As fled with the Securities and Exchange Commission on August 4, 1999
Registration No. 333-___
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. ___ [ ] Post-Effective Amendment No. ___
---------------------
PHOENIX-ABERDEEN WORLDWIDE OPPORTUNITIES FUND
(Exact Name of Registrant as Specified in Declaration of Trust)
101 Munson Street, Greenfield, Massachusetts 01301
(Address of Principal Executive Offices)
c/o Phoenix Equity Planning Corporation - Shareholder Services
(800) 243-1574
(Registrants Telephone Number, including Area Code)
---------------------
Nancy J. Engberg, Esq.
Vice President and Counsel
Phoenix Investment Partners, Ltd.
56 Prospect Street
Hartford, Connecticut 06115-0479
(Name and address of Agent for Service)
Copies of Communications to:
Geoffrey R.T. Kenyon, Esq.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109-2881
---------------------
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Registration Statement.
---------------------
Registrant is relying on Section 24(f) of the Investment Company Act of
1940, as amended, which permits registration of an indefinite number of shares
of beneficial interest, $.01 par value per share of the Registrant. Accordingly,
no filing fee is due in connection with this Registration Statement.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
PHOENIX-ABERDEEN WORLDWIDE OPPORTUNITIES FUND
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
<TABLE>
<CAPTION>
Caption or Location in
Form N-14 Item No. and Caption Prospectus/Proxy Statement
- ------------------------------ --------------------------
Part A Information Required in Prospectus/Proxy Statement
------
<S> <C> <C>
1. Beginning of Registration Statement Cover Page; Cross Reference Sheet
and Outside Front Cover Page of Prospectus
2. Beginning and Outside Back Cover Table of Contents
Page of Prospectus
3. Fee Table, Synopsis Information and Risk Factors Synopsis; Principal Risk Factors; Comparison of
Investment Objectives and Policies
4. Information about the Transaction Synopsis; The Proposed Reorganization;
Comparative Information on Shareholder Rights;
Exhibit A (Agreement and Plan of
Reorganization)
5. Information about the Registrant Cover Page; Synopsis; Principal Risk Factors;
Comparison of Investment Objectives and
Policies; The Proposed Reorganization;
Comparative Information on Distribution
Arrangements; Comparative Information on
Shareholder Services; Comparative Information
on Shareholder Rights; Management and Other
Service Providers; Additional Information About
The Funds; Current Prospectus of Registrant
6. Information about the Company Being Acquired Synopsis; Comparison of Investment Objectives
and Policies; The Proposed Reorganization;
Comparative Information on Distribution
Arrangements; Comparative Information on
Shareholder Services; Comparative Information
on Shareholder Rights; Additional Information
About The Funds; Prospectus of the Phoenix-Engemann
Global Growth Fund dated May 1, 1999
7. Voting Information Synopsis; The Proposed Reorganization;
Comparative Information on Shareholder Rights;
Voting Information
8. Interest of Certain Persons and Experts The Proposed Reorganization
9. Additional Information Required for Not Applicable
Reoffering By Persons Deemed to be Underwriters
<PAGE>
Caption or Location in
Form N-14 Item No. and Caption Prospectus/Proxy Statement
- ------------------------------ --------------------------
Part B: Information Required in Statement of Additional Information
------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. Additional Information about the Registrant Cover Page; Statement of Additional Information
of Registrant dated December 16, 1998
13. Additional Information about the Cover Page; Statement of Additional Information
Company Being Acquired of The Phoenix-Engemann Funds dated May 3, 1999
14. Financial Statements Annual Report of the Registrant for the year ended
June 30, 1999; Annual Report of The Phoenix-Engemann
Funds for the year ended December 31, 1998;
Semi-Annual Report of The Phoenix-Engemann Funds
for the six-month period ended June 30, 1999;
and Pro Forma Financial Statements
Part C: Other Information
------
15. Indemnification Indemnification
16. Exhibits Exhibits
17. Undertakings Undertakings
</TABLE>
<PAGE>
PART A
<PAGE>
PHOENIX-ENGEMANN GLOBAL GROWTH FUND
a series of
The Phoenix-Engemann Funds
600 North Rosemead Boulevard
Pasadena, California 91107-2133
------------------------------------
September __, 1999
Dear Shareholder:
The Phoenix-Engemann Global Growth Fund, a series of The Phoenix-Engemann
Funds (the "Trust"), will hold a special meeting of shareholders at __ a.m.,
local time, on October 20, 1999 at the offices of the Trust. At the meeting, the
shareholders of the Global Growth Fund will vote on an agreement and plan of
reorganization under which the Global Growth Fund will be combined with the
Phoenix-Aberdeen Worldwide Opportunities Fund, the sole series of the
Phoenix-Aberdeen Worldwide Opportunities Fund (the "Acquiring Trust"). The
Worldwide Opportunities Fund has substantially similar investment objectives to
those of the Global Growth Fund. If the reorganization agreement is implemented,
you will become a shareholder of the Worldwide Opportunities Fund and will
receive shares of the corresponding class of the Worldwide Opportunities Fund
with an aggregate value equal to the aggregate value of your investment in the
Global Growth Fund. No sales charge will be imposed in connection with the
reorganization. Phoenix Investment Counsel, Inc. will pay all costs of the
reorganization. The reorganization will be conditioned upon receipt of an
opinion of counsel indicating that the reorganization will qualify as a tax-free
reorganization for federal income tax purposes.
The Board of Trustees of the Trust believes that the reorganization offers
you the opportunity to pursue your goals in a larger fund. The Board of Trustees
has carefully considered and has unanimously approved the proposed
reorganization, as described in the accompanying materials and believes that the
reorganization is in the best interests of the Global Growth Fund and its
shareholders. The Board of Trustees therefore recommends that you vote in favor
of the reorganization agreement.
We strongly urge you to review, complete, and return your proxy as soon as
possible. Your vote is important no matter how many shares you own. Voting your
shares early will help to avoid costly follow-up mail and telephone
solicitation. After reviewing the enclosed materials, please exercise your right
to vote today by completing, dating, and signing each proxy card you receive and
mailing the proxy in the self-addressed, postage-paid envelope that we have
enclosed for your convenience. It is very important that you vote and that your
voting instructions be received no later than October __, 1999.
Please note that you may receive more than one proxy package if you hold
shares of the Global Growth Fund in more than one account. You should return
separate proxy cards for such accounts. If you have any questions, please call
(800) 243-1574.
Sincerely,
Roger Engemann
Chairman of the Board and President
<PAGE>
PHOENIX-ENGEMANN GLOBAL GROWTH FUND
a series of
The Phoenix-Engemann Funds
600 North Rosemead Boulevard
Pasadena, California 91107-2133
----------------------------
Notice of Special Meeting of Shareholders
to be Held October 20, 1999
----------------------------
TO THE SHAREHOLDERS:
The Phoenix-Engemann Global Growth Fund, a series of The Phoenix-Engemann
Funds, a Massachusetts business trust, will hold a special meeting of
shareholders at the offices of The Phoenix-Engemann Funds, 600 North Rosemead
Boulevard, Pasadena, California 91107-2133, on October 20, 1999 at __ a.m.,
local time, for the following purposes:
1. To consider and act upon a proposal to approve the Agreement and Plan of
Reorganization, dated August 4, 1999, and the transactions it contemplates,
including (a) the transfer of all or substantially all of the assets of the
Global Growth Fund to Phoenix-Aberdeen Worldwide Opportunities Fund in exchange
solely for shares of the corresponding class of the Worldwide Opportunities Fund
and the assumption by the Worldwide Opportunities Fund of all the liabilities of
the Global Growth Fund and (b) the distribution of the shares of the Worldwide
Opportunities Fund so received to shareholders of the Global Growth Fund in
complete liquidation of the Global Growth Fund.
2. To consider and act upon any other business as may properly come before
the meeting and any adjournments thereof.
You are entitled to vote at the meeting and any adjournment(s) if you owned
shares of the Global Growth Fund at the close of business on August __, 1999. If
you attend the meeting, you may vote your shares in person. If you do not expect
to attend the meeting, please complete, date, sign, and return the enclosed
proxy card in the enclosed self-addressed, postage-paid return envelope.
Please indicate your voting instructions on the enclosed proxy card, then
please date and sign the card and return it in the envelope provided. If you
sign, date, and return the proxy card but give no voting instructions, your
shares will be voted "FOR" the proposal noticed above. In order to avoid the
additional expense and delay of further solicitation, we ask your cooperation in
mailing in your proxy card promptly. Unless proxy cards submitted by
corporations and partnerships are signed by the appropriate persons as indicated
in the voting instructions on the proxy card, such proxy cards cannot be voted.
By Order of the Board of Trustees of The Phoenix-Engemann Funds,
Tina L. Mitchell
Secretary
Pasadena, California
September __, 1999
<PAGE>
PHOENIX-ABERDEEN WORLDWIDE OPPORTUNITIES FUND
a series of
Phoenix-Aberdeen Worldwide Opportunities Fund
101 Munson Street
Greenfield, Massachusetts 01301
1 (800) 243-1574
PHOENIX-ENGEMANN GLOBAL GROWTH FUND
a series of
The Phoenix-Engemann Funds
600 North Rosemead Boulevard
Pasadena, California 91107-2133
1 (800) 243-1574
PROSPECTUS/PROXY STATEMENT
Dated September __, 1999
This Prospectus/Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Trustees of The Phoenix-Engemann Funds,
a Massachusetts business trust (the "Trust"), for use at the special meeting of
shareholders of the Phoenix-Engemann Global Growth Fund to be held at __ a.m.,
local time, on October 20, 1999 at the offices of the Trust, 600 North Rosemead
Boulevard, Pasadena, California 91107-2133, and at any adjournment(s).
The purpose of the meeting is to consider an agreement and plan of
reorganization that would effect the reorganization of the Global Growth Fund
into the Phoenix-Aberdeen Worldwide Opportunities Fund, the sole portfolio
series of the Phoenix-Aberdeen Worldwide Opportunities Fund (the "Acquiring
Trust"), as described below. Under the reorganization agreement, which has been
approved by the Board of Trustees of the Trust, all or substantially all of the
assets of the Global Growth Fund would be transferred to the Worldwide
Opportunities Fund in exchange solely for Class A, Class B and Class C shares of
beneficial interest in the Worldwide Opportunities Fund and the assumption by
the Worldwide Opportunities Fund of all the liabilities of the Global Growth
Fund. These shares of the Worldwide Opportunities Fund would then be distributed
pro rata to the shareholders of the corresponding classes of the Global Growth
Fund, and then the Global Growth Fund would be liquidated. As a result of the
proposed transactions, each shareholder of the Global Growth Fund would receive
a number of full and fractional shares of the corresponding class of the
Worldwide Opportunities Fund with an aggregate net asset value equal to the
aggregate net asset value of the shareholder's Global Growth Fund shares on the
effective date of the reorganization.
The Worldwide Opportunities Fund and the Global Growth Fund are both
portfolio series of open-end management investment companies. The Worldwide
Opportunities Fund has an investment objective of capital appreciation. The
Global Growth Fund has an investment objective of long-term growth of capital.
The Worldwide Opportunities Fund employs an adviser, Phoenix Investment Counsel,
Inc. to select securities of U.S. issuers, and a subadviser, Aberdeen Fund
Managers, Inc. to select securities of all other issuers. Roger Engemann &
Associates, Inc. serves as investment adviser to the Global Growth Fund. As used
in this Prospectus/Proxy Statement the term "adviser" refers to Phoenix
Investment Counsel or Roger Engemann & Associates, as the context requires.
This Prospectus/Proxy Statement, which you should retain for future
reference, sets forth concisely the information that you should know about the
Global Growth Fund, the Worldwide Opportunities Fund, and the transactions
contemplated by the reorganization agreement, before you vote on the proposed
reorganization. As used in this Prospectus/Proxy Statement, the term "funds"
refers to the Global Growth Fund and the Worldwide Opportunities Fund,
collectively, and the term "trusts" refers to the Trust and the Acquiring Trust,
collectively. A copy of the prospectus for the Worldwide Opportunities Fund,
dated December 16, 1998, is included with this Prospectus/Proxy Statement and is
incorporated by reference in this Prospectus/Proxy Statement.
A Prospectus and a Statement of Additional Information for the Global
Growth Fund, each dated May 1, 1999, have been filed with the Securities and
Exchange Commission and are incorporated by reference in this
<PAGE>
Prospectus/Proxy Statement. A Statement of Additional Information for the
Worldwide Opportunities Fund, dated December 16, 1998 has also been filed with
the SEC and is incorporated by reference in this Prospectus/Proxy Statement.
Copies of the above-referenced documents are available upon written or oral
request and without charge by contacting Phoenix Equity Planning Corporation at
100 Bright Meadow Boulevard, Post Office Box 2200, Enfield, Connecticut
06083-2200, or by telephoning Phoenix Equity Planning toll-free at 1-800-
243-4361.
A Statement of Additional Information, dated September __, 1999 relating to
the proposed transactions described in this Prospectus/Proxy Statement has been
filed with the SEC and is incorporated by reference in this Prospectus/Proxy
Statement. Copies of this Statement of Additional Information may be obtained
without charge by contacting Phoenix Equity Planning, at 100 Bright Meadow
Boulevard, Post Office Box 2200, Enfield, Connecticut 06083-2200, or by
telephoning Phoenix Equity Planning toll free at 1-800-243-4361.
The Securities and Exchange Commission maintains a web site
(http://www.sec.gov) that contains the Statement of Additional Information dated
September __, 1999 and other material incorporated by reference, together with
other information regarding the Worldwide Opportunities Fund and the Global
Growth Fund.
This Prospectus/Proxy Statement constitutes the proxy statement of the
Global Growth Fund for the meeting and the prospectus for shares of the
Worldwide Opportunities Fund that have been registered with the SEC and are
being issued in connection with the reorganization. This Prospectus/Proxy
Statement is expected to first be sent to shareholders on or about September __,
1999.
----------------------
- --------------------------------------------------------------------------------
The securities of the Worldwide Opportunities Fund 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/Proxy Statement. Any representation to the contrary is a criminal
offense.
- --------------------------------------------------------------------------------
----------------------
The date of this Prospectus/Proxy Statement is September __, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SYNOPSIS.......................................................................1
PRINCIPAL RISK FACTORS.........................................................6
THE PROPOSED REORGANIZATION....................................................8
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES..............................13
COMPARATIVE INFORMATION ON DISTRIBUTION ARRANGEMENTS..........................19
COMPARATIVE INFORMATION ON SHAREHOLDER SERVICES...............................20
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS.................................21
FISCAL YEAR...................................................................23
MANAGEMENT AND OTHER SERVICE PROVIDERS........................................23
VOTING INFORMATION............................................................24
ADDITIONAL INFORMATION ABOUT THE FUNDS........................................26
MISCELLANEOUS.................................................................26
OTHER BUSINESS................................................................29
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
SYNOPSIS
Background
The proposed reorganization is the outcome of deliberations by the Boards
of Trustees of the trusts undertaken at the request of each adviser. Each
adviser recommended that the Trustees of each trust consider the benefits that
the shareholders of the funds would realize if the Global Growth Fund were to be
combined with the Worldwide Opportunities Fund. In response to this
recommendation, the independent trustees of each trust, trustees who are not
"interested persons" of their respective trusts (as defined in Section 2(a)(19)
of the 1940 Act), requested that management outline a specific reorganization
proposal for their consideration and provide the independent trustees with an
analysis of the specific benefits that shareholders would realize from the
proposal. After considering the specific reorganization proposal, the Trustees
of the Acquiring Trust, including the independent trustees, at meetings held on
February 24, 1999 and May 26, 1999 unanimously approved the reorganization
agreement. The Trustees of the Trust, including the independent trustees,
unanimously approved the reorganization agreement at a meeting held on
February 9, 1999.
Summary of the Proposed Reorganization
The reorganization will be effected in accordance with the terms of the
reorganization agreement, a copy of which is attached to this Prospectus as
Appendix A. The reorganization agreement provides for:
o the acquisition of all or substantially all of the assets of the
Global Growth Fund by the Worldwide Opportunities Fund in exchange
solely for Class A, Class B and Class C shares of the Worldwide
Opportunities Fund;
o the assumption by the Worldwide Opportunities Fund of all the
liabilities of the Global Growth Fund;
o the pro rata distribution of the corresponding class of Worldwide
Opportunities Fund shares to the Global Growth Fund shareholders; and
o the cancellation of the outstanding Global Growth Fund shares.
The reorganization is anticipated to occur on or about October 22, 1999. If
the reorganization agreement is implemented, each Global Growth Fund shareholder
would receive a number of full and fractional shares of the corresponding class
of Worldwide Opportunities Fund shares with an aggregate net asset value equal
in value to the aggregate net asset value of his or her Global Growth Fund
shares, as of the closing date of the reorganization.
The implementation of the reorganization agreement is subject to a number
of conditions set forth in the reorganization agreement. See "The Proposed
Reorganization." Among the significant conditions (which may not be waived) are:
o the receipt by each trust of an opinion of counsel as to the federal
income tax consequences of the reorganization; and
o the approval of the reorganization agreement by the shareholders of
the Global Growth Fund.
The reorganization agreement provides that Phoenix Investment Counsel will
bear all costs and expenses of the reorganization, including the costs of the
meeting, the costs and expenses incurred in the preparation and mailing of the
notice, this Prospectus/Proxy Statement and the proxy, and the solicitation of
proxies.
Investment Objectives and Policies
The investment objectives and principal investment strategies of the Global
Growth Fund and the Worldwide Opportunities Fund are substantially identical:
o The Worldwide Opportunities Fund has an investment objective of
capital appreciation. The Global Growth Fund has an investment
objective of long-term growth of capital.
o The Worldwide Opportunities Fund and the Global Growth Fund invest in
securities of both U.S. and foreign issuers.
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<PAGE>
- --------------------------------------------------------------------------------
o The Worldwide Opportunities Fund and the Global Growth Fund invest at
least 65% of their assets in securities of issuers located in 3 or
more countries, one of which is the United States.
o Both funds may invest in companies in foreign countries with developed
markets and countries with "emerging markets."
See "Principal Risk Factors" and "Comparison of Investment Objectives and
Policies" below, for further information on the similarities and differences
between the investment objectives, policies and risks of the Worldwide
Opportunities Fund and the Global Growth Fund. You can also find additional
information in the Worldwide Opportunities Fund's Prospectus.
Distribution and Purchase Arrangements
The Global Growth Fund and the Worldwide Opportunities Fund both offer
three classes of shares, Class A, Class B and Class C shares. Shares are offered
to the public at a price equal to the net asset value per share plus a sales
charge which, at the election of the purchaser, may be imposed as follows:
o Class A shares--at the time of purchase.
o Class B and Class C shares--on a contingent deferred basis.
See "Comparative Information on Distribution Arrangements" below for further
information on the distribution arrangements of the Global Growth Fund and the
Worldwide Opportunities Fund. You can also find additional information on
distribution arrangements in the Worldwide Opportunities Fund's Prospectus.
Dividends and Distributions
The dividend and distribution policies of the funds are substantially
identical.
o The Global Growth Fund distributes net investment income annually and
distributes net realized capital gains, if any, at least annually.
o The Worldwide Opportunities Fund distributes net investment income
semi-annually and distributes net realized capital gains, if any, at
least annually.
All dividends and distributions of the Global Growth Fund and the Worldwide
Opportunities Fund are paid in additional shares of the respective series unless
shareholders elect to receive cash. You can also find additional information on
dividends and distributions in the Worldwide Opportunities Fund's Prospectus.
Exchanges
The Global Growth Fund and the Worldwide Opportunities Fund currently offer
shareholders identical exchange privileges. Shareholders of the Global Growth
Fund and the Worldwide Opportunities Fund may exchange their shares for shares
of a corresponding class of shares of other Phoenix funds or The
Phoenix-Engemann Funds, Phoenix-Seneca Funds or any other mutual fund advised,
subadvised or distributed by Phoenix Investment Counsel, Equity Planning or any
of their corporate affiliates, except for the mutual funds of the Phoenix-Zweig
Trust.
On exchanges with share classes that carry a contingent deferred sales
charge, the contingent deferred sales charge schedule of the original shares
purchased continues to apply. You can also find additional information on
exchanges in the Worldwide Opportunities Fund's Prospectus.
Redemption Procedures
Shareholders of both the Global Growth Fund and the Worldwide Opportunities
Fund may redeem their shares at a redemption price equal to the net asset value
of the shares (minus any applicable contingent deferred sales charge) as next
determined following the receipt of a redemption order in proper form. Payments
of redemption proceeds for redeemed Global Growth Fund and Worldwide
Opportunities Fund shares ordinarily are made within seven days after receipt of
a redemption request in proper form. See "Comparative Information on Shareholder
Services" for more information. You can also find additional information on
redemption procedures in the Worldwide Opportunities Fund's Prospectus.
Federal Tax Consequences of Proposed
Reorganization
At the closing of the reorganization, the Trust and the Acquiring Trust
will receive an opinion of
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
counsel that subject to customary assumptions and representations:
o shareholders of the Global Growth Fund will recognize no gain or loss
for federal income tax purposes on their receipt of shares of the
Worldwide Opportunities Fund;
o the aggregate tax basis of the Worldwide Opportunities Fund shares,
including any fractional shares, received by each shareholder of the
Global Growth Fund pursuant to the reorganization will be the same as
the aggregate tax basis of the Global Growth Fund shares held by such
shareholder immediately prior to the reorganization; and
o the holding period of the Worldwide Opportunities Fund shares,
including fractional shares, to be received by each shareholder of the
Global Growth Fund will include the period during which the Global
Growth Fund shares exchanged therefor were held by such shareholder
(provided that the Global Growth Fund shares were held as a capital
asset on the date of the reorganization).
See "The Proposed Reorganization--Federal Income Tax Consequences" for more
information.
Risk Factors
An investment in the Worldwide Opportunities Fund is subject to specific
risks arising from the types of securities in which the Worldwide Opportunities
Fund invests and general risks arising from investing in any mutual fund.
Investors can lose money by investing in the Worldwide Opportunities Fund. There
is no assurance that the Worldwide Opportunities Fund will meet its investment
objective. Because the Worldwide Opportunities Fund's investment objective and
policies are substantially similar to those of the Global Growth Fund, an
investment in the Worldwide Opportunities Fund is subject to many of the same
specific risks as an investment in the Global Growth Fund. See "Principal Risk
Factors" for the principal risks associated with an investment in the Worldwide
Opportunities Fund.
Comparative Fee Tables
The tables below are designed to assist an investor in understanding the
various direct and indirect costs and expenses associated with an investment in
the relevant class of shares of each fund. Each table also includes pro forma
information for the combined Worldwide Opportunities Fund resulting from the
reorganization assuming the reorganization took place on June 30, 1999, and
after adjusting such information to reflect current fees. The expense
information for the Worldwide Opportunities Fund and the Global Growth Fund is
based upon expenses for the twelve months ended June 30, 1999.
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3
<PAGE>
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[As indicated in the table below, immediately upon effectiveness of the
reorganization, the "Total Fund Operating Expenses" for the combined Worldwide
Opportunities Fund are expected to be lower than the "Total Fund Operating
Expenses" for the Global Growth Fund.]
<TABLE>
<CAPTION>
Worldwide Opportunities Fund Global Growth Fund
---------------------------- ------------------
Class A Class B Class C Class A Class B Class C
Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Annual Fund Operating Expenses
(expenses that are deducted
from fund assets)
Management Fees 0.75% 0.75% 0.75% 1.10% 1.10% 1.10%
Distribution and Service (12b-1 Fees) (a) 0.25% 1.00% 1.00% 0.25% 1.00% 1.00%
Other Expenses 0.42% 0.42% 0.42% 0.76% 0.76% 0.76%
----- ----- ----- ----- ----- -----
Total Annual Fund Operating Expenses (b) 1.42% 2.17% 2.17% 2.11% 2.86% 2.86%
===== ===== ===== ===== ===== =====
<CAPTION>
Pro Forma
Combined Worldwide
Opportunities Fund
---------------------------
Class A Class B Class C
Shares Shares Shares
------ ------ ------
<S> <C> <C> <C>
Annual Fund Operating Expenses
(expenses that are deducted
from fund assets)
Management Fees % % %
Distribution and Service (12b-1 Fees) (a) % % %
Other Expenses % % %
--- --- ---
Total Annual Fund Operating Expenses (b) % % %
=== === ===
</TABLE>
The following table shows shareholder transaction expenses currently
applicable to the purchase of Class A, Class B and Class C shares of both funds.
These expenses will remain in effect as to the combined Worldwide Opportunities
Fund following the reorganization.
<TABLE>
<CAPTION>
Worldwide Opportunities Fund Class A Class B Class C
Global Growth Fund Shares Shares Shares
- ------------------ ------ ------ ------
<S> <C> <C> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases 4.75% None None
(as a percentage of offering price)
Maximum Deferred Sales Charge (Load) (as a percentage of
the lesser of the value redeemed or the amount invested) None 5%(c) 1%(d)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
</TABLE>
(a) Distribution and Service 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").
(b) The Global Growth Fund's administrator has agreed to waive a portion of its
administration fee so that other operating expenses of the Global Growth
Fund do not exceed 0.60% of the first $50 million of the
average daily net assets. Total Annual Operating Expenses for the Global
Growth Fund, after waiver of administration fees, are ___% for Class A
shares, ___% for Class B shares and ___% for Class C shares.
(c) The Maximum Deferred Sales charge is imposed on Class B shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during
the fourth and fifth years and to 0% after the fifth year. Class B shares
of the Global Growth Fund purchased prior to January 20, 1998 are subject
to the following sales load schedule; 5% during the first year;
thereafter, it decreases 1% annually to 3% during the third and fourth
years and to 0% after the fourth year.
(d) The Deferred Sales Charge is imposed on Class C shares redeemed during the
first year only. Class C shares of the Global Growth Fund purchased prior
to January 20, 1998 are not subject to the 1% deferred Sales charge.
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4
<PAGE>
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Example
These examples illustrate the impact of the above fees and expenses on an
account with an initial investment of $10,000, based on the expenses shown
above. They assume a 5% annual return, the reinvestment of all dividends and
distributions and "annual fund operating expenses" remaining the same each year.
These examples are hypothetical; actual fund expenses and returns vary from year
to year, and may be higher or lower than those shown. In the case of Class B
shares, it is assumed that your shares are converted to Class A shares after
eight years and that the sales charges applicable to shares purchased after
January 20, 1998 apply.
Fees and expenses if you redeemed your shares at the end of each time period:
<TABLE>
<CAPTION>
Worldwide Opportunities Fund Global Growth Fund
---------------------------- ------------------
1 Year 3 Years 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A shares $613 $903 $1,214 $2,096 $679 $1,104 $1,555 $2,800
Class B shares $620 $879 $1,164 $2,313 $689 $1,086 $1,508 $3,008
Class C shares $320 $679 $1,164 $2,503 $389 $ 886 $1,508 $3,185
<CAPTION>
Pro Forma
Combined Worldwide Opportunities Fund
--------------------------------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A shares $ $ $ $
Class B shares $ $ $ $
Class C shares $ $ $ $
</TABLE>
Fees and expenses if you did not redeem your shares at the end of each time
period:
<TABLE>
<CAPTION>
Worldwide Opportunities Fund Global Growth Fund
---------------------------- ------------------
1 Year 3 Years 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A shares $613 $903 $1,214 $2,096 $679 $1,104 $1,555 $2,800
Class B shares $220 $679 $1,164 $2,313 $289 $ 886 $1,508 $3,008
Class C shares $220 $679 $1,164 $2,503 $289 $ 886 $1,508 $3,185
<CAPTION>
Pro Forma
Combined Worldwide Opportunities Fund
-------------------------------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A shares $ $ $ $
Class B shares $ $ $ $
Class C shares $ $ $ $
</TABLE>
Note: Actual expenses for the Global Growth Fund may be lower than those shown
in the tables above since the expense levels used to calculate the
figures shown do not include the waiver of expenses over certain levels
by the Global Growth Fund's administrator.
The purpose of the tables above is to help the investor understand the various
costs and expenses that the investor will bear directly or indirectly. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE RETURNS OR
EXPENSES. ACTUAL RETURNS OR EXPENSES MAY BE GREATER OR LESS THAN SHOWN.
- --------------------------------------------------------------------------------
5
<PAGE>
PRINCIPAL RISK FACTORS
An investment in the Worldwide Opportunities Fund is subject to specific
risks arising from the types of securities in which the Worldwide Opportunities
Fund invests and general risks arising from investing in any mutual fund.
Investors can lose money by investing in the Worldwide Opportunities Fund. There
is no assurance that the Worldwide Opportunities Fund will meet its investment
objective. Because the Worldwide Opportunities Fund's investment objective and
policies are substantially similar to those of the Global Growth Fund, an
investment in the Worldwide Opportunities Fund is subject to many of the same
specific risks as an investment in the Global Growth Fund. The principal
specific risks associated with an investment in the Worldwide Opportunities Fund
are listed below. The following discussion is qualified in its entirety by the
more extensive discussion of risk factors in the Prospectuses and Statements of
Additional Information for the Worldwide Opportunities Fund and the Global
Growth Fund, respectively.
Foreign Investing
The Worldwide Opportunities Fund invests in non-U.S. companies. Investing
in the securities of non-U.S. companies involves special risks and
considerations not typically associated with investing in U.S. companies. These
include:
o differences in accounting, auditing and financial reporting standards;
o generally higher commission rates on foreign portfolio transactions;
o differences and inefficiencies in transaction settlement systems;
o the possibility of expropriation or confiscatory taxation;
o adverse changes in investment or exchange control regulations;
o political instability; and
o potential restrictions on the flow of international capital.
Political and economic uncertainty as well as relatively less public
information about foreign investments may negatively impact the Worldwide
Opportunities Fund's portfolio.
Foreign securities often trade with less frequency and volume than domestic
securities and therefore may exhibit greater price volatility. Additionally,
dividends and interest payable on foreign securities may be subject to foreign
taxes withheld prior to receipt by the Worldwide Opportunities Fund.
Many of the foreign securities held by the Worldwide Opportunities Fund
will not be registered with, nor will the issuers of those securities be subject
to the reporting requirements of, the Securities and Exchange Commission.
Accordingly, there may be less publicly available information about the
securities and about the foreign company or government issuing them than is
available about a domestic company or government entity. Moreover, individual
foreign economies may differ favorably or unfavorably from the U.S. economy in
such respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payment positions.
Foreign Currency
Significant portions of the Worldwide Opportunities Fund's assets may be
invested in securities denominated in foreign currencies. Changes in foreign
exchange rates will affect the value of those securities denominated or quoted
in currencies other than the U.S. dollar. The forces of supply and demand in the
foreign exchange markets determine exchange rates and these forces are in turn
affected by a range of economic,
6
<PAGE>
political, financial, governmental and other factors. Exchange rate fluctuations
can affect the Worldwide Opportunities Fund's net asset value (share price) 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 terms.
Emerging Market Investing
The Worldwide Opportunities Fund may invest in companies located in
emerging market countries and regions. Investment in less-developed countries
whose markets are still emerging generally presents risks in greater degree than
those presented by investment in foreign issuers based in countries with
developed securities markets and more advanced regulatory systems. Prior
governmental approval of foreign investments may be required under certain
circumstances in some developing countries, and the extent of foreign investment
in domestic companies may be subject to limitation in other developing
countries. The charters of individual companies in developing countries may
impose limitations on foreign ownership to prevent, among other concerns,
violation of foreign investment limitations.
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.
Small Market Capitalization Investing
The Worldwide Opportunities Fund may invest in large and small companies
throughout the world. Companies with small capitalization are often companies
with a limited operating history or companies in industries which have recently
emerged due to cultural, economic, regulatory or technological developments.
Such developments can have a significant positive or negative effect on small
capitalization companies and their stock performance. Given the limited
operating history and rapidly changing fundamental prospects, investment returns
from smaller capitalization companies can be highly volatile. Smaller companies
may find their ability to raise capital impaired by their size or lack of
operating history. Product lines are often less diversified and subject to
competitive threats. Smaller capitalization stocks are subject to varying
patterns of trading volume and may, at times, be difficult to sell.
Mutual Fund Investing
The Worldwide Opportunities Fund may invest in other mutual funds to take
advantage of investment opportunities in certain countries where the Worldwide
Opportunities Fund otherwise would not be able to invest or where the size of a
fund investment in any particular country would be too small. The Worldwide
Opportunities Fund may invest up to 10% of its assets in the shares of other
mutual funds, however the Worldwide Opportunities Fund will not invest more than
5% of its assets in any one mutual fund. When the Worldwide Opportunities Fund
purchases shares of another mutual fund the assets invested in the other mutual
fund incur a layering of expenses including operating costs, advisory fees, and
administrative fees that you indirectly bear.
Impact of the Year 2000 Issue on Fund Investments
The Year 2000 issue is the result of computer programs being written using
two rather than four digits to define the applicable year. There is the
possibility that some or all of a company's computer programs that have
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. If a company whose securities are held by the Worldwide
Opportunities Fund does not "fix" its Year 2000 issue, it is possible that its
operations and financial results would be hurt. Also, the cost of modifying
computer programs to become Year 2000 compliant may hurt the financial
performance and market price of companies whose securities are held by the
Worldwide Opportunities Fund.
7
<PAGE>
THE PROPOSED REORGANIZATION
Agreement and Plan of Reorganization
The terms and conditions under which the proposed reorganization may be
consummated are set forth in the reorganization agreement. Significant
provisions of the reorganization agreement are summarized below. This summary,
however, is qualified in its entirety by reference to the reorganization
agreement, a form of which is attached to this Prospectus/Proxy Statement as
Appendix A.
The Plan contemplates (a) the acquisition by the Worldwide Opportunities
Fund, on the closing date of the reorganization, of all or substantially all of
the assets of the Global Growth Fund by the Worldwide Opportunities Fund in
exchange solely for Class A, Class B and Class C shares of the Worldwide
Opportunities Fund and the assumption by the Worldwide Opportunities Fund of all
the liabilities of the Global Growth Fund and (b) the distribution of shares of
the corresponding class of the Worldwide Opportunities Fund to the shareholders
of the Global Growth Fund in exchange for their respective shares of the Global
Growth Fund.
The assets of the Global Growth Fund to be acquired by the Worldwide
Opportunities Fund include all property, including, without limitation, all
cash, securities, and dividends or interest receivables which are owned by the
Global Growth Fund and any deferred or prepaid expenses shown as an asset on the
books of the Global Growth Fund on the closing date of the reorganization. The
Worldwide Opportunities Fund will assume all liabilities, accrued expenses,
costs, charges, and reserves of the Global Growth Fund reflected on an unaudited
statement of assets and liabilities as of the closing date. The closing of the
reorganization will occur on the first Friday following satisfaction (or waiver)
of the conditions to closing set forth in the reorganization agreement
(currently anticipated to be October 22, 1999), or such later date as the
parties may agree.
The value of the Global Growth Fund's assets to be acquired and the Global
Growth Fund's liabilities to be assumed by the Worldwide Opportunities Fund and
the net asset value of each class of shares of the Worldwide Opportunities Fund
will be determined as of immediately after the close of regular trading on the
New York Stock Exchange on the closing date, using the valuation procedures set
forth in the Worldwide Opportunities Fund's then current Prospectus and
Statement of Additional Information. The number of Class A, Class B and Class C
shares of the Worldwide Opportunities Fund to be issued to the Global Growth
Fund will be determined by dividing (a) the value of the aggregate net assets
attributable to each class of shares of the Global Growth Fund by (b) the net
asset value per share of the corresponding class of the Worldwide Opportunities
Fund.
On the closing date, the Global Growth Fund will liquidate and distribute
pro rata to its shareholders of record the Worldwide Opportunities Fund shares
received by the Global Growth Fund in exchange for their respective shares in
the Global Growth Fund. This liquidation and distribution will be accomplished
by opening an account on the books of the Worldwide Opportunities Fund in the
name of each shareholder of record in the Global Growth Fund and by crediting to
each account the shares due pursuant to the reorganization. Every Global Growth
Fund shareholder will own shares of the corresponding class of the Worldwide
Opportunities Fund immediately after the reorganization, the value of which will
be equal to the value of the shareholder's Global Growth Fund shares immediately
prior to the reorganization.
At or prior to the closing date, the Global Growth Fund will declare a
dividend or dividends which, together with all previous such dividends, will
have the effect of distributing to the Global Growth Fund shareholders all of
the Global Growth Fund's investment company taxable income for all taxable years
ending at or prior to the closing date (computed without regard to any deduction
for dividends paid) and all of its net capital gains realized (after reduction
for any capital loss carry-forward) in all taxable years ending at or prior to
the closing date.
The consummation of the reorganization is subject to a number of conditions
set forth in the reorganization agreement. Certain of these conditions may be
waived by the Board of Trustees of either trust, or by an authorized officer of
each trust, as appropriate.
8
<PAGE>
Among the significant conditions which may not be waived are: (a) the
receipt by the Trust and the Acquiring Trust of an opinion of counsel as to
certain federal income tax aspects of the reorganization and (b) the approval of
the reorganization agreement by the shareholders of the Global Growth Fund. The
Plan may be terminated and the reorganization abandoned at any time, before or
after approval by the shareholders of the Global Growth Fund, prior to the
closing date, by either party by resolution of its Board of Trustees. In
addition, the reorganization agreement may be amended by mutual agreement,
except that no amendment may be made to the reorganization agreement subsequent
to the meeting that would change the provisions for determining the number of
Worldwide Opportunities Fund shares to be issued to shareholders of the Global
Growth Fund without their further approval.
Reasons for the Reorganization
The proposed reorganization is the outcome of deliberations by the Board of
Trustees of the trusts undertaken at the request of each adviser. Each adviser
recommended that the Trustees of each trust consider the benefits that
shareholders of the funds would realize if the Global Growth Fund were to be
combined with the Worldwide Opportunities Fund. In response to this
recommendation, the independent trustees of each trust requested that management
authorize a specific reorganization proposal for their consideration and provide
the independent trustees with an analysis of the specific benefits to be
realized by shareholders for the proposal.
In the course of their review, the Trustees of the Trust noted that the
reorganization would be a means of combining two series with substantially
similar investment objectives and principal investment strategies and would
permit the shareholders of the Global Growth Fund to pursue their investment
goals in a larger fund. In reaching this conclusion, the Board considered a
number of additional factors, including the following:
o the total expense ratio of the combined Worldwide Opportunities
Fund following the reorganization is projected to be [lower] than
the current total expense ratio of the Global Growth Fund;
o the average annual return of Class A shares of the Worldwide
Opportunities Fund of 31.21% and 19.84% for the one and three
year periods ended December 31, 1998 compared favorably with
the average annual return of 14.35% and 15.71% for the Class A
shares of the Global Growth Fund for the same periods;
o the reorganization provides for continuity of distribution and
advisory arrangements and shareholder services; and
o the reorganization will not result in the recognition of any gain
or loss for federal income tax purposes either to the Global
Growth Fund or the Worldwide Opportunities Fund or to the
shareholders of either of the funds.
o the reorganization could result in economies of scale through the
spreading of fixed costs over a larger asset base. At only
$22.4 million in net assets (as of December 31, 1998), the
Global Growth Fund's fixed costs are spread over that relatively
small asset base;
After considering these and other factors, the Board of Trustees of the
Trust, including the independent trustees, unanimously concluded at a meeting
held on February 9, 1999 that the reorganization would be in the best interests
of the Global Growth Fund and its shareholders and that the interests of
existing Global Growth Fund shareholders will not be diluted as a result of the
transactions contemplated by the reorganization. The Board of Trustees of the
Trust then unanimously voted to approve the reorganization agreement and
authorize the officers of the Trust to submit the reorganization agreement to
shareholders for consideration.
In addition, at meetings held on February 24, 1999 and May 26, 1999, the
Board of Trustees of the Acquiring Trust, including the independent trustees,
unanimously concluded that the reorganization would be in the best interests of
the Worldwide Opportunities Fund and the shareholders and that the interests of
existing Worldwide Opportunities
9
<PAGE>
Fund shareholders will not be diluted as a result of the reorganization. The
Board of Trustees of the Acquiring Trust also unanimously voted to approve the
reorganization agreement.
Federal Income Tax Consequences
Counsel to the funds, Goodwin, Procter & Hoar LLP, is to opine that,
subject to customary assumptions and representations, on the basis of the
existing provisions of the Internal Revenue Code (the "Code"), the Treasury
Regulations promulgated thereunder and current administrative and judicial
interpretations thereof, for federal income tax purposes: (a) the transfer of
all or substantially all of the assets of the Global Growth Fund solely in
exchange for Worldwide Opportunities Fund shares and the assumption by the
Worldwide Opportunities Fund of certain assumed liabilities of the Global Growth
Fund, and the distribution of such shares to the shareholders of the Global
Growth Fund, will constitute a "reorganization" within the meaning of Section
368(a)(1)(C); the Worldwide Opportunities Fund and the Global Growth Fund will
each be a "party to a reorganization" within the meaning of Section 368(b); (b)
no gain or loss will be recognized by the Worldwide Opportunities Fund on the
transfer of the assets of the Global Growth Fund to the Worldwide Opportunities
Fund in exchange for Worldwide Opportunities Fund shares and the assumption by
the Worldwide Opportunities Fund of certain assumed liabilities of the Global
Growth Fund or upon the distribution of Worldwide Opportunities Fund shares to
the Global Growth Fund shareholders in exchange for their shares of the Global
Growth Fund; (c) the tax basis of the Global Growth Fund's assets acquired by
the Worldwide Opportunities Fund will be the same to the Worldwide Opportunities
Fund as the tax basis of such assets to the Global Growth Fund immediately prior
to the reorganization, and the holding period of the assets of the Global Growth
Fund in the hands of the Worldwide Opportunities Fund will include the period
during which those assets were held by the Global Growth Fund; (d) no gain or
loss will be recognized by the Worldwide Opportunities Fund upon the receipt of
the assets of the Global Growth Fund solely in exchange for the Worldwide
Opportunities Fund shares and the assumption by the Worldwide Opportunities Fund
of certain assumed liabilities of the Global Growth Fund; (e) no gain or loss
will be recognized by shareholders of the Global Growth Fund upon the receipt of
Worldwide Opportunities Fund shares by such shareholders, provided such
shareholders receive solely Worldwide Opportunities Fund shares (including
fractional shares) in exchange for their Global Growth Fund shares; and (f) the
aggregate tax basis of the Worldwide Opportunities Fund shares, including any
fractional shares, received by each shareholder of the Global Growth Fund
pursuant to the reorganization will be the same as the aggregate tax basis of
the Global Growth Fund shares held by such shareholder immediately prior to the
reorganization, and the holding period of the Worldwide Opportunities Fund
shares, including fractional shares, to be received by each shareholder of the
Global Growth Fund will include the period during which the Global Growth Fund
shares exchanged therefor were held by such shareholder (provided that the
Global Growth Fund shares were held as a capital asset on the date of the
reorganization).
The receipt of such an opinion is a condition to the consummation of the
reorganization. The Trust has not obtained an Internal Revenue Service ("IRS")
private letter ruling regarding the federal income tax consequences of the
reorganization, and the IRS is not bound by advice of counsel. If the transfer
of the assets of the Global Growth Fund in exchange for Worldwide Opportunities
Fund shares and the assumption by the Worldwide Opportunities Fund of certain
liabilities of the Global Growth Fund do not constitute a tax-free
reorganization, each Global Growth Fund shareholder will recognize gain or loss
equal to the difference between the value of Worldwide Opportunities Fund shares
such shareholder acquires and the tax basis of such shareholder's Global Growth
Fund shares. Shareholders of the funds should consult their tax advisers
regarding the effect, if any, of the proposed reorganization in light of their
individual circumstances. Since the foregoing discussion relates only to the
federal income tax consequences of the reorganization, shareholders of the funds
should also consult tax advisers as to state and local tax consequences, if any,
of the reorganization.
Capitalization
The following table sets forth the capitalization of the Worldwide
Opportunities Fund and the Global Growth Fund, and on a pro forma basis for the
Combined Worldwide Opportunities Fund as of June 30, 1999 giving effect to the
proposed acquisition of net assets of the Global Growth Fund at net asset value.
The pro forma data reflects an exchange ratio of ___________, _______________
and _________ for Class A, Class B and Class C shares,
10
<PAGE>
respectively, of the Worldwide Opportunities Fund issued for each Class A, Class
B and Class C share, respectively, of the Global Growth Fund.
<TABLE>
<CAPTION>
Global Combined Worldwide
Worldwide Growth Opportunities Fund
Opportunities Fund Fund Pro Forma
------------------ ------ ------------------
<S> <C> <C> <C>
Net assets
Class A $ $ $
Class B
Class C
Net asset value per share
Class A $ $ $
Class B
Class C
Shares outstanding
Class A
Class B
Class C
</TABLE>
The table set forth above should not be relied on to determine the number
of Worldwide Opportunities Fund shares to be received in the reorganization. The
actual number of shares to be received will depend upon the net asset value and
number of shares outstanding of the Global Growth Fund and the Worldwide
Opportunities Fund at the time of the reorganization.
Historical Performance Information
The following table sets forth the average annual total return of the Class
A, Class B and Class C shares of the Worldwide Opportunities Fund and the Global
Growth Fund for the periods indicated.
<TABLE>
<CAPTION>
Average Annual Total Returns for
Periods Ending 6/30/99(a)
Since Inception
Fund Name 1 Year 5 Years 10 Years Inception Date
--------- ------ ------- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
Worldwide Opportunities Fund
Class A % % % % 5/13/1960
Class B % % N/A % 7/15/1994
Class C % % N/A % 12/16/1998
MSCI World(b) % % % N/A N/A
Global Growth Fund
Class A % % N/A % 11/1/1993
Class B % N/A N/A % 9/18/1996
Class C % N/A N/A % 10/21/1996
[MSCI AC World Index](c) % % N/A ___% N/A
</TABLE>
Returns indicate past performance, which is not predictive of future
performance. Investment return and net asset value will fluctuate, so that
shares, when redeemed, may be worth more or less than the original cost.
(a) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in Class A shares and a full
redemption of Class B and Class C shares.
11
<PAGE>
(b) The Morgan Stanley Capital International World (net) Index (MSCI World) is
an unmanaged index calculated as an arithmetical average weighted by the
market value of approximately 1,600 companies listed on stock exchanges in
23 countries, including the U.S. and Canada. The index does not reflect any
sales charges or fees but does include the effect of foreign tax
withholding.
(c) Morgan Stanley Capital International All Country World Index (MSCI AC) is
an unmanaged, commonly used measure of global stock market total return
performance. The index's performance does not reflect any sales charges.
12
<PAGE>
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The following discussion summarizes some of the more significant
similarities and differences in the investment objectives, policies and
restrictions of the Worldwide Opportunities Fund and the Global Growth Fund. The
discussion below is qualified in its entirety by the discussion elsewhere in
this Prospectus/Proxy Statement, and in the Prospectus and Statement of
Additional Information for each fund.
Investment Objectives and Policies
The investment objectives of the Worldwide Opportunities Fund and the
Global Growth Fund are substantially similar. The Worldwide Opportunities Fund
has an investment objective of capital appreciation. The Global Growth Fund has
an investment objective of long-term growth of capital. The investment
objectives of the Worldwide Opportunities Fund and the Global Growth Fund are
policies which may not be changed without the approval of the holders of at
least a "majority of the outstanding voting securities" (as that term is defined
in the 1940 Act) of the respective fund.
The principal investment strategies of the Worldwide Opportunities Fund are
substantially similar to the principal investment strategies of the Global
Growth Fund.
o The Worldwide Opportunities Fund and the Global Growth Fund
invest in securities of both U.S. and foreign issuers.
o Each invests at least 65% of its assets in securities of issuers
located in 3 or more countries, one of which will be the United
States.
o Both funds may invest in companies in foreign countries with
developed markets and countries with "emerging markets."
The Worldwide Opportunity Fund is managed by an adviser and subadviser. The
subadviser determines how much of the Worldwide Opportunities Fund's assets will
be invested in different countries and regions. The subadviser also decides
which investments to buy and sell in all countries and regions other than the
United States. The adviser decides which investments to buy and sell in the
United States. The adviser uses a growth oriented approach in selecting
investments. The subadviser uses a value-oriented approach in selecting
investments. The Global Growth Fund invests primarily in common stock of U.S.
and foreign companies that offer the potential for growth.
Certain Investment Restrictions
The Worldwide Opportunities Fund and the Global Growth Fund are both
subject to certain investment restrictions that restrict the scope of their
investments. Fundamental investment restrictions may not be changed without the
affirmative vote of the holders of a majority of the outstanding securities (as
defined in the 1940 Act) of the fund. However, investment restrictions that are
not fundamental may be changed by the Board of Trustees without shareholder
approval. The table below compares certain fundamental and non-fundamental
investment restrictions of the Worldwide Opportunities Fund and the Global
Growth Fund. Fundamental restrictions are followed by an (F); non-fundamental
restrictions are followed by an (nf).
13
<PAGE>
<TABLE>
<CAPTION>
Subject Matter
of Restriction Worldwide Opportunities Fund Global Growth Fund
- -------------- ---------------------------- ------------------
<S> <C> <C>
Borrowing The Worldwide Opportunities Fund may The Global Growth Fund may not borrow
not borrow money, except from a bank money in excess of 20% of its total assets
and then only if there is an asset coverage (taken at cost) and then only as a temporary
of at least 300%; provided, however, that measure for extraordinary or emergency
the fund may not purchase securities while reasons and not for investment. The fund
outstanding borrowings exceed 5% of the may borrow only from banks. Immediately
fund's total assets. (F) after any such borrowings there must be an
asset coverage (total assets of the fund,
including the amount borrowed, less
liabilities other than such borrowings) of at
least 300% of the amount of all borrowings.
In the event that, due to market decline or
other reason, asset coverage falls below
300%, the fund is required within three
days, not including Sundays and holidays,
to reduce the amount of its borrowings to
the extent necessary so that the assets
coverage of the borrowings is at last 300%.
If this should happen, the fund may have to
sell securities at a time when it would be
disadvantageous to do so. (F)
- ------------------------------------------------------------------------------------------------------------------------
Pledging No fundamental or non-fundamental The Global Growth Fund may not pledge
restriction. more than 25% of its total assets (taken at
cost) in connection with permissible
borrowings. For the purpose of this
restriction, the deposit of underlying
securities and other assets in connection
with the writing of put and call options and
collateral arrangements with respect to
margin for currency futures contracts are
not deemed to be a pledge of assets. (F)
- ------------------------------------------------------------------------------------------------------------------------
Debt Securities- The Worldwide Opportunities Fund may No fundamental or non-fundamental
Credit Quality invest up to 35% of its assets in non- restriction.
convertible fixed-income securities of
U.S. and non-U.S. issuers that are rated
within the three highest rating categories
of Standard & Poor's or Moody's Investor
Service. (F)
- ------------------------------------------------------------------------------------------------------------------------
Foreign Under normal circumstances, at least 65% The Global Growth Fund may invest up to
Securities of the total assets of the Worldwide 100% of its assets in foreign securities. (F)
Opportunities Fund will be invested in the
securities of issuers located in at least
three different countries, one of which
will be the United States. (F)
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Subject Matter
of Restriction Worldwide Opportunities Fund Global Growth Fund
- -------------- ---------------------------- ------------------
<S> <C> <C>
Lending The Worldwide Opportunities Fund may The Global Growth Fund may not make
not lend money, except in connection with loans, except (a) by purchase of marketable
the acquisition of a portion of an issue of bonds, debentures, commercial paper or
publicly distributed bonds, debentures or corporate notes, and similar marketable
other corporate obligations. (F) evidences of indebtedness which are part of
an issue to the public or to financial
institutions, (b) by entry into repurchase
agreements, or (c) through the lending of its
portfolio securities with respect to not more
than 25% of its total assets. (F)
- ------------------------------------------------------------------------------------------------------------------------
Illiquid The Worldwide Opportunities Fund will The Global Growth Fund may not invest in
Securities/ not invest more than 15% of its net assets (a) securities which at the time of such
Restricted in illiquid securities, comprised of assets investment are not readily marketable, (b)
which may not be sold or disposed of in securities restricted as to resale (excluding
the ordinary course of business within securities determined to be readily
seven days at approximately the value at marketable), and (c) repurchase agreements
which the fund has valued the investment. maturing in more than seven days, if, as a
(nf) result, more than 15% of the Global
Growth Fund's net assets (taken at current
value) would be invested in the aggregate in
securities described in (a), (b) and (c)
above. (nf)
- ------------------------------------------------------------------------------------------------------------------------
Purchases of The Worldwide Opportunities Fund may The Global Growth Fund may not purchase
Margin not purchase securities on margin except securities on margin (but it may obtain
Securities and as may be permitted under the 1940 Act. short-term credits for the clearance of
Short Sales For purposes of this restriction, the purchases and sales of its portfolio
deposit or payment of margin in securities, and may make margin payments
connection with the use of futures in connection with transactions in
contracts will not be deemed to be a permissible futures and options contracts) or
purchase of securities on margin. (F) make uncovered short sales. (nf)
- ------------------------------------------------------------------------------------------------------------------------
Unseasoned The Worldwide Opportunities Fund will The Global Growth Fund may not invest
Issuers not purchase any securities if, as a result, more than 5% of its total assets in securities
the fund would then have more than 5% of any one issuer which, together with any
of its total assets (taken at current value) predecessor, has been in continuous
invested in securities of companies operation for less than three years. (F)
(including their predecessors) with less
than three years of operating history. (nf)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Subject Matter
of Restriction Worldwide Opportunities Fund Global Growth Fund
- -------------- ---------------------------- ------------------
<S> <C> <C>
Other The Worldwide Opportunities Fund may The Global Growth Fund may not purchase
Investment not invest in securities of other investment the securities of any other investment
Companies companies except to the extent permitted company except (a) within the limits of the
by the 1940 Act. (F) 1940 Act, (b) in a public offering or in the
open market or in privately negotiated
transactions where, in either case, to the
best information of the fund, no
commission, profit or sales charge to a
sponsor or dealer, other than a customary
broker's commission or underwriting
discount, results from such purchase, (c) if
such purchase is part of a merger,
consolidation, or acquisition of assets, or
(d) as part of a master-feeder arrangement.
(F)
- ------------------------------------------------------------------------------------------------------------------------
Diversification The Worldwide Opportunities Fund will The Global Growth Fund may not, with
not purchase any securities (excluding respect to 75% of its total assets, purchase
government securities) if more than 5% of any security (other than obligations issued
the fund's total assets (taken at current or guaranteed by the U.S. Government, its
value) would then be invested in securities agencies or instrumentalities) if, as a result,
of a single issuer. (nf) more than 5% of the value of the fund's
total assets would be invested in securities
of any one issuer. This limitation does not
apply with respect to the remaining 25% of
the fund's total assets. (F)
The Global Growth Fund also may not,
with respect to 75% of its total assets,
acquire more than 10% of any one class of
securities of an issuer or more than 10% of
the outstanding voting securities of any one
issuer. (For this purpose all common stocks
of an issuer are regarded as a single class,
and all preferred stocks of an issuer are
regarded as a single class.) (F)
- ------------------------------------------------------------------------------------------------------------------------
Industry The Worldwide Opportunities Fund may The Global Growth Fund may not
Concentration not invest more than 25% of its total concentrate its investments in particular
assets in any one industry. For purposes industries, and in no event invest more than
of this policy, foreign governments and 25% of the value of its total assets in any
supranational agencies shall be deemed to one industry. (F)
be separate industries. (F)
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Subject Matter
of Restriction Worldwide Opportunities Fund Global Growth Fund
- -------------- ---------------------------- ------------------
<S> <C> <C>
Oil & Gas and The Worldwide Opportunities Fund will The Global Growth Fund may not buy or
Commodity not invest in interests in oil, gas, or other sell oil, gas or other mineral leases, rights
Contracts mineral exploration or development or royalty contracts or commodities or
programs. (nf) commodity contracts, except for
transactions in futures contracts and options
The Worldwide Opportunities Fund may thereon entered into for hedging purposes.
not purchase or sell commodities or (F)
commodity contracts. The terms
commodities and commodity contracts
shall not include (a) forward foreign
currency exchange contracts, (b) futures
contracts on foreign currencies, (c)
options on futures contracts, or (d) options
on foreign currencies. (F)
- ------------------------------------------------------------------------------------------------------------------------
Senior Securities The Worldwide Opportunities Fund may The Global Growth Fund may not issue
not issue senior securities such as bonds, senior securities such as bonds, debentures,
debentures, or senior equity securities. or senior equity securities. (F)
However, to the extent that it is permitted
by the 1940 Act, the fund may borrow
money from banks pursuant to the fund's
investment restriction regarding the
borrowing of money and enter into
transactions involving forward foreign
currency exchange contracts, foreign
currency futures contracts and options on
foreign currency futures contracts, and
options on foreign currencies as described
in the fund's Prospectus and Statement of
Additional Information. (F)
- ------------------------------------------------------------------------------------------------------------------------
Futures and The Worldwide Opportunities Fund will The Global Growth Fund may not engage in
Options not invest more than 5% of its total assets puts, calls, straddles, spreads or any
in any combination of puts, calls, combination thereof, except that, to the
straddles or spreads. (nf) extent described in the fund's Prospectus
and Statement of Additional Information,
The fund may purchase put or call options the fund may buy and sell put and call
or combinations of put or call options options (and any combination thereof) on
written by others if the aggregate securities, on financial futures contracts, on
premiums paid for the options do not securities indices, on currency futures
exceed 2% of the fund's net assets. (nf) contracts and on foreign currencies and may
buy and sell put and call warrants, the
values of which are based upon securities
indices. (nf)
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Subject Matter
of Restriction Worldwide Opportunities Fund Global Growth Fund
- -------------- ---------------------------- ------------------
<S> <C> <C>
Securities held No fundamental or non-fundamental The Global Growth Fund may not invest in
by Trustees and restriction. securities of any company, if officers and
Officers Trustees of the Trust and officers and
directors of the adviser who beneficially
own more than 0.5% of the shares or
securities of that company collectively own
more than 5% of such securities. (F)
- ------------------------------------------------------------------------------------------------------------------------
Real Estate The Worldwide Opportunities Fund may The Global Growth Fund may not purchase
not purchase or sell real estate. (F) or sell real property (including limited
partnership interests), except that it may (a)
purchase or sell readily marketable interests
in real estate investment trusts or readily
marketable securities of companies which
invest in real estate, (b) purchase or sell
securities that are secured by interests in
real estate or interests therein, or (c)
acquire real estate through exercise of its
rights as a holder of obligations secured by
real estate or interests therein or sell real
estate so acquired. (F)
- ------------------------------------------------------------------------------------------------------------------------
Underwriting The Worldwide Opportunities Fund may The Global Growth Fund may not act as an
not underwrite the sale of securities of underwriter except that, in connection with
other issuers, but the fund may be deemed the disposition of its portfolio securities, it
to be an underwriter in connection with may be deemed to be an underwriter under
any acquisition of restricted securities. certain federal securities laws. (F)
(F)
- ------------------------------------------------------------------------------------------------------------------------
Control The Worldwide Opportunities Fund may The Global Growth Fund may not make
not invest in companies for the purpose of investments for the purpose of exercising
exercising control or management. (F) control of a company's management. (nf)
- ------------------------------------------------------------------------------------------------------------------------
Warrants The Worldwide Opportunities Fund will The Global Growth Fund may not purchase
not purchase warrants, except warrants warrants if, as a result, its warrant
acquired by the fund in units or attached holdings, valued at the lower of cost or
to securities which may be deemed to be market, would exceed 5% of the fund's net
without value, in amounts in excess of 5% assets, with no more than 2% of net assets
of the fund's net assets. (nf) in warrants not listed on the New York or
American Stock Exchanges. (nf)
- ------------------------------------------------------------------------------------------------------------------------
Joint Account No fundamental or non-fundamental The Global Growth Fund may not
restriction. participate on a joint or joint and several
basis in any securities trading account. (nf)
- ------------------------------------------------------------------------------------------------------------------------
Issuing The Worldwide Opportunities Fund may No fundamental or non-fundamental
Securities not issue any of its securities other than restriction.
for cash or securities (including securities
of which the fund is the issuer), except as
a dividend or distribution or in connection
with a reorganization. (F)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
COMPARATIVE INFORMATION ON DISTRIBUTION ARRANGEMENTS
Multiple Class Structure
Both funds offer three classes of shares: Class A, Class B and Class C
shares. The classes of the funds are substantially identical except that Class B
shares of the Global Growth Fund purchased prior to January 20, 1998 convert to
Class A shares six years after purchase rather than eight years. Class B shares
of the Global Growth Fund purchased prior to January 20, 1998 will remain
subject to the six year conversion period after the reorganization. Class B
shares of the Global Growth Fund purchased prior to January 20, 1998 will also
remain subject to the sales load schedule as it existed prior to that date. All
Class B shares of the Global Growth Fund purchased after January 20, 1998 and
all Worldwide Opportunities Fund Class B shares convert to Class A after eight
years.
