As filed with the Securities and Exchange Commission on February 24, 1996
Registration No. 33-31243
File No. 811-5909
================================================================================
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. 10
[x]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940
[x]
Amendment No. 12
[x]
(Check appropriate box or boxes)
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Phoenix Multi-Sector Fixed Income Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
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101 Munson Street, Greenfield, Massachusetts 01301
(Address of Principal Executive Offices) (Zip Code)
c/o Phoenix Equity Planning Corporation - Customer Service
(800) 243-1574
Registrant's Telephone Number
----------
Philip R. McLoughlin, Esq.
Vice Chairman and Chief Executive Officer
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115
(Name and Address of Agent for Service)
----------
It is proposed that this filing will become effective (check appropriate
box):
[ ] immediately upon filing pursuant to paragraph (b)
[x] on February 28, 1997 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Declaration Pursuant to Rule 24f-2
Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Registrant filed the notice required by Rule 24f-2 with
respect to its fiscal year ended October 31, 1995 on December 28, 1995.
================================================================================
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
Cross Reference Sheet
Required by Rule 495
Under the Securities Act of 1933
PART A
Information Required in Prospectus
<TABLE>
<CAPTION>
Item Number Prospectus Caption
----------------------------------------------- --------------------------------------------------------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Fund Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Introduction; Investment Objective and
Policies; Additional Information
5. Management of the Fund Management of the Fund
6. Capital Stock and Other Securities Dividends, Distributions and Taxes; Net Asset Value; How
to Buy Shares; Additional Information
7. Purchase of Securities Being Offered Net Asset Value; How to Buy Shares; Alternative Sales
Arrangements; Investor Accounts and Services Available;
Distribution Plans
8. Redemption or Repurchase How to Redeem Shares
9. Legal Proceeding Not Applicable
</TABLE>
PART B
Information Required in Statement of Additional Information
<TABLE>
<CAPTION>
Item Number Statement of Additional Information
----------------------------------------------- --------------------------------------------------------
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Cover Page; General Information
13. Investment Objectives and Policies Investment Objective; Cover Page; Investment
Restrictions; Investment Policies
14. Management of the Fund Services of the Adviser; Other Information;
Directors and Officers
15. Control Persons and Principal Holders Not Applicable
of Securities
16. Investment Advisory and Other Services Services of the Adviser
17. Brokerage Allocation Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities Net Asset Value; How to Buy Shares
19. Purchase, Redemption and Pricing of Net Asset Value; How to Buy Shares; Exchange Privileges;
Securities Being Offered How to Redeem Shares
20. Tax Status Dividends, Distributions and Taxes
21. Underwriter The National Distributor
22. Calculations of Performance Data Performance Data
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
101 Munson Street
Greenfield, MA 01301
PROSPECTUS
February 28, 1997
Phoenix Multi-Sector Fixed Income Fund, Inc. (the "Fund") is a diversified,
open-end management investment company with an investment objective to
maximize current income consistent with the preservation of capital.
In pursuing its objective, except as limited below, the Fund may invest its
assets in each or any combination of these market sectors in any proportion
deemed advisable by the Fund's investment adviser. The Fund will not,
however, invest more than 35% of its assets, determined at the time of
investment in high yield, high risk fixed income securities ("junk bonds").
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. No dealer, salesperson or
any other person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given
or made, such information or representations must not be relied upon as
having been authorized by the Fund, Adviser or Distributor. This Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy any
of the securities offered hereby in any state in which, or to any person to
whom, it is unlawful to make such an offer. Neither the delivery of this
Prospectus nor any sale hereunder shall, under any circumstances, create any
implication that information herein is correct at any time subsequent to its
date. Investors should read and retain this Prospectus for future reference.
Additional information about the Fund is contained in the Statement of
Additional Information, dated February 28, 1997, which has been filed with
the Securities and Exchange Commission (the "Commission") and which is
available upon request and at no charge by calling 800-243-4361 or by writing
to Phoenix Equity Planning Corporation at 100 Bright Meadow Boulevard, P.O.
Box 2200, Enfield, Connecticut 06083-2200. The Statement of Additional
Information is incorporated herein by reference.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, credit union, or affiliated entity, and are not
federally insured or otherwise protected by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency and involve
investment risk, including possible loss of principal.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CUSTOMER SERVICE: (800) 243-1574
MARKETING: (800) 243-4361
TELEPHONE ORDERS/EXCHANGES: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY): (800) 243-1926
<PAGE>
TABLE OF CONTENTS
Page
----
INTRODUCTION ............................................................ 3
FUND EXPENSES ........................................................... 4
FINANCIAL HIGHLIGHTS .................................................... 5
PERFORMANCE INFORMATION ................................................. 6
INVESTMENT OBJECTIVE AND POLICIES ....................................... 6
INVESTMENT TECHNIQUES AND RELATED RISKS ................................ 9
INVESTMENT RESTRICTIONS ................................................. 13
PORTFOLIO TURNOVER ...................................................... 13
MANAGEMENT OF THE FUND ................................................. 14
DISTRIBUTION PLANS ...................................................... 14
HOW TO BUY SHARES ...................................................... 16
INVESTOR ACCOUNTS AND SERVICES AVAILABLE ................................ 20
NET ASSET VALUE ......................................................... 23
HOW TO REDEEM SHARES .................................................... 23
DIVIDENDS, DISTRIBUTIONS AND TAXES ..................................... 24
ADDITIONAL INFORMATION ................................................. 25
APPENDIX ............................................................... 26
2
<PAGE>
INTRODUCTION
This Prospectus describes the shares offered by and the operations of
Phoenix Multi-Sector Fixed Income Fund, Inc. (the "Fund"). The Fund is a
diversified, open-end management investment company established as a
corporation under the laws of Maryland. The Fund's investment objective is to
maximize current income consistent with the preservation of capital. The Fund
will seek to achieve its objective by investing in the following sectors of
the fixed income securities markets: (a) securities issued or guaranteed as
to principal and interest by the U.S. Government, its agencies, authorities
or instrumentalities; (b) debt securities issued by foreign issuers,
including foreign governments and their political subdivisions; (c)
securities rated investment grade by a nationally recognized statistical
rating organization and (d) high yield, high risk fixed income securities.
There can be no assurance that the Fund's investment objective will be
achieved.
The Investment Adviser
National Securities & Research Corporation ("National" or the "Adviser") is
the investment adviser of the Fund and its professional staff selects and
supervises the investments in the Fund's portfolio. National is a subsidiary
of Phoenix Duff & Phelps Corporation and, prior to November 1, 1995, was an
indirect subsidiary of Phoenix Home Life Mutual Insurance Company. See
"Management of the Fund" for a description of the Investment Advisory
Agreement and management fees.
Distributor and Distribution Plans
Phoenix Equity Planning Corporation ("Equity Planning" or "Distributor")
serves as national distributor of the Fund's shares. See "Distribution Plans"
and the Statement of Additional Information. Equity Planning also acts as
financial agent and as such receives a fee. See "The Financial Agent." Equity
Planning also serves as the Fund's transfer agent. See "The Custodian and
Transfer Agent."
The Fund has adopted distribution plans pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act"). Pursuant to the
distribution plan adopted for Class A Shares, the Fund shall reimburse the
Distributor up to a maximum annual rate of 0.30% of the Fund's average daily
Class A Share net assets for distribution expenditures incurred in connection
with the sale and promotion of Class A Shares and for furnishing shareholder
services. Although the Class A Shares Plan continues to provide for a 0.30%
distribution fee, the Distributor has voluntarily agreed to limit the Rule
12b-1 fee charged to Class A Shares to 0.25% for the fiscal year 1997.
Pursuant to the distribution plan adopted for Class B Shares, the Fund shall
reimburse the Distributor up to a maximum annual rate of 1.00% of the Fund's
average daily Class B Share net assets for distribution expenditures incurred
in connection with the sale and promotion of Class B Shares and for
furnishing shareholder services. See "Distribution Plans."
Purchase of Shares
The Fund offers two classes of shares which may be purchased at a price
equal to their net asset value per share plus a sales charge which, at the
election of the purchaser may be imposed (i) at the time of purchase (the
"Class A Shares"), or (ii) on a contingent deferred basis (the "Class B
Shares").
Class A Shares are offered to the public at the next determined net asset
value after receipt of the order by State Street Bank and Trust Company plus
a maximum sales charge of 4.75% of the offering price (4.99% of the amount
invested) on single purchases of less than $50,000. The sales charge for
Class A Shares is reduced on a graduated scale on single purchases of $50,000
or more and subject to other conditions stated below. See "How to Buy
Shares," "How to Obtain Reduced Sales Charges on Class A Shares" and "Net
Asset Value."
Class B Shares are offered to the public at the next determined net asset
value after receipt of an order by State Street Bank and Trust Company with
no sales charge. Class B Shares are subject to a sales charge if they are
redeemed within five years of purchase. See "How to Buy Shares" and "Deferred
Sales Charge Alternative--Class B Shares."
Shares of each class represent an identical interest in the investment
portfolio of the Fund and generally have the same rights except that Class B
Shares bear the cost of higher distribution fees which cause the Class B
Shares to have a higher expense ratio and to receive lower dividends than
Class A Shares. See "How To Buy Shares."
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.
Minimum Initial and Subsequent Investments
The minimum initial investment is $500 ($25 if using the bank draft
investing program designated "Investo-Matic"), and the minimum subsequent
investment is $25. Exceptions to the minimum and subsequent investment
amounts are available under certain circumstances. See "How to Buy Shares."
Redemption Price
Class A Shares may be redeemed at any time at the net asset value per share
next computed after receipt of a redemption request by State Street Bank and
Trust Company. Class B shareholders redeeming shares within five years of the
date of purchase will normally be assessed a contingent deferred sales
charge. See "How to Redeem Shares."
Risk Factors
There can be no assurance that the Fund will achieve its investment
objective. In addition, special risks may be presented by the particular
types of securities in which the Fund may invest. For example, the Fund may
invest up to 35% of its total assets in below investment grade securities.
Such
3
<PAGE>
securities are sometimes referred to as "junk bonds." Investing in junk bonds
involves risks not typically 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. In addition, investors should consider risks
inherent in foreign debt securities, including foreign exchange rate
fluctuations and exchange controls. See "Investment Objective and Policies."
FUND EXPENSES
The following table illustrates fees and expenses a shareholder will incur.
The fees and expenses are set forth in the table for the fiscal year ended
October 31, 1996.
Class A Shares Class B Shares
-------------- ------------------
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price) 4.75% None
Maximum Sales Load Imposed on
Reinvested Dividends None None
Deferred Sales Load (as a
percentage of original None 5% during the first
purchase price or redemption year, decreasing 1%
proceeds, as applicable) annually to 2%
during the fourth
and fifth years;
thereafter decreasing
to 0% after the fifth
year
Redemption Fee None None
Exchange Fee None None
Annual Fund Operating Expenses
(as a percentage of average net
assets for the year ended
October 31, 1996)
Management Fees .55% .55%
12b-1 Fees (a) (after waiver) .25% 1.00%
Other Operating Expenses .27% .27%
----- -----
Total Fund Operating Expenses 1.07% 1.82%
===== =====
(a) "Rule 12b-1 Fees" represent an asset-based sales charge that, for a
long-term shareholder, may be higher than the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc. ("NASD").
While the Distribution Plan for Class A Shares continues to provide for a
0.30% distribution fee, the Distributor has voluntarily agreed to continue to
limit the fee to 0.25% for the fiscal year 1997.
Cumulative Expenses
Paid for the Period
Example* 1 year 3 years 5 years 10 years
- --------------------------------------- ------ ------- ------- --------
An investor would pay the following
expenses on a hypothetical $1,000
investment assuming (1) 5% annual
return and (2) redemption at the
end of each time period:
Class A Shares $58 $80 $104 $172
Class B Shares $68 $87 $119 $194
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:
Class A Shares $58 $80 $104 $172
Class B Shares $18 $57 $ 99 $194
*The purpose of the above table 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. See
"Management of the Fund," "Distribution Plans," and "How to Buy Shares."
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following table sets forth certain financial information for each class
of shares for the Fund. This financial information has been audited by Price
Waterhouse LLP, independent accountants. Their opinion and the Fund's
Financial Statements and notes thereto are incorporated by reference in the
Statement of Additional Information. The Statement of Additional Information
and the Fund's most recent Annual Report (containing the report of
Independent Accountants and additional information relating to Fund
performance) are available at no charge upon request by calling (800)
243-4361.
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
----------------------------------------------
Year Ended October 31,
----------------------------------------------
1996 1995 1994 1993
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.56 $11.94 $14.13 $13.29
Income from investment operations
Net investment income 0.94 0.96 0.76 1.14
Net realized and unrealized gain (loss) 0.72 0.61 (1.35) 1.08
--------- --------- --------- ---------
Total from investment operations 1.66 1.57 (0.59) 2.22
--------- --------- --------- ---------
Less distributions
Dividends from net investment income (0.95) (0.95) (0.77) (1.19)
Dividends in excess of net investment income -- -- (0.05) (0.02)
Dividends from net realized gains -- -- (0.63) (0.17)
Tax return of capital -- -- (0.15) --
--------- --------- --------- ---------
Total distributions (0.95) (0.95) (1.60) (1.38)
--------- --------- --------- ---------
Change in net asset value 0.71 0.62 (2.19) 0.84
--------- --------- --------- ---------
Net asset value, end of period $13.27 $12.56 $11.94 $14.13
========= ========= ========= =========
Total return(1) 13.75% 13.83% (4.57%) 17.55%
Ratios/supplemental data:
Net assets, end of period (thousands) $169,664 $168,875 $172,966 $176,859
Ratio to average net assets of:
Operating expenses 1.07% 1.10% 1.13% 1.29%
Net investment income 7.56% 8.10% 7.05% 8.27%
Portfolio turnover 255% 201% 123% 207%
</TABLE>
<TABLE>
<CAPTION>
From
Inception
12/18/89 to
1992 1991 10/31/90
----------- --------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $12.81 $11.11 $11.91
Income from investment operations
Net investment income 1.24 1.22(2) 1.01(2)
Net realized and unrealized gain (loss) 0.50 1.71 (.78)
--------- -------- -----------
Total from investment operations 1.74 2.93 .23
--------- -------- -----------
Less distributions
Dividends from net investment income (1.21) (1.23) (1.03)
Dividends in excess of net investment income -- -- --
Dividends from net realized gains (0.05) -- --
Tax return of capital -- -- --
--------- -------- -----------
Total distributions (1.26) (1.23) (1.03)
--------- -------- -----------
Change in net asset value 0.48 1.70 0.80
--------- -------- -----------
Net asset value, end of period $13.29 $12.81 $11.11
========= ======== ===========
Total return(1) 14.11% 27.56% 1.85%
Ratios/supplemental data:
Net assets, end of period (thousands) $141,627 $68,139 $8,667
Ratio to average net assets of:
Operating expenses 1.48% 1.50% 1.20%
Net investment income 9.42% 10.13% 9.59%
Portfolio turnover 116% 180% 2%
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------------
Year Ended October 31,
----------------------------------------------
1996 1995 1994 1993
----------- ---------------------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.54 $11.93 $14.10 $13.25
Income from investment operations
Net investment income 0.85 0.86 0.68 1.04
Net realized and unrealized gain (loss) 0.71 0.61 (1.36) 1.08
--------- --------- --------- ---------
Total from investment operations 1.56 1.47 (0.68) 2.12
--------- --------- --------- ---------
Less distributions
Dividends from net investment income (0.85) (0.86) (0.67) (1.08)
Dividends in excess of net investment income -- -- (0.05) (0.02)
Dividends from net realized gains -- -- (0.63) (0.17)
Tax return of capital -- -- (0.14) --
--------- --------- --------- ---------
Total distributions (0.85) (0.86) (1.49) (1.27)
--------- --------- --------- ---------
Change in net asset value 0.71 0.61 (2.17) 0.85
--------- --------- --------- ---------
Net asset value, end of period $13.25 $12.54 $11.93 $14.10
========= ========= ========= =========
Total return(1) 12.84% 12.96% (5.21%) 16.78%
Ratios/supplemental data:
Net assets, end of period (thousands) $142,869 $144,020 $156,629 $193,064
Ratio to average net assets of:
Operating expenses 1.82% 1.85% 1.78% 1.99%
Net investment income 6.80% 7.30% 6.46% 7.36%
Portfolio turnover 255% 201% 123% 207%
</TABLE>
<TABLE>
<CAPTION>
From
Inception
1/3/92 to
10/31/92
-----------
<S> <C>
Net asset value, beginning of period $13.02
Income from investment operations
Net investment income 0.94
Net realized and unrealized gain (loss) 0.21
---------
Total from investment operations 1.15
---------
Less distributions
Dividends from net investment income (0.92)
Dividends in excess of net investment income --
Dividends from net realized gains --
Tax return of capital --
---------
Total distributions (0.92)
---------
Change in net asset value 0.23
---------
Net asset value, end of period $13.25
=========
Total return(1) 8.81%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $82,522
Ratio to average net assets of:
Operating expenses 2.18%(3)
Net investment income 8.47%(3)
Portfolio turnover 116%
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Includes reimbursement of operating expenses by investment adviser of
$0.04 and $0.38, respectively.
(3) Annualized
(4) Not annualized
5
<PAGE>
PERFORMANCE INFORMATION
The Fund may, from time to time, include its yield and total return in
advertisements, sales literature or reports to current and prospective
shareholders. Both yield and total return figures are computed separately for
Class A and Class B Shares in accordance with formulas specified by the
Securities and Exchange Commission. Yield and total return are based on
historical earnings and are not intended to indicate future performance.
The yield of the Fund will be computed by dividing the Fund's net investment
income over a 30-day period by an average value of invested assets (using the
average number of shares entitled to receive dividends and the maximum
offering price per share at the end of the period), all in accordance with
applicable regulatory requirements. Such amount will be compounded for six
months and then annualized for a twelve month period to derive the Fund's
yield for each class.
Standardized quotations of average annual total return for Class A and Class
B Shares will be expressed in terms of the average annual compounded rate of
return of a hypothetical investment in either Class A or Class B Shares over
a period of 1, 5 and 10 years (or the life of the class of shares of the
Fund). Standardized total return quotations reflect the deduction of a
proportional share of each Class's expenses (on an annual basis), deduction
of the maximum initial sales load in the case of Class A Shares or the
maximum contingent deferred sales charge applicable to a complete redemption
of the investment in the case of Class B Shares, and assume that all
dividends and distributions on Class A and Class B Shares are reinvested when
paid. It is expected that the performance of Class A Shares will be better
than that of Class B Shares as a result of lower distribution fees and
certain incrementally lower expenses paid by Class A Shares. The Fund also
may quote supplementally a rate of total return over different periods of
time or by means of aggregate, average and year-by-year or other types of
total return figures. In addition the Fund may from time to time publish
material citing historical volatility for shares of the Fund.
The Fund may from time to time include 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, the Fund may compare its performance
results to other investment or savings vehicles (such as certificates of
deposit) and may refer to results published in various publications such as
Changing Times, Forbes, Fortune, Money, Barrons, Business Week and Investor's
Daily, Stanger's Mutual Fund Monitor, The Stanger Register, Stanger's
Investment Adviser, The Wall Street Journal, The New York Times, Consumer
Reports, Registered Representative, Financial Planning, Financial Services
Weekly, Financial World, U.S. News and World Report, Standard and Poor's, The
Outlook, and Personal Investor. The Fund may from time to time illustrate the
benefits of tax deferral by comparing taxable investments to investments made
through tax-deferred retirement plans. The total return may also be used to
compare the performance of the Fund against certain widely acknowledged
outside standards or indices for stock and bond market performance, such as
the Lehman Brothers Aggregate Bond Index, Standard & Poor's 500 Stock Index
(the "S&P 500"), Dow Jones Industrial Average, Europe Australia Far East
Index (EAFE), Consumer Price Index, Lehman Brothers Corporate Index and
Lehman Brothers T-Bond Index. The 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 indexes.
Advertisements, sales literature and communications may contain information
about the Fund or Advisor's current investment strategies and management
style. Current strategies and style may change to allow the Fund to respond
quickly to a changing market and economic conditions. From time to time, the
Fund may discuss specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, the Fund may
separate its cumulative and average annual returns into income results and
capital gains or losses; or cite separately as a return figure the equity or
bond portion of the Fund's portfolio; or compare the Fund's equity or bond
return figure to well-known indices of market performance including but not
limited to: the S&P 500 Index, Dow Jones Industrial Average, Lehman Brothers
Aggregate Bond Index, CS First Boston High Yield Index and Salomon Brothers
Corporate and Government Bond Indices.
Performance information for the Fund reflects only the performance of a
hypothetical investment in Class A or Class B Shares of the Fund during the
particular time period on which the calculations are based. Performance
information should be considered in light of the Fund's investment 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 the Fund, see the Statement of
Additional Information.
The Fund's Annual Report, available upon request and without charge,
contains a discussion of the performance of the Fund and a comparison of that
performance to a securities market index.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to maximize current income consistent
with the preservation of capital. The investment objective of the Fund is a
fundamental policy which may not be changed without the approval of the
holders of a majority of the outstanding shares of the Fund. There can be no
assurance that the Fund's investment objective will be achieved.
The Fund will seek to achieve its objective by investing at least 65% of its
total assets in the following sectors of the fixed income securities markets:
(a) securities issued or guaranteed
6
<PAGE>
as to principal and interest by the U.S. Government, its agencies,
authorities or instrumentalities ("U.S. Government Securities"); (b) debt
securities issued by foreign issuers, including foreign governments and their
political subdivisions ("Foreign Securities"); (c) securities rated at the
time of purchase as investment grade ("Investment Grade Securities") by a
nationally recognized statistical rating organization ("NRSRO"); and (d) high
yield, high risk fixed income securities commonly referred to as "junk
bonds". The Fund's assets generally will be invested in each market sector,
but the Fund may invest any amount of its assets in any one sector (except
for high yield, high risk corporate fixed income securities, in which sector
the Fund will not invest more than 35% of its assets determined at the time
of investment) and may choose not to invest in a sector in order to achieve
its investment objective. The Adviser believes that by following this
strategy, the Fund's net asset value is likely to be more stable than that of
a fund which invests in only one of these four fixed income sectors. Greater
stability would occur because, in general, broad diversification over several
market sectors tends to reduce volatility. For certain of the risk
considerations involved in an investment in the Fund, see "Investment
Techniques and Related Risks."
U.S. Government Securities
The U.S. Government Securities in which the Fund 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 Fund 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 Fund invests 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.
Examples of agencies and instrumentalities that issue U.S. Government
Securities in which the Fund will invest are GNMA, the Federal Home Loan
Mortgage Corporation ("FHLMC"), the Federal National Mortgage Association
("FNMA"), and Student Loan Marketing Association ("SLMA"). GNMA is a wholly
owned corporate instrumentality of the United States and is authorized to
borrow from the U.S. Treasury without limitation to meet its payment
obligations on the mortgage-backed securities which it issues and guarantees.
FNMA is a federally chartered but privately owned corporation which
guarantees the timely payment of principal of and interest on the
certificates it issues; the guarantee is not backed by the U.S. government.
FHLMC and SLMA are corporate instrumentalities of the United States which
guarantee the timely payment of interest on and the ultimate payment of
principal of their certificates; the guarantee is not backed by the U.S.
Government. With respect to obligations issued or guaranteed by U.S.
Government agencies, authorities and instrumentalities, guarantees as to the
timely payment of principal and interest do not extend to the value of the
Fund's shares. In addition, the market value of U.S. Government Securities
fluctuates as interest rates change.
These securities may also include collateralized mortgage-backed
obligations ("CMOs") and real estate mortgage investment conduits ("REMICs").
CMOs 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 GNMA, FHLMC,
or FNMA. 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. Mortgages backing U.S. Government Securities may include, among
others, conventional 30-year fixed-rate mortgages, graduated-payment
mortgages, 15-year mortgages and adjustable-rate mortgages.
The Fund 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).
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. 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
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would indicate. Although the specific 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 the relevant 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 usually are lower than, the rates earned on the
original pass-through securities. This reinvestment risk is increased in the
case of GNMA securities because principal is repaid monthly rather than in a
lump sum at maturity. Prepayments on a pool of mortgage loans are influenced
by a variety of economic, geographic, social and other factors, including
changes in mortgagors' housing needs, job transfers, unemployment,
mortgagors' net equity in the mortgaged properties and servicing decisions.
Generally, however, prepayments on fixed rate mortgage loans will increase
during a period of falling interest rates and decrease during a period of
rising interest rates. Mortgage-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 the risk of prepayment.
The Fund may purchase pass-through securities at a premium or at a discount.
The values of pass-through securities in which the Fund may invest will
fluctuate with changes in interest rates. The value of such securities varies
inversely with interest rates, except that when interest rates decline, the
value of pass-through securities may not increase as much as other debt
securities because of the prepayment feature. Changes in the value of such
securities will not affect interest income from those obligations but will be
reflected in the Fund's net asset value.
Foreign Securities
The Foreign Securities in which the Fund 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. Because
foreign government obligations, like U.S. Government obligations, are
generally guaranteed as to principal and interest by the government issuing
the security, the principal risk of investing in foreign government
obligations is that the foreign government will not, or will be unable to,
meet its obligations. The Fund may also purchase securities of
non-governmental issuers considered creditworthy by the Adviser. For a
discussion of the risk considerations of investing in foreign securities, see
"Investment Techniques and Related Risks." While a portion of the Fund's
assets normally will be invested in securities issued abroad and denominated
in foreign currencies ("non-U.S. dollar securities"), that amount may vary
depending on the relative yield of such securities, the relative strength of
the economies and the financial markets of such countries, the relative
interest rates available in such countries and the relationship of such
countries' currencies to the U.S. dollar. Investments in non-U.S. dollar
securities and currency will be evaluated on the basis of fundamental
economic criteria (e.g., relative inflation levels and trends, growth rate
forecasts, balance of payments status, and economic policies) as well as
technical and political data. Normally, the Fund invests approximately 10-20%
of its assets in non-U.S. dollar securities; however, the Fund does not
intend to invest more than 50% of its assets in such securities. The Fund may
hold foreign currency for hedging purposes to protect against declines in the
U.S. dollar value of foreign securities held by the Fund and against
increases in the U.S. dollar value of the foreign securities which the Fund
might purchase.
Investment Grade Securities
Investment Grade Securities of domestic issuers in which the Fund 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 Fund may invest in Investment Grade Securities of U.S.
issuers denominated in foreign currencies. The Investment Grade Securities
that the Fund 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
High Yield-High Risk Securities of domestic issuers in which the Fund may
invest are preferred and preference stock and Debt Obligations. The Fund may
invest in High Yield-High Risk Securities of domestic issuers which are
denominated in foreign currencies. The High Yield-High Risk Securities that
the Fund 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
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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.
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 Fund 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 under
"Investment Objective and Policies--U.S. Government Securities."
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 Fund 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 Fund 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 Fund obtains equity securities, the Fund 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 Fund's assets.
The Adviser evaluates the purchase of High Yield-High Risk Securities for
the Fund primarily through the exercise of its own investment and credit
analysis and on the ratings assigned by NRSROs. The Fund 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 securities obligations,
see the Appendix.
As a fundamental policy, the Fund's investments in High Yield-High Risk
Securities will be limited to not more than 35% of its assets. This
restriction applies at the time of investment and any subsequent change in
the percentage due to changes in market value of portfolio securities or
other changes in the total assets will not be considered a violation of this
restriction. Because of the additional risks associated with investments in
these securities, an investor may wish to consider carefully the manner in
which the Fund seeks its objective, and the investor's ability to assume
these risks, before investing in the Fund.
General Investment Policies
For temporary defensive purposes part or all of the Fund's assets may be in
cash or invested in cash equivalents at the discretion of the Adviser. At
times when the Adviser determines that Fund assets should be in cash or
invested in cash equivalents for temporary defensive purposes, the Fund will
not be investing in accordance with its investment objective. The Adviser
will convert Fund assets to cash or invest in cash equivalents for temporary
defensive purposes during periods of rising interest rates, unstable pricing
and currency exchange or in response to extreme market fluctuations.
The Fund expects that, under normal market conditions, the maturity of any
single portfolio security will not exceed 30 years in the U.S. Government
Securities sector, 15 years in the Foreign Securities sector, and 25 years in
the Investment Grade Securities and High Yield-High Risk Securities sectors.
However, the dollar-weighted average maturity of the securities in such
sectors of the Fund's portfolio may vary significantly from time to time,
based on such factors as the Adviser's expectations as to future changes in
interest or exchange rates, the maturity schedules and possible prepayment of
bonds held by the Fund and the characteristics and maturities of securities
available in the market for purchase by the Fund at various future times. The
adjustment of the Fund's dollar-weighted average maturity through the sale of
portfolio holdings and the reinvestment of sale proceeds in securities of
different maturities may cause the Fund's portfolio turnover rate to be
higher than if the Fund had held its holdings until their maturity. For a
discussion of portfolio turnover rate, see "Portfolio Turnover." As a
fundamental policy, the Fund may borrow money from banks to the extent
permitted under the 1940 Act. As an operating (non-fundamental) policy, the
Fund does not intend to borrow any amount in excess of 10% of its assets, and
would do so only for temporary emergency or administrative purposes. In
addition, to avoid the potential leveraging of its assets, the Fund will not
make additional investments when its borrowings are in excess of 5% of its
total assets. If the Fund should determine to expand its ability to borrow
beyond this current operating policy, the Prospectus would be amended and
shareholders would be notified.
INVESTMENT TECHNIQUES AND RELATED RISKS
In addition to the investment policies described above, the Fund may utilize
the following investment practices or techniques.
Zero Coupon, Step Coupon and PIK Bonds
The Fund may invest up to 15% of its assets, determined at the time of
investment, in any combination of zero coupon bonds,
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step coupon bonds and bonds on which interest is payable in kind ("PIK
bonds"), in the aggregate. A zero coupon bond is a bond that does not pay
interest currently for its entire life. Step coupon bonds frequently do not
entitle the holder to any periodic payments of interest for some initial
period after the issuance of the obligation; thereafter, step coupon bonds
pay interest for fixed periods of time at particular interest rates (a "step
coupon bond"). In the case of a zero coupon bond, the nonpayment of interest
on a current basis may result from the bond's having no stated interest rate,
in which case the bond pays only principal at maturity and is initially
issued at a discount from face value. Alternatively, a zero coupon obligation
may provide for a stated rate of interest, but provide that such interest is
not payable until maturity, in which case the bond may initially be issued at
par. The value to the investor of a zero coupon or step coupon bond is
represented by the economic accretion either of the difference between the
purchase price and the nominal principal amount (if no interest is stated to
accrue) or of accrued, unpaid interest during the bond's life or payment
deferral period. PIK bonds are obligations which provide that the issuer
thereof may, at its option, pay interest on such bonds in cash or in the form
of additional debt securities. Such securities benefit the issuer by
mitigating its need for cash to meet debt service, but also require a higher
rate of return to attract investors who are willing to defer receipt of such
cash. The Fund will accrue income on such investments for tax and accounting
purposes, which is distributable to shareholders from available cash or
liquidated assets. See "Risk Factors" for additional information concerning
the characteristics of zero coupon bonds, step coupon bonds and PIK bonds.
See also "Dividends, Distributions and Taxes."
Options and Other Hedging Activities
The Fund may write and purchase options, including over-the-counter
options, for hedging purposes. The Fund may also engage in foreign currency
exchange transactions and in transactions involving interest rate futures
contracts and options thereon as a hedge against changes in exchange and
interest rates. For more information regarding the Fund's options activities,
see the Statement of Additional Information.
Loan Participations
The Fund may invest up to 5% of its net assets, determined at the time of
investment, in loan participations. A loan participation agreement involves
the purchase of a share of a loan made by a bank to a company in return for a
corresponding share of the borrower's principal and interest payments. Loan
participations of the type in which the Fund may invest include interests in
both secured and unsecured corporate loans. See the Statement of Additional
Information.
Trading of Securities
The Fund may trade securities from its portfolio which are not subject to
options, or which are not held in a segregated account with its custodian,
for short-term (less than one year) profits in order to take advantage of
differentials in prices and yields or of fluctuations in interest rates,
consistent with its investment objective.
Reverse Repurchase Agreements and Dollar Roll Agreements
The Fund may enter into reverse repurchase agreements and dollar roll
agreements. A dollar roll agreement is identical to a reverse repurchase
agreement except for the fact that substantially identical securities may be
repurchased. Under a reverse repurchase agreement or a dollar roll agreement,
the Fund sells securities and agrees to repurchase them, or substantially
similar securities in the case of a dollar roll agreement, at a mutually
agreed upon date and price. Reverse repurchase agreements and dollar roll
agreements are considered a form of borrowing. At the time the Fund enters
into a reverse repurchase agreement or a dollar roll agreement, it will
establish and maintain a segregated account with its Custodian containing any
asset, including equity securities and non-investment grade debt so long as
the asset is liquid, unencumbered and marked to market daily having a value
not less than the repurchase price (including accrued interest). The Fund's
ability to enter into reverse repurchase agreements and dollar roll
agreements is limited by the requirement to maintain assets in segregated
accounts, by requirements relating to the Fund's status as a regulated
investment company under the Code, and by the Fund's overall limitations on
borrowing. Furthermore, because dollar roll transactions may be for terms
ranging between one and six months, they may be deemed to be "illiquid" and
subject to the Fund's overall limitations on investment in illiquid
securities.
While the use of reverse repurchase agreements and dollar roll agreements
creates opportunities for increased income, the use of these agreements may
cause losses. Reverse repurchase agreements and dollar roll agreements
involve the risk that the market value of the securities to be repurchased by
the Fund may decline below the price at which the Fund is obligated to
repurchase. Also, in the event the buyer of securities under a reverse
repurchase agreement or a dollar roll agreement files for bankruptcy or
becomes insolvent, such buyer or its trustee or receiver may receive an
extension of time to determine whether to enforce the Fund's obligation to
repurchase the securities, and the Fund's use of the proceeds of the reverse
repurchase agreement or the dollar roll agreement may effectively be
restricted pending such decision.
Repurchase Agreements
The Fund may enter into repurchase agreements with respect to U.S.
Government Securities. Repurchase agreements may be entered into only with
registered broker-dealers or government securities dealers ("dealers") and
depository institutions ("banks") believed by National to present minimum
credit risk in accordance with guidelines approved by the Fund's Directors.
National will review and monitor the creditworthiness of such dealers and
banks. Under such agreements, the dealer or bank agrees, upon entering into
the contract, to repurchase a security it sells at a time and price, mutually
agreed upon with the purchaser of such security, thereby determining the
yield during the term of the agreement. This results in a fixed rate of
return insulated from
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market fluctuations during such period. The seller under a repurchase
agreement will be required to maintain the value of the securities subject to
the agreement at not less than the repurchase price, and such value will be
determined on a daily basis by marking the underlying securities to their
market value. With respect to any repurchase agreements with a maturity of
greater than one day, such agreements shall be collateralized in an amount at
least equal to 102% of the repurchase price. The Fund does not bear the risk
of a decline in value of the underlying security unless the seller defaults
under its repurchase obligation. In the event of a bankruptcy or other
default of a seller of a repurchase agreement, the Fund could experience both
delays in liquidating the underlying securities and losses, including (a)
possible decline in the value of the underlying securities during the period
while the Fund seeks to enforce its rights thereto; (b) possible subnormal
levels of income and lack of access to income during this period; and (c)
expenses of enforcing rights. The Fund will limit its investments in
repurchase agreements to 5% of its net assets.
When-Issued Securities and Delayed Delivery Transactions
The Fund may purchase securities on a when-issued or delayed delivery basis.
In such transactions, the price is fixed at the time the commitment to
purchase is made, but delivery and payment for the securities take place more
than seven days in the future or after a period longer than the customary
settlement period for the particular security. Customary settlement for newly
issued mortgage-backed securities occurs only when the composition of the
underlying mortgage pools are set, typically once a month. At the time the
Fund makes the commitment to purchase a security on a when-issued or delayed
delivery basis, it will record the transaction and reflect the value of the
security and the liability to pay the purchase price in determining the
Fund's net asset value. The value of the security on the settlement date may
be more or less than the price paid as a result of, among other things,
changes in the level of interest rates or other market factors. No interest
accrues on the security between the time the Fund enters into the commitment
and the time the security is delivered. The Fund will establish a segregated
account with the Custodian in which it will maintain any asset, including
equity securities and non-investment grade debt so long as the asset is
liquid, unencumbered and marked to market daily, equal in value to
commitments for when-issued or delayed delivery securities. Such segregated
securities either will mature or, if necessary, be sold on or before the
settlement date. While when-issued or delayed delivery securities may be sold
prior to the settlement date, it is intended that the Fund will purchase such
securities with the purpose of actually acquiring them unless a sale appears
desirable for investment reasons, in which case the Fund may sell its
interest in the securities rather than take delivery, and may reinvest the
proceeds in similar or other securities. The Fund may not invest more than
25% of its net assets at the time of investment in securities purchased on a
when-issued or delayed delivery basis.
Risk Factors and Special Considerations
High Yield-High Risk Securities
Under normal conditions, up to 35% of the Fund's assets may be invested in
high yield-high risk fixed income securities commonly referred to as "junk
bonds." These 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 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 Fund's net asset value to the extent the
Fund's assets are invested in such securities. In addition, the Fund 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.
The Fund 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 the Fund anticipates 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 Fund's asset value,
and on the Fund's ability to dispose of particular issues when necessary to
meet the Fund's liquidity needs or on the Fund'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 Fund to obtain
accurate market quotations for purposes of valuing the Fund's portfolio.
Market quotations are generally available on many
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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 Fund 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 Fund 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.
Participation on Creditors' Committees
The Fund may from time to time participate on committees formed by creditors
to negotiate with the management of financially troubled issuers of
securities held by the Fund. Such participation may subject the Fund to
expenses such as legal fees and may make the Fund an "insider" of the issuer
for purposes of the federal securities laws, and therefore may restrict the
Fund's ability to purchase or sell a particular security when it might
otherwise desire to do so. Participation by the Fund on such committees also
may expose the Fund to potential liabilities under the federal bankruptcy
laws or other laws governing the rights of creditors and debtors. The Fund
will participate on such committees only when the Adviser believes that such
participation is necessary or desirable to enforce the Fund's rights as a
creditor or to protect the value of securities held by the Fund.
Foreign Securities
Less public information may be available to the Adviser concerning issuers
of foreign securities as compared to equivalent domestic issuers. In certain
instances, there may be less government regulation of stock exchanges,
brokers and banks in foreign countries than in the United States. In
addition, differences exist among U.S. and foreign issuers with respect to
growth of gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payment positions. In investing in
bonds denominated in foreign currencies, the Fund will be subject to the risk
of currency fluctuations. Foreign currencies may be affected by revaluation,
future adverse political and economic developments, and governmental
restrictions. The values of foreign investments and the investment income
derived from them also may be adversely affected by changes in currency
exchange control regulations. Although the Fund will invest only in
securities denominated in foreign currencies that are fully exchangeable into
U.S. dollars without legal restriction at the time of investment, no
assurance can be given that currency exchange controls will not be imposed at
a later date.
Certain foreign countries are less stable politically than the United
States. The possibility exists that certain foreign governments may adopt
policies providing for expropriation or nationalization of assets,
confiscatory taxation, currency blockage or limitations on the use or removal
of monies or other assets of an investment company. Finally, the Fund may
encounter difficulty in obtaining and enforcing judgments against issuers of
foreign securities. The economies of developing countries generally are
heavily dependent upon international trade and, accordingly, have been and
may
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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.
Securities Denominated in Foreign Currencies
In investing in securities denominated in foreign currencies, the Fund will
be subject to the additional risk of currency fluctuations. An adverse change
in the value of a particular foreign currency as against the U.S. dollar, to
the extent that such change is not offset by a gain in other foreign
currencies, will result in a decrease in the Fund's assets. Any such change
may also have the effect of decreasing or limiting the income available for
distribution. Foreign currencies may be affected by revaluation, adverse
political and economic developments, and governmental restrictions. Although
the Fund will invest only in securities denominated in foreign currencies
that are fully convertible into U.S. dollars without legal restriction at the
time of investment, no assurance can be given that currency exchange controls
will not be imposed on any particular currency at a later date.
Changes in foreign exchange rates will affect the value of those securities
which are denominated or quoted in currencies other than the U.S. dollar.
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 Fund'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.
Securities of U.S. issuers denominated in foreign currencies may be less
liquid and their prices more volatile than securities issued by domestic
issuers and denominated in U.S. dollars. In addition, investing in securities
denominated in foreign currencies often entails costs not associated with
investment in U.S. dollar-denominated securities of U.S. issuers, such as the
cost of converting foreign currency to U.S. dollars, higher brokerage
commissions, custodial expenses and other fees. Non-U.S. dollar denominated
securities may be subject to certain withholding and other taxes of the
relevant jurisdiction, which may reduce the yield on the securities to the
Fund and which may not be recoverable by the Fund or its investors.
Zero Coupon, Step Coupon and PIK Bonds
The Fund may invest up to 15% of its assets in any combination of zero
coupon bonds, step coupon bonds and PIK bonds, in the aggregate. See
"Investment Techniques--Zero Coupon, Step Coupon and PIK Bonds." Zero coupon
and step coupon bonds are issued and traded at a discount from their face
amounts. The amount of the discount varies depending on such factors as the
time remaining until maturity of the bonds, prevailing interest rates, the
liquidity of the security and the perceived credit quality of the issuer. The
market prices of zero coupon, step coupon and PIK bonds generally are more
volatile than the market prices of securities that pay interest periodically
and are likely to respond to changes in interest rates to a greater degree
than do bonds on which regular cash payments of interest are being made that
have similar maturities and credit quality. In order to satisfy a requirement
for qualification as a "regulated investment company" under the Code, the
Fund must distribute its investment company taxable income, including the
original issue discount accrued on zero coupon or step coupon bonds or
interest paid in additional debt obligations on PIK bonds. Because the Fund
will not receive on a current basis cash payments in respect of accrued
original issue discount on zero coupon bonds, step coupon bonds during the
period before interest payments commence or interest paid in additional debt
obligations on PIK bonds, the Fund may have to distribute cash obtained from
other sources in order to satisfy the distribution requirement under the
Code. See also "Dividends, Distributions and Taxes."
INVESTMENT RESTRICTIONS
Not more than 25% of the total assets of the Fund will be concentrated in
the securities of any one industry. As a diversified investment company, at
least 75% of the Fund's total assets must be represented by cash or cash
items, government securities, securities of other investment companies and
other securities limited in respect of any one issuer to an amount not
greater than 5% of the value of the total assets of the Fund. The Fund will
invest no more than 35% of its assets, determined at the time of purchase, in
High Yield-High Risk Securities. See the Statement of Additional Information
for a detailed description of all of the Fund's investment restrictions.
PORTFOLIO TURNOVER
A change in securities held by the Fund is known as "portfolio turnover" and
may involve the payment by the Fund of dealer mark-up or underwriting
commissions and other transaction costs on the sale of securities, as well as
on the reinvestment of the proceeds in other securities. Portfolio turnover
rate for a fiscal year is the percentage determined by dividing the lesser of
the cost of purchases or proceeds from sales of portfolio securities by the
average of the value of portfolio securities during such year, all excluding
securities whose maturities at acquisition were one year or less. The Fund's
portfolio turnover rate will not be a limiting factor when the Adviser deems
it desirable to sell or purchase securities. The Fund's portfolio turnover
rate may be higher if the Fund finds it necessary to significantly change its
portfolio to adopt a temporary defensive position. A high turnover rate may
involve greater expenses to the Fund and could involve realization of capital
gains that would be taxable to the shareholders. Portfolio turnover rates for
the fiscal years of the Fund are shown in the section "Financial Highlights."
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<PAGE>
MANAGEMENT OF THE FUND
The Fund is a mutual fund known as an open-end management investment
company. The Directors of the Fund ("Directors") are responsible for the
overall supervision of the operations of the Fund and perform the various
duties imposed on Directors by the 1940 Act and the Maryland General
Corporation Law.
The Adviser
The Fund's investment adviser is National Securities & Research Corporation
(the "Adviser"), which is located at 56 Prospect Street, Hartford,
Connecticut 06115. The Adviser is a subsidiary of Phoenix Duff & Phelps
Corporation of Chicago, Illinois. Prior to November 1, 1995, the Adviser was
an indirect, wholly owned subsidiary of Phoenix Home Life Mutual Insurance
Company ("Phoenix Home Life") of Hartford, Connecticut. Phoenix Home Life is
a majority shareholder of Phoenix Duff & Phelps Corporation. Phoenix Home
Life is in the business of writing ordinary and group life and health
insurance and annuities. Its principal offices are located at One American
Row, Hartford, Connecticut 06102. Phoenix Duff & Phelps Corporation is a New
York Stock Exchange traded company that provides various financial advisory
services to institutional investors, corporations and individuals through
operating subsidiaries. The Adviser also acts as the investment adviser or
manager for Phoenix Income and Growth Fund, Phoenix Multi-Sector Short Term
Bond Fund, Phoenix California Tax-Exempt Bonds, Inc., Phoenix Strategic
Equity Series Fund: Phoenix Equity Opportunities Fund, and the Phoenix
Worldwide Opportunities Fund. The Adviser currently has approximately $1.7
billion in assets under management. The Adviser has acted as an investment
adviser for over sixty years.
As compensation for its services, the Adviser receives a fee, which is
accrued daily against the value of the Fund's net assets and is payable
monthly by the Fund. The monthly fee is computed at an annual rate of .55% on
the first $1 billion of the Fund's average daily net assets, .50% on average
daily net assets between $1 billion and $2 billion, and .45% on average daily
net assets in excess of $2 billion. The ratio of management fees to average
net assets for the fiscal year ended October 31, 1996 for Class A and Class B
Shares was .55%.
The Portfolio Manager
Mr. David L. Albrycht is Portfolio Manager of the Fund, and as such, is
primarily responsible for the day-to-day management of the Fund's portfolio.
Mr. Albrycht has co-managed the Fund since March 1, 1994, and assumed full
management of the Fund on April 10, 1995.
Mr. Albrycht has been the Portfolio Manager of the Phoenix Diversified
Income Portfolio of the Phoenix Multi-Portfolio Fund, since April 1993. Mr.
Albrycht has also been the Portfolio Manager of Phoenix Multi-Sector Short
Term Bond Fund since August, 1993. Mr. Albrycht is a Managing Director, Fixed
Income, of Phoenix Investment Counsel, Inc. and National. He has held various
investment management positions with Phoenix Home Life during the past five
years.
The Financial Agent
Equity Planning also acts as financial agent of the Fund and, as such,
performs administrative, bookkeeping and pricing functions for the Fund. As
compensation for such services, Equity Planning is entitled to a fee, payable
monthly and based upon (a) the average of the aggregate daily net asset
values of the Fund, at the following incremental annual rates:
First $100 million .05%
$100 million to $300 million .04%
$300 million to $500 million .03%
Greater than $500 million .015%
(b) a minimum fee of $70,000; and (c) an annual fee of $12,000 together with
an additional $12,000 for any additional class of shares created in the
future. For its services during the Fund's fiscal year ended October 31,
1996, Equity Planning received $92,536 or 0.03% of average net assets.
The Custodian and Transfer Agent
The custodian of the assets of the Fund is State Street Bank and Trust
Company, P.O. Box 351, Boston, Massachusetts 02101 (the "Custodian"). The
Fund has authorized the custodian to appoint one or more subcustodians for
the assets of the Fund held outside the United States.
Pursuant to a Transfer Agent and Service Agreement with the Phoenix Funds,
Equity Planning acts as transfer agent for the Fund (the "Transfer Agent")
for which it is paid $19.25 plus out-of-pocket expenses for each designated
shareholder account. The Transfer Agent has and shall engage sub-agents from
time to time to perform certain shareholder servicing functions for which
such agents shall be paid a fee by Equity Planning.
Brokerage Commissions
Although the Conduct Rules of the National Association of Securities
Dealers, Inc. ("NASD") prohibit its members from seeking orders for the
execution of investment company portfolio transactions on the basis of their
sales of investment company shares, under such Rules, sales of investment
company shares may be considered in selecting brokers to effect portfolio
transactions. Accordingly, some portfolio transactions are, subject to such
Rules and to obtaining best prices and executions, effected through dealers
(excluding Equity Planning) who sell shares of the Fund. The Adviser may also
select an affiliated broker-dealer to execute transactions for the Fund,
provided that the commissions, fees or other remuneration paid to such
affiliated broker is reasonable and fair as compared to that paid to
non-affiliated brokers for comparable transactions.
DISTRIBUTION PLANS
The offices of Equity Planning, the National Distributor of the shares, are
located at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut
06083-2200. Philip R. McLoughlin is a director and President of the Fund and
a director and officer of Equity Planning. David R. Pepin, a director and
officer of Equity Planning, is an officer of the
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<PAGE>
Fund. Michael E. Haylon, a director of Equity Planning, is an officer of the
Fund. G. Jeffrey Bohne, Nancy G. Curtiss, William E. Keen III, William R.
Moyer, Leonard J. Saltiel, and Thomas N. Steenburg are officers of the Fund
and officers of Equity Planning.
Equity Planning and the Fund have entered into distribution agreements under
which Equity Planning has agreed to use its best efforts to find purchasers
for Fund shares sold subject to an initial sales charge and those sold
subject to a contingent deferred sales charge. The Fund has granted Equity
Planning the exclusive right to purchase from the Fund and resell, as
principal, shares needed to fill unconditional orders for Fund shares. Equity
Planning may sell Fund shares through its registered representatives or
through securities dealers with whom it has sales agreements. Equity Planning
may also sell Fund shares pursuant to sales agreements entered into with
banks or bank affiliated securities brokers who, acting as agent for their
customers, place orders for Fund shares with Equity Planning. Although the
Glass-Steagall Act prohibits banks and bank affiliates from engaging in the
business of underwriting, distributing or selling securities (including
mutual fund shares), banking regulators have not indicated that such
institutions are prohibited from purchasing mutual fund shares upon the order
and for the account of their customers. If, because of changes in law or
regulations, or because of new interpretations of existing law, it is
determined that agency transactions of banks or bank affiliated securities
brokers are not permitted under the Glass-Steagall Act, the Directors will
consider what action, if any, is appropriate. It is not anticipated that
termination of sales agreements with banks or bank affiliated securities
brokers would result in a loss to their customers or a change in the net
asset value per share of the Fund.
The sale of Fund shares through a bank or a securities broker affiliated
with a bank is not expected to preclude the Fund from borrowing from such
bank or from availing itself of custodial or transfer agency services offered
by such bank.
The Directors have adopted separate distribution plans under Rule 12b-1 of
the 1940 Act for each class of shares of the Fund (the "Class A Plan," the
"Class B Plan," and collectively the "Plans"). The Plans permit the Fund to
reimburse the Distributor for expenses incurred in connection with the sale
and promotion of Fund shares and the furnishing of shareholder services.
Pursuant to the Class A Plan, the Fund may reimburse the Distributor for
actual expenses of the Distributor up to 0.30% annually of the average daily
net assets of the Fund's Class A Shares. However, the Distributor has
voluntarily agreed to limit the maximum amount of reimbursement under the
Class A Plan for fiscal year 1997 to 0.25% annually of the average daily net
assets of the Fund's Class A Shares. Under the Class B Plan, the Fund may
reimburse the Distributor monthly for actual expenses of the Distributor up
to 1.00% annually of the average daily net assets of the Fund's Class B
Shares.
Expenditures incurred under the Plans may consist of: (i) commissions to
sales personnel for selling shares of the Fund (including underwriting
commissions and finance charges related to the payment of commissions for
sales of Class B Shares); (ii) compensation, sales incentives and payments to
sales, marketing and service personnel; (iii) payments to broker-dealers and
other financial institutions which have entered into agreements with the
Distributor for services rendered in connection with the sale and
distribution of shares of the Fund; (iv) payment of expenses incurred in
sales and promotional activities including advertising expenditures related
to the Fund; (v) the costs of preparing and distributing promotional
materials; (vi) the costs of printing the Fund's Prospectus and Statement of
Additional Information for distribution to potential investors; and (vii)
such other similar services that the Directors determine are reasonably
calculated to result in the sale of shares of the Fund; provided, however,
that a portion of such fee, equal to or less than 0.25% annually of the
average daily net assets of the Fund shares, may be paid for reimbursing the
costs of providing services to shareholders, including assistance in
connection with inquiries related to shareholder accounts (the "Service
Fee"). From the Service Fee, the Distributor expects to pay a quarterly fee
to qualifying broker-dealer firms, as compensation for providing personal
services and/or the maintenance of shareholder accounts, with respect to
shares sold by such firms. This fee will not exceed on an annual basis 0.25%
of the average annual net asset value of such shares, and will be in addition
to sales charges on Fund shares which are reallowed to such firms. To the
extent that the entire amount of the Service Fee is not paid to such firms,
the balance will serve as compensation for personal and account maintenance
services furnished by the Distributor.
In order to receive payments under the Plans, participants must meet such
qualifications as are to be established in the sole discretion of the
Distributor, such as services to the Fund's shareholders; or services
providing the Fund with more efficient methods of offering shares to groups
of clients, members or prospects of a participant; or services permitting
bulking of purchases or sales, or transmissions of such purchases or sales by
computerized tape or other electronic equipment; or other batch processing.
