As filed with the Securities and Exchange Commission on February 25, 1997
Registration No. 33-45758
Investment Company Act File No. 811-6566
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. 6
[x]
and/or
REGISTRATION STATEMENT
Under
THE INVESTMENT COMPANY ACT OF 1940
[x]
Amendment No. 7
[x]
(Check appropriate box or boxes.)
Phoenix Multi-Sector Short Term Bond Fund
(Exact Name of Registrant as Specified in Charter)
101 Munson Street, Greenfield, Massachusetts 01301
(Address of Principal Executive Offices) (Zip Code)
c/o Phoenix Equity Planning Corporation--Shareholder Services
(800) 243-1574
(Registrant's Telephone Number including Area Code)
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 of shares under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940.
A Rule 24f-2 Notice for the fiscal year ended on October 31, 1996 was filed
by Registrant with the Commission on December 28, 1996.
<PAGE>
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
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 Introduction
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
Arrangement; Distribution Plans; Investor Accounts and
Services Available
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings 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 Cover Page; Investment Objective;
Investment Policies; Investment
Restrictions
14. Management of the Fund Services of the Adviser; Trustees and
Officers; Other Information
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;
Securities Being Offered Exchange Privileges; How to Redeem Shares
20. Tax Status Dividends, Distributions and Taxes
21. Underwriters The Distributor
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
PHOENIX
FUNDS
Phoenix Multi-Sector Short Term Bond Fund
PROSPECTUS
FEBRUARY 28, 1977
[logo] PHOENIX
DUFF & PHELPS
<PAGE>
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
101 Munson Street
Greenfield, MA 01301
PROSPECTUS
February 28, 1997
Phoenix Multi-Sector Short Term Bond Fund (the "Fund") is a diversified,
open-end management investment company with an investment objective of
providing high current income relative to short-term alternatives, while
attempting to limit fluctuations in the net asset value of Fund shares
resulting from movements in interest rates.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. No dealer, salesperson or
any other person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given
or made, such information or representations must not be relied upon as
having been authorized by the Fund, Adviser or Distributor. This Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy any
of the securities offered hereby in any state in which, or to any person to
whom, it is unlawful to make such offer. Neither the delivery of this
Prospectus nor any sale hereunder shall, under any circumstances, create 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 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
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION 3
FUND EXPENSES 4
FINANCIAL HIGHLIGHTS 5
PERFORMANCE INFORMATION 6
INVESTMENT OBJECTIVE AND POLICIES 6
INVESTMENT TECHNIQUES AND RELATED RISKS 10
INVESTMENT RESTRICTIONS 14
PORTFOLIO TURNOVER 14
MANAGEMENT OF THE FUND 14
DISTRIBUTION PLANS 15
HOW TO BUY SHARES 16
INVESTOR ACCOUNTS AND SERVICES AVAILABLE 21
NET ASSET VALUE 23
HOW TO REDEEM SHARES 23
DIVIDENDS, DISTRIBUTIONS AND TAXES 25
ADDITIONAL INFORMATION 26
APPENDIX 26
</TABLE>
2
<PAGE>
INTRODUCTION
This Prospectus describes the shares offered by, and the operations of
Phoenix Multi-Sector Short Term Bond Fund (the "Fund"). The Fund is a
diversified, open-end management investment company established as a business
trust under the laws of Massachusetts. The Fund's investment objective is to
provide high current income relative to other short-term investment
alternatives, while attempting to limit fluctuations in the net asset value
of Fund shares resulting from movements in interest rates. The Fund will seek
to achieve its objective by investing in the following market sectors: (a)
securities issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities; (b) debt securities issued by
foreign issuers, including foreign governments and their political
subdivisions; and (c) high yield ("junk bonds") and investment grade fixed
income securities. 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. There
can be no assurance that the Fund's 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 of the Fund and as such receives a fee. See "The Financial
Agent." Equity Planning also serves as the Fund's transfer agent. See "The
Custodian and Transfer Agent."
The Fund has adopted 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 .75% 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 sales charges 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 2.25% of the offering price (2.30% 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 three 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
investment program designated "Investo-Matic"), and the minimum subsequent
investment is $25. Exceptions to the minimum and subsequent investment
amounts are available under certain circumstances. See "How to Buy Shares."
Redemption Price
Class A Shares may be redeemed at any time at the net asset value per
share next computed after receipt of a redemption request by State Street
Bank and Trust Company. Class B shareholders redeeming shares within three
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 assets in below investment grade securities (rated
below BBB/Baa by Standard & Poor's Corporation and Moody's
3
<PAGE>
Investor's Service, Inc.). Such 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 all fees and expenses a shareholder will
incur. The fees and expenses set forth in the table are for the fiscal year
ended October 31, 1996.
<TABLE>
<CAPTION>
Class A Shares Class B Shares
-------------- --------------
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 2.25% None
Maximum Sales Load Imposed on Reinvested
Dividends None None
Deferred Sales Load (as a percentage of None 2% during the first
original purchase price or redemption year, decreasing
proceeds, as applicable) .50% annually to
1% during the third
year and dropping
from 1% to 0% after
the third 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 .25%(a) .75%
Other Operating Expenses (After Expense
Reimbursement) (b) .20% .20%
----- ----
Total Fund Operating Expenses 1.00% 1.50%
===== =====
</TABLE>
(a) "Rule 12b-1 Fees" represent an asset-based sales charge that, for a
long-term shareholder, may be higher than the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc. ("NASD").
While the 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.
(b) The Adviser has agreed to reimburse the Fund's operating expenses
other than Management Fees and Rule 12b-1 Fees related to Class A and Class B
Shares for the amount, if any, by which such operating expenses for the
fiscal year ended October 31, 1997, exceed .20% of the average net assets.
The Total Fund Operating Expenses for Class A and Class B Shares would have
been 2.19% and 2.69%, respectively, absent such waiver or reimbursement, for
the fiscal year ended October 31, 1996.
<TABLE>
<CAPTION>
Cumulative Expenses
Paid for the Period
Example* 1 year 3 years 5 years 10 years
- ------------------------------------------------------- -------- --------- --------- -----------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a
hypothetical $1,000 investment assuming (1) 5% annual
return and (2) redemption at the end of each time
period:
Class A Shares $32 $54 $77 $142
Class B Shares $35 $57 $82 $153
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 $32 $54 $77 $142
Class B Shares $15 $47 $82 $153
</TABLE>
*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 by calling (800) 243-4361.
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
------------------------------------------------------
Year Ended From
October 31, inception
------------------------------------------ 7/6/92 to
1996 1995 1994 1993 10/31/92
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 4.74 $ 4.61 $ 4.91 $ 4.83 $ 4.89
Income from investment operations
Net investment income 0.33(2) 0.33(2) 0.29(2) 0.32(2) 0.08(2)
Net realized and unrealized gain
(loss) 0.17 0.13 (0.26) 0.08 (0.06)
--------- --------- --------- --------- -----------
Total from investment operations 0.50 0.46 0.03 0.40 0.02
--------- --------- --------- --------- -----------
Less distributions
Dividends from net investment income (0.33) (0.33) (0.29) (0.32) (0.08)
Dividends from net realized gains -- -- (0.03) -- --
Tax return of capital -- -- (0.01) -- --
Total distributions (0.33) (0.33) (0.33) (0.32) (0.08)
--------- --------- --------- --------- -----------
Change in net asset value 0.17 0.13 (0.30) 0.08 (0.06)
--------- --------- --------- --------- -----------
Net asset value, end of period $ 4.91 $ 4.74 $ 4.61 $ 4.91 $ 4.83
========= ========= ========= ========= ===========
Total return(1) 10.91% 10.27% 0.40% 8.49% 0.40%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $13,702 $9,303 $9,371 $6,829 $6,531
Ratio to average net assets of:
Operating expenses 1.00% 1.00% 1.00% 1.00% 1.00%(4)
Net investment income 6.88% 7.07% 5.99% 6.39% 5.79%(4)
Portfolio turnover 232% 344% 121% 128% 6%(4)
</TABLE>
<TABLE>
<CAPTION>
Class B
------------------------------------------------------
Year Ended From
October 31, Inception
------------------------------------------ 7/6/92 to
1996 1995 1994 1993 10/31/92
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 4.74 $ 4.61 $ 4.91 $ 4.83 $ 4.89
Income from investment operations
Net investment income 0.31(3) 0.30(3) 0.27(3) 0.30(3) 0.07(3)
Net realized and unrealized gain
(loss) 0.17 0.13 (0.26) 0.08 (0.06)
--------- --------- --------- --------- -----------
Total from investment operations 0.48 0.43 0.01 0.38 0.01
--------- --------- --------- --------- -----------
Less distributions
Dividends from net investment income (0.31) (0.30) (0.27) (0.30) (0.07)
Dividends from net realized gains -- -- (0.03) -- --
Tax return of capital -- -- (0.01) -- --
Total distributions (0.31) (0.30) (0.31) (0.30) (0.07)
--------- --------- --------- --------- -----------
Change in net asset value 0.17 0.13 (0.30) 0.08 (0.06)
--------- --------- --------- --------- -----------
Net asset value, end of period $ 4.91 $ 4.74 $ 4.61 $ 4.91 $ 4.83
========= ========= ========= ========= ===========
Total return(1) 10.36% 9.71% (0.03%) 8.02% 0.20%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $5,943 $4,659 $6,418 $3,968 $1,357
Ratio to average net assets of:
Operating expenses 1.50% 1.50% 1.45% 1.45% 1.45%(4)
Net investment income 6.38% 6.59% 5.74% 5.79% 5.30%(4)
Portfolio turnover 232% 344% 121% 128% 6%(4)
</TABLE>
(1) Maximum sales charges are not included in total return calculation.
(2) Includes reimbursement of operating expenses by investment adviser of
$0.06, $0.08, $0.08, $0.09 and $0.14, respectively.
(3) Includes reimbursement of operating expenses by investment adviser of
$0.06, $0.08, $0.08, $0.09 and $0.21, respectively.
(4) Annualized.
(5) 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
proportionate 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 load 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 by means
of aggregate, average, and year-by-year or other types of total return
figures. In addition, the Fund may from time to time publish materials citing
historical volatility for shares of the Fund.
The Fund may from time to time include in advertisements containing total
return the ranking of those performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc. and 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 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 Aggregate Bond Index, Merrill Lynch Medium Quality Corporate
Short-Term Bond 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 indices.
Advertisements, sales literature and communications may contain
information about the Fund or Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Fund
to respond quickly to 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, Merrill Lynch
Medium Quality Corporate Short-Term 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 objective
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 provide high current income relative
to short-term investment alternatives, while attempting to limit fluctuations
in the net asset value of Fund shares resulting from movements in interest
rates. The Fund's investment objective is a fundamental policy and may not be
changed without approval of the holders of a majority of the outstanding
shares of the Fund. There can be no assurance that the Fund will achieve its
investment objective.
6
<PAGE>
The Fund will seek to achieve its objective by investing in a diversified
portfolio of fixed income securities comprised primarily of shorter-term
securities having an expected remaining weighted average maturity of three
years or less. The Fund will seek to achieve its objective by investing
primarily in a portfolio of shorter-term securities in the following market
sectors: (a) securities issued or guaranteed as to principal and interest by
the U.S. Government, its agencies or instrumentalities ("U.S. Government
Securities"), (b) debt securities issued by foreign issuers, including
foreign governments and their political subdivisions ("Foreign Securities");
and (c) high yield and investment grade fixed income securities. The Fund's
assets generally will be invested in each fixed income sector; however, the
Fund may invest any amount of its assets in any one sector (except the Fund
may not invest more than 35% of its assets determined at the time of
investment in foreign debt securities). The Fund may choose not to invest in
a sector in order to achieve its investment objective. By following this
strategy, the Fund's net asset value is anticipated to be relatively stable
because, in general, broad diversification over several market sectors tends
to reduce volatility. Under normal circumstances, the Fund's portfolio will
be invested primarily in shorter-term fixed income securities.
The Fund may, however, invest up to 35% of its assets in non-short-term
securities of differing maturities and in preferred stock. There will be
fluctuations in the Fund's net asset value per share in response to changes
in the value of the securities in which the Fund invests due to changes in
prevailing interest rates and other market and credit factors. It is
anticipated that such fluctuations will generally be less than that of
long-term securities, since the asset values of short-term securities
(without regard to other market and credit factors) are typically less
sensitive to interest rate movements than longer term securities.
The Fund has no requirements regarding whether the securities it purchases
must be rated. The Fund will typically invest at least 65% of its assets in
Investment Grade Securities which are rated, at the time of investment, BBB
or above by Standard & Poor's Corporation ("S&P"), Duff & Phelps Credit
Rating Co. ("D&P") or Fitch Investor Services, Inc. ("Fitch"), or Baa or
above by Moody's Investor's Service, Inc. ("Moody's") (or, in the case of
unrated securities, judged by the Adviser to be of comparable quality). The
Fund may invest up to 10% of its assets in High-Yield, High Risk Securities
rated, at the time of investment, lower than B and as low as Caa by Moody's
and CCC by S&P, D&P, or Fitch. Fixed income securities rated lower than BB by
S&P or Ba by Moody's are commonly referred to as "junk bonds." The Fund may
invest up to 35% of its assets in securities rated, at the time of
investment, in securities rated below BBB/Baa to as low as B by S&P, D&P,
Fitch or Moody's. The Fund will not invest in high yield securities rated at
the time of investment lower than CCC by S&P, D&P or Fitch or lower than Caa
by Moody's. Securities rated CCC by S&P are regarded by S&P as, on balance,
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. Securities rated Caa by Moody's are regarded by Moody's
to be of poor standing. The Fund may, but is not obligated to, dispose of
debt securities whose credit quality falls below investment grade. For a more
complete description of ratings of corporate obligations, see the Appendix.
See also "Risk Factors and Special Considerations."
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 time 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 the 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 7
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
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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.
U.S. Government Securities in which the Fund invests may be issued by U.S.
Government agencies in the form of collateralized mortgage-backed obligations
("CMOs"). CMOs are hybrid instruments with characteristics of both mortgage-
backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid 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.
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.
U.S. Government Securities in which the Fund invests may be structured as
mortgage pass-through securities. 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 and other mortgage-related securities 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 markets 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 these securities. Prepayments occur when the holder of
an individual mortgage prepays the remaining principal before the mortgage's
scheduled maturity date. As a result of the pass-through of prepayments of
principal on the underlying securities, mortgage-backed securities are often
subject to more rapid prepayment of principal than their stated maturity
would indicate. Although the 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. The Fund may
purchase pass-through securities at a premium or at a discount.
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. 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.
Therefore, pass-through 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. Changes in the value of such securities will not affect
interest payments 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 markets. 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 "Risk Factors and
Special Considerations". While 35% or less of the Fund's assets normally will
be invested in foreign securities, the overall percentage invested and the
allocations among specific foreign securities will vary depending upon the
relative yields of such securities, the relative strength of the economies
and financial markets of eligible issuers and the expected trends in the
value of foreign currencies compared to the U.S. dollar. The Fund will make
this comparative analysis based on a review of economic, financial, political 8
and other relevant information reasonably available to it. The Fund may hold
foreign currency deposits or buy and sell foreign currency contracts
(including forward and swap contracts) in order to protect against decreases
in the U.S. dollar value of foreign securities. The Fund's investment
restrictions provide that it will not acquire a security if, as a result, the
Fund would have 25% or more of the value of its total assets invested in
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the securities of any one industry. A foreign government will be treated as
an industry for purposes of this restriction. See "Investment Restrictions"
in the Statement of Additional Information.
Investment Grade Securities
Investment Grade Securities of domestic issuers in which the Fund may
invest include the following types of debt obligations of varying maturities
("Debt Obligations"): bonds, debentures, notes, municipal bonds, zero coupon
bonds, convertible securities, equipment lease certificates, equipment trust
certificates, commercial and residential pass-through securities and other
mortgage-related securities deemed appropriate by the Adviser, collateralized
mortgage obligations issued by private issuers ("private label CMOs"),
conditional sales contracts and commercial paper (including obligations
secured by such instruments).
Municipal bonds are debt obligations which generally have a maturity at
the time of issue in excess of one year and are issued to obtain funds for
various public purposes. The two principal classifications of municipal bonds
are "general obligation" and "revenue" bonds. General obligation bonds are
secured by the issuer's pledge of its full faith, credit and taxing power for
the payment of principal and interest. Revenue bonds are payable only from
the revenues derived from a particular facility or class of facilities or, in
some cases, from the proceeds of a special excise or specific revenue source.
Industrial development bonds or private activity bonds are issued by or on
behalf of public authorities to obtain funds for privately operated
facilities and are, in most cases, revenue bonds which do not generally carry
the pledge of the full faith and credit of the issuer of such bonds, but
depend for payment on the ability of the industrial user to meet its
obligations (or any property pledged as security).
Mortgage pass-through securities created by non-governmental issuers
(such as commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers) may
be supported by various forms of insurance or guarantees, including
individual loan, title, pool and hazard insurance and letters of credit,
which may be issued by governmental entities, private insurers or the
mortgage poolers.
The Investment Grade Securities that the Fund may purchase consist of
securities rated Aaa/AAA, AA/AA, A/A and Baa/BBB (the top four rating
categories) by Moody's, S&P, D&P or Fitch, respectively. Securities rated Baa
by Moody's or BBB by S&P are medium grade investment obligations. Moody's
describes securities rated Baa as having 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. See the
Appendix for a complete description of ratings of corporate obligations. The
Fund may invest in Investment Grade Securities of U.S. issuers that are
denominated in foreign currencies. Such securities shall not be counted for
purposes of the 35% limit applicable to Foreign Securities. The Fund may hold
foreign currency deposits or buy and sell foreign currency contracts
(including forward and swap contracts) in order to protect against decreases
in the U.S. dollar value of such securities.
High Yield-High Risk Securities
High Yield-High Risk Securities in which the Fund may invest are preferred
or preference stock and debt obligations rated below investment grade by the
established rating agencies and unrated securities deemed to be of comparable
quality, which the Adviser believes will produce a relatively high yield
compared to short-term investments. These lower-rated and comparable unrated
securities, while selected for their relatively high yield, may be subject to
greater fluctuations in market value and greater risks of loss of income and
principal than higher-rated securities. High yields often reflect the greater
risks associated with the securities that offer such yields. Because of these
greater risks, high yield securities often carry lower ratings. They are also
colloquially known as "junk bonds."
The Adviser evaluates the purchase of high yield securities for the Fund
primarily through the exercise of its own investment and credit analysis and
on the ratings assigned by the rating agencies. The Adviser seeks to reduce
risk resulting from fluctuations in market value and limit fluctuations in
the net asset value per share of the Fund through diversification and by
attention to current developments and trends in both the economy and
financial markets. The Fund will invest only in the high yield securities of
issuers which the Adviser believes will continue to meet principal and
interest payments.
The Fund may invest in high yield securities of domestic issuers which are
denominated in foreign currencies. Any such securities shall not be counted
for purposes of the 35% limit applicable to foreign securities. The Fund may
hold foreign currency deposits or buy and sell foreign currency contracts
(including forward and swap contracts) in order to protect against decreases
in the U.S. dollar value of such securities.
High yield securities may also include increasing rate notes. Increasing 9
rate notes are high yield, 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 or
refinanced within six months to two years after issuance.
The Fund's investments in high yield 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.
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INVESTMENT TECHNIQUES AND RELATED RISKS
In addition to the investment policies described above, the Fund may
utilize the following investment practices or techniques.
Hedging
General Policies. To preserve a return or spread on a particular
investment or portion of its portfolio, the Fund may enter into various
hedging transactions, such as interest rate swaps, and the purchase or sale
of interest rate collars, caps and floors. Hedging transactions may also be
used to attempt to protect against possible declines in the market value of
the Fund's assets resulting from downward trends in the debt securities
markets (generally due to a rise in interest rates), to protect the Fund's
unrealized gains in the value of its portfolio securities, to facilitate the
sale of such securities or to establish a position in the securities markets
as a temporary substitute for purchasing particular securities. Any or all of
these techniques may be used at any time. There is no particular strategy
that requires use of one technique rather than another. Use of any hedging
transaction is a function of market conditions. The hedging transactions that
the Fund currently contemplates using are described in more detail below.
Further hedging transactions may be used by the Fund in the future as they
are developed or deemed by the Trustees to be appropriate, and to be in the
best interest of investors in the Fund. The Fund intends to use these
transactions as a hedge against interest rate fluctuations and not as
speculative investments. The Fund reserves the right, but has no current
intention, to enter into futures contracts, and to write and purchase
options, including foreign currency options and over-the-counter options.
Interest Rate Transactions. Interest rate swaps involve the exchange with
another party of commitments to pay or receive interest, e.g., an exchange of
floating rate payments for fixed rate payments. The purchase of an interest
rate cap entitles the purchaser, to the extent that a specified index exceeds
a predetermined interest rate, to receive payments of interest on a notional
principal amount from the party selling such interest rate cap. The purchase
of an interest rate floor entitles the purchaser, to the extent that a
specified index falls below a predetermined interest rate, to receive
payments of interest on a notional principal amount from the party selling
such interest rate floor. An interest rate collar combines the elements of
purchasing a cap and selling a floor. The collar protects against an interest
rate rise above the maximum amount but gives up the benefit of an interest
rate decline below the minimum amount. The net amount of the excess, if any,
of the Fund's obligations over its entitlements with respect to each interest
rate swap will be accrued on a daily basis and any asset, including equity
securities and non-investment grade debt so long as the asset is liquid,
unencumbered and marked to market daily having an aggregate net asset value
at least equal to the accrued excess will be maintained in a segregated
account by the Fund's custodian. If there is a default by the other party to
such a transaction, the Fund will have contractual remedies pursuant to the
agreements related to the transaction.
When-Issued and Forward Commitment Securities. The Fund may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices and secure a favorable rate of return. When such
transactions are negotiated, the price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment
for the securities take place at a later date, which can be a month or more
after the date of the transaction. At the time the Fund makes the commitment
to purchase securities on a when-issued or forward commitment basis, it will
record the transaction and thereafter reflect the value of such securities in
determining its net asset value. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, a segregated
account consisting of 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 when-issued or forward commitment
securities will be established and maintained with the Custodian. On the
delivery date, the Fund will meet its obligations from securities that are
then maturing or sales of the securities held in the segregated asset account
and/or from then available cash flow. Typically no income accrues on
securities purchased on a when-issued basis prior to the time delivery of the
securities is made, although the Fund may earn income on securities it has
deposited in a separate account. When purchasing a security on a when-issued
basis, the Fund assumes the rights and risks of ownership of the security,
including the risk of price and yield fluctuations, and takes such
fluctuations into account when determining its net asset value. Because the
Fund is not required to pay for the security until the delivery date, these
risks are in addition to the risks associated with the Fund's other
investments. If the Fund remains substantially fully invested at a time when
when-issued purchases are outstanding, the when-issued purchases may result
in a form of leverage, which magnifies the potential for gain or loss and
increases the speculative nature of the Fund. The Trustees, however, do not
believe the Fund's net asset value or income will be exposed to additional
risk as the result of when-issued purchases. When-issued securities and
forward commitments may be sold prior to the settlement date, but the Fund
presently intends to enter into when-issued and forward commitments only with
the intention of actually receiving or delivering the securities, as the case
may be. If the Fund disposes of the right to acquire a when-issued security
prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it can incur a gain or loss due to market
fluctuation. There is always a risk that the securities may not be delivered
and that the Fund may incur a loss or will have lost the opportunity to
invest the amount set aside for such transaction in the segregated asset
account.
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Repurchase Agreements
The Fund may invest in repurchase agreements, which are agreements
pursuant to which securities are acquired by the Fund from a third party with
the commitment that they will be repurchased by the seller at a fixed price
on an agreed-upon date. These agreements may be made with respect to those
U.S. Government Securities in which the Fund is authorized to invest.
Repurchase agreements may be characterized as loans secured by the underlying
securities. The resale price reflects the purchase price plus an agreed upon
market rate of interest which is unrelated to the coupon rate or date of
maturity of the purchased security. The collateral will be marked to market
daily.
Repurchase agreements facilitate portfolio management and allow the Fund
to earn additional revenue. The Fund enters into repurchase agreements in
order to increase liquidity or as a temporary investment while the Fund is
acquiring suitable long term investments. The Fund may enter into repurchase
agreements with (i) depository institutions ("banks") and (ii) securities
dealers ("dealers"), provided that such banks or dealers meet the
creditworthiness standards established by the Trustees. The Adviser will
monitor the continued creditworthiness of banks and dealers, subject to
oversight by the Trustees.
The use of repurchase agreements involves certain risks. For example, if
the seller of securities under a repurchase agreement defaults on its
obligation to repurchase the underlying securities, as a result of its
bankruptcy or otherwise, the Fund will seek to dispose of such securities,
which action could involve costs or delays. To minimize the risk, the
securities underlying the repurchase agreement will be held by the Custodian
at all times in an amount at least equal to the repurchase price, including
accrued interest.
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.
U.S. Treasury and Corporate Zero Coupon Securities
The Fund may invest from time to time in U.S. Treasury and corporate zero
coupon securities. Zero coupon securities are issued and traded at a discount
from their face amount. The amount of the discount varies depending on such
factors as the time remaining until maturity of the securities and prevailing
interest rates. The market prices of U.S. Treasury zero coupon securities are
generally more volatile than the market prices of securities that pay
interest periodically and are more 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
securities. Because the Fund will not receive on a current basis cash
payments in respect of accrued original issue discount on zero coupon
securities during the period before maturity, the Fund will distribute cash
obtained from other sources in order to satisfy the distribution requirement
under the Code. The Fund will not invest more than 3% of its assets in zero
coupon securities. See "Dividends, Distributions and Taxes."
Lending of Securities
The Fund may make secured loans of its portfolio securities to brokers,
dealers and financial institutions provided that cash, U.S. government
securities or other liquid high-quality debt securities, or bank letters of
credit equal to at least 100% of the market value of the securities loaned
are deposited and maintained by the borrower with the Fund. The risks in
lending portfolio securities, as with other extensions of credit, consist of
possible loss of rights in the collateral should the borrower fail
financially. In determining whether to lend securities to a particular
borrower, the Adviser (subject to review by the Trustees) will consider all
relevant facts and circumstances, including the creditworthiness of the
borrower. While securities are on loan, the borrower will pay the Fund any
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income earned thereon and the Fund may invest any cash collateral in liquid
high-grade portfolio securities, thereby earning additional income, or
receive an agreed upon amount of income from a borrower who has delivered
equivalent collateral. The Fund may pay reasonable finders, administrative
and custodial fees in connection with a loan. The Fund will not lend
portfolio securities in excess of 5% of the value of its total assets or lend
its portfolio securities to any officer, director, employee or affiliate of
the Fund or the Adviser. The Trustees will monitor the Fund's lending of
portfolio securities.
Illiquid Securities
The Fund will not invest more than 15% of its net assets (taken at market
value at the time of the investment) in "illiquid securities." For this
purpose, illiquid securities include: securities subject to legal or
contractual restrictions on resale (which may include private placements);
repurchase agreements maturing in more than seven days; certain options
traded over-the-counter that the Fund has purchased; certain securities being
used to cover options a Fund has written; certain positions in interest-rate
swaps, or interest-rate caps, collars, or floors; certain private issue
interest-only and principal-only stripped securities; securities for which
market quotations are not readily available; or other securities which
legally or in the Adviser's or Trustees' opinion may be deemed illiquid. In
determining whether a Rule 144A security is liquid, the Trustees 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). Dollar roll transactions may be for terms ranging between one and
six months and may be deemed to be "illiquid" and subject to the Fund's
overall limitations on investment in illiquid 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. The principal credit risk
associated with acquiring participation interests is the credit risk
associated with the underlying corporate borrower. There is also a risk that
there may not be a readily available market for participation loan interests
and, in some cases, this could result in the Fund disposing of such
securities at a substantial discount from face value or holding such
securities until maturity.
Borrowing
As a fundamental policy, the Fund may borrow money from banks to the
extent permitted under the 1940 Act. The Fund does not intend at present to
borrow money from banks or financial institutions other than for emergency or
extraordinary purposes. The Fund will not borrow in excess of 10% of total
assets or 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. Reverse repurchase agreements and dollar
roll transactions are treated as borrowings by the Fund, and therefore the
Fund's entry into such transactions is subject to the Fund's overall
limitations on borrowing.
Risk Factors and Special Considerations
High Yield-High Risk Securities
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.
Factors adversely impacting the market value of high yield 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. The risk of loss
due to default by the issuer is significantly greater for the holders of high
yield securities because such securities are generally unsecured and are
often subordinated to other debt of the issuer. During an economic downturn
or a sustained period of rising interest rates, highly leveraged issuers of
high yield 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.
The Fund may have difficulty disposing of certain high yield securities
because there may be a thin trading market for such securities. Because not
all dealers maintain markets in all high yield 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 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, on the Fund's net 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 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
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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
securities, especially in a thinly-traded market.
From time to time, proposals have been discussed and legislation adopted
designed to limit the use of certain high yield securities by issuers in
connection with leveraged buyouts, mergers and acquisitions, or to limit the
deductibility of interest payments on such securities. For example, under a
provision of the Internal Revenue Code (the "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 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.
While credit rating agencies evaluate the safety of principal and interest
payments, they do not evaluate market value risk of high yield securities. In
addition, credit rating agencies may not change credit ratings on a timely
basis to reflect subsequent events. Accordingly, investing in 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.
Foreign Securities
Under normal conditions, up to 35% of the Fund's assets may be invested in
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 values and 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 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 value of 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 to 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
13
<PAGE>
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.
INVESTMENT RESTRICTIONS
Not more than 25% of the total assets of the Fund will be concentrated in
the securities of any one industry. The Fund may not, with respect to 75% of
the total assets of the Fund, invest more than 5% of the value of its total
assets in the securities of any one issuer, or, with respect to 100% of the
total assets of the Fund, own more than 10% of the outstanding voting
securities of any one issuer (other than U.S. Government obligations). 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 increase if the Fund finds it necessary to significantly change its
portfolio to adopt a temporary defensive position. A high turnover rate
involves 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."
MANAGEMENT OF THE FUND
The Fund is a mutual fund, known as an open-end management investment
company. The Trustees of the Fund ("Trustees") are responsible for the
overall supervision of the operations of the Fund and perform the various
duties imposed on Trustees by the 1940 Act and the laws of the Commonwealth
of Massachusetts.
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 06115. 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
Fixed Income Fund, Inc., Phoenix California Tax-Exempt Bonds, Inc., Phoenix
Strategic Equity Series: Phoenix Equity Opportunities Fund and 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% of
the Fund's average daily net assets up to $1 billion; .50% of the Fund's
average daily net assets between $1 billion and $2 billion; and .45% on the
average daily net assets in excess of $2 billion. The Adviser's fee is
accrued daily against the value of the Fund's net assets and is payable by
the Fund monthly. The ratio of management fees to average net assets for the
fiscal year ended October 31, 1996 for Class A Shares and Class B Shares was
.55%.
The Portfolio Manager
Mr. David L. Albrycht has been the Portfolio Manager of the Fund since
August 1993. As such, Mr. Albrycht is primarily responsible for the day to
day management of the Fund's portfolio. Since April of 1993, Mr. Albrycht has
also been the Portfolio Manager of the Phoenix Diversified Income Portfolio
of the Phoenix Multi-Portfolio Fund, advised by Phoenix Investment Counsel,
Inc. ("PIC"), an affiliate of National. Mr. Albrycht is Vice President of
Phoenix Multi-Sector Fixed Income Fund, Inc. and assumed full management of
the Fund August 1995. Mr. Albrycht is Managing Director, Fixed Income of PIC
and National and has held various investment management positions with
Phoenix Home Life during the past five years. Since May 14, 1993, he has
served as Investment Officer of National.
14
<PAGE>
The Financial Agent
Equity Planning acts as financial agent of the Fund and, as such, performs
administrative, bookkeeping and pricing functions for the Fund. As
compensation, Equity Planning is entitled to a fee, payable monthly and based
upon (a) the average of the aggregate daily net asset values of the Fund, at
the following incremental annual rates:
<TABLE>
<CAPTION>
<S> <C>
First $100 million .05 %
$100 million to $300 million .04 %
$300 million to $500 million .03 %
Greater than $500 million .015%
</TABLE>
(b) a minimum fee based on the predominant type of assets of the Fund; 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 $4,717, 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 service 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 Trust's
shares, are located at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200. Philip R. McLoughlin is a Trustee and President of
the Fund and a director and officer of Equity Planning. David R. Pepin, a
director and officer of Equity Planning, is an officer of the Fund. Michael
E. Haylon, a director of Equity Planning, is an officer of the Fund. G.
Jeffrey Bohne, Nancy G. Curtiss, William E. Keen III, William R. Moyer,
Leonard J. Saltiel, and Thomas N. Steenburg are officers of the Trust and
officers of Equity Planning.
Equity Planning and the Fund have entered into distribution agreements
under which Equity Planning has agreed to use its best efforts to find
purchasers for Fund shares sold subject to an initial sales charge and those
sold subject to a contingent deferred sales charge. The Fund has granted
Equity Planning the exclusive right to purchase from the Fund and resell, as
principal, shares needed to fill unconditional orders for Fund shares. Equity
Planning may sell Fund shares through its registered representatives or
through securities dealers with whom it has sales agreements. Equity Planning
may also sell Fund shares pursuant to sales agreements entered into with
banks or bank affiliated securities brokers who, acting as agent for their
customers, place orders for Fund shares with Equity Planning. Although the
Glass-Steagall Act prohibits banks and bank affiliates from engaging in the
business of underwriting, distributing or selling securities (including
mutual fund shares), banking regulators have not indicated that such
institutions are prohibited from purchasing mutual fund shares upon the order
and for the account of their customers. If, because of changes in law or
regulations, or because of new interpretations of existing law, it is
determined that agency transactions of banks or bank affiliated securities
brokers are not permitted under the Glass-Steagall Act, the Trustees will
consider what action, if any, is appropriate. It is not anticipated that
termination of sales agreements with banks or bank affiliated securities
brokers would result in a loss to their customers or a change in the net
asset value per share of 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 Trustees have adopted separate distribution plans under Rule 12b-1 of
the 1940 Act for each class of shares of the Fund (the "Class A Plan," the
"Class B Plan," and collectively the "Plans"). The Plans permit the Fund to
reimburse the Distributor for expenses incurred in connection with the sale
and promotion of Fund shares and the furnishing of shareholder services.
Pursuant to the Class A Plan, the Fund may reimburse the Distributor for
actual expenses of the Distributor up to 0.30% annually 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 0.75% 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
15
<PAGE>
(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 Trustees
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 $27,005 under
the Class A Plan and $36,914 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 Trustees review a report on expenditures under
each Plan and the purposes for which expenditures were made. The Trustees
conduct an additional more extensive review annually in determining whether
each Plan will be continued. By its terms, continuation of each Plan from
year to year is contingent on annual approval by a majority of the Fund's
Trustees and by a majority of the Trustees who are not "interested persons"
(as defined in the 1940 Act) and who have no direct or indirect financial
interest in the operation of either Plan or any related agreements (the "Plan
Trustees"). Each Plan provides that it may not be amended to increase
materially the costs which the Fund may bear without approval of the
applicable class of shareholders of the Fund and that other material
amendments must be approved by a majority of the Plan Trustees by vote cast
in person at a meeting called for the purpose of considering such amendments.
