Phoenix Equity Planning Corporation (the
"Distributor"), a broker-dealer registered under the Securities
Exchange Act of 1934, have entered into a Distribution Agreement
pursuant to which the Distributor will act as principal underwriter of
each class of shares of the Fund for sale to the permissible
purchasers. The Trustees of the Fund have determined to adopt this
Distribution Plan (the "Plan"), in accordance with the requirements of
Section 12b-1 of the Investment Company Act of 1940, as amended (the
"Act") with respect to Class A shares of the Fund and have determined
that there is a reasonable likelihood that the Plan will benefit the
Fund and its Class A shareholders.
2. Rule 12b-1 Fees
The Fund shall pay the Distributor, at the end of each month, an
amount on an annual basis equal to 0.25% of the average daily value of
the net assets of the Fund's Class A shares, as compensation for
providing personal service to shareholders, including assistance in
connection with inquiries relating to shareholder accounts, and for
maintaining shareholder accounts (the "Service Fee").
Amounts paid or payable by the Fund under this Plan or any
agreement with any person or entity relating to the implementation of
this Plan ("related agreement") shall only be used to pay for, or
reimburse payment for, the distribution expenditures described in the
preceding paragraph and shall, given all surrounding circumstances,
represent charges within the range of what would have been negotiated
at arm's length as payment for the specific sales or promotional
services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise
of reasonable business judgment, in light of fiduciary duties under
state law and Sections 36(a) and (b) of the Act and based upon
appropriate business estimates and projections.
3. Reports
At least quarterly in each year this Plan remains in effect, the
Fund's Principal Accounting Officer or Treasurer, or such other person
authorized to direct the disposition of monies paid or payable by the
Fund, shall prepare and furnish to the Trustees of the Fund for their
review, and the Trustees shall review, a written report complying with
the requirements of Rule 12b-1 under the Act regarding the amounts
expended under this Plan and the purposes for which such expenditures
were made.
<PAGE>
4. Required Approval
This Plan shall not take effect until it, together with any
related agreement, has been approved by a vote of at least a majority
of the Fund's Trustees as well as a vote of at least a majority of the
Trustees of the Fund who are not interested persons (as defined in the
Act) of the Fund and who have no direct or indirect financial interest
in the operation of this Plan or in any related agreement (the
"Disinterested Trustees"), cast in person at a meeting called for the
purpose of voting on this Plan or any related agreement and this Plan
shall not take effect with respect to the Fund until it has been
approved by a vote of at least a majority of the outstanding voting
Class A shares (as such phrase is defined in the Act).
5. Term
This Plan shall remain in effect for one year from the date of
its adoption and may be continued thereafter if specifically approved
at least annually by a vote of at least a majority of the Trustees of
the Fund as well as a majority of the Disinterested Trustees. This Plan
may be amended at any time, provided that (a) the Plan may not be
amended to increase materially the amount of the distribution expenses
provided in Paragraph 2 hereof (including the Service Fee) without the
approval of at least a majority of the outstanding voting securities
(as defined in the Act) of the Class A shares of the Fund and (b) all
material amendments to this Plan must be approved by a majority vote of
the Trustees of the Fund and of the Disinterested Trustees cast in
person at a meeting called for the purpose of such vote.
6. Selection of Disinterested Trustees
While this Plan is in effect, the selection and nomination of
Trustees who are not interested persons (as defined in the Act) of the
Fund shall be committed to the discretion of the Disinterested Trustees
then in office.
7. Related Agreements
Any related agreement shall be in writing and shall provide that
(a) such agreement shall be subject to termination, without penalty, by
vote of a majority of the outstanding voting securities (as defined in
the Act) of the Class A shares of the Fund on not more than 60 days'
written notice to the other party to the agreement and (b) such
agreement shall terminate automatically in the event of its assignment.
8. Termination
This Plan may be terminated at any time by a vote of a majority
of the Disinterested Trustees or by a vote of a majority of the
outstanding voting securities (as defined in the Act) of the Class A
shares of the Fund. In the event this Plan is terminated or otherwise
discontinued, no further payments hereunder will be made hereunder.
<PAGE>
9. Records
The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to Paragraph 3 hereof, and any
other information, estimates, projections and other materials that
serve as a basis therefor, considered by the Trustees of the Fund, for
a period of not less than six years from the date of this Plan, the
agreement or report, as the case may be, the first two years in an
easily accessible place.
10. Non-Recourse
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.
[Adopted at a duly held meeting of the Board of Trustees on August 27,
1997.]
Exhibit 15.2
Amended and Restated Distribution Plan
for Class B Shares
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
(the "Fund")
CLASS B SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
The Fund and Phoenix Equity Planning Corporation (the
"Distributor"), a broker-dealer registered under the Securities
Exchange Act of 1934, have entered into a Distribution Agreement
pursuant to which the Distributor will act as principal underwriter of
each class of shares of the Fund for sale to the permissible
purchasers. The Trustees of the Fund have determined to adopt this
Distribution Plan (the "Plan"), in accordance with the requirements of
Section 12b-1 of the Investment Company Act of 1940, as amended (the
"Act") with respect to Class B shares of the Fund and have determined
that there is a reasonable likelihood that the Plan will benefit the
Fund and its Class B shareholders.