Under the Class A Plan, reimbursement or payment of expenses may not be made
unless such payments or reimbursement occurs prior to the earliest of (a) the
last day of the one year period commencing on the last day of the calendar
quarter during which the specific service or activity was performed, or (b)
the last day of the one year period commencing on the last day of the
calendar quarter during which payment was made by a third party on behalf of
the Fund. The Class B Plan, however, does not limit the reimbursement of
distribution related expenses to expenses incurred in specified time periods.
For the fiscal year ended October 31, 1996, the Fund paid $417,446 under the
Class A Plan and $1,414,739 under the Class B Plan. The fees were used to
compensate unaffiliated broker-dealers for servicing shareholder's accounts,
compensating sales personnel and reimbursing the Distributor for commission
expenses and expenses related to preparation of the marketing material. On a
quarterly basis, the Fund's Directors review a
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<PAGE>
report on expenditures under each Plan and the purposes for which
expenditures were made. The Directors conduct an additional more extensive
review annually in determining whether each Plan will be continued. By its
terms, continuation of each Plan from year to year is contingent on annual
approval by a majority of the Fund's Directors and by a majority of the
Directors who are not "interested persons" (as defined in the 1940 Act) and
who have no direct or indirect financial interest in the operation of either
Plan or any related agreements (the "Plan Directors"). Each Plan provides
that it may not be amended to increase materially the costs which the Fund
may bear without approval of the applicable class of shareholders of the Fund
and that other material amendments must be approved by a majority of the Plan
Directors by vote cast in person at a meeting called for the purpose of
considering such amendments. Each Plan further provides that while it is in
effect, the selection and nomination of Directors who are not "interested
persons" shall be committed to the discretion of the Directors who are not
"interested persons". Each Plan may be terminated at any time by vote of a
majority of the Plan Directors or a majority of the applicable class of
outstanding shares of the Fund.
The Directors have concluded that there is a reasonable likelihood that the
Plans will benefit the Fund and all classes of shareholders. The Class A Plan
and the Class B Plan were approved by shareholders of the Fund at a special
meeting of shareholders held on May 7, 1993.
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 Directors to suspend distribution fees or amend either or both
Plans.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent investment
is $25. Both the minimum initial and subsequent investment amounts are $25
for investments pursuant to the "Investo-Matic" plan, a bank draft investing
program administered by Equity Planning, or pursuant to the Systematic
Exchange privilege. (See the Statement of Additional Information.) A
completed application for the purchase of shares should be mailed to the
Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8301.
Each class of shares represents an interest in the same portfolio of
investments of the Fund, has the same rights, and is identical to the other
in all respects, except that Class B Shares bear the expenses of the deferred
sales arrangement and any expenses (including the higher distribution
services fee and any incremental transfer agency costs) resulting from such
sales arrangement. Each class has exclusive voting rights with respect to
provisions of the Rule 12b-1 distribution plan pursuant to which its
distribution services fee is paid, and each class has different exchange
privileges. Only the Class B Shares are subject to a conversion feature. The
net income attributable to Class B Shares and the dividends payable on Class
B Shares will be reduced by the amount of the higher distribution services
fee and incremental expenses associated with such distribution services fee;
likewise, the net asset value of the Class B Shares will be reduced by such
amount to the extent the Fund has undistributed net income.
Subsequent investments for the purchase of full and fractional shares in
amounts of $25 or more may be made through an investment dealer or by sending
a check to Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box
8301, Boston, MA 02266-8301. Share certificates representing any number of
full shares will be issued only on request, and subject to certain
conditions. A fee may be incurred by the shareholder for a lost or stolen
share certificate. Sales personnel of broker-dealers distributing the Fund's
shares may receive differing compensation for selling Class A or Class B
Shares.
The Fund offers combination purchase privileges, letters of intent,
accumulation plans, withdrawal plans and reinvestment and exchange
privileges. Certain privileges may not be available in connection with Class
B Shares. Shares of the Fund may be exchanged for shares of the same class on
the basis of the relative net asset values per share at the time of the
exchange. Exchanges are subject to the minimum initial investment requirement
of the designated Phoenix Fund, except if made in connection with the
Systematic Exchange privilege. Shareholders may exchange shares held in book-
entry form for an equivalent number (value) of the same class of shares of
any other Phoenix Fund. On Class B share exchanges, the contingent deferred
sales charge schedule of the original shares purchased is not taken and
continues to apply.
Alternative Sales Arrangements
The alternative purchase arrangement permits an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Fund, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the
Fund, the accumulated continuing distribution services fee and contingent
deferred sales charges on Class B Shares prior to conversion would be less
than the initial sales charge and accumulated distribution services fee on
Class A Shares purchased at the same time, and to what extent such
differential would be offset by the higher yield of Class A Shares. In this
regard, Class A Shares will be more beneficial to the investor who qualifies
for certain reduced initial sales charges. For this reason, the Distributor
intends to limit sales of Class B Shares sold to any shareholder to a maximum
total value of $250,000. Class B Shares sold to unallocated qualified
employer sponsored plans may be limited to a total value of $1,000,000.
Class B Shares sold to allocated qualified employer sponsored plans,
including 401(k) plans, will be limited to a maximum total value of $250,000
for each participant. The Distributor reserves the right to decline the sale
of Class B Shares to allocated qualified employer sponsored plans not
utilizing an approved participant tracking system. In addition, Class B
Shares will not be sold to any qualified employee
16
<PAGE>
benefit plan, endowment fund or foundation if, on the date of the initial
investment, the plan, fund or foundation has assets of $10,000,000 or more or
at least 100 eligible employees. Class B Shares will also not be sold to
investors who have reached the age of 85 because of such persons' expected
distribution requirements.
Class A Shares are subject to a lower distribution services fee and,
accordingly, pay correspondingly higher dividends per share. However, because
initial sales charges are deducted at the time of purchase, such investors
would not have all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced initial
sales charges who expect to maintain their investment for an extended period
of time might consider purchasing Class A Shares because the accumulated
continuing distribution charges on Class B Shares may exceed the initial
sales charge on Class A Shares during the life of the investment. Again,
however, such investors must weigh this consideration against the fact that,
because of such initial sales charge, not all their funds will be invested
initially. However, other investors might determine that it would be more
advantageous to purchase Class B Shares to have all their funds invested
initially, although remaining subject to higher continuing distribution
charges and, for a five-year period, being subject to a contingent deferred
sales charge.
Initial Sales Charge Alternative--Class A Shares
The public offering price of Class A Shares is the net asset value plus a
sales charge, as set forth below. Offering prices become effective at the
close of the general trading session of the New York Stock Exchange. Orders
received by dealers prior to such time are confirmed at the offering price
effective at that time, provided the order is received by State Street Bank &
Trust Company prior to its close of business.
The sales charge varies with the size of the purchase and reduced charges
apply to the aggregate of purchases of the Fund made at one time by "any
person," which term includes an individual, an individual and his/her spouse
and their children under the age of 21, or a trustee or other fiduciary
purchasing shares for a single trust, estate or fiduciary account although
more than one beneficiary is involved.
Class A Shares of the Fund are offered to the public at the net asset value
next computed after the purchase order is received by State Street Bank and
Trust Company plus a maximum sales charge of 4.75% of the offering price
(4.99% of the amount invested) on single purchases of less than $50,000. The
sales charge is reduced on a graduated scale on single purchases of $50,000
or more as shown below.
Sales Charge Sales Charge Dealer Discount
Amount of as Percentage as Percentage or Agency Fee
Transaction of Offering of Amount as Percentage of
at Offering Price Price Invested Offering Price*
- ------------------- ------------- ------------- ----------------
Less than $50,000 4.75% 4.99% 4.25%
$50,000 but under
$100,000 4.50% 4.71% 4.00%
$100,000 but under
$250,000 3.50% 3.63% 3.00%
$250,000 but under
$500,000 3.00% 3.09% 2.75%
$500,000 but under
$1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None None**
* Equity Planning will sponsor sales contests, training and educational
meetings and provide to all qualifying dealers, from its own profits and
resources, additional compensation in the form of trips, merchandise or
expense reimbursement. Brokers 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. Equity Planning shall
also pay service and retention fees, from its own profits and resources, to
qualified wholesalers in connection with the sale of shares of Phoenix Funds
(exclusive of Class A Shares of Phoenix Money Market Series) by registered
financial institutions and related third party marketers.
** In connection with Class A Share purchases (or subsequent purchases in any
amount) by an account held in the name of a qualified employee benefit plan
with at least 100 eligible employees. Equity Planning may pay broker/dealers,
from its own resources, an amount equal to 1% on the first $3 million of
purchases, 0.50% on the next $3 million, plus 0.25% on the amount in excess
of $6 million.
In connection with Class A Share purchases of $1,000,000 or more (or
subsequent purchases in any amount), excluding purchases by qualified
employee benefit plans as described above Equity Planning may pay
broker-dealers, from its own profits and resources, a percentage of the net
asset value of any shares sold as set forth below:
Purchase Amount Payment to Broker-Dealer
------------------------ ------------------------
$1,000,000 to $3,000,000 1%
$3,000,001 to $6,000,000 0.50 of 1%
$6,000,001 or more 0.25 of 1%
If part or all of such investment including investments by qualified
employee benefit plans is subsequently redeemed within one year of the
investment date, the broker-dealer will refund to the Distributor any such
amounts paid with respect to the investment.
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How To Obtain Reduced Sales Charges--Class A Shares
Investors choosing the initial sales charge alternative under certain
circumstances may be entitled to pay reduced sales charges. The circumstances
under which such investors may pay reduced sales charges are described below.
Qualified Purchasers No sales charge will be imposed on sales of shares to
(1) any Phoenix Fund trustee, director or officer; (2) any director or
officer, or to any full-time employee or sales representative (who has acted
as such for at least 90 days) of the Adviser or of Equity Planning; (3)
registered representatives and employees of securities dealers with whom
Equity Planning has sales agreements; (4) any qualified retirement plan
exclusively for persons described above; (5) any officer, director or
employee of a corporate affiliate of the Adviser or Equity Planning; (6) any
spouse, child, parent, grandparent, brother or sister of any person named in
(1), (2), (3) or (5) above; (7) employee benefit plans for employees of the
Adviser, Equity Planning and/or their corporate affiliates; (8) any employee
or agent who retires from the Adviser, Equity Planning and/or a corporate
affiliates; (9) any account held in the name of a qualified employee benefit
plan, endowment fund or foundation if, on the date of the initial investment,
the plan, fund or foundation has assets of $10,000,000 or more or at least
100 eligible employees; (10) any person with a direct rollover transfer of
shares from an established Phoenix Fund qualified plan; (11) any Phoenix Home
Life separate account which funds group annuity contracts offered to
qualified employee benefit plans; (12) any state, county, city,
instrumentality, department, authority or agency prohibited by law from
paying a sales charge; (13) any fully matriculated student in a U.S. service
academy; (14) any unallocated accounts held by a third party administrator,
registered investment adviser, trust company, or bank trust department which
exercises discretionary authority and holds the account in a fiduciary,
agency, custodial or similar capacity if in the aggregate such accounts held
by such entity equal or exceed $1,000,000; or (15) any person who is
investing redemption proceeds from investment companies other than the
Phoenix Funds if, in connection with the purchases or redemption of the
redeemed shares, the investor paid a prior sales charge provided such
investor supplies verification that the redemption occurred within 90 days of
the Phoenix Fund purchase and that a sales charge was paid; provided that
sales to persons listed in (1) through (15) above are made upon the written
assurance of the purchaser that the purchase is made for investment purposes
and that the shares so acquired will not be resold except to the Fund.
In addition, Class A shares purchased by the following investors are not
subject to any Class A sales charge: (1) investment advisors and financial
planners who charge an advisory, consulting or other fee for their services
and buy shares for their own accounts or the accounts of their clients, and
(2) retirement plans and deferred compensation plans and trusts used to fund
those plans (including, for example, plans qualified or created under
sections 401(a), 403(b) or 457 of the Internal Revenue Code), and "rabbi
trusts" that buy shares for their own accounts, in each case if those
purchases are made through a broker or agent or other financial intermediary
that has made special arrangements with the Distributor for those purchases;
(3) clients of such investment advisors or financial planners who buy shares
for their own accounts may also purchase shares without sales charge but only
if their accounts are linked to a master account of their investment advisor
or financial planner on the books and records of the broker, agent or
financial intermediary with which the Distributor has made such special
arrangements (each of these investors may be charged a fee by the broker,
agent or financial intermediary for purchasing shares).
Shares issued pursuant to the automatic reinvestment of income dividends or
capital gains distributions are not subject to any sales charges. The Fund
receives the entire net asset value of its Class A Shares sold to investors.
The Distributor's commission is the sales charge shown above less any
applicable discount or commission "re-allowed" to selected dealers and
agents. The Distributor will re-allow discounts to selected dealers and
agents in the amounts indicated in the table above. In this regard, the
Distributor may elect to reallow the entire sales charge to selected dealers
and agents for all sales with respect to which orders are placed with the
Distributor. A selected dealer who receives reallowance in excess of 90% of
such a sales charge may be deemed to be an "underwriter" under the Securities
Act of 1933.
Combination Purchase Privilege. Purchases, either singly or in any
combination, of shares of the Fund or shares of any other Phoenix Fund,
(including Class B Shares and excluding Money Market Fund Series Class A
Shares) if made at a single time by a single purchaser, will be combined for
the purpose of determining whether the total dollar amount of such purchases
entitles the purchaser to a reduced sales charge on any such purchases of
Class A Shares. Each purchase of Class A Shares will then be made at the
public offering price, as described in the then current Prospectus relating
to such shares, which at the time of such purchase is applicable to a single
transaction of the total dollar amount of all such purchases. The term
"single purchaser" includes an individual, or an individual, his spouse and
their children under the age of majority purchasing for his or their own
account (including an IRA account) including his or their own trust, commonly
known as a living trust; a trustee or other fiduciary purchasing for a single
trust, estate or single fiduciary account, although more than one beneficiary
is involved; multiple trusts or 403(b) plans for the same employer; multiple
accounts (up to 200) under a qualified employee benefit plan or administered
by a third party administrator; or trust companies, bank trust departments,
registered investment advisers, and similar entities placing orders or
providing administrative services with respect to funds over which they
exercise discretionary investment authority and which are held in a
fiduciary, agency, custodial or similar capacity, provided all shares are
held of record in the name, or nominee name, of the entity placing the order.
Letter of Intent. Class A Shares or shares of any other Phoenix Fund
(including Class B Shares and excluding Money Market Fund Series Class A
Shares) may be purchased by a
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"single purchaser" (as defined above) within a period of thirteen months
pursuant to a Letter of Intent, in the form provided by Equity Planning,
stating the investor's intention to invest in such shares during such period
an amount which, together with the value (at their maximum offering prices on
the date of the Letter) of the Class A Shares of the Fund or Class A or Class
B Shares of any other Phoenix Fund then owned by such investor, equals a
specified dollar amount. Each purchase of shares made pursuant to a Letter of
Intent will be made at the public offering price, as described in the then
current Prospectus relating to such shares, which at the time of purchase is
applicable to a single transaction of the total dollar amount specified in
the Letter of Intent.
An investor's Letter of Intent is not a binding commitment of the investor
to purchase or a binding obligation of the Fund or Equity Planning to sell a
specified dollar amount of shares qualifying for a reduced sales charge.
Accordingly, out of his initial purchase (and subsequent purchases if
necessary), 5% of the dollar amount of purchases required to complete his
investment is held in escrow in the form of shares (valued at the purchase
price thereof) registered in the investor's name until he completes his
investment, at which time escrowed shares are deposited to his account. If
the investor does not complete his investment and does not within 20 days
after written request by Equity Planning or his dealer pay the difference
between the sales charge on the dollar amount specified in his Letter of
Intent and the sales charge on the dollar amount of actual purchases, the
difference will be realized through the redemption of an appropriate number
of the escrowed shares and any remaining escrowed shares will be deposited to
his account.
Right of Accumulation. "Single purchasers" (as defined above) may also
qualify for reduced sales charges based on the combined value of purchases of
either class of shares of the Fund, or any other Phoenix Fund, made over
time. Reduced sales charges are offered to investors whose shares, in the
aggregate, are valued (i.e., the dollar amount of such purchases plus the
then current value (at the public offering price as described in the then
current prospectus relating to such shares) of shares of all Phoenix Funds
owned) in excess of the threshold amounts described in the section entitled
"Initial Sales Charge Alternative--Class A Shares." To use this option, the
investor must supply sufficient information as to account registrations and
account numbers to permit verification that one or more of his purchases
qualifies for a reduced sales charge.
Associations. A group or association may be treated as a "single purchaser"
and qualify for reduced initial sales charges under the Combination Privilege
and Right of Accumulation if the group or association (1) has been in
existence for at least six months; (2) has a legitimate purpose other than to
purchase mutual fund shares at a reduced sales charge; (3) gives its
endorsements or authorization to the investment program to facilitate
solicitation of the membership by the investment dealer, thus effecting
economies of sales effort; and (4) is not a group whose sole organizational
nexus is that the members are credit card holders of a company, policyholders
of an insurance company, customers of a bank or a broker-dealer or clients of
an investment adviser.
Deferred Sales Charge Alternative--Class B Shares
Investors choosing the deferred sales charge alternative purchase Class B
Shares at net asset value per share without the imposition of a sales charge
at the time of purchase. The Class B Shares are sold without an initial sales
charge but are subject to a sales charge if redeemed within five years of
purchase.
Proceeds from the contingent deferred sales charge are paid to the
Distributor and are used in whole or in part by the Distributor to defray its
expenses related to providing distribution-related services to the Fund in
connection with the sale of the Class B Shares, such as the payment of
compensation to selected dealers and agents for selling Class B Shares. The
combination of the contingent deferred sales charge and the distribution fee
facilitates the ability of the Fund to sell the Class B shares without a
sales charge being deducted at the time of purchase.
Contingent Deferred Sales Charge. Class B Shares which are redeemed within
five years of purchase will be subject to a contingent deferred sales charge
at the rates set forth below charged as a percentage of the dollar amount
subject thereto. The charge will be assessed on an amount equal to the lesser
of the current market value or the cost of the shares being redeemed.
Accordingly, no sales charge will be imposed on increases in net asset value
above the initial purchase price. In addition, no charge will be assessed on
shares derived from reinvestment of dividends or capital gains distributions.
The Distributor intends to pay investment dealers a sales commission of 4%
of the sale price of Class B Shares sold by such dealers, subject to future
amendment or termination. The Distributor will retain all or a portion of the
continuing distribution fee assessed to Class B shareholders and will receive
the entire amount of the contingent deferred sales charge paid by
shareholders on the redemption of shares to finance the 4% commission plus
interest and related marketing expenses.
The amount of the contingent deferred sales charge, if any, will vary
depending on the number of years from the time of payment for the purchase of
Class B Shares until the time of redemption of such shares. Solely for
purposes of determining the number of years from the time of any payment for
the purchases of shares, all payments during a month will be aggregated and
deemed to have been made on the last day of the previous month.
Contingent Deferred
Sales Charge as
a Percentage of
Dollar Amount
Year Since Purchase Subject to Charge
------------------- -------------------
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth 2%
Sixth 0%
In determining whether a contingent deferred sales charge is applicable to a
redemption, it will be assumed that any Class
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A Shares are being redeemed first. Class B Shares held for over 5 years and
shares acquired pursuant to reinvestment of dividends or distributions are
redeemed next. Any Class B Shares held longest during the five-year period,
are redeemed next unless the shareholder directs otherwise. The charge will
not be applied to dollar amounts representing an increase in the net asset
value since the time of purchase.
To provide an example, assume in 1990, an investor purchased 100 Class B
Shares. In 1993, the investor purchased another 100 Class B Shares at $12 per
share. In 1995, the investor purchased 100 Class A Shares. Assume that in
1996, the investor owns 225 Class B Shares (15 Class B Shares resulting from
dividend reinvestment and distributions upon the Class B Shares purchased in
1990 and 10 Class B Shares resulting from dividend reinvestment and
distributions upon the Class B Shares purchased in 1993) as well as 100 Class
A Shares. If the investor wished to then redeem 300 shares and had not
specified a preference in redeeming shares: first, 100 Class A Shares would
be redeemed without charge. Second, 115 Class B Shares purchased in 1990
(including 15 shares issued as a result of dividend reinvestment and
distributions) would be redeemed next without charge. Finally, 85 Class B
Shares purchased in 1993 would be redeemed resulting in a deferred sales
charge of $27 [75 shares (85 shares minus 10 shares resulting from dividend
reinvestment) x $12 (original price or current NAV if less than original) x
3% (applicable rate in the third year after purchase)].
The contingent deferred sales charge is waived on redemptions of shares (a)
if redemption is made within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint
tenant is the deceased's spouse, or (iii) of the beneficiary of a Uniform
Gifts to Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other
custodial account; (b) if redemption is made within one year of disability,
as defined in Section 72(m)(7) of the Code; (c) in connection with mandatory
distributions upon reaching age 70-1/2 under any retirement plan qualified
under Sections 401, 408 or 403(b) of the Code or any redemption resulting
from the tax-free return of an excess contribution to an IRA; (d) in
connection with redemptions by 401(k) plans using an approved participant
tracking system for: participant hardships, death, disability or normal
retirement, and loans which are subsequently repaid; (e) in connection with
the exercise of certain exchange privileges among Class B Shares of the Fund
and Class B Shares of other Phoenix Funds; (f) in connection with any direct
rollover transfer of shares from an established Phoenix Fund qualified plan
into a Phoenix Fund IRA by participants terminating from the qualifying plan;
and (g) in accordance with the terms specified under the Systematic
Withdrawal Program. If, upon the occurrence of a death as outlined above, the
account is transferred to an account registered in the name of the deceased's
estate, the contingent deferred sales charge will be waived on any redemption
from the estate account occurring within one year of the death. If the Class
B Shares are not redeemed within one year of the death, they will remain
Class B Shares and be subject to the applicable contingent deferred sales
charge when redeemed.
Class B Shares of the Fund will automatically convert to Class A Shares
without a sales charge at the relative net asset values of each class after
eight years from the acquisition of the Class B Shares, and as a result, will
thereafter be subject to the lower distribution fee under the Class A Plan.
Such conversion will be on the basis of the relative net asset value of the
two classes without the imposition of any sales load, fee or other charge.
The purpose of the conversion feature is to relieve the holders of Class B
Shares that have been outstanding for a period of time sufficient for the
Distributor to have been compensated for distribution-related expenses from
the burden of such distribution-related expenses.
For purposes of conversion to Class A, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares
in a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Fund account
(other than those in the sub-account) are converted to Class A Shares, an
equal pro rata portion of the Class B Shares in the sub-account will also be
converted to Class A Shares.
The conversion of Class B Shares to Class A Shares is subject to the
continuing availability of an opinion of counsel or a ruling from the
Internal Revenue Service ("IRS") to the effect: (i) that the conversion of
shares does not constitute a taxable event under federal income tax law; and
(ii) the assessment of the higher distribution fees and transfer agency costs
with respect to Class B Shares does not result in any dividends or
distributions constituting "preferential dividends" under the Code. The
conversion of Class B Shares to Class A Shares may be suspended if such an
opinion or ruling is not available. In that event, no further conversions of
Class B Shares would occur, and shares might continue to be subject to the
higher distribution fee for an indefinite period which may extend beyond the
period ending eight (8) years after the end of the month in which affected
Class B Shares were purchased. If the Fund were unable to obtain such
assurances with respect to the assessment of distribution fees and transfer
agent costs relative to the Class B Shares it might make additional
distributions if doing so would assist in complying with the Fund's general
practice of distributing sufficient income to reduce or eliminate U.S.
federal taxes.
INVESTOR ACCOUNTS AND SERVICES AVAILABLE
An account will be opened for the investor after the investor makes an
initial investment. Shares purchased will be held in the shareholder's
account by the Transfer Agent which will forward a statement each time there
is a change in the number of shares in the account. At any time, a
shareholder may request that a certificate be issued, subject to certain
conditions, representing any number of full shares held in his or her
account.
The Fund mails periodic reports to its shareholders. In order to reduce the
volume of mail, to the extent possible, only one copy of most Fund reports
will be mailed to households for
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multiple accounts with the same surname at the same household address. Please
contact Equity Planning to request additional copies of shareholder reports.
Shareholder inquiries should be directed to the Fund at (800) 243-1574.
Bank Draft Investing Program (Investo-Matic Plan)
By completing the Investo-Matic Section of the New Account Application, a
shareholder may authorize the bank named in the form to draw $25 or more from
his personal checking account to be used to purchase additional shares for
his account. The amount the shareholder designates will be made available, in
form payable to the order of the Transfer Agent by the bank on the date the
bank draws on his account and will be used to purchase shares at the
applicable offering price. The shareholder or his or her registered
representative may, by telephone or written notice, cancel or change the
dollar amount being invested pursuant to the Investo-Matic Plan unless the
shareholder has notified the Fund or Transfer Agent that his or her
registered representative shall not have this authority.
Distribution Option
The Fund currently declares all income dividends and all capital gain
distributions, if any, payable in shares of the Fund at net asset value or,
at the option of the shareholder, in cash. By exercising the distribution
option, a shareholder may elect to: (1) receive both dividends and capital
gain distributions in additional shares or (2) receive dividends in cash and
capital gain distributions in additional shares or (3) receive both dividends
and capital gain distributions in cash. If a shareholder elects to receive
dividends and/or distributions in cash and the check cannot be delivered or
remains uncashed by the shareholder due to an invalid address, then the
dividend and/or distribution will be reinvested after the Transfer Agent has
been informed that the proceeds are undeliverable. Additional shares will be
purchased for the shareholder's account at the then current net asset value.
Shareholders who maintain an account balance of at least $5,000, or $2,000
for tax qualified retirement benefit plans (calculated on the basis of the
net asset value of the shares held in a single account), may direct that any
dividends and distributions paid with respect to shares in that account be
automatically reinvested in a single account of one of the other Phoenix
Funds at net asset value. Shareholders should obtain a current prospectus and
consider the objectives and policies of each 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. Dividends and capital gain
distributions received in shares are taxable to the shareholder and credited
to the shareholder's account in full and fractional shares computed at the
closing net asset value on the next business day after the record date. A
distribution option may be changed at any time by notifying Customer Service
by telephone at (800) 243-1574 or by sending a letter signed by the
registered owner(s) of the account. Requests for directing distributions to
an alternate payee must be made in writing with a signature guarantee of the
registered owner(s). To be effective with respect to a particular dividend or
distribution, notification of the new distribution option must be received by
the Transfer Agent at least three days prior to the record date of such
dividend or distribution. If all shares in the shareholder's account are
repurchased or redeemed or transferred between the record date and the
payment date of a dividend or distribution, he/she will receive cash for the
dividend or distribution regardless of the distribution option selected.
Systematic Withdrawal Program
The Systematic Withdrawal Program allows shareholders to periodically redeem
a portion of their account on a predetermined monthly or quarterly,
semiannual or annual basis. A sufficient number of full and fractional shares
shall therefore 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 the shareholder's bank account. In
addition to the limitations stated below, withdrawals may not be less than
$25 and minimum account balance requirements shall continue to apply. See
"Redemption of Small Accounts."
Class A shareholders participating in the Systematic Withdrawal Program must
own shares of the Fund worth $5,000 or more, as determined by the
then-current net asset value per share and elect to have all dividends
reinvested. The purchase of shares while participating in the withdrawal
program will ordinarily be disadvantageous to the Class A Shares investor
since a sales charge will be paid by the investor on the purchase of Class A
Shares at the same time as other shares are being redeemed. For this reason,
investors in Class A Shares may not participate in an automatic investment
program while participating in the Systematic Withdrawal Program.
To participate in the Systematic Withdrawal Program, Class B shareholders
must initially own shares of the Fund worth $5,000 or more and elect to have
all dividends reinvested in additional Class B Shares of the Fund. Through
the Program, Class B shareholders may withdraw up to 1% of their aggregate
net investments (purchases, at initial value, to date net of non-Program
redemptions) each month or up to 3% of their aggregate net investments each
quarter without incurring otherwise applicable contingent deferred sales
charges.
Class B shareholders redeeming more shares than the percentage permitted by
the withdrawal program shall be subject to any applicable contingent deferred
sales charge on all shares redeemed. Accordingly, the purchase of Class B
Shares will generally not be suitable for an investor who anticipates
withdrawing sums in excess of the above limits shortly after purchase.
Tax Sheltered Retirement Plans
Shares of the Fund are offered in connection with the following qualified
prototype retirement plans: IRA, Rollover
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<PAGE>
IRA, SEP-IRA, Profit-Sharing and Money Purchase Pension Plans which can be
adopted by self-employed persons ("Keogh") and by corporations and 403(b)
Retirement Plans. Write or call Equity Planning at (800) 243-4361 for further
information about the plans.
Exchange Privileges
Shareholders may exchange Class A or Class B Shares held in book entry form
for shares of the same class of other Phoenix Funds provided that the
following conditions are met: (1) the shares that will be acquired in the
exchange (the "Acquired Shares") are available for sale in the shareholder's
state of residence; (2) the Acquired Shares are of the same class as the
shares to be surrendered (the "Exchanged Shares"); (3) the Acquired Shares
will be registered to the same shareholder account as the Exchanged Shares;
(4) the account value of the Fund whose shares are to be acquired must equal
or exceed the minimum initial investment amount required by that Fund after
the exchange is implemented; and (5) if a shareholder has elected not to
utilize the Telephone Exchange Privilege (see below), a properly executed
exchange request must be received by State Street Bank and Trust Company.
Subject to the above requirements for an exchange, a shareholder or his/her
registered representative may, by telephone or written notice, elect to have
Class A or Class B shares of the Fund exchanged for the same class of shares
of another Phoenix Fund automatically on a monthly, quarterly, semi-annual,
or annual basis or may cancel the privilege ("Systematic Exchange").
Shareholders who maintain an account balance in the Fund of at least $5,000,
or $2,000 for tax qualified retirement benefit plans (calculated on the basis
of the net asset value of the shares held in a single account), may direct
that shares of the Fund be automatically exchanged at predetermined intervals
for shares of the same class of another Phoenix Fund. If the shareholder is
participating in the Self Security program offered by Phoenix Home Life, it
is not necessary to maintain the above account balances in order to use the
Systematic Exchange privilege.
Such exchanges will be executed upon the close of business on the 10th of a
month and if the 10th falls on a holiday or weekend, then at the close of
business on the next succeeding business day. The minimum initial and
subsequent amount that may be exchanged under the Systematic Exchange is $25.
Systematic Exchange forms are available from Equity Planning.
Exchanges will be based upon each Fund's net asset value per share next
computed following receipt of a properly executed exchange request, without a
sales charge. On Class B Share exchanges, the contingent deferred sales
charge schedule of the original shares purchased continues to apply.
The exchange of shares from one fund to another is treated as a sale of the
Exchanged Shares and a purchase of the Acquired Shares for Federal income tax
purposes. The shareholder may, therefore, realize a taxable gain or loss. See
"Dividends, Distributions and Taxes" for information concerning the Federal
income tax treatment of the disposition of shares.
Because excessive trading can hurt Fund performance and harm shareholders,
the Fund reserves the right to temporarily or permanently terminate exchange
privileges or reject any specific order for any dealer, shareholder or person
whose transactions seem to follow a timing pattern, including those who
request more than one exchange out of a fund within any 30 day period. The
Distributor has entered into agreements with certain dealers and investment
advisors permitting them to exchange their clients' shares by telephone.
These privileges are limited under those agreements and the Distributor has
the right to reject or suspend those privileges. The Fund reserves the right
to terminate or modify its exchange privileges at any time upon giving
prominent notice to shareholders at least 60 days in advance.
Each Phoenix Fund has different investment objectives and policies.
Shareholders should, therefore, obtain and review the current prospectus of
the fund into which the exchange is to be made before any exchange requests
are made.
Telephone Exchanges
Telephone Exchange privileges are only available in states where the shares
to be acquired may be legally sold (see the Statement of Additional
Information). Unless a shareholder elects in writing not to participate in
the Telephone Exchange Privilege, shares for which certificates have not been
issued may be exchanged by calling (800) 243-1574 provided that the exchange
is made between accounts with identical registrations. Under the Telephone
Exchange Privilege, telephone exchange orders may also be entered on behalf
of the shareholder by his or her registered representative.
The Fund and the Transfer Agent will employ reasonable procedures to confirm
that telephone instructions are genuine. In addition to requiring identical
registrations on both accounts, the Transfer Agent will require address
verification and will record telephone instructions on tape. All exchanges
will be confirmed in writing with the shareholder. To the extent that
procedures reasonably designed to prevent unauthorized telephone exchanges
are not followed, the Fund and/or the Transfer Agent may be liable for
following telephone instructions for exchange transactions that prove to be
fraudulent. Broker/dealers other than Equity Planning have agreed to bear the
risk of any loss resulting from any unauthorized telephone exchange
instruction from the firm or its registered representatives. However, the
shareholder would bear the risk of loss resulting from instructions entered
by an unauthorized third party that the Fund and/or the Transfer Agent
reasonably believe to be genuine. The Telephone Exchange Privilege may be
modified or terminated at any time on 60 days' notice to shareholders. In
addition, during times of drastic economic or market changes, the Telephone
Exchange Privilege may be difficult to exercise or may be suspended
temporarily. In such event an exchange may be effected by following the
procedure outlined for tendering shares represented by certificate(s).
If a shareholder elects not to use the Telephone Exchange Privilege or if
the shares being exchanged are represented by a certificate or certificates,
in order to exchange shares the
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shareholder must submit a written request to Phoenix Funds c/o State Street
Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301. If the shares
are being exchanged between accounts that are not registered identically, the
signature on such request must be guaranteed by an eligible guarantor
institution as defined by the Fund's transfer agent in accordance with its
signature guarantee procedures. Currently such procedures generally permit
guarantees by banks, broker/dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations. Any outstanding certificate or certificates for the tendered
shares must be duly endorsed and submitted.
Purchase and withdrawal plans and reinvestment and exchange privileges are
described more fully in the Statement of Additional Information. For further
information, call Equity Planning at (800) 243-1574.
NET ASSET VALUE
The net asset value per share of the Fund is determined as of the close of
regular trading of the New York Stock Exchange (the "Exchange") on days when
the Exchange is open for trading. The net asset value per share of the Fund
is determined by adding the values of all securities and other assets of the
Fund, subtracting liabilities, and dividing by the total number of
outstanding shares of the Fund. The total liability allocated to a class,
plus that class's distribution fee and any other expenses allocated solely to
that class, are deducted from the proportionate interest of such class in the
assets of the Fund, and the resulting amount of each is divided by the number
of shares of that class outstanding to produce the net asset value per share.
Foreign and domestic fixed income securities (other than short-term
investments) are valued on the basis of broker quotations or valuations
provided by a pricing service approved by the Directors when such prices are
believed to reflect the fair value of such securities. Short term investments
having a remaining maturity of less than sixty-one days are valued at
amortized cost, which the Directors have determined approximates market.
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. The
Fund's investments are valued at market value or, where market quotations are
not available, at fair value as determined in good faith by the Directors or
their delegates. For further information about security valuations, see the
Statement of Additional Information.
HOW TO REDEEM SHARES
Shareholders have the right to have the Fund buy back shares at the net
asset value next determined after receipt of a redemption request and any
other required documentation in proper form by Phoenix Funds c/o State Street
Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301 (see "Net Asset
Value"). In the case of Class B Share redemptions, investors will be subject
to the applicable deferred sales charge, if any, for such shares (see
"Deferred Sales Charge Alternative--Class B Shares", above). To redeem, any
outstanding share certificates in proper form for transfer must be received
by Phoenix Funds c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8801. To be in proper form to redeem shares, the signature
of the shareholder(s) on the certificate or stock power must be signed
exactly as registered, including any fiduciary title, on a written
instruction letter, certificate, or accompanying stock power, such signatures
being guaranteed by an eligible guarantor institution as determined in
accordance with standards and procedures established by the Transfer Agent
(please contact the Fund at (800) 243-1574 with any questions regarding
eligible guarantors).
If no certificate has been issued, the Transfer Agent requires a written
request with signature guarantee. The Transfer Agent may waive the signature
guarantee requirement if the shares are registered in the names of
individuals singly, jointly, or as custodian under the Uniform Gifts to
Minors Act or the Uniform Transfers to Minors Act, the proceeds do not exceed
$50,000, and the proceeds are payable to the registered owner(s) at the
address of record. Such requests must be signed by each person in whose name
the account is registered. In addition, a shareholder may sell shares back to
the Fund through securities dealers who may charge customary commissions for
their services. The redemption price in such case will be the price as of the
close of the regular trading session of the Exchange on that day, provided
the order is received by the dealer prior thereto, and is transmitted to the
Transfer Agent prior to the close of its business. No charge is made by the
Fund on redemptions, but shares tendered through investment dealers may be
subject to a service charge by such dealers. Payment for shares redeemed is
made within seven days; provided, however, that redemption proceeds will not
be disbursed until each check used for purchases of shares has been cleared
for payment by the investor's bank, which may take up to 15 days after
receipt of the check.
Additional documentation may be required for redemptions by corporations,
partnerships or other organizations, executors, administrators, trustees,
custodians, guardians, or from IRA's or other retirement plans, or if
redemption is requested by anyone but the shareholder(s) of record. To avoid
delay in redemption or transfer, shareholders having questions about specific
requirements should contact the Fund at (800) 243-1574. Redemption requests
will not be honored until all required documents in proper form have been
received.
Telephone Redemptions
Unless a shareholder elects in writing not to participate in the Telephone
Redemption privilege, shares for which certificates have not been issued may
be redeemed by telephoning (800) 243-1574 and telephone redemptions will also
be accepted on behalf of the shareholder from his or her registered
representative.
The Fund and the Transfer Agent will employ reasonable procedures to confirm
that telephone instructions are genuine. Address and bank account information
will be verified,
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telephone redemption instructions will be recorded on tape, and all
redemptions will be confirmed in writing to the shareholder. If there has
been an address change within the past 60 days, a telephone redemption will
not be authorized. To the extent that procedures reasonably designed to
prevent unauthorized telephone redemptions are not followed, the Fund and/or
the Transfer Agent may be liable for following telephone instructions for
redemption transactions that prove to be fraudulent. Broker/dealers other
than Equity Planning have agreed to bear the risk of any loss resulting from
any unauthorized telephone redemption instruction from the firm or its
registered representatives. However, the shareholder would bear the risk of
loss resulting from instructions entered by an unauthorized third party that
the Fund and/or the Transfer Agent reasonably believe to be genuine. The
Telephone Redemption Privilege may be modified or terminated at any time upon
60 days notice to shareholders. In addition, during times of drastic economic
or market changes, the Telephone Redemption Privilege may be difficult to
exercise or may be suspended temporarily and a shareholder should submit a
written redemption request, as described above.
If the amount of the redemption is over $500, the proceeds will be wired to
the shareholder's designated U.S. commercial bank account. If the amount of
the redemption is less than $500, the proceeds will be sent by check to the
address of record on the shareholder's account.
Telephone redemption orders received and accepted by the Transfer Agent, on
any day when the Transfer Agent is open for business will be entered at the
next determined net asset value. However telephone redemption orders received
and accepted by the Transfer Agent after the close of trading hours on the
Exchange will be executed on the following business day. The proceeds of a
telephone redemption will normally be sent on the first business day
following receipt of the redemption request. However, with respect to the
telephone redemption of shares purchased by check, such requests will only be
effected after the Fund has assured itself that good payment has been
collected for the purchase of shares, which may take up to 15 days. This
expedited redemption privilege is not available to HR-10, IRA and 403(b)(7)
Plans.
Reinvestment Privilege
Shareholders have a one time privilege of using redemption proceeds to
purchase Class A Shares of any Phoenix Fund with no sales charge (at the net
asset value next determined after the request for 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 for reinvestment 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
this reinvestment privilege.
Redemption of Small Accounts
Due to the relatively high cost of maintaining small accounts, the Fund
reserves the right to redeem, at net asset value, the shares of any
shareholder whose account has a value, due to redemptions, of less than $200.
Before the Fund redeems these shares, the shareholder will be given notice
that the value of the shares in the account is less than the minimum amount
and will be allowed 30 days to make an additional investment in an amount
which will increase the value of the account to at least $200.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to continue to qualify annually as a regulated investment
company under Subchapter M of the Code and to distribute annually to
shareholders all or substantially all of its net investment income and net
realized capital gains, after utilization of any capital loss carryovers. If
the Fund so qualifies, it generally will not be subject to Federal income tax
on the income it distributes.
Income dividends will be declared daily and paid monthly. Capital gain
distributions, if any, will be paid at least annually. An additional capital
gain distribution may be paid after the end of the Fund's fiscal year.
The Fund will be subject to a nondeductible 4% excise tax if it fails to
meet certain annual distribution requirements. In order to prevent imposition
of the excise tax, it may be necessary for the Fund to make distributions
more frequently than described in the previous paragraph.
Unless a shareholder elects to receive distributions in cash, dividends will
be paid in additional shares of the Fund credited at the next asset value per
share on the ex-dividend date. Dividends and distributions, whether received
in cash or in additional shares of the Fund, generally are subject to Federal
income tax and may be subject to state, local and other taxes. Shareholders
will be notified annually about the amount and character of distributions
made to them by the Fund.
Capital gains, if any, distributed to shareholders and designated by the
Fund as long-term capital gain dividends are taxable to shareholders as
long-term capital gain distributions regardless of the length of time shares
of the Fund have been held by the shareholder. Distributions of short-term
capital gains and net investment income, if any, are taxable to shareholders
as ordinary income.
Dividends and distributions generally will be taxable to shareholders in the
taxable year of the shareholder in which they are received. However,
dividends and distributions declared by the Fund in October, November or
December of any calendar year, with a record date in such a month, and paid
24
<PAGE>
during the following January will be treated as if they were paid by the Fund
and received by shareholders on December 31 of the calendar year in which
they were declared.
A redemption or other disposition (including an exchange) of shares of the
Fund generally will result in the recognition of a taxable gain or loss,
which will be a long- or short-term capital gain or loss (assuming the shares
were a capital asset in the hands of the shareholder), depending upon the
shareholder's holding period for his or her shares. A capital loss realized
on a disposition of Fund shares held six months or less will be treated as a
long-term capital loss to the extent of capital gain dividends received with
respect to such shares. In addition, if shares of the Fund are disposed of at
a loss and are replaced (either through purchases or through reinvestment of
dividends) within a period commencing thirty days before and ending thirty
days after the disposition of such shares, the realized loss will be
disallowed and appropriate adjustments to the tax basis of the new shares
will be made. In addition, special rules may apply to determine the amount of
gain or loss realized on an exchange.
Investment income received by the Fund from sources within foreign countries
may be subject to foreign income taxes withheld at the source.
The Fund may recognize interest attributable to it from holding zero coupon
securities. Current federal law requires that for most zero coupon
securities, a holder (such as the Fund) must accrue a portion of the discount
at which the security was purchased as income each year even though the Fund
receives no interest payment in cash on the security during the year. As a
regulated investment company, the Fund must pay out substantially all of its
net investment income each year. Accordingly, the Fund may be required to pay
out as an income distribution each year an amount which is greater than the
total amount of cash interest the Fund actually received. Such distributions
will be made from the cash assets of the Fund or by liquidation of portfolio
securities, if necessary. If a distribution of cash necessitates the
liquidation of portfolio securities, the Adviser will select which securities
to sell. The Fund may realize a gain or loss from such sales.
Investors are urged to consult their attorney or tax adviser regarding
specific questions as to Federal, foreign, state or local taxes. Foreign
shareholders may be subject to U.S. Federal income tax rules that differ from
those described above. For more information regarding distributions and
taxes, see "Dividends, Distributions and Taxes" in the Statement of
Additional Information.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS regulations, the Fund may be required to withhold 31% of all
reportable payments including any taxable dividends, capital gain
distributions or share redemption proceeds, for any account which does not
have a taxpayer identification number or social security number and certain
required certifications. The Fund reserves the right to refuse to open an
account for any person failing to provide a taxpayer identification number
along with the required certifications.
The Fund sends to all shareholders, within 31 days after the end of the
calendar year, information which is required by the Internal Revenue Service
for preparing Federal income tax returns. Investors are urged to consult
their attorney or tax advisor regarding specific questions as to Federal,
foreign, state or local taxes.
ADDITIONAL INFORMATION
Organization of the Fund
The Fund was organized as a corporation under the laws of the State of
Maryland on September 20, 1989. On December 23, 1993 shareholders approved a
change in the name of the Fund, effective January 1, 1994, to reflect the
Fund's affiliation with Phoenix Home Life Mutual Insurance Company ("Phoenix
Home Life"), which resulted from the transfer of ownership of the Fund's
Adviser to Phoenix Home Life on May 14, 1993. Prior to January 1, 1994, the
Fund's name was "National Multi-Sector Fixed Income Fund, Inc."
The Articles of Incorporation, as amended, provide for the issuance of up to
500,000,000 Shares. The Fund's Shares are divided equally between two
classes, each consisting of 250,000,000 Shares. The Fund issues Class A and
Class B Common Stock. The shares of the Fund, when issued, will be fully paid
and non-assessable, have no preference, preemptive, exchange or similar
rights, and will be freely transferable. There is no requirement or intention
to hold annual meetings of shareholders. Accordingly, there will normally be
no meetings of shareholders for the purpose of electing Directors unless and
until such time as less than a majority of the Directors holding office have
been elected by shareholders, at which time the Directors then in office will
call a meeting for the election of Directors. Shareholders may, in accordance
with the Articles of Incorporation, cause a meeting of shareholders to be
held for the purpose of voting on the removal of a Director or Directors.
Meetings of the shareholders will be called upon written request of
shareholders holding in the aggregate at least 10% of the Fund's outstanding
shares. The Directors will provide appropriate assistance to shareholders, in
compliance with the provisions of the 1940 Act, if such a request for a
meeting is received. Except as set forth above, the Directors will continue
to hold office and appoint successor Directors. Shares do not have cumulative
voting rights and the holders of more than 50% of the shares of the Fund
voting for the election of Directors can elect all of the Directors of the
Fund if they choose to do so and in such event the holders of the remaining
shares would not be able to elect any Directors. Shareholders are entitled to
redeem their shares as set forth under "How to Redeem Shares."
Registration Statement
This Prospectus does not contain all the information included in the Fund's
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. upon payment of the prescribed fee.
25
<PAGE>
APPENDIX
Description of Certain Bond Ratings
Moody's Investor's Service, Inc.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
Standard & Poor's Corporation
BB, B, CCC--Bonds rated BB, B and CCC are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with terms of the obligation. BB indicates the lowest
degree of speculation and CCC the highest degree of speculation. While such
debt will likely have some quality and protective characteristics, these are
outweighed by large uncertainties of major risk exposures to adverse
conditions. Ability to pay interest and repay principal may be affected over
time by adverse economic changes. However, business and financial
alternatives can be identified which could assist the obligor in satisfying
its debt service requirement.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited
margin of safety and the need for reasonable business and economic activity
throughout the life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied,
may lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
26
<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:
Give Social Security Number or
Account Type Tax Identification Number of:
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
Step 2. If you do not have a TIN, you must obtain Form SS-5 (Application for
Social Security Number) or Form SS-4 (Application for Employer
Identification Number) from your local Social Security or IRS office
and apply for one. Write "Applied For" in the space on the
application.
Step 3. If you are one of the entities listed below, you are exempt from
backup withholding.
(bullet) A corporation
(bullet) Financial institution
(bullet) Section 501(a) exempt organization (IRA, Corporate
Retirement Plan, 403(b), Keogh)
(bullet) United States or any agency or instrumentality thereof
(bullet) A State, the District of Columbia, a possession of the
United States, or any subdivision or instrumentality thereof
(bullet) International organization or any agency or instrumentality
thereof
(bullet) Registered dealer in securities or commodities registered in
the U.S. or a possession of the U.S.
(bullet) Real estate investment trust
(bullet) Common trust fund operated by a bank under section 584(a)
(bullet) An exempt charitable remainder trust, or a non-exempt trust
described in section 4947(a)(1)
(bullet) Regulated Investment Company
If you are in doubt as to whether you are exempt, please contact the Internal
Revenue Service.
Step 4. IRS Penalties--If you do not supply us with your TIN, you will be
subject to an IRS $50 penalty unless your failure is due to
reasonable cause and not willful neglect. If you fail to report
interest, dividend or patronage dividend income on your federal
income tax return, you will be treated as negligent and subject to an
IRS 5% penalty tax on any resulting underpayment of tax unless there
is clear and convincing evidence to the contrary. If you falsify
information on this form or make any other false statement resulting
in no backup withholding on an account which should be subject to a
backup withholding, you may be subject to an IRS $500 penalty and
certain criminal penalties including fines and imprisonment.
This Prospectus sets forth concisely the information about the Phoenix
Multi-Sector Fixed Income Fund, Inc. (the "Fund") which you should know
before investing. Please read it carefully and retain it for future
reference.
The Fund has filed with the Securities and Exchange Commission a Statement of
Additional Information about the Fund, dated February 28, 1997. The Statement
contains more detailed information about the Fund and is incorporated into
this Prospectus by reference. You may obtain a free copy of the Statement by
writing the Fund c/o Phoenix Equity Planning Corporation, 100 Bright Meadow,
P.O. Box 2200, Enfield, Connecticut 06083-2200.
Financial information relating to the Fund is contained in the Annual Report
to Shareholders for the year ended October 31, 1996 and is incorporated into
the Statement of Additional Information by reference.
(recycle logo) Printed on recycled paper using soybean ink
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PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
101 Munson Street
Greenfield, Massachusetts 01301
Statement of Additional Information
February 28, 1997
This Statement of Additional Information is not the Prospectus but expands
upon and supplements the information contained in the current Prospectus of
Phoenix Multi-Sector Fixed Income Fund, Inc. (the "Fund"), dated February 28,
1997 and should be read in conjunction with it. The Fund's Prospectus may be
obtained by calling Phoenix Equity Planning Corporation ("Equity Planning")
at (800) 243-4361 or by writing to Phoenix Funds, c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301.
TABLE OF CONTENTS
PAGE
THE FUND (3) ........................................................... 1
INVESTMENT OBJECTIVE AND POLICIES (6) ................................. 1
INVESTMENT RESTRICTIONS (13) .......................................... 1
INVESTMENT TECHNIQUES (9) ............................................. 2
PERFORMANCE INFORMATION (6) ............................................ 7
PORTFOLIO TRANSACTIONS AND BROKERAGE (14) .............................. 7
SERVICES OF THE ADVISER (14) .......................................... 8
NET ASSET VALUE (23) ................................................... 9
HOW TO BUY SHARES (16) ................................................ 10
EXCHANGE PRIVILEGES (22) ............................................... 11
INVEST-BY-PHONE ........................................................ 11
TAX SHELTERED RETIREMENT PLANS (21) .................................... 12
REDEMPTION OF SHARES (23) ............................................. 12
DIVIDENDS, DISTRIBUTIONS AND TAXES (24) ............................... 12
THE DISTRIBUTOR (14) ................................................... 15
PLANS OF DISTRIBUTION (14) ............................................. 15
DIRECTORS AND OFFICERS ................................................ 16
OTHER INFORMATION ..................................................... 23
Numbers appearing in parentheses correspond to related disclosure
in the Fund's Prospectus.
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders/Exchanges: (800) 367-5877
TTY: (800) 243-1926
PDP 695B (2/97)
<PAGE>
THE FUND
Phoenix Multi-Sector Fixed Income Fund, Inc. is a diversified open-end,
management investment company which was organized as a corporation under
Maryland law on September 20, 1989. On December 23, 1993, shareholders of the
Fund approved a change in the name of the Fund, effective January 1, 1994, to
reflect the Fund's affiliation with Phoenix Home Life Mutual Insurance
Company ("Phoenix Home Life"), which resulted from the transfer of ownership
of the Fund's investment adviser to Phoenix Home Life on May 14, 1993. Prior
to January 1, 1994, the Fund's name was "National Multi-Sector Fixed Income
Fund, Inc."
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to maximize current income consistent with
the preservation of capital. The Fund will seek to achieve its objective by
investing in U.S. Government Securities, Foreign Securities, Investment Grade
Securities and High Yield-High Risk Securities (as such terms are defined in
the Prospectus). There is no assurance that the Fund will achieve its
investment objective.
INVESTMENT RESTRICTIONS
Fundamental Policies
The following investment restrictions are fundamental policies that cannot
be changed without the approval of the holders of a majority of the Fund's
outstanding voting securities (i.e., the lesser of (a) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares are
represented, or (b) more than 50% of the outstanding shares.)
The Fund may not:
1. Underwrite the sale of securities of other issuers.
2. Deal in real estate, but it may purchase marketable securities of
companies which deal in real estate investment trusts.
3. Deal in commodities or commodity contracts, except that the Fund may,
subject to the limitations and conditions set forth herein, enter into
interest rate futures contracts and foreign currency futures contracts on
domestic and foreign exchanges, purchase and write put and call options on
interest rate futures contracts and foreign currency and write covered call
options.
4. Make loans to other persons but may, however, lend portfolio securities
(up to 33% of net assets at the time the loan is made) to brokers or dealers
or other financial institutions not affiliated with the Fund or the Adviser
subject to conditions established by the Adviser (See "Lending Portfolio
Securities").
5. Enter into repurchase agreements and purchase or hold participations in
loans in excess of 5% of net assets, respectively.