Class A Shares
o Are offered to the public at net asset value plus a maximum sales
charge of 4.75% of the offering price (4.99% of the amount invested).
The sales charge may be reduced or waived under certain conditions.
o Are not subject to any charges when redeemed.
o Have lower distribution and service fees (0.25%) and therefore pay
higher dividends than Class B and Class C shares.
Class B Shares
o Are offered to the public at the next determined net asset value after
receipt of the order with no sales charge at the time of purchase.
o Are subject to a sales charge of up to 5% of the shares value if
they are redeemed within the first five years of purchase (four
years for Class B shares of the Global Growth Fund purchased prior
to January 20, 1998).
o Will automatically convert to Class A shares without a sales charge at
the relative net asset value of each class eight years after the
acquisition of the Class B shares (six years for Class B shares of the
Global Growth Fund purchased prior to January 20, 1998.)
o Have higher distribution and service fees (1.00%) and pay lower
dividends than Class A shares.
Class C Shares
o Are offered to the public at the next determined net asset value after
receipt of the order with no sales charge at the time of purchase.
o Are subject to a sales charge of 1% if they are redeemed within the
first year after they are purchased.
o Have the same distribution and service fees (1%) as Class B shares and
thereafter pay comparable dividends.
o Class C shares do not convert to any other class of shares of the
fund.
In the proposed reorganization, you will receive the same class of
shares of the Worldwide Opportunities Fund in exchange for your shares in the
Global Growth Fund. The reorganization will be effected at net asset value. No
sales charge will be imposed on your shares.
19
<PAGE>
For purposes of calculating the contingent deferred sales charge that you may
pay when you redeem any acquired Class B and Class C shares of the Worldwide
Opportunities Fund, the holding period of the redeemed shares will be "tacked"
to the holding period of the Global Growth Fund. If you acquire Class B and
Class C shares as a result of the reorganization you will continue to be subject
to a contingent deferred sales charge upon subsequent redemption to the same
extent as if you had continued to hold your shares of the Global Growth Fund.
Distribution Plans
Phoenix Equity Planning Corporation serves as the distributor of shares of
both the Worldwide Opportunities Fund and the Global Growth Fund. The Acquiring
Trust has adopted separate amended and restated distribution plans under Rule
12b-1 of the 1940 Act for each class of shares of the Worldwide Opportunities
Fund relating to the sale and promotion of Worldwide Opportunities Fund shares
and the furnishing of shareholder services (the "Worldwide Opportunities Class A
Plan," "Worldwide Opportunities Class B Plan," and the "Worldwide Opportunities
Class C Plan," collectively the "Worldwide Opportunities Plans").
Under the Worldwide Opportunities Class B Plan and the Worldwide
Opportunities Class C Plan, the Worldwide Opportunities Fund may reimburse
Equity Planning Corporation monthly for actual expenses of Equity Planning
Corporation up to 0.75% of the average daily net assets of the Worldwide
Opportunities Fund's Class B and Class C shares, respectively. In addition, the
Worldwide Opportunities Fund pays Equity Planning Corporation 0.25% annually of
the average daily net assets for providing services to the shareholders,
including assistance in connection with inquiries related to shareholder
accounts. Equity Planning Corporation's distribution expenses from selling and
servicing Class B shares may be more than the payments received from contingent
deferred sales charges collected on redeemed shares and from the Acquiring Trust
under the Worldwide Opportunities Class B Plan. Those expenses may be carried
over and paid in future years. At June 30, 1999, Equity Planning had incurred
unreimbursed expenses under the Worldwide Opportunities Class B Plan of
$__________.
The Trust also has adopted distribution plans pursuant to Rule 12b-1 on
behalf of the Class B and Class C shares of the Global Growth Fund, (the "Trust
Class B Plan" and "Trust Class C Plan," and collectively, the "Trust Plans").
Under the Trust Class B Plan and the Trust Class C Plan, the Global Growth Fund
pays the Distributor 0.75% of the average daily net assets of the Class B and
Class C shares. The Trust has also adopted a service agreement under which the
Global Growth Fund will pay a continuing service fee to service providers, in an
amount, computed and prorated on a daily basis, equal to 0.25% per annum of the
fund's average daily net assets.
COMPARATIVE INFORMATION ON SHAREHOLDER SERVICES
Both the Worldwide Opportunities Fund and the Global Growth Fund offer the
same shareholder services, including a Systematic Withdrawal Program, telephone
exchanges, telephone redemptions and access to the Investo-Matic Program, an
automatic investment program.
The Worldwide Opportunities Fund distributes net investment income
semi-annually, and distributes net realized capital gains, if any, at least
annually. The Global Growth Fund distributes net investment income annually, and
distributes net realized capital gains, if any, at least annually. All dividends
and distributions with respect to the shares of the Worldwide Opportunities Fund
and the Global Growth Fund are paid in additional shares of the respective fund
unless shareholders elect to receive cash. The number of shares received in
connection with any reinvestment of dividends will be based upon the net asset
value per share of the applicable class of shares of the Worldwide Opportunities
Fund and the Global Growth Fund in effect on the record date.
20
<PAGE>
The Worldwide Opportunities Fund and the Global Growth Fund currently offer
shareholders identical exchange privileges. Shareholders of the Worldwide
Opportunities Fund and the Global Growth Fund may exchange their shares for
shares of a corresponding class of shares of other affiliated Phoenix funds,
except for the mutual funds of the Phoenix-Zweig Trust.
Shares of the Worldwide Opportunities Fund and shares of the Global Growth
Fund may be redeemed at a redemption price equal to the net asset value of the
shares as next determined following the receipt of a redemption order and any
other required documentation in proper form. In the case of Class B and Class C
shares redemption, investors will be subject to the applicable determined
deferred sales charge, if any, for such shares. Payment of redemption proceeds
for redeemed Global Growth Fund and Worldwide Opportunities Fund shares are made
within seven days after receipt of a redemption request in proper form and
documentation.
Because both the Worldwide Opportunities Fund and the Global Growth Fund
offer the same shareholder services, after the Closing the same services will
continue to be available to the shareholders of the Global Growth Fund but in
their capacity as shareholders of the Worldwide Opportunities Fund.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS
The following is a summary of certain provisions of the Declaration of
Trust of each of the trusts.
Form of Organization
The Worldwide Opportunities Fund is a series of the Acquiring Trust, an
unincorporated voluntary association organized under the laws of the
Commonwealth of Massachusetts as a business trust, pursuant to a Declaration of
Trust dated November 4, 1991, as amended. The Global Growth Fund is a series of
the Trust, which is also an unincorporated voluntary association organized under
the laws of the Commonwealth of Massachusetts as a business trust, pursuant to a
Declaration of Trust dated May 28, 1986, as amended. The operations of the
Worldwide Opportunities Fund and the Global Growth Fund are governed by their
Declarations of Trust and by Massachusetts law, as applicable. Both the
Acquiring Trust and the Trust are registered with the Securities and Exchange
Commission as open-end management investment companies and are subject to the
provisions of the 1940 Act and the rules and regulations of the Commission
thereunder.
Shares
Each Declaration of Trust authorizes the Trustees to create an unlimited
number of series in each trust. Within each series, the Trustees may create an
unlimited number of classes, each with an unlimited number of full and
fractional shares. The Trust currently has six series outstanding: the
Phoenix-Engemann Balanced Return Fund, the Phoenix-Engemann Global Growth Fund,
the Phoenix-Engemann Growth Fund, the Phoenix-Engemann Nifty Fifty Fund, the
Phoenix-Engemann Small & Mid-Cap Growth Fund and the Phoenix-Engemann Value 25
Fund. The Acquiring Trust currently has one series outstanding: the
Phoenix-Aberdeen Worldwide Opportunities Fund. In addition to the currently
existing series, each trust may organize other series in the future.
Both the Worldwide Opportunities Fund and the Global Growth Fund offer
Class A, Class B and Class C shares. When issued, the shares are fully paid and
non-assessable, have no preference, preemptive or similar rights (unless
assigned by the Trustees), and are freely transferable. The assets and proceeds
received by each trust from the issue or sale of shares of a series or class are
allocated to that series and class and constitute the rights of that series or
class, subject only to the rights of creditors. Any underlying assets of a
series or class are required to be segregated on the books of account of the
trusts. These assets are to be used to pay the expenses of the series or class
as well as a share of the general expenses of each relevant trust.
Meetings
The Worldwide Opportunities Fund is not required to hold periodic, special
shareholder meetings. The president may call shareholder meetings at any time.
If a majority of trustees requests a meeting in writing or by
21
<PAGE>
board resolution, or if holders of more than ten percent of the issued and
outstanding stock entitled to vote at a meeting request a meeting in writing,
the president and secretary shall call a meeting.
The Global Growth Fund also is not required to hold periodic, special
shareholder meetings. Trustees may call shareholder meetings as necessary.
Shareholder Liability
Unlike the stockholders of a corporation, under certain circumstances
shareholders of a Massachusetts business trust may be held personally liable for
the debts, claims or other obligations of a business trust. However, both the
Phoenix Worldwide Opportunities Fund Declaration of Trust and the
Phoenix-Engemann Funds Declaration of Trust limit shareholder liability.
The Phoenix Worldwide Opportunities Fund Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts,
obligations or affairs of the Phoenix Worldwide Opportunities Fund. The Phoenix
Worldwide Opportunities Fund will indemnify shareholders for all losses and
expenses which they incur if they are held personally liable for the obligations
of the fund. Such indemnification will come out of the property of the fund.
The Phoenix-Engemann Funds Declaration of Trust specifies that shareholders
shall not be personally liable for claims against the Global Growth Fund, and it
prevents the fund or any trustee, officer, employee or agent of the fund from
personally binding any shareholder for payment other than for payment to which
the shareholder agrees. The Global Growth Fund will indemnify shareholders for
all losses and expenses which they incur if they are held personally liable for
the obligations of the fund. Such indemnification will come out of the property
of the fund.
Due to the indemnification provisions in the declarations of trust of each
trust, the risk of financial loss to shareholders on account of shareholder
liability is considered remote.
Liability of Trustees
Each Declaration of Trust provides that a trustee will generally be
personally liable only for the trustee's own willful misfeasance, bad faith,
gross negligence or reckless disregard of duties. Under the Phoenix Worldwide
Opportunities Declaration of Trust, a trustee will not be personally liable to
any person, except to the trust or its shareholders, in connection with trust
property or the affairs of the trust, unless the trustee acted in bad faith,
willful misfeasance, gross negligence or reckless disregard of the trustee's
duties.
The Phoenix Worldwide Opportunities Declaration of Trust provides for
indemnification of trustees for the expenses of proceedings against the trustee
unless:
o the trustee acted with willful misfeasance, bad faith, gross negligence or
reckless disregard of duties with respect to the trust, a series of the
trust, or shareholders of the trust;
o the trustee did not act in good faith in the reasonable belief that the
trustee's actions with respect to any matter were in the best interest of
the trust; or
o the proceeding against the trustee ends in a settlement or similar
disposition in which the trustee is required to make payment, unless an
appropriate authority determines that the trustee did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
trustee's duties.
The Phoenix Worldwide Opportunities Declaration of Trust allows the trust
to purchase insurance for a trustee to provide indemnification in the event of
proceedings against the trustee and also permits the trust to advance money to a
trustee for the expenses of litigation. If the trustee's conduct is later found
to preclude indemnification, the trustee must repay the advance to the trust.
22
<PAGE>
Under the Phoenix-Engemann Funds Declaration of Trust a trustee will not be
liable for claims against the trust or actions of any other trustee, officer,
agent or employee of the trust unless the trustee would be liable because of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
trustee's duties. The trust will indemnify a trustee for the expenses of
litigation against the trustee and may purchase insurance for a trustee to
provide the indemnification. The trust also may advance money to the trustee for
the expenses of litigation.
Voting Requirements
The Phoenix Worldwide Opportunities Declaration of Trust provides that
whole shares which are entitled to vote on a matter are entitled to one vote,
and fractional shares which are entitled to vote on a matter are entitled to a
corresponding fractional vote. There is no cumulative voting in elections for
trustees.
The Phoenix-Engemann Funds Declaration of Trust provides that each whole
share entitled to vote on a matter is entitled to one vote, and each fractional
share entitled to vote on a matter is entitled to a proportionate fractional
vote. There is no cumulative voting in elections for trustees.
Liquidation or Dissolution
In the event of the liquidation or dissolution of a class or series of
either trust, the trustees shall distribute the assets of the terminating class
or series to the shareholders, according to their respective rights, after
accounting for the liabilities of the terminating class or series.
FISCAL YEAR
The Worldwide Opportunities Fund operates on a fiscal year which ends June
30. The Global Growth Fund operates on a fiscal year which ends December 31.
MANAGEMENT AND OTHER SERVICE PROVIDERS
Responsibility for the overall supervision of the Trust, including the
Global Growth Fund, rests with the Trust's Board of Trustees. Roger Engemann and
Associates serves as investment manager to the Trust. Responsibility for the
overall supervision of the Acquiring Trust, including the Worldwide
Opportunities Fund, rests with the Acquiring Trust's Board of Trustees. Phoenix
Investment Counsel serves as the investment adviser to the Worldwide
Opportunities Fund. National Securities & Research Corporation, a direct
subsidiary of Phoenix Investment Partners, Ltd. (formerly known as Phoenix Duff
& Phelps Corporation), acted as the adviser to the Worldwide Opportunities Fund
prior to June 1, 1998. Effective June 1, 1998, National Securities & Research
Corporation assigned its investment advisory contract to Phoenix Investment
Counsel. Phoenix Investment Counsel is responsible for managing the Worldwide
Opportunities Fund's investment program and the day-to-day management of the
domestic portion of the fund's portfolio. Aberdeen Fund Managers, Inc., is the
subadviser to the fund and is responsible for the day-to-day management of the
foreign holdings of the fund. Roger Engemann, James E. Jair and John S. Tilson
are primarily responsible for the day-to-day management of the Global Growth
Fund.
Equity Planning serves as administrative agent of the Worldwide
Opportunities Fund and the Global Growth Fund and, as such, performs
administrative, bookkeeping and pricing functions. Equity Planning also acts as
transfer agent for the Worldwide Opportunities Fund and the Global Growth Fund.
State Street Bank and Trust Company acts as custodian for the Global Growth
Fund. Brown Brothers Harriman & Co. serves as custodian of the Worldwide
Opportunities Fund.
PricewaterhouseCoopers LLP serve as independent accountants for the funds.
23
<PAGE>
VOTING INFORMATION
Quorum and Voting Requirements
This Prospectus/Proxy Statement is being furnished to the shareholders of
the Global Growth Fund in connection with the solicitation by the Board of
Trustees of The Phoenix-Engemann Funds of proxies to be used at the meeting.
Shareholders of record of the Global Growth Fund at the close of business
on August 23, 1999 will be entitled to vote at the meeting or at any
adjournments thereof. As of the record date, there were ___________, __________
and _________ issued and outstanding Class A, Class B and Class C shares,
respectively, of the Global Growth Fund. Shareholders are entitled to one vote
for each share held and a proportionate vote for each fractional share held.
Shareholders of the Global Growth Fund will vote together as a single class on
the reorganization proposal. The holders of forty percent (40%) of the shares
entitled to vote at the close of business on the record date present in person
or represented by proxy will constitute a quorum for the meeting. A quorum being
present, the approval of the reorganization proposal requires the affirmative
vote of a majority of the outstanding shares of the Global Growth Fund. For
purposes of determining the presence of a quorum for transacting business at the
meeting and for determining whether sufficient votes have been received for
approval of the proposal to be acted upon at the meeting, abstentions and broker
"non-votes" (that is, proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial owner or other
persons entitled to vote shares on a particular matter with respect to which the
brokers or nominees do not have discretionary power) will be treated as shares
that are present at the meeting, but which have not been voted. For this reason,
abstentions and broker non-votes will assist the Global Growth Fund in
obtaining a quorum, but both have the practical effect of a "no" vote for
purposes of obtaining the requisite vote for approval of the proposal.
If either (a) a quorum is not present at the meeting or (b) a quorum is
present but sufficient votes in favor of the reorganization proposal have not
been obtained, then the persons named as proxies may propose one or more
adjournments of the meeting without further notice to shareholders to permit
further solicitation of proxies provided such persons determine, after
consideration of all relevant factors, including the nature of the proposal, the
percentage of votes then cast, the percentage of negative votes then cast, the
nature of the proposed solicitation activities and the nature of the reasons for
such further solicitation, that an adjournment and additional solicitation is
reasonable and in the interests of shareholders. The persons named as proxies
will vote those proxies that such persons are required to vote FOR the
reorganization proposal in favor of such an adjournment and will vote those
proxies required to be voted AGAINST the reorganization proposal against such
adjournment.
The meeting may be adjourned from time to time by a majority of the votes
properly cast upon the question of adjourning to another date and time, whether
or not a quorum is present, and the meeting may be held as adjourned within a
reasonable time after the date set for the original meeting without further
notice.
The individuals named as proxies on the enclosed proxy card will vote in
accordance with the shareholder's direction, as indicated thereon, if the proxy
card is received and is properly executed. If the shareholder properly executes
a proxy and gives no voting instructions with respect to the reorganization
proposal, the shares will be voted in favor of the reorganization proposal. The
proxies, in their discretion, may vote upon such other matters as may properly
come before the meeting. The Board of Trustees of the Trust is not aware of any
other matters to come before the meeting.
Approval of the reorganization proposal by the shareholders of the Global
Growth Fund is a condition of the consummation of the reorganization. If the
reorganization is not approved, the Global Growth Fund will continue as a series
of the Trust and the Board of Trustees of the Trust may consider other
alternatives in the best interests of the shareholders of the Global Growth
Fund.
Revocation of Proxies
Any shareholder who has given a proxy has the right to revoke the proxy any
time prior to its exercise
24
<PAGE>
o by written notice of the proxy's revocation to the Secretary of the
Trust at the above address prior to the meeting;
o by the subsequent execution and return of another proxy prior to the
meeting;
o by submitting a subsequent telephone vote; or
o by being present and voting in person at the meeting and giving oral
notice of revocation to the Chairman of the meeting.
No Appraisal Rights
The staff of the SEC has taken the position that any rights to appraisal
arising under state law are preempted by the provisions of the 1940 Act and Rule
22c-1 thereunder, which generally requires that shares of a registered open-end
investment company be valued at their next determined net asset value.
Solicitation of Proxies
In addition to solicitation of proxies by mail, officers of the Trust and
officers and regular employees of Phoenix Investment Counsel, affiliates of
Phoenix Investment Counsel, or other representatives of the Trust may also
solicit proxies by telephone or telegram or in person. The Trust may also use a
proxy solicitation firm to assist with the mailing and tabulation effort and any
special, personal solicitation of proxies.
Shareholders of the Global Growth Fund may be asked by the proxy
solicitor's representatives to cast their votes by authorizing the execution of
a proxy by telephone. Shareholders will either be contacted by a representative
of the proxy solicitor using information derived from a shareholder list
provided by the Trust or shareholders may be sent a written communication or
left a telephone message asking the shareholder to telephone the solicitor at a
designated toll-free number. In all such cases, the representative of the
solicitor will ask for the shareholder's full name and address, the last four
digits of the shareholder's social security number or employer identification
number, the person's title (in the case of a corporate shareholder) and
confirmation that the person is authorized to direct the voting of the shares.
The shareholder will be asked to confirm that the Prospectus/Proxy Statement and
proxy form have been received. If answered in the affirmative, the solicitor
representative will advise the shareholder that the shareholder may authorize
the execution of a proxy over the telephone and ask the shareholder if the
shareholder desires to authorize the execution of a proxy at that time.
Telephone conversations will be recorded. If the shareholder chooses to proceed,
the representative of the solicitor will then ask the shareholder if the
shareholder wishes to support the reorganization proposal. If answered in the
affirmative, the solicitor will read the reorganization proposal to the
shareholder and ask for such shareholder's voting instruction on the
reorganization proposal.
Although the representative of the solicitor will assist with any
questions, the answers to which are contained in the Proxy Statement, the
representative of the solicitor will not make recommendations on how to vote on
the reorganization proposal. Finally, the representative of the solicitor will
explain that the solicitor will execute a written proxy as the shareholder's
agent in accordance with the shareholder's instructions and will forward the
proxy to the Trust. Within 72 hours after each telephone call, the solicitor
will send to each shareholder who used the telephone proxy voting method a
written confirmation of the shareholder's instructions. The shareholder will be
asked to contact the solicitor immediately if the shareholder's instructions
have not been properly recorded.
If a shareholder wishes to participate in the meeting, but does not wish to
authorize the execution of a proxy by telephone, the shareholder may still
submit the proxy form included with this Prospectus/Proxy Statement or attend
the meeting in person.
The costs of the meeting, such as the preparation and mailing of the
notice, the Prospectus/Proxy Statement and the proxy, and the solicitation of
proxies, including reimbursement to persons who forward proxy materials to their
clients, and the expenses connected with the solicitation of these proxies in
person, by telephone, or by
25
<PAGE>
telegraph, will be borne by Phoenix Investment Counsel. The costs of any
additional solicitation and of any adjourned session of the meeting will be
borne by Phoenix Investment Counsel. Phoenix Investment Counsel will reimburse
banks, brokers, and other persons holding Global Growth Fund shares registered
in their names or in the names of their nominees, for their expenses incurred in
sending proxy material to and obtaining proxies from the beneficial owners of
such Global Growth Fund shares. [Name of proxy solicitor], a proxy solicitation
firm, has been engaged by ______________ to act as solicitor and will receive
fees estimated at $___________, plus reimbursement of out-of-pocket expenses.
Ownership of Voting Securities
Based on holdings and total shares outstanding as of _________, 1999, the
Trustees and officers of the Trust owned as a group less than 1% of the
outstanding voting securities of the Global Growth Fund. If the reorganization
were consummated as of __________, 1999, the Trustees and officers of the Trust
would own less than 1% of the outstanding voting securities of the Combined
Worldwide Opportunities Fund based on their holdings and total shares
outstanding as of ___________, 1999. Based on holdings and total shares
outstanding as of __________, 1999, and assuming consummation of the
reorganization, no person would own beneficially or of record 5% or more of the
outstanding shares of the Global Growth Fund or the Combined Worldwide
Opportunities Fund.
THE BOARD OF TRUSTEES OF THE TRUST, INCLUDING THE INDEPENDENT TRUSTEES OF
THE TRUST, RECOMMEND YOU APPROVE THE PLAN OF REORGANIZATION.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE FILL IN, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS NECESSARY IF IT IS MAILED IN THE UNITED STATES.
ADDITIONAL INFORMATION ABOUT THE FUNDS
Additional information about the Worldwide Opportunities Fund, and the
Acquiring Trust is included in the Worldwide Opportunities Fund Prospectus
accompanying this document and is incorporated by reference herein. Further
information about the Worldwide Opportunities Fund and the Acquiring Trust is
included in the Statement of Additional Information for the Worldwide
Opportunities Fund, dated September __, 1999, which has been filed with the
Commission and is incorporated by reference herein. A copy of the Worldwide
Opportunities Fund Statement of Additional Information may be obtained without
charge by contacting Equity Planning at 100 Bright Meadow Boulevard, Post Office
Box 2200, Enfield, Connecticut 06083-2200, or by telephoning Equity Planning
toll-free at 1-800-243-4361.
Additional information about the Global Growth Fund is included in the
current Prospectus for the Global Growth Fund dated May 1, 1999. A copy of the
Global Growth Fund Prospectus has been filed with the Commission, and is
incorporated by reference herein. Further information about the Global Growth
Fund is included in the Statement of Additional Information for the Global
Growth Fund dated May 1, 1999, which also has been filed with the Commission and
is incorporated by reference herein. A copy of the Global Growth Fund's
Prospectus and Statement of Additional Information may be obtained without
charge by contacting Equity Planning at 100 Bright Meadow Boulevard, Post Office
Box 2200, Enfield, Connecticut 06083-2200, or by telephoning Equity Planning
toll-free at 1-800-243-4361.
MISCELLANEOUS
Available Information
The Acquiring Trust and the Trust are each registered under the 1940 Act
and is subject to the informational requirements of the Securities Exchange Act
of 1934, as amended, and the 1940 Act, and, in accordance therewith,
26
<PAGE>
files reports, proxy materials, and other information with the Commission. Such
reports, proxy materials, and other information can be inspected at the
Securities and Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 as well as at the following regional offices: New York
Regional Office, 75 Park Place, Room 1228, New York, NY 10007; and Chicago
Regional Office, Northwestern Atrium Center, 500 Madison Street, Suite 1400,
Chicago, IL 60661. Copies of such material also can be obtained from the Public
Relations Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a Web Site
(http://www.sec.gov) that contains this Prospectus, Statement of Additional
Information, material incorporated by reference, and other information regarding
registrants that file electronically with the Commission.
Management's Discussion of the Worldwide Opportunities Fund's Performance for
the Year Ended June 30, 1999
[To be filed by Pre-Effective Amendment]
Legal Matters
Certain legal matters in connection with the issuance of the shares of the
Worldwide Opportunities Fund will be passed upon by Goodwin, Procter & Hoar LLP.
Additional Financial Information
The table set forth below presents certain financial information for the
Worldwide Opportunities Fund. This information is derived from the Worldwide
Opportunities Fund audited financial statements for the year ended June 30,
1999. The data should be read in conjunction with the audited financial
statements and related notes, which are included in the Statement of Additional
Information related to this Prospectus/Proxy Statement. The financial highlights
for the Worldwide Opportunities Fund for prior periods are contained in the
Worldwide Opportunities Fund Prospectus, and the financial statements for the
Worldwide Opportunities Fund for prior periods are contained in the Acquiring
Trust's Annual Report to Shareholders which are included in the Statement of
Additional Information related to this Prospectus Proxy/Statement.
27
<PAGE>
PHOENIX WORLDWIDE OPPORTUNITIES FUND
Financial Highlights
For a share of beneficial interest outstanding throughout each period
<TABLE>
<CAPTION>
Year Ended June 30, 1999
------------------------------------------
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period $ $ $
Income from investment operations
Net investment income
Net realized and unrealized gain (loss) _________ _________ __________
Total from investment operations _________ _________ __________
Less distributions
Dividends from net investment income
Dividends from net realized gains
In excess of accumulated net realized gains _________ _________ __________
Total distributions _________ _________ __________
Change in net asset value _________ _________ __________
Net asset value, end of period $ $ $
========= ========= ==========
Total return(1) % % %
Ratios/supplemental data:
Net assets, end of period (thousands) $ $ $
Ratio to average net assets of:
Expenses % % %
Net investment income % % %
Portfolio turnover rate % % %
</TABLE>
- -------------------
(1) Maximum sales charge is not reflected in total return calculation.
28
<PAGE>
OTHER BUSINESS
The Board of Trustees of the Trust knows of no business to be brought
before the meeting other than the matters set forth in this Prospectus/Proxy
Statement. Should any other matter requiring a vote of Global Growth Fund
shareholders arise, however, the proxies will vote thereon according to their
best judgment in the interests of the Global Growth Fund and the shareholders of
the Global Growth Fund.
29
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this 4th day of August, 1999, by and between PHOENIX-ABERDEEN WORLDWIDE
OPPORTUNITIES FUND (the "Worldwide Opportunities Trust"), a Massachusetts
business trust with its principal place of business at 101 Munson Street,
Greenfield, Massachusetts 01301, on behalf of the Phoenix-Aberdeen Worldwide
Opportunities Fund, the sole portfolio series thereof (the "Acquiring Fund") and
THE PHOENIX-ENGEMANN FUNDS (the "Phoenix-Engemann Trust"), a Massachusetts
business trust with its principal place of business at 600 North Rosemead
Boulevard, Pasadena, California 91107-2133, on behalf of the Phoenix-Engemann
Global Growth Fund, a portfolio series thereof (the "Acquired Fund").
All references in this Agreement to action taken by the Acquiring Fund or
the Acquired Fund shall be deemed to refer to action taken by the Worldwide
Opportunities Trust or the Phoenix-Engemann Trust, on behalf of the respective
portfolio series.
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer by the Acquired Fund of all or
substantially all of the assets of the Acquired Fund to the Acquiring Fund, in
exchange solely for Class A, Class B and Class C shares of beneficial interest
in the Acquiring Fund (the "Acquiring Fund Shares"), the assumption by the
Acquiring Fund of all the liabilities of the Acquired Fund, and the distribution
of the Acquiring Fund Shares to the shareholders of the Acquired Fund in
complete liquidation of the Acquired Fund as provided herein, all upon the terms
and conditions hereinafter set forth in this Agreement.
WHEREAS, the Worldwide Opportunities Trust and the Phoenix-Engemann Trust
are each open-end, registered investment companies of the management type;
WHEREAS, the Board of Trustees of the Worldwide Opportunities Trust has
determined that the exchange of all or substantially all of the assets of the
Acquired Fund for Acquiring Fund Shares and the assumption of all the
liabilities of the Acquired Fund by the Acquiring Fund is in the best interests
of the Acquiring Fund and that the interests of the existing shareholders of the
Acquiring Fund would not be diluted as a result of this transaction; and
WHEREAS, the Board of Trustees of the Phoenix-Engemann Trust has determined
that the exchange of all or substantially all of the assets of the Acquired Fund
for Acquiring Fund Shares and the assumption of all the liabilities of the
Acquired Fund by the Acquiring Fund is in the best interests of the Acquired
Fund and that the interests of the existing shareholders of the Acquired Fund
would not be diluted as a result of this transaction.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. THE TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING
FUND SHARES, THE ASSUMPTION OF ALL THE LIABILITIES OF THE ACQUIRED FUND AND
THE LIQUIDATION OF THE ACQUIRED FUND
1.1 Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Acquired Fund agrees
to transfer all or substantially all of the Acquired Fund's assets, as set forth
in paragraph 1.2, to the Acquiring Fund, and the Acquiring Fund agrees in
exchange therefor: (i) to deliver to the Acquired Fund the number of full and
fractional Acquiring Fund Shares, computed in the manner and as of the time and
date set forth in Article 2 and (ii) to assume all the liabilities of the
Acquired Fund, as set forth in paragraph 1.3. Such transactions shall take place
at the closing provided for in paragraph 3.1 (the "Closing").
<PAGE>
1.2 The assets of the Acquired Fund to be acquired by the Acquiring Fund
shall consist of all property, including, without limitation, all cash,
securities, commodities and futures interests, and dividends or interest
receivable which are owned by the Acquired Fund and any deferred or prepaid
expenses shown as an asset on the books of the Acquired Fund on the closing date
provided in paragraph 3.1 (the "Closing Date").
1.3 The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. The Acquiring Fund shall
assume all liabilities, expenses, costs, charges and reserves reflected on an
unaudited statement of assets and liabilities of the Acquired Fund, prepared by
Phoenix Equity Planning Corporation, in its capacity as financial agent for the
Acquired Fund as of the Valuation Date (as defined in paragraph 2.1) in
accordance with generally accepted accounting principles consistently applied
from the prior audited period.
1.4 Immediately after the transfer of assets provided for in paragraph 1.1,
the Acquired Fund will distribute pro rata to the Acquired Fund's shareholders
of record, determined as of immediately after the close of business on the
Closing Date (the "Acquired Fund Shareholders"), the Acquiring Fund Shares
received by the Acquired Fund pursuant to paragraph 1.1 and will completely
liquidate. Such distribution and liquidation will be accomplished by the
transfer of the Acquiring Fund Shares then credited to the account of the
Acquired Fund on the books of the Acquiring Fund to open accounts on the share
records of the Acquiring Fund in the names of the Acquired Fund Shareholders and
representing the respective pro rata number of the Acquiring Fund Shares of the
corresponding class due such shareholders. All issued and outstanding shares of
the Acquired Fund will simultaneously be canceled on the books of the Acquired
Fund, although share certificates representing interests in the Acquired Fund
will represent a number of Acquiring Fund Shares after the Closing Date as
determined in accordance with paragraph 2.2. The Acquiring Fund shall not issue
certificates representing the Acquiring Fund Shares in connection with such
exchange. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent.
2. VALUATION
2.1 The value of the Acquired Fund's net assets to be acquired by the
Acquiring Fund hereunder and the net asset value of Acquiring Fund Shares of
each class shall be computed as of immediately after the close of business of
the New York Stock Exchange on the Closing Date (such time and date being
hereinafter called the ("Valuation Date")), using the valuation procedures set
forth in the Acquiring Fund's Declaration of Trust and then-current prospectus
or statement of additional information.
2.2 The number of the Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Fund's assets and the
assumption of liabilities shall be determined by dividing the value of the net
assets of the Acquired Fund attributable to each class of shares of the Acquired
Fund by the net asset value of an Acquiring Fund Share of the corresponding
class.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be the next Friday that is a full business day
following satisfaction (or waiver as provided herein) of all of the conditions
set forth in Articles 6, 7, and 8 of this Agreement (other than those conditions
which may by their terms be satisfied only at the Closing), or such later date
as the parties may agree to in writing. All acts taking place at the Closing
shall be deemed to take place simultaneously as of immediately after the close
of business on the Closing Date unless otherwise agreed to by the parties. The
close of business on the Closing Date shall be as of 4:00 p.m. New York Time.
The Closing shall be held at the offices of Phoenix Investment Counsel, Inc.
("PIC"), 56 Prospect Street, Hartford, Connecticut 06115-0480, or at such other
time and/or place as the parties may agree.
3.2 The Phoenix-Engemann Trust shall cause Phoenix Equity Planning
Corporation (the "Transfer Agent"), transfer agent of the Acquired Fund, to
deliver at the Closing a certificate of an authorized officer
2
<PAGE>
stating that its records contain the names and addresses of the Acquired Fund
Shareholders and the number and percentage ownership of outstanding shares of
each class owned by each such shareholder immediately prior to the Closing. The
Acquiring Fund shall issue and deliver a confirmation evidencing the Acquiring
Fund Shares to be credited on the Closing Date to the Secretary of
Phoenix-Engemann Trust or provide evidence satisfactory to the Phoenix-Engemann
Trust that such Acquiring Fund Shares have been credited to the Acquired Fund's
account on the books of the Acquiring Fund. At the Closing, each party shall
deliver to the other such bills of sales, checks, assignments, share
certificates, if any, receipts or other documents as such other party or its
counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Phoenix-Engemann Trust represents and warrants to the Worldwide
Opportunities Trust as follows:
(a) The Phoenix-Engemann Trust is a voluntary association with
transferable shares of the type commonly referred to as a Massachusetts business
trust duly organized and validly existing under the laws of the Commonwealth of
Massachusetts.
(b) The Phoenix-Engemann Trust is a registered investment company
classified as a management company of the open-end type, and its registration
with the Securities and Exchange Commission (the "Commission"), as an investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and the registration of its shares under the Securities Act of 1933, as amended
(the "1933 Act"), are in full force and effect.
(c) The Phoenix-Engemann Trust is not, and the execution, delivery and
performance of this Agreement will not result, in a material violation of its
Declaration of Trust or By-Laws or of any agreement, indenture, instrument,
contract, lease or other undertaking relating to the Acquired Fund.
(d) The Acquired Fund has no material contracts or other commitments
(other than this Agreement) which will be terminated with liability to the
Acquired Fund prior to the Closing Date.
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquired Fund or any of its
properties or assets. The Acquired Fund knows of no facts which might form the
basis for the institution of such proceedings and is not a party to or subject
to the provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability to
consummate the transactions herein contemplated.
(f) The Statement of Assets and Liabilities of the Acquired Fund at
December 31, 1998 has been audited by PricewaterhouseCoopers, LLP, independent
accountants, and is in accordance with generally accepted accounting principles
consistently applied and such statement (copies of which have been furnished to
Worldwide Opportunities Trust,) fairly reflects the financial condition of the
Acquired Fund as of such date, and there are no known contingent liabilities of
the Acquired Fund as of such date not disclosed therein.
(g) Since December 31, 1998, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred. For the purposes of this subparagraph
(g), a decline in net asset value per share of the Acquired Fund, the discharge
of Acquired Fund liabilities, or the redemption of Acquired Fund shares by
Acquired Fund Shareholders shall not constitute a material adverse change.
3
<PAGE>
(h) All Federal and other tax returns and reports of the Acquired Fund
required by law to have been filed have been filed and are correct, and all
Federal and other taxes shown as due or required to be shown as due on said
returns and reports have been paid or provision has been made for the payment
thereof, and to the best of the Acquired Fund's knowledge no such return is
currently under audit and no assessment has been asserted with respect to such
returns.
(i) For each taxable year of its operation, the Acquired Fund has met
the requirements of Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such.
(j) All issued and outstanding shares of the Acquired Fund are duly
and validly issued and outstanding, fully paid and non-assessable by the
Acquired Fund (recognizing that, under Massachusetts law, Acquired Fund
Shareholders could, under certain circumstances be held personally liable for
obligations of the Acquired Fund). The Acquired Fund does not have outstanding
any options, warrants or other rights to subscribe for or purchase any of the
Acquired Fund shares, nor is there outstanding any security convertible into any
of the Acquired Fund shares (except for the conversion feature of the Class B
shares into Class A shares as described in the current prospectus of the
Acquired Fund).
(k) The execution, delivery and performance of this Agreement has been
duly authorized prior to the Closing Date by all necessary action on the part of
the Board of Trustees of the Phoenix-Engemann Trust, and, subject to the
approval of the Acquired Fund Shareholders, this Agreement constitutes a valid
and binding obligation of the Phoenix-Engemann Trust enforceable in accordance
with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights, and to general equity principles.
4.2 The Worldwide Opportunities Trust represents and warrants to the
Phoenix-Engemann Trust as follows:
(a) The Worldwide Opportunities Trust is a voluntary association with
transferable shares of the type commonly referred to as a Massachusetts business
trust duly organized and validly existing under the laws of the Commonwealth of
Massachusetts.
(b) The Worldwide Opportunities Trust is a registered investment
company classified as a management company of the open-end type, and its
registration with the Commission, as an investment company under the 1940 Act,
and the registration of its shares under the 1933 Act are in full force and
effect.
(c) The current prospectus and statement of additional information of
the Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading.
(d) The Worldwide Opportunities Trust is not, and the execution,
delivery and performance of this Agreement will not result in a material
violation of the Acquiring Fund's Declaration of Trust or By-laws or of any
agreement, indenture, instrument, contract, lease or other undertaking relating
to the Acquiring Fund.
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquiring Fund or any of its
properties or assets. The Acquiring Fund knows of no facts which might form the
basis for the institution of such proceedings and is not a party to or subject
to the provisions of any order, decree, or judgment of any court or governmental
body which materially and adversely affects the Acquiring Fund's business or its
ability to consummate the transactions herein contemplated.
4
<PAGE>
(f) The Statement of Assets and Liabilities of the Acquiring Fund at
June 30, 1998, has been audited by PricewaterhouseCoopers, LLP, independent
accountants and is in accordance with generally accepted accounting principles
consistently applied and such statement (copies of which have been furnished to
the Phoenix-Engemann Trust), fairly reflects the financial condition of the
Acquiring Fund as of such date, and there are no known contingent liabilities of
the Acquiring Fund as of such date not disclosed therein.
(g) Since June 30, 1998, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred. For the purposes of this
subparagraph (g), a decline in net asset value per share of the Acquiring Fund
Shares, the discharge of Acquiring Fund liabilities, or the redemption of
Acquiring Fund shares by Acquiring Fund shareholders, shall not constitute a
material adverse change.
(h) All Federal and other tax returns and reports of the Acquiring
Fund required by law to have been filed have been filed and are correct, and all
Federal and other taxes shown as due or required to be shown as due on said
returns and reports have been paid or provision has been made for the payment
thereof, and, to the best of the Acquiring Fund's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to such
returns.
(i) For each taxable year of its operation, the Acquiring Fund has met
the requirements of Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such.
(j) All issued and outstanding Acquiring Fund Shares are duly and
validly issued and outstanding, fully paid and non-assessable by the Acquiring
Fund (recognizing that, under Massachusetts law, Acquiring Fund shareholders
could under certain circumstances be held personally liable for the obligations
of the Acquiring Fund). The Acquiring Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any Acquiring
Fund Shares, nor is there outstanding any security convertible into any
Acquiring Fund Shares (except for the conversion feature of the Class B shares
into Class A shares as described in the current prospectus of the Acquiring
Fund).
(k) The execution, delivery and performance of this Agreement has been
fully authorized prior to the Closing Date by all necessary action, if any, on
the part of the Board of Trustees of the Worldwide Opportunities Trust and this
Agreement constitutes a valid and binding obligation of the Acquiring Fund
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors rights, and to general equity principles.
(l) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund for the account of the Acquired Fund Shareholders, pursuant to the
terms of this Agreement at the Closing Date have been duly authorized.
5. COVENANTS OF THE ACQUIRING FUND, AND THE ACQUIRED FUND
5.1 The Acquiring Fund and the Acquired Fund each will operate its business
in the ordinary course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include the declaration
and payment of customary dividends and distributions, the dividends contemplated
by Section 8.6 hereof, and any other distribution that may be advisable.
5.2 The Phoenix-Engemann Trust will call a meeting of the Acquired Fund
Shareholders to consider and act upon this Agreement and to take all other
action necessary to obtain approval of the transactions contemplated herein.
5
<PAGE>
5.3 The Acquired Fund covenants that the Acquiring Fund Shares to be issued
hereunder are not being acquired for the purpose of making any distribution
thereof other than in accordance with the terms of this Agreement.
5.4 The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund Shares
5.5 Subject to the provisions of this Agreement, the Acquiring Fund and the
Acquired Fund will each take, or cause to be taken, all action, and do or cause
to be done, all things reasonably necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement.
5.6 The Phoenix-Engemann Trust will provide the Acquiring Fund with
information reasonably necessary for the preparation of a registration statement
on Form N-14 of the Worldwide Opportunities Trust (the "Registration
Statement"), such Registration Statement to consist of, without limitation, a
prospectus (the "Prospectus") that includes a proxy statement of the Acquired
Fund (the "Proxy Statement").
5.7 The Worldwide Opportunities Trust agrees to use all reasonable efforts
to obtain the approvals and authorizations required by the 1933 Act, the 1940
Act, and such of the state blue sky or securities laws as may be necessary in
order to continue the operations of the Acquiring Fund after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Phoenix-Engemann Trust to consummate the
transactions provided for herein shall be subject, at its election, to the
performance by the Worldwide Opportunities Trust and the Acquiring Fund of all
the obligations to be performed by them hereunder on or before the Closing Date,
and, in addition thereto, to the following further conditions:
6.1 All representations and warranties of the Worldwide Opportunities Trust
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
6.2 The Worldwide Opportunities Trust shall have delivered to the
Phoenix-Engemann Trust a certificate executed in its name by its President or
Vice President and its Treasurer or Assistant Treasurer, in a form reasonably
satisfactory to the Phoenix-Engemann Trust, and dated as of the Closing Date, to
the effect that the representations and warranties of the Worldwide
Opportunities Trust made in this Agreement are true and correct in all material
respects at and as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement and as to such other matters as the
Phoenix-Engemann Trust shall reasonably request.
6.3 The Acquiring Fund Shares to be issued and delivered to the Acquiring
Fund, for the account of the Acquired Fund Shareholders when so issued and
delivered, shall be duly and validly issued, and shall be fully paid and
non-assessable by the Acquiring Fund (recognizing that, under Massachusetts law,
shareholders of the Acquiring Fund could under certain circumstances be held
personally liable for its obligations);
6.4 The Proxy Statement and Prospectus (only insofar as they relate to the
Acquiring Fund), on the effective date of the Registration Statement and on the
Closing Date, (i) shall comply in all material respects with the applicable
provisions of the 1933 Act, the Securities Exchange Act of 1934, as amended (the
"1934 Act") and the 1940 Act and the regulations thereunder and (ii) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statement herein in light
of the circumstances under which such statements were made, not materially
misleading.
6
<PAGE>
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Worldwide Opportunities Trust to complete the
transactions provided for herein shall be subject, at its election, to the
performance by the Phoenix-Engemann Trust and the Acquired Fund of all of the
obligations to be performed by them hereunder on or before the Closing Date and,
in addition thereto, to the following conditions:
7.1 All representations and warranties of the Phoenix-Engemann Trust
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
7.2 The Phoenix-Engemann Trust shall have delivered to the Worldwide
Opportunities Trust a statement of the Acquired Fund's assets and liabilities,
as of the Closing Date, certified by the Treasurer of the Acquired Fund; and
7.3 The Phoenix-Engemann Trust shall have delivered to the Worldwide
Opportunities Trust on the Closing Date a certificate executed in its name by
its President or Vice President and its Treasurer or Assistant Treasurer, in
form and substance satisfactory to the Worldwide Opportunities Trust, and dated
as of the Closing Date, to the effect that the representations and warranties of
the Phoenix-Engemann Trust made in this Agreement are true and correct in all
material respects at and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement, and as to such other matters
as the Worldwide Opportunities Trust shall reasonably request.
7.4 The Acquired Fund shall have good and marketable title to the Acquired
Fund's assets to be transferred to the Acquiring Fund pursuant to paragraph 1.1
and full right, power, and authority to sell, assign, transfer and deliver such
assets hereunder, and, upon delivery and payment for such assets.
7.5 The Proxy Statement and Prospectus (other than information therein that
relates to the Worldwide Opportunities Trust or the Acquiring Fund), on the
effective date of the Registration Statement and on the Closing Date (i) shall
comply in all material respects with the applicable provisions of the 1933 Act,
the 1934 Act, the 1940 Act and the regulations thereunder and (ii) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not materially
misleading.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
The obligations of the Phoenix-Engemann Trust and the Worldwide
Opportunities Trust to consummate the transactions contemplated by this
Agreement shall be subject, at their election (except as provided in paragraphs
8.1 and 8.5 below) to the following conditions:
8.1 The Agreement and the transactions contemplated herein shall have been
approved by the holders of the outstanding shares of beneficial interest in the
Acquired Fund in accordance with the provisions of the Declaration of Trust and
By-Laws of the Phoenix-Engemann Trust and certified copies of the resolutions
evidencing such approval shall have been delivered to the Worldwide
Opportunities Trust. Notwithstanding anything herein to the contrary, neither
the Worldwide Opportunities Trust nor the Phoenix-Engemann Trust may waive the
conditions set forth in this paragraph 8.1;
8.2 On the Closing Date, no action, suit or other proceeding shall be
threatened or pending before any court or governmental agency in which it is
sought to restrain or prohibit, or to obtain damages or other relief in
connection with this Agreement or the transactions contemplated herein;
7
<PAGE>
8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
the Worldwide Opportunities Trust or the Phoenix-Engemann Trust to permit
consummation, in all material respects, of the transactions contemplated hereby
shall have been obtained, except where failure to obtain any such consent order
or permit would not involve a risk of a material adverse effect on the assets or
properties of the Worldwide Opportunities Trust or the Phoenix-Engemann Trust.
8.4 The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
8.5 The parties shall have received an opinion from the law firm of
Goodwin, Procter & Hoar LLP addressed to the Worldwide Opportunities Trust and
Phoenix-Engemann Trust substantially to the effect that the transaction
contemplated by this Agreement shall constitute a tax-free reorganization for
Federal income tax purposes. The delivery of such opinion is conditioned upon
receipt by the law firm of Goodwin, Procter & Hoar LLP of representations it
shall request of the Worldwide Opportunities Trust and the Phoenix-Engemann
Trust. Notwithstanding anything herein to the contrary, neither the Worldwide
Opportunities Trust nor the Phoenix-Engemann Trust may waive the condition set
forth in this paragraph 8.5.
8.6 At or immediately prior to the Closing, the Acquired Fund shall have
declared and paid a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to the Acquired Fund
Shareholders all of such Acquired Fund's investment company taxable income for
taxable years ending at or prior to the Closing and all of its net capital gain,
if any, realized in taxable years ending at or prior to the Closing (after
reduction for any capital loss carry-forward).
9. BROKERAGE FEES AND EXPENSES
9.1 The Worldwide Opportunities Trust and the Phoenix-Engemann Trust each
represents and warrants to the other that there are no brokers or finders
entitled to receive any payments in connection with the transactions provided
for herein.
9.2 All of the expenses and costs of the Reorganization and the
transactions contemplated thereby shall be borne by PIC.
10. ENTIRE AGREEMENT
10.1 The Worldwide Opportunities Trust and the Phoenix-Engemann Trust agree
that neither party has made any representation, warranty or covenant not set
forth herein and that this Agreement constitutes the entire agreement between
the parties.
11. TERMINATION
This Agreement and the transactions contemplated hereby may be terminated
and abandoned by either party by resolution of the party's Board of Trustees, at
any time prior to the Closing Date, if circumstances should develop that, in the
opinion of such Board, make proceeding with the Agreement inadvisable. In the
event of any such termination, there shall be no liability for damages on the
part of either the Worldwide Opportunities Trust or the Phoenix-Engemann Trust,
or their respective Trustees or officers, to the other party.
12. AMENDMENTS
This agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of the
Phoenix-Engemann Trust and the Worldwide Opportunities
8
<PAGE>
Trust; provided, however, that following the meeting of the Acquired Fund
Shareholders called by the Phoenix-Engemann Trust pursuant to paragraph 5.2 of
this Agreement, no such amendment may have the effect of changing the provisions
for determining the number of the Acquiring Fund Shares to be issued to the
Acquired Fund Shareholders under this Agreement to the detriment of such
shareholders without their further approval.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the parties hereto at their
principal place of business.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
14.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts each of
which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
14.5 It is expressly agreed that the obligations of the Phoenix-Engemann
Trust hereunder shall not be binding upon any of the trustees, shareholders,
nominees, officers, agents, or employees of the Phoenix-Engemann Trust
personally, but shall bind only the trust property of the Phoenix-Engemann
Trust, as provided in the Declaration of Trust of the Phoenix-Engemann Trust.
The execution and delivery by such officers of the Phoenix-Engemann Trust shall
not be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Acquired Fund as provided in the Declaration of Trust of the
Phoenix-Engemann Trust. The Phoenix-Engemann Trust is a series company with
multiple series, and has entered into this Agreement on behalf of one such
series, the Acquired Fund. With respect to any obligation of the
Phoenix-Engemann Trust arising hereunder, the Worldwide Opportunities Trust and
the Acquiring Fund shall look for payment or satisfaction of such obligations
solely to the assets and property of the Acquired Fund.
14.6 It is expressly agreed that the obligations of the Worldwide
Opportunities Trust hereunder shall not be binding upon any of the trustees,
shareholders, nominees, officers, agents or employees of the Worldwide
Opportunities Trust personally, but shall bind only the trust property of the
Worldwide Opportunities Trust, as provided in the Declaration of Trust of the
Worldwide Opportunities Trust. The execution and delivery by such officers of
the Worldwide Opportunities Trust shall not be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Worldwide Opportunities Trust as
provided in the Declaration of Trust of the Worldwide Opportunities Trust. The
Worldwide Opportunities Trust is a series company with a sole portfolio series,
the Acquiring Fund and has entered into this Agreement on behalf of such series.
With respect to any obligation of the Worldwide Opportunities Trust arising
hereunder, the Phoenix-Engemann Trust and the Acquired Fund shall look for
payment or satisfaction of such obligations solely to the assets and property of
the Acquiring Fund.
9
<PAGE>
14.7 The sole remedy of a party hereto for a breach of any representation
or warranty made in this Agreement by the other party shall be an election by
the non-breaching party not to complete the transactions contemplated herein as
set forth in Paragraph 6.1 and 7.1.
10
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its President or Vice President and its seal to be affixed hereto
and arrested by its Secretary or Assistant Secretary.
PHOENIX WORLDWIDE OPPORTUNITIES FUND,
on behalf of the Phoenix-Aberdeen Worldwide
Opportunities Fund
ATTEST: By:________________________________________
___________________________ Name: Philip R. McLoughlin
G. Jeffrey Bohne Title: President
Secretary
THE PHOENIX-ENGEMANN FUNDS, on behalf of
the Phoenix-Engemann Global Growth Fund
ATTEST: By:________________________________________
___________________________ Name: Roger Engemann
Tina L. Mitchell Title: President
Secretary
11
<PAGE>
Phoenix Investment Partners
|
| Prospectus
|
| December 16, 1998
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|-------Aberdeen
Phoenix-Aberdeen Worldwide
Opportunities Fund
Phoenix-Aberdeen Worldwide
Opportunities Fund is a mutual fund
that mainly invests in common stocks
of U.S. and foreign companies with
the investment objective of capital
appreciation.
Neither the Securities and Exchange
Commission nor any state securities
commission has approved or
disapproved of these securities or
determined if this prospectus is
truthful or complete. Any representation
to the contrary is a criminal offense.
This Prospectus contains important
information about the Phoenix-Aberdeen
Worldwide Opportunities Fund that you
should know before investing. Please
read it carefully and retain it for future
reference.
[LOGO] PHOENIX
INVESTMENT PARTNERS, LTD.
<PAGE>
> Phoenix-
Aberdeen
Worldwide
Opportunities
Fund
Table of Contents
- -------------------------------------
<TABLE>
<S> <C>
Investment Risk and Return Summary ............. page 2
Fund Expenses .................................. page 5
Investment Strategies .......................... page 6
Risks Related to Investment Strategies ......... page 8
Management of the Fund ......................... page 12
Pricing of Fund Shares ......................... page 15
Sales Charges .................................. page 16
Your Account ................................... page 19
How to Buy Shares .............................. page 20
How to Sell Shares ............................. page 20
Things You Should Know When
Selling Shares ................................ page 21
Account Policies ............................... page 23
Investor Services .............................. page 24
Tax Status ..................................... page 25
Financial Highlights ........................... page 26
Additional Information ......................... page 27
</TABLE>
<PAGE>
Investment Risk and Return Summary
- ---------------------------------------------------------------
Investment Objective
Phoenix-Aberdeen Worldwide Opportunities Fund has
an investment objective of capital appreciation.
Distributions of investment income, such as
dividends and interest, are incidental in the
selection of investments. There is no guarantee
that the fund will achieve the objective.
Principal Investment Strategies
[arrow] The fund may invest in a diversified
portfolio of equity and fixed income
securities. The fund will invest at least 65%
of its assets in securities of issuers
located in 3 or more countries, one of which
will be the United States.
[arrow] The fund intends to invest at least 65% of
its total assets in common stocks.
[arrow] The fund may invest in other types of equity
securities including preferred stock, other
securities that can be converted into common
stock or preferred stock, and warrants to
purchase common stock or preferred stock.
[arrow] An adviser and subadviser will manage the
fund. The subadviser will determine how much
of the fund's assets will be invested in
different countries and regions. The
subadviser will also decide which investments
to buy and sell in all countries and regions
other than the United States. The adviser
will decide which investments to buy and sell
in the United States.
[arrow] The subadviser uses a value-oriented approach
in selecting investments. The adviser uses a
growth-oriented approach in selecting
investments.
[arrow] Up to 35% of the fund's assets may be
invested in fixed income securities such as
corporate and government notes and bonds. Up
to 5% of the fund's assets can be invested in
high-yield securities ("junk bonds"). The
rest must be invested in investment grade
securities.
[arrow] The fund may invest in small companies as
well as larger companies.
[arrow] The fund may invest in companies in foreign
countries with developed markets and
countries with "emerging markets."
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<PAGE>
Principal Risks
If you invest in this fund, you risk that you may
lose your investment.
The fund will seek to increase the value of your
shares by investing in securities the adviser or
subadviser expect to increase in value. Most of
the fund's investments will be in common stocks
and other equity investments. Conditions affecting
the overall economy, specific industries or
companies in which the fund invests can be worse
than expected. As a result, the value of your
shares may decrease. Increases in interest rates
affecting the global economy, particular
industries or specific companies can cause fixed
income investments that the fund may own to
decline in value. This, too, can cause your share
value to decrease.
Unlike many other mutual funds, this fund may make
significant investments in companies in foreign
countries and in foreign governments, including
some "emerging market" countries (those with
markets that are not fully developed). Political
and economic uncertainty as well as relatively
less public information about investments may
negatively impact the fund's portfolio. Some
investments may be made in currencies other than
U.S. dollars that will fluctuate in value as a
result of changes in the currency exchange rate.
Foreign markets and currencies may not perform as
well as U.S. markets. Emerging market countries
and companies doing business in emerging markets
may not have the same range of opportunities as
countries and their companies in developed
nations. They may also have more obstacles to
financial success.
This fund may also invest in small companies as
well as larger companies. Smaller companies,
regardless of their location, may be affected to a
greater extent than larger companies by changes in
general economic conditions and conditions in
particular industries. Smaller companies may also
be relatively new and not have the same operating
history and "track record" as larger companies.
This could make future performance of smaller
companies more difficult to predict.
3 |
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<PAGE>
Performance Tables
The bar chart below provides an indication of the
risks of investing in the Phoenix-Aberdeen
Worldwide Opportunities Fund by showing changes in
the fund's Class A Shares performance from year to
year over a 10-year period(1). The table below
shows how the fund's Class A Shares average annual
returns for one, five and ten years compare to
those of a broad-based securities market index.
The fund's past performance is not necessarily an
indication of how the fund will perform in the
future.
Worldwide Opportunities Fund
[Tabular representation of bar chart]
<TABLE>
<CAPTION>
Calendar Year
-------------------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Return (%) 11.1 9.1 (22.7) 24.5 3.2 37.8 0.0 15.1 15.0 14.1
</TABLE>
(1) The fund's average annual returns in the chart above do not
reflect the deduction of any sales charges. The returns would
have been less than those shown if sales charges were deducted.
During the 10-year period shown in the chart above, the highest
return for a quarter was 16.61% (quarter ending March 31, 1991)
and the lowest return for a quarter was -19.72% (quarter ending
September 30, 1990). Year to date performance (through
September 30, 1998) was 10.07%.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Average Annual Total Returns
(for the periods ending 12/31/97)(1) One Year Five Years Ten Years Life of the Fund(2)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares 8.66% 14.67% 9.07% 8.92%
- ---------------------------------------------------------------------------------------------------------
Class B Shares 9.43% N/A N/A 11.09%
- ---------------------------------------------------------------------------------------------------------
Class C Shares(3) N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------
MSCI World(4) 15.76% 15.34% 10.56% N/A
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above
reflect the deduction of the maximum sales charge for an
investment in the fund's Class A Shares and a full redemption
in the fund's Class B Shares.
(2) Class A Shares since May 13, 1960 and Class B Shares since
July 15, 1994.
(3) Class C Shares will be offered as of the effective date of
this prospectus.
(4) The Morgan Stanley Capital International World (net) Index
(MSCI World) is an unmanaged index calculated as an
arithmetical average weighted by the market value of
approximately 1,600 companies listed on stock exchanges in 23
countries, including the U.S. and Canada. The index does not
reflect any sales charges or fees but does include the effect
of foreign tax withholding.