2 Rule 12b-1 Fees
The Fund shall reimburse the Distributor, at the end of each
month, up to a maximum on an annual basis of .75% of the average daily
value of the net assets of the Fund's Class B shares, subject to any
applicable restrictions imposed by rules of the National Association of
Securities Dealers, Inc., for distribution expenditures incurred by
Distributor subsequent to the effectiveness of this Plan, in connection
with the sale and promotion of the Class B shares of the Fund and the
furnishing of services to Class B shareholders of the Fund. Such
expenditures shall consist of: (i) commissions to sales personnel for
selling Class B shares of the Fund (including underwriting commissions
and finance charges related to the payment of commissions); (ii)
compensation, sales incentives and payments to sales, marketing and
service personnel; (iii) payments to broker-dealers and other financial
institutions which have entered into selling agreements with the
Distributor for services rendered in connection with the sale and
distribution of Class B shares of the Fund; (iv) payment of expenses
incurred in sales and promotional activities, including advertising
expenditures related to the Class B shares of the Fund; (v) the costs
of preparing and distributing promotional materials; (vi) the cost of
printing the Fund's Prospectus and Statement of Additional Information
for distribution to potential investors; and (vii) such other similar
services that the Trustees of the Fund determine are reasonably
calculated to result in the sale of Class B shares of the Fund. The
Fund shall also pay the Distributor, at the end of each month, an
amount on an annual basis equal to 0.25% of the average daily value of
the net assets of the Fund's Class B shares, as compensation for
providing personal service to shareholders, including assistance in
connection with inquiries relating to shareholder accounts, and for
maintaining shareholder accounts (the "Service Fee").
<PAGE>
Any reduction to amounts payable under this Plan shall first be
to the extent of the Service Fee, and then from the balance of the
12b-1 Fee.
Amounts paid or payable by the Fund under this Plan or any
agreement with any person or entity relating to the implementation of
this Plan ("related agreement") shall only be used to pay for, or
reimburse payment for, the distribution expenditures described in the
preceding paragraph and shall, given all surrounding circumstances,
represent charges within the range of what would have been negotiated
at arm's length as payment for the specific sales or promotional
services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise
of reasonable business judgment, in light of fiduciary duties under
state law and Sections 36(a) and (b) of the Act and based upon
appropriate business estimates and projections.
3. Reports
At least quarterly in each year this Plan remains in effect, the
Fund's Principal Accounting Officer or Treasurer, or such other person
authorized to direct the disposition of monies paid or payable by the
Fund, shall prepare and furnish to the Trustees of the Fund for their
review, and the Trustees shall review, a written report complying with
the requirements of Rule 12b-l under the Act regarding the amounts
expended under this Plan and the purposes for which such expenditures
were made.
4. Required Approval
This Plan shall not take effect until it, together with any
related agreement, has been approved by a vote of at least a majority
of the Fund's Trustees as well as a vote of at least a majority of the
Trustees of the Fund who are not interested persons (as defined in the
Act) of the Fund and who have no direct or indirect financial interest
in the operation of this Plan or in any related agreement (the
"Disinterested Trustees"), cast in person at a meeting called for the
purpose of voting on this Plan or any related agreement and this Plan
shall not take effect with respect to the Fund until it has been
approved by a vote of at least a majority of the outstanding voting
Class B shares (as such phrase is defined in the Act).
5. Term
This Plan shall remain in effect for one year from the date of
its adoption and may be continued thereafter if specifically approved
at least annually by a vote of at least a majority of the Trustees of
the Fund as well as a majority of the Disinterested Trustees. This Plan
may be amended at any time, provided that (a) the Plan may not be
amended to increase materially the amount of the distribution expenses
provided in Paragraph 2 hereof (including the Service Fee) without the
approval of at least a majority of the outstanding voting securities
(as defined in the Act) of the Class B shares of the Fund and (b) all
material amendments to this Plan must be approved by a majority vote of
the Trustees of the Fund and of the Disinterested Trustees cast in
person at a meeting called for the purpose of such vote.
<PAGE>
6. Selection of Disinterested Trustees
While this Plan is in effect, the selection and nomination of
Trustees who are not interested persons (as defined in the Act) of the
Fund shall be committed to the discretion of the Disinterested Trustees
then in office.
7. Related Agreements
Any related agreement shall be in writing and shall provide that
(a) such agreement shall be subject to termination, without penalty, by
vote of a majority of the outstanding voting securities (as defined in
the Act) of the Class B shares of the Fund on not more than 60 days'
written notice to the other party to the agreement and (b) such
agreement shall terminate automatically in the event of its assignment.
8. Termination
This Plan may be terminated at any time by a vote of a majority
of the Disinterested Trustees or by a vote of a majority of the
outstanding voting securities (as defined in the Act) of the Class B
shares of the Fund. In the event this Plan is terminated or otherwise
discontinued, no further payments hereunder will be made hereunder.
9. Records
The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to Paragraph 3 hereof, and any
other information, estimates, projections and other materials that
serve as a basis therefor, considered by the Trustees of the Fund, for
a period of not less than six years from the date of this Plan, the
agreement or report, as the case may be, the first two years in an
easily accessible place.
10. Non-Recourse
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.
[Adopted at a duly held meeting of the Board of Trustees on August 27,
1997.]
Exhibit 15.3
CLASS C SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
<PAGE>
PHOENIX MULT-PORTFOLIO FUND
(the "Fund")
CLASS C SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have entered
into a Distribution Agreement pursuant to which the Distributor will act as
principal underwriter of each class of shares of the Fund for sale to the
permissible purchasers. The Trustees of the Fund have determined to adopt this
Distribution Plan (the "Plan"), in accordance with the requirements of Section
12b-1 of the Investment Company Act of 1940, as amended (the "Act") with respect
to Class C shares of the Fund and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its Class C shareholders.