Each Plan further provides that while it is in effect, the selection and
nomination of Trustees who are not "interested persons" shall be committed to
the discretion of the Trustees who are not "interested persons". Each Plan
may be terminated at any time by vote of a majority of the Plan Trustees or a
majority of the applicable class of outstanding shares of the Fund.
The Trustees have concluded that there is a reasonable likelihood that the
Plans will benefit the Fund and all classes of shareholders. The Class A Plan
and the Class B Plan were approved by shareholders of the Fund at a special
meeting of shareholders held on April 30, 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 Trustees to suspend distribution fees or amend either or both
Plans.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent
investment is $25. Both the minimum initial and subsequent investment amounts
are $25 for investments pursuant to the "Investo-Matic" plan, a bank draft
investing program administered by Equity Planning, or pursuant to the
Systematic Exchange privilege. (See the Statement of Additional Information.)
Completed applications for the purchase of shares should be mailed to the
Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8301.
Each class of shares represents an interest in the same portfolio of
investments of the Fund, have the same rights and is identical to the others
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
16
<PAGE>
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. Class A Shares of the Fund held longer than six months and Class B
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 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 will be limited to a total value of $1,000,000.
Class B Shares sold to allocated qualified employer sponsored plans,
including 401(k) plans, will be limited to a maximum total value of $250,000
for each participant. The Distributor reserves the right to decline the sale
of Class B Shares to allocated qualified employer sponsored plans not
utilizing an approved participant tracking system. In addition, Class B
Shares will not be sold to any qualified employee benefit plan, endowment
fund or foundation if, on the date of the initial investment, the plan, fund
or foundation has assets of $10,000,000 or more or at least 100 eligible
employees. Class B Shares will also not be sold to investors who have reached
the age of 85 because of such persons' expected distribution requirements.
Class A Shares are subject to a lower distribution services fee and,
accordingly, pay correspondingly higher dividends per share. However, because
initial sales charges are deducted at the time of purchase, such investors
would not have all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced initial
sales charges who expect to maintain their investment for an extended period
of time might consider purchasing Class A Shares because the accumulated
continuing distribution charges on Class B Shares may exceed the initial
sales charge on Class A Shares during the life of the investment. Again,
however, such investors must weigh this consideration against 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 three-year period, being subject to a contingent deferred
sales charge.
Initial Sales Charge Alternative--Class A Shares
The public offering price of Class A Shares is the net asset value plus a
sales charge, as set forth below. Offering prices become effective at the
close of the general trading session of the New York Stock Exchange. Orders
received by dealers prior to such time are confirmed at the offering price
effective at that time, provided the order is received by State Street Bank
and Trust Company prior to its close of business.
The sales charge varies with the size of the purchase and reduced charges
apply to the aggregate of purchases of the Fund made at one time by "any
person," which term includes an individual 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 2.25% of the offering price
(2.30%
17
<PAGE>
of the amount invested) on single purchases of less than $50,000. The sales
charge is reduced on a graduated scale on single purchases of $50,000 or more
as shown below.
<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Discount
Amount of as Percentage as Percentage or Agency Fee
Transaction of Offering of Amount as Percentage of
at Offering Price Price Invested Offering Price*
- ------------------------ ----------------- ----------------- --------------------
<S> <C> <C> <C>
Less than $50,000 2.25% 2.30% 2.00%
$50,000 but under
$100,000 1.25% 1.27% 1.00%
$100,000 but under
$500,000 1.00% 1.01% 1.00%
$500,000 but under
$1,000,000 .75% .76% .75%
$1,000,000 or more None None None**
</TABLE>
* Equity Planning will sponsor sales contests, training and educational
meetings and provide to all qualifying dealers, from its own profits and
resources, additional compensation in the form of trips, merchandise or
expense reimbursement. Brokers 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:
<TABLE>
<CAPTION>
Purchase Amount Payment to Broker-Dealer
------------------------------ ------------------------------
<S> <C>
$1,000,000 to $3,000,000 1 %
$3,000,001 to $6,000,000 0.50 of 1%
$6,000,001 or more 0.25 of 1%
</TABLE>
If part or all of such investment, including investments by qualified
employee benefit plans is subsequently redeemed within one year of the
investment date, the broker-dealer will refund to the Distributor any such
amounts paid with respect to the investment.
How to Obtain Reduced Sales Charges on Class A Shares
Investors choosing the initial sales charge alternative under certain
circumstances may be entitled to pay reduced sales charges. The circumstances
under which such investors may pay reduced sales charges are described below.
Qualified Purchasers. No sales charge will be imposed on sales of shares
to (1) any Phoenix Fund trustee, director or officer; (2) any director or
officer, or 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 Phoenix Home Life or Equity Planning and/or their
corporate affiliates; (9) any account held in the name of a qualified
employee benefit plan, endowment fund or foundation if, on the date of
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, department, authority or similar 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 and 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 purpose 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
18
<PAGE>
financial planner on the books and records of the broker, agent or financial
intermediary with which the Distributor has made such special arrangements
(each of these investors may be charged a fee by the broker, agent or
financial intermediary for purchasing shares).
Shares issued pursuant to the automatic reinvestment of income dividends
or capital gains distributions are not subject to any sales charges. The Fund
receives the entire net asset value of its Class A Shares sold to investors.
The Distributor's commission is the sales charge shown above less any
applicable discount or commission "re-allowed" to selected dealers and
agents. The Distributor will re-allow discounts to selected dealers and
agents in the amounts indicated in the table above. In this regard, the
Distributor may elect to re-allow the entire sales charge to selected
dealers and agents for all sales with respect to which orders are placed with
the Distributor. A selected dealer who receives re-allowance in excess of 90%
of such a sales charge may be deemed to be an "underwriter" under the
Securities Act of 1933.
Combination Purchase Privilege. Purchases, either singly or in any
combination, of shares of the Fund or shares of any other Phoenix Fund,
(including Class B Shares and excluding Money Market 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 "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
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<PAGE>
the imposition of a sales charge at the time of purchase. The Class B Shares
are being sold without an initial sales charge but are subject to a sales
charge if redeemed within three years of purchase.
Proceeds from the contingent deferred sales charge are paid to the
Distributor and are used in whole or in part by the Distributor to defray the
expenses of the Distributor related to providing distribution-related
services to the Fund in connection with the sale of 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
three 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 2%
of the sales 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 2% 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.
<TABLE>
<CAPTION>
Contingent Deferred
Sales Charge as
a Percentage of
Dollar Amount
Year Since Purchase Subject to Charge
- ------------------------- ------------------------
<S> <C>
First 2.0%
Second 1.5%
Third 1.0%
Fourth 0%
</TABLE>
In determining whether a contingent deferred sales charge is applicable to
a redemption, it will be assumed that any Class A Shares are being redeemed
first, Class B Shares held for over 5 years and shares acquired pursuant to
reinvestment of dividends or distributions are redeemed next. Any Class B
Shares held longest during the 3 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 an investor purchased 100 shares at $10 per
share (at a cost of $1,000) and in the second year after purchase, the net
asset value per share is $12 and, during such time, the investor has acquired
10 additional shares through dividend reinvestment. If, at such time the
investor makes his first redemption of 50 shares (proceeds of $600), 10
shares will not be subject to charge because of dividend reinvestment. With
respect to the remaining 40 shares, the charge is applied only to the
original cost of $10 per share and not to the increase in net asset value of
$2 per share. Therefore, $400 of the $600 redemption proceeds will be charged
at a rate of 1.5% (the applicable rate in the second year after purchase) or
$6.00.
The contingent deferred sales charge is waived on redemptions of shares
(a) if redemption is made within one year of death (i) of the sole
shareholder on an individual account, (ii) of a joint tenant where the
surviving joint tenant is the deceased's spouse, or (iii) of the beneficiary
of 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 of the
classes after six 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
20
<PAGE>
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
the 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 six (6) 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 shareholders. In order to reduce the
volume of mail, to the extent possible, only one copy of most Fund reports
will be mailed to households for multiple accounts with the same surname at
the same household address. Please contact Equity Planning to request
additional copies of shareholder reports.
Shareholder inquiries should be directed to the Fund at (800) 243-1574.
Bank Draft Investing Program (Investo-Matic Plan)
By completing the Investo-Matic Section of the New Account Application, a
shareholder may authorize the bank named in the form to draw $25 or more from
his 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/her account and will be used to purchase shares at the
applicable offering price. The shareholder or his or her registered
representative may, by telephone or written notice, cancel or change the
dollar amount being invested pursuant to the Investo-Matic Plan unless the
shareholder has notified the Fund or Transfer Agent that his or her
registered representative shall not have this authority.
Distribution Option
The Fund currently declares all income dividends and all capital gain
distributions, if any, payable in shares of the Fund at net asset value or,
at the option of the shareholder, in cash. 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.
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<PAGE>
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 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) 243-4631 for further information about the plans.
Exchange Privileges
Shareholders may exchange Class A Shares (held more than six months) or
Class B Shares held in book entry form for shares of the same class of other
Phoenix Funds provided the following conditions are met: (1) the shares that
will be acquired in the exchange (the "Acquired Shares") are available for
sale in the shareholder's state of residence; (2) the Acquired Shares are 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 Shares held longer than six months 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 applicable to initial purchases 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
22
<PAGE>
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 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 Trustees 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 Trustees 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 Trustees 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 order and any other
required documentation in proper form by Phoenix Funds c/o State Street Bank
and Trust Company, P.O. Box 8301, Boston, MA 02266-8301 (see "Net Asset
Value"). In the case of Class B Share redemption, 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
23
<PAGE>
Company, P.O. Box 8301, Boston, MA 02266-8301. To be in proper form to redeem
shares, the signatures 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 Uniform Transfers to Minors Act, the proceeds of the redemption
do not exceed $50,000, and the proceeds are payable to the registered
owners(s) at the address of record. Such requests must be signed by each
person in whose name the account is registered. In addition, the Fund
maintains a continuous offer to repurchase its shares, and shareholders may
normally sell their shares through securities dealers, brokers, or agents,
who may charge customary commissions or fees for their services. The
redemption price in such case will be the price as of the close of the
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 shareholders 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, 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 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
the Reinvestment Privilege.
24
<PAGE>
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 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. The discussion below is based upon the assumption that
the Fund will be treated as a regulated investment company.
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
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
25
<PAGE>
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 under Massachusetts law on February 20, 1992 as a
business trust. On December 23, 1993, shareholders of the Fund approved a
change in the name of the Fund, 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 Adviser to Phoenix Home Life
on May 14, 1993. On February 22, 1996, the Trustees approved another change
in the Fund's name to more accurately reflect its present investment policies
and objectives. Prior to this revision, the Fund's name was "Phoenix Asset
Reserve." The Declaration of Trust, as amended, provides that the Trustees
are authorized to create an unlimited number of series and, with respect to
each series, to issue an unlimited number of full and fractional shares of
beneficial interest of one or more classes and to divide or combine the
shares into a greater or lesser number of shares without thereby changing the
proportionate beneficial interests in the series. All shares have equal
voting rights, except that only shares of the respective series or separate
classes within a series are entitled to vote on matters concerning only that
series or class. At the date of this Prospectus, there is only one existing
series of the Fund, having two classes of shares.
The shares of the Fund, when issued, will be fully paid and
non-assessable, have no preference, preemptive, or similar rights, and will
be freely transferable. There will normally be no meetings of shareholders
for the purpose of electing Trustees unless and until such time as less than
a majority of the Trustees holding office have been elected by shareholders,
at which time the Trustees then in office will call a shareholders' meeting
for the election of Trustees. Shareholders may, in accordance with the
Declaration of Trust, cause a meeting of shareholders to be held for the
purpose of voting on the removal of Trustees. Meetings of the shareholders
may be called upon written request of shareholders holding in the aggregate
not less than 10% of the outstanding shares having voting rights. The
Trustees 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 and subject to the 1940 Act, the Trustees
will continue to hold office and appoint successor Trustees. Shares do not
have cumulative voting rights and the holders of more than 50% of the shares
of the Fund voting for the election of Trustees can elect all of the Fund's
Trustees if they choose to do so and in such event the holders of the
remaining shares would not be able to elect any Trustees. Shareholders are
entitled to redeem their shares as set forth under "How to Redeem Shares."
The Declaration of Trust establishing the Fund (a copy of which, together
with all amendments thereto, is on file in the office of the Secretary of the
Commonwealth of Massachusetts), provides that the name "Phoenix Multi-Sector
Short Term Bond Fund" refers to the Trustees under the Declaration of Trust
collectively as Trustees, but not as individuals or personally; and no
Trustee, shareholder, officer, employee or agent of the Fund shall be held to
any personal liability, nor shall resort be had to their personal property
for the satisfaction of any obligation or claim of said Fund but the "Trust
Property" only shall be liable.
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.
APPENDIX
Description of Certain Bond Ratings
Moody's Investor's Service, Inc.
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
Baa: Bonds which are rated Baa are considered as medium grade obligations;
i.e., they are neither highly protective nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Note: Those bonds in the Aa, A and Baa groups which Moody's believes
possess the strongest investment attributes are designated by the symbols
Aa1, A1 and Baa1.
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<PAGE>
Ba: Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safe guarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
and interest.
Standard & Poor's Corporation
AAA: Bonds rated AAA have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A: Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds
in this category than for bonds in the A category.
BB, B, CCC: Bonds rated BB, B, 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 exposure to adverse
conditions.
Duff & Phelps Credit Rating Co.
D&P is a Nationally Recognized Statistical Rating Organization by the SEC
as well as State Commissions and insurance regulatory bodies. Ratings qualify
for SEC Rule 2a-7 provisions and broker/dealer capital computation
guidelines on commercial paper inventory. D&P ratings also qualify for NAIC
rating designations and for ERISA guidelines governing asset-backed
securities as stated by the Department of Labor.
Rating Scale:
Duff & Phelps offers ratings for short-term and long-term debt, preferred
stock, structured financings, and insurer's claims paying ability. D&P
ratings are specific to credit quality, i.e., the likelihood of timely
payment for principal, interest, and in the case of a preferred stock rating,
preferred stock dividends. The insurance company claims paying ability
ratings reflect an insurer's ability to meet its claims obligations.
<TABLE>
<CAPTION>
Long-Term Ratings
-------------------------------------------------------------------
<S> <C>
AAA Highest Quality
AA+, AA, AA- High Quality
A+, A, A- Good Quality
BBB+, BBB, BBB- Satisfactory Quality (investment grade)
BB+, BB, BB- Non-Investment Grade
B+, B, B- Non-Investment Grade
CCC Speculative
Short-Term Ratings
-------------------------------------------------------------------
Duff 1+
Duff 1 X A-1/P-1
Duff 1-
Duff 2 A-2/P-2
Duff 3 A-3/P-3
Duff 4 Non-Investment Grade
Duff 5 Defaulted
</TABLE>
Fitch Investor Services, Inc.
AAA: Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA: Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA". Because bonds
rated in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated "F-1+."
A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds with
higher ratings.
Plus (+) Minus (-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus
and minus signs, however, are not used in the "AAA" category.
NR: Indicates that Fitch does not rate the specific issue.
Conditional: A conditional rating is premised on the successful completion
of a project or the occurrence of a specific event.
27
<PAGE>
Suspended: A rating is suspended when Fitch deems the amount of
information available from the issuer to be inadequate for rating purposes.
Withdrawn: A rating will be withdrawn when an issue matures or is called
or refinanced and, at Fitch's discretion, when an issuer fails to furnish
proper and timely information.
FitchAlert: Ratings are placed on FitchAlert to notify investors of an
occurrence that is likely to result in a rating change and the likely
direction of such change. These are designated as "Positive", indicating a
potential upgrade; "Negative"; for potential downgrade, or "Evolving", where
ratings may be raised or lowered. FitchAlert is relatively short-term, and
would be resolved within 12 months.
Credit Trend: Credit Trend indicators show whether credit fundamentals are
improving, stable, declining or uncertain, as follows:
Improving
Stable
Declining
Uncertain
Credit Trend indicators are not predictions that any rating change will
occur, and have a longer-term time frame than issues placed on FitchAlert.
Fitch speculative grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The
ratings ("BB" to "C") represent Fitch's assessment of the likelihood of
timely payment of principal and interest in accordance with the terms of
obligation for bond issuers not in default. For defaulted bonds, the rating
("DDD" to "D") is an assessment of the potential recovery value through
reorganization or liquidation.
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor
as well as the economic and political environment, that might affect the
issuer's futures financial strength.
Bonds that have the same rating are of similar but not necessarily
identical credit quality since rating categories cannot fully reflect the
differences in degrees of credit risk.
BB: Bonds are considered speculative. The obligor's 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 requirements.
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.
DDD, DD, and D: Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be valued on the
basis of their ultimate recovery value in liquidation or reorganization of
the obligor. "DDD" represents the highest potential for recovery on these
bonds, and "D" represents the lowest potential for recovery.
Plus (+) Minus (-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus
and minus signs however, are not used in the "DDD", "DD", or "D" categories.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.
The short-term rating places greater emphasis than a long-term rating on
the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
Fitch's short-term ratings are as follows:
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1: Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-l+."
F-2: Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as for issues assigned "F-1+" and "F-1" ratings.
F-3: Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate,
however, near-term adverse changes could cause these securities to be rated
below investment grade.
F-5: Weak Credit Quality. Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are
vulnerable to near-term adverse changes in financial and economic conditions.
D: Default. Issues assigned this rating are in actual or imminent payment
default.
LOC: The symbol LOC indicates that the rating is based on a letter of
credit issued by a commercial bank.
28
<PAGE>
BACKUP WITHHOLDING INFORMATION
Step 1. Please make sure that the social security number or taxpayer
identification number (TIN) which appears on the Application complies
with the following guidelines:
<TABLE>
<CAPTION>
Give Social Security Number or Tax
Account Type Identification Number of:
<S> <C>
Individual Individual
Joint (or Joint Tenant) Owner who will be paying tax
Uniform Gifts to Minors Minor
Legal Guardian Ward, Minor or Incompetent
Sole Proprietor Owner of Business (also provide owner's name)
Trust, Estate, Pension Plan Trust Trust, Estate, Pension Plan Trust (not personal TIN
of fiduciary)
Corporation, Partnership,
Other Organization Corporation, Partnership, Other Organization
Broker/Nominee Broker/Nominee
</TABLE>
Step 2. If you do not have a TIN, you must obtain Form SS-5 (Application for
Social Security Number) or Form SS-4 (Application for Employer
Identification Number) from your local Social Security or IRS office
and apply for one. Write "Applied For" in the space on the
application.
Step 3. If you are one of the entities listed below, you are exempt from
backup withholding.
(bullet) A corporation
(bullet) Financial institution
(bullet) Section 501(a) exempt organization (IRA, Corporate
Retirement Plan, 403(b), Keogh)
(bullet) United States or any agency or instrumentality thereof
(bullet) A State, the District of Columbia, a possession of the
United States, or any subdivision or instrumentality thereof
(bullet) International organization or any agency or instrumentality
thereof
(bullet) Registered dealer in securities or commodities registered in
the U.S. or a possession of the U.S.
(bullet) Real estate investment trust
(bullet) Common trust fund operated by a bank under section 584(a)
(bullet) An exempt charitable remainder trust, or a non-exempt trust
described in section 4947(a)(1)
(bullet) Regulated Investment Company
If you are in doubt as to whether you are exempt, please contact the Internal
Revenue Service.
Step 4. IRS Penalties--If you do not supply us with your TIN, you will be
subject to an IRS $50 penalty unless your failure is due to
reasonable cause and not willful neglect. If you fail to report
interest, dividend or patronage dividend income on your federal
income tax return, you will be treated as negligent and subject to an
IRS 5% penalty tax on any resulting underpayment of tax unless there
is clear and convincing evidence to the contrary. If you falsify
information on this form or make any other false statement resulting
in no backup withholding on an account which should be subject to a
backup withholding, you may be subject to an IRS $500 penalty and
certain criminal penalties including fines and imprisonment.
This Prospectus sets forth concisely the information about the Phoenix
Multi-Sector Short Term Bond Fund (the Fund) which you should know before
investing. Please read it carefully and retain it for future reference.
The Fund has filed with the Securities and Exchange Commission a Statement of
Additional Information about the Fund, dated 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 Trust 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.
[recycled logo} Printed on recycled paper using soybean ink
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
PO Box 2200
Enfield CT 06083-2200
[logo] PHOENIX
DUFF & PHELPS
PDP 694 (2/97)
<PAGE>
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
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 Short Term Bond Fund (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
<TABLE>
<CAPTION>
PAGE
<S> <C>
THE FUND 2
INVESTMENT OBJECTIVE AND POLICIES (7) 2
INVESTMENT RESTRICTIONS (15) 2
INVESTMENT TECHNIQUES (10) 3
PERFORMANCE INFORMATION (6) 9
PORTFOLIO TRANSACTIONS AND BROKERAGE (16) 10
SERVICES OF THE ADVISER (15) 11
NET ASSET VALUE (24) 12
HOW TO BUY SHARES (17) 12
EXCHANGE PRIVILEGES (23) 14
INVEST-BY-PHONE 14
TAX SHELTERED RETIREMENT PLANS (23) 14
REDEMPTION OF SHARES (24) 14
DIVIDENDS, DISTRIBUTIONS AND TAXES (25) 15
THE DISTRIBUTOR (16) 17
PLANS OF DISTRIBUTION 18
TRUSTEES AND OFFICERS 19
OTHER INFORMATION 26
Numbers appearing in parentheses correspond to related
disclosures in the Fund's Prospectus.
</TABLE>
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders/Exchanges: (800) 367-5877
Telecommunication Device TTY: (800) 243-1926
PDP 694B (2/97)
1
<PAGE>
THE FUND
Phoenix Multi-Sector Short Term Bond Fund is a diversified open-end,
management investment company, consisting currently of one series, with two
classes of shares. The Fund was organized as a business trust under
Massachusetts law on February 20, 1992. On December 23, 1993, shareholders of
the Fund approved a change in the name of the Fund, 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. On February 22,
1996, the Trustees approved another change in the Fund's name to more
accurately reflect its present investment policies and objectives. Prior to
this revision, the Fund's name was "Phoenix Asset Reserve."
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide high current income relative
to other short-term investment alternatives, while attempting to limit
fluctuations in the net asset value of Fund shares resulting from movements
in interest rates. 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 approval by holders of a "majority of the outstanding
voting securities" of the Fund, which as used herein means the vote of the
lesser of (i) 67% or more of the outstanding voting securities of the Fund
present at a meeting, if the holders of more than 50% of the outstanding
voting securities of the Fund are present or represented by proxy, or (ii)
more than 50% of the outstanding voting securities of the Fund. The term
"voting securities" as used in this paragraph has the same meaning as in the
1940 Act.
The Fund may not:
(1) with respect to 75% of the total assets of the Fund (taken at market
value at the time of purchase), invest more than 5% of the value of its
total assets in the securities of any one issuer, or, with respect to 100%
of the total assets of the Fund, own more than 10% of the outstanding
voting securities of any one issuer, in each case other than U.S.
Government securities (as defined in the 1940 Act);
(2) invest 25% or more of the value of its total assets in securities of
issuers engaged in any one industry (excluding U.S. Government securities
as defined in the 1940 Act);
(3) purchase or sell real estate (although it may purchase securities
secured by real estate or interests therein, or securities issued by
companies which invest in real estate, or interests therein (other than
real estate limited partnership interests));
(4) purchase or sell commodities or commodities contracts or oil, gas or
mineral programs. This restriction shall not prohibit the Fund, subject to
restrictions described in the Prospectus and elsewhere in this Statement
of Additional Information, from purchasing, selling or entering into
futures contracts, options on futures contracts, foreign currency forward
contracts, foreign currency options, or any interest rate or foreign
currency-related hedging instrument, subject to compliance with any
applicable provisions of the federal securities or commodities laws.
(5) purchase securities on margin, except for use of short-term credit
necessary for clearance of purchases and sales of portfolio securities,
but it may make margin deposits in connection with transactions in
options, futures and options on futures;
(6) borrow money, issue senior securities, or pledge, mortgage or
hypothecate its assets, except that the Fund 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 each borrowing there is asset coverage of 300% and (ii)
enter into transactions in options, futures and options on futures as
described in the Prospectus and in this 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 a Fund's assets);
(7) lend any funds or other assets, except that the Fund may, consistent
with its investment objective and policies: (a) invest in debt obligations
including bonds, debentures or other debt securities, bankers' acceptances
and commercial paper, even though purchase of such obligations may be
deemed to be the making of loans; (b) enter into repurchase agreements;
and (c) lend its portfolio securities in an amount not to exceed 1/3 of
the value of its total assets, provided such loans are made in accordance
with applicable guidelines established by the Securities and Exchange
Commission and the Trustees;
(8) act as an underwriter of securities of other issuers, except to the
extent that in connection with the disposition of portfolio securities, it
may be deemed to be an underwriter under the federal securities laws; or
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(9) maintain a short position, or purchase, write or sell puts, calls,
straddles, spreads or combinations thereof, except as set forth in the
Prospectus and in this Statement of Additional Information for
transactions in options, futures, and options on futures.
Non-Fundamental Policies
The following restrictions of the Fund are not fundamental policies and
may be changed by the Board of Trustees of the Fund without shareholder
approval. The Fund may not:
(A) invest for the purpose of exercising control or management;
(B) purchase securities of other investment companies, except that the
Fund may, for temporary purposes, purchase shares of money market mutual
funds, subject to such restrictions as may be imposed by the 1940 Act and
rules thereunder, or by any State in which shares of the Fund are
registered;
(C) invest more than 15% of the net assets of the Fund (taken at market
value at the time of the investment) in "illiquid securities". Illiquid
securities may include securities subject to legal or contractual
restrictions on resale (which may include private placements), repurchase
agreements maturing in more than seven days, certain options traded over
the counter that the Fund has purchased, certain securities being used to
cover options the Fund has written, securities for which market quotations
are not readily available, or other securities which legally or in the
Adviser's or Trustees' opinion may be deemed illiquid;
(D) invest in a security if, as a result of such investment, more than 5%
of its total assets (taken at market value at the time of such investment)
would be invested in securities of issuers (other than issuers of Federal
agency obligations) having a record, together with predecessors or
unconditional guarantors, of less than three years of continuous
operation;
(E) purchase or retain securities of any issuer if 5% of the securities of
such issuer are owned by those officers and directors or trustees of the
Fund or of the Adviser who each own beneficially more than 1/2 of 1% of
its securities;
(F) purchase securities for the Fund from, or sell portfolio securities
to, any of the officers and directors or trustees of the Fund or of the
Adviser; or
(G) borrow any amount in excess of 10% of the Fund's total assets or make
additional investments when the Fund's borrowings are in excess of 5% of
the Fund's total assets.
Notwithstanding the provisions of restriction (G), the Fund has no current
intention of borrowing money from banks or other financial institutions,
other than on a temporary basis for emergency or extraordinary purposes,
provided, however, that the provisions of restriction (G) shall not be deemed
to apply to reverse repurchase agreements and other investment techniques
which may be deemed to constitute borrowings for purposes of the 1940 Act.
Unless otherwise indicated, all percentage limitations listed above apply
to the Fund only at the time a transaction is entered into. Accordingly, if a
percentage restriction is adhered to at the time of investment, a later
increase or decrease in the percentage which results from a relative change
in values or from a change in the Fund's net assets will not be considered a
violation.
INVESTMENT TECHNIQUES
The Fund may utilize the following practices or techniques in pursuing its
investment objective.
Mortgage-Backed Securities
GNMA Certificates. The Government National Mortgage Association ("GNMA")
is a wholly owned corporate instrumentality of the United States within the
Department of Housing and Urban Development. The National Housing Act of
1934, as amended (the "Housing Act"), authorizes GNMA to guarantee the timely
payment of the principal of and interest on certificates that are based on
and backed by a pool of mortgage loans insured by the Federal Housing
Administration under the Housing Act, or Title V of the Housing Act of 1949
("FHA Loans"), or guaranteed by the Department of Veterans Affairs under the
Servicemen's Readjustment Act of 1944, as amended ("VA Loans"), or by pools
of other eligible mortgage loans. The Housing Act provides that the full
faith and credit of the United States government is pledged to the payment of
all amounts that may be required to be paid under any guaranty. In order to
meet its obligations under such guaranty, GNMA is authorized to borrow from
the U.S. Treasury with no limitations as to amount.
The GNMA Certificates in which the Fund will invest will represent a pro
rata interest in one or more pools of the following types of mortgage loans:
(i) fixed rate level payment mortgage loans; (ii) fixed rate graduated
payment mortgage loans; (iii) fixed rate growing equity mortgage loans; (iv)
fixed rate mortgage loans secured by manufactured (mobile) homes; (v)
mortgage loans on multifamily residential properties under construction; (vi)
mortgage loans on completed multifamily projects; (vii) fixed rate mortgage
loans as to which escrowed funds are used to reduce the borrower's monthly
payments during the early years of the mortgage loans ("buydown" mortgage
loans); (viii) mortgage loans that provide for adjustments in payments based
on periodic changes in interest rates or in other payment terms of the
mortgage loans; and (ix) mortgage-backed serial notes. All of these mortgage
loans will be FHA Loans or VA Loans and, except as otherwise specified above,
will be fully-amortizing loans secured by first liens on one-to four-family
housing units.
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FNMA Certificates. The Federal National Mortgage Association ("FNMA") is a
federally chartered and privately owned corporation organized and existing
under the Federal National Mortgage Association Charter Act of 1938. The
obligations of FNMA are not backed by the full faith and credit of the U.S.
government.
Each FNMA Certificate will represent a pro rata interest in one or more
pools of FHA Loans, VA Loans or conventional mortgage loans (i.e., mortgage
loans that are not insured or guaranteed by any governmental agency) of the
following types: (i) fixed rate level payment mortgage loans; (ii) fixed rate
growing equity mortgage loans; (iii) fixed rate graduated payment mortgage
loans; (iv) variable rate California mortgage loans; (v) other adjustable
rate mortgage loans; and (vi) fixed rate and adjustable mortgage loans
secured by multifamily projects.
FHLMC Certificates. The Federal Home Loan Mortgage Corporation ("FHLMC")
is a corporate instrumentality of the United States created pursuant to the
Emergency Home Finance Act of 1970, as amended (the "FHLMC Act"). The
obligations of FHLMC are obligations solely of FHLMC and are not backed by
the full faith and credit of the U.S. government.
FHLMC Certificates represent a pro rata interest in a group of mortgage
loans (a "FHLMC Certificate group") purchased by FHLMC. The mortgage loans
underlying the FHLMC Certificates will consist of fixed rate or adjustable
rate mortgage loans with original terms to maturity of between 10 and 30
years, substantially all of which are secured by first liens on one-to-four
family residential properties or multifamily projects. Each mortgage loan
must meet the applicable standards set forth in the FHLMC Act. A FHLMC
Certificate group may include whole loans, participation interests in whole
loans and undivided interests in whole loans and participations comprising
another FHLMC Certificate group.
Adjustable Rate Mortgages--Interest Rate Indices. The One Year Treasury
Index is the figure derived from the average weekly quoted yield on U.S.
Treasury Securities adjusted to a constant maturity of one year. The Cost of
Funds Index reflects the monthly weighted average cost of funds of savings
and loan associations and savings banks whose home offices are located in
Arizona, California and Nevada (the "FHLB Eleventh District") that are member
institutions of the Federal Home Loan Bank of San Francisco (the "FHLB of San
Francisco"), as computed from statistics tabulated and published by the FHLB
of San Francisco. The FHLB of San Francisco normally announces the Cost of
Funds Index on the last working day of the month following the month in which
the cost of funds was incurred.
A number of factors affect the performance of the Cost of Funds Index and
may cause the Cost of Funds Index to move in a manner different from indices
based upon specific interest rates, such as the One Year Treasury Index.
Because of the various origination dates and maturities of the liabilities of
member institutions of the FHLB Eleventh District upon which the Cost of
Funds Index is based, among other things, at any time the Cost of Funds Index
may not reflect the average prevailing market interest rates on new
liabilities of similar maturities. There can be no assurance that the Cost of
Funds Index will necessarily move in the same direction or at the same rate
as prevailing interest rates since as longer term deposits or borrowings
mature and are renewed at market interest rates, the Cost of Funds Index will
rise or fall depending upon the differential between the prior and the new
rates on such deposits and borrowings. In addition, dislocations in the
thrift industry in recent years have caused and may continue to cause the
cost of funds of thrift institutions to change for reasons unrelated to
changes in general interest rate levels. Furthermore, any movement in the
Cost of Funds Index as compared to other indices based upon specific interest
rates may be affected by changes instituted by the FHLB of San Francisco in
the method used to calculate the Cost of Funds Index. To the extent that the
Cost of Funds Index may reflect interest changes more slowly than other
indices, mortgage loans which adjust in accordance with the Cost of Funds
Index may produce a higher yield later than would be produced by such other
indices, and in a period of declining interest rates, the Cost of Funds Index
may remain higher than other market interest rates which may result in a
higher level of principal prepayments on mortgage loans which adjust in
accordance with the Cost of Funds Index than mortgage loans which adjust in
accordance with other indices.
LIBOR, the London Interbank Offered Rate, is the interest rate that the
most creditworthy international banks dealing in U.S. dollar-denominated
deposits and loans charge each other for large dollar-denominated loans.
LIBOR is also usually the base rate for large dollar-denominated loans in the
international market. LIBOR is generally quoted for loans having rate
adjustments at one, three, six or twelve month intervals.
Stripped Mortgage-Backed Securities
The cash flows and yields on interest-only ("IO") and principal-only
("PO") classes are extremely sensitive to the rate of principal payments
(including prepayments) on the related underlying mortgage assets. For
example, a rapid or slow rate of principal payments may have a material
adverse effect on the yield to maturity of IOs or POs, respectively. If the
underlying mortgage assets experience greater than anticipated prepayments of
principal, an investor may fail to recoup fully its initial investment in an
IO class of a stripped mortgage-backed security, even if the IO class is
rated AAA or Aaa. Conversely, if the underlying Mortgage Assets experience
slower than anticipated prepayments of principal, the yield on the PO class
will be affected more severely than would be the case with a traditional
Mortgage-Backed Security.
Borrowing and Reverse Repurchase Agreements
The Fund may borrow for temporary administrative or emergency purposes.
This borrowing may be unsecured. The Investment Company Act of 1940, as
amended (the "1940 Act") requires the Fund to maintain continuous asset
coverage (that is, total assets including borrowings, less liabilities
exclusive of borrowings) of 300% of the amount borrowed. If the 300% asset
coverage should
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decline as a result of market fluctuations or other reasons, the Fund may be
required to sell some of its portfolio holdings within three days to reduce
the debt and restore the 300% asset coverage, even though it may be
disadvantageous from an investment standpoint to sell securities at that
time. To avoid the potential leveraging effects of the Fund's borrowings,
additional investment will not be made while unsecured bank borrowing is in
excess of 5% of the Fund's total assets. Borrowing may exaggerate the effect
on net asset value of any increase or decrease in the market value of the
portfolio. Money borrowed will be subject to interest costs which may or may
not be recovered by appreciation of the securities purchased. The Fund also
may be required to maintain minimum average balances in connection with such
borrowing or to pay a commitment or other fee to maintain a line of credit;
either of these requirements would increase the cost of borrowing over the
stated interest rate.