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<PAGE>
Fund Expenses
- ------------------------------------------
This table illustrates all fees and expenses that
you may pay if you buy and hold shares of the
fund.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares(b)
-------- -------- ---------
<S> <C> <C> <C>
Shareholder Fees (fees paid directly from
your investment)
Maximum Sales Charge (load) Imposed on
Purchases (as a percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (load) (as a None 5%(a) 1% during the
percentage of the lesser of the value redeemed or first year
the amount invested)
Maximum Sales Charge (load) Imposed on
Reinvested Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
-------------------------------------------
Class A Class B Class C
Shares Shares Shares(b)
-------- -------- ---------
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management Fees 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees(c) 0.25% 1.00% 1.00%
Other Expenses 0.42% 0.42% 0.42%
---- -------- ----
Total Annual Fund Operating Expenses 1.42% 2.17% 2.17%
==== ======== ====
</TABLE>
------------------
(a) The maximum deferred sales charge is imposed on Class B
Shares redeemed during the first year; thereafter, it
decreases 1% annually to 2% during the fourth and fifth years
and to 0% after the fifth year.
(b) Class C Shares will be offered as of the effective date of
this prospectus.
(c) Distribution and Service 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").
Example
This example is intended to help you compare the
cost of investing in the fund with the cost of
investing in other mutual funds.
The example assumes that you invest $10,000 in the
fund for the time periods indicated and then
redeem all of your shares at the end of those
periods. The example also assumes that your
investment has a 5% return each year and that the
fund's operating expenses remain the same. In the
case of Class B Shares, it is assumed that your
shares are converted to Class A after eight years.
Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
5 |
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<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Class 1 year 3 years 5 years 10 years
- ----------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $613 $903 $1,214 $2,096
- ----------------------------------------------------------
Class B $620 $879 $1,164 $2,313
- ----------------------------------------------------------
Class C $320 $679 $1,164 $2,503
- ----------------------------------------------------------
</TABLE>
You would pay the following expenses if you did
not redeem your shares:
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Class 1 year 3 years 5 years 10 years
- ----------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $613 $903 $1,214 $2,096
- ----------------------------------------------------------
Class B $220 $679 $1,164 $2,313
- ----------------------------------------------------------
Class C $220 $679 $1,164 $2,503
- ----------------------------------------------------------
</TABLE>
Investment Strategies
- --------------------------------------------------
Investment Objective
The fund's investment objective is capital
appreciation. Income distribution (yield) will not
be a factor. There is no guarantee that the fund
will achieve its investment objective.
Principal Investment Strategies
The fund invests in a diversified portfolio of
securities of domestic and non-U.S. issuers,
including companies, governments, governmental
agencies and international organizations. The fund
may invest in any region of the world. Under
normal circumstances, the fund will invest at
least 65% of its total assets in the securities of
issuers located in at least three different
countries, one of which will be the United States.
The fund employs an adviser, Phoenix Investment
Counsel, Inc., to select securities of U.S.
issuers, and a subadviser, Aberdeen Fund Managers,
Inc., to select securities of all other issuers.
Each month the subadviser's investment strategy
committee determines how much (what percentage) of
the fund's assets will be invested in each region
of the world (e.g., continental Europe, United
Kingdom, Asia, etc.). The adviser will invest the
amount allocated for investment in the United
States. The subadviser invests all other amounts.
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<PAGE>
The fund will invest at least 65% of its assets in
common stocks. The fund may also invest in other
equity securities including preferred stocks,
securities convertible into common stocks,
warrants and rights to purchase common stock. The
adviser uses a top down/bottom up, growth-oriented
stock selection process. The subadviser uses a
bottom up, value-oriented process that selects
companies that exhibit growth in recurring
earnings, clean balance sheets, strong management,
clear and credible business vision and a history
of fair treatment of minority shareholders. The
fund may invest in securities of issuers of any
size, in countries with developed markets and
countries with emerging markets.
The fund may also invest up to 35% of its assets
in non-convertible fixed-income securities of U.S.
and non-U.S. issuers (described below) when the
adviser or subadviser feels that such securities
are appropriate for the achievement of the fund's
investment objective. Market values of
fixed-income securities typically move in the
opposite direction from changes in interest rates.
Therefore, investing in fixed-income securities
can provide an opportunity for capital
appreciation when interest rates are expected to
decline.
The non-convertible fixed-income securities
referred to above may consist of:
o corporate notes, bonds and debentures of U.S.
issuers that are rated high grade (i.e., rated
within the three highest rating categories by
a nationally recognized statistical rating
organization) or, if unrated, are considered
by the fund's adviser to be of comparable
quality;
o corporate notes, bonds, debentures and other
securities (such as Euro-currency instruments)
of non-U.S. issuers that are rated within the
three highest rating categories of rating
services or, if unrated, are deemed by the
fund's subadviser to be of comparable credit
quality;
o Treasury bills, notes and bonds issued by the
United States Government or related agencies;
and
o securities issued by foreign governments and
supranational agencies (such as the World
Bank).
The fund may invest up to 5% of its net assets in
fixed-income securities rated below investment
grade (commonly referred to as "junk bonds").
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<PAGE>
Temporary defensive strategy: if the adviser or
subadviser believes that market conditions are not
favorable to the fund's principal strategies, the
fund may invest without limit in U.S. government
securities and in money market instruments. When
this happens, the fund may not achieve its
investment objective.
Risks Related to Investment Strategies
- -------------------------------------------------------------------
General
The fund's focus is capital appreciation. The
adviser and subadviser intend to invest fund
assets so that your shares increase in value.
However, the value of the fund's investments that
support your share value can decrease as well as
increase. If between the time you purchase shares
and the time you sell shares the value of the
fund's investments decreases you will lose money.
The value of the fund's investments can decrease
for a number of reasons. For example, changing
economic conditions may cause a decline in the
value of many or even most equity and fixed income
investments. Particular industries can face poor
markets for their products or services so that
companies engaged in those businesses do not do as
well as companies in other industries. Interest
rate changes may improve prospects for certain
types of businesses and they may worsen prospects
for others. To the extent that the fund's
investments are affected by general economic
declines, declines in industries, and interest
rate changes that negatively affect the companies
in which the fund invests, fund share values may
decline. Share values can also decline if the
specific companies selected for fund investment
fail to perform as the adviser or subadviser
expects, regardless of general economic trends,
industry trends, interest rates and other economic
factors.
In addition to these general risks of investing in
the fund, there are several specific risks of
investing in the fund that you should note.
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<PAGE>
Foreign Investing
The fund will invest in non-U.S. companies.
Investing in the securities of non-U.S. companies
involves special risks and considerations not
typically associated with investing in U.S.
companies. These include:
[arrow] differences in accounting, auditing and
financial reporting standards,
[arrow] generally higher commission rates on foreign
portfolio transactions,
[arrow] differences and inefficiencies in transaction
settlement systems,
[arrow] the possibility of expropriation or
confiscatory taxation,
[arrow] adverse changes in investment or exchange
control regulations,
[arrow] political instability, and
[arrow] potential restrictions on the flow of
international capital.
Political and economic uncertainty as well as
relatively less public information about
investments may negatively impact the fund's
portfolio.
Foreign securities often trade with less frequency
and volume than domestic securities and therefore
may exhibit greater price volatility.
Additionally, dividends and interest payable on
foreign securities may be subject to foreign taxes
withheld prior to receipt by the fund.
Many of the foreign securities held by the fund
will not be registered with, nor will the issuers
of those securities be subject to the reporting
requirements of, the U.S. Securities and Exchange
Commission. Accordingly, there may be less
publicly available information about the
securities and about the foreign company or
government issuing them than is available about a
domestic company or government entity. Moreover,
individual foreign economies may differ favorably
or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate
of inflation, capital reinvestment, resource
self-sufficiency and balance of payment positions.
9 |
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<PAGE>
Foreign Currency
Significant portions of the fund's assets may be
invested in securities denominated in foreign
currencies. Changes in foreign exchange rates will
affect the value of those securities denominated
or quoted in currencies other than the U.S.
dollar. The forces of supply and demand in the
foreign exchange markets determine exchange rates
and these forces are in turn affected by a range
of economic, political, financial, governmental
and other factors. Exchange rate fluctuations can
affect the fund's net asset value (share price)
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 terms.
Effective January 1, 1999, eleven European
countries will begin converting from their
sovereign currency to the European Union common
currency called the "Euro." This conversion may
expose the fund to certain risks including the
reliability and timely reporting of pricing
information of the fund's portfolio holdings. In
addition, one or more of the following may
adversely affect specific securities in the fund's
portfolio:
[arrow] known trends or uncertainties related to the
Euro conversion that an issuer reasonably
expects will have a material impact on
revenues, expenses or income from its
operations;
[arrow] competitive implications of increased price
transparency of European Union markets
(including labor markets) resulting from
adoption of a common currency and issuers'
plans for pricing their own products and
services in the Euro;
[arrow] issuers' ability to make required information
technology updates on a timely basis, and
costs associated with the conversion
(including costs of dual currency operations
through January 1, 2002);
[arrow] currency exchange rate risk and derivatives
exposure (including the disappearance of
price sources, such as certain interest rate
indices); and
[arrow] potential tax consequences.
The subadviser does not expect to invest in any
securities that may be adversely affected by the
conversion to the Euro.
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Emerging Market Investing
The fund may invest in companies located in
emerging market countries and regions. Investment
in less-developed countries whose markets are
still emerging generally presents risks in greater
degree than those presented by investment in
foreign issuers based in countries with developed
securities markets and more advanced regulatory
systems. Prior governmental approval of foreign
investments may be required under certain
circumstances in some developing countries, and
the extent of foreign investment in domestic
companies may be subject to limitation in other
developing countries. The charters of individual
companies in developing countries may impose
limitations on foreign ownership to prevent, among
other concerns, violation of foreign investment
limitations.
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.
Small Market Capitalization Investing
The fund may invest in large and small companies
throughout the world. Companies with small
capitalization are often companies with a limited
operating history or companies in industries which
have recently emerged due to cultural, economic,
regulatory or technological developments. Such
developments can have a significant positive or
negative effect on small capitalization companies
and their stock performance. Given the limited
operating history and rapidly changing fundamental
prospects, investment returns from smaller
capitalization companies can be highly volatile.
Smaller companies may find their ability to raise
capital impaired by their size or lack of
operating history. Product lines are often less
diversified and subject to competitive threats.
Smaller capitalization stocks are subject to
varying patterns of trading volume and may, at
times, be difficult to sell.
Mutual Fund Investing
The fund may invest in other mutual funds to take
advantage of investment opportunities in certain
countries where the fund otherwise would not be
able to invest or where the size of a fund
11 |
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<PAGE>
investment in any particular country would be too
small. The fund may invest up to 10% of its assets
in the shares of other mutual funds, however the
fund will not invest more than 5% of its assets in
any one mutual fund. When the fund purchases
shares of another mutual fund the assets invested
in the other mutual fund incur a layering of
expenses including operating costs, advisory fees,
and administrative fees that you indirectly bear.
Impact of the Year 2000 Issue on Fund Investments
The Year 2000 issue is the result of computer
programs being written using two rather than four
digits to define the applicable year. There is the
possibility that some or all of a company's
computer programs that have date-sensitive
software may recognize a date using "00" as the
year 1900 rather than the year 2000. If a company
whose securities are held by the fund does not
"fix" its Year 2000 issue, it is possible that its
operations and financial results would be hurt.
Also, the cost of modifying computer programs to
become Year 2000 compliant may hurt the financial
performance and market price of companies whose
securities are held by the fund.
Management of the Fund
- ---------------------------------------------------
The Advisers
Phoenix Investment Counsel, Inc. ("Phoenix") is
the investment adviser to the fund and is located
at 56 Prospect Street, Hartford, CT 06115. Phoenix
also acts as the investment adviser for 14 other
mutual funds, as subadviser to three additional
mutual funds and as adviser to institutional
clients. As of September 30, 1998, Phoenix had
$21.3 billion in assets under management. Phoenix
has acted as an investment adviser for over sixty
years.
Aberdeen Fund Managers Inc. ("Aberdeen") is the
subadviser to the fund and is located at 1
Financial Plaza, Suite 2210, Fort Lauderdale, FL
33394. Aberdeen is a wholly-owned subsidiary of
Aberdeen Asset Management PLC based in Aberdeen,
Scotland. Together with its subsidiaries, Aberdeen
Asset Management PLC provides investment
management services to unit and investment trusts,
segregated pension funds and other institutional
and private portfolios, and through Aberdeen, U.S.
mutual funds. Aberdeen has served as subadviser
for the following mutual funds since their
inception in 1996: Phoenix-Aberdeen New Asia Fund,
Phoenix-
12 |
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<PAGE>
Aberdeen Global Small Cap Fund and the Aberdeen
New Asia Series of The Phoenix Edge Series Fund.
As of September 30, 1998, Aberdeen Asset
Management PLC had $22.3 billion in assets under
management.
Subject to the direction of the fund's Board of
Trustees, Phoenix is responsible for managing the
fund's investment program and the day-to-day
management of the domestic portion of the fund's
portfolio. Aberdeen, as subadviser, is responsible
for the day-to-day management of the foreign
holdings of the fund. Both Phoenix and Aberdeen
manage the fund's assets to conform with the
investment policies as described in this
prospectus. The fund pays Phoenix a monthly
investment management fee that is accrued daily
against the value of the fund's net assets at the
following rates.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
1st billion $1+ billion through $2 billion $2+ billion
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee 0.75% 0.70% 0.65%
- -------------------------------------------------------------------------------------------
</TABLE>
Phoenix pays Aberdeen a fee for that portion of
the fund's net assets that are invested in
non-U.S. securities as follows.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
1st billion $1+ billion through $2 billion $2+ billion
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
Subadvisory Fee 0.375% 0.35% 0.325%
- --------------------------------------------------------------------------------------------
</TABLE>
During the fund's last fiscal year, the fund paid
total management fees of $1,278,505. The ratio of
management fees to average net assets for the
fiscal year ended June 30, 1998 was 0.75%. The
total advisory fee of 0.75% of the aggregate net
assets of the fund is greater than that for most
mutual funds; however, the Trustees have
determined that it is comparable to fees charged
by other mutual funds whose investment objectives
are similar to those of the fund. On June 1, 1998,
National Securities & Research Corporation
("National") assigned its investment management
agreement to Phoenix Investment Counsel, Inc.
Phoenix and National are subsidiaries of Phoenix
Investment Partners, Ltd. (formerly Phoenix Duff &
Phelps Corporation). Of the total management fees
paid by the fund during the last fiscal year,
National was paid $1,161,194 and Phoenix was paid
$117,311.
13 |
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<PAGE>
Portfolio Management
Aberdeen's senior strategy committee determines
and monitors the fund's regional allocations
across the globe on a monthly basis. An Aberdeen
team of investment professionals located in
offices spread around the world selects securities
for the foreign portion of the fund's portfolio.
At the same time, a Phoenix team of investment
professionals manages the U.S. portion of the
fund's portfolio.
Impact of the Year 2000 Issue on Fund Operations
The Trustees have directed management to ensure
that the systems used by service providers
(Phoenix and its affiliates) in support of the
fund's operations be assessed and brought into
Year 2000 compliance. Based upon preliminary
assessments, Phoenix has determined that it will
be required to modify or replace portions of its
software so that its computer systems will
properly utilize dates beyond December 31, 1999.
Phoenix management believes that the majority of
these systems are already Year 2000 compliant.
Phoenix believes that with modifications to
existing software and conversions to new software,
the Year 2000 issue will be mitigated. It is
anticipated that such modifications and
conversions will be completed on a timely basis.
It is not known at this time if there could be a
material impact on the operations of Phoenix or
its affiliates or the fund if such modifications
and conversions are not timely completed.
Phoenix will utilize both internal and external
resources to reprogram, or replace, and test the
software for Year 2000 modifications. Certain
systems are already in the process of being
converted due to previous initiatives and it is
expected that all core systems will be remediated
by December 31, 1998 and tested by June 1999. The
total cost to become Year 2000 compliant is not an
expense of the fund and is not expected to have a
material impact on the operating results of
Phoenix.
| 14
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<PAGE>
Pricing of Fund Shares
- ---------------------------------------------------
How is the Share Price determined?
The fund calculates a share price for each class
of its shares. The share price is based on the net
assets of the fund and the number of outstanding
shares. In general, the fund calculates net asset
value by:
[arrow] adding the values of all securities and other
assets of the fund,
[arrow] subtracting liabilities, and
[arrow] dividing by the total number of outstanding
shares of the fund.
Asset Value: The fund's investments are valued at
market value. If market quotations are not
available, the fund determines a "fair value" for
an investment according to rules and procedures
approved by the Trustees. Foreign and domestic
debt securities (other than short-term
investments) are valued on the basis of broker
quotations or valuations provided by a pricing
service approved by the Trustees when such prices
are believed to reflect the fair value of such
securities. Foreign and domestic equity securities
are valued at the last sale price or, if there has
been no sale that day, at the last bid price,
generally. Short-term investments having a
remaining maturity of sixty days or less are
valued at amortized cost, which the Trustees have
determined approximates market value.
Liabilities: Class specific expenses, distribution
fees, service fees and other liabilities are
deducted from the assets of each class. Expenses
and liabilities that are not class specific (such
as management fees) are allocated to each class in
proportion to each class's net assets except where
an alternative allocation can be more fairly made.
Net Asset Value: The liability allocated to a
class plus any other expenses are deducted from
the proportionate interest of such class in the
assets of the fund. The resulting amount for each
class is then divided by the number of shares
outstanding of that class to produce each class's
net asset value per share.
The net asset value per share of each class of the
fund is determined on days when the New York Stock
Exchange (the "NYSE") is open for trading as of
the close of trading (normally
15 |
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<PAGE>
4:00 PM eastern time). The fund will not calculate
its net asset values per share on days when the
NYSE is closed for trading. Trading of securities
held by the fund in foreign markets may negatively
or positively impact the value of such securities
on days when the fund neither trades securities
nor calculates its net asset values (i.e.,
weekends and certain holidays).
At what price are shares purchased?
All investments received by the fund's authorized
agents prior to the close of regular trading on
the NYSE (normally 4:00 PM eastern time) will be
executed based on that day's net asset value.
Shares credited to your account from the
reinvestment of fund distributions will be in full
and fractional shares that are purchased at the
closing net asset value on the next business day
on which the fund's net asset value is calculated
following the dividend record date.
Sales Charges
- ------------------------------------------
What are the classes and how do they differ?
The fund presently offers three classes of shares
that have different sales and distribution charges
(see "Fund Expenses" previously in this
prospectus). The fund has adopted distribution and
service plans allowed under Rule 12b-1 of the
Investment Company Act of 1940 that authorize the
fund to pay distribution and service fees for the
sale of its shares and for services provided to
shareholders. The distribution and service 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").
What arrangement is best for you?
The different classes permit you to choose the
method of purchasing shares that is most
beneficial to you. In choosing a class, consider
the amount of your investment, the length of time
you expect to hold the shares, whether you decide
to receive distributions in cash or to reinvest
them in additional shares, and any other personal
circumstances. Depending upon these
considerations, the accumulated distribution and
service fees and contingent deferred sales charges
of one class may be more or less than the initial
sales charge and accumulated distribution and
service fees of another class of shares bought at
the same time.
| 16
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<PAGE>
Because distribution and service fees are paid out
of the fund's assets on an ongoing basis, over
time these fees will increase the cost of your
investment and may cost you more than paying other
types of sales charges.
Class A Shares. If you purchase Class A Shares,
you will pay a sales charge at the time of
purchase equal to 4.75% of the offering price
(4.99% of the amount invested). The sales charge
may be reduced or waived under certain conditions.
Class A Shares are not subject to any charges by
the fund when redeemed. Class A Shares have lower
distribution and service fees (0.25%) and pay
higher dividends than any other class.
Class B Shares. If you purchase Class B Shares,
you will not pay a sales charge at the time of
purchase. If you sell your Class B Shares within
the first 5 years after they are purchased, you
will pay a sales charge of up to 5% of your
shares' value. See "Deferred Sales Charge
Alternative--Class B and C Shares" below. This
charge declines to 0% over a period of 5 years and
may be waived under certain conditions. Class B
shares have higher distribution and service fees
(1.00%) and pay lower dividends than Class A
Shares. Class B Shares automatically convert to
Class A Shares eight years after purchase.
Purchases of Class B Shares may be inappropriate
for any investor who may qualify for reduced sales
charges of Class A Shares and anyone who is over
85 years of age. The underwriter may decline
purchases in such situations.
Class C Shares. If you purchase Class C Shares,
you will not pay a sales charge at the time of
purchase. If you sell your Class C Shares within
the first year after they are purchased, you will
pay a sales charge of 1%. See "Deferred Sales
Charge Alternative--Class B and C Shares" below.
Class C Shares have the same distribution and
service fees (1.00%) and pay comparable dividends
as Class B Shares. Class C Shares do not convert
to any other class of shares of the fund.
Initial Sales Charge Alternative--Class A Shares
The public offering price of Class A Shares is the
net asset value plus a sales charge that varies
depending on the size of your purchase (see "Class
A Shares--Reduced Sales Charges: Combination
Purchase Privilege" in the Statement of Additional
Information). Shares purchased based on the
automatic reinvestment of income dividends or
capital gains distributions are not subject to any
sales charges. The sales charge is divided between
your investment dealer and the fund's underwriter
(Phoenix Equity Planning Corporation or "PEPCO").
17 |
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<PAGE>
Sales Charge you may pay to purchase Class A
Shares
<TABLE>
<CAPTION>
Sales Charge as
a percentage of
------------------------------
Amount of Net
Transaction Offering Amount
at Offering Price Price Invested
------------------------------------------------------------
<S> <C> <C>
Under $50,000 4.75% 4.99%
$50,000 but under $100,000 4.50 4.71
$100,000 but under $250,000 3.50 3.63
$250,000 but under $500,000 3.00 3.09
$500,000 but under $1,000,000 2.00 2.04
$1,000,000 or more None None
</TABLE>
Deferred Sales Charge Alternative--
Class B and C Shares
Class B and C Shares are purchased without an
initial sales charge; however, shares sold within
a specified time period are subject to a declining
contingent deferred sales charge ("CDSC") at the
rates listed below. The sales charge will be
multiplied by the then current market value or the
initial cost of the shares being redeemed,
whichever is less. No sales charge will be imposed
on increases in net asset value or on shares
purchased through the reinvestment of income
dividends or capital gains distributions. To
minimize the sales charge, shares not subject to
any charge will be redeemed first, followed by
shares held the longest time. To calculate the
amount of shares owned and time period held, all
Class B Shares purchased in any month are
considered purchased on the last day of the
preceding month, and all Class C Shares are
considered purchased on the trade date.
Deferred Sales charge you may pay to sell Class B
Shares
Year 1 2 3 4 5 6+
--------------------------------------------------
CDSC 5% 4% 3% 2% 2% 0%
Deferred Sales charge you may pay to sell Class C
Shares
Year 1 2+
--------------------------------------------------
CDSC 1% 0%
| 18
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<PAGE>
Your Account
- -----------------------------------------
Opening an Account
Your financial advisor can assist you with your
initial purchase as well as all phases of your
investment program. If you are opening an account
by yourself, please follow the instructions
outlined below.
Step 1.
Your first choice will be the initial amount you
intend to invest.
Minimum initial investments:
[arrow] $25 for individual retirement accounts, or
accounts that use the systematic exchange
privilege, or accounts that use the
Investo-Matic program (see below for more
information on the Investo-Matic program).
[arrow] There is no initial dollar requirement for
defined contribution plans, profit-sharing
plans, or employee benefit plans. There is
also no minimum for reinvesting dividends and
capital gains into another account.
[arrow] $500 for all other accounts.
Minimum additional investments:
[arrow] $25 for any account.
[arrow] There is no minimum for defined contribution
plans, profit-sharing plans, or employee
benefit plans. There is also no minimum for
reinvesting dividends and capital gains into
an existing account.
Step 2.
Your second choice will be what class of shares to
buy. The fund offers three classes of shares for
individual investors. Each has different sales and
distribution charges. Because all future
investments in your account will be made in the
share class you choose when you open your account,
you should make your decision carefully. Your
financial advisor can help you pick the share
class that makes the most sense for your
situation.
19 |
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<PAGE>
Step 3.
Your next choice will be how you want to receive
any dividends and capital gain distributions. Your
options are:
[arrow] Receive both dividends and capital gain
distributions in additional shares
[arrow] Receive dividends in cash and capital gain
distributions in additional shares
[arrow] Receive both dividends and capital gain
distributions in cash
No interest will be paid on uncashed distribution
checks.
How To Buy Shares
- -------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
To Open An Account
- ------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- ------------------------------------------------------------------------------------------------
Complete a New Account Application and send it with a check
Through the mail payable to the fund. Mail them to: State Street Bank, P.O. Box
8301, Boston, MA 02266-8301.
- ------------------------------------------------------------------------------------------------
By Federal Funds wire Call us at 1-800-243-1574 (press 1, then 0).
- ------------------------------------------------------------------------------------------------
Complete the appropriate section on the application and send it
By Investo-Matic with your initial investment payable to the fund. Mail them to:
State Street Bank, P.O. Box 8301, Boston, MA 02266-8301.
- ------------------------------------------------------------------------------------------------
By telephone exchange Call us at 1-800-243-1574 (press 1, then 0).
- ------------------------------------------------------------------------------------------------
</TABLE>
How to Sell Shares
- -----------------------------------------------
You have the right to have the fund buy back
shares at the net asset value next determined
after receipt of a redemption order by the fund's
Transfer Agent or an authorized agent. In the case
of a Class B or C Share redemption, you will be
subject to the applicable deferred sales charge,
if any, for such shares. Subject to certain
restrictions, shares may be redeemed by telephone
or in writing. In
| 20
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<PAGE>
addition, shares may be sold through securities
dealers, brokers or agents who may charge
customary commissions or fees for their services.
The fund does not charge any redemption fees.
Payment for shares redeemed is made within seven
days; however, redemption proceeds will not be
disbursed until each check used for purchases of
shares has been cleared for payment by your bank,
which may take up to 15 days after receipt of the
check.
<TABLE>
- --------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- --------------------------------------------------------------------------------------------------
Send a letter of instruction and any share certificates (if you
hold certificate shares) to: State Street Bank, P.O. Box 8301,
Through the mail Boston, MA 02266-8301. Be sure to include the registered
owner's name, fund and account number, number of shares
or dollar value you wish to sell.
- --------------------------------------------------------------------------------------------------
For sales up to $50,000, requests can be made by calling
By telephone 1-800-243-1574.
- --------------------------------------------------------------------------------------------------
By telephone exchange Call us at 1-800-243-1574 (press 1, then 0).
- --------------------------------------------------------------------------------------------------
</TABLE>
Things You Should Know When Selling Shares
- -----------------------------------------------------------------------
You may realize a taxable gain or loss (for
federal income tax purposes) if you redeem shares
of the fund. The fund reserves the right to pay
large redemptions "in-kind" (in securities owned
by the fund rather than in cash). Large
redemptions are those over $250,000 or 1% of the
fund's net assets. Additional documentation will
be required for redemptions by organizations,
fiduciaries, or retirement plans, or if redemption
is requested by anyone but the shareholder(s) of
record. Transfers between broker-dealer "street"
accounts are governed by the accepting
broker-dealer. Questions regarding this type of
transfer should be directed to your financial
advisor. Redemption requests will not be honored
until all required documents in proper form have
been received. To avoid delay in redemption or
transfer, shareholders having questions about
specific requirements should contact the fund's
Transfer Agent at (800) 243-1574.
Redemptions by Mail
[arrow] Send a clear letter of instructions if all of
these apply:
21 |
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<PAGE>
o Your shares are registered individually,
jointly, or as custodian under the Uniform
Gifts to Minors Act or Uniform Transfers to
Minors Act.
o The proceeds do not exceed $50,000.
o The proceeds are payable to the registered
owner at the address on record.
[arrow] Send a clear letter of instructions with a
signature guarantee when any of these apply:
o You are selling more than $50,000 worth of
shares.
o The name or address on the account has changed
within the last 60 days.
o You want the proceeds to go to a different
name or address than on the account.
If you are selling shares held in a corporate or
fiduciary account, please contact the fund's
Transfer Agent at (800) 243-1574.
The signature on your 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.
Selling Shares by Telephone
The Transfer Agent will use reasonable procedures
to confirm that telephone instructions are
genuine. Address and bank account information are
verified, redemption instructions are taped, and
all redemptions are confirmed in writing.
The individual investor bears the risk from
instructions given by an unauthorized third party
that the Transfer Agent reasonably believed to be
genuine.
The Transfer Agent may modify or terminate the
telephone redemption privilege at any time with 60
days notice to shareholders.
During times of drastic economic or market
changes, telephone redemptions may be difficult to
make or temporarily suspended.
| 22
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<PAGE>
Account Policies
- ---------------------------------------------
Account Reinstatement Privilege
For 180 days after you sell your Class A, B, or C
Shares, you can purchase Class A Shares of any
fund at net asset value, with no sales charge, by
reinvesting all or part of your proceeds, but not
more. Send your written request to State Street
Bank, P.O. Box 8301, Boston, MA 02266-8301. You
can call us at 1-800-243-1574 for more
information.
Please remember, a redemption and reinvestment are
considered to be a sale and purchase for
tax-reporting purposes. Class B shareholders who
have had the contingent deferred sales charge
waived because they are in the Systematic
Withdrawal Program are not eligible for this
reinstatement privilege.
Redemption of Small Accounts
Due to the high cost of maintaining small
accounts, if your account balance is less than
$200, you may receive a notice requesting you to
bring the balance up to $200 within 60 days. If
you do not, the shares in the account will be sold
at net asset value, and a check will be mailed to
the address of record.
Exchange Privileges
You should read the prospectus carefully before
deciding to make an exchange. You can obtain a
prospectus from your financial advisor or by
calling us at 1-800-243-4361 or accessing our Web
site at www.phoenixinvestments.com.
o You may exchange shares for another fund in
the same class of shares; e.g., Class A for
Class A.
o Exchanges may be made by phone
(1-800-243-1574) or by mail (State Street
Bank, P.O. Box 8301, Boston, MA 02266-8301).
o The amount of the exchange must be equal to
the minimum initial investment required.
o The exchange of shares is treated as a sale
and purchase for federal income tax purposes.
o Because excessive trading can hurt fund
performance and harm other shareholders, the
fund reserves the right to temporarily or
permanently end exchange privileges or reject
an order from
23 |
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<PAGE>
anyone who appears to be attempting to time
the market, including investors who request
more than one exchange in any 30-day period.
The fund's underwriter has entered into
agreements with certain market timing firms
permitting them to exchange by telephone.
These privileges are limited, and the fund
distributor has the right to reject or suspend
them.
Retirement Plans
Shares of the fund may be used as investments
under the following qualified prototype retirement
plans: traditional IRA, rollover IRA, SIMPLE IRA,
Roth IRA, 401(k) plans, profit-sharing, money
purchase plans, and 403(b) plans. For more
information, call 1-800-243-4361.
Investor Services
- ----------------------------------------------
Investo-Matic is a systematic investment plan that
allows you to have a specified amount
automatically deducted from your checking or
savings account and then deposited into your
mutual fund account. Just complete the
Investo-Matic Section on the application and
include a voided check.
Systematic Exchange allows you to automatically
move money from one Phoenix Fund to another on a
monthly, quarterly, semi-annual or annual basis.
Shares of one Phoenix Fund will be exchanged for
shares of the same class of another fund at the
interval you select. To sign up, just complete the
Systematic Exchange Section on the application.
Telephone Exchange lets you exchange shares of one
fund for the same class of shares in another fund,
using our customer service telephone service. See
the Telephone Exchange Section on the application.
Systematic Withdrawal Program allows you to
periodically redeem a portion of your account on a
predetermined monthly, quarterly, semiannual, or
annual basis. Sufficient shares will be redeemed
on the 15th of the month at the closing net asset
value so that the payment is made about the 20th
of the month. The program also provides for
redemptions on or about the 10th, 15th, or 25th
with proceeds directed through Automated Clearing
House (ACH) to your bank. The minimum withdrawal
is $25.00, and minimum account balance
requirements continue. Shareholders in the program
must own fund shares worth at least $5,000.
| 24
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<PAGE>
Tax Status
- ---------------------------------------
The fund intends to continue to qualify annually
as a regulated investment company (mutual fund)
under Subchapter M of the Internal Revenue Code.
The fund also intends to annually distribute to
shareholders all of its net investment income and
net realized capital gains, after utilization of
any capital loss carryovers. If the fund continues
to qualify, it generally will not be subject to
federal income tax on the income it distributes.
The discussion below is based on the assumption
that the fund will continue to qualify as a
regulated investment company.
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.
Dividends and Distributions
The fund plans to make distributions from net
investment income semiannually, and to distribute
net realized capital gains, if any, at least
annually. Distributions of short-term capital
gains and net investment income are taxable to
shareholders as ordinary income. Long-term capital
gains, if any, distributed to shareholders and
which are designated by the fund as capital gain
distributions, are taxable to shareholders as
long-term capital gain distributions regardless of
the length of time you have owned your shares.
Unless you elect to receive distributions in cash,
dividends and capital gain distributions are paid
in additional shares. All distributions, cash or
additional shares, are subject to federal income
tax and may be subject to state, local and other
taxes.
Backup Withholding
By law, 31% of fund distributions and any
redemption proceeds must be withheld if you have
not provided complete, correct taxpayer
identification number and certain required
certifications. The fund reserves the right to
refuse to open an account for any person failing
to provide the necessary taxpayer information.
25 |
|
|
<PAGE>
Financial Highlights
- -------------------------------------------------
This table is intended to help you understand the
fund's financial performance for the past five
years. Class C Shares are a new class of shares
and as such have no financial performance to
report as of the effective date of this
prospectus. Certain information reflects financial
results for a single fund share. The total returns
in the table represent the rate that an investor
would have earned on an investment in the fund
(assuming reinvestment of all dividends and
distributions). This information has been audited
by PricewaterhouseCoopers LLP, independent
accountants. Their report, together with the
fund's financial statements, are included in the
fund's most recent Annual Report, which is
available upon request.
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------
Year Ended June 30,
----------------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 10.75 $ 10.29 $ 9.04 $ 10.17 $ 8.00
Income from investment
operations:(5)
Net investment income (loss) 0.02 0.03(1) (0.02)(1) 0.01(1) 0.01
Net realized and unrealized gains 2.97 1.25 1.87 0.56 2.19
--------- ---------- --------- --------- --------
Total from investment operations 2.99 1.28 1.85 0.57 2.20
--------- ---------- --------- --------- --------
Less distributions:
Dividends from net investment
income (0.13 (0.04) -- -- (0.03)
Distributions from net realized gains (1.20 (0.78) (0.60) ( 1.37) --
In excess of net investment income (0.01 -- -- -- --
In excess of net realized gains -- -- -- ( 0.33) --
--------- ---------- --------- --------- --------
Total distributions (1.34 (0.82) (0.60) ( 1.70) (0.03)
--------- ---------- --------- --------- --------
Change in net asset value 1.65 0.46 1.25 ( 1.13) 2.17
--------- ---------- --------- --------- --------
Net asset value, end of period $ 12.40 $ 10.75 $ 10.29 $ 9.04 $ 10.17
========= ========== ========= ========= ========
Total return(2) 31.45% 13.40% 21.39% 6.53% 27.46%
Ratios/supplemental data:
Net assets, end of period (thousands) $ 183,188 $ 153,005 $ 146,052 $ 126,481 $118,707
Ratio to average net assets of:
Operating expenses 1.42% 1.53% 1.60% 1.80% 1.50%
Net investment income (loss) 0.21% 0.34% (0.19)% 0.16% 0.09%
Portfolio turnover 156% 234% 245% 277% 259%
<CAPTION>
Class B
-----------------------------------------------------------------
From
Inception
Year Ended June 30, 7/15/94
--------------------------------------------- to
1998 1997 1996 6/30/95
---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 10.53 $ 10.14 $ 8.98 $ 10.40
Income from investment
operations:(5)
Net investment income (loss) (0.06) (0.03)(1) (0.08)(1) (0.02)(1)
Net realized and unrealized gains 2.90 1.21 1.84 0.30
--------- --------- --------- -----------
Total from investment operations 2.84 1.18 1.76 0.28
--------- --------- --------- -----------
Less distributions:
Dividends from net investment
income (0.11) (0.01) -- --
Distributions from net realized gains (1.20) (0.78) (0.60) (1.37)
In excess of net investment income (0.02) -- -- --
In excess of net realized gains -- -- -- (0.33)
--------- --------- --------- -----------
Total distributions (1.33) (0.79) (0.60) (1.70)
--------- --------- --------- -----------
Change in net asset value 1.51 0.39 1.16 (1.42)
--------- --------- --------- -----------
Net asset value, end of period $ 12.04 $ 10.53 $ 10.14 $ 8.98
========= ========= ========= ===========
Total return(2) 30.61% 12.46% 20.50% 3.54%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 10,855 $ 8,412 $ 5,709 $ 2,849
Ratio to average net assets of:
Operating expenses 2.17% 2.29% 2.34% 2.61%(4)
Net investment income (loss) (0.54)% (0.35)% (0.86)% (0.33)%(4)
Portfolio turnover 156% 234% 245% 277%
</TABLE>
------------------
(1) Computed using average shares outstanding.
(2) Sales charges are not reflected in the total return
calculation.
(3) Not annualized.
(4) Annualized.
(5) Distributions are made in accordance with the prospectus;
however, class level income per share from investment
operations may vary from anticipated results depending on
the timing of share purchases and redemptions.
| 26
|
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<PAGE>
Additional Information
- ---------------------------------------------------
Statement of Additional Information
The fund has filed a Statement of Additional Information about the fund,
dated December 16, 1998 with the Securities and Exchange Commission. The
Statement contains more detailed information about the fund. It is
incorporated into this prospectus by reference and is legally part of the
prospectus. You may obtain a free copy of the Statement:
[arrow] by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
[arrow] by calling (800) 243-4361.
You may also obtain information about the fund from the Securities and
Exchange Commission:
[arrow] through its internet site (http://www.sec.gov),
[arrow] by visiting its Public Reference Room in Washington, DC or
[arrow] by writing to its Public Reference Section, Washington, DC 20549-6009
(a fee may be charged).
Information about the operation of the Public Reference Room may be
obtained by calling (800) SEC-0330.
Shareholder Reports
The fund semiannually mails to its shareholders detailed reports
containing information about the fund's investments. The fund's Annual
Report contains a detailed discussion of the market conditions and
investment strategies that significantly affected the fund's performance
from July 1 through June 30. You may request a free copy of the fund's
Annual and Semiannual Reports:
[arrow] by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
[arrow} by calling (800) 243-4361.
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunication Device (TTY): (800) 243-1926
SEC File Nos. 2-16590 & 811-945
[LOGO] Printed on recycled paper using soybean ink
27 |
|
|
<PAGE>
Phoenix Equity Planning Corporation Bulk Rate Mail
PO Box 2200 US Postage
Enfield CT 06083-2200 PAID
Springfield, MA
Permit No. 444
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Acquisition of the Assets of
PHOENIX-ENGEMANN GLOBAL GROWTH FUND
a series of
The Phoenix-Engemann Funds
600 North Rosemead Boulevard
Pasadena, California 91107-2133
(626) 351-9686
By and in Exchange for Shares of
PHOENIX-ABERDEEN WORLDWIDE OPPORTUNITIES FUND
a series of
Phoenix-Aberdeen Worldwide Opportunities Fund
101 Munson Street
Greenfield, Massachusetts 01301
(800) 243-1574
This Statement of Additional Information, relating specifically to the
proposed transfer of all or substantially all of the assets and all the
liabilities of the Phoenix-Engemann Global Growth Fund, a series of The
Phoenix-Engemann Funds, to the Phoenix-Aberdeen Worldwide Opportunities Fund,
the sole portfolio series of the Phoenix-Aberdeen Worldwide Opportunities Fund,
in exchange for shares of the corresponding class of the Worldwide Opportunities
Fund, consists of this cover page and the following described documents, each of
which is attached hereto and incorporated by reference herein:
(1) the Statement of Additional Information of the Phoenix-Aberdeen
Worldwide Opportunities Fund dated December 16, 1998;
(2) the Statement of Additional Information of The Phoenix-Engemann Funds
dated May 1, 1999;
(3) the Annual Report of the Phoenix-Aberdeen Worldwide Opportunities Fund
for the year ended June 30, 1999;
(4) the Annual Report of The Phoenix-Engemann Funds for the year ended
December 31, 1998;
(5) the Semiannual Report of The Phoenix-Engemann Funds for the six-month
period ended June 30, 1999; and
(6) the Pro Forma Financial Statements.
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the Prospectus/Proxy
Statement dated September __, 1999. A copy of the Prospectus/Proxy Statement may
be obtained without charge by contacting Equity Planning, at 100 Bright Meadow
Boulevard, Post Office Box 2200, Enfield, Connecticut 06083-2200 or by
telephoning Equity Planning toll free at 1 (800) 243-4361.
The date of this Statement of Additional Information is September ___,
1999
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Statement of Additional Information of the Phoenix-Aberdeen Worldwide Opportunities Fund dated
December 16, 1998. B-
Statement of Additional Information of The Phoenix-Engemann Funds dated May 1, 1999. B-
Annual Report of the Phoenix-Aberdeen Worldwide Opportunities Fund for the year ended
June 30, 1999. B-
Annual Report of The Phoenix-Engemann Funds for the year ended December 31, 1998. B-
Semi-Annual Report of The Pohenix-Engemann Funds for the six-month period ended
June 30, 1999. B-
Pro Forma Financial Statements. B-
</TABLE>
<PAGE>
PHOENIX-ABERDEEN WORLDWIDE OPPORTUNITIES FUND
101 Munson Street
Greenfield, MA 01301
Statement of Additional Information
December 16, 1998
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current prospectus of
Phoenix-Aberdeen Worldwide Opportunities Fund (the "Fund"), dated December 16,
1998, and should be read in conjunction with it. The Fund's prospectus may be
obtained by calling Phoenix Equity Planning Corporation ("Equity Planning") at
(800) 243-4361 or by writing to Equity Planning at 100 Bright Meadow Boulevard,
P.O. Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
THE FUND ...................................... 1
INVESTMENT OBJECTIVE AND POLICIES ............. 1
INVESTMENT RESTRICTIONS ....................... 1
PERFORMANCE INFORMATION ....................... 4
PORTFOLIO TRANSACTIONS AND BROKERAGE .......... 5
SERVICES OF THE ADVISER ....................... 6
NET ASSET VALUE ............................... 8
HOW TO BUY SHARES ............................. 8
INVESTOR ACCOUNT SERVICES ..................... 10
REDEMPTION OF SHARES .......................... 11
DIVIDENDS, DISTRIBUTIONS AND TAXES ............ 12
TAX SHELTERED RETIREMENT PLANS ................ 14
THE DISTRIBUTOR ............................... 14
DISTRIBUTION PLANS ............................ 15
MANAGEMENT OF THE FUND ........................ 16
OTHER INFORMATION ............................. 22
</TABLE>
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
TTY: (800) 243-1926
PXP 691B (12/98)
<PAGE>
THE FUND
The Fund was originally incorporated in New York in 1956, and on January
13, 1992, the Fund was reorganized as a Massachusetts business trust. The Fund
has operated as an open-end, diversified management investment company since
May 1960. On June 30, 1993, the Trustees voted to change the name of the Fund
to "Phoenix Worldwide Opportunities Fund" to reflect the purchase of the former
adviser by Phoenix Home Life Mutual Insurance Company and the affiliation with
other Phoenix Funds. On November 18, 1998, the Trustees voted to change the
name of the Fund to "Phoenix-Aberdeen Worldwide Opportunities Fund."
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is capital appreciation. The Fund's
investment objective is a fundamental policy and may not be changed without
shareholder approval.
Under normal circumstances, at least 65% of the total assets of the Fund
will be invested in the securities of issuers located in at least three
different countries, one of which will be the United States. The Fund intends
to invest at least 65% of its total assets in common stocks. The Fund may
invest in other types of equity securities including preferred stocks,
securities convertible into common stocks, warrants and any rights to purchase
common stocks. The Fund may also invest up to 35% of its assets in
non-convertible fixed-income securities of U.S. and non-U.S. issuers (described
below) when the Adviser or Subadviser has determined that such securities are
appropriate for the achievement of the Fund's investment objective. Because the
market value of fixed-income securities can be expected to vary inversely to
changes in prevailing interest rates, investing in such fixed-income securities
can provide an opportunity for capital appreciation when interest rates are
expected to decline.
The non-convertible fixed-income securities referred to above will consist
of (1) corporate notes, bonds and debentures of U.S. issuers that are rated
high grade (i.e. within the three highest rating categories of Standard &
Poor's or Moody's Investors Service) or, if unrated, are deemed by the Adviser
or Subadviser to be of comparable quality to those securities that are rated
high grade, (2) corporate notes, bonds, debentures and other securities (such
as Euro-currency instruments) of non-U.S. issuers that are rated within the
three highest rating categories of rating services chosen by the Adviser or
Subadviser to rate foreign debt obligations or, if unrated, are deemed by the
Adviser or Subadviser to be of comparable credit quality to rated securities
that may be purchased and (3) Treasury bills, notes and bonds issued by the
United States Government or its agencies or instrumentalities and securities
issued by foreign governments and supranational agencies (such as World Bank).
The Fund may, for daily cash management purposes, invest in the
non-convertible fixed income securities described above or in high quality
money market securities. In addition, the Fund may invest, without limit, in
any combination of the U.S. Government securities and money market instruments
referred to above when, in the opinion of the Adviser or Subadviser, it is
determined that a temporary defensive position is warranted based upon current
market conditions. In such instances, the Fund will not be achieving its stated
investment objective.
The percentage of the Fund's assets invested in particular geographic
sectors will shift from time to time in accordance with the judgment of the
Subadviser.
Capital appreciation will more often than not be sought through long-term
holdings but the Fund may attempt to take advantage of apparent short-term
trends, and such operations will occasion more trading, and hence, more than
normal brokerage commissions and other expenses. Investments are selected for
the Fund in such proportions and amounts as deemed advisable, subject to the
investment restrictions set forth herein (see "Investment Restrictions"), in
accordance with the Adviser's or Subadviser's judgment of investment
opportunities and the general economic outlook.
INVESTMENT RESTRICTIONS
Fundamental Policies
The following investment restrictions are fundamental policies that cannot
be changed without the approval of the holders of a majority of the Fund's
outstanding voting securities (which means the lesser of (a) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares are
represented or (b) more than 50% of the outstanding shares).
The Fund may not:
1. Borrow money, except from a bank and then only if there is an asset
coverage of at least 300%; provided, however, that the Fund may not purchase
securities while outstanding borrowings exceed 5% of the Fund's total assets.
2. Underwrite the sale of securities of other issuers (but the Fund may be
deemed to be an underwriter in connection with any acquisition of restricted
securities).
3. Purchase or sell real estate.
4. Purchase or sell commodities or commodity contracts; provided, however,
that the terms commodities and commodity contracts shall not be deemed to
include (i) forward foreign currency exchange contracts (ii) futures contracts
on foreign currencies, (iii) options on futures contracts or (iv) options on
foreign currencies.
1
<PAGE>
5. Lend money, except in connection with the acquisition of a portion of
an issue of publicly distributed bonds, debentures or other corporate
obligations.
6. Issue senior securities except to the extent that it is permitted (a)
to borrow money from banks pursuant to the Fund's investment restriction
regarding the borrowing of money, and (b) to enter into transactions involving
forward foreign currency exchange contracts, foreign currency futures contracts
and options thereon, and options on foreign currencies as described in the
Fund's Prospectus and this Statement of Additional Information.
7. Invest more than 25% of its total assets in any one industry. For
purposes of this policy, foreign governments and supranational agencies shall
be deemed to be separate industries.
8. Make short sales unless at the time of the sale the Fund owns, or by
virtue of ownership of other securities, has the right to obtain, at least an
equal amount of the securities sold short.
9. Issue bonds, debentures, or senior equity securities.
10. Issue any of its securities other than for cash or securities
(including securities of which the Fund is the issuer), except as a dividend or
distribution or in connection with a reorganization.
11. Purchase securities on margin, except as may be permitted under the
Investment Company Act of 1940 (the "1940 Act"), and except that, for purposes
of this restriction, the deposit or payment of initial or variation margin in
connection with the entry into or use of futures contracts will not be deemed
to be a purchase of securities on margin.
12. Invest in companies for the purpose of exercising control or
management.
13. Invest in securities of other investment companies except to the extent
permitted by the 1940 Act.
Other Policies
The following investment restrictions do not constitute fundamental
policies and may, therefore, be changed without shareholder approval.
The Fund intends to comply with the Statement of Policy on investment
companies approved by certain state securities commissioners. Additional
investment restrictions currently imposed by the Statement of Policy are as
follows: The Fund will not:
1. Purchase any securities (excluding government securities) if by reason
thereof more than 5% of the Fund's total assets (taken at current value) would
then be invested in securities of a single issuer.
2. Purchase any securities if, as a result, the Fund would then have more
than 5% of its total assets (taken at current value) invested in securities of
companies (including their predecessors) with less than three years of
operating history.
3. Invest more than 5% of its total assets in puts, calls, straddles,
spreads, and/or any combination thereof.
4. Invest in interests in oil, gas, or other mineral exploration or
development programs.
5. Invest more than 15% of its net assets in illiquid securities,
comprised of assets which may not be sold or disposed of in the ordinary course
of business within seven days at approximately the value at which the Fund has
valued the investment.
In addition, the Fund has given undertakings to certain state securities
commissioners to the effect that (a) the Fund will not purchase warrants
(except warrants acquired by the Fund in units or attached to securities which
may be deemed to be without value) in amounts in excess of 5% of the Fund's net
assets, and (b) the Fund may purchase put or call options or combinations
thereof written by others, provided the aggregate premiums paid for all such
options held do not exceed 2% of the Fund's net assets.
Writing Covered Call Options
The Fund may write covered call option contracts, which are options on
securities that the Fund owns, if such options are listed on an organized
securities exchange and the Adviser determines that such activity is consistent
with the Fund's investment objective. A call option gives the purchaser of the
option the right to buy the underlying security from the writer at the exercise
price at any time prior to the expiration of the contract, regardless of the
market price of the security during the option period. The premium paid to the
writer is the consideration for undertaking the obligations under the option
contract. The writer forgoes the opportunity to profit from an increase in the
market price of the underlying security above the exercise price except insofar
as the premium represents such a profit. The writing of option contracts is a
highly specialized activity which involves investment techniques and risks
different from those ordinarily associated with investment companies, and the
restrictions listed above would tend to reduce such risks.
Securities for the Fund's portfolio will continue to be bought and sold on
the basis of investment considerations and appropriateness to the fulfillment
of the Fund's investment objective. In order to close out a position, the Fund
will normally make a "closing purchase transaction"--the purchase of a call
option on the same security with the same exercise price and expiration
2
<PAGE>
date as the call option which it has previously written on any particular
security. When a security is sold from the Fund's portfolio, the Fund will
effect a closing purchase transaction so as to close out any existing call
option on that security.
Forward Foreign Currency Exchange Contracts
In order to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward foreign currency exchange contracts
("forward currency contracts") for the purchase or sale of a specified currency
at a specified future date. Such contracts may involve the purchase or sale of
a foreign currency against the U.S. dollar or may involve two foreign
currencies. The Fund may enter into forward currency contracts either with
respect to specific transactions or with respect to the Fund's portfolio
positions.
Futures Contracts on Foreign Currencies and Options on Futures Contracts
The Fund may engage in futures contracts on foreign currencies and options
on these futures transactions as a hedge against changes in the value of the
currencies to which the Fund is subject or to which the Fund expects to be
subject in connection with future purchases, in accordance with the rules and
regulations of the Commodity Futures Trading Commission (the "CFTC"). The Fund
also may engage in such transactions when they are economically appropriate for
the reduction of risks inherent in the ongoing management of the Fund.
The Fund may buy and sell futures contracts on foreign currencies and
groups of foreign currencies. The Fund will engage in transactions in only
those futures contracts and options thereon that are traded on a commodities
exchange or a board of trade. A "sale" of a futures contract means the
assumption of a contractual obligation to deliver the specified amount of
foreign currency at a specified price in a specified future month. A "purchase"
of a futures contract means the assumption of a contractual obligation to
acquire the currency called for by the contract at a specified price in a
specified future month. At the time a futures contract is purchased or sold,
the Fund must allocate cash or securities as a deposit payment (initial
margin). Thereafter, the futures contract is valued daily and the payment of
"variation margin" may be required, resulting in the Fund's providing or
receiving cash that reflects any decline or increase in the contract's value, a
process known as "marking to market".
Options on Foreign Currencies
The Fund may purchase and write put and call options on foreign currencies
traded on securities exchanges or boards of trade (foreign and domestic) for
hedging purposes in a manner similar to that in which forward currency
contracts and futures contracts on foreign currencies will be employed. Options
on foreign currencies are similar to options on stock, except that the Fund has
the right to take or make delivery of a specified amount of foreign currency,
rather than stock.
The Fund may purchase and write options to hedge the Fund's portfolio
securities denominated in foreign currencies. If there is a decline in the
dollar value of a foreign currency in which the Fund's portfolio securities are
denominated, the dollar value of such securities will decline even though
foreign currency value remains the same. See "Special Considerations and Risk
Factors." To hedge against the decline of the foreign currency, the Fund may
purchase put options on such foreign currency. If the value of the foreign
currency declines, the gain realized on the put option would offset, in whole
or in part, the adverse effect such decline would have on the value of the
portfolio securities. Alternatively, the Fund may write a call option on the
foreign currency. If the value of the foreign currency declines, the option
would not be exercised and the decline in the value of the portfolio securities
denominated in such foreign currency would be offset in part by the premium the
Fund received for the option.
If, on the other hand, the Adviser anticipates purchasing a foreign
security and also anticipates a rise in the value of such foreign currency
(thereby increasing the cost of such security), the Fund may purchase call
options on the foreign currency. The purchase of such options could offset, at
least partially, the effects of the adverse movements of the exchange rates.
Alternatively, the Fund could write a put option on the currency and, if the
exchange rates move as anticipated, the option would expire unexercised.
Segregated Accounts
At the time of purchase of a futures contract, option on futures contract
or forward foreign currency exchange contract, any asset, including equity
securities and non-investment grade debt so long as the asset is liquid,
unencumbered and marked to market daily equal to the contract's market value
minus initial margin deposit will be deposited in a pledged account with the
Fund's custodian bank to fully collateralize the position.
Other Policies
The Fund is authorized to invest in the securities of other investment
companies subject to the limitations contained in the 1940 Act. In certain
countries, investments by the Fund may only be made through investments in
other investment companies that, in turn, are authorized to invest in the
securities that are issued in such countries. Investors should recognize that
the Fund's purchase of the securities of such other investment companies
results in the layering of expenses such that investors indirectly bear a
proportionate part of the expenses for such investment companies including
operating costs and investment advisory and administrative fees.
Special Considerations and Risk Factors
Investing in the securities of foreign companies involves special risks
and considerations not typically associated with investing in U.S. companies.
These include: differences in accounting, auditing and financial reporting
standards, generally higher
3
<PAGE>
commission rates on foreign portfolio transactions, the possibility of
expropriation or confiscatory taxation, adverse changes in investment or
exchange control regulations, political instability which could affect U.S.
investments in foreign countries, and potential restrictions on the flow of
international capital. Additionally, dividends payable on foreign securities
may be subject to foreign taxes withheld prior to distribution. Foreign
securities often trade with less frequency and volume than domestic securities
and therefore may exhibit greater price volatility, and changes in foreign
exchange rates will affect the value of those securities which are denominated
or quoted in securities which are denominated or quoted in currencies other
than the U.S. dollar. Many of the foreign securities held by the Fund will not
be registered with, nor the issuers thereof be subject to the reporting
requirements of, the U.S. Securities and Exchange Commission. Accordingly,
there may be less publicly available information about the securities and about
the foreign company or government issuing them than is available about a
domestic company or government entity. Moreover, individual foreign economies
may differ favorably or unfavorably for the United States economy in such
respects as growth of Gross National Product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payment positions.
The Fund's use of forward currency contracts involves certain investment
risks and transaction costs to which it might not otherwise be subject. These
include: (1) the Adviser may not always be able to accurately predict movements
within currency markets, (2) the skills and techniques needed to use forward
currency contracts are different from those needed to select the securities in
which the Fund invests and (3) there is no assurance that a liquid secondary
market will exist that would enable the Adviser to "close out" existing forward
contracts when doing so is desirable. The Fund's successful use of forward
currency contracts, options on foreign currencies, futures contracts on foreign
currencies and options on such contracts depends upon the Adviser's ability to
predict the direction of the market and political conditions, which require
different skills and techniques than predicting changes in the securities
markets generally. For instance, if the value of the securities being hedged
moves in a favorable direction, the advantage to the Fund would be wholly or
partially offset by a loss in the forward contracts or futures contracts.
Further, if the value of the securities being hedged does not change, the
Fund's net income would be less than if the Fund had not hedged since there are
transaction costs associated with the use of these investment practices.
These practices are subject to various additional risks. The correlation
between movements in the price of options and futures contracts and the price
of the currencies being hedged is imperfect. The use of these instruments will
hedge only the currency risks associated with investments in foreign currency
advances before it invests in securities denominated in such currency and the
currency market declines, the Fund might incur a loss on the futures contract.
The Fund's ability to establish and maintain positions will depend on market
liquidity. The ability of the Fund to close out a futures position or an option
depends upon a liquid secondary market. There is no assurance that liquid
secondary markets will exist for any particular futures contract or option at
any particular time.
The Fund may invest up to 5% of its net assets in fixed income securities
rated below investment grade (commonly referred to as "junk bonds"). Fixed
income securities rated below investment grade are deemed to be predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligations. Fixed income
securities rated below investment grade may involve a substantial risk of
default or may be in default. Changes in economic conditions or developments
regarding the individual issuer are more likely to cause price volatility and
weaken the capacity of the issuers of such securities to make principal and
interest payments than is the case for higher grade debt securities. An
economic downturn affecting the issuer may result in an increased incidence of
default and a decline in prices of the issuer's lower-rated securities. The
market for fixed income securities rated below investment grade may be thinner
and less active than for higher-rated securities. The secondary market in which
fixed income securities rated below investment grade are traded is generally
less liquid than the market for higher grade debt securities.
PERFORMANCE INFORMATION
The Fund may, from time to time, include its total return in
advertisements, sales literature or reports to shareholders or prospective
investors. Performance information in advertisements and sales literature may
be expressed as a yield of a class of shares and as a total return of a class
of shares.
Standardized quotations of average annual total return for Class A, Class
B or Class C Shares will be expressed in terms of the average annual compounded
rate of return for a hypothetical investment in either Class A, Class B or
Class C Shares over periods of 1, 5 and 10 years or up to the life of the class
of shares), calculated for each class separately pursuant to the following
formula: P(1+T)n = ERV (where P = a hypothetical initial payment of $1,000, T =
the average annual total return, n = the number of years, and ERV = the ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the
period). All total return figures reflect the deduction of a proportional share
of each Class's expenses (on an annual basis), deduction of the maximum initial
sales load in the case of Class A Shares and the maximum contingent deferred
sales charge applicable to a complete redemption of the investment in the case
of Class B and Class C Shares, and assume that all dividends and distributions
on Class A, Class B and Class C Shares are reinvested when paid.
Performance information for the Fund may be compared, in reports and
promotional literature, to: (i) the EAFE (Europe, Australia, and Far East)
Index, the MSCI World (Net) Index, the Europac Index, or other unmanaged
indices so that investors may compare the Fund's results with those of a group
of unmanaged securities widely regarded by investors as representative of the
securities markets
4
<PAGE>
in general; (ii) other groups of mutual funds tracked by Lipper Analytical
Services, Inc., a widely used independent research firm which ranks mutual
funds by overall performance, investment objectives, and assets, or tracked by
other services, companies, publications, or persons who rate or rank mutual
funds on overall performance or other criteria; and (iii) the Consumer Price
Index (measure for inflation) to assess the real rate of return from an
investment in the Fund. Unmanaged indices may assume the reinvestment of
dividends but generally do not reflect deductions for administrative and
management costs and expenses.
The Fund may from time to time include in advertisements containing total
return the ranking of those performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar, Inc.