6. Borrow money, issue senior securities as defined in the Investment
Company Act of 1940, or pledge, mortgage or hypothecate its assets, except
that it may (i) borrow from banks, enter into reverse repurchase agreements
or employ similar investment techniques, and pledge its assets in connection
therewith, but only if immediately after such borrowing there is asset
coverage of 300%; and (ii) enter into transactions in options, futures, and
options on futures as described in the Fund's Prospectus and Statement of
Additional Information (the deposit of assets in escrow in connection with
the writing of covered put and call options and the purchase of securities
on a when-issued or delayed delivery basis and collateral arrangements with
respect to initial or variation margin deposits for futures contracts will
not be deemed to be pledges of the Fund's assets).
7. Purchase on margin, except that for purposes of this restriction, the
deposit or payment of initial or variation margin in connection with futures
contracts will not be deemed to be a purchase of securities on margin.
8. Sell short, except that the Fund may enter into short sales against the
box.
9. The Fund will not invest more than 25% of its assets in any one industry
or group of industries.
10. As a diversified investment company, at least 75% of the Fund's total
assets must be represented by cash or cash items, government securities,
securities of other investment companies and other securities limited in
respect of any one issuer to an amount not greater than 5% of the value of
the total assets of the Fund.
11. The Fund cannot make an investment for the purpose of exercising control
or management, nor may it invest in real estate limited partnerships, or
invest in oil, gas or other mineral leases.
12. The Fund will invest no more than 35% of its assets, determined at the
time of purchase, in High Yield-High Risk Securities.
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Non-Fundamental Policies
The following restrictions of the Fund are not fundamental policies and may
be changed by the Board of Directors of the Fund without shareholder
approval:
1. The Fund will not invest more than 15% of its net assets in illiquid
securities. See "Other Policies--Illiquid Securities."
2. The Fund may invest no more than 15% of its assets in any combination of
zero coupon bonds, step coupon bonds and payment-in-kind ("PIK") bonds.
3. The Fund does not intend to borrow any amount in excess of 10% of its
assets, and would do so only for temporary emergency or administrative
purposes. In addition, to avoid the potential leveraging of its assets, the
Fund will not make additional investments when its borrowings are in excess
of 5% of its total assets.
INVESTMENT TECHNIQUES
The Fund may utilize the following practices or techniques in pursuing its
investment objectives.
Options and Other Hedging Activities
The Fund may write and purchase options, including over-the-counter options,
for hedging purposes. The Fund may also engage in the writing of covered call
option contracts on securities owned at such times and from time to time as
the Adviser shall determine to be appropriate and consistent with the
investment objectives of the Fund. Such options must be listed on an
organized national securities exchange. The aggregate value of the securities
underlying the calls will be limited to not more than 25% of the net assets
of the Fund.
A call option gives the purchaser of the option the right to buy the
underlying security from the writer at the exercise price at any time prior
to the expiration of the contract, regardless of the market price of the
security during the option period. The premium paid to the writer is the
consideration for undertaking the obligations under the option contract. The
writer forgoes the opportunity to profit from an increase in the market price
of the underlying security above the exercise price except insofar as the
premium represents such a profit. The Fund will write only call option
contracts and will receive a premium from the writing of such contracts, and
it is believed that total return to the Fund can be increased through such
premiums consistent with the Fund's investment objective.
The Fund may also write covered call options on securities indexes. Through
the writing of call index options the Fund can achieve many of the same
objectives as through the use of call options on individual securities. Call
options on securities indexes are similar to call options on a security
except that, rather than the right to take delivery of a security at a
specified price, a call option on a securities index gives the holder the
right to receive, upon exercise of the option, an amount of cash if the
closing level of the securities index upon which the call option is based is
greater than the exercise price of the option. The writing of such index call
options would be subject to the present limitation of covered call option
writing.
The Fund may purchase options to close out a position, i.e., a "closing
purchase transaction"--the purchase of a call option on the same security
with the same exercise price and expiration date as the call option which it
has previously written on a particular security. When a security is sold from
the Fund's portfolio, the Fund will effect a closing purchase transaction so
as to close out any existing call option on that security, realizing a profit
or loss depending on whether the amount paid to purchase a call option is
less or more than the amount received from the sale thereof. In addition, the
Fund may wish to purchase a call option to hedge its portfolio against an
anticipated increase in the price of securities it intends to purchase or to
purchase a put option to hedge its portfolio against an anticipated decline
in securities prices. No more than 5% of the assets of the Fund may be
invested in the purchase of put and call options, including index options.
The Fund may also engage in foreign currency exchange transactions and in
transactions involving interest rate futures contracts and options thereon as
a hedge against changes in exchange and interest rates. Hedging is a means of
transferring risk that an investor does not desire to assume in an uncertain
interest or exchange rate environment. The Adviser believes it is possible to
reduce the effects of interest and exchange rate fluctuations on the value of
the Fund's portfolio, or sectors thereof, through the use of such strategies.
The costs of, and possible losses incurred from, the foregoing activities
may reduce the Fund's current income and involve a loss of principal. Any
incremental return earned by the Fund resulting from options transactions and
from its hedging activities would be expected to offset anticipated losses or
a portion thereof, and will be treated as long term or short term capital
gains. See "Dividends, Distributions and Taxes."
The Fund will not engage in the foregoing activities for speculative
purposes but only as a hedge against changes resulting from market conditions
in the values of securities in its portfolio, or sectors thereof, or that it
intends to acquire.
2
<PAGE>
Futures Contracts, Options on Futures Contracts and Forward Contracts
The Fund may enter into futures contracts to purchase and sell the security
or foreign currency underlying the contracts and is permitted to purchase put
and call options on the contracts. The Fund will engage in these transactions
solely for the purpose of hedging against the effects of changes in the value
of its portfolio securities or those it intends to purchase due to
anticipated changes in interest rates and currency values, and not for
purposes of speculation. In order for the Fund to qualify as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"), it must, among other things, 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 held for less than three months.
Accordingly, the Fund may have to limit its ability to trade in futures
contracts and related options in order to comply with this test.
The Fund may enter into both interest rate futures contracts and foreign
currency futures contracts on domestic and foreign exchanges. Entering into a
futures contract to sell a debt security or foreign currency, which may be
referred to as entering into a "short" futures position, creates an
obligation by the seller to deliver a specified amount of the underlying
security or foreign currency at a specified future time and at an agreed upon
price. Entering into a futures contract to purchase a debt security or
foreign currency, which may be referred to as entering into a "long" futures
position, creates an obligation by the purchaser to take delivery of a
specified amount of the underlying security or foreign currency at a
specified future time and at a stated price. The specified instruments
delivered or taken at the delivery date are determined in accordance with the
rules of the exchange on which the futures contract is effected. Although the
terms of futures contracts specify actual delivery or receipt of the
underlying commodity, futures contracts generally are closed out before the
delivery date without making delivery or receiving the underlying
instruments. Instead, the futures position is terminated by entering into an
opposite position in the same commodity on the same (or a linked) exchange.
Upon entering into a futures contract, the Fund will be required to deposit
with a broker an amount of cash or cash equivalent equal to approximately 1%
to 5% of the contract price, which amount is subject to change by the
exchange on which the contract is traded or by the brokers. This amount,
which is known as "initial margin," does not involve the borrowing of funds
to finance the transactions; rather, it is in the nature of a performance
bond or good faith deposit on the contract that will be returned to the Fund
upon termination of the futures contract, assuming all contractual
obligations have been satisfied. Subsequent payments, known as "variation
margin," to and from the broker, will be made daily as the price of the
instrument underlying the futures contract fluctuates, making the long and
short positions in the futures contract more or less valuable, a process
known as "marking-to-market." Upon the liquidation of a futures position,
final determinations of variation margin are then made, any additional cash
is paid by the Fund or released to it and a loss or gain is realized.
An interest rate futures contract provides for the future sale by one party
and the purchase by the other party of a certain amount of a specified debt
security at a stated date, time, place and price. Among the debt securities
on which interest rate futures contracts currently are based are futures
contracts for the purchase or sale of U.S. Government Securities, including
long-term Treasury Bonds, Treasury Notes, three-month Treasury Bills and
Government National Mortgage Association modified pass-through
mortgage-backed securities ("GNMA pass-through securities") and 90-day
commercial paper. Interest rate futures contracts currently are traded in the
United States primarily on the floors of the Chicago Board of Trade ("CBT")
and the International Monetary Market of the Chicago Mercantile Exchange
("CME"). Interest rate futures also are traded on foreign exchanges such as
the London International Financial Futures Exchange ("LIFFE") and the
Singapore International Monetary Exchange ("SIMEX").
The Fund may enter into interest rate futures contracts to protect against
fluctuations in interest rates affecting the value of debt securities that
the Fund either holds or intends to acquire. If interest rates are expected
to increase, the Fund may enter into short interest rate futures contracts on
debt securities that correlate historically with the value of the portfolio
securities of the Fund to hedge against a decline in the value of these
securities. In the event that interest rates increase as anticipated, the
value of the interest rate futures contracts would increase at a similar rate
thus mitigating any decline in the value of the Fund's portfolio securities
and resulting in a higher net asset value than would have occurred without
the sale of the futures contracts. Although the Fund could accomplish a
similar result by selling certain of its debt securities, the liquidity of
the futures market permits it to maintain a defensive position without
selling its portfolio securities.
When the Fund anticipates that interest rates may decline, it may purchase
interest rate futures contracts to hedge against a rise in the price of debt
securities it intends to purchase. The value of certain futures contracts may
fluctuate at approximately the same rate as the value of the debt securities
the Fund intends to purchase, thus permitting the Fund to benefit from the
appreciating cost of the debt securities without actually buying them until
the market has stabilized. The Fund may liquidate the futures contract by
offset and buy the securities in the cash market. When the Fund enters into
futures contracts to hedge against the increasing cost of debt securities it
might purchase in the future, it will maintain any asset, including equity
securities and non-investment grade debt so long as the asset is liquid,
unencumbered and marked to market daily, in a segregated asset account with
its custodian sufficient to cover the obligations of the Fund with respect to
the futures contracts.
A foreign currency futures contract provides for the future sale and
purchase by the respective parties of a certain amount of a specified foreign
currency at a stated date, time, place and price. At present, foreign
currency futures contracts are based on
3
<PAGE>
British pounds, German deutsche marks, Canadian dollars, Japanese yen, French
francs, Swiss francs, and European Currency Units (ECUs). Foreign currency
futures contracts currently are traded on CME, MidAmerica Commodity Exchange,
the Philadelphia Board of Trade, LIFFE and SIMEX.
The Fund may enter into foreign currency futures contracts to attempt to
establish the rate at which it would be entitled to make a future exchange of
U.S. dollars for another currency. If the Fund anticipates that the value of
a foreign currency may decline against the U.S. dollar, it may enter into
futures contracts to sell that foreign currency in order to attempt to hedge
against a decline in the U.S. dollar value of those of its securities payable
in those currencies.
The Fund may also attempt to establish the price in U.S. dollars of
securities it intends to acquire at a future date by entering into futures
contracts to purchase foreign currencies in which those securities are
denominated to hedge against an increase in price, in U.S. dollars, of those
securities.
The Fund may purchase and write put and call options on interest rate
futures contracts as a hedge against changes in interest rates and on foreign
currency futures contracts as a hedge against fluctuating currency values, in
lieu of purchasing and writing options directly on the underlying security or
currency or purchasing and selling the underlying futures contracts. The Fund
may enter into closing transactions with respect to these options to
terminate existing positions.
When an option is exercised, the writer of the option will deliver to the
holder of the option the futures position together with the accumulated
balance in the option writer's futures margin account. The futures margin
account balance represents the amount by which the market price of the
futures contract exceeds (in the case of a call option) or is less than (in
the case of a put option) the exercise price of the option on the futures
contract. The potential loss related to the purchase of an option on a
futures contract is limited to the premium paid for the option plus related
transaction costs.
The purchase of an option on an interest rate futures contract will give the
Fund the right to enter into a futures contract to purchase (in the case of a
call option) or sell (in the case of a put option) a particular debt security
at a specified exercise price at any time prior to the expiration date of the
option. Options on interest rate futures contracts currently are available
with respect to Treasury Bonds, Treasury Notes, and Eurodollars.
The Fund may purchase a put option on an interest rate futures contract to
hedge against a decline in the value of its portfolio securities as a result
of rising interest rates. Purchasing put options on futures contracts is
similar to purchasing put options on the portfolio securities themselves. As
interest rates rise, the value of debt securities generally declines, thus
making put options on interest rate futures more valuable. The Fund may
purchase a call option on an interest rate futures contract to hedge against
the risk of an increase in the price of securities it intends to purchase
resulting from declining interest rates. The purchase of call options in
those situations generally would have the same effect as purchasing call
options on the debt securities. The Fund may write put and call options on
interest rates futures contracts as part of closing sale transactions to
terminate its option positions.
The purchase of options on foreign currency futures contracts gives the Fund
the right to enter into a futures contract to purchase (in the case of a call
option) or sell (in the case of a put option) a particular currency at a
specified price at any time during the period before the option expires.
Options on foreign currency futures contracts are available with respect to
British pounds, German deutsche marks and Swiss francs. The Fund may purchase
options on foreign currency futures as a hedge against fluctuating currency
values.
The Fund is permitted to engage in foreign currency exchange transactions in
order to protect against uncertainty in the level of future exchange rates.
The Fund may conduct its currency exchange transactions on a "spot" (i.e.,
cash) basis at the rate then prevailing in the currency exchange market, or
on a forward basis, by entering into futures (as previously discussed) or
forward contracts to purchase or sell currency. The Fund's dealings in
foreign currency exchange contracts is limited to hedging involving either
specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of foreign currency with respect
to specific receivables or payables of the Fund generally arising in
connection with the purchase or sale of its portfolio securities and accruals
of interest receivable and the Fund's expenses. The Fund may engage in
transaction hedging to protect against a change in the foreign currency
exchange rate between the date on which the Fund contracts to purchase or
sell the security and the settlement date, or to "lock in" the U.S. dollar
equivalent of a dividend or interest payment in a foreign currency. In such
circumstances, the Fund will purchase or sell a foreign currency on a spot
basis at the prevailing spot rate.
Position hedging is the purchase or sale of currency with respect to
portfolio security positions denominated or quoted in that currency. The Fund
may engage in position hedging to protect against a decline in the value of
the currencies in which its portfolio securities are denominated or quoted.
To engage in position hedging, the Fund will enter into foreign currency
futures and related options (as described above), forward foreign currency
contracts, and options on foreign currencies. The Fund also will purchase or
sell foreign currency on a spot basis.
The Fund will not position hedge with respect to a particular currency for
an amount greater than the aggregate market value, determined at the time of
sale of foreign currency, of the securities held (or to be held) in its
portfolio denominated or quoted
4
<PAGE>
in or currently convertible into that currency. If the Fund enters into a
position hedging transaction, it will place in a segregated account with its
custodian 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 the total assets the Fund committed to the consummation
of the forward contract. If the value of the securities placed in the
segregated account declines, additional cash or securities will be placed in
the account so that the value of the account would equal the amount of assets
the Fund committed to the currency contract.
A forward foreign currency 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 as agreed upon by the parties, at a price
set at the date of the contract. The holder of a forward contract containing
a cancellation provision has the unilateral right to cancel the contract at
maturity by paying a specified fee. Forward contracts are entered into in the
interbank market conducted directly between currency dealers, which usually
are large commercial banks and brokerage houses, and their customers. Forward
currency contracts are conducted on a principal basis and therefore generally
involve no margin, commissions or other fees. Instead, bid and ask prices are
quoted by dealers who profit from the difference in the spread between those
prices.
Although the use of forward currency contracts does not eliminate
fluctuations in the underlying price of securities, it will establish a rate
of exchange that can be achieved in the future. Forward contracts limit the
risk of loss due to a decline in the value of the hedged currency but also
limit any potential gain that might result in the event the value of the
currency increases.
Unlike a foreign currency futures contract, which has a predetermined
maturity date in any month, a forward currency contract matures any fixed
number of days from the date of the contract agreed upon by the parties. At
the maturity of a forward contract, the Fund may either take or make delivery
of the currency specified in the contract, or, at or prior to maturity, it
may enter into a closing transaction involving the purchase or sale of an
offsetting contract. Because these contracts will be entered into on a
principal basis rather than on an exchange, closing transactions for forward
contracts will be effected with the currency dealer who was a party to the
original forward contract.
The Fund may also purchase or write put and call options on exchanges for
the purpose of hedging against changes in future currency exchange rates. An
option on a foreign currency gives the purchaser, in return for a premium
paid plus related transaction costs, the right to sell (in the case of a put
option) and buy (in the case of a call option), the underlying currency at a
specified price until the option expires. Currency options traded on United
States or other exchanges may be subject to position limits, which may affect
the ability of the Fund to hedge its positions. Foreign currency options
currently are traded on the Philadelphia Stock Exchange, the International
Options Clearing Corp. and LIFFE. The Fund will purchase and sell options on
foreign exchanges to the extent permitted by the Commodity Futures Trading
Commission ("CFTC").
The Fund may purchase or write options on currency only when the Adviser
believes that a liquid secondary market exists for these options; however, no
assurance can be given that a liquid secondary market will exist for a
particular option at any specific time.
The value of an option on foreign currency depends upon the value of the
foreign currency when compared to the value of the U.S. dollar. Transactions
in foreign currency options generally involve smaller amounts than those on
the interbank market and therefore option investors may have to deal at
prices for the underlying foreign currencies that are less favorable than
those for larger transactions. In addition, the foreign currency market has
neither a systematic reporting of last sale information nor a regulatory
requirement that available quotations be firm or revised on a timely basis.
Available quotation information usually represents large transactions in the
interbank market and may not reflect transactions valued at less than $1
million. Because the interbank market in foreign currencies is a global,
around-the-clock market, significant price and rate movements may take place
during periods when the U.S. options markets are closed and therefore may not
be reflected in the U.S. options markets.
The Fund will not use leverage when it enters into long futures contracts or
related options. For each long position the Fund enters into, it will deposit
any asset, including equity securities and non-investment grade debt so long
as the asset is liquid, unencumbered and marked to market daily, having a
value equal to the market value of the contract as collateral in a segregated
account with the custodian of the Fund. The Fund will not enter into futures
contracts and related options if as a result the aggregate of the initial
margin deposits on the Fund's existing futures and premiums paid for
unexpired options exceeds 5% of the fair market value of the Fund's assets.
Using futures contracts and related options involves certain risks,
including (1) the risk of imperfect correlation between fluctuations in the
value of a futures contract and the portfolio security that is being hedged;
(2) the risk that in its use of futures and related options the Fund may not
outperform a fund that does not make use of those instruments; (3) the fact
that no assurance can be given that active markets will be available to
offset positions; (4) the fact that futures contracts and options on futures
may be closed out, by entering into an offsetting position, only on the
exchange on which the contracts were entered into or through a linked
exchange; (5) the risk that the value of the assets underlying the futures
contract on the date of delivery will vary significantly from the amount
which the Fund has agreed to pay or the price at which the Fund has agreed to
sell under such contract, thereby subjecting the Fund to losses; and (6) the
fact that successful use of futures contracts and related options for hedging
purposes will depend upon the ability of the Adviser to predict correctly
movements in the direction of the overall interest rate and foreign currency
markets.
5
<PAGE>
Certain exchanges on which futures are traded may establish daily limits in
the amount that the price of a futures or related option contract may
fluctuate from the previous day's settlement price. When a daily limit has
been reached in a particular contract, no trades may be made that day at a
price beyond that limit. If a daily limit were reached, the Fund could be
prevented from liquidating unfavorable positions and thus could be subject to
losses. In certain situations, the Fund would be unable to close a position
and also would have to make daily cash payments of variation margin. Although
an increase in the price of securities could partially or completely offset
those losses, no assurance can be given that the price of the underlying
securities will correlate with the price of the futures contracts and thus
offset any losses on the contracts.
Foreign currency futures contracts and related options, forward foreign
currency contracts and options on foreign currency may be traded on foreign
exchanges. The regulation of transactions on those exchanges may be less
extensive than the regulation of U.S. exchanges. The Fund only would trade
those options approved by the CFTC. Transactions on foreign exchanges also
may not involve a clearing mechanism and related guarantees and may be
subject to the risk of governmental actions affecting trading in, or the
prices of, foreign securities. The value of such positions also could be
affected adversely by (1) other foreign political, legal and economic
factors; (2) less information being available on which to make trading
decisions than is available in the U.S.; (3) a delay in the ability to act on
significant events occurring in the foreign markets during non-business hours
in the United States; (4) different exercise and settlement terms and margin
requirements from those imposed domestically; and (5) less trading volume
than on U.S. exchanges.
An additional risk of foreign exchange transactions is that foreign
exchanges offer less protection against defaults in the forward trading of
currencies than is available on a United States exchange. Because a forward
foreign currency contract is not guaranteed by an exchange or clearinghouse,
a default on the contract would deprive the Fund of unrealized profits or
would force the Fund to cover its commitments for purchase or resale, if any,
at the current market price.
Lending Portfolio Securities
The Fund may lend portfolio securities to broker-dealers or other
institutional borrowers, but only when the borrower pledges cash, U.S.
government securities, or other liquid high-grade debt securities as
collateral to the Fund and agrees to maintain such collateral so that it
amounts at all times to at least 100% of the value of the securities loaned.
While securities are on loan, the borrower will pay the Fund any income
earned thereon and the Fund may invest any cash collateral in portfolio
securities, thereby earning additional income, or receive an agreed-upon
amount of income from a borrower who has delivered equivalent collateral.
Furthermore, the Fund may terminate such loans at any time, and must receive
reasonable interest on the collateral as well as dividends, interest, or
other distributions paid on the security during the loan period. Upon
expiration of the loan the borrower of the securities will be obligated to
return to the Fund the same number and kind of securities as those loaned
together with duly executed stock powers. The Fund must be permitted to vote
the proxies if a material event affecting the value of the security is to
occur. The Fund may pay reasonable fees in connection with the loan,
including reasonable fees to the Fund's Custodian for its services. In the
event that the borrower defaults on its obligation to return borrowed
securities because of insolvency or otherwise, the Fund could experience
delays and costs in gaining access to the collateral and could suffer a loss
to the extent that the value of the collateral falls below the market value
of the borrowed securities.
Loan Participations
The Fund may invest up to 5% of its net assets, determined at the time of
investment, in loan participations. A loan participation agreement involves
the purchase of a share of a loan made by a bank to a company in return for a
corresponding share of the borrower's principal and interest payments. Loan
participations of the type in which the Fund may invest include interests in
both secured and unsecured corporate loans.
In the event that a corporate borrower failed to pay its scheduled interest
or principal payments on participations held by the Fund, the market value of
the affected participation would decline, resulting in a loss of value of
such investment to the Fund. Accordingly, such participations are speculative
and may result in the income level and net assets of the Fund being reduced.
Moreover, loan participation agreements generally limit the right of a
participant to resell its interest in the loan to a third party and, as a
result, loan participations will be deemed by the Fund to be illiquid
investments. The Fund will invest only in participations with respect to
borrowers whose creditworthiness is, or is determined by the Adviser to be,
substantially equivalent to that of issuers whose senior unsubordinated debt
securities are rated B or higher by Moody's Investor's Service, Inc.
("Moody's") or Standard & Poor's Corporation ("S&P").
Illiquid Securities
The Fund will not invest more than 15% of its net assets in illiquid
securities, which securities include private placements, illiquid loan
participations, securities with legal or contractual restrictions on resale,
repurchase agreements maturing in more than seven days, and, in certain
circumstances, securities issued under Rule 144A and OTC options. The staff
of the Securities and Exchange Commission (the "Commission") has taken the
position that purchased OTC options and the assets used as "cover" for
written OTC options are illiquid securities unless certain procedures are
followed. The Fund intends to follow those procedures. Thus, the Fund will
sell OTC options only to qualified dealers who agree that the Fund may
repurchase any OTC options it writes for a maximum price to be calculated by
a predetermined formula. In such cases, the OTC option would be considered
illiquid
6
<PAGE>
only to the extent that the maximum repurchase price under the formula
exceeds the intrinsic value of the option. The Fund may also follow certain
procedures from time to time which have been adopted by the Fund's Board of
Directors for the purpose of making determinations regarding the liquidity of
securities issued pursuant to Rule 144A under the Securities Act of 1933.
In determining whether a Rule 144A security is liquid, the Board of
Directors may take into account the frequency of trades and quotes for the
security, the number of dealers willing to purchase or sell the security and
the number of other potential purchasers, dealer undertakings to make a
market in the security, and the nature of the marketplace trades (e.g., the
time needed to dispose of the security, the method of soliciting offers, and
the mechanics of transfer).
PERFORMANCE INFORMATION
As discussed in the Prospectus, from time to time the Fund may quote its
"yield" and/or its "total return" in advertisements and sales literature.
Average annual return and yield are computed separately for Class A and Class
B Shares in accordance with the formulas specified by the Commission. The
yield will be computed by dividing the Fund's net investment income over a
30-day period by an average value (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
12-month period to derive the Fund's yield. For the 30-day period ending
October 31, 1996, the Class A Shares yield, calculated pursuant to this
formula was 6.58%. The Class B Shares yield was 6.16% calculated pursuant to
this formula.
Average annual total return quotations will be computed by finding the
average annual compounded rates of return over the 1, 5 and 10 year periods
that would equate the initial amount invested to the ending redeemable value,
according to the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years;
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the 1, 5, or 10 year periods at the end of the
1, 5, or 10 year periods (or fractional portion thereof).
Advertisements, sales literature and other communications may contain
information about the Fund and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Fund
to respond quickly to changing market and economic conditions. From time to
time the Fund may include specific portfolio holdings or industries, in such
communications. To illustrate components of overall performance, the Fund may
separate its cumulative and average annual returns into income and capital
gains components; or cite separately as a return figure the equity or bond
portion of the Fund's portfolio; or compare the Fund's equity or bond figures
to well-known indices of market performance, including, but not limited to:
the S&P 500 Index, Dow Jones Industrial Average, Lehman Brothers Aggregate
Bond Index, CS First Boston High Yield Index and Salomon Brothers Corporate
Bond and Government Bond Indices.
For the 1 and 5 year periods ended October 31, 1996, the average annual
total return of the Class A was 8.31%, 9.56%, and from inception, December
18, 1989, through October 31, 1996 was 11.01%. For the one year ended October
31, 1996 and since inception, January 3, 1992, for Class B shares, the
average annual total return was 7.84%, and 8.98%, respectively.
The Fund may also compute aggregate total return for specified periods based
on a hypothetical Class A or Class B account with an assumed initial
investment of $10,000. The aggregate return is determined by dividing the net
asset value of this account at the end of the specified period by the value
of the initial investment and is expressed as a percentage. Calculation of
aggregate total return reflects payment of the Class A maximum sales charge
of 4.75% and assumes reinvestment of all income dividends and capital gain
distributions during the period.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser places orders for the purchase and sale of securities,
supervises their execution and negotiates brokerage commissions on behalf of
the Fund. It is the practice of the Adviser to seek the best prices and
execution of orders and to negotiate brokerage commissions which in its
opinion are reasonable in relation to the value of the brokerage services
provided by the executing broker. Brokers who have executed orders for the
Fund are asked to quote a fair commission for their services. If the
execution is satisfactory and if the requested rate approximates rates
currently being quoted by the other brokers selected by the Adviser, the rate
is deemed by the Adviser to be reasonable. Brokers may ask for higher rates
of commission if all or a portion of the securities involved in the
transaction are positioned by the broker, if the broker believes it has
brought the Fund an unusually favorable trading opportunity, or if the broker
regards its research services as being of exceptional value. Payment of such
commissions is authorized by the Adviser after the transaction has been
consummated. If the Adviser more than occasionally differs with the broker's
appraisal of opportunity or value, the broker would not be selected to
execute trades in the future.
7
<PAGE>
The Adviser believes that the Fund benefits with a securities industry
comprised of many and diverse firms and that the long-term interests of
shareholders of the Fund are best served by its brokerage policies which will
include paying a fair commission rather than seeking to exploit its leverage
to force the lowest possible commission rate. The primary factors considered
in determining the firms to which brokerage orders are given are the
Adviser's appraisal of: the firm's ability to execute the order in the
desired manner, the value of research services provided by the firm, and the
firm's attitudes toward and interest in mutual funds in general including
those managed and sponsored by the Adviser. The Adviser does not offer or
promise to any broker an amount or percentage of brokerage commissions as an
inducement or reward for the sale of shares of the Fund. Over-the-counter
purchases and sales are transacted directly with principal market makers
except in those circumstances where, in the opinion of the Adviser, better
prices and executions are available elsewhere. In the over-the-counter
market, securities are usually traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the
price of the security usually contains a profit to the dealer. The Fund also
expects that securities will be purchased at times in underwritten offerings
where the price includes a fixed amount of compensation, usually referred to
as the underwriter's concession or discount. The foregoing discussion does
not relate to transactions effected on foreign securities exchanges which do
not permit the negotiation of brokerage commissions and where the Adviser
would, under the circumstances, seek to obtain best price and execution on
orders for the Fund.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller
firms in general tend to provide information and interpretations on a smaller
scale, frequently with a regional emphasis. In addition, several firms
monitor federal, state, local and foreign political developments. Many of the
brokers also provide access to outside consultants. The outside research
assistance is particularly useful to the Adviser's staff since the brokers,
as a group, tend to monitor a broader universe of securities and other
matters than the Adviser's staff can follow. In addition, it provides the
Adviser with a diverse perspective on financial markets. Research and
investment information is provided by these and other brokers at no cost to
the Adviser and is available for the benefit of other accounts advised by the
Adviser and its affiliates and not all of this information will be used in
connection with the Fund. While this information may be useful in varying
degrees and may tend to reduce the Adviser's expenses, it is not possible to
estimate its value and in the opinion of the Adviser it does not reduce the
Adviser's expenses in a determinable amount. The extent to which the Adviser
makes use of statistical, research and other services furnished by brokers is
considered by the Adviser in the allocation of brokerage business but there
is no formula by which such business is allocated. The Adviser does so in
accordance with its judgment of the best interest of the Fund and its
shareholders.
The Fund has adopted a policy and procedures governing the execution of
aggregated advisory client orders ("bunching procedures") in an attempt to
lower commission costs on a per-share and per-dollar basis. According to the
bunching procedures, the Adviser shall aggregate transactions unless it
believes in its sole discretion that such aggregation is consistent with its
duty to seek best execution (which shall include the duty to seek best price)
for the Fund. No advisory account of the Adviser is to be favored over any
other account and each account that participates in an aggregated order is
expected to participate at the average share price for all transactions of
the Adviser in that security on a given business day, with all transaction
costs shared pro rata based on the Fund's participation in the transaction.
If the aggregated order is filled in its entirety, it shall be allocated
among the Adviser's accounts in accordance with the allocation order, and if
the order 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 Directors will annually review these procedures or as frequently as shall
appear appropriate.
During the fiscal years ended October 31, 1994, 1995, and 1996 brokerage
commissions paid by the Fund totaled $0, $0, and $0, respectively.
SERVICES OF THE ADVISER
The Adviser provides certain services and facilities required to carry on
the day-to-day operations of the Fund (for which it receives a management
fee) other than the costs of printing and mailing proxy materials, reports
and notices to shareholders; outside legal and auditing services; regulatory
filing fees and expenses of printing the Fund's registration statements (but
the Distributor purchases such copies of the Fund's prospectuses and reports
and communications to shareholders as it may require for sales purposes);
insurance expense; association membership dues; brokerage fees; and taxes.
8
<PAGE>
The Adviser is an indirect less than wholly-owned subsidiary of Phoenix Home
Life Mutual Insurance Company ("Phoenix Home Life"). Phoenix Home Life's
principal place of business is located at One American Row, Hartford,
Connecticut. The Adviser also serves as investment adviser to Phoenix
Worldwide Opportunities Fund, Phoenix Multi-Sector Short Term Bond Fund,
Phoenix California Tax Exempt Bonds, Inc., Phoenix Income and Growth Fund,
and Phoenix Strategic Equity Series Fund: Phoenix Equity Opportunities Fund.
The Adviser currently has approximately $1.7 billion in assets under
management and has acted as an investment adviser for over sixty years.
The current Management Agreement was approved by the Directors of the Fund
on March 16, 1993 and by the shareholders of the Fund on May 7, 1993. The
Management Agreement became effective on May 14, 1993, and it will continue
in effect until lapsed or terminated. The Management Agreement will continue
in effect from year to year if specifically approved annually by a majority
of the Directors who are not interested persons of the parties thereto, as
defined in the Investment Company Act of 1940, as amended ("1940 Act"), and
by either (a) the Directors of the Fund or (b) the vote of a majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act). The
Agreement may be terminated without penalty at any time by the Directors or
by a vote of a majority of the outstanding voting securities of the Fund or
by the Adviser upon 60 days' written notice and will automatically terminate
in the event of its "assignment" as defined in Section 2(a)(4) of the 1940
Act.
The Management Agreement provides that the Adviser is not liable for any act
or omission in the course of, or in connection with, rendering services under
the Agreement in the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties under the
Agreement. The Agreement permits the Adviser to render services to others and
to engage in other activities.
As compensation for its services, the Adviser receives a fee, which is
accrued daily against the value of the Fund's average daily net assets and is
paid by the Fund monthly. The fee is computed at the annual rate of .55% of
the Fund's average daily net assets of up to $1 billion, .50% of the Fund's
average daily net assets from $1 billion to $2 billion, and .45% of the
Fund's average daily net assets in excess of $2 billion. Total management
fees for the fiscal years ended October 31, 1994, 1995, and 1996 amounted to
$2,162,069, $1,692,191, and $1,696,487 respectively.
The Adviser makes its personnel available to serve as officers and
"interested" Directors of the Fund. The Fund has not directly compensated any
of its officers or Directors for services in such capacities except to pay
fees to the Directors who are not otherwise affiliated with the Fund. The
Directors of the Fund are not prohibited from authorizing the payment of
salaries to the officers pursuant to the Management Agreement, including
out-of-pocket expenses, at some future time.
In addition to the management fee, expenses paid by the Fund include: fees
of Directors who are not "interested persons," interest charges, taxes, fees
and commissions of every kind, including brokerage fees, expenses of
issuance, repurchase or redemption of shares, expenses of registering or
qualifying shares for sale (including the printing and filing of the Fund's
registration statements, reports and prospectuses excluding those copies used
for sales purposes which the Distributor purchases), accounting services
fees, insurance expenses, litigation expenses, association membership dues,
all charges of custodians, transfer agents, registrars, auditors and legal
counsel, expenses of preparing, printing and distributing all proxy material,
reports and notices to shareholders, and all costs incident to the Fund's
existence as a Maryland corporation.
The Adviser has agreed, under the terms of the Management Agreement, to
reimburse the Fund to the extent that, in any fiscal year, aggregate annual
expenses of the Fund, exclusive of payments made pursuant to a Rule 12b-1
distribution plan, taxes, brokerage fees, interest, and extraordinary charges
such as litigation costs, exceed the most restrictive expense limitations
imposed by any state in which the Fund's shares are qualified for sale.
Currently, the most restrictive expense limitations applicable to the Fund,
which provides that aggregate annual expenses of an investment company (which
excludes interest, taxes, certain annual distribution plan expenses,
litigation costs, and capital items such as brokerage costs) shall not exceed
2.5% of the first $30,000,000 of the Fund's average net assets, 2% of the
next $70,000,000 of the Fund's average net assets, and 1.5% of the remaining
average net assets of the Fund for any fiscal year. To the extent that the
Fund's expenses exceed this limitation, the Adviser would be required to
reduce or rebate its management fee. The Adviser would not be required to
absorb any other Fund expenses in excess of its fees. In the event legislation
were to be adopted in each state so as to eliminate this restriction, the Fund
would take such action necessary to eliminate this expense limitation. See the
"Fund Expenses" table in the Fund's current Prospectus for further information.
NET ASSET VALUE
The net asset value per share of the Fund is determined as of the close of
regular trading of the New York Stock Exchange (the "Exchange") on days when
the Exchange is open for trading. The Exchange will be closed on the
following observed national holidays: New Year's Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Since the Fund does not price securities on weekends or United
States national holidays, the net asset value of the Fund's foreign assets
may be significantly affected on days when the investor has no access to the
Fund. The net asset value per share of the Fund is determined by adding the
values of all securities and other assets of the Fund, subtracting
liabilities, and dividing by the total number of outstanding shares of the
Fund. Assets and liabilities are determined in accordance with generally
accepted accounting principles and applicable rules and regulations of the
Securities and Exchange Commission. The total liability allocated to a class,
plus that class's distribution fee and any other expenses allocated solely to
that class, are deducted from the proportionate interest of such class in the
assets of the Fund, and the resulting amount of each is divided by the number
of shares of that class outstanding to produce the net asset value per share.
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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 Directors or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world,
the calculation of net asset value may not take place for the Fund if it
invests in foreign securities contemporaneously with the determination of the
prices of the majority of the portfolio securities of such Fund. All assets
and liabilities initially expressed in foreign currency values will be
converted into United States dollar values at the mean between the bid and
ask quotations of such currencies against United States dollars as last
quoted by any recognized dealer. If an event were to occur after the value of
an investment was so established but before the net asset value per share was
determined, which was likely to materially change the net asset value, then
the instrument would be valued using fair value considerations by the
Directors or their delegates. If at any time the Fund has investments where
market quotations are not readily available, such investments are valued at
the fair value thereof as determined in good faith by the Directors although
the actual calculations may be made by persons acting pursuant to the
direction of the Directors.
HOW TO BUY SHARES
Shares may be purchased from investment dealers having sales agreements with
the Distributor at the public offering price (the net asset value next
computed following receipt by State Street Bank and Trust Company of a
purchase application in proper form, plus the applicable sales charge). The
minimum initial purchase is $500 ($25 if using the bank draft program
designated "Investo-Matic"), and the minimum subsequent investment is $25.
Alternative Purchase Arrangements
Shares of the Fund may be purchased from investment dealers at a price equal
to their net asset value per share, plus a sales charge which, at the
election of the purchaser, may be imposed either (i) at the time of the
purchase (the "initial sales charge alternative"), or (ii) on a contingent
deferred basis (the "deferred sales charge alternative").
Class A Shares
An investor who elects the initial sales charge alternative acquires Class A
shares. Class A shares incur a sales charge when they are purchased and enjoy
the benefit of not being subject to any sales charge when they are redeemed.
Class A shares are subject to an ongoing distribution services fee at an
annual rate of up to 0.30% of the Fund's aggregate average daily net assets
attributable to the Class A shares. However for the fiscal year 1997, the
Distributor has voluntarily agreed to limit the distribution services fee for
Class A Shares to 0.25%. In addition, certain purchases of Class A shares
qualify for reduced initial sales charges. See the Fund's current Prospectus
for additional information.
Class B Shares
An investor who elects the deferred sales charge alternative acquires Class
B shares. Class B shares do not incur a sales charge when they are purchased,
but they are subject to a sales charge if they are redeemed within five years
of purchase. The deferred sales charge may be waived in connection with
certain qualifying redemptions. See the Fund's current Prospectus for
additional information.
Class B shares are subject to an ongoing distribution services fee at an
annual rate of up to 1.00% of the Fund's aggregate average daily net assets
attributable to the Class B shares. Class B shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment
is made. The higher ongoing distribution services fee paid by Class B shares
will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than those related to Class
A shares. Class B shares will automatically convert to Class A shares eight
years after the end of the calendar month in which the shareholder's order to
purchase was accepted, in the circumstances and subject to the qualifications
described in the Fund's Prospectus. 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. See "Conversion
Feature," below.
The alternative purchase arrangement permits an investor to choose the
method of purchasing shares that is more beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Fund, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the
Fund, the accumulated continuing distribution services fee and contingent
deferred sales charges on Class B shares prior to conversion would be less
than the initial sales charge and accumulated distribution services fee on
Class A shares purchased at the same time, and to what extent such
differential would be offset by the lower expenses attributable to Class A
shares.
Class A shares are subject to a lower distribution services fee and,
accordingly, pay correspondingly higher dividends, to the extent any
dividends are paid, per share. However, because initial sales charges are
deducted at the time of purchase, such investors would not have all their
funds invested initially and, therefore, would initially own fewer shares.
Investors not qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time might consider
purchasing Class A
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shares because the accumulated continuing distribution charges on Class B
shares may exceed the initial sales charge on Class A shares during the life
of the investment. Again, however, such investors must weigh this
consideration against the fact that, because of such initial sales charges,
not all their funds will be invested initially. However, other investors
might determine that it would be more advantageous to purchase Class B shares
to have all their funds invested initially, although remaining subject to
higher continuing distribution charges and, for a five-year period, being
subject to a contingent deferred sales charge.
The distribution expenses incurred by the Distributor in connection with the
sale of the shares will be paid, in the case of Class A shares, from the
proceeds of the initial sales charge and the ongoing distribution services
fee and, in the case of Class B shares, from the proceeds of the ongoing
distribution services fee and the contingent deferred sales charge incurred
upon redemption within five years of purchase. Sales personnel of
broker-dealers distributing the Fund's shares may receive differing
compensation for selling Class A or Class B shares. Investors should
understand that the purpose and function of the contingent deferred sales
charge and ongoing distribution services fee with respect to the Class B
shares are the same as those of the initial sales charge and ongoing
distribution services fees with respect to the Class A shares.
Dividends paid by the Fund, if any, with respect to Class A and Class B
shares will be calculated in the same manner at the same time on the same
day, except that the higher distribution services fee and any incremental
transfer agency costs relating to Class B shares will be borne exclusively by
that class. See "Dividends, Distributions and Taxes."
The Directors of the Fund have determined that currently no conflict of
interest exists between the Class A and Class B shares. On an ongoing basis,
the Directors of the Fund, pursuant to their fiduciary duties under the 1940
Act and state laws, will seek to ensure that no such conflict arises.
Conversion Feature
Class B shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period
ending eight years after the end of the month in which the shares were
issued. At the end of this period, Class B shares will automatically convert
to Class A shares and will no longer be subject to the higher distribution
services fee. Such conversion will be on the basis of the relative net asset
value of the two classes without the imposition of any sales load, fee or
other charge.
For purposes of conversion to Class A, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B shares
in a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class B shares in the shareholder's Fund account
(other than those in the sub-account) convert to Class A, an equal pro rata
portion of the Class B shares in the sub-account will also convert to Class
A.
EXCHANGE PRIVILEGES
Subject to limitations, shares of the Fund held in book entry form may be
exchanged for shares of the same class of any other Phoenix Fund on the basis
of the relative net asset values per share at the time of exchange. On Class
B share exchanges, the contingent deferred sales charge schedule of the
original shares purchased continues to apply. See the Fund's current
Prospectus under "Exchange Privileges" for additional information and
conditions for exchanges. Each Phoenix Fund has different investment
objectives and policies. Shareholders should, therefore, obtain and review
the prospectus of the fund into which the exchange is to be made before any
exchange requests are made.
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. This
service may also be used to sell shares of the Fund and direct proceeds of
sale through ACH to a shareholder's bank account.
To establish this service, please complete the Invest-by-Phone Application
and attach a voided check. 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. (Eastern 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 Fund may delay the mailing of a check for
redemption proceeds of Fund shares purchased with a check or via
Invest-by-Phone service until the Fund has assured itself that good payment
has been collected for the purchase of the shares, which may take up to 15
days. The Fund and Equity Planning reserve the right to modify or terminate
the Invest-by-Phone service for any reason or to institute charges for
maintaining an Invest-by-Phone account.
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TAX SHELTERED RETIREMENT PLANS
Shares of the Fund and other Phoenix Funds may be offered in connection with
employer-sponsored 401(k) plans. Phoenix Home Life and its affiliates may
provide administrative services to these plans and to their participants, in
addition to the services that the Adviser and its affiliates provide to the
Phoenix Funds, and may receive compensation therefor. For information on the
terms and conditions applicable to employee participation in such plans,
including information on applicable plan administrative charges and expenses,
prospective investors should consult the plan documentation and employee
enrollment information which is available from participating employers.
REDEMPTION OF SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended
and payment therefore postponed during periods when the New York Stock
Exchange is closed, other than customary weekend and holiday closings, or if
permitted by rules of the Securities and Exchange Commission, during periods
when trading on the New York Stock Exchange is restricted or during any
emergency which makes it impracticable for the Fund to dispose of its
securities or to fairly value its net assets during any other period
permitted by order of the Securities and Exchange Commission. Furthermore,
the Transfer Agent will not mail redemption proceeds until checks received
for shares purchased have cleared, which may take up to 15 days after receipt
of the check. Redemptions by Class B shareholders will be subject to the
applicable deferred sales charge, if any. See the Fund's current Prospectus
for more information.
By Mail
The shareholder may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds, c/o State Street Bank
and Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when
certificates for shares are in the possession of the shareholder, they must
be mailed or presented, duly endorsed in the full name of the account, with a
written request to Equity Planning that the Fund redeem the shares. See the
Fund's current Prospectus for more information.
By Telephone
Unless a shareholder elects in writing not to participate in the Telephone
Redemption Privilege, shares for which certificates have not been issued may
be redeemed by calling (800) 243-1574 and telephone redemptions will also be
accepted on behalf of the shareholder from his or her registered
representative as described in the Prospectus. Address and bank account
information will be verified, telephone redemption instructions will be
recorded on tape, and all redemptions will be confirmed in writing to the
shareholder. If there has been an address change within the past 60 days, a
telephone redemption will not be authorized. The Fund and the Transfer Agent
will employ reasonable procedures to confirm that telephone instructions are
genuine. To the extent that procedures reasonably designed to prevent
unauthorized telephone redemptions are not followed, the Fund and/or the
Transfer Agent may be liable for following telephone instructions for
redemption transactions that prove to be fraudulent. Broker-dealers other
than Equity Planning may have agreed to bear the risk of any loss resulting
from any unauthorized telephone redemption instruction from the firm or its
registered representatives. However, the shareholder would bear the risk of
loss resulting from instructions entered by an unauthorized third party that
the Fund and/or the Transfer Agent reasonably believe to be genuine.
If the amount of the redemption is $500 or more, the proceeds will be wired
to the designated commercial bank account in the United States. If the amount
of the redemption is less than $500, the proceeds will be sent by mail to the
address of record on the shareholder's account. With respect to the telephone
redemption of shares purchased by check, such redemption requests will be
effected only after the Fund has assured itself that good payment has been
collected for the purchase of shares, which may take up to 15 days after
receipt of the check. See the Fund's current Prospectus for more information.
This expedited redemption privilege is not available to HR-10, IRA and
403(b)(7) Plans. In addition to the Telephone Redemption Privilege, a
shareholder may also redeem by telephone through the "Invest-by-Phone"
service.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to continue to qualify as a regulated investment company
under certain provisions of the Internal Revenue Code (as amended the
"Code"). If the Fund so qualifies, it will not be subject to federal income
tax on its investment company taxable income (which includes dividends,
interest and the excess of net short-term capital gains over net long-term
capital losses) that it distributes to shareholders. To qualify for treatment
as a regulated investment company, the Fund generally must, among other
things, (a) derive in each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to security loans and gains from
the sale or disposition of stock or securities or foreign currencies and
other income (including but not limited to gains from options, futures and
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies; (b) derive in each taxable year less than
30% of its gross income from gains (without deduction for losses) from the
sale or other disposition of (i) stock or securities held for less than three
months; (ii) foreign currencies or options, futures or forward contracts on
foreign currencies) held for less than three months but only if such
investments are not directly related to the Fund's principal business of
investing in stock or securities (or options and futures with respect to
stock or securities); and (iii) options, futures or forward contracts (other
than options, futures and forward contracts on foreign currencies) held for
less
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than three months; and (c) diversify its holdings so that, at the end of each
quarter of the taxable year (i) at least 50% of the market value of the
Fund's assets are represented by cash, U.S. Government securities, securities
of other regulated investment companies and other securities, with such other
securities of any one issuer limited for the purposes of this calculation to
an amount not greater than 5% of the Fund's total assets and 10% of the
outstanding voting securities of any one issuer; and (ii) not more than 25%
of the value of its total assets is invested in the securities of any one
issuer (other than U.S. Government securities or the securities of other
regulated investment companies). If in any taxable year the Fund does not
qualify as a regulated investment company, all of its taxable income will be
taxed to the Fund at corporate rates.
Dividends paid by the Fund will be taxable to shareholders as ordinary
income, except for (a) such portion as may exceed a shareholder's ratable
share of the Fund's earnings and profits, which excess will be applied
against and reduce the shareholder's cost or other tax basis for his shares
and (b) amounts representing a distribution of net capital gains, if any,
which are designated by the Fund as capital gain dividends. If the amount
described in (a) above exceeds the shareholder's tax basis for his shares,
the excess over basis will be treated as gain from the sale or exchange of
such shares. The excess of any net long-term capital gains over net
short-term capital losses recognized and distributed by the Fund and
designated by the Fund as a capital gain dividend, is taxable to shareholders
as long-term capital gain regardless of the length of time a particular
shareholder may have held his shares in the Fund. Dividends and distributions
are taxable as described, whether received in cash or reinvested in
additional shares of the Fund.
The Code imposes a 4% nondeductible excise tax on a regulated investment
company, such as the Fund, if it does not distribute to its shareholders (or
is deemed not to have distributed) during the calendar year an amount equal
to 98% of the Fund's ordinary income, with certain adjustments, for such
calendar year, plus 98% of the Fund's capital gains net income (adjusted for
certain losses, as prescribed in the Code) for the 12-month period ending on
October 31 of such calendar year. In addition, an amount equal to any
undistributed investment company taxable income or capital gain net income
from the previous calendar year must also be distributed to avoid the excise
tax. The excise tax is imposed on the amount by which the regulated
investment company does not meet the foregoing distribution requirements.
The Code provides that any dividend declared by the Fund in October,
November or December of any calendar year to shareholders of record on a date
in such month will be deemed to have been received by the shareholder on
December 31 of that calendar year, provided that the dividend is actually
paid by the Fund during January of the following year.
Based on the aforementioned, the Fund's policy will be to distribute to its
shareholders at least 90% of net investment company taxable income as defined
above and in the Code and any net realized capital gains for each year and
consistent therewith to meet the distribution requirement of Part I of
subchapter M, including the requirements with respect to diversification of
assets and sources of income, so that the Fund will pay no taxes on net
investment income and net realized capital gains paid to shareholders. One of
those requirements, as described above, is that less than 30% of the Fund's
gross income must be derived from gains from the sale or other disposition of
stock, securities or other investments held for less than three months.
Accordingly, the Fund may be restricted in the following activities, all of
which produce such gains: writing of options on securities which have been
held less than three months, writing of options which expire in less than
three months, and effecting closing purchase transactions with respect to
options which have been written less than three months prior to such
transactions.
The Fund intends to declare dividends daily. Dividends may be paid from net
investment income. Distribution of net realized short-term and long-term
capital gains will be distributed at least annually. Income dividends will be
paid on the last business day of the month and reinvested in additional
shares at net asset value, unless the shareholder elects to receive dividends
in cash. Whether received in shares or cash, dividends paid by the Fund from
net investment income and distributions from any net short-term capital
gains are taxable to shareholders as ordinary income. Distributions of net
long-term capital gains, if any, realized on sales of investments for the
fiscal year normally will be distributed following the end of the Fund's
fiscal year. Distributions of net long-term capital gains are taxable to
shareholders as such, whether paid in cash or additional shares of the Fund
and regardless of the length of time Fund shares have been owned by the
shareholder. Net short-term capital gains are net realized short-term capital
gains, including net premiums from expired options, net gains from closing
purchase transactions, and net short-term gains from securities sold upon
the exercise of options or otherwise, less any net realized long-term capital
losses. Distributions paid by the Fund are subject to taxation as of the date
of payment, whether received by shareholders in cash or in shares of the
Fund, and whether representing an ordinary distribution or a long-term
capital gains distribution. No dividends or distributions will be made to a
shareholder on shares for which no payment has been received. It is not
anticipated that any of the dividends paid by the Fund will qualify for the
70% dividends received deduction available to corporate shareholders of the
Fund.
The Fund's investments in any regulated futures contracts, non-equity
options, or foreign currency contracts, as those terms are defined in the
Code, are considered section 1256 contracts. The principles of
marking-to-market apply to such contracts such that the contracts are treated
as having been sold for their fair market value on the last business day of
the Fund's taxable year. Generally, 60% of any net gain or loss recognized on
the deemed sale, as well as 60% of the gain or loss with respect to any
actual
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termination (including expiration), will be treated as long-term capital gain
or loss and the remaining 40% will be treated as short-term capital gain or
loss. However, the gain or loss on certain foreign currency contracts may be
treated as ordinary income under section 988 of the Code.
Premiums from expired call options written by the Fund and net gain or loss
from closing purchase transactions, which are not section 1256 contracts, are
generally treated as short-term capital gain or loss for federal income tax
purposes and are taxable to shareholders as ordinary income. If a written
call option is exercised, the premium is added to the proceeds of sale of the
underlying security, and the gain or loss from such sale will be short or
long-term, depending upon the period such security was held.
Payments which are classified as long-term capital gains distributions will
be taxed to shareholders as long-term capital gains regardless of how long
shareholders have held shares of the Fund. However, if a shareholder holds
shares of the Fund for six months or less, any loss on the sale of the shares
will be treated as a long-term capital loss to the extent of the long-term
capital gains distributions received by such shareholder.