Among the forms of investments in which the Fund may engage, and which may
be deemed to constitute borrowings, is the entry into reverse repurchase
agreements. A reverse repurchase agreement involves the sale of a
portfolio-eligible security by a Fund, coupled with its agreement to
repurchase the instrument at a specified time and price. The Fund will
maintain a segregated account with its Custodian consisting of 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 its
obligations under reverse repurchase agreements with broker-dealers and
banks. However, reverse repurchase agreements involve the risk that the
market value of securities retained by the Fund may decline below the
repurchase price of the securities sold by the Fund which it is obligated to
repurchase.
The Fund also may enter into "mortgage dollar rolls," which are similar to
reverse repurchase agreements in certain respects. In a "dollar roll"
transaction, the Fund sells a mortgage-related security (such as a GNMA
security) to a dealer and simultaneously agrees to purchase a similar
security (but not the same security) in the future at a pre-determined price.
A "dollar roll" can be viewed, like a reverse repurchase agreement, as a
collateralized borrowing in which the Fund pledges a mortgage-related
security to a dealer to obtain cash. Unlike in the case of reverse repurchase
agreements, the dealer with which the Fund enters into a dollar roll
transaction is not obligated to return the same securities as those
originally sold by the Fund, but only securities which are "substantially
identical." To be considered "substantially identical," the securities
returned to the Fund generally must: (1) be collateralized by the same types
of underlying mortgages; (2) be issued by the same agency and be part of the
same program; (3) have a similar original stated maturity; (4) have identical
net coupon rates; (5) have similar market yields (and therefore price); and
(6) satisfy "good delivery" requirements, meaning that the aggregate
principal amount of the securities received back must be within 2.5% of the
initial amount delivered.
The Fund's obligations under a dollar roll agreement must be covered by
cash or high quality debt securities equal in value to the securities subject
to repurchase by the Fund, maintained in a segregated account. Dollar roll
transactions are treated as borrowings by the Fund, and therefore the Fund's
entry into dollar roll transactions is subject to the Fund's overall
limitations on borrowing. Furthermore, because dollar roll transactions may
be for terms ranging between one and six months, dollar roll transactions may
be deemed "illiquid" and subject to the Fund's overall limitations on
investment in illiquid securities.
Lending Portfolio Securities
The Fund may make secured loans of its portfolio securities to
broker-dealers and other financial institutions. The 1940 Act requires that
(a) the borrower pledge and maintain collateral consisting of cash, a letter
of credit issued by a domestic U.S. bank, or securities issued or guaranteed
by the U.S. government having a value at all times not less than 100% of the
value of the securities loaned; (b) the borrower add to such collateral
whenever the price of the securities borrowed rises (i.e., the value of the
loan is "marked to the market" on a daily basis); (c) the loan be made
subject to termination by the Fund at any time; and (d) the Fund receives
reasonable interest on the loan (which may include the investing of any cash
collateral in high quality interest-bearing short-term investments), any
distributions on the loaned securities, and any increase in their market
value. In addition, voting rights may pass with the loaned securities, but if
a material event were to occur, the loan must be called and the securities
voted by the Fund.
Hedging
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, respectively. 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 hedging 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
hedging activities would be expected to offset anticipated losses or a
portion thereof. See "Dividends, Distributions and Taxes."
The Fund will not enter into options or futures transactions for
speculative purposes, but only as a hedge against changes in the values of
securities in its portfolio, or sectors thereof, or in securities that it
intends to acquire resulting from market conditions.
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Options on Securities and Indexes
The Fund may, as specified in the Prospectus, purchase and sell both put
and call options on debt or other securities or indexes in standardized
contracts traded on foreign or national securities exchanges, boards of
trade, or similar entities, or quoted on NASDAQ or on a regulated foreign
over-the-counter market, and agreements, sometimes called cash puts, which
may accompany the purchase of a new issue of bonds from a dealer.
An option on a security (or index) is a contract that gives the holder of
the option, in return for a premium, the right to buy from (in the case of a
call) or sell to (in the case of a put) the writer of the option, the
security underlying the option (or the cash value of the index) at a
specified exercise price at any time during the term of the option. The
writer of an option on a security has the obligation upon exercise of the
option to deliver the underlying security upon payment of the exercise price
or to pay the exercise price upon delivery of the underlying security. Upon
exercise, the writer of an option on an index is obligated to pay the
difference between the cash value of the index and the exercise price
multiplied by the specified multiplier for the index option. (An index is
designed to reflect specified facets of a particular financial or securities
market, a specified group of financial instruments or securities, or certain
economic indicators.)
The Fund will write call options and put options only if they are
"covered." In the case of a call option on a security, the option is
"covered" if the Fund owns the security underlying the call or has an
absolute and immediate right to acquire that security without additional cash
consideration (or, if additional cash consideration is required, cash or cash
equivalents in such amount are placed in a segregated account by its
custodian) upon conversion or exchange of other securities held by the Fund.
For a call option on an index, the option is covered if the Fund maintains
with its custodian cash or cash equivalents equal to the contract value. A
call option is also covered if the Fund holds a call on the same security or
index as the call written where the exercise price of the call held is (i)
equal to or less than the exercise price of the call written, or (ii) greater
than the exercise price of the call written, provided the difference is
maintained by the Fund in cash or cash equivalents in a segregated account
with its custodian. A put option on a security or an index is "covered" if
the Fund maintains cash or cash equivalents equal to the exercise price in a
segregated account with its custodian. A put option is also covered if the
Fund holds a put on the same security or index as the put written where the
exercise price of the put held is (i) equal to or greater than the exercise
price of the put written, or (ii) less than the exercise price of the put
written, provided the difference is maintained by the Fund in cash or cash
equivalents in a segregated account with its custodian.
If an option written by the Fund expires, the Fund realizes a capital gain
equal to the premium received at the time the option was written. If an
option purchased by the Fund expires unexercised, the Fund realizes a capital
loss equal to the premium paid.
Prior to the earlier of exercise or expiration, an option may be closed
out by an offsetting purchase or sale of an option of the same series (type,
exchange, underlying security or index, exercise price, and expiration).
There can be no assurance, however, that a closing purchase or sale
transaction can be effected when the Fund desires.
The Fund will realize a capital gain from a closing purchase transaction
if the cost of the closing option is less than the premium received from
writing the option, or, if it is more, the Fund will realize a capital loss.
If the premium received from a closing sale transaction is more than the
premium paid to purchase the option, the Fund will realize a capital gain or,
if it is less, the Fund will realize a capital loss. The principal factors
affecting the market value of a put or a call option include supply and
demand, interest rates, the current market price of the underlying security
or index in relation to the exercise price of the option, the volatility of
the underlying security or index, and the time remaining until the expiration
date.
The premium paid for a put or call option purchased by the Fund is an
asset of the Fund. The premium received for an option written by the Fund is
recorded as a deferred credit. The value of an option purchased or written is
marked to market daily and is valued at the closing price on the exchange on
which it is traded or, if not traded on an exchange or no closing price is
available, at the mean between the last bid and asked prices.
Risks Associated with Options on Securities and Indexes
There are several risks associated with transactions in options on
securities and on indexes. For example, there are significant differences
between the securities and options markets that could result in an imperfect
correlation between these markets, causing a given transaction not to achieve
its objectives. A decision as to whether, when and how to use options
involves the exercise of skill and judgment, and even a well-conceived
transaction may be unsuccessful to some degree because of market behavior or
unexpected events.
There can be no assurance that a liquid market will exist when the Fund
seeks to close out an option position. If the Fund were unable to close out
an option that it had purchased on a security, it would have to exercise the
option in order to realize any profit or the option may expire worthless. If
the Fund were unable to close out a covered call option that it had written
on a security, it would not be able to sell the underlying security unless
the option expired without exercise. As the writer of a covered call option,
the Fund forgoes, during the option's life, the opportunity to profit from
increases in the market value of the security covering the call option above
the sum of the premium and the exercise price of the call.
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If trading were suspended in an option purchased by the Fund, the Fund
would not be able to close out the option. If restrictions on exercise were
imposed, the Fund might be unable to exercise an option it has purchased.
Except to the extent that a call option on an index written by the Fund is
covered by an option on the same index purchased by the Fund, movements in
the index may result in a loss to the Fund; however, such losses may be
mitigated by changes in the value of the Fund's securities during the period
the option was outstanding.
Foreign Currency Options
The Fund may buy or sell put and call options on foreign currencies either
on exchanges or in the over-the-counter market. A put option on a foreign
currency gives the purchaser of the option the right to sell a foreign
currency at the exercise price until the option expires. Currency options
traded on U.S. or other exchanges may be subject to position limits which may
limit the ability of the Fund to reduce foreign currency risk using such
options. Over-the-counter options differ from traded options in that they are
two-party contracts with price and other terms negotiated between buyer and
seller, and generally do not have as much market liquidity as exchange-traded
options.
Futures Contracts and Options on Futures Contracts
The Fund may use interest rate, foreign currency or index futures
contracts, as specified in the Prospectus. An interest rate, foreign currency
or index futures contract provides for the future sale by one party and
purchase by another party of a specified quantity of a financial instrument,
foreign currency or the cash value of an index at a specified price and time.
A futures contract on an index is an agreement pursuant to which two parties
agree to take or make delivery of an amount of cash equal to the difference
between the value of the index at the close of the last trading day of the
contract and the price at which the index contract was originally written.
Although the value of an index might be a function of the value of certain
specified securities, no physical delivery of these securities is made. A
public market exists in futures contracts covering several indexes as well as
a number of financial instruments and foreign currencies, including: the S&P
500; the S&P 100; the NYSE composite; U.S. Treasury bonds; U.S. Treasury
notes; GNMA Certificates; three month U.S. Treasury bills; 90-day commercial
paper; bank certificates of deposit; Eurodollar certificates of deposit; the
Australian dollar; the Canadian dollar; the British pound; the German mark;
the Japanese yen; the French franc; the Swiss franc; the Mexican peso; and
certain multinational currencies, such as the European Currency Unit ("ECU").
It is expected that other futures contracts will be developed and traded in
the future.
The Fund may purchase and write call and put options on futures. Futures
options possess many of the same characteristics as options on securities and
indexes (discussed above). A futures option gives the holder the right, in
return for the premium paid, to assume a long position (call) or short
position (put) in a futures contract at a specified exercise price at any
time during the period of option. Upon exercise of a call option, the holder
acquires a long position in the futures contract and the writer is assigned
the opposite short position. In the case of a put option, the opposite is
true.
As long as required by regulatory authorities, the Fund will limit its use
of futures contracts and futures options to hedging transactions. For
example, the Fund might use futures contracts to hedge against anticipated
changes in interest rates that might adversely affect either the value of the
Fund's securities or the price of the securities which the Fund intends to
purchase. The Fund's hedging activities may include sales of futures
contracts as an offset against the effect of expected increases in interest
rates, and purchases of futures contracts as an offset against the effect of
expected declines in interest rates. Although other techniques could be used
to reduce the Fund's exposure to interest rate fluctuations, the Fund may be
able to hedge its exposure more effectively and perhaps at a lower cost by
using futures contracts and futures options.
The Fund will only enter into futures contracts and futures options which
are standardized and traded on a U.S. or foreign exchange, board of trade, or
similar entity, or quoted on an automated quotation system.
When a purchase or sale of a futures contract is made by the Fund, the
Fund is required to deposit with its custodian (or broker, if legally
permitted) a specified amount of cash or U.S. Government securities ("initial
margin"). The margin required for a futures contract is set by the exchange
on which the contract is traded and may be modified during the term of the
contract. The initial margin is in the nature of a performance bond or good
faith deposit on the futures contract which is returned to the Fund upon
termination of the contract, assuming all contractual obligations have been
satisfied. The Fund expects to earn interest income on its initial margin
deposits. A futures contract held by the Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day the Fund
pays or receives cash, called "variation margin," equal to the daily change
in value of the futures contract. This process is known as "marking to
market." Variation margin does not represent a borrowing or loan by the Fund
but is instead a settlement between the Fund and the broker of the amount one
would owe the other if the futures contract expired. In computing daily net
asset value, the Fund will mark to market its open futures positions.
The Fund is also required to deposit and maintain margin with respect to
put and call options on futures contracts written by it. Such margin deposits
will vary depending on the nature of the underlying futures contract (and the
related initial margin requirements), the current market value of the option,
and other futures positions held by the Fund.
Although some futures contracts call for making or taking delivery of the
underlying securities, generally these obligations are closed out prior to
delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying security
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or index, and delivery month). If an offsetting purchase price is less than
the original sale price, the Fund realizes a capital gain, or if it is more,
the Fund realizes a capital loss. Conversely, if an offsetting sales price is
more than the original purchase price, the Fund realizes a capital gain, or
if it is less, the Fund realizes a capital loss. The transaction costs must
also be included in these calculations.
Limitations on Use of Futures and Futures Options
The Fund will not enter into a futures contract or futures options
contract if, immediately thereafter, the aggregate initial margin deposits
relating to such positions plus premiums paid by it for open futures option
positions, less the amount by which any such options are "in-the-money,"
would exceed 5% of the Fund's total assets. A call option is "in-the-money"
if the value of the futures contract that is the subject of the option
exceeds the exercise price. A put option is "in-the-money" if the exercise
price exceeds the value of the futures contract that is the subject of the
option.
When entering into a futures contract, the Fund will maintain with its
custodian (and mark-to-market on a daily basis) cash, U.S. Government
securities, or other highly liquid debt securities that, when added to the
amount deposited with a futures commission merchant as margin, are equal to
the market value of the futures contract. Alternatively, the Fund may "cover"
its position by purchasing a put option on the same futures contract with a
strike price as high or higher than the price of the contract held by the
Fund.
When selling a futures contract, the Fund will maintain with its custodian
(and mark-to-market on a daily basis) liquid assets that, when added to the
amount deposited with a futures commission merchant as margin, are equal to
the market value of the instruments underlying the contract. Alternatively,
the Fund may "cover" its position by owning the instruments underlying the
contract (or, in the case of an index futures contract, a portfolio with a
volatility substantially similar to that of the index on which the futures
contract is based), or by holding a call option permitting the Fund to
purchase the same futures contract at a price no higher than the price of the
contract written by the Fund (or at a higher price if the difference is
maintained in liquid assets with the Fund's custodian).
When selling a call option on a futures contract, the Fund will maintain
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 that, when added to the amounts deposited with a futures commission
merchant as margin, equal the total market value of the futures contract
underlying the call option. Alternatively, the Fund may cover its position by
entering into a long position in the same futures contract at a price no
higher than the strike price of the call option, by owning the instruments
underlying the futures contract, or by holding a separate call option
permitting the Fund to purchase the same futures contract at a price not
higher than the strike price of the call option sold by the Fund.
When selling a put option on a futures contract, the Fund will maintain
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 that equal the purchase price of the futures contract, less any margin
on deposit. Alternatively, the Fund may cover the position either by entering
into a short position in the same futures contract, or by owning a separate
put option permitting it to sell the same futures contract so long as the
strike price of the put option is the same or higher than the strike price of
the put option sold by the Fund.
In order to comply with applicable regulations of the Commodity Futures
Trading Commission ("CFTC") pursuant to which the Fund avoids being deemed a
"commodity pool," the Fund is limited in its futures trading activities to
positions which constitute "bona fide hedging" positions within the meaning
and intent of applicable CFTC rules, or to positions which qualify under an
alternative test. Under this alternative test, the "underlying commodity
value" of each long position in a commodity contract in which the Fund
invests may not at any time exceed the sum of: (1) the value of short-term
U.S. debt obligations or other U.S. dollar-denominated high quality
short-term money market instruments and cash set aside in an identifiable
manner, plus any Funds deposited as margin on the contract; (2) unrealized
appreciation on the contract held by the broker; and (3) cash proceeds from
existing investments due in not more than 30 days. "Underlying commodity
value" means the size of the contract multiplied by the daily settlement
price of the contract.
The requirements for qualification as a regulated investment company also
may limit the extent to which the Fund may enter into futures, futures
options or forward contracts.
Risks Associated with Futures and Futures Options
There are several risks associated with the use of futures contracts and
futures options as hedging techniques. A purchase or sale of a futures
contract may result in losses in excess of the amount invested in the futures
contract. There can be no guarantee that there will be a correlation between
price movements in the hedging vehicle and in the Fund securities being
hedged. In addition, there are significant differences between the securities
and futures markets that could result in an imperfect correlation between the
markets, causing a given hedge not to achieve its objectives. The degree of
imperfection of correlation depends on circumstances such as variations in
speculative market demand for futures and futures options on securities,
including technical influences in futures trading and futures options, and
differences between the financial instruments being hedged and the
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instruments underlying the standard contracts available for trading in such
respects as interest rate levels, maturities, and creditworthiness of
issuers. A decision as to whether, when and how to hedge involves the
exercise of skill and judgment, and even a well-conceived hedge may be
unsuccessful to some degree because of market behavior or unexpected interest
rate trends.
Futures exchanges may limit the amount of fluctuation permitted in certain
futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of the
current trading session. Once the daily limit has been reached in a futures
contract subject to the limit, no more trades may be made on that day at a
price beyond that limit. The daily limit governs only price movements during
a particular trading day and therefore does not limit potential losses
because the limit may work to prevent the liquidation of unfavorable
positions. For example, futures prices have occasionally moved to the daily
limit for several consecutive trading days with little or no trading, thereby
preventing liquidation of positions and subjecting some holders of futures
contracts to substantial losses.
There can be no assurance that a liquid market will exist at a time when
the Fund seeks to close out a futures or a futures option position, and the
Fund would remain obligated to meet margin requirements until the position is
closed. In addition, many of the contracts discussed above are relatively new
instruments without a significant trading history. As a result, there can be
no assurance that an active secondary market will develop or continue to
exist.
Additional Risks of Foreign Exchange-Traded Options, Futures and Forward
Currency Exchange Contracts
Options on securities, futures contracts, options on futures contracts,
currencies and options on currencies may be traded on foreign exchanges. Such
transactions may not be regulated as effectively as similar transactions in
the United States; may not involve a clearing mechanism and related
guarantees; and are subject to the risk of governmental actions affecting
trading in, or the prices of, foreign securities. The value of such positions
also could be adversely affected by (i) other complex foreign political,
legal and economic factors, (ii) lesser availability than in the United
States of data on which to make trading decisions, (iii) delays in the Fund's
ability to act upon economic events occurring in foreign markets during
non-business hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in
the United States, and (v) lesser trading volume.
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 6.21%. The Class B Shares yield was 5.85% 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 = 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, Merrill Lynch Medium Quality
Corporate Short-Term Bond Index, and Salomon Brothers Corporate Bond and
Government Bond Indices.
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For the one year period ended October 31, 1996, the average annual total
return of the Class A Shares was 8.40%, and from inception, July 6, 1992
through October 31, 1996 was 6.42%. For the one year ended October 31, 1996
and since inception, July 6, 1992 for the Class B Shares, the average annual
total return was 8.36% and 6.42%, 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 total return is determined by dividing
the net asset value of this account at the end of the specified period by the
value of the initial investment and is expressed as a percentage. Calculation
of aggregate total return reflects payment of the Class A Share's maximum
sales charge of 2.25% and assumes reinvestment of all income dividends and
capital gain distributions during the period.
The Fund also may quote annual, average annual and annualized total return
and aggregate total return performance data, for both classes of shares of
the Fund, both as a percentage and as a dollar amount based on a hypothetical
$10,000 investment for various periods other than those noted above. Such
data will be computed as described above, except that (1) the rates of return
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
charge will not be included with respect to annual, annualized or aggregate
rate of return calculations.
PORTFOLIO 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.
The Adviser believes that the Fund benefits with a securities industry
comprised of many diverse firms and that the long-term interests of
shareholders of the Fund are best served by their 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 attitude 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 execution 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.
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 Trustees will annually review these procedures or as frequently as shall
appear appropriate.
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In general terms, the nature of research services provided by brokers
encompasses statistical and background information, 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 paid no brokerage commissions for the fiscal years ended October
31, 1996, 1995, and 1994.
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.
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 Fixed Income Fund, Inc.,
Phoenix California Tax Exempt Bonds, Inc., Phoenix Income and Growth Fund,
and Phoenix Strategic Equity Series: Phoenix Equity Opportunities Fund. The
Adviser currently has $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 Board of Trustees 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 Trustees who are not interested persons of the parties thereto, as
defined in the 1940 Act, and by either (a) the Board of Trustees 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 Trustees 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 net assets and is paid by the
Fund monthly. The fee is computed at 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 billion to $2 billion; and 0.45% 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 $74,189,
$78,929, and $86,482, respectively, which amounts were waived by the Adviser.
The Adviser makes its personnel available to serve as officers and
"interested" Trustees of the Fund. The Fund has not directly compensated any
of its officers or Trustees for services in such capacities except to pay
fees to the Trustees who are not otherwise affiliated with the Fund. The
Trustees 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 Trustees 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
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<PAGE>
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 Massachusetts business trust.
The Adviser has agreed to reimburse the Fund's operating expenses other
than Management Fees and Rule 12b-1 Fees related to Class A and Class B
Shares for the amount, if any, by which such operating expenses for the
fiscal year ended October 31, 1997, exceed .20% of the average net assets.
The Total Fund Operating Expenses for Class A and Class B Shares would have
been 2.19% and 2.69%, respectively, absent such waiver or reimbursement for
the fiscal year ended October 31, 1996. The Adviser has not undertaken to
extend the reimbursement beyond fiscal year 1997.
The Adviser has agreed, under the terms of the Management Agreement, to
reimburse the Fund to the extent that, in any fiscal year, the 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
offer or 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.
A security that is listed or traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary exchange for such
security by the Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world,
the calculation of net asset value may not take place for the Fund if it
invests in foreign securities contemporaneously with the determination of the
prices of the majority of the portfolio securities of the Fund. All assets
and liabilities initially expressed in foreign currency values will be
converted into United States dollar values at the mean between the bid and
ask quotations of such currencies against United States dollars as last
quoted by any recognized dealer. If an event were to occur after the value of
an investment was so established but before the net asset value per share was
determined, which was likely to materially change the net asset value, then
the instrument would be valued using fair value considerations by the
Trustees or their delegates. If at any time the Fund has investments where
market quotations are not readily available, such investments are valued at
the fair value thereof as determined in good faith by the Trustees although
the actual calculations may be made by persons acting pursuant to the
direction of the Trustees.
HOW TO BUY SHARES
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
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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
three 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 .75% 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 six
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 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
weight 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 three-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 three years of purchase. Sales personnel of
broker-dealers distributing the Fund's shares may receive differing
compensation for selling Class A or Class B shares. Investors should
understand that the purpose and function of the contingent deferred sales
charge and ongoing distribution services fee with respect to the Class B
shares are the same as those of the initial sales charge and ongoing
distribution services fees with respect to the Class A shares.
Dividends paid by the Fund, if any, with respect to Class A and Class B
shares will be calculated in the same manner at the same time on the same
day, except that the higher distribution services fee and any incremental
transfer agency costs relating to Class B shares will be borne exclusively by
that class. See "Dividends, Distributions and Taxes."
The Trustees of the Fund have determined that currently no conflict of
interest exists between the Class A and Class B shares. On an ongoing basis,
the Trustees of the Fund, pursuant to their fiduciary duties under the 1940
Act and state laws, will seek to ensure that no such conflict arises.
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 six 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.
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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 (except
Class A shares of the Fund held less than six months) 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 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.
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 therefor postponed during periods when the New York Stock
Exchange is closed, other than customary weekend and holiday closings, or if
permitted by rules of the Securities and Exchange Commission, during periods
when trading on the New York Stock Exchange is restricted or during any
emergency which makes it impracticable for the Fund to dispose of its
securities or 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
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when
certificates for shares are in the possession of the shareholder, they must
be mailed or presented, duly endorsed in the full name of the account, with a
written request to Equity Planning that the Fund redeem the shares. See the
Fund's current Prospectus for more information.
14
<PAGE>
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) 367-5877 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 of 1986, as amended
(the "Code"). If the Fund so qualifies, it will not be subject to federal
income tax on the 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 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 it 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 regulated investment
companies, such as the Fund, if the Fund 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 each regulated investment company does not meet the foregoing
distribution requirements.
15
<PAGE>
The Code provides that any dividends 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 a 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 foregoing, the Fund's policy will be to distribute to its
shareholders at least 90% of investment company taxable income and any net
realized capital gains for each year, so that the Fund generally will pay no
taxes on net investment income and net realized capital gains paid to
shareholders. As described above, less than 30% of the Fund's gross income
must be derived from gains from the sale or other disposition of certain
investments held for less than three months. Accordingly, the Fund may be
restricted with respect to certain activities, including the following
activities, all of which may 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; effecting closing purchase
transactions with respect to options which have been written less than three
months prior to such transactions; and transactions involving futures and
forward contracts.
The Fund intends to declare dividends daily and to pay dividends monthly.
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 the shares have been owned by the shareholder. Net
short-term capital gains are net realized short-term capital gains, generally
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 generally 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 investment 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 generally 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 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.
Under the Code, gains or losses attributable to fluctuations in exchange
rates which occur between the time the Fund accrues interest or other
receivables or accrues expenses or other liabilities denominated in a foreign
currency and the time it actually collects such receivables or pays such
liabilities generally are treated as ordinary gain or loss. Similarly, on
disposition of debt securities denominated in a foreign currency and on
disposition of certain futures contracts, forward contracts and options,
gains or losses attributable to fluctuations in the value of the foreign
currency between the date of acquisition of the security or contract and the
date of disposition also are treated as ordinary gain or loss. These gains
and losses, referred to under the Code as section 988 gains or losses, may
increase or decrease the amount of the Fund's investment company taxable
income to be distributed to its shareholders as ordinary income.
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.
Certain offsetting positions held by the Fund (including certain positions
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 position in such a straddle may 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 tax consequences of certain investments and other activities that the
Fund may make or undertake (such as, but not limited to, dollar roll
agreements) are not entirely clear. While the Fund will endeavor to treat the
tax items arising from these transactions in a manner which it believes to be
appropriate, assurance cannot be given that the Internal Revenue Service or a
court will agree with the Fund's treatment and that adverse tax consequences
will not ensue.
16
<PAGE>
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.
It is expected that the Fund will not be eligible to elect to pass-through
to its shareholders the amount of foreign income and similar taxes paid by
it, so that shareholders will not be eligible to claim a foreign tax credit
or to deduct their pro rata share of such foreign taxes. Such foreign taxes
generally will reduce the net income of the Fund distributable to
shareholders. If the Fund were eligible to make the pass-through election,
and so elected, shareholders would be notified regarding the relevant items
to be taken into account by the shareholders.
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
certified social security or taxpayer identification number, certifies as to
exemption from backup withholding, and otherwise complies with applicable
requirements of the Code. Backup withholding is not an additional tax. Any
amount withheld may be credited against the shareholder's U.S. federal tax
liability.
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.
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.
Under certain circumstances, the sales charge incurred in acquiring shares
of the Fund may not be taken into account in determining the gain or loss on
the disposition of those shares. This rule applies if shares of the Fund are
exchanged within 90 days after the date they were purchased and new shares of
a regulated investment company are acquired without a sales charge or at a
reduced sales charge. In that case, the gain or loss recognized on the
exchange will be determined by excluding from the tax basis of the shares
exchanged all or a portion of the amount of the sales charge incurred in
acquiring those shares. This exclusion applies to the extent that the
otherwise applicable sales charge with respect to the newly acquired shares
is reduced as a result of having incurred the sales charge initially. The
portion of the sales charge affected by this rule will be treated as an
amount paid for the new shares.
Dividends, distributions and redemption proceeds also may be subject to
state, local and foreign taxes depending upon each shareholder's particular
situation. In addition, foreign shareholders may be subject to federal income
tax rules that differ from those described above. Shareholders are advised to
consult with their tax advisers or attorneys.
The Fund is organized as a Massachusetts business trust. 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
Commonwealth of Massachusetts.
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 $50,671,
$53,927, and $57,335, respectively, of which the principal underwriter
received net commissions of $10,267, $34,673, and $19,570, 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 Trustees who are not "interested persons" of
the Fund and who have no direct or indirect financial interest in the
operation of the Distribution Plan or in any related agreements. The
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:
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<PAGE>
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 charge 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 $4,717.
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 0.75% 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 Trustees
of the Fund determine are reasonably calculated to result in the sale of
shares of the Fund, provided, however, that a portion of such amount 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").
Expenses not reimbursed during any year, because of the limitations on
reimbursements, may be carried over and paid in future years when actual
expenses are less than the respective limits under each Plan. If a
reimbursement appears probable, it will be accounted for as a current expense
of the Fund regardless of the time period over which the reimbursement may
actually be paid by the Fund. If the Plans are terminated in accordance with
their terms, the obligations of the Fund to make payments to the Distributor
pursuant to the Plans, including payments for expenses carried over from
previous years, will cease and the Fund will not be required to make any
payments past the date on which either Plan terminates.
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. If the Plans are terminated
in accordance with their terms, the obligations of the Fund to make payments
to the Distributor pursuant to the Plans will cease and the Fund will not be
required to make any payments past the date on which 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.
18
<PAGE>
For the fiscal year ended October 31, 1996, the Fund paid 12b-1 fees in
the amount of $63,919 ($27,005 under the Distribution Plan for Class A
shares; $36,914 under the Distribution Plan for Class B shares), of which the
Distributor of the Fund received $33,962. The 12b-1 payments were used for
(1) compensating dealers $61,396, (2) compensating sales personnel $2,037,
and (3) compensating the Distributor for marketing material $486.
On a quarterly basis, the Fund's Trustees review a report on expenditures
under the Plans and the purposes for which expenditures were made. The
Trustees conduct an additional, more extensive review annually in determining
whether the Plans will be continued. By its terms, continuation of the Plans
from year to year is contingent on annual approval by a majority of the
Fund's Trustees and by a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of the Plans or any related agreements
(the "Plan Trustees"). The Plans provides 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
Trustees 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 Trustees who are not "interested
persons" shall be committed to the discretion of the Trustees who are not
"interested persons". The Plans may be terminated at any time by vote of the
Plan Trustees 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 Trustees to suspend distribution
fees or amend the Plan.
TRUSTEES AND OFFICERS
The following table sets forth information concerning the Trustees and
executive officers of the Fund, including their principal occupations during
the past five years. Unless otherwise noted, the address of each executive
officer and Trustee is 56 Prospect Street, Hartford, Connecticut, 06115-0480.
On November 15, 1995, the Trustees voted to increase the number of Trustees
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) Trustee Partner in the law firm of Day, Berry & Howard.
CityPlace Director/Trustee, Phoenix Funds (1980-present).
Hartford, CT 06103 Trustee, Phoenix-Aberdeen Series Fund and
Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director/Trustee, the National
Affiliated Investment Companies (until 1993).
Robert Chesek (62) Trustee Trustee/Director, Phoenix Funds (1981-present)
49 Old Post Road and Chairman (1989-1994). Trustee,
Wethersfield, CT 06109 Phoenix-Aberdeen Series 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).
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<PAGE>
E. Virgil Conway (67) Trustee Chairman (1992-present), Metropolitan
9 Rittenhouse Road Transportation Authority. Trustee/Director,
Bronxville, NY 10708 Consolidated Edison Company of New York, Inc.
(1970-present), Pace University (1978-present),
Atlantic Mutual Insurance Company
(1974-present), HRE Properties (1989-present),
Greater New York Councils, Boy Scouts of America
(1985-present), Union Pacific Corp. (1978-
present), Blackrock 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) Trustee Director/Trustee, Phoenix Funds (1983-present).
330 East 39th Street Director, Duff & Phelps Utilities Tax-Free
Apartment 29G Income Inc. (1995-present), Duff & Phelps
New York, NY 10016 Utility and Corporate Bond 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) Trustee Director and Chairman of the Board, Phoenix Duff
6585 Nicholas Blvd. & Phelps Corporation (1995-present).
Apt. 1601 Director/Trustee, Phoenix Funds (1995-present).
Naples, FL 33963 Trustee, Phoenix-Aberdeen Series 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.
20
<PAGE>
Leroy Keith, Jr. (58) Trustee Chairman and Chief Executive Officer, Carson
64 Ross Road Products Company (1995-present).
Savannah, GA 30750 Director/Trustee, Phoenix Funds (1980-present).
Trustee, Phoenix-Aberdeen Series Fund and
Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Equifax Corp. (1991-
present), and Keystone International Fund, Inc.
(1989-present). Trustee, Keystone Liquid Trust,
Keystone Tax Exempt Trust, Keystone Tax Free
Fund, Master Reserves Tax Free Trust, and Master
Reserves Trust. Director/Trustee, the National
Affiliated Investment Companies (until 1993).
Director, Blue Cross/Blue Shield (1989-1993) and
First Union Bank of Georgia (1989-1993).
President, Morehouse College (1987-1994).
Chairman and Chief Executive Officer, Keith
Ventures (1992-1994).
*Philip R. McLoughlin (50) Trustee and Director, Vice Chairman and Chief Executive
One American Row President Officer, Phoenix Duff & Phelps Corporation
Hartford, CT 06102 (1995-present). 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).
21
<PAGE>
Everett L. Morris (68) Trustee Vice President, W.H. Reaves and Company (1993-
164 Laird Road present). Director/ Trustee, Phoenix Funds
Colts Neck, NJ 07722 (1995-present). 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) Trustee Managing Director, Wydown Group (1994-present).
60 State Street Chairman, IBEX Capital Markets LLC
Suite 950 (1997-present). Director, Phoenix Duff & Phelps
Boston, MA 02109 Corporation (1995-present). Director/Trustee,
Phoenix Funds (1987-present). Trustee,
Phoenix-Aberdeen Series Fund and Phoenix Duff &
Phelps Institutional Mutual Funds
(1996-present). Director, Govett Worldwide
Opportunity Funds, Inc. (1991-present), Blue
Cross 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) Trustee Director and President, Phoenix Duff & Phelps
55 East Monroe Street Corporation (1995-present). Director/Trustee,
Suite 3600 Phoenix Funds (1995-present). Trustee,
Chicago, IL 60603 Phoenix-Aberdeen Series Fund and Phoenix Duff &
Phelps Institutional Mutual Funds
(1996-present). President and Chief Executive
Officer, Duff & Phelps Utilities Tax-Free Income
Inc. (1995-present), Duff & Phelps Utilities
Income Fund (since inception), and Duff & Phelps
Utility and Corporate Bond Trust Inc.
(1995-present). Director (1986-1995), President
(1993-1995) and Executive Vice President
(1992-1993), Duff & Phelps Corporation.
Philip R. Reynolds (69) Trustee Director/Trustee, Phoenix Funds (1984-present).
43 Montclair Drive Trustee, Phoenix-Aberdeen Series Fund and
West Hartford, CT 06107 Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Vestaur Securities,
Inc. (1972-present). Trustee and Treasurer, J.
Walton Bissell Foundation, Inc. (1988-present).
Director/Trustee, the National Affiliated
Investment Companies (until 1993).