Additionally, the Fund may compare its performance results to other investment
or savings vehicles (such as certificates of deposit) and may refer to results
published in various publications such as Changing Times, Forbes, Fortune,
Money, Barrons, Business Week, Investor's Daily, Stanger's Mutual Fund Monitor,
The Stanger Register, Stanger's Investment Adviser, The Wall Street Journal,
The New York Times, Consumer Reports, Registered Representative, Financial
Planning, Financial Services Weekly, Financial World, U.S. News and World
Report, Standard & Poor's The Outlook, and Personal Investor. The Fund may from
time to time illustrate the benefits of tax deferral by comparing taxable
investments to investments made through tax-deferred retirement plans. The
total return may also be used to compare the performance of the Fund against
certain widely acknowledged outside standards or indices for stock and bond
market performance, such as the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500"), Dow Jones Industrial Average, Europe Australia Far East
Index (EAFE), Morgan Stanley Capital International World (net) Index, Consumer
Price Index, Lehman Brothers Corporate Index and Lehman Brothers T-Bond Index.
Advertisements, sales literature and other communications may contain
information about the Fund and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Fund to
respond quickly to changing market and economic conditions. From time to time
the Fund may include specific portfolio holdings or industries, in such
communications. To illustrate components of overall performance, the Fund may
separate its cumulative and average annual returns into income and capital
gains components; or cite separately as a return figure the equity or bond
portion of the Fund's portfolio; or compare the Fund's equity or bond return
figures to well-known indices of market performance, including, but not limited
to: the S&P 500, Dow Jones Industrial Average, CS First Boston High Yield Index
and Salomon Brothers Corporate Bond and Government Bond Indices.
For the 1, 5 and 10 year periods ended June 30, 1998, the average annual
total return of the Class A Shares was 25.16%, 18.53% and 9.76%, respectively.
For the one year ended June 30, 1998 and, since inception, July 15, 1994 for
Class B Shares, the average annual total return was 26.61% and 16.20%,
respectively. Performance information reflects only the performance of a
hypothetical investment in each class during the particular time period on
which the calculations are based. Performance information should be considered
in light of the Fund's investment objectives and policies, characteristics and
quality of the portfolio, and the market condition during the given time
period, and should not be considered as a representation of what may be
achieved in the future.
The Fund may also compute aggregate total return for specified periods
based on a hypothetical Class A or Class B account with an assumed initial
investment of $10,000. The aggregate total return is determined by dividing the
net asset value of this account at the end of the specified period by the value
of the initial investment and is expressed as a percentage. Calculation of
aggregate total return reflects payment of the Class A Shares's maximum sales
charge of 4.75% and assumes reinvestment of all income dividends and capital
gain distributions during the period. Based on the foregoing, the Class A
Share's aggregate total return quotation for the period commencing May 13, 1960
and ending June 30, 1998 was 3,048%.
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.
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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
include paying a fair commission rather than seeking to exploit their leverage
to force the lowest possible commission rate. The primary factors considered in
determining the firms to which brokerage orders are given are the Adviser's
appraisal of: the firm's ability to execute the order in the desired manner,
the value of research services provided by the firm, and the firm's attitudes
toward and interest in mutual funds in general including those managed and
sponsored by the Adviser. The Adviser does not offer or promise to any broker
an amount or percentage of brokerage commissions as an inducement or reward for
the sale of shares of the Fund. Over-the-counter purchases and sales are
transacted directly with principal market-makers except in those circumstances
where, in the opinion of the Adviser, better prices and executions are
available elsewhere. In the over-the-counter market, securities are usually
traded on a "net" basis with dealers acting as principal for their own accounts
without a stated commission, although the price of the security usually
contains a profit to the dealer. The Fund also expects that securities will be
purchased at times in underwritten offerings where the price includes a fixed
amount of compensation, usually referred to as the underwriter's concession or
discount. The foregoing discussion does not relate to transactions effected on
foreign securities exchanges which do not permit the negotiation of brokerage
commissions and where the Adviser would, under the circumstances, seek to
obtain best price and execution on orders for the Fund.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller firms
in general tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. In addition, several firms monitor
federal, state, local, and foreign political developments. Many of the brokers
also provide access to outside consultants. The outside research assistance is
particularly useful to the Adviser's staff since the brokers, as a group, tend
to monitor a broader universe of securities and other matters than the
Adviser's staff can follow. In addition, it provides the Adviser with a diverse
perspective on financial markets. Research and investment information is
provided by these and other brokers at no cost to the Adviser and is available
for the benefit of other accounts advised by the Adviser and its affiliates and
not all of the 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
interests of the Fund and its shareholders.
The Fund has adopted a policy and procedures governing the execution of
aggregated advisory client orders ("bunching procedures") in an attempt to
lower commission costs on a per-share and per-dollar basis. According to the
bunching procedures, the Adviser shall aggregate transactions unless it
believes in its sole discretion that such aggregation is inconsistent with its
duty to seek best execution (which shall include the duty to seek best price)
for the Fund. No advisory account of the Adviser is to be favored over any
other account and each account that participates in an aggregated order is
expected to participate at the average share price for all transactions of the
Adviser in that security on a given business day, with all transaction costs
shared pro rata based on the Fund's participation in the transaction. If the
aggregated order is filled in its entirety, it shall be allocated among the
Adviser's accounts in accordance with the allocation order, and if the order 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.
During the fiscal years ended June 30, 1996, 1997, and 1998, brokerage
commissions paid by the Fund totalled $1,279,610, $1,136,406 and $911,734,
respectively. Brokerage commissions of $729,387 were paid during the last
fiscal year on portfolio transactions aggregating $325,528,828 and executed by
brokers who provided research and other statistical and factual information.
SERVICES OF THE ADVISER
Effective June 1, 1998, National Securities & Research Corporation
("National") assigned its investment advisory contract to Phoenix Investment
Counsel, Inc. ("PIC"). PIC now serves as adviser for the Fund. National and PIC
are both subsidiaries of Phoenix Investment Partners, Ltd. (formerly Phoenix
Duff & Phelps Corporation) whose majority shareholder is 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, where
it is engaged in the insurance and investment business.
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Phoenix Investment Partners, Ltd. is the 10th largest publicly traded
investment company in the nation, and has served investors for over 70 years.
It manages approximately $50 billion in assets through its seven investment
partners: Aberdeen Fund Managers, Inc. (Aberdeen) in Aberdeen, London,
Singapore and Fort Lauderdale; Duff & Phelps Investment Management Co. (Duff &
Phelps) in Chicago and Cleveland; Roger Engemann & Associates, Inc. (Engemann)
in Pasadena; Seneca Capital Management LLC (Seneca) in San Francisco; and
Phoenix Investment Counsel, Inc. (Goodwin, Hollister, and Oakhurst divisions)
in Hartford, Sarasota, and Scotts Valley, CA, respectively.
The Adviser provides certain services and facilities required to carry on
the day-to-day operations of the Fund (for which it receives a management fee)
other than the costs of printing and mailing proxy materials, reports and
notices to shareholders; outside legal and auditing accounting services,
regulatory filing fees and expenses of printing the Fund's registration
statements (but the Distributor purchases such copies of the Fund's
prospectuses and reports and communication to shareholders as it may require
for sales purposes), insurance expense, association membership dues, brokerage
fees, and taxes.
The current Management Agreement was approved by the Trustees of the Fund
on March 16, 1993 and by the shareholders of the Fund on May 7, 1993. The
Management Agreement became effective on May 14, 1993, and it will continue in
effect until lapsed or terminated. The Management Agreement will continue in
effect from year to year if specifically approved annually by a majority of the
Trustees who are not interested persons of the parties thereto, as defined in
the 1940 Act, and by either (a) the Trustees of the Fund or (b) the vote of a
majority of the outstanding voting securities of the Fund (as defined in the
1940 Act). The Agreement may be terminated without penalty at any time by the
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 an annual rate of 0.75% of the Fund's
average daily net assets of up to $1 billion, 0.70% of the Fund's average daily
net assets from $1 billion to $2 billion, and 0.65% of the Fund's average daily
net assets in excess of $2 billion. Total management fees for the fiscal years
ended June 30, 1996, 1997, and 1998 amounted to $1,037,386, $1,137,290 and
$1,278,505, respectively.
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 Fund
reimburses all Trustees for their out-of-pocket expenses. 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 compensated by the Adviser, 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 at printer's over-run cost),
accounting services fees, insurance 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.
Philip R. McLoughlin, a Trustee and officer of the Fund, is also a
director of the Adviser. Michael E. Haylon and William R. Moyer, officers of
the Fund, are also directors and officers of the Adviser. G. Jeffrey Bohne,
Nancy G. Curtiss, William E. Keen, III, Leonard J. Saltiel, Thomas N. Steenburg
and Pierre G. Trinque, officers of the Fund, are also officers of the Adviser.
The Subadviser
Aberdeen Fund Managers Inc. ("Aberdeen") serves as sub-advisor for the
Fund. Aberdeen has been an investment advisor since 1995 and is a wholly-owned
subsidiary of Aberdeen Asset Management PLC which was established in 1983 to
provide investment management services to unit and investment trusts,
segregated pension funds and other institutional and private portfolios. As of
June 30, 1998 Aberdeen managed in excess of $286 million in assets for
institutional portfolios. Aberdeen's principal offices are located at 1
Financial Plaza, Suite 2210, Nations Bank Tower, Fort Lauderdale, Florida
33394. The address of Aberdeen Asset Management PLC is 10 Queens Terrace,
Aberdeen, Scotland AB101QG.
The Subadvisory Agreement provides that the advisor, PIC, will delegate to
Aberdeen the performance of certain of its investment management services under
the Management Agreement. Aberdeen will furnish at its own expense the office
facilities and personnel necessary to perform such services. For its services
as subadvisor, PIC will pay Aberdeen compensation at the annual rate of .375%
of the Fund's average daily net assets up to $1 billion, .35% of the Fund's
average daily net assets from $1 billion to $2 billion and
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.325% of the Fund's average daily net assets in excess of $2 billion. The
Subadvisory Agreement was approved by the Board of Trustees at its meeting on
May 27, 1998 and by shareholders at a meeting on October 27, 1998. It will
continue in effect thereafter only so long as its continuance has been
specifically approved at least annually by the Trustees, including a majority
of the disinterested Trustees.
NET ASSET VALUE
The net asset value per share of the Fund is determined as of the close of
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Since the Fund does not price securities on
weekends or United States national holidays, the 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 which
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
The minimum initial investment is $500 and the minimum subsequent
investment is $25. However, both the minimum initial and subsequent investment
amounts are $25 for investments pursuant to the "Investo-Matic" plan, a bank
draft investing program administered by Distributor, or pursuant to the
Systematic Exchange privilege or for an individual retirement account (IRA). In
addition, there are no subsequent investment minimum amounts in connection with
the reinvestment of dividend or capital gain distributions. Completed
applications for the purchase of shares should be mailed to: Phoenix Funds, c/o
State Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301. See
the Fund's current Prospectus for more information.
The Fund has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Fund's behalf.
The Fund will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts
the order. Customer orders will be priced at the Fund's net asset value next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
Class A Shares -- Reduced Sales Charges
Investors choosing the initial sales charge alternative under certain
circumstances may be entitled to pay reduced sales charges. The circumstances
under which such investors may pay reduced sales charges are described below.
Qualified Purchasers. No sales charge will be imposed on sales of shares
to: (1) any trustee, director or officer of the Phoenix Funds, Phoenix-Engemann
Funds, Phoenix-Seneca Funds or other mutual funds advised, subadvised or
distributed by the Adviser, Distributor or any of their corporate affiliates
(an "Affiliated Phoenix Fund"); (2) any director or officer, or any full-time
employee or sales representative (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 Mutual
Insurance Company or Equity Planning; (9) any account held in the name of a
qualified employee benefit plan, endowment fund or foundation if, on the date
of initial investment, the plan, fund or foundation has assets of $10,000,000
or more or at least 100 eligible employees; (10) any person with a direct
rollover transfer of shares from an established Affiliated Phoenix Fund
qualified plan; (11) any Phoenix Home Life separate account which funds group
annuity contracts offered to qualified employee benefit plans; (12) any state,
county,
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city, instrumentality, department, authority or agency prohibited by law from
paying a sales charge; (13) any fully matriculated student in a U.S. service
academy; (14) any unallocated accounts held by a third party administrator,
registered investment adviser, trust company, or bank trust department which
exercises discretionary authority and holds the account in a fiduciary, agency,
custodial or similar capacity if in the aggregate such accounts held by such
entity equal or exceed $1,000,000; (15) any person who is investing redemption
proceeds from investment companies other than Affiliated Phoenix Funds if, in
connection with the purchases or redemption of the redeemed shares, the
investor paid a prior sales charge provided such investor supplies verification
that the redemption occurred within 90 days of the Affiliated Phoenix Fund
purchase and that a sales charge was paid; or (16) any deferred compensation
plan established for the benefit of any Affiliated Phoenix Fund trustee or
director; provided that sales made to persons listed in (1) through (16) above
are made upon the written assurance of the purchaser that the purchase is made
for investment purposes and that the shares so acquired will not be resold
except to the Fund.
In addition, Class A shares purchased by the following investors are not
subject to any Class A sales charge: (1) investment advisers and financial
planners who charge an advisory, consulting or other fee for their services and
buy shares for their own accounts or the accounts of their clients, 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 advisers 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 adviser or financial planner on
the books and records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements (each of these investors may
be charged a fee by the broker, agent or financial intermediary for purchasing
shares).
Combination Purchase Privilege. Purchases, either singly or in any
combination, of shares of the Fund or shares of any other Affiliated Phoenix
Fund, (including Class B Shares 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 in record
in the name, or nominee name, of the entity placing the order.
Letter of Intent. Class A Shares or shares of any other Affiliated Phoenix
Fund (including Class B Shares and excluding Money Market 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 Affiliated Phoenix Fund then owned by
such investor, equals a specified dollar amount. Each purchase of shares made
pursuant to a Letter of Intent will be made at the public offering price, as
described in the then current Prospectus relating to such shares, which at the
time of purchase is applicable to a single transaction of the total dollar
amount specified in the Letter of Intent.
An investor's Letter of Intent is not a binding commitment of the investor
to purchase or a binding obligation of the Fund or Equity Planning to sell a
specified dollar amount of shares qualifying for a reduced sales charge.
Accordingly, out of an initial purchase (and subsequent purchases if
necessary), 5% of the dollar amount of purchases required to complete his
investment (valued at the purchase price thereof) is held in escrow in the form
of shares registered in the investor's name until completion of the investment,
at which time escrowed shares are deposited to the investor's account. If the
investor does not complete the investment and does not within 20 days after
written request by Equity Planning or the 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 Affiliated Phoenix Fund, made
over time. Reduced sales charges are offered to investors whose shares, in the
aggregate, are valued (i.e., the dollar amount of such purchases plus the then
current value (at the public offering price as described in the then current
prospectus relating to such shares) of shares of all Affiliated 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 the purchases
qualifies for a reduced sales charge.
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Associations. A group or association may be treated as a "single
purchaser" and qualify for reduced initial sales charges under the Combination
Purchase 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.
Class B and C Shares -- Waiver of Sales Charges
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 701/2 under any retirement plan qualified under Sections 401,
408 or 403(b) of the Code or any redemption resulting from the tax-free return
of an excess contribution to an IRA; (d) in connection with redemptions by
401(k) plans using an approved participant tracking system for: participant
hardships, death, disability or normal retirement, and loans which are
subsequently repaid; (e) in connection with the exercise of certain exchange
privileges among Class B or Class C Shares of the Fund and Class B or Class C
Shares of other Affiliated Phoenix Funds; (f) in connection with any direct
rollover transfer of shares from an established Affiliated Phoenix Fund
qualified plan into a Affiliated Phoenix Fund IRA by participants terminating
from the qualifying plan; and (g) in accordance with the terms specified under
the Systematic Withdrawal Program. If, upon the occurrence of a death as
outlined above, the account is transferred to an account registered in the name
of the deceased's estate, the contingent deferred sales charge will be waived
on any redemption from the estate account occurring within one year of the
death. If the Class B Shares are not redeemed within one year of the death,
they will remain Class B Shares and be subject to the applicable contingent
deferred sales charge when redeemed.
Automatic Conversion of Class B Shares
Class B Shares of the Fund will automatically convert to Class A Shares
without a sales charge at the relative net asset values of each of the classes
after eight years from the acquisition of the Class B Shares, and as a result,
will thereafter be subject to the lower distribution and services fee under the
Class A Plan. Such conversion will be on the basis of the relative net asset
value of the two classes without the imposition of any sales load, fee or other
charge. The purpose of the conversion feature is to relieve the holders of
Class B Shares that have been outstanding for a period of time sufficient for
the Distributor to have been compensated for distribution related expenses from
the burden of such distribution related expenses.
For purposes of conversion to Class A, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares
in a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Fund account
(other than those in the sub-account) are converted to Class A Shares, an equal
pro rata portion of the Class B Shares in the sub-account will also be
converted to Class A Shares.
The conversion of Class B Shares to Class A Shares is subject to the
continuing availability of an opinion of counsel or a ruling from the Internal
Revenue Service ("IRS") to the effect: (i) that the conversion of shares does
not constitute a taxable event under federal income tax law; and (ii) the
assessment of higher distribution and services fees and transfer agency costs
with respect to Class B Shares does not result in 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 no
longer available. In that event, no further conversion of Class B Shares would
occur, and shares might continue to be subject to the higher distribution and
services fee for an indefinite period which may extend beyond the period ending
eight (8) years after the end of the month in which affected Class B Shares
were purchased. If the Fund were unable to obtain such assurances with respect
to the assessment of distribution and services 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 ACCOUNT SERVICES
The Fund offers accumulation plans, withdrawal plans and reinvestment and
exchange privileges. Certain privileges may not be available in connection with
all classes. In most cases, changes to account services may be accomplished
over the phone. Inquiries regarding policies and procedures relating to
shareholder account services should be directed to Shareholder Services at
(800) 243-1574.
Exchanges
Under certain circumstances, shares of the Fund may be exchanged for
shares of the same class of any other Affiliated Phoenix Fund on the basis of
the relative net asset values per share at the time of the exchange. Exchanges
are subject to the minimum initial investment requirement of the designated
Series, Fund, or Portfolio, except if made in connection with the Systematic
Exchange privilege. Shareholders may exchange shares held in book-entry form
for an equivalent number (value) of the same class of shares of any other
Affiliated Phoenix Fund, if currently offered. On exchanges with share classes
that carry a contingent deferred
10
<PAGE>
sales charge, the CDSC schedule of the original shares purchased continues to
apply. The exchange of shares is treated as a sale and purchase for federal
income tax purposes (see also "Dividends, Distributions and Taxes").
Systematic Exchanges. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Affiliated Phoenix Fund automatically on a
monthly, quarterly, semi-annual or annual basis or may cancel this privilege at
any time. If you maintain an account balance of at least $5,000, or $2,000 for
tax qualified retirement benefit plans (calculated on the basis of the net
asset value of the shares held in a single account), you may direct that shares
be automatically exchanged at predetermined intervals for shares of the same
class of another Affiliated Phoenix Fund. This requirement does not apply to
Phoenix "Self Security" program participants. Systematic exchanges will be
executed upon the close of business on the 10th day of each month or the next
succeeding business day. Systematic exchange forms are available from the
Distributor.
Dividend Reinvestment Across Accounts
If you maintain an account balance of at least $5,000, or $2,000 for tax
qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that any
dividends and distributions paid with respect to shares in that account be
automatically reinvested in a single account of one of the other Affiliated
Phoenix Funds at net asset value. You should obtain a current prospectus and
consider the objectives and policies of each fund carefully before directing
dividends and distributions to another fund. Reinvestment election forms and
prospectuses are available from Equity Planning. Distributions may also be
mailed to a second payee and/or address. Requests for directing distributions
to an alternate payee must be made in writing with a signature guarantee of the
registered owner(s). To be effective with respect to a particular dividend or
distribution, notification of the new distribution option must be received by
the Transfer Agent at least three days prior to the record date of such
dividend or distribution. If all shares in your account are repurchased or
redeemed or transferred between the record date and the payment date of a
dividend or distribution, you will receive cash for the dividend or
distribution regardless of the distribution option selected.
REDEMPTION OF SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefor postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for the Fund to dispose of its securities or to determine fairly the value of
its net assets or during any other period permitted by order of the Securities
and Exchange Commission for the protection of investors. Furthermore, the
Transfer Agent will not mail redemption proceeds until checks received for
shares purchased have cleared, which may take up to 15 days after receipt of
the check. Redemptions by Class B and Class C shareholders will be subject to
the applicable deferred sales charge, if any. See the Fund's current Prospectus
for further information.
The Fund has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Fund's behalf.
The Fund will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts
the order. Customer orders will be priced at the Fund's net asset value next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
A shareholder should contact his/her broker/dealer if he/she wishes to
transfer shares from an existing broker/dealer street name account to a street
name account with another broker/dealer. The Fund has no specific procedures
governing such account transfers.
Redemption of Small Accounts
Due to the relatively high cost of maintaining small accounts, the Fund
reserves the right to redeem, at net asset value, the shares of any shareholder
whose account has a value, due to redemptions, of less than $200. Before the
Fund redeems these shares, the shareholder will be given notice that the value
of the shares in the account is less than the minimum amount and will be
allowed 30 days to make an additional investment in an amount which will
increase the value of the account to at least $200.
By Mail
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the possession of the shareholder, they must be mailed or
presented, duly endorsed in the full name of the account, with a written
request to Equity Planning that the Fund redeem the shares. See the Fund's
current Prospectus for more information.
Telephone Redemptions
Shareholders may redeem by telephone up to $50,000 worth of their shares
held in book-entry form. See the Fund's current Prospectus for additional
information.
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<PAGE>
Reinvestment Privilege
Shareholders who may have overlooked features of their investment at the
time they redeemed have the privilege of reinvesting their investment at net
asset value. See the Fund's current Prospectus for more information and
conditions attached to this privilege.
Redemption in Kind
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. However, the Fund
has elected to pay in cash all requests for redemption by any shareholder of
record, limited in respect to each shareholder during any 90-day period to the
lesser of $250,000 or 1% of the net asset value of the Fund at the beginning of
such period. This election has been made pursuant to Rule 18f-1 under the
Investment Company Act of 1940 and is irrevocable while the Rule is in effect
unless the Securities and Exchange Commission, by order, permits the withdrawal
thereof. In case of a redemption in kind, securities delivered in payment for
shares would be readily marketable and valued at the same value assigned to
them in computing the net asset value per share of the Fund. A shareholder
receiving such securities would incur brokerage costs when selling the
securities.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to remain qualified as a regulated investment company
under certain provisions of the Code. Under such provisions, the Fund will not
be subject to federal income tax on such part of its ordinary income and net
realized capital gains which it distributes to shareholders provided it meets
certain distribution requirements. To qualify for treatment as a regulated
investment company, the Fund generally must, among other things (a) derive in
each taxable year at least 90% of its gross income from (i) dividends, (ii)
interest, (iii) payments with respect to securities loans, (iv) gains from the
sale or other disposition of stock or securities or foreign currencies, and (v)
other income derived with respect to its business of investing in such stock,
securities or currencies; and (b) meet certain diversification requirements
imposed under the Code at the end of each quarter of the taxable year.
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 distributions. 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 distribution, will be taxable to shareholders as a 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.
Under certain circumstances, the sales charge incurred in acquiring shares
of the Fund may not be taken in account in determining the gain or loss on the
disposition of those shares. This rule applies where shares of the Fund are
disposed of within 90 days after the date on which they were acquired and new
shares of a regulated investment company are acquired without a sales charge or
at a reduced sales charge. In that case, the gain or loss realized on the
disposition will be determined by excluding from the tax basis of the shares
disposed all or a portion 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 the shareholder having incurred a sales charge initially. The portion of the
sales charge affected by this rule will be treated as a sales charge paid for
the new shares.
Distributions by the Fund reduce the net asset value of the Fund's shares.
Should a distribution reduce the net asset value of a share below a
shareholder's cost for the share, such a distribution nevertheless generally
would be taxable to the shareholder as ordinary income or long-term capital
gain, even though, from an investment standpoint, it may constitute a partial
return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to the declaration of a dividend
or distribution, but the dividend or distribution generally would be taxable to
them.
Some shareholders may be subject to withholding of federal income tax on
dividends and redemption payments from the Fund ("backup withholding") at the
rate of 31%. Corporate shareholders and certain other shareholders specified in
the Code generally are exempt from such backup withholding. Generally,
shareholders subject to backup withholding will be (i) those for whom a
certified taxpayer identification number is not on file with the Fund, (ii)
those about whom notification has been received (either by the shareholder or
the Fund) from the Internal Revenue Service that they are subject to backup
withholding or (iii) those who, to the Fund's knowledge, have furnished an
incorrect taxpayer identification number. Generally, to avoid backup
withholding, an investor must, at the time an account is opened, certify under
penalties of perjury that the taxpayer identification number furnished is
correct and that he or she is not subject to backup withholding.
It is anticipated that the Fund will receive dividends from its
investments, in which case dividends paid by the Fund from net investment
income may qualify for the 70% corporate dividends received deduction, but only
to the extent that such income is derived from dividends of domestic
corporations.
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<PAGE>
The Code imposes a 4% nondeductible excise tax on a regulated investment
company, such as the Fund, if it does not distribute to its shareholders during
the calendar year an amount equal to at least 98% of the Fund's capital gains
net income for the 12-month period ending on October 31 of each calendar year.
In addition, an amount equal to any undistributed investment company taxable
income or capital gain net income from the previous calendar year must also be
distributed to avoid the excise tax. The excise tax is imposed on the amount by
which the regulated investment company does not meet the foregoing distribution
requirements. If the Fund has taxable income that would be subject to the
excise tax, the Fund generally intends to distribute such income so as to avoid
payment of the excise tax.
Under another provision of the Code, any dividend declared by the Fund to
shareholders of record in October, November, and December of any calendar year
and payable to shareholders of record on a specified date in such a month will
be deemed to have been received by, and will be taxable to shareholders as of
December 31 of such calendar year, provided that the dividend is actually paid
by the Fund before February 1 of the following year.
Based on the foregoing, the Fund's policy is to distribute to its
shareholders at least 90% of net investment company taxable income, as defined
above and in the Code, and any net realized capital gains for each year and,
consistent therewith, to meet the distribution requirements of Part I of
subchapter m of the Code. The Fund intends to meet the other requirements of
Part I of subchapter m, including the requirements with respect to
diversification of assets and sources of income, so that the Fund will continue
to qualify as a regulated investment company.
Equity options written by the Fund (covered call options on portfolio
stock) will be subject to the provisions under Section 1234 of the Code. If the
Fund writes a call option, no gain is recognized upon its receipt of a premium.
If the option lapses or is closed out, any gain or loss is treated as a
short-term capital gain or loss. If a call option is exercised, any resulting
gain or loss is a short-term or long-term capital gain or loss depending on the
holding period of the underlying stock.
Many futures contracts entered into by the Fund and all listed non-equity
options written or purchased by the Fund (including covered call options
written on debt securities and options written or purchased on futures
contracts) will be governed by Section 1256 of the Code. Absent a tax election
to the contrary, gain or loss attributable to the lapse, exercise or closing
out of any such position will be treated as 60% long-term and 40% short-term
capital gain or loss, and on the last trading day of the Fund's fiscal year
(and, generally on October 31 for purposes of the 4% excise tax), all
outstanding Section 1256 positions will be marked to market (i.e. treated as if
such positions were closed out at their closing price on such day), with any
resulting gain or loss recognized as 60% long-term and 40% short-term capital
gain or loss. Under certain circumstances, entry into a futures contract to
sell a security may constitute a short sale for federal income tax purposes,
causing an adjustment in the holding period of the underlying security or a
substantially identical security in the Fund's portfolio.
Positions of the Fund which consist of at least one stock and at least one
stock option or other position with respect to a related security which
substantially diminishes the Fund's risk of loss with respect to such stock
could be treated as a "straddle" which is governed by Section 1092 of the Code,
the operation of which may cause deferral of losses, adjustments in the holding
periods of stock or securities and conversion of short-term capital losses into
long-term capital losses. An exception to these straddle rules exists for any
"qualified covered call options" on stock options written by the Fund.
If the Fund invests in stock of certain passive foreign investment
companies, the Fund may be subject to U.S. federal income taxation on a portion
of any "excess distribution" with respect to, or gain from the disposition of,
such stock. The tax would be determined by allocating such distribution or gain
ratably to each day of the Fund's holding period for the stock. The
distributions or gain so allocated to any taxable year of the Fund, other than
the taxable year of the excess distribution or disposition, would be taxed to
the Fund at the highest ordinary income rate in effect for such year, and the
tax would be further increased by an interest charge to reflect the value of
the tax deferral deemed to have resulted from the ownership of the foreign
company's stock. Any amount of distribution or gain allocated to the taxable
year of the distribution or disposition would be included in the Fund's
investment company taxable income and, accordingly, would not be taxable to the
Fund to the extent distributed by the Fund as a dividend to its shareholders.
The Fund may elect to mark to market (i.e., treat as if sold at their closing
market price on same day), its investments in passive foreign investment
companies and avoid any tax and or interest charge on excess distributions.
The foregoing discussion of U.S. federal income tax law relates solely to
the application of that law to U.S. persons, i.e., U.S. citizens and residents
and U.S. corporations, partnerships, trusts and estates. Each shareholder who
is not a U.S. person should consider the U.S. and foreign tax consequences of
ownership of shares of the Fund, including the possibility that such a
shareholder may be subject to a U.S. withholding tax at a rate of 31% (or at a
lower rate under an applicable income tax treaty) on amounts constituting
ordinary income received by him or her, where such amounts are treated as
income from U.S. sources under the Code.
The Fund furnishes all shareholders, within 31 days after the end of the
calendar year, with information which is required by the Internal Revenue
Service for preparing federal income tax returns. Investors are urged to
consult their attorney or tax adviser regarding specific questions as to
federal, foreign, state or local taxes.
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<PAGE>
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 gains
distributions or share redemption proceeds, for an 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.
TAX SHELTERED RETIREMENT PLANS
Shares of the Fund and other Affiliated Phoenix Funds may be offered in
connection with employer-sponsored 401(k) plans. PIC and its affiliates may
provide administrative services to these plans and to their participants, in
addition to the services that PIC and its affiliates provide to the Phoenix
Funds, and receive compensation therefor. For information on the terms and
conditions applicable to employee participation in such plans, including
information on applicable plan administrative charges and expenses, prospective
investors should consult the plan documentation and employee enrollment
information which is available from participating employers.
THE DISTRIBUTOR
Phoenix Equity Planning Corporation, ("Equity Planning" or "Distributor"),
acts as the Distributor of 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 PIC. Shares of the Fund may be purchased
through investment dealers who have sales agreements with the Distributor.
During the fiscal years 1996, 1997, and 1998, purchasers of shares of the Fund
paid aggregate sales charges of $132,820, $111,630 and $115,136, respectively,
of which the Distributor received net commissions of $21,894, $32,104 and
$36,903, 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 Plans or in any related agreements. The Underwriting Agreement
will terminate automatically in the event of its assignment.
Dealers with whom the Distributor has entered into sales agreements
receive a discount or commission as set forth below.
<TABLE>
<CAPTION>
Dealer Discount
Sales Charge Sales Charge or Agency Fee
Amount of Transaction as Percentage as Percentage as Percentage of
at Offering Price of Offering Price of Amount Invested Offering Price
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 but under $100,000 4.50% 4.71% 4.00%
$100,000 but under $250,000 3.50% 3.63% 3.00%
$250,000 but under $500,000 3.00% 3.09% 2.75%
$500,000 but under $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None None
</TABLE>
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sale price of
Class C Shares sold by such dealers. Your broker, dealer or investment adviser
may also charge you additional commissions or fees for their services in
selling shares to you provided they notify the Distributor of their intention
to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of
the Funds and/or for providing other shareholder services. Depending on the
nature of the services, these fees may be paid either from the Funds through
distribution fees, service fees or transfer agent fees or in some cases, the
Distributor may pay certain fees from its own profits and resources. From its
own profits and resources, the Distributor does intend to: (a) sponsor sales
contests, training and educational meetings and provide additional compensation
to qualifying dealers in the form of trips, merchandise or expense
reimbursements; (b) from time to time pay special incentive and retention fees
to qualified wholesalers, registered financial institutions and third party
marketers; (c) pay broker/dealers an amount equal to 1% of the first $3 million
of Class A Share purchases by an account held in the name of a qualified
employee benefit plan with at least 100 eligible employees, 0.50% on the next
$3 million, plus 0.25% on the amount in excess of $6 million; and (d) excluding
purchases as described in (c) above, pay broker/dealers an amount equal to 1%
of the amount of Class A Shares sold above $1 million but under $3 million,
0.50% on the next $3 million, plus 0.25% on the amount in excess of $6 million.
If part or all of such investment, including investments by qualified employee
benefit plans, is
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<PAGE>
subsequently redeemed within one year of the investment date, the broker-dealer
will refund to the Distributor such amounts paid with respect to the
investment. In addition, the Distributor may pay the entire applicable sales
charge on purchases of Class A Shares to selected dealers and agents. Any
dealer who receives more than 90% of a sales charge may be deemed to be an
"underwriter" under the Securities Act of 1933.
Administrative Services
Equity Planning also acts as administrative agent of the Fund and as such
performs administrative, bookkeeping and pricing functions for the Fund. For
its services, Equity Planning will be paid a fee equal to the sum of (1) the
documented cost of fund accounting and related services provided by PFPC, Inc.,
as subagent, plus (2) the documented cost to Equity Planning to provide
financial reporting and tax services and to oversee the subagent's performance.
The current fee schedule of PFPC, Inc. is based upon the average of the
aggregate daily net asset values of the Fund, at the following incremental
annual rates.
<TABLE>
<S> <C>
First $200 million .085%
$200 million to $400 million .05%
$400 million to $600 million .03%
$600 million to $800 million .02%
$800 million to $1 billion .015%
Greater than $1 billion .0125%
</TABLE>
Percentage rates are applied to the aggregate daily net asset values of
the Fund. PFPC, Inc. also charges minimum fees and additional fees for each
additional class of fund shares. Equity Planning retains PFPC, Inc. as subagent
for each of the funds for which Equity Planning serves as administrative agent.
PFPC, Inc. agreed to a modified fee structure and waived certain charges.
Because PFPC, Inc.'s arrangement would have favored smaller funds over larger
funds, Equity Planning reallocates PFPC, Inc.'s overall asset-based charges
among all funds for which it serves as administrative agent on the basis of the
relative net assets of each fund. As a result, the PFPC, Inc. charges to the
Fund are expected to be slightly less than the amount that would be found
through direct application of the table illustrated above. For its services
during the Fund's fiscal year ended June 30, 1998, Equity Planning received
$97,030.
DISTRIBUTION PLANS
The Fund has adopted separate amended and restated distribution plans
under Rule 12b-1 of the 1940 Act for each class of shares of the Fund (the
"Class A Plan," the "Class B Plan," the "Class C 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 and require the Fund to pay for the
furnishing of shareholder services.
Under the Class B and Class C Plans, the Fund may reimburse the
Distributor monthly for actual expense of the Distributor up to 0.75% of the
average daily net assets of the Fund's Class B and Class C Shares,
respectively. 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 payment of commissions);
(ii) compensation, sales incentives and payments to sales, marketing and
service personnel; (iii) payments to broker-dealers and other financial
institutions which have entered into agreements with the Distributor in the
form of the Dealer Agreement for Phoenix Funds for services rendered in
connection with the sale and distribution of shares of the Fund; (iv) payment
of expenses incurred in sales and promotional activities, including advertising
expenditures related to the Fund; (v) the costs of preparing and distributing
promotional materials; (vi) the cost of printing the Fund's Prospectus and
Statement of Additional Information for distribution to potential investors;
and (vii) such other similar services that the Trustees of the Fund determine
are reasonably calculated to result in the sale of shares of the Fund. In
addition, the Fund shall pay the Distributor 0.25% annually of the average
daily net assets of the Fund for providing services to the shareholders,
including assistance in connection with inquiries related to shareholder
accounts (the "Service Fee").
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 re-allowed 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 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.
In addition to the amount paid to dealers pursuant to the sales charge
table in the section above, the Distributor may from time to time pay, from its
own resources or pursuant to the Plans, 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.
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<PAGE>
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,
re-allow the entire portion of the sales charge on Class A Shares which it
normally retains to individual selling dealers. However, such additional
re-allowance 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.
For the fiscal year ended June 30, 1998 the Fund paid Rule 12b-1 Fees in
the amount of $494,443 of which the Distributor received $196,013, W.S.
Griffith & Co., an affiliate, received $13,032 and unaffiliated broker-dealers
received $285,398. The Rule 12b-1 payments were used for (1) compensation to
dealers ($353,361), (2) compensation to sales personnel ($172,649), (3)
advertising ($88,808), (4) service costs ($44,327), (5) printing and mailing of
prospectuses to other than current shareholders ($11,871) and (6) other
($35,251). The Distributor's expenses from selling and servicing Class B Shares
may be more than the payments received from contingent deferred sales charges
collected on redeemed shares and from the Fund under the Class B Plan. Those
expenses may be carried over and paid in future years. At June 30, 1998, the
end of the last Plan year, the Distributor had incurred unreimbursed expenses
under the Class B Plan of $354,718 (equal to 0.18% of the Fund's net assets)
which have been carried over into the present Class B Plan year.
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 their 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 provide that they may not be amended to increase materially the costs
which the Fund may bear pursuant to the Plans without approval of the
shareholders of the Fund and that other material amendments to the Plans must
be approved by a majority of the Plan Trustees by vote cast in person at a
meeting called for the purpose of considering such amendments. The Plans
further provide that while 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 a majority of the Plan Trustees or a majority of the
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 National Association of Securities Dealers, Inc. (the "NASD") regards
certain distribution fees as asset-based sales charges subject to NASD sales
load limits. The NASD's maximum sales charge rule may require the Trustees to
suspend distribution fees or amend the Plans.
MANAGEMENT OF THE FUND
The Trustees of the Fund are responsible for the overall supervision of
the operations of the Fund and perform the various duties imposed on Trustees
by the 1940 Act and Massachusetts business trust law.
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. 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>
Robert Chesek (64) Trustee Trustee/Director (1981-present) and Chairman (1989-1994),
49 Old Post Road Phoenix Funds. Trustee, Phoenix-Aberdeen Series Fund and
Wethersfield, CT 06109 Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present). Vice President, Common Stock, Phoenix Home Life
Mutual Insurance Company (1980-1994). Director/Trustee, the
National Affiliated Investment Companies (until 1993).
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------------- --------------- ----------------------------------------------------------------
<S> <C> <C>
E. Virgil Conway (69) Trustee Chairman, Metropolitan Transportation Authority (1992-
9 Rittenhouse Road present). Trustee/Director, Consolidated Edison Company of
Bronxville, NY 10708 New York, Inc. (1970-present), Pace University (1978-
present), Atlantic Mutual Insurance Company (1974-present),
HRE Properties (1989-present), Greater New York Councils,
Boy Scouts of America (1985-present), Union Pacific Corp.
(1978-present), Blackrock Freddie Mac Mortgage Securities
Fund (Advisory Director) (1990-present), Centennial Insurance
Company (1974-present), Josiah Macy, Jr., Foundation (1975-
present), The Harlem Youth Development Foundation (1987-
present), Accuhealth (1994-present), Trism, Inc. (1994-
present), Realty Foundation of New York (1972-present), New
York Housing Partnership Development Corp. (Chairman)
(1981-present) and Fund Directions (Advisory Director)
(1993-present). Director/Trustee, Phoenix Funds (1993-
present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present).
Director, Duff & Phelps Utilities Tax-Free Income Inc. and
Duff & Phelps Utility and Corporate Bond Trust Inc. (1995-
present). Member, Audit Committee of the City of New York
(1981-1996). Advisory Director, Blackrock Fannie Mae
Mortgage Securities Fund (1989-1996). Member (1990-1995),
Chairman (1992-1995), Financial Accounting Standards
Advisory Council. Director/Trustee, the National Affiliated
Investment Companies (until 1993).
Harry Dalzell-Payne (69) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
330 East 39th Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Apartment 29G Institutional Mutual Funds (1996-present). Director, Duff &
New York, NY 10016 Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present). Director,
Farragut Mortgage Co., Inc. (1991-1994). Director/Trustee, the
National Affiliated Investment Companies (1983-1993).
Formerly a Major General of the British Army.
*Francis E. Jeffries (68) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
6585 Nicholas Blvd. Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Apt. 1601 Institutional Mutual Funds (1996-present). Director, Duff &
Naples, FL 33963 Phelps Utilities Income Inc. (1987-present), Duff & Phelps
Utilities Tax-Free Income Inc. (1991-present) and Duff &
Phelps Utility and Corporate Bond Trust Inc. (1993-present).
Director, The Empire District Electric Company (1984-
present). Director (1989-1997), Chairman of the Board (1993-
1997), President (1989-1993), and Chief Executive Officer
(1989-1995), Phoenix Investment Partners, Ltd.
Leroy Keith, Jr. (59) Trustee Chairman and Chief Executive Officer, Carson Products
Chairman and Chief Company (1995-present). Director/Trustee, Phoenix Funds
Executive Officer (1980-present). Trustee, Phoenix-Aberdeen Series Fund and
Carson Product Company Phoenix Duff & Phelps Institutional Mutual Funds (1996-
64 Ross Road present). Director, Equifax Corp. (1991-present) and
Savannah, GA 30750 Evergreen International Fund, Inc. (1989-present). Trustee,
Evergreen Liquid Trust, Evergreen Tax Exempt Trust,
Evergreen Tax Free Fund, Master Reserves Tax Free Trust,
and Master Reserves Trust. President, Morehouse College
(1987-1994). Chairman and Chief Executive Officer, Keith
Ventures (1992-1994). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ---------------------------- --------------- -----------------------------------------------------------------
<S> <C> <C>
*Philip R. McLoughlin (52) Trustee and Chairman (1997-present), Director (1995-present), Vice
President Chairman (1995-1997) and Chief Executive Officer (1995-
present), Phoenix Investment Partners, Ltd. Director (1994-
present) and Executive Vice President, Investments (1988-
present), Phoenix Home Life Mutual Insurance Company.
Director/Trustee and President, Phoenix Funds (1989-present).
Trustee and President, Phoenix-Aberdeen Series Fund and
Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present). Director, Duff & Phelps Utilities Tax-Free Income Inc.
(1995-present) and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1995-present). Director (1983-present) and Chairman
(1995-present), Phoenix Investment Counsel, Inc. Director
(1984-present) and President (1990- present), Phoenix Equity
Planning Corporation. Director (1993-present), Chairman (1993-
present) and Chief Executive Officer (1993-1995), National
Securities & Research Corporation. Director, Phoenix Realty
Group, Inc. (1994-present), Phoenix Realty Advisors, Inc. (1987-
present), Phoenix Realty Investors, Inc. (1994-present), Phoenix
Realty Securities, Inc. (1994-present), PXRE Corporation
(Delaware) (1985-present), and World Trust Fund (1991-present).
Director and Executive Vice President, Phoenix Life and Annuity
Company (1996-present). Director and Executive Vice President,
PHL Variable Insurance Company (1995-present). Director,
Phoenix Charter Oak Trust Company (1996-present). Director
and Vice President, PM Holdings, Inc. (1985-present). Director,
PHL Associates, Inc. (1995-present). Director and President,
Phoenix Securities Group, Inc. (1993-1995). Director (1992-
present) and President (1992-1994), W.S. Griffith & Co., Inc.
Director/Trustee, the National Affiliated Investment Companies
(until 1993).
Everett L. Morris (70) Trustee Vice President, W.H. Reaves and Company (1993-present).
164 Laird Road Director/Trustee, Phoenix Funds (1995-present). Trustee,
Colts Neck, NJ 07722 Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director, Duff &
Phelps Utilities Tax-Free Income Inc. (1991-present) and Duff
& Phelps Utility and Corporate Bond Trust Inc. (1993-
present).
*James M. Oates (52) Trustee Chairman, IBEX Capital Markets LLC (1997-present).
Managing Director Managing Director, Wydown Group (1994-present). Director,
The Wydown Group Phoenix Investment Partners, Ltd. (1995-present). Director/
IBEX Capital Markets LLC Trustee, Phoenix Funds (1987-present). Trustee, Phoenix-
60 State Street Aberdeen Series Fund and Phoenix Duff & Phelps
Suite 950 Institutional Mutual Funds (1996-present). Director, AIB
Boston, MA 02109 Govett Funds. (1991-present), Blue Cross and Blue Shield of
New Hampshire (1994-present), Investors Financial Service
Corporation (1995-present), Investors Bank & Trust
Corporation (1995-present), Plymouth Rubber Co. (1995-
present), Stifel Financial (1996-present) and Command
Systems, Inc. (1998-present). Vice Chairman, Massachusetts
Housing Partnership (1992-present). Member, Chief
Executives Organization (1996-present). Director (1984-1994),
President (1984-1994) and Chief Executive Officer (1986-
1994), Neworld Bank. Director/Trustee, the National Affiliated
Investment Companies (until 1993).
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------- --------------- ---------------------------------------------------------------
<S> <C> <C>
*Calvin J. Pedersen (56) Trustee Director (1986-present), President (1993-present) and
Phoenix Investment Executive Vice President (1992-1993), Phoenix Investment
Partners, Ltd. Partners, Ltd. Director/Trustee, Phoenix Funds (1995-present).
55 East Monroe Street Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff &
Suite 3600 Phelps Institutional Mutual Funds (1996-present). President
Chicago, IL 60603 and Chief Executive Officer, Duff & Phelps Utilities Tax-Free
Income Inc. (1995-present), Duff & Phelps Utilities Income
Inc. (1994-present) and Duff & Phelps Utility and Corporate
Bond Trust Inc. (1995-present).
Herbert Roth, Jr. (70) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
P.O. Box 909 Institutional Mutual Funds (1996-present). Director, Boston
Sherborn, MA 01770 Edison Company (1978-present), Landauer, Inc. (medical
services) (1970-present),Tech Ops./Sevcon, Inc. (electronic
controllers) (1987-present), and Mark IV Industries
(diversified manufacturer) (1985-present). Member, Directors
Advisory Counsel, Phoenix Home Life Mutual Insurance
Company (1998-present). Director, Key Energy Group (oil rig
service) (1988-1994) and Phoenix Home Life Mutual
Insurance Company (1972-1998). Director/Trustee, the
National Affiliated Investment Companies (until 1993).
Richard E. Segerson (52) Managing Director, Mullin Associates (1993-present).
102 Valley Road Director/Trustee, Phoenix Funds (1993-present). Trustee,
New Canaan, CT 07840 Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Vice President and
General Manager, Coats & Clark, Inc. (previously Tootal
American, Inc.) (1991-1993). Director/Trustee, the National
Affiliated Investment Companies (1984-1993).
Lowell P. Weicker, Jr. (67) Trustee/Director, Phoenix Funds (1995-present). Trustee,
731 Lake Avenue Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Greenwich, CT 06830 Institutional Mutual Funds (1996-present). Director, UST Inc.
(1995-present), Burroughs Wellcome Fund (1996-present),
HPSC Inc. (1995-present), and Compuware (1996-present).
Visiting Professor, University of Virginia (1997-present).
Director, Duty Free International, Inc. (1997) Chairman,
Dresing, Lierman, Weicker (1995-1996). Governor of the State
of Connecticut (1991-1995).
Michael E. Haylon (40) Executive Director and Executive Vice President--Investments, Phoenix
Vice Investment Partners, Ltd. (1995-present). Executive Vice
President President, Phoenix Funds (1993-present) and Phoenix-
Aberdeen Series Fund (1996-present). Executive Vice
President (1997-present), Vice President (1996-1997),
Phoenix Duff & Phelps Institutional Mutual Funds. Director
(1994-present), President (1995-present), Executive Vice
President (1994-1995), Vice President (1991-1994), Phoenix
Investment Counsel, Inc. Director (1994-present), President
(1996-present), Executive Vice President (1994-1996), Vice
President (1993-1994), National Securities & Research
Corporation. Director, Phoenix Equity Planning Corporation
(1995-present). Senior Vice President, Securities Investments,
Phoenix Home Life Mutual Insurance Company (1993-1995).
Various other positions with Phoenix Home Life Mutual
Insurance Company (1990-1993).
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------------- --------------- --------------------------------------------------------------
<S> <C> <C>
John F. Sharry (46) Executive Managing Director, Retail, Phoenix Equity Planning
Vice Corporation (1995-present). Executive Vice President, Phoenix
President Funds and Phoenix-Aberdeen Series Fund (1998-present).
Managing Director, Director and National Sales Manager
(December 1993-November 1995), Senior Vice President,
Director and National Sales Manager (December 1992-
December 1993), Putnam Funds.
William E. Keen, III (35) Vice Assistant Vice President (1996-present), Director of Mutual
100 Bright Meadow Blvd. President Fund Compliance (1995-1996), Phoenix Equity Planning
P.O. Box 2200 Corporation. Vice President, Phoenix Funds (1996-present),
Enfield, CT 06083-2200 Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present), and Phoenix-Aberdeen Series Fund (1996-present).
Assistant Vice President, USAffinity Investments LP (1994-
1995). Treasurer and Secretary, USAffinity Funds (1994-
1995). Manager, Fund Administration, SEI Corporation (1991-
1994).
William R. Moyer (54) Vice Senior Vice President and Chief Financial Officer, Phoenix
100 Bright Meadow Blvd. President Investment Partners, Ltd. (1995-present). Senior Vice
P.O. Box 2200 President, Finance (1990-present), Chief Financial Officer
Enfield, CT 06083-2200 (1996-present), and Treasurer (1994-1996 and 1998-present),
Phoenix Equity Planning Corporation. Director (1998-present),
Senior Vice President (1990-present), Chief Financial Officer
(1996-present) and Treasurer (1994-present), Phoenix
Investment Counsel, Inc. Director (1998-present), Senior Vice
President, Finance (1993-present), Chief Financial Officer
(1996-present), and Treasurer (1994-present), National
Securities & Research Corporation. Senior Vice President
and Chief Financial Officer, Duff & Phelps Investment
Management Co. (1996-present). Vice President, Phoenix
Funds (1990-present), Phoenix-Duff & Phelps Institutional
Mutual Funds (1996-present), Phoenix-Aberdeen Series Fund
(1996-present). Vice President, Investment Products Finance,
Phoenix Home Life Mutual Insurance Company (1990-1995).
Senior Vice President and Chief Financial Officer, W. S.
Griffith & Co., Inc. (1992-1995) and Townsend Financial
Advisers, Inc. (1993-1995). Vice President, the National
Affiliated Investment Companies (until 1993).
Leonard J. Saltiel (44) Vice Managing Director, Operations and Service, (1996-present),
President Senior Vice President (1994-1996), Phoenix Equity Planning
Corporation. Vice President, Phoenix Funds (1994-present),
Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present), Phoenix-Aberdeen Series Fund (1996-present). Vice
President, National Securities & Research Corporation (1994-
1996). Vice President, Investment Operations, Phoenix Home
Life Mutual Insurance Company (1994-1995). Various
positions with Home Life Insurance Company and Phoenix
Home Life Mutual Insurance Company (1987-1994).
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ------------------------ --------------- ----------------------------------------------------------------
<S> <C> <C>
Pierre G. Trinque (43) Vice Managing Director, Large Cap Growth Team (1997-present),
President Managing Direcor, Director of Equity Research (1996-1997),
Senior Research Analyst (1996) and Associate Portfolio
Manager--Institutional Funds (1992-1995), Phoenix
Investment Counsel, Inc. Vice President, The Phoenix Edge
Series Fund (1997-present), Phoenix Series Fund (1997-
present), Phoenix Duff & Phelps Institutional Mutual Funds
(1997-present), Phoenix Multi-Portfolio Fund (1998-present)
and Phoenix Worldwide Opportunities Fund (1998-present).
Nancy G. Curtiss (46) Treasurer Vice President, Fund Accounting (1994-present) and Treasurer
(1996-present), Phoenix Equity Planning Corporation. Treasurer,
Phoenix Funds (1994-present), Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present), Phoenix-Aberdeen
Series Fund (1996-present). Second Vice President and
Treasurer, Fund Accounting, Phoenix Home Life Mutual
Insurance Company (1994-1995). Various positions with Phoenix
Home Life Insurance Company (1987-1994).
G. Jeffrey Bohne (51) Secretary Vice President and General Manager, Phoenix Home Life
101 Munson Street Mutual Insurance Co. (1993-present). Vice President, Mutual
Greenfield, MA 01301 Fund Customer Service (1996-present), Vice President,
Transfer Agency Operations (1993-1996), Phoenix Equity
Planning Corporation. Secretary/Clerk, Phoenix Funds (1993-
present), Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present) and Phoenix-Aberdeen Series Fund (1996-
present).
</TABLE>
- -----------
*Indicates that the Trustee is an "interested person" of the Trust within the
meaning of the definition set forth in Section 2(a)(19) of the Investment
Company Act of 1940.
For services rendered to the Fund for the fiscal year ended June 30, 1998,
the Trustees received aggregate remuneration of $19,397. For service 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 $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 $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 $1,000 per joint Nominating Committee
meeting attended. Each Trustee who serves on the Executive Committee and who is
not an interested person of the Fund receives a retainer at the annual rate of
$2,000 and $2,000 per joint Executive Committee meeting attended. The function
of the Executive Committee is to serve as a contract review, compliance review
and performance review delegate of the full Board of Trustees. Trustees costs
are allocated equally to each of the Series and Funds within the complex. The
foregoing fees do not include the reimbursement of expenses incurred in
connection with meetings attended. Officers and employees of the Adviser who
are "interested persons" are compensated for their services by the Adviser and
receive no compensation from the Fund.
21
<PAGE>
For the Fund's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
Total
Compensation
Pension or From Fund and
Aggregate Retirement Benefits Estimated Fund Complex
Compensation Accrued as Part Annual Benefits (14 Funds)
Name From Fund of Fund Expenses Upon Retirement Paid to Directors
- ------------------------ -------------- --------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Robert Chesek $ 1,495 $58,500
E. Virgil Conway+ $ 2,044 $79,750
Harry Dalzell-Payne+ $ 1,819 $71,000
Francis E. Jeffries $ 1,525* $60,000
Leroy Keith, Jr. $ 1,553 None None $61,000
Philip R. McLoughlin+ $ 0 for any for any $ 0
Everett L. Morris+ $ 1,790* $70,750
James M. Oates+ $ 1,790 Trustee Trustee $70,000
Calvin J. Pedersen $ 0 $ 0
Herbert Roth, Jr.+ $ 2,102* $81,000
Richard E. Segerson $ 1,808 $70,750
Lowell P. Weicker, Jr. $ 1,808 $70,000
</TABLE>
- ---------
*This compensation (and the earnings thereon) will be deferred pursuant to the
Directors' Deferred Compensation Plan. At July 1, 1998, the total amount of
deferred compensation (including interest and other accumulation earned on the
original amounts deferred) accrued for Messrs. Jeffries, Morris and Roth was
$99,645, $141,647 and $142,534, respectively. At present, by agreement among
the Fund, the Distributor and the electing director, director fees that are
deferred are paid by the Fund to the Distributor. The liability for the
deferred compensation obligation appears only as a liability of the
Distributor.
+Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are members
of the Executive Committee.
On December 4, 1998, the Trustees and officers of the Fund beneficially
owned less than 1% of the outstanding shares of the Fund.
Principal Shareholders
The following table sets forth information as of December 8, 1998 with
respect to each person who owns of record or is known by the Fund to own of
record or beneficially own 5% or more of any class of the Fund's equity
securities.
<TABLE>
<CAPTION>
Percent
Name of shareholder Class Number of shares of Class
- ----------------------------------------------- --------- ------------------ ---------
<S> <C> <C> <C>
Trustees of Phoenix Savings & Investment Plan Class A 782,894.909 5.35%
100 Bright Meadow Blvd.
Enfield, CT 06082
MLPF&S for the sole Class B 95,205.404 10.81%
benefit of its customers
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
</TABLE>
OTHER INFORMATION
Capital Stock
The Declaration of Trust 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, which has
three 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, as
amended, cause a meeting of shareholders to be held for the purpose of voting
on the removal of Trustees.
22
<PAGE>
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. Except as set forth above and subject to the 1940 Act, the
Trustees will continue to hold office and appoint successor Trustees. Shares do
not have cumulative voting rights and the holders of more than 50% of the
shares of the Fund voting for the election of Trustees can elect all of the
Trustees of the Trust 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 described in the prospectus and in this
Statement of Additional Information.
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 Fund's name refers to the
Trustees under the Declaration of Trust collectively as Trustees, but not as
individuals or personally; and no Trustee, shareholder, officer, employee or
agent of the Fund shall be held to any personal liability, nor shall resort be
had to their private property for the satisfaction of any obligation or claim
of said Fund, but the "Trust Property" only shall be liable.
Independent Accountants
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110, serves
as independent accountants for the Fund (the "Accountants"). The Accountants
audit the Fund's annual financial statements and express an opinion thereon.
Custodian and Transfer Agent
Brown Brothers Harriman & Co., having its principal place of business at
40 Water Street, Boston, Massachusetts 02109, serves as custodian of the Fund's
assets (the "Custodian"). Equity Planning, 100 Bright Meadow Boulevard, P.O.
Box 2200, Enfield, CT 06083-2200, acts as Transfer Agent for the Fund (the
"Transfer Agent"). As compensation, Equity Planning receives a fee equivalent
to $17.95 for each designated shareholder account plus out-of-pocket expenses.
Transfer Agent fees are also utilized to offset costs and fees paid to
subtransfer agents employed by Equity Planning. State Street Bank and Trust
Company serves as a subtransfer agent pursuant to a Subtransfer Agency
Agreement.
Report to Shareholders
The fiscal year of the Fund ends on June 30. The Fund will send financial
statements to its shareholders at least semi-annually. An annual report,
containing financial statements audited by the Fund's independent accountants,
will be sent to shareholders each year.
Financial Statements
The Financial Statements for the Fund's fiscal year ended June 30, 1998,
appearing in the Fund's 1998 Annual Report to Shareholders, are incorporated
herein by reference.
23
<PAGE>
PHOENIX-ENGEMANN GROWTH FUND PHOENIX-ENGEMANN NIFTY-FIFTY FUND
PHOENIX-ENGEMANN BALANCED RETURN FUND
PHOENIX-ENGEMANN GLOBAL GROWTH FUND
PHOENIX-ENGEMANN SMALL & MID-CAP FUND
PHOENIX-ENGEMANN VALUE 25 FUND
600 North Rosemead Boulevard
Pasadena, California 91107-2133
Statement of Additional Information
May 1, 1999
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current prospectus of The
Phoenix-Engemann Funds (the "Trust"), dated May 1, 1999 (the "Prospectus"), and
should be read in conjunction with it. Such Prospectus may be obtained by
calling Phoenix Equity Planning Corporation ("Equity Planning") at (800)
243-4361 or by writing to Equity Planning at 100 Bright Meadow Boulevard, P.O.
Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
THE TRUST ................................................................. 1
INVESTMENT OBJECTIVES AND POLICIES ........................................ 1
INVESTMENT RESTRICTIONS ................................................... 9
PERFORMANCE INFORMATION ................................................... 11
PORTFOLIO TRANSACTIONS AND BROKERAGE ...................................... 13
PORTFOLIO TURNOVER ........................................................ 14
SERVICES OF THE ADVISER ................................................... 14
NET ASSET VALUE ........................................................... 15
HOW TO BUY SHARES ......................................................... 16
ALTERNATIVE PURCHASE ARRANGEMENTS ......................................... 16
INVESTOR ACCOUNT SERVICES ................................................. 18
HOW TO REDEEM SHARES ...................................................... 19
TAX SHELTERED RETIREMENT PLANS ............................................ 20
DIVIDENDS, DISTRIBUTIONS AND TAXES ........................................ 20
THE DISTRIBUTOR ........................................................... 21
DISTRIBUTION PLANS ........................................................ 23
MANAGEMENT OF THE TRUST ................................................... 24
OTHER INFORMATION ......................................................... 27
APPENDIX .................................................................. 28
</TABLE>
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
PXP 2011 (5/99)
<PAGE>
THE TRUST
The Phoenix-Engemann Funds (the "Trust") (formerly called the "Pasadena
Investment Trust") is a diversified open-end management investment company
which was organized under Massachusetts law in 1986 as a business trust. The
name change of the Trust was made on September 3, 1997 in connection with the
merger of an acquisition subsidiary of Phoenix Investment Partners, Ltd. and
Pasadena Capital Corporation. The Trust presently comprises six series:
Phoenix-Engemann Growth Fund, Phoenix-Engemann Nifty Fifty Fund,
Phoenix-Engemann Balanced Return Fund, Phoenix-Engemann Global Growth Fund,
Phoenix-Engemann Small & Mid-Cap Growth Fund and Phoenix-Engemann Value 25
Fund, each a "Fund" and, collectively, the "Funds."