Offsetting positions held by the Fund involving financial futures and
options transactions may be considered, for tax purposes, to constitute
"straddles." Depending on whether certain elections are available and made by
the Fund, losses realized by the Fund on one or more positions in such a
straddle will be deferred to the extent of unrealized gain in the offsetting
position. Moreover, short-term capital losses on straddle positions may be
re-characterized as long-term capital losses, and long-term capital gains may
be treated as short-term capital gains.
The Fund may have to limit its use of futures contracts and related options
in order to comply with the 30% test previously described above.
Under the Code, a shareholder who does not fall within one of certain exempt
categories may be subject to backup withholding at the rate of 31% with
respect to dividends and capital gains distributions paid to shareholders or
reinvested by the Fund and other amounts distributed by it including proceeds
of redemptions, unless such shareholder provides a social security or
taxpayer identification number, certifies as to exemption from backup
withholding, and otherwise complies with applicable requirements of the Code.
Sales and redemptions of shares of the Fund may result in gains or losses
for tax purposes to the extent of the difference between the proceeds from
the shares relinquished and the shareholder's adjusted tax basis for such
shares. If any shares have been held as a capital asset for more than one
year, the gain or loss realized will be long-term capital gain or loss.
The Fund may be subject to a tax on dividend or interest income received
from securities of non-U.S. issuers withheld by a foreign country at the
source. The United States has entered into tax treaties with many foreign
countries which entitle the Fund to a reduced rate of tax or exemption from
tax on such income. It is impossible to determine the effective rate of
foreign tax in advance since the amount of the Fund's assets to be invested
within various countries is not known. The Fund intends to operate so as to
qualify for treaty tax benefits where applicable. To the extent that the Fund
is liable for foreign income taxes withheld at the source, the Fund may
operate so as to meet the requirements of the Code to "pass through" to the
Fund's shareholders tax benefits attributable to foreign income taxes paid by
the Fund. If more than 50% of the value of the Fund's total assets at the
close of its taxable year is comprised of securities issued by foreign
corporations, the Fund may file an election with the Internal Revenue Service
to "pass through" to the Fund's shareholders the amount of foreign income
taxes paid by the Fund. Pursuant to this election, shareholders will be
required to (i) include in gross income, even though not actually received,
their respective pro rata share of foreign taxes paid by the Fund; (ii) treat
their pro rata share of foreign taxes as paid by them; and (iii) either
deduct their pro rata share of foreign taxes in computing their taxable
income, or use such share as a foreign tax credit against U.S. income taxes
(but not both). No deduction for foreign taxes may be claimed by a
non-corporate shareholder who does not itemize deductions. The Fund may meet
the requirements to "pass through" to its shareholders foreign income taxes
paid, but there can be no assurance that the Fund will be able to do so. Each
shareholder will be notified within 60 days after the close of each taxable
year of the Fund if the foreign taxes paid by the Fund will "pass through"
for that year, and, if so, the amount of each shareholder's pro rata share
(by country) of (i) the foreign taxes paid and (ii) the Fund's gross income
from foreign sources. Shareholders who are not liable for federal income
taxes will not be affected by any such "pass through" of foreign tax credits.
Distributions and the transactions referred to in the preceding paragraphs
may be subject to state and local income taxes, and the treatment thereof may
differ from the federal income tax consequences discussed herein.
Shareholders are advised to consult with their tax advisers or attorneys.
The Fund is organized as a Maryland corporation. Under current law, as long
as it qualifies for the federal income tax treatment described above, the
Fund itself is not liable for any income or franchise tax in the State of
Maryland.
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THE DISTRIBUTOR
Phoenix Equity Planning Corporation ("Equity Planning") acts as the
Distributor for the Fund and as such will conduct a continuous offering
pursuant to a "best efforts" arrangement requiring it to take and pay for
only such securities as may be sold to the public. Equity Planning is an
indirect less than wholly-owned subsidiary of Phoenix Home Life Mutual
Insurance Company and an affiliate of the Adviser. Shares of the Fund may be
purchased through investment dealers who have sales agreements with the
Distributor. During the fiscal years ended October 31, 1994, 1995, and 1996,
purchasers of shares of the Fund paid aggregate sales charges of $1,180,368,
$1,114,261, and $841,871, respectively, of which the Distributor received net
commissions of $551,710, $811,088, and $482,443, respectively, for its
services, the balance being paid to dealers.
The Underwriting Agreement may be terminated at any time on not more than 60
days written notice, without payment of a penalty, by the Distributor, by
vote of a majority of the outstanding voting securities of the Fund, or by
vote of a majority of the Fund's Directors who are not "interested persons"
of the Fund and who have no direct or indirect financial interest in the
operation of the Distribution Plan or in any related agreements. The
Underwriting Agreement will terminate automatically in the event of its
assignment.
Equity Planning also acts as administrative agent of the Fund and as such
performs administrative, bookkeeping and pricing functions for the Fund. As
compensation for such services, effective as of January 1, 1997, Equity
Planning is entitled to a fee, payable monthly and based upon the average of
the aggregate daily net asset values of the Fund, at the following
incremental annual rates:
First $100 million .05% plus a minimum fee
$100 million to $300 million .04%
$300 million to $500 million .03%
Greater than $500 million .015%
A minimum fee of $70,000 is applicable. In addition, Equity Planning is paid
$12,000 for each class of shares beyond one. Until December 31, 1996, Equity
Planning's fee for these services was based on an annual rate of 0.03% of the
Fund's aggregate daily net asset value. For its services during the Fund's
fiscal year ended October 31, 1996, Equity Planning received $92,536.
PLANS OF DISTRIBUTION
The Fund has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for each class of shares of the Fund (the "Class A Plan", the "Class
B Plan", and collectively the "Plans"). The Plans permit the Fund to
reimburse the Distributor for expenses incurred in connection with activities
intended to promote the sale of shares of each class of shares of the Fund.
For the fiscal year 1997, the Distributor has voluntarily agreed to limit the
Rule 12b-1 fee for Class A Shares to 0.25%.
Pursuant to the Class A Plan, the Fund may reimburse the Distributor for
actual expenses of the Distributor up to 0.30% annually of the average daily
net assets of the Fund's Class A shares. Under the Class B Plan, the Fund may
reimburse the Distributor monthly for actual expenses of the Distributor up
to 1.00% annually of the average daily net assets of the Fund's Class B
shares. Expenditures under the Plans shall consist of: (i) commissions to
sales personnel for selling shares of the Fund (including underwriting fees
and financing expenses incurred in connection with the sale of Class B
shares); (ii) compensation, sales incentives and payments to sales, marketing
and service personnel; (iii) payments to broker-dealers and other financial
institutions which have entered into agreements with the Distributor in the
form of the Dealer Agreement for Phoenix Funds for services rendered in
connection with the sale and distribution of shares of the Fund; (iv) payment
of expenses incurred in sales and promotional activities, including
advertising expenditures related to the Fund; (v) the costs of preparing and
distributing promotional materials; (vi) the cost of printing the Fund's
Prospectus and Statement of Additional Information for distribution to
potential investors; and (vii) such other similar services that the Board of
Directors of the Fund determines are reasonably calculated to result in the
sale of shares of the Fund; provided, however, that a portion of such amount
equal to or less than 0.25% annually of the average daily net assets of Fund
shares may be paid for reimbursing the costs of providing services to
shareholders, including assistance in connection with inquiries related to
shareholder accounts (the "Service Fee").
In order to receive payments under the Plans, participants must meet such
qualifications to be established in the sole discretion of the Distributor,
such as services to the Fund's shareholders; or services providing the Fund
with more efficient methods of offering shares to coherent groups of clients,
members or prospects of a participant; or services permitting bulking of
purchases or sales, or transmission of such purchases or sales by
computerized tape or other electronic equipment; or other processing.
No amounts paid or payable by the Fund under the Class A Plan may be used to
pay for, or reimburse payment for, sales or promotional services or
activities unless such payment or reimbursement takes place prior to the
earliest of (a) the last day of the one year period commencing on the last
day of the calendar quarter during which the specific service or activity was
performed, or (b) the last day of the one year period commencing on the last
day of the calendar quarter during which payment for the services or activity
was made by a third party on behalf of the Fund. The Class B Plan, however,
does not limit the reimbursement of distribution related expenses to expenses
incurred in specific time periods. If the Plans are terminated in accordance
with their
15
<PAGE>
terms, the obligations of the Fund to make payments to the Distributor
pursuant to the Plans will cease and the Fund will not be required to make
any payments past the date on which either Plan terminates.
In addition to the amount paid to dealers pursuant to the sales charge table
in the Prospectus, the Distributor may from time to time pay, from its own
resources or pursuant to the Plan, a bonus or other incentive to dealers
(other than the Distributor) which employ a registered representative who
sells a minimum dollar amount of the shares of the Fund during a specific
period of time. Such bonus or other incentive may take the form of payment
for travel expenses, including lodging, incurred in connection with trips
taken by qualifying registered representatives and members of their families
to places within or without the United States or other bonuses such as gift
certificates or the cash equivalent of such bonuses. The Distributor may,
from time to time, reallow the entire portion of the sales charge on Class A
Shares which it normally retains to individual selling dealers. However, such
additional reallowance generally will be made only when the selling dealer
commits to substantial marketing support such as internal wholesaling through
dedicated personnel, internal communications and mass mailings.
The Directors have concluded that there is a reasonable likelihood that the
Plans will benefit the Fund and its shareholders. The Plans were approved by
Class A and Class B shareholders of the Fund at a special meeting of
shareholders held on May 7, 1993. For the fiscal year ended October 31, 1996,
the Fund paid 12b-1 fees in the amount of $1,832,185 ($417,446 under the
Distribution Plan for Class A shares; $1,414,739 under the Distribution Plan
for Class B shares), of which the Distributor of the Fund received
$1,144,260. The 12b-1 payments were used for (1) compensating dealers
$1,232,024, (2) compensating sales personnel $442,825, (3) compensating the
Distributor for marketing material $73,232, and (4) advertising $84,104.
On a quarterly basis, the Fund's Directors review a report on expenditures
under the Plans and the purposes for which expenditures were made. The
Directors conduct an additional, more extensive review annually in
determining whether the Plans will be continued. By their terms, continuation
of the Plans from year to year is contingent on annual approval by a majority
of the Fund's Directors and by a majority of the Directors who are not
"interested persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of the Plans or any related
agreements (the "Plan Directors"). The Plans provide that they may not be
amended to increase materially the costs which the Fund may bear pursuant to
the Plans without approval of the shareholders of that class of the Fund and
that other material amendments to the Plans must be approved by a majority of
the Plan Directors by vote cast in person at a meeting called for the purpose
of considering such amendments. The Plans further provide that while they are
in effect, the selection and nomination of Directors who are not "interested
persons" shall be committed to the discretion of the Directors who are not
"interested persons". The Plans may be terminated at any time by vote of a
majority of the Plan Directors or a majority of the outstanding shares of the
relevant class of the Fund.
The National Association of Securities Dealers ("NASD"), recently approved
certain amendments to the NASD's mutual fund maximum sales charge rule. The
amendments would, under certain circumstances, regard distribution fees as
asset-based sales charges subject to NASD sales load limits. The NASD's
maximum sales charge rule may require the Directors to suspend distribution
fees or amend the Plan.
DIRECTORS AND OFFICERS
The following table sets forth information concerning the Directors and
executive officers of the Fund, including their principal occupations during
the past five years. Unless otherwise noted, the address of each executive
officer and Director is 56 Prospect Street, Hartford, Connecticut,
06115-0480. On November 15, 1995, the Directors voted to increase the number
of Directors to fourteen and to appoint Francis E. Jeffries, Everett L.
Morris and Calvin J. Pedersen to fill the vacancies caused by the increase.
The Trustees and executive officers are listed below:
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ------------------------- ------------------ ---------------------------------------------------------
<S> <C> <C>
C. Duane Blinn (69) Director Partner in the law firm of Day, Berry & Howard.
Day, Berry & Howard Director/Trustee, Phoenix Funds (1980-present). Trustee,
CityPlace Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Hartford, CT 06103 Institutional Mutual Funds (1996-present).
Director/Trustee, the National Affiliated Investment
Companies (until 1993).
Robert Chesek (62) Director Trustee/Director, Phoenix Funds (1981-present) and
49 Old Post Road Chairman (1989-1994). Trustee, Phoenix-Aberdeen Series
Wethersfield, CT 06109 Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director/Trustee, the National Affiliated
Investment Companies (until 1993). Vice President, Common
Stock, Phoenix Home Life Mutual Insurance Company
(1980-1994).
16
<PAGE>
E. Virgil Conway (67) Director Chairman (1992-present), Metropolitan Transportation
9 Rittenhouse Road Authority. Trustee/Director, Consolidated Edison Company
Bronxville, NY 10708 of New York, Inc. (1970-present), Pace University
(1978-present), Atlantic Mutual Insurance Company
(1974-present), HRE Properties (1989-present), Greater
New York Councils, Boy Scouts of America (1985-present),
Union Pacific Corp. (1978-present), Blackrock Fund for
Freddie Mac Mortgage Securities (Advisory Director)
(1990-present), Centennial Insurance Company
(1974-present), Josiah Macy, Jr., Foundation
(1975-present) and The Harlem Youth Development
Foundation (1987-present). Chairman, Audit Committee of
the City of New York (1981-1996). Director/Trustee, the
National Affiliated Investment Companies (until 1993).
Director/Trustee, Phoenix Funds (1993-present). Trustee,
Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director, Duff
& Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present).
Director, Accuhealth (1994-present), Trism, Inc.
(1994-present), Realty Foundation of New York
(1972-present), Chairman, New York Housing Partnership
Development Corp. (1981-present), and Blackrock Fannie
Mae Mortgage Securities Fund (Advisory Director) (1989-
1996) and Advisory Director, Fund Directions (1993-
present). Chairman, Financial Accounting Standards
Advisory Council (1992-1995).
Harry Dalzell-Payne (67) Director Director/Trustee, Phoenix Funds (1983-present). Director,
330 East 39th Street Duff & Phelps Utilities Tax-Free Income Inc.
Apartment 29G (1995-present), Duff & Phelps Utility and Corporate Bond
New York, NY 10016 Trust Inc. (1995-present). Trustee, Phoenix-Aberdeen
Series Fund and Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present). Director, Farragut Mortgage
Co., Inc. (1991-1994). Director/ Trustee, the National
Affiliated Investment Companies (1983-1993). Formerly a
Major General of the British Army.
*Francis E. Jeffries (66) Director Director and Chairman of the Board, Phoenix Duff & Phelps
6585 Nicholas Blvd. Corporation (1995-present). Director/Trustee, Phoenix
Apt. 1601 Funds (1995-present). Trustee, Phoenix-Aberdeen Series
Naples, FL 33963 Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Duff & Phelps Utilities Income
Fund (1987-present), Duff & Phelps Utilities Tax-Free
Income Inc. (1991-present), Duff & Phelps Utility and
Corporate Bond Trust Inc. (1993-present) and The Empire
District Electric Company (1984-present). Director
(1989-1995), Chairman of the Board (1993-1995), President
(1989-1993), and Chief Executive Officer (1989-1995),
Duff & Phelps Corporation.
17
<PAGE>
Leroy Keith, Jr. (58) Director Chairman and Chief Executive Officer, Carson Products
Chairman and Chief Company (1995-present). Director/Trustee, Phoenix Funds
Executive Officer (1980-present). Trustee, Phoenix-Aberdeen Series Fund and
Carson Products Company Phoenix Duff & Phelps Institutional Mutual Funds
64 Ross Road (1996-present). Director, Equifax Corp. (1991-present),
Savannah, GA 30750 and Keystone International Fund, Inc. (1989-present).
Trustee, Keystone Liquid Trust, Keystone Tax Exempt
Trust, Keystone Tax Free Fund, Master Reserves Tax Free
Trust, and Master Reserves Trust. Director/Trustee, the
National Affiliated Investment Companies (until 1993).
Director, Blue Cross/Blue Shield (1989-1993) and First
Union Bank of Georgia (1989-1993). President, Morehouse
College (1987-1994). Chairman and Chief Executive
Officer, Keith Ventures (1992-1994).
*Philip R. McLoughlin (50) Director and Director, Vice Chairman and Chief Executive Officer,
One American Row President Phoenix Duff & Phelps Corporation (1995-present).
Hartford, CT 06102 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, Phoenix-Aberdeen
Series Fund and Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present), Duff & Phelps Utilities
Tax-Free Income Inc. (1995-present), and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present).
Director (1983-present) and Chairman (1995-present)
Phoenix Investment Counsel, Inc. Director (1984-present)
and President (1990-present), Phoenix Equity Planning
Corporation. Director, Phoenix Realty Group, Inc.
(1994-present), Phoenix Realty Advisors, Inc.
(1987-present), Phoenix Realty Investors, Inc.
(1994-present), Phoenix Realty Securities, Inc.
(1994-present), PXRE Corporation (Delaware)
(1985-present), and World Trust Fund (1991-present).
Director and Executive Vice President, Phoenix Life and
Annuity Company (1996-present), Director and Executive
Vice President, PHL Variable Insurance Company
(1995-present), and Director, Phoenix Charter Oak Trust
Company (1996-present). Director/Trustee, the National
Affiliated Investment Companies (until 1993). Director
(1994-present), Chairman (1996-present), and Chief
Executive Officer (1995-1996), National Securities &
Research Corporation and Director and President, Phoenix
Securities Group, Inc. (1993-1995). Director (1992-
present) and President (1992-1994), W.S. Griffith & Co.,
Inc. and Director (1992-1995) and President (1992-1994),
Townsend Financial Advisers, Inc. Director and Vice
President, PM Holdings, Inc. (1985-present).
18
<PAGE>
Everett L. Morris (68) Director Vice President, W.H. Reaves and Company (1993-present).
164 Laird Road Director/ Trustee, Phoenix Funds (1995-present).
Colts Neck, NJ 07722 Trustee, Duff & Phelps Mutual Funds (1994-present).
Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff &
Phelps Institutional Mutual Funds (1996-present).
Director, Duff & Phelps Utilities Tax-Free Income, Inc.
(1991-present), Duff & Phelps Utility and Corporate Bond
Trust, Inc. (1993-present) and Public Service Enterprise
Group, Incorporated (1986-1993). President and Chief
Operating Officer, Enterprise Diversified Holdings,
Incorporated (1989-1993). Senior Executive Vice President
and Chief Financial Officer, Public Service Electric and
Gas Company (1986-1992). Director, First Fidelity Bank,
N.A., N.J. (1984-1991).
*James M. Oates (50) Director Managing Director, Wydown Group (1994-present). Chairman,
Managing Director IBEX Capital Markets LLC (1997-present). Director,
The Wydown Group Phoenix Duff & Phelps Corporation (1995-present).
Chairman, IBEX Director/Trustee, Phoenix Funds (1987-present). Trustee,
Capital Markets LLC Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
60 State Street Institutional Mutual Funds (1996-present). Director,
Suite 950 Govett Worldwide Opportunity Funds, Inc. (1991-present),
Boston, MA 02109 Blue Cross and Blue Shield of New Hampshire
(1994-present), Investors Financial Service Corporation
(1995-present), Investors Bank & Trust Corporation
(1995-present) and Plymouth Rubber Co. (1995-present).
Director, Stifel Financial (1996-present). Member, Chief
Executives Organization (1996-present).
Director/Trustee, the National Affiliated Investment
Companies (until 1993). Director and President
(1984-1994) and Chief Executive Officer (1986-1994),
Neworld Bank.
*Calvin J. Pedersen (55) Director Director and President, Phoenix Duff & Phelps Corporation
Phoenix Duff & Phelps (1995-present). Director/Trustee, Phoenix Funds
Corporation (1995-present). Trustee, Phoenix-Aberdeen Series Fund and
55 East Monroe Street Phoenix Duff & Phelps Institutional Mutual Funds
Suite 3600 (1996-present). President and Chief Executive Officer,
Chicago, IL 60603 Duff & Phelps Utilities Tax-Free Income Inc.
(1995-present), Duff & Phelps Utilities Income Fund
(since inception), and Duff & Phelps Utility and
Corporate Bond Trust Inc. (1995-present). Director
(1986-1995), President (1993-1995) and Executive Vice
President (1992-1993), Duff & Phelps Corporation.
Philip R. Reynolds (69) Director Director/Trustee, Phoenix Funds (1984-present). Trustee,
43 Montclair Drive Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
West Hartford, CT 06107 Institutional Mutual Funds (1996-present). Director,
Vestaur Securities, Inc. (1972-present). Trustee and
Treasurer, J. Walton Bissell Foundation, Inc. (1988-
present). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
19
<PAGE>
Herbert Roth, Jr. (68) Director Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
P.O. Box 909 Institutional Mutual Funds (1996-present). Director,
Sherborn, MA 01770 Boston Edison Company (1978-present), Phoenix Home Life
Mutual Insurance Company (1972-present), Landauer, Inc.
(medical services) (1970-present), Tech Ops./Sevcon,
Inc. (electronic controllers) (1987-present), Key Energy
Group (oil rig service) (1988-1994), and Mark IV
Industries (diversified manufacturer) (1985-present).
Director/Trustee, the National Affiliated Investment
Companies (until 1993).
Richard E. Segerson (51) Director Director/Trustee, Phoenix Funds, (1993-present). Trustee,
102 Valley Road Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
New Canaan, CT 06840 Institutional Mutual Funds (1996-present). Managing
Director, Mullin Associates (1993-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. (65) Director Trustee/Director, Phoenix Funds (1995-present). Trustee,
Dresing Lierman Weicker Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
6931 Arlington Road Institutional Mutual Funds (1996-present). Chairman,
Suite 501 Dresing, Lierman, Weicker (1995-present). Director, UST
Bethesda, MD 20814 Inc. (1995-present) and HPSC Inc. (1995-present).
Director, Duty Free International (1997-present).
Governor of the State of Connecticut (1991-1995).
Michael E. Haylon (39) Executive Vice Director and Executive Vice President-Investments,
President Phoenix Duff & Phelps Corporation (1995-present). Senior
Vice President, Securities Investments, Phoenix Home Life
Mutual Insurance Company (1993-1995). Director
(1994-present), President (1996-present), and Executive
Vice President (1994-1996), National Securities &
Research Corporation. Executive Vice President, Phoenix
Funds (1995-present) Phoenix-Aberdeen Series Fund
(1996-present) and Vice President, Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director
(1994-present) and President (1995-present), Phoenix
Investment Counsel, Inc. Director, Phoenix Equity
Planning Corporation (1995-present). Various other
positions with Phoenix Home Life Mutual Insurance Company
(1990-1993).
20
<PAGE>
David R. Pepin (54) Executive Vice Executive Vice President, Phoenix Funds, Phoenix-
President Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present). Director, Phoenix Investment
Counsel, Inc., National Securities & Research Corporation
and Phoenix Equity Planning Corporation (1996-present).
Executive Vice President, Mutual Fund Sales and
Operations, Phoenix Equity Planning Corporation
(1996-present). Managing Director, Phoenix-Aberdeen
International Advisors, LLC (1996-present). Executive
Vice President (1996-present) and Director
(1997-present), Phoenix Duff & Phelps Corporation. Vice
President, Phoenix Home Life Mutual Insurance Company
(1994-1995). Vice President and General Manager, Digital
Equipment and Corporation (1980-1994).
David L. Albrycht (35) Vice President Managing Director, Fixed Income, Phoenix Investment
Counsel, Inc. (1996-present). Portfolio Manager, Phoenix
Home Life Mutual Insurance Company (1990-1995). Vice
President, Phoenix Multi-Portfolio Fund (1993-present)
and Phoenix Investment Counsel, Inc. (1995-1996).
Managing Director, Fixed Income National Securities &
Research Corporation (1996-present). Investment Officer,
National Securities & Research Corporation (1994-1996).
William E. Keen, III (33) Vice President Assistant Vice President, Phoenix Equity Planning
100 Bright Meadow Blvd. Corporation (1996-present). Vice President, Phoenix
P.O. Box 2200 Funds, Phoenix-Aberdeen Series Fund, and Phoenix Duff &
Enfield, CT 06083-2200 Phelps Institutional Mutual Funds (1996-present).
Assistant Vice President USAffinity Funds, USAffinity
Investments LP, (1994-1995). Manager, Fund
Administration, SEI Corporation (1991-1994).
William R. Moyer (52) Vice President Senior Vice President and Chief Financial Officer,
100 Bright Meadow Blvd. Phoenix Duff & Phelps Corporation (1995-present). Vice
P.O. Box 2200 President, Investment Products Finance, Phoenix Home Life
Enfield, CT 06083-2200 Mutual Insurance Company (1990-1995). Senior Vice
President (1990-present), Chief Financial Officer
(1996-present), Finance (until 1990), and Treasurer
(1994-1996), Phoenix Equity Planning Corporation, and
Phoenix Investment Counsel, Inc. Vice President, Phoenix
Funds (1990-present), Phoenix-Aberdeen Series Fund and
Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Vice President, the National Affiliated
Investment Companies (until 1993). Senior Vice President,
Finance, Phoenix Securities Group, Inc. (1993-1995).
Senior Vice President, Finance (1993-present), and
Treasurer (1994-present), National Securities & Research
Corporation. Senior Vice President (1994-present), Chief
Financial Officer (1996-present) Finance (until 1996)
and Treasurer (1994-present), W.S. Griffith & Co., Inc.
and Townsend Financial Advisers.
21
<PAGE>
Leonard J. Saltiel (43) Vice President Managing Director, Operations and Service Phoenix Equity
Planning Corporation (1996-present). Senior Vice
President, Phoenix Equity Planning Corporation (1994-
1996). Vice President, Phoenix Funds (1994-present),
Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present), and National
Securities & Research Corporation (1994-present). Vice
President, Investment Operations, Phoenix Home Life
Mutual Insurance Company (1994-1995). Various positions
with Home Life Insurance Company and Phoenix Home Life
Mutual Insurance Company (1987-1994).
Nancy G. Curtiss (44) Treasurer Vice President, Fund Accounting, Phoenix Equity Planning
Corporation (1996-present). Treasurer, Phoenix Funds
(1994-present), Phoenix-Aberdeen Series Fund and Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present).
Second Vice President, Fund Accounting, Phoenix Equity
Planning Corporation (1994-1995). 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 (49) Secretary Vice President, Mutual Fund Customer Service, Phoenix
101 Munson Street Equity Planning Corporation (1996-present). Secretary,
Greenfield, MA 01301 the Phoenix Funds (1993-present), Phoenix-Aberdeen Series
Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Vice President and General Manager,
Phoenix Home Life Mutual Insurance Co. (1993-1995). Vice
President, Transfer Agent Operations, Phoenix Equity
Planning Corporation (1993-1996). Vice President, Home
Life of New York Insurance Company (1984-1992).
</TABLE>
*Messrs. Jeffries, McLoughlin, Oates and Pedersen are "interested persons" of
the Fund within the meaning of the definition set forth in Section 2(a)(19)
of the 1940 Act.
For services rendered to the Fund for the fiscal year ended October 31,
1996, the Trustees received aggregate remuneration of $16,440. 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. Trustees costs are allocated
equally to each of the Series and Funds within the Fund complex. The
foregoing fees do not include the reimbursement of expenses incurred in
connection with meeting attendance. Officers and interested Trustees of the
Fund are compensated for their services by the Adviser and receive no
compensation from the Fund. Any other interested person not compensated by
the Adviser receives no fees from the Fund.
22
<PAGE>
For the Fund's last fiscal year ending October 31, 1996, the Trustees
received the following compensation:
<TABLE>
<CAPTION>
Total
Compensation
Pension or From Fund and
Aggregate Retirement Benefits Estimated Fund Complex
Compensation Accrued as Part Annual Benefits (11 Funds)
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
- --------------------- ------------ ------------------- --------------- ----------------
<S> <C> <C> <C> <C>
C. Duane Blinn $1,730* $53,750
Robert Chesek $1,645 $50,750
E. Virgil Conway $1,965 $60,000
Harry Dalzell-Payne $1,645 $51,000
Francis E. Jeffries $ 0 $ 0
Leroy Keith, Jr. $1,645 None None $50,750
Philip R. McLoughlin $ 0 for any for any $ 0
Everett L. Morris $1,100* Trustee Trustee $37,000
James M. Oates $1,890 $57,750
Calvin J. Pedersen $ 0 $ 0
Philip R. Reynolds $1,645 $50,750
Herbert Roth, Jr. $2,070* $63,000
Richard E. Segerson $1,890 $58,000
Lowell P. Weicker, Jr. $1,890 $57,750
</TABLE>
*This compensation (and the earnings thereon) was deferred pursuant to the
Trustees' Deferred Compensation Plan.
On October 31, 1996, the Trustees and officers of the Fund beneficially
owned less than 1% of the outstanding shares of the Fund.
OTHER INFORMATION
Independent Accountants
Price Waterhouse LLP has been selected independent accountants for the Fund.
Price Waterhouse LLP audits the Fund's annual financial statements and
expresses an opinion thereon.
Custodian and Transfer Agent
State Street Bank and Trust Company, P. O. Box 8301, Boston, MA 02266-8301,
serves as the Fund's Custodian, Phoenix Equity Planning Corporation, 100
Bright Meadow Boulevard, P.O. Box 2200, Enfield, CT 06083-2200, serves as the
Fund's transfer agent.
Reports to Shareholders
The fiscal year of the Fund ends on October 31. The Fund will send to its
shareholders at least semi-annually reports showing the securities of the
Fund's portfolio and other information. An annual report, containing
financial statements audited by the Fund's independent accountants, will be
sent to shareholders each year.
Financial Statements
Financial information relating to the Fund is contained in the Annual Report
to Shareholders for the year ended October 31, 1996 and is available by
calling Equity Planning at (800) 243-4361, or by writing to Equity Planning
at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut
06083-2200. The Annual Report is incorporated by reference into this
Statement of Additional Information. A copy of the Annual Report must precede
or accompany this Statement of Additional Information.
23
<PAGE>
[FRONT COVER]
OCTOBER 31, 1996
Phoenix Multi-Sector
Fixed Income Fund, Inc.
Annual Report
[LOGOTYPE] PHOENIX
DUFF & PHELPS
PHOENIX
ANNUAL REPORT
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
- ------------------------------------------------------------------------------
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
- ------------------------------------------------------------------------------
MARKET AND PORTFOLIO REVIEW
Fund Description
Phoenix Multi-Sector Fixed Income Fund invests in a wide variety of
fixed-income securities. These securities may include U.S. treasury, agency,
corporate and yankee bonds, as well as mortgage-backed and asset-backed
securities. This intermediate-term bond fund emphasizes the most undervalued
sectors of the market and de-emphasizes the most overvalued sectors.
Investment Environment
Shifting market opinion over the direction of the U.S. economy was
responsible for much of the volatility in interest rates during this latest
twelve-month reporting period. During December and January, the Federal
Reserve cut the Fed Funds Rate in an effort to stimulate what was believed to
be a sluggish economy. Although it was widely anticipated that the Fed would
have to lower rates again, a surprisingly strong February employment report
provided conflicting evidence about the economy's condition. As more
information became available, it became evident that the economy had grown
robustly over the first half of 1996. During this period, interest rates were
pushed higher as the financial markets had to consider the threat of future
inflation.
By late summer, the consensus view on Wall Street shifted once again as
signs of more moderate economic growth became increasingly more apparent and
concerns over inflation declined. These signs of a slower economy allowed
interest rates to fall for the remainder of the reporting period. In total,
the yield on the bell weather 30-year Treasury bond ranged from as low as
5.95% to high as 7.19% over the last twelve months. Despite all these market
gyrations, the "long bond" finished the reporting period at 6.64%--only 35
basis points higher than where it started one year ago.
Portfolio Review
Despite a challenging bond market environment, the Fund posted outstanding
results over this latest reporting cycle. For the twelve-month period ended
October 31, 1996, the Fund's class A shares provided a total return of 13.75%
and class B shares returned 12.84%. These results compare very favorably with
the Lehman Brothers Aggregate Bond Index return of 5.85% over the same
period. All of these returns assume reinvestment of any distributions, but
exclude the effect of sales charges.
The Fund's strong performance over the latest reporting period can be
attributed primarily to its holdings in the emerging markets and corporate
high-yield sectors as well as its commercial and non-agency residential
mortgage- backed exposure. Although often overlooked by many bond investors,
our focus on taxable municipal securities also enhanced the Fund's overall
results. As of October 31, 1996, the Fund had an average credit quality of
"BBB" and its average duration was 4.96 years.
Outlook
As we move closer to year-end, we are pleased to see that much of the
pessimism that has afflicted the bond market during 1996 appears to have
subsided. Although concerns over inflation are still present, the latest
economic data suggests that we could see a slower economy going forward. If
this outlook is correct, it will be a welcome relief for the fixed-income
market.
Looking ahead, we have not made any drastic modifications to the Fund's
sector strategy. As a result of an improving real estate market and growing
institutional investor demand, we still favor commercial mortgage-backed
securities relative to investment-grade corporates. Non-agency residential
mortgage-backed securities also look attractive versus agency mortgage-backed
securities, as they offer a significant yield advantage. We continue to
maintain our exposure to the taxable municipal sector as well as Treasuries.
Lastly, despite the extended rally in the emerging markets sector, we are
finding attractive valuations in countries like Mexico, Argentina, Peru and
Venezuela. As always, we will continue to overweight undervalued sectors of
the bond market as our primary means of adding value relative to our
benchmark, the Lehman Brothers Aggregate Bond Index.
1
<PAGE>
- -------------------------------------------------------------------------------
Phoenix Multi-Sector Fixed Income Fund, Inc.
- -------------------------------------------------------------------------------
[GRAPHIC]
[LINE CHART]
Phoenix Lehman
Multi-Sector Brothers
Fixed Income - Aggregate
Class A Bond Index*
12/18/89 9525 10000
10/31/90 9704 10503
10/31/91 12378 12164
10/31/92 14125 13359
10/31/93 16605 14946
10/31/94 15845 14397
10/31/95 18036 16650
10/31/96 20516 17624
[/LINE CHART]
Average Annual Total Returns for Periods Ending 10/31/96
<TABLE>
<CAPTION>
From From
Inception Inception
12/18/89 to 1/3/92 to
1 Year 5 Years 10/31/96 10/31/96
---------------------------- -------- --------- ------------- -----------
<S> <C> <C> <C> <C>
Class A with 4.75% sales
charge 8.31% 9.56% 11.01% --
---------------------------- ------- -------- ----------- ---------
Class A at net asset value 13.75% 10.63% 11.79% --
---------------------------- ------- -------- ----------- ---------
Class B with CDSC 8.84% -- -- 8.98%
---------------------------- ------- -------- ----------- ---------
Class B at net asset value 12.84% -- -- 9.28%
---------------------------- ------- -------- ----------- ---------
Lehman Brothers Aggregate
Bond Index* 5.85% 7.70% 8.64%** 7.11%***
---------------------------- ------- -------- ----------- ---------
</TABLE>
This chart assumes an initial gross investment of $10,000 made on December
18, 1989 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 shares performance will
be greater or less than that shown based on differences in inception dates,
fees and sales charges. The total return (since inception 1/3/92) 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). Investment return and
net asset value will fluctuate so that your shares, when redeemed, may be
worth more or less than the original cost. Returns indicate past performance
which is not predictive of future performance.
Foreign investing involves special risks, such as currency fluctuations, less
public disclosure as well as economic and political risks.
*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 indexes. The index's performance does not include
sale charges.
**Index information from 12/31/89 to 10/31/96.
***Index information from 12/31/91 to 10/31/96.
2
<PAGE>
- -------------------------------------------------------------------------------
Phoenix Multi-Sector Fixed Income Fund, Inc.
- -------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1996
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- --------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--13.2%
U.S. Treasury Bonds--4.1%
U.S. Treasury Bonds
6.50%, '06 (g) AAA $ 3,450 $ 3,485,573
U.S. Treasury Bonds WI
6.50%, '26 (f) AAA 2,000 2,006,000
U.S. Treasury Bonds
6.75%, '26 AAA 7,250 7,328,445
-----------
12,820,018
-----------
U.S. Treasury Notes--7.7%
U.S. Treasury Notes
5.875%, '98 AAA 4,000 4,011,244
U.S. Treasury Notes WI 5.875%, '99 (f) AAA 4,750 4,748,100
U.S. Treasury Notes
6.25%, '01 AAA 14,125 14,224,299
U.S. Treasury Notes
5.75%, '03 AAA 1,000 974,720
-----------
23,958,363
-----------
Agency Mortgage-Backed Securities--1.4%
FHLMC 9%, '04 AAA 28 27,711
FHLMC 7.50%, '18 AAA 338 340,265
FHLMC 8.75%, '20 AAA 399 407,412
FNMA 7%, '07 AAA 254 249,579
FNMA 8.70%, '16 AAA 794 819,895
FNMA 6.65%, '17 AAA 1,000 994,569
FNMA 6.50%, '18 AAA 1,000 989,469
FNMA 7%, '21 AAA 550 539,632
-----------
4,368,532
-----------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $40,733,511) 41,146,913
-----------
NON-CONVERTIBLE BONDS--49.4%
Asset-Backed Securities--7.1%
Airplanes Pass Through Trust 1D 10.875%, '19 BB 4,780 5,186,300
Green Tree Financial Corp. 93-2, B 8%, '18 Baa(c) 5,000 5,165,625
Green Tree Financial Corp. 94-1, B2 7.85%, '19
(g) Baa(c) 2,000 2,028,125
Green Tree Financial Corp. 96-3, B1 7.70%, '27 BBB+ 2,600 2,630,469
Green Tree Financial Corp. 7.85%, '27 AA- 5,000 5,121,875
National Car Rental 96-1, A2 144A 6.80%, '00
(b) A(c) 2,000 2,011,875
-----------
22,144,269
-----------
Chemical--0.8%
ISP Holdings, Inc. 144A 9%, '03 (b) B+ $ 2,500 $ 2,518,750
-----------
Containers--0.7%
US Can Corp. 144A 10.125%, '06 (b) B 2,000 2,065,000
-----------
Hospital Management & Services--0.9%
Tenet Healthcare Corp. 9.625%, '02 BB 2,500 2,743,750
-----------
Insurance--1.9%
Middletown Trust Notes Series C, PIK interest
capitalization, 11.75%, '10 (e) A+ 1,600 6,071,360
-----------
Non-Agency Mortgage-Backed Securities--29.5%
Bear Stearns Mortgage Sec., Inc. 95-1, 1B3
144A 6.4812%, '10 (b) NR 664 553,672
DLJ Mortgage Acceptance 94-M11, B1 8.10%,
'04 (g) Baa(c) 5,000 5,057,812
Equitable Life 174 C1 144A 7.52%, '09 (b) A(c) 1,000 1,020,312
Equitable Life 174 D1 144A 7.77%, '09 (b)(g) Baa(c) 4,000 4,077,500
FDIC REMIC 94-C1, 2D 8.70%, '25 (g) A(c) 7,000 7,293,125
Fund America Structured Trust 96-1, A 144A 0%,
'26 (b) Baa(c) 3,000 2,163,750
General Electric 96-8, 2A5 7.50%, '26 AAA 3,666 3,607,372
Kidder Peabody Acceptance Corp. 93-M3, D
6.50%, '25 Baa(c) 2,147 2,028,915
Merrill Lynch Mortgage, Inc. 95-C2, C 7.79%,
'21 A(c) 1,237 1,265,504
Morgan Stanley Capital I 96-WF1, C 144A 6.59%,
'06 (b) A(c) 3,350 3,214,953
Norwest Asset Securities Corp. 96-3, B2 7.25%,
'26 BBB(c) 2,185 2,077,515
Norwest Asset Securities Corp. 96-3, B1 7.25%,
'26 A(c) 3,499 3,403,826
Prudential Home Mortgage 93H, B2 144A 6.759%,
'08 (b) Aa(c) 3,000 2,936,699
See Notes to Financial Statements
3
<PAGE>
- ------------------------------------------------------------------------------
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
- -------------------------------------------------------------------------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- --------------
Non-Agency Mortgage-Backed Securities--continued
Prudential Home Mortgage 93-H, B4 144A 6.759%,
'08 (b) Baa(c) $4,907 $ 4,686,246
Prudential Home Mortgage 93-L, 3B2 144A
6.641%, '23 (b) NR 4,770 4,641,806
Prudential Home Mortgage 95-F, B1 144A 6.625%,
'24 (b) Ba(c) 1,237 975,364
Residential Asset Securitization Trust
96-A8, C2 8%, '26 AAA 5,000 5,084,375
Residential Funding Mortgage 93-S29, M3 7%,
'08 BBB(c) 578 552,944
Resolution Trust Corp. 92-C8, D 8.835%, '23 BBB- 4,367 4,515,837
Resolution Trust Corp. 92-C3, B 9.05%, '23 AA 3,309 3,396,243
Resolution Trust Corp. 93-C3, A4 6.55%, '24
(g) Aaa(c) 793 791,360
Resolution Trust Corp. 94-C2, D 8%, '25 BBB 5,234 5,338,201
Resolution Trust Corp. 94-C1, D 8%, '26 BBB 6,773 6,827,939
Resolution Trust Corp. 95-C2, C 7%, '27 A(c) 2,849 2,776,408
Resolution Trust Corp. 95-1, C2 7.50%, '28 BBB 3,416 3,405,670
Ryland Mortgage Security Corp. III 92-A, 1A
8.33%, '30 A- 384 383,802
Structured Asset Securities Corp. 93-C1, B
6.60%, '24 A+ 5,000 4,728,437
Structured Asset Securities Corp. 95-C1, B
7.375%, '24 AA 5,344 5,367,380
-----------
92,172,967
-----------
Oil & Gas--0.3%
Forcenergy, Inc. 9.50%, '06 B 1,000 1,013,750
-----------
Oil Service & Equipment--1.5%
Noble Drilling Corp. 9.125%, '06 BB+ 4,450 4,705,875
-----------
Paper & Forest Products--1.6%
Buckeye Cellulose Corp. 8.50%, '05 BB- 5,000 4,912,500
-----------
Publishing, Broadcasting, Printing
& Cable--1.3%
Poland Communications, Inc. 144A 9.875%, '03
(b) BB- 4,000 4,000,000
-----------
Retail--Food--0.6%
Rini Rego Supermarkets, Inc. 9.75%, '01 NR 2,000 1,867,500
-----------
Retail--Food Service--0.0%
ARA Services, Inc. 10.625%, '00 BBB- $ 54 $ 59,805
-----------
Telecommunications Equipment--1.5%
Sprint Spectrum L.P. 11%, '06 B+ 4,800 4,872,000
-----------
Utility--Electric--1.7%
California Energy Co. 0%, '04 (e)(g) BB 5,000 5,150,000
Rural Electric Cooperative 9.73%, '17 AAA 140 151,278
-----------
5,301,278
-----------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $150,033,964) 154,448,804
-----------
FOREIGN NON-CONVERTIBLE BONDS--7.3%
Canada--1.0%
Gulf Canada Resources Ltd. 8.35%, '06 BB+ 3,000 3,089,910
-----------
Chile--2.0%
CSAV 144A 7.375%, '03 (b) BBB 5,000 4,775,000
Petropower Funding 144A 7.36%, '14 (b) BBB 1,450 1,391,246
-----------
6,166,246
-----------
Colombia--0.8%
Centragas Yankee 144A 10.65%, '10 (b) BBB- 2,413 2,582,093
-----------
Indonesia--0.9%
Asia Pulp & Paper Co. Yankee 11.75%, '05 BB 2,750 2,856,562
-----------
Mexico--2.6%
Aerovias De Mexico S.A. 9.75%, '00 NR 2,000 1,890,000
Aerovias Mexico Euro RG 9.75%, '00 NR 500 472,500
Coca-Cola Femsa 8.95%, '06 BB+ 500 502,187
Grupo Televisa S.A. 0%,
'08 (e) Ba(c) 8,375 5,171,563
-----------
8,036,250
-----------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $22,333,633) 22,731,061
-----------
FOREIGN GOVERNMENT SECURITIES--21.0%
Algeria--0.6%
Algeria Tranch A Loans 6.625%-7.3125%, '06 (e) NR 2,380 1,689,800
-----------
Argentina--4.2%
Republic of Argentina Bocon Pro1 M1, PIK
interest capitalization, 3.515%, '07 (e) NR 3,500 3,018,750
See Notes to Financial Statements
4
<PAGE>
- ------------------------------------------------------------------------------
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
- -------------------------------------------------------------------------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- --------------
Argentina--continued
Republic of Argentina Bearer FRB 6.625%,
'05 (e) BB- $12,250 $ 10,106,250
-----------
13,125,000
-----------
Brazil--4.9%
Republic of Brazil C Bond, PIK interest
capitalization, 8%, '14 (e) B+ 11,014 7,645,746
Republic of Brazil DCB-L Euro 6.563%, '12 (e) B+ 10,700 7,683,937
-----------
15,329,683
-----------
Colombia--0.6%
Republic of Colombia Yankee 7.25%, '04 BBB- 2,000 1,890,000
-----------
Mexico--1.5%
United Mexican States 144A 7.688%, '01 (b)(e) Baa(c) 3,500 3,501,050
United Mexican States Global Bond 11.50%,
'26 BB 1,250 1,248,438
-----------
4,749,488
-----------
Morocco--1.0%
Morocco R&C Agreement Series A 6.438%,
'09 (e) NR 4,000 3,175,000
-----------
Panama--1.5%
Panama PDI 144A, PIK interest capitalization,
6.75%, '16 (b)(e) NR 6,250 4,648,437
-----------
Peru--2.0%
Peru Citibank Non- Performing Loans (d) NR 2,500 2,887,500
Peru FLIRB WI 3.25%, '49 (e)(f) NR 1,500 828,750
Peru Non-Citibank Non- Performing Loans (d) NR 1,250 1,443,750
Peru PDI WI 4%, '49 (e)(f) NR 2,000 1,207,500
-----------
6,367,500
-----------
Poland--1.2%
Poland Discount Euro 6.50%, '24 (e) BBB- 4,000 3,827,500
-----------
Venezuela--3.5%
Banco Central Venezuela NMB B-NP 6.625%,
'05 (e) Ba(c) 4,750 3,897,969
Banco Central Venezuela NMB B-P 6.625%,
'05 (e) Ba(c) 1,500 1,230,937
Venezuela--continued
Republic of Venezuela DCB Euro 6.625%, '07 (e) Ba(c) $ 2,000 $ 1,643,750
Republic of Venezuela Series A NMB 6.75%, '05
(e) Ba(c) 5,000 4,103,125
-----------
10,875,781
-----------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $63,140,644) 65,678,189
-----------
MUNICIPAL BONDS--8.6%
California--1.8%
Fresno Pension Obligation 7.80%, '14 AAA 1,500 1,570,410
Orange County California Pension, A Taxable
7.67%, '09 (g) AAA 3,750 3,927,413
-----------
5,497,823
-----------
Florida--2.7%
Dade County Florida Ed. Facs. Authority 5.75%,
'20 AAA 990 1,000,662
Palm Beach Waste Revenue Project B Taxable
10.50%, '11 NR 3,750 3,790,237
University Miami Exchange Revenue A 7.65%, '20 AAA 3,510 3,517,547
-----------
8,308,446
-----------
Pennsylvania--3.2%
Pennsylvania Economic Development 9.50%, '12 NR 6,200 5,996,454
Pennsylvania Financial Development 6.75%, '07 NR 4,050 4,151,169
-----------
10,147,623
-----------
Virginia--0.9%
Newport News, Va. Taxable Series B 7.05%, '25 AA- 1,000 951,610
Pittsylvania County Series B 7.65%, '10 NR 1,900 2,033,551
-----------
2,985,161
-----------
TOTAL MUNICIPAL BONDS
(Identified cost $26,259,260) 26,939,053
-----------
FOREIGN CONVERTIBLE BONDS--0.2%
Mexico--0.2%
Empresas ICA Sociedad Euro Cv. 5%, '04 B(c) 750 513,750
-----------
TOTAL FOREIGN CONVERTIBLE BONDS
(Identified cost $512,652) 513,750
-----------
TOTAL LONG-TERM INVESTMENTS--99.7%
(Identified cost $303,013,664) 311,457,770
-----------
</TABLE>
See Notes to Financial Statements
5
<PAGE>
- ------------------------------------------------------------------------------
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
VALUE
(000) VALUE
-------- -------------
<S> <C> <C>
SHORT-TERM OBLIGATIONS--0.6%
Federal Agency Securities--0.6%
Federal Home Loan
Mortgage Corp. 5.175%,
11-19-96 $1,875 $ 1,870,148
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $1,870,148) 1,870,148
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
----------------
<S> <C>
TOTAL INVESTMENTS--100.3%
(Identified cost $304,883,812) $313,327,918(a)
Cash and receivables, less liabilities--(0.3%) (794,716)
---------------
NET ASSETS--100.0% $312,533,202
===============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $10,227,346 and gross
depreciation of $1,957,564 for income tax purposes. At October 31, 1996,
the aggregate cost of securities for federal income tax purposes was
$305,058,136. At October 31, 1996, the Fund had capital loss carryforwards
aggregating $8,579,546 available to offset future gains and expiring in
2003.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
1996, these securities amounted to a value of $51,763,753 or 16.6% of net
assets.
(c) As rated by Moody's, Fitch, or Duff & Phelp's.
(d) Non-income producing.
(e) Variable or step coupon bond; interest rate shown reflects the rate
currently in effect.
(f) When issued.
(g) Segregated as collateral.
See Notes to Financial Statements
6
<PAGE>
- -------------------------------------------------------------------------------
Phoenix Multi-Sector Fixed Income Fund, Inc.
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Assets
Investment securities at value
(Identified cost $304,883,812) $313,327,918
Cash 1,602,999
Receivables
Investment securities sold 19,810,261
Fund shares sold 793,048
Interest 3,562,560
-----------
Total assets 339,096,786
-----------
Liabilities
Payables
Investment securities purchased 25,171,115
Fund shares repurchased 496,480
Income distribution payable 378,796
Distribution fee 156,512
Investment advisory fee 145,254
Transfer agent fee 80,837
Directors' fee 9,966
Financial agent fee 7,923
Accrued expenses 116,701
-----------
Total liabilities 26,563,584
-----------
Net Assets $312,533,202
===========
Net Assets Consist of:
Capital paid in on shares of capital stock $313,164,748
Distributions in excess of net investment income (316,094)
Accumulated net realized loss (8,759,558)
Net unrealized appreciation 8,444,106
-----------
Net Assets $312,533,202
===========
Class A
Shares of capital stock outstanding,
$0.10 par value, 250,000,000 shares authorized
(Net Assets $169,663,820) 12,788,178
Net asset value per share $13.27
Offering price per share
$13.27/(1-4.75%) $13.93
Class B
Shares of capital stock outstanding,
$0.10 par value, 250,000,000 shares authorized
(Net Assets $142,869,382) 10,783,035
Net asset value and offering price per share $13.25
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Interest $26,612,919
------------
Total investment income 26,612,919
------------
Expenses
Investment advisory fee 1,696,487
Distribution fee--Class A 417,446
Distribution fee--Class B 1,414,739
Financial agent fee 92,536
Transfer agent 478,443
Custodian 73,162
Printing 65,227
Professional 58,565
Registration 39,836
Directors 20,237
Miscellaneous 11,729
------------
Total expenses 4,368,407
------------
Net investment income 22,244,512
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 10,341,278
Net change in unrealized appreciation (depreciation)
on investments 5,985,981
------------
Net gain on investments 16,327,259
------------
Net increase in net assets resulting from operations $38,571,771
============
</TABLE>
See Notes to Financial Statements
7
<PAGE>
- -------------------------------------------------------------------------------
Phoenix Multi-Sector Fixed Income Fund, Inc.