22
<PAGE>
Herbert Roth, Jr. (68) Trustee Director/Trustee, Phoenix Funds (1980-present).
134 Lake Street Trustee, Phoenix-Aberdeen Series Fund and
P.O. Box 909 Phoenix Duff & Phelps Institutional Mutual Funds
Sherborn, MA 01770 (1996-present). Director, Boston Edison Company
(1978-present), Phoenix Home Life Mutual
Insurance Company (1972-present), Landauer,
Inc. (medical services) (1970-present), Tech
Ops./Sevcon, Inc. (electronic controllers)
(1987-present), Key Energy Group (oil rig
service) (1988-1994), and Mark IV Industries
(diversified manufacturer) (1985-present).
Director/Trustee, the National Affiliated
Investment Companies (until 1993).
Richard E. Segerson (51) Trustee Director/Trustee, Phoenix Funds, (1993-present).
102 Valley Road Trustee, Phoenix-Aberdeen Series Fund and
New Canaan, CT 06840 Phoenix Duff & Phelps 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) Trustee Trustee/Director, Phoenix Funds (1995-present).
Dresing Lierman Weicker Trustee, Phoenix-Aberdeen Series Fund and
6931 Arlington Road Phoenix Duff & Phelps Institutional Mutual Funds
Suite 501 (1996-present). Chairman, Dresing, Lierman,
Bethesda, MD 20814 Weicker (1995-present). Director, UST Inc.
(1995-present) and HPSC Inc. (1995-present).
Director, Duty Free International (1997-
present). Governor of the State of Connecticut
(1991-1995).
</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.
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
------------------------------------------------------------ ----------------------------------------------
<S> <C> <C>
Michael E. Haylon (39) Executive Vice President Director and Executive Vice
President-Investments, 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 Funds (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).
23
<PAGE>
David R. Pepin (54) Executive Vice President Executive Vice President, Phoenix Funds,
Phoenix-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
100 Bright Meadow Blvd. Planning Corporation (1996-present). Vice
P.O. Box 2200 President, Phoenix Funds, Phoenix-Aberdeen
Enfield, CT 06083-2200 Series Fund, and Phoenix Duff & 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
100 Bright Meadow Blvd. Officer, Phoenix Duff & Phelps Corporation
P.O. Box 2200 (1995-present). Vice President, Investment
Enfield, CT 06083-2200 Products Finance, Phoenix Home Life Mutual
Insurance Company (1990-1995). Senior Vice
President (1990-present), Chief Financial
Officer (1996-present), Finance (until 1996),
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.
24
<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,
101 Munson Street Phoenix Equity Planning Corporation
Greenfield, MA 01301 (1996-present). Secretary, 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>
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.
25
<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 $1,500* $53,750
Robert Chesek $ 1,410 $50,750
E. Virgil Conway $ 1,680 $60,000
Harry Dalzell-Payne $ 1,410 $51,000
Francis E. Jeffries $ 0 $ 0
Leroy Keith, Jr. $ 1,410 None None $50,750
Philip R. McLoughlin $ 0 for any for any $ 0
Everett L. Morris $ 990* Trustee Trustee $37,000
James M. Oates $ 1,620 $57,750
Calvin J. Pedersen $ 0 $ 0
Philip R. Reynolds $ 1,410 $50,750
Herbert Roth, Jr. $ 1,770* $63,000
Richard E. Segerson $ 1,620 $58,000
Lowell P. Weicker, Jr. $ 1,620 $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 as 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 a
semi-annual report containing unaudited financial statements to the
shareholders. An annual report, containing financial statements audited by
independent accountants, will be sent to shareholders each year, and is
available without charge upon request.
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.
26
<PAGE>
[FRONT COVER] OCTOBER 31, 1996
PHOENIX
ANNUAL REPORT
Phoenix Multi-Sector
Short Term Bond Fund
Annual Report
[LOGOTYPE] PHOENIX
DUFF & PHELPS
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
- -------------------------------------------------------------------------------
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
- -------------------------------------------------------------------------------
MARKET AND PORTFOLIO REVIEW
Fund Description
Phoenix Multi-Sector Short Term Bond Fund invests in a wide variety of
short-term fixed-income securities. These securities may include U.S. Treasury,
agency, corporate and yankee bonds, as well as mortgage-backed and asset-backed
securities. The 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. Overall, as
measured by the two-year Treasury note, interest rates on short-term bonds
ranged from as low as 4.79% to high as 6.43% over the last twelve months.
Despite all these market gyrations, the yield on the two-year Treasury note
finished the reporting period at 5.73%--only 22 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 10.91%
and class B shares returned 10.36%. As measured by the Merrill Lynch Medium
Quality Corporate Short-Term Bond Index, the market returned 6.71% for 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 2.38 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.
1
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
- -------------------------------------------------------------------------------
[GRAPHIC]
[LINE CHART]
Phoenix Phoenix Merrill Lynch
Multi-Sector Multi-Sector Medium Quality
Short Term Short Term Corporate
--Class B --Class A Short-Term
Bond Index*
----------- ------------ ------------
7/6/92 10000 9775 10000
10/31/92 10006.7 9818.76 10281
10/31/93 10809.6 10652.8 11049
10/31/94 10806.1 10695 11263
10/31/95 11855.2 11794 12332
10/31/96 13083.3 13080.8 13159
[/LINE CHART]
Average Annual Total Returns for Periods Ending 10/31/96
<TABLE>
<CAPTION>
From Inception
7/6/92 to
1 Year 10/31/96
----------------------------------------- -------- ----------------
<S> <C> <C>
Class A with 2.25% sales charge 8.40% 6.42%
Class A at net asset value 10.91% 6.96%
Class B with CDSC 8.86% 6.42%
Class B at net asset value 10.36% 6.42%
Merrill Lynch Medium Quality Corporate
Short-Term Bond Index* 6.71% 6.53%**
</TABLE>
This chart assumes an initial gross investment of $10,000 made on July 6,
1992 (inception of the Fund).
Total returns for Class A shares reflect the maximum sales charge of 2.25% on
the initial investment and assume reinvestment of dividends and capital gains.
Class B shares reflect the 2% contingent deferred sales charge (CDSC), which is
applicable on all shares redeemed during the 1st year after purchase and 1.5%
for all shares redeemed during the 2nd year after purchase (scaled down to
1%-3rd year and 0% thereafter). Investment return and net asset value will
fluctuate so that an investor's 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 fluctuation, less
public disclosure as well as economic and political risks.
*The Merrill Lynch Medium Quality Corporate Short-Term Bond Index is an
unmanaged but commonly used index that tracks the returns of 336 corporate
issues rated between BBB and A by Standard & Poor's, with maturities from 1
to 3 years. The index's performance does not reflect sales charges.
**Index information from 6/30/92 to 10/31/96.
2
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
- -------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1996
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ----- -----
<S> <C> <C> <C>
NON-CONVERTIBLE BONDS--62.4%
Airlines--0.8%
AMR Corp. 7.75%, '97 Baa $155 $ 157,974
----------
Asset-Backed Securities--15.2%
Airplanes Pass Through Trust 1D
10.875%, '19 Ba 250 271,250
Case Equipment Loan Trust 6.45%,
'02 A 500 497,969
Countrywide Funding Corp. 93-12,
B3 6.625%, '24 Baa 161 158,750
Eagle 96-1 B 144A 6.55%, '02 (b) Baa 379 379,694
First Sierra Equipment TR 96-1,
A 6.85%, '03 (g) Aaa 250 253,311
Fleetwood Credit Corp. 96-A, B
6.95%, '11 A 260 261,631
Ford Credit Auto Owner Trust
96-B, 6.55%, '02 A 250 251,367
Green Tree Financial Corp. 93-3,
A3 5.20%, '18 Aa 400 399,250
Green Tree Financial Corp. 96-1,
A2 5.85%, '27 (g) Aaa 250 244,648
Standard Credit Card Master
Trust 93-1, B 5.50%, '98 (g) A 265 264,655
----------
2,982,525
----------
Banks--1.9%
Banponce Financial Corp. 5.48%,
'98 A 375 369,932
----------
Entertainment, Leisure & Gaming--2.2%
Caesar's World, Inc.
8.875%, '02 Ba 250 260,625
Time Warner, Inc.
6.46%, '00 (d) BBB-(c) 162 162,405
----------
423,030
----------
Healthcare - Diversified--1.3%
Manor Care, Inc. 9.50%, '02 BBB-(c) 250 264,688
----------
Hospital Management Services--2.1%
Tenet Healthcare Corp. 9.625%,
'02 Ba 375 411,563
----------
Metals & Mining--1.3%
USX Corp. 6.375%, '98 Baa 250 250,623
----------
Natural Gas--1.3%
Arkla Inc. 9.875%, '97 Baa 250 254,290
----------
Non-Agency Mortgage-Backed Securities--27.3%
Bear Stearns Mortgage 95-1, 2B3
144A 7.40%, '10 (b) NR 309 274,203
G.E. Capital Mortgage Service
94-26, B2 7.03%, '09 Ba 273 259,956
Non-Agency Mortgage-Backed Securities--continued
Kidder Peabody Acceptance Corp.
94-C2, D 7.18%, '05 BBB(c) $350 $ 345,134
Merrill Lynch Mortgage, Inc.
95-C2, C 7.79%, '21 A 337 345,137
Nomura Asset Securities Corp.
94-MD2, A6 6.687%, '03 (d) AA(c) 195 195,419
Prudential Home Mortgage 93-L,
3B2 144A 6.641%, '23 (b) NR 250 243,281
Residential Asset Securitization
Trust
96-A8, C2 8%, '26 AAA(c) 500 508,438
Resolution Trust Corp. 92-C3, B
9.05%, '23 (g) AA(c) 173 177,042
Resolution Trust Corp. 92-CHF, B
7.15%, '20 AA(c) 480 483,162
Resolution Trust Corp. 93-C1, B
8.75%, '24 Aa 500 512,948
Resolution Trust Corp. 93-C2, B
7.75%, '25 AA(c) 250 254,926
Resolution Trust Corp. 93-C3, A4
6.55%, '24 Aaa 53 52,757
Resolution Trust Corp. 95-1, C2
7.50%, '28 A 297 296,145
Resolution Trust Corp. 95-2, C1
7.45%, '29 Baa 419 416,198
Resolution Trust Corp. 95-2, M1
7.15%, '29 Aa 384 385,224
Resolution Trust Corp.
95-C1, B 6.90%, '27 Aa 425 419,156
Salomon Brothers Mortgage
Securities VII 93-C1, A1 6.47%,
'23 Aa 96 95,639
Structured Asset Securities
Corp. 96-CFL, C 6.525%, '28 A(c) 100 96,906
----------
5,361,671
----------
Oil--1.8%
Tosco Corp. 9%, '97 Baa 350 353,479
----------
Paper & Forest Products--1.1%
Buckeye Cellulose Corp. 8.50%,
'05 Ba 225 221,063
----------
Publishing, Broadcasting, Printing & Cable--3.5%
Poland Communications, Inc. 144A
9.875%, '03 (b) BB-(c) 450 450,000
Tele-Communications, Inc.
7.375%, '00 BBB-(c) 250 248,778
----------
698,778
----------
See Notes to Financial Statements
3
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
- -------------------------------------------------------------------------------
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ----- -----
NON-CONVERTIBLE BONDS--(Continued)
Telecommunications Equipment--1.6%
Panamsat L.P. 9.75%, '00 Ba $ 300 $ 317,250
-----------
Utility-Electric--1.0%
Coso Funding Corp. 144A 7.99%,
'97 (b) Baa 190 192,483
-----------
TOTAL NON-CONVERTIBLE BONDS
$12,259,349
-----------
FOREIGN NON-CONVERTIBLE BONDS--4.6%
Colombia--1.3%
Financiera Energ Nacional 9%,
'99 BBB(c) 250 260,313
----------
Indonesia--0.7%
Asia Pulp & Paper Co.
Yankee 11.75%, '05 Ba 125 129,843
-----------
Mexico--1.3%
Grupo Elektra SA DE CV 12.75%,
'01 B(c) 250 262,188
-----------
Philippines--1.3%
JG Summit Philippines 144A 8%,
'02 (b) (f) NR 250 249,688
-----------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $892,152) 902,032
-----------
FOREIGN GOVERNMENT SECURITIES--24.8%
Argentina--4.5%
Republic of Argentina Bearer FRB
6.625%, '05 (d) BB-(c) 1,078 889,350
-----------
Brazil--3.7%
Republic of Brazil DCB-L Euro
6.563%, '12 (d) B 1,000 718,125
-----------
Colombia--2.6%
Republic of Colombia Euro 9%,
'97 Baa 500 505,380
-----------
Croatia--1.2%
Croatia Series B 6.688%,
'06 (d) NR 250 236,250
-----------
Mexico--2.8%
United Mexican Discount B Euro
6.391%, '19 (d) (e) Ba 250 205,625
United Mexican States 144A
7.688%, '01 (b) (d) Baa 350 350,105
-----------
555,730
-----------
Panama--3.0%
Panama PDI 144A, PIK interest
capitalization, 6.75%, '16 (b)
(d) NR $ 800 $ 595,000
-----------
Peru--1.5%
Peru FLIRB WI 3.25%,
'49 (d) (f) NR 250 138,125
Peru PDI WI 4%, '49 (d) (f) NR 250 150,938
-----------
289,063
-----------
Poland--2.4%
Poland Discount Euro 6.50%, '24
(d) Baa 500 478,437
-----------
Venezuela--3.1%
Banco Central Venezuela NMB B-NP
6.625%, '05 (d) Ba 250 205,156
Republic of Venezuela DCB Euro
6.625%, '07 (d) Ba 500 410,937
-----------
616,093
-----------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $4,824,288) 4,883,428
-----------
MUNICIPAL BONDS--2.8%
Chicago O'Hare Taxable Revenue
6.37%, '00 Aaa 150 150,407
University of Miami
Exchange Revenue A Taxable
5.95%, '98 Aaa 395 393,502
-----------
TOTAL MUNICIPAL BONDS
(Identified cost $545,000) 543,909
-----------
TOTAL LONG-TERM INVESTMENTS--94.6%
(Identified cost $18,374,738) 18,588,718
-----------
SHORT-TERM OBLIGATIONS--3.0%
Commercial Paper--3.0%
Corporate Receivables Corp.
5.70%, 11-1-96 A-1 585 585,000
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $585,000) 585,000
-----------
TOTAL INVESTMENTS--97.6%
(Identified cost $18,959,738) 19,173,718(a)
Cash and receivables, less liabilities--2.4% 471,400
-----------
NET ASSETS--100.0% $19,645,118
===========
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $270,066 and gross
depreciation of $56,086 for income tax purposes. At October 31, 1996, the
aggregate cost of securities for federal income tax purposes was
$18,959,738. At October 31, 1996, the Fund had capital loss carryforwards
aggregating $36,672 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 $2,734,454 or 13.9% of net
assets.
(c) As rated by Standard & Poor's, Fitch and/or Duff & Phelp's.
(d) Variable rate; interest rate shown reflects the rate currently in effect.
(e) Recovery Euro Rights incorporated as a unit.
(f) When issued.
(g) Segregated as collateral.
See Notes to Financial Statements
4
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Assets
Investment securities at value
(Identified cost $18,959,738) $19,173,718
Receivables
Interest 239,511
Investment securities sold 2,983,917
Receivable from adviser 7,179
Fund shares sold 41,621
Deferred organization expense 11,897
----------
Total assets 22,457,843
----------
Liabilities
Payables
Investment securities purchased 2,714,245
Income distribution payable 20,475
Fund shares repurchased 1,002
Trustees' fee 8,215
Distribution fee 6,548
Transfer agent fee 6,188
Financial agent fee 489
Accrued expenses 55,563
----------
Total liabilities 2,812,725
----------
Net Assets $19,645,118
==========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $19,488,764
Distributions in excess of net investment income (16,157)
Accumulated net realized loss (41,469)
Net unrealized appreciation 213,980
----------
Net Assets $19,645,118
==========
Class A
Shares of beneficial interest outstanding,
$0.01 par value, unlimited authorization
(Net Assets $13,701,710) 2,792,165
Net asset value per share $4.91
Offering price per share
$4.91/(1-2.25%) $5.02
Class B
Shares of beneficial interest outstanding,
$0.01 par value, unlimited authorization
(Net Assets $5,943,408) 1,210,861
Net asset value and offering price per share $4.91
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Interest $1,239,101
---------
Total investment income 1,239,101
---------
Expenses
Investment advisory fee 86,482
Distribution fee--Class A 27,005
Distribution fee--Class B 36,914
Financial agent fee 4,717
Transfer agent 54,552
Registration 38,119
Professional 36,823
Printing 25,975
Trustees 17,193
Amortization of deferred organization expense 16,395
Custodian 14,588
Miscellaneous 10,669
---------
Total expenses 369,432
Less expenses borne by investment adviser (187,582)
---------
Net expenses 181,850
---------
Net investment income 1,057,251
---------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 475,148
Net change in unrealized appreciation (depreciation) on
investments 68,949
---------
Net gain on investments 544,097
---------
Net increase in net assets resulting from operations $1,601,348
=========
</TABLE>
See Notes to Financial Statements
5
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
- -------------------------------------------------------------------------------
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 $ 1,057,251 $ 990,986
Net realized gain (loss) 475,148 (340,004)
Net change in unrealized appreciation (depreciation) 68,949 716,254
----------- -----------
Increase in net assets resulting from operations 1,601,348 1,367,236
----------- -----------
From Distributions to Shareholders
Net investment income--Class A (737,150) (661,287)
Net investment income--Class B (311,273) (326,755)
----------- -----------
Decrease in net assets resulting from distributions to shareholders (1,048,423) (988,042)
----------- -----------
From Share Transactions
Class A
Proceeds from sales of shares (1,883,600 and 1,676,012 shares, respectively) 9,085,891 7,796,116
Net asset value of shares issued from reinvestment of distributions
(119,182 and 103,434 shares, respectively) 573,651 479,080
Cost of shares repurchased (1,171,859 and 1,851,728 shares, respectively) (5,645,597) (8,606,909)
----------- -----------
Total 4,013,945 (331,713)
----------- -----------
Class B
Proceeds from sales of shares (439,768 and 259,029 shares, respectively) 2,129,724 1,195,146
Net asset value of shares issued from reinvestment of distributions
(42,139 and 47,980 shares, respectively) 202,745 221,981
Cost of shares repurchased (253,126 and 717,637 shares, respectively) (1,216,818) (3,290,924)
----------- -----------
Total 1,115,651 (1,873,797)
----------- -----------
Increase (decrease) in net assets from share transactions 5,129,596 (2,205,510)
----------- -----------
Net increase (decrease) in net assets 5,682,521 (1,826,316)
Net Assets
Beginning of period 13,962,597 15,788,913
----------- -----------
End of period (including distributions in excess of net investment income of
($16,157) and ($15,205), respectively) $19,645,118 $13,962,597
=========== ===========
</TABLE>
See Notes to Financial Statements
6
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------
From
Inception
Year Ended October 31, 7/6/92 to
1996 1995 1994 1993 10/31/92
--------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 4.74 $4.61 $ 4.91 $ 4.83 $ 4.89
Income from investment operations
Net investment income 0.33(2) 0.33(2) 0.29(2) 0.32(2) 0.08(2)
Net realized and unrealized gain (loss) 0.17 0.13 (0.26) 0.08 (0.06)
------ ----- ------ ------ ------
Total from investment operations 0.50 0.46 0.03 0.40 0.02
------ ----- ------ ------ ------
Less distributions
Dividends from net investment income (0.33) (0.33) (0.29) (0.32) (0.08)
Dividends from net realized gains -- -- (0.03) -- --
Tax return of capital -- -- (0.01) -- --
------ ------ ------ ------ ------
Total distributions (0.33) (0.33) (0.33) (0.32) (0.08)
------ ----- ------ ------ ------
Change in net asset value 0.17 0.13 (0.30) 0.08 (0.06)
------ ----- ------ ------ ------
Net asset value, end of period $ 4.91 $4.74 $4.61 $ 4.91 $ 4.83
====== ===== ====== ====== ======
Total return(1) 10.91% 10.27% 0.40% 8.49% 0.40%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $13,702 $9,303 $9,371 $6,829 $6,531
Ratio to average net assets of:
Operating expenses 1.00% 1.00% 1.00% 1.00% 1.00%(4)
Net investment income 6.88% 7.07% 5.99% 6.39% 5.79%(4)
Portfolio turnover 232% 344% 121% 128% 6%(4)
</TABLE>
<TABLE>
<CAPTION>
Class B
-------------------------------------------------------
From
Inception
Year Ended October 31, 7/6/92 to
1996 1995 1994 1993 10/31/92
--------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 4.74 $ 4.61 $ 4.91 $ 4.83 $ 4.89
Income from investment operations
Net investment income 0.31(3) 0.30(3) 0.27(3) 0.30(3) 0.07(3)
Net realized and unrealized gain (loss) 0.17 0.13 (0.26) 0.08 (0.06)
------ ------ ------ ----- ------
Total from investment operations 0.48 0.43 0.01 0.38 0.01
------ ------ ------ ----- ------
Less distributions
Dividends from net investment income (0.31) (0.30) (0.27) (0.30) (0.07)
Dividends from net realized gains -- -- (0.03) -- --
Tax return of capital -- -- (0.01) -- --
------ ------ ------ ----- ------
Total distributions (0.31) (0.30) (0.31) (0.30) (0.07)
------ ------ ------ ----- ------
Change in net asset value 0.17 0.13 (0.30) 0.08 (0.06)
------ ------ ------ ----- ------
Net asset value, end of period $ 4.91 $ 4.74 $ 4.61 $ 4.91 $ 4.83
====== ====== ====== ===== ======
Total return(1) 10.36% 9.71% -0.03% 8.02% 0.20%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $5,943 $4,659 $6,418 $3,968 $1,357
Ratio to average net assets of:
Operating expenses 1.50% 1.50% 1.45% 1.45% 1.45%(4)
Net investment income 6.38% 6.59% 5.74% 5.79% 5.30%(4)
Portfolio turnover 232% 344% 121% 128% 6%(4)
</TABLE>
(1)Maximum sales charges are not included in total return calculation.
(2)Includes reimbursement of operating expenses by investment adviser of
$0.06, $0.08, $0.08, $0.09 and $0.14, respectively.
(3)Includes reimbursement of operating expenses by investment adviser of
$0.06, $0.08, $0.08, $0.09 and $0.21, respectively.
(4)Annualized.
(5)Not annualized.
See Notes to Financial Statements
7
<PAGE>
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Multi-Sector Short Term Bond Fund (the "Fund"), formerly the Phoenix
Asset Reserve, is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as a
diversified open-end management investment company. The Fund's investment
objective is to provide high current income relative to short-term
alternatives, while attempting to limit fluctuations in the net asset value
of Fund shares resulting from movements in interest rates. The Fund offers
both Class A and Class B shares. Class A shares are sold with a front-end
sales charge of up to 2.25%. Class B shares are sold with a contingent
deferred sales charge which declines from 2% 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 amount of assets, liabilities, revenues and
expenses. Actual results could differ from those estimates.
A. Security valuation:
Debt securities are valued on the basis of broker quotations or valuations
provided by a pricing service which utilizes information with respect to
recent sales, market transactions in comparable securities, quotations from
dealers, and various relationships between securities in determining value.
Short-term investments having a remaining maturity of 60 days or less are
valued at amortized cost which approximates market. All other securities and
assets are valued at their fair value as determined in good faith by or under
the direction of the Trustees.
B. Security transactions and related income:
Security transactions are recorded on the trade date. 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, 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. Organization expense:
In 1992 the Fund incurred organizational expenses in the amount of
$82,967. The Fund has deferred these expenses and is amortizing such expenses
on a straight line basis over five years from the date of commencement of
operations.
G. 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
8
<PAGE>
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996 (Continued)
Insurance Company ("PHL"), is entitled to a fee at an annual rate of 0.55% of
the average daily net assets of the Fund. The Adviser has agreed to assume
expenses of the Fund in excess of 1.00% and 1.50% of the average aggregate
daily net asset value of Class A and Class B shares, respectively. For the
year ended October 31, 1996, the Adviser has reimbursed the Fund $187,582 for
such expenses.
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 $1,877 for Class A shares and deferred sales
charges of $15,695 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 0.75% 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, $33,962 was
earned by the Distributor and $29,957 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 as sub-transfer agent. For the year
ended October 31, 1996, transfer agent fees were $54,552 of which PEPCO
retained $957 which is net of the fees paid to State Street.
At October 31, 1996, PHL and affiliates held 26,259 Class A shares of the
Fund with a value of $128,930.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities, excluding short-term securities, for the
year ended October 31, 1996, aggregated $40,166,474 and $34,901,760,
including $14,618,806 and $16,101,119, respectively, of U.S. Government and
agency securities.
4. 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 $464,114.
5. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Fund has recorded several
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of the Fund and are designed generally to
present undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder. As of October 31, 1996,
the Fund decreased undistributed net investment income by $9,780 and
decreased accumulated net realized loss by $9,780.
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.
9
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[PRICE WATERHOUSE LLP LOGOTYPE]
To the Trustees and Shareholders of
Phoenix Multi-Sector Short Term Bond Fund
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments (except for bond ratings), and the
related statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the financial
position of Phoenix Multi-Sector Short Term Bond Fund, formerly Phoenix Asset
Reserve, (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
10
<PAGE>
PHOENIX MULTI-SECTOR
SHORT TERM BOND FUND
101 Munson Street
Greenfield, Massachusetts 01301
Trustees
C. Duane Blinn
Robert Chesek
E. Virgil Conway
Harry Dalzell-Payne
Francis E. Jeffries
Leroy Keith, Jr.
Philip R. McLoughlin
Everett L. Morris
James M. Oates
Calvin J. Pedersen
Philip R. Reynolds
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
Officers
Philip R. McLoughlin, President
Michael E. Haylon, Executive Vice President
David R. Pepin, Executive Vice President
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>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[BACK COVER]
Phoenix Multi-Sector Short Term Bond Fund [Bulk Rate Mail
U.S. POSTAGE
P.O. Box 2200 PAID
Enfield, CT 06083-2200 Springfield, MA
Permit No. 444]
[LOGOTYPE] PHOENIX
DUFF & PHELPS [DALBAR LOGO]
PDP 681 (12/96)
<PAGE>
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PART C--OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A: Financial Highlights
Included in Part B: Financial Statements and Notes thereto, and Report
of Independent Accountants are included in the
Annual Report to Shareholders for the year ended
October 31, 1996, incorporated by reference.
(b) Exhibits:
<TABLE>
<CAPTION>
<S> <C>
1. Declaration of Trust as amended of the Registrant, previously filed and filed herewith via
EDGAR, and herein incorporated by reference.
1.1 Amendment to Declaration of Trust changing name of Trust, filed with Post-Effective
Amendment No. 4 on February 27, 1995 and filed herewith via EDGAR and incorporated herein by
reference.
1.2 Amendment to Declaration of Trust changing name of Trust, filed via EDGAR with
Post-effective Amendment No. 5 on February 28, 1996, and incorporated by reference.
2. By-laws of the Registrant, previously filed and filed herewith via EDGAR, and herein
incorporated by reference.
3. Not applicable.
4. Reference is made to Article V of the Registrant's Declaration of Trust, as amended, and
filed with the Registration Statement referred to in Exhibit 1.1.
5. Management Agreement between Registrant and National Securities & Research Corporation dated
May 14, 1993, filed with Post-Effective Amendment No. 2 on December 30, 1993 filed herewith
via EDGAR and incorporated herein by reference.
5.1 Amendment to Management Agreement dated January 1, 1994, filed with Post-Effective Amendment
No. 4 on February 27, 1995 filed herewith via EDGAR and incorporated herein by reference.
6. (a) 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. 2 on December 30, 1993 filed herewith via EDGAR and incorporated herein by
reference.
(b) Underwriting Agreement for Class B Shares between Registrant and Equity Planning dated
May 14, 1993, filed with Post-Effective Amendment No. 2 on December 30, 1993 filed
herewith via EDGAR and incorporated herein by reference.
7. None.
8.1 Custodian Contract between Registrant and State Street Bank and Trust Company dated October
14, 1993, filed with Post-Effective Amendment No. 2 on December 30, 1993 and incorporated
herein by reference.
8.2 Amendment to Custodian Contract between Registrant and State Street Bank and Trust Company
dated November 1, 1996, and filed herewith.
9.1 Transfer Agency and Service Agreement between Registrant and Phoenix Equity Planning
Corporation dated June 1, 1994, filed with Post-Effective Amendment No. 4 on February 27,
1995 filed herewith via EDGAR and incorporated herein by reference.
9.2 Form of Sales Agreement, filed with Post-Effective Amendment No. 2 on December 30, 1993
filed herewith via EDGAR and incorporated herein by reference.
9.3 Financial Agent Agreement between Registrant and Phoenix Equity Planning Corporation dated
May 25, 1994, filed with Post-Effective Amendment No. 4 on February 27, 1995 filed herewith
via EDGAR and incorporated herein by reference.
9.4 Financial Agent Agreement between Registrant and Phoenix Equity Planning Corporation dated
December 11, 1996, and filed herewith.
10. Opinion as to legality of the shares, filed with Pre-Effective Amendment No. 3 on July 6,
1992, filed herewith via EDGAR, and herein incorporated by reference.
C-1
<PAGE>
11. Consent of Independent Accountants, filed herewith and incorporated herein by reference.
12. Not applicable.
13. None.
14. None.
15. (a) Distribution Plan for Class A Shares dated May 14, 1993, filed with Post-Effective
Amendment No. 2 on December 30, 1993 filed herewith via EDGAR and incorporated herein by
reference.
(b) Distribution Plan for Class B Shares dated May 14, 1993, filed with Post-Effective
Amendment No. 2 on December 30, 1993 filed herewith via EDGAR and incorporated herein by
reference.
16. Schedule for computation of yield and effective yield quotations, filed with Post-Effective
Amendment No. 4 on February 27, 1995 filed herewith via EDGAR and incorporated herein by
reference.
17. Financial Data Schedule filed herewith and reflected on EDGAR as Exhibit 27.
18.1 Rule 18f-3 Dual Distribution Plan effective November 15, 1995, filed via EDGAR with
Post-Effective Amendment No. 5, and incorporated herein by reference.
18.2 Rule 18f-3 Dual Distribution Plan effective November 1, 1995, filed herewith via EDGAR.
18.3 Rule 18f-3 Dual Distribution Plan effective November 1, 1996, filed herewith via EDGAR.
19. Powers of attorney, filed herewith via EDGAR.
</TABLE>
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:
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
- ---------------------------------------- ---------------
<S> <C>
Shares of Beneficial Interest--Class A 494
Shares of Beneficial Interest--Class B 384
</TABLE>
Item 27. Indemnification
Registrant's indemnification provision is set forth in Pre-Effective
Amendment No. 3 filed with the Securities and Exchange Commission on July 6,
1992, and is incorporated herein by reference.
Item 28. Business and Other Connections of Investment Adviser
See "Management of the Fund" in the Prospectus and "Services of the
Adviser" and "Trustees and Officers" 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>
Positions with
Name Investment 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.
C-2
<PAGE>
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., Worldwide Phoenix Offshore,
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.
William J. Newman Executive Vice Executive Vice President and Chief Investment
President and Chief Strategist, Phoenix Investment Counsel, Inc.,
Investment 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 Finance, Phoenix Home Life
Mutual Insurance Company.
C-3
<PAGE>
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.
Sandra L. Becker Managing Director, Managing Director, Private Placements, Phoenix
Private 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, Managing Director, Private Placements, Phoenix
Private Placements Investment Counsel, Inc. Managing Director,
Investment Department, Phoenix Home Life Mutual
Insurance Company.
Nelson Correa Managing Director, Managing Director, Private Placements, Phoenix
Private 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.
C-4
<PAGE>
Van Harissis Managing Director, Equities Managing Director, Equities, Phoenix Investment
Counsel, Inc. Vice President, Phoenix Series
Fund and The Phoenix Edge Series Fund. Senior
Portfolio Manager, Howe & Rusling, Inc.
Richard C. Harland Managing Director, Equities Managing Director, Equities, Phoenix Investment
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, Equities Managing Director, Equities, Phoenix Investment
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, Equities Managing Director, Equities, Phoenix Investment
Counsel, Inc. Vice President, Phoenix Series
Fund, The Phoenix Edge Series Fund, Phoenix
Strategic Allocation Fund, Inc. Director of
Equity Management, NationsBanc.
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.
C-5
<PAGE>
George I. Askew Portfolio Manager, Equities Portfolio Manager, Equities, Phoenix Investment
Counsel, Inc.
John M. Hamlin Portfolio Manager, Equities Portfolio Manager, Equities, Phoenix Investment
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, Equities Portfolio Manager, Equities, Phoenix Investment
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>
The respective principal addresses of the companies or other entities
named above are as follows:
<TABLE>
<CAPTION>
<S> <C>
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 Inc. 55 East Monroe Street
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 Advisors, LLC One American Row
Hartford, CT 06115-0480
Phoenix-Aberdeen Series Fund 101 Munson Street
Greenfield, MA 01301
Phoenix Charter Oak Trust Company One American Row
Hartford, CT 06115-0480
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
C-6
<PAGE>
Phoenix Investment Counsel, Inc. 56 Prospect Street
Hartford, CT 06115-0480
Phoenix Life and Annuity Company One American Row
Hartford, CT 06115-0480
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
PHL Variable Insurance Company One American Row
Hartford, CT 06115-0480
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
</TABLE>
Item 29. Principal Underwriter
(a) See "The Underwriter" and "How to Buy Shares" in the Prospectus and
"The National Distributor" and "Distribution Plans of," in the Statement of
Additional Information, both of which are included in this Post-Effective
Amendment to the Registration Statement.
(b)
<TABLE>
<CAPTION>
Name and Position and Offices Position and Offices
Principal Address with Underwriter with Registrant
----------------------------- -------------------------------------- ------------------------------
<S> <C> <C>
Michael E. Haylon Director Executive Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Trustee and President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
David R. Pepin Executive Vice President, Executive Vice President
56 Prospect Street Mutual Fund Sales and Operations
P.O. Box 150480
Hartford, CT 06115-0480
C-7
<PAGE>
Leonard J. Saltiel Managing Director, Vice President
100 Bright Meadow Blvd. Operations and Service
P.O. Box 2200
Enfield, CT 06083-2200
Paul A. Atkins Senior Vice President and None
56 Prospect Street Sales Manager
P.O. Box 150480
Hartford, CT 06115-0480
Maris L. Lambergs Senior Vice President, None
100 Bright Meadow Blvd. Insurance and Independent Division
P.O. Box 2200
Enfield, CT 06083-2200
William R. Moyer Senior Vice President and Vice President
100 Bright Meadow Blvd. Chief Financial Officer
P.O. Box 2200
Enfield, CT 06083-2200
John F. Sharry Managing Director, None
100 Bright Meadow Blvd. Mutual Fund Distribution
P.O. Box 2200
Enfield, CT 06083-2200
G. Jeffrey Bohne Vice President, Secretary
101 Munson Street Mutual Fund
Greenfield, MA 01301 Customer Service
Eugene A. Charon Vice President and None
100 Bright Meadow Blvd. Controller
P.O. Box 2200
Enfield, CT 06083-2200
Nancy G. Curtiss Vice President and Treasurer, Treasurer
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
William E. Keen III Assistant Vice President, Vice President
100 Bright Meadow Blvd. Mutual Fund Regulation
P.O. Box 2200
Enfield, CT 06083-2200
Elizabeth Sadowinski Vice President, Administration None
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Counsel and Secretary Assistant Secretary
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
(c) Equity Planning received the following commissions or other
compensation from the Registrant during the fiscal year ending
October 31, 1996:
<TABLE>
<CAPTION>
Net Underwriting Compensation on
Name of Principal Discounts and Redemption and Brokerage Other
Underwriter Commissions Repurchase Commissions Compensation
----------------- ---------------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
Equity Planning $3,875 $15,695 $0 $4,717
</TABLE>
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 Registrant's
investment adviser, National Securities & Research Corporation, 56 Prospect
Street, Hartford, CT 06115; at the offices of the Fund's Custodian,
State Street Bank and Trust Company, P.O. Box
C-8
<PAGE>
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 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 its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Hartford, and State of Connecticut on the 25th day of February, 1997.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
ATTEST: /s/ Thomas N. Steenburg By: /s/ Philip R. McLoughlin
------------------------ ------------------------
Thomas N. Steenburg Philip R. McLoughlin
Assistant Secretary President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons
in the capacities on the date indicated, on the 25th day of February, 1997.