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Fund is deemed to be a fundamental policy
which may not be changed without the approval of the holders of a majority of
the outstanding shares of each Fund. Investment restrictions described in this
Statement of Additional Information as a fundamental policy may not be changed
without the approval of such Fund's shareholders. Notwithstanding the
foregoing, certain investment restrictions affect more than one series of the
Trust and therefore modifications may require the consent of other
shareholders. There is no assurance that any Fund will meet its investment
objective.
Foreign Securities
Each Fund may invest (directly and/or through Depositary Receipts) in
securities principally traded in markets outside the United States. Foreign
investments can be affected favorably or unfavorably by changes in currency
exchange rates and in exchange control regulations. There may be less publicly
available information about a foreign company than about a U.S. company, and
the information available may not be of the same quality. Foreign companies
also may not be subject to accounting, auditing and financial reporting
standards and requirements comparable to those applicable to U.S. companies.
Securities of some foreign companies are less liquid or more volatile than
securities of U.S. companies, and foreign brokerage commissions and custodian
fees are generally higher than in the United States.
Investments in foreign securities can involve other risks different from
those affecting U.S. investments, including local political or economic
developments, expropriation or nationalization of assets and imposition of
withholding taxes on dividend or interest payments. To hedge against possible
variations in currency exchange rates, a Fund (except the Growth Fund, the
Nifty Fifty Fund and the Balanced Return Fund) may purchase and sell forward
currency exchange contracts. These are agreements to purchase or sell specified
currencies at specified dates and prices. A Fund will only purchase and sell
forward currency exchange contracts in amounts which the Adviser deems
appropriate to hedge existing or anticipated portfolio positions and will not
use such forward contracts for speculative purposes. Foreign securities, like
other assets of a Fund, will be held by such Fund's custodian or by an
authorized subcustodian. While none of the Growth, Nifty Fifty and Balanced
Return Funds anticipates investing a significant portion of its assets in
foreign securities, each of these Funds may invest up to 15% of the value of
its total assets (at time of purchase, giving effect thereto) in the securities
of foreign issuers and obligors. The Small & Mid-Cap Growth Fund may invest up
to 50% of its assets, the Value 25 Fund may invest up to 25% of its assets and
the Global Growth Fund may invest up to 100% of its assets in foreign
securities.
Depositary Receipts. Each Fund's investments in the securities of foreign
issuers may be in the form of Depositary Receipts ("DRs"), e.g., American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs"), Continental Depositary Receipts ("CDRs"), or
other forms of DRs. DRs are receipts typically issued by a United States or
foreign bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. The Fund may invest in DRs through "sponsored"
or "unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the underlying security and a depository, whereas a depository may
establish an unsponsored facility without participation by the issuer of the
deposited security. The depository of unsponsored DRs generally bears all the
costs of such facilities and the depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
Foreign Currency Transactions
In General. As described below, each Fund (except the Growth Fund, the
Nifty Fifty Fund and the Balanced Return Fund) may engage in certain foreign
currency exchange and option transactions. These transactions involve
investment risks and transaction costs to which a Fund would not be subject
absent the use of these strategies. If the Adviser's predictions of movements
in the direction of securities prices or currency exchange rates are
inaccurate, the adverse consequences to a Fund may leave such Fund in a worse
position than if it had not used such strategies. Risks inherent in the use of
option and foreign currency forward and futures contracts include: (1)
dependence on the Adviser's ability to correctly predict movements in the
direction of securities prices and currency exchange rates; (2) imperfect
correlation between the price of options and futures contracts and movements in
the prices of the securities or currencies being hedged; (3) the fact that the
skills needed to use these strategies are different from those needed to select
portfolio securities; (4) the possible absence of a liquid secondary market for
any particular instrument at any time; and (5) the possible need to defer
closing out certain hedged positions to avoid adverse tax consequences.
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Each Fund's ability to enter into futures contracts is also limited by the
requirements of the Internal Revenue Code of 1986, as amended, (the "Code") for
qualification as a regulated investment company.
The Global Growth Fund, Small & Mid-Cap Growth Fund and Value 25 Fund may
engage in currency exchange transactions to protect against uncertainty in the
level of future currency exchange rates. In addition, each Fund may write
covered put and call options on foreign currencies for the purpose of
increasing its return.
Generally, each of the above Funds may engage in both "transaction
hedging" and "position hedging." When it engages in transaction hedging, a Fund
enters into foreign currency transactions with respect to specific receivables
or payables, generally arising in connection with the purchase or sale of
portfolio securities. A Fund will engage in transaction hedging when it desires
to "lock in" the U.S. dollar price of a security it has agreed to purchase or
sell, or the U.S. dollar equivalent of a dividend or interest payment in a
foreign currency. By transaction hedging, a Fund will attempt to protect itself
against a possible loss resulting from an adverse change in the exchange rate
between the U.S. dollar and the applicable foreign currency during the period
between the date on which the security is purchased or sold, or on which the
dividend or interest payment is declared, and the date on which such payments
are made or received.
Each of the above Funds may purchase or sell a foreign currency on a spot
(or cash) basis at the prevailing spot rate in connection with the settlement
of transactions in portfolio securities denominated in that foreign currency.
Each Fund may also enter into contracts to purchase or sell foreign currencies
at a future date ("forward contracts") and purchase and sell foreign currency
futures contracts.
For transaction hedging purposes, each of the above Funds may also
purchase exchange-listed and over-the-counter put and call options on foreign
currency futures contracts and on foreign currencies. A put option on a futures
contract gives a Fund the right to assume a short position in the futures
contract until the expiration of the option. A put option on a currency gives a
Fund the right to sell the currency at an exercise price until the expiration
of the option. A call option on a futures contract gives a Fund the right to
assume a long position in the futures contract until the expiration of the
option. A call option on a currency gives a Fund the right to purchase the
currency at the exercise price until the expiration of the option.
When it engages in position hedging, a Fund enters into foreign currency
exchange transactions to protect against a decline in the values of the foreign
currencies in which its portfolio securities are denominated (or an increase in
the values of currency for securities which such Fund expects to purchase, when
such Fund holds cash or short-term investments). In connection with position
hedging, each of the Funds may purchase put or call options on foreign currency
and on foreign currency futures contracts and buy or sell forward contracts and
foreign currency futures contracts. Each Fund may also purchase or sell foreign
currency on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is also impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward or futures
contract. Accordingly, it may be necessary for a Fund to purchase additional
foreign currency on the spot market (and bear the expense of such purchase) if
the market value of the security or securities being hedged is less than the
amount of foreign currency such Fund is obligated to deliver and a decision is
made to sell the security or securities and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio security or
securities if the market value of such security or securities exceeds the
amount of foreign currency a Fund is obligated to deliver.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which a Fund owns or intends to purchase or
sell. They simply establish a rate of exchange which one can achieve at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they
tend to limit any potential gain which might result from the increase in value
of such currency.
Each of the above Funds may seek to increase its return or to offset some
of the costs of hedging against fluctuations in currency exchange rates by
writing covered put options and covered call options on foreign currencies. A
Fund receives a premium from writing a put or call option, which increases such
Fund's current return if the option expires unexercised or is closed out at a
net profit. A Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it
purchases an option having the same terms as the option written.
A Fund's currency hedging transactions may call for the delivery of one
foreign currency in exchange for another foreign currency and may at times not
involve currencies in which its portfolio securities are then denominated. The
Adviser will engage in such "cross hedging" activities when it believes that
such transactions provide significant hedging opportunities for a Fund. Cross
hedging transactions by a Fund involve the risk of imperfect correlation
between changes in the values of the currencies to which such transactions
relate and changes in the value of the currency or other asset or liability
which is the subject of the hedge.
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None of the Funds is a commodity pool. The Funds' transactions in futures
and options thereon as described herein will constitute bona fide hedging or
other permissible transactions under regulations promulgated by the Commodity
Futures Trading Commission ("CFTC"). In addition, no Fund may engage in such
transactions if the sum of the amount of initial margin deposits and premiums
paid for unexpired futures and options thereon would exceed 5% of the value of
such Fund's net assets, with certain exclusions as defined in the applicable
CFTC rules. At the time of purchase of a foreign currency exchange contract, a
foreign currency futures contract or related option, liquid assets, such as
cash, U.S. government securities or other appropriate high-grade debt
obligations, marked to market daily equal to the market value of the foreign
currency contract or related option minus the Fund's initial margin deposit
will be deposited in a pledged account with the Funds' custodian to
collateralize the position and thereby ensure that it is not leveraged.
Currency forward and futures contracts. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract as agreed by the parties, at a price set at the time of the
contract. The holder of a cancelable forward contract has the unilateral right
to cancel the contract at maturity by paying a specified fee. The contracts are
traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward contract
generally has no deposit requirement, and no commissions are charged at any
stage for trades. A foreign currency futures contract is a standardized
contract for the future delivery of a specified amount of a foreign currency at
a future date at a price set at the time of the contract. Foreign currency
futures contracts traded in the United States are designed by and traded on
exchanges regulated by the CFTC, such as the New York Mercantile Exchange.
Forward foreign currency exchange contracts differ from foreign currency
futures contracts in certain respects. For example, the maturity date of a
forward contract may be any fixed number of days from the date of the contract
agreed upon by the parties, rather than a predetermined date in a given month.
Forward contracts may be in any amounts agreed upon by the parties rather than
predetermined amounts. Also, forward foreign exchange contracts are traded
directly between currency traders so that no intermediary is required. A
forward contract generally requires no margin or other deposit.
At the maturity of a forward or futures contract, a Fund either may accept
or make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original
forward contract. Closing transactions with respect to futures contracts are
effected on a commodities exchange; a clearing corporation associated with the
exchange assumes responsibility for closing out such contracts.
Although each Fund (except the Growth Fund, the Nifty Fifty Fund and the
Balanced Return Fund) intends to purchase or sell foreign currency futures
contracts only on exchanges or boards of trade where there appears to be an
active market, there is no assurance that a market on an exchange or board of
trade will exist for any particular contract or at any particular time. In such
event, it may not be possible to close a futures position and, in the event of
adverse price movements, the Fund would continue to be required to make daily
cash payments of variation margin.
Foreign currency options. In general, options on foreign currencies
operate similarly to options on securities and are subject to many similar
risks. Foreign currency options are traded primarily in the over-the-counter
market, although options on foreign currencies have recently been listed on
several exchanges. Options are traded not only on the currencies of individual
nations, but also on the European Currency Unit, which is composed of amounts
of a number of currencies and is the official medium of exchange of the
European Community's European Monetary System.
Each Fund (except the Growth, Nifty Fifty and Balanced Return Funds) will
only purchase or write foreign currency options when the Fund's Adviser
believes that a liquid market exists for such options. There can be, however,
no assurance that a liquid market will exist for a particular option at any
specific time. Options on foreign currencies are affected by all of those
factors which influence foreign exchange rates and investments generally.
The value of any currency, including U.S. dollars and foreign currencies,
may be affected by complex political and economic factors applicable to the
issuing country. In addition, the exchange rates of foreign currencies (and
therefore the values of foreign currency options) may be affected
significantly, fixed, or supported directly or indirectly, by U.S. and foreign
government actions. Government intervention may increase risks involved in
purchasing or selling foreign currency options, since exchange rates may not be
free to fluctuate in response to other market forces.
The value of a foreign currency option reflects the value of an exchange
rate, which in turn reflects the relative values of two currencies, generally
the U.S. dollar and the foreign currency in question. Because foreign currency
transactions occurring in the interbank market involve substantially larger
amounts than those that may be involved in the exercise of foreign currency
options, investors may be disadvantaged by having to deal in an odd-lot market
for the underlying foreign currencies in connection with options at prices that
are less favorable than for round lots. Foreign governmental restrictions or
taxes could result in adverse changes in the cost of acquiring or disposing of
foreign currencies.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information
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is generally representative of very large round-lot transactions in the
interbank market and thus may not reflect exchange rates for smaller odd- lot
transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that options markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that cannot be reflected in the options markets.
Settlement procedures. Settlement procedures relating to the Funds'
investments in foreign securities and to the Funds' foreign currency exchange
transactions may be more complex than settlements with respect to investments
in debt or equity securities of U.S. issuers, and may involve certain risks not
present in the Funds' domestic investments. For example, settlement of
transactions involving foreign securities or foreign currency may occur within
a foreign country, and a Fund may be required to accept or make delivery of the
underlying securities or currency in conformity with any applicable U.S. or
foreign restrictions or regulations, and may be required to pay any fees, taxes
or charges associated with such delivery. Such investments may also involve the
risk that an entity involved in the settlement may not meet its obligations.
Settlement procedures in many foreign countries are less established than those
in the United States, and some foreign country settlement periods can be
significantly longer than those in the United States.
Foreign currency conversion. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to a
Fund at one rate, while offering a lesser rate of exchange should such Fund
desire to resell that currency to the dealer.
Futures Contracts and Related Options
A financial futures contract sale creates an obligation by the seller to
deliver the type of financial instrument called for in the contract in a
specified delivery month for a stated price. A financial futures contract
purchase creates an obligation by the purchaser to take delivery of the type of
financial instrument called for in the contract in a specified delivery month
at a stated price. The specific instruments delivered or taken, respectively,
at settlement date are not determined until on or near that date. The
determination is made in accordance with the rules of the exchange on which the
futures contract sale or purchase was made. Futures contracts are traded in the
United States only on commodity exchanges or boards of trade--known as
"contract markets"--approved for such trading by the CFTC, and must be executed
through a futures commission merchant or brokerage firm which is a member of
the relevant contract market. None of the Funds that can invest in futures
contracts and related options will invest more than 5% of its net assets in
such contracts and options.
No Fund will deal in commodity contracts per se, and the Global Growth,
Small & Mid-Cap Growth and Value 25 Funds will deal only in futures contracts
involving financial instruments. Although futures contracts by their terms call
for actual delivery or acceptance of securities, in most cases the contracts
are closed out before the settlement date without the making or taking of
delivery. Closing out a futures contract sale is effected by purchasing a
futures contract for the same aggregate amount of the specific type of
financial instrument or commodity with the same delivery date. If the price of
the initial sale of the futures contract exceeds the price of the offsetting
purchase, the seller is paid the difference and realizes a gain. Conversely, if
the price of the offsetting purchase exceeds the price of the initial sale, the
seller realizes a loss. Similarly, the closing out of a futures contract
purchase is effected by the purchaser's entering into a futures contract sale.
If the offsetting sale price exceeds the purchase price, the purchaser realizes
a gain, and if the purchase price exceeds the offsetting sale price, he
realizes a loss. Futures contracts traded on an exchange approved by the CFTC
are "marked to market" at the end of each year, whether or not they are closed
out. In general, 40% of the gain or loss arising from the closing out or
marking to market of a futures contract traded on an exchange approved by the
CFTC is treated as short-term capital gain or loss, and 60% is treated as
long-term capital gain or loss.
Unlike when a Fund purchases or sells a security, no price is paid or
received by such Fund upon the purchase or sale of a futures contract. Upon
entering into a contract, such Fund is required to deposit with its custodian
in a segregated account in the name of the futures broker an amount of cash
and/or certain liquid securities. This amount is known as "initial margin." The
nature of initial margin in futures transactions is different from that of
margin in security transactions in that futures contract margin does not
involve the borrowing of funds to finance the transactions. Rather, initial
margin is similar to a performance bond or good faith deposit which is returned
to such Fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied. Futures contracts also involve brokerage
costs.
Subsequent payments, called "variation margin," to and from the broker (or
the custodian) are made on a daily basis as the price of the underlying
security or commodity fluctuates, making the long and short positions in the
futures contract more or less valuable, a process known as "marking to the
market." For example, when a Fund has purchased a futures contract on a
security and the price of the underlying security has risen, that position
would increase in value and such Fund would receive from the broker a variation
margin payment based on that increase in value. Conversely, when a Fund has
purchased a security futures contract and the price of the underlying security
has declined, the position would be less valuable and such Fund would be
required to make a variation margin payment to the broker.
A Fund may elect to close some or all of its futures positions at any time
prior to their expiration in order to reduce or eliminate a hedge position then
currently held by such Fund. A Fund may close its positions by taking opposite
positions which will operate
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to terminate such Fund's position in the futures contracts. Final
determinations of variation margin are then made, additional cash is required
to be paid by or released to such Fund, and such Fund realizes a loss or a
gain. Such closing transactions involve additional commission costs.
At the time of purchase of a financial futures contract or a call option
on a futures contract, liquid assets, such as cash, U.S. government securities
or other appropriate high-grade debt obligations, marked to market daily equal
to the market value of the futures contract minus the Fund's initial margin
deposit will be deposited in a pledged account with the Funds' custodian to
collateralize the position and thereby ensure that it is not leveraged.
Options on futures contracts. Each Fund (except the Growth Fund, the Nifty
Fifty Fund and the Balanced Return Fund) may purchase and write put and call
options on futures contracts it may buy or sell and enter into closing
transactions with respect to such options to terminate existing positions.
Options on future contracts give the purchaser the right, in return for the
premium paid, to assume a position in a futures contract at the specified
option exercise price at any time during the period of the option. Each of the
above Funds may use options on futures contracts in lieu of writing or buying
options directly on the underlying securities or purchasing and selling the
underlying futures contracts. For example, to hedge against a possible decrease
in the value of its portfolio securities, a Fund may purchase put options or
write call options on futures contracts rather than selling futures contracts.
Similarly, a Fund may purchase call options or write put options on futures
contracts as a substitute for the purchase of futures contracts to hedge
against a possible increase in the price of securities which such Fund expects
to purchase. Such options generally operate in the same manner as options
purchased or written directly on the underlying investments.
As with options on securities, the holder or writer of an option may
terminate its position by selling or purchasing an offsetting option. There is
no guarantee that such closing transactions can be effected.
The Global Growth, Small & Mid-Cap Growth and Value 25 Funds will be
required to deposit initial margin and maintenance margin with respect to put
and call options on futures contracts written by such Funds pursuant to
brokers' requirements similar to those described above in connection with the
discussion of futures contracts.
Risks of transactions in futures contracts and related options. Successful
use of futures contracts by a Fund is subject to the Adviser's ability to
predict movements in the direction of interest rates and other factors
affecting securities markets. For example, if a Fund has hedged against the
possibility of decline in the values of its investments and the values of its
investments increase instead, such Fund will lose part or all of the benefit of
the increase through payments of daily maintenance margin. A Fund may have to
sell investments at a time when it may be disadvantageous to do so in order to
meet margin requirements. The loss from investing in futures transactions is
potentially unlimited.
Compared to the purchase or sale of futures contracts, the purchase of put
or call options on futures contracts involves less potential risk to a Fund
because the maximum amount at risk is the premium paid for the options (plus
transaction costs). However, there may be circumstances when the purchase of a
put or call option on a futures contract would result in a loss to a Fund when
the purchase or sale of a futures contract would not, such as when there is no
movement in the prices of the hedged investments. The writing of an option on a
futures contract involves risks similar to those risks relating to the sale of
futures contracts.
There is no assurance that higher than anticipated trading activity or
other unforeseen events might not, at times, render certain market clearing
facilities inadequate, and thereby result in the institution by exchanges of
special procedures which may interfere with the timely execution of customer
orders.
To reduce or eliminate a hedge position held by a Fund, such Fund may seek
to close out a position. The ability to establish and close out positions will
be subject to the development and maintenance of a liquid secondary market. It
is not certain that this market will develop or continue to exist for a
particular futures contract or option. Reasons for the absence of a liquid
secondary market on an exchange include the following: (i) there may be
insufficient trading interest in certain contracts or options; (ii)
restrictions may be imposed by an exchange on opening transactions or closing
transactions or both; (iii) trading halts, suspensions or other restrictions
may be imposed with respect to particular classes or series of contracts or
options, or underlying securities; (iv) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (v) the facilities of an exchange
or a clearing corporation may not at all times be adequate to handle current
trading volume; or (vi) one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the trading
of contracts or options (or a particular class or series of contracts or
options), in which event the secondary market on that exchange for such
contracts or options (or in the class or series of contracts or options) would
cease to exist, although outstanding contracts or options on the exchange that
had been issued by a clearing corporation as a result of trades on that
exchange would continue to be exercisable in accordance with their terms.
Index futures contracts. An index futures contract is a contract to buy or
sell units of an index at a specified future date at a price agreed upon when
the contract is made. Entering into a contract to buy units of an index is
commonly referred to as buying or purchasing a contract or holding a long
position in the index. Entering into a contract to sell units of an index is
commonly referred to as selling a contract or holding a short position. A unit
is the current value of the index. Each of the Global Growth, Small
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& Mid-Cap Growth and Value 25 Funds may enter into stock index futures
contracts, debt index futures contracts, or other index futures contracts
appropriate to its objective. Each of these Funds may also purchase and sell
options on index futures contracts.
For example, the Standard & Poor's Composite 500 Stock Price Index ("S&P
500") is composed of 500 selected common stocks, most of which are listed on
the New York Stock Exchange. The S&P 500 assigns relative weightings to the
common stocks included in the index, and the value fluctuates with changes in
the market values of those common stocks. In the case of the S&P 500, contracts
are to buy or sell 500 units. Thus, if the value of the S&P 500 were $150, one
contract would be worth $75,000 (500 units x $150). A stock index futures
contract specifies that no delivery of the actual stocks making up the index
will take place. Instead, settlement in cash must occur upon the termination of
the contract, with the settlement being the difference between the contract
price and the actual level of the stock index at the expiration of the
contract. For example, if a Fund enters into a futures contract to buy 500
units of the S&P 500 at a specified future date at a contract price of $150 and
the S&P 500 is at $154 on that future date, the Fund will gain $2,000 (500
units x gain of $4 per unit). If a Fund enters into a futures contract to sell
500 units of the stock index at a specified future date at a contract price of
$150 and the S&P 500 is at $152 on that future date, the Fund will lose $1,000
(500 units x loss of $2 per unit).
There are several risks in connection with the use by the Funds of index
futures as a hedging device. One risk arises because of the imperfect
correlation between movements in the prices of the index futures and movements
in the prices of securities which are the subject of the hedge. The Funds'
Adviser will, however, when engaging in this type of activity, attempt to
reduce this risk by buying or selling, to the extent possible, futures on
indices the movements of which will, in its judgment, have a significant
correlation with movements in the prices of the securities sought to be hedged.
Successful use of index futures by a Fund for hedging purposes is also
subject to the Adviser's ability to predict movements in the direction of the
market. It is possible that, where a Fund has sold futures to hedge its
portfolio against a decline in the market, the index on which the futures are
written may advance and the value of securities held in such Fund's portfolio
may decline. If this occurred, such Fund would lose money on the futures and
also experience a decline in value in its portfolio securities. It is also
possible that, if a Fund has hedged against the possibility of a decline in the
market adversely affecting securities held in its portfolio and securities
prices increase instead, such Fund will lose part or all of the benefit of the
increased value of those securities it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations, if
such Fund has insufficient cash, it may have to sell securities to meet daily
variation margin requirements at a time when it is disadvantageous to do so.
In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the index futures and the
portion of the portfolio being hedged, the prices of index futures may not
correlate perfectly with movements in the underlying index due to certain
market distortions. First, all participants in the futures market are subject
to margin deposit and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close futures contracts through
offsetting transactions which could distort the normal relationship between the
index and futures markets. Second, margin requirements in the futures market
are less onerous than margin requirements in the securities market, and as a
result the futures market may attract more speculators than the securities
market does. Increased participation by speculators in the futures market may
also cause temporary price distortions. Due to the possibility of price
distortions in the futures market and also because of the imperfect correlation
between movements in the index and movements in the prices of index futures,
even a correct forecast of general market trends may not result in a successful
hedging transaction over a short time period.
Options on stock index futures. Options on stock index futures are similar
to options on securities except that options on index futures give the
purchaser the right, in return for the premium paid, to assume a position in an
index futures contract (a long position if the option is a call and a short
position if the option is a put) at a specified exercise price at any time
during the period of the option. Upon exercise of the option, the delivery of
the futures position by the writer of the option to the holder of the option
will be accompanied by delivery of the accumulated balance in the writer's
futures margin account which represents the amount by which the market price of
the index futures contract, at exercise, exceeds (in the case of a call) or is
less than (in the case of a put) the exercise price of the option on the index
future. If an option is exercised on the last trading day prior to its
expiration date, the settlement will be made entirely in cash equal to the
difference between the exercise price of the option and the closing level of
the index on which the future is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
Options on Indices
As an alternative to purchasing put and call options on index futures,
each of the Global Growth, Small & Mid-Cap Growth and Value 25 Funds may
purchase and sell put and call options on the underlying indices themselves.
Such options would be used in a manner identical to the use of options on index
futures.
Index Warrants
Each Fund (except the Growth Fund, the Nifty Fifty Fund and the Balanced
Return Fund) may purchase put warrants and call warrants whose values vary
depending on the change in the value of one or more specified securities
indices ("index warrants"). Index warrants are generally issued by banks or
other financial institutions and give the holder the right, at any time during
the term of the warrant, to receive upon exercise of the warrant a cash payment
from the issuer based on the value of the underlying
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index at the time of exercise. In general, if the value of the underlying index
rises above the exercise price of the index warrant, the holder of a call
warrant will be entitled to receive a cash payment from the issuer upon
exercise based on the difference between the value of the index and the
exercise price of the warrant; if the value of the underlying index falls, the
holder of a put warrant will be entitled to receive a cash payment from the
issuer upon exercise based on the difference between the exercise price of the
warrant and the value of the index. The holder of a warrant would not be
entitled to any payments from the issuer at any time when, in the case of a
call warrant, the exercise price is greater than the value of the underlying
index, or, in the case of a put warrant, the exercise price is less than the
value of the underlying index. If a Fund were not to exercise an index warrant
prior to its expiration, then such Fund would lose the amount of the purchase
price paid by it for the warrant.
A Fund will normally use index warrants in a manner similar to its use of
options on securities indices. The risks of a Fund's use of index warrants are
generally similar to those relating to its use of index options. Unlike most
index options, however, index warrants are issued in limited amounts and are
not obligations of a regulated clearing agency, but are backed only by the
credit of the bank or other institution which issues the warrant. Also, index
warrants generally have longer terms than index options. Although each Fund
will normally invest only in exchange listed warrants, index warrants are not
likely to be as liquid as certain index options backed by a recognized clearing
agency. In addition, the terms of index warrants may limit a Fund's ability to
exercise the warrants at such time, or in such quantities, as the Fund would
otherwise wish to do.
Securities Loans
Each Fund may make secured loans of its portfolio securities amounting to
not more than 25% of its total assets, thereby increasing its total return. The
risks in lending portfolio securities, as with other extensions of credit,
consist of possible delay in recovery of the securities or possible loss of
rights in the collateral should the borrower fail financially. As a matter of
policy, securities loans are made to broker-dealers pursuant to agreements
requiring that loans be continuously secured by collateral consisting of cash
or high-grade short-term debt obligations at least equal at all times to the
value of the securities on loan, "marked-to-market" daily. The borrower pays to
such Fund an amount equal to any dividends or interest received on securities
lent. A Fund retains all or a portion of the interest received on investment of
the cash collateral or receives a fee from the borrower. Although voting
rights, or rights to consent, with respect to the loaned securities pass to the
borrower, a Fund retains the right to call the loans at any time on reasonable
notice, and it will do so to enable the Fund to exercise the voting rights on
any matters materially affecting the investment. A Fund may also call such
loans in order to sell securities.
Forward Commitments
Each Fund (except the Growth Fund, the Nifty Fifty Fund and the Balanced
Return Fund) may enter into contracts to purchase securities for a fixed price
at a future date beyond customary settlement time ("forward commitments") if
the Fund holds, and maintains until settlement date in a segregated account,
cash or high-grade debt obligations in an amount sufficient to meet the
purchase price, or if the Fund enters into offsetting contracts for the forward
sale of other securities it owns. Forward commitments may be considered
securities in themselves, and involve a risk of loss if the value of the
security to be purchased declines prior to the settlement date, which risk is
in addition to the risk of decline in the value of the Fund's other assets.
Where such purchases are made through dealers, the Fund relies on the dealer to
consummate the sale. The dealer's failure to do so may result in the loss to
the Fund of an advantageous yield or price. Although each Fund will generally
enter into forward commitments with the intention of acquiring securities for
its portfolio or for delivery pursuant to options contracts it has entered
into, such Fund may dispose of a commitment prior to settlement if the Adviser
deems it appropriate to do so. A Fund may realize short-term profits or losses
upon the sale of forward commitments.
Illiquid Securities
Each of the Global Growth, Small & Mid-Cap Growth, and Value 25 Funds may
invest up to 15% and each of the Growth, Nifty Fifty and Balanced Return Funds
may invest up to 10% of the value of its net assets in securities as to which a
liquid trading market does not exist, provided such investments are consistent
with such Fund's objective and other policies. Such securities may include
securities that are not readily marketable, such as certain securities that are
subject to legal or contractual restrictions on resale, repurchase agreements
providing for settlement in more than seven days after notice, certain options
traded in the over-the-counter market and securities used to cover such
options. As to these securities, a Fund is subject to a risk that should the
Fund desire to sell them when a ready buyer is not available at a price the
Fund deems representative of their value, the value of the Fund could be
adversely affected. When purchasing securities that have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), and are not
readily marketable, each Fund will endeavor to obtain the right to registration
at the expense of the issuer. Generally, there will be a lapse of time between
a Fund's decision to sell any such security and the registration of the
security permitting sale. During any such period, the price of the securities
will be subject to market fluctuations. However, if a substantial market of
qualified institutional buyers develops pursuant to Rule 144A under the 1933
Act for certain unregistered securities held by a Fund, such Fund intends to
treat such securities as liquid securities in accordance with procedures
approved by the Trust's Board of Trustees. Because it is not possible to
predict with any assurance how the market for restricted securities pursuant to
Rule 144A will develop, the Board of Trustees has directed the Adviser to
monitor carefully any Fund investments in such securities with particular
regard to trading activity, availability or reliable price information and
other relevant
7
<PAGE>
information. To the extent that, for a period of time, qualified institutional
buyers cease purchasing such restricted securities pursuant to Rule 144A, a
Fund's investing in such securities may have the effect of increasing the level
of illiquidity in the Fund's portfolio during such period.
Repurchase Agreements
Each Fund may, for temporary defensive purposes, invest its assets in
eligible U.S. Government securities and concurrently enter into repurchase
agreements with respect to such securities. Under such agreements, the seller
of the security agrees to repurchase it at a mutually agreed upon time and
price. The repurchase price may be higher than the purchase price, the
difference being income to the Fund, or the purchase and repurchase prices may
be the same, with interest at a stated rate due to the Fund together with the
repurchase price on repurchase. In either case, the income to the Fund is
unrelated to the interest rate on the U.S. Government security itself. Such
repurchase agreements will be made only with banks with assets of $1 billion or
more that are insured by the Federal Deposit Insurance Corporation or with
Government securities dealers recognized as primary dealers by the Federal
Reserve Board and registered as broker-dealers with the SEC or exempt from such
registration. In addition, to the extent a Fund has over $10 million in assets,
the Fund will limit the amount of its transactions with any one bank or
Government securities dealer to a maximum of 25% of its assets. Any repurchase
agreements entered into by a Fund will be of short duration, from overnight to
one week, although the underlying securities generally have longer maturities.
No Fund may enter into a repurchase agreement with more than seven days to
maturity if, as a result, more than 10% of the value of the Growth, Nifty Fifty
or Balanced Return Funds' or 15% of the value of the Global Growth, Small &
Mid-Cap Growth or Value 25 Funds' net assets would be invested in such
repurchase agreements and other illiquid assets.
For purposes of the Investment Company Act of 1940 (the "1940 Act"), a
repurchase agreement is deemed to be a loan from a Fund to the seller of the
U.S. Government security subject to the repurchase agreement. In the event of
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the U.S. Government security before its repurchase under a repurchase
agreement, a Fund may encounter delays and incur costs before being able to
sell the security. Delays may involve loss of interest or a decline in price of
the U.S. Government security. If a court characterizes the transaction as a
loan and the Fund has not perfected a security interest in the U.S. Government
security, the Fund may be required to return the security to the seller's
estate and be treated as an unsecured creditor of the seller. As an unsecured
creditor, the Fund would be at risk of losing some or all of the principal and
income involved in the transaction. As with any unsecured debt instrument
purchased for a Fund, the Adviser seeks to minimize the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligor, in this
case the seller of the U.S. Government security.
Apart from the risk of bankruptcy or insolvency proceedings, there is also
the risk that the seller may fail to repurchase the security. However, each
Fund will always receive as collateral for any repurchase agreement to which it
is a party U.S. Government securities acceptable to it, the market value of
which is equal to at least 100% of the amount invested by the Fund plus accrued
interest, and the Fund will make payment against such securities only upon
physical delivery or evidence of book entry transfer to the account of its
Custodian or other entity authorized by the Trust's Board of Trustees to have
custody for purposes of repurchase agreement transactions. If the market value
of the U.S. Government security subject to the repurchase agreement becomes
less than the repurchase price (including interest), the Fund will direct the
seller of the U.S. Government security to deliver additional securities so that
the market value of all securities subject to the repurchase agreement will
equal or exceed the repurchase price. It is possible that the Fund will be
unsuccessful in seeking to impose on the seller a contractual obligation to
deliver additional securities, however.
Special Situations
Subject to the limitations in the Prospectus, each Fund (except the Global
Growth Fund) may invest in special situations that the Adviser believes present
opportunities for capital growth. Such situations most typically include
corporate restructurings, mergers, and tender offers.
A special situation arises when, in the opinion of the Adviser, the
securities of a particular company will, within a reasonably estimable period
of time, be accorded market recognition at an appreciated value solely by
reason of a development particularly or uniquely applicable to that company and
regardless of general business conditions or movements of the market as a
whole. Developments creating special situations might include, among others,
the following: liquidations, reorganizations, recapitalizations, mergers, or
tender offers; material litigation or resolution thereof; technological
breakthroughs; and new management or management policies. Although large and
well-known companies may be involved, special situations often involve much
greater risk than is inherent in ordinary investment securities.
Unseasoned Companies
As a matter of operating policy, the Funds may invest to a limited extent
in securities of unseasoned companies and new issues. The Adviser regards a
company as unseasoned when, for example, it is relatively new to or not yet
well established in its primary line of business. Such companies generally are
smaller and younger than companies whose shares are traded on the major stock
exchanges. Accordingly, their shares are often traded over-the-counter and
their share prices may be more volatile than those of larger, exchange-listed
companies. In order to avoid undue risks, a Fund will not invest more than 5%
of its total assets in securities
8
<PAGE>
of any one company with a record of fewer than three years' continuous
operation (including that of predecessors). Investments by the Nifty Fifty Fund
and the Balanced Return Fund in the securities of unseasoned companies may not
exceed 5% and 30% respectively of each Fund's total assets.
New Issues
The Funds may invest in new issues. A new issue may be an initial public
offering by a previously private company. There may be less public information
about the company and the company may have a limited operating history and
rapidly changing fundamental prospects. This may make investment returns of new
issues highly volatile. New issues may also be subject to varying patterns of
trading volume and may, at times, be difficult to sell.
INVESTMENT RESTRICTIONS
The following restrictions have been adopted as matters of fundamental or
operating policy for the Funds. Fundamental policies may not be changed without
the approval of a majority of the Fund's outstanding voting securities and
approval of the Board of Trustees. Operating policies can be changed by vote of
the Board of Trustees. The Funds may not:
(1) With respect to 75% of a Fund's total assets, purchase any security
(other than obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities) if, as a result, more than 5% of the value of
the Fund's total assets would be invested in securities of any one issuer. This
limitation does not apply with respect to the remaining 25% of a Fund's total
assets (except that neither the Growth Fund nor the Balanced Return Fund will
invest more than 10% of its total assets in any one non-U.S. Government
issuer). [Fundamental Policy]
(2) Purchase securities on margin (but it may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of its
portfolio securities, and may make margin payments in connection with
transactions in permissible futures and options contracts) or make uncovered
short sales. [Operating Policy]
(3) With respect to 75% of the Global Growth, Small & Mid-Cap Growth and
Value 25 Funds' total assets and 100% of the Growth, Nifty Fifty and Balanced
Return Funds' total assets, acquire more than 10% of any one class of
securities of an issuer or more than 10% of the outstanding voting securities
of any one issuer. (For this purpose all common stocks of an issuer are
regarded as a single class, and all preferred stocks of an issuer are regarded
as a single class.) [Fundamental Policy]
(4) Borrow money in excess of 20% (5% for the Growth, the Nifty Fifty and
Balanced Return Funds) of its total assets (taken at cost) and then only as a
temporary measure for extraordinary or emergency reasons and not for
investment. (Each Fund may borrow only from banks and immediately after any
such borrowings there must be an asset coverage [total assets of the Fund,
including the amount borrowed, less liabilities other than such borrowings] of
at least 300% of the amount of all borrowings. In the event that, due to market
decline or other reasons, such asset coverage should at any time fall below
300%, the Fund is required within three days, not including Sundays and
holidays, to reduce the amount of its borrowings to the extent necessary to
cause the asset coverage of such borrowings to be at least 300%. If this should
happen, the Fund may have to sell securities at a time when it would be
disadvantageous to do so.) [Fundamental Policy]
(5) With respect to the Global Growth, the Small & Mid-Cap Growth and the
Value 25 Funds, pledge more than 25% of its total assets (taken at cost) in
connection with permissible borrowings. For the purposes of this restriction,
the deposit of underlying securities and other assets in connection with the
writing of put and call options and collateral arrangements with respect to
margin for currency futures contracts are not deemed to be a pledge of assets.
[Fundamental Policy]
(6) Invest more than 5% (30% for the Balanced Return Fund) of its total
assets in securities of any one issuer which, together with any predecessor,
has been in continuous operation for less than three years. [Fundamental
Policy]
(7) Invest in securities of any company, if officers and Trustees of the
Trust and officers and directors of the Adviser who beneficially own more than
0.5% of the shares or securities of that company collectively own more than 5%
of such securities. [Fundamental Policy with respect to the Growth, Nifty
Fifty, Balanced Return, Global Growth and Small & Mid-Cap Growth Funds]
(8) Make loans, except (a) by purchase of marketable bonds, debentures,
commercial paper or corporate notes, and similar marketable evidences of
indebtedness which are part of an issue to the public or to financial
institutions, (b) by entry into repurchase agreements, or (c) through the
lending of its portfolio securities with respect to not more than 25% of its
total assets. [Fundamental Policy]
(9) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts or commodities or commodity contracts, except for transactions in
futures contracts and options thereon entered into for hedging purposes, and
the Growth, Nifty Fifty and Balanced Return Funds may purchase marketable
securities of companies or partnerships holding such interests. [Fundamental
Policy for the Global Growth, Small & Mid-Cap Growth and Value 25 Funds]
(10) Act as an underwriter except to the extent that, in connection with
the disposition of its portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws. [Fundamental Policy]
9
<PAGE>
(11) Make investments for the purpose of exercising control of a company's
management. [Operating Policy]
(12) Concentrate its investments in particular industries, and in no event
invest more than 25% of the value of its total assets in any one industry.
[Fundamental Policy]
(13) Engage in puts, calls, straddles, spreads or any combination thereof,
except that, to the extent described in the Prospectus and this Statement of
Additional Information, a Fund may buy and sell put and call options (and any
combination thereof) on securities, on financial futures contracts, on
securities indices, on currency futures contracts and on foreign currencies and
may buy and sell put and call warrants, the values of which are based upon
securities indices. [Operating Policy]
(14) Purchase warrants if, as a result, its warrant holdings, valued at
the lower of cost or market, would exceed 5% of the Fund's net assets, with no
more than 2% of net assets in warrants not listed on the New York or American
Stock Exchanges. [Operating Policy]
(15) Invest in (a) securities which at the time of such investment are not
readily marketable, (b) securities restricted as to resale (excluding
securities determined by the Trustees of the Funds, or by a person designated
by the Trustees of the Funds, to make such determinations pursuant to
procedures adopted by the Trustees to be readily marketable), and (c)
repurchase agreements maturing in more than seven days, if, as a result, more
than 10% of the Growth, Nifty Fifty and Balanced Return Funds' and more than
15% of the Global Growth, Small & Mid-Cap Growth and Value 25 Funds' net assets
(taken at current value) would be invested in the aggregate in securities
described in (a), (b) and (c) above. [Operating Policy]
(16) Purchase or sell real property (including limited partnership
interests), except that the Fund may (a) purchase or sell readily marketable
interests in real estate investment trusts or readily marketable securities of
companies which invest in real estate, (b) purchase or sell securities that are
secured by interests in real estate or interests therein, or (c) acquire real
estate through exercise of its rights as a holder of obligations secured by
real estate or interests therein or sell real estate so acquired. [Fundamental
Policy]
(17) Participate on a joint or joint and several basis in any securities
trading account. [Operating Policy]
(18) Purchase the securities of any other investment company except (a)
within the limits of the 1940 Act, (b) in a public offering or in the open
market or in privately negotiated transactions where, in either case, to the
best information of the Fund, no commission, profit or sales charge to a sponsor
or dealer (other than a customary broker's commission or underwriting discount)
results from such purchase, (c) if such purchase is part of a merger,
consolidation, or acquisition of assets, or (d) as part of a master-feeder
arrangement (see below). [Fundamental Policy]
(19) With respect to the Growth Fund, the Nifty Fifty Fund and the
Balanced Return Fund, purchase or sell financial futures, commodities or
commodities contracts, including futures contracts on physical commodities.
[Fundamental Policy]
(20) Issue senior securities, as such term is defined in the Investment
Company Act of 1940, as amended, except as otherwise permitted under these
fundamental investment restrictions. [Fundamental Policy]
Each Fund, notwithstanding any other investment policy or limitation
(whether or not fundamental), may invest all of its assets in the securities or
beneficial interests of a single pooled investment fund having substantially
the same objective, policies and limitations as such Fund.
Some of the practices referred to above are subject to restrictions
contained in the 1940 Act. In addition to the restrictions described above, a
Fund may from time to time agree to additional investment restrictions for
purposes of compliance with the securities laws of those states and foreign
jurisdictions where such Fund intends to offer or sell its shares. Any such
additional restrictions that would have a material bearing on a Fund's
operations will be reflected in the Prospectus or a Prospectus supplement and
may require shareholder approval.
10
<PAGE>
PERFORMANCE INFORMATION
The Funds may, from time to time, include total return in advertisements
or reports to shareholders or prospective investors. Performance information in
advertisements and sales literature may be expressed as a yield of a class or
Fund and as a total return of any Class or Fund.
Standardized quotations of average annual total return for each Class of
Shares of a Fund will be expressed in terms of the average annual compounded
rate of return for a hypothetical investment in either Class A, Class B, or
Class C Shares of a Fund over periods of 1, 5 and 10 years or up to the life of
the class of shares of a Fund, calculated for each class separately pursuant to
the formula below. All total return figures reflect the deduction of a
proportional share of each class's expenses (on an annual basis), deduction of
the maximum initial sales load in the case of Class A Shares and the maximum
contingent deferred sales charge applicable to a complete redemption of the
investment in the case of Class B and C Shares, and assume that all dividends
and distributions are reinvested when paid.
P(T + 1)n = ERV
where P = a hypothetical initial payment of $1,000,
T = average annual total return,
n = number of years,
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the 1, 5, or 10 year periods at the end of
the 1, 5, or 10 year periods (or fractional portion thereof).
The Funds may from time to time include in advertisements containing total
return the ranking of those performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar, Inc.
Additionally, the Funds may compare 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, Investor's Daily, Stanger's Mutual Fund Monitor,
The Stanger Register, Stanger's Investment Adviser, The Wall Street Journal,
The New York Times, Consumer Reports, Registered Representative, Financial
Planning, Financial Services Weekly, Financial World, U.S. News and World
Report, Standard & Poor's The Outlook, and Personal Investor. The Funds 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 Funds against
certain widely acknowledged outside standards or indices for stock and bond
market performance, such as the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500"), Russell 2000 Index, Morgan Stanley Capital International
All Country World Index, Dow Jones Industrial Average, Europe Australia Far
East Index (EAFE), Consumer Price Index, Lehman Brothers Corporate Index and
Lehman Brothers T-Bond Index.
Advertisements, sales literature and other communications may contain
information about the Funds and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Funds to
respond quickly to changing market and economic conditions. From time to time
the Funds may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, the Funds may
separate its cumulative and average annual returns into income and capital
gains components.
Performance information reflects only the performance of a hypothetical
investment in each class during the particular time period on which the
calculations are based. Performance information should be considered in light
of each Fund's investment objectives and policies, characteristics and quality
of the portfolio, and the market condition during the given time period, and
should not be considered as a representation of what may be achieved in the
future.
The Funds may also compute aggregate cumulative total return for specified
periods based on a hypothetical Class A, Class B, or Class C account with an
assumed initial investment of $10,000. The aggregate total return is determined
by dividing the net asset value of this account at the end of the specified
period by the value of the initial investment and is expressed as a percentage.
Calculation of aggregate total return reflects payment of the Class A Shares'
maximum sales charge of 4.75% and assumes reinvestment of all income dividends
and capital gain distributions during the period.
The Funds also may quote annual, average annual and annualized total
return and aggregate total return performance data, for each class of shares of
the Funds, both as a percentage and as a dollar amount based on a hypothetical
$10,000 investment for various periods other than those noted below. Such data
will be computed as described above, except that (1) the rates of return
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
charge will not be included with respect to annual, annualized or aggregate
rate of return calculations.
11
<PAGE>
The average annual compounded rates of return, or total return, for the
Class A, Class B and Class C shares of each of the Funds for the indicated
periods ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
One Five Ten Inception(1) to
Year Years Years December 31, 1998
Class A ---- ----- ----- -----------------
<S> <C> <C> <C> <C>
The Growth Fund 30.88% 17.88% 17.06% 14.93%
The Balanced Return Fund 22.98% 15.93% 15.23% 15.72%
The Nifty Fifty Fund 28.70% 20.27% N/A 20.01%
The Global Growth Fund* 8.91% 18.11% N/A 20.05%
The Small & Mid-Cap Growth Fund* 8.87% N/A N/A 31.53%
The Value 25 Fund 2.11% N/A N/A 11.59%
</TABLE>
<TABLE>
<CAPTION>
One Inception(2) to
Year December 31, 1998
Class B ---- -----------------
<S> <C> <C>
The Growth Fund 32.53% 18.13%
The Balanced Return Fund 24.21% 16.06%
The Nifty Fifty Fund 30.30% 20.53%
The Global Growth Fund 9.47% 13.94%
The Small & Mid-Cap Growth Fund 9.54% 22.06%
The Value 25 Fund 2.57% 9.87%
</TABLE>
<TABLE>
<CAPTION>
One Inception(2) to
Year December 31, 1998
Class C ---- -----------------
<S> <C> <C>
The Growth Fund 36.38% 18.32%
The Balanced Return Fund 28.07% 16.26%
The Nifty Fifty Fund 34.14% 20.70%
The Global Growth Fund 13.26% 14.37%
The Small & Mid-Cap Growth Fund 13.34% 18.74%
The Value 25 Fund 6.42% 12.88%
</TABLE>
(1)The inception dates of the Funds are as follows:
Growth Fund--June 24, 1986
Balanced Return Fund--June 8, 1987
Nifty Fifty Fund--December 17, 1990
Global Growth Fund--November 1, 1993
Small & Mid-Cap Growth Fund--October 10, 1994
Value 25 Fund--December 17, 1996
(2)The inception date for Class B and Class C shares for the Growth, Nifty Fifty
and Balanced Return Funds was January 3, 1994; the inception date for the
Class B shares for the Global Growth* and Small & Mid-Cap* Growth Funds was
September 18, 1996; the inception date for the Class C shares for the Global
Growth Fund* was October 21, 1996 and the inception date for the Class C
shares of the Small & Mid-Cap Growth Fund* was October 8, 1996. The inception
date for Class B and C shares for the Value 25 Fund was January 9, 1997.
* Prior to September 1, 1996, the Global Growth and Small & Mid-Cap Growth
Funds' shares were not offered to the public and, although each Fund's
portfolio was managed substantially in accordance with the investment
policies described in its current Prospectus during that period, some
management differences did occur due primarily to each Fund's small asset
size. Accordingly, each Fund's performance during periods prior to September
1, 1996 may not be relevant to an assessment of such Fund's performance
subsequent to such date. Additionally, the Adviser waived all management,
administrative and service fees otherwise payable to it by the Global Growth
Fund during 1993, 1994 and 1995 and the Small & Mid-Cap Growth Fund during
1994 and 1995, which had the effect of increasing each Fund's total return
for those periods.
A Fund may also, from time to time, include a reference to the current
distribution rate of each Class of shares in investor communications and sales
literature preceded or accompanied by a prospectus for such Fund, reflecting
the amounts actually distributed to shareholders of each Class which could
include capital gains and other items of income, as well as interest and
dividend income received by a Fund and distributed to the shareholders. All
calculations of a Class's distribution rate are based on the distributions per
share which are declared, but not necessarily paid, during the fiscal year. The
distribution rate for a Class is determined by dividing the distributions
declared during the period by the maximum offering price per share of the Class
on the last day of the period and annualizing the resulting figure. The
distribution rate does not reflect capital appreciation or depreciation in the
price of a Fund's shares and should not be confused with yield or considered to
be a complete indicator of the return to the investor on his investment.
12
<PAGE>
Investors should note that the investment results of each Fund will
fluctuate over time, and any presentation of a Fund's current yield, total
return or distribution rate for any period should not be considered as a
representation of what an investment may earn or what an investor's total
return, yield or distribution rate may be in any future period.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser places orders for the purchase and sale of securities,
supervises their execution and negotiates brokerage commissions on behalf of
the Funds. It is the practice of the Adviser to seek the best prices and
execution of orders and to negotiate brokerage commissions which in the
Adviser's opinion are reasonable in relation to the value of the brokerage
services provided by the executing broker. Brokers who have executed orders for
the Funds 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 Funds
an unusually favorable trading opportunity, or if the broker regards its
research services as being of exceptional value, and 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 Funds benefit with a
securities industry comprised of many and diverse firms and that the long-term
interest of shareholders of the Funds is best served by brokerage policies
which include paying a fair commission rather than seeking to exploit its
leverage to force the lowest possible commission rate. The primary factors
considered in determining the firms to which brokerage orders are given are the
Adviser's appraisal of: the firm's ability to execute the order in the desired
manner; the value of research services provided by the firm; and the firm's
attitude toward and interest in mutual funds in general including the sale of
mutual funds managed and sponsored by the Adviser. The Adviser does not offer
or promise to any broker an amount or percentage of brokerage commissions as an
inducement or reward for the sale of shares of the Funds. 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 general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller firms
in general tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. In addition, several firms monitor
federal, state, local and foreign political developments; many of the brokers
also provide access to outside consultants. The outside research assistance is
particularly useful to the Adviser's staff since the brokers as a group tend to
monitor a broader universe of securities and other matters than the Adviser's
staff can follow. In addition, it provides the Adviser with a diverse
perspective on financial markets. Research and investment information is
provided by these and other brokers at no cost to the Adviser and is available
for the benefit of other accounts advised by the Adviser and its affiliates and
not all of this information will be used in connection with the Funds. While
this information may be useful in varying degrees and may tend to reduce the
Adviser's expenses, it is not possible to estimate its value and in the opinion
of the Adviser it does not reduce the Adviser's expenses in a determinable
amount. The extent to which the Adviser makes use of statistical, research and
other services furnished by brokers is considered by the Adviser in the
allocation of brokerage business but there is no formula by which such business
is allocated. The Adviser does so in accordance with its judgment of the best
interest of the Funds and shareholders.
A high rate of portfolio turnover involves a correspondingly higher amount
of brokerage commissions and other costs which must be borne directly by the
Funds and indirectly by shareholders.
Stolper & Company, Inc., of which Michael Stolper, a former Trustee of the
Trust and a Director of Pasadena Capital Corporation, is the sole shareholder,
has in the past received brokerage business from the Adviser. Stolper &
Company, Inc. assists its clients in selecting an investment adviser and offers
a service measuring the performance of investment advisers, in return for which
the client pays cash or directs the investment adviser to execute a portion of
the brokerage business through Bear, Stearns & Company for the credit of
Stolper & Company, Inc. Stolper & Company, Inc. and the Adviser anticipate that
such brokerage allocation from the Adviser will continue. However, neither
Michael Stolper nor Stolper & Company, Inc. will receive or participate in
commissions paid by a Fund nor receive any reciprocal business as a result of
commissions paid by a Fund, although a Fund may pay usual and customary
brokerage commissions to Bear, Stearns & Company for brokerage business by such
Fund.
It is possible that purchases or sales of securities for a Fund also may
be considered for other clients of the Adviser or its affiliates, including the
other series of the Trust. Any transactions in such securities at or about the
same time will be allocated among such Fund and such other clients in a manner
deemed equitable to all by the Adviser, taking into account the respective
sizes of the Fund and the other clients' accounts, and the amount of securities
to be purchased or sold. It is recognized that it is possible that in some
cases this procedure could have a detrimental effect on the price or volume of
the security so far as that Fund is concerned. However, in other cases, it is
possible that the ability to participate in volume transactions and to
negotiate lower commissions will be beneficial to such Fund.
13
<PAGE>
The Board of Trustees of the Trust periodically monitors the operation of
these brokerage policies by reviewing the allocation of brokerage orders. For
the fiscal years ended December 31, 1996, 1997 and 1998, brokerage commissions
paid by the Trust on Fund transactions totaled $2,875,432, $3,928,310 and
$2,322,602, respectively. Brokerage commissions of $316,877 paid during the
fiscal year ended December 31, 1998 were paid on fund transactions aggregating
$279,064,805 executed by brokers who provided research and other statistical
and factual information. None of such commissions was paid to a broker who was
an affiliated person of the Trust or and affiliated person of such a person, or
to the knowledge of the Trust, to a broker an affiliated person of which was an
affiliated person of the Trust, its advisers or its national distributor.
PORTFOLIO TURNOVER
The Funds pay brokerage commissions for purchases and sales of portfolio
securities. A high rate of portfolio turnover generally involves a
correspondingly greater amount of brokerage commissions and other costs which
must be borne directly by a Fund and thus indirectly by its shareholders. It
may also result in the realization of larger amounts of short-term capital
gains, which are taxable to shareholders as ordinary income. If such rate of
turnover exceeds 100%, the Funds will pay more in brokerage commissions than
would be the case if they had lower portfolio turnover rates. Historical
turnover rates can be found under the heading "Financial Highlights" located in
the Trust's Prospectus. Portfolio turnover rates varied between 1997 and 1998
due to market conditions and the various investment strategies employed by the
funds' managers.
SERVICES OF THE ADVISER
The following information concerning the investment management and
administrative services provided to the Funds supplements the information
contained in the section in the Prospectus entitled "Management of the Funds."
Investment Management Agreement
The Adviser, Roger Engemann & Associates, Inc., ("REA") has entered into
an Investment Management Agreement (the "Management Agreement") with the Trust,
on behalf of each series of the Trust including the Funds, to provide
investment advice and investment management services with respect to the assets
of each Fund, provide personnel, office space, facilities and equipment as may
be needed by the Funds in their day-to-day operations and provide the officers
of the Trust. The Management Agreement has been approved by the Board of
Trustees of the Trust with respect to each Fund, including a majority of the
Trustees who are not a party to the Management Agreement or interested persons
of a party to the Management Agreement, and by a majority of the outstanding
voting shares of each Fund at a special meeting of shareholders on August 28,
1997.
The Management Agreement dated as of September 3, 1997 will be in effect
through September 2, 1999. The Management Agreement may be continued thereafter
for successive periods not to exceed one year, provided that such continuance
is specifically approved annually by a vote of a majority of each Fund's
outstanding voting securities or by the Board of Trustees, and by the vote of a
majority of the Trustees who are not parties to the Management Agreement or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval.
REA is an indirect subsidiary of Phoenix Investment Partners, Ltd.
("PXP"). PXP is a publicly-traded, independent registered investment advisory
firm, and has served investors for over 70 years. It manages over $57 billion
in assets through its investment partners: Aberdeen Fund Managers, Inc.
(Aberdeen) in Aberdeen, London, Singapore and Fort Lauderdale; Duff & Phelps
Investment Management Co. (Duff & Phelps) in Chicago and Cleveland; Roger
Engemann & Associates, Inc. (Engemann) in Pasadena; Seneca Capital Management
LLC (Seneca) in San Francisco and Zweig/Glaser Advisers LLC in New York; and
Phoenix Investment Counsel, Inc. (Goodwin, Hollister, and Oakhurst divisions)
in Hartford, Sarasota, and Scotts Valley, CA, respectively.
Expenses
Except as set forth in the separate Administration Agreement discussed
below, the Adviser is not responsible under the Management Agreement for any
expenses related to the operation of the Funds.
Under the Management Agreement, each Fund is responsible and has assumed
the obligation for paying all of its expenses, including but not limited to:
(i) brokerage and commission expenses, (ii) federal, state, or local taxes,
including issue and transfer taxes, incurred by or levied on a Fund, (iii)
interest charges on borrowings, (iv) charges and expenses of a Fund's custodian
and transfer agent, (v) payment of all investment advisory and management fees,
(vi) insurance premiums on a Fund's property and personnel, including the
fidelity bond and liability insurance for officers and Trustees, (vii) printing
and mailing of all reports, including semi-annual and annual reports,
prospectuses, and statements of additional information to existing
shareholders, (viii) fees and expenses of registering a Fund's shares under the
federal securities laws and of qualifying its shares under applicable state
securities (Blue Sky) laws subsequent to a Fund's initial fiscal period,
including expenses attendant upon renewing and increasing such registrations
and qualifications, (ix) legal fees and expenses including legal expenses of
the independent Trustees, (x) independent Trustees' fees and auditing expenses,
including auditing fees of independent public accountants, (xi) all costs
associated with shareholders meetings and the preparation and dissemination of
proxy solicitation materials, except for meetings called solely for the
Adviser's benefit, (xii) dues and other costs of membership in industry
associations, subject to the approval of any such membership by the Board of
Trustees, (xiii) service fees paid to dealers and other shareholder service
providers pursuant to Services Agreements between the Trust and such service
providers, and (xiv) any extraordinary and non-recurring expenses, except as
otherwise prescribed therein.
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<PAGE>
As compensation for its services under the Management Agreement, the
Adviser is paid a monthly fee based on a Fund's average daily net assets at the
following annual rates:
<TABLE>
<CAPTION>
First Next Over
$50 $450 $500
Million Million Million
------- ------- -------
<S> <C> <C> <C>
Growth Fund 0.90% 0.80% 0.70%
Nifty Fifty Fund 0.90% 0.80% 0.70%
Balanced Return Fund 0.80% 0.70% 0.60%
Global Growth Fund 1.10% 1.00% 0.90%
Small & Mid-Cap Growth Fund 1.00% 0.90% 0.80%
Value 25 Fund 0.90% 0.80% 0.70%
</TABLE>
For services to the Trust during the fiscal years ended December 31, 1996,
1997 and 1998, pursuant to the then-effective management agreements with the
former adviser (the "Former Adviser") (Roger Engemann Management Co., Inc.) and
the current Adviser (REA), the Trust paid management fees (approximately) of
$5,160,858, $6,614,000 and $8,380,000, respectively. Of these totals, the
Former Adviser and/or REA received fees from each Fund as follows:
<TABLE>
<CAPTION>
Fund 1996 1997 1998
---- ---- ---- ----
<S> <C> <C> <C>
Growth Fund $3,202,000 $3,490,000 $3,842,000
Nifty Fifty Fund $1,391,000 $1,967,000 $2,617,000
Balanced Return Fund $ 528,000 $ 551,000 $ 603,000
Global Growth Fund $ 22,646* $ 143,000 $ 247,000
Small & Mid-Cap Fund $ 17,212** $ 288,000 $ 741,000
Value 25 Fund N/A $ 175,000 $ 330,000
</TABLE>
* Former Adviser was entitled to $49,798; however, the Former Adviser waived
$27,147 of such fees for the first eight months of 1996.