2. Rule 12b-1 Fees
---------------
The Fund shall reimburse the Distributor, at the end of each month, up
to a maximum on an annual basis of .75% of the average daily value of the net
assets of the Fund's Class C shares, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc., for
distribution expenditures incurred by Distributor subsequent to the
effectiveness of this Plan, in connection with the sale and promotion of the
Class C shares of the Fund and the furnishing of services to Class C
shareholders of the Fund. Such expenditures shall consist of: (i) commissions to
sales personnel for selling Class C 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 C shares of the
Fund; (iv) payment of expenses incurred in sales and promotional activities,
including advertising expenditures related to the Class C 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 C shares of the Fund. The Fund shall also pay the Distributor, at
the end of each month, an amount on an annual basis equal to 0.25% of the
average daily value of the net assets of the Fund's Class C shares, as
compensation for providing personal service to
<PAGE>
shareholders, including assistance in connection with inquiries relating to
shareholder accounts, and for maintaining shareholder accounts (the "Service
Fee").
Any reduction to amounts payable under this Plan shall first be to the
extent of the Service Fee, and then from the balance of the 12b-1 Fee.
Amounts paid or payable by the Fund under this Plan or any agreement
with any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
3. Reports
-------
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare and
furnish to the Trustees of the Fund for their review, and the Trustees shall
review, a written report complying with the requirements of Rule 12b-l under the
Act regarding the amounts expended under this Plan and the purposes for which
such expenditures were made.
4. Required Approval
-----------------
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of this Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or any related agreement and this
Plan shall not take effect with respect to the Fund until it has been approved
by a vote of at least a majority of the outstanding voting Class C shares (as
such phrase is defined in the Act).
5. Term
----
This Plan shall remain in effect for one year from the date of its
adoption and may be continued thereafter if specifically approved at least
annually by a vote of at least a majority of the Trustees of the Fund as well as
a majority of the Disinterested Trustees. This Plan may be amended at any time,
provided that (a) the Plan may not be amended to increase materially the amount
of the distribution expenses provided in Paragraph 2 hereof (including the
Service Fee) without the approval of at least a majority of the outstanding
voting securities (as defined in the Act) of the Class C shares of the Fund and
(b) all material amendments to this Plan must be approved by a majority vote of
the Trustees of the Fund and of the Disinterested Trustees cast in person at a
meeting called for the purpose of such vote.
<PAGE>
6. Selection of Disinterested Trustees
------------------------------------
While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
------------------
Any related agreement shall be in writing and shall provide that (a)
such agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class C shares of the Fund on not more than 60 days' written notice to the other
party to the agreement and (b) such agreement shall terminate automatically in
the event of its assignment.
8. Termination
-----------
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class C shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
9. Records
-------
The Fund shall preserve copies of this Plan and any related agreements
and all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
10. Non-Recourse
------------
The Fund's Declaration of Trust dated 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.
Exhibit 15.4
CLASS M SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
<PAGE>
PHOENIX MULT-PORTFOLIO FUND
(the "Fund")
CLASS M SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have entered
into a Distribution Agreement pursuant to which the Distributor will act as
principal underwriter of each class of shares of the Fund for sale to the
permissible purchasers. The Trustees of the Fund have determined to adopt this
Distribution Plan (the "Plan"), in accordance with the requirements of Section
12b-1 of the Investment Company Act of 1940, as amended (the "Act") with respect
to Class M shares of the Fund and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its Class M shareholders.
2. Rule 12b-1 Fees
---------------
The Fund shall reimburse the Distributor, at the end of each month, up
to a maximum on an annual basis of .25% of the average daily value of the net
assets of the Fund's Class M shares, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc., for
distribution expenditures incurred by Distributor subsequent to the
effectiveness of this Plan, in connection with the sale and promotion of the
Class M shares of the Fund and the furnishing of services to Class M
shareholders of the Fund. Such expenditures shall consist of: (i) commissions to
sales personnel for selling Class M 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 M shares of the
Fund; (iv) payment of expenses incurred in sales and promotional activities,
including advertising expenditures related to the Class M 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 M shares of the Fund. The Fund shall also pay the Distributor, at
the end of each month, an amount on an annual basis equal to 0.25% of the
average daily value of the net assets of the Fund's Class M shares, as
compensation for providing personal service to shareholders, including
assistance in connection with inquiries relating to shareholder accounts, and
for maintaining shareholder accounts (the "Service Fee").
<PAGE>
Any reduction to amounts payable under this Plan shall first be to the
extent of the Service Fee, and then from the balance of the 12b-1 Fee.
Amounts paid or payable by the Fund under this Plan or any agreement
with any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
3. Reports
-------
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare and
furnish to the Trustees of the Fund for their review, and the Trustees shall
review, a written report complying with the requirements of Rule 12b-l under the
Act regarding the amounts expended under this Plan and the purposes for which
such expenditures were made.
4. Required Approval
-----------------
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of this Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or any related agreement and this
Plan shall not take effect with respect to the Fund until it has been approved
by a vote of at least a majority of the outstanding voting Class M shares (as
such phrase is defined in the Act).
5. Term
----
This Plan shall remain in effect for one year from the date of its
adoption and may be continued thereafter if specifically approved at least
annually by a vote of at least a majority of the Trustees of the Fund as well as
a majority of the Disinterested Trustees. This Plan may be amended at any time,
provided that (a) the Plan may not be amended to increase materially the amount
of the distribution expenses provided in Paragraph 2 hereof (including the
Service Fee) without the approval of at least a majority of the outstanding
voting securities (as defined in the Act) of the Class M shares of the Fund and
(b) all material amendments to this Plan must be approved by a majority vote of
the Trustees of the Fund and of the Disinterested Trustees cast in person at a
meeting called for the purpose of such vote.