<TABLE>
<CAPTION>
Signature Title
--------------------------------- -----------------------------------------
<S> <C>
- --------------------------------- Trustee
C. Duane Blinn*
- --------------------------------- Trustee
Robert Chesek*
- --------------------------------- Trustee
E. Virgil Conway*
- --------------------------------- Treasurer (Principal Financial and
Nancy G. Curtiss* Accounting Officer)
- --------------------------------- Trustee
Harry Dalzell-Payne*
- --------------------------------- Trustee
Francis E. Jeffries*
- --------------------------------- Trustee
Leroy Keith, Jr.*
- --------------------------------- President and Trustee (Principal
/s/ Philip R. McLoughlin Executive Officer)
- --------------------------------- Trustee
Philip R. McLoughlin
- --------------------------------- Trustee
Everett L. Morris*
- --------------------------------- Trustee
James M. Oates*
- --------------------------------- Trustee
Calvin J. Pedersen*
- --------------------------------- Trustee
Philip R. Reynolds*
- --------------------------------- Trustee
Herbert Roth, Jr.*
- --------------------------------- Trustee
Richard E. Segerson*
--------------------------------- Trustee
S-1
<PAGE>
---------------------------------
Lowell P. Weicker, Jr.* Trustee
By /s/ Philip R. McLoughlin
-------------------------------
Philip R. McLoughlin
</TABLE>
*Philip R. McLoughlin Attorney-in-fact pursuant to powers of attorney
filed herewith.
S-2
Exhibit 1
NATIONAL ASSET RESERVE
Amended and Restated Establishment and Designation
of Series and Classes of Shares of Beneficial
Interest, Par Value $0.01 Per Share
The Establishment and Designation of Series of Shares of Beneficial
Interest, Par Value $0.01 Per Share, of National Short-Term Income Series, dated
February 20, 1992, is hereby amended and restated as follows:
The undersigned, being a majority of the Trustees of National Asset
Reserve (formerly, National Short-Term Income Series), a Massachusetts business
trust (the "Trust"), acting pursuant to Section 5.11 of the Declaration of Trust
dated February 20, 1992, as amended (the "Declaration of Trust"), hereby
establish and designate a single series of shares (the "Fund"), and divide that
series of shares of beneficial interest of the Trust into two separate classes
(the "Classes"), the Fund and Classes hereby created having the following
special and relative rights:
1. The Fund shall be designated as National Asset Reserve, and
each Class thereof shall be designated as follows: National
Asset Reserve Class A; National Asset Reserve Class B.
2. The Fund shall be authorized to invest in cash, securities,
instruments and other property as from time to time described
in the Fund's then currently effective prospectus and
registration statement under the Securities Act of 1933. Each
share of beneficial interest of the Fund ("Share") shall be
redeemable, shall represent a pro rata beneficial interest in
the assets allocated to the Fund, and shall be entitled to
receive a pro rata share of net assets of the Fund upon
liquidation of the Fund, all as provided in the Declaration of
Trust. The proceeds of sales of Shares of the Fund, together
with any income and gain thereon, less any diminution or
expenses thereof, shall irrevocably belong to the Fund, unless
otherwise required by law.
3. Each Share of beneficial interest of the Fund shall be
entitled to one vote (or fraction thereof in respect of a
fractional share) on matters on which such Shares of the Fund
shall be entitled to vote. Shareholders of the Fund shall vote
together as a single class on any matter, except to the extent
otherwise required by the Investment Company Act of 1940 or
when the Trustees have determined that the matter affects only
the interests of Shareholders of certain Classes, in which
case only the Shareholders of such Classes shall be entitled
to vote thereon. Any matter shall be deemed to have been
effectively acted upon with respect to the Classes if acted
upon as provided in Rule 18f-2 under the Act or any successor
rule and in the Declaration of Trust.
<PAGE>
4. The liabilities of the Trust shall be allocated to the
above-referenced Fund, as set forth in Section 5.11 of the
Declaration of Trust, except as described below.
(a) Liabilities, expenses, costs, charges or reserves relating
to the distribution of, and other identified expenses that
should properly be allocated to the Shares of a particular
Class may be charged to and borne solely by such Class and the
bearing of expenses solely by a Class of Shares may be
appropriately reflected and cause differences in net asset
value attributable to and the dividend, redemption and
liquidation rights of, the Shares of different Classes.
(b) Each allocation of liabilities, expenses, costs, charges
and reserves by the Trustees shall be conclusive and binding
upon the Shareholders of all Classes for all purposes,
5. Shares of the Fund shall vary between the different Classes as
to rights of redemption and conversion rights, as set out in
the Fund's then current prospectus.
6. The Trustees (including any successor Trustees) shall have the
right at any time and from time to time to reallocate assets
and expenses or to change the designation of any Fund or Class
thereof now or hereafter created, or to otherwise change the
special and relative rights of any such Fund or Class,
provided that such change shall not adversely affect the
rights of the Shareholders of such Fund or Class.
/s/ Lincoln W. Allan /s/ Gerald W. Blakely
Lincoln W. Allan Gerald W. Blakely, Jr.
/s/ E. Virgil Conway
Gen. Harry Dalzell-Payne E. Virgil Conway
/s/ Mark L. Lipson /s/ Richard E. Segerson
Mark L. Lipson Richard E. Segerson
/s/ Edward L. Palmer
David W. Wallace Edward L. Palmer
<PAGE>
NATIONAL SHORT-TERM INCOME SERIES
Establishment and Designation
of Series of Shares of Beneficial
Interest, Par Value $0.01 Per Share
February 20, 1992
The undersigned, being a majority of the Trustees of National
Short-Term Income Series, a Massachusetts business trust (the "Trust"), acting
pursuant to Section 5.11 of the Declaration of Trust dated February 20, 1992, as
amended (the "Declaration of Trust"), hereby divide the shares of beneficial
interest of the Trust into two separate series (the "Funds"), each Fund hereby
created having the following special and relative rights:
1. The Funds shall be designated as follows: National
Adjustable Rate U.S. Government Securities Fund and National Short-Term
Multi-Sector Fixed Income Fund.
2. Each Fund shall be authorized to invest in cash,
securities, instruments and other property as from time to time
described in that Fund's then currently effective prospectus and
registration statement under the Securities Act of 1933. Each share of
beneficial interest of each Fund ("Share") shall be redeemable, shall
be entitled to one vote (or fraction thereof in respect of a fractional
Share) on matters on which Shares of the Fund shall be entitled to
vote, shall represent a pro rata beneficial interest in the assets
allocated to that Fund, and shall be entitled to receive its pro rata
share of net assets of that Fund upon liquidation of that Fund, all as
provided in the Declaration of Trust. The proceeds of sales of Shares
of each Fund, together with any income and gain thereon, less any
diminution or expenses thereof, shall irrevocably belong to that Fund,
unless otherwise required by law.
3. Shareholders of the Funds shall vote together as a class on
any matter, except to the extent otherwise required by the Investment
Company Act of 1940 or when the Trustees have determined that the
matter affects only the interests of Shareholders of certain Funds, in
which case only the Shareholders of such Funds shall be entitled to
vote thereon. Any matter shall be deemed to have been effectively acted
upon with respect to the Funds if acted upon as provided in Rule l8f-2
under such Act or any successor rule and in the Declaration of Trust.
<PAGE>
4. The assets and liabilities of the Trust shall be allocated
among the above-referenced Funds, as set forth in Section 5.11 of the
Declaration of Trust, except as described below.
(a) Costs incurred by the Trust on behalf of the
Funds in connection with the organization and initial registration and
public offering of Shares of the Funds shall be amortized for the Funds
over the lesser of the life of the Fund or the five year period (ten
year period in the case of the Equity Index Fund) beginning with the
month that each Fund commences operations.
(b) The liabilities, expenses, costs, charges or
reserves of the Trust (other than the investment advisory fee, the
administration fee, any distribution fee, or the organizational
expenses paid by the Trust) which are not readily identifiable as
belonging to any particular Fund shall be allocated among the Funds, on
the basis of their relative average daily net assets except where
allocations of direct expenses can otherwise fairly be made.
(c) The Trustees may from time to time in particular
cases make specific allocations of assets or liabilities among the
Funds.
5. The Trustees (including any successor Trustees) shall have
the right at any time and from time to time to reallocate assets and
expenses or to change the designation of any Fund now or hereafter
created, or to otherwise change the special and relative rights of any
such Fund, provided that such change shall not adversely affect the
rights of the Shareholders of such series.
/s/ Mark L. Lipson
Mark L. Lipson
/s/ Denis McAuley, III
Denis McAuley, III
- 2 -
<PAGE>
-------------------
DECLARATION OF TRUST OF
NATIONAL SHORT-TERM INCOME SERIES
DATED: FEBRUARY 20, 1992
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I -- Name and Definitions 1
--------------------
Section 1.1 Name 1
Section 1.2 Definitions 1
ARTICLE II -- Trustees 3
--------
Section 2.1 General Powers. 3
Section 2.2 Investments 4
Section 2.3 Legal Title 6
Section 2.4 Issuance and Repurchase of Shares 6
Section 2.5 Delegation; Committees 6
Section 2.6 Collection and Payment 6
Section 2.7 Expenses 7
Section 2.8 Manner of Acting; By-laws 7
Section 2.9 Miscellaneous Powers 7
Section 2.10 Principal Transactions 8
Section 2.11 Number of Trustees 8
Section 2.12 Election and Term 8
Section 2.13 Resignation and Removal 9
Section 2.14 Vacancies 9
Section 2.15 Delegation of Power to Other Trustees 10
ARTICLE III -- Contracts 10
---------
Section 3.1 Distribution Contract 10
Section 3.2 Advisory or Management Contract 10
Section 3.3 Administrator 11
Section 3.4 Transfer Agent and Shareholder
Servicing Agents 11
Section 3.5 Affiliations of Trustees or Officers, Etc. 11
Section 3.6 Compliance with 1940 Act 12
ARTICLE IV -- Limitations of Liability of 12
Shareholders, Trustees and Others
---------------------------------
Section 4.1 No Personal Liability of Shareholders, 12
Trustees, Etc.
Section 4.2 Non-Liability of Trustees, Etc. 13
Section 4.3 Mandatory Indemnification 13
Section 4.4 No Bond Required of Trustees 15
Section 4.5 No Duty of Investigation; Notice in Trust 15
Instruments, Etc.
Section 4.6 Reliance on Experts, Etc. 16
<PAGE>
ARTICLE V -- Shares of Beneficial Interest 16
-----------------------------
Section 5.1 Beneficial Interest 16
Section 5.2 Rights of Shareholders 16
Section 5.3 Trust Only 17
Section 5.4 Issuance of Shares 17
Section 5.5 Register of Shares 17
Section 5.6 Transfer of Shares 17
Section 5.7 Notices, Reports 18
Section 5.8 Treasury Shares 18
Section 5.9 Voting Powers 19
Section 5.10 Meetings of Shareholders 19
Section 5.11 Series Designation 20
Section 5.l2 Assent to Declaration of Trust 22
Section 5.13 Class Designation 22
ARTICLE VI -- Redemption and Repurchase of Shares 23
-----------------------------------
Section 6.1 Redemption of Shares 23
Section 6.2 Price 24
Section 6.3 Payment 24
Section 6.4 Effect of Suspension of 24
Determination of Net Asset Value
Section 6.5 Repurchase by Agreement 25
Section 6.6 Redemption of Sub-Minimum Accounts 25
Section 6.7 Redemption of Shares in Order to 25
Qualify as Regulated Investment
Company; Disclosure of Holding
Section 6.8 Reductions in Number of 26
Outstanding Shares Pursuant
to Net Asset Value Formula
Section 6.9 Suspension of Right of Redemption 26
ARTICLE VII -- Determination of Net Asset Value, 26
Net Income and Distributions
----------------------------
Section 7.1 Net Asset Value 26
Section 7.2 Distributions to Shareholders 27
Section 7.3 Determination of Net Income; 28
Constant Net Asset Value;
Reduction of Outstanding Shares
Section 7.4 Allocation Between Principal and Income 29
Section 7.5 Power to Modify Foregoing Procedures 29
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<PAGE>
ARTICLE VIII -- Duration; Termination of Trust; 29
Amendment; Mergers, Etc.
-------------------------------
Section 8.l Duration 29
Section 8.2 Termination of Trust 29
Section 8.3 Amendment Procedure 30
Section 8.4 Merger, Consolidation and Sale of Assets 31
Section 8.5 Incorporation 31
ARTICLE IX -- Reports to Shareholders 32
-----------------------
ARTICLE X -- Miscellaneous 32
-------------
Section 10.1 Filing 32
Section l0.2 Governing Law 33
Section 10.3 Counterparts 33
Section l0.4 Reliance by Third Parties 33
Section 10.5 Provisions in Conflict with 33
Law or Regulations
Section 10.6 Principal Place of Business 34
Section 10.7 Resident Agent 34
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<PAGE>
DECLARATION OF TRUST OF
NATIONAL SHORT-TERM INCOME SERIES
DATED FEBRUARY 20, 1992
DECLARATION OF TRUST made this 20th day of February, 1992 by the
undersigned Trustees (together with all other persons from time to time duly
elected, qualified and serving as Trustees in accordance with the provisions of
Article II hereof, the "Trustees");
WHEREAS, the Trustees desire to establish a trust for the investment
and reinvestment of funds contributed thereto; and
WHEREAS, the Trustees desire that the beneficial interest in the trust
assets be divided into transferable shares of beneficial interest, as
hereinafter provided;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust established hereunder shall be held and managed in
trust for the benefit of the holders, from time to time, of the shares of
beneficial interest issued hereunder and subject to the provisions hereof.
ARTICLE I
NAME AND DEFINITIONS
--------------------
Section 1.1. Name. The name of the Trust created hereby is "National
Short Term Income Series".
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
a) "Administrator" means a party furnishing services to the Trust
pursuant to any contract described in Section 3.3 hereof.
(b) "By-laws" means the By-laws referred to in Section 2.8 hereof, as
from time to time amended.
(c) "Class" means the two or more classes as may be established and
designated from time to time by the Trustees pursuant to Section 5.13 hereof.
(d) The term "Commission" has the meaning given it in the 1940 Act, The
term "Interested Person" has the meaning given it in the 1940 Act, as modified
by any applicable order or orders of the Commission. Except as otherwise defined
by the Trustees in conjunction with the establishment of any series of Shares,
the term "vote of a majority of the Shares outstanding and entitled
<PAGE>
to vote" shall have the same meaning as the term "vote of a majority of
the outstanding voting securities" given it in the 1940 Act.
(e) "Custodian" means any Person other than the Trust who has custody
of any Trust Property as required by Section 17(f) of the 1940 Act, but does not
include a system for the central handling of securities described in said
Section 17(f).
(f) "Declaration" means this Declaration of Trust as further amended
from time to time. Reference in this Declaration of Trust to "Declaration,"
"hereof," "herein," and "hereunder" shall be deemed to refer to this Declaration
rather than exclusively to the article or section in which such words appear.
(g) "Distributor" means the party, other than the Trust, to the
contract described in Section 3.1 hereof.
(h) "His" shall include the feminine and neuter, as well as the
masculine genders.
(i) "Investment Adviser" means the party, other than the Trust, to the
contract described in Section 3.2 hereof.
(j) "Municipal Bonds" means obligations issued by or on behalf of
states, territories of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities, the interest from which
is exempt from regular Federal income tax.
(k) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time.
(l) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.
(m) "Series" individually or collectively means the two or more Series
as may be established and designated from time to time by the Trustees pursuant
to Section 5.11 hereof. Unless the context otherwise requires, the term "Series"
shall include Classes into which shares of the Trust, or of a Series, may be
divided from time to time,
(n) "Shareholder" means a record owner of outstanding Shares.
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<PAGE>
(o) "Shareholder Servicing Agent" means a party furnishing services to
the Trust pursuant to any shareholder servicing contract described in Section
3.4 hereof.
(p) "Shares" means the equal proportionate units of interest into which
the beneficial interest in the Trust shall be divided from time to time,
including the Shares of any and all Series and Classes which may be established
by the Trustees, and includes fractions of Shares as well as whole Shares.
"Outstanding Shares" means those Shares shown from time to time on the books of
the Trust or its Transfer Agent as then issued and outstanding, but shall not
include Shares which have been redeemed or repurchased by the Trust and which
are at the time held in the treasury of the Trust.
(q) "Transfer Agent" means any one or more Persons other than the Trust
who maintains the Shareholder records of the Trust, such as the list of
Shareholders, the number of Shares credited to each account, and the like.
(r) The "Trust" means the Trust referred to in Section 1.1.
(s) The "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees.
(t) The "Trustees" means the person or persons who has or have signed
this Declaration, so long as he or they shall continue in office in accordance
with the terms hereof, and all other persons who may from time to time be duly
qualified and serving as Trustees in accordance with the provisions of Article
11 hereof, and reference herein to a Trustee or the Trustees shall refer to such
person or persons in this capacity or their capacities as trustees hereunder.
ARTICLE II
TRUSTEES
--------
Section 2.1. General Powers. The Trustees shall have exclusive and
absolute control over the Trust Property and over the business of the Trust to
the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
<PAGE>
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 2.2. Investments. The Trustees shall have the power:
(a) To operate as and carry on the business of an investment company,
and exercise all the powers necessary and appropriate to the conduct of such
operations.
(b) To invest in, hold for investment, or reinvest in, securities,
including common and preferred stocks; warrants; bonds, debentures, bills, time
notes and all other evidences of indebtedness; negotiable or nonnegotiable
instruments; any form of gold or other precious metal; commodity contracts;
shares of, or any other interest in, any investment company as defined in the
1940 Act; government securities, including securities of any state, municipality
or other political subdivision thereof, or any governmental or
quasi-governmental agency or instrumentality; and money market instruments
including bank certificates of deposit, finance paper, commercial paper, bankers
acceptances and all kinds of repurchase agreements, of any corporation, company,
trust, association, firm or other business organization however established, and
of any country, state, municipality or other political subdivision, or any
governmental or quasi-governmental agency or instrumentality; "when issued"
contracts for any such securities, contracts or interests; to retain Trust
assets in cash and from time to time to change the securities contracts or
interests in which the assets of the Trust are invested.
(c) To acquire (by purchase, subscription or otherwise), to hold, to
trade in and deal in, to acquire any rights or options to purchase or sell, to
sell or otherwise dispose of, to lend, and to pledge any such securities,
contracts or interests, and to enter into repurchase agreements and forward
foreign currency exchange contracts, to purchase and sell futures contracts on
securities, securities indices and foreign currencies, to purchase or sell
options on such contracts, foreign currency
- 4 -
<PAGE>
contracts, and foreign currencies and to engage in all types of hedging and risk
management transactions.
(d) To exercise all rights, powers and privileges of ownership or
interest in all securities, repurchase agreements, futures contracts and options
and other assets included in the Trust Property, including the right to vote
thereon and other wise act with respect thereto and to do all acts for the
preservation, protection, improvement and enhancement in value of all such
assets.
(e) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any property, real or
personal, including cash, and any interest therein.
(f) To borrow money and in this connection issue notes or other
evidence of indebtedness; to secure borrowings by mortgaging, pledging or
otherwise subjecting as security the Trust Property; to endorse, guarantee, or
undertake the performance of any obligation or engagement of any other Person
and to lend Trust Property.
(g) To aid by further investment any corporation, company, trust,
association or firm, any obligation of or interest in which is included in the
Trust Property or in the affairs of which the Trustees have any direct or
indirect interest; to do all acts and things designed to protect, preserve,
improve or enhance the value of such obligation or interest, and to guarantee or
become surety on any or all of the contract stocks, bonds, notes, debentures and
other obligations of any such corporation, company, trust, association or firm.
(h) To enter into a plan of distribution and any related agreements
whereby the Trust may finance directly or indirectly any activity which is
primarily intended to result in the sale of Shares.
(i) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or Proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers,
and the foregoing enumeration of specific powers shall
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<PAGE>
not be held to limit or restrict in any manner the general powers of the
Trustees.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
Section 2.3. Legal Title. Legal title to all the Trust Property,
including the property of any Series of the Trust, shall be vested in the
Trustees as joint tenants except that the Trustees shall have power to cause
legal title to any Trust Property to be held by or in the name of one or more of
the Trustees, or in the name of the Trust, or in the name of any other Person as
nominee, on such terms as the Trustees may determine, provided that the interest
of the Trust therein is deemed appropriately protected. The right, title and
interest of the Trustees in the Trust Property and the property of each Series
of the Trust shall vest automatically in each Person who may hereafter become a
Trustee. Upon the termination of the term of office, resignation, removal or
death of a Trustee he shall automatically cease to have any right, title or
interest in any of the Trust Property or the property of any Series of the
Trust, and the right, title and interest of such Trustee in the Trust Property
shall vest automatically in the remaining Trustees. Such vesting and cessation
of title shall be effective whether or not conveyancing documents have been
executed and delivered.
Section 2.4. Issuance and Repurchase of Shares. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise deal in Shares and, subject
to the provisions set forth in Articles VI and VII and Section 5.11 hereof, to
apply to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares any funds or property of the particular series of the
Trust with respect to which such Shares are issued, whether capital or surplus
or otherwise, to the full extent now or hereafter permitted by the laws of the
Commonwealth of Massachusetts governing business corporations.
Section 2.5. Delegation; Committees. The Trustees shall have power to
delegate from time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient, to the same extent as such
delegation is permitted by the 1940 Act.
Section 2.6. Collection and Payment. The Trustees shall have power to
collect all property due to the Trust; to pay all
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<PAGE>
claims, including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to foreclose
any security interest securing any obligations, by virtue of which any property
is owed to the Trust; and to enter into releases, agreements and other
instruments.
Section 2.7. Expenses. The Trustees shall have the power to incur and
pay any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of this Declaration, and to pay
reasonable compensation from the funds of the Trust to themselves as Trustees.
The Trustees shall fix the compensation of all officers, employees and Trustees.
Section 2.8. Manner of Acting; By-laws. Except as otherwise provided
herein or in the By-laws, any action to be taken by the Trustees may be taken by
a majority of the Trustees present at a meeting of Trustees (a quorum being
present), including any meeting held by means of a conference telephone circuit
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, or by written consents of the entire number
of Trustees then in office. The Trustees may adopt By-laws not inconsistent with
this Declaration to provide for the conduct of the business of the Trust and may
amend or repeal such By-laws to the extent such power is not reserved to the
Shareholders.
Notwithstanding the foregoing provisions of this Section 2.8 and in
addition to such provisions or any other provision of this Declaration or of the
By-laws, the Trustees may by resolution appoint a committee consisting of less
than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body.
Section 2.9. Miscellaneous Powers. Subject to Section 5.11 hereof, the
Trustees shall have the power to: (a) employ or contract with such Persons as
the Trustees may deem desirable for the transaction of the business of the
Trust; (b) enter into joint ventures, partnerships and any other combinations or
associations; (c) remove Trustees or fill vacancies in or add to their number,
elect and remove such officers and appoint and terminate such agents or
employees as they consider appropriate, and appoint from their own number, and
terminate, any one or more committees which may exercise some or all of the
power and
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<PAGE>
authority of the Trustees as the Trustees may determine; (d) purchase, and pay
for out of Trust Property, insurance policies insuring the Shareholders, the
Administrator, Trustees, officers, employees, agents, investment advisers,
distributors, selected dealers or independent contractors of the Trust against
all claims arising by reason of holding any such position or by reason of any
action taken or omitted by any such Person in such capacity, whether or not
constituting negligence, or whether or not the Trust would have the power to
indemnify such Person against such liability; (e) establish pension,
profit-sharing, share purchase, and other retirement, incentive and benefit
plans for any Trustees, officers, employees and agents of the Trust; (f) to the
extent permitted by law, indemnify any person with whom the Trust has dealings,
including the Investment Adviser, Distributor, Transfer Agent and selected
dealers, to such extent as the Trustees shall determine; (g) guarantee
indebtedness or contractual obligations of others; (h) determine and change the
fiscal year of the Trust and the method by which its accounts shall be kept; and
(i) adopt a seal for the Trust, but the absence of such seal shall not impair
the validity of any instrument executed on behalf of the Trust.
Section 2.10. Principal Transactions. Except in transactions not
permitted by the 1940 Act or rules and regulations adopted by the Commission,
the Trustees may, on behalf of the Trust, buy any securities from or sell any
securities to, or lend any assets of the Trust to, any Trustee or officer of the
Trust or any firm of which any such Trustee or officer is a member acting as
principal, or have any such dealings with the Investment Adviser, Distributor or
transfer agent or with any Interested Person of such Person; and the Trust may
employ any such Person, or firm or company in which such Person is an Interested
Person, as broker, legal counsel, registrar, transfer agent, dividend disbursing
agent or Custodian upon customary terms.
Section 2.11. Number of Trustees. The number of Trustees shall
initially be two (2), and thereafter shall be such number as shall be fixed from
time to time by a written instrument signed by a majority of the Trustees,
provided, however, that the number of Trustees shall in no event be more than
fifteen (15).
Section 2.12. Election and Term. Except for the Trustees named herein
or appointed to fill vacancies pursuant to Section 2.14 hereof, the Trustees
shall be elected by the Shareholders owning of record a plurality of the Shares
voting at a meeting of Shareholders. Such a meeting shall be held on a date
fixed by the Trustees. Except in the event of resignation or removals pursuant
to Section 2.13 hereof, each Trustee shall hold office until such time as less
than a majority of the Trustees holding
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<PAGE>
office have been elected by Shareholders. In such event the Trustees then in
office will call a Shareholders' meeting for the election of Trustees. Except
for the foregoing circumstances, the Trustees shall continue to hold office and
may appoint successor Trustees.
Section 2.13. Resignation and Removal. Any Trustee may resign his trust
(without the need for any prior or subsequent accounting) by an instrument in
writing signed by him and delivered to the other Trustees and such resignation
shall be effective upon such delivery, or at a later date according to the terms
of the instrument. Any of the Trustees may be removed (provided the aggregate
number of Trustees after such removal shall not be less than one) with cause, by
the action of two-thirds of the remaining Trustees. Any Trustee may be removed
at any meeting of Shareholders by vote of two-thirds of the Outstanding Shares.
The Trustees shall promptly call a meeting of the shareholders for the purpose
of voting upon the question of removal of any such Trustee or Trustees when
requested in writing so to do by the holders of not less than ten percent of the
Outstanding Shares and, in that connection, the Trustees will assist shareholder
communications to the extent provided for in Section 16(c) under the 1940 Act.
Upon the resignation or removal of a Trustee, or his otherwise ceasing to be a
Trustee, he shall execute and deliver such documents as the remaining Trustees
shall require for the purpose of conveying to the Trust or the remaining
Trustees any Trust Property or property of any series of the Trust held in the
name of the resigning or removed Trustee. Upon the incapacity or death of any
Trustee, his legal representative shall execute and deliver on his behalf such
documents as the remaining Trustees shall require as provided in the preceding
sentence
Section 2.14. Vacancies. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death, resignation,
removal, bankruptcy, adjudicated incompetence or other incapacity to perform the
duties of the office of a Trustee. No such vacancy shall operate to annul the
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of an existing vacancy, including a vacancy
existing by reason of an increase in the number of Trustees, subject to the
provisions of Section 16(a) of the 1940 Act, the remaining Trustees shall fill
such vacancy by the appointment of such other person as they in their discretion
shall see fit, made by a written instrument signed by a majority of the Trustees
then in office. Any such appointment shall not become effective, however, until
the person named in the written instrument of appointment shall have accepted in
writing such appointment and agreed in writing to be bound by the terms of the
Declaration. An appointment of a Trustee may be made in
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<PAGE>
anticipation of a vacancy to occur at a later date by reason of retirement,
resignation or increase in the number of Trustees, provided that such
appointment shall not become effective prior to such retirement, resignation or
increase in the number of Trustees. Whenever a vacancy in the number of Trustees
shall occur, until such vacancy is filled as provided in this Section 2.14, the
Trustees in office, regardless of their number, shall have all the powers
granted to the Trustees and shall discharge all the duties imposed upon the
Trustees by the Declaration. A written instrument certifying the existence of
such vacancy signed by a majority of the Trustees in office shall be conclusive
evidence of the existence of such vacancy.
Section 2.15. Delegation of Power to Other Trustees. Any Trustee may,
by power of attorney, delegate his power for a period not exceeding six (6)
months at any one time to any other Trustee or Trustees; Provided that in no
case shall less than two (2) Trustees personally exercise the powers granted to
the Trustees under this Declaration except as herein otherwise expressly
provided.
ARTICLE III
CONTRACTS
---------
Section 3.1. Distribution Contract. The Trustees may in their
discretion from time to time enter into an exclusive or non-exclusive
underwriting contract or contracts providing for the sale of the Shares at a
price based on the net asset value of a Share, whereby the Trustees may either
agree to sell the Shares to the other party to the contract or appoint such
other party their sales agent for the Shares, and in either case on such terms
and conditions, if any, as may be prescribed in the By-laws, and such further
terms and conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Article III or of the By-laws; and such
contract may also provide for the repurchase of the Shares by such other party
as agent of the Trustees. Such contract may also further provide that such other
party may enter into selected dealer agreements with registered securities
dealers to further the purpose of the distribution or repurchase of the Shares.
The foregoing services may be provided by one or more Persons.
Section 3.2. Advisory or Management Contract. The Trustees may in their
discretion from time to time enter into an investment advisory or management
contract or separate advisory contracts with respect to one or more Series
whereby the other party to such contract shall undertake to furnish to the Trust
such management, investment advisory, statistical and research
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<PAGE>
facilities and services and such other facilities and services, if any, and all
upon such terms and conditions as the Trustees may in their discretion
determine, including the grant of authority to such other party to determine
what securities shall be purchased or sold by the Trust and what portion of its
assets shall be uninvested, which authority shall include the power to make
changes in the investments of the Trust or any Series.
The Trustees may also employ, or authorize the Investment Adviser to
employ, one or more sub-advisers from time to time to perform such of the acts
and services of the Investment Adviser and upon such terms and conditions as may
be agreed upon between the Investment Adviser and such sub-advisers and approved
by the Trustees. Any reference in this Declaration to the Investment Adviser
shall be deemed to include such sub-advisers unless the context otherwise
requires.
Section 3.3. Administrator. The Trustees may in their discretion from
time to time enter into one or more administrative services contracts whereby
the other party to each such contract shall undertake to furnish such
administrative services to the Trust as the Trustees shall from time to time
consider desirable and all upon such terms and conditions as the Trustees may in
their discretion determine, provided that such terms and conditions are not
inconsistent with the provisions of this Declaration or the By-Laws. Such
services may be provided by one or more persons.
Section 3.4. Transfer Agent and Shareholder Servicing Agents. The
Trustees may in their discretion from time to time enter into one or more
transfer agency contracts and one or more shareholder servicing contracts
whereby the other party to each such contract shall undertake to furnish such
transfer agency and/or shareholder services to the Trust as the Trustees shall
from time to time consider desirable and all upon such terms and conditions as
the Trustees may in their discretion determine, provided that such terms and
conditions are not inconsistent with the provisions of this Declaration or the
By-Laws. Such services may be provided by one or more Persons.
Section 3.5. Affiliations of Trustees or Officers, Etc. The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee,
manager, adviser or distributor of or for any partnership, corporation,
trust, association or other organization or of or for any parent or
affiliate of any organization, with which a contract of the character
described in Sections 3.1, 3.2, 3.3 or 3.4 above or any
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<PAGE>
Custodian contract as described in Article X of the By-Laws, or for
related services may have been or may hereafter be made, or that any
such organization, or any parent or affiliate thereof, is a Shareholder
of or has an interest in the Trust, or that
(ii) any partnership, corporation, trust, association or other
organization with which a contract of the character described in
Sections 3.1, 3.2, 3.3 or 3.4 above or for services as Custodian or for
related services may have been or may hereafter be made also has any
one or more of such contracts with one or more other partnerships,
corporations, trusts, associations or other organizations, or has other
business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
Section 3.6. Compliance with 1940 Act. Any contract entered into
pursuant to Sections 3.1 or 3.2, shall be consistent with and subject to the
requirements of Section 15 of the 1940 Act (including any amendment thereof or
other applicable act of Congress hereafter enacted), as modified by any
applicable order or orders of the Commission, with respect to its continuance in
effect, its termination and the method of authorization and approval of such
contract or renewal thereof.
ARTICLE IV
LIMITATIONS OF LIABILITY OF SHAREHOLDERS, TRUSTEES AND OTHERS
-------------------------------------------------------------
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust. No Trustee, officer, employee or agent of the Trust shall be subject to
any personal liability whatsoever to any Person, other than to the Trust or its
Shareholders, in connection with Trust Property or the affairs of the Trust,
save only that arising from bad faith, willful misfeasance, gross negligence or
reckless disregard of his duties with respect to such Person; and all such
Persons shall look solely to the Trust Property for satisfaction of claims of
any nature arising in connection with the affairs of the Trust. If any
Shareholder, Trustee, officer, employee, or agent, as such, of the Trust, is
made a party to any suit or proceeding to enforce any such liability of the
Trust, he shall not, on account thereof, be held to any personal liability. The
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<PAGE>
Trust shall indemnify and hold each Shareholder harmless from and against all
claims and liabilities, to which such Shareholder may become subject by reason
of his being or having been a Shareholder, and shall reimburse such Shareholder
for all legal and other expenses reasonably incurred by him in connection with
any such claim or liability. The indemnification and reimbursement required by
the preceding sentence shall be made only out of the assets of the one or more
Series of which the Shareholder who is entitled to indemnification or
reimbursement was a Shareholder at the time the act or event occurred which gave
rise to the claim against or liability of said Shareholder. The rights accruing
to a Shareholder under this Section 4.1 shall not impair any other right to
which such Shareholder may be lawfully entitled, nor shall anything herein
contained restrict the right of the Trust to indemnify or reimburse a
Shareholder in any appropriate situation even though not specifically provided
herein.