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1996 October 31, 1995
---------------- -----------------
<S> <C> <C>
From Operations
Net investment income $ 22,244,512 $23,759,674
Net realized gain (loss) 10,341,278 (17,445,818)
Net change in unrealized appreciation
(depreciation) 5,985,981 31,680,763
----------- -----------
Increase in net assets resulting from operations 38,571,771 37,994,619
----------- -----------
From Distributions to Shareholders
Net investment income--Class A (12,387,209) (12,901,571)
Net investment income--Class B (9,458,214) (10,373,226)
----------- -----------
Decrease in net assets resulting from
distributions to shareholders (21,845,423) (23,274,797)
----------- -----------
From Share Transactions
Class A
Proceeds from sales of shares (5,502,177 and
2,352,653 shares, respectively) 70,788,640 28,484,405
Net asset value of shares issued from
reinvestment of distributions (587,270 and
654,268 shares, respectively) 7,517,879 7,837,803
Cost of shares repurchased (6,751,478 and
4,039,172 shares, respectively) (86,500,171) (48,234,621)
----------- -----------
Total (8,193,652) (11,912,413)
----------- -----------
Class B
Proceeds from sales of shares (1,249,907 and
887,773 shares, respectively) 16,054,776 10,692,887
Net asset value of shares issued from
reinvestment of distributions (275,807 and
308,741 shares, respectively) 3,526,914 3,693,059
Cost of shares repurchased (2,226,264 and
2,844,501 shares, respectively) (28,475,995) (33,893,205)
----------- -----------
Total (8,894,305) (19,507,259)
----------- -----------
Decrease in net assets from share transactions (17,087,957) (31,419,672)
----------- -----------
Net decrease in net assets (361,609) (16,699,850)
Net Assets
Beginning of period 312,894,811 329,594,661
----------- -----------
End of period (including distributions in excess
of net investment income of ($316,094) and
($186,415), respectively) $312,533,202 $312,894,811
=========== ===========
</TABLE>
See Notes to Financial Statements
8
<PAGE>
- ------------------------------------------------------------------------------
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------
Year Ended October 31,
1996 1995 1994 1993 1992
----------- ------------- ---------------------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.56 $11.94 $14.13 $13.29 $12.81
Income from investment operations
Net investment income 0.94 0.96 0.76 1.14 1.24
Net realized and unrealized gain (loss) 0.72 0.61 (1.35) 1.08 0.50
------- ------- ------- ------- -------
Total from investment operations 1.66 1.57 (0.59) 2.22 1.74
------- ------- ------- ------- -------
Less distributions
Dividends from net investment income (0.95) (0.95) (0.77) (1.19) (1.21)
Dividends in excess of net investment income -- -- (0.05) (0.02) --
Dividends from net realized gains -- -- (0.63) (0.17) (0.05)
Tax return of capital -- -- (0.15) -- --
------- ------- ------- ------- -------
Total distributions (0.95) (0.95) (1.60) (1.38) (1.26)
------- ------- ------- ------- -------
Change in net asset value 0.71 0.62 (2.19) 0.84 0.48
------- ------- ------- ------- -------
Net asset value, end of period $13.27 $12.56 $11.94 $14.13 $13.29
======= ======= ======= ======= =======
Total return(1) 13.75% 13.83% -4.57% 17.55% 14.11%
Ratios/supplemental data:
Net assets, end of period (thousands) $169,664 $168,875 $172,966 $176,859 $141,627
Ratio to average net assets of:
Operating expenses 1.07% 1.10% 1.13% 1.29% 1.48%
Net investment income 7.56% 8.10% 7.05% 8.27% 9.42%
Portfolio turnover 255% 201% 123% 207% 116%
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------------------------
From
Inception
Year Ended October 31, 1/3/92 to
1996 1995 1994 1993 10/31/92
----------- ---------------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.54 $11.93 $14.10 $13.25 $13.02
Income from investment operations
Net investment income 0.85 0.86 0.68 1.04 0.94
Net realized and unrealized gain (loss) 0.71 0.61 (1.36) 1.08 0.21
------- ------- ------- ------- -------
Total from investment operations 1.56 1.47 (0.68) 2.12 1.15
------- ------- ------- ------- -------
Less distributions
Dividends from net investment income (0.85) (0.86) (0.67) (1.08) (0.92)
Dividends in excess of net investment income -- -- (0.05) (0.02) --
Dividends from net realized gains -- -- (0.63) (0.17) --
Tax return of capital -- -- (0.14) -- --
------- ------- ------- ------- -------
Total distributions (0.85) (0.86) (1.49) (1.27) (0.92)
------- ------- ------- ------- -------
Change in net asset value 0.71 0.61 (2.17) 0.85 0.23
------- ------- ------- ------- -------
Net asset value, end of period $13.25 $12.54 $11.93 $14.10 $13.25
======= ======= ======= ======= =======
Total return(1) 12.84% 12.96% -5.21% 16.78% 8.81%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $142,869 $144,020 $156,629 $193,064 $82,522
Ratio to average net assets of:
Operating expenses 1.82% 1.85% 1.78% 1.99% 2.18%(3)
Net investment income 6.80% 7.30% 6.46% 7.36% 8.47%(3)
Portfolio turnover 255% 201% 123% 207% 116%
</TABLE>
(1)Maximum sales charges are not reflected in the total return calculation.
(2)Not annualized
(3)Annualized
See Notes to Financial Statements
9
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Multi-Sector Fixed Income Fund, Inc. (the "Fund") is organized as a
Maryland corporation and is registered under the Investment Company Act of
1940, as amended, as a diversified open-end management investment company.
The Fund's investment objective is to maximize current income consistent with
the preservation of capital by investing in fixed income securities. The Fund
offers both Class A and Class B shares. Class A shares are sold with a
front-end sales charge of up to 4.75%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending on
the period of time the shares are held. Both classes of shares have identical
voting, dividend, liquidation and other rights and the same terms and
conditions, except that each class bears different distribution expenses and
has exclusive voting rights with respect to its distribution plan. Income and
expenses of the Fund are borne pro rata by the holders of both classes of
shares, except that each class bears distribution expenses unique to that
class.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and
expenses. Actual results could differ from those estimates.
A. Security valuation:
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 their fair value as determined in good faith by or under
the direction of the Directors.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Interest income is
recorded on the accrual basis. Discounts and premiums are amortized to income
using the effective interest method. Realized gains and losses are determined
on the identified cost basis.
C. Income taxes:
It is the policy of the Fund to comply with the requirements of the
Internal Revenue Code (the "Code") applicable to regulated investment
companies, and to distribute substantially all of its taxable income to its
shareholders. In addition, the Fund intends to distribute an amount
sufficient to avoid imposition of any excise tax under Section 4982 of the
Code. Therefore, no provision for federal income taxes or excise taxes has
been made.
D. Distributions to shareholders:
Distributions to shareholders are declared and recorded daily. 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.
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
Fund does not separate that portion of the results of operations arising from
changes in exchange rates and that portion arising from changes in the market
prices of securities.
F. When-Issued and delayed delivery transactions:
The Fund may engage in when-issued or delayed delivery transactions. The
Fund 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 Fund, the Investment Adviser,
National Securities and Research Corporation, an indirect majority-owned
subsidiary of Phoenix Home Life Mutual Insurance Company ("PHL"), is entitled
to a fee at an annual rate of 0.55% for the first $1 billion of the average
daily net assets of the Fund.
As Distributor of the Fund's shares, Phoenix Equity Planning Corp.
("PEPCO"), an indirect majority-owned subsidiary of PHL, has advised the Fund
that it retained net selling commissions of $47,017 for Class A shares and
deferred sales charges of
10
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996 (Continued)
$435,426 for Class B shares for the year ended October 31, 1996. In addition,
the Fund pays PEPCO a distribution fee at an annual rate of 0.25% for Class A
shares and 1.00% for Class B shares of the average daily net assets of the
Fund. The Distribution Plan for Class A shares provides for fees to be paid
up to a maximum on an annual basis of 0.30%; the Distributor has voluntarily
agreed to limit the fee to 0.25%. The Distributor has advised the Fund that
of the total amount expensed for the year ended October 31, 1996, $1,144,260
was earned by the Distributor and $687,925 was earned by unaffiliated
participants.
As Financial Agent of the Fund, PEPCO receives a fee at an annual rate of
0.03% of the average daily net assets of the Fund for bookkeeping,
administration and pricing services. PEPCO serves as the Fund's Transfer
Agent with State Street Bank and Trust Company as sub-transfer agent. For the
year ended October 31, 1996, transfer agent fees were $478,443 of which PEPCO
retained $192,608 which is net of the fees paid to State Street.
At October 31, 1996, PHL and affiliates held 10,753 Class A shares and 12
Class B shares of the Fund with a combined value of $142,843.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities, excluding short-term securities, for the
year ended October 31, 1996, aggregated $763,020,581 and $769,133,714,
including $362,845,390 and $375,218,219, of U.S. Government and agency
securities, respectively.
4. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Fund has recorded several
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of the Fund and are designed generally to
present undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder. As of October 31, 1996,
the Fund has decreased undistributed net investment income by $528,768,
decreased accumulated net realized loss by $826,396 and decreased capital
paid in on shares of capital stock by $297,628.
5. CAPITAL LOSS CARRYOVERS
For the year ended October 31, 1996, the Fund was able to utilize losses
deferred in the prior year against current year capital gains in the amount
of $10,737,669.
This report is authorized for use by other than shareholders only when
accompanied or preceded by the delivery of a current prospectus showing
the sales charge and other material information.
11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGOTYPE] PRICE WATERHOUSE LLP [LOGO]
To the Board of Directors and Shareholders of
Phoenix Multi-Sector Fixed Income Fund, Inc.
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 Multi-Sector Fixed Income Fund, Inc. (the "Fund") at
October 31, 1996, 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 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 October 31, 1996 by correspondence with the
custodian 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
December 13, 1996
12
<PAGE>
PHOENIX MULTI-SECTOR FIXED
INCOME FUND, INC.
101 Munson Street
Greenfield, Massachusetts 01301
Directors
C. Duane Blinn
Robert Chesek
E. Virgil Conway
Harry Dalzell-Payne
Francis E. Jeffries
Leroy Keith, Jr.
Philip R. McLoughlin
Everett L. Morris
James M. Oates
Calvin J. Pedersen
Philip R. Reynolds
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
Officers
Philip R. McLoughlin, President
Michael E. Haylon, Executive Vice President
David R. Pepin, Executive Vice President
David L. Albrycht, Vice President
William R. Moyer, Vice President
Leonard J. Saltiel, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary
Investment Adviser
National Securities & Research Corporation
56 Prospect Street
Hartford, Connecticut 06115-0480
Principal Underwriter
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
Transfer Agent
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Legal Counsel
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005-1208
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc. [POSTAGE
P.O. Box 2200 PERMIT]
Enfield, CT 06083-2200 Bulk Rate Mail
U.S. Postage
PAID
Springfield, MA
Permit No. 444
[LOGOTYPE] PHOENIX
DUFF & PHELPS
[DALBAR LOGO]
PDP 660 (12/96)
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PART C--OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Included in Part A: Financial Highlights
Included in Part B: Financial Statements and Notes thereto, and Report of
Independent Accountants are included in the Annual
Report to Shareholders for the year ended October 31,
1996, incorporated by reference.
(b) Exhibits:
1. Articles of Incorporation of the Registrant and amendments thereto,
previously filed, filed via Edgar herewith and herein incorporated by
reference.
1.1 Articles of Amendment changing name of Corporation to Phoenix
Multi-Sector Fixed Income Fund, Inc., and Articles Supplementary
reclassifying shares filed with Post-Effective Amendment No. 8 on
February 27, 1995, filed via Edgar herewith and incorporated herein
by reference.
2. By-laws of the Registrant, previously filed, filed via Edgar herewith
and herein incorporated by reference.
3. Not applicable.
4. Reference is made to Exhibit 1.1, Articles Supplementary to the
Articles of Incorporation reclassifying shares.
5. Management Agreement between Registrant and National Securities &
Research Corporation dated May 14, 1993 filed with Post-Effective
Amendment No. 6 on December 30, 1993, filed via Edgar herewith and
incorporated herein by reference.
5.1 Amendment to Management Agreement dated January 1, 1994, filed with
Post-Effective Amendment No. 8 on February 27, 1995, filed via Edgar
herewith and incorporated herein by reference.
6. Underwriting Agreement for Class A Shares between Registrant and
Phoenix Equity Planning Corporation ("Equity Planning") dated May 14,
1993 filed with Post-Effective Amendment No. 6 on December 30, 1993,
filed via Edgar herewith and incorporated herein by reference.
6.1 Underwriting Agreement for Class B Shares between Registrant and
Equity Planning dated May 14, 1993 filed with Post-Effective
Amendment No. 6 on December 30, 1993, filed via Edgar herewith and
incorporated herein by reference.
7. None.
8. Custodian Contract between Registrant and State Street Bank and Trust
Company dated October 14, 1993 filed with Post-Effective Amendment
No. 6 on December 30, 1993 and incorporated herein by reference.
8.1 Amendment to Custodian Contract between Registrant and State Street
Bank and Trust Company dated October 17, 1996 filed via Edgar
herewith.
9. Transfer Agency and Service Agreement between Registrant and Phoenix
Equity Planning Corporation dated June 1, 1994, filed with
Post-Effective Amendment No. 8 on February 27, 1995, filed via Edgar
herewith and incorporated herein by reference.
9.1 Form of Sales Agreement filed with Post-Effective Amendment No. 6 on
December 30, 1993, filed via Edgar herewith and incorporated herein
by reference.
9.2 Financial Agent Agreement between Registrant and Phoenix Equity
Planning Corporation dated May 25, 1994, filed with Post-Effective
Amendment No. 8 on February 27, 1995, filed via Edgar herewith and
incorporated herein by reference.
9.3 Financial Agent Agreement between Registrant and Phoenix Duff &
Phelps Corporation dated
December 11, 1996, filed via Edgar herewith.
10. Opinion of counsel as to legality of the shares dated February 24,
1995 filed with Post-Effective Amendment No. 8 on February 27, 1995,
filed via Edgar herewith and incorporated herein by reference.
11. Consent of Independent Accountants filed via Edgar herewith.
C-1
<PAGE>
12. Not Applicable
13. None.
14. None.
15. Distribution Plan for Class A Shares dated May 14, 1993 filed with
Post-Effective Amendment No. 6 on December 30, 1993, filed via Edgar
herewith and incorporated herein by reference.
15.1 Distribution Plan for Class B Shares dated May 14, 1993 filed with
Post-Effective Amendment No. 6 on December 30, 1993, filed via Edgar
herewith and incorporated herein by reference.
16. Schedule for computation of yield and effective yield quotations,
filed with Post-Effective Amendment No. 8 on February 27, 1995, filed
via Edgar herewith and incorporated herein by reference.
17. Financial Data Schedule filed herewith and reflected on EDGAR as
Exhibit 27.
18. Rule 18f-3 Dual Distribution Plan effective November 15, 1995 via
Edgar with Post-Effective Amendment No. 9 and incorporated herein by
reference.
18.1 Amended and Restated Plan Pursuant to Rule 18f-3 effective November
1, 1995 filed via Edgar herewith.
18.2 Amended and Restated Plan Pursuant to Rule 18f-3 effective November
1, 1996 filed via Edgar herewith.
19. Powers of Attorney for Ms. Curtiss and Messrs. Blinn, Chesek, Conroy,
Dalzell-Payne, Jeffries, Keith, Morris, Oates, Pedersen, Reynolds,
Roth, Segerson and Weicker filed via Edgar herewith.
Item 25. Persons Controlled by or Under Common Control With Registrant
No person is controlled by, or under common control with, the Registrant.
Item 26. Number of Holders of Securities
As of December 31, 1996, the number of record holders of each class of
securities of the Registrant was as follows:
Number of
Title of Class Record-holders
- ---------------------------------------------- --------------
Common Stock--Class A 7,529
Common Stock--Class B 5,530
Item 27. Indemnification
Under Section 2-418 of the Maryland General Corporation Law, with respect to
any proceeding against a present or former director, officer, agent, or
employee of the Registrant (a "corporation representative"), except a
proceeding brought by or on behalf of the Registrant, the Registrant may
indemnify the corporation representative against expenses, including
attorney's fees and judgments, fines, and amounts paid in settlement actually
and reasonably incurred by the corporate representative in connection with
the proceeding, if: (i) he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Registrant; and
(ii) with respect to any criminal proceeding, he had no reasonable cause to
believe his conduct was unlawful.
The Registrant is also authorized under Section 2-418 of the Maryland
General Corporation Law to indemnify a corporate representative under certain
circumstances against expenses incurred in connection with the defense of a
suit or action by or in the right of the Registrant. Reference is made to
Article VI of Registrant's Articles of Incorporation, Article VI of
Registrant's By-laws and Section 2-418 of the Maryland General Corporation
Law.
C-2
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
See "Management of the Fund" in the Prospectus and "Services of the Adviser"
and "Directors and Officers" in the Statement of Additional Information, each
of which is included in this Post-Effective Amendment.
The directors and officers of National Securities & Research Corporation
(the "Adviser") and their business and other connections are as follows:
<TABLE>
<CAPTION>
Position with Investment
Name Adviser Other Vocation or Employment
- ---------------------------- --------------------------- --------------------------------------------------
<S> <C> <C>
Michael E. Haylon Director and President Executive Vice President--Investments, Phoenix
Duff & Phelps Corporation. Director and
President, Phoenix Investment Counsel, Inc.
Director, Phoenix Equity Planning Corporation.
Executive Vice President, Phoenix Funds and
Phoenix-Aberdeen Series Fund. Vice President,
Phoenix Duff & Phelps Institutional Mutual
Funds. Senior Vice President, Securities
Investments, Phoenix Home Life Mutual Insurance
Company.
Philip R. McLoughlin Director and Chairman Director, Vice Chairman and Chief Executive
Officer, Phoenix Duff & Phelps Corporation.
Director and Executive Vice President,
Investments, Phoenix Home Life Mutual Insurance
Company. Director and Chairman, Phoenix
Investment Counsel, Inc. Director and President,
Phoenix Equity Planning Corporation.
Director/Trustee and President, Phoenix Funds.
Trustee and President, Phoenix Duff & Phelps
Institutional Mutual Funds and Phoenix-Aberdeen
Series Fund. Director and Executive Vice
President, Phoenix Life and Annuity Company and
PHL Variable Insurance Company. Director,
Phoenix Realty Group, Inc., Phoenix Realty
Advisors, Inc., Phoenix Realty Investors, Inc.,
Phoenix Realty Securities, Inc., Phoenix
Founders, Inc., and World Trust Fund. Trustee,
Duff & Phelps Utilities Tax-Free Income Inc. and
Duff & Phelps Utility and Corporate Bond Trust
Inc. Director and Vice President, PM Holdings,
Inc. Director, W.S. Griffith & Co., Inc.,
Phoenix Charter Oak Trust Company and Worldwide
Phoenix Offshore, Inc.
David R. Pepin Director Executive Vice President and Director , Phoenix
Duff & Phelps Corporation. Director, Phoenix
Investment Counsel, Inc. Managing Director,
Phoenix-Aberdeen International Advisors, LLC.
Director and Executive Vice President, Mutual
Fund Sales and Operations, Phoenix Equity
Planning Corporation. Executive Vice President,
Phoenix Funds, Phoenix Duff & Phelps
Institutional Mutual Funds and Phoenix-Aberdeen
Series Fund. Vice President, Phoenix Home Life
Mutual Insurance Company.
C-3
<PAGE>
William J. Newman Executive Vice President Executive Vice President and Chief Investment
and Chief Investment Strategist, Phoenix Investment Counsel, Inc.
Strategist Senior Vice President, The Phoenix Edge Series
Fund, Phoenix Income and Growth Fund, Phoenix
Multi-Portfolio Fund, Phoenix Series Fund,
Phoenix Strategic Allocation Fund, Inc., Phoenix
Strategic Equity Series Fund, Phoenix Worldwide
Opportunities Fund, Phoenix-Aberdeen Series
Fund, Phoenix Duff & Phelps Institutional Mutual
Funds. Vice President, Common Stock and Chief
Investment Strategist, Phoenix Home Life Mutual
Insurance Company.
William R. Moyer Senior Vice President, Senior Vice President and Chief Financial
Chief Financial Officer Officer, Phoenix Duff & Phelps Corporation.
and Treasurer Senior Vice President, Chief Financial Officer
and Treasurer, Phoenix Investment Counsel, Inc.
Senior Vice President and Chief Financial
Officer, Phoenix Equity Planning Corporation.
Vice President, Phoenix Funds, Phoenix Duff &
Phelps Institutional Mutual Funds, and Phoenix-
Aberdeen-Series Fund. Senior Vice President,
Chief Financial Officer and Treasurer, W.S.
Griffith and Co., Inc. Vice President,
Investment Products, Phoenix Home Life Mutual
Insurance Company.
Rosemary T. Strekel Senior Vice President and Senior Vice President and Managing Director,
Managing Director, Private Private Placements, Phoenix Investment Counsel,
Placements Inc. Vice President, Phoenix Home Life Mutual
Insurance Company.
Eugene A. Charon Vice President and Vice President and Controller, Phoenix
Controller Investment Counsel, Inc. and Phoenix Equity
Planning Corporation.
Thomas N. Steenburg Vice President, Counsel Vice President, Counsel and Secretary, Phoenix
and Secretary Duff & Phelps Corporation, Phoenix Investment
Counsel, Inc. and Phoenix Equity Planning
Corporation.
David L. Albrycht Managing Director, Fixed Managing Director, Fixed Income, Phoenix
Income Investment Counsel, Inc. Vice President, Phoenix
Multi-Portfolio Fund, Phoenix Multi-Sector Fixed
Income Fund and Phoenix Multi-Sector Short Term
Bond Fund. Portfolio Manager, Phoenix Home Life
Mutual Insurance Company.
Michael K. Arends Managing Director, Managing Director, Phoenix Investment Counsel,
Equities Inc. Vice President, Phoenix Series Fund and
Phoenix Strategic Equity Series Fund. Portfolio
Manager, Phoenix Home Life Mutual Insurance
Company.
Curtiss O. Barrows Managing Director, Fixed Managing Director, Phoenix Investment Counsel,
Income Inc. Vice President, Phoenix Series Fund,
Phoenix Multi-Portfolio Fund, The Phoenix Edge
Series Fund. Portfolio Manager, Public Bonds,
Phoenix Home Life Mutual Insurance Company.
C-4
<PAGE>
Sandra L. Becker Managing Director, Private Managing Director, Private Placements, Phoenix
Placements Investment Counsel, Inc. Managing Director,
Venture Capital and Private Placements, Phoenix
Home Life Mutual Insurance Company.
David Byerly Managing Director, Fixed Managing Director, Fixed Income, Phoenix
Income Investment Counsel, Inc.
Mary E. Canning Managing Director and Managing Director and Investment Strategist,
Investment Strategist, Equities, Phoenix Investment Counsel, Inc. Vice
Equities President, Phoenix Series Fund, The Phoenix Edge
Series Fund and Phoenix Strategic Allocation
Fund, Inc. Associate Portfolio Manager, Common
Stock, Phoenix Home Life Mutual Insurance
Company.
Paul M. Chute Managing Director, Private Managing Director, Private Placements, Phoenix
Placements Investment Counsel, Inc. Managing Director,
Investment Department, Phoenix Home Life Mutual
Insurance Company.
Nelson Correa Managing Director, Private Managing Director, Private Placements, Phoenix
Placements Investment Counsel, Inc. Managing Director,
Private Placements, Phoenix Home Life Mutual
Insurance Company.
Jeanne H. Dorey Managing Director, Managing Director, Equities, Phoenix Investment
Equities Counsel, Inc. Vice President, The Phoenix Edge
Series Fund, Phoenix Multi-Portfolio Fund and
Phoenix Worldwide Opportunities Fund. Portfolio
Manager, International, Phoenix Home Life Mutual
Insurance Company.
Van Harissis Managing Director, Managing Director, Equities, Phoenix Investment
Equities Counsel, Inc. Vice President, Phoenix Series
Fund and The Phoenix Edge Series Fund. Senior
Portfolio Manager, Howe & Rusling, Inc.
Richard C. Harland Managing Director, Managing Director, Equities, Phoenix Investment
Equities Counsel, Inc. Portfolio Manager, Phoenix Home
Life Mutual Insurance Company. Senior
Institutional Portfolio Manager, Managing
Director, J & W Seligman & Co.
Christopher J. Kelleher Managing Director, Fixed Managing Director, Fixed Income, Phoenix
Income Investment Counsel, Inc. Vice President, Phoenix
Series Fund, The Phoenix Edge Series Fund,
Phoenix Duff & Phelps Institutional Mutual
Funds. Portfolio Manager, Public Bonds, Phoenix
Home Life Mutual Insurance Company.
Thomas S. Melvin, Jr. Managing Director, Managing Director, Equities, Phoenix Investment
Equities Counsel, Inc. Vice President, Phoenix
Multi-Portfolio Fund and Phoenix Duff & Phelps
Institutional Mutual Funds. Portfolio Manager,
Common Stock, Phoenix Home Life Mutual Insurance
Company.
C. Edwin Riley, Jr. Managing Director, Managing Director, Equities, Phoenix Investment
Equities Counsel, Inc. Vice President, Phoenix Series
Fund, The Phoenix Edge Series Fund, Phoenix
Strategic Allocation Fund, Inc. Director of
Equity Management, NationsBanc.
C-5
<PAGE>
Amy L. Robinson Managing Director, Equity Managing Director, Equity Trading, Phoenix
Trading Investment Counsel, Inc. Vice President, The
Phoenix Edge Series Fund and Phoenix Series
Fund. Managing Director, Securities
Administration, Phoenix Home Life Mutual
Insurance Company.
James D. Wehr Managing Director, Fixed Managing Director, Fixed Income, Phoenix
Income Investment Counsel, Inc. Vice President, The
Phoenix Edge Series Fund, Phoenix Series Fund,
Phoenix Multi-Portfolio Fund, Phoenix California
Tax-Exempt Bonds, Inc. and Phoenix Duff & Phelps
Institutional Mutual Funds. Managing Director,
Public Fixed Income, Phoenix Home Life Mutual
Insurance Company.
Matthew Considine Director, Equity Research Director, Equity Research, Phoenix Investment
Counsel, Inc. Vice President, Phoenix
Multi-Portfolio Fund.
Timothy M. Heaney Director, Fixed Income Director, Fixed Income Research, Phoenix
Research Investment Counsel, Inc. Vice President, Phoenix
Multi-Portfolio Fund and Phoenix California Tax
Exempt Bonds, Inc.
Peter S. Lannigan Director, Fixed Income Director, Fixed Income Research, Phoenix
Research Investment Counsel, Inc. Vice President, Phoenix
Multi-Portfolio Fund.
Dorothy J. Skaret Director, Money Market Director, Money Market Trading, Phoenix
Trading Investment Counsel, Inc. Vice President, Phoenix
Series Fund, The Phoenix Edge Series Fund,
Phoenix Duff & Phelps Institutional Mutual
Funds, Phoenix-Aberdeen Series Fund, Phoenix
Realty Securities, Inc. Director, Public Fixed
Income, Phoenix Home Life Mutual Insurance
Company.
George I. Askew Portfolio Manager, Portfolio Manager, Equities, Phoenix Investment
Equities Counsel, Inc.
John M. Hamlin Portfolio Manager, Portfolio Manager, Equities, Phoenix Investment
Equities Counsel, Inc. Vice President, Phoenix Income and
Growth Fund and Phoenix Series Fund. Portfolio
Manager, Common Stock, Phoenix Home Life Mutual
Insurance Company.
David Lui Portfolio Manager, Portfolio Manager, Equities ,Phoenix Investment
Equities Counsel, Inc. Vice President, Phoenix Worldwide
Opportunities Fund, Phoenix Multi-Portfolio
Fund, The Phoenix Edge Series Fund. Associate
Portfolio Manager, International Portfolios,
Phoenix Home Life Mutual Insurance Company. Vice
President, Asian Equities, Alliance Capital
Management.
</TABLE>
C-6
<PAGE>
The respective principal addresses of the companies or other entities named
above are as follows:
Alliance Capital Management 1345 Avenue of the Americas
New York, NY 10105
Duff & Phelps Utilities Tax-Free Income Inc. 55 East Monroe Street
Chicago, IL 60603
Duff & Phelps Utility and Corporate Bond Trust 55 East Monroe Street
Inc. Chicago, IL 60603
Howe & Rusling, Inc. 120 East Avenue
Rochester, NY 14604
J & W Seligman & Co. 100 Park Avenue
New York, NY 10017
NationsBanc One NationsBanc Plaza
Charlotte, NC 28255
Phoenix-Aberdeen International Advisers LLC One American Row
Hartford, CT 06102-5056
PHL Variable Insurance Company One American Row
Hartford, CT 06102-5056
Phoenix-Aberdeen Series Fund 101 Munson Street
Greenfield, MA 01301
Phoenix Charter Oak Trust Company One American Row
Hartford, CT 06102-5056
Phoenix Duff & Phelps Corporation 56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Phoenix Duff & Phelps Institutional Mutual Funds 101 Munson Street
Greenfield, MA 01301
Phoenix Equity Planning Corporation 100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, CT 06083-2200
Phoenix Founders, Inc. 38 Prospect Street
Hartford, CT 06115-0479
Phoenix Home Life Mutual Insurance Company One American Row
Hartford, CT 06102-5056
Phoenix Investment Counsel, Inc. 56 Prospect Street
Hartford, CT 06115-0480
Phoenix Life and Annuity Company One American Row
Hartford, CT 06102-5056
Phoenix Realty Advisors, Inc. 38 Prospect Street
Hartford, CT 06115-0479
Phoenix Realty Group, Inc. 38 Prospect Street
Hartford, CT 06115-0479
Phoenix Realty Investors, Inc. 38 Prospect Street
Hartford, CT 06115-0479
Phoenix Realty Securities, Inc. 38 Prospect Street
Hartford, CT 06115-0479
C-7
<PAGE>
PM Holdings, Inc. One American Row
Hartford, CT 06102-5056
The Phoenix Funds 101 Munson Street
Greenfield, MA 01301
W.S. Griffith & Co., Inc. One American Row
Hartford, CT 06102-5056
World Trust Fund KREDIETRUST
Societe Anonyme
11, rue Aldringen
L-2690 Luxembourg
R.C. Luxembourg B 10.750
Worldwide Phoenix Offshore, Inc. One American Row
Hartford, CT 06102-5056
Item 29. Principal Underwriters
(a) See "The Underwriter" and "How to Buy Shares" in the Prospectus and
"The National Distributor" and "Plan of Distribution" in the Statement
of Additional Information, both of which are included in this
Post-Effective Amendment to the Registration Statement.
(b)
Positions and Offices Positions and Offices
Name and Principal Address with Underwriter with Registrant
- -------------------------- --------------------- ---------------------
Michael E. Haylon Director Executive Vice
56 Prospect St. President
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Trustee and
56 Prospect St. President
P.O. Box 150480
Hartford, CT 06115-0480
David R. Pepin Executive Vice President, Executive Vice
56 Prospect St. Mutual Fund Sales and President
P.O. Box 150480 Operations
Hartford, CT 06115-0480
Leonard J. Saltiel Managing Director, Vice President
100 Bright Meadow Blvd. Operations and Service
P.O. Box 1900
Enfield, CT 06083-1900
Paul A. Atkins Senior Vice President None
56 Prospect St. and Sales Manager
P.O. Box 150480
Hartford, CT 06115-0480
Maris L. Lambergs Senior Vice President, None
100 Bright Meadow Blvd. Insurance and Independent
P.O. Box 1900 Division
Enfield, CT 06083-1900
William R. Moyer Senior Vice President Vice President
100 Bright Meadow Blvd. and Chief Financial Officer
P.O. Box 1900
Enfield, CT 06083-1900
C-8
<PAGE>
John F. Sharry Managing Director, Mutual None
100 Bright Meadow Blvd. Fund Distribution
P.O. Box 1900
Enfield, CT 06083-1900
G. Jeffrey Bohne Vice President, Mutual Secretary
101 Munson Street Fund Customer Service
P.O. Box 810
Greenfield, MA 01302-0810
Eugene A. Charon Vice President and None
100 Bright Meadow Blvd. Controller
P.O. Box 1900
Enfield, CT 06083-1900
Nancy G. Curtiss Vice President and Treasurer
56 Prospect St. Treasurer, Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
William E. Keen III Assistant Vice President, Vice President
100 Bright Meadow Blvd. Mutual Fund Regulation
P.O. Box 1900
Enfield, CT 06083-1900
Elizabeth R. Sadowinski Vice President, None
56 Prospect St. Administration
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Counsel Assistant
56 Prospect St. and Secretary Secretary
P.O. Box 150480
Hartford, CT 06115-0480
(c) Equity Planning received the following commissions or other compensation
from the Registrant during the fiscal year ending October 31, 1996:
Name of Net Underwriting Compensation on
Principal Discounts and Redemption and Brokerage Other
Underwriter Commissions Repurchase Commissions Compensation
- ------------- ---------------- --------------- ----------- ------------
Equity Planning $47,017 $435,426 $0 $92,536
Item 30. Location of Accounts and Records
The account books and other documents required to be maintained by the
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940
and the Rules thereunder will be maintained at the offices of the Fund, 100
Bright Meadow Boulevard, Enfield, Connecticut 06083-1900, at the offices of
Registrant's investment adviser, National Securities & Research Corporation,
56 Prospect Street, Hartford, Connecticut 06115, at the offices of the Fund's
Custodian, State Street Bank and Trust Company, P.O. Box 8301, Boston,
Massachusetts 02266-8301, and at the offices of the Transfer Agent, Financial
Agent and Principal Underwriter, Phoenix Equity Planning Corporation, 100
Bright Meadow Boulevard, Enfield, Connecticut 06083-1900.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Registrant undertakes to furnish to each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to
shareholders upon request and without charge.
C-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Hartford
and State of Connecticut on the 24th day of February, 1997.
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
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 and on the date indicated, on the 24th day of February,
1997.
Signature Title
- ----------------------------- -----
- -----------------------------
Duane Blinn* Director
- -----------------------------
Robert Chesek* Director
- -----------------------------
E. Virgil Conway* Director
- -----------------------------
Nancy G. Curtiss* Treasurer
(Principal Financial and Accounting Officer)
- -----------------------------
Harry Dalzell-Payne* Director
- -----------------------------
Francis E. Jeffries* Director
- -----------------------------
Leroy Keith, Jr.* Director
/s/ Philip R. McLoughlin President and Director
- ----------------------------- (Principal Executive Officer)
Philip R. McLoughlin
- -----------------------------
Everett L. Morris* Director
- -----------------------------
James M. Oates* Director
- -----------------------------
Calvin J. Pedersen* Director
- -----------------------------
Philip R. Reynolds* Director
- -----------------------------
Herbert Roth, Jr.* Director
S-1
<PAGE>
- -----------------------------
Richard E. Segerson* Director
- -----------------------------
Lowell P. Weicker, Jr.* Director
/s/ Philip R. McLoughlin President and Director
- ----------------------------- (Principal Executive Officer)
Philip R. McLoughlin
* Philip R. McLoughlin, attorney-in-fact pursuant to powers of attorney filed
herewith.
S-2
Exhibit 1
ARTICLES SUPPLEMENTARY
OF
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC.
APPROVED AND RECEIVED FOR RECORD BY THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND. JANUARY 2, 1992 AT 10:28 O'CLOCK A.M. AS IN CONFORMITY
WITH LAW AND ORDERED RECORDED.
----------
ORGANIZATION AND RECORDING SPECIAL
CAPITALIZATION PAID FEE PAID FEE PAID
$ $ 20.00 $
--------------------- --------- -------------------
-----------------
D2870251
TO THE CLERK OF THE COURT OF BALTIMORE CITY
IT IS HEREBY CERTIFIED, THAT THE WITHIN INSTRUMENT, TOGETHER WITH ALL
ENDORSEMENTS THERE-ON, HAS BEEN RECEIVED, APPROVED AND RECORDED BY THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.
RETURN TO:
THE CORPORATION TRUST
INCORPORATED
32 SOUTH STREET
BALTIMORE MD 21202
[STATE SEAL]
<PAGE>
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC.
ARTICLES SUPPLEMENTARY
NATIONAL MULTI-SECTOR FIXED INCOME FUND; INC., a Maryland corporation
having its principal office in the State of Maryland in the City of Baltimore
(hereinafter called the "Corporation"), hereby certifies to the State Department
of Assessments and Taxation of Maryland, that:
FIRST: The Corporation's Board of Directors has reclassified One Hundred
Million (100,000,000) unissued shares of Class A shares of the Corporation, par
value Ten Cents ($0.10) per share as National Multi-Sector Fixed Income Fund,
Inc. Class B Common Stock, par value Ten Cents ($0.10) per share (hereinafter,
"Class B Shares"), by setting or changing the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption thereof as hereinafter set
forth.
SECOND: The shares of Class B Shares as so reclassified by the
Corporation's Board of Directors shall have the preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption set forth in the
Corporation's Articles of Incorporation and shall be subject to all provisions
of the Articles of Incorporation relating to shares of the Corporation
generally, and those set forth as follows:
(a) The assets belonging to the Class B Shares shall be invested in the
same investment portfolio of the Corporation as the assets belonging to
National Multi-Sector Fixed Income Fund, Inc. Common Stock.
(b) The dividends and distributions of investment income and capital gains
with respect to Class B Shares shall be in such amount as may be declared
from time to time by the Board of Directors, and such dividends and
distributions may vary from dividends and distributions of investment
income and capital gains with respect to the National Multi-Sector Fixed
Income Fund, Inc. Common Stock to reflect differing allocations of the
expenses of the Corporation between the holders of the two classes and any
resultant differences between the net asset value per share of the two
classes, to such extent and for such purposes as the Board of Directors may
deem appropriate. The allocation of investment income or capital gains and
expenses and liabilities of the Corporation between the National
Multi-Sector Fixed Income
<PAGE>
Fund, Inc. Common Stock and the Class B Shares shall be determined by the
Board of Directors in a manner that is consistent with the order issued by
the Securities and Exchange Commission under the Investment Company Act of
1940 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) The proceeds of the redemption of Class B Shares (including a
fractional share) shall be reduced by the amount of any contingent deferred
sales charge payable on such redemption pursuant to the terms of the
issuance of such share.
(d) The holders of Class B Shares shall have (i) exclusive voting rights
with respect to provisions of any distribution plan adopted by the
Corporation pursuant to Rule 12b-1 under the Investment Company Act of 1940
(a "Plan") applicable to the Class B Shares and (ii) no voting rights with
respect to provisions of any Plan applicable to the National Multi-Sector
Fixed Income Fund, Inc. Common Stock or with regard to any other matter
submitted to a vote of shareholder which does not affect holders of Class B
Shares.
(e)(1) Each Class B Share, other than a share purchased through the
automatic reinvestment of a dividend or a distribution with respect to
Class B Shares, shall be converted automatically, and without any action or
choice on the part of the holder thereof, into National Multi-Sector Fixed
Income Fund, Inc. Common Stock on the date that is the first Corporation
business day following the month in which the eighth anniversary date of
the date of the issuance of the share falls. (the "Conversion Date").
(2) Each Class B Share purchased through the automatic reinvestment of
a dividend or a distribution with respect to Class B Shares shall be
segregated in a separate subaccount. Each time any Class B Shares in a
shareholder's Fund account (other than those in the sub-account) convert to
National Multi-Sector Fixed Income Fund, Inc. Common Stock, an equal pro
rata portion of the Class B Shares then in the sub-account will also
convert to National Multi-Sector Fixed Income Fund, Inc. Common Stock. The
portion will be determined by the ratio that the shareholder's Class B
Shares converting to National Multi-Sector Fixed Income Fund, Inc. Common
Stock bears to the shareholder's total Class B Shares not acquired through
dividends and distributions.
<PAGE>
(3) The conversion of Class B Shares to National Multi-Sector Fixed
Income Fund, Inc. Common Stock 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 Corporation'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.
(4) The number of shares of National Multi-Sector Fixed Income Fund,
Inc. Common Stock into which a share of Class B Shares is converted
pursuant to paragraphs (e) (1) and (e) (2) hereof shall equal the number
(including for this purpose fractions of a share) obtained by dividing the
net asset value per share of the Class B Shares for purposes of sales and
redemptions thereof on the Conversion Date by the net asset value per share
of the National Multi-sector Fixed Income Fund, Inc. Common Stock for
purposes of sales and redemptions thereof on the Conversion Date.
(5) On the Conversion Date, the Class B Shares converted into shares of
National Multi-Sector Fixed Income Fund, Inc. Common Stock will cease to
accrue dividends and will no longer be deemed outstanding and the rights of
the holders thereof (except the right to receive the number of shares of
National Multi-Sector Fixed Income Fund, Inc. Common Stock into which the
shares of Class B Shares have been converted and declared but unpaid
dividends to the Conversion Date) will cease. Certificates representing
shares of the National Multi-Sector Fixed Income Fund, Inc. Common Stock
resulting from the conversion need not be issued until certificates
representing shares of Class B Shares converted, if issued, have been
received by the Corporation or its agent duly endorsed for transfer.
THIRD: The Shares aforesaid have been duly reclassified by the
Corporation's Board of Directors pursuant to authority and power contained in
the Corporation's Articles of Incorporation.
<PAGE>
IN WITNESS WHEREOF, National Multi-Sector Fixed Income Fund, Inc. has
caused these Articles Supplementary to be executed by its President and attested
by its Secretary and its corporate seal to be affixed on this 19th day of
December 1991. The President of the Corporation who signed these Articles
Supplementary acknowledges them to be the act of the Corporation and states
under the penalties of perjury that to the best of his knowledge, information
and belief the matters and facts relating to approval hereof are true in all
material respects.
NATIONAL MULTI-SECTOR FIXED
INCOME FUND, INC.
By: /s/ Mark L. Lipson
----------------------
Mark L. Lipson
President
[CORPORATE SEAL]
Attested: /s/ Lisa M. Hurley
----------------------------
Lisa M. Hurley
Secretary
<PAGE>
ARTICLES OF AMENDMENT
OF
NATIONAL MULTI-SECTOR BOND FUND, INC.
CHANGING ITS NAME TO:
NATIONAL MULTI-SECTOR FIXED INCOME FUND INC.
APPROVED AND RECEIVED FOR RECORD BY THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND DECEMBER 8, 1989 AT 10:54 O'CLOCK A.M. AS IN CONFORMITY
WITH LAW AND ORDERED RECORDED.
ORGANIZATION AND RECORDING SPECIAL
CAPITALIZATION FEE PAID: FEE PAID: FEE PAID:
$ $ 20.00 $
-------------------------- --------- -------------
-------------
D2870251
TO THE CLERK OF THE COURT OF BALTIMORE CITY
IT IS HEREBY CERTIFIED, THAT THE WITHIN INSTRUMENT, TOGETHER WITH ALL
ENDORSEMENTS THEREON, HAS BEEN RECEIVED, APPROVED AND RECORDED BY THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.
RETURN TO:
THE CORPORATION TRUST INCORPORATE
D
32 SOUTH STREET
BALTIMORE MD 21202
[STATE SEAL]
Exhibit 1.1
NATIONAL MULTI-SECTOR BOND FUND, INC.
ARTICLES OF AMENDMENT
National Multi-Sector Bond Fund, Inc., a Maryland corporation having its
principal office in Baltimore, Maryland (hereinafter called the Corporation),
hereby certifies to the State Department of Assessments and Taxation of
Maryland, that:
FIRST: The Charter of the Corporation is hereby amended by:
1. Striking out the name of the Corporation in Articles II of the Articles
of Incorporation and inserting in lieu thereof the following name:
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC.
SECOND: The amendment to the charter of the Corporation herein made was
advised by the Board of Directors and approved by the sole stockholder of the
Corporation, pursuant to joint unanimous written consent of the Board of
Directors and the sole stockholder dated as of December 6, 1989.
IN WITNESS WHEREOF, the Corporation has caused these Articles to be signed in
its name and on behalf by its Vice President and attested by its Secretary on
this 6th day of December, 1989.
NATIONAL MULTI-SECTOR BOND FUND, INC.
By: /S/ Denis McAuley
----------------------
Denis McAuley, Vice President
Attest: /s/ Lisa H. Borger
---------------------------
Lisa H. Borger, Secretary
THE UNDERSIGNED Vice President of National Multi-Sector Bond Fund, Inc. has
executed on behalf of said Corporation the foregoing Articles of Amendment, of
which this certificate is made a part, and hereby acknowledges, in the name and
on behalf of said Corporation, the foregoing Articles of Amendment to be the
corporate act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.
/s/ Denis McAuley
-----------------------------
Denis McAuley, Vice President
<PAGE>
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
11/6/89 at 10:37 A.M.
NATIONAL BALANCED BOND FUND, INC.
ARTICLES OF AMENDMENT
National Balanced Bond Fund, Inc., a Maryland corporation having its
principal office in Baltimore, Maryland (hereinafter called the Corporation),
hereby certifies to the State Department of Assessments and Taxation of
Maryland, that:
FIRST: The charter of the Corporation is hereby amended by:
1. Striking out the name of the Corporation in Article II of the Articles
of Incorporation and inserting in lieu thereof the following name:
NATIONAL MULTI-SECTOR BOND FUND, INC.
2. Striking out the dollar amount in lines 6 and 13 of Paragraph 2 of
Article VIII and inserting in lieu thereof the amount of $1000.
SECOND: The amendments to the charter of the Corporation herein made were
duly approved by unanimous written consent of the entire Board of Directors
dated October 31, 1989, and at the time of approval by the Directors there were
no shares of stock of the Corporation entitled to vote on the matter either
outstanding or subscribed for.
IN WITNESS WHEREOF the Corporation has caused these Articles to be signed in its
name and on its behalf by its President and attested by its Secretary on this
1st day of November, 1989.
NATIONAL BALANCED BOND FUND, INC.
By: /s/ Mark L. Lipson
-----------------------
Mark L. Lipson, President
Attest:
/s/ Lisa H. Borger
- -----------------------------
Lisa H. Borger, Secretary
- --------------------------------------------------------------------------------
STATE OF MARYLAND
-----------------
I hereby certify that this is a true and complete copy of the 3 page document on
file in this office. DATED: 11/7/89.
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
BY: /s/ Billie J. Swoboda
---------------------------------------------------------------------------
This stamp replaces our previous certification system. Effective: 10/84
- --------------------------------------------------------------------------------
<PAGE>
THE UNDERSIGNED, President of National Balanced Bond Fund, Inc., who
executed on behalf of said Corporation the foregoing Articles of Amendment, of
which this certificate is made a part, hereby acknowledges, in the name and on
behalf of said Corporation, the foregoing Articles of Amendment to be the
corporate act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.
/s/ Mark L. Lipson
-------------------------
Mark L. Lipson, President
<PAGE>
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
9/20/89 at 10:18
------- -----.m.
ARTICLES OF INCORPORATION
OF
NATIONAL BALANCED BOND FUND, INC.
* * *
ARTICLE I
THE UNDERSIGNED, Lisa H. Borger, whose post office address is c/o National
Securities & Research Corporation, 3 Pickwick Plaza, Greenwich, CT 06830, being
at least eighteen (18) years of age, does hereby act as sole incorporator, under
and by virtue of the General Laws of the State of Maryland authorizing the
formation of corporations and with the intention of forming a corporation.
ARTICLE II
NAME
----
The name of the Corporation is
NATIONAL BALANCED BOND FUND, INC.
ARTICLE III
PURPOSES AND POWERS
-------------------
The purpose or purposes for which the Corporation is formed is to act as an
open-end, management investment company under the Investment Company Act of
1940, as amended, and the business or objects to be transacted, carried on and
promoted by it are as follows:
(1) To hold, invest and reinvest its assets in securities, and in
connection therewith to hold part or all of its assets in cash.
(2) To issue and sell shares of its own capital stock in such amounts and
on such terms and conditions, for such purposes and for such amount or kind of
consideration now or hereafter permitted by the General Corporation Law of the
State of Maryland and by these Articles of Incorporation, as its Board of
Directors may determine, provided, however, that the value of the consideration
per share to be received by the Corporation upon the sale or other disposition
of any shares of its capital stock shall be not less than the net asset value
per share of such capital stock outstanding at the time of such event.
- --------------------------------------------------------------------------------
STATE OF MARYLAND
I hereby certify that this is a true and complete a copy of the 9 page document
on file in this office. DATED: September 20, 1989.
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
BY: /s/ Billie J. Swoboda
---------------------------------------------------------------------------
This stamp replaces our previous certification system. Effective: 10/84
- --------------------------------------------------------------------------------
<PAGE>
(3) To redeem, purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the stockholders
of the Corporation) shares of its capital stock, in any manner and to the extent
now or hereafter permitted by the General Corporation Law of the State of
Maryland and by these Articles of Incorporation.
(4) To do any and all such further acts or things and to exercise any and
all such further powers or rights as may be necessary, incidental, relative,
conducive, appropriate or desirable for the accomplishment, carrying out or
attainment of any of the foregoing purposes or objects.
The Corporation shall be authorized to exercise and enjoy all of the
powers, rights and privileges granted to or conferred upon corporations by the
General Laws of the State of Maryland now or hereafter in force and the
enumerations of the foregoing shall not be deemed to exclude any powers, rights
or privileges so granted or conferred.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
-----------------------------------
The post office address of the principal office of the Corporation in the
State of Maryland is c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. The name of the resident agent of the Corporation in
this State is The Corporation Trust Incorporated, a corporation of the State of
Maryland, and the post office address of the resident agent is 21 South Street,
Baltimore, Maryland 21202.
ARTICLE V
CAPITAL-STOCK
-------------
(1) The total number of shares of capital stock which the Corporation shall
have authority to issue is Five Hundred Million (500,000,000) shares of the par
value of Ten Cents ($0.10) per share and of the aggregate par value of Fifty
Million Dollars ($50,000,000).
The shares shall be divided into five classes of Common Stock, each of which is
to consist of One Hundred Million (100,000,000) shares. The classes are hereby
designated as follows: National Balanced Bond Fund, Inc. Common Stock, and
Classes A, B, C and D Common Stock.
-2-
<PAGE>
(a) The holders of each share of stock of the Corporation shall be entitled
to one vote for each full share, and a fractional vote for each fractional share
of stock, irrespective of the class, then standing in his name on the books of
the Corporation. On any matter submitted to a vote of Stockholders, all shares
of the Corporation then issued and outstanding and entitled to vote shall be
voted in the aggregate and not by class except that (1) when otherwise expressly
required by the Maryland General Corporation Law or the Investment Company Act
of 1940, as amended, shares shall be voted by individual class; (2) only shares
of the respective classes are entitled to vote on matters concerning only that
class; and (3) fundamental policies may not be changed, unless a change affects
only one class, without the approval of the holders of a majority of the
Corporation's outstanding voting shares, including a majority (as defined under
the Investment Company Act of 1940) of the shares of each class.
(b) Each class of stock of the Corporation shall have the following powers,
preferences or other special rights, and the qualifications, restrictions, and
limitations thereof shall be as follows;
(1) The shares of each class, when issued, will be fully paid and
non-assessable, have no preference, preemptive, conversion, exchange,
or similar rights, and will be freely transferable
(2) The Board of Directors may from time to time declare and pay dividends
or distributions, in stock or in cash, on any or all classes of stock,
the amount of such dividends and distributions and the payment of them
being wholly in the discretion of the Board of Directors.
(i) Dividends or distributions on shares of any class of stock shall be
paid only out of earned surplus or other lawfully available assets belonging to
such class.
(ii) Inasmuch as one goal of the Corporation is to qualify as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended, or any successor or comparable statute thereto, and the Regulations
promulgated thereunder, and inasmuch as the computation of net income and gains
for Federal income tax purposes may vary from the computation thereof on the
books of the Corporation, the Board of Directors shall have the power in its
discretion to distribute in any fiscal years as dividends, including dividends
designated in whole or in part as capital gains distributions, amounts
sufficient in the opinion of the Board of Directors to enable the Corporation to
quality as a regulated investment company and to avoid liability for the
Corporation for Federal income tax in respect of that year. In furtherance, and
not in limitation of the foregoing, in the event that a class of shares has a
net capital loss for a fiscal year, and to the extent that a
-3-
<PAGE>
net capital loss for a fiscal year offsets net capital gains from one or more of
the other classes, the amount to be deemed available for distribution to the
class or classes with the net capital gain may be reduced by the amount offset.
(3) The assets belonging to any class of stock shall be charged with the
liabilities in respect to such class, and shall also be charged with
its share of the general liabilities of the Corporation in proportion
to the asset value of the respective classes. The determination of the
Board of Directors shall be conclusive as to the amount of liabilities,
the allocation of the same as to a given class, and as to whether the
same or general assets of the Corporation are allocable to one or more
classes.
(4) Prior to the issuance of any shares of a class, the Board of Directors
may by resolution change the designation of such class to the name of
the Fund of the Corporation with respect to which such shares will be
issued.
(c) The Board of Directors may classify or reclassify any unissued capital
stock of the Corporation from time to time by setting or changing the
preferences, conversion or other rights, voting powers, restriction, limitations
as to dividends, qualifications, or terms or conditions of redemption of such
stock.
(d) Anything in the Corporation's charter or By-laws to the contrary
notwithstanding, unless otherwise prohibited by law, so long as the Corporation
is registered as an open-end management investment company under the Investment
Company Act of 1940, the Board of Directors may increase or decrease the
aggregate number of shares of stock which the Corporation shall have authority
to issue or the number of shares of stock of any authorized class.
(2) All persons who shall acquire stock in the Corporation shall acquire
the same subject to the provisions of these Articles of Incorporation and the
By-Laws of the Corporation.
ARTICLE VI
PROVISIONS FOR DEFINING, LIMITING, AND REGULATING
CERTAIN POWERS OF THE CORPORATION AND OF
THE DIRECTORS AND STOCKHOLDERS
------------------------------
(1) The number of directors of the Corporation shall be two, which number
may be increased pursuant to the By-laws of the Corporation but shall never be
less than two. The name of the directors who shall act until the first annual
meeting of shareholders or until their successors are duly elected and qualify
are:
Mark L. Lipson
Denis McAuley III
-4-
<PAGE>
(2) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of capital stock, whether now
or hereafter authorized, for such consideration as the Board of Directors may
deem advisable, subject to such limitations as may be set forth in these
Articles of Incorporation or in the By--laws of the Corporation or in the
General Corporation Law of the State of Maryland.
(3) Each director and each officer of the Corporation shall be indemnified
by the Corporation to the full extent permitted by the General Laws of the State
of Maryland subject to the requirements of the Investment Company Act of 1940,
as amended.
(4) The Board of Directors of the Corporation may make, alter or repeal
from time to time any of the By-laws of the Corporation except any particular
By-law which is specified as not subject to alteration or repeal by the Board of
Directors, subject to the requirements of the Investment Company Act of 1940, as
amended.