<PAGE>
6. Selection of Disinterested Trustees
------------------------------------
While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
------------------
Any related agreement shall be in writing and shall provide that (a)
such agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class M shares of the Fund on not more than 60 days' written notice to the other
party to the agreement and (b) such agreement shall terminate automatically in
the event of its assignment.
8. Termination
-----------
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class M shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
9. Records
-------
The Fund shall preserve copies of this Plan and any related agreements
and all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
10. Non-Recourse
------------
The Fund's Declaration of Trust dated 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.
PHOENIX FUNDS
(the "Funds")
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended ("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the original effective date of this Plan, the Funds shall offer
multiple classes of shares, as described herein, pursuant to Rule 18f-3 and this
Plan.
2. The Multi-Class Structure
-------------------------
The portfolios of the Funds listed on Schedule A hereto shall offer up
to four classes of shares as indicated on Schedule A: Class A, Class B, Class C
and Class M ("Multi-Class Portfolios"). Shares of the Multi-Class Portfolios
shall represent an equal pro rata interest in the respective Multi-Class
Portfolio and, generally, shall have identical voting, dividend, liquidation,
and other rights, preferences, powers, restrictions, limitations, qualifications
and terms and conditions, except that: (a) each class shall have a different
designation; (b) each class shall bear any Class Expenses, as defined by Section
2(b), below; (c) each class shall have exclusive voting rights on any matter
submitted to shareholders that relates solely to its distribution arrangement;
and (d) each class shall have separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the interests of
any other class. In addition, Class A, Class B, Class C and Class M shares shall
have the features described in Sections a, b, c and d, below.
a. Distribution Plans
The Funds have adopted Distribution Plans pursuant to Rule 12b-1 with
respect to each Multi-Class Portfolio, containing substantially the following
terms:
i. Class A shares of each Multi-Class Portfolio shall
reimburse Phoenix Equity Planning Corporation (the "Distributor") for costs and
expenses incurred in connection with distribution and marketing of shares
thereof, as provided in the Class A Distribution Plan
<PAGE>
-2-
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.
ii. Class B shares of each Multi-Class Portfolio shall
reimburse the Distributor for costs and expenses incurred in connection with
distribution and marketing of shares thereof, as provided in the Class B
Distribution Plan and any supplements thereto, subject to an annual limit of
1.00% of the average daily net assets of a Multi-Class Portfolio's Class B
shares.
iii. Class C shares of each Multi-Class Portfolio shall
reimburse the Distributor for costs and expenses incurred in connection with
distribution and marketing of shares thereof, as provided in the Class C
Distribution Plan and any supplements thereto, subject to an annual limit of
1.00%, or in some cases 0.50%, of the average daily net assets of a Multi-Class
Portfolio's Class C shares.
iv. Class M shares of each Multi-Class Portfolio shall
reimburse the Distributor for costs and expenses incurred in connection with
distribution and marketing of shares thereof, as provided in the Class M
Distribution Plan and any supplements thereto, subject to an annual limit of
0.50% of the average daily net assets of a Multi-Class Portfolio's Class M
shares.
b. Allocation of Income and Expenses
i. General.
The gross income, realized and unrealized capital gains and
losses and expenses (other than Class Expenses, as defined below) of each
Multi-Class Portfolio shall be allocated to each class on the basis of its net
asset value relative to the net asset value of the Multi-Class Portfolio.
Expenses to be so allocated include expenses of the Funds that are not
attributable to a particular Multi-Class Portfolio or class of a Multi-Class
Portfolio but are allocated to a Multi-Class Portfolio ("Fund Expenses") and
expenses of a particular Multi-Class Portfolio that are not attributable to a
particular class of that Multi-Class Portfolio ("Portfolio Expenses"). Fund
Expenses include, but are not limited to, trustees' fees, insurance costs and
certain legal fees. Portfolio Expenses include, but are not limited to, certain
state registration fees, custodial fees, advisory fees and other expenses
relating to the management of the Multi-Class Portfolio's assets.
ii. Class Expenses.
Expenses attributable to a particular class ("Class Expenses")
shall be limited to: (1) transfer agency fees; (2) stationery, printing,
postage, and delivery expenses relating to preparing and distributing
shareholder reports, prospectuses, and proxy statements; (3) state Blue Sky
registration fees; (4) SEC registration fees; (5) expenses of administrative
personnel and
<PAGE>
-3-
services to the extent related to another category of class-specific expenses;
(6) trustees' fees and expenses; (7) accounting expenses, auditors' fees,
litigation expenses, and legal fees and expenses; and (8) expenses incurred in
connection with shareholder meetings. Expenses described in subsection (a) (i)
and (ii) above of this paragraph must be allocated to the class for which they
are incurred. All other expenses described in this paragraph will be allocated
as Class Expenses, if a Fund's President and Treasurer have determined, subject
to Board approval or ratification, which of such categories of expenses will be
treated as Class Expenses, consistent with applicable legal principles under the
1940 Act and the Internal Revenue Code of 1986, as amended ("Code"). The
difference between the Class Expenses allocated to each share of a class during
a year and the Class Expenses allocated to each share of any other class during
such year shall at all times be less than .50% of the average daily net asset
value of the class of shares with the smallest average net asset value. The
afore-described description of Class Expenses and any amendment thereto shall be
subject to the continuing availability of an opinion of counsel or a ruling from
the Internal Revenue Service to the effect that any such allocation of expenses
or the assessment of higher distribution fees and transfer agency costs on any
class of shares does not result in any dividends or distributions constituting
"preferential dividends" under the Code.
In the event that a particular expense is no longer reasonably
allocable by class or to a particular class, it shall be treated as a Fund
Expense or Portfolio Expense as applicable, and in the event a Fund Expense or
Portfolio Expense becomes allocable as a Class Expense, it shall be so
allocated, subject to compliance with Rule 1 8f-3 and Board approval or
ratification.