Section 4.2. Non-Liability of Trustees, Etc. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust, its Shareholders,
or to any Shareholder, Trustee, officer, employee, or agent thereof for any
action or failure to act (including without limitation the failure to compel in
any way any former or acting Trustee to redress any breach of trust) except for
his own bad faith, willful misfeasance, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
Section 4.3. Mandatory Indemnification. (a) Subject to the exceptions
and limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee or officer of
the Trust shall be indemnified by the Trust to the fullest extent
permitted by law against all liability and against all expenses
reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or
otherwise by virtue of his being or having been a Trustee or officer
and against amounts paid or incurred by him in the settlement thereof;
and
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal, administrative or other, including appeals), actual or
threatened; and the words "liability" and "expenses" shall include,
without limitation, attorneys fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
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(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any liability to the Trust, a Series thereof, or
the Shareholders by reason of a final adjudication by a court or other
body before which a proceeding was brought that he engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust; or
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraph (b)(i) or
(b)(ii) resulting in a payment by a Trustee or officer, unless there
has been a determination that such Trustee or officer did not engage in
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office:
(A) by the court or other-body approving the
settlement or other disposition; or
(B) based upon a review of readily available facts
(as opposed to a full trial-type inquiry) by (x) vote of a
majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then
in office act on the matter) or (y) written opinion of
independent legal counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
affect any other rights to which any Trustee or officer may now or hereafter be
entitled, shall continue as to a person who has ceased to be such Trustee or
officer and shall inure to the benefit of the heirs, executors, administrators
and assigns of such a person. Nothing contained herein shall affect any rights
to indemnification to which personnel of the Trust other than Trustees and
officers may be entitled by contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a) of this
Section 4.3 may be advanced by the Trust prior to final disposition thereof upon
receipt of an
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undertaking by or on behalf of the recipient to repay such amount if it is
ultimately determined that he is not entitled to indemnification under this
Section 4.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust shall be
insured against losses arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees act on
the matter) or an independent legal counsel in a written opinion shall
determine, based upon a review of readily available facts (as opposed
to a full trial-type inquiry), that there is reason to believe that the
recipient ultimately will be found entitled to indemnification.
As used in this Section 4,3, a "Disinterested Trustee" is one who is not (i) an
Interested Person of the Trust (including anyone who has been exempted from
being an Interested Person by any rule, regulation or order of the Commission) ,
or (ii) involved in the claim, action, suit or proceeding.
Section 4.4. No Bond Required of Trustees. No Trustee shall be
obligated to give any bond or other security for the Performance of any of his
duties hereunder.
Section 4.5. No Duty of Investigation; Notice in Trust Instruments,
Etc. No purchaser, lender, transfer agent or other Person dealing with the
Trustees or any officer, employee or agent of the Trust shall be bound to make
any inquiry concerning the validity of any transaction purporting to be made by
the Trustees or by said officer, employee or agent or be liable for the
application of money or property paid, loaned, or delivered to or on the order
of the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust or
undertaking, and every other act or thing whatsoever executed in connection with
the Trust shall be conclusively presumed to have been executed or done by the
executors thereof only in their capacity as Trustees under this Declaration or
in their capacity as officers, employees or agents of the Trust. Every written
obligation, contract, instrument, certificate, Share, other security of the
Trust or undertaking made or issued by the Trustees may recite that the same is
executed or made by them not individually, but as Trustees under the
Declaration, and that the obligations of the Trust under any such instrument are
not binding upon any of the Trustees or Shareholders individually, but bind only
the trust estate, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall
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not operate to bind the Trustees individually. The Trust shall at all times
maintain insurance for the protection of the Trust Property, its Shareholders,
Trustees, officers, employees and agents in such amount as the Trustees shall
deem adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
Section 4.6. Reliance on Experts, Etc. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by the Investment Adviser, the Distributor,
Transfer Agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
-----------------------------
Section 5.1. Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable Shares of beneficial interest, all
of one class, except as provided in Section 5.11 and Section 5.13 hereof, par
value $.01 per share. The number of Shares of beneficial interest authorized
hereunder is unlimited. All Shares issued hereunder including, without
limitation, Shares issued in connection with a dividend in Shares or a split of
Shares, shall be fully paid and non-assessable.
Section 5.2. Rights of Shareholders. The ownership of the Trust
Property and the property of each Series of the Trust of every description and
the right to conduct any business hereinbefore described are vested exclusively
in the Trustees, and the Shareholders shall have no interest therein other than
the beneficial interest conferred by their Shares, and they shall have no right
to call for any partition or division of any property, profits, rights or
interests of the Trust nor can they be called upon to share or assume any losses
of the Trust or suffer an assessment of any kind by virtue of their owner ship
of Shares. The Shares shall be personal property giving only the rights
specifically set forth in this Declaration. The Shares shall not entitle the
holder to preference, preemptive, appraisal, conversion or exchange rights,
except as the Trustees may determine with respect to any Series of Shares.
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Section 5.3. Trust Only. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust,
Nothing in this Declaration of Trust shall be construed to make the
Shareholders, either by themselves or with the Trustees, partners or members of
a joint stock association.
Section 5.4. Issuance of Shares. The Trustees in their discretion may,
from time to time without vote of the Shareholders, issue Shares, in addition to
the then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, including cash
or property, at such time or times and on such terms as the Trustees may deem
best, and may in such manner acquire other assets (including the acquisition of
assets subject to, and in connection with the assumption of liabilities) and
businesses. In connection with any issuance of Shares, the Trustees may issue
fractional Shares and Shares held in the treasury. The Trustees may from time to
time divide or combine the Shares into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Trust.
Contributions to the Trust may be accepted for, and Shares shall be redeemed as,
whole Shares and/or 1/1,000ths of a Share or integral multiples thereof.
Section 5.5. Register of Shares. A register shall be kept at the
principal office of the Trust or an office of the Transfer Agent which shall
contain the names and addresses of the Shareholders and the number of Shares
held by them respectively and a record of all transfers thereof. Such register
shall be conclusive as to who are the holders of the Shares and who shall be
entitled to receive dividends or distributions or otherwise to exercise or enjoy
the rights of Shareholders. No Shareholder shall be entitled to receive payment
of any dividend or distribution, nor to have notice given to him as herein or in
the By-laws provided, until he has given his address to the Transfer Agent or
such other officer or agent of the Trustees as shall keep the said register for
entry thereon. It is not contemplated that certificates will be issued for the
Shares; however, the Trustees, in their discretion, may authorize the issuance
of share certificates and promulgate appropriate rules and regulations as to
their use.
Section 5.6. Transfer of Shares. Except as otherwise provided by the
Trustees, shares shall be transferable on the records of the Trust only by the
record holder thereof or by his
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agent thereunto duly authorized in writing, upon delivery to the Trustees or the
Transfer Agent of a duly executed instrument of transfer, together with such
evidence of the genuineness of each such execution and authorization and of
other matters as may reasonably be required. Upon such delivery the transfer
shall be recorded on the register of the Trust. Until such record is made, the
Shareholder of record shall be deemed to be the holder of such Shares for all
purposes hereunder and neither the Trustees nor any transfer agent or registrar
nor any officer, employee or agent of the Trust shall be affected by any notice
of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded an the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law.
Section 5.7. Notices, Reports. Any and all notices to which any
Shareholder may be entitled and any and all communications shall be deemed duly
served or given if mailed, postage prepaid, addressed to any Shareholder of
record at his last known address as recorded on the register of the Trust. A
notice of a meeting, an annual report and any other communication to
Shareholders need not be sent to a Shareholder (i) if an annual report and a
proxy statement for two consecutive shareholder meetings have been mailed to
such Shareholders address and have been returned as undeliverable, (ii) if all,
and at least two, checks (if sent by first class mail) in payment of dividends
on Shares during a twelve-month period have been mailed to such Shareholder's
address and have been returned as undeliverable or (iii) in any other case in
which a proxy statement concerning a meeting of security holders is not required
to be given pursuant to the Commission s proxy rules as from time to time in
effect under the Securities Exchange Act of 1934. However, delivery of such
proxy statements, annual reports and other communications shall resume if and
when such Shareholder delivers or cause to be delivered to the trust written
notice setting forth such Shareholder's then current address.
Section 5.8. Treasury Shares. Shares held in the treasury shall, until
reissued pursuant to Section 5.4, not confer any voting rights on the Trustees,
nor shall such Shares be entitled
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to any dividends or other distributions declared with respect to the Shares.
Section 5.9. Voting Powers. The Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Section 2.12; (ii) for the
removal of Trustees as provided in Section 2.13; (iii) with respect to any
investment advisory or management contract entered into pursuant to section 3.2;
(iv) with respect to termination of the Trust as provided in Section 8.2; (v)
with respect to any amendment of this Declaration to the extent and as provided
in Section 8.3; (vi) with respect to any merger, consolidation or sale of assets
as provided in Section 8.4; (vii) with respect to incorporation of the Trust or
any Series to the extent and as provided in Section 8.5; (viii) to the same
extent as the stockholders of Massachusetts business corporation as to whether
or not a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or any
Series or Class thereof or the Shareholders (provided, however, that a
Shareholder of a particular Series or Class shall not be entitled to a
derivative or class action on behalf of any other Series or Class (or
Shareholder of any other Series or Class) of the Trust); (ix) with respect to
any plan adopted pursuant to Rule 12b-1 (or any successor rule) under the 1940
Act; and (x) with respect to such additional matters relating to the Trust as
may be required by this Declaration, the By-laws or any registration of the
Trust as an investment company under the 1940 Act with the Commission (or any
successor agency) or as the Trustees may consider necessary or desirable. Each
whole Share shall be entitled to one vote as to any matter on which it is
entitled vote and each fractional Share shall be entitled to a proportionate
fractional vote, except that the Trustees may, in conjunction with establishment
of any Series or Class of Shares, establish or reserve the right to establish
conditions under which the several Series or Classes shall have separate voting
rights or, if a Series or Class would not, in the sole judgment of the Trustees,
be materially affected by a proposal, no voting rights. There shall be no
cumulative voting in the election of Trustees. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required by law, this Declaration or the By laws to be taken by Shareholders.
The By-laws may include further provisions for Shareholders votes and meetings
and related matters.
Section 5.10. Meetings of Shareholders. Meetings of Shareholders may be
called at any time by the President, and shall be called by the President and
Secretary at the request in writing or by resolution, of a majority of Trustees,
or at the written request of the holder or holders of ten percent (10%) or more
of the total number of Shares then issued and outstanding of
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the Trust entitled to vote at such meeting. Any such request shall state the
purpose of the proposed meeting. At any meeting of Shareholders of the Trust or
of any series of the Trust, a Shareholder Servicing Agent may vote any shares as
to which such Shareholder Servicing Agent is the agent of record and which are
not otherwise represented in person or by proxy at the meeting, proportionately
in accordance with the votes cast by holders of all shares otherwise represented
at the meeting in person or by proxy as to which such Shareholder Servicing
Agent is the agent of record. Any shares so voted by a Shareholder Servicing
Agent will be deemed represented at the meeting for quorum purposes.
Section 5.11. Series Designation. The Trustees, in their discretion,
may authorize the division of Shares into two or more Series, and the different
Series shall be established and designated, and the variations in the relative
rights and preferences as between the different Series shall be fixed and
determined, by the Trustees; provided, that all Shares shall be identical except
that there may be variations so fixed and determined between different Series as
to investment objective, purchase price, allocation of expenses, right of
redemption, special and relative rights as to dividends and on liquidation,
conversion rights, and conditions under which the several Series shall have
separate voting rights. All references to Shares in this Declaration shall be
deemed to be Shares of any or all series as the context may require.
If the Trustees shall divide the Shares of the Trust into two or more
Series, the following provisions shall be applicable:
(a) All provisions herein relating to the Trust shall apply equally to
each Series of the Trust except as the context requires otherwise.
(b) The number of authorized Shares and the number of Shares of each
Series that may be issued shall be unlimited. The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired of
any Series into one or more Series that may be established and designated from
time to time. The Trustees may hold as treasury Shares (of the same or some
other Series), reissue for such consideration and an such terms as they may
determine, or cancel any Shares of any Series reacquired by the Trust at their
discretion from time to time.
(c) All consideration received by the Trust for the issue or sale of
Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment
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of such proceeds in whatever form the same may be, shall irrevocably belong to
that Series for all purposes, subject only to the rights of creditors of such
Series and except as may otherwise be required by applicable laws, and shall be
so recorded upon the books of account of the Trust. In the event that there are
any assets, income, earnings, profits, and proceeds thereof, funds, or payments
which are not readily identifiable as belonging to any particular Series, the
Trustees shall allocate them among any one or more of the Series established and
designated from time to time in such manner and on such basis as they, in their
sole discretion, deem fair and equitable. Each such allocation by the Trustees
shall be conclusive and binding upon the shareholders of all Series for all
purposes.
(d) The assets belonging to each particular Series shall be charged
with the liabilities of the Trust in respect of that Series and all expenses,
costs, charges and reserves attributable to that Series, and any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series shall be allocated
and charged by the Trustees to and among any one or more of the Series
established and designated from time to time in such manner and on such basis as
the Trustees in their sole discretion deem fair and equitable. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Series for all purposes. The
Trustees shall have full discretion, to the extent not inconsistent with the
1940 Act, to determine which items are capital; and each such determination and
allocation shall be conclusive and binding upon the Shareholders. The assets of
a particular Series of the Trust shall, under no circumstances, be charged with
liabilities attributable to any other Series of the Trust. All persons extending
credit to, or contracting with or having any claim against a particular Series
of the Trust shall look only to the assets of that particular Series for payment
of such credit, contract or claim. No Shareholder or former Shareholder of any
Series shall have any claim on or right to any assets allocated or belonging to
any other series.
(e) Each Share of a Series of the Trust shall represent a beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his pro rata share of distributions of income and
capital gains made with respect to such Series. Upon redemption of his Shares or
indemnification for liabilities incurred by reason of his being or having been a
Shareholder of a Series, such shareholder shall be paid solely out of the funds
and property of such Series of the Trust. Upon liquidation or termination of a
Series of the
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Trust, Shareholders of such Series shall be entitled to receive a pro rata share
of the net assets of such Series. A Shareholder of a particular Series of the
Trust shall not be entitled to participate in a derivative or class action on
behalf of any other Series or the Shareholders of any other Series of the Trust.
(f) The establishment and designation of any Series of Shares shall be
effective upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such Series, or as otherwise provided in such instrument. The
Trustees may by an instrument executed by a majority of their number abolish any
Series and the establishment and designation thereof. Except as otherwise
provided in this Article V, the Trustees shall have the power to determine the
designations, preferences, privileges, limitations and rights, of each class and
Series of Shares. Each instrument referred to in this paragraph shall have the
status of an amendment to this Declaration.
Section 5.12. Assent to Declaration of Trust. Every Shareholder, by
virtue of having become a shareholder, shall be held to have expressly assented
and agreed to the terms hereof and to have become a party hereto.
Section 5.13. Class Designation. The Trustees, in their discretion, may
authorize the division of the Shares of the Trust, or, if any Series be
established, the Shares of any Series, into two or more Classes, and the
different Classes shall be established and designated, and the variations in the
relative rights and preferences as between the different Classes shall be fixed
and determined, by the Trustees; provided, that all Shares of the Trust or of
any Series shall be identical to all other Shares of the Trust or the same
Series, as the case may be, except that there may be variations between
different classes as to allocation of expenses, right of redemption, special and
relative rights as to dividends and on liquidation, conversion rights, and
conditions under which the several Classes shall have separate voting rights.
All references to Shares in this Declaration shall be deemed to be Shares of any
or all Classes as the context may require.
If the Trustees shall divide the Shares of the Trust or any Series into
two or more Classes, the following provisions shall be applicable:
(a) All provisions herein relating to the Trust, or any Series of the
Trust, shall apply equally to each Class of Shares
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of the Trust or of any Series of the Trust, except as the context requires
otherwise.
b) The number of Shares of each Class that may be issued shall be
unlimited. The Trustees may classify or reclassify any unissued Shares of the
Trust or any Series or any Shares previously issued and reacquired of any Class
of the Trust or of any Series into one or more Classes that may be established
and designated from time to time, The Trustees may hold as treasury Shares (of
the same or some other Class), reissue for such consideration and on such terms
as they may determine, or cancel any Shares of any Class reacquired by the Trust
at their discretion from time to time.
c) Liabilities, expenses, costs, charges and reserves related to the
distribution of, and other identified expenses that should properly be allocated
to, the Shares of a particular Class may be charged to and borne solely by such
Class and the bearing of expenses solely by a Class of Shares may be
appropriately reflected (in a manner determined by the Trustees) and cause
differences in the net asset value attributable to, and the dividend, redemption
and liquidation rights of, the Shares of different Classes. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Classes for all purposes.
d) The establishment and designation of any Class of Shares shall be
effective upon the execution of a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such Class, or as otherwise provided in such instrument. The
Trustees may, by an instrument executed by a majority of their number, abolish
any Class and the establishment and designation thereof. Each instrument
referred to in this paragraph shall have the status of an amendment to this
Declaration.
ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES
-----------------------------------
Section 6.1. Redemption of Shares. All Shares of the Trust shall be
redeemable, at the redemption price determined in the manner set out in this
Declaration. Redeemed or repurchased Shares may be resold by the Trust.
The Trust shall redeem the Shares upon the appropriately verified written
application of the record holder thereof (or upon such other form of request as
the Trustees may determine) at the office of the Transfer Agent, the Shareholder
Servicing
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Agent, which is the agent of record for such Shareholder, or at the office of
any bank or trust company, either in or outside the Commonwealth of
Massachusetts, which is a member of the Federal Reserve System and which the
said Transfer Agent or the said Shareholder Servicing Agent has designated for
that purpose, or at such office or agency as may be designated from time to time
in the Trust's then effective registration statement under the Securities Act of
1933. The Trustees may from time to time specify additional conditions, not
inconsistent with the 1940 Act, regarding the redemption of Shares in the
Trust's then effective registration statement under the Securities Act of 1933.
Section 6.2. Price. Shares shall be redeemed at their net asset value
determined as set forth in Section 7.1 hereof as of such time as the Trustees
shall have theretofore prescribed by resolution. In the absence of such
resolution, the redemption price of Shares deposited shall be the net asset
value of such Shares next determined as set forth in Section 7.1 hereof after
receipt of such application.
Section 6.3. Payment. Payment for such Shares shall be made in cash or
in property out of the assets of the relevant series of the Trust to the
Shareholder of record at such time and in the manner, not inconsistent with the
1940 Act or other applicable laws, as may be specified from time to time in the
Trust's then effective registration statement under the Securities Act of 1933,
subject to the provisions of Section 6.4 hereof.
Section 6.4. Effect of Suspension of Determination of Net Asset Value.
If, pursuant to Section 6.9 hereof, the Trustees shall declare a suspension of
the determination of net asset value, the rights of Shareholders (including
those who shall have applied for redemption pursuant to Section 6.1 hereof but
who shall not yet have received payment) to have Shares redeemed and paid for by
the Trust shall be suspended until the termination of such suspension is
declared. Any record holder who shall have his redemption right so suspended
may, during the period of such suspension, by appropriate written notice of
revocation at the office or agency where application was made, revoke any
application for redemption not honored and withdraw any certificates on deposit.
The redemption price of Shares for which redemption applications have not been
revoked shall be the net asset value of such Shares next determined as set forth
in Section 7.1 after the termination of such suspension, and payment shall be
made within seven (7) days after the date upon which the application was made
plus the period after such application during which the determination of net
asset value was suspended.
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Section 6. 5. Repurchase by Agreement. The Trust may repurchase Shares
directly, or through the Distributor or another agent designated for the purpose
by agreement with the owner thereof at a price not exceeding the net asset value
per share determined as of the time when the purchase or contract of purchase is
made or the net asset value as of any time which may be later determined
pursuant to Section 7.1 hereof, provided payment is not made for the Shares
prior to the time as of which such net asset value is determined.
Section 6.6. Redemption of Sub-Minimum Accounts. The Trust shall have
the right at any time without prior notice to the shareholder to redeem Shares
of any shareholder for their then current net asset value per Share if at such
time the shareholder owns Shares having an aggregate net asset value of less
than an amount set from time to time by the Trustees, subject to such terms and
conditions as the Trustees may approve, and subject to the Trust's giving
general notice to all shareholders of its intention to avail itself of such
right, either by publication in the Trust s registration statement, if any, or
by such other means as the Trustees may determine.
Section 6.7. Redemption of Shares in Order to Qualify as Regulated
Investment Company; Disclosure of Holding. If the Trustees shall, at any time
and in good faith, be of the opinion that direct or indirect ownership of Shares
or other securities of the Trust has or may become concentrated in any Person to
an extent which would disqualify any Series of the Trust as a regulated
investment company under the Internal Revenue Code, then the Trustees shall have
the power by lot or other means deemed equitable by them (i) to call for
redemption by any such Person a number, or principal amount, of Shares or other
securities of the Trust sufficient to maintain or bring the direct or indirect
ownership of Shares or other securities of the Trust into conformity with the
requirements for such qualification, and (ii) to refuse to transfer or issue
Shares or other securities of the Trust to any Person whose acquisition of the
Shares or other securities of the Trust in question would result in such
disqualification. The redemption shall be effected at the redemption price and
in the manner provided in Section 6.1.
The holders of Shares or other securities of the Trust shall upon
demand disclose to the Trustees in writing such information with respect to
direct and indirect ownership of Shares or other securities of the Trust as the
Trustees deem necessary to comply with the provisions of the Internal Revenue
Code, or to comply with the requirements of any other taxing authority.
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Section 6.8. Reductions in Number of Outstanding Shares Pursuant to Net
Asset Value Formula. The Trust may also reduce the number of Outstanding Shares
pursuant to the provisions of Section 7.3.
Section 6.9. Suspension of Right of Redemption. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New York
Stock Exchange is closed other than customary week-end and holiday closings,
(ii) during which trading on the New York Stock Exchange is restricted, (iii)
during which an emergency exists as a result of which disposal by the Trust of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the value of its net assets, or
(iv) during any other period when the Commission may for the protection of
Shareholders of the Trust by order permit suspension of the right of redemption
or postponement of the date of payment or redemption; provided that applicable
rules and regulations of the Commission shall govern as to whether the
conditions prescribed in (ii), (iii), or (iv) exist. Such suspension shall take
effect at such time as the Trust shall specify but not later than the close of
business on the business day next following the declaration of suspension, and
thereafter there shall be no right of redemption or payment on redemption until
the Trust shall declare the suspension at an end, except that the suspension
shall terminate in any event on the first day on which said stock exchange shall
have reopened or the Period specified in (ii) or (iii) shall have expired (as to
which in the absence of an official ruling by the Commission, the determination
of the Trust shall be conclusive). In the case of a suspension of the right of
redemption, a Shareholder may either withdraw his request for redemption or
receive payment based on the net asset value existing after the termination of
the suspension.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE, NET INCOME AND DISTRIBUTIONS
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Section 7.1. Not Asset Value. The value of the assets of the Trust or
any Series of the Trust shall be determined by appraisal of the securities of
the Trust or allocated to such Series, such appraisal to be on the basis of the
amortized cost of such securities in the case of money market securities, market
value in the case of other securities, or by such other method as shall be
deemed to reflect the fair value thereof, determined in good faith by or under
the direction of the Trustees. From the total value of said assets, there shall
be deducted all indebtedness, interest, taxes, payable or accrued,
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including estimated taxes on unrealized book profits, expenses and management
charges accrued to the appraisal date, net income determined and declared as a
distribution and all other items in the nature of liabilities attributable to
the Trust or such Series or Class thereof which shall be deemed appropriate. The
net asset value of a Share shall be determined by dividing the net asset value
of the Class, or, if no Class has been established, of the Series, or, if no
Series has been established, of the Trust, by the number of Shares of that
Class, or Series, or of the Trust, as applicable, outstanding. The net asset
value of Shares of the Trust or any Class or Series of the Trust shall be
determined pursuant to the procedure and methods prescribed or approved by the
Trustees in their discretion and as set forth in the most recent Registration
Statement of the Trust as filed with the Securities and Exchange Commission
pursuant to the requirements of the Securities Act of 1933, as amended, the
Investment Company Act of 1940, as amended, and the Rules thereunder. The net
asset value of the Shares shall be determined at least once on each business
day, as of the close of trading on the New York Stock Exchange or as of such
other time or times as the Trustees shall determine. The power and duty to make
the daily calculations may be delegated by the Trustees to the Investment
Adviser, the custodian, the Transfer Agent or such other Person as the Trustees
may determine by resolution or by approving a contract which delegates such duty
to another Person. The Trustees may suspend the daily determination of net asset
value to the extent permitted by the 1940 Act.
Section 7.2. Distributions to Shareholders. The Trustees shall from
time to time distribute ratably among the Shareholders of the Trust or a Series
such proportion of the net profits, surplus (including paid-in surplus),
capital, or assets of the Trust or such Series held by the Trustees as they may
deem proper, Such distributions may be made in cash or property (including
without limitation any type of obligations of the Trust or such Series or any
assets thereof), and the Trustees may distribute ratably among the Shareholders
additional Shares of the Trust or such Series issuable hereunder in such manner,
at such times, and on such terms as the Trustees may deem proper. Such
distributions may be among the Shareholders of record at the time of declaring a
distribution or among the Shareholders of record at such other date or time or
dates or times as the Trustees shall determine. To the extent the Trustees deem
it appropriate as a matter of administrative convenience, distributions to
Shareholders may be effected on different dates to different Shareholders,
provided that such distributions shall be made at regularly occurring intervals
of approximately the same length with respect to each Shareholder of the Trust.
The Trustees may in their discretion determine that, solely for the purposes of
such distributions, Outstanding Shares shall exclude
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Shares for which orders have been placed subsequent to a specified time on the
date the distribution is declared or on the next preceding day if the
distribution is declared as of a day on which Boston banks are not open for
business, all as described in the registration statement under the Securities
Act of 1933. The Trustees may always retain from the net profits such amount as
they may deem necessary to pay the debts or expenses of the Trust or the Series
or to meet obligations of the Trust or the Series, or as they may deem desirable
to use in the conduct of its affairs or to retain for future requirements or
extensions of the business. The Trustees may adopt and offer to Shareholders
such dividend reinvestment Plans, cash dividend payout plans or related plans as
the Trustees shall deem appropriate.
Inasmuch as the computation of net income and gains for Federal income
tax purposes may vary from the commutation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust or the Series to avoid or reduce liability for taxes.
Section 7.3. Determination of Net Income; Constant Net Asset Value;
Reduction of Outstanding Shares. Subject to Section 5.11 hereof, the net income
of the Trust or any Series shall be determined in such manner as the Trustees
shall provide by resolution. Expenses of the Trust or a Series, including the
advisory or management fee and service fees, shall be accrued each day. Such net
income may be determined by or under the direction of the Trustees as of the
close of trading on the New York Stock Exchange on each day on which such
Exchange is open or as of such other time or times as the Trustees shall
determine, and, except as provided herein, all the net income of the Trust or
any Series, as so determined, may be declared as a dividend on the Outstanding
Shares of the Trust or such Series. If, for any reason, the net income of the
Trust or any Series, determined at any time is a negative amount, the Trustees
shall have the power with respect to the Trust or such Series (i) to offset each
Shareholder's pro rata share of such negative amount from the accrued dividend
account of such Shareholder, or (ii) to reduce the number of Outstanding Shares
of the Trust or such Series by reducing the number of Shares in the account of
such Shareholder by that number of full and fractional Shares which represents
the amount of such excess negative net income, or (iii) to cause to be recorded
on the books of the Trust or such Series an asset account in the amount of such
negative net income, which account may be reduced by the amount, provided that
the same shall thereupon become the property of the Trust or such Series with
respect to the Trust or such Series and shall not be paid to any
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Shareholder, of dividends declared thereafter upon the outstanding Shares of the
Trust or such Series on the day such negative net income is experienced, until
such asset account is reduced to zero, or (iv) to combine the methods described
in clauses (i) and (ii) and (iii) of this sentence, in order to cause the net
asset value per Share of the Trust or such Series to remain at a constant amount
per Outstanding Share immediately after each such determination and
declarations. The Trustees shall also have the power to fail to declare a
dividend out of net income for the purpose of causing the net asset value per
Share to be increased to a constant amount. The Trustees shall not be required
to adopt, but may at any time adopt, discontinue or amend the practice of
maintaining the net asset value per Share of the Trust or a Series at a constant
amount.
Section 7.4. Allocation Between Principal and Income. The Trustees
shall have full discretion to determine whether any cash or property received
shall be treated as income or as principal and whether any item of expense shall
be charged to the income or the principal account, and their determination made
in good faith shall be conclusive upon the Shareholders. In the case of stock
dividends received, the Trustees shall have full discretion to determine, in the
light of the particular circumstances, how much if any of the value thereof
shall be treated as income, the balance, if any, to be treated as principal.
Section 7.5. Power to Modify Foregoing Procedures. Notwithstanding any
of the foregoing provisions of this Article VII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
Share net asset value or net income, or the declaration and payment of dividends
and distributions as they may deem necessary or desirable.
ARTICLE VIII
DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC.
--------------------------------------------------------
Section 8.l. Duration. The Trust shall continue without limitation of
time but subject to the provisions of this Article VIII.
Section 8.2. Termination of Trust. (a) The Trust or any Series of the
Trust may be terminated by an instrument in writing signed by a majority of the
Trustees, or by the affirmative vote of the holders a majority of the Shares of
the Trust or Series outstanding and entitled to vote, at any meeting of
Shareholders. Upon the termination of the Trust or any Series,
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(i) the Trust or any Series shall carry on no business except
for the purpose of winding up its affairs;
(ii) the Trustees shall proceed to wind up the affairs of the
Trust or Series and all of the powers of the Trustees under this
Declaration shall continue until the affairs of the Trust or Series
shall have been wound up, including the power to fulfill or discharge
the contracts of the Trust or Series, collect its assets, sell, convey,
assign, exchange, transfer or otherwise dispose of all or any part of
the remaining Trust Property or property of the Series to one or more
persons at public or private sale for consideration which may consist
in whole or in part of cash, securities or other property of any kind,
discharge or pay its liabilities, and do all other acts appropriate to
liquidate its business; and
(iii) after paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities and
refunding agreements as they deem necessary for their protection, the
Trustees may distribute the remaining Trust Property or property of the
Series, in cash or in kind or partly each, among the Shareholders of
the Trust or Series according to their respective rights.
(b) After termination of the Trust or any Series and distribution to
the Shareholders as herein provided, a majority of the Trustees shall execute
and lodge among the records of the Trust an instrument in writing setting forth
the fact of such termination, and the Trustees shall thereupon be discharged
from all further liabilities and duties hereunder, and the rights and interests
of all Shareholders of the Trust or Series shall thereupon cease.
Section 8.3. Amendment Procedure. (a) This Declaration may be amended
by a vote of the holders of a majority of the Shares outstanding and entitled to
vote. Amendments shall be effective upon the taking of action as provided in
this section or at such later time as shall be specified in the applicable vote
or instrument. The Trustees may also amend this Declaration without the vote or
consent of Shareholders if they deem it necessary to conform this Declaration to
the requirements of applicable federal or state laws or regulations or the
requirements of the regulated investment company provisions of the Internal
Revenue Code (including those provisions of such Code relating to the retention
of the exemption from federal income tax with respect to dividends paid by the
Trust out of interest income received on Municipal Bonds), but the Trustees
shall not be liable for failing so to do. The Trustees may also amend this
Declaration without the vote or consent of Shareholders if they deem it
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necessary or desirable to change the name of the Trust or to make any other
changes in the Declaration which do not materially adversely affect the rights
of Shareholders hereunder.
(b) No amendment may be made under this Section 8.3 which would change
any rights with respect to any Shares of the Trust or Series by reducing the
amount payable thereon upon liquidation of the Trust or Series or by diminishing
or eliminating any voting rights pertaining thereto, except with the vote or
consent of the holders of two-thirds of the Shares of the Trust or series
outstanding and entitled to vote. Nothing contained in this Declaration shall
permit the amendment of this Declaration to impair the exemption from personal
liability of the Shareholders, Trustees, officers, employees and agents of the
Trust or to permit assessments upon Shareholders.
(c) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and executed by
a majority of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of securities of the Trust shall have become
effective, this Declaration may be terminated or amended in any respect by the
affirmative vote of a majority of the Trustees or by an instrument signed by a
majority of the Trustees.
Section 8.4. Merger, Consolidation and Sale of Assets. The Trust or any
Series thereof may merge or consolidate with any other corporation, association,
trust or other organization or may sell, lease or exchange all or substantially
all of the Trust Property or the property of any Series, including its good
will, upon such terms and conditions and for such consideration when and as
authorized at any meeting of Shareholders of the Trust or Series called for the
purpose by the affirmative vote of the holders of a majority of the Shares of
the Trust or Series.
Section 8.5. Incorporation. With the approval of the holders of a
majority of the Shares of the Trust or any Series outstanding and entitled to
vote, the Trustees may cause to be organized or assist in organizing a
corporation or corporations under the laws of any jurisdiction or any other
trust, partnership, association or other organization to take over all of the
Trust Property or the property of any Series or to carry on any business in
which the Trust or the Series shall directly or indirectly have any interest,
and to sell, convey and transfer
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<PAGE>
the Trust Property or the property of any Series to any such corporation, trust,
association or organization in exchange for the Shares or securities thereof or
otherwise, and to lend money to, subscribe for the Shares or securities of, and
enter into any contracts with any such corporation, trust, partnership,
association or organization, or any corporation, partnership, trust, association
or organization in which the Trust or the Series holds or is about to acquire
shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any Series or any successor thereto and any
such corporation, trust, partnership, association or other organization if and
to the extent permitted by law, as provided under the law then in effect.
Nothing contained herein shall be construed as requiring approval of
Shareholders for the Trustees to organize or assist in organizing one or more
corporations, trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property to such
organization or entities.
ARTICLE IX
REPORTS TO SHAREHOLDERS
-----------------------
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report, which may be included in the Trust's prospectus or
statement of additional information, of the transactions of the Trust, including
financial statements which shall at least annually be certified by independent
public accountants.
ARTICLE X
MISCELLANEOUS
-------------
Section 10.1. Filing. This Declaration and any amendment hereto shall
be filed in the office of the Secretary of the Commonwealth of Massachusetts and
in such other places as may be required under the laws of Massachusetts and may
also be filed or recorded in such other places as the Trustees deem appropriate.
Unless the amendment is embodied in an instrument signed by a majority of the
Trustees, each amendment filed shall be accompanied by a certificate signed and
acknowledged by a Trustee stating that such action was duly taken in a manner
provided herein. A restated Declaration, integrating into a single instrument
all of the provisions of the Declaration which are then in effect and operative,
may be executed from time to time by a majority of the Trustees and shall, upon
filing with the Secretary of the Commonwealth of Massachusetts, be conclusive
evidence of all amendments contained therein and may hereafter be referred to in
lieu of the original Declaration and the various
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amendments thereto. The restated Declaration may include any amendment which the
Trustees are empowered to adopt, whether or not such amendment has been adopted
prior to the execution of the restated Declaration.