** Former Adviser was entitled to $25,255; however, the Former Adviser waived
$8,043 of such fees for the first eight months of 1996.
The Management Agreement is terminable with respect to each Fund on 60-days'
written notice by vote of a majority of such Fund's outstanding shares, by vote
of a majority of the Board of Trustees, or by the Adviser on 60-days' written
notice. The Management Agreement automatically terminates in the event of its
assignment as defined in the 1940 Act. The Management Agreement provides that
in the absence of willful misfeasance, bad faith, or gross negligence on the
part of the Adviser, or of reckless disregard of its obligations thereunder,
the Adviser is not liable for any action or failure to act in accordance with
its duties.
NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close
of trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Since the Fund does not price securities on
weekends or United States national holidays, the net asset value of a 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 a 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 any Fund which
invests in foreign securities contemporaneously with the determination of the
prices of the majority of the portfolio securities of such Fund. All assets and
liabilities initially expressed in foreign currency values will be converted
into United States dollar values at the mean between the bid and ask quotations
of such currencies against United States dollars as last quoted by any
recognized dealer. If an event were to occur after the value of an investment
was so established but before the net asset value per share was determined,
which was likely to materially change the net asset value, then the instrument
would be valued using fair value considerations by the Trustees or their
delegates. If at any time a 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.
15
<PAGE>
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent
investment is $25. However, both the minimum initial and subsequent investment
amounts are $25 for investments pursuant to the "Investo-Matic" plan, a bank
draft investing program administered by Distributor, or pursuant to the
Systematic Exchange privilege or for an individual retirement account (IRA). In
addition, there are no subsequent investment minimum amounts in connection with
the reinvestment of dividend or capital gain distributions. Completed
applications for the purchase of shares should be mailed to: Phoenix-Engemann
Funds, c/o State Street Bank and Trust Company, P.O. Box 8301, Boston, MA
02266-8301.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased from investment dealers at a price equal to their
net asset value per share, plus a sales charge which, at the election of the
purchaser, may be imposed either (i) at the time of the purchase (the "initial
sales charge alternative") or (ii) on a contingent deferred basis (the
"deferred sales charge alternative"). Orders received by dealers prior to the
close of trading on the New York Stock Exchange are confirmed at the offering
price effective at that time, provided the order is received by the Authorized
Agent prior to its close of business.
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is more beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Funds, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the Trust,
the accumulated continuing distribution and services fees and contingent
deferred sales charges on Class B or C Shares would be less than the initial
sales charge and accumulated distribution and services fees on Class A Shares
purchased at the same time.
Dividends paid by the Funds, if any, with respect to each class of shares
will be calculated in the same manner at the same time on the same day, except
that fees such as higher distribution and services fees and any incremental
transfer agency costs relating to each class of shares will be borne
exclusively by that class. See "Dividends, Distributions and Taxes."
Class A Shares
Class A Shares incur a sales charge when they are purchased and enjoy the
benefit of not being subject to any sales charge when they are redeemed. Class
A Shares are subject to an ongoing services fee at an annual rate of 0.25% of
the Trust's aggregate average daily net assets attributable to the Class A
Shares. In addition, certain purchases of Class A Shares qualify for reduced
initial sales charges. See the Funds' current Prospectus for additional
information.
Class B Shares
Class B Shares do not incur a sales charge when they are purchased, but
they are subject to a sales charge if they are redeemed within five years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions. Class B Shares purchased prior to January 20, 1998 are
subject to the sales charge schedule as it existed prior to that date. See the
Funds' current Prospectus for additional information.
Class B Shares are subject to ongoing distribution and services fees at an
annual rate of up to 1.00% of the Fund's aggregate average daily net assets
attributable to the Class B Shares. Class B Shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment
is made. The higher ongoing distribution and services fees paid by Class B
Shares will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than those related to Class A
Shares. Class B Shares will automatically convert to Class A Shares eight years
after the end of the calendar month in which the shareholder's order to
purchase was accepted (six years for Class B Shares purchased prior to January
20, 1998), in the circumstances and subject to the qualifications described in
the Funds' Prospectus. The purpose of the conversion feature is to relieve the
holders of the Class B Shares that have been outstanding for a period of time
sufficient for the adviser and the Distributor to have been compensated for
distribution expenses related to the Class B Shares from most of the burden of
such distribution related expenses.
Class B Shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were issued. At the
end of this period, Class B Shares will automatically convert to Class A Shares
and will no longer be subject to the higher distribution and services fees.
Such conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge.
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 Share dividends in the sub-account will also convert to
Class A Shares.
Class C Shares
Class C Shares are purchased without an initial sales charge but are
subject to a deferred sales charge if redeemed within one year of purchase.
Class C Shares of the Growth Fund, Balanced Return Fund and Nifty Fifty Fund
purchased prior to January
16
<PAGE>
20, 1998 are not subject to the deferred sales charge. The deferred sales
charge may be waived in connection with certain qualifying redemptions. Shares
issued in conjunction with the automatic reinvestment of income distributions
and capital gain distributions are not subject to any sales charges. Class C
Shares are subject to ongoing distribution and services fees of up to 1.00% of
the Funds' aggregate average daily net assets attributable to Class C Shares.
See the Funds' current Prospectus for more information.
Class A Shares--Reduced Initial Sales Charges
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. If you fall within any one of the following
categories, you will not have to pay a sales charge on your purchase of Class A
Shares: (1) any trustee, director or officer of the Phoenix Funds or any other
open-end management investment company advised, subadvised or distributed by the
Adviser, Distributor or any corporate affiliate of either or both the Adviser
and Distributor (an "Affiliated Phoenix Fund"); (2) any director or officer, or
any full-time employee or sales representative (for at least 90 days), of the
Adviser or Distributor; (3) registered representatives and employees of
securities dealers with whom Distributor has sales agreements; (4) any qualified
retirement plan exclusively for persons described above; (5) any officer,
director or employee of a corporate affiliate of the Adviser or Distributor; (6)
any spouse, child, parent, grandparent, brother or sister of any person named in
(1), (2), (3) or (5) above; (7) employee benefit plans for employees of the
Adviser, Distributor and/or their corporate affiliates; (8) any employee or
agent who retires from Phoenix Home Life, Distributor and/or their corporate
affiliates; (9) any account held in the name of a qualified employee benefit
plan, endowment fund or foundation if, on the date of the initial investment,
the plan, fund or foundation has assets of $10,000,000 or more or at least 100
eligible employees; (10) any person with a direct rollover transfer of shares
from an established Phoenix-Engemann Fund or other 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 any U.S. service academy; (14)
any unallocated account held by a third party administrator, registered
investment adviser, trust company, or bank trust department which exercises
discretionary authority and holds the account in a fiduciary, agency, custodial
or similar capacity, if in the aggregate such accounts held by such entity equal
or exceed $1,000,000; (15) any person who is investing redemption proceeds from
investment companies other than the Phoenix Funds if, in connection with the
purchases or redemption of the redeemed shares, the investor paid a prior sales
charge provided such investor supplies verification that the redemption occurred
within 90 days of the Phoenix-Engemann Fund purchase and that a sales charge was
paid; (16) any deferred compensation plan established for the benefit of any
Phoenix-Engemann Fund or other Affiliated Phoenix Fund trustee or director;
provided that sales to persons listed in (1) through (15) above are made upon
the written assurance of the purchaser that the purchase is made for investment
purposes and that the shares so acquired will not be resold except to the Trust;
(17) purchasers of Class A Shares bought through investment advisors (including
President's Circle clients of REA) and financial planners who charge an
advisory, consulting or other fee for their services and buy shares for their
own accounts or the accounts of their clients; (18) retirement plans and
deferred compensation plans and trusts used to fund those plans (including, for
example, plans qualified or created under sections 401(a), 403(b) or 457 of the
Internal Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker or agent or
other financial intermediary that has made special arrangements with the
Distributor for such purchases; or (19) clients of investment advisors or
financial planners who buy shares for their own accounts but only if their
accounts are linked to a master account of their investment advisor or financial
planner on the books and records of the broker, agent or financial intermediary
with which the Distributor has made such special arrangements (each of the
investors described in (17) through (19) may be charged a fee by the broker,
agent or financial intermediary for purchasing shares). Class A shareholders who
made their initial investment prior to January 20, 1998 and qualified to
purchase shares without a sales charge, will not have to pay a sales charge on
subsequent purchases of Class A Shares.
Combination Purchase Privilege. Your purchase of any class of shares of
the Funds or any other Affiliated Phoenix Fund (other than Phoenix Money Market
Fund Series Class A Shares), if made at the same time by the same "person,"
will be added together to determine whether the combined sum entitles you to an
immediate reduction in sales charges. A "person" is defined in this and the
following sections as (a) any individual, their spouse and minor children
purchasing shares for his or their own account (including an IRA account)
including his or their own trust; (b) a trustee or other fiduciary purchasing
for a single trust, estate or single fiduciary account (even though more than
one beneficiary may exist); (c) multiple employer trusts or Section 403(b)
plans for the same employer; (d) multiple accounts (up to 200) under a
qualified employee benefit plan or administered by a third party administrator;
or (e) trust companies, bank trust departments, registered investment advisers,
and similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority
and which are held in a fiduciary, agency, custodial or similar capacity,
provided all shares are held of record in the name, or nominee name, of the
entity placing the order.
An "Affiliated Phoenix Fund" means any other mutual fund advised,
subadvised or distributed by the Adviser or Distributor or any corporate
affiliate of either or both the Adviser and Distributor provided such other
mutual fund extends reciprocal privileges to shareholders of the Phoenix Funds.
17
<PAGE>
Letter of Intent. If you sign a Letter of Intent, your purchase of any
class of shares of the Funds or any other Affiliated Phoenix Fund (other than
Phoenix Money Market Fund Series Class A Shares), if made by the same person
within a thirteen month period, will be added together to determine whether you
are entitled to an immediate reduction in sales charges. Sales charges are
reduced based on the overall amount you indicate that you will buy under the
Letter of Intent. The Letter of Intent is a mutually non-binding arrangement
between you and the Distributor. Since the Distributor doesn't know whether you
will ultimately fulfill the Letter of Intent, shares worth 5% of the amount of
each purchase will be set aside until you fulfill the Letter of Intent. When
you buy enough shares to fulfill the Letter of Intent, these shares will no
longer be restricted. If, on the other hand, you do not satisfy the Letter of
Intent, or otherwise wish to sell any restricted shares, you will be given the
choice of either buying enough shares to fulfill the Letter of Intent or paying
the difference between any sales charge you previously paid and the otherwise
applicable sales charge based on the intended aggregate purchases described in
the Letter of Intent. You will be given 20 days to make this decision. If you
do not exercise either election, the Distributor will automatically redeem the
number of your restricted shares needed to make up the deficiency in sales
charges received. The Distributor will redeem restricted Class A or M Shares
before Class C or B Shares, respectively. Oldest shares will be redeemed before
selling newer shares. Any remaining shares will then be deposited to your
account.
Right of Accumulation. Your purchase of any class of shares of the Funds
or any other Affiliated Phoenix Fund, if made over time by the same person may
be added together to determine whether the combined sum entitles you to a
prospective reduction in sales charges. You must provide certain account
information to the Distributor to exercise this right.
Associations. Certain groups or associations may be treated as a "person"
and qualify for reduced Class A Share sales charges. The group or association
must: (1) have been in existence for at least six months; (2) have a legitimate
purpose other than to purchase mutual fund shares at a reduced sales charge;
(3) work through an investment dealer; or (4) not be a group whose sole reason
for existing is to consist of members who are credit card holders of a
particular company, policyholders of an insurance company, customers of a bank
or a broker-dealer or clients of an investment adviser.
Class B and C Shares--Waiver of Sales Charges
The CDSC is waived on the redemption (sale) of Class B and C Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to
Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section
72(m)(7); (c) as a mandatory distribution upon reaching age 701/2 under any
retirement plan qualified under Code Sections 401, 408 or 403(b) or resulting
from the tax-free return of an excess contribution to an IRA; (d) by 401(k)
plans using an approved participant tracking system for participant hardships,
death, disability or normal retirement, and loans which are subsequently
repaid; (e) based on the exercise of exchange privileges among Class B and C
Shares of this or any other Affiliated Phoenix Fund; (f) based on any direct
rollover transfer of shares from an established Affiliated Phoenix Fund
qualified plan into an Affiliated Phoenix Fund IRA by participants terminating
from the qualified plan; and (g) based on the systematic withdrawal program
(Class B Shares only). If, as described in condition (a) above, an account is
transferred to an account registered in the name of a deceased's estate, the
CDSC will be waived on any redemption from the estate account occurring within
one year of the death. If the Class B or C Shares are not redeemed within one
year of the death, they will remain subject to the applicable CDSC.
Conversion Feature--Class B Shares
Class B Shares will automatically convert to Class A Shares of the same
Fund eight years after they are purchased. Conversion will be on the basis of
the then prevailing net asset value of Class A and B Shares. There is not sales
load, fee or other charge for this feature. Class B Shares acquired through
dividend or distribution reinvestments will be converted into Class A Shares at
the same time that other Class B Shares are converted based on the proportion
that the reinvested shares bear to purchased Class B Shares. The conversion
feature is subject to the continuing availability of an opinion of counsel or a
ruling of the Internal Revenue Service that the assessment of the higher
distribution fees and associated costs with respect to Class B Shares does not
result in any dividends or distributions constituting "preferential dividends"
under the Code, and that the conversion of shares does not constitute a taxable
event under federal income tax law. If the conversion feature is suspended,
Class B Shares would continue to be subject to the higher distribution fee for
an indefinite period. Even if the Funds were unable to obtain such assurances,
it might continue to make distributions if doing so would assist in complying
with its general practice of distributing sufficient income to reduce or
eliminate federal taxes otherwise payable by the Funds.
INVESTOR ACCOUNT SERVICES
The Funds offer accumulation plans, withdrawal plans and reinvestment and
exchange privileges. Certain privileges may not be available in connection with
all classes. In most cases, changes to account services may be accomplished
over the phone. Inquiries regarding policies and procedures relating to
shareholder account services should be directed to Shareholder Services at
(800) 243-1574.
Exchanges. Under certain circumstances, shares of any Phoenix-Engemann
Fund may be exchanged for shares of the same Class of another Phoenix-Engemann
Fund or any other Affiliated Phoenix Fund on the basis of the relative net
asset values per
18
<PAGE>
share at the time of the exchange. Exchanges are subject to the minimum initial
investment requirement of the designated Fund, except if made in connection
with the Systematic Exchange privilege. Shareholders may exchange shares held
in book-entry form for an equivalent number (value) of the same class of shares
of any other Phoenix-Engemann Fund or any other Affiliated Phoenix Fund, if
currently offered. On exchanges with share classes that carry a contingent
deferred sales charge, the CDSC schedule of the original shares purchased
continues to apply. The exchange of shares is treated as a sale and purchase
for federal income tax purposes (see also "Dividends, Distributions and
Taxes").
Systematic Exchanges. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Phoenix-Engemann Fund or any other
Affiliated Phoenix Fund automatically on a monthly, quarterly, semi-annual or
annual basis or may cancel this privilege at any time. If you maintain an
account balance of at least $5,000, or $2,000 for tax qualified retirement
benefit plans (calculated on the basis of the net asset value of the shares
held in a single account), you may direct that shares be automatically
exchanged at predetermined intervals for shares of the same class of another
Phoenix-Engemann Fund or any other Affiliated Phoenix Fund. This requirement
does not apply to Phoenix "Self Security" program participants. Systematic
exchanges will be executed upon the close of business on the 10th day of each
month or the next succeeding business day. Systematic exchange forms are
available from the Distributor. Exchanges will be based upon each Fund's net
asset value per share next computed after the close of business on the 10th day
of each month (or next succeeding business day), without sales charge. On Class
B and C Share exchanges, the CDSC schedule of the original shares purchased
continues to apply.
Dividend Reinvestment Across Accounts. If you maintain an account balance
of at least $5,000, or $2,000 for tax qualified retirement benefit plans
(calculated on the basis of the net asset value of the shares held in a single
account), you may direct that any dividends and distributions paid with respect
to shares in that account be automatically reinvested in a single account of
one of the other Phoenix-Engemann Fund or any other Affiliated Phoenix Fund at
net asset value. You should obtain a current prospectus and consider the
objectives and policies of each Fund carefully before directing dividends and
distributions to another Fund. Reinvestment election forms and prospectuses are
available from Equity Planning. Distributions may also be mailed to a second
payee and/or address. Requests for directing distributions to an alternate
payee must be made in writing with a signature guarantee of the registered
owner(s). To be effective with respect to a particular dividend or
distribution, notification of the new distribution option must be received by
the Transfer Agent at least three days prior to the record date of such
dividend or distribution. If all shares in your account are repurchased or
redeemed or transferred between the record date and the payment date of a
dividend or distribution, you will receive cash for the dividend or
distribution regardless of the distribution option selected.
Systematic Withdrawal Program. The Systematic Withdrawal Program allows
you to periodically redeem a portion of your account on a predetermined
monthly, quarterly, semiannual or annual basis. A sufficient number of full and
fractional shares will be redeemed so that the designated payment is made on or
about the 20th day of the month. Shares are tendered for redemption by the
Transfer Agent, as agent for the shareowner, on or about the 15th of the month
at the closing net asset value on the date of redemption. The Systematic
Withdrawal Program also provides for redemptions to be tendered on or about the
10th, 15th or 25th of the month with proceeds to be directed through Automated
Clearing House (ACH) to your bank account. In addition to the limitations
stated below, withdrawals may not be less than $25 and minimum account balance
requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of a Fund worth $5,000 or more, as determined by the then current net
asset value per share, and elect to have all dividends reinvested. Participants
in the Program redeeming Class C Shares will be subject to any applicable
contingent deferred sales charge. The purchase of shares while participating in
the withdrawal program will ordinarily be disadvantageous to the Class A Shares
investor since a sales charge will be paid by the investor on the purchase of
Class A Shares at the same time as other shares are being redeemed. For this
reason, investors in Class A Shares may not participate in an automatic
investment program while participating in the Systematic Withdrawal Program.
Through the Program, Class B shareholders may withdraw up to 1% of their
aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B shareholders redeeming more shares than the
percentage permitted by the withdrawal program will be subject to any
applicable contingent deferred sales charge on all shares redeemed.
Accordingly, the purchase of Class B Shares will generally not be suitable for
an investor who anticipates withdrawing sums in excess of the above limits
shortly after purchase.
HOW TO REDEEM SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefor postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for the Fund to dispose of its
19
<PAGE>
securities or to determine fairly the value of its net assets or during any
other period permitted by order of the Securities and Exchange Commission for
the protection of investors. Furthermore, the Transfer Agent will not mail
redemption proceeds until checks received for shares purchased have cleared,
which may take up to 15 days or more. See the Funds' current Prospectus for
further information. Redemptions by Class B and C shareholders will be subject
to the applicable deferred sales charge, if any.
The Trust has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when
an authorized broker or, if applicable, a broker's authorized designee, accepts
the order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
Redemption of Small Accounts
Each shareholder account in the Funds which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the
giving of not less than 60 days written notice to the shareholder mailed to the
address of record. During the 30 day period the shareholder has the right to
add to the account to bring its value to $200 or more.
Telephone Redemptions
Shareholders may redeem up to $50,000 worth of their shares by telephone.
See the Funds' current Prospectus for additional information.
Account Reinstatement Privilege
Shareholders who may have overlooked features of their investment at the
time they redeemed have a privilege of reinvestment of their investment at net
asset value. See the Funds' current Prospectus for more information and
conditions attached to this privilege.
Redemption in Kind
To the extent consistent with state and federal law, the Funds may make
payment of the redemption price in cash or in kind. However, the Funds have
elected to pay in cash all requests for redemption by any shareholder of
record, limited in respect to each shareholder during any 90-day period to the
lesser of $250,000 or 1% of the net asset value of the Fund at the beginning of
such period. This election has been made pursuant to Rule 18f-1 under the
Investment Company Act of 1940 and is irrevocable while the Rule is in effect
unless the Securities and Exchange Commission, by order, permits the withdrawal
thereof. In case of a redemption in kind, securities delivered in payment for
shares would be readily marketable and valued at the same value assigned to
them in computing the net asset value per share of the Fund. A shareholder
receiving such securities would incur brokerage costs when selling the
securities.
TAX SHELTERED RETIREMENT PLANS
Shares of the Funds and other Phoenix Funds may be offered in connection
with the following qualified prototype retirement plans: IRA, Rollover IRA,
SEP-IRA, SIMPLE IRA, Roth IRA, 401(k) Profit Sharing and Money Purchase Pension
Plans and 403(b) Retirement Plans. REA and its affiliates may provide
administrative services to these plans and to their participants, in addition
to the services that REA and its affiliates provide to the Phoenix-Engemann
Funds and other Affiliated 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. Write or call Equity Planning at (800) 243-4361 for
information about the plans.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund is treated as a separate entity for federal income tax purposes.
Each Fund intends to elect to be treated as a regulated investment company
("RIC") and qualify annually as such under certain provision of the Internal
Revenue Code (the "Code"). Under such provisions, each Fund will not be subject
to federal income tax on such part of its ordinary income and net realized
capital gains which it distributes to shareholders provided it meets certain
distribution requirements. To qualify for treatment as a regulated investment
company, each Fund must, among other things: (a) derive in each taxable year at
least 90% of its gross income from dividends, interest and gains from the sale
or other disposition of securities; and (b) meet certain diversification
requirements imposed under the Code at the end of each quarter of the taxable
year.
The Code imposes a 4% nondeductible excise tax on a regulated investment
company if it does not distribute to its shareholders during the calendar year
an amount equal to 98% of the Fund's net ordinary income, with certain
adjustments, for such calendar year, plus 98% of each Fund' net capital gains
for the 12-month period ending on October 31 of such calendar year. In
addition, an amount equal to any undistributed investment company taxable
income or capital gain net income from the previous calendar year must also be
distributed to avoid the excise tax. The excise tax is imposed on the amount by
which the regulated investment company does not meet the foregoing distribution
requirements. If each Fund has taxable income that would be subject to the
excise tax, each Fund intends to distribute such income so as to avoid payment
of the excise tax.
20
<PAGE>
Under another provision of the Code, any dividend declared by each Fund to
shareholders of record in October, November and December of any year will be
deemed to have been received by, and will be taxable to shareholders as of
December 31 of such year, provided that the dividend is actually paid by each
Fund before February 1, of the following year.
The Funds' policy is to distribute to its shareholders substantially all
investment company taxable income as defined in the Code and any net realized
capital gains for each year and consistent therewith to meet the distribution
requirements of Part I of subchapter M of the Code. The Funds intend to meet
the other requirements of Part I of subchapter M, including the requirements
with respect to diversification of assets and sources of income, so that the
Funds will pay no taxes on net investment income and net realized capital gains
distributed to shareholders.
Under certain circumstances, the sales charge incurred in acquiring shares
of the Funds may not be taken into account in determining the gain or loss on
the disposition of those shares. This rule applies where shares of the Funds
are disposed of within 90 days after the date on which they were acquired and
new shares of a regulated investment company are acquired without a sales
charge or at a reduced sales charge. In that case, the gain or loss realized on
the disposition will be determined by excluding from the tax basis of the
shares disposed of all or a portion 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 the shareholder having incurred a sales charge initially. The
portion of the sales charge affected by this rule will be treated as a sales
charge paid for the new shares.
Distributions by the Funds reduce the net asset value of the Funds'
shares. Should a distribution reduce the net asset value of a share below a
shareholder's cost for the shares, such a distribution nevertheless generally
would be taxable to the shareholder as ordinary income or long-term capital
gain, even though, from an investment standpoint, it may constitute a partial
return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution by a Fund. The
price of shares purchased at that time may include the amount of the
forthcoming distribution, but the distribution generally would be taxable to
them.
Transactions in options on stock indices are subject to the Code rules of
section 1256. Pursuant to these rules, such options, whether sold by the Funds
during a taxable year or held by the Funds at the close of its taxable year,
will be treated as if sold for their market value, with 40% of any resulting
gain or loss treated as short-term and 60% long-term.
A high portfolio turnover rate may result in the realization of larger
amounts of short-term gains, which are taxable to shareholders as ordinary
income.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS Regulations, the Funds may be required to withhold 31% of
all reportable payments including any taxable dividends, capital gains
distributions or share redemption proceeds, for an account which does not have
a taxpayer identification number or social security number and certain required
certifications. The Funds reserve the right to refuse to open an account for
any person failing to provide a taxpayer identification number along with the
required certifications.
The Funds will furnish shareholders, within 31 days after the end of the
calendar year, with information which is required by the Internal Revenue
Service for preparing income tax returns. Investors are urged to consult their
attorney or tax adviser regarding specific questions as to Federal, foreign,
state or local taxes.
THE DISTRIBUTOR
Pursuant to a Distribution Agreement with the Funds, Phoenix Equity
Planning Corporation (the "Distributor"), a wholly-owned subsidiary of Phoenix
Investment Partners, Ltd. and an affiliate of the Adviser, serves as
distributor for the Funds. As such, the Distributor conducts a continuous
offering pursuant to a "best efforts" arrangement requiring the Distributor to
take and pay for only such securities as may be sold to the public. The address
of the Distributor is 100 Bright Meadow Blvd., P.O. Box 2200, Enfield,
Connecticut 06083-2200.
The Distribution 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 Funds, or by
vote of a majority of the Funds' Trustees who are not "interested persons" of
the Funds and who have no direct or indirect financial interest in the
operation of the Distribution Plan or in any related agreements. The
Distribution Agreement will terminate automatically in the event of its
assignment.
Dealers with whom the Distributor has entered into sales agreements
receive sales charges in accordance with the commission table set forth in the
Prospectus. The Distributor may from time to time pay, from its own resources
or pursuant to the Plan of Distribution described below, a bonus or other
incentive to dealers (other than the Distributor) which employ a registered
representative who sells a minimum dollar amount of the shares of the Funds
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
21
<PAGE>
gift certificates or the cash equivalent of such bonuses. The Distributor may,
from time to time, reallow the entire portion of the sales charge which it
normally retains to individual selling dealers. However, such additional
reallowance generally will be made only when the selling dealer commits to
substantial marketing support such as internal wholesaling through dedicated
personnel, internal communications and mass mailings.
Pasadena Fund Services, Inc. ("PFSI") served as the principal underwriter
for the Funds prior to September 3, 1997. For the fiscal years ended December
31, 1996, 1997 and 1998, purchasers of shares of the Funds paid aggregate sales
charges of $1,370,002, $2,038,126 and $2,334,408, respectively, of which PFSI
and/or the Distributor received net commissions of $623,002, $897,831 and
$707,783, respectively, for its services, the balance being paid to dealers.
For the fiscal year ended December 31, 1998, the Distributor received net
commissions of $101,674 for Class A Shares and deferred sales charges of
$606,109 for Class B and Class C Shares.
Dealer Concessions
Dealers with whom the Distributor has entered into sales agreements
receive a discount or commission as set forth below.
<TABLE>
<CAPTION>
Dealer Discount
Sales Charge Sales Charge or Agency Fee
Amount of Transaction as Percentage as Percentage as Percentage of
at Offering Price of Offering Price of Amount Invested Offering Price
--------------------- ----------------- ------------------ ----------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 but under $100,000 4.50% 4.71% 4.00%
$100,000 but under $250,000 3.50% 3.63% 3.00%
$250,000 but under $500,000 3.00% 3.09% 2.75%
$500,000 but under $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None None
</TABLE>
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sale price of
Class C Shares sold by such dealers. Your broker, dealer or investment adviser
may also charge you additional commissions or fees for their services in
selling shares to you provided they notify the Distributor of their intention
to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of
the Funds and/or for providing other shareholder services. Depending on the
nature of the services, these fees may be paid either from the Funds through
distribution fees, service fees or transfer agent fees or in some cases, the
Distributor may pay certain fees from its own profits and resources. From its
own profits and resources, the Distributor does intend to: (a) sponsor training
and educational meetings and provide additional compensation to qualifying
dealers in the form of trips, merchandise or expense reimbursements; (b) from
time to time pay special incentive and retention fees to qualified wholesalers,
registered financial institutions and third party marketers; (c) pay
broker/dealers an amount equal to 1% of the first $3 million of Class A Share
purchases by an account held in the name of a qualified employee benefit plan
with at least 100 eligible employees, 0.50% on the next $3 million, plus 0.25%
on the amount in excess of $6 million; and (d) excluding purchases as described
in (c) above, pay broker/dealers an amount equal to 1% of the amount of Class A
Shares sold above $1 million but under $3 million, 0.50% on the next $3
million, plus 0.25% on the amount in excess of $6 million. If part or all of
such investment as described in (c) and (d) above, including investments by
qualified employee benefit plans, is subsequently redeemed within one year of
the investment date, the broker-dealer will refund to the Distributor such
amounts paid with respect to the investment. In addition, the Distributor may
pay the entire applicable sales charge on purchases of Class A Shares to
selected dealers and agents. Any dealer who receives more than 90% of a sales
charge may be deemed to be an "underwriter" under the Securities Act of 1933.
Administration Agreement
Phoenix Equity Planning Corporation ("PEPCO") has entered into an
Administration Agreement with the Trust on behalf of each series of the Trust
including each Fund. Under the Administration Agreement, PEPCO, in its capacity
as Administrator, (a) furnishes each Fund with various administrative and
shareholder services including, but not limited to, (i) preparing and
distributing all shareholder reports, (ii) preparing all tax returns and other
regulatory filings, (iii) Blue Sky compliance services, and (iv) expenses
related to fund accounting and net asset value determination, and (b) pays for
all of the normal operating fees and expenses of a Fund, except for the fees
and expenses related to the services to be provided by the Adviser under the
Investment Management Agreement, certain professional, fiduciary and audit
expenses, including the legal expenses of the independent Trustees, the
independent auditing expenses and expenses related to compensation of the
independent Trustees and the services fees paid under the Services Agreements,
the distribution fees paid under the Rule 12b-1 distribution plans, brokerage
and commission expenses and certain de minimis fees of its independent
auditors, legal counsel and trustees. See "Plans of Distribution."
The Administration Agreement dated as of September 3, 1997, was approved,
with respect to each Fund, by the Board of Trustees of the Trust, including a
majority of the Trustees who are not parties to the Administration Agreement,
and continues in effect until terminated on behalf of any Fund by either party
on 60-days' written notice.
22
<PAGE>
As compensation for its services and obligations under the Administration
Agreement, the Administrator is paid a monthly fee at an annual rate equal to
0.60% of each Funds' average daily net assets up to $50 million, which rate is
reduced at higher levels of net assets. For services to the Trust during the
fiscal years ended December 31, 1996, 1997 and 1998, pursuant to the then-
effective Administration Agreement with the former adviser (the "Former
Adviser") (Roger Engemann Management Co., Inc.) and the current Distributor
(PEPCO), the Trust paid administrative fees (approximately) of $5,517,679,
$5,458,000, and $5,305,000, respectively. Of these totals, the Former Adviser
and/or PEPCO received fees from each Fund as follows:
<TABLE>
<CAPTION>
Fund 1996 1997 1998
- ---- ---- ---- ----
<S> <C> <C> <C>
Growth Fund $3,453,000 $3,078,000 $2,420,000
Nifty Fifty Fund $1,485,000 $1,612,000 $1,655,000
Balanced Return Fund $ 557,000 $ 400,000 $ 445,000
Global Growth Fund $ 12,352* $ 78,000 $ 131,000
Small & Mid-Cap Fund $ 10,327** $ 173,000 $ 434,000
Value 25 Fund N/A $ 117,000 $ 219,000
</TABLE>
* Former Adviser was entitled to $40,856; however, the Former Adviser waived
$28,504 of such fees for 1996.
** Former Adviser was entitled to $18,772; however, the Former Adviser waived
$8,445 of such fees for 1996.
PEPCO has voluntarily agreed to waive, when necessary, a portion of its
administration fee so that Other Operating Expenses (operating expenses
excluding management fees and 12b-1 fees) do not exceed the following limits.
<TABLE>
<CAPTION>
Fund 1st $50 million next $450 million next $125 million over $625 million
- ---- --------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Growth 0.99% 0.50% 0.30% 0.30%
Nifty Fifty 0.99% 0.50% 0.30% 0.30%
Balanced Return 1.09% 0.60% 0.40% 0.40%
Global Growth 0.60% 0.50% 0.40% 0.40%
Small & Mid-Cap Growth 0.60% 0.50% 0.40% 0.40%
Value 25 0.60% 0.50% 0.40% 0.40%
</TABLE>
DISTRIBUTION PLANS
The Trust has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for Class B and Class C of each series of the Trust (the "Class B
Plan," the "Class C Plan," and collectively the "12b-1 Plans"). The 12b-1 Plans
permit the Funds 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 Funds.
Pursuant to the 12b-1 Plans, the Funds pay the Distributor 0.75% of the
average daily net assets of the Funds' Class B and Class C Shares,
respectively. Expenditures under the 12b-1 Plans shall consist of: (i)
commissions to sales personnel for selling shares of the Funds (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 Funds; (iv) payment
of expenses incurred in sales and promotional activities, including advertising
expenditures related to the Funds; (v) the costs of preparing and distributing
promotional materials; (vi) the cost of printing the Funds' Prospectuses and
Statements of Additional Information for distribution to potential investors;
and (vii) such other similar services that the Trustees of the Funds determine
are reasonably calculated to result in the sale of shares of the Funds.
From its own resources or pursuant to the Plan, and subject to the
dealers' prior approval, the Distributor may provide additional compensation to
registered representatives of dealers in the form of travel expenses, meals,
and lodging associated with training and educational meetings sponsored by the
Distributor. The Distributor may also provide gifts amounting in value to less
than $100, and occasional meals or entertainment, to registered representatives
of dealers. Any such travel expenses, meals, lodging, gifts or entertainment
paid will not be preconditioned upon the registered representatives' or
dealers' achievement of a sales target. 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.
In order to receive payments under the 12b-1 Plans and/or Services
Agreements (described below), participants must meet such qualifications to be
established in the sole discretion of the Distributor, such as services to the
Funds' shareholders; or services providing the Funds 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. If the 12b-1 Plans are terminated in
accordance with their terms, the obligations
23
<PAGE>
of the Funds to make payments to the Distributor pursuant to the 12b-1 Plans
will cease and the Funds will not be required to make any payments past the
date on which each 12b-1 Plan terminates.
On a quarterly basis, the Funds' Trustees review a report on expenditures
under the 12b-1 Plans and the purposes for which expenditures were made. The
Trustees conduct an additional, more extensive review annually in determining
whether the 12b-1 Plans will be continued. By its terms, continuation of the
12b-1 Plans from year to year is contingent on annual approval by a majority of
the Funds' 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 12b-1 Plans or any related
agreements (the "12b-1 Plan Trustees"). The 12b-1 Plans provide that they may
not be amended to increase materially the costs which the Funds may bear
pursuant to the 12b-1 Plans without approval of the shareholders of the Funds
and that other material amendments to the 12b-1 Plans must be approved by a
majority of the 12b-1 Plan Trustees by vote cast in person at a meeting called
for the purpose of considering such amendments. The 12b-1 Plans 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." The 12b-1 Plans may be terminated at
any time by vote of a majority of the 12b-1 Plan Trustees or a majority of the
outstanding shares of the Funds.
The National Association of Securities Dealers, Inc. (the "NASD") regards
certain distribution fees as asset-based sales charges subject to NASD sales
load limits. The NASD's maximum sales charge rule may require the Trustees to
suspend distribution fees or amend the Plans.
For the fiscal year ended December 31, 1998, the Funds paid Rule 12b-1
distribution fees in the amount of $3,898,100, of which the principal
underwriter received $1,470,657. W.S. Griffith & Co., Inc., an affiliate,
received $16,306, and unaffiliated broker-dealers reeived $2,411,137.
Distribution fees were used by the Distributor to compensate dealers for the
sale of the Fund's Class B and Class C Shares.
Services Agreements
Under the Services Agreement, each Fund will pay a continuing service fee
to service providers, in an amount, computed and prorated on a daily basis,
equal to 0.25% per annum of the Fund's average daily net assets, which will
include the Adviser or Phoenix Equity Planning Corporation (the "Distributor"),
for shareholder accounts not serviced by other service providers. (Prior to
September 3, 1997, Pasadena Fund Services, Inc. (the "Former Distributor")
served as distributor of the Funds' shares.) Such amounts are compensation for
providing certain services to clients owning shares of such Fund, including
personal services such as processing purchase and redemption transactions,
assisting in change of address requests and similar administrative details, and
providing other information and assistance with respect to such Fund, including
responding to shareholder inquiries.
For the fiscal year ended December 31, 1998, the Funds paid service fees
in the amount of $665,554, of which the principal underwriter received
$446,872, and unaffiliated broker-dealers received $218,682.
MANAGEMENT OF THE TRUST
The Trustees of the Trust are responsible for the overall supervision of
the Funds and perform the various duties imposed on Trustees by the 1940 Act
and Massachusetts business trust law.
Trustees And Officers
The Trustees and Officers of the Trust and their business affiliations for
the past five years are set forth below.
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- --------------------- --------------- -----------------------
<S> <C> <C>
Roger Engemann* (58) Chairman of the Chairman, President and Director of the Adviser since 1969.
600 North Rosemead Board, President and Chairman, President and Director, Pasadena Capital
Boulevard Trustee Corporation (1988-present) and Roger Engemann Management
Pasadena, California 91107 Co., Inc. (1985-present).
John S. Tilson (55) Chief Financial Executive Vice President, Portfolio Manager and Securities
600 North Rosemead Officer and Secretary Analyst with the Adviser since 1983. Executive Vice
Boulevard President and Director of Pasadena Capital Corporation.
Pasadena, California 91107 Executive Vice President, Roger Engemann Management Co.,
Inc. (1994-present)
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- --------------------- -------------- -----------------------
<S> <C> <C>
Barry E. McKinley (63) Trustee Certified Public Accountant; head of B.E. McKinley &
201 South Lake Avenue Associates, an accounting firm, since its inception in 1971.
Suite 400
Pasadena, California 91101
Robert L. Peterson (61) Trustee Private investor. From 1988-1995, Regional Manager for
P.O. Box 80784 Commercial Real Estate Brokerage in the Pasadena office
San Marino, California 91118 of Jon Douglas Company, a real estate firm. Prior thereto he
was associated with the real estate brokerage firm of R.A.
Rowan & Co.
Richard C. Taylor (52) Trustee President of Richard Taylor Company, Inc., a food ingredients
2100 Huntington Drive, #9 broker, since 1987.
San Marino, California 91108
Angela Wong (47) Trustee Since 1986, Ms. Wong has been of counsel to the law firm of
11355 West Olympic Manatt, Phelps, Phillips & Kantor, specializing in employee
Boulevard benefits.
Los Angeles, California 90064
</TABLE>
*Indicates that the Trustee is an "interested person" of the Trust within the
meaning of the definition set forth in Section 2(a)(19) of the Investment
Company Act of 1940.
For services rendered to the Trust for the fiscal year ended December 31,
1998, the Trustees received an aggregate of $80,000. For services on the Board
of Trustees, each Trustee who is not an employee of the Adviser or any of its
affiliates currently receives $2,500 per quarter plus $2,500 for each meeting
attended. The officers of the Trust and the Trustees affiliated with the
Adviser receive no direct compensation for performing the duties of such
offices. However, those officers and Trustees who are affiliated with the
Adviser may receive remuneration indirectly because the Adviser receives
management fees from the Funds.
For the Trust's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
Total
Pension or Compensation
Aggregate Retirement Benefits Estimated From Fund and
Compensation Accrued as Part Annual Benefits Fund Complex
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
---- ------------ ------------------- --------------- ----------------
<S> <C> <C> <C> <C>
Roger Engemann None None None None
John S. Tilson None None None None
Barry E. McKinley $20,000 None None $20,000
Robert L. Peterson $20,000 None None $20,000
Richard C. Taylor $20,000 None None $20,000
Angela Wong $20,000 None None $20,000
</TABLE>
As of April 9, 1999, the Trustees and Officers of the Trust, as a group,
owned less than 1% of the outstanding shares of the Nifty Fifty Fund and the
Balanced Return Fund. As of April 9, 1999, the Trustees and Officers of the
Trust, as a group, owned 1.08% of the Growth Fund Class A Shares, 10.99% of the
Global Growth Fund Class A Shares, 22.89% of the Value 25 Fund Class A Shares,
and 3.98% of the Small & Mid-Cap Growth Fund Class A Shares.
Principal Shareholders
As of April 9, 1999 the following shareholders, to the Trust's knowledge,
owned of record 5% or more of each Fund's outstanding shares by class, as
noted:
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Phoenix-Engemann Growth Fund 45.78% 48.53% 66.23%
Merrill Lynch, Pierce,
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6485
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Phoenix-Engemann Balanced Return Fund 21.85% 41.94% 65.10%
Merrill Lynch, Pierce,
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6485
Phoenix-Engemann Nifty Fifty Fund 40.61% 46.73% 71.04%
Merrill Lynch, Pierce,
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32216
Phoenix-Engemann Global Growth Fund
Merrill Lynch, Pierce,
Fenner & Smith, Inc.* 25.29% 34.96% 48.86%
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32216
Pasadena National Trust 7.89%
Cust for IRA of
Roger Engemann
731 S. Madre Street
Pasadena, California 91107-5662
Union Bank of California 5.94%
FBO Barney Sofro
475 Sansome Street, 11th Floor
San Francisco, California 94111-
3103
Phoenix-Engemann Small & Mid-Cap Growth Fund
Merrill Lynch, Pierce, 35.89% 35.79% 53.25%
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32216
Phoenix-Engemann Value 25 Fund
Pasadena National Trust 16.56%
Cust for IRA #1 of
Roger Engemann
731 S. Madre Street
Pasadena, California 91107-5662
Union Bank of California Cust 7.41%
FBO Moore Investment Partnership
PO Box 109
San Diego, California 92112-4103
Merrill Lynch, Pierce, 7.07% 36.02% 59.34%
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32216
Pasadena National Trust 6.15%
Cust for IRA #2 of
Roger Engemann
731 S. Madre Street
Pasadena, California 91107-5662
</TABLE>
*Record owner only for its individual customers. To the Trust's knowledge, no
customer beneficially owned 5% or more of the total outstanding shares of any
Class of any Fund.
26
<PAGE>
OTHER INFORMATION
Capital Stock
The Trust was established on May 28, 1986 as a Massachusetts business
trust. The capitalization of the Trust consists solely of an unlimited number
of shares of beneficial interest. The Trust currently offers shares in
different Funds and different classes of those Funds. Holders of shares of a
Fund have equal rights with regard to voting, redemptions, dividends,
distributions, and liquidations with respect to that Fund, except that Class B
and C Shares of any Fund, which bear higher distribution fees and certain
incrementally higher expenses associated with the deferred sales arrangement,
pay correspondingly lower dividends per share than Class A and M Shares of the
same Fund. Shareholders of all Funds vote on the election of Trustees. On
matters affecting an individual Fund (such as approval of an investment
advisory agreement or a change in fundamental investment policies) and on
matters affecting an individual class (such as approval of matters relating to
a Plan of Distribution for a particular class of shares), a separate vote of
that Fund or class is required. The Trustees will call a meeting when at least
10% of the outstanding shares so request in writing. If the Trustees fail to
call a meeting after being so notified, the Shareholders may call the meeting.
The Trustees will assist the Shareholders by identifying other shareholders or
mailing communications, as required under Section 16(c) of the Investment
Company Act of 1940.
Shares are fully paid, nonassessable, redeemable and fully transferable
when they are issued. Shares do not have cumulative voting rights, preemptive
rights or subscription rights. The assets received by the Funds for the issue
or sale of shares of each Fund, and any class thereof and all income, earnings,
profits and proceeds thereof, are allocated to such Fund, and class,
respectively, subject only to the rights of creditors, and constitute the
underlying assets of such Fund or class. The underlying assets of each Fund are
required to be segregated on the books of account, and are to be charged with
the expenses in respect to such Fund and with a share of the general expenses
of the Trust. Any general expenses of the Trust not readily identifiable as
belonging to particular Fund or class will be allocated by or under the
direction of the Trustees as they determine fair and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a business trust such as the Trust may be personally liable for
debts or claims against the Trust. The Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts or
obligations of the Trust and that every written agreement, undertaking or
obligation made or issued by the Trust shall contain a provision to that
effect. The Declaration of Trust provides for indemnification out of the Trust
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability, which is considered remote,
is limited to circumstances in which the Trust itself would be unable to meet
its obligations.
Independent Accountants
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts
02110, is the independent accountants for the Funds. PricewaterhouseCoopers LLP
audits the Funds' annual financial statements and expresses an opinion thereon.
Custodian and Transfer Agent
The custodian of the assets of the Funds (other than the Global Growth
Fund) is Union Bank of California, 475 Sansome Street, San Francisco,
California 94111. The custodian of the assets of the Global Growth Fund is
State Street Bank and Trust Company, P.O. Box 351, Boston, Massachusetts 02101.
Pursuant to a Transfer Agent and Service Agreement with the Trust, Equity
Planning serves as transfer agent for the Funds (the "Transfer Agent") for
which it is paid $14.95 plus certain out of pocket expenses for each designated
shareholder account. The Transfer Agent engages sub-agents to perform certain
shareholder servicing functions for which such agents are paid a fee by Equity
Planning.
Report to Shareholders
The fiscal year of the Trust ends on December 31. The Trust will send
financial statements to its shareholders at least semiannually. An Annual
Report containing financial statements audited by the Trust's independent
accountants will be sent to shareholders each year.
Financial Statements
The Financial Statements for the Fund's fiscal year ended December 31,
1998, appearing in the Fund's 1998 Annual Report to Shareholders, are
incorporated herein by reference.
27
<PAGE>
APPENDIX
Moody's Investors Service, Inc. Corporate Bond Ratings
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa Group they 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 some time in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Standard & Poor's Corporation's Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
BB-B-CCC-CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
28
<PAGE>
ANNUAL REPORT OF THE PHOENIX-ABERDEEN
WORLDWIDE OPPORTUNITIES FUND
FOR THE YEAR ENDED JUNE 30, 1999
[TO BE FILED BY PRE-EFFECTIVE AMENDMENT]
<PAGE>
Phoenix Investment Partners
DECEMBER 31, 1998
Engemann
ANNUAL REPORT
Phoenix-Engemann
Growth Fund
Phoenix-Engemann
Nifty Fifty Fund
Phoenix-Engemann
Balanced Return Fund
Phoenix-Engemann
Global Growth Fund
Phoenix-Engemann
Small & Mid-Cap
Growth Fund
Phoenix-Engemann
Value 25 Fund
[LOGO] PHOENIX
INVESTMENT PARTNERS
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
The Growth Fund........................................................... 3
The Nifty Fifty Fund...................................................... 12
The Balanced Return Fund.................................................. 20
The Global Growth Fund.................................................... 29
The Small & Mid-Cap Growth Fund........................................... 40
The Value 25 Fund......................................................... 48
Notes to Financial Statements............................................. 55
Mutual Funds are not insured by the FDIC; are not
deposits or other obligations
of a bank and are not guaranteed by a bank; and are
subject to investment
risks, including possible loss of the principal
invested.
</TABLE>
<PAGE>
MESSAGE FROM THE CHAIRMAN
DEAR FELLOW SHAREHOLDERS:
[PHOTO]
ROGER ENGEMANN
The year 1998 had a little something for the bears, much more for the
bulls, a lot of scary stuff for the press--and, happily, good news for
shareholders of the Phoenix-Engemann Funds.
More details are on the following pages, but here is a performance
snapshot. Based on the net asset value (NAV) of Class A Shares, all the funds in
the family showed positive returns for the year. Other than the Phoenix-Engemann
Value 25 Fund, all the Funds had double-digit gains and surpassed the average
fund in their respective categories, based on net asset value.(1) Further, the
Phoenix-Engemann Growth, Nifty Fifty and Balanced Return Funds beat the
impressive performance of the S&P 500 Index.(2)
The market in 1998 was both selective and volatile. Selectivity showed up
in investors' preference for large growth stocks over value stocks--one reason
the Value 25 Fund lagged in its returns. Not only does this Fund emphasize
value, it focuses on a narrow range of just 25 stocks. Last year wasn't the year
for value. But, like all market phenomena, that is subject to change.
Last year, small also played second fiddle to large. Small stocks suffered
a third quarter that was their third worst quarter since 1979. However, interest
rate cuts and waning fears of recession brought a nice fourth-quarter rally to
small stocks and to the Phoenix-Engemann Small & Mid-Cap Fund in particular.
Volatility, the other key feature of 1998, gave us a lot of what we call
"white knuckle time." The third quarter was the worst for stock funds since
1990. Then the market turned around abruptly, as it is wont to do, making the
fourth quarter the best for stocks since 1987.
After many placid years, what the market dished out in 1998 might make now
a good time to dust off some old, forgotten investment practices. Three of my
favorites are: (1) DIVERSIFY, (2) STICK WITH YOUR PLAN, and (3) IGNORE THE HERD.
DIVERSIFICATION can't cure volatility, yet it can be a great balm for its
pain. If you include large-cap, small-cap, growth, balanced, and value funds in
your portfolio, you may not earn the peak return of the best one ... but you'll
avoid having everything in the one that takes the biggest fall.
STICK WITH YOUR PLAN is what I refer to as "stay on the train." Decide on
your goal, select the investments to get you there, and then muster the courage
to hang on through a bumpy ride. Trying to time the market is something even
experts seldom do successfully. And if you chase after the current best
performer, you're apt to catch it just as it heads in the other direction.
(1) ACCORDING TO LIPPER INC.
(2) THE S&P 500 INDEX, WHICH IS AN UNMANAGED, COMMONLY USED MEASURE OF STOCK
MARKET TOTAL RETURN PERFORMANCE, RETURNED 28.8% FOR THE YEAR ENDED
DECEMBER 31, 1998. THE INDEX IS NOT AVAILABLE FOR DIRECT INVESTMENT.
1
<PAGE>
MESSAGE FROM THE CHAIRMAN (CONTINUED)
IGNORE THE HERD. When the market sinks and headlines rail against the risk
of stocks, it's tempting to pull out and tuck your dollars under the mattress.
That's when it's time to remind yourself that company fundamentals propel stock
prices over the long term. Periodically, investor psychology may be a
controlling factor. But attitudes can change. Bull markets can follow bear
markets. Investing in stocks for the short term is clearly a risky practice, but
history shows us that stocks of solid, profitable companies move up over time.
Finally, a word about the future. Some analysts say the market can't have
another strong year, and it is true that past performance is no guarantee of
future performance. However, we see nothing on the horizon we think will impede
good progress. Though corporate profits may cool somewhat, we believe there will
always be companies with good, solid earnings prospects. And we will do our best
to find them and place them in your portfolios.
Thank you for your confidence and for "staying on the train" through these
volatile times.
s Roger Engemann
Roger Engemann
Chairman of the Board and President
JANUARY 15, 1999
2
<PAGE>
PHOENIX-ENGEMANN GROWTH FUND
A DISCUSSION WITH JIM MAIR AND JOHN TILSON, THE PORTFOLIO MANAGERS OF
THE
PHOENIX-ENGEMANN MUTUAL FUNDS
Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A: The Phoenix-Engemann Growth Fund's objective is to achieve long-term capital
appreciation by investing in common stocks with rapidly growing earnings per
share. The Fund invests in stocks of various capitalizations.
Q: HOW DID THE FUND PERFORM OVER THE YEAR ENDED DECEMBER 31, 1998?
A: This was an excellent year for the Fund. The NAV for Class A Shares increased
37.4%, surpassing both the 28.8% return of the S&P 500 Index(1) as well as the
22.9% return of the average growth fund in a universe of 980 funds as measured
by Lipper Inc. Class B and C shares returned 36.4% for the year. All performance
figures assume reinvestment of distributions and exclude the effect of sales
charges.
Q: WHAT WERE SOME OF THE FACTORS THAT AFFECTED THE FUND'S PERFORMANCE?
A: There were several key elements responsible for the Fund's outperformance.
First, the Fund was overweighted in communication equipment and service
companies that are benefiting from the dramatic growth of the Internet. Second,
the Fund had solid performance in several retail stocks as these companies
experienced a solid domestic economy. Finally, during the market correction in
August and October we reduced our exposure to consumer products that we believed
would be negatively impacted by weak economies in Asia and Latin America.
Subsequently, we used the proceeds from these sales to increase our holdings in
financial services companies, which were selling at what we believed to be very
compelling valuation levels.
Q: PLEASE DISCUSS SOME OF THE INDIVIDUAL WINNERS IN THE FUND.
A: For the second year in a row America Online was the Fund's best performer.
The stock rose nearly six-fold during 1998. Now the Fund's largest position,
largely because of price appreciation, the company is riding the Internet boom
and is leveraging its dominant franchise into tremendous profit growth. Another
way we have been playing the explosive growth of the Internet is through
communications equipment companies that are building the infrastructure or
backbone of the Internet. Both Cisco and Lucent Technologies are among the
leaders in this fast growing area and each stock more than doubled during the
year. Other stocks that performed extremely well were MCI WorldCom, Microsoft,
and Texas Instruments.
Q: WHAT WERE SOME AREAS THAT PROVED DISAPPOINTING?
A: Consumer staple companies are one area where the Fund has historically
invested a large part of its assets. For many years companies such as Gillette
and Coca-Cola were able to provide above-average consistent growth. The Asian
crisis, however, proved to be a very difficult challenge for these companies.
Their growth slowed dramatically and in some cases profits actually declined.
Although these companies are excellent franchises and dominate their markets,
the near-term outlook for profit growth is uncertain at best. Therefore,
(1) THE S&P 500 INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF STOCK MARKET
TOTAL RETURN PERFORMANCE. THE INDEX IS NOT AVAILABLE FOR DIRECT
INVESTMENT.
3
<PAGE>
PHOENIX-ENGEMANN GROWTH FUND (CONTINUED)
we trimmed our positions in several of these companies. That being said, one
company that performed extremely well, despite its global presence, was
McDonald's. After several years of sub-par performance, management implemented a
strategy to improve their domestic operations and continue their global
expansion--efforts that investors rewarded nicely.
Q: WHAT IS YOUR OUTLOOK FOR 1999?
A: Our outlook has not changed much since we last communicated with you. Despite
tremendous volatility in the second half the year, the stock market rebounded
vigorously and posted a fourth year of better than 20% gains. Although we do not
believe that such levels of returns are sustainable, we are still able to find
opportunities we feel have the potential for exceptional growth. More
importantly, the investment backdrop remains favorable as inflation is well
contained and the U.S. economy continues to grow at a solid pace. As such, we
believe that valuations are justifiable, provided companies continue to deliver
the earnings. We have positioned the Fund in the companies that we believe have
the best earnings prospects and expect will be rewarded over time. In summary,
we believe that growth stocks are still a good place to be.
JANUARY 29, 1999
4
<PAGE>
Phoenix-Engemann Growth Fund
AVERAGE ANNUAL TOTAL RETURNS(1) PERIODS ENDING 123198
<TABLE>
<CAPTION>
INCEPTION INCEPTION
1 YEAR 5 YEARS 10 YEARS TO 123198 DATE
------ ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Class A Shares at NAV(2) 37.41% 19.04% 17.64% -- --
Class A Shares at POP(3) 30.88 17.88 17.06 -- --
Class B Shares at NAV(2) 36.38 -- -- 18.32% 1394
Class B Shares with CDSC(4) 32.53 -- -- 18.13 1394
Class C Shares at NAV(2) 36.38 -- -- 18.32 1394
Class C Shares with CDSC(4) 36.38 -- -- 18.32 1394
</TABLE>
(1) Total returns are historical and include changes in share price and the
reinvestment of both dividends and capital gains distributions.
(2) "NAV" (Net Asset Value) total returns do not include the effect of any
sales charge.
(3) "POP" (Public Offering Price) total returns include the effect of the
maximum front-end 4.75% sales charge. Prior to 12098, the maximum front-end
sales charge was 5.5%.
(4) CDSC (Contingent Deferred Sales Charge) is applied to redemptions of
certain classes of shares that do not have a sales charge applied at the
time of purchase. CDSC charges for B shares decline from 5% to 0% over a
five year period. CDSC charges for C shares are 1% in the first year and 0%
thereafter.
(5) This chart illustrates POP returns on Class A Shares for ten years. Returns
on Class B and Class C Shares will vary due to differing sales charges.
(6) The S&P 500 Index is an unmanaged, commonly used measure of stock market
total return performance. The Index's performance does not reflect sales
charges. All returns represent past performance which may not be indicative
of future performance. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
GROWTH OF $10,000 PERIODS ENDING 1231
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PHOENIX-ENGEMANN S&P
GROWTH FUND 500
CLASS A(5) INDEX(6)
<S> <C> <C> <C>
12301988 $ 9,525.00 12311988 $10,000.00
12291989 $13,119.02 12311989 $13,143.49
12311990 $12,522.67 12311990 $12,723.63
12311991 $21,017.31 12311991 $16,609.89
12311992 $21,488.47 12311992 $17,887.30
12311993 $20,227.25 12311993 $19,676.05
12301994 $19,468.73 12311994 $19,936.37
12291995 $24,755.99 12311995 $27,413.96
12311996 $30,324.36 12311996 $33,787.07
12311997 $35,187.14 12311997 $45,063.71
</TABLE>
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
123188 in Class A shares and reflects the maximum sales charge of 4.75% on the
initial investment. Performance assumes dividends and capital gains are
reinvested. The performance of other share classes will be greater or less than
that shown based on differences in inception dates, fees and sales charges.