The initial determination of expenses that will be allocated
as Class Expenses and any subsequent changes thereto as set forth in this Plan
shall be reviewed by the Board of Trustees and approved by such Board and by a
majority of the Trustees who are not "interested persons" of the Fund, as
defined in the 1940 Act ("Independent Trustees").
iii. Waivers or Reimbursements of Expenses.
Investment Advisor may waive or reimburse its management fee
in whole or in part provided that the fee is waived or reimbursed to all shares
of the Fund in proportion to the relative average daily net asset values.
Investment Advisor or a related entity who charges a fee for a
Class Expense may waive or reimburse that fee in whole or in part only if the
revised fee more accurately reflects the relative cost of providing to each
Multi-Class Portfolio the service for which the Class Expense is charged.
Distributor may waive or reimburse a Rule 12b- 1 Plan fee
payment in whole or in part.
c. Exchange Privileges
<PAGE>
-4-
Shareholders of a Multi-Class Portfolio may exchange shares of a
particular class for shares of the same class in another Multi-Class Portfolio,
at the relative net asset values of the respective shares to be exchanged and
with no sales charge, provided the shares to be acquired in the exchange are, as
may be necessary, qualified for sale in the shareholder's state of residence and
subject to the applicable requirements, if any, as to minimum amount. Each
Multi-Class
<PAGE>
-5-
Portfolio reserves the right to temporarily or permanently terminate exchange
privileges, impose conditions upon the exercision of exchange privileges, or
reject any specific order for any dealer, shareholder or person whose
transactions seem to follow a timing pattern, including those who request more
than one exchange out of a Multi-Class Portfolio within any thirty (30) day
period. Each Multi-Class Portfolio reserves the right to terminate or modify
these exchange privileges at any time upon giving prominent notice to
shareholders at least 60 days in advance.
d. Conversion Feature
Class B Shares of a Multi-Class Portfolio will automatically convert to
Class A Shares of that portfolio, without sales charge, at the relative net
asset values of each such classes, not later than eight years from the
acquisition of the Class B Shares. The conversion of Class B Shares to Class A
Shares is subject to the continuing availability of an opinion of counsel or a
ruling from the Internal Revenue Service to the effect that the conversion of
shares does not constitute a taxable event under federal income tax law.
3. Board Review
------------
a. Approval of Amended and Restated Plan
The Board of Trustees, including a majority of the Independent
Trustees, at a meeting held on November __, l997, approved the Amended and
Restated Plan based on a determination that the Plan, including the expense
allocation, is in the best interests of each class and Multi-Class Portfolio
individually and of the Funds. Their determination was based on their review of
information furnished to them which they deemed reasonably necessary and
sufficient to evaluate the Plan.
b. Approval of Amendments
The Plan may not be amended materially unless the Board of Trustees,
including a majority of the Independent Trustees, have found that the proposed
amendment, including any proposed related expense allocation, is in the best
interests of each class and Multi-Class Portfolio individually and of the Funds.
Such funding shall be based on information required by the Board and furnished
to them that the Board deems reasonably necessary to evaluate the proposed
amendment.
c. Periodic Review
The Board shall review reports of expense allocations and such other
information as they request at such times, or pursuant to such schedule, as they
may determine consistent with applicable legal requirements.
<PAGE>
-6-
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>
-7-
SCHEDULE A
----------
<TABLE>
<CAPTION>
Class A Class B Class C Class M
------- ------- ------- -------
<S> <C> <C> <C> <C>
PHOENIX CALIFORNIA TAX-EXEMPT BONDS, INC. X X __ __
PHOENIX EQUITY SERIES FUND:
PHOENIX CORE EQUITY FUND X X X X
PHOENIX GROWTH AND INCOME FUND X X X X
PHOENIX INCOME AND GROWTH FUND X X __ __
PHOENIX INVESTMENT TRUST 97:
PHOENIX SMALL CAP VALUE FUND X X X X
PHOENIX VALUE EQUITY FUND X X X X
PHOENIX MULTI-PORTFOLIO FUND:
EMERGING MARKETS BOND PORTFOLIO X X X X
INTERNATIONAL PORTFOLIO X X __ __
MID CAP PORTFOLIO X X __ __
REAL ESTATE SECURITIES PORTFOLIO X X __ __
STRATEGIC INCOME PORTFOLIO X X X X
TAX-EXEMPT BOND PORTFOLIO X X __ __
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC. X X X X
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND X X X __
PHOENIX SERIES FUND:
AGGRESSIVE GROWTH FUND SERIES X X __ __
BALANCED FUND SERIES X X __ __
CONVERTIBLE FUND SERIES X X __ __
GROWTH FUND SERIES X X __ __
HIGH YIELD FUND SERIES X X X X
MONEY MARKET FUND SERIES X X X X
U.S. GOVERNMENT SECURITIES FUND
SERIES X X __ __
<PAGE>
-8-
PHOENIX STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND X X __ __
MICRO CAP FUND X X __ __
SMALL CAP FUND X X __ __
STRATEGIC THEME FUND X X X X
PHOENIX STRATEGIC ALLOCATION FUND, INC. X X __ __
PHOENIX WORLDWIDE OPPORTUNITIES FUND X X __ __
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 011
<NAME> PHOENIX TAX EXEMPT BOND PORTFOLIO CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 120182
<INVESTMENTS-AT-VALUE> 126785
<RECEIVABLES> 2198