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
---------------------------
No holder of stock of the Corporation shall by reason of his holding shares
of stock of the Corporation have any preemptive or preferential right to
purchase or subscribe for any shares of the capital stock of the Corporation,
now or hereafter authorized, or any other security of the Corporation which it
may issue or sell, now or hereafter authorized, whether or not the issuance of
any such shares or other securities would adversely affect the voting or
dividend rights of such stockholders, other than such right, if any, as the
Board of Directors in its discretion, may determine. The Board of Directors may
issue shares of any class of the Corporation, or any notes, debentures, bonds or
any security convertible into shares of any class, either in whole or in part,
to existing Stockholders.
ARTICLE VIII
REDEMPTION
----------
(1) Each holder of shares of capital stock of the Corporation shall be
entitled to require the Corporation to redeem all or any part of the shares of
capital stock of the Corporation standing in the name of such holder on the
books of the Corporation, and all shares of capital stock issued by the
Corporation shall be subject to redemption by the Corporation, at the redemption
price of such shares as in effect from time to time as may be determined by
-5-
<PAGE>
the Board of Directors of the Corporation in accordance with the provisions
hereof, subject to the right of the Board of Directors of the Corporation to
suspend the right of redemption of shares of capital stock of the Corporation or
postpone the date of payment of such redemption price in accordance with
provisions of applicable law. The redemption price of shares of capital stock of
the Corporation shall be the net asset value thereof as determined by the Board
of Directors of the Corporation from time to time in accordance with the
provisions of applicable law, less such redemption fee or other charge, if any,
as may be fixed by resolution of the Board of Directors of the Corporation.
Payment of the redemption price shall be made in cash by the Corporation at such
time and in such manner as may be determined from time to time by the Board of
Directors of the Corporation.
(2) The Corporation shall be entitled to redeem its shares of capital stock
from any Stockholder who shall have held shares of capital stock of the
Corporation as of record for a period of at least one year, where the aggregate
redemption price for such shares, as determined in accordance with paragraph (1)
of this Article, is less than $200. Prior to effecting any such redemption, the
Corporation shall give a Stockholder 60 days prior written notice of redemption,
mailed to such Stockholder at his or its address of record. At any time during
the 60-day period following the giving of such notice, the Stockholder receiving
the notice may purchase additional shares of capital stock of the Corporation
sufficient to cause the aggregate redemption price of all shares of capital
stock held by such Stockholder to be $200 or more, in which case the Corporation
shall not effect a redemption of such Stockholder's shares of capital stock.
ARTICLE IX
DETERMINATION BINDING
---------------------
Any determination made in good faith, so far as accounting matters are
involved, in accordance with accepted accounting practice by or pursuant to the
direction of the Board of Directors, as to the amount of assets, obligations or
liabilities of the Corporation, as to the amount of net income of the
Corporation from dividends and interest for any period or amounts at any time
legally available for the payment of dividends, as to the amount of any reserves
or charges set up and the propriety thereof, as the time of or purpose for
creating reserves or as to the use, alteration or cancellation of any reserves
or charges (whether or not any obligation or liability for which such reserves
or charges shall have been created, shall have been paid or discharged or shall
be then or thereafter required to be paid or discharged), as to the price of any
security owned by the Corporation or as to any other matters relating to the
issuance, sale, redemption or other
-6-
<PAGE>
acquisition or disposition of securities or shares of capital stock of the
Corporation, and any reasonable determination made in good faith by the Board of
Directors as to whether any transaction constitutes a purchase of securities on
"margin", a sale of securities "short", or an underwriting of the sale of, or a
participation in any underwriting or selling group in connection with the public
distribution of, any securities, shall be final and conclusive, and shall be
binding upon the Corporation and all holders of its capital stock, past, present
and future, and shares of the capital stock of the Corporation are issued and
sold on the condition and understanding, evidenced by the purchase of shares of
capital stock or acceptance of share certificates, that any and all such
determinations shall be binding as aforesaid. No provision of these Articles of
Incorporation shall be effective to (a) require a waiver of compliance with any
provision of the Securities Act of 1933, as amended, or the Investment Company
Act of 1940, as amended, or of any valid rule, regulation or order of the
Securities and Exchange Commission thereunder or (b) protect or purport to
protect any director or officer of the Corporation against any liability to the
Corporation or its security holders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
ARTICLE X
PRIVATE PROPERTY OR STOCKHOLDERS
--------------------------------
The private property of Stockholders shall not be subject to the payment of
corporate debts to any extent whatsoever.
ARTICLE XI
PERPETUAL EXISTENCE
-------------------
The duration of the Corporation shall be perpetual.
ARTICLE XII
ANNUAL MEETINGS
---------------
Anything in these Articles of Incorporation or in the Corporation's By-laws
to the contrary notwithstanding, unless otherwise provided by law, so long as
the Corporation is registered as an investment company under the Investment
Company Act of 1940, the Corporation shall not be required to hold an annual
meeting in any year in which none of the following is required to be acted on by
the Stockholders of the Corporation under the Investment Company Act of 1940:
(1) election of directors, (2) approval of an
-7-
<PAGE>
investment advisory agreement, (3) ratification of the selection of independent
public accountants, and (4) approval of a distribution agreement.
ARTICLE XIII
AMENDMENT
---------
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in its charter, in the manner now or hereafter prescribed by
statute, including any amendment which alters the contract rights, as expressly
set forth in the charter, of any outstanding stock and substantially adversely
affects the Stockholders' rights, and all rights conferred upon Stockholders
herein are granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned incorporator of the Corporation hereby
executes the foregoing Articles of Incorporation and acknowledges the same to be
her act and further acknowledges that, to the best of her knowledge, the matters
and facts set forth herein are true in all material respects under the penalties
of perjury.
Dated the 31 day of September, 1989.
/s/ Lisa H. Borger
---------------------------
Lisa H. Borger
-8-
<PAGE>
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC.
ARTICLES OF AMENDMENT
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC., a Maryland corporation
having its principal Maryland office in the City of Baltimore in the State of
Maryland(hereinafter referred to as the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland, that:
FIRST: Article II of the Articles of Incorporation of the Corporation is
hereby amended by striking out the name of the Corporation and substituting
therefor the following name:
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
SECOND: The amendment to the Articles of Incorporation of the Corporation
as hereinabove set forth has been duly approved by the Board of Directors on
June 30, 1993 and approved by the stockholders of the Corporation on December
23, 1993 in the manner and by the vote required by law.
IN WITNESS WHEREOF, NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC. has
caused these Articles of Amendment to be executed in its name and on its behalf
by its duly authorized officers who acknowledge that these Articles of Amendment
are the act of the Corporation, that to the best of their knowledge, information
and belief, the matters and facts set forth herein as to authorization and
approval are true in all material respects and that this statement is made under
the penalties of perjury.
DATED this 10th day of June, 1994.
NATIONAL MULTI-SECTOR FIXED INCOME
FUND, INC. (renamed PHOENIX MULTI-SECTOR
FIXED INCOME FUND, INC.)
(seal) By: /s/ Philip R. McLoughlin
--------------------------------------
Philip R. McLoughlin
President
ATTEST:
By: /s/ Richard J. Wirth
- --------------------------------
Richard J. Wirth
Assistant Secretary
<PAGE>
ARTICLES OF AMENDMENT
OF
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC.
CHANGING ITS NAME TO:
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
APPROVED AND RECEIVED FOR RECORD BY THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND JUNE 14, 1994 AT 12:27 O'CLOCK P. M. AS IN CONFORMITY WITH
LAW AND ORDERED RECORDED.
------------------
ORGANIZATION AND RECORDING SPECIAL
CAPITALIZATION FEE PAID: FEE PAID: FEE PAID:
$ $ 20.00 $
---------------------- --------- --------
----------
D2870251
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
IT IS HEREBY CERTIFIED, THAT THE WITHIN INSTRUMENT, TOGETHER WITH ALL
INDORSEMENTS THEREON, HAS BEEN RECEIVED, APPROVED AND RECORDED BY THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.
DECHERT, PRICE & RHOADS
ATTN NATALIE BEJ
1500 K ST, NW #500
WASHINGTON DC 20005
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
ARTICLES SUPPLEMENTARY
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC., formerly National
Multi-Sector Fixed Income Fund, Inc., a Maryland corporation having its
principal Maryland office in the City of Baltimore in the State of Maryland
(hereinafter called the "Corporation"), hereby certifies to the State Department
of Assessments and Taxation of Maryland (the "Department"), that:
FIRST: The Corporation has authority to issue FIVE HUNDRED MILLION
-----
(500,000,000)shares, of one or more distinct and separate series of classes
thereof as the Board of Directors shall from time to time create and establish,
with par value of Ten Cents ($0.10) each, and with aggregate par value of FIFTY
MILLION Dollars ($50,000,000). At a meeting of the Board of Directors of the
Corporation held on September 20, 1991, the Board of Directors determined to
implement a dual distribution system and, in connection therewith, to issue
shares of the Corporation's capital stock in two classes: Class A and Class B.
On January 2, 1992, the Corporation filed Articles Supplementary with the
Department classifying the Corporation's shares of capital stock as follows:
Number of Shares
Name of Class Allocated on 1-2-92
------------- -------------------
Class A 100,000,000
Class B 200,000,000
Class C 100,000,000
Class D 100,000,000
Common Stock 0
SECOND: At a meeting of the Board of Directors of the Corporation held on
May 25, 1994,the Board of Directors classified as "Class B" shares of the
Corporation FIFTY MILLION (50,000,000)unissued shares of Class C Common Stock of
the Corporation, par value Ten Cents ($0.10) per share; classified as "Class A"
shares of the Corporation the remaining FIFTY MILLION (50,000,000) unissued
shares of Class C Common Stock of the Corporation, par value Ten Cents ($0.10)
per share; and classified as "Class A" shares of the Corporation ONE HUNDRED
MILLION (100,000,000) unissued shares of Class D Common Stock of the
Corporation, par value Ten Cents ($0.10) per share. Based on the foregoing,
notwithstanding anything possibly to the contrary, there shall presently exist
TWO HUNDRED FIFTY MILLION (250,000,000) shares of Class A Common Stock of the
Corporation, par value Ten Cents ($0.10) per share and TWO HUNDRED FIFTY MILLION
(250,000,000) shares of Class B Common Stock of the Corporation, par value Ten
Cents ($0.10) per share. The preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption of the classes of shares shall be as set forth in the
Corporation's Articles of Incorporation, as amended, and shall be subject to all
provisions of the Articles of Incorporation relating to shares of the
Corporation generally, and those set forth as follows:
(a) The assets belonging to each class shall be invested in the same
investment portfolio of the Corporation.
(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 Board of Directors, and the dividends and distributions
of each class may vary from dividends and distribution of investment income
and capital gains with respect to the other classes to reflect
<PAGE>
differing allocations of the expenses of the Corporation among the holders
of the classes and any resultant differences between the net asset value
per share of each class, to such extent and for such purposes as the Board
of Directors may deem appropriate. The allocation of investment income or
capital gains and expenses and liabilities of the Corporation among the
classes shall be determined by the Board of Directors 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 shares (including fractional shares) may be subject to an
initial sales charge pursuant to the terms of the issuance of such shares.
(d) The proceeds of the redemption of Class B shares (including fractional
shares) 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
Corporation pursuant to Rule 12b-1 under the Investment Company Act of 1940
(a "Plan") applicable to the respective class, and (ii) no voting rights
with respect to provisions of any Plan applicable to any other class or
with regard to any other matter submitted to a vote of shareholders which
does not affect holders of that respective class.
(f)(1) Each Class B share, other than a share purchased through the
automatic reinvestment of a dividend or a distribution with respect to
Class B shares, shall be converted automatically, and without any action or
choice on the part of the holder thereof, into Class A shares on the date
that is the first business day of 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 capital stock or shares of beneficial
interest, as applicable, 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 Corporation, 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 capital stock or shares of
beneficial interest, as applicable.
(2) Each Class B share purchased through the automatic reinvestment of
a dividend or a distribution with respect to Class B shares shall be
segregated in a separate subaccount. Each time any Class B shares in a
shareholder's Fund account (other than those in the sub-account) convert to
Class A shares, an equal pro rata portion of the Class B shares then in the
sub-account will also convert automatically to Class A shares 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.
(3) 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
-2-
<PAGE>
dividends on Class A shares and Class B shares does not result in the
Corporation'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
tax law.
(4) The number of Class A shares into which a share of Class B shares
is converted pursuant to paragraphs (f)(1) and (f)(2) hereof shall equal
the number (including for this purpose fractions of a share) obtained by
dividing the net asset value per share of the Class B shares (for purposes
of sales and redemptions thereof on the Conversion Date) by the net asset
value per share of the Class A shares (for purposes of sales and
redemptions thereof on the Conversion Date).
(5) On the Conversion Date, the Class B shares converted into 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 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 issued, have been received by the Corporation or its
agent duly endorsed for transfer.
THIRD: The shares of the Corporation classified pursuant to Article SECOND
of these Articles Supplementary have been duly authorized and classified by the
Corporation's Board of Directors pursuant to authority and power contained in
the Corporation's Articles of Incorporation and in accordance with Section 2-208
of the Maryland General Corporation Law.
IN WITNESS WHEREOF, PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC. has caused
there Articles Supplementary to be executed by its duly authorized officers who
acknowledge that these Articles Supplementary are the act of the Corporation,
that to the best of their knowledge, information and belief, the matters and
facts set forth herein relating to authorization and approval of these Articles
Supplementary are true in all material respects and that this statement is made
under the penalties of perjury.
DATED this 10th day of June, 1994.
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
(SEAL)
By: /s/ Philip R. McLoughlin
----------------------------
Philip R. McLoughlin
President
ATTEST:
By: /s/ Richard J. Wirth
- ----------------------------
Richard J. Wirth
Assistant Secretary
fund/908
-3-
<PAGE>
ARTICLES SUPPLEMENTARY
OF
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
APPROVED AND RECEIVED FOR RECORD BY THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND JUNE 14, 1994 AT 12:29 O'CLOCK P.M. AS IN CONFORMITY WITH
LAW AND ORDERED RECORDED.
------------------
ORGANIZATION AND RECORDING SPECIAL
CAPITALIZATION FEE PAID: FEE PAID: FEE PAID:
$ $20.00 $
------------------------ -------- -------
----------
D2870251
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
IT IS HEREBY CERTIFIED, THAT THE WITHIN INSTRUMENT, TOGETHER WITH ALL
ENDORSEMENTS THEREON, HAS BEEN RECEIVED, APPROVED AND RECORDED BY THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.
DECHERT, PRICE & RHOADS
ATTN NATALIE BEJ
1500 K ST, NW #500
WASHINGTON DC 20005
001C3086917
A 458006
[STATE SEAL] RECORDED IN THE RECORDS OF THE
STATE DEPARTMENT OF ASSESSMENTS
Exhibit 2
BY-LAWS
OF
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC.
ARTICLE I
OFFICES
-------
Section 1. PRINCIPAL OFFICE. The principal office of the Corporation shall
be in the City of Baltimore, State of Maryland.
Section 2. PRINCIPAL EXECUTIVE OFFICE. The principal executive office of
the Corporation shall be at 600 Third Avenue, New York, New York.
Section 3. OTHER OFFICES. The Corporation may have such other offices in
such places as the Board of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. ANNUAL MEETING. The annual meeting of the stockholders of the
Corporation shall be held on such day of each year as may be designated annually
by the Board of Directors; provided, however, that no annual meeting shall be
held in any year unless required under the Maryland General Corporation Laws or
the Investment Company Act of 1940 as amended.
Any business of the Corporation may be transacted at the annual meeting
without being specifically designated in the notice, except such business as is
specifically required by statute to be stated in the notice.
Section 2. SPECIAL MEETINGS. Special meetings of the stockholders, unless
otherwise provided by law or by the Articles of Incorporation, may be called for
any purpose or purposes by a majority of the Board of Directors, the President,
or on the written request of the holders of 25% of the outstanding shares of
capital stock of the Corporation entitled to vote at such meeting to the extent
permitted by Maryland law.
Section 3. PLACE OF MEETINGS. The annual meeting and any special meeting of
the stockholders shall be held at such place within the United States as the
Board of Directors may from time to time determine.
<PAGE>
Section 4. NOTICE OF MEETINGS; WAIVER OF NOTICE. Notice of the place, date
and time of the holding of each annual and special meeting of the stockholders
and the purpose or purposes of each special meeting shall be given personally or
by mail, not less than 10 and not more than ninety days before the date of such
meeting, to each stockholder entitled to vote at such meeting and to each other
stockholder entitled to notice of the meeting. Notice by mail shall be deemed to
be duly given when deposited in the United States mail addressed to the
stockholder at his address as it appears on the records of the Corporation, with
postage thereon prepaid.
Notice of any meeting of stockholders shall be deemed waived by any
stockholder who shall attend such meeting in person or by proxy, or who shall,
either before or after the meeting, submit a signed waiver of notice which is
filed with the records of the meeting. When a meeting is adjourned to another
time and place, unless the Board of Directors, after the adjournment, shall fix
a new record date for an adjourned meeting, or the adjournment is for more than
one hundred and twenty days after the original record date, notice of such
adjourned meeting need not be given if the time and place to which the meeting
shall be adjourned were announced at the meeting at which the adjournment is
taken.
Section 5. QUORUM. At all meetings of the stockholders, the holders of a
majority of the shares of stock of the Corporation entitled to vote at the
meeting, present in person or by proxy, shall constitute a quorum for the
transaction of any business, except as otherwise provided by statute or by the
Articles of Incorporation or these By-Laws. In the absence of a quorum no
business may be transacted, except that the holders of a majority of the shares
of stock present in person or by proxy and entitled to vote may adjourn the
meeting from time to time, without notice other than announcement thereat except
as otherwise required by these By-Laws, until the holders of the requisite
amount of shares of stock shall be so present. At any such adjourned meeting at
which a quorum may be present any business may be transacted which might have
been transacted at the meeting as originally called. The absence from any
meeting, in person or by proxy, of holders of the number of shares of stock of
the Corporation in excess of a majority thereof which may be required by the
laws of the State of Maryland, the Investment Company Act of 1940, as amended,
or other applicable statute, the Articles of Incorporation, or these By-Laws,
for action upon any given matter shall not prevent action at such meeting upon
any other matter or matters which may properly come before the meeting, if there
shall be present thereat, in person or by proxy, holders of the number of shares
of stock of the Corporation required for action in respect of such other matter
or matters.
-2-
<PAGE>
Section 6. ORGANIZATION. At each meeting of the stockholders, the Chairman
of the Board (if one has been designated by the Board), or in his absence or
inability to act, the President, or in the absence or inability to act of the
Chairman of the Board and the President, a Vice President, shall act as chairman
of the meeting. The Secretary, or in his absence or inability to act, any person
appointed by the chairman of the meeting, shall act as secretary of the meeting
and keep the minutes thereof.
Section 7. ORDER OF BUSINESS. The order of business at all meetings of the
stockholders shall be as determined by the chairman of the meeting.
Section 8. VOTING. Except as otherwise provided by statute or the Articles
of Incorporation, each holder of record of shares of stock of the Corporation
having voting power shall be entitled at each meeting of the stockholders to one
vote for every share of such stock standing in his name on the record of
stockholders of the Corporation as of the record date determined pursuant to
Section 9 of this Article or if such record date shall not have been so fixed,
than at the later of (i) the close of business on the day on which notice of the
meeting is mailed or (ii) the thirtieth day before the meeting.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a proxy signed by such
stockholder or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date thereof, unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the stockholder
executing it, except in those cases where such proxy states that it is
irrevocable and where an irrevocable proxy is permitted by law. Except as
otherwise provided by statute, the Articles of Incorporation or these By-Laws,
any corporate action to be taken by vote of the stockholders shall be authorized
by a majority of the total votes cast at a meeting of stockholders by the
holders of shares present in person or represented by proxy and entitled to vote
on such action.
If a vote shall be taken on any question other than the election of
directors, which shall be by written ballot, unless required by statute or these
By-Laws, or determined by the chairman of the meeting to be advisable, any such
vote need not be by ballot. On a vote by ballot, each ballot shall be signed by
the stockholder voting, or by his proxy, if there be such proxy, and shall state
the number of shares voted.
-3-
<PAGE>
Section 9. FIXING OF RECORD DATE. The Board of Directors may set a record
date for the purpose of determining stockholders entitled to vote at any meeting
of the stockholders. The record date, which may not be prior to the close of
business on the day the record date is fixed, shall be not more than ninety nor
less than ten days before the date of the meeting of the stockholders. All
persons who were holders of record of shares at such time, and no others, shall
be entitled to vote at such meeting and any adjournment thereof.
Section 10. INSPECTORS. The Board may, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If the inspectors shall not be so appointed or if any of
them shall fail to appear or act, the chairman of the meeting may, and on the
request of any stockholder entitled to vote thereat shall, appoint inspectors.
Each inspector, before entering upon the discharge of his duties, shall take and
sign an oath to execute faithfully the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors
shall determine the number of shares outstanding and the voting powers of each,
the number of shares represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result, and do such acts as were proper to conduct the election or vote with
fairness to all stockholders. On request of the chairman of the meeting or any
stockholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, request or matter determined by them and shall execute
a certificate of any fact found by them. No director or candidate for the office
of director shall act as inspector of an election of directors. Inspectors need
not be stockholders.
Section 11. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Except as otherwise
provided by statute or the Articles of Incorporation, any action required to be
taken at any annual or special meeting of stockholders, or any action which may
be taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if the following are
filed with the records of the meeting: (i) a unanimous written consent which
sets forth the action and is signed by each stockholder entitled to vote on the
matter and (ii) a written waiver of any right to dissent signed by each
stockholder entitled to notice of the meeting but not entitled to vote thereat.
-4-
<PAGE>
ARTICLE III
BOARD OF DIRECTORS
-------------------
Section 1. GENERAL POWERS. Except as otherwise provided in the Articles of
Incorporation, the business and affairs of the Corporation shall be managed
under the direction of the Board of Directors. All powers of the Corporation may
be exercised by or under authority of the Board of Directors except as conferred
on or reserved to the stockholders by law or by the Articles of Incorporation or
these By-Laws.
Section 2. NUMBER OF DIRECTORS. The number of directors shall be fixed from
time to time by resolution of the Board of Directors adopted by a majority of
the Directors then in office; provided, however, that the number of directors
shall in no event be less than two nor more than fifteen. Any vacancy created by
an increase in Directors may be filled in accordance with Section 6 of this
Article III. No reduction in the number of directors shall have the effect of
removing any director from office prior to the expiration of his term unless
such director is specifically removed pursuant to Section 5 of this Article III
at the time of such decrease. Directors need not be stockholders.
Section 3. ELECTION AND TERM OF DIRECTORS. Directors shall be elected by
written ballot at the annual meeting of stockholders, or a special meeting held
for that purpose. The term of office of each director shall be from the time of
his election and qualification until his death or until he shall have resigned
or have been removed as hereinafter provided in these By-Laws, or as otherwise
provided by statute or the Articles of Incorporation.
Section 4. RESIGNATION. A director of the Corporation may resign at any
time by giving written notice of his resignation to the Board or the Chairman of
the Board or the President or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its receipt; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
-5-
<PAGE>
Section 5. REMOVAL OF DIRECTORS. Any director of the Corporation may be
removed by the stockholders by a vote of a majority of the votes entitled to be
cast on the matter at any meeting of stockholders, duly called and at which a
quorum is present.
Section 6. VACANCIES. Any vacancies in the Board, whether arising from
death, resignation, removal, an increase in the number of directors or any other
cause, shall be filled by a vote of the majority of the Board of Directors then
in office even though such majority is less than a quorum, provided that no
vacancies shall be filled by action of the remaining directors, if after the
filling of said vacancy or vacancies, less than two-thirds of the directors than
holding office shall have been elected by the stockholders of the Corporation.
In the event that at any time there is a vacancy in any office of a director
which vacancy may not be filled by the remaining directors, a special meeting of
the stockholders shall be held as promptly as possible and in any event within
sixty days, for the purpose of filling said vacancy or vacancies. Any directors
elected or appointed to fill a vacancy shall hold office only until the next
annual meeting of stockholders of the Corporation and until a successor shall
have been chosen and qualified or until his earlier resignation or removal.
Section 7. PLACE OF MEETINGS. Meetings of the Board may be held at such
place within or without the State of Maryland as the Board may from time to time
determine or as shall be specified in the notice of such meeting.
Section 8. REGULAR MEETINGS. Regular meetings of the Board may be held
without notice at such time and place as may be determined by the Board of
Directors.
Section 9. SPECIAL MEETINGS. Special meetings of the Board may be called by
two or more directors of the Corporation or by the Chairman of the Board or the
President.
Section 10. TELEPHONE MEETINGS. Members of the Board of Directors or of any
committee thereof may participate in a meeting by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time. Subject to the provisions of
the Investment Company Act of 1940, as amended, participation in a meeting by
these means constitutes presence in person at the meeting.
Section 11. NOTICE OF SPECIAL MEETINGS. Notice of each special meeting of
the Board shall be given by the Secretary as hereinafter provided, in which
notice shall be stated the time and place of the meeting. Notice of each such
meeting shall be delivered to each director, either personally or by telephone
or any standard form of telecommunication, at least twenty-four hours before the
time at which such meeting is to be held, or by first-class mail, postage
prepaid, addressed to him at his residence or usual place of business, at least
three days before the day on which such meeting is to be held.
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Section 12. WAIVER OF NOTICE OF MEETINGS. Notice of any special meeting
need not be given to any director who shall, either before or after the meeting,
sign a written waiver of notice which is filed with the records of the meeting
or who shall attend such meeting. Except as otherwise specifically required by
these By-Laws, a notice or waiver of notice of any meeting need not state the
purposes of such meeting.
Section 13. QUORUM AND VOTING. One-third, but not less than two, of the
members of the entire Board shall be present in person at any meeting of the
Board in order to constitute a quorum for the transaction of business at such
meeting, and except as otherwise expressly required by statute, the Articles of
Incorporation, these By-Laws, the Investment Company Act of 1940, as amended, or
other applicable statute, the act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the Board. In the
absence of a quorum at any meeting of the Board, a majority of the directors
present thereat may adjourn such meeting to another time and place until a
quorum shall be present thereat. Notice of the time and place of any such
adjourned meeting shall be given to the directors who were not present at the
time of the adjournment and, unless such time and place were announced at the
meeting at which the adjournment was taken, to the other directors. At any
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called.
Section 14. ORGANIZATION. The Board may, by resolution adopted by a
majority of the entire Board, designate a Chairman of the Board, who shall
preside at each meeting of the Board. In the absence or inability of the
Chairman of the Board to preside at a meeting, the President or, in his absence
or inability to act, another director chosen by a majority of the directors
present, shall act as chairman of the meeting and preside thereat. The Secretary
(or, in his absence or inability to act, any person appointed by the Chairman)
shall act as secretary of the meeting and keep the minutes thereof.
Section 15. WRITTEN CONSENT OF DIRECTORS IN LIEU OF A MEETING. Subject to
the provisions of the Investment Company Act of 1940, as amended, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the Board
or committee, as the case may be, consent thereto in writing, and the writings
are filed with the minutes of the proceedings of the Board or committee.
Section 16. COMPENSATION. Directors may receive compensation for services
to the Corporation in their capacities as directors or otherwise in such manner
and in such amounts as may be fixed from time to time by the Board.
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Section 17. INVESTMENT POLICIES. It shall be the duty of the Board of
Directors to direct that the purchase, sale, retention and disposal of portfolio
securities and the other investment practices of the Corporation are at all
times consistent with the investment policies and restrictions with respect to
securities investments and otherwise of the Corporation, as recited in the
current prospectus of the Corporation filed from time to time with the
Securities and Exchange Commission and as required by the Investment Company Act
of 1940, as amended. The Board, however, may delegate the duty of management of
the assets and the administration of its day to day operations to an individual
or corporate management company and/or investment adviser pursuant to a written
contract or contracts which have obtained the requisite approvals, including the
requisite approvals of renewals thereof, of the Board of Directors and/or the
stockholders of the Corporation in accordance with the provisions of the
Investment Company Act of 1940, as amended.
ARTICLE IV
COMMITTEES
----------
Section 1. EXECUTIVE COMMITTEE. The Board may, by resolution adopted by a
majority of the entire Board, designate an Executive Committee consisting of two
or more of the directors of the Corporation, which committee shall have and may
exercise all the powers and authority of the Board with respect to all matters
other than:
(a) the submission to stockholders of any action requiring authorization of
stockholders pursuant to statute or the Articles of Incorporation;
(b) the filling of vacancies on the Board of Directors;
(c) the fixing of compensation of the directors for serving on the Board or
on any committee of the Board, including the Executive Committee;
(d) the approval or termination of any contract with an investment adviser
or principal underwriter, as such terms are defined in the Investment Company
Act of 1940, as amended, or the taking of any other action required to be taken
by the Board of Directors by the Investment Company Act of 1940, as amended;
(e) the amendment or repeal of these By-Laws or the adoption of new
By-Laws;
(f) the amendment or repeal of any resolution of the Board which by its
terms may be amended or repealed only by the Board; and
(g) the declaration of dividends and the issuance of capital stock of the
Corporation.
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The Executive Committee shall keep written minutes of its proceedings and
shall report such minutes to the Board. All such proceedings shall be subject to
revision or alteration by the Board; provided, however, that third parties shall
not be prejudiced by such revision or alteration.
Section 2. OTHER COMMITTEES OF THE BOARD. The Board of Directors may from
time to time, by resolution adopted by a majority of the whole Board, designate
one or more other committees of the Board, each such committee to consist of two
or more directors and to have powers and duties as the Board of Directors may,
by resolution, prescribe.
Section 3. GENERAL. One-third, but not less than two, of the members of any
committee shall be present in person at any meeting of such committee in order
to constitute a quorum for the transaction of business at such meeting, and the
act of a majority present shall be the act of such committee. The Board may
designate a chairman of any committee and such chairman or any two members of
any committee may fix the time and place of its meetings unless the Board shall
otherwise provide. In the absence or disqualification of any member of any
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member, or to dissolve
any such committee. Nothing herein shall be deemed to prevent the Board from
appointing one or more committees consisting in whole or in part of persons who
are not directors of the Corporation provided, however, that no such committee
shall have or may exercise any authority or power of the Board in the management
of the business or affairs of the Corporation.
ARTICLE V
OFFICERS, AGENTS AND EMPLOYEES
------------------------------
Section 1. NUMBER; QUALIFICATIONS. The officers of the Corporation shall be
a President, who shall be a director of the Corporation, a Secretary and a
Treasurer, each of whom shall be elected by the Board of Directors. The Board of
Directors may elect or appoint such other officers, agents and employees as it
may deem necessary or proper. Any two or more offices may be held by the same
person, except the offices of President and Vice President, but no officer shall
execute, acknowledge or verify any instrument in more than one capacity. Such
officers shall be elected by the Board of Directors each year at the first
meeting of the Board of Directors held in such year, each to hold office until
the next meeting of the stockholders and until his successor shall have been
duly elected and shall have qualified, or until his death, or until he shall
have resigned, or have been removed, as hereinafter provided
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in these By-Laws. The Board may from time to time elect, or delegate to the
President the power to appoint, such officers (including one or more Assistant
Vice Presidents, one or more Assistant Treasurers and one or more Assistant
Secretaries) and such agents, as may be necessary or desirable for the business
of the Corporation. Such officers and agents shall have such duties and shall
hold their offices for such terms as may be prescribed by the Board or by the
appointing authority.
Section 2. RESIGNATIONS. Any officer of the Corporation may resign at any
time by giving written notice of resignation to the Board, the Chairman of the
Board, President or the Secretary. Any such resignation shall take effect at the
time specified therein or, if the time when it shall become effective shall not
be specified therein, immediately upon its receipt; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 3. REMOVAL OF OFFICER, AGENT OR EMPLOYEE. Any officer, agent or
employee of the Corporation may be removed by the Board of Directors with or
without cause at any time, and the Board may delegate such power of removal as
to agents and employees not elected or appointed by the Board of Directors. Such
removal shall be without prejudice to such person's contract rights, if any,
both the appointment of any person as an officer, agent or employee of the
Corporation shall not of itself create contract rights.
Section 4. VACANCIES. A vacancy in any office, either arising from death,
resignation, removal or any other cause, may be filled for the unexpired portion
of the term of the office which shall be vacant, in the manner prescribed in
these By-Laws for the regular election or appointment to such office.
Section 5. COMPENSATION. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer in respect of other officers under his control.
Section 6. BONDS OR OTHER SECURITY. If required by the Board, any officer,
agent or employee of the Corporation shall give a bond or other security for the
faithful performance of his duties, in such amount and with such surety or
sureties as the Board may require.
Section 7. PRESIDENT. The President shall be the chief executive officer of
the Corporation. In the absence of the Chairman of the Board (or if there be
none), he shall preside at all meetings of the stockholders and of the Board of
Directors. He shall have, subject to the control of the Board of Directors,
general charge of the business and affairs of the Corporation. He may employ and
discharge employees and agents of the Corporation,
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except such as shall be appointed by the Board, and he may delegate these
powers,
Section 8. VICE PRESIDENT. Each Vice President shall have such powers and
perform such duties as the Board of Directors or the President may from time to
time prescribe.
Section 9. TREASURER. The Treasurer shall:
(a) have charge and custody of, and be responsible for, all the funds and
securities of the Corporation, except those which the Corporation has placed in
the custody of a bank or trust company or member of a national securities
exchange (as that term is defined in the Securities Exchange Act of 1934, as
amended) pursuant to a written agreement designating such bank or trust company
or member of a national securities exchange as custodian of the property of the
Corporation;
(b) keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation;
(c) cause all moneys and other valuables to be deposited to the credit of
the Corporation;
(d) receive, and give receipts for, moneys due and payable, to the
Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the investment of
its funds as ordered or authorized by the Board, taking proper vouchers
therefor; and
(f) in general, perform all the duties incident to the office of Treasurer
and such other duties as from time to time may be assigned to him by the Board
or the President.
Section 10. SECRETARY. The Secretary shall:
(a) keep or cause to be kept in one or more books provided for the
purposes, the minutes of all meetings of the Board, the committees of the Board
and the stockholders;
(b) see that all notices are duly given in accordance with the provisions
of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and affix
and attest the seal to all stock certificates of the Corporation (unless the
seal of the Corporation on such certificates shall be a facsimile, as
hereinafter provided) and affix and attest the seal to all other documents to be
executed on behalf of the Corporation under its seal;
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(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly kept and
filed; and
(e) in general, perform all the duties incident to the office of Secretary
and such other duties as from time to time may be assigned to them by the Board
or the President.
Section 11. DELEGATION OF DUTIES. In case of the absence of any officer of
the Corporation, or for any other reason that the Board may deem sufficient, the
Board may confer for the time being the powers or duties, or any of them, of
such officer upon any other officer or upon any director.
ARTICLE VI
INDEMNIFICATION
---------------
Each officer and director of the Corporation shall be indemnified by the
Corporation to the full extent permitted under the General Laws of the State of
Maryland and the Investment Company Act of 1940, as amended, except that such
indemnity shall not protect any such person against any liability to the
Corporation or any stockholder thereof to which such person 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. Absent a
court determination that an officer or director seeking indemnification was not
liable on the merits or guilty of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office, the decision by the Corporation to indemnify such person must be based
upon the reasonable determination of independent counsel or nonparty independent
directors, after review of the facts, that such officer or director is not
guilty of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
The Corporation may purchase insurance on behalf of an officer or
director protecting such person to the full extent permitted under the General
Laws of the State of Maryland and the Investment Company Act of 1940, as
amended, from liability arising from his activities as officer or director of
the Corporation. The Corporation, however, may not purchase insurance on behalf
of any officer or director of the Corporation that protects or purports to
protect such person from liability to the Corporation or to its stockholders to
which such officer or director 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.
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The Corporation may indemnify or purchase insurance to the extent provided
in this Article VI on behalf of an employee or agent who is not an officer or
director of the Corporation.
ARTICLE VII
CAPITAL STOCK
--------------
Section 1. STOCK CERTIFICATES. Each holder of stock of the Corporation
shall be entitled upon request to have a certificate or certificates, in such
form as shall be approved by the Board, representing the number of shares of
stock of the Corporation owned by him, provided, however, that certificates for
fractional shares will not be delivered in any case. The certificates
representing shares of stock shall be signed by or in the name of the
Corporation by the President or a Vice President and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed with
the seal of the Corporation. Any or all of the signatures or the seal on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate shall be issued, it may be issued by the Corporation with the same
effect as if such officer, transfer agent or registrar were still in office at
the date of issue.
Section 2. BOOKS OF ACCOUNT AND RECORD OF STOCKHOLDERS. There shall be kept
at the principal executive office of the Corporation correct and complete books
and records of account of all the business and transactions of the Corporation.
There shall be made available upon request of any stockholder, in accordance
with Maryland law, a record containing the number of shares of stock issued
during a specified period not to exceed twelve months and the consideration
received by the Corporation for each such share.
Section 3. TRANSFERS OF SHARES. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent or
transfer clerk, and on surrender of the certificate or certificates, if issued,
for such shares properly endorsed or accompanied by a duly executed stock
transfer power and the payment of all taxes thereon. Except as otherwise
provided by law, the Corporation shall be entitled to recognize the exclusive
right of a person in whose name any share or shares stand on the record of
stockholders as the owner of such share or shares for all purposes, including,
without limitation, the right to receive dividends or other distributions, and
to vote as such owner, and the Corporation shall not be bound to recognize any
equitable or legal claim to or interest in any such share or shares on the part
of any other person.
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Section 4. REGULATIONS. The Board may make such additional rules and
regulations, not inconsistent with these By-Laws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation. It may appoint, or authorize any officer or officers
to appoint, one or more transfer agents or one or more transfer clerks and one
or more registrars and may require all certificates for shares of stock to bear
the signature or signatures of any of them.
Section 5. LOST, DESTROYED OR MUTILATED CERTIFICATES. The holder of any
certificates representing shares of stock of the Corporation shall immediately
notify the Corporation of any loss, destruction or mutilation of such
certificate, and the Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it which the owner thereof shall
allege to have been lost or destroyed or which shall have been mutilated, and
the Board may, in its discretion, require such owner or his legal
representatives to give to the Corporation a bond in such sum, limited or
unlimited and in such form and with such surety or sureties, as the Board in its
absolute discretion shall determine, to indemnify the Corporation against any
claim that may be made against it on account of the alleged loss or destruction
of any such certificate, or issuance of a new certificate. Anything herein to
the contrary notwithstanding, the Board, in its absolute discretion, may refuse
to issue any such new certificate, except pursuant to legal proceedings under
the laws of the State of Maryland.
Section 7. INFORMATION TO STOCKHOLDERS AND OTHERS. Any stockholder of the
Corporation or his agent may inspect and copy during usual business hours the
Corporation's By-Laws, minutes of the proceedings of its stockholders, annual
statements of its affairs, and voting trust agreements on file at its principal
office.
ARTICLE VIII
SEAL
----
The seal of the Corporation shall be circular in form and shall bear, in
addition to any other emblem or device approved by the Board of Directors, the
name of the Corporation, the year of its incorporation and the words "Corporate
Seal" and "Maryland". Said seal may be used by causing it or a facsimile thereof
to be impressed or affixed or in any other manner reproduced.
ARTICLE IX
FISCAL YEAR
-----------
Unless otherwise determined by the Board, the fiscal year of the
Corporation shall end on the 31st day of October.
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ARTICLE X
DEPOSITORIES AND CUSTODIANS
---------------------------
Section 1. DEPOSITORIES. The funds of the Corporation shall be deposited
with such banks or other depositories as the Board of Directors of the
Corporation may from time to time determine.
Section 2. CUSTODIANS. All securities and other investments shall be
deposited in the safe keeping of such banks or other companies as the Board of
Directors of the Corporation may from time to time determine. Every arrangement
entered into with any bank or other company for the safe keeping of the
securities and investments of the Corporation shall contain provisions complying
with the Investment Company Act of 1940, as amended, and the general rules and
regulations thereunder.
ARTICLE XI
EXECUTION OF INSTRUMENTS
------------------------
Section 1. CHECKS, NOTES, DRAFTS, ETC. Checks, notes, rafts, acceptances,
bills of exchange and other orders or obligations for the payment of money shall
be signed by such officer or officers or person or persons as the Board of
Directors by resolution shall from time to time designate.
Section 2. SALE OR TRANSFER OF SECURITIES. Stock certificates, bonds or
other securities at any time owned by the Corporation may be held on behalf of
the Corporation or sold, transferred or otherwise disposed of subject to any
limits imposed by these By-Laws and pursuant to authorization by the Board and,
when so authorized to be held on behalf of the Corporation or sold, transferred
or otherwise disposed of, may be transferred from the name of the Corporation by
the signature of the President or a Vice President or the Treasurer or pursuant
to any procedure approved by the Board of Directors, subject to applicable law.
ARTICLE XII
ANNUAL STATEMENT
----------------
The books of account of the Corporation shall be examined by an independent
firm of public accountants at the close of each annual period of the Corporation
and at such other times as may be directed by the Board. A report to the
stockholders based upon each such examination shall be mailed to each
stockholder of the Corporation of record on such date with respect to each
report as may be determined by the Board, at his address as the same appears on
the books of the Corporation. Such annual statement shall also be
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available at the annual meeting of stockholders, if one is held, and be placed
on file at the Corporation's principal office in the State of Maryland. Each
such report shall show the assets and liabilities of the Corporation as of the
close of the annual or quarterly period covered by the report and the securities
in which the funds of the Corporation were than invested. Such report shall also
show the Corporation's income and expenses for the period from the end of the
Corporation's preceding fiscal year to the close of the annual or quarterly
period covered by the report and any other information required by the
Investment Company Act of 1940, as amended, and shall set forth such other
matters as the Board or such firm of independent public accountants shall
determine.
ARTICLE XIV
AMENDMENTS
----------
These By-Laws or any of them may be amended, altered or repealed at any
annual meeting of the stockholders or at any special meeting of the stockholders
at which a quorum is present or represented, provided that notice of the
proposed amendment, alteration or repeal be contained in the notice of such
special meeting. These By-Laws, except Article XIV hereof, may also be amended,
altered or repealed by the affirmative vote of a majority of the Board of
Directors. A certified copy of these By-Laws, as they may be amended from time
to time, shall be kept at the principal office of the Corporation in the State
of Maryland.
(0339a)
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Exhibit 5
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC.
MANAGEMENT AGREEMENT
AGREEMENT made this 14th day of May, 1993 by and between NATIONAL
MULTI-SECTOR FIXED INCOME FUND, INC., a Maryland corporation (the "Fund"), and
NATIONAL SECURITIES & RESEARCH CORPORATION, a New York corporation (the
"Manager").
The Fund is a diversified open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "Investment Company
Act").
The Fund desires to retain the Manager to render investment advisory
services to the Fund, to administer the Fund's day-to-day corporate affairs and
to make available to the Fund certain facilities of the Manager, and the Manager
is willing to render such investment advisory and administrative services and
provide the use of such facilities.
The parties agree as follows:
1. The Fund hereby appoints the Manager to act as manager of the Fund and
administrator of its business affairs for the period and on the terms set forth
in this Agreement. The Manager accepts such appointment and agrees to render the
services described, for the compensation provided, in this Agreement.
2. Subject to the supervision of the Board of Directors of the Fund, the
Manager shall administer the Fund's corporate affairs and furnish the Fund with
office facilities and with clerical, bookkeeping and recordkeeping services at
such office facilities, and the Manager shall manage the investment operations
of the Fund and the composition of the Fund's portfolio, including the purchase
and retention and disposition of portfolio securities, in accordance with the
Fund's investment objectives, policies and restrictions as stated in the Fund's
Prospectus and Statement of Additional Information (as defined below) subject to
the following understandings:
(a) The Manager shall provide supervision of the Fund's investments
and determine from time to time what investments will be made, held or disposed
of or what securities will be purchased, retained, sold or loaned by the Fund,
and what portion of the assets will be invested or held uninvested as cash.
(b) The Manager shall use its best judgment in the performance of
its duties under this Agreement.
(c) The Manager, in the performance of its duties and obligations
under this Agreement, shall (i) act in conformity with the Articles of
Incorporation, By-Laws, Prospectus and Statement of
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Additional Information of the Fund, and with the instructions and directions of
the Board of Directors of the Fund and (ii) conform to and comply with the
requirements of the Investment Company Act and all other applicable federal and
state laws and regulations.
(d) (i) The Manager shall determine the securities to be purchased
or sold by the Fund and will place orders pursuant to its determinations with or
through such persons, brokers or dealers to carry out the policy with respect to
brokerage as set forth in the Fund's Prospectus and Statement of Additional
Information or as the Board of Directors may direct from time to time. In
providing the Fund with investment supervision, the Manager will give primary
consideration to securing the most favorable price and efficient execution. The
Manager may also consider the financial responsibility, research and investment
information and other services and research related products provided by brokers
or dealers who may effect or be a party to any such transactions or other
transactions to which other clients of the Manager may be a party. The Fund
recognizes that the services and research related products provided by such
brokers may be useful to the Manager in connection with its services to other
clients.
(ii) When the Manager deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients, the Manager, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be sold or purchased in order to obtain the most favorable price
or lower brokerage commissions and efficient execution. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transactions, will be made by the Manager in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Fund and to such other clients.
(e) The Manager shall maintain, or cause to be maintained, all
books and records required under the Investment Company Act to the extent not
maintained by the custodian of the Fund. The Manager shall render to the Fund's
Board of Directors such periodic and special reports as the Directors may
reasonably request.
(f) The Manager shall provide the Fund's custodian on each business
day information relating to all transactions concerning the Fund's assets.
(g) The investment management services of the Manager to the Fund
under this Agreement are not to be deemed exclusive, and the Manager shall be
free to render similar services to others.
3. The Fund has delivered to the Manager copies of each of the following
documents and will deliver to it all future amendments and supplements, if any:
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(a) Articles of Incorporation, as amended, as filed with the State
Department of Assessments and Taxation of Maryland (such Articles of
Incorporation, as in effect on the date hereof and as further amended from time
to time, are herein called the "Articles of Incorporation");
(b) By-Laws of the Fund (such By-Laws, as in effect on the date
hereof and as amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Board of Directors of the Fund
authorizing the appointment of the Manager and approving this Agreement;
(d) Registration Statement on Form N-1A under the Investment
Company Act and the Securities Act of 1933, as amended from time to time (the
"Registration Statement"), as filed with the Securities and Exchange Commission
(the "Commission"), relating to the Fund and shares of the Fund's Common Stock
and all amendments thereto;
(e) Notification of Registration of the Fund under the Investment
Company Act on Form N-8A as filed with the Commission and all amendments
thereto; and
(f) Prospectus and Statement of Additional Information included in
the Registration Statement, as amended from time to time. All references in this
Agreement to Prospectus and Statement of Additional Information shall be to such
documents as most recently amended or supplemented and in effect.
4. The Manager shall authorize and permit any of its directors, officers
and employees who may be elected as directors or officers of the Fund to serve
in the capacities in which they are elected. All services to be furnished by the
Manager under this Agreement may be furnished through such directors, officers
or employees of the Manager.
5. The Manager agrees that all records which it maintains for the Fund are
property of the Fund. The Manager will surrender promptly to the Fund any such
records upon the Fund's request. The Manager further agrees to preserve such
records for the periods prescribed in Rule 31a-2 of the Commission under the
Investment Company Act.
6. (i) In connection with the services rendered by the Manager under this
Agreement, the Manager will pay all of the following expenses:
(a) the salaries and expenses of all personnel of the Fund and the
Manager except the fees of the directors who are not affiliated persons of the
Manager; and
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(b) all expenses incurred by the Manager or by the Fund in
connection with managing the ordinary course of the Fund's business other than
those assumed by the Fund.
(ii) The Fund will pay the following:
(a) the fees and expenses of directors who are not affiliated
persons of the Manager;
(b) the fees and expenses of the custodian that relate to (I) the
custodial function and recordkeeping connected with such function, (II) fund
accounting services, (III) the providing of records to the Manager useful to the
Manager in connection with the Manager's obligation to maintain the required
accounting records of the Fund, (IV) the pricing of shares of the Fund,
including the cost of any pricing services which may be retained pursuant to the
authorization of the Board of Directors of the Fund, and (V) for both mail and
wire orders, the cashiering function in connection with the issuance and
redemption of the Fund's securities;
(c) the fees and expenses of the Fund's transfer agent, which may
be the custodian, that relate to the maintenance of each shareholder account;
(d) the charges and expenses of legal counsel and independent
accountants for the Fund and directors who are not affiliated persons of the
Manager;
(e) brokers' commissions and any issue or transfer taxes chargeable
to the Fund in connection with its securities transactions;
(f) all taxes and corporate fees payable by the Fund to the
federal, state or other governmental agencies;
(g) the fees of any trade association of which the Fund may be a
member;
(h) the cost of stock certificates representing, and non-negotiable
share deposit receipts evidencing, shares of the Fund;
(i) the fees and expenses involved in registering and maintaining
registration of the shares of the Fund with the Securities and Exchange
Commission, registering the Fund as a broker or dealer and qualifying shares of
the Fund under state securities laws, including the preparation and printing of
the Fund's registration statement and prospectus for filing under federal and
state securities laws for such purposes;
(j) communications expenses with respect to investor services and
all expenses of shareholders' and directors' meetings
-4-
<PAGE>
and of preparing, printing and mailing reports to shareholders in the amount
necessary for distribution to shareholders;
(k) insurance, litigation and indemnification expenses; and
(l) other extraordinary expenses not incurred in the ordinary
course of the Fund's business.
7. In the event the expenses of the Fund for any fiscal year (including the
fees payable to the Manager but excluding interest, taxes, brokerage
commissions, distribution fees and litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of the Fund's
business) exceed the lowest applicable annual expense limitation established
pursuant to the statutes or regulations of any jurisdictions in which shares of
the Fund are then qualified for offer and sale, the compensation due the Manager
will be reduced by the amount of such excess, or, if such reduction exceeds the
compensation payable to the Manager, the Manager will pay the Fund the amount of
such reduction which exceeds the amount of such compensation.
8. For the services provided and the expenses assumed pursuant to this
Agreement, the Fund will pay to the Manager as compensation a fee at the annual
rate of .70% of the first $500,000,000, .55% of the next $250,000,000, and .45%
of the excess over $750,000,000 of the Fund's daily net assets, computed daily
and paid monthly.
9. The Manager may rely on information reasonably believed by it to be
accurate and reliable. Neither the Manager nor its officers, directors,
employees or agents or controlling persons shall be liable for any error or
judgment or mistake of law, or for any loss suffered by the Fund in connection
with or arising out of the matters to which this Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Manager in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement .
10. This Agreement shall continue in effect for a period of two years from
the date hereof and shall continue in effect thereafter for so long as such
continuance is specifically approved at least annually by the affirmative vote
of (i) a majority of the Fund's Board of Directors, who are not interested
persons of the Fund, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) a majority of the Fund's Board of Directors or
the holders of a majority of the outstanding voting securities of the Fund;
provided however, that this Agreement may be terminated by the Fund, without the
payment of any penalty, by the Board of Directors of the Fund or by vote of a
majority of the outstanding voting securities (as defined in the Investment
Company Act) of the Fund, or by the Manager at any time, without the
-5-
<PAGE>
payment of any penalty, on not more than 60 days' nor less than 30 days' written
notice to the other party. This Agreement shall terminate automatically in the
event of its assignment provided that a transaction which does not, under the
Investment Company Act, result in a change of actual control or management of
the Manager's business shall not be deemed to be an assignment for the purposes
of this Agreement.
11. Nothing in this Agreement shall limit or restrict the right of any
director, officer or employee of the Manager who may also be a trustee, officer
or employee of the Fund to engage in any other business or to devote his time
and attention in part to the management or other aspect of any business, whether
of a similar or dissimilar nature, and shall not limit or restrict the right of
the Manager to engage in any other business or to render services of any kind to
any other person or entity.
12. During the term of this Agreement, the Fund agrees to furnish the
Manager at its principal office all prospectuses, proxy statements, reports to
shareholders, sales literature, or other material prepared for distribution to
shareholders of the Fund or the public, which refer in any way to the Manager,
prior to use thereof and not to use such material if the Manager reasonably
objects in writing within five business days (or such other time as may be
mutually agreed) after receipt. In the event of termination of the Agreement,
the Fund will continue to furnish to the Manager such other information relating
to the business affairs of the Fund as the Manager at any time, or from time to
time, reasonably requests in order to discharge its obligations hereunder.
13. This Agreement may be amended by mutual agreement, but only after
authorization of such amendments by the affirmative vote of (i) the holders of
the majority of the outstanding voting securities of the Fund and (ii) a
majority of the members of the Fund's Board of Directors who are not interested
persons of the Fund or the Manager, cast in person at a meeting called for the
purpose of voting on such approval.
14. The Manager and the Funds each agree that the name "National" is
proprietary to, and a property right of, the Manager. The Fund agrees and
consents that (i) it will only use the name "National" as part of its name and
for no other purpose, (ii) it will not purport to grant any third party the
right to use the name "National" and (iii) upon the termination of this
Agreement, the Fund shall, upon the request of the Manager, cease to use the
name "National", and shall use its best efforts to cause its officers, directors
and shareholders to take any and all actions which the Manager may request to
effect the foregoing.