SECTOR WEIGHTINGS 123198
As a percentage of equity holdings
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Technology 40%
Consumer Cyclicals 17
Financials 15
Health-Care 11
Consumer Staples 7
Communication Services 6
Capital Goods 3
</TABLE>
5
<PAGE>
Phoenix-Engemann Growth Fund
TEN LARGEST HOLDINGS AT DECEMBER 31, 1998
(AS A PERCENTAGE OF TOTAL NET ASSETS)
<TABLE>
<S> <C>
1. America Online, Inc. 5.9%
MAJOR PROVIDER OF ONLINE SERVICES TO CONSUMERS
2. MCI WorldCom, Inc. 5.6%
COMPREHENSIVE TELECOMMUNICATIONS SERVICE PROVIDER
3. Cisco Systems, Inc. 5.1%
LEADING PRODUCER OF SWITCHES AND ROUTERS FOR INTERNETWORKING
4. Lucent Technologies, Inc. 4.9%
LEADING SUPPLIER OF TELECOMMUNICATIONS EQUIPMENT
5. Medtronic, Inc. 4.8%
LEADING PRODUCER OF IMPLANTABLE CARDIAC DEVICES
6. Microsoft Corp. 4.6%
WORLD'S LEADING COMPUTER SOFTWARE COMPANY
7. Texas Instruments, Inc. 4.0%
LEADING SUPPLIER OF DIGITAL SIGNAL PROCESSORS FOR THE COMMUNICATION MARKET
8. Home Depot, Inc. (The) 4.0%
LEADING HOME IMPROVEMENT RETAILER
9. Pfizer, Inc. 4.0%
PRODUCES AND DISTRIBUTES PROPRIETARY HEALTH-RELATED ITEMS
10. General Electric Co. 3.2%
</TABLE>
<PAGE>
INVESTMENTS AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C> <C>
COMMON STOCKS--98.9%
AIR FREIGHT--1.1%
FDX Corp.(b)............................ 68,000 $ 6,052,000
BANKS (MAJOR REGIONAL)--1.8%
Wells Fargo & Co........................ 247,700 9,892,519
BEVERAGES (NON-ALCOHOLIC)--1.2%
Coca-Cola Co. (The)..................... 97,900 6,547,062
CHEMICALS (DIVERSIFIED)--0.2%
Monsanto Co............................. 25,000 1,187,500
COMMUNICATIONS EQUIPMENT--7.1%
Lucent Technologies, Inc................ 243,000 26,730,000
Tellabs, Inc.(b)........................ 170,550 11,693,334
-------------
38,423,334
-------------
COMPUTERS (HARDWARE)--3.0%
Compaq Computer Corp.................... 135,000 5,661,562
Dell Computer Corp.(b).................. 141,000 10,319,437
-------------
15,980,999
-------------
COMPUTERS (NETWORKING)--5.1%
Cisco Systems, Inc.(b).................. 296,112 27,482,895
COMPUTERS (PERIPHERALS)--2.1%
EMC Corp.(b)............................ 132,000 11,220,000
COMPUTERS (SOFTWARE & SERVICES)--15.2%
America Online, Inc.(b)................. 200,000 32,000,000
At Home Corp.(b)........................ 65,000 4,826,250
BMC Software, Inc.(b)................... 185,000 8,244,062
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)--CONTINUED
Compuware Corp.(b)...................... 156,000 $ 12,187,500
Microsoft Corp.(b)...................... 181,300 25,144,044
-------------
82,401,856
-------------
CONSUMER FINANCE--1.6%
MBNA Corp............................... 340,450 8,489,972
ELECTRICAL EQUIPMENT--3.2%
General Electric Co..................... 170,000 17,350,625
ELECTRONICS (SEMICONDUCTORS)--6.8%
Intel Corp.............................. 126,400 14,986,300
Texas Instruments, Inc.................. 254,600 21,784,212
-------------
36,770,512
-------------
ENTERTAINMENT--0.9%
Walt Disney Co. (The)................... 163,850 4,915,500
FINANCIAL (DIVERSIFIED)--6.6%
American Express Co..................... 92,000 9,407,000
Citigroup, Inc.......................... 220,000 10,890,000
Freddie Mac............................. 239,150 15,410,228
-------------
35,707,228
-------------
HEALTH CARE (DIVERSIFIED)--0.8%
Johnson & Johnson....................... 54,200 4,546,025
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--5.7%
Merck & Co., Inc........................ 64,100 9,466,769
Pfizer, Inc............................. 170,600 21,399,638
-------------
30,866,407
-------------
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C> <C>
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--4.8%
Medtronic, Inc.......................... 350,100 $ 25,994,925
INSURANCE (MULTI-LINE)--1.8%
American International Group, Inc....... 102,500 9,904,063
INVESTMENT BANKING/BROKERAGE--2.1%
Merrill Lynch & Co., Inc................ 174,000 11,614,500
INVESTMENT MANAGEMENT--0.6%
Price (T. Rowe) Associates, Inc......... 93,400 3,198,950
LEISURE TIME (PRODUCTS)--1.0%
Harley-Davidson, Inc.................... 116,000 5,495,500
LODGING-HOTELS--1.9%
Carnival Corp........................... 215,500 10,344,000
PERSONAL CARE--1.9%
Gillette Co............................. 216,300 10,449,994
RESTAURANTS--1.3%
McDonald's Corp......................... 95,000 7,279,375
RETAIL (BUILDING SUPPLIES)--4.0%
Home Depot, Inc. (The).................. 350,000 21,415,625
RETAIL (DEPARTMENT STORES)--1.6%
Kohl's Corp.(b)......................... 142,700 8,767,131
RETAIL (DRUG STORES)--0.9%
Walgreen Co............................. 84,000 4,919,250
RETAIL (GENERAL MERCHANDISE)--1.0%
Dayton Hudson Corp...................... 100,000 5,425,000
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C> <C>
RETAIL (SPECIALTY)--1.7%
Republic Industries, Inc. (b)........... 270,000 $ 3,982,500
Staples, Inc.(b)........................ 125,000 5,460,938
-------------
9,443,438
-------------
SERVICES (ADVERTISING/MARKETING)--1.3%
Interpublic Group of Companies, Inc.
(The)................................... 85,750 6,838,563
SERVICES (COMMERCIAL & CONSUMER)--2.9%
Cendant Corp.(b)........................ 832,333 15,866,348
SERVICES (PAYROLL PROCESSING)--1.3%
Paychex, Inc............................ 135,975 6,994,214
TELECOMMUNICATIONS (LONG DISTANCE)--5.6%
MCI WorldCom, Inc.(b)................... 420,600 30,178,050
TOBACCO--0.8%
Philip Morris Companies, Inc............ 82,450 4,411,075
- - -----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $265,361,571) 536,374,435
- - -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--98.9%
(IDENTIFIED COST $265,361,571) 536,374,435(a)
Cash and receivables, less liabilities--1.1% 5,337,261
--------------
NET ASSETS--100.0% $ 541,711,696
--------------
--------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $271,214,995 and gross
depreciation of $1,710,258 for federal income tax purposes. At December 31,
1998, the aggregate cost of securities for federal income tax purposes was
$266,869,698.
(b) Non-income producing.
See Notes to Financial Statements 7
<PAGE>
Phoenix-Engemann Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $265,361,571) $ 536,374,435
Cash 6,886,252
Receivables
Fund shares sold 292,021
Dividends and interest 203,502
--------------
Total assets 543,756,210
--------------
LIABILITIES
Payables
Fund shares repurchased 975,014
Distribution fee 452,276
Investment advisory fee 351,482
Administration fee 221,926
Trustees' fee 5,210
Accrued expenses 38,606
--------------
Total liabilities 2,044,514
--------------
NET ASSETS $ 541,711,696
--------------
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 213,641,486
Accumulated net realized gain 57,057,346
Net unrealized appreciation 271,012,864
--------------
NET ASSETS $ 541,711,696
--------------
--------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $441,146,043) 16,448,639
Net asset value per share $26.82
Offering price per share $26.82/(1-4.75%) $28.16
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $65,986,007) 2,589,052
Net asset value and offering price per share $25.49
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $34,579,646) 1,356,769
Net asset value and offering price per share $25.49
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 3,651,796
Interest 458,470
Foreign taxes withheld (10,662)
-------------
Total investment income 4,099,604
-------------
EXPENSES
Investment advisory fee 3,841,502
Distribution fee, Class A 965,685
Distribution fee, Class B 573,110
Distribution fee, Class C 302,676
Distribution fee, Class M 427
Administration 2,419,689
Professional 41,369
Trustees 14,667
-------------
Total expenses 8,159,125
-------------
NET INVESTMENT LOSS (4,059,521)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 77,374,130
Net realized loss on foreign currency transactions (11,008)
Net change in unrealized appreciation (depreciation) on
investments 80,943,604
-------------
NET GAIN ON INVESTMENTS 158,306,726
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 154,247,205
-------------
-------------
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended
12/31/97
Year Ended (Rounded to
12/31/98 thousands)
------------- -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (4,059,521) $ (4,678,000)
Net realized gain (loss) 77,363,122 95,837,000
Net change in unrealized appreciation
(depreciation) 80,943,604 (18,157,000)
------------- -------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 154,247,205 73,002,000
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A (19,191,036) (74,825,000)
Net realized gains, Class B (3,003,744) (10,906,000)
Net realized gains, Class C (1,570,635) (5,880,000)
------------- -------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (23,765,415) (91,611,000)
------------- -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (554,463
and 419,000 shares, respectively) 12,769,077 9,864,000
Net asset value of shares issued from
reinvestment of distributions
(665,077 and 3,374,000 shares,
respectively) 17,245,429 66,573,000
Cost of shares repurchased (3,536,921
and 4,478,000 shares, respectively) (79,785,149) (106,146,000)
------------- -------------
Total (49,770,643) (29,709,000)
------------- -------------
CLASS B
Proceeds from sales of shares (245,967
and 284,000 shares, respectively) 5,372,379 6,477,000
Net asset value of shares issued from
reinvestment of distributions
(110,700 and 529,000 shares,
respectively) 2,728,756 10,026,000
Cost of shares repurchased (534,746
and 357,000 shares, respectively) (11,527,013) (8,373,000)
------------- -------------
Total (3,425,878) 8,130,000
------------- -------------
CLASS C
Proceeds from sales of shares (164,645
and 187,000 shares, respectively) 3,582,593 4,261,000
Net asset value of shares issued from
reinvestment of distributions
(58,568 and 284,000 shares,
respectively) 1,443,709 5,374,000
Cost of shares repurchased (356,278
and 254,000 shares, respectively) (7,561,830) (5,945,000)
------------- -------------
Total (2,535,528) 3,690,000
------------- -------------
CLASS M
Proceeds from sales of shares (4,866
and 0 shares, respectively) 100,100 --
Cost of shares repurchased (4,866 and
0 shares, respectively) (108,609) --
------------- -------------
Total (8,509) --
------------- -------------
DECREASE IN NET ASSETS FROM SHARE
TRANSACTIONS (55,740,558) (17,889,000)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS 74,741,232 (36,498,000)
NET ASSETS
Beginning of period 466,970,464 503,468,000
------------- -------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME OF
$0 AND $0, RESPECTIVELY] $ 541,711,696 $ 466,970,000
------------- -------------
------------- -------------
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Phoenix-Engemann Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 20.43 $ 21.94 $ 19.28 $ 15.40 $ 16.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.16)(1) (0.16)(1)(2) (0.14)(1)(3) (0.06)(1) (0.03)(1)
Net realized and unrealized gain
(loss) 7.76 3.51 4.47 4.24 (0.57)
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 7.60 3.35 4.33 4.18 (0.60)
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment
income -- -- -- -- --
Dividends from net realized gains (1.21) (4.86) (1.67) (0.30) --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (1.21) (4.86) (1.67) (0.30) --
-------- -------- -------- -------- --------
Change in net asset value 6.39 (1.51) 2.66 3.88 (0.60)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 26.82 $ 20.43 $ 21.94 $ 19.28 $ 15.40
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total return(4) 37.41% 16.04%(2) 22.49%(3) 27.16% (3.75)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $441,146 $383,481 $426,785 $415,416 $391,831
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.58% 1.6%(2) 1.6%(3) 1.6% 1.6%
Net investment income (loss) (0.72)% (0.7)%(2) (0.6)%(3) (0.3)% (0.2)%
Portfolio turnover 119% 70.6% 70.1% 65.9% 53.8%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1998 1997 1996 1995 1994(5)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 19.61 $ 21.40 $ 18.99 $ 15.28 $ 15.89
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.32)(1) (0.34)(1)(2) (0.31)(1)(3) (0.20)(1) (0.14)(1)
Net realized and unrealized gain
(loss) 7.41 3.41 4.39 4.21 (0.47)
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 7.09 3.07 4.08 4.01 (0.61)
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment
income -- -- -- -- --
Dividends from net realized gains (1.21) (4.86) (1.67) (0.30) --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (1.21) (4.86) (1.67) (0.30) --
-------- -------- -------- -------- --------
Change in net asset value 5.88 (1.79) 2.41 3.71 (0.61)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 25.49 $ 19.61 $ 21.40 $ 18.99 $ 15.28
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total return(4) 36.38% 15.13%(2) 21.52%(3) 26.26% (3.84)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $65,986 $54,267 $49,444 $34,786 $11,349
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.33% 2.4%(2) 2.3%(3) 2.4% 2.3%
Net investment income (loss) (1.47)% (1.5)%(2) (1.5)%(3) (1.1)% (1.0)%
Portfolio turnover 119% 70.6% 70.1% 65.9% 53.8%
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS C
-------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1998 1997 1996 1995 1994(5)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 19.61 $ 21.40 $ 18.99 $ 15.28 $ 15.89
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.32)(1) (0.34)(1)(2) (0.31)(1)(3) (0.20)(1) (0.14)(1)
Net realized and unrealized gain
(loss) 7.41 3.41 4.39 4.21 (0.47)
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 7.09 3.07 4.08 4.01 (0.61)
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment
income -- -- -- -- --
Dividends from net realized gains (1.21) (4.86) (1.67) (0.30) --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (1.21) (4.86) (1.67) (0.30) --
-------- -------- -------- -------- --------
Change in net asset value 5.88 (1.79) 2.41 3.71 (0.61)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 25.49 $ 19.61 $ 21.40 $ 18.99 $ 15.28
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total return(4) 36.38% 15.13%(2) 21.52%(3) 26.26% (3.84)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $34,580 $29,222 $27,239 $20,497 $6,136
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.33% 2.4%(2) 2.3%(3) 2.4% 2.3%
Net investment income (loss) (1.47)% (1.5)%(2) (1.5)%(3) (1.1)% (1.0)%
Portfolio turnover 119% 70.6% 70.1% 65.9% 53.8%
</TABLE>
The table above provides condensed information concerning income and
capital changes for one share of the Phoenix-Engemann Growth Fund. Such
information is based on the Fund's audited financial statements for the
years presented.
(1) Computed using average shares outstanding.
(2) These amounts reflect the impact of a waiver of administration fees of
$18,196. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class A, Class B and Class C shares would not have changed.
(3) These amounts reflect the impact of a waiver of administration fees of
$30,000. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class A, Class B and Class C shares would have been $(.14), $(.31) and
$(.31), respectively, 22.49%, 21.52% and 21.52%, respectively, 1.6%, 2.4%
and 2.4%, respectively, and (0.7)%, (1.5)% and (1.5)%, respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front- end or contingent deferred sales charge.
(5) Inception date for Class B and Class C is January 3, 1994.
See Notes to Financial Statements 11
<PAGE>
INVESTMENTS AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C> <C>
COMMON STOCKS--99.4%
BANKS (MAJOR REGIONAL)--3.3%
State Street Corp....................... 25,000 $ 1,739,062
Wells Fargo & Co........................ 269,400 10,759,162
-------------
12,498,224
-------------
BEVERAGES (NON-ALCOHOLIC)--2.2%
Coca-Cola Co. (The)..................... 87,850 5,874,969
PepsiCo, Inc............................ 62,000 2,538,125
-------------
8,413,094
-------------
CHEMICALS (DIVERSIFIED)--0.5%
Monsanto Co............................. 40,000 1,900,000
COMMUNICATIONS EQUIPMENT--5.9%
Lucent Technologies, Inc................ 130,000 14,300,000
Tellabs, Inc.(b)........................ 120,000 8,227,500
-------------
22,527,500
-------------
COMPUTERS (HARDWARE)--3.7%
Compaq Computer Corp.................... 198,200 8,312,012
Dell Computer Corp.(b).................. 80,000 5,855,000
-------------
14,167,012
-------------
COMPUTERS (NETWORKING)--3.6%
Cisco Systems, Inc.(b).................. 147,937 13,730,403
COMPUTERS (PERIPHERALS)--3.8%
EMC Corp.(b)............................ 170,000 14,450,000
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)--7.9%
BMC Software, Inc.(b)................... 180,000 $ 8,021,250
Compuware Corp.(b)...................... 57,000 4,453,125
Microsoft Corp.(b)...................... 84,400 11,705,225
Oracle Corp.(b)......................... 137,550 5,931,844
-------------
30,111,444
-------------
CONSUMER FINANCE--0.5%
MBNA Corp............................... 75,000 1,870,312
ELECTRICAL EQUIPMENT--3.1%
General Electric Co..................... 115,000 11,737,187
ELECTRONICS (SEMICONDUCTORS)--6.9%
Intel Corp.............................. 111,500 13,219,719
Texas Instruments, Inc.................. 154,000 13,176,625
-------------
26,396,344
-------------
ENTERTAINMENT--0.9%
Walt Disney Co. (The)................... 111,600 3,348,000
FINANCIAL (DIVERSIFIED)--7.7%
American Express Co..................... 66,000 6,748,500
Citigroup, Inc.......................... 150,000 7,425,000
Freddie Mac............................. 168,250 10,841,609
Morgan Stanley, Dean Witter & Co........ 60,000 4,260,000
-------------
29,275,109
-------------
HEALTH CARE (DIVERSIFIED)--2.5%
American Home Products Corp............. 65,000 3,660,313
Johnson & Johnson....................... 68,000 5,703,500
-------------
9,363,813
-------------
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C> <C>
HEALTH CARE (DRUGS--MAJOR PHARMACEUTICALS)--6.9%
Merck & Co., Inc........................ 56,300 $ 8,314,806
Pfizer, Inc............................. 121,950 15,297,103
Schering-Plough Corp.................... 50,000 2,762,500
-------------
26,374,409
-------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--4.2%
Medtronic, Inc.......................... 216,300 16,060,275
HOUSEHOLD PRODUCTS (NON-DURABLES)--1.6%
Colgate-Palmolive Co.................... 65,600 6,092,600
INSURANCE (MULTI-LINE)--2.0%
American International Group, Inc....... 77,000 7,440,125
INVESTMENT BANKING/BROKERAGE--2.0%
Merrill Lynch & Co., Inc................ 116,000 7,743,000
INVESTMENT MANAGEMENT--1.1%
Franklin Resources, Inc................. 90,400 2,892,800
Price (T. Rowe) Associates, Inc......... 40,000 1,370,000
-------------
4,262,800
-------------
LODGING-HOTELS--2.7%
Carnival Corp........................... 214,700 10,305,600
MANUFACTURING (DIVERSIFIED)--0.6%
Tyco International Ltd.................. 365 27,541
United Technologies Corp................ 20,000 2,175,000
-------------
2,202,541
-------------
PERSONAL CARE--2.4%
Gillette Co............................. 190,600 9,208,363
RESTAURANTS--2.0%
McDonald's Corp......................... 101,000 7,739,125
RETAIL (BUILDING SUPPLIES)--3.4%
Home Depot, Inc. (The).................. 130,000 7,954,375
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C> <C>
RETAIL (BUILDING SUPPLIES)--CONTINUED
Lowe's Companies, Inc................... 100,300 $ 5,134,106
-------------
13,088,481
-------------
RETAIL (DEPARTMENT STORES)--0.7%
Kohl's Corp.(b)......................... 40,000 2,457,500
RETAIL (DRUG STORES)--1.5%
Walgreen Co............................. 95,000 5,563,438
RETAIL (GENERAL MERCHANDISE)--2.1%
Dayton Hudson Corp...................... 145,000 7,866,250
RETAIL (SPECIALTY)--1.0%
Staples, Inc.(b)........................ 82,500 3,604,219
SERVICES (ADVERTISING/MARKETING)--1.3%
Interpublic Group of Companies, Inc.
(The)................................... 60,000 4,785,000
SERVICES (COMMERCIAL & CONSUMER)--3.4%
Cendant Corp.(b)........................ 677,000 12,905,313
SERVICES (DATA PROCESSING)--0.5%
Automatic Data Processing, Inc.......... 25,000 2,004,688
TELECOMMUNICATIONS (LONG DISTANCE)--5.9%
MCI WorldCom, Inc.(b)................... 315,000 22,601,250
TOBACCO--1.6%
Philip Morris Companies, Inc............ 110,650 5,919,775
- - -----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $198,933,779) 378,013,194
- - -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS --99.4%
(IDENTIFIED COST $198,933,779) 378,013,194(a)
Cash and receivables, less liabilities--0.6% 2,436,072
--------------
NET ASSETS--100.0% $ 380,449,266
--------------
--------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $178,052,473 and gross
depreciation of $2,319,680 for federal income tax purposes. At December 31,
1998, the aggregate cost of securities for federal income tax purposes was
$202,280,401.
(b) Non-income producing.
See Notes to Financial Statements 15
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $198,933,779) $378,013,194
Cash 2,897,862
Receivables
Fund shares sold 605,483
Dividends and interest 167,239
------------
Total assets 381,683,778
------------
LIABILITIES
Payables
Fund shares repurchased 341,177
Distribution fee 446,038
Investment advisory fee 250,368
Administration fee 158,073
Trustees' fee 1,784
Accrued expenses 37,072
------------
Total liabilities 1,234,512
------------
NET ASSETS $380,449,266
------------
------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $184,321,838
Accumulated net realized gain 17,048,013
Net unrealized appreciation 179,079,415
------------
NET ASSETS $380,449,266
------------
------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $235,064,848) 6,057,862
Net asset value per share $38.80
Offering price per share $38.80/(1-4.75%) $40.73
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $96,983,082) 2,606,496
Net asset value and offering price per share $37.21
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $48,401,336) 1,300,849
Net asset value and offering price per share $37.21
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 2,870,327
Interest 320,928
Foreign taxes withheld (8,352)
------------
Total investment income 3,182,903
------------
EXPENSES
Investment advisory fee 2,617,212
Distribution fee, Class A 499,686
Distribution fee, Class B 790,426
Distribution fee, Class C 418,993
Distribution fee, Class M 429
Administration 1,654,508
Professional 39,187
Trustees 14,667
------------
Total expenses 6,035,108
------------
NET INVESTMENT LOSS (2,852,205)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 24,005,577
Net change in unrealized appreciation (depreciation) on
investments 76,678,083
------------
NET GAIN ON INVESTMENTS 100,683,660
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 97,831,455
------------
------------
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended
12/31/97
Year Ended (Rounded to
12/31/98 thousands)
------------- -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (2,852,205) $ (2,495,000)
Net realized gain (loss) 24,005,577 23,555,000
Net change in unrealized appreciation
(depreciation) 76,678,083 21,916,000
------------- -------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 97,831,455 42,976,000
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A (3,938,869) (13,104,000)
Net realized gains, Class B (1,688,560) (5,183,000)
Net realized gains, Class C (844,698) (3,031,000)
------------- -------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (6,472,127) (21,318,000)
------------- -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(1,393,163 and 1,403,000 shares,
respectively) 45,389,712 42,888,000
Net asset value of shares issued from
reinvestment of distributions
(94,125 and 417,000 shares,
respectively) 3,589,938 11,853,000
Cost of shares repurchased (1,467,112
and 1,272,000 shares, respectively) (47,556,423) (38,417,000)
------------- -------------
Total 1,423,227 16,324,000
------------- -------------
CLASS B
Proceeds from sales of shares (498,534
and 681,000 shares, respectively) 15,592,450 19,549,000
Net asset value of shares issued from
reinvestment of distributions
(40,281 and 166,000 shares,
respectively) 1,473,476 4,576,000
Cost of shares repurchased (341,912
and 259,000 shares, respectively) (10,575,072) (7,706,000)
------------- -------------
Total 6,490,854 16,419,000
------------- -------------
CLASS C
Proceeds from sales of shares (213,942
and 551,000 shares, respectively) 6,658,822 15,687,000
Net asset value of shares issued from
reinvestment of distributions
(20,953 and 101,000 shares,
respectively) 766,453 2,780,000
Cost of shares repurchased (342,357
and 252,000 shares, respectively) (10,440,823) (7,370,000)
------------- -------------
Total (3,015,548) 11,097,000
------------- -------------
CLASS M
Proceeds from sales of shares (3,392
and 0 shares, respectively) 100,100 --
Net asset value of shares issued from
reinvestment of distributions
(0 and 0 shares, respectively) -- --
Cost of shares repurchased (3,392 and
0 shares, respectively) (111,184) --
------------- -------------
Total (11,084) --
------------- -------------
INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS 4,887,449 43,840,000
------------- -------------
NET INCREASE IN NET ASSETS 96,246,777 65,498,000
NET ASSETS
Beginning of period 284,202,489 218,704,000
------------- -------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME OF
$0 AND $0, RESPECTIVELY] $ 380,449,266 $ 284,202,000
------------- -------------
------------- -------------
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 29.21 $ 26.50 $ 22.18 $ 17.30 $ 17.12
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.20)(1) (0.20)(1)(2) (0.12)(1)(3) (0.05)(1) (0.03)(1)
Net realized and unrealized gain
(loss) 10.45 5.23 6.00 4.93 0.21
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 10.25 5.03 5.88 4.88 0.18
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment
income -- -- -- -- --
Dividends from net realized gains (0.66) (2.32) (1.56) -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.66) (2.32) (1.56) -- --
-------- -------- -------- -------- --------
Change in net asset value 9.59 2.71 4.32 4.88 0.18
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 38.80 $ 29.21 $ 26.50 $ 22.18 $ 17.30
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total return(4) 35.13% 19.23%(2) 26.53%(3) 28.21% 1.05%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $235,065 $176,378 $145,469 $122,322 $100,596
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.60% 1.6%(2) 1.7%(3) 1.9% 1.9%
Net investment income (loss) (0.61)% (0.7)%(2) (0.4)%(3) (0.3)% (0.2)%
Portfolio turnover 92% 68.8% 41.9% 26.5% 23.2%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------------
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------
1998 1997 1996 1995 1994(5)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.24 $ 25.88 $ 21.85 $ 17.17 $ 17.02
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.43)(1) (0.42)(1)(2) (0.30)(1)(3) (0.21)(1) (0.14)(1)
Net realized and unrealized gain
(loss) 10.06 5.10 5.89 4.89 0.29
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 9.63 4.68 5.59 4.68 0.15
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment
income -- -- -- -- --
Dividends from net realized gains (0.66) (2.32) (1.56) -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.66) (2.32) (1.56) -- --
-------- -------- -------- -------- --------
Change in net asset value 8.97 2.36 4.03 4.68 0.15
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 37.21 $ 28.24 $ 25.88 $ 21.85 $ 17.17
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total return(4) 34.14% 18.33%(2) 25.60%(3) 27.26% 0.88%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $96,983 $68,051 $47,143 $27,462 $6,722
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.35% 2.4%(2) 2.5%(3) 2.6% 2.6%
Net investment income (loss) (1.35)% (1.4)%(2) (1.2)%(3) (1.0)% (0.9)%
Portfolio turnover 92% 68.8% 41.9% 26.5% 23.2%
</TABLE>
18 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS C
-------------------------------------------------------------------
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------
1998 1997 1996 1995 1994(5)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.24 $ 25.88 $ 21.85 $ 17.17 $ 17.02
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.43)(1) (0.42)(1)(2) (0.30)(1)(3) (0.21)(1) (0.15)(1)
Net realized and unrealized gain
(loss) 10.06 5.10 5.89 4.89 0.30
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 9.63 4.68 5.59 4.68 0.15
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment
income -- -- -- -- --
Dividends from net realized gains (0.66) (2.32) (1.56) -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.66) (2.32) (1.56) -- --
-------- -------- -------- -------- --------
Change in net asset value 8.97 2.36 4.03 4.68 0.15
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 37.21 $ 28.24 $ 25.88 $ 21.85 $ 17.17
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total return(4) 34.14% 18.33%(2) 25.60%(3) 27.26% 0.88%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $48,401 $39,773 $26,092 $15,105 $4,283
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.35% 2.4%(2) 2.5%(3) 2.6% 2.6%
Net investment income (loss) (1.35)% (1.4)%(2) (1.2)%(3) (1.0)% (0.9)%
Portfolio turnover 92% 68.8% 41.9% 26.5% 23.2%
</TABLE>
The table above provides condensed information concerning income and
capital changes for one share of the Phoenix-Engemann Nifty Fifty Fund.
Such information is based on the Fund's audited financial statements for
the years presented.
(1) Computed using average shares outstanding.
(2) These amounts reflect the impact of a waiver of administration fees of
$42,459. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class A, Class B and Class C shares would have been $(.20), $(.42) and
$(.42), respectively, 19.23%, 18.33% and 18.33%, respectively, 1.6%, 2.4%
and 2.4%, respectively, and (0.7)%, (1.5)% and (1.5)%, respectively.
(3) These amounts reflect the impact of a waiver of administration fees of
$70,000. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class A, Class B and Class C shares would have been $(.13), $(.31) and
$(.31), respectively, 26.48%, 25.55% and 25.55%, respectively, 1.8%, 2.5%
and 2.5%, respectively, and (0.5)%, (1.3)% and (1.3)%, respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front- end or contingent deferred sales charge.
(5) Inception date for Class B and Class C is January 3, 1994.
See Notes to Financial Statements 19
<PAGE>
INVESTMENTS AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- ------------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES--27.2%
U.S. TREASURY BONDS-- 13.9%
U.S. Treasury Bonds 6%, 2/15/26......... AAA $ 11,700 $ 12,791,443
U.S. TREASURY NOTES--13.3%
U.S. Treasury Notes 6.50%, 8/15/05...... AAA 11,100 12,203,635
- - ---------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES
(IDENTIFIED COST $23,936,183) 24,995,078
- - ---------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
-------
<S> <C> <C> <C>
COMMON STOCKS--69.7%
BANKS (MAJOR REGIONAL)--2.6%
State Street Corp....................... 11,000 765,187
Wells Fargo & Co........................ 41,000 1,637,437
-------------
2,402,624
-------------
BEVERAGES (NON-ALCOHOLIC)--1.0%
Coca-Cola Co. (The)..................... 13,900 929,562
COMMUNICATIONS EQUIPMENT--3.8%
Lucent Technologies, Inc................ 19,000 2,090,000
Tellabs, Inc.(b)........................ 20,000 1,371,250
-------------
3,461,250
-------------
COMPUTERS (HARDWARE)--1.6%
Compaq Computer Corp.................... 35,000 1,467,812
<CAPTION>
SHARES VALUE
------- -------------
<S> <C> <C> <C>
COMPUTERS (NETWORKING)--2.1%
Cisco Systems, Inc.(b).................. 20,400 $ 1,893,375
COMPUTERS (PERIPHERALS)--2.1%
EMC Corp.(b)............................ 23,000 1,955,000
COMPUTERS (SOFTWARE & SERVICES)--5.4%
BMC Software, Inc.(b)................... 29,000 1,292,313
Compuware Corp.(b)...................... 10,000 781,250
Microsoft Corp.(b)...................... 13,920 1,930,530
Oracle Corp.(b)......................... 21,800 940,125
-------------
4,944,218
-------------
ELECTRICAL EQUIPMENT--1.7%
General Electric Co..................... 15,000 1,530,938
ELECTRONICS (SEMICONDUCTORS)--6.8%
Intel Corp.............................. 34,000 4,031,125
Texas Instruments, Inc.................. 26,000 2,224,625
-------------
6,255,750
-------------
ENTERTAINMENT--1.4%
Walt Disney Co. (The)................... 41,670 1,250,100
FINANCIAL (DIVERSIFIED)--5.4%
American Express Co..................... 11,500 1,175,875
Citigroup, Inc.......................... 20,000 990,000
Freddie Mac............................. 37,100 2,390,631
Morgan Stanley, Dean Witter & Co.(b).... 6,000 426,000
-------------
4,982,506
-------------
</TABLE>
See Notes to Financial Statements 23
<PAGE>
Phoenix-Engemann Balanced Return Fund
<TABLE>
<CAPTION>
SHARES VALUE
------- -------------
<S> <C> <C> <C>
HEALTH CARE (DIVERSIFIED)--1.1%
Johnson & Johnson....................... 12,000 $ 1,006,500
HEALTH CARE (DRUGS--MAJOR PHARMACEUTICALS)--5.7%
Merck & Co., Inc........................ 18,000 2,658,375
Pfizer, Inc............................. 20,300 2,546,381
-------------
5,204,756
-------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--2.1%
Medtronic, Inc.......................... 25,800 1,915,650
HOUSEHOLD PRODUCTS (NON-DURABLES)--1.6%
Colgate-Palmolive Co.................... 15,500 1,439,563
INSURANCE (MULTI-LINE)--2.1%
American International Group, Inc....... 20,000 1,932,500
INVESTMENT BANKING/BROKERAGE--0.5%
Merrill Lynch & Co., Inc................ 7,000 467,250
INVESTMENT MANAGEMENT--1.7%
Franklin Resources, Inc................. 29,000 928,000
Price (T. Rowe) Associates, Inc......... 19,000 650,750
-------------
1,578,750
-------------
LODGING-HOTELS--2.6%
Carnival Corp........................... 50,000 2,400,000
PERSONAL CARE--1.5%
Gillette Co............................. 28,000 1,352,750
RAILROADS--1.3%
Kansas City Southern Industries, Inc.... 25,000 1,229,688
<CAPTION>
SHARES VALUE
------- -------------
<S> <C> <C> <C>
RESTAURANTS--2.5%
McDonald's Corp......................... 29,450 $ 2,256,606
RETAIL (BUILDING SUPPLIES)--1.9%
Home Depot, Inc. (The).................. 29,000 1,774,438
RETAIL (DRUG STORES)--0.8%
Walgreen Co............................. 11,800 691,038
RETAIL (GENERAL MERCHANDISE)--2.2%
Dayton Hudson Corp...................... 38,000 2,061,500
SERVICES (ADVERTISING/MARKETING)--2.1%
Interpublic Group of Companies, Inc.
(The)................................... 24,000 1,914,000
SERVICES (COMMERCIAL & CONSUMER)--0.8%
Cendant Corp.(b)........................ 38,000 724,375
TELECOMMUNICATIONS (LONG DISTANCE)--3.6%
MCI WorldCom, Inc.(b)................... 46,000 3,300,500
TOBACCO--1.7%
Philip Morris Companies, Inc............ 30,000 1,605,000
- - ---------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $31,126,112) 63,927,999
- - ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--96.9%
(IDENTIFIED COST $55,062,295) 88,923,077(a)
Cash and receivables, less liabilities--3.1% 2,819,210
-------------
NET ASSETS--100.0% $ 91,742,287
-------------
-------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $33,737,432 and gross
depreciation of $53,178 for federal income tax purposes. At December 31,
1998, the aggregate cost of securities for federal income tax purposes was
$55,238,823.
(b) Non-income producing.
24 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Balanced Return Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $55,062,295) $ 88,923,077
Cash 2,361,921
Receivables
Dividends and interest 588,155
Fund shares sold 174,923
-------------
Total assets 92,048,076
-------------
LIABILITIES
Payables
Fund shares repurchased 89,784
Distribution fee 84,986
Investment advisory fee 56,927
Administration fee 41,876
Trustees' fee 6,464
Accrued expenses 25,752
-------------
Total liabilities $ 305,789
-------------
NET ASSETS $ 91,742,287
-------------
-------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 54,879,407
Accumulated net realized gain 3,002,098
Net unrealized appreciation 33,860,782
-------------
NET ASSETS $ 91,742,287
-------------
-------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $72,619,667) 2,085,244
Net asset value per share $34.83
Offering price per share $34.83/(1-4.75%) $36.57
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $11,512,253) 334,934
Net asset value and offering price per share $34.37
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $7,610,367) 220,980
Net asset value and offering price per share $34.44
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 546,292
Interest 1,650,792
Foreign taxes withheld (3,257)
-------------
Total investment income 2,193,827
-------------
EXPENSES
Investment advisory fee 602,837
Distribution fee, Class A 158,546
Distribution fee, Class B 90,270
Distribution fee, Class C 64,475
Distribution fee, Class M 414
Administration 444,883
Professional 27,087
Trustees 14,667
-------------
Total expenses 1,403,179
-------------
NET INVESTMENT INCOME 790,648
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 8,795,193
Net change in unrealized appreciation (depreciation) on
investments 11,029,950
-------------
NET GAIN ON INVESTMENTS 19,825,143
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 20,615,791
-------------
-------------
</TABLE>
See Notes to Financial Statements 25
<PAGE>
Phoenix-Engemann Balanced Return Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended
12/31/97
Year Ended (Rounded to
12/31/98 thousands)
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 790,648 $ 562,000
Net realized gain (loss) 8,795,193 7,971,000
Net change in unrealized appreciation
(depreciation) 11,029,950 2,552,000
------------ ------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 20,615,791 11,085,000
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (718,900) (537,000)
Net investment income, Class B (51,501) (22,000)
Net investment income, Class C (31,607) (15,000)
Net realized gains, Class A (4,454,688) (6,686,000)
Net realized gains, Class B (700,523) (824,000)
Net realized gains, Class C (468,778) (659,000)
------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (6,425,997) (8,743,000)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (511,438
and 173,000 shares, respectively) 16,268,814 5,340,000
Net asset value of shares issued from
reinvestment of distributions
(140,176 and 233,000 shares,
respectively) 4,824,840 6,692,000
Cost of shares repurchased (514,775
and 308,000 shares, respectively) (16,514,937) (9,485,000)
------------ ------------
Total 4,578,717 2,547,000
------------ ------------
CLASS B
Proceeds from sales of shares (138,818
and 92,000 shares, respectively) 4,376,531 2,810,000
Net asset value of shares issued from
reinvestment of distributions
(20,594 and 28,000 shares,
respectively) 699,581 781,000
Cost of shares repurchased (72,187 and
38,000 shares, respectively) (2,275,763) (1,166,000)
------------ ------------
Total 2,800,349 2,425,000
------------ ------------
CLASS C
Proceeds from sales of shares (69,806
and 64,000 shares, respectively) 2,171,650 1,952,000
Net asset value of shares issued from
reinvestment of distributions
(13,470 and 22,000 shares,
respectively) 458,553 633,000
Cost of shares repurchased (56,060 and
42,000 shares, respectively) (1,759,923) (1,322,000)
------------ ------------
Total 870,280 1,263,000
------------ ------------
CLASS M
Proceeds from sales of shares (3,393
and 0 shares, respectively) 100,100 --
Net asset value of shares issued from
reinvestment of distributions
(0 and 0 shares, respectively) -- --
Cost of shares repurchased (3,393 and
0 shares, respectively) (112,685) --
------------ ------------
Total (12,585) --
------------ ------------
INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS 8,236,761 6,235,000
------------ ------------
NET INCREASE IN NET ASSETS 22,426,555 8,577,000
NET ASSETS
Beginning of period 69,315,732 60,739,000
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME
OF $0 AND $11,002, RESPECTIVELY] $ 91,742,287 $ 69,316,000
------------ ------------
------------ ------------
</TABLE>
26 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Balanced Return Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 29.05 $ 28.08 $ 25.39 $ 20.54 $ 21.97
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.40 0.30(1)(2) 0.29(1)(3) 0.27(1) 0.39(1)
Net realized and unrealized gain
(loss) 8.03 4.98 4.23 5.31 (1.36)
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 8.43 5.28 4.52 5.58 (0.97)
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment
income (0.40) (0.32) (0.30) (0.29) (0.46)
Dividends from net realized gains (2.25) (3.99) (1.53) (0.44) --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (2.65) (4.31) (1.83) (0.73) (0.46)
-------- -------- -------- -------- --------
Change in net asset value 5.78 0.97 2.69 4.85 (1.43)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 34.83 $ 29.05 $ 28.08 $ 25.39 $ 20.54
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total return(4) 29.12% 18.98%(2) 17.78%(3) 27.18% (4.43)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $72,620 $56,610 $51,947 $52,028 $53,047
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.63% 1.7%(2) 2.0%(3) 2.1% 2.1%
Net investment income (loss) 1.15% 1.0%(2) 1.1%(3) 1.2% 1.8%
Portfolio turnover 124% 40.3% 35.1% 51.1% 28.2%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------------
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------
1998 1997 1996 1995 1994(5)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $28.76 $ 27.85 $ 25.26 $ 20.49 $ 21.89
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.13 0.08(1)(2) 0.09(1)(3) 0.08(1) 0.26(1)
Net realized and unrealized gain
(loss) 7.91 4.93 4.16 5.29 (1.32)
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 8.04 5.01 4.25 5.37 (1.06)
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment
income (0.18) (0.11) (0.13) (0.16) (0.34)
Dividends from net realized gains (2.25) (3.99) (1.53) (0.44) --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (2.43) (4.10) (1.66) (0.60) (0.34)
-------- -------- -------- -------- --------
Change in net asset value 5.61 0.91 2.59 4.77 (1.40)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $34.37 $ 28.76 $ 27.85 $ 25.26 $ 20.49
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total return(4) 28.06% 18.15%(2) 16.82%(3) 26.20% (4.85)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 11,512 $ 7,125 $ 4,609 $ 2,721 $ 1,223
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.38% 2.4%(2) 2.7%(3) 2.9% 2.9%
Net investment income (loss) 0.39% 0.3%(2) 0.3%(3) 0.3% 1.3%
Portfolio turnover 124% 40.3% 35.1% 51.1% 28.2%
</TABLE>
The table above provides condensed information concerning income and
capital changes for one share of the Phoenix-Engemann Balanced Return Fund.
Such information is based on the Fund's audited financial statements for
the years presented.
(1) Computed using average shares outstanding.
(2) These amounts reflect the impact of a waiver of administration fees of
$33,360. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class A, Class B and Class C shares would have been $.29, $.06 and
$.06, respectively, 18.98%, 18.15% and 18.11%, respectively, 1.7%, 2.5% and
2.5%, respectively, and 0.9%, 0.2% and 0.2%, respectively.
(3) These amounts reflect the impact of a waiver of administration fees of
$55,000. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class A, Class B and Class C shares would have been $.27, $.06 and
$.06, respectively, 17.66%, 16.74% and 16.71%, respectively, 2.1%, 2.8% and
2.8%, respectively, and 1.0%, 0.2% and 0.2%, respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front- end or contingent deferred sales charge.
(5) Inception date for Class B and Class C is January 3, 1994.
See Notes to Financial Statements 27
<PAGE>
Phoenix-Engemann Balanced Return Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS C
-------------------------------------------------------------------
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------
1998 1997 1996 1995 1994(5)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.80 $ 27.88 $ 25.28 $ 20.48 $ 21.89
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.14 0.08(1)(2) 0.09(1)(3) 0.07(1) 0.25(1)
Net realized and unrealized gain
(loss) 7.92 4.92 4.16 5.30 (1.31)
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 8.06 5.00 4.25 5.37 (1.06)
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment
income (0.17) (0.09) (0.12) (0.13) (0.35)
Dividends from net realized gains (2.25) (3.99) (1.53) (0.44) --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (2.42) (4.08) (1.65) (0.57) (0.35)
-------- -------- -------- -------- --------
Change in net asset value 5.64 0.92 2.60 4.80 (1.41)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 34.44 $ 28.80 $ 27.88 $ 25.28 $ 20.48
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total return(4) 28.07% 18.11%(2) 16.79%(3) 26.23% (4.85)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 7,610 $ 5,581 $ 4,183 $ 2,809 $ 1,449
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.38% 2.4%(2) 2.7%(3) 2.9% 2.9%
Net investment income (loss) 0.39% 0.3%(2) 0.3%(3) 0.3% 1.3%
Portfolio turnover 124% 40.3% 35.1% 51.1% 28.2%
</TABLE>
The table above provides condensed information concerning income and
capital changes for one share of the Phoenix-Engemann Balanced Return Fund.
Such information is based on the Fund's audited financial statements for
the years presented.
(1) Computed using average shares outstanding.
(2) These amounts reflect the impact of a waiver of administration fees of
$33,360. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class A, Class B and Class C shares would have been $.29, $.06 and
$.06, respectively, 18.98%, 18.15% and 18.11%, respectively, 1.7%, 2.5% and
2.5%, respectively, and 0.9%, 0.2% and 0.2%, respectively.
(3) These amounts reflect the impact of a waiver of administration fees of
$55,000. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class A, Class B and Class C shares would have been $.27, $.06 and
$.06, respectively, 17.66%, 16.74% and 16.71%, respectively, 2.1%, 2.8% and
2.8%, respectively, and 1.0%, 0.2% and 0.2%, respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front- end or contingent deferred sales charge.
(5) Inception date for Class B and Class C is January 3, 1994.
28 See Notes to Financial Statements
<PAGE>
INVESTMENTS AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C> <C>
FOREIGN COMMON STOCKS--52.0%
FINLAND--3.3%
Nokia Corp. Sponsored ADR Class A
(Communications Equipment).............. 6,100 $ 734,669
FRANCE--6.9%
AXA-UAP Sponsored ADR (Insurance
(Life/Health)).......................... 4,800 346,800
Alcatel SA ADR (Communications
Equipment).............................. 10,100 246,819
Rhone-Poulenc Class A (Health Care
(Drugs-Major Pharmaceuticals)).......... 6,000 308,915
Vivendi (Services (Commercial &
Consumer)).............................. 2,500 648,943
------------
1,551,477
------------
GERMANY--9.1%
DaimlerChrysler AG (Automobiles)(b)..... 3,758 361,003
Hoechst AG (Chemicals).................. 6,500 269,676
SAP AG Sponsored ADR (Computers
(Software & Services))(b)............... 23,000 829,437
Siemens AG (Manufacturing
(Diversified)).......................... 4,100 269,555
Volkswagen AG (Automobiles)............. 3,900 315,649
------------
2,045,320
------------
IRELAND--3.0%
Allied Irish Banks PLC Sponsored ADR
(Banks (Major Regional))................ 2,300 253,862
Elan Corp. PLC Sponsored ADR (Health
Care (Drugs-Major
Pharmaceuticals))(b).................... 6,100 424,331
------------
678,193
------------
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C> <C>
ITALY--2.9%
Luxottica Group SPA Sponsored ADR
(Health Care (Medical Products &
Supplies)).............................. 25,000 $ 300,000
Telecom Italia SPA Sponsored ADR
(Communications Equipment).............. 4,000 348,000
------------
648,000
------------
NETHERLANDS--7.5%
ING Groep NV (Banks (Money Center))..... 11,725 715,370
Koninklijke Philips Electronics NV NY
Registered Shares (Electrical
Equipment).............................. 2,100 142,144
Unilever NV NY Registered Shares
(Personal Care)......................... 3,100 257,106
Wolters Kluwer NV (Publishing).......... 2,626 562,234
------------
1,676,854
------------
SINGAPORE--1.4%
Datacraft Asia Ltd. (Communications
Equipment).............................. 172,250 304,882
SOUTH KOREA--0.0%
Kookmin Bank Sponsored GDR 144A (Banks
(Money Center))(c)...................... 1 7
SWEDEN--2.1%
Telefonaktiebolaget LM Ericsson
Sponsored ADR (Communications
Equipment).............................. 19,500 466,781
SWITZERLAND--5.8%
Nestle SA Sponsored ADR (Foods)......... 2,200 239,465
Novartis AG NY Registered Shares (Health
Care (Drugs--Major Pharmaceuticals)).... 160 314,530
</TABLE>
32 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Global Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C> <C>
SWITZERLAND--CONTINUED
Zurich Allied AG Registered Shares
(Insurance (Multi-Line))................ 1,020 $ 755,264
------------
1,309,259
------------
UNITED KINGDOM--10.0%
Amvescap PLC Sponsored ADR (Banks (Major
Regional)).............................. 14,200 546,700
Cable & Wireless Communications PLC
(Telecommunications
(Cellular/Wireless))(b)................. 5,200 235,950
Hays PLC (Professional Services)........ 37,000 324,734
Ladbroke Group PLC (Gaming, Lottery &
Parimutuel Companies)(b)................ 34,653 139,239
Rentokil Initial PLC (Services
(Facilities & Environmental))........... 55,500 418,307
Vodafone Group PLC Sponsored ADR
(Telecommunications
(Cellular/Wireless)).................... 3,600 580,050
------------
2,244,980
------------
- - -----------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $8,917,446) 11,660,422
- - -----------------------------------------------------------------------------
COMMON STOCKS--46.4%
UNITED STATES--46.4%
Affiliated Managers Group, Inc.
(Investment Management)(b).............. 8,000 239,000
American Express Co. (Financial
(Diversified)).......................... 2,785 284,766
American International Group, Inc.
(Insurance (Multi-Line))................ 2,395 231,417
BMC Software, Inc. (Computers (Software
& Services))(b)......................... 3,725 165,995
Carnival Corp. (Lodging-Hotels)......... 6,350 304,800
Cendant Corp. (Services (Commercial &
Consumer))(b)........................... 5,184 98,820
Cisco Systems, Inc. (Computers
(Networking))(b)........................ 3,910 362,897
Citigroup, Inc. (Financial
(Diversified)).......................... 3,480 172,260
Coca-Cola Co. (The) (Beverages
(Non-Alcoholic))........................ 2,775 185,578
Colgate-Palmolive Co. (Household
Products (Non-Durables))................ 2,400 222,900
Compaq Computer Corp. (Computers
(Hardware))............................. 4,140 173,621
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C> <C>
UNITED STATES--CONTINUED
Compuware Corp. (Computers (Software &
Services))(b)........................... 1,285 $ 100,391
Dayton Hudson Corp. (Retail (General
Merchandise))........................... 5,445 295,391
EMC Corp. (Computers
(Peripherals))(b)....................... 3,230 274,550
Federated Investors, Inc. (Investment
Management)............................. 12,500 226,563
Franklin Resources, Inc. (Investment
Management)............................. 3,365 107,680
Freddie Mac (Financial (Diversified))... 5,670 365,361
General Electric Co. (Electrical
Equipment).............................. 2,245 229,130
Gillette Co. (Personal Care)............ 4,120 199,048
Home Depot, Inc. (The) (Retail (Building
Supplies)).............................. 3,970 242,914
Intel Corp. (Electronics
(Semiconductors))....................... 4,160 493,220
Interpublic Group of Companies, Inc.
(The) (Services
(Advertising/Marketing))................ 3,110 248,023
Johnson & Johnson (Health Care
(Diversified)).......................... 1,880 157,685
Kansas City Southern Industries, Inc.
(Railroads)............................. 3,410 167,729
Liberty Financial Co. (Financial
(Diversified)).......................... 4,300 116,100
Lucent Technologies, Inc.
(Communications Equipment).............. 2,675 294,250
MCI WorldCom, Inc. (Telecommunications
(Long Distance))(b)..................... 5,690 408,258
McDonald's Corp. (Restaurants).......... 3,910 299,604
Medtronic, Inc. (Health Care (Medical
Products & Supplies))................... 4,305 319,646
Merck & Co., Inc. (Health Care
(Drugs-Major Pharmaceuticals)).......... 2,620 386,941
Microsoft Corp. (Computers (Software &
Services))(b)........................... 2,050 284,309
Oracle Corp. (Computers (Software &
Services))(b)........................... 2,785 120,103
Pfizer, Inc. (Health Care (Drugs-Major
Pharmaceuticals))....................... 3,115 390,738
Philip Morris Companies, Inc.
(Tobacco)............................... 4,500 240,750
Price (T. Rowe) Associates, Inc.
(Investment Management)................. 3,640 124,670
Scottish Annuity & Life Holdings Ltd.
(Insurance (Multi-Line))(b)............. 30,000 412,500
State Street Corp. (Banks (Major
Regional)).............................. 1,940 134,951
Tellabs, Inc. (Communications
Equipment)(b)........................... 2,500 171,406
</TABLE>
See Notes to Financial Statements 33
<PAGE>
Phoenix-Engemann Global Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C> <C>
UNITED STATES--CONTINUED
Texas Instruments, Inc. (Electronics
(Semiconductors))....................... 3,870 $ 331,127
Waddell & Reed Financial, Inc. Class A
(Financial (Diversified))............... 9,190 217,688
Walgreen Co. (Retail (Drug Stores))..... 1,895 110,976
Walt Disney Co. (The) (Entertainment)... 7,275 218,250
Wells Fargo & Co. (Banks (Major
Regional)).............................. 7,075 282,558
------------
10,414,564
------------
- - -----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $8,382,280) 10,414,564
- - -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--98.4%
(IDENTIFIED COST $17,299,726) 22,074,986(a)
Cash and receivables, less liabilities--1.6% 389,186
-------------
NET ASSETS--100.0% $ 22,464,172
-------------
-------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $5,013,095 and gross
depreciation of $286,167 for federal income tax purposes. At December 31,
1998, the aggregate cost of securities for federal income tax purposes was
$17,348,058.
(b) Non-income producing.
(c) 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 December 31,
1998, these securities amounted to a value of $7 or less than 1% of net
assets.
34 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Global Growth Fund
INDUSTRY DIVERSIFICATION
AS A PERCENTAGE OF THE VALUE OF TOTAL INVESTMENTS
(UNAUDITED)
<TABLE>
<S> <C>
Automobiles............................. 3.1%
Banks (Major Regional).................. 5.5
Banks (Money Center).................... 3.2
Beverages (Non-Alcoholic)............... 0.8
Chemicals............................... 1.2
Communications Equipment................ 11.6
Computers (Hardware).................... 0.8
Computers (Networking).................. 1.7
Computers (Peripherals)................. 1.2
Computers (Software & Services)......... 6.8
Electrical Equipment.................... 1.7
Electronics (Semiconductors)............ 3.7
Entertainment........................... 1.0
Financial (Diversified)................. 5.2
Foods................................... 1.1
Gaming, Lottery & Parimutuel
Companies............................... 0.6
Health Care (Diversified)............... 0.7
Health Care (Drugs-Major
Pharmaceuticals)........................ 8.3
Health Care (Medical Products &
Supplies)............................... 2.8
Household Products (Non-Durables)....... 1.0
Insurance (Life/Health)................. 1.6
Insurance (Multi-Line).................. 6.3
Investment Management................... 3.2
Lodging-Hotels.......................... 1.4
Manufacturing (Diversified)............. 1.2
Personal Care........................... 2.1
Professional Services................... 1.5
Publishing.............................. 2.5
Railroads............................... 0.8
Restaurants............................. 1.4
Retail (Building Supplies).............. 1.1
Retail (Drug Stores).................... 0.5
Retail (General Merchandise)............ 1.3
Services (Advertising/Marketing)........ 1.1
Services (Commercial & Consumer)........ 3.4
Services (Facilities & Environmental)... 1.9
Telecommunications
(Cellular/Wireless)..................... 3.7
Telecommunications (Long Distance)...... 1.9
Tobacco................................. 1.1
---------
100.0%
---------
---------
</TABLE>
See Notes to Financial Statements 35
<PAGE>
Phoenix-Engemann Global Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $17,299,726) $ 22,074,986
Receivables
Investment securities sold 826,380
Fund shares sold 41,915
Dividends and interest 19,539
-------------
Total assets 22,962,820
-------------
LIABILITIES
Payables
Custodian 359,212
Fund shares repurchased 67,493
Distribution fee 16,728
Investment advisory fee 12,952
Administration fee 11,775
Trustees' fee 5,823
Accrued expenses 24,665
-------------
Total liabilities 498,648
-------------
NET ASSETS $ 22,464,172
-------------
-------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 19,486,294
Accumulated net realized loss (1,798,408)
Net unrealized appreciation 4,776,286
-------------
NET ASSETS $ 22,464,172
-------------
-------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $13,452,636) 602,051
Net asset value per share $22.34
Offering price per share $22.34/(1-4.75%) $23.45
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $4,729,841) 215,634
Net asset value and offering price per share $21.93
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $4,281,695) 195,318
Net asset value and offering price per share $21.92
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 271,191
Interest 1,582
Foreign taxes withheld (21,640)
-------------
Total investment income 251,133
-------------
EXPENSES
Investment advisory fee 246,560
Distribution fee, Class A 34,832
Distribution fee, Class B 42,531
Distribution fee, Class C 41,424
Distribution fee, Class M 401
Administration 131,429
Professional 25,834
Trustees 12,923
-------------
Total expenses 535,934
Less expenses borne by investment adviser (38,757)
-------------
Net expenses 497,177
-------------
NET INVESTMENT LOSS (246,044)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (1,655,274)
Net realized gain on foreign currency transactions 6,574
Net change in unrealized appreciation (depreciation) on
investments 4,509,782
Net change in unrealized appreciation (depreciation) on
foreign currency and foreign currency transactions 1,017
-------------
NET GAIN ON INVESTMENTS 2,862,099
-------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 2,616,055
-------------
-------------
</TABLE>
36 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Global Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended
12/31/97
Year Ended (Rounded to
12/31/98 thousands)
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (246,044) $ (149,000)
Net realized gain (loss) (1,648,700) 760,000
Net change in unrealized appreciation
(depreciation) 4,510,799 203,000
------------ ------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 2,616,055 814,000
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A (120,705) (703,000)
Net realized gains, Class B (41,681) (217,000)
Net realized gains, Class C (36,810) (238,000)
In excess of accumulated net realized
gains, Class A (81,653) --
In excess of accumulated net realized
gains, Class B (28,196) --
In excess of accumulated net realized
gains, Class C (24,901) --
------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (333,946) (1,158,000)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (243,697
and 391,000 shares, respectively) 5,188,236 8,211,000
Net asset value of shares issued from
reinvestment of distributions
(8,717 and 34,000 shares,
respectively) 190,194 653,000
Cost of shares repurchased (253,582
and 223,000 shares, respectively) (5,341,266) (4,567,000)
------------ ------------
Total 37,164 4,297,000
------------ ------------
CLASS B
Proceeds from sales of shares (82,048
and 138,000 shares, respectively) 1,741,279 2,861,000
Net asset value of shares issued from
reinvestment of distributions
(3,137 and 10,000 shares,
respectively) 67,204 199,000
Cost of shares repurchased (38,086 and
25,000 shares, respectively) (810,368) (492,000)
------------ ------------
Total 998,115 2,568,000
------------ ------------
CLASS C
Proceeds from sales of shares (47,457
and 180,000 shares, respectively) 1,013,490 3,790,000
Net asset value of shares issued from
reinvestment of distributions
(2,766 and 11,000 shares,
respectively) 59,214 200,000
Cost of shares repurchased (47,553 and
4,000 shares, respectively) (985,469) (84,000)
------------ ------------
Total 87,235 3,906,000
------------ ------------
CLASS M
Proceeds from sales of shares (5,050
and 0 shares, respectively) 100,100 --
Net asset value of shares issued from
reinvestment of distributions
(0 and 0 shares, respectively) -- --
Cost of shares repurchased (5,050 and
0 shares, respectively) (101,405) --
------------ ------------
Total (1,305) --
------------ ------------
INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS 1,121,209 10,771,000
------------ ------------
NET INCREASE IN NET ASSETS 3,403,318 10,427,000
NET ASSETS
Beginning of period 19,060,854 8,634,000
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME OF
$0 AND $0, RESPECTIVELY] $ 22,464,172 $ 19,061,000
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements 37
<PAGE>
Phoenix-Engemann Global Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
------------------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 19.83 $ 19.06 $ 17.27 $ 14.06 $ 11.18
INCOME FROM INVESTMENT
OPERATIONS(6)
Net investment income (loss) (0.18)(1)(5) (0.19)(1)(2) 0.03(1)(3) 0.24(1)(3) 0.10(1)(3)
Net realized and unrealized
gain (loss) 3.02 2.29 3.55 3.11 2.78
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 2.84 2.10 3.58 3.35 2.88
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net
investment income -- -- (0.04) -- --
Dividends from net realized
gains (0.20) (1.33) (1.75) (0.14) --
In excess of accumulated net
realized gains (0.13) -- -- -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.33) (1.33) (1.79) (0.14) --
-------- -------- -------- -------- --------
Change in net asset value 2.51 0.77 1.79 3.21 2.88
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 22.34 $ 19.83 $ 19.06 $ 17.27 $ 14.06
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total return(4) 14.35% 11.27%(2) 21.77%(3) 23.84%(3) 25.76%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $13,453 $11,964 $7,654 $3,203 $141
RATIO TO AVERAGE NET ASSETS
OF:
Operating expenses 1.94% 2.0%(2) 0.8%(3) --%(3) --%(3)
Net investment income (loss) (0.81)% (0.9)%(2) 0.1%(3) 1.4%(3) 0.8%(3)
Portfolio turnover 95% 237.2% 220.3% 29.0% 479.3%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------
1998 1997 1996
<S> <C> <C> <C>
Net asset value, beginning of
period $ 19.65 $ 19.04 $ 17.44(7)
INCOME FROM INVESTMENT
OPERATIONS(6)
Net investment income (loss) (0.34)(1)(5) (0.35)(1)(2) (0.08)(1)
Net realized and unrealized
gain (loss) 2.95 2.29 1.82
----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 2.61 1.94 1.74
----- ----- -----
LESS DISTRIBUTIONS
Dividends from net
investment income -- -- --
Dividends from net realized
gains (0.20) (1.33) (0.14)
In excess of accumulated net
realized gains (0.13) -- --
----- ----- -----
TOTAL DISTRIBUTIONS (0.33) (1.33) (0.14)
----- ----- -----
Change in net asset value 2.28 0.61 1.60
----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 21.93 $ 19.65 $ 19.04
----- ----- -----
----- ----- -----
Total return(4) 13.31% 10.44%(2) 9.98%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $4,730 $3,312 $874
RATIO TO AVERAGE NET ASSETS
OF:
Operating expenses 2.69% 2.8%(2) 2.7%(8)
Net investment income (loss) (1.59)% (1.7)%(2) (1.9)%(8)
Portfolio turnover 95% 237.2% 220.3%
</TABLE>
38 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Global Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------
1998 1997 1996
<S> <C> <C> <C>
Net asset value,
beginning of period $ 19.65 $ 19.03 $ 17.88(7)
INCOME FROM INVESTMENT
OPERATIONS(6)
Net investment income
(loss) (0.33)(1)(5) (0.37)(1)(2) (0.04)(1)
Net realized and
unrealized gain
(loss) 2.93 2.32 1.34
----- ----- -----
TOTAL FROM
INVESTMENT
OPERATIONS 2.60 1.95 1.30
----- ----- -----
LESS DISTRIBUTIONS
Dividends from net
investment income -- -- (0.01)
Dividends from net
realized gains (0.20) (1.33) (0.14)
In excess of
accumulated net
realized gains (0.13) -- --
----- ----- -----
TOTAL DISTRIBUTIONS (0.33) (1.33) (0.15)
----- ----- -----
Change in net asset value 2.27 0.62 1.15
----- ----- -----
NET ASSET VALUE, END OF
PERIOD $ 21.92 $ 19.65 $ 19.03
----- ----- -----
----- ----- -----
Total return(4) 13.26%(2) 10.50%(2) 7.28%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $4,282 $3,785 $106
RATIO TO AVERAGE NET
ASSETS OF:
Operating expenses 2.69% 2.7%(2) 2.7%(8)
Net investment income
(loss) (1.57)% (1.8)%(2) (1.6)%(8)
Portfolio turnover 95% 237.2% 220.3%
</TABLE>
The table above provides condensed information concerning income and
capital changes for one share of the Phoenix-Engemann Global Growth Fund.