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 128983
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 423
<TOTAL-LIABILITIES> 423
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 121978
<SHARES-COMMON-STOCK> 10986
<SHARES-COMMON-PRIOR> 12111
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (124)
<ACCUMULATED-NET-GAINS> 108
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6598
<NET-ASSETS> 128560
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8325
<OTHER-INCOME> 0
<EXPENSES-NET> (1300)
<NET-INVESTMENT-INCOME> 7025
<REALIZED-GAINS-CURRENT> 175
<APPREC-INCREASE-CURRENT> 421
<NET-CHANGE-FROM-OPS> 7621
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6761
<DISTRIBUTIONS-OF-GAINS> 1899
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5120
<NUMBER-OF-SHARES-REDEEMED> (6702)
<SHARES-REINVESTED> 458
<NET-CHANGE-IN-ASSETS> (13795)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1867
<OVERDISTRIB-NII-PRIOR> (118)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 593
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1300
<AVERAGE-NET-ASSETS> 131826
<PER-SHARE-NAV-BEGIN> 11.28
<PER-SHARE-NII> 0.59
<PER-SHARE-GAIN-APPREC> 0.05
<PER-SHARE-DIVIDEND> (0.59)
<PER-SHARE-DISTRIBUTIONS> (0.16)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.17
<EXPENSE-RATIO> 0.96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> PHOENIX TAX EXEMPT BOND PORTFOLIO CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 120182
<INVESTMENTS-AT-VALUE> 126785
<RECEIVABLES> 2198
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 128983
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 423
<TOTAL-LIABILITIES> 423
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 121978
<SHARES-COMMON-STOCK> 517
<SHARES-COMMON-PRIOR> 421
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (124)
<ACCUMULATED-NET-GAINS> 108
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6598
<NET-ASSETS> 128560
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8325
<OTHER-INCOME> 0
<EXPENSES-NET> (1300)
<NET-INVESTMENT-INCOME> 7025
<REALIZED-GAINS-CURRENT> 175
<APPREC-INCREASE-CURRENT> 421
<NET-CHANGE-FROM-OPS> 7621
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 234
<DISTRIBUTIONS-OF-GAINS> 66
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 200
<NUMBER-OF-SHARES-REDEEMED> (120)
<SHARES-REINVESTED> 16
<NET-CHANGE-IN-ASSETS> 1035
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1867
<OVERDISTRIB-NII-PRIOR> (118)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 593
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1300
<AVERAGE-NET-ASSETS> 131826
<PER-SHARE-NAV-BEGIN> 11.32
<PER-SHARE-NII> 0.50
<PER-SHARE-GAIN-APPREC> 0.06
<PER-SHARE-DIVIDEND> (0.50)
<PER-SHARE-DISTRIBUTIONS> (0.16)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.22
<EXPENSE-RATIO> 1.71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> PHOENIX MID CAP PORTFOLIO CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 347187
<INVESTMENTS-AT-VALUE> 402805
<RECEIVABLES> 2709
<ASSETS-OTHER> 6
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 405520
<PAYABLE-FOR-SECURITIES> 25864
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1020
<TOTAL-LIABILITIES> 26884
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 288268
<SHARES-COMMON-STOCK> 17445
<SHARES-COMMON-PRIOR> 20849
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 34750
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 55618
<NET-ASSETS> 378636
<DIVIDEND-INCOME> 2465
<INTEREST-INCOME> 2252
<OTHER-INCOME> 320
<EXPENSES-NET> (5488)
<NET-INVESTMENT-INCOME> (451)
<REALIZED-GAINS-CURRENT> 36322
<APPREC-INCREASE-CURRENT> (8036)
<NET-CHANGE-FROM-OPS> 27835
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 51980
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2046
<NUMBER-OF-SHARES-REDEEMED> (8074)
<SHARES-REINVESTED> 2624
<NET-CHANGE-IN-ASSETS> (91420)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 52883
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3028
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5488
<AVERAGE-NET-ASSETS> 403701
<PER-SHARE-NAV-BEGIN> 21.65
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> 1.52
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (2.51)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.64
<EXPENSE-RATIO> 1.33
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> PHOENIX MID CAP PORTFOLIO CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 347187
<INVESTMENTS-AT-VALUE> 402805
<RECEIVABLES> 2709
<ASSETS-OTHER> 6
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 405520
<PAYABLE-FOR-SECURITIES> 25864
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1020
<TOTAL-LIABILITIES> 26884
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 288268
<SHARES-COMMON-STOCK> 924
<SHARES-COMMON-PRIOR> 826
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 34750
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 55618
<NET-ASSETS> 378636
<DIVIDEND-INCOME> 2465
<INTEREST-INCOME> 2252
<OTHER-INCOME> 320
<EXPENSES-NET> (5488)
<NET-INVESTMENT-INCOME> (451)
<REALIZED-GAINS-CURRENT> 36322
<APPREC-INCREASE-CURRENT> (8036)
<NET-CHANGE-FROM-OPS> 27835
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 2026
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 230
<NUMBER-OF-SHARES-REDEEMED> (234)
<SHARES-REINVESTED> 102
<NET-CHANGE-IN-ASSETS> 984
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 52883
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3028