Section 10.2. Governing Law. This Declaration is executed by the
Trustees and delivered in the Commonwealth of Massachusetts and with reference
to the internal laws thereof, and the rights of all parties and the validity and
construction of every provision hereof shall be subject to and construed
according to the internal laws of said State without regard to the choice of law
rules thereof.
Section 10.3. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original counter
part.
Section 10.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of any instrument or
writing, (c) the form of any vote passed at a meeting of Trustees or
Shareholders, (d) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements of
this Declaration, (e) the form of any By-laws adopted by or the identity of any
officers elected by the Trustees, or (f) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with the
Trustees and their successors.
Section 10.5. Provisions in Conflict with Law or Regulations. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of this
Declaration; provided, however, that such determination shall not affect any of
the remaining provisions of this Declaration or render invalid or improper any
action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or
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unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect such provisions in any other jurisdiction or any
other provision of this Declaration in any jurisdiction.
Section 10.6. Principal Place of Business. The principal place of
business of the Trust is 2 Pickwick Plaza, Greenwich, Connecticut 06830. The
principal place of business may be changed by resolution of a majority of the
Trustees.
Section 10.7. Resident Agent. The Trust shall maintain a resident agent
in the Commonwealth of Massachusetts, which agent shall initially be CT
Corporation System, 2 Oliver Street, Boston, Massachusetts 02109. The Trustees
may designate a successor resident agent, provided however, that such
appointment shall not become effective until written notice thereof is delivered
to the office of the Secretary of the Commonwealth.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this instrument this
20th day of February, 1992.
/s/ Eric G. Woodbury
Eric G. Woodbury
(as Trustee and not individually)
Ten Post Office Square, Suite 1230
Boston, MA 02109
/s/ Nancy J. Cox
Nancy J. Cox
(as Trustee and not individually)
Ten-Post Office Square, Suite 1230
Boston, MA 02109
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. February 20, 1992
Then personally appeared the above-named Eric G. Woodbury and Nancy J.
Cox who acknowledged the foregoing instrument to be their free act and deed.
Before me,
/s/ Linda M. Lombardi
Notary Public
My commission expires:
LINDA M. LOMBARDI, Notary Public
My Commission Expires Nov. 27, 1998
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Exhibit 1.1
CERTIFICATE OF AMENDMENT OF
DECLARATION OF TRUST OF
NATIONAL SHORT-TERM INCOME SERIES
The undersigned hereby certify that each is a Trustee of National
Short-Term Income Series, a Massachusetts business trust (the "Trust") and
further certify that:
(1) The Declaration of Trust of the Fund is hereby amended to
change the name of the Fund to "National Asset Reserve" and to
substitute said name for the name of "National Short-Term
Income Series" in each place it appears in said Declaration of
Trust.
(2) Said amendment was duly adopted in accordance with the terms
of the Declaration of Trust by a vote of the Trustees of the
Fund at a meeting called for such purpose held on June 12,
1992.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the 12th day of June, 1992.
/s/ Lincoln W. Allan /s/ Gerald W. Blakely, Jr.
Lincoln W. Allan Gerald W. Blakeley, Jr.
/s/ Harry Dalzell-Payne
E. Virgil Conway Harry Dalzell-Payne
/s/ Mark L. Lipson /s/ Richard E. Segerson
Mark L. Lipson Richard E. Segerson
/s/ Edward L. Palmer /s/ David W. Wallace
Edward L. Palmer David W. Wallace
Exhibit 2
BY-LAWS
OF
NATIONAL ASSET RESERVE
FEBRUARY 20, 1992
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I - DEFINITIONS 1
ARTICLE II - OFFICES 1
Section 1. Resident Agent 1
Section 2. Offices 1
ARTICLE III - SHAREHOLDERS 1
Section 1. Meetings 1
Section 2. Notice of Meetings 2
Section 3. Record Date for Meetings and Other
Purposes 2
Section 4. Proxies 2
Section 5. Inspection of Records 3
Section 6. Action without Meeting 3
ARTICLE IV - TRUSTEES 3
Section 1. Meetings of the Trustees 3
Section 2. Quorum and Manner of Acting 4
ARTICLE V - COMMITTEES 4
Section 1. Executive and Other Committees 4
Section 2. Meetings, Quorum and Manner of Acting 4
Section 3. Chairman 5
ARTICLE VI - OFFICERS 5
Section 1. General Provisions 5
Section 2. Term of Office and Qualifications 5
Section 3. Removal 5
Section 4. Powers and Duties of the President 6
Section 5. Powers and Duties of Vice Presidents 6
Section 6. Powers and Duties of the Treasurer 6
Section 7. Powers and Duties of the Secretary 6
Section 8. Powers and Duties of Assistant Treasurers 7
Section 9. Powers and Duties of Assistant Secretaries 7
Section 10. Compensation of Officers and Trustees 7
ARTICLE VII - FISCAL YEAR 7
ARTICLE VIII - SEAL 7
ARTICLE IX - WAIVERS OF NOTICE 8
-i-
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ARTICLE X - CUSTODY OF SECURITIES 8
Section 1. Employment of a Custodian 8
Section 2. Action Upon Termination of Custodian Agreement 8
Section 3. Central Certificate System 8
Section 4. Acceptance of Receipts in Lieu of Certificate 9
ARTICLE XI - AMENDMENTS 9
ARTICLE XII - MISCELLANEOUS 9
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BY-LAWS
OF
NATIONAL SHORT TERM INCOME SERIES
ARTICLE I
DEFINITIONS
The terms "Administrator", "Class", "Commission", "Custodian",
"Declaration", "Distributor", "His", "Interested Person", "Investment Adviser",
"Municipal Bonds", "1940 Act", "Person", "Series". "Shareholder", "Shareholder
Servicing Agent", "Shares", "Transfer agent", "Trust", "Trust Property",
"Trustees", and "vote of a majority of the Shares outstanding and entitled to
vote", have the respective meanings given them in the Declaration of Trust of
National Worldwide Opportunities Fund dated February 20, 1992, as amended from
time to time.
ARTICLE II
OFFICES
Section 1. Resident Agent. The Trust shall maintain a resident agent in
the Commonwealth of Massachusetts, which agent shall initially be CT Corporation
System, 2 Oliver Street, Boston, Massachusetts 02109. The Trustees may designate
a successor resident agent, provided, however, that such appointment shall not
become effective until written notice thereof is delivered to the office of the
Secretary of the Commonwealth.
Section 2. Offices. The Trust may have its principal office and other
offices in such places without as well as within the Commonwealth of
Massachusetts as the Trustees may from time to time determine.
ARTICLE III
SHAREHOLDERS
Section 1. Meetings. A meeting of Shareholders may be called at any
time by a majority of the Trustees and shall be called by any Trustee upon
written request, which shall specify the purpose or purposes for which such
meeting is to be called, of Shareholders holding in the aggregate not less than
10% of the outstanding Shares entitled to vote on the matters specified in such
written request. Any such meeting shall be held as provided in the Declaration
at such place within or without the Commonwealth of Massachusetts as the
Trustees shall designate. The holders of a majority of outstanding Shares
present in person
<PAGE>
or by proxy shall constitute a quorum at any meeting of the Shareholders. In the
absence of a quorum, a majority of outstanding Shares entitled to vote present
in person or by proxy may adjourn the meeting from time to time until a quorum
shall be present.
Section 2. Notice of Meetings. Notice of all meetings of the
Shareholders, stating the time, place and purposes of the meeting, shall be
given by the Trustees by mail to each Shareholder at his address as recorded on
the register of the Trust mailed at least (10) days and not more than sixty (60)
days before the meeting. Only the business stated in the notice of the meeting
shall be considered at such meeting. Any adjourned meeting may be held as
adjourned without further notice. No notice need be given to any Shareholder who
shall have failed to inform the Trust of his current address or if a written
waiver of notice, executed before or after the meeting by the Shareholder or his
attorney thereunto authorized, is filed with the records of the meeting.
Section 3. Record Date for Meetings and Other Purposes. For the purpose
of determining the Shareholders who are entitled to notice of and to vote at any
meeting, or to participate in any distribution, or for the purpose of any other
action, the Trustees may from time to time close the transfer books for such
period, not exceeding thirty (30) days, as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date not more than
sixty (60) days prior to the date of any meeting of Shareholders or distribution
or other action as a record date for the determinations of the persons to be
treated as Shareholders of record for such purposes, except for dividend
payments which shall be governed by the Declaration.
Section 4. Proxies. At any meeting of Shareholders, any holder of
Shares entitled to vote threat may vote by proxy, provided that no proxy shall
be voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken.
Proxies may be solicited in the name of one or more Trustees or one or more of
the officers of the Trust. Only Shareholders of record shall be entitled to
vote. Each whole share shall be entitled to one vote as to any matter on which
it is entitled by the Declaration to vote, and each fractional Share shall be
entitled to a proportionate fractional vote. When any Share is held jointly by
several persons, any one of them may vote at any meeting in person or by proxy
in respect of such Share, but if more than one of them shall be present at such
meeting in person or by proxy, and such joint owners or their proxies so present
disagree as to any vote to be cast, such vote
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shall not be received in respect of such Share. A proxy purporting to be
executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise, and the burden of proving invalidity
shall rest on the challenger. If the holder of any such share is a minor or a
person of unsound mind, and subject to guardianship or the legal control of any
other person as regards the charge or management of such Share, he may vote by
his guardian or such other person appointed or having such control, and such
vote may be given in person or by proxy.
Section 5. Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
shareholders of a Massachusetts business corporation.
Section 6. Action without Meeting. Any action which may be taken by
Shareholders may be taken without a meeting if a majority of Shareholders
entitled to vote on the matter (or such larger proportion thereof as shall be
required by law, the Declaration or these By-Laws for approval of such matter)
consent to the action in writing and the written consents are filed with the
records of the meetings of Shareholders. Such consents shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
ARTICLE IV
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees may in their
discretion provide for regular or stated meetings of the Trustees. Notice of
regular or stated meetings need not be given. Meetings of the Trustees other
than regular or stated meetings shall be held whenever called by the President,
or by any one of the Trustees, at the time being in office. Notice of the time
and place of each meeting other than regular or stated meetings shall be given
by the Secretary or an Assistant Secretary or by the officer or Trustee calling
the meeting and shall be mailed to each Trustee at least two days before the
meeting, or shall be telegraphed, cabled, or wirelessed to each Trustee at his
business address, or personally delivered to him at least one day before the
meeting. Such notice may, however, be waived by any Trustee. Notice of a meeting
need not be given to any Trustee if a written waiver of notice, executed by him
before or after the meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him. A notice or waiver of notice need not
specify the purpose of any meeting. The Trustees may meet by means of a
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telephone conference circuit or similar communications equipment by means of
which all persons participating in the meeting shall be deemed to have been held
at a place designated by the Trustees at the meeting. Participation in a
telephone conference meeting shall constitute presence in person at such
meeting. Any action required or permitted to be taken at any meeting of the
Trustees may be taken by the Trustees without a meeting if all the Trustees
consent to the action in writing and the written consents are filed with the
records of the Trustees meetings. Such consents shall be treated as a vote for
all purposes.
Section 2. Quorum and Manner of Acting. A majority of the Trustees
shall be present in person at any regular or special meeting of the Trustees in
order to constitute a quorum for the transaction of business at such meeting and
(except as otherwise required by law, the Declaration of these By-Laws) the act
of a majority of the Trustees present at any such meeting, at which a quorum is
present, shall be the act of the Trustees. In the absence of a quorum, a
majority of the Trustees present may adjourn the meeting from time to time until
a quorum shall be present. Notice of an adjourned meeting need not be given.
ARTICLE V
COMMITTEES
Section 1. Executive and Other Committees. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than three (3) to hold office at the pleasure
of the Trustees, which shall have the power to conduct the current and ordinary
business of the Trust while the Trustees are not in session, including the
purchase and sale of securities and the designation of securities to be
delivered upon redemption of Shares of the Trust, and such other powers of the
Trustees as the Trustees may, from time to time, delegate to them except those
powers which by law, the Declaration or these By-Laws they are prohibited from
delegating. The Trustees may also elect from their own number other Committees
from time to time, the number composing such Committees, the powers conferred
upon the same (subject to the same limitations as with respect to the Executive
Committee) and the term of membership on such Committees to be determined by the
Trustees. The Trustees may designate a chairman of any such Committee. In the
absence of such designation the Committee may elect its own Chairman.
Section 2. Meetings, Quorum and Manner of Acting. The Trustees may (1)
provide for stated meetings of any Committee, (2) specify the manner of calling
and notice required for special meetings of any Committee, (3) specify the
number of members of a
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Committee required to constitute a quorum and the number of members of a
Committee required to exercise specified powers delegated to such Committee, (4)
authorize the making of decisions to exercise specified powers by written assent
of the requisite number of members of a Committee without a meeting, and (5)
authorize the members of a Committee to meet by means of a telephone conference
circuit.
The Executive Committee shall keep regular minutes of its meetings and
records of decisions taken without a meeting and cause them to be recorded in a
book designated for that purpose and kept in the Office of the Trust.
Section 3. Chairman. The Trustees may, by a majority vote of all the
Trustees, elect from their own number a Chairman, to hold office until his
successors shall have been duly elected and qualified. The Chairman shall not
hold any other office. The Chairman may be, but need not be, a Shareholder. The
Chairman shall preside at all meetings of the Trustees and shall have such other
duties as from time to time may be assigned to him by the Trustees.
ARTICLE VI
OFFICERS
Section 1. General Provisions. The officers of the Trust shall be a
President, a Treasurer and a Secretary, each of whom shall be elected by the
Trustees. The Trustees may elect or appoint such other officers or agents as the
business of the Trust may require, including one or more Vice Presidents, one or
more Assistant Secretaries, and one or more Assistant Treasurers. The Trustees
may delegate to any officer or committee the power to appoint any subordinate
officers or agents,
Section 2. Term of Office and Qualifications. Except as otherwise
provided by law, the Declaration or these By-Laws, the President, the Treasurer
and the Secretary shall each hold office until his successor shall have been
duly elected and qualified, and all other officers shall hold office at the
pleasure of the Trustees. The Secretary and Treasurer may be the same person. A
Vice President and the Treasurer or a Vice President and the Secretary may be
the same person, but the offices of Vice President, Secretary and Treasurer
shall not be held by the same person. The President shall hold no other office.
Except as above provided, any two offices may be held by the same person. Any
officer may be but none need be a Trustee or Shareholder.
Section 3. Removal. The Trustees, at any regular or special meeting of
the Trustees, may remove any officer without
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cause, by a vote of a majority of the Trustees then in office. Any officer or
agent appointed by an officer or committee may be removed with or without cause
by such appointing officer or committee.
Section 4. Powers and Duties of the President. The President may call
meetings of the Trustees and of any Committee thereof when he deems it necessary
and shall preside at all meetings of the Shareholders. Subject to the control of
the Trustees and to the control of any Committees of the Trustees, within their
respective spheres, as provided by the Trustees, he shall at all times exercise
a general supervision and direction over the affairs of the Trust. He shall have
the power to employ attorneys and counsel for the Trust and to employ such
subordinate officers, agents, clerks and employees as he may find necessary to
transact the business of the Trust. He shall also have the power to grant,
issue, execute or sign such powers of attorney, proxies or other documents as
may be deemed advisable or necessary in furtherance of the interests of the
Trust. The President shall have such other powers and duties, as from time to
time may be conferred upon or assigned to him by the Trustees.
Section 5. Powers and Duties of Vice Presidents. In the absence or
disability of the President, the Vice President or, if there be more than one
Vice President, any Vice President designated by the Trustees shall perform all
the duties and may exercise any of the powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees and the President.
Section 6. Powers and Duties of the Treasurer. The Treasurer shall be
the principal financial and accounting officer of the Trust. He shall deliver
all funds of the Trust which may come into his hands to such Custodian as the
Trustees may employ pursuant to Article X of these By-Laws, He shall render a
statement of condition of the finances of the Trust to the Trustees as often as
they shall require the same and he shall 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 Trustees. The Treasurer shall give a bond for the
faithful discharge of his duties, if required so to do by the Trustees, in such
sum and with such surety or sureties as the Trustees shall require.
Section 7. Powers and Duties of the Secretary. The Secretary shall keep
the minutes of all meetings of the Trustees and of the Shareholders in proper
books provided for that purpose; he shall have custody of the seal of the Trust
he shall have charge of the Share transfer books, lists and records unless
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the same are in the charge of the Transfer Agent. He shall attend to the giving
and serving of all notices by the Trust in accordance with the provisions of
these By-Laws and as required by law; and subject to these By-Laws, he shall in
general perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the Trustees.
Section 8. Powers and Duties of Assistant Treasurers. In the absence or
disability of the Treasurer, any Assistant Treasurer designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Treasurer. Each Assistant Treasurer shall perform such other duties as from time
to time may be assigned to him by the Trustees. Each Assistant Treasurer shall
give a bond for the faithful discharge of his duties, if required so to do by
the Trustees, in such sum and with such surety or sureties as the Trustees shall
require.
Section 9. Powers and Duties of Assistant Secretaries. In the absence
or disability of the Secretary, any Assistant Secretary designated by the
Trustees shall perform all the duties, and may exercise any of the powers, of
the Secretary. Each Assistant Secretary shall perform such other duties as from
time to time may be assigned to him by the Trustees.
Section 10. Compensation of Officers and Trustees. Subject to any
applicable provisions of the Declaration, the compensation of the officers and
Trustees shall be fixed from time to time by the Trustees or, in the case of
officers, by any Committee or officer upon whom such power may be conferred by
the Trustees. No officer shall be prevented from receiving such compensation as
such officer by reason of the fact that he is also a Trustee.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Trust shall begin on the first day of July in
each year and shall end on the thirtieth day of June in each year, provided,
however, that the Trustees may from time to time change the fiscal year.
ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form and shall
have such inscription thereon as the Trustees may from time to time prescribe.
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ARTICLE IX
WAIVERS OF NOTICE
Whenever any notice whatever is required to be given by law, the
Declaration or these By-Laws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. A notice shall be deemed to have
been telegraphed, cabled or wirelessed for the purposes of these By-Laws when it
has been delivered to a representative of any telegraph, cable or wireless
company with instructions that it be telegraphed, cabled or wirelessed.
ARTICLE X
CUSTODY OF SECURITIES
Section 1. Employment of a Custodian. The Trust shall place and at all
times maintain in the custody of a Custodian (including any sub-custodian for
the Custodian) all funds, securities and similar investments included in the
Trust Property. The Custodian (and any sub-custodian) shall be a bank having not
less than $2,000,000 aggregate capital, surplus and undivided profits and shall
be appointed from time to time by the Trustees, who shall fix its remuneration.
Section 2. Action Upon Termination of Custodian Agreement. Upon
termination of a Custodian Agreement or inability of the Custodian to continue
to serve, the Trustees shall promptly appoint a successor custodian, but in the
event that no successor custodian can be found who has the required
qualifications and is willing to serve, the Trustees shall call as promptly as
possible a special meeting of the Shareholders to determine whether the Trust
shall function without a custodian or shall be liquidated. If so directed by
vote of the holders of a majority of the outstanding voting securities, the
Custodian shall deliver and pay over all Trust Property held by it as specified
in such vote.
Section 3. Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
Custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person as
may be permitted by the commission, or otherwise in accordance with the 1940
Act, pursuant to which system all securities of any particular class or series
of any issuer deposited within the system are treated as fungible and may be
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transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodian.
Section 4. Acceptance of Receipts in Lieu of Certificates. Subject to
such rules, regulations and orders as the Commission may adopt, the Trustees may
direct the Custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry form in the Federal
Reserve System in accordance with regulations promulgated by the Board of
Governors of the Federal Reserve System and the local Federal Reserve Banks in
lieu of receipt of certificates representing such securities.
ARTICLE XI
AMENDMENTS
These By-Laws, or any of them, may be altered, amended or repealed, or
new By-Laws may be adopted by (a) vote of a majority of the Shares outstanding
and entitled to vote or (b) by the Trustees, provided, however, that no By-Law
may be amended, adopted or repealed by the Trustees if such amendment, adoption
or repeal requires, pursuant to law, the Declaration or these By-Laws, a vote of
the Shareholders.
ARTICLE XII
MISCELLANEOUS
(A) Except as hereinafter provided, no officer or Trustees of the Trust
and no partner, officer, director or shareholder of the Investment Adviser of
the Trust (as that term is defined in the Investment Company Act of 1940) or of
the underwriter of the Trust, and no Investment Adviser or underwriter of the
Trust, shall take long or short positions in the securities issued by the Trust.
(1) The foregoing provisions shall not prevent the underwriter
from purchasing Shares from the Trust if such purchases are limited
(except for reasonable allowances for clerical errors, delays and
errors of transmission and cancellation of orders) to purchase for the
purpose of filling orders for such Shares received by the underwriter,
and provided that orders to purchase from the Trust are entered with
the Trust or the Custodian promptly upon receipt by the underwriter of
purchase orders for such Shares, unless the underwriter is otherwise
instructed by its customer.
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(2) The foregoing provision shall not prevent the underwriter
from purchasing Shares of the Trust as agent for the account of the
Trust.
(3) The foregoing provisions shall not prevent the purchase
from the Trust or from the underwriter of Shares issued by the Trust, by any
officer, or Trustee of the Trust or by any partner, officer, director or
shareholder of the Investment Adviser of the Trust or of the underwriter of the
Trust at the price available to the public generally at the moment of such
purchase, or as described in the then currently effective Prospectus of the
Trust.
(4) The foregoing shall not prevent the Investment Adviser, or
any affiliate thereof, of the Trust from purchasing Shares prior to the
effectiveness of the first registration statement relating to the Shares under
the Securities Act of 1933.
(B) The Trust shall not lend assets of the Trust to any officer or
Trustee of the Trust, or to any partner, officer, director or shareholder of, or
person financially interested in, the Investment Adviser of the Trust, or the
underwriter of the Trust, or to the Investment Adviser of the Trust or to the
underwriter of the Trust.
(C) The Trust shall not impose any restrictions upon the transfer of
the Shares of the Trust except as provided in the Declaration, but this
requirement shall not prevent the charging of customary transfer agent fees.
(D) The Trust shall not permit any officer or Trustee of the Trust, or
any partner, officer or director of the Investment Adviser or underwriter of the
Trust to deal for or on behalf of the Trust with himself as principal or agent,
or with any partnership, association or corporation in which he has a financial
interest; provided that the foregoing provisions shall not prevent (a) officers
and Trustees of the Trust or partners, officers or directors of the Investment
Adviser or underwriter of the Trust from buying, holding or selling shares in
the Trust, or from being partners, officers or directors or otherwise
financially interested in the Investment Adviser or underwriter of the Trust;
(b) purchases or sales of securities or other property by the Trust from or to
an affiliated person or to the Investment Advisers or underwriters of the Trust
if such transaction is exempt from the applicable provisions of the 1940 Act;
(c) purchases of investments for the portfolio of the Trust or sales of
investments owned by the Trust through a security dealer who is, or one or more
of whose partners, shareholders, officers or directors is, an officer or Trustee
of the Trust, or
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a partner, officer or director of the Investment Adviser or underwriter of the
Trust, if such transactions are handled in the capacity of broker only and
commissions charged do not exceed customary brokerage charges for such services;
(d) employment of legal counsel, registrar, Transfer Agent, dividend disbursing
agent or Custodian who is, or has a partner, shareholder, officer, or director
who is, an officer or Trustee of the Trust, or a partner, officer or director of
the Investment Adviser or underwriter of the Trust, if only customary fees are
charged for services to the Trust; (e) sharing statistical research, legal and
management expenses and office hire and expenses with any other investment
company in which an officer or Trustee of the Trust, or a partner, officer or
director of the Investment Adviser or underwriter of the Trust, is an officer or
director or otherwise financially interested.
END OF BY-LAWS
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Exhibit 5.
MANAGEMENT AGREEMENT
<PAGE>
NATIONAL ASSET RESERVE
MANAGEMENT AGREEMENT
AGREEMENT made this 14th day of May, l993 by and between NATIONAL ASSET
RESERVE, a Massachusetts business trust (the "Fund") and NATIONAL SECURITIES &
RESEARCH CORPORATION, a New York corporation (the "Manager").
The Fund is an open-end management investment company registered under the
Investment Company Act of l940, 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 business 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 Trustees, the Manager shall administer
the Fund's business 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 Declaration of Trust,
By-Laws, Prospectus and Statement of
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Additional Information of the Fund, and with the instructions and directions of
the Trustees 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 Trustees 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
Trustees such periodic and special reports as the Trustees 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.
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<PAGE>
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:
(a) Declaration of Trust, as amended, as filed with the Secretary of
the Commonwealth of Massachusetts (such Declaration of Trust, as in effect on
the date hereof and as further amended from time to time, are herein called the
"Declaration of Trust");
(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 Trustees authorizing the appointment
of the Manager and approving this Agreement on behalf of the Fund;
(d) Registration Statement on Form N-lA under the Investment Company
Act and the Securities Act of l933, as amended from time to time (the
"Registration Statement"), as filed with the Securities and Exchange Commission
(the "Commission"), relating to the Fund and the Fund's shares of beneficial
interest.
(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;
(f) Prospectus and Statement of Additional Information included in the
Registration Statement, as amended from time to time. All references in this
Agreement to the Prospectus and the 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 trustees 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. In connection with the services rendered by the Manager under this
Agreement, the Manager will pay all of the following expenses:
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(a) the salaries and expenses of all personnel of the Fund and the
Manager except the fees of the trustees who are not affiliated persons of the
Manager; and
(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.
The Fund will pay the following:
(a) the fees and expenses of trustees who are not affiliated persons of the
Manager;
(b) fees and expenses related to the provision of fund accounting services;
(c) the fees and expenses of the custodian that relate to (i) the custodial
function and recordkeeping connected with such function (ii) 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, (iii) the
pricing of shares of the Fund, including the cost of any pricing services which
may be retained pursuant to the authorization of the Trustees, and (iv) for both
mail and wire orders, the cashiering function in connection with the issuance
and redemption of the Fund's securities;
(d) the fees and expenses of the Fund's transfer agent, which may be the
custodian, that relate to the maintenance of each shareholder account;
(e) the charges and expenses of legal counsel and independent accountants
for the Fund and trustees who are not affiliated persons of the Manager;
(f) brokers' commissions and any issue or transfer taxes chargeable to the
Fund in connection with its securities transactions;
(g) all taxes and corporate fees payable by the Fund to the federal, state
or other governmental agencies;
(h) the fees of any trade association of which the Fund may be a member;
(i) the cost of share certificates representing, and non-negotiable share
deposit receipts evidencing, shares of the Fund;
(j) 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
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<PAGE>
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;
(k) communications expenses with respect to investor services and all
expenses of shareholders' and Trustees' meetings and of preparing, printing and
mailing reports to shareholders in the amount necessary for distribution to
shareholders;
(l) insurance, litigation and indemnification expenses; and
(m) 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 .55 of 1% of the Fund's average 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 Trustees, 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 Trustees or the holders of a majority of the
outstanding voting securities of the Fund; provided
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<PAGE>
however, that this Agreement may be terminated by the Fund, without the payment
of any penalty, by the Trustees 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 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 Trustees 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,
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<PAGE>
trustees 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, (l) to the Manager at 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.
17. The Declaration of Trust, establishing the Fund, dated February 20,
l992, a copy of which, together with all amendments thereto (the "Declaration"),
is on file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "National Asset Reserve" refers to the Trustees under the
Declaration collectively as trustees, but not individually or personally; and no
Trustee, shareholder, officer, employee or agent of the Fund may be held to any
personal liability, nor may resort be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of the Fund, but the Fund property only shall be liable.
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 ASSET RESERVE
/s/ Mairead M. Collins /s/ Thomas Ole Dial
Attest:------------------------ By:-------------------------------
Mairead M. Collins Thomas Ole Dial, Vice President
Assistant Secretary
NATIONAL SECURITIES & RESEARCH
CORPORATION
/s/ Mairead M. Collins /s/ Denis McAuley
Attest:------------------------ By:-------------------------------
Mairead M. Collins Denis McAuley, Senior Vice
Assistant Secretary President and Chief Financial
Officer
-7-
Exhibit 5.1
FIRST AMENDMENT TO
PHOENIX ASSET RESERVE
MANAGEMENT AGREEMENT
THIS AMENDMENT made effective as of this 1st day of January, 1994 by
and between PHOENIX ASSET RESERVE, f/k/a National Asset Reserve (hereinafter
called the "Trust") and NATIONAL SECURITIES & RESEARCH CORPORATION (hereinafter
called the "Manager").
Preamble
--------
The Trust 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 Trust in exchange for which
the Trust agreed to pay a prescribed fee to the Manager.
On June 30, 1993, the Board of Trustees of the Trust approved an
amendment to the Trust's Declaration of Trust changing the name of the Trust to
Phoenix Asset Reserve.
On August 25, 1993, the Board of Trustees of the Trust 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 Trust's average daily net assets
up to $1 billion, 0.50% of the Trust's average daily net assets from $1 to $2
billion, and 0.45% of the Trust's average daily net assets in excess of $2
billion.
Accordingly, parties intend to amend the Agreement to reflect the
present name of the Trust and the revised management fees payable to 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 Asset Reserve" are hereby
deleted and "Phoenix Asset Reserve" 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 Trust will pay the Manager a
management fee equivalent to the annual rate of 0.55% of the Trust's
average daily net assets up to $1 billion, 0.50% of the Trust's average
daily net assets from $1 to $2 billion, and 0. 45 % of the Trust's
average daily net assets in excess of $2 billion. The Manager's fee
will be accrued daily against the value of the Trust's net assets and
will be payable by the Trust on the last business day of each month.
- 1 -
<PAGE>
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 ASSET RESERVE
By: /s/ Philip R. McLoughlin
------------------------------
Name: Philip R. McLoughlin
Title: President
Attest:
By: /s/ Richard J. Wirth
------------------------------
Richard Wirth
Asst. Secretary
NATIONAL SECURITIES & RESEARCH
CORPORATION
By: /s/ Michael E. Haylon
------------------------------
Name: Michael Haylon
Title: Vice President
Attest:
By: /s/ Patricia O. McLaughlin
------------------------------
Patricia O. McLaughlin
Assistant Secretary
-2-
Exhibit 6(a)
UNDERWRITING AGREEMENT
CLASS A
<PAGE>
CLASS A SHARES
NATIONAL ASSET RESERVE
UNDERWRITING AGREEMENT
AGREEMENT made and entered into this 14th day of May, 1993, by and
between NATIONAL ASSET RESERVE, a Massachusetts business trust (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 beneficial
interest 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
Declaration of Trust 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 Trustees
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 of beneficial
interest 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 of
beneficial interest 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
-3-
<PAGE>
pursuant to the reinvestment of 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.
11. This Agreement has been approved by the Board of Trustees of the Fund,
including the Trustees 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 Trustees"), by vote cast in person at a meeting
-4-
<PAGE>
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 Trustees, acting on behalf of the Fund,
and by a majority of the Disinterested Trustees, 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 Trustees or by vote of a
majority of the outstanding voting securities (as defined in the Act) of Class A
shares of the Fund, on not more than 60 days' written notice to the Underwriter.
13. The Declaration of Trust establishing the Fund, dated February 20,
1992, a copy of which, together with all amendments thereto (the "Declaration"),
is on file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "National Asset Reserve" refers to the Trustees under the
Declaration collectively as trustees, but not as individuals or personally; and
no Trustee, shareholder, officer, employee or agent of the Fund may be held to
any personal liability, nor may resort be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of said Fund, but the Fund property only shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
NATIONAL ASSET RESERVE
/s/ Mairead M. Collins /s/ Thomas Ole Dial
Attest:------------------------ By:-------------------------------
Mairead M. Collins Thomas Ole Dial, Vice President
Assistant Secretary
PHOENIX EQUITY PLANNING CORPORATION
/s/ Patricia O. McLaughlin /s/ Martin J. Gavin
Attest:------------------------ By:-------------------------------
Patricia O. McLaughlin Martin J. Gavin
Assistant Secretary Executive Vice President
-5-
Exhibit 6(b)
UNDERWRITING AGREEMENT
CLASS B
<PAGE>
CLASS B SHARES
NATIONAL ASSET RESERVE
UNDERWRITING AGREEMENT
AGREEMENT made and entered into this 14th day of May, 1993, by and
between NATIONAL ASSET RESERVE, a Massachusetts business trust (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 beneficial
interest 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
Declaration of Trust 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 Trustees
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 of beneficial
interest 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 of
beneficial interest 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
-3-
<PAGE>
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
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 Trustees of the Fund,
including the Trustees 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 Trustees"), by vote cast in person at a meeting
called for the purpose of voting on this Agreement. This Agreement
-4-
<PAGE>
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 Trustees, acting on behalf of the Fund,
and by a majority of the Disinterested Trustees, 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 the Disinterested Trustees 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.
13. The Declaration of Trust establishing the Fund, dated February 20,
1992, a copy of which, together with all amendments thereto (the "Declaration"),
is on file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "National Asset Reserve" refers to the Trustees under the
Declaration collectively as trustees, but not as individuals or personally; and
no Trustee, shareholder, officer, employee or agent of the Fund may be held to
any personal liability, nor may resort be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of said Fund, but the Fund property only shall be liable.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
NATIONAL ASSET RESERVE
/s/ Mairead M. Collins /s/ Thomas Ole Dial
Attest:------------------------ By:-------------------------------
Mairead M. Collins Thomas Ole Dial, Vice President
Assistant Secretary
PHOENIX EQUITY PLANNING CORPORATION
/s/ Patricia O. McLaughlin /s/ Martin J. Gavin
Attest:------------------------ By:-------------------------------
Patricia O. McLaughlin Martin J. Gavin
Assistant Secretary Executive Vice President
-6-
Exhibit 8.2
Amendment to Custodian Contract
<PAGE>
AMENDMENT TO THE CUSTODIAN CONTRACT
AGREEMENT made by and between State Street Bank and Trust Company (the
"Custodian") and Phoenix Multi-Sector Short Term Bond Fund (f/k/a Phoenix Asset
Reserve f/k/a National Asset Reserve) (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 Custodian Contract
to provide for the maintenance of the Fund's foreign securities, and cash
incidental to transactions in such securities, in the custody of certain foreign
banking institutions and foreign securities depositories acting as
sub-custodians in conformity with the requirements of Rule 17f-5 under the
Investment Company Act of 1940;
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 conditions:
1. Appointment of Foreign Sub-Custodians.
The Fund hereby authorizes and instructs the Custodian to employ as
sub-custodians for the Fund's securities and other assets maintained
outside the United States the foreign banking institutions and foreign
securities depositories designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions", as defined in
Section 4 of the Custodian Contract, together with a certified resolution
of the Fund's Board of Trustees, the Custodian and the Fund may agree to
amend Schedule A hereto from time to time to designate additional foreign
banking institutions and foreign securities depositories to act as
sub-custodian. Upon receipt of Proper Instructions, the Fund may instruct
the Custodian to cease the employment of any one or more such
sub-custodians for maintaining custody of the Fund's assets.