Such information is based on the Fund's audited financial statements for
the years presented.
(1) Computed using average shares outstanding.
(2) These amounts reflect the impact of a waiver of administration fees of
$708. Absent the waiver, net investment income (loss) per share, total
return and the ratios of expenses and net investment income (loss) to
average net assets for Class A, Class B and Class C shares would have been
$(.19), $(.35) and $(.37), respectively, 11.27%, 10.44% and 10.50%,
respectively, 2.0%, 2.8% and 2.8%, respectively, and (0.9)%, (1.7)% and
(1.8)%, respectively.
(3) These amounts reflect the impact of a waiver of Manager fees of $62,438,
$42,545 and $2,784 for the periods ended December 31, 1996, 1995 and 1994,
respectively, and the Manager's reimbursement for income taxes of $13,109
during 1994. Absent waivers and reimbursement, net investment income (loss)
per share, total return and ratios of expenses and net investment income
(loss) to average net assets would have been $(.21), 21.71% and 2.0%,
respectively, $(.15), 22.88% and 2.3%, respectively, and $(.21), 14.40% and
10.4% (2.3% if only normal and recurring expenses are taken into account),
respectively, and $(.03), 11.40% and 2.3%, respectively, for the periods
ended December 31, 1996, 1995 and 1994, respectively.
(4) Total return measures the change in the value of an investment during each
of the periods presented and does not include the impact of paying any
sales charge. Total return for the periods ended December 31, 1996 (Class B
and Class C only) have not been annualized.
(5) Includes reimbursement of operating expenses by investment adviser of
$0.04.
(6) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
(7) The beginning net asset value per share of Class B and Class C shares
equals the net asset value per share of the Class A shares as of the first
day Class B and Class C shares were sold, September 18, 1996 and October
21, 1996, respectively.
(8) Annualized.
See Notes to Financial Statements 39
<PAGE>
INVESTMENTS AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMMON STOCKS--97.1%
BIOTECHNOLOGY--3.0%
Coulter Pharmaceutical, Inc.(b)......... 30,000 $ 900,000
Incyte Pharmaceuticals, Inc.(b)......... 16,250 607,344
Inhale Therapeutic Systems(b)........... 30,000 990,000
Texas Biotechnology Corp.(b)............ 100,000 493,750
------------
2,991,094
------------
COMPUTERS (NETWORKING)--0.8%
Xylan Corp.(b).......................... 46,000 807,875
COMPUTERS (SOFTWARE & SERVICES)--12.2%
Aspect Development, Inc.(b)............. 50,000 2,215,625
i2 Technologies, Inc.(b)................ 30,000 911,250
Inktomi Corp.(b)........................ 6,600 853,875
Legato Systems, Inc.(b)................. 30,000 1,978,125
Peregrine Systems, Inc.(b).............. 25,000 1,159,375
Rational Software Corp.(b).............. 40,000 1,060,000
Sapient Corp.(b)........................ 7,000 392,000
Software AG Systems, Inc.(b)............ 85,000 1,540,625
VeriSign, Inc.(b)....................... 20,000 1,182,500
Walker Interactive Systems, Inc.(b)..... 150,000 1,012,500
------------
12,305,875
------------
CONSUMER FINANCE--2.5%
Metris Companies, Inc................... 50,000 2,515,625
ELECTRONICS (INSTRUMENTATION)--3.7%
Flextronics International Ltd.(b)....... 15,000 1,284,375
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
ELECTRONICS (INSTRUMENTATION)--CONTINUED
Micrel, Inc.(b)......................... 45,000 $ 2,475,000
------------
3,759,375
------------
ELECTRONICS (SEMICONDUCTORS)--4.0%
Applied Micro Circuits Corp.(b)......... 51,800 1,759,581
Vitesse Semiconductor Corp.(b).......... 50,000 2,281,250
------------
4,040,831
------------
FINANCIAL (DIVERSIFIED)--2.5%
American Capital Strategies Ltd......... 50,000 862,500
Federal Agricultural Mortgage Corp.
Class C(b).............................. 21,000 779,625
HealthCare Financial Partners,
Inc.(b)................................. 22,500 897,187
------------
2,539,312
------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--0.9%
PharmaPrint, Inc.(b).................... 70,000 918,750
HEALTH CARE (HOSPITAL MANAGEMENT)--2.9%
Curative Health Services, Inc.(b)....... 50,000 1,675,000
Health Management Associates, Inc. Class
A(b).................................... 56,500 1,221,812
------------
2,896,812
------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--2.2%
Schein (Henry), Inc.(b)................. 50,000 2,237,500
HEALTH CARE (SPECIALIZED SERVICES)--2.3%
ALZA Corp.(b)........................... 30,000 1,567,500
</TABLE>
42 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
HEALTH CARE (SPECIALIZED SERVICES)--CONTINUED
PAREXEL International Corp.(b).......... 30,000 $ 750,000
------------
2,317,500
------------
INSURANCE (MULTI-LINE)--3.1%
Annuity and Life Re (Holdings) Ltd...... 56,250 1,518,750
Scottish Annuity & Life Holdings
Ltd.(b)................................. 119,000 1,636,250
------------
3,155,000
------------
INVESTMENT BANKING/BROKERAGE--0.8%
Donaldson, Lufkin & Jenrette, Inc....... 20,000 820,000
LEISURE TIME (PRODUCTS)--7.1%
Action Performance Companies, Inc.(b)... 83,000 2,936,125
International Speedway Corp. Class A.... 105,000 4,252,500
------------
7,188,625
------------
OIL & GAS (EXPLORATION & PRODUCTION)--4.2%
Pinnacle Oil International, Inc.(b)..... 224,500 4,265,500
RAILROADS--1.8%
Kansas City Southern Industries, Inc.... 38,000 1,869,125
RESTAURANTS--4.9%
CKE Restaurants, Inc.................... 86,900 2,558,119
Cheesecake Factory, Inc. (The)(b)....... 80,000 2,372,500
------------
4,930,619
------------
RETAIL (COMPUTERS & ELECTRONICS)--1.3%
CDW Computer Centers, Inc.(b)........... 13,800 1,323,937
RETAIL (FOOD CHAINS)--2.9%
Whole Foods Market, Inc.(b)............. 60,000 2,902,500
RETAIL (GENERAL MERCHANDISE)--10.5%
99 Cents Only Stores(b)................. 62,500 3,070,312
Bed, Bath & Beyond, Inc.(b)............. 122,000 4,163,250
Cost Plus, Inc.(b)...................... 67,900 2,130,363
Lands' End, Inc.(b)..................... 18,500 498,344
Smart & Final, Inc...................... 75,000 721,875
------------
10,584,144
------------
RETAIL (SPECIALTY)--10.7%
Claire's Stores, Inc.................... 100,000 2,050,000
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
RETAIL (SPECIALTY)--CONTINUED
Lithia Motors, Inc. Class A(b).......... 55,000 $ 907,500
MSC Industrial Direct Co., Inc. Class
A(b).................................... 120,000 2,715,000
Restoration Hardware, Inc.(b)........... 113,000 3,036,875
Sonic Automotive, Inc.(b)............... 45,000 1,549,688
United Auto Group, Inc.(b).............. 55,000 505,313
------------
10,764,376
------------
SAVINGS & LOAN COMPANIES--0.6%
Staten Island Bancorp, Inc.............. 30,000 598,125
SERVICES (ADVERTISING/MARKETING)--1.6%
Abacus Direct Corp.(b).................. 35,000 1,592,500
SERVICES (COMMERCIAL & CONSUMER)--7.1%
Budget Group, Inc. Class A(b)........... 80,400 1,276,350
MAXIMUS, Inc.(b)........................ 30,000 1,110,000
United Rentals (North America),
Inc.(b)................................. 144,000 4,770,000
------------
7,156,350
------------
SERVICES (DATA PROCESSING)--2.4%
NCO Group, Inc.(b)...................... 53,000 2,385,000
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--1.1%
WinStar Communications, Inc.(b)......... 28,000 1,092,000
- - ----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $74,530,617) 97,958,350
- - ----------------------------------------------------------------------------
FOREIGN COMMON STOCKS--1.0%
OIL & GAS (EXPLORATION & PRODUCTION)--1.0%
Encal Energy Ltd. (Canada)(b)........... 270,200 1,002,734
- - ----------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $987,612) 1,002,734
- - ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--98.1%
(IDENTIFIED COST $75,518,229) 98,961,084(a)
Cash and receivables, less liabilities--1.9% 1,879,463
--------------
NET ASSETS--100.0% $ 100,840,547
--------------
--------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $25,127,406 and gross
depreciation of $2,161,509 for federal income tax purposes. At December 31,
1998, the aggregate cost of securities for federal income tax purposes was
$75,995,187.
(b) Non-income producing.
See Notes to Financial Statements 43
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $75,518,229) $ 98,961,084
Cash 2,051,179
Receivables
Fund shares sold 646,150
Dividends and interest 17,016
-------------
Total assets 101,675,429
-------------
LIABILITIES
Payables
Investment securities purchased 473,434
Fund shares repurchased 94,465
Distribution fee 122,081
Investment advisory fee 69,667
Administration fee 42,614
Trustees' fee 6,812
Accrued expenses 25,809
-------------
Total liabilities 834,882
-------------
NET ASSETS $ 100,840,547
-------------
-------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest 88,412,046
Accumulated net realized loss (11,014,354)
Net unrealized appreciation 23,442,855
-------------
NET ASSETS $ 100,840,547
-------------
-------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $54,186,652) 2,250,328
Net asset value per share $24.08
Offering price per share $24.08/(1-4.75%) $25.28
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $31,631,170) 1,337,864
Net asset value and offering price per share $23.64
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $15,022,725) 635,861
Net asset value and offering price per share $23.63
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 141,693
Interest 160,603
-------------
Total investment income 302,296
-------------
EXPENSES
Investment advisory fee 740,594
Distribution fee, Class A 102,801
Distribution fee, Class B 236,341
Distribution fee, Class C 118,976
Distribution fee, Class M 426
Administration 433,926
Professional 27,083
Trustees 14,648
-------------
Total expenses 1,674,795
Less expenses borne by investment adviser (41,731)
-------------
Net expenses 1,633,064
-------------
NET INVESTMENT LOSS (1,330,768)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (10,304,077)
Net realized gain on foreign currency transactions 375
Net change in unrealized appreciation (depreciation) on
investments 22,375,638
-------------
NET GAIN ON INVESTMENTS 12,071,936
-------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 10,741,168
-------------
-------------
</TABLE>
44 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended
12/31/97
Year Ended (Rounded to
12/31/98 thousands)
------------- ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (1,330,768) $ (498,000)
Net realized gain (loss) (10,303,702) 4,530,000
Net change in unrealized appreciation
(depreciation) 22,375,638 698,000
------------- ------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 10,741,168 4,730,000
------------- ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
In excess of accumulated net realized
gains, Class A (48,557) (2,443,000)
In excess of accumulated net realized
gains, Class B (28,857) (1,543,000)
In excess of accumulated net realized
gains, Class C (13,819) (718,000)
------------- ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (91,233) (4,704,000)
------------- ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(1,832,747 and 1,013,000 shares,
respectively) 39,721,245 21,556,000
Net asset value of shares issued from
reinvestment of distributions
(2,097 and 115,000 shares,
respectively) 46,145 2,307,000
Cost of shares repurchased (901,103
and 239,000 shares, respectively) (19,287,058) (4,740,000)
------------- ------------
Total 20,480,332 19,123,000
------------- ------------
CLASS B
Proceeds from sales of shares (776,437
and 706,000 shares, respectively) 16,692,888 15,726,000
Net asset value of shares issued from
reinvestment of distributions
(1,267 and 67,000 shares,
respectively) 27,357 1,327,000
Cost of shares repurchased (268,731
and 25,000 shares, respectively) (5,454,844) (514,000)
------------- ------------
Total 11,265,401 16,539,000
------------- ------------
CLASS C
Proceeds from sales of shares (389,879
and 364,000 shares, respectively) 8,174,670 7,688,000
Net asset value of shares issued from
reinvestment of distributions
(580 and 33,000 shares,
respectively) 12,526 659,000
Cost of shares repurchased (141,833
and 13,000 shares, respectively) (2,899,692) (279,000)
------------- ------------
Total 5,287,504 8,068,000
------------- ------------
CLASS M
Proceeds from sales of shares (5,260
and 0 shares, respectively) 110,536 --
Net asset value of shares issued from
reinvestment of distributions
(0 and 0 shares, respectively) -- --
Cost of shares repurchased (5,260 and
0 shares, respectively) (102,183) --
------------- ------------
Total 8,353 --
------------- ------------
INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS 37,041,590 43,730,000
------------- ------------
NET INCREASE IN NET ASSETS 47,691,525 43,756,000
NET ASSETS
Beginning of period 53,149,022 9,393,000
------------- ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME OF
$0 AND $0, RESPECTIVELY] $ 100,840,547 $ 53,149,000
------------- ------------
------------- ------------
</TABLE>
See Notes to Financial Statements 45
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------
INCEPTION
YEAR ENDED DECEMBER 31 10/10/94
-------------------------------------------------------- THROUGH
1998 1997 1996 1995 12/31/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 21.09 $ 18.39 $ 14.90 $ 12.07 $ 10.00
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (loss) (0.30)(1)(7) (0.31)(1)(2) (0.12)(1)(3) 0.22(1)(3) 0.07(1)(3)
Net realized and unrealized
gain (loss) 3.31 5.07 7.45 2.87 2.00
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 3.01 4.76 7.33 3.09 2.07
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net
investment income -- -- (0.28) (0.08) --
Dividends from net realized
gains -- (2.06) (3.56) (0.18) --
In excess of accumulated net
realized gains (0.02) -- -- -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.02) (2.06) (3.84) (0.26) --
-------- -------- -------- -------- --------
Change in net asset value 2.99 2.70 3.49 2.83 2.07
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 24.08 $ 21.09 $ 18.39 $ 14.90 $ 12.07
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total return(4) 14.29% 26.41%(2) 52.37%(3) 25.68%(3) 20.70%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $54,187 $27,771 $7,859 $1,742 $121
RATIO TO AVERAGE NET ASSETS
OF:
Operating expenses 1.78% 1.80%(2) 1.10%(3) --%(3) --%(5)
Net investment income (loss) (1.39)% (1.40)%(2) (0.70)%(3) 1.50%(3) 2.60%(5)
Portfolio turnover 147% 313.5% 297.1% 121.4% 157.9%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------
1998 1997 1996
<S> <C> <C> <C>
Net asset value, beginning of
period $ 20.87 $ 18.35 $ 16.44(6)
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (loss) (0.45)(1)(7) (0.46)(1)(2) (0.32)(1)
Net realized and unrealized
gain (loss) 3.24 5.04 2.43
----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 2.79 4.58 2.11
----- ----- -----
LESS DISTRIBUTIONS
Dividends from net
investment income -- -- --
Dividends from net realized
gains -- (2.06) (0.20)
In excess of accumulated net
realized gains (0.02) -- --
----- ----- -----
TOTAL DISTRIBUTIONS (0.02) (2.06) (0.20)
----- ----- -----
Change in net asset value 2.77 2.52 1.91
----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 23.64 $ 20.87 $ 18.35
----- ----- -----
----- ----- -----
Total return(4) 13.39% 25.49%(2) 12.84%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $31,631 $17,298 $1,480
RATIO TO AVERAGE NET ASSETS
OF:
Operating expenses 2.53% 2.60%(2) 2.60%(5)
Net investment income (loss) (2.14)% (2.10)%(2) (2.20)%(5)
Portfolio turnover 147% 313.5% 297.1%
</TABLE>
46 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------
1998 1997 1996
<S> <C> <C> <C>
Net asset value, beginning of
period $ 20.87 $ 18.35 $ 17.99(6)
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (loss) (0.45)(1)(7) (0.47)(1)(2) (0.29)(1)
Net realized and unrealized
gain (loss) 3.23 5.05 0.85
----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 2.78 4.58 0.56
----- ----- -----
LESS DISTRIBUTIONS
Dividends from net
investment income -- -- --
Dividends from net realized
gains -- (2.06) (0.20)
In excess of accumulated net
realized gains (0.02) -- --
----- ----- -----
TOTAL DISTRIBUTIONS (0.02) (2.06) (0.20)
----- ----- -----
Change in net asset value 2.76 2.52 0.36
----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 23.63 $ 20.87 $ 18.35
----- ----- -----
----- ----- -----
Total return(4) 13.34% 25.49%(2) 3.12%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $15,023 $8,080 $54
RATIO TO AVERAGE NET ASSETS
OF:
Operating expenses 2.53% 2.60%(2) 2.60%(5)
Net investment income (loss) (2.14)% (2.10)%(2) (2.20)%(5)
Portfolio turnover 147% 313.5% 297.1%
</TABLE>
The table above provides condensed information concerning income and
capital changes for one share of the Phoenix-Engemann Small & Mid-Cap
Growth Fund. Such information is based on the Fund's audited financial
statements for the years presented.
(1) Computed using average shares outstanding.
(2) These amounts reflect the impact of a waiver of administration fees of
$1,128. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class A, Class B and Class C shares would have been $(.31), $(.46) and
$(.47), respectively, 26.41%, 25.49% and 25.49%, respectively, and 1.8%,
2.6% and 2.6%, respectively, and (1.4)%, (2.1)% and (2.1)%, respectively.
(3) These amounts reflect the impact of a waiver of Manager fees of $18,499,
$13,443, and $585 for the periods ended December 31, 1996, 1995 and 1994,
respectively, and the Manager's reimbursement for income taxes of $6,654
during 1994. Had the waivers and reimbursement not been made, net
investment income (loss) per share, total return (not annualized for the
period ended December 31, 1994) and the ratios of expenses and net
investment income (loss) to average net assets (annualized for the period
ended December 31, 1994) would have been $(.25), 51.35%, 1.9% and (1.4)%,
respectively, $(.11), 23.40%, 2.3% and (0.8)%, respectively, and $(.01),
15.10%, 22.1% (2.3% if only normal and recurring expenses are taken into
account) and (0.4)%, respectively, for the periods ended December 31, 1996,
1995 and 1994, respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge. Total return for
the periods ended December 31, 1996 (Class B and Class C only) and December
31, 1994 have not been annualized.
(5) Annualized.
(6) The beginning net asset value per share of Class B and Class C shares
equals the net asset value per share of the Class A shares as of the first
day Class B and Class C shares were sold, September 18, 1996 and October 8,
1996, respectively.
(7) Includes reimbursement of operating expenses by investment adviser of
$0.01.
See Notes to Financial Statements 47
<PAGE>
INVESTMENTS AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C> <C>
COMMON STOCKS--96.5%
AUTO PARTS & EQUIPMENT--3.8%
Dana Corp............................... 33,700 $ 1,377,487
AUTOMOBILES--9.0%
Ford Motor Co........................... 26,700 1,566,956
General Motors Corp..................... 22,900 1,638,781
------------
3,205,737
------------
BUILDING MATERIALS--4.0%
Armstrong World Industries, Inc......... 23,500 1,417,344
CHEMICALS--6.9%
Dow Chemical Co. (The).................. 14,700 1,336,781
Eastman Chemical Co..................... 24,900 1,114,275
------------
2,451,056
------------
CHEMICALS (SPECIALTY)--6.9%
Hercules, Inc........................... 41,800 1,144,275
Nalco Chemical Co....................... 42,600 1,320,600
------------
2,464,875
------------
CONTAINERS (METAL & GLASS)--4.0%
Crown Cork & Seal Co., Inc.............. 47,000 1,448,187
ELECTRONICS (INSTRUMENTATION)--5.9%
Tektronix, Inc.......................... 70,300 2,113,394
IRON & STEEL--7.3%
Allegheny Teledyne, Inc................. 68,400 1,397,925
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C> <C>
IRON & STEEL--CONTINUED
USX-U. S. Steel Group................... 52,700 $ 1,212,100
------------
2,610,025
------------
LEISURE TIME (PRODUCTS)--5.4%
Brunswick Corp.......................... 77,300 1,913,175
MACHINERY (DIVERSIFIED)--17.2%
Cooper Industries, Inc.................. 30,800 1,468,775
Milacron, Inc........................... 71,200 1,370,600
SPX Corp.(b)............................ 25,814 1,729,538
Timken Co. (The)........................ 83,100 1,568,512
------------
6,137,425
------------
MANUFACTURING (DIVERSIFIED)--7.8%
Aeroquip-Vickers, Inc................... 42,900 1,284,319
National Service Industries, Inc........ 39,400 1,497,200
------------
2,781,519
------------
METALS MINING--3.4%
Phelps Dodge Corp....................... 24,100 1,226,088
OIL & GAS (REFINING & MARKETING)--4.0%
Sunoco, Inc............................. 39,300 1,417,256
OIL (DOMESTIC INTEGRATED)--3.3%
Phillips Petroleum Co................... 27,900 1,189,238
TRUCKS & PARTS--7.6%
Cummins Engine Co., Inc................. 40,800 1,448,400
</TABLE>
50 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Value 25 Fund
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C> <C>
TRUCKS & PARTS--CONTINUED
PACCAR, Inc............................. 30,500 $ 1,254,313
------------
2,702,713
------------
- - ---------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $34,103,063) 34,455,519
- - ---------------------------------------------------------------------------
FOREIGN COMMON STOCKS--2.4%
AUTOMOBILES--2.4%
DaimlerChrysler AG (Germany)(b)......... 9,100 874,169
- - ---------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $450,281) 874,169
- - ---------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS --98.9%
(IDENTIFIED COST $34,553,344) 35,329,688(a)
Cash and receivables, less liabilities--1.1% 382,768
-------------
NET ASSETS--100.0% $ 35,712,456
-------------
-------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $4,603,224 and gross
depreciation of $3,896,645 for federal income tax purposes. At December 31,
1998, the aggregate cost of securities for federal income tax purposes was
$34,623,109.
(b) Non-income producing.
See Notes to Financial Statements 51
<PAGE>
Phoenix-Engemann Value 25 Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $34,553,344) $ 35,329,688
Cash 394,657
Receivables
Dividends and interest 83,602
Fund shares sold 37,869
-------------
Total assets 35,845,816
-------------
LIABILITIES
Payables
Fund shares repurchased 6,187
Distribution fee 54,643
Investment advisory fee 23,536
Administration fee 18,049
Trustees' fee 7,247
Accrued expenses 23,698
-------------
Total liabilities 133,360
-------------
NET ASSETS $ 35,712,456
-------------
-------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 34,541,729
Undistributed net investment income 30,470
Accumulated net realized gain 363,913
Net unrealized appreciation 776,344
-------------
NET ASSETS $ 35,712,456
-------------
-------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $18,089,672) 1,554,189
Net asset value per share $11.64
Offering price per share $11.64/(1-4.75%) $12.22
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $10,980,753) 947,391
Net asset value and offering price per share $11.59
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $6,642,031) 573,565
Net asset value and offering price per share $11.58
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 1,092,130
Interest 11,183
-------------
Total investment income 1,103,313
-------------
EXPENSES
Investment advisory fee 329,629
Distribution fee, Class A 48,719
Distribution fee, Class B 105,179
Distribution fee, Class C 65,250
Distribution fee, Class M 500
Administration 219,418
Professional 24,871
Trustees 14,668
-------------
Total expenses 808,234
Less expenses borne by investment adviser (39,539)
-------------
Net expenses 768,695
-------------
NET INVESTMENT INCOME 334,618
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 2,097,474
Net change in unrealized appreciation (depreciation) on
investments (352,262)
-------------
NET GAIN ON INVESTMENTS 1,745,212
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,079,830
-------------
-------------
</TABLE>
52 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Value 25 Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended
12/31/97
Year Ended (Rounded to
12/31/98 thousands)
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 334,618 $ 231,000
Net realized gain (loss) 2,097,474 1,504,000
Net change in unrealized appreciation
(depreciation) (352,262) 1,133,000
------------ ------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 2,079,830 2,868,000
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (211,860) (171,000)
Net investment income, Class B (57,698) (37,000)
Net investment income, Class C (35,805) (22,000)
Net investment income, Class M (335) --
Net realized gains, Class A (869,860) (878,000)
Net realized gains, Class B (538,067) (403,000)
Net realized gains, Class C (327,380) (221,000)
------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (2,041,005) (1,732,000)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (447,148
and 1,831,000 shares, respectively) 5,386,173 20,131,000
Net asset value of shares issued from
reinvestment of distributions
(92,048 and 86,000 shares,
respectively) 1,040,977 977,000
Cost of shares repurchased (673,296
and 277,000 shares, respectively) (7,993,719) (3,121,000)
------------ ------------
Total (1,566,569) 17,987,000
------------ ------------
CLASS B
Proceeds from sales of shares (297,032
and 770,000 shares, respectively) 3,568,146 8,726,000
Net asset value of shares issued from
reinvestment of distributions
(39,114 and 23,000 shares,
respectively) 439,118 260,000
Cost of shares repurchased (151,755
and 30,000 shares, respectively) (1,790,599) (357,000)
------------ ------------
Total 2,216,665 8,629,000
------------ ------------
CLASS C
Proceeds from sales of shares (249,615
and 421,000 shares, respectively) 2,992,809 4,940,000
Net asset value of shares issued from
reinvestment of distributions
(30,269 and 17,000 shares,
respectively) 339,363 197,000
Cost of shares repurchased (130,943
and 13,000 shares, respectively) (1,510,855) (162,000)
------------ ------------
Total 1,821,317 4,975,000
------------ ------------
CLASS M
Proceeds from sales of shares (20,926
and 0 shares, respectively) 256,291 --
Net asset value of shares issued from
reinvestment of distributions
(28 and 0 shares, respectively) 335 --
Cost of shares repurchased (20,954 and
0 shares, respectively) (263,766) --
------------ ------------
Total (7,140) --
------------ ------------
INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS 2,464,273 31,591,000
------------ ------------
NET INCREASE IN NET ASSETS 2,503,098 32,727,000
NET ASSETS
Beginning of period 33,209,358 482,000
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME OF $30,470 AND
$1,038, RESPECTIVELY] $ 35,712,456 $ 33,209,000
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements 53
<PAGE>
Phoenix-Engemann Value 25 Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------------------------- --------------------------------
YEAR ENDED DECEMBER 31, INCEPTION YEAR ENDED DECEMBER 31,
-------------------------------- 12/17/96 TO --------------------------------
1998 1997 12/31/96 1998 1997
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 11.56 $ 10.11 $ 10.00 $ 11.53 $ 10.39(5)
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income (loss) 0.15(1)(6) 0.17(1)(2) --(1) 0.06(1)(6) 0.08(1)(2)
Net realized and
unrealized gain
(loss) 0.66 1.95 0.11 0.65 1.67
------ ------ ------ ------ ------
TOTAL FROM
INVESTMENT
OPERATIONS 0.81 2.12 0.11 0.71 1.75
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net
investment income (0.14) (0.12) -- (0.06) (0.06)
Dividends from net
realized gains (0.59) (0.55) -- (0.59) (0.55)
------ ------ ------ ------ ------
TOTAL
DISTRIBUTIONS (0.73) (0.67) -- (0.65) (0.61)
------ ------ ------ ------ ------
Change in net asset
value 0.08 1.45 0.11 0.06 1.14
------ ------ ------ ------ ------
NET ASSET VALUE, END
OF PERIOD $ 11.64 $ 11.56 $ 10.11 $ 11.59 $ 11.53
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total return(3) 7.23% 21.10%(2) 1.10% 6.41% 16.97%(2)
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (thousands) $18,090 $19,518 $482 $10,981 $8,799
RATIO TO AVERAGE NET
ASSETS OF:
Operating expenses 1.75% 1.80%(2) 1.70%(4) 2.50% 2.60%(4)
Net investment
income (loss) 1.25% 1.40%(2) 1.80%(4) 0.54% 0.70%(4)
Portfolio turnover 135% 87.7% --% 135% 87.7%
<CAPTION>
CLASS C
--------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------
1998 1997
<S> <C><C> <C>
Net asset value,
beginning of period $ 11.52 $ 10.39(5)
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income (loss) 0.06(1)(6) 0.09(1)(2)
Net realized and
unrealized gain
(loss) 0.65 1.66
----- -----
TOTAL FROM
INVESTMENT
OPERATIONS 0.71 1.75
----- -----
LESS DISTRIBUTIONS
Dividends from net
investment income (0.06) (0.07)
Dividends from net
realized gains (0.59) (0.55)
----- -----
TOTAL
DISTRIBUTIONS (0.65) (0.62)
----- -----
Change in net asset
value 0.06 1.13
----- -----
NET ASSET VALUE, END
OF PERIOD $ 11.58 $ 11.52
----- -----
----- -----
Total return(3) 6.42% 17.01%(2)
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (thousands) $6,642 $4,893
RATIO TO AVERAGE NET
ASSETS OF:
Operating expenses 2.50% 2.60%(4)
Net investment
income (loss) 0.52% 0.80%(4)
Portfolio turnover 135% 87.7%
</TABLE>
The table above provides condensed information concerning income and
capital changes for one share of the Phoenix-Engemann Value 25 Fund. Such
information is based on the Fund's audited financial statements for the
years presented.
(1) Computed using average shares outstanding.
(2) These amounts reflect the impact of a waiver of administration fees of
$789. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class A, Class B and Class C shares would have been $.17, $.08 and $.08,
respectively, 21.10%, 16.97% and 17.01%, respectively, 1.8%, 2.6% and 2.6%,
respectively, and 1.4%, 0.7% and 0.8%, respectively.
(3) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front- end or contingent deferred sales charge. Total return for
the period from inception (December 17, 1996) through December 31, 1996 has
not been annualized.
(4) Annualized.
(5) The beginning net asset value per share of Class B and Class C shares
equals the net asset value per share of the Class A shares as of the first
day Class B and Class C shares were sold, January 9, 1997.
(6) Includes reimbursement of operating expenses by investment adviser of
$0.01.
54 See Notes to Financial Statements
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix-Engemann Funds (the "Trust") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. To date, six
Funds are offered for sale: Phoenix-Engemann Growth Fund, Phoenix-Engemann Nifty
Fifty Fund, Phoenix-Engemann Balanced Return Fund, Phoenix-Engemann Global
Growth Fund, Phoenix-Engemann Small & Mid-Cap Growth Fund and Phoenix-Engemann
Value 25 Fund, collectively referred to as the "Funds," are series of The
Phoenix-Engemann Funds. Each Fund represents an investment in a separate
diversified fund with its own investment objectives. GROWTH FUND seeks to
achieve long-term capital appreciation. NIFTY FIFTY FUND seeks to achieve
long-term capital appreciation by investing in approximately 50 different
securities. BALANCED RETURN FUND seeks to maximize a total investment return
consistent with reasonable risk through a balanced approach. GLOBAL GROWTH FUND
seeks to achieve long-term growth of capital by investing in a globally
diversified portfolio of equity securities. SMALL & MID-CAP GROWTH FUND seeks to
achieve long-term growth of capital by investing primarily in a diversified
portfolio of equity securities of companies with market capitalizations below
$1.5 billion. VALUE 25 FUND seeks to achieve dividend income and long-term
growth of capital by investing in equity securities which the Adviser believes
offer the best potential for current dividend yield and long-term capital
appreciation.
Each Fund offers Class A, Class B and Class C shares. Class M shares have been
closed. Class A shares are sold with a front-end sales charge of up to 4.75%.
Class B shares are sold with a contingent deferred sales charge which declines
from 5% to zero depending on the period of time the shares are held. Class C
shares are sold with a 1% contingent deferred sales charge if redeemed within
one year of purchase. All 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 Funds are borne pro
rata by the holders of all classes of shares, except that each class bears
distribution expenses unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
A. SECURITY VALUATION:
Equity securities are valued at the last sale price, or if there had been no
sale that day, at the last bid price. Debt securities are valued on the basis of
broker quotations or valuations provided by a pricing service which utilizes
information with respect to recent sales, market transactions in comparable
securities, quotations from dealers and various relationships between securities
in determining value. Short-term investments having a remaining maturity of 60
days or less are valued at amortized cost which approximates market. All other
securities and assets are valued at 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. Dividend income is recorded on the ex-dividend
date or, in the case of certain foreign securities, as soon as the Trust is
notified. Realized gains and losses are determined on the identified cost basis.
The Trust does not amortize premiums but does amortize discounts.
C. INCOME TAXES:
Each Fund is treated as a separate taxable entity. It is the policy of each
Fund to comply with the requirements of the Internal Revenue Code (the "Code")
applicable to regulated investment companies, and to distribute all of its
taxable income to its shareholders. In addition, each 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 are recorded by each Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, expiring
capital loss carryforwards, foreign currency gain/loss, partnerships, operating
losses and losses deferred due to wash sales and excise tax regulations.
Permanent book and tax basis differences relating to shareholder distributions
will result in reclassifications to paid in capital.
E. FOREIGN CURRENCY TRANSLATION:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at the
trade date. The gain or loss resulting from a change in currency exchange rates
between the trade and settlement dates of a
55
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 (CONTINUED)
portfolio transaction is treated as a gain or loss on foreign currency.
Likewise, the gain or loss resulting from a change in currency exchange rates
between the date income is accrued and paid is treated as a gain or loss on
foreign currency. The Trust does not separate that portion of the results of
operations arising from changes in the exchange rates and that portion arising
from changes in the market prices of securities.
F. FORWARD CURRENCY CONTRACTS:
The Global Growth Fund, the Small & Mid-Cap Growth Fund and the Value 25 Fund
may enter into forward currency contracts in conjunction with the planned
purchase or sale of foreign denominated securities in order to hedge the U.S.
dollar cost or proceeds. Forward currency contracts involve, to varying degrees,
elements of market risk in excess of the amount recognized in the Statement of
Assets and Liabilities. Risks arise from the possible movements in foreign
exchange rates or if the counterparty does not perform under the contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time of
the contract. These contracts are traded directly between currency traders and
their customers. The contract is marked-to-market daily and the change in market
value is recorded by each Fund as an unrealized gain (or loss). When the
contract is closed or offset with the same counterparty, the Fund records a
realized gain (or loss) equal to the change in the value of the contract when it
was opened and the value at the time it was closed or offset.
G. FUTURES CONTRACTS:
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. The Global Growth Fund, the Small &
Mid-Cap Growth Fund and the Value 25 Fund may enter into financial futures
contracts as a hedge against anticipated changes in the market value of their
portfolio securities. Upon entering into a futures contract, the Fund is
required to pledge to the broker an amount of cash and/or securities equal to
the "initial margin" requirements of the futures exchange on which the contract
is traded. Pursuant to the contract, the Fund agrees to receive from or pay to
the broker an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as daily variation margin and are
recorded by the Fund as unrealized gains and losses. When the contract is
closed, the Fund records a realized gain or loss equal to the difference between
the value of the contract at the time it was opened and the value at the time it
was closed. The potential risk to the Fund is that the change in value of the
futures contract may not correspond to the change in value of the hedged
instruments.
H. OPTIONS:
The Global Growth Fund and the Small & Mid-Cap Growth Fund may write covered
options or purchase options contracts for purpose of hedging against changes in
the market value of the underlying securities or foreign currencies. To a
limited extent, the Value 25 Fund may buy and sell options on domestic and
foreign securities indices for hedging purposes.
Each Fund will realize a gain or loss upon the expiration or closing of the
option transaction. Gains and losses on written options are reported separately
in the Statement of Operations. When a written option is exercised, the proceeds
on sales or amounts paid are adjusted by the amount of premium received. Options
written are reported as a liability in the Statement of Assets and Liabilities
and subsequently marked-to-market to reflect the current value of the option.
The risk associated with written options is that the change in value of options
contracts may not correspond to the change in value of the hedged instruments.
In addition, losses may arise from changes in the value of the underlying
instruments, or if a liquid secondary market does not exist from the contracts.
Each Fund may purchase options which are included in the Fund's Schedule of
Investments and subsequently marked-to-market to reflect the current value of
the option. When a purchased option is exercised, the cost of the security is
adjusted by the amount of premium paid. The risk associated with purchased
options is limited to the premium paid.
I. EXPENSES:
Expenses incurred by the Trust with respect to any two or more Funds are
allocated in proportion to the net assets of each Fund, except where allocation
of direct expense to each Fund or an alternative allocation method can be more
fairly made.
J. LOAN AGREEMENTS:
The Funds may invest in direct debt instruments which are invested in amounts
owed by a corporation, governmental, or other borrower to lenders or lending
syndicates. The Funds' investments in loans may be in the form of participations
in loans or assignments of all or a portion of loans from third parties. A loan
is often administered by a bank or other financial institution (the lender) that
acts as agent for all holders. The agent administers the terms of the loan, as
specified in the loan agreement. When investing in a loan participation, the
Funds have the right to receive payments of principal, interest and any fees to
which it is entitled only from the lender selling the loan agreement and only
upon receipt by the lender of payments from the borrower. The Funds generally
have no right to enforce compliance with the terms of the loan agreement with
the borrower. As a result, the Funds may be subject to the credit risk of both
the borrower and lender that is selling the loan agreement. For loans which the
Funds
56
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 (CONTINUED)
are a participant, the Funds may not sell their participation in the loan
without the lender's prior consent. When the Funds purchase assignments from
lenders it acquires direct rights against the borrower on the loan. Direct
indebtedness of emerging countries involves a risk that the government entities
responsible for the repayment of the debt may be unable, or unwilling to pay the
principal and interest when due.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Trust, the Adviser, Roger Engemann &
Associates, Inc. ("REA", or the "Adviser"), a wholly owned subsidiary of
Pasadena Capital Corporation, which in turn is a wholly owned subsidiary of
Phoenix Investment Partners, Ltd. a publicly-traded company 60% owned by Phoenix
Home Life Mutual Insurance Company, is entitled to a fee, based upon the
following annual rates as a percentage of the average daily net assets of each
Fund:
<TABLE>
<CAPTION>
First $50 Next $450 Over $500
Million Million Million
--------- ---------- ----------
<S> <C> <C> <C>
Growth Fund.................. 0.90% 0.80% 0.70%
Nifty Fifty Fund............. 0.90% 0.80% 0.70%
Balanced Return Fund......... 0.80% 0.70% 0.60%
Global Growth Fund........... 1.10% 1.00% 0.90%
Small & Mid-Cap Growth
Fund......................... 1.00% 0.90% 0.80%
Value 25 Fund................ 0.90% 0.80% 0.70%
</TABLE>
The Adviser furnishes advice and recommendations with respect to the Funds'
securities portfolios, supervises the Funds' investments, provides Fund
accounting and pricing, and provides the Trust's Board of Trustees with periodic
and special reports on investment securities, economic conditions and other
pertinent subjects. The Manager also performs various administrative and
shareholder services for each Fund under separate administration agreements. All
normal operating expenses of the Funds, except for fees and expenses associated
with investment management services, service fees, distribution fees, Trustees'
fees, audit fees and certain legal fees are paid by the Manager pursuant to the
administration agreements.
Phoenix Equity Planning Corporation ("PEPCO") an indirect majority-owned
subsidiary of PHL, which serves as the national distributor of the Trust's
shares has advised the Trust that it retained net selling commissions of
$101,674 for Class A shares and deferred sales charges of $501,234 for Class B
shares and $104,875 for Class C shares for the year ended December 31, 1998. In
addition, each Fund pays PEPCO a distribution fee at an annual rate of 0.25% for
Class A shares, 1.00% for Class B shares, 1.00% for Class C shares and 0.50% for
Class M shares applied to the average daily net assets of each Fund. The
distributor has advised the Trust that of the total amount expensed for the year
ended December 31, 1998 $2,016,392 was retained by the Distributor, $2,629,819
was paid out to unaffiliated Participants and $16,306 was paid to W.S. Griffith,
an indirect subsidiary of PHL.
As Administrator of the Funds, PEPCO received a fee for bookkeeping,
administration, and pricing services at an annual rate of 0.60% of average daily
net assets up to $50 million, 0.50% of average daily net assets of $50 million
to $500 million, 0.40% of average daily net assets of $500 million through $625
million, and 0.30% of average daily net assets greater than $625 million: a
minimum fee may apply.
PEPCO has voluntarily agreed to waive, when necessary, a portion of its
administration fee so that Other Operating Expenses (operating expenses
excluding management fees and 12b-1 fees) do not exceed the following limits:
<TABLE>
<CAPTION>
1st $50 next $450 next $125 over $625
million million million million
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Growth Fund.............. 0.99% 0.50% 0.30% 0.30%
Nifty Fifty Fund......... 0.99% 0.50% 0.30% 0.30%
Balanced Return Fund..... 1.09% 0.60% 0.40% 0.40%
Global Growth Fund....... 0.60% 0.50% 0.40% 0.40%
Small & Mid-Cap Growth
Fund................... 0.60% 0.50% 0.40% 0.40%
Value 25 Fund............ 0.60% 0.50% 0.40% 0.40%
</TABLE>
PEPCO serves as the Fund's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended December 31, 1998
(excluding U.S. Government and agency securities, short-term securities, futures
contracts and forward currency contracts) aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Growth Fund.......................... $555,311,417 $614,413,792
Nifty Fifty Fund..................... 305,753,217 290,307,238
Balanced Return Fund................. 60,122,526 53,879,018
Global Growth Fund................... 21,996,573 20,166,638
Small & Mid Cap Growth Fund.......... 145,983,951 108,128,563
Value 25 Fund........................ 49,499,799 48,785,988
</TABLE>
Purchases and sales of U.S. Government and agency securities during the year
ended December 31, 1998, aggregated $35,971,164 and $39,843,599 respectively,
for the Balanced Return Fund.
4. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices
57
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 (CONTINUED)
of such investments may be volatile. The consequences of political, social or
economic changes in these markets may have disruptive effects on the market
prices of these investments and the income they generate, as well as a fund's
ability to repatriate such amounts.
5. CAPITAL LOSS CARRYOVERS
For the fiscal year ended December 31, 1998, the following Funds had capital
loss carryovers, expiring in 2006, which may be used to offset future capital
gains.
<TABLE>
<S> <C>
Global Growth Fund................. $ 1,742,859
Small & Mid-Cap Growth Fund........ 10,519,829
</TABLE>
Under current tax law, capital losses realized after October 31, 1998 may be
deferred and treated as occurring on the first day of the following tax year.
For the calendar year ended December 31, 1998 the Global Growth Fund and the
Small & Mid-Cap Growth Fund elected to defer losses occurring between November
1, 1998 and December 31, 1998 in the amount of $7,217 and $17,567, respectively.
In addition, the Small & Mid-Cap Fund, Value 25 Fund, and Balanced Return Fund
were able to utilize losses deferred in the prior year in the amount of
$189,050, $7,087, and $247,437, respectively.
6. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Funds have recorded several
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of the Funds and are designed generally to present
undistributed net investment income and realized gains on a tax basis which is
considered to be more informative to the shareholder. As of December 31, 1998,
the Funds recorded the following reclassifications to increase (decrease) the
accounts listed below:
<TABLE>
<CAPTION>
Undistributed Capital paid
net in
investment Accumulated on shares of
income net realized beneficial
(loss) gain (loss) interest
------------ ------------ --------------
<S> <C> <C> <C>
Growth Fund........................ $ 4,059,521 $ 10,516 $ (4,070,037)
Nifty Fifty Fund................... 2,852,205 (2,852,429) 224
Balanced Return Fund............... 358 172 (530)
Global Growth Fund................. 246,044 (13,986) (232,058)
Small & Mid Cap Growth Fund........ 1,330,768 10,751 (1,341,519)
Value 25 Fund...................... 512 (299) (213)
</TABLE>
TAX INFORMATION NOTICE (UNAUDITED)
For the fiscal year ended December 31, 1998, the following Funds distributed
long-term capital gain dividends as follows:
<TABLE>
<CAPTION>
Total
Long-Term
Distributions
------------
<S> <C>
Growth Fund........................................ $23,765,415
Nifty Fifty Fund................................... 6,472,127
Balanced Return Fund............................... 5,623,989
Value 25 Fund...................................... 520,008
</TABLE>
For federal income tax purposes, a percentage of the ordinary income dividends
paid by the following Funds qualify for the dividends received deduction (DRD)
for corporate shareholders:
<TABLE>
<CAPTION>
% of Ordinary
Income
Dividend
Qualified
for DRD
-----------------
<S> <C>
Balanced Return Fund........................... 65.68%
Value 25 Fund.................................. 59.50%
</TABLE>
This report is not authorized for distribution to prospective investors in the
Phoenix-Engemann Funds unless preceded or accompanied by an effective Prospectus
which includes information concerning the sales charge, the Fund's record and
other pertinent information.
58
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO]
To the Trustees and Shareholders of
The Phoenix-Engemann Funds:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments (except for bond ratings), and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the Phoenix-Engemann Growth Fund, the Phoenix-Engemann Nifty Fifty Fund, the
Phoenix-Engemann Balanced Return Fund, the Phoenix-Engemann Small & Mid-Cap
Growth Fund, the Phoenix-Engemann Value 25 Fund and the Phoenix-Engemann Global
Growth Fund (the "Funds") at December 31, 1998, and the results of each of their
operations, the changes in each of their net assets and the financial highlights
for 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 Funds'
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 December 31, 1998, by correspondence with the
custodians and brokers, provide a reasonable basis for the opinion expressed
above. The financial statements of The Phoenix-Engemann Funds (except for the
Phoenix-Engemann Value 25 Fund) for the year ended December 31, 1996, and prior
periods were audited by other independent accountants whose report dated
February 14, 1997, expressed an unqualified opinion on those statements.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
February 11, 1999
59
<PAGE>
PHOENIX-ENGEMANN FUNDS
600 North Rosemead Boulevard
Pasadena, California 91107-2133
TRUSTEES
Roger Engemann
Barry E. McKinley
Robert L. Peterson
Richard C. Taylor
Angela Wong
OFFICERS
Roger Engemann, President
Malcolm Axon, Chief Financial Officer
Tina L. Mitchell, Secretary
John S. Tilson, Vice President
Thomas N. Steenburg, General Counsel and
Vice President
INVESTMENT ADVISERS
Roger Engemann & Associates ("REA")
600 North Rosemead Boulevard
Pasadena, California 91107-2101
PRINCIPAL UNDERWRITER
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
CUSTODIANS
Union Bank of California
475 Sansome Street
San Francisco, California 94111
State Street Bank and Trust Company
(Global Growth Fund)
P.O. Box 351
Boston, Massachusetts 02101
TRANSFER AGENT
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
160 Federal Street
Boston, Massachusetts 02110
HOW TO CONTACT US
The Fund Connection 1-800-243-1574
Customer Service 1-800-243-1574 (option 0)
Investment Strategy Hotline 1-800-243-4361 (option 2)
Marketing Department 1-800-243-4361 (option 3)
Text Telephone 1-800-243-1926
Internet access:
WWW.PHOENIXINVESTMENTS.COM
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION PRSRT STD
PO Box 2200 U.S. Postage
Enfield CT 06083-2200 PAID
Springfield, MA
[LOGO] PHOENIX Permit No. 444
INVESTMENT PARTNERS
PXP 2115 (299)
<PAGE>
SEMI-ANNUAL REPORT OF THE PHOENIX-ENGEMANN
FUNDS FOR THE SIX-MONTH PERIOD ENDED
JUNE 30, 1999
[TO BE FILED BY PRE-EFFECTIVE AMENDMENT]
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
[TO BE FILED BY PRE-EFFECTIVE AMENDMENT]
<PAGE>
PHOENIX-ABERDEEN WORLDWIDE OPPORTUNITIES FUND
PART C
OTHER INFORMATION
Item 15. Indemnification
The response to this item is incorporated by reference to Part A of the
Prospectus/Proxy Statement in this Registration Statement under the caption
"Comparative Information on Shareholder Rights--Liability of Trustees."
Item 16. Exhibit
(1)(a) Declaration of Trust of the Registrant, previously filed and filed as
Exhibit 1.1 via EDGAR with Post-Effective Amendment No. 63 on October
24, 1997 and herein incorporated by reference.
(1)(b) Amendment to Declaration of Trust designating Classes of Shares, filed
as Exhibit 1.2 via EDGAR with Post-Effective Amendment No. 61 on
October 30, 1995, incorporated herein by reference.
(1)(c) Amendment to Declaration of Trust establishing Class C Shares, filed as
Exhibit (1)(c) via EDGAR with Post-Effective Amendment No. 66 on
December 15, 1998, and incorporated herein by reference.
(1)(d) Amendment to Declaration of Trust changing name of Trust to
"Phoenix-Aberdeen Worldwide Opportunities Fund", filed as Exhibit
(1)(d) via EDGAR with Post-Effective Amendment No. 66 on December 15,
1998, and incorporated herein by reference.
(2) By-laws of the Registrant, previously filed and filed as Exhibit 2.1
via EDGAR with Post-Effective Amendment No. 63 on October 24, 1997 and
herein incorporated by reference.
(3) [Not Applicable.]
(4) Agreement and Plan of Reorganization (included as Exhibit A to the
Prospectus/Proxy Statement contained in Part A of this Registration
Statement).
(5) Reference is hereby made to Article V of Registrant's Declaration of
Trust referenced in Exhibit 1 above.
(6)(a) Management Agreement between Registrant and National Securities &
Research Corporation dated May 14, 1993 and assigned to Phoenix
Investment Counsel, Inc. effective June 1, 1998, filed with Post-
Effective Amendment No. 58 on August 30, 1993 and filed as Exhibit 5.1
via EDGAR with Post-Effective Amendment No. 63 on October 24, 1997 and
herein incorporated by reference.
(6)(b) Amendment to Management Agreement between Registrant and National
Securities & Research Corporation, dated January 1, 1994 and assigned
to Phoenix Investment Counsel, Inc. Effective June 1, 1998, filed as
Exhibit 5.2 via EDGAR with Post-Effective Amendment No. 61 on October
30, 1995, incorporated herein by reference.
(6)(c) Subadvisory Agreement between Phoenix Investment Counsel, Inc. And
Aberdeen Fund Managers, Inc. dated October 27, 1998, filed via EDGAR
with Post-Effective Amendment No. 66 on December 15, 1998, incorporated
herein by reference.
(7)(a) Underwriting Agreement between Registrant and Phoenix Equity Planning
Corporation dated November 19, 1997 and filed as Exhibit 6.1 via EDGAR
with Post-Effective Amendment No. 64 on October 6, 1998, herein
incorporated by reference.
(7)(b) Form of Sales Agreement between Phoenix Equity Planning Corporation and
dealers filed as Exhibit 6.2 via EDGAR with Post-Effective Amendment
No. 64 on October 6, 1998, herein incorporated by reference.
<PAGE>
(7)(c) Form of Supplement to Phoenix Family of Funds Sales Agreement filed as
Exhibit 6.3 via EDGAR with Post-Effective Amendment No. 64 on October
6, 1998, herein incorporated by reference.
(7)(d) Form of Financial Institution Sales Contract for the Phoenix Family of
Funds filed as Exhibit 6.4 via EDGAR with Post-Effective Amendment No.
64 on October 6, 1998, herein incorporated by reference.
(8) Not Applicable.
(9) Custody Agreement between Registrant and Brown Brothers Harriman & Co.
dated August 11, 1994, filed with Post-Effective Amendment No. 60 on
October 26, 1994 and filed as Exhibit 8 via EDGAR with Post-Effective
Amendment No. 63 on October 24, 1997 and incorporated herein by
reference.
(10)(a) Amended and Restated Distribution Plan Pursuant to Rule 12b-1 for Class
A Shares filed as Exhibit 15.1 via EDGAR with Post-Effective Amendment
No. 63 on October 24, 1997 and incorporated herein by reference.
(10)(b) Amended and Restated Distribution Plan Pursuant to Rule 12b-1 for Class
B Shares filed as Exhibit 15.2 via EDGAR with Post-Effective Amendment
No. 63 on October 24, 1997 and incorporated herein by reference.
(11) Opinion and consent of Goodwin, Procter & Hoar LLP with respect to
legality of the shares being issued (to be filed by Pre-Effective
Amendment ).
(12) Opinion and Consent of Goodwin, Procter & Hoar LLP with respect to tax
matters relating to acquisition of the Phoenix-Engemann Global Growth
Fund (to be filed by Post-Effective Amendment).
(13)(a) Transfer Agency and Service Agreement between Registrant and Phoenix
Equity Planning Corporation dated June 1, 1994, filed with
Post-Effective Amendment No. 60 on October 26, 1994 and filed as
Exhibit 9.1 via EDGAR with Post-Effective Amendment No. 63 on October
24, 1997 and incorporated herein by reference.
(13)(b) Sub-transfer Agent Agreement between Equity Planning and State Street
Bank and Trust Company dated June 1, 1994 filed as Exhibit 9.2 via
EDGAR with Post-Effective Amendment No. 64 on October 6, 1998, herein
incorporated by reference.
(13)(c) Amended and Restated Financial Agent Agreement between Registrant and
Phoenix Equity Planning Corporated dated November 19, 1997 and filed as
Exhibit 9.3 via EDGAR with Post-Effective Amendment No. 64 on October
6, 1998, herein incorporated by reference.
(13)(d) First Amendment to Amended and Restated Financial Agent Agreement
between Registrant and Phoenix Equity Planning Corporation dated March
23, 1998 and filed as Exhibit 9.4 via EDGAR with Post-Effective
Amendment No. 64 on October 6, 1998, herein incorporated by reference.
(13)(e) Second Amendment to Amended and Restated Financial Agent Agreement
between Registrant and Phoenix Equity Planning Corporation dated July
31, 1998 and filed as Exhibit 9.5 via EDGAR with Post-Effective
Amendment No. 64 on October 6, 1998, herein incorporated by reference.
(14) Consent of Independent Accountants (to be filed by Pre-Effective
Amendment).
(15) Not Applicable.
(16)* Powers of Attorney.
C-2
<PAGE>
(17)* Form of Proxy Card for Phoenix-Engemann Global Growth Fund.
*Filed herewith.
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a
part of this Registration Statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act of 1933, the reoffering prospectus will contain the
information called for by the applicable registration form for
reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to
the registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities
Act of 1933, each post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and the
offering of the securities at that time shall be deemed to be the
initial bona fide offering of them.
(3) The undersigned Registrant agrees to file, by post-effective amendment,
an Opinion of Counsel or a copy of an IRS ruling supporting the tax
consequences of the Reorganization within a reasonable time after
receipt of such opinion or ruling.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on behalf of the Registrant in the City
of Hartford and State of Connecticut on the 4th day of August 1999.
PHOENIX-ABERDEEN WORLDWIDE
OPPORTUNITIES FUND
By:/s/ Philip R. McLoughlin
--------------------------------------
Name: Philip R. McLoughlin
Title: President
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
- ---------------------------------
Robert Chesek* Trustee
- ---------------------------------
E. Virgil Conway* Trustee
/s/ Jacqueline M. Porter
- --------------------------------- Assistant Treasurer
Jacqueline M. Porter
- ---------------------------------
Harry Dalzell-Payne* Trustee
- ---------------------------------
Francis E. Jeffries* Trustee
- ---------------------------------
Leroy Keith, Jr.* Trustee
/s/ Philip R. McLoughlin
- ---------------------------------
Philip R. McLoughlin Trustee and President
- ---------------------------------
Everett L. Morris* Trustee
- ---------------------------------
James M. Oates* Trustee
- ---------------------------------
Calvin J. Pedersen* Trustee
- ---------------------------------
Herbert Roth, Jr.* Trustee
- ---------------------------------
Richard E. Segerson* Trustee
</TABLE>
<PAGE>
<TABLE>
<S> <C>
- ---------------------------------
Lowell P. Weicker, Jr.* Trustee
*By:/s/ Philip R. McLoughlin
-----------------------------
</TABLE>
*Philip R. McLoughlin pursuant to powers of attorney filed previously.
C-5
<PAGE>
Index To Exhibits
(14) Consent of Independent Accountants (to be filed by Pre-Effective
Amendment)
(17) Form of Proxy Card for the Phoenix-Engemann Global Growth Fund
C-6
<PAGE>
Exhibit (14)
CONSENT OF INDEPENDENT ACCOUNTANTS
(TO BE FILED BY PRE-EFFECTIVE AMENDMENT)
C-7
<PAGE>
Exhibit (17)
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS
September __, 1999
The undersigned shareholder of the Phoenix-Engemann Global Growth Fund (the
"Global Growth Fund"), revoking any and all previous proxies heretofore given
for shares of the Global Growth Fund held by the undersigned, does hereby
appoint Philip R. McLoughlin, and Tina L. Mitchell, each and any of them, with
full power of substitution each, to be the attorneys and proxies of the
undersigned, to attend the special meeting of the shareholders of the Global
Growth Fund to be held on the 20th day of October, 1999, at a.m., local time, at
the offices of the Global Growth Fund at 600 North Rosemead Boulevard, Pasadena,
California 91107-2133, and any adjournments thereof and to represent and direct
shares of each class of the Global Growth Fund held by the undersigned as of the
record date for the meeting for the proposal specified below.
This proxy, if properly executed, will be voted in the manner as directed herein
by the undersigned shareholder. Unless otherwise specified below in the boxes
provided, the undersigned's vote will be cast "FOR" the proposal. If no
direction is made for the proposal, this proxy will be voted "FOR" the proposal.
In their discretion, the proxies are authorized to transact and vote upon such
other matters and business as may come before the meeting or any adjournments
thereof.
To approve the Agreement and Plan of Reorganization, dated August 4, 1999,
and the transactions it contemplates, including (a) the transfer of all or
substantially all of the assets of the Global Growth Fund to
Phoenix-Aberdeen Worldwide Opportunities Fund (the "Worldwide
Opportunities Fund") in exchange solely for shares of the corresponding
class of the Worldwide Opportunities Fund and the assumption by the
Worldwide Opportunities Fund of all the liabilities of the Global Growth
Fund and (b) the distribution of the shares of the Worldwide Opportunities
Fund so received to shareholders of the Global Growth Fund.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
To consider and act upon any other business as may properly come before
the meeting and any adjournment thereof.
To avoid the expense of adjourning the meeting to a subsequent date,
please return this proxy in the enclosed self-addressed, postage-paid envelope.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE
PHOENIX-ENGEMANN FUNDS, WHICH RECOMMENDS A VOTE FOR THE PROPOSAL.
Dated: _____________________, 1999
Name
-----------------------------------------
Signature of Shareholder
C-8