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5488
<AVERAGE-NET-ASSETS> 403701
<PER-SHARE-NAV-BEGIN> 21.30
<PER-SHARE-NII> (0.16)
<PER-SHARE-GAIN-APPREC> 1.47
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (2.50)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.11
<EXPENSE-RATIO> 2.08
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> PHOENIX INTERNATIONAL PORTFOLIO CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 123470
<INVESTMENTS-AT-VALUE> 142474
<RECEIVABLES> 500
<ASSETS-OTHER> 9
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 142983
<PAYABLE-FOR-SECURITIES> 73
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1412
<TOTAL-LIABILITIES> 1485
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 111404
<SHARES-COMMON-STOCK> 9454
<SHARES-COMMON-PRIOR> 9362
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (332)
<ACCUMULATED-NET-GAINS> 11420
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 19006
<NET-ASSETS> 141498
<DIVIDEND-INCOME> 1800
<INTEREST-INCOME> 715
<OTHER-INCOME> 0
<EXPENSES-NET> (2280)
<NET-INVESTMENT-INCOME> 235
<REALIZED-GAINS-CURRENT> 11443
<APPREC-INCREASE-CURRENT> (622)
<NET-CHANGE-FROM-OPS> 11056
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2608
<DISTRIBUTIONS-OF-GAINS> 12022
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4286
<NUMBER-OF-SHARES-REDEEMED> (5208)
<SHARES-REINVESTED> 1013
<NET-CHANGE-IN-ASSETS> (4186)
<ACCUMULATED-NII-PRIOR> 2213
<ACCUMULATED-GAINS-PRIOR> 12614
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1062
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2280
<AVERAGE-NET-ASSETS> 141652
<PER-SHARE-NAV-BEGIN> 14.48
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 1.01
<PER-SHARE-DIVIDEND> (0.29)
<PER-SHARE-DISTRIBUTIONS> (1.34)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.89
<EXPENSE-RATIO> 1.56
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 032
<NAME> PHOENIX INTERNATIONAL PORTFOLIO CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 123470
<INVESTMENTS-AT-VALUE> 142474
<RECEIVABLES> 500
<ASSETS-OTHER> 9
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 142983
<PAYABLE-FOR-SECURITIES> 73
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1412
<TOTAL-LIABILITIES> 1485
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 111404
<SHARES-COMMON-STOCK> 749
<SHARES-COMMON-PRIOR> 489
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (332)
<ACCUMULATED-NET-GAINS> 11420
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 19006
<NET-ASSETS> 141498
<DIVIDEND-INCOME> 1800
<INTEREST-INCOME> 715
<OTHER-INCOME> 0
<EXPENSES-NET> (2280)
<NET-INVESTMENT-INCOME> 235
<REALIZED-GAINS-CURRENT> 11443
<APPREC-INCREASE-CURRENT> (622)
<NET-CHANGE-FROM-OPS> 11056
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 129
<DISTRIBUTIONS-OF-GAINS> 658
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 728
<NUMBER-OF-SHARES-REDEEMED> (525)
<SHARES-REINVESTED> 57
<NET-CHANGE-IN-ASSETS> 3204
<ACCUMULATED-NII-PRIOR> 2213
<ACCUMULATED-GAINS-PRIOR> 12614
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1062
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2280
<AVERAGE-NET-ASSETS> 141652
<PER-SHARE-NAV-BEGIN> 14.22
<PER-SHARE-NII> (0.08)
<PER-SHARE-GAIN-APPREC> 1.00
<PER-SHARE-DIVIDEND> (0.24)
<PER-SHARE-DISTRIBUTIONS> (1.34)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.56
<EXPENSE-RATIO> 2.31
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 061
<NAME> PHOENIX REAL ESTATE SECURITIES PORTFOLIO CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 48301
<INVESTMENTS-AT-VALUE> 59421
<RECEIVABLES> 155
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 59576
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 150
<TOTAL-LIABILITIES> 150
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 44325
<SHARES-COMMON-STOCK> 2218
<SHARES-COMMON-PRIOR> 1741
<ACCUMULATED-NII-CURRENT> 212
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3769
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11120
<NET-ASSETS> 59426
<DIVIDEND-INCOME> 2114
<INTEREST-INCOME> 75
<OTHER-INCOME> 0
<EXPENSES-NET> (739)
<NET-INVESTMENT-INCOME> 1450
<REALIZED-GAINS-CURRENT> 3771
<APPREC-INCREASE-CURRENT> 6591
<NET-CHANGE-FROM-OPS> 11812
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1017)
<DISTRIBUTIONS-OF-GAINS> (437)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1072
<NUMBER-OF-SHARES-REDEEMED> (692)
<SHARES-REINVESTED> 96
<NET-CHANGE-IN-ASSETS> 13464
<ACCUMULATED-NII-PRIOR> 193
<ACCUMULATED-GAINS-PRIOR> 598
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 355
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 851
<AVERAGE-NET-ASSETS> 47347
<PER-SHARE-NAV-BEGIN> 13.14
<PER-SHARE-NII> 0.49
<PER-SHARE-GAIN-APPREC> 3.52
<PER-SHARE-DIVIDEND> (0.51)
<PER-SHARE-DISTRIBUTIONS> (0.25)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.39
<EXPENSE-RATIO> 1.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 062
<NAME> PHOENIX REAL ESTATE SECURITIES PORTFOLIO CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 48301
<INVESTMENTS-AT-VALUE> 59421
<RECEIVABLES> 155
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 59576
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 150
<TOTAL-LIABILITIES> 150
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 44325
<SHARES-COMMON-STOCK> 1415
<SHARES-COMMON-PRIOR> 630
<ACCUMULATED-NII-CURRENT> 212
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3769
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11120
<NET-ASSETS> 59426
<DIVIDEND-INCOME> 2114