15. Any notice or other communications required to be given pursuant to
this Agreement shall be deemed to be given if delivered or mailed by registered
mail, postage paid, (1) to the Manager at
-6-
<PAGE>
Two Pickwick Plaza, Greenwich, CT 06830, Attention: Secretary; or (2) to the
Fund, Two Pickwick Plaza, Greenwich, CT 06830, Attention: Secretary.
16. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York. The terms "interested person," "assignment,"
and "vote of the majority of the outstanding securities" shall have the meaning
set forth in the Investment Company Act.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first written
above.
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC.
By: /s/ Thomas Ole Dial
----------------------------------------
Thomas Ole Dial, Vice President
Attest:
/s/ Mairead M. Collins
- ----------------------------------------
Mairead M. Collins
Assistant Secretary
NATIONAL SECURITIES & RESEARCH CORPORATION
By: /s/ Denis McAuley
----------------------------------------
Denis McAuley, Senior Vice President and
Chief Financial Officer
Attest:
/s/ Mairead M. Collins
- ----------------------------------------
Mairead M. Collins
Assistant Secretary
natl\multi.man
-7-
Exhibit 5.1
FIRST AMENDMENT TO
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
MANAGEMENT AGREEMENT
THIS AMENDMENT made effective as of the 1st day of January, 1994 by and
between PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC. f/k/a National Multi-Sector
Fixed Income Fund, Inc. (hereinafter called the "Fund") and NATIONAL SECURITIES
& RESEARCH CORPORATION (hereinafter called "Manager").
Preamble
--------
The Fund and the Manager have entered into a certain Management Agreement
dated May 14, 1993 (the "Agreement") wherein the Manager agreed inter alia, to
provide its advice and assistance to the Fund in exchange for which the Fund
agreed to pay a prescribed fee to the Manager.
On June 30, 1993, the Board of Directors of the Fund approved an amendment
to the Fund's Articles of Incorporation changing the name of the Fund to Phoenix
Multi-Sector Fixed Income Fund, Inc. At a special meeting of shareholders of the
Fund held on December 23, 1993, the requisite majority of shareholders of the
ratified the foregoing amendment.
On August 25, 1993, the Board of Directors of the Fund also approved an
amendment reducing the management fees payable to the Manager to a monthly fee
equivalent to the annual rate of 0.55% of the Fund's average daily net assets up
to $1 billion, 0.50% of the Fund's average daily net assets from $1 to $2
billion, and 0.45% of the Fund's average daily net assets in excess of $2
billion.
Accordingly, parties intend to amend the Agreement to reflect the present
name of the Fund and the revised management fees payable to the Manager.
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the parties mutually agree that the Agreement is
hereby revised as follows:
1. Any and all references to "National Multi-Sector Fixed Income Fund,
Inc." are hereby deleted and "Phoenix Multi-Sector Fixed Income Fund, Inc." is
substituted therefor.
2. Paragraph numbered 8 of the Agreement is hereby deleted and the
following is inserted in lieu thereof:
As compensation to the Manager, the Fund will pay the Manager a management
fee equivalent to the annual rate of 0.55% of the Fund's average daily net
assets up to $1 billion, 0.50% of the Fund's average daily net assets from
$1 to $2
-1-
<PAGE>
billion, and 0.45% of the Fund's average daily net assets in excess of $2
billion. the Manager's fee will be accrued daily against the value of the
Fund's net assets and will be payable by the Fund on the last business day
of each month.
Except as herein modified, all other terms and provisions set forth in the
Agreement shall be and remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their officers thereunto duly authorized as of the day and year
first above written.
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
By: /s/ Philip R. McLoughlin
--------------------------------------------
Name: Philip R. McLoughlin
Title: President
Attest:
By: /s/ Richard Wirth
--------------------------------------------
Richard Wirth
Asst. Secretary
NATIONAL SECURITIES & RESEARCH CORPORATION
By: /s/ Michael Haylon
--------------------------------------------
Name: Michael Haylon
Title: Vice President
Attest:
By: /s/ Patricia O. McLaughlin
--------------------------------------------
Patricia O. McLaughlin
Assistant Secretary
-2-
Exhibit 6
CLASS A SHARES
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC.
UNDERWRITING AGREEMENT
AGREEMENT made and entered into this 14th day of May, 1993, by and between
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC., a Maryland corporation
(hereinafter called the "Fund"), and PHOENIX EQUITY PLANNING CORPORATION, a
Connecticut corporation (hereinafter called the "Underwriter").
1. The Fund hereby appoints the Underwriter as its exclusive agent to
promote the sale and to arrange for the sale of Class A shares of the Fund,
including both unissued shares and treasury shares, through broker-dealers or
otherwise, in all parts of the United States and elsewhere throughout the world.
The Fund agrees to sell and deliver its Class A shares, upon the terms
hereinafter set forth, as long as it has unissued and/or treasury Class A shares
available for sale.
(a) The Fund hereby authorizes the Underwriter, subject to law and the
Articles of Incorporation of the Fund, to accept, for the account of the
Fund, orders for the purchase of its Class A shares, satisfactory to the
Underwriter, as of the time of receipt of such orders by the dealer, or as
otherwise described in the then-current Prospectus of the Fund.
(b) The public offering price of such Class A shares shall be based on
the net asset value per share (as determined by the Fund) of the
outstanding Class A shares of the Fund. Such net asset value shall be
regularly determined on every business day as of the time of the regular
closing of the New York Stock Exchange and the public offering price based
upon such net asset value shall become effective as set forth from time to
time in the current Prospectus; such net asset value shall also be
regularly determined, and the public offering price based thereon shall
become effective, as of such other times for the regular determination of
net asset value as may be required or permitted by rules of the National
Association of Securities Dealers, Inc. or of the Securities and Exchange
Commission. The Fund shall furnish the Underwriter, with all possible
promptness, a statement of each computation of net asset value, and of the
details entering into such computation.
<PAGE>
The public offering price of such shares shall be equal to the net asset
value, as described above, plus a commission to be fixed from time to time
by the Fund and the Underwriter and as described in the current Prospectus
of the Fund. The Underwriter may fix quantity discounts and other similar
terms not inconsistent with the provisions of the Investment Company Act of
1940, as amended (the "Act"). The Underwriter shall not impose any
commission, permit any quantity discounts or impose any other similar terms
in connection with the sale of Class A shares of the Fund except as
disclosed in the then-current Prospectus of the Fund.
(c) The Underwriter shall be entitled to deduct a commission on all
such shares sold equal to the difference between the public offering price
and the net asset value on which such price is based. If any such
commission is received by the Fund, it will pay such commission to the
Underwriter. Out of such commission, the Underwriter may allow to dealers
such concessions as the Underwriter may determine from time to time.
Notwithstanding anything in this Agreement otherwise provided, sales may be
made at net asset value as provided in the then-current Prospectus of the
Fund.
(d) As reimbursement for expenditures made in connection with providing
certain distribution-related services, the Underwriter may receive from the
Fund a distribution services fee under the terms and conditions set forth
in the Fund's Distribution Plan adopted under Rule 12b-1 under the Act (the
"Plan"), as the Plan may be amended from time to time and subject to any
further limitations on such fees as the Directors may impose.
2. The Underwriter agrees to devote reasonable time and effort to enlist
investment dealers and otherwise promote the sale and distribution and act as
Underwriter for the sale and distribution of the Class A shares of the Fund as
such arrangements may profitably be made; but so long as its does so, nothing
herein contained shall prevent the Underwriter from entering into similar
arrangements with other funds and to engage in other activities. The Fund
reserves the right to issue Class A shares in connection with any merger or
consolidation of the Fund with any other investment company or any personal
holding company or in connection with offers of exchange exempted from Section
22(d) of the Act.
3. Upon receipt by the Fund at its principal place of business of a written
order from the Underwriter, together with delivery instructions, the Fund shall,
as promptly as practicable, cause certificates for the Class A shares called for
in such order to be delivered or credited in such amounts and in such names as
shall be specified by the Underwriter, against payment therefor in
-2-
<PAGE>
such manner as may be acceptable to the Fund.
4. All sales literature and advertisements used by the Underwriter in
connection with sales of the Class A shares of the Fund shall be subject to the
approval of the Fund. The Fund authorizes the Underwriter in connection with the
sale or arranging for the sale of its Class A shares to give only such
information and to make only such statements or representations as are contained
in the Prospectus or in sales literature or advertisements approved by the Fund
or in such financial statements and reports as are furnished to the Underwriter
pursuant to paragraph 6 below. The Fund shall not be responsible in any way for
any information, statements or representations given or made by the Underwriter
or its representatives or agents other than such information, statements and
representations.
5. The Underwriter, as agent of the Fund, is authorized, subject to the
direction of the Fund, to accept Class A shares for redemption at prices
determined as prescribed in the then-current Prospectus of the Fund. The Fund
shall reimburse the Underwriter monthly for its out-of-pocket expenses
reasonably incurred in carrying out the foregoing authorization, but the
Underwriter shall not be entitled to any commissions or other compensation with
respect to such redemptions. The Underwriter shall report all such redemptions
promptly to the Fund.
6. The Fund shall keep the Underwriter fully informed with regard to its
affairs, shall furnish the Underwriter with a certified copy of all financial
statements, and a signed copy of each report, prepared by independent public
accountants and with such reasonable number of printed copies of each annual and
other periodic reports of the Fund as the Underwriter may request, and shall
cooperate fully in the efforts of the Underwriter to sell and arrange for the
sale of its Class A shares and in the performance by the Underwriter of all of
its duties under this Agreement.
7. The Fund will pay or cause to be paid expenses (including counsel fees
and disbursements) of any registration of its Class A shares under, but not
limited to, Federal, State or other regulatory authority, fees for filing
periodic reports with regulatory bodies and of preparing, setting in type and
printing the Prospectus and any amendments thereto prepared for use in
connection with the offering of Class A shares of the Fund, for fees and
expenses incident to the issuance of Class A shares such as the cost of stock
certificates, issuance taxes, fees of the transfer agent including the cost of
preparing and mailing notices to shareholders pertaining to transactions with
respect to such shareholders' accounts, dividend disbursing agent's costs
including the cost of preparing and mailing notices confirming shares acquired
by the shareholder pursuant to the reinvestment of
-3-
<PAGE>
dividends and distributions, and the mailing to shareholders of prospectuses,
notices and reports as may be required from time to time by regulatory bodies or
for such other purposes, except for purposes of sales by the Underwriter as
outlined in paragraph 8 below.
8. The Underwriter shall pay all of its own costs and expenses (other than
expenses and costs heretofore deemed payable by the Fund and other than expenses
which one or more dealers may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the shares issued or sold
hereunder including (a) expenses of printing copies of prospectuses to be used
in connection with the sale of Class A shares of the Fund at printer's overrun
costs; (b) expenses of printing and distributing or disseminating any other
literature, advertising or selling aids in connection with the offering of Class
A shares for sale (however, the expenses referred to in (a) and (b) do not
include expenses incurred in connection with the preparation, printing and
distribution of any prospectus or report or other communication to shareholders
to the extent that such expenses are necessarily incurred to effect compliance
by the Fund with any Federal or State law or other regulatory bodies); and (c)
expenses of advertising in connection with such offering.
9. The Fund agrees to register, from time to time as necessary, additional
Class A shares with the Securities and Exchange Commission, State and other
regulatory bodies and to pay the related filing fees therefor and to file such
amendments, reports and other documents as may be necessary in order that there
may be no untrue statement of a material fact in the Registration Statement or
Prospectus or no omission to state a material fact therein necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. As used in this Agreement, the term "Registration
Statement" shall mean the Registration Statement most recently filed by the Fund
with the Securities and Exchange Commission and effective under the Securities
Act of 1933, as amended, as such Registration Statement is amended from time to
time, and the term "Prospectus" shall mean the most recent form of prospectus
authorized by the Fund for use by the Underwriter and by dealers.
10. This Agreement shall terminate automatically in the event of its
assignment. The term "assignment" for this purpose shall have the meaning
defined in Section 2(a)(4) of the Act.
-4-
<PAGE>
11. This Agreement has been approved by the Board of Directors of the Fund,
including the Directors who are not "interested persons" of the Fund, as defined
in the Act, and who have no direct or indirect financial interest in this
Agreement (the "Disinterested Directors"), by vote cast in person at a meeting
called for the purpose of voting on this Agreement. This Agreement shall
continue in effect for two years from its effective date, and thereafter for
successive annual periods, provided that such continuance is specifically
approved annually by a majority of the Directors, acting on behalf of the Fund,
and by a majority of the Disinterested Directors, cast in person at a meeting
called for such purpose.
12. This Agreement may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Disinterested Directors or 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
Underwriter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC.
By: /s/ Thomas Ole Dial
---------------------------------------------
Thomas Ole Dial, Vice President
Attest:
By: /s/ Mairead M. Collins
---------------------------------------------
Mairead M. Collins
Assistant Secretary
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Martin J. Gavin
---------------------------------------------
Martin J. Gavin
Executive Vice President
Attest:
By: /s/ Patricia O. McLaughlin
---------------------------------------------
Patricia O. McLaughlin
Assistant Secretary
natl\multi.au
-5-
Exhibit 6.1
CLASS B SHARES
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC.
UNDERWRITING AGREEMENT
AGREEMENT made and entered into this 14th day of May 1993, by and between
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC. a Maryland corporation
(hereinafter called the "Fund"), and PHOENIX EQUITY PLANNING CORPORATION, a
Connecticut corporation (hereinafter called the "Underwriter").
1. The Fund hereby appoints the Underwriter as its exclusive agent to
promote the sale and to arrange for the sale of Class B shares of the Fund,
including both unissued shares and treasury shares, through broker-dealers or
otherwise, in all parts of the United States and elsewhere throughout the world.
The Fund agrees to sell and deliver its Class B shares, upon the terms
hereinafter set forth, as long as it has unissued and/or treasury Class B shares
available for sale.
(a) The Fund hereby authorizes the Underwriter, subject to law and the
Articles of Incorporation of the Fund, to accept, for the account of the
Fund, orders for the purchase of its Class B shares, satisfactory to the
Underwriter, as of the time of receipt of such orders by the dealer, or as
otherwise described in the Prospectus of the Fund.
(b) The public offering price of such Class B shares shall be the net
asset value per share (as determined by the Fund) of the outstanding Class
B shares of the Fund. Such net asset value shall be regularly determined on
every business day as of the time of the regular closing of the New York
Stock Exchange and the public offering price shall become effective as set
forth from time to time in the Prospectus; such net asset value shall also
be regularly determined, and the public offering price shall become
effective, as of such other times for the regular determination of net
asset value as may be required or permitted by rules of the National
Association of Securities Dealers, Inc. or of the Securities and Exchange
Commission. The Fund shall furnish the Underwriter, with all possible
promptness, a statement of each computation of net asset value, and of the
details entering into such computation.
<PAGE>
(c) As compensation for providing services under this Agreement, (i)
the Underwriter shall receive from the Fund a distribution services fee
under the terms and conditions set forth in the Fund's Distribution Plan
(the "Plan") adopted under Rule 12b-1 under the Investment Company Act of
1940, as amended (the "Act"), as the Plan may be amended from time to time
and subject to any further limitations on such fees as the Fund's Directors
may impose, and (ii) the Underwriter shall receive from the Fund all
contingent deferred sales charges applied on redemptions of Class B shares.
Whether and to what extent a contingent deferred sales charge will be
imposed with respect to a redemption shall be determined in accordance
with, and in a manner set forth in, the Fund's Prospectus.
(d) The Underwriter may reallow any or all of the distribution fees and
contingent deferred sales charges which it is paid under the Agreement to
such dealers as it may from time to time determine.
(e) The Underwriter may fix quantity discounts and other similar
variances or waivers of the contingent deferred sales charge not
inconsistent with the provisions of the Act. The Underwriter shall not
impose any commission, permit any quantity discounts or impose any other
similar waiver or variance in connection with the sale of Class B shares
except as disclosed in the Prospectus of the Fund.
2. The Underwriter agrees to devote reasonable time and effort to enlist
investment dealers and otherwise promote the sale and distribution and act as
Underwriter for the sale and distribution of the Class B shares of the Fund as
such arrangements may profitably be made; but so long as its does so, nothing
herein contained shall prevent the Underwriter from entering into similar
arrangements with other funds and to engage in other activities. The Fund
reserves the right to issue Class B shares in connection with any merger or
consolidation of the Fund with any other investment company or any personal
holding company or in connection with offers of exchange exempted from Section
22(d) of the Act.
3. Upon receipt by the Fund at its principal place of business of a written
order from the Underwriter, together with delivery instructions, the Fund shall,
as promptly as practicable, cause certificates for the Class B shares called for
in such order to be delivered or credited in such amounts and in such names as
shall be specified by the Underwriter, against payment therefor in such manner
as may be acceptable to the Fund.
- 2 -
<PAGE>
4. All sales literature and advertisements used by the Underwriter in
connection with sales of the Class B shares of the Fund shall be subject to the
approval of the Fund. The Fund authorizes the Underwriter in connection with the
sale or arranging for the sale of its Class B shares to give only such
information and to make only such statements or representations as are contained
in the Prospectus or in sales literature or advertisements approved by the Fund
or in such financial statements and reports as are furnished to the Underwriter
pursuant to paragraph 6 below. The Fund shall not be responsible in any way for
any information, statements or representations given or made by the Underwriter
or its representatives or agents other than such information, statements and
representations.
5. The Underwriter, as agent of the Fund, is authorized, subject to the
direction of the Fund, to accept Class B shares for redemption at prices
determined as prescribed in the Prospectus of the Fund. Such price shall reflect
the subtraction of the applicable contingent deferred sales charge, if any,
computed in accordance with and in the manner set forth in the Fund's
Prospectus. The Fund shall reimburse the Underwriter monthly for its
out-of-pocket expenses reasonably incurred in carrying out the foregoing
authorization. The Underwriter shall report all such redemptions promptly to the
Fund.
6. The Fund shall keep the Underwriter fully informed with regard to its
affairs, shall furnish the Underwriter with a certified copy of all financial
statements, and a signed copy of each report, prepared by independent public
accountants and with such reasonable number of printed copies of each annual and
other periodic report of the Fund as the Underwriter may request, and shall
cooperate fully in the efforts of the Underwriter to sell and arrange for the
sale of its Class B shares and in the performance by the Underwriter of all its
duties under this Agreement.
7. The Fund will pay or cause to be paid expenses (including counsel fees
and disbursements) of any registration of its Class B shares under, but not
limited to, Federal, State or other regulatory authority, fees for filing
periodic reports with regulatory bodies and of preparing, setting in type and
printing the Prospectus and any amendments thereto prepared for use in
connection with the offering of Class B shares of the Fund, for fees and
expenses incident to the issuance of Class B shares such as the cost of stock
certificates, issuance taxes, fees of the transfer agent including the cost of,
preparing and mailing notices to shareholders pertaining to transactions with
respect to such shareholders' accounts, dividend disbursing agent's costs,
including the cost of preparing and mailing notices confirming shares acquired
by the shareholder pursuant to the reinvestment of dividends and distributions,
and the mailing to shareholders of
- 3 -
<PAGE>
prospectuses, notices and reports as may be required from time to time by
regulatory bodies or for such other purposes, except for purposes of sales by
the Underwriter as outlined in paragraph 8 hereof.
8. The Underwriter shall pay all of its own costs and expenses (other than
expenses and costs heretofore deemed payable by the Fund and other than expenses
which one or more dealers may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the shares issued or sold
hereunder including (a) expenses of printing copies of the Prospectus to be used
in connection with the sale of Class B shares of the Fund at printer's overrun
costs; (b) expenses of printing and distributing or disseminating any other
literature, advertising or selling aids in connection with the offering of Class
B shares for sale (however, the expenses referred to in (a) and (b) do not
include expenses incurred in connection with the preparation, printing and
distribution of the Prospectus or any report or other communication to
shareholders to the extent that such expenses are necessarily incurred to effect
compliance by the Fund with any Federal or State law or other regulatory
bodies); and (c) expenses of advertising in connection with such offering.
9. The Fund agrees to register, from time to time as necessary, additional
Class B shares with the Securities and Exchange Commission, State and other
regulatory bodies and to pay the related filing fees therefor and to file such
amendments, reports and other documents as may be necessary in order that there
may be no untrue statement of a material fact in the Registration Statement or
Prospectus or no omission to state a material fact therein necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. As used in this Agreement, the term "Registration
Statement" shall mean the Registration Statement most recently filed by the Fund
with the Securities and Exchange Commission and effective under the Securities
Act of 1933, as amended, as such Registration Statement is amended from time to
time, and the term "Prospectus" shall mean the most recent form of prospectus
authorized by the Fund for use by the Underwriter and by dealers.
10. This Agreement shall terminate automatically in the event of its
assignment. The term "assignment" for this purpose shall have the meaning
defined in Section 2(a)(4) of the Act.
11. This Agreement has been approved by the Board of Directors of the Fund,
including the Directors who are not "interested persons" of the Fund, as defined
in the Act, and who have no direct or indirect financial interest in this
Agreement (the "Disinterested Directors"), by vote cast in person at a meeting
called for the purpose of voting on this Agreement. This
- 4 -
<PAGE>
Agreement shall continue in effect for two years from its effective date and
thereafter for successive annual periods, provided that such continuance is
specifically approved annually by a majority of the Directors, acting on behalf
of the Fund, and by a majority of the Disinterested Directors, cast in person at
a meeting called for the purpose of such vote.
12. This Agreement may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Disinterested Directors or 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
Underwriter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers thereunto duly authorized.
NATIONAL MULTI-SECTOR FIXED
INCOME FUND, INC.
By: /s/ Thomas Ole Dial
-------------------------------
Thomas Ole Dial, Vice President
Attest:
By: /s/ Mairead M. Collins
-------------------------------
Mairead M. Collins
Assistant Secretary
PHOENIX EQUITY PLANNING
CORPORATION
By: /s/ Martin J. Gavin
-------------------------------
Martin J. Gavin
Executive Vice President
Attest:
By: /s/ Patricia O. McLaughlin
-------------------------------
Patricia O. McLaughlin
Assistant Secretary
natl\multi.bu
- 5 -
Exhibit 8.1
AMENDMENT TO CUSTODIAN CONTRACT
Agreement made by and between State Street Bank and Trust Company (the
"Custodian") and Phoenix Multi-Sector Fixed Income, Inc. (f/k/a National
Multi-Sector Fixed Income, Inc.) (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated October 14, 1993 (the "Custodian Contract") governing the terms and
conditions under which the Custodian maintains custody of the securities and
other assets of the Fund; and
WHEREAS, the Custodian and the Fund desire to amend the terms and
conditions under which the Custodian maintains the Fund's securities and other
non-cash property in the custody of certain foreign sub-custodians in conformity
with the requirements of Rule 17f-5 under the Investment Company Act of 1940, as
amended;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby amend the Custodian Contract by the
addition of the following terms and provisions;
1. Notwithstanding any provisions to the contrary set forth in the
Custodian Contract, the Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash property
of the Fund which are maintained in such account shall identify by book-entry
those securities and other non-cash property belonging to the Fund and (ii) the
Custodian shall require that securities and other non-cash property so held by
the foreign sub-custodian be held separately from any assets of the foreign
sub-custodian or of others.
2. Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force and
effect.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed as a sealed instrument in its name and behalf by its duly authorized
representative this 17th day of October, 1996.
PHOENIX MULTI-SECTOR FIXED INCOME, INC.
By: /s/ Michael E. Haylon
-----------------------------------
Title: Executive Vice President
STATE STREET BANK AND TRUST COMPANY
By: /s/ Donald E. Lynn
-----------------------------------
Title: Executive Vice President
Exhibit 9
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
PHOENIX FUNDS
AND
PHOENIX EQUITY PLANNING CORPORATION
<PAGE>
TABLE OF CONTENTS
------------------
PAGE
-----
ARTICLE 1 - TERMS OF APPOINTMENT; DUTIES OF TRANSFER AGENT................. 1
ARTICLE 2 - FEES AND EXPENSES ............................................. 3
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF TRANSFER AGENT............... 3
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF THE PHOENIX FUNDS............ 3
ARTICLE 5 - DATA ACCESS AND PROPRIETARY INFORMATION........................ 4
ARTICLE 6 - INDEMNIFICATION................................................ 5
ARTICLE 7 - STANDARD OF CARE............................................... 6
ARTICLE 8 - COVENANTS...................................................... 6
ARTICLE 9 - TERMINATION.................................................... 7
ARTICLE 10 - ASSIGNMENT..................................................... 7
ARTICLE 11 - AMENDMENT...................................................... 7
ARTICLE 12 - CONNECTICUT LAW TO APPLY....................................... 7
ARTICLE 13 - FORCE MAJEURE ................................................. 7
ARTICLE 14 - CONSEQUENTIAL DAMAGES.......................................... 8
ARTICLE 15 - MERGER OF AGREEMENT............................................ 8
ARTICLE 16 - LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS...... 8
ARTICLE 17 - COUNTERPARTS................................................... 8
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the 1st day of June, 1994, by and between the
undersigned entities (hereinafter singularly referred to as a "Fund" and
collectively referred to as the "Phoenix Funds"), and PHOENIX EQUITY PLANNING
CORPORATION (hereinafter referred to as the "Transfer Agent").
W I T N E S S E T H :
WHEREAS, the Phoenix Funds desire to appoint Transfer Agent as their
transfer agent, dividend disbursing agent and agent in connection with certain
other activities, and Transfer Agent desires to accept such appointment; and
WHEREAS, the parties wish to set forth herein their mutual understandings
and agreements.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and other good and valuable consideration, the receipt and sufficiency whereof
being hereby acknowledged and affirmed, the parties hereto agree as follows:
ARTICLE 1 TERMS OF APPOINTMENT; DUTIES OF TRANSFER AGENT
----------------------------------------------
1.01 Subject to the terms and conditions set forth in this Agreement, the
Phoenix Funds hereby employ and appoint Transfer Agent to act as, and Transfer
Agent agrees to act as, transfer agent for the authorized and issued shares of
beneficial interest or common stock, as the case may be, of each of the Phoenix
Funds (hereinafter collectively and singularly referred to as "Shares"),
dividend disbursing agent and agent in connection with any accumulation,
open-account or similar plans provided to the shareholders of the Phoenix Funds
("Shareholders") and as set out in the currently effective registration
statement of each Fund (the prospectus and statement of additional information
portions of such registration statement being referred to as the "Prospectus"),
including, without limitation, any periodic investment plan or periodic
withdrawal program.
1.02 Transfer Agent agrees that it will perform the following services
pursuant to this Agreement:
(a) In accordance with procedures established from time to time by
agreement between the Phoenix Funds and Transfer Agent, Transfer Agent shall:
i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation therefor
to the Custodian appointed from time to time by the
Trustees/Directors of each Fund (which entity or entities, as the
case may be, shall be referred to as the "Custodian");
ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the each appropriate Shareholder
account;
iii) Receive for acceptance, redemption requests and redemption
directions and deliver the appropriate documentation therefor to
the Custodian;
iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Transfer Agent shall execute transactions directly
with broker-dealers authorized by the Phoenix Funds who shall
thereby be deemed to be acting on behalf of the Phoenix Funds;
<PAGE>
v) At the appropriate time as and when it receives monies paid to it
by any Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
vi) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
vii) Prepare and transmit payments for dividends and distributions
declared by each Fund, if any;
viii) Issue replacement certificates for those certificates alleged to
have been lost, stolen or destroyed upon receipt by the Transfer
Agent of indemnification satisfactory to the Transfer Agent and
the Phoenix Funds, and the Transfer Agent at its option, may
issue replacement certificates in place of mutilated stock
certificates upon presentation thereof and without such
indemnity;
ix) Maintain records of account for and advise each Fund and its
respective Shareholders as to the foregoing; and
x) Record the issuance of Shares and maintain pursuant to Rule
17Ad-10(e) under the Exchange Act of 1934, a record of the total
number of Shares which are authorized, issued and outstanding
based upon data provided to it by each Fund. The Transfer Agent
shall also provide on a regular basis to each Fund the total
number of Shares which are authorized, issued and outstanding
shall have no obligation, when recording the issuance of Shares,
to monitor the issuance of such Shares or to take cognizance of
any laws relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of each respective
Fund.
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), Transfer Agent shall: (i) perform all of the customary services
of a transfer agent, dividend disbursing agent and, as relevant, agent in
connection with accumulation, open-account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal program),
including, but not limited to, maintaining all Shareholder accounts, preparing
Shareholder meeting lists, mailing proxies, receiving and tabulating proxies,
mailing Shareholder reports and Prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts, preparing
and filing U.S. Treasury Department Forms 1099 and other appropriate forms
required with respect to dividends and distributions by federal authorities for
all Shareholders, preparing and mailing confirmation forms and statements of
account to Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts, preparing and mailing activity
statements for Shareholders, and providing Shareholder account information; and
(ii) provide a system which will enable each Fund to monitor the total number of
Shares sold in each State.
(c) In addition, the Phoenix Funds shall (i) identify to Transfer Agent in
writing those transactions and assets to be treated as exempt from blue sky
reporting for each State, and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of Transfer Agent for a Fund's blue
sky State registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Phoenix Funds and the
reporting of such transactions to each Fund as provided above.
(d) Procedures as to who shall provide certain of the services in Article 1
may be established from time to time by agreement between the Phoenix Funds and
Transfer Agent per the attached service responsibility schedule, if any. The
Transfer Agent may at times perform only a portion of these services and the
Phoenix Funds or its agent may perform these services on behalf of any Fund.
-2-
<PAGE>
(e) The Transfer Agent shall provide additional services on behalf of the
Phoenix Funds (i.e., escheatment services) which may be agreed upon in writing
between the Phoenix Funds and the Transfer Agent.
ARTICLE 2 FEES AND EXPENSES
-----------------
2.01 In consideration of the services provided by the Transfer Agent
pursuant to this Agreement, each Fund agrees to pay Transfer Agent an annual
maintenance fee for each Shareholder account as set forth in Schedule A attached
hereto and made a part hereof. Annual Maintenance Fees and out-of-pocket
expenses and advances identified under Section 2.02 below may be changed from
time to time subject to mutual written agreement between each Fund and Transfer
Agent. Nothing herein shall preclude the assignment of all or any portion of the
foregoing fees and expense reimbursements to any sub-agent contracted by
Transfer Agent.
2.02 In addition to the fee paid under Section 2.01 above, the Phoenix
Funds agree to reimburse Transfer Agent for out-of-pocket expenses or advances
incurred by Transfer Agent for the items set out in Schedule A attached hereto.
In addition, any other expenses incurred by Transfer Agent at the request or
with the consent of any Fund, will be reimbursed by the Fund requesting the
same.
2.03 The Phoenix Funds agree to pay all fees and reimbursable expenses
within five days following the mailing of the respective billing notice. The
above fees will be charged against each Fund's custodian checking account five
(5) days after the invoice is transmitted to the Phoenix Funds. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
Shareholder accounts shall be advanced to Transfer Agent at least seven (7) days
prior to the mailing date of such materials.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF TRANSFER AGENT
------------------------------------------------
The Transfer Agent represents and warrants to the Phoenix Funds that:
3.01 It is a corporation organized and existing and in good standing under
the laws of the State of Connecticut.
3.02 It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.03 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.04 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3.05 It is and shall continue to be a duly registered transfer agent
pursuant to Section 17A(c)(2) of the Securities Exchange Act of 1934.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PHOENIX FUNDS
-----------------------------------------------
The Phoenix Funds represent and warrant to Transfer Agent that:
4.01 All corporate or trust proceedings, as the case may be, required to
enter into and perform this Agreement have been undertaken and are in full force
and effect.
4.02 Each Fund is an open-end, diversified management investment companies
registered under the Investment Company Act of 1940.
-3-
<PAGE>
4.03 A registration statement under the Securities Act of 1933 is currently
effective for each Fund that is offering its securities for sale and such
registration statement will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with respect to all
Shares being offered for sale.
ARTICLE 5 DATA ACCESS AND PROPRIETARY INFORMATION
---------------------------------------
5.01 The Phoenix Funds acknowledge that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and documentation
manuals furnished to the Phoenix Funds by the Transfer Agent as part of each
Fund's ability to access certain Fund-related data ("Customer Data") maintained
by the Transfer Agent on data bases under the control and ownership of the
Transfer Agent or other third party ("Data Access Services") constitute
copyrighted, trade secret, or other proprietary information (collectively,
"Proprietary Information") of substantial value to the Transfer Agent or other
third party. In no event shall Proprietary Information be deemed Customer Data.
The Phoenix Funds agree to treat all Proprietary Information as proprietary to
the Transfer Agent and further agree that it shall not divulge any Proprietary
Information to any person or organization except as may be provided hereunder.
Without limiting the foregoing, the Phoenix Funds agree for itself and its
employees and agents:
(a) to access Customer Data solely from location as may be designated in
writing by the Transfer Agent and solely in accordance with the
Transfer Agent's applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to inform in a timely manner of such fact and dispose of such
information in accordance with the Transfer Agent's instructions;
(d) to refrain from causing or allowing third-party data acquired hereunder
from being retransmitted to any other computer facility or other
location, except with the prior written consent of the Transfer Agent;
(e) that the Phoenix Funds shall have access only to those authorized
transactions agreed upon by the parties; and
(f) to honor all reasonable written requests made by the Transfer Agent to
protect at the Transfer Agent's expense the rights of the Transfer
Agent in Proprietary Information at common law, under federal copyright
law and under other federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Article 5. The obligations of this Article shall
survive any earlier termination of this Agreement.
5.02 If the Phoenix Funds notified the Transfer Agent that any of the Data
Access Services do not operate in material compliance with the most recently
issued user documentation for such services, the Transfer Agent shall endeavor
in a timely manner to correct such failure. Organizations from which the
Transfer Agent may obtain certain data included in the Data Access Services are
solely responsible for the contents of such data and the Phoenix Funds agree to
make no claim against the Transfer Agent arising out of the contents of such
third-party data, including, but not limited to, the accuracy thereof. DATA
ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN
CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE TRANSFER
AGENT EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
-4-
<PAGE>
5.03 If the transactions available to the Phoenix Funds include the ability
to originate electronic instructions to the Transfer Agent in order to (i)
effect the transfer or movement of cash or Shares or (ii) transmit Shareholder
information or other information (such transactions constituting a "COEFI"),
then in such event the Transfer Agent shall be entitled to rely on the validity
and authenticity of such instruction without undertaking any further inquiry as
long as such instruction is undertaken in conformity with security procedures
established by the Transfer Agent from time to time.
ARTICLE 6 INDEMNIFICATION
---------------
6.01 The Transfer Agent shall not be responsible for, and the Phoenix Funds
shall indemnify and hold Transfer Agent harmless from and against, any and all
losses, damages, costs, charges, counsel fees, payments, expenses and liability
arising out of or attributable to:
(a) All actions of Transfer Agent or its agent or subcontractors required
to be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct.
(b) The lack of good faith, negligence or willful misconduct by the Phoenix
Funds which arise out of the breach of any representation or warranty
of the Phoenix Funds hereunder.
(c) The reliance on or use by the Transfer Agent or its agents or
subcontractors of information, records and documents which (i) are
received by Transfer Agent or its agents or subcontractors, and (ii)
have been prepared, maintained or performed by the Phoenix Funds or any
other person or firm on behalf of the Phoenix Funds including but not
limited to any previous transfer agent or registrar.
(d) The reliance on, or the carrying out by Transfer Agent or its agents or
subcontractors of any instructions or requests of the Phoenix Funds.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state
or in violation of any stop order or other determination or ruling by
any federal agency or any state with respect to the offer or sale of
such Shares in such state.
6.02 Transfer Agent shall indemnify and hold each of the Phoenix Funds
harmless from and against any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liability arising out of or attributable to any
action or failure or omission to act by Transfer Agent, or any sub-agent, as a
result of Transfer Agent's, or such sub-agent's, lack of good faith, negligence
or willful misconduct.
6.03 At any time the Transfer Agent may apply to any officer of the Phoenix
Funds for instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by Transfer Agent
under this Agreement, and Transfer Agent and its agents or subcontractors shall
not be liable and shall be indemnified by the Phoenix Funds for any action taken
or omitted by it in reliance upon such instructions or upon the opinion of such
counsel. The Transfer Agent, its agents and subcontractors shall be protected
and indemnified in acting upon any paper or document furnished by or on behalf
of the Phoenix Funds, reasonably believed to be genuine and to have been signed
by the proper person or persons, or upon any instruction, information, data,
records or documents provided Transfer Agent or its agents or subcontractors by
machine readable input, telex, CRT data entry or other similar means authorized
by the Phoenix Funds, and shall not be held to have notice of any change of
authority of any person, until receipt of written notice thereof from the
Phoenix Funds. Transfer Agent, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which are reasonably
-5-
<PAGE>
believed to bear the proper manual or facsimile signatures of the officers of
any Fund, and the proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
6.04 In order that the indemnification provisions contained in this Article
6 shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
6.05 Transfer Agent hereby expressly acknowledges that recourse against any
of the Phoenix Funds, if any, shall be subject to those limitations provided by
governing law and the Declaration of Trust of the Phoenix Funds, as applicable,
and agrees that obligations assumed by the Phoenix Funds hereunder shall be
limited in all cases to the Phoenix Funds and their respective assets. Transfer
Agent shall not seek satisfaction of any such obligation from the shareholders
or any shareholder of the Phoenix Funds, nor shall the Transfer Agent seek
satisfaction of any obligations from the Trustees/Directors or any individual
Trustee/Director of the Phoenix Funds.
ARTICLE 7 STANDARD OF CARE
----------------
7.01 The Transfer Agent shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy of all
services performed under this Agreement, but assumes no responsibility and shall
not be liable for loss or damage due to errors unless said errors are caused by
its negligence, bad faith, or willful misconduct of that of its employees.
ARTICLE 8 COVENANTS
---------
8.01 The Phoenix Funds shall promptly furnish to Transfer Agent the
following:
(a) A certified copy of the resolution of its Trustees/Directors
authorizing the appointment of Transfer Agent and the execution and delivery of
this Agreement.
(b) A copy of the Declaration of Trust or Articles of Incorporation, as the
case may be, and By-Laws, if any, and all amendments thereto of each Fund.
8.02 The Transfer Agent hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Phoenix Funds for safekeeping of
stock certificates, check forms and facsimile signature imprinting devices, if
any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices.
8.03 The Transfer Agent shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, Transfer Agent agrees that all such records prepared
or maintained by Transfer Agent relating to the services to be performed by
Transfer Agent hereunder are the property of each respective Fund and will be
preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to each respective Fund on and in
accordance with its request.
8.04 The parties agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this
-6-
<PAGE>
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records, Transfer Agent will endeavor to notify the affected Fund
and to secure instructions from an authorized officer of such Fund as to such
inspection. Transfer Agent reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that it
may be held liable for the failure to exhibit the Shareholder records to such
person.
ARTICLE 9 TERMINATION
-----------
9.01 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other. The parties mutually acknowledge
that the termination of this Agreement by one, but not each Fund shall not
effect a termination of this Agreement as to any and all other Phoenix Fund(s)
which have not terminated the Agreement.
9.02 Should any Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the terminating Fund. Additionally, Transfer Agent reserves the right to charge
any other reasonable expenses associated with such termination and/or a charge
equivalent to the average of three (3) months' fees to the terminating Fund.
ARTICLE 10 ASSIGNMENT
-----------
10.01 Except as provided in Section 10.03 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
10.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
10.03 The Transfer Agent may, without further consent on the part of any of
the Phoenix Funds, subcontract for the performance hereof with one or more
sub-agents; provided, however, that Transfer Agent shall be as fully responsible
to each Fund for the acts and omissions of any subcontractor as it is for its
own acts and omissions.
ARTICLE 11 AMENDMENT
--------
11.01 This Agreement may be amended or modified by a written agreement
executed by the parties and authorized or approved by a resolution of the
Trustees/Directors of each respective Fund.
ARTICLE 12 CONNECTICUT LAW TO APPLY
------------------------
12.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Connecticut.
ARTICLE 13 FORCE MAJEURE
-------------
13.01 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
-7-
<PAGE>
ARTICLE 14 CONSEQUENTIAL DAMAGES
---------------------
14.01 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
ARTICLE 15 MERGER OF AGREEMENT
-------------------
15.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
15.02 This Agreement shall not be merged with or construed in conjunction
with any other current or future agreement between the Phoenix Funds (including
any Fund) and Phoenix Equity Planning Corporation, each and all of which
agreements shall at all times remain separate and distinct.
ARTICLE 16 LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS
---------------------------------------------------------
16.01 For the Funds which that are formed as Massachusetts business trusts,
notice is hereby given that the Agreement and Declaration of such Trusts are on
file with the Secretary of the Commonwealth of Massachusetts and was executed on
behalf of the Trustees of such Trusts as Trustees and not individually and that
the obligations of this instrument are not binding upon any of the Trustees or
Shareholders individually but are binding only upon the assets and property of
each Fund.
ARTICLE 17 COUNTERPARTS
------------
17.01 This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
PHOENIX ASSET RESERVE
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX EQUITY OPPORTUNITIES FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX SERIES FUND
PHOENIX TOTAL RETURN FUND, INC.
PHOENIX WORLDWIDE OPPORTUNITIES FUND
By: /s/ Philip R. McLoughlin
-------------------------------
Name: Philip McLoughlin
Title: President
ATTEST:
By: /s/ Richard Wirth
-------------------------------
Name: Richard Wirth
Title: Asst. Secretary
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Martin J. Gavin
-------------------------------
Executive Vice President
ATTEST:
By: /s/ Patricia O. McLaughlin
-------------------------------
Name: Patricia O. McLaughlin
Title: Assistant Secretary
-9-
<PAGE>
SCHEDULE A
----------
FEE SCHEDULE
Annual Maintenance Fees shall be based on the following formula:
AMFFund = BAMF x SA
where, AMFFund refers to the aggregate Annual Maintenance Fee levied
against each respective Fund,
BAMF refers to the Base Annual Maintenance Fee levied against each
respective Fund for each shareholder account, as more particularly
described below, at the basic annual per account rate of $19.25 for
daily dividend accounts and $14.95 for non-daily dividend accounts, and
SA refers to the number of Shareholder Accounts subject to the terms of
this Agreement and any and all sub-transfer agent agreements which
presently or hereafter may be entered into by the Transfer Agent. For
the purpose of computing the foregoing, the Transfer Agent will
ascertain the number of Shareholders of each Fund regardless of whether
any such Shares are held in accordance with any pooled or omnibus
accounts or arrangement managed or controlled by any entity,
broker/dealer or sub-transfer agent.
Other Fees
- ----------
* Omnibus Accounts, Per Transaction $2.50
* Closed Accounts, per Account, per month $0.20
* Check writing Fees:
o Privilege set-up $5.00
o Per Cleared Check $1.00
Out-of-Pocket Expenses
- ----------------------
Out-of-pocket expenses include, but are not limited to: confirmation production,
postage, forms, telephone, microfilm, microfiche, stationary and supplies billed
as .1122% of postage costs and expenses incurred at the specific direction of
any Fund. Postage for mass mailings is due seven days in advance of the mailing
date.
fund\900
Exhibit 9.1
PHOENIX EQUITY PLANNING CORPORATION
100 Bright Meadow Boulevard
Enfield, Connecticut 06082-1989
800-243-4361
(203) 253-1000
PHOENIX FAMILY OF FUNDS
SALES AGREEMENT
TO: Phoenix Equity Planning Corporation FROM:
100 Bright Meadow Boulevard
Enfield, Connecticut 06082
Sir/Madam:
We desire to enter into an Agreement with you for the sale and distribution of
shares of registered investment companies (which shall collectively be referred
to hereafter as the "Funds") for which you are national distributor or principal
underwriter and which may be listed in the Annex A hereto which such Annex may
be amended by you from time to time. Upon acceptance of this Agreement by you,
we understand that we may offer and sell shares of each of the funds (hereafter
"Shares") subject, however, to all of the terms and conditions hereof including
your right to suspend or cease the sale of such shares.
1. We understand and agree that in all sales of Shares to the public we
shall be acting as dealer for our own account: that all purchase orders
and applications submitted to you by us are subject to acceptance or
rejection by you in your sole discretion: and that each purchase will
be deemed to have been consummated in your principal office subject to
your acceptance and effective only upon confirmation to us by you.
2. We agree that all purchases of Shares by us shall be made only for the
purpose of covering purchase orders already received from our customers
(who may be any person other than a securities dealer or broker) or for
our own bona fide investment.
3. We shall offer and sell shares purchased pursuant to this Agreement for
the purpose of covering purchase orders of our customers at the current
public offering price for such Shares ("Offering Price") as set forth
in the current prospectus of each of the funds.
4. We shall pay you for Shares purchased by us within five (5) business
days of the date of your confirmation to us of such purchase. The
purchase price shall be the Offering Price, less only the applicable
dealer discount ("Dealer Discount"), if any, as set forth in Annex A
hereto. We agree that you have the right, without notice, to cancel any
order for which payment has not been received by you as provided in
this paragraph, in which case you may hold us responsible for any loss
suffered by you resulting from our failure to make payment as
aforesaid.
5. We understand and agree that any Dealer Discount or fee is subject to
change from time to time. Any orders placed after the effective date of
any such Dealer Discount change shall be subject to the Dealer
Discounts in effect at the time such order is received by you.
6. We understand and agree that Shares purchased by us under this
Agreement will not be delivered until payment has been received by you.
Delivery of shares will be made by credit to a shareholder open account
unless delivery of certificates is specified in the purchase order. In
order to avoid unnecessary delay, it is understood that, at our
request, any Shares resold by us to one of our customers will be
delivered (whether by credit to a shareholder open account or by
delivery of certificates) in the name of our customer.
<PAGE>
7. We understand that all purchases of Shares to which the terms of this
Agreement are applicable by a person for whom we are dealer of record,
you will pay us an amount equal to the Dealer Discount or fees which
would have been paid to us with respect to such Shares if such Shares
have been purchased through us. We understand and agree that the dealer
of record for this purpose shall be the dealer through whom such person
most recently purchased Shares of such fund. We understand that all
amounts payable to us under this paragraph and currently payable under
this agreement will be paid as of the end of each month unless
specified otherwise for the total amount of Shares to which this
paragraph is applicable but may be paid more frequently as you may
determine in your discretion.
8. You appoint the transfer agent for each of the Funds as your agent to
execute the purchase transaction of Shares and to confirm such
purchases to our customers on our behalf, and we guarantee the legal
capacity of our customers so purchasing such shares. We further
understand if a customer's account is established without the customer
signing the application form, we represent that the instructions
relating to the registration and shareholder options selected (whether
on the application form, in some other document or orally) are in
accordance with the customer's instructions and we agree to indemnify
the Funds, the transfer agent and you for any loss or liability
resulting from acting upon such instructions.
9. Upon the purchase of Shares pursuant to a Letter of Intent, we will
promptly return to you any excess of the Dealer Discount previously
allowed or paid to us over that allowable in respect to such larger
purchase.
10. Unless at the time of transmitting a purchase order we advise you to
the contrary, you may consider that the investor owns no other Shares
and may further assume that the investor is not entitled to any lower
sales charge than that accorded to a single transaction in the amount
of the purchase order as set forth in Annex A hereto.
11. We understand and agree that if any Shares purchased by us under the
terms of this Agreement are, within seven (7) business days after the
date of your confirmation to us of the original purchase order for such
shares, repurchased by you as agent for such fund or are tendered to
such fund for redemption, we shall forfeit the right to, and shall pay
over to you the amount of, any Dealer Discount allowed to us with
respect to such Shares. It is understood that you will forthwith pay
over such amount to such fund and also shall pay over to such fund your
share of the Sales Charge, if any, on the original transaction. We
understand that you will notify us of such repurchase or redemption
within ten (10) days of the date upon which certificates are delivered
to you or to such fund or the date upon which the holder of Shares held
in a shareholder open account places or causes to be placed to you or
with such fund an order to have such Shares repurchased or redeemed.
12. We agree that, in the case of any repurchase of any Shares made more
than seven (7) business days after confirmation by you of any purchase
of such Shares, except in the case of Shares purchased by us from you
for our own bona fide investment, we will act only as agent for the
holders of such Shares and will place the orders for repurchase only
with you. It is understood that we may charge the holder of such Shares
a fair commission for handling the transaction.
13. Your obligations to us under this Agreement are subject to all the
provisions of the respective distribution agreements entered into
between you and each of the Funds. We understand and agree that in
performing our services under this agreement we are acting in the
capacity of an independent contractor, and you are in no way
responsible for the manner of our performance or for any of our acts or
omissions in connection therewith. Nothing in the Agreement shall be
construed to constitute us or any of our agents, employees or
representatives as your agent, partner or employee or the agent,
partner or employee of any of the Funds.
14. We understand that you will supply us with reasonable quantities of the
current prospectus and periodic reports to shareholders for each of the
Funds. We agree not to use any other advertising or sales material
relating to the sale of shares of any of the Funds unless other
advertising or sales material is approved in writing by you.
<PAGE>
15. We shall offer and sell Shares, and execute telephone exchanges, only
in accordance with the terms and conditions of the then current
prospectus of each of the Funds and subject to the provisions of this
Agreement, and we will make no representations not contained in any
such prospectus or in any authorized supplemental material supplied by
you. We will use our best efforts in the development and promotion of
sales of the Shares covered by this Agreement, and agree to be
responsible for the proper instruction and training of all sales
representatives employed by us in order that such Shares will be
offered in accordance with terms and conditions of this Agreement and
all applicable laws, rules and regulations. We agree to hold you
harmless and indemnify you in the event that we or any of our sales
representatives should violate any law, rule or regulation or any
provisions of this Agreement which may result in possible liability to
you. In addition, in consideration for the extension of the right to
exercise the telephone exchange privilege to us and our registered
representatives, we acknowledge that neither the Funds nor the Transfer
Agent nor Equity Planning will be liable for any loss, injury or damage
incurred as a result of acting upon, nor will they be responsible for
the authenticity of any telephone instructions, and agree that we will
indemnify and hold harmless the Funds, Equity Planning and the Transfer
Agent against any loss, injury or damage resulting from any telephone
exchange instruction from us or our registered representatives.
(Telephone instructions will be recorded on tape.) In the event you
determine to refund any amounts paid by any investor by reason of any
such violation on our part, we shall forfeit the right to, and pay over
to you, the amount of any dealer discount allowed to us with respect to
the transaction for which the refund is made. All expenses which we
incur in connection with our activities under this Agreement shall be
borne by us.
16. We represent that we are properly registered as a broker or dealer
under the Securities Exchange Act of 1934 and are members of the
National Association of Securities Dealers, Inc. ("NASD") and agree to
maintain membership in the NASD or, in the alternative, that we are
foreign dealers not eligible for membership in the NASD. We agree to
notify you promptly of any change, termination, or suspension of the
foregoing status. We agree to abide by all the rules and regulations of
the NASD including Section 26 of Article III of the Rules of Fair
Practice which is incorporated herein by reference as if set forth in
full. We further agree to comply with all applicable state and Federal
laws and the rules and regulations of applicable regulatory agencies.
We further agree that we will not sell, or offer for sale, Shares in
any state or jurisdiction in which such Shares have not been duly
registered or qualified for sale.
17. Either party may terminate this Agreement for any reason by written or
telegraphic notice to the other party which termination shall become
effective fifteen (15) days after the date of mailing or telegraphing
such notice to the other party. You may also terminate this Agreement
for cause or as a result of a violation by us, as determined by you in
your discretion, of any of the provisions of this Agreement, said
termination to be effective on the date of mailing written or
telegraphing notice to us of the same. Without limiting the generality
of the foregoing, our own expulsion from the NASD will automatically
terminate this Agreement without notice. Our suspension from the NASD
of violation or applicable state or Federal laws or rules and
regulations of applicable regulatory agencies will terminate this
Agreement effective upon the date of your mailing written notice or
telegraphing notice to us of such termination. Your failure to
terminate this Agreement for any cause shall not constitute a waiver of
your right to so terminate at a later date for such cause.
18. We understand and agree that all communications and notices to you or
to us shall be sent to the addresses set forth at the beginning of this
Agreement or to such other addresses as either party may specify in
writing from time to time.
19. This Agreement shall become effective upon the date of its acceptance
by you as set forth herein. This Agreement and all rights and
obligations of the parties hereunder shall be governed by and construed
under the laws of the State of Connecticut. This Agreement is not
assignable or transferable, except that you may assign or transfer this
Agreement to any successor distributor of the Shares described herein.
ACCEPTED ON BEHALF OF
PHOENIX EQUITY PLANNING CORPORATION DEALER FIRM
Date
------------------------------------ ------------------------------------
NAME OF DEALER
By John W. Filoon, Jr., Snr. Vice Pres.,
Sales & Mktg. Date
------------------------------------- --------------------------------
NAME AND TITLE
By
----------------------------------
NAME AND TITLE
/s/ John W. Filoon, Jr.