2. Assets to be Held.
The Custodian shall limit the securities and other assets maintained in the
custody of the foreign sub-custodians to: (a) "foreign securities", as
defined in paragraph (c)(1) of Rule 17f-5 under the Investment Company Act
of 1940, and (b) cash and cash equivalents in such amounts as the Custodian
or the Fund may determine to be reasonably necessary to effect the Fund's
foreign securities transactions. The Custodian shall identify on its books
as belonging to the Fund, the foreign securities of the Fund held by each
foreign sub-custodian.
3. Foreign Securities Depositories.
Except as may otherwise be agreed upon in writing by the Custodian and the
Fund, assets of the Funds shall be maintained in foreign securities
depositories only through arrangements implemented by the foreign banking
institutions serving as sub-custodians pursuant to the terms hereof. Where
possible, such arrangements shall include entry into agreements containing
the provisions set forth in Section 5 hereof.
4. Holding Securities.
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
<PAGE>
property so held by the foreign sub-custodian be held separately from any
assets of the foreign sub-custodian or of others.
5. Agreements with Foreign Banking Institutions.
Each agreement with a foreign banking institution shall provide that: (a)
the Fund's assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking
institution or its creditors or agent, except a claim of payment for their
safe custody or administration; (b) beneficial ownership of the Fund's
assets will be freely transferable without the payment of money or value
other than for custody or administration; (c) adequate records will be
maintained by the Custodian identifying the assets as belonging to the
Fund; (d) officers of or auditors employed by, or other representatives of
the Custodian, including to the extent permitted under applicable law the
independent public accountants for the Fund, will be given access to the
books and records of the foreign banking institution relating to its
actions under its agreement with the Custodian; and (e) assets of the Fund
held by the foreign sub-custodian will be subject only to the instructions
of the Custodian or its agents.
6. Access of Independent Accountants of the Fund.
Upon request of the Fund, the Custodian will use its best efforts to
arrange for the independent accountants of the Fund to be afforded access
to the books and records of any foreign banking institution employed as a
foreign sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement with
the Custodian.
7. Reports by Custodian.
The Custodian will supply to the Fund from time to time, as mutually agreed
upon, statements in respect of the securities and other assets of the Fund
held by foreign sub-custodians, including but not limited to an
identification of entities having possession of the Fund's securities and
other assets and advices or notifications of any transfers of securities to
or from each custodial account maintained by a foreign banking institution
for the Custodian on behalf of its customers indicating, as to securities
acquired for the Fund, the identity of the entity having physical
possession of such securities.
8. Transactions in Foreign Custody Account.
(a) Except as otherwise provided in paragraph (b) of this Section 8, the
provision of Sections 2.2 and 2.7 of the Custodian Contract shall apply,
mutatis mutandis to the foreign securities of the Fund held outside the
United States by foreign sub-custodians.
(b) Notwithstanding any provision of the Custodian Contract to the
contrary, settlement and payment for securities received for the account of
the Fund and delivery of securities maintained for the account of the Fund
may be effected in accordance with the customary established securities
trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with
the expectation of receiving later payment for such securities from such
purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as set
forth in Section 2.3 of the Custodian Contract, and the Fund agrees to hold
any such nominee harmless from any liability as a holder of record of such
securities.
9. Liability of Foreign Sub-Custodians.
Each agreement pursuant to which the Custodian employs a foreign banking
institution as a foreign sub-custodian shall require the institution to
exercise reasonable care in the performance of its duties and to indemnify,
and hold harmless, the Custodian and the Fund from and against any loss,
damage, cost, expense, liability or claim arising
<PAGE>
out of or in connection with the institution's performance of such
obligations. At the election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with respect to any claims
against a foreign banking institution as a consequence of any such loss,
damage, cost, expense, liability or claim if and to the extent that the
Fund has not been made whole for any such loss, damage, cost, expense,
liability or claim.
10. Liability of Custodian.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
sub-custodians generally in the Custodian Contract and, regardless of
whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by paragraph 13 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has otherwise exercised
reasonable care. Notwithstanding the foregoing provisions of this paragraph
10, in delegating custody duties to State Street London Ltd., the Custodian
shall not be relieved of any responsibility to the Fund for any loss due to
such delegation, except such loss as may result from (a) political risk
(including, but not limited to, exchange control restrictions,
confiscation, expropriation, nationalization, insurrection, civil strife or
armed hostilities) or (b) other losses (excluding a bankruptcy or
insolvency of State Street London Ltd. not caused by political risk) due to
Acts of God, nuclear incident or other losses under circumstances where the
Custodian and State Street London Ltd. have exercised reasonable care.
11. Reimbursement for Advances.
If the Fund requires the Custodian to advance cash or securities for any
purpose including the purchase or sale of foreign exchange or of contracts
for foreign exchange, or in the event that the Custodian or its nominee
shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Contract,
except such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time
held for the account of the Fund shall be security therefor and should the
Fund fail to repay the Custodian promptly, the Custodian shall be entitled
to utilize available cash and to dispose of such Fund assets to the extent
necessary to obtain reimbursement.
12. Monitoring Responsibilities.
The Custodian shall furnish annually to the Fund, during the month of June,
information concerning the foreign sub-custodians employed by the
Custodian. Such information shall be similar in kind and scope to that
furnished to the Fund in connection with the initial approval of the
Custodian Contract. In addition, the Custodian will promptly inform the
Fund in the event that the Custodian learns of a material adverse change in
the financial condition of a foreign sub-custodian or any material loss of
the assets of the Fund or in the case of any foreign sub-custodian not the
subject of an exemptive order from the Securities and Exchange Commission
is notified by such foreign sub-custodian that there appears to be a
substantial likelihood that its shareholders' equity will decline below
$200 million (U.S. dollars or the equivalent thereof) or that its
shareholders' equity has declined below $200 million (in each case computed
in accordance with generally accepted U.S. accounting principles).
13. Branches of U.S. Banks.
(a) Except as otherwise set forth in this amendment to the Custodian
Contract, the provisions hereof shall not apply where the custody of the
Funds assets is maintained in a foreign branch of a banking institution
which is a "bank" as defined by Section 2(a)(5) of the Investment Company
Act of 1940 meeting the qualification set forth in Section 26(a) of said
Act. The appointment of any such branch as a sub-custodian shall be
governed by paragraph 1 of the Custodian Contract.
(b) Cash held for the Fund in the United Kingdom shall be maintained in an
interest bearing account established for the Fund with the Custodian's
London branch, which account shall be subject to the direction of the
Custodian, State Street London Ltd. or both.
<PAGE>
14. Tax Law.
The Custodian shall have no responsibility or liability for any obligations
now or hereafter imposed on the Fund or the Custodian as custodian of the
Fund by the tax law of the United States of America or any state or
political subdivision thereof. It shall be the responsibility of the Fund
to notify the Custodian of the obligations imposed on the Fund or the
Custodian as custodian of the Fund by the tax law of jurisdictions other
than those mentioned in the above sentence, including responsibility for
withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting. The sole responsibility of the
Custodian with regard to such tax law shall be to use reasonable efforts to
assist the Fund with respect to any claim for exemption or refund under the
tax law of jurisdictions for which the Fund has provided such information.
15. Applicability of Custodian Contract
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 in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 1st day of November, 1996.
ATTEST PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
/s/ Noreen M. O'Connell By /s/ Michael E. Haylon
- ----------------------- ------------------------
Executive Vice President
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Francine S. Hayes By /s/ Ronald E. Logue
- --------------------- --------------------
Executive Vice President
Exhibit 9.1
TRANSFER AGENCY AND SERVICE AGREEMENT
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
between
PHOENIX FUNDS
and
PHOENIX EQUITY PLANNING CORPORATION
<PAGE>
Table of Contents
Page
Article 1 - Terms of Appointment; Duties of Transfer Agent......... 1
Article 2 - Fees and Expenses...................................... 3
Article 3 - Representations and Warranties of Transfer Agent....... 3
Article 4 - Representations and Warranties of the Phoenix Funds.... 3
Article 5 - Data Access and Proprietary Information................ 4
Article 6 - Indemnification........................................ 5
Article 7 - Standard of Care....................................... 6
Article 8 - Covenants.............................................. 6
Article 9 - Termination............................................ 7
Article 10 - Assignment............................................. 7
Article 11 - Amendment.............................................. 7
Article 12 - Connecticut Law to Apply............................... 7
Article 13 - Force Majeure.......................................... 7
Article 14 - Consequential Damages.................................. 8
Article 15 - Merger of Agreement.................................... 8
Article 16 - Limitations of Liability of the Trustees
and Shareholders....................................... 8
Article 17 - Counterparts........................................... 8
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 1st day of June, 1994, by and between the
undersigned entities (hereinafter singularly referred to as a "Fund" and
collectively referred to as the "Phoenix Funds"), and PHOENIX EQUITY PLANNING
CORPORATION (hereinafter referred to as the "Transfer Agent").
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;
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;
<PAGE>
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.
(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.
-2-
<PAGE>
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.
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
-3-
<PAGE>
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
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.
-5-
<PAGE>
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 Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other person, except
as may be required by law.
-6-
<PAGE>
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.
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.
-7-
<PAGE>
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
/s/ Philip R. McLoughlin
By: ---------------------------------------
Name: Philip R. McLoughlin
Title: President
ATTEST:
/s/ Richard J. Wirth
By: ---------------------
Name: Richard Wirth
Title: Asst. Secretary
PHOENIX EQUITY PLANNING CORPORATION
/s/ Martin J. Gavin
By: ---------------------------------------
Executive Vice President
ATTEST:
/s/ Patricia O. McLauglin
By: -------------------------
Name: Patricia O. McLauglin
Title: Assistant Secretary
-9-
<PAGE>
Schedule A
Fee Schedule
Annual Maintenance Fees shall be based on the following formula:
AMF = BAMF x SA
Fund
where, AMF refers to the aggregate Annual Maintenance Fee levied
Fund
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
[solid bullet]. Omnibus Accounts, Per Transaction $2.50
[solid bullet]. Closed Accounts, per Account, per month $0.20
[solid bullet]. Check writing Fees:
[open bullet]. Privilege set-up $5.00
[open bullet]. Per Cleared Check $1.00
Out-of-Pocket Expenses
Out-of-pocket expenses include, but are not limited to: confirmation production,
postage, forms, telephone, microfilm, microfiche, stationary and supplies billed
as .1122% of postage costs and expenses incurred at the specific direction of
any Fund. Postage for mass mailings is due seven days in advance of the mailing
date.
Exhibit 9.2
PHOENIX EQUITY PLANNING CORPORATION
100 Bright Meadow Boulevard
Enfield, Connecticut 06082-1989
800-243-4361
(203) 253-1000
PHOENIX FAMILY 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 9.3
FINANCIAL AGENT AGREEMENT
<PAGE>
FINANCIAL AGENT AGREEMENT
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, CT 06083-2200
May 25, 1994
Gentlemen:
1. Each of the undersigned mutual funds (hereinafter collectively and
singularly referred to as the "Fund") hereby appoints you, subject to your
acceptance, as Financial Agent subject to the terms and conditions set forth
below, effective January 1, 1994. You shall keep the books of each Fund and
compute the daily net asset value of shares of each Fund in accordance with
instructions received from time to time from the Board of Directors/Trustees of
each Fund; which instructions shall be certified to you by each Fund's
Secretary. You shall report such net asset value so determined to each Fund and
shall perform such other services as may be requested from time to time by each
or any Fund as are reasonably incidental to your duties as Financial Agent.
2. You shall be obligated to maintain, for the periods and in the places
required by Rule 31a-2 under the Investment Company Act of 1940, as amended,
those books and records maintained by you as Financial Agent. Such books and
records are the property of each respective Fund and shall be surrendered
promptly to the appropriate Fund upon its request. Furthermore, such books and
records shall be open to inspection and audit at reasonable times by officers
and auditors of each respective Fund.
3. As compensation for your services hereunder during any fiscal year of
each respective Fund, you shall receive, within five days after the end of each
fiscal quarter of each respective Fund, a fee based on the average of the
aggregate daily net asset values of each respective Fund at the annual rate per
each $1 million of $300.
4. You shall not be liable for anything done or omitted by you in the
exercise of due care in discharging your duties as Financial Agent and shall be
answerable and accountable only for your own acts and omissions and not for
those of any agent employed by you nor for those of any bank, trust company,
broker, depository, correspondent or other person. You shall be protected in
acting upon any instruction, notice, request, consent, certificate, resolution,
or other instrument or paper believed by you to be genuine, and to have been
properly executed, and shall, unless otherwise specifically provided herein, be
entitled to receive as conclusive proof of any fact or matter required to be
ascertained by you hereunder a certificate signed by the Secretary of each
respective Fund. You shall be entitled, with respect to questions of law
relating to your duties hereunder, to advice of counsel (which may be counsel
for any Fund) and, with respect to anything done or omitted by you in good faith
hereunder in conformity with the advice of or based upon an opinion of counsel,
to be held harmless by each respective Fund from all claims of loss or damage.
Nothing herein shall protect you against any liability to any Fund or to its
respective shareholders to which you would otherwise be subject by reason of
your wilful misfeasance, bad faith, gross negligence or reckless disregard of
your duties hereunder. Except as provided in this Paragraph 4, you shall not be
entitled to any indemnification by any Fund.
5. Subject to prior approval of the Board of Directors/Trustees of each
Fund, you may appoint one or more sub-financial agents to perform any of the
functions and services which are to be provided under the terms of this
Agreement upon such terms and conditions as may be mutually agreed upon among
each respective Fund, you and such sub-financial agent.
6. This Agreement shall continue in effect only so long as (a) such
continuance is specifically approved at least annually by the Board of
Directors/Trustees of each Fund or by a vote of a majority of the outstanding
voting securities of each respective Fund, and (b) the terms and any renewal of
such Agreement
<PAGE>
have been approved by the vote of a majority of the directors/trustees of each
respective Fund who are not parties to the Agreement or interested persons, as
that term is defined in the Investment Company Act of 1940, of any such party,
cast in person at a meeting called for the purpose of voting on such approval. A
"majority of the outstanding voting securities of each respective Fund" shall
have, for all purposes of this Agreement, the meaning provided therefor in the
Investment Company Act.
7. Either you or any Fund may terminate your appointment as Financial Agent
hereunder on written notice to the other, whereupon you will be relieved of the
duties described herein with respect to such Fund. Any Fund may terminate this
Agreement without in any manner affecting the continued existence of the same
with respect to any and all other Fund(s) not terminating the Agreement. This
Agreement shall immediately terminate in the event of its assignment, as that
term is defined in the Investment Company Act of 1940.
8. This Agreement shall be construed and the rights and obligations of the
parties hereunder enforced in accordance with the laws of the State of
Connecticut.
If this letter correctly sets forth your understanding of the powers to be
granted to you and the restrictions to be imposed upon you as Financial Agent,
kindly confirm the same by signing in the appropriate space provided below.
Very truly yours,
Phoenix Asset Reserve
Phoenix California Tax Exempt Bonds, Inc.
Phoenix Equity Opportunities Fund
Phoenix Income and Growth Fund
Phoenix Multi-Portfolio Fund
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Series Fund
Phoenix Total Return Fund, Inc.
Phoenix Worldwide Opportunities Fund
/s/ Philip R. McLoughlin
By: --------------------------
President
Accepted as of date first above written:
PHOENIX EQUITY PLANNING CORPORATION
/s/ Martin J. Gavin
By: -------------------------
Executive Vice President
Exhibit 9.4
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
Opinion as to Legality of the Shares
<PAGE>
July 2, 1992
National Asset Reserve
Two Pickwick Plaza
Greenwich, CT 06830
Gentlemen:
In connection with the registration under the Securities Act of 1933
of an indefinite number of shares of beneficial interest of National Asset
Reserve (the "Fund"), I have examined such matters as I have deemed necessary
to give this opinion.
On the basis of the foregoing, it is my opinion that the shares have
been duly authorized and, when paid for as contemplated by the Fund's
Registration Statement, will be validly issued, fully paid, and non-assessable.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement.
Very truly yours,
/s/ Lisa M. Hurley
------------------
Lisa M. Hurley
Exhibit 11
Consent of Independent Accountants
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 6 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 Short Term Bond Fund, 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(a)
Distribution Plan for Class A
<PAGE>
DISTRIBUTION PLAN OF
NATIONAL ASSET RESERVE
PURSUANT TO RULE 12B-1
CLASS A SHARES
Distribution Plan for Class A shares dated May 14, 1993 (the "Plan"),
of NATIONAL ASSET RESERVE (the "Fund"), a Massachusetts business trust.
WHEREAS, the Fund and Phoenix Equity Planning Corporation ("PEPCO" or
the "Distributor"), a wholly owned subsidiary of Phoenix Home Life Mutual
Insurance Company ("Phoenix Home Life") and a broker-dealer registered under the
Securities Exchange Act of 1934, have entered into 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 Trustees 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 sy ynhareholders.
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 July 1, 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 Class A 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 Companies for
-1-
<PAGE>
services rendered in connection with the sale and distribution of Class A shares
of the Fund; (iv) payment of expenses incurred in sales and promotional
activities, including advertising expenditures related to the Class A shares of
the Fund; (v) the costs of preparing and distributing promotional materials;
(vi) the cost of printing the Fund's Prospectus and Statement of Additional
Information for distribution to potential investors; and (vii) such other
similar services that the Trustees of the Fund determine are reasonably
calculated to result in 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 Trustees of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
2. At least quarterly in each year the Plan remains in effect, the
Fund's Principal Accounting Officer or Treasurer, or such other person
authorized to direct the disposition of monies paid or payable by the Fund,
shall prepare and furnish to the Trustees of the Fund for their review, and the
Trustees shall review, a written report complying with the requirements of Rule
12b-l 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
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
related agreements (the "Disinterested Trustees"), 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.
-2-
<PAGE>
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 Trustees of the Fund as well as
a majority of the Disinterested Trustees. This Plan may be amended at any time,
provided that (a) the Plan may not be amended to increase materially the amount
of the distribution expenses provided in Paragraph l 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
Trustees of the Fund and of the Disinterested Trustees cast in person at a
meeting called for the purpose of such vote.
5. While this Plan is in effect, the selection and nomination of
Trustees who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the Disinterested Trustees then in
office.
6. Any related agreement shall be in writing and shall provide that (a)
such agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class 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 Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class A shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made 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 Trustees of the Fund, for a period of not less than
six years from the date of this Plan, the agreement or report, as the case may
be, the first two years in an easily accessible place.
9. The Declaration of Trust establishing the Fund dated February 20,
1992, a copy of which, together with the amendments thereto (the "Declaration"),
is on file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "National Asset Reserve" refers to the Trustees under the
Declaration of Trust collectively as Trustees, but not as individuals or
personally; and no Trustee, shareholder, officer, employee or agent of the Fund
may be held to any personal liability, nor may any resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
-3-
<PAGE>
connection with the affairs of the Fund but the Fund property only shall be
liable.
IN WITNESS WHEREOF, the Fund and its shareholders have adopted this
Plan as of this 14th day of May, 1993.
NATIONAL ASSET RESERVE
CLASS A SHARES
By: /s/ Thomas Ole Dial
--------------------------------
Thomas Ole Dial, Vice President
Attest:
/s/ Mairead M. Collins
- --------------------------------
Mairead M. Collins
Assistant Secretary
Exhibit 15(b)
Distribution Plan for Class B
<PAGE>
DISTRIBUTION PLAN OF
NATIONAL ASSET RESERVE
PURSUANT TO RULE 12B-1
CLASS B SHARES
Distribution Plan for Class B shares dated May 14, 1993 (the "Plan") of
NATIONAL ASSET RESERVE (the "Fund"), a Massachusetts business trust.
WHEREAS, the Fund and Phoenix Equity Planning Corporation ("PEPCO" or
the "Distributor"), a wholly owned subsidiary of Phoenix Home Life Mutual
Insurance Company ("Phoenix Home Life") and a broker-dealer registered under the
Securities Exchange Act of 1934, have entered into 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 Trustees 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 0.75% of the average daily value of the
net assets of the Fund's Class B shares, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc., for
distribution expenditures incurred by NSR pursuant to the Fund's Distribution
Plan dated July 1, 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 Class B shareholders of the Fund. Such expenditures
shall consist of: (i) commissions to sales personnel for selling Class B shares
of the Fund (including underwriting commissions and finance charges related to
the payment of commissions); (ii) compensation, sales incentives and payments to
sales, marketing and service personnel; (iii) payments to broker-dealers and
other financial institutions which have entered into agreements with the
Distributor in the form of the Dealer Agreement for National Affiliated
Investment
<PAGE>
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 Trustees of the Fund determine are reasonably
calculated to result in the sale of Class B shares of the Fund; provided
however, that a portion of such amount paid to the Distributor, which portion
shall be equal to or less than 0.25% annually of the average daily net assets of
the Fund's Class B shares, may be paid for reimbursing the costs of providing
services to Class B shareholders including assistance in connection with
inquiries related to shareholder accounts (the "Service Fee").
Amounts paid or payable by the Fund under this Plan or any agreement
with any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
2. At least quarterly in each year the Plan remains in effect, the
Fund's Principal Accounting Officer or Treasurer, or such other person
authorized to direct the disposition of monies paid or payable by the Fund,
shall prepare and furnish to the Trustees of the Fund for their review, and the
Trustees shall review, a written report complying with the requirements of Rule
12b-l under the Act regarding the amounts expended under the Plan and the
purposes for which such expenditures were made.
3. This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
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 B shares of the Fund.
-2-
<PAGE>
4. This Plan shall remain in effect for one year from the date of its
adoption and may be continued thereafter if specifically approved at least
annually by a vote of at least a majority of the Trustees of the Fund as well as
a majority of the Disinterested Trustees. This Plan may be amended at any time,
provided that (a) the Plan may not be amended to increase materially the amount
of the distribution expenses provided in Paragraph 1 hereof (including the
Service Fee) without the approval of at least a majority of the outstanding
voting securities (as defined in the Act) of the Class B shares of the Fund and
(b) all material amendments to this Plan must be approved by a majority vote of
the Trustees of the Fund and of the Disinterested Trustees cast in person at a
meeting called for the purpose of such vote.
5. While this Plan is in effect, the selection and nomination of
Trustees who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the Disinterested Trustees then in
office.
6. Any related agreement shall be in writing and shall provide that (a)
such agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class B shares of the Fund on not more than 60 days' written notice to the other
party to the agreement, and (b) such agreement shall terminate automatically in
the event of its assignment.
7. This Plan may be terminated at any time by a vote of a majority of
the Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class B shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made by the Plan.
8. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to Paragraph 2 hereof, and any other
information, estimates, projections and other materials that serve as a basis
therefor, considered by the Trustees of the Fund, for a period of not less than
six years from the date of this Plan, the agreement or report, as the case may
be, the first two years in an easily accessible place.
9. The Declaration of Trust establishing the Fund dated February 20,
1992, as amended, a copy of which, together with the amendments thereto
("Declaration"), is on file in the office of the Secretary of the Commonwealth
of Massachusetts, provides that the name "National Asset Reserve" refers to the
Trustees under the Declaration of Trust collectively as Trustees, but not as
individuals or personally, and no Trustee, shareholder, officer, employee or
agent of the Fund may be held to any personal liability, nor may any resort be
had to their private property for the satisfaction of any obligation or claim or
otherwise in
-3-
<PAGE>
connection with the affairs of the Fund but the Fund property only shall be
liable.
IN WITNESS WHEREOF, the Fund and its shareholders have adopted this
Plan as of this 14th day of May, 1993.
NATIONAL ASSET RESERVE
CLASS B SHARES
By: /s/ Thomas Ole Dial
-----------------------------------
Thomas Ole Dial, Vice President
Attest:
/s/ Mairead M. Collins
- -----------------------------------
Mairead M. Collins, Assistant Secretary
-4-
Exhibit 16
EXPLANATION OF YIELD AND EFFECTIVE YIELD CALCULATION
The following is an example of the yield calculation for the Phoenix Asset
Reserve 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 Asset Reserve is computed as follows:
Class A Shares
63,037 - 71,820
Yield=2[(-----------------) + 1) (6) - 1] = 7.04
2,023,025 x 4.72
Class B Shares
41,152 - 7,598
Yield=2[(----------------) + 1) (6) -1] = 6.71%
1,320,681 x 4.61
Exhibit 18.2
RULE 18f-3 DUAL DISTRIBUTION PLAN
<PAGE>
PHOENIX FUNDS
(the "Funds")
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended ("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the original effective date of this Plan, the Funds shall offer
multiple classes of shares, as described herein, pursuant to Rule 18f-3 and this
Plan.
2. The Multi-Class Structure
The portfolios of the Funds listed on Schedule A hereto shall offer two
classes of shares, Class A and Class B ("Multi-Class Portfolios"). Shares of the
Multi-Class Portfolios shall represent an equal pro rata interest in the
respective Multi-Class Portfolio and, generally, shall have identical voting,
dividend, liquidation, and other rights, preferences, powers, restrictions,
limitations, qualifications and terms and conditions, except that: (a) each
class shall have a different designation; (b) each class shall bear any Class
Expenses, as defined by Section B, below; (c) each class shall have exclusive
voting rights on any matter submitted to shareholders that relates solely to its
distribution arrangement; and (d) each class shall have separate voting rights
on any matter submitted to shareholders in which the interests of one class
differ from the interests of any other class. In addition, Class A and Class B
shares shall have the features described in Sections a, b, c and d, below.
a. Distribution Plans
The Funds have adopted Distribution Plans pursuant to Rule 12b-1 with
respect to each Multi-Class Portfolio, containing substantially the following
terms:
i. Class A shares of each Multi-Class Portfolio shall reimburse Phoenix
Equity Planning Corporation (the "Distributor") for costs and expenses incurred
in connection with distribution and marketing of shares thereof, as provided in
the Class A Distribution Plan and any supplements thereto, subject to an annual
limit of 0.25%, or in some cases 0.30%, of the average daily net assets of a
Multi-Class Portfolio's Class A shares.
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
<PAGE>
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.
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
<PAGE>
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>
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
RULE 18f-3 DUAL DISTRIBUTION PLAN
<PAGE>
PHOENIX FUNDS
(the "Funds")
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended ("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the original effective date of this Plan, the Funds shall offer
multiple classes of shares, as described herein, pursuant to Rule 18f-3 and this
Plan.
2. The Multi-Class Structure
The portfolios of the Funds listed on Schedule A hereto shall offer two
classes of shares, Class A and Class B ("Multi-Class Portfolios"). Shares of the
Multi-Class Portfolios shall represent an equal pro rata interest in the
respective Multi-Class Portfolio and, generally, shall have identical voting,
dividend, liquidation, and other rights, preferences, powers, restrictions,
limitations, qualifications and terms and conditions, except that: (a) each
class shall have a different designation; (b) each class shall bear any Class
Expenses, as defined by Section 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.
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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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 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.
<PAGE>
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
Exhibit 19
Powers of Attorney
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Multi-Sector Short Term Bond Fund, hereby constitute and appoint Philip R.
McLoughlin and Thomas N. Steenburg or either of them as my true and lawful
attorneys and agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940 relating to Phoenix Multi-Sector Short Term Bond
Fund, 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 Short Term Bond Fund, 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.
/s/ C. Duane Blinn
-----------------------------
C. Duane Blinn, Trustee
February 21, 1996
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Multi-Sector Short Term Bond Fund, hereby constitute and appoint Philip R.
McLoughlin and Thomas N. Steenburg or either of them as my true and lawful
attorneys and agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940 relating to Phoenix Multi-Sector Short Term Bond
Fund, 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 Short Term Bond Fund, 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.
/s/ Robert Chesek
-----------------------------
Robert Chesek, Trustee
February 21, 1996
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Multi-Sector Short Term Bond Fund, hereby constitute and appoint Philip R.
McLoughlin and Thomas N. Steenburg or either of them as my true and lawful
attorneys and agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940 relating to Phoenix Multi-Sector Short Term Bond
Fund, 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 Short Term Bond Fund, 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.
/s/ E. Virgil Conway
-----------------------------
E. Virgil Conway, Trustee
February 21, 1996
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Multi-Sector Short Term Bond Fund, hereby constitute and appoint Philip R.
McLoughlin and Thomas N. Steenburg or either of them as my true and lawful
attorneys and agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940 relating to Phoenix Multi-Sector Short Term Bond
Fund, 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 Short Term Bond Fund, 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.
/s/ Harry Dalzell-Payne
-----------------------------
Harry Dalzell-Payne, Trustee
February 21, 1996
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Multi-Sector Short Term Bond Fund, hereby constitute and appoint Philip R.
McLoughlin and Thomas N. Steenburg or either of them as my true and lawful
attorneys and agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940 relating to Phoenix Asset Reserve, 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.
/s/ Francis E. Jeffries
-----------------------------
Francis E. Jeffries, Trustee
February 21, 1996
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Multi-Sector Short Term Bond Fund, hereby constitute and appoint Philip R.
McLoughlin and Thomas N. Steenburg or either of them as my true and lawful
attorneys and agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940 relating to Phoenix Multi-Sector Short Term Bond
Fund, 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 Short Term Bond Fund, 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.
/s/ Leroy Keith, Jr.
-----------------------------
Leroy Keith, Jr., Trustee
February 21, 1996
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Multi-Sector Short Term Bond Fund, hereby constitute and appoint Philip R.
McLoughlin and Thomas N. Steenburg or either of them as my true and lawful
attorneys and agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940 relating to Phoenix Asset Reserve, 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.
/s/ Everett L. Morris
-----------------------------
Everett L. Morris, Trustee
February 21, 1996
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Multi-Sector Short Term Bond Fund, hereby constitute and appoint Philip R.
McLoughlin and Thomas N. Steenburg or either of them as my true and lawful
attorneys and agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940 relating to Phoenix Multi-Sector Short Term Bond
Fund, 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 Short Term Bond Fund, 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.
/s/ James M. Oates
-----------------------------
James M. Oates, Trustee
February 21, 1996
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Multi-Sector Short Term Bond Fund, hereby constitute and appoint Philip R.
McLoughlin and Thomas N. Steenburg or either of them as my true and lawful
attorneys and agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940 relating to Phoenix Asset Reserve, 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.
/s/ Calvin J. Pedersen
-----------------------------
Calvin J. Pedersen, Trustee
March 12, 1996
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Multi-Sector Short Term Bond Fund, hereby constitute and appoint Philip R.
McLoughlin and Thomas N. Steenburg or either of them as my true and lawful
attorneys and agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940 relating to Phoenix Multi-Sector Short Term Bond
Fund, 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 Short Term Bond Fund, 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.
/s/ Philip R. Reynolds
-----------------------------
Philip R. Reynolds, Trustee
February 21, 1996
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Multi-Sector Short Term Bond Fund, hereby constitute and appoint Philip R.
McLoughlin and Thomas N. Steenburg or either of them as my true and lawful
attorneys and agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940 relating to Phoenix Multi-Sector Short Term Bond
Fund, 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 Short Term Bond Fund, 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.
/s/ Herbert Roth, Jr.
-----------------------------
Herbert Roth, Jr., Trustee
February 21, 1996
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Multi-Sector Short Term Bond Fund, hereby constitute and appoint Philip R.
McLoughlin and Thomas N. Steenburg or either of them as my true and lawful
attorneys and agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940 relating to Phoenix Multi-Sector Short Term Bond
Fund, 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 Short Term Bond Fund, 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.
/s/ Richard E. Segerson
-----------------------------
Richard E. Segerson, Trustee
February 21, 1996
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Multi-Sector Short Term Bond Fund, hereby constitute and appoint Philip R.
McLoughlin and Thomas N. Steenburg or either of them as my true and lawful
attorneys and agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940 relating to Phoenix Multi-Sector Short Term Bond
Fund, 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 Short Term Bond Fund, 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.
/s/ Lowell P. Weicker, Jr.
-----------------------------
Lowell P. Weicker, Jr., Trustee
February 21, 1996
<PAGE>
POWER OF ATTORNEY
I, the undersigned Treasurer and Principal Accounting Officer of
Phoenix Multi-Sector Short Term Bond Fund, hereby constitute and appoint Philip
R. McLoughlin and Thomas N. Steenburg or either of them as my true and lawful
attorneys and agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940 relating to Phoenix Multi-Sector Short Term Bond
Fund, 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 Short Term Bond Fund, 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.
/s/ Nancy G. Curtiss
-----------------------------
Nancy G. Curtiss
Treasurer
Principal Financial and
Accounting Officer
February 21, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> PHOENIX MULTI-SECTOR SHORT TERM BOND FUND CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 18959
<INVESTMENTS-AT-VALUE> 19174
<RECEIVABLES> 247
<ASSETS-OTHER> 3037
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 22458
<PAYABLE-FOR-SECURITIES> 2714
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 99
<TOTAL-LIABILITIES> 2813
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19489
<SHARES-COMMON-STOCK> 2792
<SHARES-COMMON-PRIOR> 1961
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (16)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (42)
<ACCUM-APPREC-OR-DEPREC> 214
<NET-ASSETS> 19645
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1239
<OTHER-INCOME> 0
<EXPENSES-NET> (182)
<NET-INVESTMENT-INCOME> 1057
<REALIZED-GAINS-CURRENT> 475
<APPREC-INCREASE-CURRENT> 69
<NET-CHANGE-FROM-OPS> 1601
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 737
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1884
<NUMBER-OF-SHARES-REDEEMED> (1172)
<SHARES-REINVESTED> 119
<NET-CHANGE-IN-ASSETS> 4399
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (15)
<OVERDIST-NET-GAINS-PRIOR> (526)
<GROSS-ADVISORY-FEES> 86
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 369
<AVERAGE-NET-ASSETS> 15724
<PER-SHARE-NAV-BEGIN> 4.74
<PER-SHARE-NII> 0.33
<PER-SHARE-GAIN-APPREC> 0.17
<PER-SHARE-DIVIDEND> (0.33)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4.91
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> PHOENIX MULTI-SECTOR SHORT TERM BOND FUND CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 18959
<INVESTMENTS-AT-VALUE> 19174
<RECEIVABLES> 247
<ASSETS-OTHER> 3037
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 22458
<PAYABLE-FOR-SECURITIES> 2714
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 99
<TOTAL-LIABILITIES> 2813
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19489
<SHARES-COMMON-STOCK> 1211
<SHARES-COMMON-PRIOR> 982
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (16)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (42)
<ACCUM-APPREC-OR-DEPREC> 214
<NET-ASSETS> 19645
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1239
<OTHER-INCOME> 0
<EXPENSES-NET> (182)
<NET-INVESTMENT-INCOME> 1057
<REALIZED-GAINS-CURRENT> 475
<APPREC-INCREASE-CURRENT> 69
<NET-CHANGE-FROM-OPS> 1601
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 311
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 440
<NUMBER-OF-SHARES-REDEEMED> (253)
<SHARES-REINVESTED> 42
<NET-CHANGE-IN-ASSETS> 1283
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (15)
<OVERDIST-NET-GAINS-PRIOR> (526)
<GROSS-ADVISORY-FEES> 86
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 369
<AVERAGE-NET-ASSETS> 15724
<PER-SHARE-NAV-BEGIN> 4.74
<PER-SHARE-NII> 0.31
<PER-SHARE-GAIN-APPREC> 0.17
<PER-SHARE-DIVIDEND> (0.31)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4.91
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