<INTEREST-INCOME> 75
<OTHER-INCOME> 0
<EXPENSES-NET> (739)
<NET-INVESTMENT-INCOME> 1450
<REALIZED-GAINS-CURRENT> 3771
<APPREC-INCREASE-CURRENT> 6591
<NET-CHANGE-FROM-OPS> 11812
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (413)
<DISTRIBUTIONS-OF-GAINS> (164)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 852
<NUMBER-OF-SHARES-REDEEMED> (100)
<SHARES-REINVESTED> 33
<NET-CHANGE-IN-ASSETS> 14832
<ACCUMULATED-NII-PRIOR> 193
<ACCUMULATED-GAINS-PRIOR> 598
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 355
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 851
<AVERAGE-NET-ASSETS> 47347
<PER-SHARE-NAV-BEGIN> 13.10
<PER-SHARE-NII> 0.38
<PER-SHARE-GAIN-APPREC> 3.50
<PER-SHARE-DIVIDEND> (0.41)
<PER-SHARE-DISTRIBUTIONS> (0.25)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.32
<EXPENSE-RATIO> 2.05
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 071
<NAME> PHOENIX EMERGING MARKETS BOND PORTFOLIO CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 126219
<INVESTMENTS-AT-VALUE> 121645
<RECEIVABLES> 21770
<ASSETS-OTHER> 2966
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 146381
<PAYABLE-FOR-SECURITIES> 39581
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 252
<TOTAL-LIABILITIES> 39833
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 108859
<SHARES-COMMON-STOCK> 5287
<SHARES-COMMON-PRIOR> 2005
<ACCUMULATED-NII-CURRENT> 362
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1900
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (4573)
<NET-ASSETS> 106548
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8683
<OTHER-INCOME> 0
<EXPENSES-NET> (1247)
<NET-INVESTMENT-INCOME> 7436
<REALIZED-GAINS-CURRENT> 1467
<APPREC-INCREASE-CURRENT> (7092)
<NET-CHANGE-FROM-OPS> 1811
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4917)
<DISTRIBUTIONS-OF-GAINS> (4478)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4048
<NUMBER-OF-SHARES-REDEEMED> (1401)
<SHARES-REINVESTED> 636
<NET-CHANGE-IN-ASSETS> 38215
<ACCUMULATED-NII-PRIOR> 161
<ACCUMULATED-GAINS-PRIOR> 6362
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 578
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1262
<AVERAGE-NET-ASSETS> 76996
<PER-SHARE-NAV-BEGIN> 14.80
<PER-SHARE-NII> 1.38
<PER-SHARE-GAIN-APPREC> 0.17
<PER-SHARE-DIVIDEND> (1.28)
<PER-SHARE-DISTRIBUTIONS> (2.23)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.84
<EXPENSE-RATIO> 1.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 072
<NAME> PHOENIX EMERGING MARKETS BOND PORTFOLIO CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 126219
<INVESTMENTS-AT-VALUE> 121645
<RECEIVABLES> 21770
<ASSETS-OTHER> 2966
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 146381
<PAYABLE-FOR-SECURITIES> 39581
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 252
<TOTAL-LIABILITIES> 39833
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 108859
<SHARES-COMMON-STOCK> 3028
<SHARES-COMMON-PRIOR> 657
<ACCUMULATED-NII-CURRENT> 362
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1900
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (4573)
<NET-ASSETS> 106548
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8683
<OTHER-INCOME> 0
<EXPENSES-NET> (1247)
<NET-INVESTMENT-INCOME> 7436
<REALIZED-GAINS-CURRENT> 1467
<APPREC-INCREASE-CURRENT> (7092)
<NET-CHANGE-FROM-OPS> 1811
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2281)
<DISTRIBUTIONS-OF-GAINS> (1490)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2934
<NUMBER-OF-SHARES-REDEEMED> (728)
<SHARES-REINVESTED> 164
<NET-CHANGE-IN-ASSETS> 28960
<ACCUMULATED-NII-PRIOR> 161
<ACCUMULATED-GAINS-PRIOR> 6362
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 578
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1262
<AVERAGE-NET-ASSETS> 76996
<PER-SHARE-NAV-BEGIN> 14.78
<PER-SHARE-NII> 1.26
<PER-SHARE-GAIN-APPREC> 0.18
<PER-SHARE-DIVIDEND> (1.22)
<PER-SHARE-DISTRIBUTIONS> (2.23)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.77
<EXPENSE-RATIO> 2.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 05
<NAME> PHOENIX DIVERSIFIED INCOME PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 6683
<INVESTMENTS-AT-VALUE> 6661
<RECEIVABLES> 233
<ASSETS-OTHER> 4
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6898
<PAYABLE-FOR-SECURITIES> 368
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 50
<TOTAL-LIABILITIES> 418
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6246
<SHARES-COMMON-STOCK> 649
<SHARES-COMMON-PRIOR> 595
<ACCUMULATED-NII-CURRENT> 15
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 241
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (22)
<NET-ASSETS> 6480
<DIVIDEND-INCOME> 15
<INTEREST-INCOME> 493
<OTHER-INCOME> 0
<EXPENSES-NET> (41)
<NET-INVESTMENT-INCOME> 467
<REALIZED-GAINS-CURRENT> 251
<APPREC-INCREASE-CURRENT> (194)
<NET-CHANGE-FROM-OPS> 524
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (469)
<DISTRIBUTIONS-OF-GAINS> (73)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 27
<NUMBER-OF-SHARES-REDEEMED> (27)
<NET-CHANGE-IN-ASSETS> 513
<SHARES-REINVESTED> 55
<ACCUMULATED-NII-PRIOR> 4
<ACCUMULATED-GAINS-PRIOR> 67
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 31
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 182
<AVERAGE-NET-ASSETS> 6263
<PER-SHARE-NAV-BEGIN> 10.03
<PER-SHARE-NII> 0.74
<PER-SHARE-GAIN-APPREC> 0.09
<PER-SHARE-DIVIDEND> (0.75)
<PER-SHARE-DISTRIBUTIONS> (0.12)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.99
<EXPENSE-RATIO> 0.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