AUTHORIZED SIGNATURE ------------------------------------
AUTHORIZED SIGNATURE
NASD - CRD - NUMBER
-----------------
<PAGE>
ANNEX A
DEALER'S AGREEMENT WITH
PHOENIX EQUITY PLANNING CORPORATION
The public offering price of Class A Shares of all Series of the Phoenix Series
Fund (except the Money Market Fund Series) all Portfolios of the Phoenix
Multi-Portfolio Fund and the Phoenix Total Return Fund Inc., is the net asset
value plus a sales charge. The offering price so determined becomes effective
after the purchase order is received by Equity Planning or the Trust's agent,
State Street Bank and Trust Company. The sales charge is reduced on a graduated
scale on single purchases of $50,000 or more as shown below:
Class A Shares
- --------------
<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Discount or Agency
Amount of Transaction as percentage as percentage fee as percentage
at offering Price of offering price -of amount invested of offering price *
- --------------------- ----------------- ------------------- -------------------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 but under $100,000 4.50% 4.71% 4.00%
$100,00 but under $250,000 3.50% 3.63% 3.00%
$250,000 but under $500,000 3.00% 3.09% 2.75%
$500,000 but under $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more ... None None (see below*)
</TABLE>
*In connection with purchases of Class A shares of $1,000,000 or more (and
subsequent purchases in any amount) including purchases of shares of the Phoenix
Money Market Fund Series, Equity Planning may pay broker-dealers from its own
profits and resources, a percentage of the net asset value of any shares sold
(excluding Phoenix Money Market Fund Series) as set forth below:
Purchase Amount Payment to Broker/Dealers
- --------------- -------------------------
$1,000,000 - $2,000,000 .75 of 1%
$2,000,000 - $4,000,000 .50 of 1%
$4,000,000 or more .25 of 1%
Effective January 1, 1994:
- -------------------------
Class B shares will be offered on sales of shares of the
Phoenix High Yield Fund Series and Phoenix U.S. Government Fund Series both of
which are Series of the Phoenix Series Fund, on sales of Shares of the Phoenix
Tax Exempt Bond Portfolio which is a Portfolio of the Phoenix Multi-Portfolio
Fund and on shares of the Phoenix Total Return Fund Inc. Class B shares are sold
at net asset value per share without the imposition of a sales charge at the
time of purchase. Shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge, as described in the Fund's
current prospectus, at the rates set forth below:
Class B Shares:
- --------------
Contingent Deferred Sales Charge
as a percentage of dollar amount
Years Since Purchase subject to charge
- -------------------- --------------------------------
First 4%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh 0
PHOENIX FUNDS DISTRIBUTION PLAN
- -------------------------------
Under their respective Distribution Plans, each of the Phoenix Funds may pay
Equity Planning an amount annually not to exceed a certain percentage of the
average daily net assets of the Fund, as shown below. Equity Planning may pay to
qualifying dealers an amount up to this percentage of the average daily net
assets in qualifying shares sold by such dealers as described in the Fund's
prospectus.
<PAGE>
FUND NAME DISTRIBUTION PLAN
- --------- -----------------
Phoenix Series Fund Class A .25% Class B .75%
Phoenix Multi-Portfolio Fund .25% .75%
Phoenix Total Return Fund .25% .75%
*Equity Planning may sponsor sales contests and provide to all qualifying
dealers from its own profits and resources, additional compensation in the form
of trips and merchandise. Brokers or dealers other than Equity Planning may also
make customary additional charges for their Services in effecting purchases, if
they notify the Trust of their intention to do so.
Exhibit 9.2
FINANCIAL AGENT AGREEMENT
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, CT 06083-2200
May 25, 1994
Gentlemen:
1. Each of the undersigned mutual funds (hereinafter collectively and
singularly referred to as the "Fund") hereby appoints you, subject to your
acceptance, as Financial Agent subject to the terms and conditions set forth
below, effective January 1, 1994. You shall keep the books of each Fund and
compute the daily net asset value of shares of each Fund in accordance with
instructions received from time to time from the Board of Directors/Trustees of
each Fund; which instructions shall be certified to you by each Fund's
Secretary. You shall report such net asset value so determined to each Fund and
shall perform such other services as may be requested from time to time by each
or any Fund as are reasonably incidental to your duties as Financial Agent.
2. You shall be obligated to maintain, for the periods and in the
places required by Rule 31a-2 under the Investment Company Act of 1940, as
amended, those books and records maintained by you as Financial Agent. Such
books and records are the property of each respective Fund and shall be
surrendered promptly to the appropriate Fund upon its request. Furthermore, such
books and records shall be open to inspection and audit at reasonable times by
officers and auditors of each respective Fund.
3. As compensation for your services hereunder during any fiscal year
of each respective Fund, you shall receive, within five days after the end of
each fiscal quarter of each respective Fund, a fee based on the average of the
aggregate daily net asset values of each respective Fund at the annual rate per
each $1 million of $300.
4. You shall not be liable for anything done or omitted by you in the
exercise of due care in discharging your duties as Financial Agent and shall be
answerable and accountable only for your own acts and omissions and not for
those of any agent employed by you nor for those of any bank, trust company,
broker, depository, correspondent or other person. You shall be protected in
acting upon any instruction, notice, request, consent, certificate, resolution,
or other instrument or paper believed by you to be genuine, and to have been
properly executed, and shall, unless otherwise specifically provided herein, be
entitled to receive as conclusive proof of any fact or matter required to be
ascertained by you hereunder a certificate signed by the Secretary of each
respective Fund. You shall be entitled, with respect to questions of law
relating to your duties hereunder, to advice of counsel (which may be counsel
for any Fund) and, with respect to anything done or omitted by you in good faith
hereunder in conformity with the advice of or based upon an opinion of counsel,
to be held harmless by each respective Fund from all claims of loss or damage.
Nothing herein shall protect you against any liability to any Fund or to its
respective shareholders to which you would otherwise be subject by reason of
your willful misfeasance, bad faith, gross negligence or reckless disregard of
your duties hereunder. Except as provided in this Paragraph 4, you shall not be
entitled to any indemnification by any Fund.
5. Subject to prior approval of the Board of Directors/Trustees of each
Fund, you may appoint one or more sub-financial agents to perform any of the
functions and services which are to be provided under the terms of this
Agreement upon such terms and conditions as may be mutually agreed upon among
each respective Fund, you and such sub-financial agent.
6. This Agreement shall continue in effect only so long as (a) such
continuance is specifically approved at least annually by the Board of
Directors/Trustees of each Fund or by a vote of a majority of the outstanding
voting securities of each respective Fund, and (b) the terms and any renewal of
such Agreement
<PAGE>
have been approved by the vote of a majority of the directors/trustees of each
respective Fund who are not parties to the Agreement or interested persons, as
that term is defined in the Investment Company Act of 1940, of any such party,
cast in person at a meeting called for the purpose of voting on such approval. A
"majority of the outstanding voting securities of each respective Fund" shall
have, for all purposes of this Agreement, the meaning provided therefor in the
Investment Company Act.
7. Either you or any Fund may terminate your appointment as Financial
Agent hereunder on written notice to the other, whereupon you will be relieved
of the duties described herein with respect to such Fund. Any Fund may terminate
this Agreement without in any manner affecting the continued existence of the
same with respect to any and all other Fund(s) not terminating the Agreement.
This Agreement shall immediately terminate in the event of its assignment, as
that term is defined in the Investment Company Act of 1940.
8. This Agreement shall be construed and the rights and obligations of
the parties hereunder enforced in accordance with the laws of the State of
Connecticut.
If this letter correctly sets forth your understanding of the powers to
be granted to you and the restrictions to be imposed upon you as Financial
Agent, kindly confirm the same by signing in the appropriate space provided
below.
Very truly yours,
PHOENIX ASSET RESERVE
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX EQUITY OPPORTUNITIES FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX SERIES FUND
PHOENIX TOTAL RETURN FUND, INC.
PHOENIX WORLDWIDE OPPORTUNITIES FUND
By: /s/ Philip R. McLaughlin
----------------------------
President
Accepted as of date first above written:
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Martin J. Gavin
-----------------------------------
Executive Vice President
fund/898
FINANCIAL AGENT AGREEMENT
THIS AGREEMENT made and concluded as of this 11th day of December, 1996 by
and between Phoenix Equity Planning Corporation, a Connecticut corporation
having a place of business located at 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Financial Agent") and each of the undersigned mutual funds
(hereinafter collectively and singularly referred to as the "Trust").
WITNESSETH THAT:
1. Financial Agent shall keep the books of the Trust and compute the daily
net asset value of shares of the Trust in accordance with instructions received
from time to time from the Board of Trustees of the Trust; which instructions
shall be certified to Financial Agent by the Trust's Secretary. Financial Agent
shall report such net asset value so determined to the Trust and shall perform
such other services as may be requested from time to time by the Trust as are
reasonably incidental to Financial Agent's duties hereunder.
2. Financial Agent shall be obligated to maintain, for the periods and in
the places required by Rule 31a-2 under the Investment Company Act of 1940, as
amended, those books and records maintained by Financial Agent. Such books and
records are the property of the Trust and shall be surrendered promptly to the
Trust upon its request. Furthermore, such books and records shall be open to
inspection and audit at reasonable times by officers and auditors of the Trust.
3. As compensation for its services hereunder during any fiscal year of the
Trust, Financial Agent shall receive, within eight days after the end of each
month, a fee as specified in Schedule A.
4. Financial Agent shall not be liable for anything done or omitted by it
in the exercise of due care in discharging its duties specifically described
hereunder and shall be answerable and accountable only for its own acts and
omissions and not for those of any agent employed by it nor for those of any
bank, trust company, broker, depository, correspondent or other person.
Financial Agent shall be protected in acting upon any instruction, notice,
request, consent, certificate, resolution, or other instrument or paper believed
by Financial Agent to be genuine, and to have been properly executed, and shall,
unless otherwise specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be ascertained by Financial
Agent hereunder a certificate signed by the Secretary of the Trust. Financial
Agent shall be entitled, with respect to questions of law relating to its duties
hereunder, to advice of counsel (which may be counsel for the Trust) and, with
respect to anything done or omitted by it in good faith hereunder in conformity
with the advice of or based upon an opinion of counsel, to be held harmless by
the Trust from all claims of loss or damage. Nothing herein shall protect
Financial Agent against any liability to the Trust or to its respective
shareholders to which Financial Agent would otherwise be subject by reason of
its willful misfeasance, bad faith, gross
<PAGE>
negligence or reckless disregard of its duties hereunder. Except as provided in
this paragraph, Financial Agent shall not be entitled to any indemnification by
the Trust.
5. Subject to prior approval of the Board of Trustees of the Trust,
Financial Agent may appoint one or more sub-financial agents to perform any of
the functions and services which are to be provided under the terms of this
Agreement upon such terms and conditions as may be mutually agreed upon by the
Trust, Financial Agent and such sub-financial agent.
6. This Agreement shall continue in effect only so long as (a) such
continuance is specifically approved at least annually by the Board of Trustees
of the Trust or by a vote of a majority of the outstanding voting securities of
the Trust, and (b) the terms and any renewal of such Agreement have been
approved by the vote of a majority of the trustees of the Trust who are not
parties to this Agreement or interested persons, as that term is defined in the
Investment Company Act of 1940, as amended, of any such party, cast in person at
a meeting called for the purpose of voting on such approval. A "majority of the
outstanding voting securities of the Trust" shall have, for all purposes of this
Agreement, the meaning provided therefor in said Investment Company Act.
7. Either party may terminate the within Agreement by tendering written
notice to the other, whereupon Financial Agent will be relieved of the duties
described herein. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in said Investment Company Act.
8. This Agreement shall be construed and the rights and obligations of the
parties hereunder enforced in accordance with the laws of the Commonwealth of
Massachusetts.
<PAGE>
9. This Agreement shall become effective on January 1, 1997.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first written above.
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
By: /s/ Philip R. McLoughlin
----------------------------
Philip R. McLoughlin
President
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ David R. Pepin
----------------------------
David R. Pepin
Executive Vice President
<PAGE>
SCHEDULE A
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS FINANCIAL AGENT
Annual Financial Agent Fees shall be based on the following formula:
(1) An incremental schedule applies as follows:
<TABLE>
<S> <C>
Up to $100 million: 5 basis points on average daily net assets
$100 million to $300 million: 4 basis points on average daily net assets
$300 million thru $500 million: 3 basis points on average daily net assets
Greater than $500 million: 1.5 basis points on average daily net assets
</TABLE>
A minimum fee will apply as follows:
Money Market $35,000
Equity $50,000
Balanced $60,000
Fixed Income $70,000
International $70,000
REIT $70,000
(2) An additional charge of $12,000 applies for each additional class of
shares above one, over and above the minimum asset-based fee previously noted.
The following tables indicates the classification and effective date for
each of the applicable fund/series/portfolio:
Classification Series Name
-------------- -----------
Money Market Phoenix Money Market Fund Series
Equity Phoenix Aggressive Growth Fund Series
Phoenix Convertible Fund Series
Phoenix Endowment Equity Portfolio
Phoenix Equity Opportunities Fund
Phoenix Growth Fund Series
Phoenix Micro Cap Fund
Phoenix Mid Cap Portfolio
Phoenix Small Cap Fund
Phoenix Strategic Theme Fund
<PAGE>
Classification Series Name
-------------- -----------
Balanced Phoenix Balanced Fund Series
Phoenix Income and Growth Fund
Phoenix Strategic Allocation Fund, Inc.
Fixed Income Phoenix California Tax Exempt Bonds, Inc.
Phoenix Diversified Income Portfolio
Phoenix Emerging Markets Bond Portfolio
Phoenix High Yield Fund Series
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Tax-Exempt Bond Portfolio
Phoenix U.S. Government Securities Fund Series
International Phoenix International Portfolio
Phoenix Worldwide Opportunities Fund
REIT Phoenix Real Estate Securities Portfolio
Exhibit 10
THE PHOENIX FUNDS
February 24, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Ladies and Gentlemen:
This opinion is furnished in connection with the registration under the
Securities Act of 1933, as amended, of Class A and Class B shares (collectively,
"Shares") of the Phoenix Multi-Sector Fixed Income Fund, Inc. (the "Phoenix
Fund").
In rendering our opinion, we have examined such documents, records, and
matters of law as we deemed necessary for purposes of this opinion. We have
assumed the genuineness of all signatures of all parties, the authenticity of
all documents submitted as originals, the correctness of all copies, and the
correctness of all facts set forth in the certificates delivered to us and the
correctness of all written or oral statements made to us.
Based upon the subject to the foregoing, it is our opinion that the
Shares that will be issued by the Phoenix Fund when sold, have been legally
issued, fully paid, and nonassessable.
Our opinion is rendered solely in connection with the Registration
Statement on Form N-1A under which the Shares will be registered and may not be
relied upon for any other purposes without our written consent. We hereby
consent to the use of this opinion as an exhibit to such Registration Statement.
Yours truly,
/s/ Richard J. Wirth
-----------------------
Richard J. Wirth
fund\1495
Exhibit 11
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. 10 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated December 13, 1996, relating to the financial
statements and financial highlights appearing in the October 31, 1996 Annual
Report to Shareholders of the Phoenix Multi-Sector Fixed Income Fund, Inc.,
which is 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 "Independent Accountants" in the Statement of
Additional Information.
/s/ Price Waterhouse LLP
- ------------------------
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 21, 1997
Exhibit 15
DISTRIBUTION PLAN OF
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC.
PURSUANT TO RULE 12B-1
CLASS A SHARES
Distribution Plan for Class A shares dated May 14, 1993 (the "Plan"), of
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC. (the "Fund"), a Maryland
corporation.
WHEREAS, the Fund and Phoenix Equity Planning Corporation ("PEPCO" or the
"Distributor"), a wholly owned subsidiary of Phoenix Home Life Mutual Insurance
Company ("Phoenix Home Life") and a broker-dealer registered under the
Securities Exchange Act of 1934, have entered into an Underwriting Agreement
pursuant to which the Distributor will act as principal underwriter of shares of
the Fund for sale to the public;
WHEREAS, Phoenix Home Life has entered into an agreement with Aitken Hume plc,
the indirect parent of National Securities Research Corporation ("NS&RC") and
its subsidiary, NSR Distributors, Inc. ("NSR"), the predecessor distributor of
the Fund, providing for the sale of the intermediate holding company parent of
NS&RC to Phoenix Home Life; and
WHEREAS, the Directors of the Fund have determined to adopt this Distribution
Plan (the "Plan"), in accordance with the requirements of Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "Act") and have determined that
there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders.
NOW THEREFORE, the Fund hereby adopts the Plan on the following terms and
conditions:
1. The Fund shall reimburse the Distributor, at the end of each month,
up to a maximum on an annual basis of 0.30% of the average daily value of the
net assets of the Fund's Class A shares, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc., for
distribution expenditures incurred by NSR pursuant to the Fund's Distribution
Plan dated January 6, 1992 but unreimbursed prior to the effectiveness of this
Plan, and expenditures incurred by PEPCO subsequent to the effectiveness of this
Plan, in connection with the sale and promotion of the Class A shares of the
Fund and the furnishing of services to shareholders of the Fund. Such
expenditures shall consist of: (i) commissions to sales personnel for selling
Class A shares of the Fund; (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 National Affiliated
Investment
-1-
<PAGE>
Companies for services rendered in connection with the sale and distribution of
Class A shares of the Fund, (iv) payment of expenses incurred in sales and
promotional activities, including advertising expenditures related to the Class
A shares of the Fund; (v) the costs of preparing and distributing promotional
materials; (vi) the cost of printing the Fund's Prospectus and Statement of
Additional Information for distribution to potential investors; and (vii) such
other similar services that the Directors of the Fund determine are reasonably
calculated to result in sales of Class A shares of the Fund; provided however,
that a portion of such amount paid to the Distributor, which portion shall be
equal to or less than 0.25% annually of the average daily net assets of the
Fund's Class A shares, may be paid for reimbursing the costs of providing
services to Class A shareholders, including assistance in connection with
inquiries related to shareholder accounts (the "Service Fee").
Amounts paid or payable by the Fund under this Plan or any agreement
with any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have 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 Directors of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections. No amounts paid or payable by the Fund under this Plan or any
related agreement may be used to pay for, or reimburse payment for, sales or
promotional services or activities unless such payment or reimbursement takes
place prior to the earliest of (a) the last day of the one-year period
commencing on the last day of the calendar quarter during which the specific
service or activity was performed, or (b) the last day of the one-year period
commencing on the last day of the calendar quarter during which payment for the
service or activity was made by a third party on behalf of the Fund.
2. At least quarterly in each year the Plan remains in effect, the
Fund's Principal Accounting Officer or Treasurer, or such other person
authorized to direct the disposition of monies paid or payable by the Fund,
shall prepare and furnish to the Directors of the Fund for their review, and the
Directors shall review, a written report complying with the requirements of Rule
12b-1 under the Act regarding the amounts expended under the Plan and the
purposes for which such expenditures were made.
3. This Plan shall not take effect until it, together with any related
agreements, have been approved by a vote of at least a majority of the Fund's
Directors as well as a vote of at least a
-2-
<PAGE>
majority of the Directors of the Fund who are not interested persons (as defined
in the Act) of the Fund and who have no direct or indirect financial interest in
the operation of the Plan or in any related agreements (the "Disinterested
Directors") cast in person at a meeting called for the purpose of voting on the
Plan or any related agreement, and the Plan shall not take effect with respect
to the Fund until it has been approved by a vote of at least a majority of the
outstanding voting securities (as defined in the Act) of the Class A shares of
the Fund.
4. This Plan shall remain in effect for one year from the date of its
execution and may be continued thereafter if specifically approved at least
annually by a vote of at least a majority of the Directors of the Fund as well
as a majority of the Disinterested Directors. This Plan may be amended at any
time, provided that (a) the Plan may not be amended to increase materially the
amount of the distribution expenses provided in Paragraph 1 hereof (including
the Service Fee) without the approval of at least a majority of the outstanding
voting securities (as defined in the Act) of the Class A shares of the Fund and
(b) all material amendments to this Plan must be approved by a vote of the
Directors of the Fund and of the Disinterested Directors.
5. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the Disinterested Directors then in
office.
6. Any related agreement shall be in writing and shall provide that (a)
such agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class 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.
7. This Plan may be terminated at any time by a vote of a majority of
the Disinterested Directors 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 the Plan is terminated or otherwise discontinued, no further payments
hereunder will be made by the Plan.
8. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to Paragraph 2 hereof, and any other
information, estimates, projections and other materials that serve as a basis
therefore, considered by the Directors 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.
-3-
<PAGE>
IN WITNESS WHEREOF, the Fund and its shareholders have adopted this
Plan as of this 14th day of May, 1993.
NATIONAL MULTI-SECTOR FIXED
INCOME FUND, INC.
CLASS A SHARES
By: /s/ Thomas Ole Dial
-------------------------------
Thomas Ole Dial, Vice President
Attest:
/s/ Mairead M. Collins
- -------------------------------
Mairead M. Collins
Assistant Secretary
natl\multi. al2
-4-
Exhibit 15.1
DISTRIBUTION PLAN OF
NATIONAL MULTI-SECTOR FIXED INCOME FUND, INC.
PURSUANT TO RULE 12B-1
CLASS B SHARES
Distribution Plan for Class B shares dated May 14, l993 (the "Plan") of NATIONAL
MULTI-SECTOR FIXED INCOME FUND, INC. (the "Fund"), a Maryland corporation.
WHEREAS, the Fund and Phoenix Equity Planning Corporation ("PEPCO" or the
"Distributor"), a wholly owned subsidiary of Phoenix Home Life Mutual Insurance
Company ("Phoenix Home Life") and a broker-dealer registered under the
Securities Exchange Act of 1934, have entered into an Underwriting Agreement
pursuant to which the Distributor will act as principal underwriter of shares of
the Fund for sale to the public;
WHEREAS, Phoenix Home Life has entered into an agreement with Aitken Hume plc,
the indirect parent of National Securities & Research Corporation ("NS&RC") and
its subsidiary, NSR Distributors, Inc. ("NSR"), the predecessor distributor of
the Fund, providing for the sale of the intermediate holding company parent of
NS&RC to Phoenix Home Life; and
WHEREAS, the Directors of the Fund have determined to adopt this Distribution
Plan (the "Plan"), in accordance with the requirements of Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "Act") and have determined that
there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders.
NOW THEREFORE, the Fund hereby adopts the Plan on the following terms and
conditions:
1. The Fund shall reimburse the Distributor at the end of each month,
up to a maximum on an annual basis of 1.00% of the average daily value of the
net assets of the Fund's Class B shares, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc., for
distribution expenditures incurred by NSR pursuant to the Fund's Distribution
Plan dated January 6, 1992 but unreimbursed prior to the effectiveness of this
Plan, and expenditures incurred by PEPCO subsequent to the effectiveness of this
Plan, in connection with the sale and promotion of shares of the Fund and the
furnishing of services to 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
-1-
<PAGE>
institutions which have entered into agreements with the Distributor in the form
of the Dealer Agreement for National Affiliated Investment Companies 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 Directors of the Fund determine are reasonably
calculated to result in the sale of Class B shares of the Fund; provided
however, that a portion of such amount paid to the Distributor, which portion
shall be equal to or less than 0.25% annually of the average daily net assets of
the Fund's Class B shares, may be paid for reimbursing the costs of providing
services to Class B shareholders including assistance in connection with
inquiries related to shareholder accounts (the "Service Fee").
Amounts paid or payable by the Fund under this Plan or any agreement
with any person or entity relating to the implementation of this Plan ("related
agreements") 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 Directors of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
2. At least quarterly in each year the Plan remains in effect, the
Fund's Principal Accounting Officer or Treasurer, or such other person
authorized to direct the disposition of monies paid or payable by the Fund,
shall prepare and furnish to the Directors of the Fund for its review, and the
Directors shall review, a written report complying with the requirements of Rule
12b-1 under the Act regarding the amounts expended under the Plan and the
purposes for which such expenditures were made.
3. This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Directors as well as a vote of at least a majority of the Directors of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
related agreement (the "Disinterested Directors") cast in person at a meeting
called for the purpose of voting on the Plan or any related agreement, and the
Plan shall not take effect with respect to the Fund until it has been approved
by a vote of at
-2-
<PAGE>
least a majority of the outstanding voting securities (as defined in the Act) of
the Fund.
4. This Plan shall remain in effect for one year from the date of its
adoption and may be continued thereafter if specifically approved at least
annually by a vote of at least a majority of the Directors of the Fund as well
as a majority of the Disinterested Directors. This Plan may be amended at any
time, provided that (a) the Plan may not be amended to increase materially the
amount of the distribution expenses provided in Paragraph 1 hereof (including
the Service Fee) without the approval of at least a majority of the outstanding
voting securities (as defined in the Act) of the Class B shares of the Fund and
(b) all material amendments to this Plan must be approved by a majority vote of
the Directors of the Fund and of the Disinterested Directors cast in person at a
meeting called for the purpose of such vote.
5. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the Disinterested Directors then in
office.
6. Any related agreement shall be in writing and shall provide that (a)
such agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class B shares of the Fund on not more than 60 days' written notice to the other
party to the agreement, and (b) such agreement shall terminate automatically in
the event of its assignment.
7. This Plan may be terminated at any time by a vote of a majority of
the Disinterested Directors or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class B shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made by the Plan.
8. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to Paragraph 2 hereof, and any other
information, estimates, projections and other materials that serve as a basis
therefor, considered by the Directors 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.
-3-
<PAGE>
IN WITNESS WHEREOF, the Fund and its shareholders have adopted this
Plan as of this 14th day of May, 1993.
NATIONAL MULTI-SECTOR FIXED
INCOME FUND, INC.
CLASS B SHARES
By: /s/ Thomas Ole Dial
-------------------------------
Thomas Ole Dial, Vice President
Attest:
/s/ Mairead M. Collins
- -------------------------------
Mairead M. Collins
Assistant Secretary
natl\multi. b12
-4-
Exhibit 16
EXPLANATION OF YIELD AND EFFECTIVE YIELD CALCULATION
The following is an example of the yield calculation for the Phoenix
Multi-Sector Fixed Income Fund, Inc. based on a 30 day period ending October 31,
1994.
The yield is computed by dividing the net investment income per share earned
during the accounting period by the maximum price per share on the last day of
the period, according to the following formula:
a-b
Yield=2[(---+1)(6)-1]
cxd
Where a = dividends and interest earned during the period by the Fund
b = expenses accrued for the period (net of any reimbursements)
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the period
The yield of the Phoenix Multi-Sector Fixed Income Fund, Inc. is computed as
follows:
Class A Shares
1,313,784-151,992
Yield=2[(-----------------)+1)6-1]=7.74
14,595,828x12.54
Class B Shares
1,189,591-235,616
Yield=2[(-----------------+1)6-1]=7.37%
13,216,070x11.93
C:multisec.exp
Exhibit 18.2
PHOENIX FUNDS
(the "Funds")
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended
("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the original effective date of this Plan, the Funds shall offer
multiple classes of shares, as described herein, pursuant to Rule 18f-3 and this
Plan.
2. The Multi-Class Structure
-------------------------
The portfolios of the Funds listed on Schedule A hereto shall offer two
classes of shares, Class A and Class B ("Multi-Class Portfolios"). Shares of the
Multi-Class Portfolios shall represent an equal pro rata interest in the
respective Multi-Class Portfolio and, generally, shall have identical voting,
dividend, liquidation, and other rights, preferences, powers, restrictions,
limitations, qualifications and terms and conditions, except that: (a) each
class shall have a different designation; (b) each class shall bear any Class
Expenses, as defined by Section B, below; (c) each class shall have exclusive
voting rights on any matter submitted to shareholders that relates solely to its
distribution arrangement; and (d) each class shall have separate voting rights
on any matter submitted to shareholders in which the interests of one class
differ from the interests of any other class. In addition, Class A and Class B
shares shall have the features described in Sections a, b, c and d, below.
a. Distribution Plans
------------------
The Funds have adopted Distribution Plans pursuant to Rule 12b-1 with
respect to each Multi-Class Portfolio, containing substantially the following
terms:
i. Class A shares of each Multi-Class Portfolio shall reimburse
Phoenix Equity Planning Corporation (the "Distributor") for costs and expenses
incurred in connection with distribution and marketing of shares thereof, as
provided in the Class A Distribution Plan and any supplements thereto, subject
to an annual limit of 0.25%, or in some cases 0.30%, of the average daily net
assets of a Multi-Class Portfolio's Class A shares.
<PAGE>
-2-
ii. Class B shares of each Multi-Class Portfolio shall reimburse the
Distributor for costs and expenses incurred in connection with distribution and
marketing of shares thereof, as provided in the Class B Distribution Plan and
any supplements thereto, subject to an annual limit of 1.00% of the average
daily net assets of a Multi-Class Portfolio's Class B shares.
b. Allocation of Income and Expenses
---------------------------------
i. General.
--------
The gross income, realized and unrealized capital gains and losses and
expenses (other than Class Expenses, as defined below) of each Multi-Class
Portfolio shall be allocated to each class on the basis of its net asset value
relative to the net asset value of the Multi-Class Portfolio. Expenses to be so
allocated include expenses of the Funds that are not attributable to a
particular Multi-Class Portfolio or class of a Multi-Class Portfolio but are
allocated to a Multi-Class Portfolio ("Fund Expenses") and expenses of a
particular Multi-Class Portfolio that are not attributable to a particular class
of that Multi-Class Portfolio ("Portfolio Expenses"). Fund Expenses include, but
are not limited to, trustees' fees, insurance costs and certain legal fees.
Portfolio Expenses include, but are not limited to, certain state registration
fees, custodial fees, advisory fees and other expenses relating to the
management of the Multi-Class Portfolio's assets.
ii. Class Expenses.
---------------
Expenses attributable to a particular class ("Class Expenses") shall
be limited to: (1) transfer agency fees; (2) stationery, printing, postage, and
delivery expenses relating to preparing and distributing shareholder reports,
prospectuses, and proxy statements; (3) state Blue Sky registration fees; (4)
SEC registration fees; (5) expenses of administrative personnel and services to
the extent related to another category of class-specific expenses; (6) trustees'
fees and expenses; (7) accounting expenses, auditors' fees, litigation expenses,
and legal fees and expenses; and (8) expenses incurred in connection with
shareholder meetings. Expenses described in subsection (a) of this paragraph
must be allocated to the class for which they are incurred. All other expenses
described in this paragraph may be allocated as Class Expenses, if a Fund's
President and Treasurer have determined, subject to Board approval or
ratification, which of such categories of expenses will be treated as Class
Expenses, consistent with applicable legal principles under the 1940 Act and the
Internal Revenue Code of 1986, as amended ("Code"). The difference between the
Class Expenses allocated to each share of a class during a year and the Class
Expenses allocated to each share of any other class during such year shall at
all times be less than .50% of the average daily net asset value of the class of
shares with the smallest average net asset value. The afore-described
description of Class Expenses and any amendment thereto shall be subject to the
continuing availability of an opinion of counsel or a ruling from the Internal
Revenue Service to the effect that any such allocation of expenses or the
assessment of higher distribution fees and transfer agency costs on any class of
shares does not result in any dividends or distributions constituting
"preferential dividends" under the Code.
<PAGE>
-3-
In the event that a particular expense is no longer reasonably
allocable by class or to a particular class, it shall be treated as a Fund
Expense or Portfolio Expense as applicable, and in the event a Fund Expense or
Portfolio Expense becomes allocable as a Class Expense, it shall be so
allocated, subject to compliance with Rule 18f-3 and Board approval or
ratification.
The initial determination of expenses that will be allocated as Class
Expenses and any subsequent changes thereto as set forth in this Plan shall be
reviewed by the Board of Trustees and approved by such Board and by a majority
of the Trustees who are not "interested persons" of the Fund, as defined in the
1940 Act ("Independent Trustees").
iii. Waivers or Reimbursements of Expenses
-------------------------------------
Expenses may be waived or reimbursed by the Fund's investment
adviser(s), its principal underwriters, or any other provider of services to a
Multi-Class Portfolio without the prior approval of Broad of Trustees.
c. Exchange Privileges
-------------------
Shareholders of a Multi-Class Portfolio may exchange shares of a
particular class for shares of the same class in another Multi-Class Portfolio,
at the relative net asset values of the respective shares to be exchanged and
with no sales charge, provided the shares to be acquired in the exchange are, as
may be necessary, qualified for sale in the shareholder's state of residence and
subject to the applicable requirements, if any, as to minimum amount.
d. Conversion Feature
------------------
Class B Shares of a Multi-Class Portfolio will automatically convert to
Class A Shares of that portfolio, without sales charge, at the relative net
asset values of each such classes, not later than eight years from the
acquisition of the Class B Shares. The conversion of Class B Shares to Class A
Shares is subject to the continuing availability of an opinion of counsel or a
ruling from the Internal Revenue Service to the effect that the conversion of
shares does not constitute a taxable event under federal income tax law.
3. Board Review
------------
a. Approval of Amended and Restated Plan
-------------------------------------
The Board of Trustees, including the Independent Trustees, at a
meeting held on August 21, 1996, approved the Amended and Restated Plan based on
a determination that the Plan, including the expense allocation, is in the best
interests of each class and Multi-Class Portfolio individually and of the Funds.
<PAGE>
-4-
b. Approval of Amendments
----------------------
The Plan may not be amended materially unless the Board of Trustees, the
Independent Trustees, have found that the proposed amendment, including any
proposed related expense allocation, is in the best interests of each class and
Multi-Class Portfolio individually and of the Funds.
c. Periodic Review
---------------
The Board shall review reports of expense allocations and such other
information as they request at such times, or pursuant to such schedule, as they
may determine consistent with applicable legal requirements.
4. Contracts
---------
Any agreement related to the Multi-Class System shall require the parties
thereto to furnish to the Board of Trustees, upon their request, such
information as is reasonably necessary to permit the Trustees to evaluate the
Plan or any proposed amendment.
5. Effective Date
--------------
The Amended and Restated Plan, having been reviewed and approved by the
Board of Trustees and the Independent Trustees, shall take effect as of the
first day of each Fund's current fiscal year.
6. Amendments
----------
The Plan may not be amended to modify materially its terms unless such
amendment has been approved in the manner specified in Section 3(b) of this
Plan.
<PAGE>
SCHEDULE A
PHOENIX CALIFORNIA TAX -EXEMPT BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND:
DIVERSIFIED INCOME PORTFOLIO
EMERGING MARKETS BOND PORTFOLIO
INTERNATIONAL PORTFOLIO
REAL ESTATE SECURITIES PORTFOLIO
MID CAP PORTFOLIO
TAX-EXEMPT BOND PORTFOLIO
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND:
AGGRESSIVE GROWTH FUND SERIES
BALANCED FUND SERIES
CONVERTIBLE FUND SERIES
GROWTH FUND SERIES
HIGH YIELD FUND SERIES
MONEY MARKET FUND SERIES
U.S. GOVERNMENT SECURITIES FUND SERIES
PHOENIX TOTAL RETURN FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND
MICRO CAP FUND
STRATEGIC THEME FUND
SMALL CAP FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
Exhibit 18.3
PHOENIX FUNDS
(the "Funds")
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended
("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the original effective date of this Plan, the Funds shall offer
multiple classes of shares, as described herein, pursuant to Rule 18f-3 and this
Plan.
2. The Multi-Class Structure
--------------------------
The portfolios of the Funds listed on Schedule A hereto shall offer two
classes of shares, Class A and Class B ("Multi-Class Portfolios"). Shares of the
Multi-Class Portfolios shall represent an equal pro rata interest in the
respective Multi-Class Portfolio and, generally, shall have identical voting,
dividend, liquidation, and other rights, preferences, powers, restrictions,
limitations, qualifications and terms and conditions, except that: (a) each
class shall have a different designation; (b) each class shall bear any Class
Expenses, as defined by Section 2(b), below; (c) each class shall have exclusive
voting rights on any matter submitted to shareholders that relates solely to its
distribution arrangement; and (d) each class shall have separate voting rights
on any matter submitted to shareholders in which the interests of one class
differ from the interests of any other class. In addition, Class A and Class B
shares shall have the features described in Sections a, b, c and d, below.
a. Distribution Plans
------------------
The Funds have adopted Distribution Plans pursuant to Rule 12b-1 with
respect to each Multi-Class Portfolio, containing substantially the following
terms:
i. Class A shares of each Multi-Class Portfolio shall reimburse
Phoenix Equity Planning Corporation (the "Distributor") for costs and expenses
incurred in connection with distribution and marketing of shares thereof, as
provided in the Class A Distribution Plan and any supplements thereto, subject
to an annual limit of 0.25%, or in some cases 0.30%, of the average daily net
assets of a Multi-Class Portfolio's Class A shares.
<PAGE>
-2-
ii. Class B shares of each Multi-Class Portfolio shall reimburse the
Distributor for costs and expenses incurred in connection with distribution and
marketing of shares thereof, as provided in the Class B Distribution Plan and
any supplements thereto, subject to an annual limit of 1.00% of the average
daily net assets of a Multi-Class Portfolio's Class B shares.
b. Allocation of Income and Expenses
---------------------------------
i. General.
--------
The gross income, realized and unrealized capital gains and losses and
expenses (other than Class Expenses, as defined below) of each Multi-Class
Portfolio shall be allocated to each class on the basis of its net asset value
relative to the net asset value of the Multi-Class Portfolio. Expenses to be so
allocated include expenses of the Funds that are not attributable to a
particular Multi-Class Portfolio or class of a Multi-Class Portfolio but are
allocated to a Multi- Class Portfolio ("Fund Expenses") and expenses of a
particular Multi-Class Portfolio that are not attributable to a particular class
of that Multi-Class Portfolio ("Portfolio Expenses"). Fund Expenses include, but
are not limited to, trustees' fees, insurance costs and certain legal fees.
Portfolio Expenses include, but are not limited to, certain state registration
fees, custodial fees, advisory fees and other expenses relating to the
management of the Multi-Class Portfolio's assets.
ii. Class Expenses.
--------------
Expenses attributable to a particular class ("Class Expenses") shall be
limited to: (1) transfer agency fees; (2) stationery, printing, postage, and
delivery expenses relating to preparing and distributing shareholder reports,
prospectuses, and proxy statements; (3) state Blue Sky registration fees; (4)
SEC registration fees; (5) expenses of administrative personnel and services to
the extent related to another category of class-specific expenses; (6) trustees'
fees and expenses; (7) accounting expenses, auditors' fees, litigation expenses,
and legal fees and expenses; and (8) expenses incurred in connection with
shareholder meetings. Expenses described in subsection (a) (i) and (ii) above of
this paragraph must be allocated to the class for which they are incurred. All
other expenses described in this paragraph will be allocated as Class Expenses,
if a Fund's President and Treasurer have determined, subject to Board approval
or ratification, which of such categories of expenses will be treated as Class
Expenses, consistent with applicable legal principles under the 1940 Act and the
Internal Revenue Code of 1986, as amended ("Code"). The difference between the
Class Expenses allocated to each share of a class during a year and the Class
Expenses allocated to each share of any other class during such year shall at
all times be less than .50% of the average daily net asset value of the class of
shares with the smallest average net asset value. The afore-described
description of Class Expenses and any amendment thereto shall be subject to the
continuing availability of an opinion of counsel or a ruling from the Internal
Revenue Service to the effect that any such allocation of expenses or the
assessment of higher distribution fees and transfer agency costs on any class of
shares does not result in any dividends or distributions constituting
"preferential dividends" under the Code.
<PAGE>
-3-
In the event that a particular expense is no longer reasonably allocable by
class or to a particular class, it shall be treated as a Fund Expense or
Portfolio Expense as applicable, and in the event a Fund Expense or Portfolio
Expense becomes allocable as a Class Expense, it shall be so allocated, subject
to compliance with Rule 18f-3 and Board approval or ratification.
The initial determination of expenses that will be allocated as Class
Expenses and any subsequent changes thereto as set forth in this Plan shall be
reviewed by the Board of Trustees and approved by such Board and by a majority
of the Trustees who are not "interested persons" of the Fund, as defined in the
1940 Act ("Independent Trustees").
iii. Waivers or Reimbursements of Expenses
-------------------------------------
Investment Advisor may waive or reimburse its management fee in whole or in
part provided that the fee is waived or reimbursed to all shares of the Fund in
proportion to the relative average daily net asset values.
Investment Advisor or a related entity who charges a fee for a Class
Expense may waive or reimburse that fee in whole or in part only if the revised
fee more accurately reflects the relative cost of providing to each Multi-Class
Portfolio the service for which the Class Expense is charged.
Distributor may waive or reimburse a Rule 12b-1 Plan fee payment in whole
or in part.
c. Exchange Privileges
-------------------
Shareholders of a Multi-Class Portfolio may exchange shares of a particular
class for shares of the same class in another Multi-Class Portfolio, at the
relative net asset values of the respective shares to be exchanged and with no
sales charge, provided the shares to be acquired in the exchange are, as may be
necessary, qualified for sale in the shareholder's state of residence and
subject to the applicable requirements, if any, as to minimum amount. Each
Multi-Class Portfolio reserves the right to temporarily or permanently terminate
exchange privileges, impose conditions upon the exercision of exchange
privileges, or reject any specific order for any dealer, shareholder or person
whose transactions seem to follow a timing pattern, including those who request
more than one exchange out of a Multi-Class Portfolio within any thirty (30) day
period. Each Multi-Class Portfolio reserves the right to terminate or modify
these exchange privileges at any time upon giving prominent notice to
shareholders at least 60 days in advance.
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
<PAGE>
-4-
Class A Shares is subject to the continuing availability of an opinion of
counsel or a ruling from the Internal Revenue Service to the effect that the
conversion of shares does not constitute a taxable event under federal income
tax law.
3. Board Review
------------
a. Approval of Amended and Restated Plan
-------------------------------------
The Board of Trustees, including a majority of the Independent
Trustees, at a meeting held on November 20, 1996, approved the Amended and
Restated Plan based on a determination that the Plan, including the expense
allocation, is in the best interests of each class and Multi-Class Portfolio
individually and of the Funds. Their determination was based on their review of
information furnished to them which they deemed reasonably necessary and
sufficient to evaluate the Plan.
b. Approval of Amendments
----------------------
The Plan may not be amended materially unless the Board of Trustees,
including a majority of the Independent Trustees, have found that the proposed
amendment, including any proposed related expense allocation, is in the best
interests of each class and Multi-Class Portfolio individually and of the Funds.
Such funding shall be based on information required by the Board and furnished
to them that the Board deems reasonably necessary to evaluate the proposed
amendment.
c. Periodic Review
---------------
The Board shall review reports of expense allocations and such other
information as they request at such times, or pursuant to such schedule, as they
may determine consistent with applicable legal requirements.
4. Contracts
---------
Any agreemen t 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.
<PAGE>
-6-
6. Amendments
----------
The Plan may not be amended to modify materially its terms unless such
amendment has been approved in the manner specified in Section 3(b) of this
Plan.
<PAGE>
SCHEDULE A
PHOENIX CALIFORNIA TAX -EXEMPT BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND:
DIVERSIFIED INCOME PORTFOLIO
EMERGING MARKETS BOND PORTFOLIO
INTERNATIONAL PORTFOLIO
MID CAP PORTFOLIO
REAL ESTATE SECURITIES PORTFOLIO
TAX-EXEMPT BOND PORTFOLIO
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND:
AGGRESSIVE GROWTH FUND SERIES
BALANCED FUND SERIES
CONVERTIBLE FUND SERIES
GROWTH FUND SERIES
HIGH YIELD FUND SERIES
MONEY MARKET FUND SERIES
U.S. GOVERNMENT SECURITIES FUND SERIES
PHOENIX STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND
MICRO CAP FUND
SMALL CAP FUND
STRATEGIC THEME FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX WORLDWIDE OPPORTUNITIES FUND
C:\WPWIN60\WPDOCS\BOARDS\AUG96\PF\18F-3.WPD
November, 1996
Exhibit 19
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of Phoenix Multi-Sector
Fixed Income Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg or either of them as my true and lawful attorneys and agents
with full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Multi-Sector Fixed Income Fund, Inc.,
and hereby ratify and confirm my signature as it may be signed by said attorneys
and agents.
I hereby further revoke any and all powers of attorney previously given by
me with respect to said Phoenix Multi-Sector Fixed Income Fund, Inc., provided
that this revocation shall not affect the exercise of such prior powers prior to
the date hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/C. Duane Blinn, Director
-----------------
C. Duane Blinn
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of Phoenix Multi-Sector
Fixed Income Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg or either of them as my true and lawful attorneys and agents
with full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Multi-Sector Fixed Income Fund, Inc.,
and hereby ratify and confirm my signature as it may be signed by said attorneys
and agents.
I hereby further revoke any and all powers of attorney previously given by
me with respect to said Phoenix Multi-Sector Fixed Income Fund, Inc., provided
that this revocation shall not affect the exercise of such prior powers prior to
the date hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/Robert Chesek, Director
----------------
Robert Chesek
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of Phoenix Multi-Sector
Fixed Income Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg or either of them as my true and lawful attorneys and agents
with full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Multi-Sector Fixed Income Fund, Inc.,
and hereby ratify and confirm my signature as it may be signed by said attorneys
and agents.
I hereby further revoke any and all powers of attorney previously given by
me with respect to said Phoenix Multi-Sector Fixed Income Fund, Inc., provided
that this revocation shall not affect the exercise of such prior powers prior to
the date hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/E. Virgil Conway, Director
--------------------
E. Virgil Conway
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of Phoenix Multi-Sector
Fixed Income Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg or either of them as my true and lawful attorneys and agents
with full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Multi-Sector Fixed Income Fund, Inc.,
and hereby ratify and confirm my signature as it may be signed by said attorneys
and agents.
I hereby further revoke any and all powers of attorney previously given by
me with respect to said Phoenix Multi-Sector Fixed Income Fund, Inc., provided
that this revocation shall not affect the exercise of such prior powers prior to
the date hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/Harry Dalzell-Payne, Director
-----------------------
Harry Dalzell-Payne
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of Phoenix Multi-Sector
Fixed Income Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg or either of them as my true and lawful attorneys and agents
with full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Multi-Sector Fixed Income Fund, Inc.,
and hereby ratify and confirm my signature as it may be signed by said attorneys
and agents.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/ Francis E. Jeffries , Director
------------------------
Francis E. Jeffries
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of Phoenix Multi-Sector
Fixed Income Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg or either of them as my true and lawful attorneys and agents
with full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Multi-Sector Fixed Income Fund, Inc.,
and hereby ratify and confirm my signature as it may be signed by said attorneys
and agents.
I hereby further revoke any and all powers of attorney previously given by
me with respect to said Phoenix Multi-Sector Fixed Income Fund, Inc., provided
that this revocation shall not affect the exercise of such prior powers prior to
the date hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/ Leroy Keith, Jr., Director
--------------------
Leroy Keith, Jr.
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of Phoenix Multi-Sector
Fixed Income Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg or either of them as my true and lawful attorneys and agents
with full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Multi-Sector Fixed Income Fund, Inc.,
and hereby ratify and confirm my signature as it may be signed by said attorneys
and agents.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/ Everett L. Morris, Director
---------------------
Everett L. Morris
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of Phoenix Multi-Sector
Fixed Income Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg or either of them as my true and lawful attorneys and agents
with full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Multi-Sector Fixed Income Fund, Inc.,
and hereby ratify and confirm my signature as it may be signed by said attorneys
and agents.
I hereby further revoke any and all powers of attorney previously given by
me with respect to said Phoenix Multi-Sector Fixed Income Fund, Inc., provided
that this revocation shall not affect the exercise of such prior powers prior to
the date hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/James M. Oates, Director
-----------------
James M. Oates
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of Phoenix Multi-Sector
Fixed Income Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg or either of them as my true and lawful attorneys and agents
with full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Multi-Sector Fixed Income Fund, Inc.,
and hereby ratify and confirm my signature as it may be signed by said attorneys
and agents.
WITNESS my hand and seal on the date set forth below.
March 12, 1996 /s/ Calvin J. Pedersen, Director
----------------------
Calvin J. Pedersen
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of Phoenix Multi-Sector
Fixed Income Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg or either of them as my true and lawful attorneys and agents
with full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Multi-Sector Fixed Income Fund, Inc.,
and hereby ratify and confirm my signature as it may be signed by said attorneys
and agents.
I hereby further revoke any and all powers of attorney previously given by
me with respect to said Phoenix Multi-Sector Fixed Income Fund, Inc., provided
that this revocation shall not affect the exercise of such prior powers prior to
the date hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/Philip R. Reynolds, Director
---------------------
Philip R. Reynolds
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of Phoenix Multi-Sector
Fixed Income Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg or either of them as my true and lawful attorneys and agents
with full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Multi-Sector Fixed Income Fund, Inc.,
and hereby ratify and confirm my signature as it may be signed by said attorneys
and agents.
I hereby further revoke any and all powers of attorney previously given by
me with respect to said Phoenix Multi-Sector Fixed Income Fund, Inc., provided
that this revocation shall not affect the exercise of such prior powers prior to
the date hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/Herbert Roth, Jr., Director
---------------------
Herbert Roth, Jr.
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of Phoenix Multi-Sector
Fixed Income Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg or either of them as my true and lawful attorneys and agents
with full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Multi-Sector Fixed Income Fund, Inc.,
and hereby ratify and confirm my signature as it may be signed by said attorneys
and agents.
I hereby further revoke any and all powers of attorney previously given by
me with respect to said Phoenix Multi-Sector Fixed Income Fund, Inc., provided
that this revocation shall not affect the exercise of such prior powers prior to
the date hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/Richard E. Segerson, Director
-----------------------
Richard E. Segerson
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of Phoenix Multi-Sector
Fixed Income Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg or either of them as my true and lawful attorneys and agents
with full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Multi-Sector Fixed Income Fund, Inc.,
and hereby ratify and confirm my signature as it may be signed by said attorneys
and agents.
I hereby further revoke any and all powers of attorney previously given by
me with respect to said Phoenix Multi-Sector Fixed Income Fund, Inc., provided
that this revocation shall not affect the exercise of such prior powers prior to
the date hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/Lowell P. Weicker, Jr., Director
-------------------------
Lowell P. Weicker, Jr.
<PAGE>
POWER OF ATTORNEY
I, the undersigned Treasurer and Principal Accounting Officer of Phoenix
Multi-Sector Fixed Income Fund, Inc., hereby constitute and appoint Philip R.
McLoughlin and Thomas N. Steenburg or either of them as my true and lawful
attorneys and agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940 relating to Phoenix Multi-Sector Fixed Income
Fund, Inc., and hereby ratify and confirm my signature as it may be signed by
said attorneys and agents.
I hereby further revoke any and all powers of attorney previously given by
me with respect to said Phoenix Multi-Sector Fixed Income Fund, Inc., provided
that this revocation shall not affect the exercise of such prior powers prior to
the date hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/Nancy G. Curtiss
--------------------
Nancy G. Curtiss
Treasurer
Principal Financial and
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC. CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 304884
<INVESTMENTS-AT-VALUE> 313328
<RECEIVABLES> 24166
<ASSETS-OTHER> 1603
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 339097
<PAYABLE-FOR-SECURITIES> 25171
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1393
<TOTAL-LIABILITIES> 26564
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 313165
<SHARES-COMMON-STOCK> 12788
<SHARES-COMMON-PRIOR> 13450
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (316)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (8760)
<ACCUM-APPREC-OR-DEPREC> 8444
<NET-ASSETS> 312533
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 26613
<OTHER-INCOME> 0
<EXPENSES-NET> (4368)
<NET-INVESTMENT-INCOME> 22245
<REALIZED-GAINS-CURRENT> 10341
<APPREC-INCREASE-CURRENT> 5986
<NET-CHANGE-FROM-OPS> 38572
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (12387)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5502
<NUMBER-OF-SHARES-REDEEMED> (6751)
<SHARES-REINVESTED> 587
<NET-CHANGE-IN-ASSETS> 789
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (186)
<OVERDIST-NET-GAINS-PRIOR> (19927)
<GROSS-ADVISORY-FEES> 1696
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4368
<AVERAGE-NET-ASSETS> 308452
<PER-SHARE-NAV-BEGIN> 12.56
<PER-SHARE-NII> 0.94
<PER-SHARE-GAIN-APPREC> 0.72
<PER-SHARE-DIVIDEND> (0.95)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.27
<EXPENSE-RATIO> 1.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC. CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 304884
<INVESTMENTS-AT-VALUE> 313328
<RECEIVABLES> 24166
<ASSETS-OTHER> 1603
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 339097
<PAYABLE-FOR-SECURITIES> 25171
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1393
<TOTAL-LIABILITIES> 26564
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 313165
<SHARES-COMMON-STOCK> 10783
<SHARES-COMMON-PRIOR> 11484
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (316)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (8760)
<ACCUM-APPREC-OR-DEPREC> 8444
<NET-ASSETS> 312533
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 26613
<OTHER-INCOME> 0
<EXPENSES-NET> (4368)
<NET-INVESTMENT-INCOME> 22245
<REALIZED-GAINS-CURRENT> 10341
<APPREC-INCREASE-CURRENT> 5986
<NET-CHANGE-FROM-OPS> 38572
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (9458)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1250
<NUMBER-OF-SHARES-REDEEMED> (2226)
<SHARES-REINVESTED> 276
<NET-CHANGE-IN-ASSETS> (1150)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (186)
<OVERDIST-NET-GAINS-PRIOR> (19927)
<GROSS-ADVISORY-FEES> 1696
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4368
<AVERAGE-NET-ASSETS> 308452
<PER-SHARE-NAV-BEGIN> 12.54
<PER-SHARE-NII> 0.85
<PER-SHARE-GAIN-APPREC> 0.71
<PER-SHARE-DIVIDEND> (0.85)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.25
<EXPENSE-RATIO> 1.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
